Hyster-Yale Inc (HY) 2021 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Hyster-Yale Q1 2021 Earnings Conference Call.

(Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to our speaker today, Ms. Christina Kmetko.

Please go ahead.

Thank you.

Good morning, everyone, and welcome to our 2021 first quarter earnings call.

I am Christina Kmetko, and I'm responsible for investor relations at Hyster-Yale.

Thank you for joining us this morning.

Joining me on today's call are Al Rankin, Chairman and Chief Executive Officer; Rajiv Prasad, President of Hyster-Yale Materials Handling; and Ken Schilling, our Senior Vice President and Chief Financial Officer.

Yesterday evening we published our first quarter 2021 results and filed our 10-Q.

This information is available on our website.

If anyone is not able to listen to today's entire call, an archived version of this webcast will be on our website later this afternoon and available for approximately 12 months.

Our remarks that follow including answers to your questions contain forward-looking statements.

These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today.

These risks include, among others, matters that we have described in our earnings release issued last night and in our 10-Q and other filings with the SEC.

We disclaim any obligations to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all.

In a moment, I'll discuss our current quarter results.

But first, let me turn the call over to our Chairman and CEO, Al Rankin, for some opening remarks.

Al?

Thanks, Christie, and good morning, everyone.

Results for our first quarter 2021 are very mixed.

On the one hand, bookings were extraordinarily strong with the forklift truck backlog at record levels.

And as a result, prospects for the future are bright.

On the other hand, supply chain disruptions had a major impact on production and material costs, which significantly reduced our first quarter earnings.

In the fourth quarter of 2020, Hyster-Yale was seeing improving market demand and increasing bookings, and was optimistic about 2021 prospects.

Then the market demand and the bookings improvements we saw in the fourth quarter actually increased during the 2021 first quarter, generating demand for forklift truck products.

It was significantly higher than we had forecasted.

Well, this demand has provided us with a record backlog.

Hyster-Yale's global supply chain, which has also had to ramp up production, has struggled to ramp up its suppliers and their capacity.

The slow and erratic ramp up exacerbated by continuing pandemic related supplier, labor shortages and cost increases and logistics constraints has led to significant component surges and material and freight cost inflation.

This has had a significant effect on Hyster-Yale in the first quarter.

As a result of these factors, our first quarter shipments were substantially lower than we had expected, particularly in our Americas division where receiving components needed to build certain trucks on schedule was very challenging.

This resulted in earnings that were significantly lower than both the 2020 fourth quarter and the first quarter.

While these results were not what we had planned or expected, our team is working diligently to obtain the components we need.

Given our very high backlog, the opportunity for increased production is high as supply chain bottlenecks are resolved.

After Christie reviews the financial results for the quarter in more detail, Rajiv will provide more detail on the supply chain challenges as well as provide an update on our business operations in strategic projects.

Ken will then discuss our outlook in this evolving environment.

Christie?

Thank you, Al.

I'll start with the quarter highlights, and then discuss the individual segments.

As Al mentioned, our unit bookings in the first quarter increased significantly, 48.8% over the fourth quarter of 2020.

We ended the quarter with historically high backlog of 50,700 units.

Our EMEA and JAPIC segments had significant increases in unit shipments over the first quarter of 2020, but these higher shipments were more than offset by a substantial decrease in unit shipments in the Americas because of supply chain constraints and component shortages resulted in a broad and rapidly increased demand as the economy recover.

We'll be able to provide more detail about our bookings and shipments in a month.

The lower shipments in the Americas were the primary driver for the 6.8% decline in the 2020 first quarter consolidated revenues to $732.2 million from $785.7 million in the first quarter of 2020.

Lower unit revenues were partly offset by favorable currency movements mainly in our EMEA and JAPIC Lift Truck segment and at Bolzoni.

As a result of the lower unit volumes, along with the resulting increase in manufacturing variances and higher material inflation and freight costs, primarily in the Lift Truck business in Bolzoni, our consolidated operating profit decreased to $3.1 million from $20.2 million in the prior year first quarter.

