Q4 2023 Terex Corp Earnings Call

Operator: Greetings and welcome to the Terex 4th Quarter and Full Year 2023 Results Conference Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the Terex fourth quarter and full year 2023 results conference call. At this time, all participants are in a listen only mode.

A brief question and answer session will follow the formal presentation.

Operator: A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paretosh Misra, Head of Investor Relations. Please go ahead.

As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host post <unk> head of Investor Relations. Please go ahead.

Paretosh Misra: Good morning and welcome to the Terex Fourth Quarter 2023 Earnings Conference Call. A copy of the press release and presentation slides is posted on our investor relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website.

Speaker Change: And welcome to the third and fourth quarter of 2020 earnings Conference call.

Host: A copy of the press release and presentation slides are posted on our Investor Relations website at investors <unk> com.

Host: In addition, the replay and slides presentation will be available on our website.

Host: We are joined by Simon Mr President and Chief Executive Officer, and Julie Duck, Senior Vice President and Chief Financial Officer.

Paretosh Misra: We are joined by Simon Meester, President and Chief Executive Officer, and Julie Beck, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by Q&A. Please turn to slide two of the presentation, which reflects our Safe Harbor Statement. Today's conference call contains forward-looking statements which are subject to risk that could cause actual results to be materially different from those expressed or implied. In addition, we will be discussing non-GAAP information we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials. Please turn to slide three, and I'll turn it over to Simon Meester.

Host: Our prepared remarks will be followed by Q&A.

Please turn to slide two of the presentation, which reflects of our safe Harbor statement.

Host: Today's conference call contains forward looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied.

Host: In addition, we will be discussing non-GAAP information, we believe is useful in evaluating the company's operating performance.

Host: Reconciliations for these non-GAAP metrics can be found in the conference call materials.

Host: Please turn to slide three and I'll turn it over to Simon Mister.

Simon Meester: Thank you, Paretosh, and good morning. I would like to welcome everyone to our earnings call and appreciate your interest in Terex. As many of you know, I've been at Terex for a little over five years now, but this is my first earnings call as CEO of the company, and I'm honored and humbled to take over from John Garrison and very excited about the road ahead. We have a great company operating in attractive markets and are financially strong. We have global market-leading businesses and an exceptional team. So, looking ahead, I would expect much of my focus to be on helping Terex accelerate its growth. And as we grow, we will continue our focus on zero-harm safety and our Terex Way values, which are an important part of our culture and embedded in everything we do. Please turn to slide four.

Simon Mister: Thank you <unk> and good morning, I would like to welcome everyone to our earnings call and appreciate your interest in Terex.

Simon Mister: As many of you know I've been a tariff or a little over five years now, but this is my first earnings call as CEO of the company and I am honored and humbled to take over from John Garrison and very excited about the road ahead.

Simon Mister: We are a great company operating in attractive markets and are financially strong we have global market, leading businesses and an exceptional team. So looking ahead I would expect much of my focus will be on helping Eric accelerated its growth and as we grow we will continue our focus on zero harm safety in our territory.

Simon Mister: <unk> values, which are an important part of our culture and embedded in everything we do please turn to slide four.

Simon Meester: We're starting the year in a great position after making significant progress in 2023 on our strategic initiative. The Terex team delivered a 17% increase in sales. Over 300 basis points improvement in gross margin, a 63% improvement in EPS, and our return on invested capital of 28.5% improved by 720 basis points. These outstanding results demonstrate the strength of the Terex operating model and the progress we've made over these last few years. Over the last seven years, our MP business has consistently grown near double digits per year, becoming a vital piece of the Terex success story and closed the year as strong as ever at 16.1% operating margin. The MP team continues to find creative ways to build on its strong and diverse portfolio, illustrated by the recent launch of Green Team, a new Terex brand that will provide a comprehensive product offering of tree care and vegetation management solutions.

Simon Mister: We're starting the year in a great position after making significant progress in 2023 on our strategic initiatives.

Simon Mister: The Terex team delivered a 17% increase in sales.

Simon Mister: Over 300 basis points improvement in gross margins.

Simon Mister: 63% improvement in EPS.

Simon Mister: And our return on invested capital of 28, 5% improved by 720 basis points.

Simon Mister: These outstanding results demonstrate the strength of the Terex operating model and the progress we've made over these last few years.

Simon Mister: Over the last seven years, our MP business has consistently grown near double digits per year, becoming a vital piece of the <unk> success story and closed the year as strong as ever at 16, 1% operating margin.

Simon Mister: The MP team continues to find creative ways to build on its strong and diverse portfolio illustrated by the recent launch of Green Tech the new Terex brands that will provide a comprehensive product offering a tree care and vegetation management solutions.

Simon Mister: Our AWP business executed very well in 2023.

Simon Meester: Our AWP business executed very well in 2023, grew sales by 18% year-over-year, and improved operating margins by 480 basis points to 12.7%. Our new state-of-the-art Monterey facility continues to ramp up as planned, and it's the largest facility we've ever built in Terex, and we're very proud of the team for the progress they've made. This facility has been mostly built for competitive reasons and to improve genies through cycle margin performance. During 2023, we will continue to invest in new products and in our manufacturing facilities besides Monterey. As an example, 10 of our facilities are now operating with net zero emissions.

Simon Mister: Sales by 18% year over year, and improved operating margins by 480 basis points to 12, 7%.

Simon Mister: Our new state of the art Monterrey facility continues to ramp up as planned and it's the largest facility we've ever built and tariffs and we're very proud of the team of the progress they've made.

Simon Mister: This facility has been mostly built for competitive reasons and to improve genius through cycle margin performance.

Simon Mister: During 2023, we continue to invest in new products and in our manufacturing facilities. Besides Monterrey.

Simon Mister: As an example, 10 of our facilities are now operating with net zero emissions.

Simon Mister: We invested in App tronic to capitalize on the accelerating trend of adopting robotics, and we expanded our battery technology investment with Accu lawn and started building the first prototypes with both.

Simon Meester: We invested in Apptronic to capitalize on the accelerating trend of robotics adoption, and we expanded our battery technology investment with Aculon and started building the first prototypes with Bolt. I'm very proud of our team members' accomplishments in 2023. Terex is in a great position with a diverse portfolio designed to help our customers achieve their goals. In the next few slides, I'd like to share some examples. Please turn to slide five.

Simon Mister: I am very proud of our team members accomplishments in 2023, Eric is in a great position with a diverse portfolio designed to help our customers achieve their goals.

Simon Mister: In the next few slides I'd like to share. Some examples please turn to slide five.

Simon Mister: Our market leading brands received recognition for their focus on return on investment and competitive cost of ownership. Our goal is to maximize the return on investment for our customers, while delivering environmentally friendly and safe product.

Simon Meester: Our market-leading brands receive recognition for their focus on return on investment and competitive cost of ownership. Our goal is to maximize return on investment for our customers while delivering environmentally friendly and safe products. In 2023, we received many awards across multiple products and geographies, highlighting our reputation in the marketplace. We are committed to continuing to develop exciting products and technologies that provide differentiated value to our customers. Please turn to the next slide.

Simon Mister: In 2023 received many awards across multiple products and geographies highlighting our reputation in the marketplace.

Simon Mister: We are committed to continuing to develop exciting products and technologies that provide differentiated value to our customers. Please turn to slide six.

Simon Mister: Okay.

Simon Mister: Terex equipment is used in many different applications around the globe from waste handling and recycling to grid expansion and data centers.

Simon Meester: Terex equipment is used in many different applications around the world, from waste handling and recycling to grid expansion and data centers. Other examples are vertical farming, as illustrated here at a customer in Denmark, and airport and stadium projects. Our products are required at all stages of the project life cycle, from foundation, building, repair, maintenance, and eventual recycling of materials for reuse. We're proud of the role our products play in many development projects around the world. Please turn to slide 7.

Simon Mister: Other examples are a vertical farming as illustrated here at a customer in Denmark, and airports and stadiums projects.

Simon Mister: Our products are required in all stages of the project lifecycle from foundation building repair maintenance and eventual recycling materials, we use.

Yes.

Simon Mister: We're proud of the role our products play in the many development projects around the globe.

Simon Mister: Please turn to slide seven.

Simon Mister: Sustainability is an essential part of our business strategy, where we focus on product innovation to enable our customers and end users to operate in safe and sustainable ways.

Simon Meester: Sustainability is an essential part of our business strategy, where we focus on product innovation to enable our customers and end users to operate in safe and sustainable ways. Team member and community engagement is essential to execute our strategy and achieve our goals, and responsible operations with sustainable practices that minimize our impact on the environment. We're proud to report that for a second consecutive year, Newsweek recognized our commitment to sustainability and named Terex one of America's most responsible companies. Additionally, Terex has been awarded a perfect score in our first ever Human Rights Council Equality Index Review, in recognition of the important work our team is doing to ensure an inclusive work environment where all team members feel valued. Please turn to the next slide.

Simon Mister: And remember in community engagement essential to execute our strategy and achieve our goals.

Simon Mister: And responsible operations with sustainable practices that minimize our impact on the environment.

Simon Mister: We're proud to report that for a second consecutive year, Newsweek recognized our commitment to sustainability and naming tariffs one of America's most responsible companies.

Simon Mister: Additionally, <unk> has been awarded a perfect score in our first ever Human Rights Council Equality Index review.

Simon Mister: A recognition of the important work our team is doing.

Simon Mister: To ensure an inclusive work environment and where all team members fuel value.

Simon Mister: Please turn to slide eight.

Simon Meester: In addition to a diverse and market-leading portfolio, our company is positioned for markets that clearly benefit from global megatrends. Investments around the world in infrastructure, digitalization, waste recycling, and electrification are favorably impacting our end market. Federal spending and incentives will support demand for our products in the years ahead. Our product portfolio is well positioned to capitalize on these opportunities. For example, the MP Power Screen and Finlay brands have leading positions in global crushing and screening markets that benefit from both the growth in infrastructure and the associated demand for aggregates and from the growing demolition and recycling projects, and P brands like Ecotec, TBI, and Terex Recycling have grown 26% this year, driven by new product development and growing demand for environmental and waste recycling. Our utilities business is well-positioned to capitalize on the investment required to upgrade the U.S. electrical We support accelerating demand as the industrial world continues to move to the use of more electrical power.

Simon Mister: In addition to a diverse and market leading portfolio. Our company is positioned towards markets that clearly benefit from global Mega trends.

Investments around the world and infrastructure Digitization waste recycling and electrification are favorably impacting our end markets.

Simon Mister: Federal spending and incentives will support demand for our products in the years ahead.

Simon Mister: Our product portfolio is well positioned to capitalize on these opportunities.

Simon Mister: For example, the A&P power screen and Finlay brands have leading positions in global crushing and screening markets that benefit from both the growth in infrastructure and the associated demand for aggregates.

Simon Mister: And from the growing demolition and recycling projects.

Simon Mister: MP brands like Ecotec, CBI and tariffs recycling systems have grown 26% this year driven by new product development.

And growing demand for environmental and waste recycling solutions.

