Q1 2024 Terex Corp Earnings Call

Operator: Greetings and welcome to the Terex first quarter 2024 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Neil Phronapal, Vice President of Investor Relations.

Greetings and welcome to the Terex first quarter 'twenty 'twenty four results conference call.

At this time all participants are in a listen only mode.

A brief question answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Neill for an Apple Vice President of Investor Relations.

Okay.

Neil Phronapal: Good morning, and welcome to the Terex First Quarter 2024 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. We are joined by Simon Meester, President and Chief Executive Officer, and Julie Beck, Senior Vice President and Chief Financial Officer.

Neill: Good morning.

Neill: Welcome to the <unk> first quarter 2024 earnings conference call.

A copy of the press release and presentation slides are posted on our Investor Relations website.

Neill: That surge that parents dotcom.

Neill: In addition, a replay and slides presentation will be available on our website.

Neill: We are joined by Simon Mr President and Chief Executive Officer, and Julie back.

Julie: You hear Vice President and Chief Financial Officer.

Neil Phronapal: Their prepared remarks will be followed by Q&A. Please turn to slide 2 of the presentation, which contains our Safe Harbor Statement. 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. These risks are described in greater detail in the hearing materials and in our reports filed with the FCC. In addition, we will be discussing non-GAAP financial 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 four, and I'll turn it over to Simon Meester.

Julie: Prepared remarks will be followed by Q&A.

Speaker Change: Please turn to slide two the presentation, which reflects our safe Harbor statement.

Speaker Change: 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.

Speaker Change: These risks are described in greater detail in the earnings materials and in our reports filed with the SEC.

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

Speaker Change: Reconciliations for these non-GAAP measures can be found in the conference call materials.

Please turn to slide four and I'll turn it over to Mr.

Simon A. Meester: Thanks Neil and good morning. I would like to welcome everyone to our earnings call and appreciate your interest in Terex. I'd like to begin by thanking all Paret team members for delivering outstanding performance in Q1. The team executed really well and delivered strong results to start the year. We increased sales by 5% and expanded operating margins by 20 base points from last year. The company also delivered earnings per share of $1.60 in the quarter and achieved a return on invested capital of more than 27%.

Speaker Change: Thanks, Neal and good morning, I would like to welcome everyone to our earnings call and I appreciate your interest in <unk>.

Neal: I'd like to begin by thanking all carriers team members for delivering outstanding performance in Q1, the team executed really well and delivered strong results to start the year with.

Neal: We increased sales by 5% and expanded operating margins by 20 basis points from last year.

Neal: We also delivered earnings per share of $1 60 in the quarter and achieved a return on invested capital of more than 27%.

Simon A. Meester: These outstanding results demonstrate our ability to execute if the team continues to perform at a high level. Additionally, we're raising our 2024 sales and profit outlook and now expect earnings per share in the range of $6.95 to $7.35. During the quarter, we also continued to advance our strategic initiatives to drive long-term shareholder value. We launched several new products across the portfolio and continue to make good progress ramping up our new facilities in Monterey. This new facility continues to absorb more of GENIE's global production mix and is expected to improve the segment's food cycle margin performance. Please turn to slide 5.

Neal: These outstanding results demonstrate our ability to execute.

Neal: <unk> continues to perform at a high level.

Neal: Additionally, we are raising our 2020 for sales and profit outlook and now expect earnings per share in the range of $6 95.

Neal: $7 35.

Neal: During the quarter. We also continued to advance our strategic initiatives to drive long term shareholder value.

Neal: We launched several new products across the portfolio and continues to make good progress ramping up our new facility in Monterrey.

Neal: This new facility continues to absorb more of genius global production mix and is expected to improve this segment's food cycle margin performance.

Neal: Please turn to slide five.

Simon A. Meester: Customer demand remains healthy across most of our businesses, supported by favorable end market conditions. Our Q1 backlog of $3.1 billion is significantly above historical levels and gives us confidence in the sales outlook for the remainder of the year. As expected, backlog continues to moderate from peak levels, which reflects more normal lead times, improving supply chain, and continued efforts by our team members to improve overall throughput. Consolidated bookings in Q1 of more than $1 billion were down from last year, which reflects a return to more normal seasonal order patterns, combined with softer demand in Europe.

Neal: Customer demand remained healthy across most of our businesses supported by favorable end market conditions.

Neal: Our Q1 backlog of $3 1 billion is significantly above historical levels and gives us confidence in the sales outlook for the remainder of the year.

Neal: As expected backlog continues to moderate from peak levels, which reflects more normal lead times, improving supply chain and continued efforts by our team members to improve overall throughput.

Neal: Consolidated bookings in Q1 more than $1 billion.

Neal: We're down from last year, which reflects the return to more normal seasonal order patterns combined with softer demand in Europe.

Neal: In the E&P segment.

Simon A. Meester: Backlog is still above historical norms, and bookings increased sequentially from the fourth and third quarter. Additionally, our AWP backlog now covers the 2024 outlook, with our utilities business actively taking orders for 2025. Overall, based on customer feedback, our backlog coverage, our bookings, and leading indicators, we feel confident about raising our 2024 outlook. Please turn to slide 6.

Neal: Backlog is still above historical norms and bookings increased sequentially from the fourth and the third quarter.

Neal: Additionally, our AWP backlog now covers the 2024 outlook with our utilities business actively taking orders for 2025.

Neal: Overall based on customer feedback, our backflow coverage, our bookings and leading indicators, we feel confident about raising our 2020 for outlook.

Neal: Please turn to slide six.