Decrease is partially offset by lower operating expenses despite the add-back of $9 million of incentive compensation that was suspended in 2020.

Our consolidated net income decreased to $5.6 million or $0.33 per share from $15.3 million or $0.91 per share.

The operating profit decline was moderated by $4.6 million gain on sale of Nuvera's investments in preferred shares of OneH2 as well as gains from favorable changes to market values of other equity investments.

In our Lift Truck business, our first quarter operating profit decreased to $0.2 million from $28 million in the prior year quarter, mainly as a result of the specific factors I noted in the discussion of our consolidated results.

At Bolzoni, revenues for the first quarter of 2021 decreased 9.6% and operating profit decreased to $800,000 from $2.7 million in the prior year first quarter.

The decrease in operating profit was primarily attributable to an increase in operating expenses because of the reinstatement of pre-pandemic employee compensation and the decrease in gross profit.

The decline in gross profit was the result of lower sales volumes, increased costs due to materially on freight cost inflation and higher manufacturing costs resulting from inefficiencies caused by the lower sales volumes.

Finally, at Nuvera, revenue decreased in the first quarter of 2021 and the operating loss increased modestly to $9.8 million from $9.4 million in 2022.

The higher operating loss was primarily attributable to a loss of manufacturing absorption caused by reduced sales, partly offset by lower operating expenses due to the favorable effects of ongoing cost-containment actions.

That completes the updated results for the quarter.

Now let me turn this over to Rajiv, who will provide an overview on our operations and our strategic projects.

Thank you, Christine.

Let me first start by saying that global team has performed very well in this challenging quarter.

Our sales team has effectively executed our strategies by generating significant booking in this strong market and increasing our market share.

And our supply chain and manufacturing groups have worked diligently to address the challenges related to supply constraints and logistic challenges that were our largest issues in the quarter.

As Al mentioned, lift truck market activity surged this quarter.

Lift Truck market grew significantly faster than anticipated during the 2021 first quarter with markets ending the quarter substantially higher than pre-pandemic levels.

Excluding China, where the market increased more than 130% over the 2020 first quarter when China was most affected by pandemic related shutdowns, the global lift truck market increased 46% compared with the first quarter of 2020.

Compared to 2020 fourth quarter, the global lift truck market, including China increased 20% driven by a 24% increase in the EMEA just under 24% increase in the Americas and almost an 18% increase in China, a significantly accelerated global demand over the 2020 fourth quarter and our share gain program translated into a substantial increase in our first quarter booking with market share improvements in Americas, EMEA, Asia, and India markets and resulted in record backlogs.

Despite the substantial increase in bookings, our unit shipments were only moderately higher than the 2020 fourth quarter and were lower than the 2020 first quarter.

The shipment increased over the fourth quarter because of substantially higher bookings in the third and fourth quarter of 2020.

However, shipments were lower than a year ago because of the low level of production rates that we put in place to match component availability and backlog.

Since the shutdown in 2020, we have prudently increased production level at our manufacturing plants to align them closely with anticipated levels of demand, target booking levels and component variability.

This approach to increasing production rate to meet accelerating market demand focused on building backlog first to ensure a stable base for production.

However, component shortages, logistic challenges and supply constraints led to reduced shipments compared to last year’s first quarter.

We expect market growth in the remainder of the year to moderate from the first – with the highest growth rate of this past quarter, although market level bookings and share were very high in April.

We also anticipate the possibility of a slowdown of bookings in the second quarter as we implement price increases to mitigate the impact of material and freight cost inflation.

Nevertheless, we continue to expect increased booking for the 2021 full year compared with the low levels in 2020 as a result of anticipated continued market growth and the strategic projects we continue to pursue at each of our businesses to enhance market share.

These strategic projects gained traction in the first quarter, although definitive timeframes for achieving full share gain results are still uncertain due to timing and full impact of our strategic projects and the continued financial impact of the fast economic recovery on supply chain and cost challenges.

