HYSTER-YALE, INC. (HY) FY 2024 MD&A

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

HYSTER-YALE, INC. AND SUBSIDIARIES

(Dollars in Millions, Except Per Share Data)

OVERVIEW

Hyster-Yale, Inc. ("Hyster-Yale" or the "Company") and its subsidiaries, including its operating company, Hyster-Yale Materials Handling, Inc. ("HYMH"), is a globally integrated company offering a full line of high-quality, application-tailored lift trucks and solutions aimed at meeting the specific materials handling needs of its customers. The Company's solutions include 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 HYMH, 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, exclusive 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. The Company owns a 90% majority interest in Hyster-Yale Maximal Forklift (Zhejiang) Co., Ltd. ("Hyster-Yale Maximal"), a 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. Lift trucks and component parts are manufactured and assembled in the United States ("U.S."), Northern Ireland, China, the Netherlands, Mexico, the Philippines, Brazil, Japan, Italy and Vietnam. On May 31, 2024, the Company changed its corporate name to Hyster-Yale, Inc. and the Company's wholly owned operating subsidiary, Hyster-Yale Group, Inc., changed its corporate name to Hyster-Yale Materials Handling, Inc.

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 U.S., 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 lift truck industry is based primarily on strength and quality of dealers, brand loyalty, customer service, new lift truck sales prices, availability of products and aftermarket parts, comprehensive product line offerings, product performance, quality and innovation, including 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.

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2023 Annual Report on Form 10-K for discussion of financial condition and results of operations for 2023 compared with 2022.

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.

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

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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. In that regard, the Company continually evaluates its deferred tax assets to determine if a valuation allowance is required or no longer needed. When the company concludes it has sufficient evidence to warrant a change in judgement regarding the realizability of its deferred tax assets, the result may have a material impact to the reported income tax expense. At December 31, 2024, the Company had gross deferred tax assets of $168.7 million which were reduced by valuation allowances of $144.3 million and gross deferred tax liabilities of $26.1 million.

Goodwill: 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 goodwill impairment testing as of May 1, 2024 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, 2024, Bolzoni had $51.9 million of goodwill. Based on the most recent interim impairment test, Bolzoni's fair value of equity exceeded the carrying value by approximately $100 million or 60%.

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 Annual Report on 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.

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 may have occurred but for which a claim has not yet been reported. 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 $0.5 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 current estimated levels, the product warranties reserves would increase and reduce operating profit by approximately $0.6 million. The Company's past results of operations have not been materially affected by a change in 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.

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FINANCIAL REVIEW

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

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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.

2024 Compared with 2023

The following table identifies the components of change in revenues for 2024 compared with 2023:

During the year ended December 31, 2024, revenues increased to $4,308.2 million, or 5%, compared to $4,118.3 million in 2023. The increase was primarily due to higher lift truck revenues from improved pricing, higher fleet services and other

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revenue from lower customer and dealer incentive programs in 2024 compared to 2023. These items were partially offset by lower parts volumes and lower lift truck shipments, which were almost fully offset by a shift in sales mix to higher priced products, mainly in the Americas.

During the year ended December 31, 2024, Bolzoni revenues increased compared with 2023 mainly from higher sales volumes and improved pricing. Nuvera revenues decreased during 2024 compared with 2023 mainly as a result of lower intercompany sales to the lift truck business.

The following table identifies the components of change in operating profit (loss) for 2024 compared with 2023:

During the year ended December 31, 2024, the Company recognized an operating profit of $244.8 million compared to $208.7 million during 2023 which represents an increase of 17.3%.

The increase in lift truck operating profit was primarily due to improved gross profit from higher pricing of $126.9 million, mainly in the Americas, partially offset by lower unit volumes and higher freight costs. The increase in gross profit was also partially offset by higher selling, general and administrative expenses related to higher sales and marketing and product development costs. Additionally, the increase in operating profit was partially offset by restructuring and impairment charges of $17.8 million primarily for streamlining the Company's manufacturing footprint by reducing costs and improving operational efficiency. See Note 19, Restructuring and Impairment Charges, to the Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion regarding the restructuring.

