Good day ladies and gentlemen and welcome to the Second Quarter 2013 Hyster-Yale Materials Handling, Inc. Earnings Conference Call. My name is Jackie and I will be your coordinator today. At this time all participants are in a listen-only mode. Following the prepared remarks there will be a question and answer session. [Operator Instructions] I will now like to turn the presentation over to Ms. Christina Kmetko, please proceed.

Thank you. Good morning, everyone, and thank you for joining us today. Yesterday, a press release was distributed outlining Hyster-Yale's results for the 2013 second quarter. If you have not received a copy of this earnings release or would like a copy of the Q, you may obtain copies of these items on our website at www.hyster-yale.com. Our conference call today will be hosted by Al Rankin, Chairman, President and Chief Executive Officer of Hyster-Yale Materials Handling. Also on the call are Michael Brogan, President and Chief Executive Officer of NACCO Materials Handling Group and Ken Schilling, Vice President and Chief Financial Officer. Al will provide an overview of the quarter and then open up the call to your questions. Before we begin, I would 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. Additional information regarding these risks and uncertainties was set forth in our earnings release and in our 10-Q. In addition, certain amounts discussed during this call are considered non-GAAP. The non-GAAP reconciliations of these amounts are included in our 2013 second quarter earnings release, which is available on our website. I will now turn the call over to Al Rankin. Al?

Thanks Christi. As all of you probably know, Hyster-Yale Materials Handling announced net income of $36.2 million or $2.16 a share on revenues of $660 million for the second quarter of 2013. That compared with net income of $19.5 million or $1.16 per diluted share on revenues of $602 million in the second quarter of 2012. Operating profit increased to $35.9 million for the second quarter from up 2013 from $24.6 million in 2012. The second quarter 2013 effective tax rate was a negative 4.9% compared with an effective tax rate of 9.3% in the second quarter of 2012. The 2013 tax rate includes a tax benefit of $12.8 million or $0.76 per diluted share from the release of certain portions of previously recorded income tax valuation allowances related to the company’s European operations. The second quarter 2012 effective tax rate includes a tax benefit of $2.1 million from the release of a deferred tax liability provided for unremitted foreign earnings in the second quarter of 2012. EBITDA for the trailing 12 months ended June 30, 2013 was $159.6 million and company’s cash position was $162.7 million as of June 30, 2013. Debt at the same date decreased to $134.8 million from $142.2 million as of December 31st. The stock repurchase program that’s in place permits the purchase of up to $50 million of the company’s outstanding Class A common shares. And since the inception of the program in November 2012, Hyster-Yale has purchased approximately 100,000 shares for an aggregate purchase price of $5.2 million, including $3 million purchased during the 6 months ended June 30, 2013. Revenues increased in the second quarter compared with the second quarter of 2012 primarily as a result of an increase in unit volumes and parts sales in the Americas. In addition, price increases…

Ladies and gentlemen, we are ready to open the lines up for your questions. [Operator Instructions] And our first question comes from the line of Mig Dobre with Robert W. Baird.

Can you maybe provide us a little bit more color on how you're thinking about the total number of units that you're looking at shipping this year? You've done about 42,000, I think year-to-date and obviously you're on track for about 82,000. I'm wondering if you sort of see this run rate pick up in the back half considering that you've had very strong bookings, as far as I can tell probably the best bookings since 2008.

Well at this point, I would say that our bias is still towards keeping our bookings -- our backlog levels at pretty full levels. And there are still uncertainties in various areas around the world, particularly as we indicated in our press release in Western Europe and also there are unsettled conditions, economic conditions in Brazil. And although China wouldn’t affect us directly, it can have an indirect affect. And so I think we’re going to stick with what we said in the press release, which is that we certainly do expect an increase in unit shipments over the remainder of this year compared to a year ago. But sort of quantifying that is something I don’t think we want to go further at this point than we really are saying here, because as I say, we have some flexibility as to when we produce units and from our vantage point it is -- well we have to meet customer lead time needs, within the flexibility that we have, we want to make sure that when we add people in our plants around the world that they are going to be there permanently, that the demand is truly developing and that are our market share programs are developing in the way that we are anticipating. And so I think we’ll stick with what we said in the press release.

Okay. Well when I look at your bookings year-to-date, strong in both the first and the second quarter, can you sort of maybe help us better understand how much of this was purely the market growing in the Americas and how much of it was perhaps you outgrowing the market and gaining some share because that's something that you highlighted as a focus for the company? And as an add-on to that, what role did UTILEV play here?

I think again, what I’d rather do it talk about our full year perspective because we have customers that are highly seasonal in their purchasing habits. And so I think it’s still certainly our perspective that we’ll have increased share for the full year and secondly, as we said that we are seeing growth in the Americas markets, Brazil, Latin America, recovery in North American demand on a -- and the rest of the world is probably not growing a lot as we see it. So we are more dependent on the execution of the share gain programs in other areas of the world. But that’s kind of the overall story that I think we see.

So let’s assume that you -- - you're going to continue the run rate that you currently have on shipments and you're going to do about 80,000 units this year. If I look historically, the prior peak that you had was back in, I believe, 2007 and 91,000 units shipped. I guess I'm wondering how should we think about the pent-up replacement demand that still exists out there in the market. How long do you think it's going to take you to get back to the prior peak? Is this a 1 or 2 year event? Can you exceed the prior peak given new product introduction? Can you give us any color there?