Now let me spend a few minutes discussing our strategic projects.

Despite the potential volatility of near-term economic activity, we continue to execute our long-term strategy by advancing our key strategic initiatives.

While essentially all of the projects required to execute our initiatives continue to move forward, in the context of COVID-19 pandemic, the pace of certain projects have been given greater emphasis than others and certain accelerated projects have experienced delays as a result of the impact of the pandemic.

We continue to introduce new products, but our primary focus in the lift truck business is on a new set of modular and scalable product family for both internal combustion engine and electric trucks.

We launched the first of these new modular products, the standard version of the 2 to 3-ton internal combustion engine lift trucks for the EMEA market in mid-April.

The new EMEA trucks have been very well received and the launch of this new range of 2 to 3-ton counterbalance truck for the other markets is expected to continue throughout 2021 and the early part of 2022.

We expect the modular structure of these new products to enhance our ability to meet customer needs at the lowest possible cost and in a way that is more specific to their application, both at the industry level and at the individual customer level.

In this rapidly changing environment, we have accelerated our efforts to finalize and implement our industry strategies and our investment in industry-focused sales capabilities to support our dealers.

Given the COVID-19 environment, we've also focused on enhancing our remote selling capabilities through technology and IT enhancements, which we'll use very successfully in our launch of the new modular truck.

Bolzoni continues to focus on implementing its 1 company, 3 brands organizational approach to help streamline corporate operations and strengthen its North America and JAPIC commercial operations.

It's also focused on increasing its Americas business and strengthening its ability to serve industries in the North America market by introducing a broad range of locally produced attachments with shorter lead time and through continuing to sell cylinders and various other components produced in its Sulligent, Alabama plant.

Nuvera continues to focus on serving heavy-duty applications, particularly bus and truck applications with its 45 kilowatt and 60 kilowatt engines, which were both released for sale during 2020.

As a result of these milestones, Nuvera has accelerated the 45 and 60 kilowatt engine commercialization operations for the global market, and it's focusing on ramping up demonstrations, quotes and booking for these products in 2021 with some booking expected in 2021.

Overall, we believe the company will emerge stronger from this pandemic and that our strategic projects will reinforce that position.

I'll now turn the call over to Ken for an update on future quarters and liquidity.

Ken?

Thank you, Rajiv.

While recent markets and booking activities are strong and growth has been better than expected, the pace of increasing shipments remains uncertain.

Overall, we continue to operate on the assumption that economic and market environment will remain difficult in 2021 until supply chain issues are fully resolved and COVID-19 vaccinations are fully implemented.

Early in 2020, we put plans in place to mitigate the impact of declining markets and bookings, and the consequential impact of reduced manufacturing activity from pandemic-related shutdowns by initiating cost reduction measures.

These measures included spending and travel restrictions, significant reductions in temporary personnel, furloughs, salary reductions and suspension of other benefits, including incentive compensation.

Effective January 1, 2021, we reinstated pre-pandemic salaries, benefits and incentive compensation programs.

The other cost containment actions are continuing and are expected to remain in place until market and economic uncertainty dissipates, and our results further improve, which we expect will occur over the course of 2021.

In the 2020 fourth quarter, we did restructure some of our operations to reduce our long-term cost structure.

We anticipate we will incur charges of approximately $1.1 million during the remainder of 2021 for additional costs related to this restructuring.

Estimated benefits from this restructuring program are expected to be approximately $10.4 million annually beginning in 2022.

As Rajiv has mentioned, we adjusted production levels at our manufacturing plants during 2020 to align them more closely with market demand and target bookings and have been building backlog levels up moderately during the second half of the year.

However, given the strong bookings in the fourth quarter and first quarter and the backlog levels at historical highs, higher build rates at first appeared reasonable for 2021.

However, as the result of continuing supply chain and logistics constraints, we were not able to achieve the production levels originally planned for the 2021 first quarter.