Simon A. Meester: The overall market outlook remains strong for many of our primary end markets, especially in North America, which represents over 60% of total company sales. In fact, we saw double-digit sales growth in North America in Q1. Our businesses remain well-positioned to benefit from higher U.S. government spending to modernize infrastructure over the coming years with an increasing number of projects continuing to be enacted. Additionally, construction spending on manufacturing is up more than 30% year-over-year, driven by on-shoring and megaprojects related to semiconductor manufacturing, clean energy, and EV battery projects.

Neal: The overall market outlook remains strong for many of our primary end markets, especially in North America, which represents over 60% with total company sales in.

Neal: In fact, we saw double digit sales growth in North America in Q1.

Neal: Our businesses remain well positioned to benefit from higher U S government spending the modernized infrastructure over the coming years with an increasing number of projects continuing to be announced.

Neal: Additionally, construction spending on manufacturing is up more than 30% year over year, driven by onshoring and mega projects related to semiconductor manufacturing clean energy and EV battery projects.

Simon A. Meester: These favorable end market trends, combined with replacement cycle tailwinds and high equipment utilization rates, are beneficial for our aerials business. Additionally, the increasing adoption of our products in emerging markets, such as India, is another possibility. The utilities market is expected to continue to grow, supported by investment in grid upgrades and expansion required for zero-carbon and amplified electrification needs, like power generation for future AI applications. In the U.S., power-related spending has been increasing at double-digit rates.

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

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

Neal: The utilities market is expected to continue to grow supported by investments in grid upgrades and expansion required for zero carbon and amplified electrification needs by power generation for future AI applications.

Neal: In the U S power related spending has been increasing at double digit rates.

Simon A. Meester: Our utilities business is benefiting from this growing demand and was up double digits in the first quarter as the team is working hard to overcome ongoing shortages in the supply chain. Strengthen U.S. infrastructure. General construction and residential end markets will continue to benefit MPs, aggregates, and concrete businesses. We expect these tailwinds to offset softness in businesses with higher European exposure.

Neal: Our utilities business is benefiting from this growing demand and was up double digits in the first quarter as the team is working hard to overcome ongoing shortages in the supply chain.

Neal: Strength in U S infrastructure general construction and residential end markets will continue to benefit <unk> aggregates and concrete businesses.

Neal: We expect these still wins to offset softness in businesses with higher European exposure.

Simon A. Meester: We expect MP's environmental business to continue its growth, driven by increasing demand for waste recycling. And our Fuchs business is focused on expanding into new geographies and new products to help offset the near-term demand softness. Overall, we see continued strength in the infrastructure, utilities, manufacturing, and recycling markets and remain positive on the 2024 market outlook for our portfolio. Please turn to slide 7.

Neal: We expect MTS environmental business to continue its growth driven by increasing demand for waste recycling.

Neal: And our foods business is focused on expanding into new geographies and new products to help offset the near term demand softness.

Neal: Overall, we see continued strength in the infrastructure utilities manufacturing and recycling markets and remain positive on the 2024 market outlook for our portfolio.

Neal: Please turn to slide seven.

Simon A. Meester: And I want to take a step back and provide a few reasons why I'm confident in Terex's growth trajectory over the coming years. First, Terex has a diverse product portfolio that provides differentiated value to our customers at all points of the project lifecycle. Notably, our equipment is utilized by customers across various applications, from foundation to building, repair, maintenance, and the eventual recycling of materials for reuse.

Neal: And I want to take a step back and provide a few reasons on why im confident and tariffs growth trajectory over the coming years first Eric has a diverse product portfolio that provides differentiated value to our customers at all points of the project lifecycle.

Neal: Notably our equipment is utilized by customers across various applications from foundation building repair maintenance and the eventual recycling of materials for reuse.

Simon A. Meester: We also remain committed to developing new products to address our customers' evolving needs and maximize their return on investment. In fact, the innovative part of our strategy continues to generate incremental growth for the company. For example, approximately 20% of our annual sales are from new products introduced in the last three years. This is a testament to our team members' collaboration with our customers to provide innovative solutions to support development across the globe. Please turn to slide 8.

Neal: We also remain committed to developing new products to address our customers' evolving needs and maximize their return on investments.

Neal: In fact, the innovative part of our strategy continues to generate incremental growth for the company.

Neal: For example.

Neal: Approximately 20% of our annual sales are from new products introduced in the last three years.

Neal: This is a testament to our team members in collaboration with our customers to provide innovative solutions to support development across the globe.

Neal: Please turn to slide eight.

Simon A. Meester: Terex also remains well positioned to capitalize on megatrends and emerging technologies that will favorably impact our end markets over the coming years. In total, around 80% of our addressable market is aligned with stimulus from megatrends and from increasing government investment and incentives. For example, our market-leading businesses all benefit, to varying degrees, from more investment in infrastructure, digitalization, waste recycling, and electrification.

Neal: <unk> also remains well positioned to capitalize on the mega trends and emerging technologies that will favorably impact our end markets over the coming years.

Neal: In total around 80% of our addressable market is aligned with the stimulus from the mega trends and from increasing government investments and incentives.

Neal: Our market, leading businesses old benefit to varying degrees by more investments in infrastructure digitization waste recycling and electrification.

Neal: For example.

Simon A. Meester: The NP team has leading positions in global crushing and screening markets that benefit from the growth of on-site demolition and infrastructure projects in general and the associated demand for agribusiness. However, keep in mind that aggregates represent around 50% of segment sales. And we also serve customers across all project lifecycle phases, including growing demand for environmental and waste recycling solutions. Our utilities business is well positioned to capitalize on the investment required to upgrade the U.S. electrical grid to support the accelerating demand as the industrial world continues to move to the use of more electrical power.