Simon Mister: Our utilities business is well positioned to capitalize on the investments required to upgrade the U S electrical grid.

To support the accelerating demand as the industrial World continues to move to be use of more electrical power.

Simon Meester: And our Genie products are benefiting from demand from infrastructure projects, data centers, manufacturing, and events and entertainment. These megatrends position us very well for 2024 and beyond. Please turn to slide nine.

Simon Mister: And our <unk> products are benefiting from demand from infrastructure projects data centers manufacturing and events and entertainment. These.

Simon Mister: These mega trends position us very well for 2024 and beyond.

Simon Mister: Please turn to slide nine.

Simon Mister: Our Q4 backlog of $3 4 billion.

Simon Meester: Our Q4 backlog of $3.4 billion is still significantly above historical levels and is the second highest in recent history, providing healthy momentum going into 2024. Our team members continue to successfully navigate supply chain issues last year and work hard to continue to improve customer on-time deliveries and return to more normal lead times. In fact, Q4 consolidated bookings, at $1.3 billion, increased 44% sequentially, consistent with typical seasonal trends and a return to more normal order patterns.

Still significantly above historical levels and it's the second highest in recent history, providing healthy momentum going into 2024.

Simon Mister: Our team members continue to successfully navigate supply chain issues last year.

Simon Mister: Work hard to continue to improve customer on time deliveries and returned to more normal lead times.

Simon Mister: In fact Q4 consolidated bookings at one 3 billion increased 44% sequentially consistent with typical seasonal trends and a return to more normal order patterns.

Simon Mister: Demand is robust for the reasons I laid out on the previous slide.

Simon Meester: Demand is robust for the reasons I laid out on the previous slide. We still see, however, some disruptions in the supply chain, but it continues to improve. Our MP business has a backlog that is above historical norms, and our AWP business locked in strong bookings in the quarter with a book to bill ratio of 129%, with Genie having order activity above these levels, and our utilities business taking orders for 2025. Overall, our backlog and booking trends are positive and give us a strong outlook for 2024. Let's turn to slide 10.

Simon Mister: We still see however, some disruptions in the supply chain, but it continues to improve.

Simon Mister: Our MP business is backlog that is above historical norms, and our AWP business logged strong bookings in the quarter with a book to bill ratio of 129% with Genie, having order activity above these levels in our utilities business, taking orders for 2025.

Simon Mister: Overall, our backlog and booking trends are positive and gives us a strong outlook for 2024, let's turn to slide 10.

Simon Mister: We continue to see positive trends in our main end markets, especially in North America, and India, but have seen some softening in Europe, which reported a slight sales decline in the fourth quarter.

Simon Meester: We continue to see positive trends in our main end markets, especially in North America and India, but we have seen some softening in Europe, which reported a slight sales decline in the fourth quarter. The U.S. government has announced more than 40,000 projects in transportation, climate, and broadband. Spending on manufacturing is up approximately 70% in the last 12-month period, driven by megaprojects related to semiconductor manufacturing, clean energy, and EV battery projects. These projects make up two-thirds of the non-residential market.

Simon Mister: The U S government has announced more than 40000 projects in transportation climate and broadband.

Simon Mister: Spending on manufacturing is up approximately 70% in the last 12 months periods, driven by Mega projects related to semiconductor manufacturing clean energy and EV battery project.

Simon Mister: These projects make up two thirds of the nonresidential market.

Simon Mister: These favorable end market trends combined with replacement cycle, <unk> and high equipment utilization rates are very beneficial for our <unk> business.

Simon Meester: These favorable end-market trends, combined with replacement cycle tailwinds and high equipment utilization rates, are very beneficial for our Gini business. Additionally, the increasing adoption of our products in emerging markets, such as India, is another positive. The utilities market is expected to continue to grow, supported by investment in grid upgrades and grid expansion needed for zero carbon and electrification goals.

Simon Mister: Additionally, the increasing adoption of our products in emerging markets such as India is another positive.

Simon Mister: The utilities market is expected to continue to grow supported by investment grid upgrades and grid expansion needed for zero carbon and electrification goals.

Simon Mister: In the U S power related spending has been increasing at a double digit growth rates in recent months.

Simon Meester: In the U.S., power-related spending has been increasing at double-digit growth rates in recent months. Our utilities business will benefit from this growing demand while we expect to continue to be constrained by body and chassis shortages. Strengthening U.S. infrastructure and general construction end markets will benefit empties, crushing and screening, and Craig Bisbee. We expect these tailwinds to offset some of the softness in the businesses with higher European exposure.

Simon Mister: Our utilities business will benefit from this growing demand, while we expect to continue to be constrained by body and chassis shortages.

Simon Mister: Strength in U S infrastructure and general construction end markets will benefit mt's crushing and screening concrete.

Simon Mister: In crane businesses.

Simon Mister: We expect these still wins to offset some of the softness in the businesses with higher European exposure.

Simon Meester: We expect MP's environmental business to continue its growth driven by increasing demand for waste recycling. Our Fuchs business is focused on expanding into new geographies and products to offset the near-term demand slowdown. Overall, we're positive about our end markets. We had an exceptional 2023 and expect strength in most of our markets in 2024. And with that, let me turn it over to Simon. Thanks, Simon. And good morning, everyone.

Simon Mister: We expect Mp's environmental business to continue its growth driven by increasing demand for waste recycling.

Simon Mister: Our Fuchs business is focused on expanding into new geographies and products to offset the near term demand softness.

Simon Mister: Overall, we are positive about our end markets, we had an exceptional 2023 and expect strength in most of our markets in 2024.

Simon Mister: With that let me turn it over to Julian.

Julian: Thanks, Simon and good morning, everyone, let's take a look at our fourth quarter financial performance following on slide 11.

Julie Beck: Let's take a look at our fourth quarter financial performance, found on slide 11. Sales of $1.2 billion were consistent with our expectations and the prior year, reflecting healthy demand for our products as strength in North America offset some softening in European markets, and deliveries returned to a more normal seasonal pattern. Our 2022 fourth quarter sales were the strongest that year as supply chain constraints started to ease; growth margins of 21.5% increased by 220 basis points over the prior year as pricing improved manufacturing efficiencies, and cost reduction initiatives helped to offset cost inflation and moderate startup costs. Growth margins were 21.8%, excluding a one-time product liability verdict of $4 million in NP. SG&A increased over the prior year due to wage inflation and incentive compensation expenses and included $13 million of one-time charges due to accelerated vesting and other expenses. Excluding these items, SG&A as a percent of sales was 11 percent. Income from operations was $116 million, excluding $17 million in one-time charges.

Julian: Sales of $1 2 billion were consistent with our expectations and prior year, reflecting healthy demand for our products as strength in North America, offset some softening in the European market and deliveries returned to a more normal seasonal pattern or.

Julian: Our 2022 fourth quarter sales were the strongest that year as supply chain constraints started to ease.

Julian: Gross margins of 21, 5% increased by 220 basis points over the prior year as pricing improved manufacturing efficiencies and cost reduction initiatives helped to offset cost inflation and Monterey startup.

Gross margins were 21, 8%, excluding a one time product liability verdict, a $4 million.

Julian: <unk>.

Julian: SG&A increased over the prior year due to wage inflation and incentive compensation expenses and included $13 million of one time charges due to the accelerated vesting and other expenses.

Julian: Excluding these items SG&A as a percent of sales was 11%.

Julian: Income from operations was $116 million.

Julian: Excluding $17 million in one time charges operating income was $133 million with operating margin of 10, 9% 100 basis points improvement over prior year.

Julie Beck: Operating income was $133 million, with an operating margin of 10.9 percent, a 100 basis points improvement over the prior year. Interest and other expense of $10 million declined $5 million from the prior year, as favorable market adjustments more than offset higher interest rates. The fourth quarter global effective tax rate was a benefit of 21% due to the establishment of a deferred tax asset from the recognition of a tax attribute associated with our operations in Switzerland. Fourth quarter earnings per share of $1.88 included a net favorable impact of $0.47 from non-recurring items, including a $0.62 one-time tax benefit related to the company's operations in Switzerland. A $0.07 mark-to-market gain on third-party investments, a $0.17 charge related to accelerated vesting and other expenses, and a $0.05 charge related to a product liability verdict in MP. Excluding these non-recurring items, fourth quarter earnings per share was $1.41.

Julian: Interest and other expense of $10 million declined $5 million from the prior year as favorable mark to market adjustments more than offset higher interest rates.

Julian: The fourth quarter global effective tax rate was a benefit of 21% due to the establishment of a deferred tax asset from the recognition of the tax attributes associated with our operations in Switzerland.

Julian: Fourth quarter earnings per share of $1 88 included a net favorable impact of <unk> 47 from non recurring items, including.

Julian: Ah 62 set one time tax benefit related to the company's operations in Switzerland.

At seven that Mark to market gain on third party investments.

Julian: At <unk> 17 charge related to accelerated investing in other expenses.

Julian: <unk> <unk> charge related to a product liability verdict and MMP.

Julian: Excluding these nonrecurring items fourth quarter earnings per share was $1 41.

Julie Beck: Free cash flow for the quarter was $135 million as increased operating profits were partially offset by inventories added to support production moves in 2024, as well as lingering supply chain disruption. Let's take a look at our segment results, starting with our materials processing segment on slide 12. MP once again delivered excellent full-year performance in 2023, as sales were up 15%, and operating margins expanded 80 basis points to 16.1%. MP's incremental margin of 21% demonstrates continued solid operational execution. For the fourth quarter, MP sales increased by 1% to $555 million compared to the exceptional fourth quarter of 2022, driven by strength in demand for aggregates and environmental products. MP's reported operating profit of $84 million was down $3 million as improved manufacturing efficiencies and discipline cost management were offset by an unfavorable product liability verdict.

Julian: Free cash flow for the quarter was $135 million is increased operating profits were partially offset by inventory added to support production moves in 2024, as well as lingering supply chain disruption.

Julian: So let's take a look at our segment results starting with our materials processing segment found on slide 12.

Julian: <unk> once again delivered excellent full year performance in 2023, our sales were up 15% and operating margin expanded 80 basis points to 16, 1%.

Julian: Mp's incremental margin of 21% demonstrates continued solid operational execution.

Julian: For the fourth quarter, <unk> sales increased by 1% to $555 million compared to the exceptional fourth quarter of 2022, driven by strength in demand for aggregates and environmental products.

Julian: MPS reported operating profit of $84 million.

Julian: Was down $3 million as improved manufacturing efficiencies and disciplined cost management was offset by an unfavorable product liability verdict.

Julie Beck: MP ended the quarter with a backlog of $767 million, still above historical norms, while our bookings increased 22% sequentially. On slide 13, see our AERO Work Platform Segment Financial Results. AWC delivered excellent performance in 2023 as full-year sales were up 18% and operating margins expanded by an impressive 480 basis points with an incremental margin of 40%. The team did a great job on price-cost discipline, efficiency improvements, and cost reduction activities, all while ramping up the Monterey facility. AWP had a solid fourth quarter with sales of $660 million, slightly down from the strong prior year due to softness in Europe and a return to seasonal delivery patterns for its customers. AWP reported quarterly operating profit of $61 million, an increase of 13% over the prior year.

