Hyster-Yale Inc (HY) 2018 Q1 法說會逐字稿

Good morning.

My name is Dan and I will be your conference operator today.

At this time, I would like to welcome everyone to the Hyster-Yale Materials Handling first quarter earnings analyst call.

(Operator Instructions)

I would now like to turn the conference over to Ms. Christina Kmetko.

Please go ahead.

Thank you, Dan.

Good morning, everyone, and welcome to our 2018 first quarter earnings call.

I'm Christina Kmetko, and I'm responsible for Investor Relations at Hyster-Yale.

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

Yesterday, we published our first quarter 2018 results and filed our 10-Q.

Copies of the earnings release and 10-Q are available on our website.

For anyone who is not able to listen to today's entire call, an archived version of this webcast will be on our website later this afternoon and available for approximately 12 months.

I would also like to remind participants that this conference call may contain certain 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 in either our prepared remarks or during the following question-and-answer session.

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

Additional information regarding these risks and uncertainties was set forth in our earnings release and in our 10-Q.

Also, certain amounts discussed during this call are considered non-GAAP.

The non-GAAP reconciliations of these amounts are included in our earnings release and available on our website.

Before we discuss our results, I want to let you all know that I do not have much of an update on the Maximal acquisition other than to say the process is continuing to move along as expected.

We expect the transaction to close during the second quarter of 2018, but it is subject to customary closing conditions and required regulatory approval.

And until all of those conditions have been achieved, we won't have much more information to provide.

We anticipate that we will be able to provide more of an update at our Investor Day on May 24.

Now let me discuss our results for the first quarter.

I will discuss the highlights first and then get into the details.

In the first quarter, the global lift truck market continued the double-digit growth trend that was seen throughout 2017 with double-digit increases in all of our geographic segments, except for EMEA, which grew 6% over a very strong 2017 first quarter.

In this strong market, we had a solid increase in our first quarter Lift Truck shipments and bookings, and our ending backlog increased 12% over the prior year.

We also experienced a substantial increase in our average unit backlog value as a result of the mix of products within backlog.

We booked more higher-value units and fewer lower-value Class 3 products as a result of competitive pressures, most notably from Chinese-produced Class 3 products.

On a consolidated basis, our revenues increased over 10% to $788.2 million, up from $713.1 million last year, driven by a 23% increase in Bolzoni's revenues and an almost 11% increase in the Lift Truck business revenues.

Despite this revenue growth, our consolidated operating profit decreased 15% to $19.2 million from $22.6 million last year, primarily as a result of higher material and manufacturing costs, net of price increases and higher operating expenses incurred to support our strategic initiatives.

We reported net income of $14.9 million this quarter or $0.90 per share compared with $18.1 million or $1.10 per share in the prior year first quarter.

In our Lift Truck business, first quarter 2018 revenues went up almost 11% to $743.3 million from $672.2 million in the prior year.

And our gross profit increased 2.8%, but operating profit decreased 10.7% to $26.6 million this quarter compared with $29.8 million last year.

Overall benefits from higher shipments and parts revenue in all geographic segments and increased pricing in the America and EMEA as well as favorable foreign currency movements in EMEA were more than offset by higher sales cost to support our strategic initiatives and material cost inflation.

Those are the significant factors affecting our truck operating results.

Now let me turn to the Lift Truck business outlook.

I'm just going to discuss the high-level outlook.

Details regarding the individual geographic segments are outlined in our earnings release.

We continue to maintain our focus on carefully paced ramp up in production and achievement of price goals through sales of a richer product mix while maintaining a healthy backlog to achieve production efficiency.

We continue to achieve better pricing, and we have seen greater demand for our higher-value internal combustion engine trucks.

And we have realigned and increased the size of our sales and marketing teams to execute our specific industry strategy more effectively as a means to target sustainable share gain.

We are focused on increasing our unit volumes and market share in 2018 and in future years through the continued implementation of our key strategic initiative.

While there are positive economic indicators in many of our industry segments, specifically in the Americas, we believe that some of the market growth we saw in the first quarter resulted from certain customers' placing orders early in anticipation of increasing prices from material cost inflation under the tariff.

As a result, we expect the overall global lift truck market growth rate to moderate from the first quarter growth rate and grow modestly during the rest of 2018 compared with 2017.