Neal: The MP team has leading positions in global crushing and screening markets that benefit from the growth of onsite demolition and infrastructure projects in general.

Neal: And the associated demand for aggregates.

Neal: Keep in mind that aggregates represents around 50% of segment sales.

Neal: <unk> also serves customers across all project lifecycle phases.

Neal: Including growing demand for environmental and waste recycling solutions.

Our utilities business is well positioned to capitalize on investments required to upgrade the use electrical grid to support the accelerating demand as the industrial World continues to move through the use of more electrical power.

Simon A. Meester: And our Genie products are benefiting from demand from infrastructure projects, data centers, manufacturing, on-shoring, and investment in the entertainment sector. Overall, Pareto's diverse product portfolio position will do very well for 2024 and beyond. Let's turn to slide 9.

Neal: And our <unk> products are benefiting from demand from infrastructure projects data centers manufacturing onshoring and investments in the entertainment sector.

Neal: Overall territory diverse product portfolio positions us very well for 2024 and beyond.

Neal: Let's turn to slide nine.

Simon A. Meester: It has been an exciting first few months as CEO of Terex, and I would like to provide a few more thoughts on our strategic priorities as we look ahead to the future. Our Execute Innovate Growth Strategy has built strong momentum over the last several years. We now have a diversified portfolio of market-leading businesses that are generating higher levels of performance through the cycle. In fact, we're on track to achieve more than $7 of earnings per share and greater than $300 million of free cash flow for the second consecutive year.

Speaker Change: It has been an exciting first few months as CEO of Terex and I would like to provide a few more thoughts on our strategic priorities as we look ahead to the future.

Speaker Change: Our execute innovative growth strategies has built strong momentum over the last several years, we now have a diversified portfolio of market, leading businesses that are generating higher levels of performance through the cycle.

Speaker Change: In fact, we're on track to achieve more than $7 of earnings per share and greater than $300 million of free cash flow for the second consecutive year.

Simon A. Meester: I'm confident that Terex has significant upside for many years to come. Looking ahead, I strongly believe we can create even more value for shareholders by accelerating the growth element of our strategy over the coming years. And it starts with our strong balance sheet and cash flow generation, which provides plenty of firepower to pursue opportunities that will drive sustainable long-term value. With respect to organic growth, we're focused on increasing product vitality and targeting opportunities to drive incremental growth across the portfolio.

Speaker Change: Im confident that Terex has significant upside for many years to come.

Speaker Change: Looking ahead I strongly believe we can create even more value for shareholders by accelerating the growth element of our strategy over the coming years.

Speaker Change: And it starts with our strong balance sheet and cash flow generation, which provides plenty of firepower to pursue opportunities that will drive sustainable long term value.

Speaker Change: With respect to organic growth, we're focused on increasing product vitality and targeting opportunities to drive incremental growth across the portfolio.

Simon A. Meester: The team is also moving with urgency to capitalize on the megatrends and emerging technologies that I highlighted earlier. And finally, we continue to grow the M&A pipeline to identify opportunities that are financially attractive, broaden our market reach, and strengthen our portfolio. With that in mind, we continue to evaluate potential inorganic action against other alternative uses of capital, which is a good position to be in. Overall, I'm excited for the opportunities that lie ahead, and I'm confident we will elevate Terex to new levels of performance. And with that, I will turn it over to Julie.

Speaker Change: The team is also moving with urgency to capitalize on the Mega trends and emerging technologies that I highlighted earlier.

Speaker Change: And finally, we continue to grow the M&A pipeline to identify opportunities that are financially attractive broaden our market reach and strengthen our portfolio.

Speaker Change: Keeping in mind, we continue to evaluate potential inorganic action against other alternative uses of capital.

Speaker Change: Which is a good position to be in.

Speaker Change: Overall I am excited for the opportunities that lie ahead, and I'm confident we will elevate Eric to new levels of performance.

Speaker Change: And with that let me turn it over to Julie.

Julie A. Beck: Thanks, Simon. And good morning, everyone.

Julie: Thanks, Simon and good morning, everyone, let's take a look at our first quarter financial performance and on pipeline.

Julie A. Beck: Let's take a look at our strong first quarter financial performance, found on slide 10. We posted sales of 1.3 billion dollars, up about 5% from last year, reflecting strong demand for our products across multiple businesses. Geographically, we delivered significant growth in North America, while Europe declined against last year's very strong first quarter. Gross margins of 23% increased by 40 basis points over the prior year on improved manufacturing throughput and disciplined price-cost management. SG&A expense increased over the prior year due primarily to higher compensation expense, although structural costs came in largely as expected.

Julie: We posted sales of $1 $3 billion up about 5% from last year.

Julie: Strong demand for our products across multiple businesses.

Julie: Geographically, we delivered significant growth in North America, while Europe declined last year's very strong first quarter.

Julie: Gross margin of 23% increased by 40 basis points over prior year and improved manufacturing through print.

Julie: Disciplined cost management.

Julie: No.

Julie: SG&A expense increased over the prior year due primarily to higher compensation expense.

Structural cost came in largely as expected.

Julie A. Beck: SG&A is a percent of sales, with 10.8% up slightly from last year. Note that SG&A includes $4 million of discrete financial call-outs due to accelerated vesting and severance charges. Excluding these charges, SG&A came in at 10.4% of sales, better than last year. Income from operations was $158 million, with an operating margin of 12.2%. 20 basic improvements over prior years. Operating income also includes the $4 million impact of vesting and severance charges.

Julie: SG&A as a percent of sales with 10, 8% up slightly from last year.

Julie: Note that SG&A increased $4 million of discreet financial callout due to accelerated vesting and severance charges.

