# HYSTER-YALE, INC. (HY) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from HYSTER-YALE, INC.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1173514/000117351423000011/hy-20221231.htm
Accession: 0001173514-23-000011
Filing date: 2023-02-27
Report date: 2022-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/HY/
All MD&A years: /company/HY/mda/
Previous year: /company/HY/mda/fy2021/ (FY 2021)
Next year: /company/HY/mda/fy2023/ (FY 2023)

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HYSTER-YALE MATERIALS HANDLING, INC. AND SUBSIDIARIES

    (Tabular Amounts in Millions, Except Per Share, Percentage Data and as Otherwise Noted)

OVERVIEW

Hyster-Yale Materials Handling, Inc. ("Hyster-Yale" or the "Company") and its subsidiaries, including its operating company Hyster-Yale Group, Inc. ("HYG"), is a leading, globally integrated, full-line lift truck manufacturer. The Company offers a broad array of solutions aimed at meeting the specific materials handling needs of its customers, including attachments and hydrogen fuel cell power products, telematics, automation and fleet management services, as well as a variety of other power options for its lift trucks. The Company, through 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. The materials handling business historically has been cyclical because the order rate for lift trucks fluctuates depending on the economic activity level in the various industries and countries its customers serve. Lift trucks and component parts are manufactured in the United States, China, Northern Ireland, Mexico, the Netherlands, Brazil, the Philippines, Italy, Japan and Vietnam.

As of December 31, 2022, the Company owned a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal"), a Chinese manufacturer of low-intensity and standard lift trucks and specialized material handling equipment. Hyster-Yale Maximal also designs and produces specialized products in the port equipment and rough terrain forklift markets. During 2021, the Company signed an Equity Transfer Agreement with Y-C Hongkong Holding Co., Limited (“HK Holding Co”). In June 2022, the Company purchased 15% of the equity interest of Hyster-Yale Maximal from HK Holding Co for an aggregate purchase price of $25.2 million, which will be paid in annual installments of $8.4 million beginning June 2022 through June 2024. The Company has an option to purchase HK Holding Co's 10% remaining interest in Hyster-Yale Maximal at any time prior to June 8, 2056 for $16.8 million. If this option is exercised, the Company will own 100% of the equity interest of 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.

Competition in the materials handling industry is intense and is based primarily on strength and quality of distribution, brand loyalty, customer service, new lift truck sales prices, availability of products and aftermarket parts, comprehensive product line offerings, product performance, product quality and features and the cost of ownership over the life of the lift truck. The Company competes with several global lift truck manufacturers that operate in all major markets, as well as other niche companies. The lift truck industry also competes with alternative methods of materials handling, including conveyor systems and automated guided vehicle systems. The Company's aftermarket parts offerings compete with parts manufactured by other lift truck manufacturers, as well as companies that focus solely on the sale of generic parts.

The Company's objective is to be a leading, globally integrated designer, manufacturer and marketer of a complete range of lift truck solutions offering the lowest cost of ownership and the best overall value by leveraging its high quality, application-tailored lift trucks, attachments and power solutions in order to transform the way the world moves materials from Port to Home. The Company’s core competency is lift truck manufacturing, but its goal is to become the lift truck solutions partner to the materials handling market, one customer and one industry at a time.

The Company’s objective is to provide a wide-range of solutions to its customers to generate profitable growth through increasing volumes, which in turn are expected to generate market share gains and drive improved margins. The Company plans to accomplish this by implementing its core strategic initiatives to: provide the lowest cost of ownership, while enhancing productivity for customers; be the leader in the delivery of industry- and customer-focused solutions; be the leader in independent distribution; grow in emerging markets; be the leader in the attachments business and be a leader in fuel cells and their applications.

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2021 Annual Report on Form 10-K for discussion of financial condition and results of operations for 2021 compared with 2020.

14

Table of Contents

Critical Accounting Policies and Estimates

The discussion and analysis of financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities, if any. On an ongoing basis, the Company evaluates its estimates based on historical experience, actuarial valuations and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

The Company believes the following are critical accounting policies. Certain of these are critical accounting estimates as they require significant judgments and estimates used in the preparation of the consolidated financial statements.

Long-lived assets, goodwill and intangible assets: Net property, plant and equipment, right-of-use ("ROU") assets, goodwill and net intangible assets at December 31, 2022 were $310.0 million, $57.2 million, $51.3 million and $42.7 million, respectively. The Company makes estimates and assumptions in preparing the consolidated financial statements for which actual results will emerge over long periods of time. This includes the recoverability of long-lived assets employed in the business, including assets of acquired businesses. These estimates and assumptions are closely monitored and periodically adjusted as circumstances warrant. For instance, expected asset lives may be shortened or an impairment recorded based on a change in the expected use of the asset or performance of the related asset group.

Goodwill is tested for impairment annually as of May 1, and is tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. The Company completed the annual testing of impairment of goodwill as of May 1, 2022 at the reporting unit level for the related goodwill. The Company uses either a qualitative or quantitative analysis to determine whether fair value exceeds carrying value. An estimate of the fair value of the reporting unit is determined through a combination of comparable market values for similar businesses and discounted cash flows. These estimates can change significantly based on such factors as the reporting unit's financial performance, economic conditions, interest rates, growth rates, pricing, changes in business strategies and competition. Based on the annual testing, the fair value of each reporting unit was in excess of its carrying value and no impairment existed. As of December 31, 2022, Bolzoni had $48.6 million of goodwill. Based on the most recent interim impairment test, Bolzoni's fair value of equity exceeded the carrying value by $79.9 million or approximately 47%.

During 2021, the Company continued to experience pandemic-related and other global supply chain constraints, component shortages, shipping container availability constraints and higher freight costs, as well as significant material cost inflation resulting from the accelerated pace of the market recovery. These items significantly impacted the Company's results of operations in 2021. In addition, the timeframe for the expected easing of these factors impacted the Company's near and long-term forecasts. Accordingly, in connection with the preparation of the 2021 financial statements, the Company conducted an interim goodwill impairment test as of December 31, 2021 for the JAPIC and Bolzoni reporting units. As a result, the Company recognized a $55.6 million goodwill impairment charge for the JAPIC reporting unit in the fourth quarter of 2021, of which $11.7 million related to the non-controlling interest share. No impairment of goodwill for the Bolzoni reporting unit was identified.