However, we anticipate that benefits from expected unit and parts revenue increases, driven by our continued investments in the strategic initiatives, are expected to be mostly offset by material cost inflation and higher operating expenses resulting in a modest increase in our 2018 operating profit compared with 2017.

Nevertheless, our 2018 net income is expected to increase substantially over last year as a result of the absence of the tax adjustments made in 2017 for U.S. tax reform.

We continue to monitor commodity costs closely as all of our peers.

We have been successful in locking in certain material prices, but while these rates are lower than current market rates, they are still higher than our plan.

We implemented pricing actions early in the first quarter and again in April 2018, specifically in the Americas, to help recover anticipated material cost inflation.

We anticipate that commodity costs will continue to increase as the year progresses, and we expect to continue to implement pricing actions as needed.

However, since the price increases do not apply to the current customer backlog, the offsetting impact is expected to be realized on a lagged basis in the second half of the year.

Moving over to Bolzoni.

Bolzoni reported net income of $1.9 million and revenues of $51.2 million for the first quarter of '18 compared with net income of $1.5 million and revenues of $41.6 million in last year's first quarter.

Bolzoni's revenue increase is driven primarily by $6.7 million of favorable foreign currency movements and higher sales volume.

Looking forward, as a result of anticipated growth in both the Americas and EMEA and the continued implementation of sales enhancement programs, Bolzoni expects revenues in 2018 to increase compared with last year.

In addition to the anticipated increase in revenues and the expected operating leverage resulting from the sales growth, we expect the continued implementation of several key strategic programs to generate substantial growth in Bolzoni's 2018 operating profit and net income.

Finally, at Nuvera.

Nuvera reported an operating loss of $10 million and a net loss of $7.3 million in the first quarter of '18 compared with an operating loss of $9.5 million and a net loss of $5.7 million a year ago.

In the first quarter of 2018, Nuvera shipped 63 Nuvera battery box replacement units compared with 29 in the prior year quarter.

But revenue on these units has been deferred until a later period.

Nuvera's net loss increased primarily as a result of Nuvera realizing a smaller tax benefit on its pretax losses due to a lower effective income tax rate under the U.S. tax reform legislation.

Due to the premium cost position and limited product range of our currently available battery box replacements, we are taking a measured approach to developing Nuvera's customer base by building relationships with customers who are willing to pay a premium for the high-power density of the current Nuvera battery box solution and the product support now offered through the Lift Truck business.

The backlog for Nuvera units was just over 300 battery box replacements as of March 31.

We expect demand to continue to increase for Nuvera's battery box replacement units throughout the year and for the cost base to fall due to substantial cost reductions already secured on future purchases of the core components.

Nuvera expects to continue to leverage improved designs and higher volumes through its supply chain with further cost reductions expected in 2019.

We expect production to begin at the Lift Truck business' manufacturing plant in Greenville, North Carolina in 2019 with a steady ramp up in demand anticipated.

In addition, in that same time frame, battery box replacement manufacturing at Nuvera's Billerica facility is expected to be phased out and transferred to the Lift Truck business.

With the phase out of battery box replacement production in Billerica, Nuvera will focus on the design, manufacture and sales and marketing of fuel cell stacks and engines.

In addition to growing demand for battery box replacement engines, Nuvera is experiencing significant interest for its stacks and fuel cell engines for applications outside of the battery box replacement market and believes this could be a significant and profitable growth opportunity.

Nuvera and the Lift Truck business were selected to partner with the Center for Transportation and the Environment, which has received a preliminary award from the California Air Resources Board, to demonstrate operations of a Hyster 1150 container handler top loader big truck using an electrified powertrain and a Nuvera Orion-based fuel cell engine for the Port of Los Angeles.

The contract has been finalized and is expected to be executed shortly.

This will be the first demonstration of Nuvera's plan to develop easily integrated, high-power fuel cell engines for use in OEM products.

We are currently targeting Nuvera to achieve breakeven by late 2019, although this target could be achieved earlier or later depending on sales volumes for fuel cell-powered lift trucks, execution of our significant cost reduction efforts as well as engine sales for other markets.

The operating loss in 2018 is expected to decrease compared with 2017, especially in the fourth quarter and moderate more substantially over 2019.

The net loss in 2018 is expected to be comparable to 2017 because a smaller tax benefit is expected to be realized on Nuvera's losses due to a lower effective income tax rate under the U.S. tax reform legislation.