Julian: <unk> ended the quarter with backlog of $767 million.

Julian: Above historical norms, while our bookings increased 22% sequentially.

Julian: On slide 13, Seer aerial work platforms segment financial results.

Julian: AWP delivered excellent performance in 2023 as full year sales were up 18% and operating margin expanded by an impressive 480 basis points with an incremental margin of 40%.

Julian: Team did a great job on price cost discipline efficiency improvement cost reduction activities, all while ramping up the Monterrey facility.

Julian: AWP had a solid fourth quarter with sales of $616 million slightly down from a strong prior year due to softness in Europe, and a return to seasonal delivery pattern for its customers.

Julian: AWP reported quarterly operating profit of $61 million, an increase of 13% over the prior year.

Julie Beck: The increase was driven by cost reduction initiatives, partially offset by unfavorable products and regional mix, manufacturing inefficiencies, and severance charges. AWP backlog is very strong at $2.6 billion, which is approximately three times the historical norm. However, strong bookings of $850 million were up 59% sequentially, returning to seasonal order patterns.

Julian: The increase was driven by cost reduction initiatives, partially offset by unfavorable product and regional mix manufacturing efficiencies and severance charges.

Julian: AWP backlog is very strong at $2 6 billion, which is approximately three times the historical norm.

Julian: <unk> bookings of $850 million were up 59% sequentially returning to seasonal order pattern.

Julie Beck: Turn me to slide 14 and full year 2023 financial highlights. Our performance in 2023 reflected significant improvement in the businesses and the extraordinary efforts of our team members. Earnings per share increased 75% from $4.32 to $7.56. Full year earnings included a net favorable impact of $0.50 from non-recurring items that we discussed earlier on the call. Excluding these items, our earnings per share increased 63% year-over-year to $7.06.

Julian: Turning to slide 14, and full year 2023 financial highlights.

Julian: Our performance in 2023 reflected significant improvement in the businesses and the extraordinary efforts of our team members.

Julian: Earnings per share increased 75% from $4 32.

Julian: The $7 56.

Julian: Full year earnings included a net favorable impact of 50 from nonrecurring items that we discussed earlier on the call.

Julian: Excluding these items our earnings per share increased 63% year over year to $7 six.

Sales of $5, one $5 billion were up 17% year over year.

Julie Beck: Sales of $5.15 billion, or up 17% year over year. Our operating income was $652 million, with an operating margin of 12.7%, excluding $15 million of non-recurring charges, which reflects a strong 320 basis points expansion over the prior year driven by prudent cost management as well as price realization. Incremental margins were 30 percent, or 32% excluding non-recurring items. Full year SG&A of 10.3% of sales, excluding non-recurring items, consistent with our expectations. The effective tax rate for the year was 10.9%, which is impacted by the establishment of a Swiss Deferred Tax Asset, as explained earlier.

Julian: Our operating income was $652 million.

Julian: With operating margin of 12, 7%, excluding $15 million of nonrecurring charges, which reflects a strong 320 basis points expansion over the prior year, driven by prudent cost management as well as price realization.

Julian: Incremental margins were 30%.

Julian: 32%, excluding nonrecurring items.

Julian: Full year SG&A was 10, 3% of sales, excluding non recurring items consistent with our expectation.

Julian: The effective tax rate for the year was 10, 9%, which is impacted by the establishment of a Swiss deferred tax asset as explained earlier.

Julie Beck: Excluding the impact, our effective tax rate would have been 18.2%. Please see slide 15 for an overview of our capital allocation strategy. Free cash flow of $366 million increased $214 million over the prior year, resulting in a 71% conversion to net income. We continue to carry a higher level of inventory to support our production moves and navigate supply chain disruption. Hospital inventory was $25 million, down $11 million from the prior year but up $5 million sequentially from the third quarter.

Julian: Excluding impact our effective tax rate would have been 18, 2%.

Julian: Please see slide 15 for an overview of our capital allocation strategy free.

Free cash flow of $366 million increased $214 million over the prior year, resulting in a 71% conversion to net income.

Julian: We continue to carry a higher level of inventory to support our production moves and navigate supply chain disruption.

Julian: Hospital inventory was $25 million down $11 million from the prior year, but up $5 million sequentially from the third quarter <unk>.

Julie Beck: Capital expenditures and investments for the year were $151 million, with a large investment related to our Monterey facility. We returned $104 million, representing 28% of our free cash flow to our shareholders in share repurchases and dividends. We reduced our debt by $152 million as we have paid down our revolver, and our bonds are at a fixed rate of 5% until the end of the decade. Our net leverage remains low at 0.4 times below our 2.5 times target through the cycle.

Julian: Capital expenditures and investments for the year were $151 million with a large investment related to our Monterey facility.

Julian: We returned $104 million, representing 28% of our free cash flow to our shareholders and share repurchases and dividends.

Julian: We reduced our debt $152 million as we have paid down our revolver and our bonds are at a fixed rate of 5% until the end of the decade.

Julian: Our net leverage remains low at four times below our two five times target through the cycle, we have ample liquidity of $971 million.

Julie Beck: We have ample liquidity of $971 million, and we reported a return on invested capital of 28.5%, up 720 basis points year over year. Tarex is in an excellent position to continue to increase shareholder value and profitably grow the business. Now turning to slide 16 in our full-year outlook, 2023 was an excellent year for Tarex, and our team members are committed to delivering another great year in 2024. However, it's important to realize we are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, so results could change negatively or positively. With that said, this outlook represents our best estimate as of today. We anticipate earnings per share of $6.85 to $7.25 based on sales of $5.1 to $5.3 billion, which reflects another year of solid, consistent performance, well ahead of our Investor Day target.

Julian: And we reported a return on invested capital of 28, 5% up 720 basis points year over year.

Julian: <unk> is an excellent position to continue to increase shareholder value and profitably grow the business now turning to slide 16, and our full year outlook.

Julian: 23 was an excellent year for tariffs and our team members are committed to delivering another great year in 2024.

Julian: As a part of realized we are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties.

Julian: Else could change negatively or positively with that said this outlook represents our best estimate as of today we.

Julian: We anticipate earnings per share of $6 85 to $7 25.

Julian: Based on sales up five one to $5 $3 billion, which reflects another year of solid consistent performance well ahead of our Investor day target.

Julie Beck: Our Sales Outlook incorporates healthy volumes supported by customer demand, but also reflects caution around supply chain and labor constraints, as well as softening in Europe. We expect the first and second half sales to be comparable to each other, with the second and third quarter sales higher than the first and fourth quarters as we return to more seasonal customer delivery patterns. We anticipate improved full-year operating margins in a range of 12.8% to 13.1% as we aim to remain price-cost neutral for the year and use cost reduction activities to offset moderate startup inefficiencies. However, we do want to emphasize the stronger first half in 2023 when making year-over-year comparisons. We expect corporate and other expenses to be evenly spread throughout the year.

Julian: Our sales outlook incorporates healthy volumes supported by customer demand, but also reflects caution around supply chain and labor constraints as well as softening in Europe.

Julian: We expect the first and second half sales to be comparable to each other with the second and third quarter sales higher than the first and fourth quarter as we returned to more seasonal customer delivery patterns.

Julian: We anticipate improved full year operating margin in a range of $12 eight to 13, 1% as we.

Julian: Aimed to remain price cost neutral for the year and unit cost reduction activities to offset moderate startup inefficiencies.

Julian: We do want to emphasize the stronger first half in 2023, when making year over year comparison.

Julian: We expect corporate and other expenses to be evenly spread throughout the year.

Julie Beck: Based upon global tax laws, we expect a 2024 effective tax rate of approximately 22% versus our 2023 normalized rate of 18.2%. We estimate free cash flow of $325 million to $375 million, including capital expenditures of approximately $145 million, with the largest component being our Genie Mexico facility. Let's review our segment outlook. We anticipate MP sales of $2.2 to $2.3 billion with continued strong margins in the range of 15.6 to 15.9% for the full year. Compared to the prior year, sales are anticipated to be lower in the first quarter to realign supply and demand in our Fuchs and Crane businesses.

Julian: Based upon the global tax laws, we expect that 2024 effective tax rate of approximately 22% versus our 2023 normalized rate of 18, 2%.

Julian: We estimate free cash flow of 325 million to $375 million, including capital expenditures of approximately $145 million with the largest component being our Genie Mexico facility.

Julian: Let's review our segment outlook.

We anticipate <unk> sales of two 2% to $2 3 billion with continued strong margins in the range of $15 six to 15, 9% for the full year compared to the prior year sales are anticipated to be lower in the first quarter to realign supply and demand and our Fuchs and <unk>.

Julian: Crane businesses.

Julie Beck: Q1 margins are anticipated to be approximately 200 basis points lower due to an unfavorable product and regional mix. Sales and margins are expected to increase from Q1 levels and be relatively consistent for the remainder of the year. We expect AWP sales of $2.9 to $3 billion, with improved operating margins of 13.4 to 13.7% for the full year. We anticipate full-year operating margin expansion due to continued cost-out activity, favorable absorption at our mature plants, partially offset by inefficiencies due to the monetary start-up. We expect Q1 sales to be higher than the prior year and margins to be slightly lower, as increased volumes are offset by unfavorable product and geographic mix and start-up inefficiencies. We anticipate the quarterly cadence of our AWP sales to be closer to historical patterns, with the highest sales in Q2 and Q3, which will also drive higher profitability for those quarters. The Terex team is committed to delivering another strong year in 2024. And with that said, I will turn it back to you, Simon. Thanks, Julie. Turning to slide 17.

Julian: Q1 margins are anticipated to be approximately 200 basis points lower due to unfavorable product and regional mix.

Julian: Sales and margins are expected to increase from Q1 levels and be relatively consistent for the remainder of the year.

Julian: We expect AWP sales of $2 $9 billion to $3 billion.

Julian: With improved operating margins of 13, 4% to 13, 7% for the full year we.

Julian: We anticipate full year operating margin expansion due to continued cost out activity favorable absorption at our mature class.

Julian: Partially offset by inefficiencies due to the Monterrey startup.

Julian: We expect Q1 sales to be higher than the prior year and margins to be slightly lower as increased volumes are offset by unfavorable product and geographic mix and startup inefficiencies.

Julian: We anticipate the quarterly cadence of our AWP sales to be closer to historical patterns with the highest sales in Q2, and Q3, which will also drive higher profitability for those quarters.

Julian: The Terex team is committed to delivering another strong year in 2024, and with that said I will turn it back to you Simon.

Simon Mister: Thanks, Julie turning to slide 17.

Simon Meester: We expect to deliver strong 2024 results, driven by continued focus on execution, continued focus on efficiency, leveraging our diverse portfolio and the favorable end market. We have industry-leading businesses and brands with competitive scale. We have a strong balance. The Bulletproof Executive, 2013.

Simon Mister: We expect to deliver strong 2024 results driven by continued focus on execution continued focus on efficiency, leveraging our diverse portfolio and a favorable end markets.