The Company has intangible assets, including customer and contractual relationships, patents and technology, and trademarks. Intangible assets with a definite life are amortized over a period ranging from one to twenty years on a systematic and rational basis (generally straight line) that is representative of the asset’s use. Costs related to internally developed intangible assets, such as patents, are expensed as incurred and included in selling, general and administrative expenses.

Intangible assets with an indefinite life, including certain trademarks, are not amortized. Indefinite-lived intangible assets are tested for impairment annually as of May 1, and are tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired. An impairment loss generally would be recognized when the fair value is less than the carrying value of the indefinite-lived intangible asset.

Of the $42.7 million of net intangible assets, $16.0 million relates to indefinite-lived trademarks, related to the acquisition of Bolzoni. The primary valuation technique used in estimating the fair value of indefinite-lived intangible assets is the present value of discounted cash flows. Specifically, a relief of royalty rate is applied to estimated sales, with the resulting amounts discounted using an appropriate discount rate of a market participant. The relief of royalty rate is the estimated royalty rate a market participant would pay to acquire the right to market and produce the product. If the resulting discounted cash flows are less than book value of the indefinite-lived intangible asset, an impairment exists and the asset would be adjusted to fair value. Based on impairment testing as of May 1, 2022, no impairment was identified.

15

Table of Contents

The Company periodically evaluates long-lived assets, including intangible assets with finite lives, for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset may not be recoverable. Upon identification of indicators of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or liabilities. The asset group would be considered impaired when the estimated future undiscounted cash flows generated by the asset group are less than carrying value. If the carrying value of an asset group is considered impaired, an impairment charge is recorded for the amount that the carrying value of the asset group exceeds its fair value. Fair value is estimated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The determination of asset groups and the underlying cash flows requires the use of significant judgment.

The continued high level of disruption to the Company’s manufacturing and logistics operations for 2021 and the effects of the COVID-19 pandemic, including border closures, halted Nuvera's progress on certain research and development agreements that were entered into prior to the start of the pandemic. In anticipation of fulfilling these agreements, Nuvera made significant investments in manufacturing and equipment expansion, as well as increased inventory levels. As a result, it was determined in connection with the preparation of the financial statements for 2021 that the carrying value of the Nuvera fixed assets exceeded the undiscounted cash flows from the assets and the carrying value of Nuvera's fixed assets exceeded the fair value by $10.0 million.

Factors which could result in future impairment charges include, but are not limited to, changes in worldwide economic conditions, changes in competitive conditions and customer preferences. These risk factors are discussed in Item 1A, "Risk Factors," of this Form 10-K. In addition, changes in the weighted average cost of capital could also impact impairment testing results. The Company will continue to monitor its reporting units and asset groups for any indicators of impairment.

Deferred Income Taxes: Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards on a taxing jurisdiction basis. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which it expects the temporary differences to be recovered or paid. U.S. generally accepted accounting principles for income taxes requires a reduction of the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) such assets will not be realized. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company's financial statements or tax returns and future profitability. The Company's accounting for deferred tax consequences represents its best estimate of those future events. Changes in the Company's estimates, due to unanticipated events or otherwise, could have a material effect on its financial condition and results of operations. The Company continually evaluates its deferred tax assets to determine if a valuation allowance is required or no longer needed. At December 31, 2022, the Company had gross deferred tax assets of $139.2 million which were reduced by valuation allowances of $121.7 million and gross deferred tax liabilities of $28.3 million.

Product liabilities: The Company is generally self-insured for product liability claims, although catastrophic insurance coverage is retained for potentially significant individual claims and the Company also has insurance for certain historic claims. The Company provides for the estimated cost of personal and property damage relating to its products based on a review of historical experience and consideration of any known trends. Reserves are recorded for estimates of the costs for known claims and estimates of the costs of incidents that have occurred but for which a claim has not yet been reported, up to the stop-loss insurance coverage. While the Company engages in extensive product quality reviews and customer education programs, the product liability provision is affected by the number and magnitude of claims of alleged product-related injury and property damage and the cost to defend those claims. In addition, the estimates regarding the magnitude of claims are affected by changes in assumptions regarding medical costs, legal defense costs, inflation rates and trends in damages awarded by juries. Changes in the assumptions regarding any one of these factors could result in a change in the estimate of the magnitude of claims. A one percent increase in the estimate of the number of claims or the magnitude of claims would increase the product liability reserve and reduce operating profit by approximately $0.1 million to $0.6 million. Although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change the estimates in the future.

Product warranties: The Company provides for the estimated cost of product warranties at the time revenues are recognized. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, the warranty obligation is affected by product failure rates, labor costs and replacement component costs incurred in correcting a product failure. If actual product failure rates, labor costs or replacement component costs differ from the Company's estimates, which are based on historical failure rates and consideration of known trends, revisions to the estimate of the cost to correct product failures would be required. If the estimate of the cost to correct product failures were to increase by one percent over 2022 levels, the product warranties reserves would increase and reduce operating profit by approximately $3.1 million. The Company's past results of operations have not been materially affected by a change in

16

Table of Contents

the estimate of product warranties and although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change the estimates in the future.

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. Pension benefits are frozen for all employees other than certain employees in the Netherlands. All other eligible employees, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans. The Company's policy is to periodically make contributions to fund the defined benefit pension plans within the range allowed by applicable regulations. The defined benefit pension plan assets consist primarily of publicly traded stocks and government and corporate bonds. There is no guarantee the actual return on the plans’ assets will equal the expected long-term rate of return on plan assets or that the plans will not incur investment losses.

The expected long-term rate of return on defined benefit plan assets reflects management’s expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations. In establishing the expected long-term rate of return assumption for plan assets, the Company considers the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return. The historical and forward-looking rates of return for each of the asset classes used to determine the Company's estimated rate of return assumption were based upon the rates of return earned or expected to be earned by investments in the equivalent benchmark market indices for each of the asset classes.

Expected returns for the Company's U.K. pension plan are based on a calculated market-related value of assets. Under this methodology, asset gains and losses resulting from actual returns that differ from expected returns are recognized in the market-related value of assets ratably over three years.

