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 companies, Hyster-Yale Materials Handling, Inc. ("HYMH") and Bolzoni S.p.A. ("Bolzoni"), 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, parts, fleet management services, technology and energy solutions.
Through HYMH, the Company designs, engineers, manufactures, sells and services a comprehensive line of lift trucks, attachments, parts, fleet management services, technology and energy solutions marketed globally, primarily under the Hyster ® , Yale ® and Nuvera® 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 and assembled in the United States ("U.S."), Northern Ireland, China, the Netherlands, Mexico, the Philippines, Brazil, Japan, Italy and Vietnam.
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.
Bolzoni manufactures precision-engineered lift truck attachments, forks, masts and lift tables designed for handling delicate and specialized loads. These solutions are marketed under the Bolzoni ® , Auramo ® and Meyer ® brand names and the Silver Line product portfolio. Bolzoni also produces components for lift truck manufacturers. Bolzoni products are manufactured in Italy, the U.S., China, Germany, Finland and Brazil. Through the design, production and distribution of a wide range of attachments, Bolzoni has a strong presence in the lift-truck attachments market and industrial material handling.
During 2025, the Company announced a strategic business realignment of Nuvera Fuel Cells, LLC ("Nuvera") designed both to increase near-term profits and to create an integrated energy solutions program in the Americas segment, which is part of the HYMH business. Nuvera was merged into HYMH in the second quarter of 2025. As a result, the Company revised its operating segments to reflect changes in the way the chief operating decision maker (“CODM”) manages and evaluates the business. These changes did not impact the Company's Consolidated Financial Statements, but did impact its reportable segments. The historical and current results of the former Nuvera segment are now presented within the Americas operating segment. Refer to Note 4, Business Segments , to the Consolidated Financial Statements for additional information on the Company's reportable segments. Comparative prior period amounts have been recast to reflect the segment change.
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 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 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 2024 Annual Report on Form 10-K for discussion of financial condition and results of operations for 2024 compared with 2023.
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
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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. 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, 2025, the Company had gross deferred tax assets of $ 187.7 million which were reduced by valuation allowances of $ 165.9 million and gross deferred tax liabilities of $ 23.2 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, 2025 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, 2025, Bolzoni had $52.9 million of goodwill. Based on the most recent interim impairment test, Bolzoni's fair value of equity exceeded the carrying value by approximately $67 million or 36%.
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 . In addition, the estimates regarding the magnitude of are affected by changes in assumptions regarding medical costs, legal defense costs, inflation rates and trends in 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 . A one percent increase in the estimate of the number of or the magnitude of 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:
Favorable / (Unfavorable)
For the Years Ended December 31,
$ Change
% Change
Revenues
Americas
EMEA
JAPIC
Lift truck business
Bolzoni
Eliminations
Gross profit
Americas
EMEA
JAPIC
Lift truck business
Bolzoni
Eliminations
Selling, general and administrative expenses
Americas
EMEA
JAPIC
Lift truck business
Bolzoni
Restructuring and impairment charges
Americas
EMEA
JAPIC
Lift truck business
Bolzoni
Operating profit (loss)
Americas
EMEA
JAPIC
Lift truck business
Bolzoni
Eliminations
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Favorable / (Unfavorable)
For the Years Ended December 31,
$ Change
% Change
Interest expense
Other income
Income (loss) before income taxes
Net income (loss) attributable to stockholders
Diluted earnings (loss) per share
Reported income tax rate
n.m. - not meaningful
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.