Speaker Change: We have industry, leading businesses and brands with competitive scale, we have a strong balance sheet to support our growth.

Speaker Change: And we have a global experienced diverse and highly engaged team that is committed to continue to create value for our customers and our shareholders.

Simon Meester: And we have a global, experienced, diverse, and highly engaged team that is committed to continuing to create value for our customers and our shareholders. I'm very excited about Terex's future and look forward to the years to come.

Speaker Change: I am very excited about <unk> future and look forward to the years to come.

Speaker Change: With that let me turn it back to fair to us.

Paretosh Misra: Thanks, Simon. As a reminder, during the question and answer session, we ask you to limit your questions to one and a follow-up to ensure we answer as many questions as possible this morning. With that, I would like to open it up to questions. Operator?

Fair: Thanks, Simon as a reminder, during the question and answer session. We ask you to limit your questions to one and a follow up to ensure we answer as many questions as possible. This morning with that I would like to open it up for questions operator.

Operator: Thank you. If you have a question, please press star 1 on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question. Your first question comes from the line of Stanley Elliott with Stiefel.

Speaker Change: Thank you if you have a question. Please press star one on your telephone keypad.

We ask that you please limit yourself to one question and one follow up question.

Speaker Change: Your first question comes from the line of Stanley Elliott with Stifel. Your line is open.

Stanley Stoker Elliott: Your line is open. Good morning, Simon, Julie and the team, and Simon, welcome. So I guess starting off, you know, the first thing you mentioned was helping accelerate growth. Could you kind of flesh that out a little bit more? How are you thinking about the organic component versus, you know, the M&A opportunities that you potentially have? Just curious how you're thinking about the business overall. Yeah, thanks for the question, Stan. Yeah, obviously, I'm in my fifth week on the job, so I hope you can appreciate I'm still very much in the enlistment and learning mode.

Stanley Stoker Elliott: Hey, good morning, Simon Julianne team in time and welcome.

Stanley Stoker Elliott: I was wondering I guess starting off the first thing you mentioned was helping accelerate growth could you just kind of flesh that out a little bit more how are you thinking about the organic component versus the M&A opportunities that you potentially have.

Stanley Stoker Elliott: Just curious how youre thinking about the business overall.

Speaker Change: Yeah. Thanks for the question Stan Yes.

Stan: Obviously, I mean, my my fifth week on the job. So I hope you can appreciate im still very much in and listening and learning mode.

Simon Meester: But, you know, we've built a great company over the past several years, and we truly transformed the portfolio and significantly improved our ability to execute. We have a portfolio of market-leading businesses with strong operating margins, strong values, and now a strong balance sheet. So obviously, a lot to play with as the incoming CEO. So that's why I said that I expect my focus to be, you know, mostly on building out and accelerating our growth, but obviously, making sure that we maintain our operational discipline and remain focused on our efficiency and our agility.

Stan: We build a great company over the past several years and we truly transformed the portfolio and significantly improved our ability to execute we have a portfolio of market leading businesses with strong operating margins strong values and now with a strong balance sheet. So obviously a lot to play with as an income.

Speaker Change: <unk> CEO. So that's why I said that I expect my focus to be.

Speaker Change: <unk> on the building building out and accelerate our growth, but obviously.

Speaker Change: Making sure that we maintain our operational discipline and remaining focused on our efficiency and our agility.

Simon Meester: We see many opportunities for organic growth, you know, and we're demonstrating strong return on invested capital. And, you know, we are ballpark, a $5 billion business in a $34 billion addressable market. So there's just a lot of opportunity for organic growth. But you know, we're also looking at inorganic opportunities, anything that could expand our addressable markets or strengthen the portfolio, but obviously, or widen our moat. But obviously, it needs to be actionable, it needs to be affordable, and it needs to be financially accretive. And everything that we have on the table, we will force rank versus, you know, things like dividends or share buybacks. And then, obviously, pick whatever provides the best shareholder value.

Speaker Change: We see many opportunities for organic growth.

Speaker Change: And we are demonstrating strong return on invested capital.

Speaker Change: We are ballpark of $5 billion business and a $34 billion addressable market. So theres, just a lot of opportunity for organic growth.

Speaker Change: But we're also looking at inorganic opportunities anything that could expand our addressable markets our strength in the portfolio with obviously or widen our moat, but obviously it needs to be actionable leads to be affordable and it needs to be financially accretive and everything that we have on the table, we will force rank versus.

Speaker Change: Things like dividends or share buybacks, and then and then obviously pick whatever provides best shareholder value, but I think that the good news at least for me as incoming CEO is that we have strong optionality versus perhaps where we were three to five years ago.

Simon Meester: But I think that the good news, at least for me as incoming CEO, is that we have strong optionality versus perhaps where we were three to five years ago. Yeah. And could you also flesh out maybe a little bit more, I guess, that question on the aerials, 100 bases, points of margin, kind of the flattish volumes?

Speaker Change: Yes.

Speaker Change: Could you flesh out maybe a little bit more I guess a question on the aerials 100 basis points of margin kind of a flattish volumes.

Julie Beck: When should we expect the kind of Mexico piece to roll off? How is the utilities market, is that kind of supply chain easing up? Any more color there would be very helpful.

Speaker Change: When should we expect kind of the Mexico piece to roll off how is the utilities market is that kind of supply chain easing up.

Speaker Change: Any more color there would be it would be very helpful. Thanks.

Julie Beck: Thanks. Thanks for the question, Stan. Good morning.

Speaker Change: Thanks for the question Stan and good morning.

Speaker Change: AWP.

Julie Beck: You know, AWP did a fantastic job in the year with, you know, sales up 18% and OP margin expansion of 480 basis points. The team successfully managed through all the disruptions in the supply chain, inflation, and longer-term footprint projects and still delivered strong year-over-year performance. Our Monterey facility is our largest facility. It's approximately a million square feet and the largest that we've ever built.

Speaker Change: They did a fantastic job in.

AWP: In the year with sales up 18% and op margin expansion of 480 basis points.

AWP: The team successfully managed through all of the disruptions in supply chain inflation and longer term foot prime projects and still delivered strong year over year performance.

AWP: Our Monterey facility is our largest facility is approximately 1 million square feet and in the largest that we've ever built and so as that facility starts to come online it's going to run unfavorable manufacturing efficiencies are unfavorable burden absorption until the product moves are completed.

Julie Beck: And so as that facility starts to come online, it's going to run unfavorable manufacturing efficiencies or unfavorable burden absorption until the product moves are completed. In Q4, manufacturing inefficiencies were about $4 million unfavorable to what we had put in our outlook as we had an in-quarter supply chain issue with one of our new suppliers. In addition, we took a $5 million charge, which was accelerated due to some of the product moves. It was a depreciation expense – a depreciation charge related to some assets not being moved to the Monterey facility.

AWP: Q4 manufacturing inefficiencies were about $4 million unfavorable to what we had put in our outlook as we've had in in quarter supply chain issue with one of our new suppliers.

AWP: In addition, we took a $5 million charge, which was accelerated due to some of the product moves that was a depreciation expense depreciation charge related to some assets not being moved to the Monterrey facility.

Julie Beck: In addition, there were some severance charges in AWP and some unfavorable effects. However, most of these charges are non-recurring, severance and depreciation, and manufacturing efficiencies will improve going forward as the plant comes online. The team did a great job expanding margins by 480 basis points, and we're confident in our margin improvement outlook for next year. We did see in Q3 and Q4 about $21 million of charges related to manufacturing efficiencies related to the Monterey facility.

AWP: In addition, there were some severance charges in AWP and some unfavorable FX. So most of these charges are nonrecurring severance and depreciation and manufacturing efficiencies will improve going forward as the plant comes online.

AWP: The team did a great job in expanding margins by 480 basis points and we're confident in.

AWP: And our and our margin improvement outlook for next year, we did see.

AWP: In the fourth Q.

AWP: Q3, and Q4 about $21 million of charges related manufacturing inefficiencies related to the moderate facility, we would assume that the charges would be about $15 million to $20 million, mostly in the first half of next year and the margins to improve as we go forward into <unk>.

Julie Beck: We would assume that the charges would be about $15 to $20 million, mostly in the first half of next year, and the margins would improve as we go forward into Q3 and Q4. And from a utilities perspective, yes, we did have a supply chain issue that disrupted Q3, and that issue is behind us, and utilities improved in the fourth quarter. Perfect. Thanks so much and best of luck.

Q3, and Q4 and from a utilities perspective, yes, we did have a supply chain issue that disrupted our Q3 and that.

AWP: Our issue is behind us and in utilities improved in the fourth quarter.

Perfect. Thanks, so much and best of luck.

Simon Meester: Thanks, Dan. Your next question comes from the line of Seth Weber with Wells Fargo. Your line is open. Hi, thanks. Hi, good morning.

AWP: Right.

Thanks, Thanks, Sam Thanks, Dan.

AWP: Your next question comes from the line of Seth Weber with Wells Fargo. Your line is open.

Seth Weber: Hi, good morning, Thanks for taking my question.

Seth Weber: Thanks for taking the question. Good morning. I wanted to maybe dig into the MP margin outlook a little bit. Julie, I think you said down 200 BIFs year-over-year in the first quarter. Is that, I guess I'm just trying to understand that, how much of that is, you know, product slash regional mix?

Seth Weber: Good morning, I wanted to maybe dig into the margin outlook a little bit.

Seth Weber: Julia I think you said.

Seth Weber: Down 200 bps year over year in the first quarter is that I guess I'm just trying to understand that how much of that is.

Seth Weber: Product slash regional mix, how much of it is it just the portfolio is transitioning through some acquisitions that you did in <unk>.

Julie Beck: How much of it is, is it just, you know, the portfolio is transitioning through some acquisitions that you did? You're just buying lower-margin stuff that's lower-margin right now. And is that?

Seth Weber: Youre, just buying lower margin stuff, that's lower margin right now.

Seth Weber: Is that.

Julie Beck: You know, will that two-hundred-and-fifths year-over-year just suddenly flip as we get into the second quarter, or is that going to be more of a gradual thing? Kind of a gradual, you know, year-over-year, compare-get-better thing. Thanks for the question, Seth. MP is forecast to have an OP margin of 15.6% to 15.9% in the year. It's just a slight year-over-year decline in our operating margin due to product mix. Our highest growth business is our environmental sales, and they're a little bit lower than the segment margin.

Seth Weber: Well that 200 bps year over year, just suddenly slip as we get into the second quarter or is that going to be more of a gradual.

Speaker Change: Kind of a gradual year over year compare get better. Thanks.

Speaker Change: Hey, Thanks for the question.

Speaker Change: Yes.

Speaker Change: Empty.

<unk> is forecasted.

Speaker Change: Margin in the $15 six to 15, 9% in the year.

Speaker Change: Just a slight year over year decline in operating margin due to product mix our highest growth.

Speaker Change: Business is our environmental sales in there a little bit lower than the segment margin and so that's how the full year margin goes down just a bit.