Julie: Excluding these charges SG&A came in at 10, 4% of sales better than last year.

Julie: Income from operations was $158 million with an operating margin of 12, 2%, a 20 basis improvement over prior year.

Julie: Operating income also included a 4 million dollar impact of that thing and severance charges.

Julie A. Beck: Interest expense was relatively consistent with the previous year, while other expenses increased $7 million from the prior year, primarily due to unfavorable mark-to-market adjustments. The first quarter global effective tax rate was 20.5% compared to 17.5% in the first quarter of 2023.

Julie: Interest expense was relatively consistent with the previous year, while other expense increased $7 million from the prior year, primarily due to unfavorable mark to market adjustments.

The first quarter global effective tax rate was 28% compared to 17.

Julie: 17, 5% in the first quarter of 2023.

Julie A. Beck: First quarter earnings per share of $1.60 was consistent with last year. As expected, with a return to more seasonal patterns, pre-cash flow for the first quarter was negative, as increasing operating profits were more than offset by working capital added to support the sales outlook. In Q1, we continue to carry a higher level of inventories to support increased Q2 and Q3 sales volumes, as well as our genie production. Now, let's take a look at our segment results. Please turn to slide 11.

Julie: First quarter earnings per share of $1 68 were consistent with last year.

Julie: As expected with a return to a more seasonal pattern free cash flow for the first quarter was negative as increasing operating profits were more than offset by working capital added to support the sales outlet.

Julie: In Q1, we continued to carry a higher level of inventory to support increased Q2, and Q3 sales volume as well as our Genie production nodes.

Speaker Change: Let's take a look at our segment results. Please turn to slide 11.

Julie A. Beck: The MP team has gotten off to another good start in 2024 and is executing well despite more challenging macro conditions for a few of its business partners. Before I go into more details on the quarter, let me first provide more perspective on the segment from a high level. We have nearly doubled the size of the MP segment over the last seven years and expanded operating margins by almost 700 basis points during this period.

Speaker Change: <unk> team has gotten off to another good start in 2024 and is executing well despite more challenging macro conditions for a few of the businesses.

Speaker Change: Before I go into more details on the quarter. Let me first provide more perspective on the segment from a high level.

Speaker Change: <unk> doubled the size of the MMP segment over the last seven years and expanded operating margins by almost 700 basis points. During this period.

Julie A. Beck: Today, MP consistently generates mid-teens operating margins and represents about half of our total annual operating profit. And this segment remains well on track to achieve the Investor Day targets we established for 2027. In fact, delivering on the long-term sales target of $2.7 billion represents an incremental dollar per share of earnings power for the total company relative to our 2024 outlook. For the first quarter, MP sales declined by 6% to $520 million compared to the exceptional first quarter of 2023, due primarily to software demand in Europe, partially offset by growth for aggregate. NT's recorded operating profit of $72 million was down $13 million due to the impact of lower sales volume, an unfavorable product mix, and product liability reserves.

Speaker Change: Today and can consistently generate mid teens operating margin and represents about half of our total annual operating profit.

Speaker Change: In this segment remains on track to achieve the Investor day targets, we established for 2020.

Speaker Change: In fact, delivering on our long term sales target of $2 $7 billion represents an incremental dollar per share of earnings power for the total company relative to our 2024 outlets.

For the first quarter MMP sales declined by 6% to $520 million compared to the exceptional first quarter of 2023, due primarily to softer demand in Europe, partially offset by growth for aggregates.

Speaker Change: <unk> recorded operating profit of $72 million was down $13 million due to the impact of lower sales volume unfavorable product mix and product liability reserve.

Julie A. Beck: Although NP's operating margins were down 150 basis points from last year, they were 50 basis points better than expected. MP ended the quarter with a backlog of $712 million, still above historical norms, while our bookings increased 7% sequentially from the fourth quarter. Keep in mind that the NP business is a shorter cycle and continues to transition back to more traditional book-to-bill dynamics as supply chains continue to improve, which impacted the comparison for bookings relative to the prior year. Turn to slide 12.

Speaker Change: Although mp's operating margins were down 150 basis points from last year, there were 50 basis points better than expected.

Speaker Change: <unk> ended the quarter with backlog of $712 million philosophe historical norms, while our bookings increased 7% sequentially from the fourth quarter.

Speaker Change: Keep in mind that the MP business this sort of cycle and continue to transition back to more traditional book to Bill dynamics and supply chain continued to improve which impacted the comparison for bookings relative to the prior year.

Speaker Change: Turning to slide 12.

Julie A. Beck: AWT delivered excellent performance in the first quarter, with sales of $773 million, up nearly 13% from last year, primarily reflecting higher demand, as well as improved supply chain and manufacturing throughput. AWP reported quarterly operating profits of $107 million, an increase of 29% over the prior year. The increase was driven by strong operational execution on the higher volumes, improved supply chain performance, and disciplined price-cost management. Operating margins expanded by 180 basis points, with an incremental margin of 28%, reflecting strong performance overall by the team. And finally, I would note that AWP's backlog is strong at $2.4 billion, which is more than two times the historical norm. Please see slide 13.

Speaker Change: AWP team delivered excellent performance in the first quarter with sales of $773 million up nearly 13% from last year, primarily reflecting higher demand as well as improved supply chain and manufacturing throughput.

Speaker Change: AWP reported quarterly operating profit of $107 million, an increase of 29% over the prior year.

Speaker Change: The increase was driven by strong operational execution on the higher volume.

Speaker Change: Supply chain performance and disciplined price cost management.

Speaker Change: Operating margin expanded by 180 basis points with an incremental margin of 28%, reflecting strong performance overall by the team.

