10-Q 1 hy-20240331.htm 10-Q hy-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 _______________________________________________________________________________________________________________________________________________________________________________________________________
FORM 10-Q
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:March 31, 2024
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 000-54799
HYSTER-YALE MATERIALS HANDLING, INC.
 (Exact name of registrant as specified in its charter) 
Delaware 31-1637659
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5875 LANDERBROOK DRIVE, SUITE 300
CLEVELAND(440)
OH449-960044124-4069
(Address of principal executive offices)(Registrant's telephone number, including area code)(Zip code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par Value Per ShareHYNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

Number of shares of Class A Common Stock outstanding at May 3, 2024: 14,029,697
Number of shares of Class B Common Stock outstanding at May 3, 2024: 3,465,329




HYSTER-YALE MATERIALS HANDLING, INC.
TABLE OF CONTENTS
   Page Number
 
    
  
    
  
    
  
    
  
    
  
    
  
    
 
    
 
    
 
    
 
    
 
    
 
    
 
    
 
    
 
    
 
    
  

1

PART I
FINANCIAL INFORMATION
Item 1. Financial Statements

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 MARCH 31
2024
 DECEMBER 31
2023
 (In millions, except share data)
ASSETS   
Current Assets   
Cash and cash equivalents$62.2  $78.8 
Accounts receivable, net520.5  497.5 
Inventories, net841.9  815.7 
Prepaid expenses and other101.4  98.1 
Total Current Assets1,526.0  1,490.1 
Property, Plant and Equipment, Net311.9  313.9 
Intangible Assets, Net37.3 39.3 
Goodwill52.0 53.3 
Deferred Income Taxes3.0  3.0 
Investments in Unconsolidated Affiliates52.1 56.8 
Other Non-current Assets136.1  122.7 
Total Assets$2,118.4  $2,079.1 
LIABILITIES AND EQUITY   
Current Liabilities   
Accounts payable$565.9  $523.5 
Accounts payable, affiliates6.9 6.7 
Revolving credit facilities69.8 83.3 
Short-term debt and current maturities of long-term debt165.3  169.4 
Accrued payroll51.6  87.4 
Deferred revenue71.1  77.9 
Other current liabilities290.1  270.4 
Total Current Liabilities1,220.7  1,218.6 
Long-term Debt239.7  241.3 
Self-insurance Liabilities45.9 51.1 
Pension Obligations4.7  5.2 
Deferred Income Taxes12.3 12.7 
Other Long-term Liabilities165.8  143.4 
Total Liabilities1,689.1  1,672.3 
Temporary Equity
Redeemable Noncontrolling Interest14.9 14.8 
Stockholders' Equity   
Common stock:   
Class A, par value $0.01 per share, 14,021,432 shares outstanding (2023 - 13,715,755 shares outstanding)
0.1  0.1 
Class B, par value $0.01 per share, convertible into Class A on a one-for-one basis, 3,467,379 shares outstanding (2023 - 3,469,875 shares outstanding)
0.1  0.1 
Capital in excess of par value336.9  327.7 
Treasury stock(9.1) 
Retained earnings302.1  256.3 
Accumulated other comprehensive loss(218.0) (194.3)
Total Stockholders' Equity412.1  389.9 
Noncontrolling Interests2.3  2.1 
Total Permanent Equity414.4  392.0 
Total Liabilities and Equity$2,118.4  $2,079.1 

See notes to unaudited condensed consolidated financial statements.
2

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 THREE MONTHS ENDED
 MARCH 31
 2024 2023
 (In millions, except per share data)
Revenues$1,056.5 $999.3 
Cost of sales820.8 824.9 
Gross Profit235.7  174.4 
Operating Expenses
Selling, general and administrative expenses151.9 131.8 
Operating Profit83.8  42.6 
Other (income) expense
Interest expense8.9 10.2 
Income from unconsolidated affiliates(1.0)(1.8)
Other, net(1.0)(1.7)
 6.9  6.7 
Income Before Income Taxes76.9  35.9 
Income tax expense25.1 8.7 
Net Income51.8  27.2 
Net income attributable to noncontrolling interests(0.2)(0.2)
Net income attributable to redeemable noncontrolling interests0.1 (0.2)
Accrued dividend to redeemable noncontrolling interests(0.2)(0.2)
Net Income Attributable to Stockholders$51.5 $26.6 
 
Basic Earnings per Share$2.97  $1.56 
Diluted Earnings per Share$2.93  $1.55 
Dividends per Share$0.3250 $0.3225 
 
Basic Weighted Average Shares Outstanding17.339 17.049 
Diluted Weighted Average Shares Outstanding17.592 17.214 

See notes to unaudited condensed consolidated financial statements.
3

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 THREE MONTHS ENDED
 MARCH 31
 20242023
(In millions)
Net Income$51.8 $27.2 
Other comprehensive income (loss) 
Foreign currency translation adjustment(16.7)11.6 
Current period cash flow hedging activity, net of tax(15.1)1.4 
Reclassification of hedging activities into earnings, net of tax7.3 10.9 
Reclassification of pension into earnings, net of tax0.8 0.6 
Comprehensive Income$28.1 $51.7 
Net income attributable to noncontrolling interests(0.2)(0.2)
Net (income) loss attributable to redeemable noncontrolling interests0.1 (0.2)
Accrued dividend to redeemable noncontrolling interests(0.2)(0.2)
Foreign currency translation adjustment attributable to noncontrolling interests (0.2)
Comprehensive Income Attributable to Stockholders$27.8 $50.9 

See notes to unaudited condensed consolidated financial statements.