Julie Beck: And so that's how the full year margin goes down just a bit. When we look at Q1, Q1 is going to be a bit lower in sales and volume due to some rebalancing of supply and demand in our foost and tower cranes business, basically. And so our margins are expected to be 200 basis points lower in Q1, but then they're expected to increase from Q2, Q3, and Q4 and be relatively consistent for the remainder of the year. And I would just add that all these businesses are operating at double-digit margins. They're all strong, performing businesses, so these are really nuances that we're talking about. MP's journey has been really remarkable over the last seven, eight years, and as I mentioned in my opening remarks on how they've been able to grow near double digits per year over the last seven, eight years, and now all of these businesses are strong double-digit businesses, so this is really nuanced for 2024. I got it.

Speaker Change: We look at Q1.

Speaker Change: Q1 is going to be a bit lower add on sales and volume.

Speaker Change: Due to some rebalancing of supply and demand in our scoop and tower Crane business basically and so our margins are expected to be 200 basis points lower than Q1, but then they are expected to increase in Q2, Q3, and Q4 would be relatively consistent for the remainder of the year.

Speaker Change: Okay.

All these all.

Speaker Change: All of these businesses are operating at double digit margins. They are all strong performing businesses. So these are really nuances that we're talking about mt's journey has been really remarkable over the last seven eight years and as I mentioned in my opening remarks on how they've been able to grow near double digits per year over the last seven eight years and now all of these businesses are.

Speaker Change: Strong double digit businesses. So this is really new loans for 2024.

Speaker Change: Got it thank you.

Simon Meester: Maybe just to follow up on AWP, the, I guess, can you just talk about the backlog that you have is all of that for 2024 and. Are you seeing any cancellations or pushouts from your customers in the AWP business? Thank you.

Speaker Change: Maybe just to follow up on AWP.

Speaker Change: I guess can you just talk to that.

Speaker Change: Backlog that you have is all of that for 2024 and can you. Just are you seeing any cancellations or push outs from your customers in the in the AWP business. Thank you.

Speaker Change: Yeah. Thanks for the question.

Simon Meester: Yeah, thanks for the question. Obviously, sequential bookings in AWP were up 59%, still record high backlog, 3x historical levels. I would say for AWP, it's not really a demand issue, very strong underlying demand. Not all the negotiations with the nationals were booked in the fourth quarter.

Honestly strong sequential bookings in the AWP up 59% still record high.

Speaker Change: Backlog <unk> historical levels.

Speaker Change: I would say for AWP, it's not really a demand demand issue very strong underlying demand.

Speaker Change: Not all all all the negotiations with the nationals were booked in the fourth quarter. Some of that will drop in the first quarter. So we expect some more strong bookings to come in the first quarter.

Simon Meester: Some of that will drop in the first quarter. So we expect, you know, some more strong bookings to come in the first quarter. Utilities within AWP are taking bookings for 2025. You know, I would definitely say we have a strong order book. It's sticky.

Speaker Change: Utilities.

Speaker Change: Within AWP is taking bookings for 2025.

Speaker Change: I would definitely say, we have a strong order book, it's sticky we don't see cancellations.

Simon Meester: We don't see cancellations. There are a lot of cultures going into 2024. Great, okay, thank you guys, I appreciate the comments. Thanks, Seth. Your next question comes from the line of Steve Fisher with UBS. Your line is open.

Speaker Change: This is a lot of confidence going into 2024.

Speaker Change: Great. Okay. Thank you guys I appreciate the comments.

Speaker Change: Thanks Beth.

Speaker Change: Your next question comes from the line of Steve Fisher with UBS. Your line is open.

Speaker Change: Yeah.

Great. Thanks, Good morning, and congrats Simon just trying to get a sense of your North American AWP volume expectations for 2024.

Steven Fisher: Just trying to get a sense of your North American AWP volume expectations for 2024. I guess with overall sales flat, I assume you have some positive pricing, some growth in parts, and utility. I assume Europe is down a few percent. Are we thinking North American volumes are expected to be kind of up mid-single digits? And I'm just curious about what the sentiment is from the broad rental channel.

Speaker Change: With overall sales flat.

Speaker Change: Assume.

Steven Fisher: Some positive pricing some growth in parts and utility.

Speaker Change: Assume Europe is down a few percent so were thinking north American volumes are expected to be kind of up mid single digits and I'm, just curious kind of what the sentiment from the broad rental channel is are they telling you that their fleet spending is up down or flat this year and how they are framing the broader cyclical context.

Simon Meester: Are they telling you that their fleet spending is up, down, or flat this year, and how they're framing that in the broader fiscal context? Yeah, you got it right on your first assumption, North America up. You're probably a little down. Overall, as I said, strong backlog going into the year, strong bookings, but you know, some caution about Europe, North America, demand, underlying demand, very, very strong. There's still a little bit of a supply chain disruption, even though it has greatly improved versus the beginning of 2023. Bill, it only needs, you know, it only takes one part for us to stop the shipment so we can't complete the product.

Speaker Change: Yes, you got it right on the first on your first assumption North America up Europe, probably a little down.

Speaker Change: Overall, as I said strong backflow of backlog going into the year strong bookings, but some caution about your north America demand underlying demand very very strong there's still a little bit of the supply chain disruption, even though it has greatly improved versus the beginning of 2023.

Speaker Change: It only needs. It only takes one parts for us to stop the shipments that we can complete a product.

Simon Meester: But, yeah, in terms of activity with our nationals, our large customers in North America, they're all very bullish. They all feel that, you know, 2024 is another strong year. As a matter of fact, 2025 seems to be strong as well, so it seems to carry forward. And I would say overall, we do probably see a little bit more activity with our nationals going into 2024, just because of their exposure to the megaproject. But overall, as a global business, it doesn't really impact us from a mixed standpoint because it just kind of washes out globally in terms of product and geography. Okay, that's very helpful. And then just to follow up on Europe, excuse me, did it get worse in the quarter? Is it stabilizing? How localized to any particular part of Europe is it?

Speaker Change: But yes in terms of activity with.

Speaker Change: With our nationals.

Speaker Change: Larger customers in North America, they are all very bullish.

Speaker Change: We all feel that.

Speaker Change: 24 is another strong year as a matter of fact 2025 is seems to be strong as well so it seems to carry forward.

Speaker Change: <unk>.

Speaker Change: And I would say overall, we do see probably a little bit more activity with our national's going into 2024, just because of their exposure to the mega projects.

Speaker Change: But overall as a global business it doesn't really impact us from a mix standpoint, because it just kind of washes out globally in terms of.

Speaker Change: Product and geographic mix.

Speaker Change: Okay. That's very helpful. And then just a follow up on Europe.

Speaker Change: Okay. That's very helpful. And then just a follow up on Europe.

Excuse me did it get worse in the quarter or is it stabilizing how localized to any particular part of your is it.

Steven Fisher: And, you know, how is competition a factor there? Yeah, are you talking about AWP or Terex Corp? Yes, yeah, both would be good.

Speaker Change: How is competition a factor there.

Speaker Change: Are you talking about AWP or yes.

Speaker Change: Yes.

Speaker Change: Both will be good.

Simon Meester: Okay, yeah, so I'll start with AWP. So it's, and actually for both businesses, it's mostly Germany and the UK, it's a little bit of Scandinavia. Germany and the UK are mostly non-RES related, while Scandinavia is mostly RESI, where it starts to slow down, and it's mostly impacting AWP and MP for that matter.

Speaker Change: Yes, so I'll start with AWP. So it's actually for both businesses, it's mostly Germany and the U K, it's a little bit Scandinavia, Germany, and UK, it's mostly non risk related and in Asia, mostly Ramsey.

Speaker Change: Where to where it starts is where it starts to slowdown and it's mostly impacting.

Speaker Change: AWP and MP for that matter.

Speaker Change: In terms of MP is it's mostly tied to the businesses that have a little bit more European exposure. So think folks. For example is also tied obviously to the scrap scrap market, but also our cranes business, specifically our tower Crane business.

David Raso: In terms of MP, it's mostly tied to the businesses that have a little bit more European exposure. So Think Fuchs, for example, is also tied, obviously, to the scrap market, but also our crane business, specifically our tower crane business, with its exposure to the European market, which is facing some headwinds. So that's what I would call out in terms of European exposure. Okay, thank you very much. Our next question comes from the line of David Raso with Evercore ISI. Your line is open. Thank you. Good morning.

Speaker Change: With their exposure to the European market that are facing some some headwinds. So that's what I would call out in terms of European exposure.

Speaker Change: Okay. Thank you very much.

Okay.

Speaker Change: Our next question comes from the line of David Raso with Evercore ISI. Your line is open.

David Raso: Hi, Thank you good morning, I'm trying to think about the straddling of demand and supply for 'twenty four 'twenty five for AWP might.

Simon Meester: I'm trying to think about the straddling of demand and supply for 24 and 25 for AWP. Might be a hard question to answer initially, but if you had Mexico running the way you expect, no labor constraints, and some of the more mature AWP plans, could you give us some idea of what the guide would have been? I'm just curious, are we talking a couple hundred dollars of revenue that you could be shipping in 24 that, at the current moment, you're saying you can't? And then the follow-up would be, do you see that simply getting pushed to 25 or maybe some incremental capacity loosened up elsewhere in the industry that, you know, unfortunately, that might be just a lost sale. So I'm just trying to think about the tightness right now, the inability to shift, and what that does to the arc of the AWP cycle for 24 and 25.

David Raso: It might be a hard question to answer initially but.

David Raso: If you had Mexico running the way you expect no labor constraints and some of the more mature AWP plans could you give us some idea of what would've.

David Raso: Would the guide a bit I'm just curious are we talking a couple hundred dollars.

David Raso: <unk> revenue.

David Raso: You could be shipping into 'twenty for that at the current moment Youre, saying your camps and then the follow up would be do you see that simply getting pushed to 'twenty five floor has maybe some incremental capacity loosened up elsewhere in the industry that unfortunately that might be just simply a loss sale. So I'm just trying to think of about the tightness right now the inability to ship.

David Raso: And what does that do to the arc of the AWP cycle for 24 and 25.

Simon Meester: Yeah, thanks for the question, David. So first of all, for everyone's math, there's about 300 million in the AWP backlog that's already carried over to 2025. So the backlog numbers that we're reporting are not all for 2024. There's about 300 million of that already allocated to 2025.

Speaker Change: Yes. Thanks for the question David So first of all for everyone's math, there is about $300 million in the AWP backlog thats already carried over to 2025.

Speaker Change: The backlog numbers that we're reporting is not all for 2024. It is about $300 million of debt already allocated 2025. So we have about nine to 10 months coverage currently in the backlog for 2024 and in the case of Monterrey, I would say, we obviously ramping up a very large facility as Julie mentioned.