So to summarize, on a consolidated basis, we expect our consolidated operating profit to be substantially higher for the 2019 full year due to: one, an expected improvement in Bolzoni's operating profit attributable to anticipated higher sales volume; two, a lower operating loss at Nuvera, primarily in the fourth quarter of 2018 from an expected reduction in component costs; and three, a modest improvement in operating profit at our Lift Truck business as benefits from anticipated higher unit and parts revenues are expected to largely -- be largely offset by material cost inflation and higher operating expenses as we continue to invest in our strategic growth initiatives.

Our consolidated net income is also expected to increase substantially due to the absence of net tax adjustments of $18.4 million made in 2017 for the U.S. tax reform legislation.

Before I open up the call for questions, I wanted to make a comment about our cash position and cash flow expectations.

Our cash position at March 31 was $228.1 million compared with $220.1 million at the end of 2017.

Our debt balance was $283.4 million, down from $290.7 million at year-end.

Also, as a result of an unplanned acceleration of payments in December 2016, we experienced higher-than-normal cash benefits from the restoration of accounts payable levels in the first quarter of last year.

Excluding the favorable effect these payments made on 2017, we expect our consolidated cash flow before financing activities to increase significantly in 2018 compared with 2017, primarily due to the cash dividend received this past first quarter from our financing joint venture as a result of the U.S. tax reform legislation.

That concludes our prepared remarks.

I will now open up the call for your questions.

(Operator Instructions) Your first question comes from the line of Joe Mondillo with Sidoti & Company.

In this environments of inflation that we're starting to see, I was just wondering how pricing is around the industry.

Are competitors being rational?

You obviously have seen 2 price increases already this year.

I think you mentioned -- I'm just wondering what the rest of the space is doing in terms of price.

I mean, it's obviously not uniform across-the-board, but I think we've seen all of our main competitors move pricing.

I think the inflation pressures we're seeing are very consistent across the industry.

And clearly, the magnitude of those prices, increases that we're seeing, some are a little bit higher and some are a little bit lower.

And they don't know if they could effect exactly at the same time.

But I think it's a fair summary to say that the industry is behaving rationally and moving prices for the lift trucks in concert with the rise in material costs.

And just to get a little more idea of what you were instating, there was a full price increase across-the-board in January and then also for -- and then plus raw material prices just increased so fast that you've decided to go another round in April.

Was that essentially -- in a basic way, is that what happened?

Well, there are always sort of tweaks as we do price increases.

They sort of vary really in general across-the-board.

I would say the one in January was more -- it was selective.

Some bore the full brunt, some a little bit less, some a little bit more.

And the one in April was really an across-the-board increase.

Okay.

And it sounds like -- I mean, it seems like your order trends and backlog trends are tracking pretty well.

Do you have any sense of -- or caution or fear that higher prices will end up resulting in slower demand?

I'd just say that, to me, it's not so much a worry about higher prices.

I think that there's probably fairly broad recognition that higher prices for certain kinds of commodities and raw materials are going to be broadly affecting economies around the world.

So I think the bigger issue is the continued momentum of the upturn in business around the world.

And if I had any concern at all, it's that in both Europe and to some degree in the Americas in recent quarters, there have been pretty substantial increases.

For several years, quarter-on-quarter, the growth had been at reasonable and modest, moderate levels.

And the industry has been jumping up quite a bit more rapidly.

On the one hand, that's good because order books go up.

And it -- and maybe there was some pent-up demand that is surfacing and capacity constraints that are surfacing.

The other side of it is that this is an industry that has seen over exuberance on a regular basis.

And my hope is that these upturns are related to the former and not the latter.

But that's what we're watching very, very carefully.

And we do it really especially in North America, but in a more general way in Europe industry-by-industry, so that we're watching the trends in industry growth and monitoring those very carefully.

So that's a bigger concern in my mind than the price.

Okay.

In terms of the backlog in dollars.

When comparing it to a year ago, how much is that boosted by currency?

Do you have that number?

We don't spit that out, but it's a -- I would say the vast majority of the increase in the dollar value of the backlog is based on product mix.

We just sold a (inaudible) mix of trucks.

But it is certainly true that we have a substantial currency increase in our revenues this quarter.

And that relates to the translation of the euro basically into dollar.

And of course, that flows through not only on revenues, but on costs.

And you do get an improvement in whatever the net profit is, but obviously, that's not incremental revenue in the same sense that real physical volume is.

So in the backlog, there's undoubtedly some impact of currency.