Operating profit in the Americas increased by $85.0 million, or 36.5%, compared to the same period in 2023, primarily due to improved gross profit from higher pricing of $121.9 million and improved margin from lower dealer and customer incentives. These improvements were partially offset by manufacturing inefficiencies tied to lower production volumes, lower parts sales and higher warranty and freight costs. In addition, operating profit was unfavorably impacted by higher selling, general and administrative expenses related to increased sales and marketing and product development costs. Operating profit in 2024 was partially offset by restructuring and impairment charges of $6.8 million.

EMEA reported an operating loss of $11.4 million in 2024 compared to an operating profit of $12.1 million in 2023, mainly due to manufacturing inefficiencies tied to lower production volumes and higher material and freight costs. In addition, selling, general and administrative expenses increased primarily from higher sales and marketing costs. The operating loss in 2024 includes restructuring and impairment charges of $2.4 million.

JAPIC's operating loss was $30.0 million in 2024 compared to $15.6 million in 2023. The change was primarily due to lower gross profit from material cost inflation and lower unit volume. In addition, JAPIC incurred restructuring and impairment charges of $8.6 million.

During the year ended December 31, 2024, Bolzoni recognized operating profit of $9.1 million compared to $15.3 million during the same period of 2023. The decrease is primarily due to restructuring and impairment charges of $4.3 million for the phase out of Bolzoni’s lower-margin legacy component manufacturing and to optimize Bolzoni's manufacturing footprint. In addition, Bolzoni's selling, general and administrative expenses increased, primarily related to higher employee-related costs in 2024 compared with 2023.

Nuvera's operating loss was $41.0 million in 2024 compared to $36.4 million in 2023. The change was primarily from an increase in research and development expenses for new product development, and selling, general and administrative expenses primarily related to occupancy expenses and restructuring charges.

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During the year ended December 31, 2024, the Company recognized net income attributable to stockholders of $142.3 million compared to $125.9 million during 2023. The increase was driven by higher operating profit of $36.1 million discussed above, lower interest expense partially offset by higher income taxes. See Note 6, Income Taxes, to the Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

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

During the year ended December 31, 2024, net cash provided by operating activities increased by $20.0 million compared to 2023 as a result of net cash adjusted for non-cash items, primarily related to restructuring and impairment charges and higher net income. The favorable net changes in assets and liabilities were mainly due to decreases in inventories and other current assets, partially offset by increases in accounts receivable and decreases in accounts payable and other liabilities during the year ended December 31, 2024 compared to the same period in 2023. The decrease in inventory is due mainly to the decrease in the Company's unit backlog as well as lower purchases. The increase in accounts receivable is mainly due to higher sales to customers with longer payment terms during the year ended December 31, 2024 compared with the same period in 2023.

The change in net cash used for investing activities during the year ended December 31, 2024 compared with the same period in 2023 was mainly due to higher capital expenditures in 2024.

The change in net cash used for financing activities was primarily due to lower debt payments during the year ended December 31, 2024 compared to 2023. Additionally, the Company purchased treasury stock during the year ended December 31, 2024 related to the Company's previously announced stock repurchase program and employee-related incentive stock compensation plans.

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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 previously included a $25.0 million tranche, which terminated on May 1, 2024.

The Term Loan was also amended in 2023 for the purpose of changing the benchmark interest rate for borrowings under the Term Loan from LIBOR to Term SOFR, each as defined in the Term Loan. See Note 13, Current and Long-Term Financing, to the Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion.

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 $1.2 billion as of December 31, 2024.

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, 2024, the Company was in compliance with the covenants in the Facility.