4

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31
2024 2023
(In millions)
Operating Activities
Net income$51.8  $27.2 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization11.7  11.2 
Amortization of deferred financing fees0.4  0.3 
Deferred income taxes(0.5) (0.3)
Stock-based compensation9.2 4.9 
Dividends from unconsolidated affiliates4.4 5.7 
Other4.1  2.8 
Changes in assets and liabilities:   
Accounts receivable(28.2) (12.7)
Inventories(37.6) (48.1)
Other current assets(7.7) (7.4)
Accounts payable45.3  16.2 
Other liabilities(30.5) 9.2 
Net cash provided by operating activities22.4  9.0 
Investing Activities
Expenditures for property, plant and equipment(7.5) (3.3)
Proceeds from the sale of assets0.5 0.4 
Proceeds from the sale of business 1.1 
Purchase of noncontrolling interest (3.2)
Net cash used for investing activities(7.0)(5.0)
Financing Activities
Additions to debt47.2  40.3 
Reductions of debt(50.1) (38.9)
Net change to revolving credit agreements(12.8) 1.8 
Cash dividends paid(5.7)(5.6)
Purchase of treasury stock(9.1)(0.1)
Net cash used for financing activities(30.5) (2.5)
Effect of exchange rate changes on cash(1.5) 4.1 
Cash and Cash Equivalents
Increase (decrease) for the period(16.6) 5.6 
Balance at the beginning of the period78.8  59.0 
Balance at the end of the period$62.2  $64.6 

See notes to unaudited condensed consolidated financial statements.

5

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY AND PERMANENT EQUITY
Temporary EquityPermanent Equity
Accumulated Other Comprehensive Income (Loss)
Redeemable Noncontrolling InterestClass A Common StockClass B Common StockTreasury StockCapital in Excess of Par ValueRetained EarningsForeign Currency Translation AdjustmentDeferred Gain (Loss) on Cash Flow HedgingPension AdjustmentTotal Stockholders' EquityNoncontrolling InterestsTotal Permanent Equity
(In millions)
Balance, December 31, 2022$14.2 $0.1 $0.1 $ $297.7 $152.7 $(137.0)$(37.7)$(71.5)$204.4 $6.5 $210.9 
Stock-based compensation—   — 4.9 — — — — 4.9 — 4.9 
Stock issued under stock compensation plans—   (0.1) — — — — (0.1)— (0.1)
Net income0.2   — — 26.6 — — — 26.6 0.2 26.8 
Cash dividends   — — (5.6)— — — (5.6) (5.6)
Accrued dividends0.2   — — — — — — — — — 
Current period other comprehensive loss—   — — — 11.6 1.4  13.0 — 13.0 
Reclassification adjustment to net income—   — — — — 10.9 0.6 11.5 — 11.5 
Purchase of noncontrolling interest—    0.8 — — — — 0.8 (4.0)(3.2)
Sale of noncontrolling interest—    — — — — — — (0.7)(0.7)
Foreign currency translation on noncontrolling interest0.1          0.1 0.1 
Balance, March 31, 2023$14.7 $0.1 $0.1 $(0.1)$303.4 $173.7 $(125.4)$(25.4)$(70.9)$255.5 $2.1 $257.6 
Balance, December 31, 2023$14.8 $0.1 $0.1 $ $327.7 $256.3 $(118.3)$(9.0)$(67.0)$389.9 $2.1 $392.0 
Stock-based compensation    9.2     9.2  9.2 
Stock issued under stock compensation plans    (9.1)    (9.1) (9.1)
Purchase of treasury stock   (9.1)9.1        
Net income (loss)(0.1)    51.5    51.5 0.2 51.7 
Cash dividends     (5.7)   (5.7) (5.7)
Accrued dividends0.2            
Current period other comprehensive loss      (16.7)(15.1) (31.8) (31.8)
Reclassification adjustment to net income       7.3 0.8 8.1  8.1 
Balance, March 31, 2024$14.9 $0.1 $0.1 $(9.1)$336.9 $302.1 $(135.0)$(16.8)$(66.2)$412.1 $2.3 $414.4 

See notes to unaudited condensed consolidated financial statements.
6

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Amounts in Millions, Except Per Share and Percentage Data)
Note 1—Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Hyster-Yale Materials Handling, Inc., a Delaware corporation, and the accounts of Hyster-Yale's wholly owned domestic and international subsidiaries and majority-owned joint ventures (collectively, "Hyster-Yale" or the "Company"). All intercompany accounts and transactions among the consolidated companies are eliminated in consolidation.
The Company, through its wholly owned operating subsidiary, Hyster-Yale Group, Inc. ("HYG"), designs, engineers, manufactures, sells and services a comprehensive line of lift trucks, attachments and aftermarket parts marketed globally primarily under the Hyster® and Yale® brand names, mainly to independent Hyster® and Yale® retail dealerships. Lift trucks and component parts are manufactured in the United States, Northern Ireland, China, Mexico, the Netherlands, Brazil, the Philippines, Italy, Japan and Vietnam. As of March 31, 2024, the Company owned a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal").