Simon Meester: So we have about nine to 10 months coverage currently in the backlog for 2024. In the case of Monterey, I would say, you know, we're obviously ramping up a very large facility, as Julie mentioned, A large facility we have built and we're very happy with the progress we're making. We're still very much on track to deliver on the 200 basis points commitment that we made for 2025 in terms of operating margin improvement. And I would say that, you know, if supply chain continues to improve in the current trend, there's definitely upsides to our guidance, to our sales outlook, and we would be towards the upper end of that range. You know, and it's too early in the year to speculate what else we could see for the remainder of the year, but I still, I believe, and as I said in my opening remarks, that, you know, 2023 was a strong year, 2024 is a strong year, and by what we're seeing today, we think 2025 will be a strong year, and maybe you don't want to answer it, fine, but just so I can ask it again though, is there a number you can give us a sense of?

Speaker Change: Large facility, we've ever built and we're very happy with the progress we're making we're still very much on track to deliver on the 200 basis points commitment that we made for 2025 in terms of operating margin improvement and I would say that if supply chain continues to improve.

Speaker Change: And the current trends and there is definitely upside to our guidance through our sales outlook and we would be towards the upper end of that range.

Speaker Change: And it's too early in the year to speculate what else we could see.

Speaker Change: The remainder of the year, but I still I believe and as I said in my opening remarks.

Speaker Change: 2023 was a strong year 2024 strong year and by what we're seeing today, we think 2025 will be a strong year.

Speaker Change: And maybe you don't want to answer it fine, but just so I can absolutely again, though is there a number you can give us a sense of what your customers are asking for in 'twenty four.

Simon Meester: What your customers are asking for in 24 relative to your guy, just so we know the torque and, hey, if things do loosen up as you said in the second half of the year, let's say, you know, the third quarter in particular, we can get that upside. Then what's the conversation like on, look, if I can't get it from you, I'm going somewhere else, and I can get it for 24, or does it inherently push it into 25?

Speaker Change: Relative to your guide just so we know the torque in.

Speaker Change: Hey, if things do loosen up as you said the second half of the year, let's say third quarter in particular.

Speaker Change: We can get that upside down what's the conversation like look if I can't get it from you, where I'm going somewhere else and I can get it for 24 or does it inherently push it into 25, I'm just curious, but those kind of dynamics thinking about.

David Raso: I'm just curious about those kind of dynamics, thinking about, you know, the two years of AWP, not just 24. Yeah, and I don't think I can give you an answer today, David. What is important for us in 2024 is that what we're committing to our customers is what we're actually delivering on. And so that's our first priority. And how much of that will eventually end up spilling over into 2025

Speaker Change: The two years of AWP not just 24.

Speaker Change: Yeah.

Speaker Change: I don't think I can give you an answer today David.

Speaker Change: It is important for us in 2024 is that what we're committing to to our customers is what we're actually delivering on and so that's our first priority and how much of that eventually will end up spilling over in 2025, what were currently committing to we don't want to spill over into 2025, and so that's what we're committing to.

Simon Meester: What we're currently committing to, we don't want to spill over into 2025. And so that's what we're committing to. That's what we want to build, and that's what we want to ship. Currently, we think that we could have upside to the upper end of the range, but I can't give you a number of what that could eventually look like when we hit the middle of the year, for example. I appreciate it. Your next question comes from the line of Steve Volkmann with Jeffries. Your line is open. Great, thank you guys. Good morning, everybody.

Speaker Change: That's what we want to build and that's what we want to ship. Currently we think that we have we could have upside to the upper end of the range, but I can't give you a number of what that eventually could look like towards when we when we hit the middle of the year for example.

Speaker Change: I appreciate it okay. Thank you.

Speaker Change: Your next question comes from the line of Steve Volkmann with Jefferies. Your line is open.

Stephen Edward Volkmann: Great. Thank you guys good morning, everybody.

Stephen Edward Volkmann: I'm going to stay with this theme a little bit. What can you sort of ballpark for us in, I don't know, two years or whenever this Monterey facility is up and running in full steam? How much capacity are you adding to the AWP product roughly? So the main reason we built Monterey, and we are building Monterey, was because we wanted to improve the overall competitiveness of the business. So it was mostly to improve Genie's through-cycle margin performance. And as I mentioned, the project went really well. We're also expanding our supply base, and it's mostly a facility that will be focused on supporting North America. But what it will actually mean in terms of capacity expansion, I can't give you a hard number, to be very honest with you. You know, it's a facility that mostly helps us to kind of bring some higher-cost facilities offline, like Oklahoma City and Rock Hill.

Stephen Edward Volkmann: Im going to stay with this theme a little bit.

Stephen Edward Volkmann: Can you sort of ballpark for us and I don't know two years or whenever this is Monterrey facility is up and running in full steam.

Stephen Edward Volkmann: How much capacity are you, adding in the AWP product roughly.

Stephen Edward Volkmann: So the main reason we build Monterey, we are building Monterey was because we wanted to improve the overall competitiveness.

Stephen Edward Volkmann: <unk> of the business. So it was mostly to improve genius through cycle margin performance.

Stephen Edward Volkmann: And as I mentioned, the project goes where you will.

Stephen Edward Volkmann: We're also expanding our supply base and its mostly a facility that will be focused on.

Supporting North America.

Stephen Edward Volkmann: <unk>.

Stephen Edward Volkmann: What it will actually mean in terms of.

<unk> expansion.

Speaker Change: Can't give you a hard number to be very honest with you.

Speaker Change: Aye.

Speaker Change: <unk> Thats, mostly.

Speaker Change: That helps us to kind of bring some higher cost facilities offline like Oklahoma City and rock Hill, So for US It was mostly mostly.

Simon Meester: So, for us, it was mostly a cost and a competitiveness play, but yeah, obviously, the facility is built to grow. And so, you know, we can expand going forward, but for now, it's mostly to bring higher cost capacity offline. Okay, thank you. And I think Julie, you said that you expected 15 to 20 million in kind of startup costs down there for the full year. Please correct me if I'm wrong.

Speaker Change: Our cost and competitiveness play, but yeah, obviously to facilities built to grow and so we can we can expand going forward, but for now it's mostly to bring higher cost capacity offline.

Speaker Change: Okay. Thank you and I think Julie you said that you expected $15 million to $20 million of kind of startup costs down there for the full year 'twenty. Four please correct me if I'm wrong are there any other kind of headwinds we should be aware of in margin in AWP in 2024, and I'm just kind of thinking about <unk>.

Julie Beck: Are there any other kind of headwinds we should be aware of in margin in AWP in 2024? And I'm just kind of thinking about bridging the gap with sort of your biggest competitor. When you think about the inefficiencies, I guess, related to Monterey, we're saying 15 to 20 million in 2024, but that's primarily more centered on the first half of the year. And so we expect margins to improve in Q3 and Q4 as more production is going through that facility. It becomes more efficient, and the inefficiencies go down. So that's the primary difference. And I guess I just take this time to talk about, as you look at our comparisons year over year, we started up our Monterey facility in Q3 and Q4 of 2023, so it impacted the second half of the margins. They're not in the first half of 2023 when you compare.

Speaker Change: <unk> the gap with some sort of your biggest competitor.

Julie: Yes, when you think about the.

Julie: The inefficiencies I guess related to Monterrey, we're saying $15 million to $20 million in 2024, but that's primarily more more centered to the first half of the year and so we expect margins to improve in Q3 and Q4 as more production is going through that facility it becomes more efficient and the inefficiencies.

Julie: Go down so.

Julie: That's the primary difference and I guess I'll just take this time to talk about as you look at our comparison year over year.

Julie: It means that when we started up our met our Monterey facility in Q3, and Q4 of 2023 impacted the second half of the margins. They are not in the first half of 2023, when you compare and so we'll have those inefficiencies running through the first half of the year and then in the fourth quarter margins will improve.

Julie Beck: And so we'll have those inefficiencies running through the first half of the year. And then in the fourth quarter, margins will improve, and those inefficiencies that were in the second half of 2023 won't be as much in the second half of 2024. That helps in your comparison.

Julie: And those inefficiencies will that were in the second half of 2023 won't be as much in the second half of 2020.

Julie: And your comp.

Julie Beck: Yep, great, thank you. Your next question comes from the line of Tami Zakaria with J.P. Morgan. Your line is open. Hi, good morning, Team Terex. Hope you're doing well. So my first question is, hi, how are you?

Speaker Change: Yep, great. Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Tami Zakaria with Jpmorgan. Your line is open.

Tami Zakaria: Hi, Good morning team tennis hope Youre doing well.

Tami Zakaria: My first hi, how are you. So my first question is on the Monterrey facility again.

Tami Zakaria: So my first question is on the Monterey facility again. Just trying to understand the 200 basis points improvement in operating margin in 2025 when it ramps up. How volume dependent is that margin improvement target? So let's say if 2025 volumes, for example, let's say it was down, would you still see a margin improvement? Given it's a big facility, capacity utilization is probably needed to get that 200 basis points number. So just trying to think about the capacity utilization versus volume dependency of that 200 basis points target. Well, Tami, there are always a lot of variables that happen, but all things being the same, we would expect to have a 200 basis point improvement.

Tami Zakaria: I'm just trying to understand the 200 basis points improvement in operating margin in 2025.

Tami Zakaria: When it ramps.

Tami Zakaria: Volume dependent is that.

Tami Zakaria: Margin improvement targets to let's say 225 volumes.

Tami Zakaria: Yeah.

Tami Zakaria: Assumption, let's say it was down would.

Tami Zakaria: Would you still see a margin improvement.

Tami Zakaria: Given it's a big facility capacity utilization is probably needed to get that 200 basis points numbers. So just trying to think about the capacity utilization versus volume dependency of that.

Tami Zakaria: 200 basis points target.

Tami Zakaria: There's always a lot of variables that happen, but all things being the same we would expect to have a 200 basis point improvement and we would expect as Simon said.

Julie Beck: And we would expect, as Simon said, that we're seeing strong demand in the marketplace, so we wouldn't anticipate that being an issue at this point in time. And so we would plan on the 200 basis point margin improvement in 2025. Okay. Okay. That's very helpful. And then I wanted to go back to Europe.

Tami Zakaria: We are seeing is strong demand in the marketplace that we wouldn't anticipate that being.

Tami Zakaria: An issue at this point in time, and so we would we would plan on the 200 basis point margin improvement in 2025.

Speaker Change: Got it got it okay. That's very helpful. And then I wanted to go back to Europe, Europe has been weak for some quarters now.

Simon Meester: Europe has been weak for some quarters now. Sitting here today, how are you thinking about a potential timeline for recovery in that market? And with that market down, are you going to be more opportunistic with some acquisitions maybe if it lends well to some of your growth ambitions? So any color on Europe and thoughts on Europe?

Speaker Change: Sitting here today, how are you thinking about.

Speaker Change: Surely a potential timeline for a recovery and that market and with with that market down are you going to be more opportunistic with some acquisitions, maybe if you know it lends well to some of your growth.

Speaker Change: Ambitions, so any color on on Europe and thoughts on Europe.

Speaker Change: I will certainly see slide.

Simon Meester: It certainly seems like you can talk about soft landing, hard landing, and no landing. It certainly seems like Europe is a little bit further behind in terms of managing their landings, so to speak, especially Germany and the U.K., as I mentioned earlier. Actually, you say a couple of quarters. We have seen it mostly hit us for the first time in the fourth quarter, and we've seen it spill over into the first and second quarters of this year.