The basis for the selection of the discount rate for each plan is determined by matching the timing of the payment of the expected obligations under the defined benefit plans against the corresponding yield of high-quality corporate bonds of equivalent maturities.

The following illustrates the sensitivity of the net periodic benefit cost and projected benefit obligation to a 1% change in the discount rate or return on plan assets (in millions):

[[GREPCENT_TABLE]]
[["Assumption","","Change","","Increase (decrease) 2023 net pension expense","","Increase (decrease) 2022 projected benefit obligation"],["Discount rate","","1% increase","","$0.1","","$(29.5)"],["","","1% decrease","","(0.3)","","36.2"],["Return on plan assets","","1% increase","","(2.5)","","N/A"],["","","1% decrease","","2.5","","N/A"]]
[[/GREPCENT_TABLE]]

A change in life expectancy by one year would result in a $4.2 million change in the 2022 projected benefit obligation. See Note 9 to the consolidated financial statements in this Annual Report on Form 10-K for further discussion of the retirement benefit plans.

CONSOLIDATED FINANCIAL REVIEW

The following table identifies the components of change for 2022 compared with 2021 by segment:

[[GREPCENT_TABLE]]
[["","","Revenues","","Gross Profit","","Operating Profit (Loss)","","Net Income (Loss) Attributable to Stockholders"],["2021","","$","3,075.7","","","$","363.4","","","$","(152.3)","","","$","(173.0)"],["Increase (decrease) in 2022"],["Americas","","420.8","","","81.6","","","66.5","","","85.7"],["EMEA","","25.3","","","(41.9)","","","(46.9)","","","(47.2)"],["JAPIC","","16.1","","","1.4","","","56.9","","","38.1"],["Lift truck business","","462.2","","","41.1","","","76.5","","","76.6"],["Bolzoni","","7.9","","","9.2","","","8.0","","","5.5"],["Nuvera","","2.7","","","19.5","","","28.0","","","25.1"],["Eliminations","","(0.2)","","","0.7","","","0.7","","","(8.3)"],["2022","","$","3,548.3","","","$","433.9","","","$","(39.1)","","","$","(74.1)"]]
[[/GREPCENT_TABLE]]

17

Table of Contents

FINANCIAL REVIEW

The segment and geographic results of operations for the Company were as follows for the year ended December 31:

[[GREPCENT_TABLE]]
[["","","","","","Favorable / (Unfavorable) % Change"],["","2022","","2021","","2022 vs. 2021"],["Lift truck unit shipments (in thousands)"],["Americas","58.4","","","54.5","","","7.2","%"],["EMEA","29.2","","","26.5","","","10.2","%"],["JAPIC","13.2","","","13.9","","","(5.0)","%"],["","100.8","","","94.9","","","6.2","%"],["Revenues"],["Americas","$","2,405.4","","","$","1,984.6","","","21.2","%"],["EMEA","704.2","","","678.9","","","3.7","%"],["JAPIC","250.0","","","233.9","","","6.9","%"],["Lift truck business","3,359.6","","","2,897.4","","","16.0","%"],["Bolzoni","355.7","","","347.8","","","2.3","%"],["Nuvera","3.4","","","0.7","","","385.7","%"],["Eliminations","(170.4)","","","(170.2)","","","n.m."],["","$","3,548.3","","","$","3,075.7","","","15.4","%"],["Gross profit (loss)"],["Americas","$","303.4","","","$","221.8","","","36.8","%"],["EMEA","45.0","","","86.9","","","(48.2)","%"],["JAPIC","22.6","","","21.2","","","6.6","%"],["Lift truck business","371.0","","","329.9","","","12.5","%"],["Bolzoni","70.7","","","61.5","","","15.0","%"],["Nuvera","(7.2)","","","(26.7)","","","73.0","%"],["Eliminations","(0.6)","","","(1.3)","","","n.m."],["","$","433.9","","","$","363.4","","","19.4","%"],["Selling, general and administrative expenses"],["Americas","$","256.6","","","$","241.5","","","(6.3)","%"],["EMEA","91.6","","","86.6","","","(5.8)","%"],["JAPIC","33.2","","","88.7","","","62.6","%"],["Lift truck business","381.4","","","416.8","","","8.5","%"],["Bolzoni","64.5","","","63.3","","","(1.9)","%"],["Nuvera","27.1","","","35.6","","","23.9","%"],["","$","473.0","","","$","515.7","","","8.3","%"],["Operating profit (loss)"],["Americas","$","46.8","","","$","(19.7)","","","337.6","%"],["EMEA","(46.6)","","","0.3","","","n.m."],["JAPIC","(10.6)","","","(67.5)","","","84.3","%"],["Lift truck business","(10.4)","","","(86.9)","","","88.0","%"],["Bolzoni","6.2","","","(1.8)","","","444.4","%"],["Nuvera","(34.3)","","","(62.3)","","","44.9","%"],["Eliminations","(0.6)","","","(1.3)","","","n.m."],["","$","(39.1)","","","$","(152.3)","","","74.3","%"]]
[[/GREPCENT_TABLE]]

18

Table of Contents

[[GREPCENT_TABLE]]
[["","","","","","Favorable / (Unfavorable) % Change"],["","2022","","2021","","2022 vs. 2021"],["Interest expense","28.4","","","15.5","","","(83.2)","%"],["Other income","(5.1)","","","(12.9)","","","(60.5)","%"],["Income (loss) before income taxes","(62.4)","","","(154.9)","","","59.7","%"],["Net income (loss) attributable to stockholders","$","(74.1)","","","$","(173.0)","","","57.2","%"],["Diluted earnings (loss) per share","$","(4.38)","","","$","(10.29)","","","57.4","%"],["Reported income tax rate","(14.7)","%","","(18.3)","%"],["n.m. - not meaningful"]]
[[/GREPCENT_TABLE]]

Following is the detail of the Company's unit shipments, bookings and backlog of unfilled orders placed with its manufacturing and assembly operations for new lift trucks, reflected in thousands of units. Unit backlog as of December 31, 2022 and September 30, 2022, excludes 2,600 suspended orders, for which the Company has no plans to fulfill. As of December 31, 2022, substantially all of the Company's backlog is expected to be sold within the next twelve months.