The Company operates Bolzoni S.p.A. ("Bolzoni"). Bolzoni is a leading worldwide producer and distributor of attachments, forks and lift tables marketed under the Bolzoni®, Auramo® and Meyer® brand names. Bolzoni also produces components for lift truck manufacturers. Bolzoni products are manufactured in the United States, Italy, China, Germany and Finland. Through the design, production and distribution of a wide range of attachments, Bolzoni has a strong presence in the market niche of lift truck attachments and industrial material handling.

The Company operates Nuvera Fuel Cells, LLC ("Nuvera"). Nuvera is an alternative-power technology company focused on the design, manufacture and sale of hydrogen fuel cell stacks and engines.

Investments in Sumitomo NACCO Forklift Co., Ltd. (“SN”), a 50%-owned joint venture, and HYG Financial Services, Inc. ("HYGFS"), a 20%-owned joint venture, are accounted for by the equity method. SN operates manufacturing facilities in Japan, the Philippines and Vietnam from which the Company purchases certain components, service parts and lift trucks. Sumitomo Heavy Industries, Ltd. ("Sumitomo") owns the remaining 50% interest in SN. Each stockholder of SN is entitled to appoint directors representing 50% of the vote of SN’s board of directors. All matters related to policies and programs of operation, manufacturing and sales activities require mutual agreement between the Company and Sumitomo prior to a vote of SN’s board of directors. HYGFS is a joint venture with Wells Fargo Financial Leasing, Inc. (“WF”), formed primarily for the purpose of providing financial services to independent Hyster® and Yale® lift truck dealers and National Account customers in the United States. National Account customers are large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. The Company’s percentage share of the net income or loss from these equity investments is reported on the line “Income from unconsolidated affiliates” in the “Other (income) expense” section of the unaudited condensed consolidated statements of operations.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company as of March 31, 2024 and the results of its operations and changes in equity for the three months ended March 31, 2024 and 2023, and the results of its cash flows for the three months ended March 31, 2024 and 2023 have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The accompanying unaudited condensed consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information or notes required by GAAP for complete financial statements.

7

Note 2—Recently Issued Accounting Standards
Adopted Accounting Pronouncements
In the first quarter of 2024, the Company did not adopt any recent accounting standard updates ("ASU") which had a material effect on the Company's financial position, results of operations, cash flows or related disclosures.
Recent Accounting Pronouncements
The following table provides a brief description of ASUs not yet adopted:
StandardDescriptionRequired Date of AdoptionEffect on the financial statements or other significant matters
ASU 2020-04 and ASU 2022-06, Reference Rate Reform (Topic 848)The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.From the date of issuance through December 31, 2024The Company does not expect the guidance to have a material effect on its financial position, results of operations, cash flows and related disclosures.
ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60)The guidance provides a basis of accounting for newly-formed joint venture entities which will recognize and measure assets and liabilities at fair value upon formation. January 1, 2025The Company is currently evaluating the guidance and the effect on its financial position, results of operations, cash flows and related disclosures.
ASU 2023-07, Segment Reporting (Topic 280)The guidance provides requirements for new and updated segment disclosures.December 31, 2024The Company is currently evaluating the guidance and the effect on its related disclosures.
ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740)The guidance provides requirements for new and updated income tax disclosures.January 1, 2025The Company is currently evaluating the guidance and the effect on its related disclosures.

Note 3—Revenue

Revenue is recognized when obligations under the terms of a contract with the customer are satisfied, which occurs when control of the trucks, parts or services are transferred to the customer. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. The satisfaction of performance obligations under the terms of a revenue contract generally gives rise for the right to payment from the customer. The Company's standard payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized and when payment is due is not significant. Given the insignificant days between revenue recognition and receipt of payment, financing components do not exist between the Company and its customers. Taxes collected from customers are excluded from revenue. The estimated costs of product warranties are recognized as expense when the products are sold. See Note 10 for further information on product warranties.

The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title and risks and rewards of ownership have transferred to the customer. Revenues for service contracts are recognized as the services are provided.

The Company also records variable consideration in the form of estimated reductions to revenues for customer programs and incentive offerings, including special pricing agreements, promotions and other volume-based incentives. Lift truck sales revenue is recorded net of estimated discounts. The estimated discount amount is based upon historical experience and trend analysis for each lift truck model. In addition to standard discounts, dealers can also request additional discounts that allow them to offer price concessions to customers. From time to time, the Company offers special incentives to increase market share or dealer stock and offers certain customers volume rebates if a specified cumulative level of purchases is obtained.

For contracts with customers that include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected cost plus margin. Impairment losses recognized on receivables or contract assets were not significant for the three months ended March 31, 2024 and 2023.