Speaker Change: And finally I would note that AWP backlog is strong at $2 $4 billion, which is more than two times the historical norm.

Speaker Change: Please see slide 13.

Julie A. Beck: Terex has a strong balance sheet with ample liquidity. Our net leverage remains low at 0.5 times, well below our 2.5x target through the cycle, providing us plenty of flexibility as we look ahead. And our outstanding bonds are at an attractive fixed rate of 5% until the end of the decade. We are reaffirming our 2024 free cash flow outlook range of $325 to $375 million. As you can see on this slide, Terex is on track to generate more than $1.1 billion of free cash flow over this five-year period.

Speaker Change: Harris has a strong balance sheet with ample liquidity.

Speaker Change: Leverage remains low at <unk> five times, well below our two five times target through the cycle, providing us plenty of flexibility as we look ahead.

Speaker Change: And our outstanding bonds are at an attractive fixed rate of 5% until the end of the decade.

Speaker Change: Reaffirming our 2020 for free cash flow outlook range of $325 million to $375 million.

Speaker Change: As you can see on this slide Eric is on track to generate more than $1 $1 billion of free cash flow over the five year period.

Julie A. Beck: This cash generation has allowed us to strengthen the balance sheet and invest for profitable growth, all while returning significant cash to shareholders. We're planning for capital expenditures this year of approximately $145 million, or about 2.7% of sales at the expected midpoint, with the largest investment related to our Monterey facility. Note that we would expect CapEx to take a step down next year and to be a benefit to free cash flow conversion in 2025. We recorded a return on invested capital of 27.6%, 370 basis points year-over-year.

Speaker Change: This cash generation has allowed us to strengthen the balance sheet and invest for profitable growth all while returning significant cash to shareholders.

Speaker Change: We're planning for capital expenditures this year of approximately $145 million or about two 7% is down at the expected midpoint with the largest investment related to our Monterey facility.

Speaker Change: That we would expect capex to take a step down next year and to be a benefit to free cash flow conversion in 2025.

Speaker Change: We reported a return on invested capital of 27, 6% up 370 basis points year over year.

Julie A. Beck: Paret has been in an excellent position to continue advancing our strategic growth initiative while returning capital to shareholders. Now turn to slide 14 and our full-year outlook. It's important to realize we are operating in a complex environment with many microeconomic variables and geopolitical uncertainties whose results could change negatively or positively.

Speaker Change: <unk> is in an excellent position to continue advancing our strategic growth initiatives, while returning capital to shareholders.

Now turning to slide 14, and our full year outlook.

It's important to realize we are operating in a complex environment and many macro economic variables and geopolitical uncertainty that results could change negatively or positively.

Julie A. Beck: With that said, this outlook represents our best estimates as of today. Following the strong start to the year, we are raising both our sales and earnings per share outlook for 2024. We are increasing our earnings per share outlook to the range of $6.95 to $7.35, up from the previous outlook of $6.85 to $7.25. We are also raising our sales outlook to a range of $5.2 to $5.4 billion, up $100 million compared to the prior outlook for mid-year. Our sales outlook incorporates healthier customer demand and improved operational throughput. With that said, the outlook reflects strong demand in North America and plans for continued softness in Europe over the balance of the year.

That said this outlook represents our best estimate as of today.

Speaker Change: Following the strong start to the year, we are raising both our sales and earnings per share outlook for 2024.

Speaker Change: We are increasing our earnings per share outlook to the range of $6 95.

Speaker Change: $7 35 up from the previous outlook of $6 85 to $7 20.

Speaker Change: We are also raising our sales outlook to a range of $5 10 to $5 4 billion up $100 million compared to the prior outlook midpoint.

Speaker Change: Our sales outlook incorporates healthier customer demand and improved operational throughput with that said the outlook reflects strong demand in North America and plans for continued softness in Europe over the balance of the year.

Julie A. Beck: We expect the first half sales to be slightly higher than the second half, 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 full year operating margins in a range of 12.8 to 13.1 percent, consistent with our prior outlook, solidly above full year 2023 performance. The margin expansion reflects strong operational execution and the impact of higher sales output. We're also driving ongoing cost reduction activities to offset software demand in Europe and continue to invest.

Speaker Change: We expect the first half sales to be slightly higher than the second half with the second and third quarter sale higher than the first and fourth quarter as we returned to more seasonal customer delivery pattern.

Speaker Change: We anticipate full year operating margin in a range of 12 eight to 13, 1% consistent with our prior outlook and solidly above full year 2023 performance.

Speaker Change: Our margin expansion reflects strong operational execution and the impact from the higher sales outlook.

Speaker Change: We're also driving ongoing cost reduction activities.

Speaker Change: Softer demand in Europe and continued inflation.

Julie A. Beck: At the midpoint of the outlook range, the implied incremental margin range for the full year is above 30%. From a modeling perspective, we do want to emphasize the strong second quarter performance in 2023 when making your year-over-year comparison for the remainder of the year. We expect corporate and other expenses to be around $25 million in the second quarter and then approximately $20 million per quarter in the second half of the year.

Speaker Change: At the midpoint of the outlook range, the implied incremental margin range for the full year is about 30%.

Speaker Change: From a modeling perspective, we do want to emphasize the strong second quarter performance and 2023, when making your year over year comparison for the remainder of the year.

Speaker Change: We expect corporate and other expenses to be around $25 million in the second quarter.

Speaker Change: Approximately $20 million per quarter in the second half of the year.

Julie A. Beck: We now expect interest and other expense of $65 million for the full year, higher than the prior outlook, to primarily reflect the financial callout in the first quarter. The outlook for the rest of the below-line items is largely unchanged from our previous outlook. And, as I highlighted earlier, we continue to estimate free cash flow in the range of $325 to $375 million.