Yes let me just say, I think it’s less a comment about our units sold because that’s a function of our share in the markets, but let me comment more to your point about the markets. I still think that in the major markets in the Western world, that we are seeing still a moderate cyclical upturn. And so as we are looking at it we see the opportunity for the market to continue to grow, if you exclude the sort of -- the element of China which -- where our position is much, much smaller, we see it continuing to grow through the end of the 5 year period. So from the 2012 to 2017, but it begins to moderate in ‘16 and ‘17. So we don’t see it coming to peak and we see continued growth from the levels of 2013 through ’14 and ‘15 but really moderating thereafter. Now in the Americas, where the market is moving up, I don’t think it’s -- the danger of a cyclical peak is a lot lower at the moment than it has been in previous cycles because the economy is not overheated. And frankly, we much prefer this kind of environment from an operating perspective than the rapid growth and then significant decline. In Europe, it’s sort of further moderated by the Western Europe segment and so if our forecasts for the 2014 through ’17 period do assume some recovery in the Western Europe economic environment, but not rapid. And in Asia, we see the influence of China moderating demand in the nearer term but them some more substantial increases in the later part of the period. And so all of that leads to a more significant percentage increases over the next couple of years and then more moderate increases but not real evidence of a peak and a decline until a little bit later.

All right. And I certainly understand all that. I guess the question that I was really trying to get at, I’m basically not necessarily trying to pin down as to when you think the peak would be, but what the growth opportunity would be in the cyclical upswing and when we’re looking at units comparing it for instance what you could do this year, compared to what you’ve done in prior cycles, given that you’ve got new product introductions.

I think all we’re really prepared to say is we’ll give you the perspective on the market, which I just gave you. As far as our share is concerned, I think what we’ve said is roughly this; that we have the capacity available to increase our share or our share plus growth in the market by on the order of 50% from a year ago. And what I would say again is that the 5 strategic programs are designed to accomplish share increase. I think it’s very difficult for us to say or for anyone to say that these share gain programs are going to pay off in precisely this period or that period. But over the next 5 years or 4 to 5 years, we see an opportunity for significant share gain because we think that the 5 strategic programs will be mature enough to have some substantial bite in the later part of the period. So I think if you think about the comments I made on the market and then you can make some assumptions on the amount of share gain, we certainly have as a goal filling up our plants. Just exactly when we do that is a little harder to predict.

Great. Last question from me would be on the operating income outlook, as I understood it from your comments being down a little bit year-over-year in the back half. Trying to reconcile that with bookings and pretty good shipment volumes probably as well as positive price costs. Can you help me sort of better bridge that gap?

Sure. Let me just elaborate -- let me just reiterate what I think I said in my comments here. You’re certainly right that we do expect our volume and our gross profit to improve. We do -- we will not replicate the foreign currency hedging gain that we had a year ago in the third quarter. So that has an impact. On the other hand, we do expect increases really for 2 or 3 reasons in GS&A in the second half. One we called out and said that we begin the transition, we will be a public company through the whole period of the second half, which we were not a year ago. So there is some incremental expenses associated with that. Secondly, we will begin to see the cumulative impact of the capabilities we have been putting in place to executive the 5 strategic programs. And finally, we do make adjustments for compensation for our people and because of the performance of the business, we do anticipate that the incentive compensation programs will pay off at a rate which exceeds the previous year, and that will have an impact on our GS&A. so the full year GS&A running rate that we see in the second half will reflect all of those things and I would say in a broader sense that it’s kind of the running rate which at the moment we see plus or minus being the running rate as we go in to 2014. In other words, we will have in the second half by and large the capabilities in place and the expenses being incurred for our strategic programs, which will then be carrying forward. So our expectation would be that 2014 GS&A would see increases that are much more on the order of inflation and perhaps even conservative inflation than we’ve seen in the last couple of years as we’ve been putting in place the capabilities for these -- the execution of these 5 strategic programs. So those are the major factors in the way they play into our prospects as we look forward.

And your next question comes from the line of Daniel Nall with Aristides Capital.

This is actually Chris Brown on for Daniel. I just had one more clarification on the net income guidance versus the second half of last year. I'm showing in the third quarter last year you are in the $1.48 a share and in the fourth quarter I have $1.93 before extraordinary items and $1.33 after. When we're comparing the second half of this year to the second half of last year, are we comparing using that $1.93 for the fourth quarter last year or $1.33 for the fourth quarter last year?

Actually I have to narrow my comments and I should have done this before. Those comments are really comments about the operating profit line and as you know, we have other factors that come to bear particularly income tax rates. And much of the numbers that you just gave me are also influenced by income tax rates, so income tax rates for the last few years, we have had the benefit of loss carry forwards and because we had valuation reserves, those losses dropped right to the bottom line. The performance of the business has been such that we have been reversing those reserves and that means that we get a big pop in 2013 or to some degree in 2012 and then we have to pay a fuller tax rate going forward. So I think if you -- the place to really concentrate is on the operating performance of the business…

Got you, so we’re talking about $28.3 million in 3Q of last year and $28.8 million of operating income in 4Q as the relevant numbers that we're comparing to year over year?

That would be what I’d address my comments to.

[Operator Instructions] At this time…

Okay, well, thank you all -- go ahead.

At this time we no questions on the queue.

Okay, thank you very much everybody. Christi?

Just thank you for joining us today. I mean we do appreciate your interest and if you have any additional follow up questions, please feel free to give me a call. My number is (440) 229-5168. Go ahead Jacquelyn.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.