YEAR ENDED
YEAR ENDED
NINE MONTHS ENDED
December 31, 2025
December 31, 2024
September 30, 2025
Bookings, approximate sales value
Backlog, approximate sales value
2025 Compared with 2024
The following table identifies the components of change in revenues for 2025 compared with 2024:
Revenues
Lift truck
Americas
EMEA
JAPIC
Increase (decrease) in 2025 from:
Lift Truck
Unit volume and product mix
Price
Parts
Foreign currency
Other
Bolzoni revenues
Eliminations
During the year ended December 31, 2025, revenues decreased to $3,769.3 million, or 12.5%, compared to $4,308.2 million in 2024. The decrease was primarily due to a decline in unit volume, mainly in the Americas and EMEA. The Company believes the lift truck market continues to reflect ongoing economic uncertainty which dampened customer booking activity over the past several quarters. The decrease was partially offset by higher other revenues, including improved fleet services revenue and the Company’s pricing actions to help offset higher costs, mainly in the Americas.
The Americas' truck volumes declined compared to 2024, especially for higher-value core counterbalanced trucks. The Company believes that customers are postponing purchases in response to lower utilization rates and ongoing efforts toward cash preservation as they navigate persistent economic uncertainty. EMEA revenues decreased during 2025 compared with 2024 primarily due to lower volumes for higher-value core counterbalanced trucks which reflects a market shift toward lower-intensity trucks, especially within counterbalanced trucks standard or value configurations, leading to reduced shipment volumes for traditional models.
During the year ended December 31, 2025, Bolzoni revenues decreased compared with 2024 primarily due to lower unit volume.
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The following table identifies the components of change in operating profit (loss) for 2025 compared with 2024:
Operating Profit (Loss)
Lift truck
Americas
EMEA
JAPIC
Increase (decrease) in 2025 from:
Lift truck gross profit and eliminations
Lift truck selling, general and administrative expenses
Restructuring and impairment charges
Bolzoni operations
During the year ended December 31, 2025, the Company recognized an operating loss of $22.1 million compared to $244.8 million of operating profit during 2024.
The decrease in Lift Truck operating profit in 2025 compared with 2024 was primarily due to lower gross profit, mainly from lower volume, the unfavorable impact of approximately $100 million of various tariff-related costs, as well as lower overhead absorption rates tied to lower production volume. Refer to Note 21, Subsequent Events, for additional information . Additionally, the Company recognized $38.4 million in restructuring and impairment charges associated with a reduction in the Company's global workforce initiated in the fourth quarter of 2025 and the strategic realignment of Nuvera initiated in the second quarter of 2025 compared to $22.6 million in 2024 to optimize the Company's manufacturing footprint. See Note 19, Restructuring and Impairment Charges , to the Company's Consolidated Financial Statements for further discussion. The decrease in operating profit was partially offset by lower selling, general and administrative expenses mainly due to lower employee-related expenses, including lower incentive compensation expenses and savings from Nuvera's strategic realignment.
Operating profit in the Americas decreased by $208.8 million in 2025 compared to 2024, primarily due to decreased gross profit, mainly from lower volume, the unfavorable impact of approximately $100 million of various tariff-related costs, as well as lower overhead absorption rates tied to lower production volume. Additionally, the Americas recognized $28.8 million in restructuring and impairment charges associated with a reduction in its global workforce initiated in the fourth quarter of 2025 and the strategic realignment of Nuvera initiated in second quarter of 2025 and $7.3 million in 2024 for the Company's manufacturing footprint optimization program. The decrease in operating profit was partially offset by lower selling, general and administrative expenses mainly due to lower employee-related expenses, including lower incentive compensation expenses and savings from Nuvera's strategic realignment.
EMEA's operating loss increased to $66.2 million in 2025 compared to $11.4 million in 2024, primarily due to lower unit volume partially driven by a market shift toward lighter-duty, lower-priced truck models and unfavorable pricing. In addition, manufacturing inefficiencies tied to lower production volumes, higher material and freight costs and increased restructuring charges also contributed to the increased operating loss.
JAPIC's operating loss was $26.2 million in 2025 compared to $30.0 million in 2024. The change was primarily due to lower selling, general and administrative expenses and restructuring and impairment charges, partially offset by lower gross profit due to unfavorable foreign currency, higher material and freight costs and lower unit volume.