But if you look at the units, I think what we would tell you is that the unit mix is a richer mix.

There are fewer Class 3 trucks and more class -- particularly Class 5 trucks, including Big Trucks.

Right.

I was just trying to get more of an idea of the backlog on a per-unit-per-dollar basis, trying to exclude currency and see how that's significant.

I know it's off, obviously.

I'm just wondering...

We don't track that number, and I would be hard-pressed for us to give it to you.

To write it off, we're speaking 2/3 of the revenue is dollar revenue anyway.

Right.

Okay.

Yes.

That's probably the best way to look at it is look at and say 1/3 of the backlog is non-US-dollar-based, and it would have seen the uptick in the depreciation of the dollar compared to those currencies there -- currency basket.

But to Al and Colin's point, the big driver is that mix shift up into higher capacity Class 5 products and fewer Class 3 products that's driving the average sales value per unit up.

Okay.

When looking at the backlog and the pricing -- or -- and -- I guess the backlog doesn't see the price increases.

But in terms of the backlog, that's really just like a quarter or 2 of lead time.

Is that correct?

Those orders stretch out.

Depends on the actual custom order, it could be a year allotment from a customer.

We typically look at it in kind of month increments.

We know what we'll build in the first month of a quarter based on backlog.

And then that percentage declines as we go through the successive months.

So that when we get to the third month, it's not -- it's a percent that isn't at the highest levels.

We would have 30%, 40% to fill in the backlog that would have to come from current orders.

But more important thing perhaps to bear in mind is that if we have an unanticipated spike in supplier costs, in general, absent very special circumstances, those prices are pretty much committed to the customer at the time of the order.

And therefore, if we have not been as accurate as we would like to be or try to be in forecasting the costs of our product as much as 6 or 8 months out into the future, which we actually do from a mechanical point of view, so that when we set a price for an order that's going to be delivered in 6 months, we try to understand what sort of inflation we're going to face between now and 6 months from now because that's when we deliver it and that's when the revenue is fixed and the cost is fixed.

On the other hand, as we've suggested to you, we'd seen a more rapid increase in supplier costs than we think anyone was quite projecting, including us.

And therefore, we've got a catch-up period to go through before we realize the benefit of the price increase on a full basis based on the type of schedule that Ken just outlined for you.

Yes.

I mean, we have between 4 and 5 months of backlog if you look at it on a pure numerical basis.

The majority of that is -- are the scheduled -- like best available slot for the customer.

But some of that backlog, as Ken said, is scheduled out throughout the year.

But that's a small part of the backlog.

And if the backlog gets too long, then we start running into trouble with letting our customers down.

And customers won't wait 20, 24 weeks for a standard product when they expect to get their product in 12, 16 weeks, roughly speaking.

And so we try to manage our production, we try to manage -- our capital balancing out with pricing, but we try not to let our backlog stretch out too long.

On the other hand, we try not to have a too extended backlog because then we run into problems in terms of pooling slots and -- between assessing our opportunities to production and that's when we start getting to -- once the lead time gets too short, then we start running into manufacturing inefficiencies.

Let me just emphasize that from a philosophical point of view, we are unlikely to chase production to meet the levels that are being booked.

We'd much rather extend the backlog out away, have the revenues come later.

And then if business does drop off either temporarily or more fundamentally, we haven't increased our production rates, hired a lot of people, have to cut back on the supply chain process and create a lot of inefficiencies.

So we try to be very careful and thoughtful about managing the backlog and that -- and its relationship to shipments.

Okay.

And just lastly, the tax rate for the core Lift Truck business seemed like there was around 25% in the first quarter.

Is that -- I know that probably fluctuates a little bit just given international revenue versus U.S. revenue.

But is that sort of -- there wasn't anything unusual in there.

Is that sort of a good sort of tax rate to sort of use for the rest of the year?

Yes.

We were 24.7% -- when you think about 21% as the new fed rate, we had 3%, 3.5% for state, we're at 24.5%.

We've got some mix issues between international being lower and some of the new tax provisions being a little bit higher.

So 25% is probably a good bogey for now.

And that would be indicative based upon the effective rate we used in the fourth quarter.

Your next question comes from the line of Mig Dobre with Baird.

This is Peter Ziel on for Mig.

Starting with a few questions on Lift Truck.

So in Americas specifically, it sounds like the market may improve a little bit more year-over-year than you guys are anticipated coming -- anticipating coming into the year related to a demand-pull forward.