Speaker Change: You can talk about soft landing hard lending no landing.

Speaker Change: Certainly seems like Europe is a.

Speaker Change: As a little bit.

Speaker Change: Further behind in terms of managing managing their landing so to speak, especially Germany and the UK as I mentioned earlier actually use a couple of quarters, we have seen it mostly hit us for the first time in the fourth quarter and received spillover into the first and the second quarter.

Speaker Change: This year.

Speaker Change: What's going to happen in terms of recovery.

Simon Meester: What's going to happen in terms of recovery, I wouldn't want to speculate, but obviously, I think, you know, the European Commission is eager to at least get some sort of soft lending for most of their economy. Yeah, in terms of inorganic action, I wouldn't be able to be specific, Tami, other than we have an active pipeline of opportunities, as I mentioned. We'd look at anything that could make us stronger, widen our moat, or help us grow faster, but we will rank everything as we should versus all the other options we have to increase shareholder value. And again, we're posting very strong returns on invested capital by just investing in our own current activities. So we have a lot of optionality, and, of course, we're also looking at Europe, but we will always force-rank it versus all the other options that we have. Nothing specific to call out there. Got it. Thank you so much.

Speaker Change: I wouldn't want to speculate but.

Speaker Change: Obviously I think.

Speaker Change: European Commission is eager to at least get some sort of soft landing for for most of their economies.

Speaker Change: Yes in terms of inorganic.

Speaker Change: <unk>.

Speaker Change: Action I wouldn't be able to be specific timing other than we have an active pipeline of opportunities.

Speaker Change: I mentioned, we'd look at anything that could make us stronger widen our moat or help us grow faster.

Speaker Change: But we will rank everything as we should.

Speaker Change: Versus all the other options, we have to increase shareholder value and again, we were posting very strong return on invested capital this investing in our own and our own currency.

Speaker Change: Activity. So we have a lot of Optionality and of course, we're also looking at Europe.

Speaker Change: But we will we will always forced ranking force rank it versus all the other options that we have.

Speaker Change: But nothing specific to call out there.

Speaker Change: Got it thank you so much.

Nicole DeBlase: Thanks for the question. Your next question comes from the line of Nicole DeBlase with Deutsche Bank. Your line is open.

Speaker Change: Thanks for the question.

Speaker Change: Your next question comes from the line of Nicole to place with Deutsche Bank. Your line is open.

Nicole: Yeah. Thanks, Good morning, guys good morning.

Nicole DeBlase: Yeah, thanks. Good morning, guys. Good morning.

Nicole: Just the first question focusing on some of the dynamics around free cash flow. So can you guys talk a little bit about your expectations for working capital for 2024, and then as we roll into 'twenty, five where do you think Capex normalizes post Monterrey investment.

Julie Beck: So just a first question focusing on some of the dynamics around free cash flow. So can you guys talk a little bit about your expectations for working capital for 2024? And then as we roll into 25, where do you think CapEx normalizes post-Monterey investments? Thanks, Nicole.

Speaker Change: Thanks Nichol.

Julie Beck: You know, we had free cash flow of $366 million, which was a conversion of 71% to net income. And, you know, we're forecasting, you know, $350 million or so of free cash flow for next year. This year benefited from the sale of our Oklahoma City facility, which was $32 million.

Speaker Change: <unk>.

Speaker Change: Free cash flow of $366 million, which was the conversion of 71% to net income.

Speaker Change: We're.

Speaker Change: We're forecasting.

Speaker Change: $350 million or so of free cash flow for next year as this year benefited from.

Speaker Change: The sale of our Oklahoma City facility, which was a $32 million.

Speaker Change: We expect that we've guided to 1% to 3% of our sales in our Investor day for capital expenditures, we've been on the higher end of that.

Julie Beck: We expect that, you know, we've guided to 1% to 3% of our sales in our investor day for capital expenditures. We've been on the higher end of that, you know, this last year and in 2024 due to the Monterey facility. And we don't have any major new 200,000 square foot facilities, you know, coming in into 2025.

This last year end and in 2024 due to the Monterrey facility and we don't have any major new Monterey.

Speaker Change: A million square foot facility coming in into 2025, So we would expect that to come down in 2025 and to have a stronger free cash flow conversion percentage going forward into 2025.

Julie Beck: So we would expect that to come down in 2025 and to have a stronger free cash flow conversion percentage going forward into 2025. And so, in terms of net working capital, we have a slight improvement in net working capital forecasted for the year. But essentially, just because of all of the production moves and still some of the disruption we're seeing in the supply chain, we'll continue to carry a bit higher inventories going forward. And, you know, just really to make sure that everyone understands that, you know, our management team, we're all, part of our incentive compensation is net working capital performance and improvement. So the team is very focused on improving net working capital. But I would definitely say, you know, we have upside on cash conversion going into 2025 because of the third and last year of the Monterey investment. Got it, thanks guys. And then, if I could just ask one nitpicky question.

Speaker Change: So in terms of net working capital, we have a slight improvement in networking capital as forecasted in the year.

Speaker Change: And essentially just because of all of the production moves and still some of the disruption we're seeing in the supply chain will continue to carry a bit higher inventory going forward and.

Speaker Change: Just really to make sure that everyone understands that our management team. We're all are part of our incentive compensation is networking capital performance an improvement. So the team is very focused on improving net working capital, but I would definitely say we have upside on the cash conversion going into 2025 because of the third and last.

Here are the Monterrey investment.

Speaker Change: Got it thanks, guys and then if I could just ask a nitpicky one.

Speaker Change: Julian when you spoke about.

Nicole DeBlase: Julie, when you spoke about MP revenues being down in the first quarter, any sense of the magnitude there, just trying to understand the underlying dynamics behind the 200 basis points as you're on your margin contraction, thank you. Yeah, in terms of, sorry, the question was on revenue, right? Yeah, so the first thing I would add is that it's important to remember that the fourth quarter of 2022 was our strongest quarter in 2022 because that was the first quarter when the supply chain really started to improve, and we started to catch up on a lot of our shipments. So that makes the year-over-year comps a little off.

Speaker Change: M P revenues being down in the first quarter any sense of the magnitude there just trying to understand the underlying dynamics behind the 200 basis points of year on year margin contraction. Thank you.

Speaker Change:

Julian: Yes in terms of in terms of.

Speaker Change: Sorry, I'm sorry, the question was on revenue right.

I think the first thing I would add is it's important to remember that the fourth quarter of 2022 was our strongest quarter in 2022, because that was the first quarter when the supply chain really starts starting to improve and we started to catch up on a lot of our shipments. So that makes the year over year comps are a little off.

Julie Beck: But then, in the fourth quarter of 2023, especially in our MP businesses, as I mentioned earlier, is where we really started to see the slowdown in Europe come in, and that kind of impacted MP a little bit. Nicole, we would expect roughly a 7% decline in sales in the first quarter due to that rebalancing in Fuchs and Towers. Thank you very much. I'll pass it on.

Speaker Change: But.

Speaker Change: The fourth quarter of 2023, especially in R&D businesses as I mentioned earlier, where we really started to see the slowdown in Europe.

Speaker Change: Come in.

Speaker Change: And thats kind of impacted a little bit Nicole we had it.

Speaker Change: Expected roughly a 7% decline in sales in the first quarter due to that rebalancing influences in towers in the first quarter.

Speaker Change: Thank you very much I'll pass it on thank.

Speaker Change: Thank you.

Robert Stephen Barger: Your next question comes from the line of Steve Barger with KeyBank. Your line is open. Thanks. Good morning. I think all the capacity questions are just trying to understand if we're near peak in terms of revenue dollars. So I'll try it another way.

Speaker Change: Your next question comes from the line of Steve Barger with Keybanc. Your line is open.

Robert Stephen Barger: Thanks, Good morning.

Robert Stephen Barger: I think I think all the capacity questions or just trying to understand if we're near peak in terms of revenue dollars. So I'll try it another way after you swap out the high cost footprint for low cost and everything is up and running do you expect to have more capacity in units or dollars in 2025 following <unk>.

Robert Stephen Barger: After you swap out the high cost footprint for the low cost footprint, and everything is up and running, do you expect to have more capacity in units or dollars in 2025 following what will be two flattish revenue years in 2023 and 2024? We do expect to have upside in our capacity yet. Can you frame magnitude at all?

Robert Stephen Barger: Two flattish revenue years in 'twenty, three and 'twenty four.

Robert Stephen Barger: We do expect to have upside in our capacity yes.

Robert Stephen Barger: Can you frame magnitude at all.

Speaker Change: No I can't.

Simon Meester: I mean, we think about it, you know, that, you know, we have the ability to add shifts, etc. So capacity is, you know, can go in step functions as well. So it's not always easy to review that.

Speaker Change: Got it.

Speaker Change: You know that we have if you have the ability to add shifts et cetera. So capacity can go in step functions as well so it's not always easy to.

Speaker Change: So we view that in Tommy.

Simon Meester: I mean, we're running single shifts in most, if not all, of our facilities. But I can't give you a hard number now. And when we think about it, you know, Steve, we have, you know, strong years in 2023 and 2024. And as Simon indicated, you know, you know, customers are talking about 2025. Right.

Speaker Change: We're running single shifts in most if not all of our facilities.

Speaker Change: But I can't give you a hard number now and when we think about it.

Speaker Change: We have.

Speaker Change: Strong years in 2023, and 2024 and as Simon indicated.

Speaker Change: Customers are talking about 2025.

Speaker Change: Right.

Julie Beck: Okay, and if we step back from the near-term margin issues that you talked about, if revenue runs in this low to mid $5 billion range, what kind of margin expansion can you drive from efficiency? And again, I understand the near-term issues, but do you think there are 50 basis points of productivity, or 10 or 100? What's achievable from continuous improvement?

Speaker Change: Okay, and if we step back from near term margin issues that you talked about if revenue runs in this low to mid $5 billion range, what kind of margin expansion can you drive from efficiency programs.

Speaker Change: And again I understand the near term issues, but do you think theres 50 basis points of productivity or 10 or 100, what's achievable from continuous improvement.

Julie Beck: So, Steve, you know, as part of a manufacturing company, continuous improvement needs to be part of our DNA. And, you know, when we talk about it, we gave out some pretty nice investor targets of where our margins would improve from 2022. And we're, you know, at this point, as we said in our prepared remarks, you know, we're slightly ahead of our investor day target. So at this point in time, we continue to think that we can have a sequential margin improvement as we grow. I understand. Thank you. Thank you.

Speaker Change: So Steve you know as part of a manufacturing company continuous improvement needs to be part of our DNA and you know when we talk about we gave out some pretty nice investor targets, where our margins improve.

Speaker Change: From 2022, and we are you know at this point as we said in our prepared remarks.

Speaker Change: We're slightly ahead of our Investor day targets. So we at this point in time. So we continue to think that we can have a sequential margin improvement.

Speaker Change: As we grow.

Steve: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Tim Thein with Citigroup. Your line is open.