Bolzoni recognized operating profit of $0.3 million compared to $9.1 million during the same period of 2024. The decrease is primarily due to lower unit volumes as well as lower overhead absorption rates tied to lower production volume. Additionally, selling general and administrative expenses were higher as a result of increased employee-related costs.
During the year ended December 31, 2025, the Company recognized a net loss attributable to stockholders of $60.1 million compared to $142.3 million of net income attributable to stockholders during 2024. The decrease was driven by lower operating profit as discussed above.
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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following tables detail the change in cash flow for the years ended December 31:
Change
Operating activities:
Net income (loss)
Depreciation and amortization
Dividends from unconsolidated affiliates
Stock-based compensation
Restructuring and impairment charges
Other operating activities
Changes in assets and liabilities:
Accounts receivable
Inventories
Accounts payable and other liabilities
Other current assets
Net cash provided by operating activities
Investing activities:
Expenditures for property, plant and equipment
Other investing activities
Net cash used for investing activities
Cash flow before financing activities
During the year ended December 31, 2025, net cash provided by operating activities decreased by $84.6 million compared to the same period in 2024. This decrease was primarily driven by net loss in 2025, compared to net income in 2024, as well as higher use of cash in other liabilities primarily due to increased employee-related payments and lower accounts payable. This was partially offset by reduced inventory levels mainly due to inventory efficiencies and to align with lower projected shipments, which more than offset the unfavorable impact of currency and tariffs during 2025 compared to 2024. In addition, accounts receivable decreased primarily from lower revenue volume.
The change in net cash used for investing activities in 2025 compared with 2024 was mainly due to higher capital expenditures in 2025.
Change
Financing Activities:
Net increase (decrease) in long-term debt and revolving credit agreements
Cash dividends paid
Purchase of treasury stock
Other
Net cash used for financing activities
The change in net cash used for financing activities was primarily due to net borrowings under the Company's revolving credit facilities during 2025 compared to net repayments in 2024.
Financing Activities
During 2025, the Company entered into an amended and restated agreement for a $300.0 million secured, floating-rate revolving credit facility (the “Facility”). The Facility consists of a domestic revolving credit facility in the initial amount of $210.0 million and a foreign revolving credit facility in the initial amount of $90.0 million. The Facility matures on June 24, 2030. The Facility replaced the Company’s previous revolving credit facility, which was set to mature in June 2026. 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.
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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, 2025.
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, 2025, the Company was in compliance with the covenants in the Facility.
Key terms of the Facility as of December 31, 2025 were as follows:
FACILITY
U.S. borrowing capacity
Non-U.S. borrowing capacity
Outstanding
Availability restrictions
Availability
FACILITY
Applicable margins, as defined in agreement
U.S. base rate loans
SOFR, EURIBOR and non-U.S. base rate loans
Applicable margins, for amounts outstanding
U.S. base rate loans
SOFR loans
Non-U.S. base rate loans
Applicable interest rate, for amounts outstanding
U.S. base rate
SOFR
Facility fee, per annum on unused commitment
The Company also has a $225.0 million term loan (the "Term Loan"), which matures in May 2028. 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 cash equivalents, accounts receivable and inventory. The approximate book value of assets held as collateral under the Term Loan was $0.8 billion as of December 31, 2025.
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, 2025, the Company was in compliance with the covenants in the Term Loan.
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Key terms of the Term Loan as of December 31, 2025 were as follows:
TERM LOAN
Outstanding
Discounts and unamortized deferred financing fees
Net amount outstanding
Applicable margins, as defined in agreement
U.S. base rate loans
SOFR
SOFR adjustment, as defined in the agreement
SOFR floor
Applicable interest rate, for amounts outstanding
The Company had other debt outstanding excluding finance leases, of approximately $150.7 million and $6.3 million of revolving credit facilities at December 31, 2025. In addition to the excess availability under the Facility of $192.1 million, the Company had remaining availability of $54.3 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 the foreseeable future thereafter.