These production headwinds are expected to continue to present significant challenges for productions in the second and third quarters, although we are hopeful that these challenges will abate and production levels will be able to be increased above our previously planned rates in the second half of the year.

We also expect significant material cost inflation and higher freight costs to continue into the second and third quarters, and the nonrenewal of tariff exclusions are expected to affect the cost of components in the second half of 2021.

We have announced and implemented price increases to moderate the effect of material cost inflation, but many of the orders in our backlog do not reflect these price increases.

As a result, we expect to experience margin pressure throughout 2021 due to the lag between when price increases went into effect and when they are fully realized since customer orders in the backlog are generally price protected.

We will continue to work closely with our suppliers to accelerate and enhance component supply levels in order to facilitate increased production levels.

We anticipate that commodity costs will continue to increase as the year progresses, and we will continue to monitor potential future supply costs and tariffs closely and adjust pricing accordingly.

Despite these factors, we expect our second quarter operating profit and net income to be significantly higher than the very low second quarter 2020 and first quarter of 2021 results since supply chain constraints are anticipated to moderate only modestly.

Operating profit is expected to increase because of an expected increase in unit shipments and an anticipated favorable currency impact based on current currency rates, partially offset by material and freight cost inflation as well as the reinstatement of incentive compensation and full salaries and benefits.

Let me take a step back and explain, our expectations for 2021 second quarter are based upon the most recent information we have available, but as past quarters and this quarter in particular have shown the effect on the lift truck market from the anticipated economic recovery from the pandemic, can change our expectations rapidly.

We are monitoring the COVID-19 hotspots, including closely monitoring the number of our suppliers based in areas where COVID-19 cases are high.

We are prepared to take further actions if necessary, to maintain the health and safety of our global workforce and to address the production and supply chain issues, which may develop.

As a result, the uncertainties of the supply chain recovery timing continues to limit our ability to forecast bookings and shipment levels for the remaining 2021 quarters.

Looking to the future in the context of an improving booking trends, we expect to increase our investment and working capital and other expenditures, to support growth in our business.

Capital expenditures are expected to be approximately $68 million in 2021.

While we expect to make these substantial additional investments in our business this year, maintaining liquidity also continues to be a priority.

At March 31, our cash on hand was $103 million and our debt was $285.4 million compared with cash on hand of $151.4 million and debt of $289.2 million at December 31.

In addition, as of March 31, we had unused borrowing capacity of approximately $265.3 million under our existing revolving credit facilities compared with $266.4 million at the end of the year.

I'll now turn the call back to Al.

I will conclude by noting that our strategy for the longer term is clear and transformative.

Our key projects as well as the explicit objectives of Hyster-Yale Group, Bolzoni and Nuvera businesses support this long-term strategy, but near-term prospects are uncertain as a result of a number of abnormal and largely external influences as we've discussed, specifically the direct impact of the COVID-19 pandemic on some markets, suppliers, manufacturing levels around the world, and logistics issues, which collectively create supply and cost challenges as well as the adoption rates for key fuel cell market segments.

End markets are strong.

We have record -- a record lift truck backlog, a strong current picking environment, we are working diligently to manage the supply chain headwinds.

We are continuing to invest in innovative products to meet increased customer demand.

As a result, we believe future increased shipping opportunities are very significant.

However, it is difficult for us to forecast when these increases will occur given the supply and logistics difficulties.

Nevertheless, when these challenges are mitigated, we believe we will deliver solid sales and earnings performance, and that our long-term strategies and prospects will have a very significant impact as we look forward.

Before I open up the call for questions, I would like to note that we will be holding a virtual investor day later this month on May 25.

A press release will be issued shortly with a registration link for that event.

We encourage you to join us as Rajiv, Ken and I along with other members of our senior management team provide further information on our strategic road map to deliver long-term shareholder value.

We'll now turn to any questions you may have.

(Operator Instructions) And your first question is from the line as Steve Ferazani.