[[GREPCENT_TABLE]]
[["","","YEAR ENDED","","NINE MONTHS ENDED","","YEAR ENDED"],["","","December 31, 2022","","September 30, 2022","","December 31, 2021"],["Unit backlog, beginning of period","","105.3","","","105.3","","","40.6"],["Unit shipments","","(100.8)","","","(73.7)","","","(94.9)"],["Unit bookings","","97.6","","","76.6","","","159.6"],["Unit backlog, end of period","","102.1","","","108.2","","","105.3"]]
[[/GREPCENT_TABLE]]

The following is the detail of the approximate sales value of the Company's lift truck unit bookings and backlog, reflected in millions of dollars. The dollar value of bookings and backlog is calculated using the current unit bookings and backlog and the forecasted average sales price per unit. Sales value of the Company's backlog as of December 31, 2022 and September 30, 2022, excludes the sales value of 2,600 suspended orders, for which the Company has no plans to fulfill.

[[GREPCENT_TABLE]]
[["","","YEAR ENDED","","NINE MONTHS ENDED","","YEAR ENDED"],["","","December 31, 2022","","September 30, 2022","","December 31, 2021"],["Bookings, approximate sales value","","$","3,080","","","$","2,390","","","$","3,820"],["Backlog, approximate sales value","","$","3,730","","","$","3,700","","","$","2,880"]]
[[/GREPCENT_TABLE]]

2022 Compared with 2021

The following table identifies the components of change in revenues for 2022 compared with 2021:

[[GREPCENT_TABLE]]
[["","Revenues"],["","","Lift truck"],["","Total","Americas","EMEA","JAPIC"],["2021","$","3,075.7","","$","1,984.6","","$","678.9","","$","233.9"],["Increase (decrease) in 2022 from:"],["Unit price","300.3","","234.0","","56.4","","9.9"],["Unit volume and product mix","132.5","","70.4","","51.6","","10.5"],["Parts","74.7","","66.2","","9.0","","(0.5)"],["Other","51.4","","45.7","","1.5","","4.2"],["Foreign currency","(96.7)","","4.5","","(93.2)","","(8.0)"],["Eliminations","(0.2)","","\u2014","","\u2014","","\u2014"],["Bolzoni revenues","7.9","","\u2014","","\u2014","","\u2014"],["Nuvera revenues","2.7","","\u2014","","\u2014","","\u2014"],["2022","$","3,548.3","","$","2,405.4","","$","704.2","","$","250.0"]]
[[/GREPCENT_TABLE]]

19

Table of Contents

Revenues increased 15.4% to $3,548.3 in 2022 from $3,075.7 million in 2021. The increase was primarily due to improved pricing, higher unit and parts volume, a shift in sales to higher-priced lift trucks and favorable aftermarket sales in the Lift Truck business, partially offset by unfavorable currency movements from the translation of sales into U.S. dollars.

The following table identifies the components of change in operating profit (loss) for 2022 compared with 2021:

[[GREPCENT_TABLE]]
[["","Operating Profit (Loss)"],["","","Lift truck"],["","Total","Americas","EMEA","JAPIC"],["2021","$","(152.3)","","$","(19.7)","","$","0.3","","$","(67.5)"],["Increase (decrease) in 2022 from:"],["Goodwill impairment charge","55.6","","\u2014","","\u2014","","55.6"],["","(96.7)","","(19.7)","","0.3","","(11.9)"],["Lift truck gross profit and eliminations","41.8","","81.6","","(41.9)","","1.4"],["Lift truck selling, general and administrative expenses","(20.2)","","(15.1)","","(5.0)","","(0.1)"],["Nuvera operations","28.0","","\u2014","","\u2014","","\u2014"],["Bolzoni operations","8.0","","\u2014","","\u2014","","\u2014"],["2022","$","(39.1)","","$","46.8","","$","(46.6)","","$","(10.6)"]]
[[/GREPCENT_TABLE]]

The Company recognized an operating loss of $39.1 million in 2022 compared with $152.3 million in 2021. The reduction in operating loss was mainly due to the absence of a non-cash impairment charge for goodwill of $55.6 million in JAPIC in 2021, increased gross profit in the lift truck business and a lower operating loss at Nuvera mainly from $26.1 million of charges related to the impairment of Nuvera's property, plant and equipment and inventory losses recorded in 2021. The increase in gross profit in 2022 compared to 2021 was primarily due to favorable pricing of $300.5 million and improved unit and parts volume in the lift truck business. The increase in gross profit was partially offset by $257.3 million of material cost inflation and higher manufacturing costs resulting from inefficiencies associated with component shortages as well as unfavorable foreign currency movements, including derivative contracts, of $43.3 million.

Americas recognized an operating profit of $46.8 million in 2022 compared with an operating loss of $19.7 million in 2021 primarily due to an increase in gross profit. Gross profit improved primarily as result of favorable pricing of $234.0 million and improved unit and parts volume. The increase in gross profit was partially offset as result of material and freight cost inflation and higher manufacturing costs resulting from inefficiencies associated with component shortages of $189.9 million and unfavorable foreign currency movements, including derivative contracts, of $23.4 million. Higher selling, general and administrative expenses primarily due to increase employee-related costs partially offset the improvement in gross profit.

EMEA recognized an operating loss of $46.6 million in 2022 compared with operating profit of $0.3 million in 2021 mainly as result of lower gross profit. Gross profit decreased primarily due to material cost inflation and higher manufacturing costs resulting from inefficiencies associated with component shortages of $95.5 million and unfavorable foreign currency movements of $18.4 million. The decrease in gross profit was partially offset by improved pricing of $56.4 million and higher unit and parts volumes.

JAPIC's operating loss improved to $10.6 million in 2022 from $67.5 million in 2021 primarily due to the absence of a non-cash impairment charge for goodwill of $55.6 million recognized in 2021. In addition, higher gross profit from improved pricing was partially offset by higher manufacturing costs resulting from inefficiencies associated with component shortages and unfavorable foreign currency movements.

Bolzoni recognized operating profit of $6.2 million in 2022 compared with an operating loss of $1.8 million in 2021 primarily due to higher gross profit from improved pricing and a shift in mix to higher-margin products, partially offset by material cost inflation and unfavorable foreign currency exchange rates.