Contractual Obligations, Contingent Liabilities and Commitments
Following is a table summarizing the Company's material cash requirements from contractual obligations as of December 31, 2025:
Payments Due by Period
Contractual Obligations
Total
Thereafter
Term Loan
Variable interest payments on Term Loan
Revolving credit agreements
Variable interest payments on revolving credit agreements
Other debt
Variable interest payments on other debt
Finance lease obligations including principal and interest
Operating leases
Purchase and other obligations
Total contractual cash obligations
The principal sources of financing for these material contractual obligations are expected to be internally generated funds and bank financing.
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 $134.5 million at December 31, 2025. 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
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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, 2025 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 2026
Actual 2025
Actual 2024
Lift truck business
Bolzoni
Planned expenditures in 2026 are primarily for investments in modular development and critical capital equipment central to the Company’s ongoing transformation, enabling progress in advanced product development, manufacturing efficiency, and information-technology enhancements. The final level of 2026 capital expenditures is dependent on the pace of production improvements. The Company will closely monitor spending throughout the year and may accelerate investments as production levels and market share improve as anticipated. The primary sources of financing for these capital expenditures are expected to be internally generated funds and bank financing.
Capital Structure
December 31
Change
Cash and cash equivalents
Other net tangible assets
Intangible assets
Goodwill
Net assets
Total debt
Total temporary and permanent equity
Debt to total capitalization
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.
OUTLOOK
The Company’s 2026 outlook is based on a set of key assumptions, which include the anticipated impact of tariffs and related mitigation efforts to counter their impact on the Company. Proactive measures such as price increases, cost reductions through adjustments in global product sourcing, supply chain enhancements and cost optimization programs are expected to partially offset increased tariff-related expenses. Key assumptions for the outlook include:
• U.S. tariffs in effect as of November 10, 2025, including Chinese tariffs at 10%, used as the baseline,
• inclusion of Section 232 tariff for steel and steel derivatives,
• current Section 301 tariff exemption for lift truck parts not extended beyond November 10, 2026,
• no additional tariffs will be added globally,
• company demand forecasts that are based on bookings trends, backlog levels and market data, and
• the successful implementation of the Company’s proactive initiatives outlined above.
In February 2026, the U.S. Supreme Court ("the Court") issued a ruling holding that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") are not legally authorized. The Court only ruled on IEEPA tariffs and did not invalidate any other tariffs, nor did the Court address whether or how the U.S. government might issue refunds of IEEPA tariffs. If the U.S. government is ultimately required to issue refunds, the process likely will take many months or years.
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Although the ruling has been issued, its implications for trade policy and related administrative actions remain uncertain. A number of tariff-related matters continue to be challenged that could impact the continued utilization of certain tariffs and the manner in which tariff costs or potential recoveries are calculated. Adverse rulings, or the replacement or implementation of new tariffs or trade restrictions, may have a material adverse effect on market demand, revenue, profitability and liquidity.
The Company’s financial outlook continues to be significantly affected by U.S. tariff policy, which has been increasing costs, dampening product demand, and reducing overall financial performance. Despite the Company’s proactive actions to mitigate these impacts, tariffs remained, and are expected to remain, a substantial financial challenge. Ongoing uncertainty around future tariff policies adds further volatility that is expected to persist through 2026. In this environment, the Company remains focused on disciplined cost management, maintaining an appropriate balance between pricing and expenses, and advancing the broad set of product initiatives designed to address the market shift to lighter-duty, lower-priced trucks. Management is committed to navigating the Company through these conditions while positioning the business for long‑term profitable growth.
Lift Truck Market and Demand Outlook
The total lift truck market contracted in Q4 2025 compared to the prior year across all geographic regions and classes. However, North America showed growth over Q3 2025, which led to increased booking activity for the Company.
For the rest of the world, the total lift truck market contracted compared to the prior quarter. This reflects a more cautious customer approach amid ongoing economic uncertainty. The Company believes many customers are deferring capital expenditures, resulting in delayed purchasing decisions and continued softening of lift truck order activity, particularly in higher duty cycle applications.