The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are reported on the line “Selling, general and administrative expenses” in the unaudited condensed consolidated statements of operations.
8

The Company pays for shipping and handling activities regardless of when control is transferred and has elected to account for shipping and handling as activities to fulfill the promise to transfer the good, rather than a promised service. These costs are reported on the line “Cost of sales” in the unaudited condensed consolidated statements of operations. The following table disaggregates revenue by category:
THREE MONTHS ENDED
MARCH 31, 2024
Lift truck business
AmericasEMEAJAPICBolzoniNuveraElimsTotal
Dealer sales$431.9 $163.2 $32.7 $ $ $ $627.8 
Direct customer sales129.8 1.6     131.4 
Aftermarket sales177.7 26.8 4.9    209.4 
Other30.3 7.8 0.1 96.2 0.5 (47.0)87.9 
Total Revenues$769.7 $199.4 $37.7 $96.2 $0.5 $(47.0)$1,056.5 
THREE MONTHS ENDED
MARCH 31, 2023
Lift truck business
AmericasEMEAJAPICBolzoniNuveraElimsTotal
Dealer sales$364.1 $177.1 $40.8 $ $ $ $582.0 
Direct customer sales122.5 2.5     125.0 
Aftermarket sales181.8 28.9 7.0    217.7 
Other17.5 6.4 0.1 98.6 1.6 (49.6)74.6 
Total Revenues$685.9 $214.9 $47.9 $98.6 $1.6 $(49.6)$999.3 

Dealer sales are recognized when the Company transfers control based on the shipping terms of the contract, which is generally when the truck is shipped from the manufacturing facility to the dealer. The majority of direct customer sales are to National Account customers. In these transactions, the Company transfers control and recognizes revenue when it delivers the product to the customer according to the terms of the contract. Aftermarket sales represent parts sales, extended warranty and maintenance services. For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer. When customers are given the right to return eligible parts and accessories, the Company estimates the expected returns based on an analysis of historical experience. The Company adjusts estimated revenues at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed. The Company recognizes revenue for extended warranty and maintenance agreements based on the standalone selling price over the life of the contract, which reflects the costs to perform under these contracts and corresponds with, and thereby depicts, the transfer of control to the customer. Bolzoni revenue from external customers is primarily the sale of attachments to customers. In these transactions, the Company transfers control and recognizes revenue according to the shipping terms of the contract. In the United States, Bolzoni also has revenue for sales of lift truck components to the lift truck business. Nuvera's revenues include development funding from third-party agreements and the sale of fuel cell stacks and engines to third parties and the lift truck business. In all revenue transactions, the Company receives cash equal to the invoice price. The amount of consideration received and the revenue recognized may vary with changes in marketing incentives. Intercompany revenues between Bolzoni, Nuvera and the lift truck business have been eliminated.

Deferred Revenue: The Company defers revenue for transactions that have not met the criteria for recognition at the time payment is collected, including extended warranties and maintenance contracts. In addition, for certain products, services and customer types, the Company collects payment prior to the transfer of control to the customer.
Deferred Revenue
Balance, December 31, 2023$92.5 
Customer deposits and billings13.5 
Revenue recognized(25.1)
Foreign currency effect(0.2)
Balance, March 31, 2024$80.7 

9

Note 4—Business Segments

The Company’s reportable segments for the lift truck business include the following three management units: the Americas, EMEA and JAPIC. Americas includes operations in the United States, Canada, Mexico, Brazil, Latin America and the corporate headquarters. EMEA includes operations in Europe, the Middle East and Africa. JAPIC includes operations in the Asia and Pacific regions, including China, as well as the equity earnings of SN operations. Certain amounts are allocated to these geographic management units and are included in the segment results presented below, including product development costs, corporate headquarter's expenses and certain information technology infrastructure costs. These allocations among geographic management units are determined by senior management and not directly incurred by the geographic operations. In addition, other costs are incurred directly by these geographic management units based upon the location of the manufacturing plant or sales units, including manufacturing variances, product liability, warranty and sales discounts, which may not be associated with the geographic management unit of the ultimate end user sales location where revenues and margins are reported. Therefore, the reported results of each segment for the lift truck business cannot be considered stand-alone entities as all segments are inter-related and integrate into a single global lift truck business.

The Company reports the results of both Bolzoni and Nuvera as separate segments. Intercompany sales between Nuvera, Bolzoni and the lift truck business have been eliminated.