Nuvera's operating loss improved to $34.3 million in 2022 compared with $62.3 million in 2021 mainly as a result of the absence of non-cash charges of $26.1 million recorded in 2021 for Nuvera's inventory and property, plant and equipment. See Notes 10 and 11 for further discussion of these charges at Nuvera.

The Company recognized a net loss attributable to stockholders of $74.1 million in 2022 compared with $173.0 million in 2021. The improvement was primarily the result of higher operating profit and the absence of a valuation allowance of $58.6 million provided against deferred tax assets in 2021. These items were partially offset by higher interest expense, the absence of the

20

Table of Contents

non-controlling interest share of the goodwill impairment charge at JAPIC of $11.7 million in 2021, higher pension expense and a $4.6 million gain related to the sale of the Company's preferred shares of OneH2, Inc. ("OneH2") recognized in 2021. See Note 6 to the consolidated financial statements in this Annual Report on Form 10-K for further discussion of income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following tables detail the change in cash flow for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2022","","2021","","Change"],["Operating activities:"],["Net income (loss)","$","(71.6)","","","$","(183.2)","","","$","111.6"],["Depreciation and amortization","43.4","","","46.2","","","(2.8)"],["Dividends from unconsolidated affiliates","15.6","","","5.5","","","10.1"],["Impairment charges","\u2014","","","65.6","","","(65.6)"],["Working capital changes:"],["Accounts receivable","(89.5)","","","(54.6)","","","(34.9)"],["Inventories","(39.1)","","","(289.7)","","","250.6"],["Accounts payable and other liabilities","173.6","","","176.0","","","(2.4)"],["Other current assets","(5.4)","","","(12.5)","","","7.1"],["Other operating activities","13.6","","","(6.8)","","","20.4"],["Net cash provided by (used for) operating activities","40.6","","","(253.5)","","","294.1"],["Investing activities:"],["Expenditures for property, plant and equipment","(28.8)","","","(44.3)","","","15.5"],["Proceeds from the sale of assets and investments","1.8","","","19.8","","","(18.0)"],["Purchase of noncontrolling interest","(8.4)","","","\u2014","","","(8.4)"],["Net cash used for investing activities","(35.4)","","","(24.5)","","","(10.9)"],["Cash flow before financing activities","$","5.2","","","$","(278.0)","","","$","283.2"]]
[[/GREPCENT_TABLE]]

The change in net cash provided by (used for) operating activities of $294.1 million in 2022 compared with 2021 was primarily a result of changes in working capital items and net income (loss), partially offset by the absence of non-cash charges of $55.6 million and $10.0 million for goodwill and long-lived asset impairments, respectively, recorded in 2021. The changes in working capital were mainly due to a smaller increase in inventory in 2022 compared 2021.

The change in net cash used for investing activities during 2022 compared with 2021 is due to the absence of the proceeds from the sale of preferred shares of OneH2 in 2021 and the current year's installment purchase of Hyster-Yale Maximal's noncontrolling interest in 2022, partially offset by lower capital expenditures in 2022.

[[GREPCENT_TABLE]]
[["","2022","","2021","","Change"],["Financing Activities:"],["Net increase in long-term debt and revolving credit agreements","$","11.1","","","$","223.0","","","$","(211.9)"],["Cash dividends paid","(21.8)","","","(21.6)","","","(0.2)"],["Other","(0.2)","","","(0.2)","","","\u2014"],["Financing fees paid","\u2014","","","(7.6)","","","7.6"],["Net cash provided by (used for) financing activities","$","(10.9)","","","$","193.6","","","$","(204.5)"]]
[[/GREPCENT_TABLE]]

The change in net cash provided by (used for) financing activities in 2022 compared with 2021 was primarily due to a smaller increase in borrowings during 2022 versus 2021, partially offset by the absence of financing fees paid in 2021.

21

Table of Contents

Financing Activities

The Company has a $300.0 million secured, floating-rate revolving credit facility (the "Facility") that expires in June 2026 and a $225.0 million term loan (the "Term Loan"), which matures in May 2028.

The Facility can be increased up to $400.0 million over the term of the Facility in minimum increments of $10.0 million, subject to approval by the lenders. The obligations under the Facility are generally secured by a first priority lien on working capital assets of the borrowers and guarantors in the Facility, which includes but is not limited to cash and cash equivalents, accounts receivable and inventory, and a second priority lien on the present and future shares of capital stock, fixtures and general intangibles consisting of intellectual property. The approximate book value of assets held as collateral under the Facility was $1.1 billion as of December 31, 2022.

The Facility includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Facility. The Facility limits the payment of dividends and other restricted payments the Company may make unless certain total excess availability and/or fixed charge coverage ratio thresholds, each as set forth in the Facility, are satisfied. The Facility also requires the Company to achieve a minimum fixed charge coverage ratio when total excess availability is less than the greater of 10% of the total borrowing base, as defined in the Facility, and $20.0 million. At December 31, 2022, the Company was in compliance with the covenants in the Facility.

Key terms of the Facility as of December 31, 2022 were as follows:

[[GREPCENT_TABLE]]
[["","FACILITY"],["U.S. borrowing capacity","$","210.0"],["Non-U.S. borrowing capacity","90.0"],["Outstanding","134.6"],["Availability restrictions","7.7"],["Availability","$","157.7"],["Applicable margins, as defined in agreement"],["U.S. base rate loans","0.25%-0.75%"],["LIBOR, EURIBOR and foreign base rate loans","1.25%-1.75%"],["Applicable margins, for amounts outstanding"],["U.S. base rate and LIBOR loans","0.50%; 1.50%"],["Non-U.S. base rate and LIBOR loans","1.50","%"],["Applicable interest rate, for amounts outstanding"],["U.S. base rate","8.00","%"],["LIBOR","5.69","%"],["EURIBOR","3.88","%"],["Facility fee, per annum on unused commitment","0.25","%"]]
[[/GREPCENT_TABLE]]

The Term Loan requires quarterly principal payments on the last day of each March, June, September and December commencing September 30, 2021 in an amount equal to $562,500 and the final principal repayment is due in May 2028. The Company may also be required to make mandatory prepayments, in certain circumstances, as provided in the Term Loan.