Speaker Change: We now expect interest and other expense of $65 million for the full year higher than the prior outlook to primarily reflect the financial call out for the first quarter.

Speaker Change: Now I would like for the rest of the below line items are largely unchanged from our previous outlook.

Speaker Change: And as I highlighted earlier, we continue to estimate free cash flow in the range of $325 million to $375 million.

Julie A. Beck: Let's review our segment outlook. We expect MP sales to be $2.2 to $2.3 billion for the full year, with margins in the range of 15.6 to 15.9%, both consistent with the previous outlook. For the second quarter, sales and margins are expected to step up from Q1 levels, and profitability is expected to steadily increase through the balance of the year. For AWP, we now expect 2024 sales of $3 to $3.1 billion, up $100 million from our previous outlook.

Let's review our segment outlook.

Speaker Change: We expect <unk> sales to be $2, two to $2 $3 billion for the full year with margins in the range of $15 six to 15, 9% both consistent with the previous outlook.

Speaker Change: For the second quarter sales and margins are expected to step up from Q1 levels profitability is expected to steadily increase through the back.

Speaker Change: Out of the year.

Speaker Change: For AWP, we now expect 2024 sales of three to $3 $1 billion up $100 million from our previous outlook.

Julie A. Beck: We are slightly raising our operating margin outlook to a range of 13.5 to 13.8% for the full year, representing upwards of 100 basis points of expansion over 2023. We expect Q2 sales to be up from the prior year, while margins are anticipated to be around 150 bp lower compared to last year's very strong second quarter. Note that margins will be impacted by moderate efficiencies and unfavorable MECs, partially offset by continued cost-out activities.

Speaker Change: We are slightly raising our operating margin outlook to a range of $13 five to 13, 8% for the full year, representing upwards of 100 basis points of expansion over 2023.

Speaker Change: We expect.

Speaker Change: Two sales to be up from the prior year, while margins are anticipated to be around 150 basis points lower compared to last years very strong second quarter.

Speaker Change: Note that margins will be impacted by moderating efficiency and unfavorable mix, partially offset by continued cost out activity.

Julie A. Beck: 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. Overall, our increased school year outlook reflects our confidence that 2024 will be another outstanding year for Terex. And with that said, I will turn it back to you, Simon. Thanks, Julie.

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

Speaker Change: Overall, our increased full year outlook reflects our confidence that 2024 will be another outstanding year for Terex and.

Speaker Change: And with that said I will turn it back to you.

Speaker Change: Thanks, Julie turning to slide 15.

Simon A. Meester: Thanks, Julie. Turning to slide 15.

Simon A. Meester: In summary, the Terex team delivered excellent results to start the year, and we now expect even stronger performance for 2024. We have a diversified portfolio of industry-leading businesses that are generating higher levels of performance through the cycle. We're also well positioned to continue to benefit from megatrends and emerging new technologies like electrification, digitalization, and AI. The team remains focused on operational execution to drive greater efficiencies and high returns on invested capital.

Speaker Change: In summary, the Terex team delivered excellent results to start the year and we now expect even stronger performance for 2024.

Speaker Change: We have a very diversified portfolio of industry, leading businesses that are generating higher levels of performance through the cycle.

Speaker Change: We're also well positioned to continue to benefit from Megatrends and emerging new technologies like electrification digitalization and AI.

Speaker Change: The team remains focused on operational execution to drive greater efficiencies and high returns on invested capital.

Simon A. Meester: We have a strong balance sheet and generate significant cash flow that will continue to fuel our profitable growth strategy and return of capital to shareholders. 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 over the coming years. And with that, let me turn it back to Neal. Thanks.

Speaker Change: We have a strong balance sheet and generate significant cash flow and will continue to fuel our profitable growth strategy and return of capital to shareholders.

Speaker Change: 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 over the coming years.

And with that let me turn it back to Neil.

Thanks Simon.

Neil Phronapal: 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?

Neil: 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.

Neil: With that I would like to open it up for questions operator.

Operator: Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Jamie Cook from Truist Securities. Please go ahead; your line is open.

Speaker Change: Thank you if you would like to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Our first question comes from Jamie Cook from tourist Securities. Please go ahead. Your line is open.

Jamie Lyn Cook: Hey, good morning. Congratulations on a nice quarter. I guess, Julie, my first question on materials processing. You noted, you know, margins came in 50 basis points ahead of expectations, but you're not changing your margin guidance for the year. I'm just also surprised we didn't reiterate the sales guidance was reiterated when the markets seem weaker, in particular with the European exposure within materials processing.

Jamie Lyn Cook: Hey, good morning, Congrats on a nice quarter.

Jamie Lyn Cook: I guess Julie My first question on materials processing, you noted margins came in 50 basis points ahead of expectations, but you're not changing your margin guidance for the year.

Jamie Lyn Cook: And just also surprised you were not the sales guidance was reiterated when the markets seem weaker in particular with the European exposure within materials processing. So if you could just help me on that that the M. P die.

Julie A. Beck: So, if you could just help me with the MP guide. I guess, in Simon, now that I guess you're, you know, close to five months in, can you just talk about what your, I know your strategy to accelerate growth. You know, can you talk about what you're seeing in the M&A sort of pipeline, whether you think there's an opportunity to do deals in 2024, and then just sort of the size of the deals that you're looking at and where you'd be interested. Thank you.

Speaker Change: I guess, then and Simon now that I guess, you're you know close to five months and.

Speaker Change: Can you just talk to what your I know your strategy sort of accelerate growth.