Operating profit is the measure of segment profit or loss. Financial information for each reportable segment is presented in the following table:
 THREE MONTHS ENDED
 MARCH 31
 20242023
Revenues from external customers
Americas$769.7 $685.9 
EMEA199.4 214.9 
JAPIC37.7 47.9 
Lift truck business1,006.8 948.7 
Bolzoni96.2 98.6 
Nuvera0.5 1.6 
  Eliminations(47.0)(49.6)
Total$1,056.5  $999.3 
Operating profit (loss)
Americas$89.6 $47.5 
EMEA5.2 2.6 
JAPIC(5.5)(2.3)
Lift truck business89.3 47.8 
Bolzoni3.3 4.4 
Nuvera(9.4)(9.8)
     Eliminations0.6 0.2 
Total$83.8  $42.6 

Note 5—Income Taxes

The income tax provision includes U.S. federal, state and local, and foreign income taxes and is generally based on the application of a forecasted annual income tax rate applied to the current quarter's year-to-date pre-tax income or loss. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings or losses, taxing jurisdictions in which the earnings or losses will be generated, the impact of state and local income taxes, the Company's ability to use tax credits and net operating loss carryforwards, carrybacks, capital loss carryforwards, and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates and certain circumstances with respect to valuation allowances or the tax effect of other unusual or nonrecurring transactions or adjustments are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated annual effective income tax rate. Additionally, the Company's interim effective income tax rate is computed and applied without regard to pre-tax losses where such losses are not expected to generate a current-year tax benefit.
10

A reconciliation of the U.S. federal statutory rate to the reported income tax rate is as follows:
THREE MONTHS ENDED
MARCH 31
20242023
Income before income taxes$76.9 $35.9 
Statutory taxes (21%)$16.1 $7.5 
Interim adjustment0.2 (0.3)
Permanent adjustments:
Valuation allowance5.3 (0.4)
Other3.4 1.7 
Discrete items0.1 0.2 
Income tax expense$25.1 $8.7 
Reported income tax rate32.6 %24.2 %

In 2024, the Company’s reported income tax rate for the current year differs from the U.S. federal statutory rate primarily as a result of recording an additional valuation allowance attributable to the capitalization of research and development expenses under current U.S. tax rules.

In 2023, the Company's reported income tax rate assumed that a significant portion of its net operating loss carryforwards would be utilized in 2023 along with the release of the associated valuation allowances. This release was offset by the capitalization of research and development expenses under U.S. tax rules for which a valuation allowance was provided. The net of these items is included in the valuation allowance line in the table above.

Note 6—Reclassifications from OCI

The following table summarizes reclassifications out of Accumulated Other Comprehensive Income ("OCI") as recorded in the unaudited condensed consolidated statements of operations:
OCI ComponentsAmount Reclassified from OCIAffected Line Item
THREE MONTHS ENDED
MARCH 31
20242023
Gain (loss) on cash flow hedges:
Interest rate contracts$1.9 $(1.2)Interest expense
Foreign exchange contracts(9.2)(9.7)Cost of sales
Total before tax(7.3)(10.9)Income before income taxes
Tax (expense) benefit  Income tax expense
Net of tax$(7.3)$(10.9)Net income
Amortization of defined benefit pension items:
Actuarial loss$(0.8)$(0.7)Other, net
Total before tax(0.8)(0.7)Income before income taxes
Tax (expense) benefit 0.1 Income tax expense
Net of tax$(0.8)$(0.6)Net income
Total reclassifications for the period$(8.1)$(11.5)

Note 7—Financial Instruments and Derivative Financial Instruments

Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair values of revolving credit agreements and long-term debt, excluding finance leases, were determined using current rates offered for similar obligations taking into account company credit risk. This valuation methodology is Level 2 as defined in the fair value hierarchy. At March 31, 2024, the carrying value and fair value of
11

revolving credit agreements and long-term debt, excluding finance leases, was $448.1 million and $447.3 million, respectively. At December 31, 2023, the carrying value and fair value of revolving credit agreements and long-term debt, excluding finance leases, was $466.7 million and $464.0 million, respectively.

Derivative Financial Instruments

The Company uses forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies. These contracts hedge firm commitments and forecasted transactions relating to cash flows associated with sales and purchases denominated in non-functional currencies. The Company offsets fair value amounts related to foreign currency exchange contracts executed with the same counterparty. Changes in the fair value of forward foreign currency exchange contracts that are effective as hedges are recorded in OCI. Deferred gains or losses are reclassified from OCI to the unaudited condensed consolidated statements of operations in the same period as the gains or losses from the underlying transactions are recorded and are generally recognized in cost of sales.

The Company periodically enters into foreign currency exchange contracts that do not meet the criteria for hedge accounting. These derivatives are used to reduce the Company's exposure to foreign currency risk related to forecasted purchase or sales transactions or forecasted intercompany cash payments or settlements. Gains and losses on these derivatives are generally recognized in cost of sales.

The Company uses interest rate swap agreements to partially reduce risks related to floating rate financing agreements that are subject to changes in the market rate of interest. Terms of the interest rate swap agreements require the Company to receive a variable interest rate and pay a fixed interest rate. The Company's interest rate swap agreements and the associated variable rate financings are predominately based upon the one-month Secured Overnight Financing Rate ("SOFR"). Changes in the fair value of interest rate swap agreements that are effective as hedges are recorded in OCI. Deferred gains or losses are reclassified from OCI to the unaudited condensed consolidated statements of operations in the same period as the gains or losses from the underlying transactions are recorded and are generally recognized in interest expense.

Cash flows from hedging activities are reported in the unaudited condensed consolidated statements of cash flows with the same classification as the hedged item, generally as a component of cash flows from operations.