The obligations under the Term Loan are generally secured by a first priority lien on the present and future shares of capital stock, material real property, fixtures and general intangibles consisting of intellectual property and a second priority lien on working capital assets of the borrowers of the Facility, which includes, but is not limited to cash and cash equivalents, accounts receivable and inventory. The approximate book value of assets held as collateral under the Term Loan was $750 million as of December 31, 2022.

In addition, the Term Loan includes restrictive covenants, which, among other things, limit additional borrowings and investments of the Company subject to certain thresholds, as provided in the Term Loan. The Term Loan limits the payment of dividends and other restricted payments the Company may make in any fiscal year, unless the consolidated total net leverage ratio, as defined in the Term Loan, does not exceed 2.50 to 1.00 at the time of the payment. At December 31, 2022, the Company was in compliance with the covenants in the Term Loan.

22

Table of Contents

Key terms of the Term Loan as of December 31, 2022 were as follows:

[[GREPCENT_TABLE]]
[["","TERM LOAN"],["Outstanding","$","221.6"],["Discounts and unamortized deferred financing fees","4.1"],["Net amount outstanding","$","217.5"],["Applicable margins, as defined in agreement"],["U.S. base rate loans","2.50","%"],["Eurodollar","3.50","%"],["Eurodollar floor","0.50","%"],["Applicable interest rate, for amounts outstanding","7.88","%"]]
[[/GREPCENT_TABLE]]

The Company incurred fees of $7.6 million in 2021. These fees related to amending the Facility and the Term Loan. These fees were deferred and are being amortized as interest expense over the term of the applicable debt agreements. No fees were incurred in 2022 or 2020. Fees related to the Term Loan are presented as a direct deduction of the corresponding debt.

The Company had other debt outstanding, excluding finance leases, of approximately $171.2 million at December 31, 2022. In addition to the excess availability under the Facility of $157.7 million, the Company had remaining availability of $25.2 million related to other non-U.S. revolving credit agreements.

The Company believes funds available from cash on hand, the Facility, other available lines of credit and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments during the next twelve months and until the expiration of the Facility in June 2026.

Contractual Obligations, Contingent Liabilities and Commitments

Following is a table summarizing the contractual obligations as of December 31, 2022:

[[GREPCENT_TABLE]]
[["","Payments Due by Period"],["Contractual Obligations","Total","","2023","","2024","","2025","","2026","","2027","","Thereafter"],["Term Loan","$","221.6","","","$","2.3","","","$","2.3","","","$","2.2","","","$","2.2","","","$","2.2","","","$","210.4"],["Variable interest payments on Term Loan","92.6","","","18.4","","","18.3","","","17.8","","","17.7","","","17.5","","","2.9"],["Revolving credit agreements","137.1","","","137.1","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Variable interest payments on revolving credit agreements","10.1","","","10.1","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Other debt","168.7","","","134.5","","","16.9","","","10.9","","","6.4","","","\u2014","","","\u2014"],["Variable interest payments on other debt","14.6","","","8.0","","","3.0","","","2.0","","","1.6","","","\u2014","","","\u2014"],["Finance lease obligations including principal and interest","30.0","","","13.4","","","10.2","","","4.9","","","0.8","","","0.7","","","\u2014"],["Operating leases","70.4","","","16.2","","","12.3","","","8.9","","","7.0","","","6.1","","","19.9"],["Tax Reform Act transition tax liability","10.5","","","2.6","","","3.5","","","4.4","","","\u2014","","","\u2014","","","\u2014"],["Purchase and other obligations","814.6","","","810.4","","","\u2014","","","1.5","","","2.7","","","\u2014","","","\u2014"],["Total contractual cash obligations","$","1,570.2","","","$","1,153.0","","","$","66.5","","","$","52.6","","","$","38.4","","","$","26.5","","","$","233.2"]]
[[/GREPCENT_TABLE]]

The principal sources of financing for these contractual obligations are expected to be internally generated funds and bank financing.

The Company has a long-term liability of approximately $7.7 million for unrecognized tax benefits, including interest and penalties, as of December 31, 2022. At this time, the Company is unable to make a reasonable estimate of the timing of payments due to, among other factors, the uncertainty of the timing and outcome of the Company's audits.

An event of default, as defined in the agreements governing the Facility, the Term Loan, other debt agreements, and in operating and capital lease agreements, could cause an acceleration of the payment schedule. No such event of default has occurred or is anticipated under these agreements.

The Company's interest payments are calculated based upon the anticipated payment schedule and the December 31, 2022 applicable rates and applicable margins as described in the Facility and other debt agreements. A 1/8% increase in the LIBOR rate would increase the Company's estimated total interest payments on debt by $0.3 million.

23

Table of Contents

The purchase and other obligations are primarily for accounts payable, open purchase orders and accrued payroll and incentive compensation.

Pension funding can vary significantly each year due to plan amendments, changes in the market value of plan assets, legislation and the Company's funding decisions to contribute any excess above the minimum legislative funding requirements. As a result, pension funding has not been included in the table above. Pension benefit payments are made from assets of the pension plans. The Company expects to contribute approximately $1.4 million to its non-U.S. pension plans in 2023.

In addition, the Company has recourse and repurchase obligations with a maximum undiscounted potential liability of $133.2 million at December 31, 2022. Recourse and repurchase obligations primarily represent contingent liabilities assumed by the Company to support financing agreements made between the Company's customers and third-party finance companies for the customer’s purchase of lift trucks from the Company. For these transactions, the Company or a third-party finance company retains a perfected security interest in the lift truck, such that the Company would take possession of the lift truck in the event it would become liable under the terms of the recourse and repurchase obligations. Generally, these commitments are due upon demand in the event of default by the customer. The security interest is normally expected to equal or exceed the amount of the commitment. To the extent the Company would be required to provide funding as a result of these commitments, the Company believes the value of its perfected security interest and amounts available under existing credit facilities are adequate to meet these commitments in the foreseeable future.

The amount of the recourse or repurchase obligations changes over time as obligations under existing arrangements expire and new obligations arise in the ordinary course of business. Losses anticipated under the terms of the recourse or repurchase obligations were not significant at December 31, 2022 and reserves have been provided for such losses in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. See also “Related-Party Transactions” below.