Speaker Change: Can you talk to what you're seeing on the M&A sort of pipeline, whether you think there's an opportunity to do deals in 2024, and then just sort of the size of the deals that youre looking at and where you'd be interested thank you.

Speaker Change: Yeah.

Simon A. Meester: Jamie, I guess I'll start with the MP outlook. So the MP business had a better quarter than anticipated. They were about 60 basis points ahead in operating margin from what we had anticipated. They had some favorable geographic mix. We had more North America exposure.

Speaker Change: I think that Jamie I guess I'll start with the <unk> outlets the DMT business.

Speaker Change: If you had.

Speaker Change: A better quarter than anticipated.

Speaker Change: They were about 60 basis points ahead in operating margin from what we had anticipated they had some favorable geographic mix, we had more north American exposure they.

Julie A. Beck: They were also impacted in the quarter by about 50 basis points for that product liability charge. We do anticipate that some of the European markets, in particular our material handling business, that's a German business tied to scrap, will be challenged going forward. But we see an upside in our environmental businesses and our concrete businesses, and aggregates continue to perform well. And from a margin perspective, we're expecting our margins to improve sequentially as we go throughout the year, and we expect sales to take a step up from Q1 levels as well. So overall, we're expecting another nice year from NPB.

Speaker Change: They were also impacted in the quarter.

Speaker Change: About 50 basis points for that product liability charge that I mentioned.

Speaker Change: We do anticipate in that you know that that's there, but some of the European markets in particular, our material handling business.

Speaker Change: The German business tied to scrap it.

Speaker Change: It's challenged going forward, but we see upside in our environmental businesses and and our our concrete business in aggregates continues to perform well and and so there is that you know and from a margin perspective.

Speaker Change: <unk>, our margins tend to improve.

Speaker Change: Sequentially as we go throughout the year and we expect our sales to take a step up from Q1 levels as well. So overall, we're expecting another nice year from from the MP business.

Simon A. Meester: Yeah, Jamie. Good morning.

Speaker Change: Yes, Jamie good morning. Thanks, Thanks for the question, yes. So.

Simon A. Meester: Thanks. Thanks for the question. Yeah, so it's been four months. It's been very exciting so far. Obviously, looking back over the last couple of years, I don't think there's any denying that we have built very strong operational momentum with our Execute, Innovate, and Grow strategy. We have truly transformed the company; we have a strong portfolio that we feel very good about. So I would say my first priority is to make sure we maintain that positive momentum that we're currently on.

Speaker Change: It's been it's been four months.

Very exciting so far.

Speaker Change: Obviously, you know looking back over the last couple of years I don't think theres any denying that we have.

Jamie Lyn Cook: So very strong operational momentum with our excuse me innovate and grow strategy, we truly have transformed the company. We have a strong portfolio that we feel very good about it. So I would say my first priority is to make sure. We maintain that positive momentum that were currently on.

Simon A. Meester: But there's no doubt that we are now in a position where we can also focus on, you know, now that we have that strong operational momentum, how we can accelerate growth. And to your point, obviously, we look at inorganic options. We're also looking at organic options. You know, we're a $5 billion business in a $34 billion addressable market. There's still a lot of white space to go after organically, and with a good return on invested capital, that is on the table for us just as much as inorganic action. But when it comes to inorganic action, you know, for the reasons I just laid out, we're not really in a hurry. We didn't set ourselves a target.

Jamie Lyn Cook: But there is no doubt that.

Jamie Lyn Cook: We now are in a position where we can also focus on now that we have strong operational momentum on how we can accelerate growth and to your point, obviously, we look at inorganic options.

Jamie Lyn Cook: We're also looking at organic options, we're a $5 billion business and a $34 billion addressable market. There's still a lot of white space to go apps organically and with good return on invested capital that is on the table for us just as much as inorganic action.

Jamie Lyn Cook: When it comes to inorganic action.

Jamie Lyn Cook: For the reasons I just laid out we're not really in a hurry we didn't set ourselves targets, we didn't set ourselves inside the timeline because we are in such a strong place and because we have strong demand for our existing businesses.

Simon A. Meester: We didn't set ourselves a timeline because we are in such a strong place and because we have strong demand for our existing businesses for the next couple of years. We're going to take our time with this, but we do have an active pipeline of opportunities. We're looking for anything inside and outside our current addressable markets that would be attractive, that would strengthen our portfolio, that would make us stronger, and that would widen our moat.

Jamie Lyn Cook: The next couple of years.

Jamie Lyn Cook: We're going to take our time to produce but we do have an active pipeline of opportunities. We're looking for anything inside and outside our current addressable market that would be attractive that would.

Jamie Lyn Cook: Strengthen our portfolio that would make us stronger widen our moat.

Simon A. Meester: But obviously, it needs to be financially attractive and ultimately, you know, further strengthen our future earnings profile. But again, I can't emphasize this enough, it all needs to rank favorably versus all the other actions that we have available to us, like share buybacks, like investing in our current businesses, and dividends. And so that's how we force rank those opportunities. But anything is on the table.

Jamie Lyn Cook: But obviously needs to be financially attractive and ultimately.

Jamie Lyn Cook: Further strengthen our future earnings profile, but again I can't emphasize this enough it all needs to rank favorably versus all the other actions that we have available to us like share buybacks like investing in our current businesses and dividends and so thats, how we force rank those opportunities, but anything at all.

Jamie Lyn Cook: The table.

Speaker Change: Okay. Thanks.

Operator: Our next question comes from Stan Elliott from Stiefel. Please go ahead. Your line is open.

Speaker Change: Thanks, Jamie.

Speaker Change: Our next question comes from Stan Elliott from Stifel. Please go ahead. Your line is open.