The Company measures its derivatives at fair value on a recurring basis using significant observable inputs. This valuation methodology is Level 2 as defined in the fair value hierarchy. The Company uses a present value technique that incorporates yield curves and foreign currency spot rates to value its derivatives and also incorporates the effect of the Company's and its counterparties' credit risk into the valuation.

The Company does not currently hold any nonderivative instruments designated as hedges or any derivatives designated as fair value hedges.

Foreign Currency Derivatives: The Company held forward foreign currency exchange contracts with total notional amounts of $0.6 billion at March 31, 2024, primarily denominated in euros, Japanese yen, Chinese renminbi, U.S. dollars, British pounds, Swedish kroner, Mexican pesos, and Australian dollars. The Company held forward foreign currency exchange contracts with total notional amounts of $0.9 billion at December 31, 2023, primarily denominated in euros, Japanese yen, U.S. dollars, Chinese renminbi, British pounds, Swedish kroner, Mexican pesos and Australian dollars. The fair value of these contracts approximated a net liability of $24.0 million and $12.2 million at March 31, 2024 and December 31, 2023, respectively.

Forward foreign currency exchange contracts that qualify for hedge accounting are generally used to hedge transactions expected to occur within the next 36 months. The mark-to-market effect of forward foreign currency exchange contracts that are considered effective as hedges has been included in OCI. Based on market valuations at March 31, 2024, $26.1 million of the amount of net deferred loss included in OCI at March 31, 2024 is expected to be reclassified as expense into the unaudited condensed consolidated statements of operations over the next twelve months, as the transactions occur.

Interest Rate Derivatives: The Company holds certain contracts that hedge interest payments on its $225.0 million term loan borrowings. In addition, the Company holds certain contracts that hedge interest payments on Bolzoni's debt.

12

The following table summarizes the notional amounts, related rates, excluding spreads, and remaining terms of interest rate swap agreements at March 31, 2024 and December 31, 2023:
Notional AmountAverage Fixed Rate
MARCH 31DECEMBER 31MARCH 31DECEMBER 31
2024202320242023Term at March 31, 2024
$180.0 $180.0 1.65 %1.65 %Extending to May 2027
$6.2 $7.5 0.56 %0.51 %Extending to May 2027
The fair value of all interest rate swap agreements was a net asset of $13.6 million and $11.9 million at March 31, 2024 and December 31, 2023, respectively. The mark-to-market effect of interest rate swap agreements that are considered effective as hedges has been included in OCI. Based on market valuations at March 31, 2024, $6.5 million of the amount included in OCI as net deferred gain is expected to be reclassified as income in the unaudited condensed consolidated statements of operations over the next twelve months, as cash flow payments are made in accordance with the interest rate swap agreements.

The following table summarizes the fair value of derivative instruments reflected on a gross basis by contract as recorded in the unaudited condensed consolidated balance sheets:
 Asset DerivativesLiability Derivatives
 Balance Sheet LocationMARCH 31
2024
DECEMBER 31
2023
Balance Sheet LocationMARCH 31
2024
DECEMBER 31
2023
Derivatives designated as hedging instruments     
Cash Flow Hedges
Interest rate swap agreements     
CurrentPrepaid expenses and other$6.0 $5.6 Prepaid expenses and other$ $ 
Long-termOther non-current assets7.6 6.3 Other non-current assets  
Foreign currency exchange contracts    
CurrentPrepaid expenses and other2.1 1.2 Prepaid expenses and other0.9 1.4 
Other current liabilities3.7 7.2 Other current liabilities26.2 22.2 
Long-termOther non-current assets 2.7 Other non-current assets 0.5 
Other long-term liabilities0.4  Other long-term liabilities2.4 0.4 
Total derivatives designated as hedging instruments$19.8 $23.0 $29.5 $24.5 
Derivatives not designated as hedging instruments     
Cash Flow Hedges
Foreign currency exchange contracts    
CurrentPrepaid expenses and other0.1 1.1 Prepaid expenses and other0.2 0.6 
Other current liabilities0.3 2.3 Other current liabilities0.9 1.6 
Total derivatives not designated as hedging instruments$0.4 $3.4  $1.1 $2.2 
Total derivatives$20.2 $26.4  $30.6 $26.7 

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The following table summarizes the offsetting of the fair value of derivative instruments on a gross basis by counterparty as recorded in the unaudited condensed consolidated balance sheets:
Derivative Assets as of March 31, 2024Derivative Liabilities as of March 31, 2024
Gross Amounts of Recognized AssetsGross Amounts OffsetNet Amounts PresentedNet AmountGross Amounts of Recognized LiabilitiesGross Amounts OffsetNet Amounts PresentedNet Amount
Cash Flow Hedges
Interest rate swap agreements$13.6 $ $13.6 $13.6 $ $ $ $ 
Foreign currency exchange contracts1.1 (1.1)  25.1 (1.1)24.0 24.0 
Total derivatives$14.7 $(1.1)$13.6 $13.6 $25.1 $(1.1)$24.0 $24.0 
Derivative Assets as of December 31, 2023Derivative Liabilities as of December 31, 2023
Gross Amounts of Recognized AssetsGross Amounts OffsetNet Amounts PresentedNet AmountGross Amounts of Recognized LiabilitiesGross Amounts OffsetNet Amounts PresentedNet Amount
Cash Flow Hedges
Interest rate swap agreements$11.9 $ $11.9 $11.9 $ $ $ $ 
Foreign currency exchange contracts2.5 (2.5)  14.7 (2.5)12.2 12.2 
Total derivatives$14.4 $(2.5)$11.9 $11.9 $14.7 $(2.5)$12.2 $12.2 