Timothy W. Thein: Your next question comes from the line of Tim Thein with Citigroup. Your line is open, on the impacts of pricing and what you expect in 24, I guess, relative to cost and how that, how you expect that fares relative to what you experienced in 23. Yeah, thanks, Tim. Yeah, so we still see inflation in 2024, although lower inflation levels than in 2023.

Speaker Change: Okay.

Timothy W. Thein: And that the impact from pricing.

Timothy W. Thein: What do you expect.

Timothy W. Thein: In 'twenty four.

I guess relative to costs.

Timothy W. Thein: And what that how you expect that your fares relative to what you experienced in 2003.

Speaker Change: Yeah. Thanks, Tim So we still see inflation in 2024, although lower inflation levels than in 2023.

Simon Meester: Our position is still the same, and obviously, we're staying very close to our customers on this; we stay very transparent. But, you know, our goal is to stay price cost neutral, to keep pushing ourselves on continuous cost out to, you know, ease the impact on our customers also, but also to continue to improve our operating margins. And so we do see some inflation, although it's declining, but especially across the board, steel, labor, integrated components, but also logistics, we definitely still see inflationary input costs for 2024, although at a lower level than in 2020. Okay, but okay. Presumably it was it was a tailwind for Terex in 23?

Speaker Change: Our position is still the same and obviously, we're staying very close to our customers on those who stay very transparent, but you know our goal is to say price cost neutral to keep pushing ourselves on continuous cost out too easy.

Speaker Change: The impact on our customers also but also to continue to improve our operating margins.

And so we do see some inflation, although although lowering but especially in actually cross the board steel labor integrated components.

Speaker Change: But also logistics, we definitely still see insulating input cost for 2024, although although at a lower level than in 2023.

Speaker Change: Okay.

Speaker Change: Okay, but presumably you is it was a was it a tailwind for Carrington in 'twenty three.

Julie Beck: Or is that just, So, Tim, we would say that you're price-cost neutral, and then the other margin improvement comes from cost and continuous improvement. Okay, understood. And then maybe just on MP, I don't think there were any comments just on the largest business with aggregates, just what the outlook is, what you have in terms of, you know, what's assumed in 24 hours. There's always, or can be some, movement there in terms of whether the dealers are adding or shrinking their rental fleets. So maybe just a comment or two in terms of the outlook for aggregates, which I know is more of a global business, but how do you see that shaping up in 24?

Speaker Change: Is that just.

Speaker Change: Okay.

Speaker Change: Yeah, Tim we would say that you know your price cost neutral and then the other margin improvement comes from some cost out.

Speaker Change: And continuous improvement.

Speaker Change: Okay understood and then maybe just.

Speaker Change: Just on <unk> I don't think we.

Speaker Change: There were any comments just on the largest business with aggregates just whats the outlook.

Speaker Change: You have in terms of.

Speaker Change: What's assumed in 'twenty four.

Speaker Change: As always can be some.

Speaker Change: Some movement there in terms of whether the dealers or.

Speaker Change: Adding R R.

Speaker Change: Shrinking their rental fleets.

Speaker Change: Just a comment or two in terms of the outlook for aggregates, which I know is more of a global business, but how you see that shaping up in 'twenty four.

Simon Meester: Definitely strong tailwinds in North America for our aggregates business, a little bit of headwinds in Europe. But, you know, with the spending on infrastructure, with the construction going on in North America, definitely benefits our aggregates business in North America. But, you know, a little slowdown in Germany and the UK is working against us.

Speaker Change: Yes.

Speaker Change: Thanks for the question.

Speaker Change: Definitely strong deal wins in North America for our aggregates business, a little bit of headwinds in Europe, but with the spending and infrastructure with the construction going on in in North America.

Speaker Change: Definitely.

Speaker Change: Benefits, our aggregates business in North America, but.

Speaker Change: A little bit of slowdown in Germany, and the UK.

Speaker Change: Is working against it.

Timothy W. Thein: All right, thank you. Thanks, Sam. Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open. Yes, hi. Good morning, everyone.

Speaker Change: Alright, thank you.

Speaker Change: Thanks, Tim.

Speaker Change: Your next question comes from the line of Jerry Revich with Goldman Sachs. Your line is open.

Jerry Revich: Yes, hi, good morning, everyone and sounds good congratulations again.

Jerry Revich: And Simon, congratulations again. Thanks. Simon, I'm wondering if we could just go back to your comments earlier in the call around M&A parameters. You know, you guys have been looking for additional bolt-ons within MP for a couple of years and haven't been able to find anything that matches the value proposition for you. How is the approach for evaluating M&A today compared to what we've been looking at over the past couple of years?

Jerry Revich: So I'm wondering if we could just go back to your comments earlier on the call.

M&A parameters.

Jerry Revich: Folks have been looking for additional bolt ons within MP for a couple of years and have been able to find anything that matches the value proposition for you folks.

Jerry Revich: How is the approach for evaluating M&A today compared to what we've been looking at over the past couple of years. It sounded like you alluded to potentially.

Simon Meester: It sounded like you alluded to potentially a few additional product lines. I'm wondering, can you just expand on your prior comments in terms of how you view what's accretive and the parameters of what you folks are evaluating going forward? Yeah, I mean, if I look at our portfolio today, we have a portfolio of market-leading businesses around the globe, diverse, definitely strengthening each other, strong operating margins, all of our businesses pretty much run into double digits now, and a strong balance sheet. So obviously, that gives us the optionality.

Jerry Revich: Few additional product clients I'm wondering can you just expand on your prior comments in terms of what's how do you view what's accretive.

Jerry Revich: Parameters of what you folks are evaluating going forward.

Jerry Revich: Yes.

Jerry Revich: If I look at our portfolio today, we have a portfolio of market leading businesses.

Jerry Revich: Around the globe diverse.

Jerry Revich: Definitely strengthening each other a strong operating margins all of our businesses pretty much run into double digits now.

Jerry Revich: <unk> strong balance sheet, so obviously that gives us the optionality.

Simon Meester: You know, we're looking at anything that would make us stronger would, you know, as I mentioned earlier, would make us more synergistic would, would widen our scope would help us grow faster. But it's going to be opportunistic in nature, it needs to be actionable, it needs to be affordable, and it needs to be financially creative. And then again, I want to reemphasize that we also still have a lot of opportunities to look just organically at expanding our businesses because we still have a lot of addressable market that we can go after with our existing portfolio. So, you know, obviously, we look at our pipeline of inorganic opportunities, but we're also very much looking at what we can do organically. So everything is on the table, is what I would say. And what makes my job a lot easier, quite frankly, as incoming CEO is that we have a lot of operational momentum going into 2024. We have posted very strong improvements in 2023 versus 2022. You know, up to 300 basis points on operating margin as Terex overall has grown 17%, a lot of strong operational momentum.

Jerry Revich: We are looking at anything that would make us stronger.

Jerry Revich: As I mentioned earlier would make us more synergistic.

Jerry Revich: Widen our mode would help us grow faster.

Jerry Revich: But it's going to be opportunistic in nature, it needs to be actionable needs to be affordable needs to be financially accretive and then again I want to reemphasize. We also still have a lot of opportunities to look.

Jerry Revich: <unk> and expanding our businesses because we still have a lot of addressable market that we can go after with our with our existing portfolio. So.

Jerry Revich: Obviously, we look at our pipeline of inorganic opportunities, but are also very much looking at what we can do organically. So everything is on the table is what I would say and what makes my job a lot easier quite frankly as incoming CEO is we have a lot of operational momentum going into 2024.

Jerry Revich: Posted very strong improvements 2023 for 2022.

Jerry Revich: Up 300 basis points on operating margin as Terex overall growing 17% a lot of strong operational momentum and I would say my first priority should be and we will have to be to make sure. We keep our operational momentum going forward into 2024.

Simon Meester: And I would say my first priority should be and will have to be to make sure we keep our operational momentum going forward into 2024. But to your point, you know, with the strong balance sheet that we have, we do have optionality, but we'll hold it against everything else that we have on the table. I really appreciate it, Simon. And can I ask, in terms of Europe, there's an anti-dumping investigation on Chinese products for AWP?

Speaker Change: But to your point.

Speaker Change: With a strong balance sheet that we have we do have optionality, but we'll hold it against everything else that we have on the table.

Speaker Change: Yeah.

Speaker Change: I appreciate the time and then can I ask you in terms of in Europe.

Speaker Change: Theres, an antidumping investigation on China product for AWP can you just talk about your position.

Jerry Revich: Can you just talk about your position in that investigation and the opportunities and potential risks that you see for yourself and others and the timeline on which you expect the decision? Thanks for the question. We learned about the petition in Europe.

Speaker Change: That investigation and the opportunities.

Potential risks that you see for yourself and others.

And the timeline that you expect the decision.

Speaker Change: Thanks for thanks for the question, Yes, we learned about the sufficient in Europe.

Simon Meester: We support the petition overall against illegal dumping of equipment in Europe or in any market for that matter. Our position is that we support fair competition in any market. We believe that a level playing field is essential and is in the best interest of all stakeholders, team members, jobs, customers, suppliers, and shareholders.

Speaker Change: We support.

Speaker Change: The division overall.

Speaker Change: Illegal.

Speaker Change: Something else equipment in Europe or in any market for that matter. Our position is that we support their competition in any market. We believe that a level playing field is essential.

Speaker Change: <unk> is in the best interest of all stakeholders team members' jobs customers suppliers and shareholders.

Simon Meester: We were made aware of the petition that was filed in December. We're working with the European Commission and are responding to their requests as required. We're monitoring the case, and we're awaiting whatever the outcome may be. Our strength is that we have a global footprint. We are pretty flexible. We have leverage. We have optionality in our footprint.

Speaker Change: And so yes, we were made aware of of.

Speaker Change: The petition that was filed in December.

Speaker Change: We're working with the European Commission.

Speaker Change: And are responding to their request is required.

Speaker Change: We're eager were monitoring the case and we're awaiting.

Speaker Change: Whatever the outcome may be.

Speaker Change: Our strength is that.

We have a global footprint, we are pretty flexible leverage we have optionality in our footprint so whatever the outcome will be.

Simon Meester: Whatever the outcome will be, we're looking forward to it, and we'll be able to respond. Thank you, Sam. Thank you. That is all the time we have for questions.

Speaker Change: We're looking forward to it and we'll be able to respond.

Speaker Change: Thank you Sam.

Operator: I will turn back to Simon for his closing remarks. All right, thank you, operator. I want to thank everyone for the questions. I'm looking forward to working with you. I want to thank you for your interest in Terex. If you have any additional questions going forward, please follow up with Julie, John, or Paretosh. And with that, operator, please disconnect the call. Thank you. This concludes today's call. We thank you for joining us. You may now disconnect your line. www.microsoft.com.au

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: That is all the time, we have for questions I will turn it back to Simon for closing remarks.

Alright. Thank you operator, I want to thanks, everyone for the questions I am looking forward working with you I want to thank you for your interest in Terex. If you have any additional questions going forward. Please follow up with Julie John or paradigm and with that operator. Please disconnect the call.

Speaker Change: Thank you. This concludes today's call. We thank you for joining you may now disconnect your lines.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: [music].