I think you covered -- there is a lot of topics to cover this morning and thank you for the great job.

It’s sort of giving an overview and certainly these were issues you talked about were coming up this quarter.

You talked extensively about it last quarter, but I'm curious, didn't the things get a lot tougher in March and into April?

Did you see the supply chain constraints become more challenging as Q1 went on?

Rajiv, you want to take that?

Sure.

Thanks, Al.

I think as situation progressed through the quarter, if I look at what we plan to build versus what we've built, I think we had impacts really throughout the quarter.

It didn't accelerate in any way.

In fact, if anything, the visibility to our supply chain as we sit here is at the best level over that time, still -- we still have a significant number of challenges.

So I believe kind of February, March were the toughest month.

April eased up a little bit.

And I think we're, as I said, we still have challenges with -- as you can imagine, India is tough, Eastern Europe is tough from a supply chain point of view, but we are working through those issues.

And…

Rajiv, could you just say a little bit about the process that we're using to track components and to try to break through these bottlenecks and give investors a flavor for the process that we're using?

Sure.

Thanks, Al.

Yes, so what we're using is a kind of war room type environment with a virtual war room, where we've got every component and every supplier.

We have supply chain team tracking each one.

We’re getting commitments from suppliers on if they can hit our projected demand.

And wherever we have concerns, we’re actively working with them.

I think if you imagine from what's already been in the news, we had issues around microprocessors, we had issues around resins, but then there were some -- those were kind of a general concerns and we used a lot of that in our truck, but also we had concerns with specific suppliers, and we individually work through them one at a time.

To give you a sense for it, in February, we were probably chasing around 7,000 key issues which improved in March to maybe low 2,000 to 3,000, and now we are chasing down of hundreds of issues.

So hopefully that gives you a sense that visibility is better, the supply chain is recovering, but we have some very specific issues, the largest of which for us is India right now.

I might add to that, at the same time, we're beginning the process of working with all of our suppliers to help them break bottlenecks, help them increase their own capacity as we look forward because as we noted a number of times, we have a record backlog.

We want to serve our customers as effectively as we can.

And so, getting an increase in our capacity of our suppliers is a priority in the sort of middle term, the last half of the year, in particular, while the immediate near term focus is the component by component process that Rajiv just described.

Okay.

Is it different for, I mean, I note that Bolzoni had a pretty nice sequential improvement.

Are they not faced -- I know it’s less complex equipment.

Are they faced with not the same challenges or is at a state more to do with what they were coming off of in 4Q?

Let me just give you an overview that, again, as was the case for Hyster-Yale Group, we were hoping for much better results in the first quarter than we actually achieved.

So absent the concerns, that affect supply and particularly material cost increase, we think we would have done much better in Bolzoni.

I think, that's the best way to answer to your questions.

No, it's fair.

It's helpful.

When we think about -- you mentioned the massive backlog, how sticky is that backlog?

Because I mean it looks like you have certainly at minimum 2 quarters of revenue without taking any additional bookings.

So you start pushing some of this out, how confident are you that backlog holds?

Go ahead, Rajiv.

Sure.

Yes, I think -- we have definitely put our lead times.

Our customers understand the lead times that we are working with.

I think we have reinforced that.

We have seen some pull ahead of orders, mainly due to the inflation that our customers are seeing.

So I expect that majority -- the vast majority of the backlog we have is very sticky.

And in fact, customers were consciously making those decisions, knowing our backlog, knowing our lead times and also knowing the challenges that are in the market that they themselves are feeling as well, especially the industrial side of the market.

Yes.

Let me just emphasize it.

First of all, the backlog is not all immediately shippable.

Some of those orders are for the -- it stand out for the full year in many cases.

So they are spread out over a period of time.

That's one point.

The other is that, if we were the only supplier in the industry that had these bottlenecks and who had the inability to make the shipments, we might be under quite a bit more competitive pressure and substitution pressure than we are.