Capital Expenditures

The following table summarizes actual and planned capital expenditures:

[[GREPCENT_TABLE]]
[["","","Planned 2023","","Actual 2022","","Actual 2021"],["Lift truck business","","$","52.4","","","$","20.3","","","$","30.6"],["Bolzoni","","8.9","","","5.5","","","10.4"],["Nuvera","","3.9","","","3.0","","","3.3"],["","","$","65.2","","","$","28.8","","","$","44.3"]]
[[/GREPCENT_TABLE]]

Planned expenditures in 2023 are primarily for product development, improvements to information technology infrastructure and improvements at manufacturing locations and manufacturing equipment. The primary sources of financing for these capital expenditures are expected to be internally generated funds and bank financing.

Capital Structure

[[GREPCENT_TABLE]]
[["","December 31"],["","2022","","2021","","Change"],["Cash and cash equivalents","$","59.0","","","$","65.5","","","$","(6.5)"],["Other net tangible assets","625.0","","","728.7","","","(103.7)"],["Intangible assets","42.7","","","50.7","","","(8.0)"],["Goodwill","51.3","","","56.5","","","(5.2)"],["Net assets","778.0","","","901.4","","","(123.4)"],["Total debt","(552.9)","","","(518.5)","","","(34.4)"],["Total temporary and permanent equity","$","225.1","","","$","382.9","","","$","(157.8)"],["Debt to total capitalization","71","%","","58","%","","13","%"]]
[[/GREPCENT_TABLE]]

RELATED-PARTY TRANSACTIONS

See Note 18 to the consolidated financial statements in this Annual Report on Form 10-K for further discussion of related party transactions.

24

Table of Contents

PERSPECTIVE AND OUTLOOK

Market Commentary

The global economic outlook remains constrained and economic activity appears to be decelerating in many parts of the world. This global downturn is due to several factors, including tight monetary policies in various countries designed to contain inflation, as well as uncertainties around China's economic reopening and the ongoing Russia/Ukraine conflict. The conflict has already negatively impacted economic activity, particularly in Europe, for a sustained period. The latest publicly available global lift truck market data shows a definitive decrease in third-quarter 2022 market activity compared with peak third-quarter levels seen in 2021 as all major geographic regions experienced double digit percentage market declines. Internal company estimates suggest that the global lift truck market will have declined in the fourth-quarter 2022 across all geographic regions compared with the prior year quarter. However, a modest volume increase versus third-quarter 2022 is predicted, primarily due to an anticipated improvement in EMEA.

Looking ahead, the global lift truck market is expected to decline for the full-year 2023 compared with 2022 in all regions except JAPIC, which is anticipated to increase modestly year-over-year. However, 2023's global market unit volumes are expected to remain relatively strong and above pre-pandemic levels in all regions except EMEA.

Several years of extraordinary lift truck market growth stretched supplier capacity to, and in some cases beyond, its limits. A moderate market slowdown could allow the lift truck component supply base to meet their supply requirements more effectively and allow the Company to work down its extended backlog.

Operational Perspectives - Lift Truck Business

As a result of several factors, including the large but declining market, a focus on booking orders with solid margins and the Company's extended lead times, fourth-quarter 2022 lift truck bookings decreased significantly from robust prior-year levels. However, fourth-quarter 2022 bookings increased modestly from third-quarter 2022 largely due to a seasonal rebound in EMEA and better-than-expected fourth-quarter market conditions in the Americas. Looking forward to 2023, bookings' levels are expected to decrease year-over-year due to the moderating market outlook and the Company’s continued focus on higher-margin units while also balancing the need to maintain a full production pipeline across its facilities. These anticipated bookings' decreases, combined with planned production increases, should help the Company reduce its backlog, which has begun trending down, to more competitive levels over the course of 2023.

Full-year 2023 production and shipment volumes are expected to increase versus 2022 helping to alleviate the substantial backlog level and reduce lead times as anticipated continued supply chain improvements are achieved. Despite these expected improvements, lengthy lead times are expected to remain. However, they should help mitigate the impact of a recessionary economic environment on the business.

Order selectivity has resulted in higher average prices and margins for both unit bookings and backlog. As the Company works through its backlog in 2023, lower-margin units are expected to ship during the 2023 first quarter and the majority of 2023 shipments are anticipated to be produced from the currently existing higher-margin backlog. As a result, average unit margins are expected to continue to improve, including into 2024 when new bookings with anticipated higher margins are expected to be produced.

The Company continues to experience material and labor cost increases, but the rate of increase has slowed. Forward economic indicators suggest inflationary pressures have begun to abate and cost inflation is expected to gradually moderate throughout 2023, absent any unanticipated effects from geopolitical events and public health crises. Due to the substantial inflationary pressure over the past two years, the Lift Truck business implemented several price increases. In 2023, the Company expects a positive price-to-current cost ratio, in part to address ongoing cost increases in certain areas. The Company will continue to monitor material and labor costs closely, as well as the impact of tariffs, and adjust pricing accordingly. As a result of abating cost increases and the current significant backlog level with its expected built-in margin increases over time, the Company believes unit margins should increase significantly in 2023 in aggregate versus 2022 and will lead to significant improvements in operating profit in 2023. Lift Truck operating profit in each of the 2023 quarters is expected to exceed 2022 fourth quarter results, with improvements following normal business seasonality patterns.

The above factors, as well as the benefits from the Company's ongoing strategic initiatives as they mature, are expected to lead to a significant increase in revenues and a substantial operating profit in 2023 at the Lift Truck business. These assumptions, however, are highly sensitive to the effect of various market forces, particularly those that impact global supply chains.

25

Table of Contents

Strategic Perspectives - Lift Truck

From a broader perspective, the Lift Truck Business has three core strategies that are expected to transform the Company’s competitiveness, market position and economic performance over time:

•To provide the lowest cost of ownership while enhancing customer productivity. This is expected to be achieved by further expanding a wide variety of vehicle innovations including: new modular and scalable product families, truck electrification projects and technology advancements in product automation, power options, telemetry and operator assist systems;

•Be the leader in the delivery of industry- and customer-focused solutions, by transforming the Company's sales approach to meet a wide variety of customer needs across a broad set of end markets; and

•Be the leader in independent distribution, by focusing on effectively coordinating dealer and major accounts coverage, dealer excellence and ensuring outstanding dealer ownership globally.