The following table summarizes the pre-tax impact of derivative instruments as recorded in the unaudited condensed consolidated statements of operations:
 Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)Location of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)Amount of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)
 THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31MARCH 31
Derivatives Designated as Hedging Instruments20242023 20242023
Cash Flow Hedges
Interest rate swap agreements$3.4 $(3.8)Interest expense$1.9 $(1.2)
Foreign currency exchange contracts(18.6)4.9 Cost of sales(9.2)(9.7)
Total$(15.2)$1.1  $(7.3)$(10.9)
Derivatives Not Designated as Hedging InstrumentsLocation of Gain or (Loss) Recognized in Income on Derivative20242023
Cash Flow Hedges
Foreign currency exchange contractsCost of sales$(3.3)$(0.1)
Total$(3.3)$(0.1)

Note 8—Retirement Benefit Plans

The Company maintains various defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. The Company's policy is to make contributions to fund these plans within the range allowed by applicable regulations. Plan assets consist primarily of publicly traded stocks and government and corporate bonds.
Pension benefits for employees covered under the Company's U.S. and U.K. plans are frozen. Only certain grandfathered employees in the Netherlands still earn retirement benefits under a defined benefit pension plan. All other eligible employees of the Company, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.

The Company presents the components of net periodic pension expense (benefit), other than service cost, in other (income) expense in the unaudited condensed consolidated statements of operations for its pension plans. Service cost for the Company's pension plan is reported in operating profit. The components of pension (income) expense are set forth below:
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 THREE MONTHS ENDED
 MARCH 31
 20242023
U.S. Pension  
Interest cost$0.5 $0.6 
Expected return on plan assets(0.6)(0.6)
Amortization of actuarial loss0.5 0.5 
Net periodic pension expense$0.4 $0.5 
Non-U.S. Pension 
Interest cost$1.3 $1.3 
Expected return on plan assets(1.7)(1.8)
Amortization of actuarial loss0.3 0.2 
Net periodic pension benefit$(0.1)$(0.3)

Note 9—Inventories

Inventories are summarized as follows:
 MARCH 31
2024
 DECEMBER 31
2023
Finished goods and service parts$453.5  $395.9 
Work in process35.2 39.2 
Raw materials 448.1  471.5 
Total manufactured inventories936.8 906.6 
LIFO reserve(94.9)(90.9)
Total inventory$841.9  $815.7 
Inventories are stated at the lower of cost or market for last-in, first-out (“LIFO”) inventory or lower of cost or net realizable value for first-in, first-out (“FIFO”) inventory. At March 31, 2024 and December 31, 2023, 52% and 49%, respectively, of total inventories were determined using the LIFO method, which consists primarily of manufactured inventories, including service parts, for the lift truck business in the United States. The FIFO method is used with respect to all other inventories. An actual valuation of inventory under the LIFO method can be made only at the end of the year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management's estimates of expected year-end inventory levels and costs. Because these estimates are subject to change and may be different than the actual inventory levels and costs at the end of the year, interim results are subject to the final year-end LIFO inventory valuation.

Note 10—Product Warranties

The Company provides a standard warranty on its lift trucks, generally for twelve months or 1,000 to 2,000 hours. For certain series of lift trucks, the Company provides a standard warranty of one to two years or 2,000 or 4,000 hours. For certain components in some series of lift trucks, the Company provides a standard warranty of two to three years or 4,000 to 6,000 hours. The Company estimates the costs which may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized.

In addition, the Company sells separately priced, extended warranty agreements for its lift trucks, which generally provide a warranty for an additional two to five years or up to 2,400 to 10,000 hours. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company does business. Revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts.

The Company also maintains a quality enhancement program under which it provides for specifically identified field product improvements in its warranty obligation. Accruals under this program are determined based on estimates of the potential number of claims and the cost of those claims based on historical and anticipated costs.

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The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims and the cost per claim.

Changes in the Company's current and long-term warranty obligations, including deferred revenue on extended warranty contracts, are as follows:
 2024
Balance at December 31, 2023$68.1 
Current year warranty expense14.5 
Change in estimate related to pre-existing warranties(0.1)
Payments made(8.8)
Foreign currency effect(0.5)
Balance at March 31, 2024$73.2 

Note 11—Contingencies

Various legal and regulatory proceedings and claims have been or may be asserted against the Company relating to the conduct of its businesses, including product liability, environmental and other claims. These proceedings and claims are incidental to the ordinary course of business. Management believes that it has meritorious defenses and will vigorously defend the Company in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. Although the ultimate disposition of these proceedings is not presently determinable, management believes, after consultation with its legal counsel, that the likelihood is remote that costs will be incurred materially in excess of accruals already recognized.