The positive trend in Q4 2025 bookings reflects a meaningful shift in customer behavior, with activity moving from elevated quoting levels without follow‑through to more decisive purchasing actions. Combined with the growing need to replace aging equipment after prolonged deferral of capital spending, these developments potentially signal early signs of strengthening demand, particularly in the Americas. While overall conditions remain cautious, this momentum is a constructive indicator for the demand environment heading into 2026.
At the end of Q4 2025, the Company’s backlog totaled $1.28 billion, reflecting shipments outpacing new bookings, most notably in EMEA. The Company believes EMEA has been slower to rebound due to persistent customer order delays and the broader industry shift toward lighter‑duty, lower-priced truck models, a segment in which the Company only recently began offering competitive products. The sequential decline in backlog was driven primarily by lower truck volumes, partially offset by higher average truck selling prices tied to increased material and component costs. Unfavorable currency movements further reduced the translated value of backlog, amplifying the impact of lower unit volumes and diminishing the real economic value of remaining orders.
Looking ahead, the Company expects bookings to continue improving through 2026, supported by the gradual normalization of customer capital investments. As new orders strengthen and bookings begin to outpace shipments, the resulting backlog growth toward a more normalized three‑ to four‑month level is expected to play a central role in driving higher production over the course of the year. Rebuilding backlog will allow the Company to transition from production schedules constrained by lower order intake to a more balanced and efficient operating cadence that better supports manufacturing utilization, inventory discipline and supply chain alignment. Although mixed demand signals warrant a prudent near‑term outlook, the Company anticipates that Q1 2026 will represent the trough of the current cycle, with production and shipments expected to steadily improve throughout the remainder of the year along with market conditions.
Operational Initiatives and Cost‑Reduction Programs
The Company continues to prioritize operational efficiency by aligning its production footprint and organizational structure with evolving market demand. To strengthen its competitive position and sustained profitability across market cycles, the Company has initiated a set of programs, including Nuvera's strategic realignment, a comprehensive restructuring program and long-term manufacturing footprint optimization. These actions are designed to lower the Company’s break-even point and support long-term financial resilience.
Nuvera’s strategic realignment was executed in Q2 2025 and delivered immediate benefits, resulting in $15 million of cost savings for the year along with the redeployment of resources to higher-growth areas.
Building on this momentum, the Company launched a restructuring program in Q4 2025, including targeted annualized cost reductions of $40–$45 million beginning in 2026. This restructuring combines timely cost reduction with strategic and structural changes which are expected to address current market pressures and position the Company for future growth as a leaner, more agile organization.
Operational improvement projects focused on optimizing the Company’s manufacturing footprint began in late 2024 and have proceeded at a measured pace, with $4 million spent in 2025. These initiatives are expected to incur additional costs of $10–$12 million and $3–$6 million in 2026 and 2027, respectively. Due to lower production volumes during the transition, the initial
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benefits realized in 2026 are expected to be minimal. By 2027, anticipated benefits from these efforts are projected to reach $20–$30 million. However, the full-year annualized income and cash benefits, estimated at $30–$40 million, are not expected until 2028, when these programs are fully implemented.
The Company’s comprehensive cost-reduction strategy balances immediate actions with longer-term initiatives, driving operational efficiency and organizational agility while maintaining investments in key strategic programs. As a result, the Company believes it is positioned to achieve significant savings, support sustainable growth and enhance financial resilience.
• Nuvera strategic realignment: Achieved $15 million in cost savings for 2025.
• Restructuring program: Targeting $40–$45 million in annualized savings beginning in Q1 2026.
• Manufacturing footprint optimization: Expected savings of $20–$30 million in 2027, fully implemented by 2028 with annualized benefits of $30–$40 million.
• Total recurring annualized savings are projected to reach $85–$100 million starting in 2028, compared to the beginning of 2025.