The Company continues to make progress on its high priority projects. Notably, in fourth-quarter 2022, the Company announced that its first hydrogen fuel cell-powered container handler, powered by Nuvera® fuel cell engines, began its testing pilot at the Port of Los Angeles (CA). After successfully performing in lighter applications, the truck has advanced to more difficult applications. Additionally, the Lift Truck business launched its first modular, scalable lift trucks in 2022, first to the EMEA market in May followed by the Americas market late in the year. Given the current extended backlog, the production ramp-up for this new product line is occurring gradually. Early customer reports indicate that this new 2- to 3-ton standard internal combustion engine lift truck is being well-received in both markets. The Company expects to launch this product in the JAPIC market in mid-2023.

Operational and Strategic Perspectives - Bolzoni

Over the course of 2023, Bolzoni expects component shortages to continue moderating, while further increasing prices to offset higher input costs. Combined, these are expected to result in increased margins over time and higher 2023 full-year operating profit compared with 2022.

Bolzoni's core strategy is to be the leader in the Attachments business. In this context, Bolzoni continues to concentrate on driving its "One Company - 3 Brands" approach and increasing its Americas business, while focusing on strengthening its ability to serve key attachment industries and customers in all global markets. Bolzoni also intends to increase its sales, marketing and product support capabilities in North America and Europe to support its industry-specific sales strategy.

Operational and Strategic Perspectives - Nuvera

Nuvera's core strategy is to be a leader in the fuel cell business. Nuvera continues to focus on placing 45kW and 60kW fuel cell engines in niche, heavy-duty vehicle applications with expected significant fuel cell adoption potential. Nuvera announced several projects in 2022 with various third parties to test Nuvera® engines in heavy-duty applications, including the Port of Los Angeles, which began testing in late 2022, and in multiple European ports which are expected to begin testing in 2023. Nuvera is also developing a new 125kW fuel cell engine for heavier-duty applications.

In 2023, Nuvera expects continued focus on ramping up customer product demonstrations and customer bookings, which are expected to result in higher sales and moderately higher costs. Combined, this is expected to generate a loss comparable to 2022 but significantly enhance the foundation for future technology adoption and improved financial returns.

Consolidated Outlook

On a consolidated basis, the Company is nearing completion on its efforts to build out the lower-priced, lower-margin backlog units held over from prior periods. As a result, continued margin expansion is expected to lead to substantial operating profit and net income for the 2023 full year. These expectations are based on the Company's ability to effectively manage ongoing component shortages, modestly increase production levels and see a reasonable stabilization of material and freight costs.

The Company’s steps to improve profitability are producing tangible results. Efforts to reduce inventory and generate cash are expected to show substantial progress in the second half of 2023. The Company remains committed to enhancing its cash flows, with ongoing action plans to improve future results including continued discipline over capital expenditures and operating expenses. Capital expenditures are expected to be approximately $65 million for full-year 2023, with spending more heavily weighted toward the second half of the year. This full-year increase over significantly restrained 2022 levels is required to adequately maintain the Company’s facilities and includes a modest return to investing for long-term profitable growth.

Working capital continues to be an area of intense focus for the Company. Inventory levels remain above historical pre-pandemic levels due to prior production delays because of parts and labor shortages. In the first half of 2023, reducing

26

Table of Contents

inventory levels will be a key focus area. Efforts to maximize use of on-hand inventory, coupled with material purchases below expected production rates, should help to reduce excess inventory levels around the Company in both the first and second half of 2023. Supply constraints continue to be an issue sporadically around the globe, but the Company expects continued improvements as 2023 progresses. As a result of these actions, the Company expects a significant increase in cash flow before financing activities for the full-year 2023 compared with 2022.

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding recently issued accounting standards refer to Note 2 to the Consolidated Financial Statements in this Form 10-K.

EFFECTS OF FOREIGN CURRENCY

The Company operates internationally and enters into transactions denominated in foreign currencies. As a result, the Company is subject to the variability that arises from exchange rate movements. The effects of foreign currency fluctuations on revenues, operating profit and net income are addressed in the previous discussions of operating results. The Company's use of foreign currency derivative contracts is discussed in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk,” of this Form 10-K.

FORWARD-LOOKING STATEMENTS

The statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) delays in delivery and other supply chain disruptions, or increases in costs as a result of inflation or otherwise, including materials and transportation costs and shortages, the imposition of tariffs, or the renewal of tariff exclusions, on raw materials or sourced products, and labor, or changes in or unavailability of quality suppliers or transporters, including the impacts of the foregoing risks on the Company's liquidity, (2) delays in manufacturing and delivery schedules, (3) customer acceptance of pricing, (4) any preventive or protective actions taken by governmental authorities related to the COVID-19 pandemic, and any unfavorable effects of the COVID-19 pandemic on either the Company's or its suppliers plants' capabilities to produce and ship products, (5) unfavorable effects of geopolitical and legislative developments on global operations, including without limitation the entry into new trade agreements and the imposition of tariffs and/or economic sanctions, as well as armed conflicts, including the Russia/Ukraine conflict, and their regional effects, (6) the ability of the Company and its dealers, suppliers and end-users to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, as a result of interest rate volatility and current economic and market conditions, including inflation, (7) reduction in demand for lift trucks, attachments and related aftermarket parts and service on a global basis, including any reduction in demand as a result of an economic recession, (8) exchange rate fluctuations, interest rate volatility and monetary policies and other changes in the regulatory climate in the countries in which the Company operates and/or sells products, (9) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives, (10) the successful commercialization of Nuvera's technology, (11) impairment charges, (12) the political and economic uncertainties in the countries where the Company does business, as well as the effects of any withdrawals from such countries, (13) bankruptcy of or loss of major dealers, retail customers or suppliers, (14) customer acceptance of, changes in the costs of, or delays in the development of new products, (15) introduction of new products by, more favorable product pricing offered by or shorter lead times available through competitors, (16) product liability or other litigation, warranty claims or returns of products, (17) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, and (18) the ability to attract, retain, and replace workforce and administrative employees.