I think it's important to keep in mind that the factors we're discussing affect other competitors of ours also, and even more generally, industry as a whole is significantly affected by supply chain issues.

I mean, you read pretty much every day right now about what the chip problems that are affecting the industry -- automotive industry are causing production shortfalls in the automotive industry.

So this is a fairly broad-based set of circumstances that are going on in the economy as we look at it.

And then you mentioned the potential for some price increases.

What's your sense on customer feedback to that?

And how much are you going to be able to, I think, offset potential of the material price?

Can you pass it all material price cost increases through or are you trying to get a partial pass through?

Well, I'd really focus on Ken's comment.

Ultimately, we expect to have a full pass through.

We have target margins.

We think they're reasonable.

We think they are competitive.

The issue here is that we have a backlog, which in general, as Ken pointed out, has a lock in prices and material costs are going up in a way that we can't really recapture through price increases.

We try to work with our suppliers to moderate the cost of price increases, but -- just to take an example, not very long ago, and in general, over time, steel prices have been somewhere around what Rajiv reported $50 or $500 a ton, they are actually at -- in the spot market right now, they are $1,500 a ton.

That's never happened before to my knowledge.

And so, these are pressures that I think everybody is feeling and I think there's going to be considerable ripple of inflationary cost pressures in the economy.

Now eventually those -- the bottlenecks are going to get broken and -- but there is a real surge in demand as a result of government programs of delayed consumption on consumer behavior, all of that, and it's creating an environment that's pretty unprecedented in terms of the rapid increase in economic activity that's going on.

And then, just wanted to touch on -- you mentioned at the end, the tariff exclusions.

I'm trying to figure out, should we think about that impact similar to the last time around or have you been able to find other sources for components or materials that made a less of an impact?

Well, let me comment on the tariff exclusions first.

The Biden administration has changed the rules on tariff exclusions.

It's very concerning to us.

The Trump administration recognized that there were certain components that were not available, and in other locations, they recognize that the impact on prices in the United States could be very high as a result of certain kinds of tariffs.

And so, they had an exclusion process which certainly wasn't perfect, but it provided some substantial relief to blanket tariff increases.

At this point, the new administration has not put any process in place for tariff exclusions.

And we have really no idea what their future plans maybe, in fact, we're not sure they do either at this point.

And it's a really serious situation.

I think, there is a lot of concern in Congress that this is not a good policy.

I think that many people understand that if the tariffs continue in China that by and large, the bulk of -- at least in our case, the bulk of what we buy in China would go to some other low-cost country, it wouldn't be repatriated to the United States because the cost would be too high even if you could find capacity to produce it.

So I think that's the perspective we have on tariffs.

We're certainly hopeful that eventually an exclusion process will be put in place maybe in the next quarter or so.

That's certainly what we think ought to happen, and we just keep our fingers crossed as it does.

As to your second point, we had all already begun to diversify our low-cost supply chain sourcing capabilities.

We have sources in Vietnam, we have sources particularly in India, but as you know, there are complexities in India right now given the impact of COVID-19 on our supply chain there, but we have active programs that are designed to find other competitive sources to Chinese components.

Rajiv, you want to add anything to that?

I think, the first thing to recognize is China, and if you just casting, there’s a lot of (inaudible).

And China, by far has the highest capacity for casting, in fact, may have more castings than the rest of the world together in terms of capacity.

So -- and the significant amount of that castings come from China.

We are looking to outsource it through other places, but again, capacity is constrained.

And if the process is slow, not only by capacity but also by the COVID-19, but that is our plan.

We will diversify…

And let me just say, to reinforce Rajiv's comment, that that's precisely -- what he just said is precisely while there needs to be an exclusion process.

That the casting capacity simply doesn't exist in the United States, and it's not likely to be put in place here.

(Operator Instructions) Your next question is from the line of Brett Kearney.

I want to ask on Nuvera.

You mentioned, it sounds like increased opportunity for product demonstration.

Could you just maybe elaborate, it's probably a question for Lucien on the 25th of this month, but I'm -- just kind of what opportunities you're seeing?