Note 12—Guarantees

Under various financing arrangements for certain customers, including independent retail dealerships, the Company provides recourse or repurchase obligations such that it would be obligated in the event of default by the customer. Terms of the third-party financing arrangements for which the Company is providing recourse or repurchase obligations generally range from one to five years. Total amounts subject to recourse or repurchase obligations at March 31, 2024 and December 31, 2023 were $161.6 million and $162.4 million, respectively. As of March 31, 2024, losses anticipated under the terms of the recourse or repurchase obligations were not significant and reserves have been provided for such losses based on historical experience in the accompanying unaudited condensed consolidated financial statements. The Company generally retains a security interest in the related assets financed such that, in the event the Company would become obligated under the terms of the recourse or repurchase obligations, the Company would take title to the assets financed. The fair value of collateral held at March 31, 2024 was approximately $218.4 million based on Company estimates. The Company estimates the fair value of the collateral using information regarding the original sales price, the current age of the equipment and general market conditions that influence the value of both new and used lift trucks. The Company also regularly monitors the external credit ratings of the entities for which it has provided recourse or repurchase obligations. As of March 31, 2024, the Company did not believe there was a significant risk of non-payment or non-performance of the obligations by these entities; however, there can be no assurance that the risk may not increase in the future. In addition, the Company has an agreement with WF to limit its exposure to losses at certain eligible dealers. Under this agreement, losses related to $33.2 million of recourse or repurchase obligations for these certain eligible dealers are limited to 7.5% of their original loan balance, or $14.0 million as of March 31, 2024. The $33.2 million is included in the $161.6 million of total amounts subject to recourse or repurchase obligations at March 31, 2024.

Generally, the Company sells lift trucks through its independent dealer network or directly to customers. These dealers and customers may enter into a financing transaction with HYGFS or other unrelated third parties. HYGFS provides debt and lease financing to both dealers and customers. On occasion, the credit quality of a customer or credit concentration issues within WF may require the Company to provide recourse or repurchase obligations of the lift trucks purchased by customers and financed through HYGFS. At March 31, 2024, approximately $152.5 million of the Company's total recourse or repurchase obligations of $161.6 million related to transactions with HYGFS. In connection with the joint venture agreement, the Company also provides a guarantee to WF for 20% of HYGFS’ debt with WF, such that the Company would become liable under the terms of HYGFS’ debt agreements with WF in the case of default by HYGFS. At March 31, 2024, loans from WF to HYGFS totaled $1.3 billion. Although the Company’s contractual guarantee was $268.5 million, the loans by WF to HYGFS are secured by HYGFS’ customer receivables, of which the Company guarantees $152.5 million. Excluding the HYGFS receivables guaranteed by the Company from HYGFS’ loans to WF, the Company’s incremental obligation as a result of this guarantee to WF is $241.8 million, which is secured by 20% of HYGFS' customer receivables and other secured assets of $310.1 million.
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HYGFS has not defaulted under the terms of this debt financing in the past, and although there can be no assurances, the Company is not aware of any circumstances that would cause HYGFS to default in future periods.

Note 13—Equity and Debt Investments

The Company maintains an interest in one variable interest entity, HYGFS. HYGFS is a joint venture with WF formed primarily for the purpose of providing financial services to independent Hyster® and Yale® lift truck dealers and National Account customers in the United States and is included in the Americas segment. The Company does not have a controlling financial interest or have the power to direct the activities that most significantly affect the economic performance of HYGFS. Therefore, the Company is not the primary beneficiary and uses the equity method to account for its 20% interest in HYGFS. The Company does not consider its variable interest in HYGFS to be significant.

The Company has a 50% ownership interest in SN, a limited liability company which was formed primarily to manufacture and distribute Sumitomo-branded lift trucks in Japan and export Hyster®- and Yale®-branded lift trucks and related components and service parts outside of Japan. The Company purchases products from SN under agreed-upon terms. The Company's ownership in SN is also accounted for using the equity method of accounting and is included in the JAPIC segment.

The Company's percentage share of the net income or loss from its equity investments in HYGFS and SN is reported on the line “Income from unconsolidated affiliates” in the “Other (income) expense” section of the unaudited condensed consolidated statements of operations. The Company's equity investments are included on the line “Investments in Unconsolidated Affiliates” in the unaudited condensed consolidated balance sheets.

The Company's equity investments in unconsolidated affiliates recorded on the unaudited condensed consolidated balance sheets are as follows:
March 31, 2024December 31, 2023
HYGFS$20.7 $22.2 
SN30.3 33.4 
Bolzoni0.3 0.4 

Dividends received from unconsolidated affiliates are summarized below:
THREE MONTHS ENDED
MARCH 31
20242023
HYGFS$4.4 $5.7 

Summarized financial information for HYGFS and SN is as follows:
 THREE MONTHS ENDED
 MARCH 31
 20242023
Revenues$108.1 $108.0 
Gross profit$40.6 $39.4 
Income from continuing operations$10.4 $11.7 
Net income$10.4 $11.7 

The Company has a debt investment in a third party, OneH2, Inc. The Company's investment was $0.8 million as of each March 31, 2024 and December 31, 2023.