Could you quantify kind of what the impact from any demand-pull forward was?

Or of course, if that's (inaudible) just quarter...

I'm not sure what you mean demand-pull forward.

Yes.

I think and although we did -- we do signal that we had some customers who we believe were buying ahead in anticipation of rising prices.

And so anecdotally, I think we put that into the release.

And that's what we're still -- we -- that's what we need to prove out by seeing the actual order book that comes in our second quarter.

That's an order question, not a shipments question.

Right.

Because it doesn't affect the shipments.

Right.

Okay.

So the orders came in higher than expected maybe just as customers try to get in ahead of some mix in price increases.

Well then, maybe tailing off that, with the January and April price increases in place, do you guys think that the prices are where they need to be given the current commodity prices?

Or are there more price increases planned just with where we are now versus the amount of commodity prices?

Anytime we make a price increase, we try to cover what we anticipate will be the conditions that we will face as we look to the future.

To some degree, for the full year, certainly, for 6 months or 8 months.

That doesn't mean that they will, in fact, be that way.

But the answer to your question is that we feel the price increases we need as we see the situation at the moment are the right levels.

What I would remind you or just emphasize, however, is that there is this lag process of realizing price increase because the backlog prices don't increase with the price increase.

And therefore, it gets phased in.

And to the degree that we've had a sharper, quicker upturn in costs than we anticipated, that's going to take us a while to work through that process.

And so you may see some impact in the next couple of quarters before you see the full impact of these price increases.

Okay.

And on that note, I guess I want to make sure that I'm interpreting the guidance correctly.

So it sounds like maybe the top line expectations for Lift Truck increased as the new markets developing better than expected for 2018.

But then given some of these unexpected material manufacturing cost increases, the margins maybe softer than it was contemplated in the last guidance.

Is that in line with what are you guys thinking?

Well, I'd just be a little more time specific and say that the revenues are coming along in a good solid way.

They certainly support the shipment plan that we have for the year.

We haven't really varied that shipment plan in a significant way.

And that there may be a couple of quarters where there are some unrecovered cost increases -- some portion of the cost increases not recovered before we get a full recovery.

So I think you have to look on a quarter-by-quarter basis.

In fourth quarter, I think we should be back in balance.

And all-in hopefully, some other things will happen that will affect us positively.

It's just there are a lot of variables and -- but I think our description of the price increases in supplier costs impact timing is really probably what you want to focus on.

Okay.

So if I'm recalling correctly the prior guidance did also expect the first half operating income for Lift Truck lower than 1/8/17 and an offset by increases in the second half.

Is it fair to say that this is more pronounced in the current guidance given obviously the ramp in input costs?

Yes.

I do.

That should be right.

Okay.

All right.

And then some of the same factors apply.

I mean, when we give out -- prior guidance out with -- we were putting out price increases in January.

We started to see the inflation hitting us in the back half of 2017 into '18.

So when we gave our guidance 3 months ago, we were basically expecting a lag benefit from the January price increases.

And so now we're expecting that they -- that pillar hasn't changed.

But what has changed is the new material inflation we're seeing and the new price increases and the lag benefit we'll get on the new increases.

Okay.

And then I guess just maybe lastly, stepping back a little bit and looking at -- a little bit longer term or medium-term outlook for North America specifically.

Looking through the investor presentation and some of the market numbers we've seen, North America retail is above prior peak for Lift Trucks, and I guess against the backdrop of some of the PMI, for example, moderating a little bit.

I guess how do you view the late 2018 into 2019 demand environment for North America lift trucks?

Yes.

What I'd say is that for our planning purposes, we -- at this point in the cycle, we want to be very conservative.

And if turns out better, that's terrific.

That's in terms of market size.

On the other hand, we see the impact of our strategic programs that influence our market share position, particularly in terms of our -- the industry focus and the sales investment that we're making in enhanced coverage having an increasing impact.

So our objective is to work through downturns in the marketplace at the same time that we're getting share increases and to have a good solid situation prospectively.

(Operator Instructions) Your next question comes from the line of Mike Shlisky with Seaport Global.

So I wanted to start off with a couple of quick Nuvera questions.

First, you mentioned you had shipped 63 BBR units in the quarter.

But there was a -- but the sales were deferred on your books.

So I was wondering if you could give us some kind of color as to what that's all about.