Obviously, you had success in the China bus market, but what else, even if initial conversations at this stage, you're seeing opportunities in the commercialization front for Nuvera.

Maybe Rajiv would just comment a little bit on how we see the sales cycle evolving because that really is what lies at the heart of the process of -- or the end result of getting bookings.

You've got to go through a cycle of activity.

Rajiv?

Yes.

Thanks, Al.

And you're right, we will go through this in much more detail on the 25th.

But let me just give you a sense for it.

So you could imagine that we're predominantly working with integrators and OEMs of equipment.

And if I think about the segment, the primary areas are around heavy-duty vehicle, so we're talking buses, trucks, vans, and some off-road vehicle, including ours.

And the process that customers go through is, you know the first question is, “Do you have an electrification plan, do you have an electrified part.” And that majority of the time they don't and some of the times they do?

The next question is, “Have you thought about integrating hydrogen into your solution?” And again, the next piece -- the third piece is integrating and developing a solution, then doing a pilot and a prototype and then going into production.

We were moving people through that whole process.

If I can just maybe talk about geographies, you're right.

I mean, over the last few years, our attention has been on China, because we felt that was a rapidly growing market.

So it’s kind of really supported by government initiative.

But we’ve seen a strong pickup in Europe, and we're starting to see some traction in North America.

And in our pipeline today, we have customers in all of those regions.

We can put -- we will give you more color on that in May, but I think that -- hopefully that gives you a sense for the process we're going through, why it's taking time, and also the business and system development, which is closely tied together.

Rajiv, just as a point of reference maybe, you know we put periodically new generations of internal combustion engines into our vehicles that meet different emission standards.

That is not a short process.

Even something as determined and fixed as putting an upgraded engine would take sort of how long, Rajiv?

Yes, we've seen -- we've done a lot of emission programs.

It takes between 24 and 36 months depending on what else we need to change with the engine, which recently has been a significant amount of the product.

So we think that they integrate -- depends on where you are.

If you already have an electric vehicle and electric platform, we think that's more 18 -- kind of average of around 18-month process with the hydrogen solution in.

If you have an internal combustion engine and you need to put -- create an electric drive frame and then put the hydrogen solution in, then that's more around the 36-month time frame.

So just to give -- plus or minus depending on the customer and their infrastructure, but that's a sense of time it's taking to go through the integration process.

And on the other hand, I would just note that, we're doing plenty of demonstrations, and then there are test programs.

We've been doing that in China where our vehicles are being run with our engines in them.

This is all part of the process of developing bookings, and we expect to be -- see an acceleration of that process over the remainder of 2021, and then, of course, significantly in 2022 and 2023.

Great.

That's very helpful.

And then, maybe just last one, small item.

Just curious what's the company's remaining stake in OneH2 at this point?

Do you still hold some amount of preferred or common equity in that business?

And I guess, what would be your intentions for it going forward?

Yes, we do still have a small ownership.

And just like always, we always look at what's the best alternative for us moving forward.

So we're talking to the OneH2 guys about what’s the potential ways of moving forward.

So certainly, sale of the remaining interest is a possibility.

We just have to see how it all works out in the context of the prospects for OneH2.

And if there is something specific to report, we'll report it.

I mean, just to strategically say that in a bit, as you know, we're really focused Nuvera on the fuel cell engine side and this is part of the kind of reinforcing that direction.

(Operator Instructions) And at this time, I'm showing there are no further questions.

Thank you.

Al, did you have any wrap-up comments?

I have no further wrap-up comments than the ones I gave earlier, Christie.

Okay.

Thank you, again, everyone for joining us today.

As a reminder, as Al mentioned, on May 25 we will be holding our Investor Day, and we will release with the link to -- register for that will be going (inaudible).

Thank you and have a good day.

Thank you for listening.

Thank you for participating in today's Hyster-Yales' Q1 2021 Earnings Conference Call.

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