Key terms of the Facility as of December 31, 2024 were as follows:

The Term Loan requires quarterly principal payments on the last day of each March, June, September and December, which commenced September 30, 2021, in an amount equal to $0.6 million 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, U.S. material real property, fixtures and general intangibles consisting of intellectual property and a second priority lien on U.S. working capital assets of the borrowers and guarantors of the Term Loan, which includes, but is not limited to cash and

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cash equivalents, accounts receivable and inventory. The approximate book value of assets held as collateral under the Term Loan was $870 million as of December 31, 2024.

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, 2024, the Company was in compliance with the covenants in the Term Loan.

Key terms of the Term Loan as of December 31, 2024 were as follows:

The Company incurred fees of $0.8 million in 2023 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 such fees were incurred in 2024 and 2022. 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 $150.2 million at December 31, 2024. In addition to the excess availability under the Facility of $242.7 million, the Company had remaining availability of $47.8 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 Company's material cash requirements from contractual obligations as of December 31, 2024:

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

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

In addition, the Company has recourse and repurchase obligations with a maximum undiscounted potential liability of $219.2 million at December 31, 2024. 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, 2024 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:

Planned expenditures in 2025 are primarily for improvements at manufacturing locations and manufacturing equipment, product development and improvements to information technology infrastructure. The wide range of potential capital spending outcomes in 2025 is due to current economic and geopolitical uncertainty. The Company expects to monitor spending during the first half of the year and may accelerate investments if the market recovers and market share increases as expected in the second half of 2025. The primary sources of financing for these capital expenditures are expected to be internally generated funds and bank financing.

Capital Structure

RELATED-PARTY TRANSACTIONS

See Note 18, Debt and Equity Investments and Related-Party Transactions, to the Consolidated Financial Statements in this Annual Report on Form 10-K for further discussion of related-party transactions.

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PERSPECTIVE AND OUTLOOK

Consolidated Strategic Perspective

The Company’s strong 2023 and 2024 financial performances were largely due to a strong backlog and strategic actions taken in recent years. These efforts focused on delivering optimal solutions and exceptional customer care. Most importantly, the execution of key strategies, projects and significant process improvements, have better positioned the Company for substantial long-term profitable growth. As part of this, the Company’s product development and process improvement efforts are leading to significant advantages, including:

•more efficient lift truck production, by enabling the Company’s plants to build internal combustion and electric trucks on the same production lines, which should support higher volumes on existing production lines;

•leveraging modular and scalable product designs to produce similar high-volume trucks globally, enabling the Company to better meet customer demand while minimizing operational costs;

•increasing operational efficiency and factory utilization; and

•phasing out Bolzoni’s lower-margin legacy component manufacturing, which creates manufacturing space for further profitable attachment growth.

Overall, these improvements are leading to a more efficient and flexible organization. To move these programs forward, in Q4 2024, the Company initiated projects to lower costs, optimize its manufacturing footprint, reduce lead times and better position itself for profitable growth. As a result, the Company incurred costs to streamline its manufacturing footprint and optimize its operations of $21 million in Q4 2024. As the Company fully executes its manufacturing footprint improvement programs, it expects additional implementation costs ranging from $8 million to $16 million in each of 2025 and 2026. Benefits from these programs are expected to begin in late 2025. These initial benefits are likely to be offset by operational inefficiencies related to lower full-year production in 2025. Benefits in 2026 are expected to be small as the Company fully phases in the programs. Beginning in 2027, these fully developed programs are currently expected to generate significant income and cash benefits from $30 million to $40 million annually, based on current assumptions for expected volumes and costs. These programs are designed to reduce the negative impact from cyclicality on the business.

Lift Truck Business

Lift Truck estimates that the Q4 2024 global lift truck bookings market declined moderately from prior year levels with industry backlog slightly above normalized levels. In 2025, Lift Truck anticipates a slight improvement in the global lift truck market from depressed 2024 levels. This increased market is primarily in EMEA and JAPIC geographic markets, leading to higher year-over-year bookings market in 2025.