Projected cost savings are stated prior to expected increases in operating expenses, which are anticipated to be in line with inflation.
Lift Truck Business
In 2025, the Company operated in a challenging macroeconomic environment marked by high tariff costs, softer industry demand, and cautious customer spending. These conditions have continued into early 2026; however, the Company expects economic uncertainty and elevated financing costs to gradually ease as the year progresses. Throughout 2025, many customers, particularly those still receiving trucks ordered when lead times were very high, deferred capital investments and extended equipment lifecycles, resulting in reduced order volumes. The Company now believes these customers are approaching their typical equipment replacement cycle. Furthermore, as fleets continue to age and maintenance expenses rise, the economic rationale for upgrading equipment becomes even more compelling. Together, these trends support expectations for a gradual strengthening of underlying replacement-driven demand.
Despite consistently strong quoting activity during 2025, order conversion lagged for much of the year as customers delayed purchasing decisions. This dynamic began to shift in Q4 2025, when customers more frequently converted quotes into firm orders, contributing to the improved booking trends previously noted. Because orders flow through a fixed production schedule and revenue is generally recognized upon shipment, the order‑to‑production cycle creates inherent timing gaps between bookings, manufacturing and deliveries.
Management expects Q1 2026 to represent the trough of the current cycle, reflecting the impact of lower booking levels earlier in 2025. As bookings continue to strengthen and backlog rebuilds, production and shipments are expected to improve gradually through the remainder of 2026. The Company expects that this will lead to a more normalized operating cadence and increased manufacturing efficiency. Moderately improved shipment volumes in 2026 are anticipated to result in slightly higher year‑over‑year revenue, with higher shipments expected in the second half of 2026 compared to the first half.
Margins, however, are expected to remain under pressure in the near term due to the growing prevalence of lighter-duty, lower-priced models. These products, typically priced lower and offered aggressively by foreign competitors, particularly in South America and Europe, have shifted demand away from traditional, higher‑margin offerings. This trend has reduced shipment volumes for traditional models and weighed on total product margins. While the Company has newly introduced models designed for these lighter-duty, lower-priced segments, competitors already have a presence. As a result, margin pressure is expected to persist until these new offerings gain market traction. Over time, the Company’s expanded portfolio of modular and scalable products is intended to strengthen competitiveness and support margin recovery as market conditions normalize.
Forecasted tariff costs on Chinese components, steel and other imports are expected to remain broadly consistent with Q4 2025 levels. These costs are subject to potential fluctuations based on future changes in U.S. tariff policy. The Company expects tariffs will continue to affect both the Company’s cost structure and customer purchasing behavior. To mitigate these impacts, the Company has implemented a series of pricing, sourcing and product‑cost initiatives. The benefits of these actions are expected to increase beginning in Q2 2026 as the full effect of measures implemented during 2025 are realized. Given the comparatively low tariff levels in early 2025, year-over-year tariff comparisons will be unfavorable in Q1 2026 but are expected to moderate over the course of the year. Despite improvements in expected tariff recovery, the Company does not expect to fully offset all tariff-related expenses.
Additionally, ongoing operational and cost‑reduction initiatives are projected to generate year‑over‑year improvements in fixed manufacturing and operating expenses. Combined with the anticipated increase in shipments, these initiatives are expected to enhance manufacturing effectiveness and support a meaningful improvement in operating profit in 2026, even with a lower-margin product mix. The Company remains committed to disciplined operational execution, proactive cost management and leveraging opportunities aligned with evolving market conditions to further strengthen its competitive position.
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Bolzoni
Bolzoni is expected to achieve modest profitability improvement in 2026. Although revenues may decline slightly due to the planned phase‑out of certain legacy components supplied to the Lift Truck business, the shift toward higher‑margin attachment products and better plant utilization is anticipated to support margin expansion. Management continues to focus on optimizing the mix and strengthening operational discipline across global facilities.