And if there's a risk of those being return back to you for some reason.

Is that why you can't book it?

No.

It's not so much the risk of them being returned.

It's the timing of customer acceptance and the revenue will be earned over a period of time, Mike.

But are you saying acceptance as far as their performance?

Or at their lowering dock and they open the box?

Or how -- is there...

It's related to the nature of the contracts.

These are -- unlike our regular forklift truck business, most of those have kind of specialized contracts, and it's related to the revenue recognition rules that are in place now that mean that a shipment doesn't necessarily trigger the revenue recognition.

And I think Ken described the fact that there are other triggers that cause the revenue to be recognized periodically as we move forward.

Yes.

Our shipments -- the shipments have -- will have occurred for the customer at a point in time.

When we have a product that needs shipment terms when it goes to the customer, we can't get revenue recognition.

On this product line, we have to be able to identify all the costs involved, Mike, and until we are able to, we will continue to pick up revenue as it's receiving cash.

Okay.

Okay.

And then the backlog there, it looks like the -- it was about [period], so a little higher than that here in this quarter.

But it didn't change much from last quarter, if I'm -- if I recall from last quarter's numbers.

Is there a reason why it didn't change much?

And are you confident that you'll have some growth for the rest of the year?

Well, my recollection -- and I'm going to look at my colleagues here, but my recollection is that there was some change in the mix in the backlog, and we had some deferral of shipments out into 2019.

And so there are some increased orders in the net that's not all that different.

And so in terms of the perspective, we have -- I don't know that it's changed a whole lot.

The other thing I would tell you is that perhaps more important is that given the backlog, we were not at this point in any hurry to add backlog and shipments that would need to be made this year.

We want to phase up in a very careful way.

We have significant cost reduction programs that are coming that are a part of the plan that moves us to breakeven at the -- toward the end of 2019.

And we want to ramp up the manufacturing capabilities in a highly orderly fashion.

And we also want to focus on business that we think is less price sensitive than some of the business that is being done in the marketplace today -- and particularly where that particular technology that we use has its greatest impact in providing value for the customer.

And so it's just part of us -- of a orderly ramp up.

I do feel that -- we feel quite positive about the opportunities for enhanced bookings as soon as we're feeling that it's the right time to go forward and aggressively solicit them in the marketplace.

So this is not necessarily about demand in the normal sense of are there orders for us out there.

It's about what we choose to pick and the timing in which we choose to pick it that is really the gating set of factors right at the moment.

Okay.

Okay.

I got it.

And then I kind of -- remind me kind of like sum it up between Lift Trucks and Bolzoni.

I mean, there were a lot of the same words in the press release and in your comment today as far as the exact phrasing of things.

But is it fair to say that you've gotten a little bit less positive on the operating income growth in Lift Trucks but, perhaps, more positive on Bolzoni?

Net-net, things don't seem all that different though from a dollar perspective or for operating profit outside Nuvera since we spoke last quarter.

Well, we've already had a discussion of the sequence of price and cost increases in HYG.

And I weigh that things are going very well in Bolzoni.

But keep in mind that we do benefit from currency.

I don't believe we've called it out in the release, but the majority of Bolzoni's business is in euros.

And so there's both enhanced physical volume and enhanced translation that are helping us with Bolzoni.

I think we're very pleased with the situation with Bolzoni overall.

And we expect that the numbers will continue to move in a positive direction.

Also, I mean, not only -- I mean, it's implied but -- the revenues in euros because most of that business is in Europe.

And we haven't seen the same level of material inflation.

We've had material inflation in euro, but nowhere near to the magnitude that we're seeing in the U.S. So they're not being hit by those same factors.

But just generally speaking, as Al said, the business is doing well.

Yes.

Of the $9.6 million revenue growth, $6.7 million was driven by currency.

So we did very well on the incremental non-currency-related sales.

And we have no further questions in the queue at this time.

I would now like to turn the call back over to Ms. Kmetko.

Thank you.

Any wrap-up comments from the group?

I don't think so.

All right.

Well, thank you very much for joining us today.

If you do have any follow-up questions, you can reach me at (440) 229-5168.

That ends it for us.

Thank you.

Thank you for participating in today's Hyster-Yale Materials Handling's First Quarter Earnings Conference Call.

This call will be available for replay beginning at 2:00 p.m.

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Eastern Standard Time on May 9, 2018.

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This will conclude today's conference call, and you may now disconnect.