Lift Truck's Q4 2024 factory bookings dollar-value decreased 17% year-over-year to $400 million. Sequentially, the value of bookings increased by 8%, primarily in the Americas. Orders increased for higher-priced, 4- to 6-ton Class 1 and Lift Truck's new modular, scalable Class 5 lift trucks. EMEA's dollar-value bookings slightly increased and JAPIC's were flat compared to Q3 2024. This overall increase suggests further stabilization for both Lift Truck and the global market.

Due to 2024 sales efforts, the Lift Truck's warehouse market share grew as result of it's warehouse penetration strategy, which includes advanced on-truck technologies. These share gains are expected to continue in 2025. Additionally, new modular, scalable counterbalanced trucks are anticipated to launch in the first half of 2025, including the electric models of the 1- to 3.5-ton trucks later in the year. These new products should lead to share gains over time.

For much of the past two years, Lift Truck has benefited from the tailwinds of favorable pricing and a significant order backlog. This supported robust production levels in 2023 and 2024 with product margins well above targeted levels. The 2024 market decline resulted in lower bookings and increased cancellations across the year, including a Q4 2024 bookings level that was below expectations. This led to a reduced, but more normalized, $1.9 billion backlog entering into 2025. As result, Lift Truck's initial 2025 production estimates are well below 2024 levels. To maintain a more consistent backlog level, while balancing market share and industry demand, production rates will be lower in the first half of 2025 and increase in the second half of the year. This sets the stage for expected accelerated growth in 2026. However, if the bookings market or Lift Truck's expected market share improvements fail to meet expectations, its global production levels will likely moderate in the second half of 2025.

Lift Truck continues to focus on maintaining bookings with margins at or above targeted margin levels through a combination of new product introductions, including modular and scalable models, and ongoing cost and pricing discipline. Margins are expected to decline in 2025 compared to the prior year due to increased competitive dynamics in the market, but importantly remain above target levels. Due to the current economic uncertainty created by potential tariff changes in the U.S. and abroad, Lift Truck intends to remain agile with its pricing strategy responding as required to reduce the impact of tariffs on its cost structure. Lift Truck anticipates margins to remain above target levels in 2025.

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As a result of the lower production levels in 2025, Lift Truck expects a significant year-over-year revenue decrease. Operating expense is expected to increase year-over-year in 2025 to support long-term profitable growth efforts. Lift Truck plans to increase its sales capacity and capability as well as enhance its underlying information technology systems. A portion of these higher costs are likely to be offset by increased use of lower cost shared service capabilities and more efficient processes and tools. As a result of the lower revenues, unit margin declines and increased expenses, Lift Truck expects 2025 operating profit to be significantly lower than the exceptionally strong 2024 performance.

Bolzoni

Bolzoni product margins are expected to improve modestly year-over-year, despite decreased revenues due to the planned phase out of lower-margin legacy component sales to the Lift Truck business. Increased production of higher margin attachments are expected to offset lower legacy component sales. As a result, Bolzoni's 2025 operating profit is anticipated to be comparable to 2024 adjusted operating profit.

Nuvera

During 2025, Nuvera will remain focused on increasing customer product demonstrations and orders, especially HydroCharge™, its new portable hydrogen fuel cell-powered generator. This product was introduced in May 2024 and began customer and dealer demonstrations in September 2024.

In 2025, Nuvera expects full-year revenues to increase over prior year largely due to HydroCharge™. The margin benefits from this increased revenue are likely partly offset by a modest increase in product development costs year-over-year to support further development on Nuvera’s more powerful 125kW fuel cell engine. In total, 2025's operating results are expected to improve modestly compared to 2024, in part due to benefits realized from the 2024 force reduction action.