Consolidated
The financial discipline established over the past several years has strengthened the Company’s ability to navigate challenging market conditions and deliver more stable results. The Company continues to target a 7% operating profit margin over the business cycle, however ongoing market uncertainty has weighed on bookings and revenue, and tariffs have materially increased costs. As a result, near‑term performance is expected to remain well below this long‑term objective. With lift truck market demand still subdued, the Company is taking deliberate steps to mitigate the near‑term financial impact through rigorous cost management and operational discipline. Over the longer term, management remains focused on enhancing resilience during economic downturns by reducing fixed costs, improving revenue durability and advancing innovative products that support profitable share gains.
On a consolidated basis, the Company anticipates a moderate operating profit for 2026. A slight loss is expected in the first half due to lower shipment volumes following reduced bookings and backlog in 2025. As booking activity strengthens and backlog recovers, the Company projects robust revenue growth in the second half of 2026. Higher-margin growth initiatives are also expected to positively impact our results of operations in the latter part of the 2026. Together with increased shipment volumes, ongoing cost-reduction and operational efficiency initiatives, these factors are expected to drive meaningful improvement in operating profit. These positive developments in the latter part of the year should more than offset the losses in the early part of the year, leading to improved full-year financial performance.
The Company also remains committed to generating strong operating cash flow and allocating capital in ways that enhance long‑term value. To support these objectives, management is executing targeted initiatives to improve working capital efficiency, with particular attention to aligning production and working capital practices with periods of reduced output. The Company expects meaningful progress on these initiatives during the first half of 2026. As production increases later in the year, the focus will shift from conserving working capital to supporting growth, while maintaining the inventory and production discipline established during the current downturn. These efforts, together with continued cost optimization, are expected to drive solid cash flow from operations, supported by improving net income.
Investment in modular development and critical capital equipment remain central to the Company’s ongoing transformation, enabling progress in advanced product development, manufacturing efficiency and information‑technology enhancements. Capital expenditures for 2026 are projected to range from $55–$75 million, with the final level dependent on the pace of production improvements. Management will closely monitor spending throughout the year and may accelerate investments as production levels and market share improve as anticipated. As the Company continues to generate cash, it will maintain its disciplined capital allocation framework, reducing leverage, pursuing strategic investments to support profitable growth and delivering strong long‑term returns to 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 customer solutions, and second, to provide exceptional customer care. The Company is focused on executing established strategic initiatives and key projects to transform the Company’s core lift truck business while building new business opportunities in the warehouse lift truck, vehicle automation, energy management and attachment business activities. These complementary growth and profit improvement projects should help the Company fulfill these two promises while achieving long-term revenue and operating profit growth. The Company believes its key projects will contribute to an increased and sustainable competitive advantage in the lift truck and attachment businesses over time.
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.
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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 effects of tariffs on raw materials or sourced products, and labor, or changes in or of quality suppliers or transporters, including the impacts of the foregoing risks on the Company's liquidity, (2) impacts resulting from increased trade 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 or other tariffs imposed by other countries where the Company does business, (3) in manufacturing and delivery schedules, (4) reduction in demand for lift trucks, attachments and related 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 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 and current economic and market conditions, including inflation, (8) effects of geopolitical and legislative developments on global operations, including without the entry into new trade agreements and the imposition of tariffs and/or economic sanctions, including the Uyghur Labor Act (the “UFLPA”) which could impact the Company's imports from China, as well as armed , including the Russia/Ukraine , the Israel and Gaza and/or the in the Red Sea, and their regional effects, (9) exchange rate fluctuations, interest rate 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 implementation of procurement and sourcing initiatives and programs, (11) the commercialization of products and technology related to the energy solutions program, (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) of or of major dealers, retail customers or suppliers, (14) introduction of new products by, more product pricing offered by or shorter lead times available through competitors, (15) product liability or other , warranty 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) resulting from natural , public health , political or other events, and (19) the ability to protect the Company’s information technology infrastructure service , data , cyber-based attacks or network .