Consolidated

The Company continues to make progress in establishing the groundwork for achieving its goal of generating 7% operating profit margins across a business cycle in the Lift Truck and Bolzoni businesses. In periods of robust demand, like those experienced in 2024, the Company exceeded its target margin levels. However, as outlined above, the Company's 2025 revenues, production levels and profits are expected to decline significantly compared to robust 2024 results. This aligns with the Company's view on the business cycle, which is expected to trough in the first half of 2025, after peaking in the two prior years.

The Company continues to focus on cash generation and accretive capital allocation. The Company made progress on working capital efficiency throughout 2024, but the improvement was below expectations. Intense efforts to accelerate improvements, particularly in inventories, are underway and are expected to generate further improvements in 2025. Overall, the Company expects cash flow from operations in 2025 to remain strong and comparable at 2024 levels, with improved working capital efficiency offset by lower net income. The Company is focused on the ongoing transformation of its business partly through significant capital investments in advanced products and manufacturing efficiency. For 2025, capital expenditures are projected to range between $40 million and $80 million. This wide range of capital spending outcomes is due to current economic and geopolitical uncertainty, particularly in the U.S. and EMEA. Management will monitor spending during the first half of the year and may accelerate investments if the market accelerates and share increases as expected in 2025. As the Company continues to generate cash, it will continue to follow its disciplined capital allocation framework to further reduce leverage, make strategic investments to support profitable business growth, and continue to generate strong returns for its shareholders.

Long-Term Objectives

The Company's vision is to transform the way the world moves materials from Port to Home. It strives to do this through its two customer promises: first, to provide optimal solutions for our customers, and second, to provide exceptional customer care. Ongoing execution of established strategic initiatives and key projects, as well as the manufacturing footprint improvement measures previously mentioned, should help the Company fulfill these promises and achieve long-term revenue and operating profit growth rates above the material handling market's expected growth rates. The Company believes these actions will contribute to an increased and sustainable lift truck and attachment competitive advantage over time. In addition, the Company believes that Nuvera's revenues can increase over future years, bringing additional value to the Company's shareholders.

Further information regarding the Company's strategic initiatives can be found in the Company's Q4 2024 Investor Deck. This presentation, currently available on the Hyster-Yale website, elaborates on the strategies that are critical for the Company's long-term prospects. The Company encourages investors to review this material to ensure a clear understanding of the Company's future direction.

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RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding recently issued accounting standards refer to Note 2, Significant Accounting Policies, to the Consolidated Financial Statements in this Annual Report on 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, critical components and transportation costs and shortages, the imposition of tariffs 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) impacts resulting from increased trade barriers and restrictions on international trade, including as a result of previously announced, and potentially new, changes to U.S. trade policy and tariffs as well as retaliatory tariffs imposed by other countries where the Company does business, (3) delays in manufacturing and delivery schedules, (4) reduction in demand for lift trucks, attachments and related aftermarket parts and service on a global basis, including any cyclical reduction in demand in the lift truck industry, (5) customer acceptance of pricing, (6) customer acceptance of, changes in the costs of, or delays in the development of new products, (7) the ability of the Company and its dealers, suppliers and end-users to access credit, or obtain financing at reasonable rates, or at all, as a result of interest rate volatility and current economic and market conditions, including inflation, (8) 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, including the Uyghur Forced Labor Prevention Act (the “UFLPA”) which could impact the Company's imports from China, as well as armed conflicts, including the Russia/Ukraine conflict, the Israel and Gaza conflict and/or the conflict in the Red Sea, and their regional effects, (9) 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, (10) the effectiveness of the cost reduction programs implemented globally, including the successful implementation of procurement and sourcing initiatives and restructuring programs, (11) the successful commercialization of Nuvera's technology, (12) 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) introduction of new products by, more favorable product pricing offered by or shorter lead times available through competitors, (15) product liability or other litigation, warranty claims or returns of products, (16) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, (17) the ability to attract, retain, and replace workforce and administrative employees, (18) disruptions resulting from natural disasters, public health crises, political crises or other catastrophic events, and (19) the ability to protect the Company’s information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network breaches.