Stanley Stoker Elliott: Good morning, Simon. Good morning, Julie. Thank you for the question.

Stanley Stoker Elliott: Hey, good morning, Good morning, Julien. Thank you for the question I guess piggybacking on that with leverage you guys have a kind of a two and a half kind of net target through the cycle is probably going to be close to debt free by the end of the year.

Julie A. Beck: I guess piggybacking on that, with leverage, you guys have a 2.5 net target through the cycle. You're probably going to be close to debt-free by the end of the year. How large of a deal would you want to pursue if something were to pop up? And if that doesn't materialize this year, then maybe help us again with opportunities for buybacks and things like that.

Speaker Change: How large of a deal would you want to pursue if something were to pop up.

Speaker Change: If that doesn't materialize this year than maybe kind of help us again with opportunities for buyback and things like that.

Simon A. Meester: Yeah, well, Stanley, we will evaluate, you know, we're evaluating all sorts of things; we have a wide pipeline. So we look at smaller things and maybe larger things as well. And we're not prescriptive. You know, I think we're just trying to follow the criteria that Simon mentioned before. So again, we'll continue to evaluate share repurchases and inorganic opportunities along the way and make the decision that provides the

Speaker Change: Yeah.

Speaker Change: Stanley, we will evaluate and we're evaluating all sorts of it.

Speaker Change: We have a wide pipelines that we look at smaller things and maybe some larger things as well.

Speaker Change: Not prescriptive.

Speaker Change: I think we're just trying to follow the criteria that Simon mentioned before.

Speaker Change: When we think about share repurchases, certainly, we've repurchased $1 $6 billion of shares.

Over the last three announced.

Speaker Change: Seven or eight years last year, we returned over 28% of our free cash flow to shareholders and we have $130 million remaining on our current authorization for share repurchase again, we'll continue to evaluate share repurchases in inorganic opportunities along the way and make the decision that that provides the greatest.

Stanley Stoker Elliott: And secondly, you know, the comments. I mean, you have had about 20% new products in the past three years. This comes at a time when you guys are generating very strong margins, returns, and making accelerated CapEx. That combination typically does not happen.

Speaker Change: Yeah.

Speaker Change: And I guess secondly, the comments you had about 20% new products you're past three years.

Speaker Change: At that time, you guys are generating very strong margins returns and making accelerated capex.

Speaker Change: That combination timber typically does not happen. What are you guys doing differently is it is a voice of customer is it kind of moving into some kind of Nietzsche white space, but you it sounds like the new product pieces is probably exceeding expectations.

Simon A. Meester: What are you guys doing differently? Is it voice to customer? Is it kind of moving into some kind of niche white space? But, you know, it sounds like the new product piece is probably exceeding expectations. Yeah, it definitely is.

Simon A. Meester: Yeah, it definitely is. And at the end of the day, we're a product company. That's what we do. That's what excites us. That's what makes us go in every single day.

Speaker Change: Yes, it definitely is and at the end of the day, we're a product company. That's what we do that's what excited us.

Speaker Change: What makes us going every single day.

Simon A. Meester: We're excited to bring new products to the market. We deliver; most of our products go to businesses. They're looking for return on investment, so whatever improves return on investment for our customers and makes our customers more successful. But yeah, you know, in NP, we've been expanding our hybrid and our plug-in power alternatives. We announced our Cummins partnership, and we collaborate on hydrogen power. We've expanded our recycling and environmental solutions offerings, like Green Tech and the new slow speed shredder that I talked about in the presentation. And it's really, you know, all the combinations you can think of.

Speaker Change: We're excited to bring new products to the market.

Speaker Change: We deliver most.

Speaker Change: Most of our products go through businesses are looking for return on investment so whenever it improves no return on investment for our customers that makes our customers more successful.

Speaker Change: So yes.

Speaker Change: <unk>, we've been expanding our hybrid.

Speaker Change: Florida power alternatives, as we announced our Cummins partnership.

Speaker Change: Collaborate on hydrogen power, we've expanded our recycling and environmental solutions offerings like Green Tech.

Speaker Change: The newest low speed rather than <unk>.

Speaker Change: It's about in the presentation and its really all the all of the combinations you can think of new products in existing markets existing products and new markets. We're exploring at all we.

Simon A. Meester: New products in existing markets, existing products in new markets. We're exploring it all. We have opportunities to take existing products into new markets. We also have opportunities to take new markets and new products into existing markets. On the Genie side, Genie has been a leader in the development of electric and hybrid products for some time. With access capacity in 2018, even before the regulations changed, Genie already brought that to market. But today, with their hybrid boost, they've really been trendsetters.

Speaker Change: Have opportunities to take existing products into new markets.

Speaker Change: Opportunities to take new markets and new products in existing market.

Speaker Change: On the G&A side, Jamie has been a leader in the development of electric and hybrid products for for some time.

Speaker Change: The excess capacity in 2018, even before the regulations changed <unk> already brought that to the market, but today with their hybrid boosted really being trendsetters. The nutella handler sit up to come out with significantly improved total cost of ownership.

Simon A. Meester: The Nutella handlers that have come out, And then lastly, on the utility side, introduced the first all-electric bucket truck combined with an EPTO on an all-electric chassis that was two years old, if I remember correctly. A big opportunity going forward there. And so yeah, we're playing the MPD card really hard because, at the end of the day, that's I think what makes our company what it is and gives us the competitive advantage that it has.

Speaker Change: And then lastly on the utility side introduced the first all electric bucket charter combined with <unk> on an all electric chassis that was two years, if I remember correctly vehicle opportunity going forward there.

Speaker Change: So yes, we're playing the SPD cars really hard because at the end of the data that I think what makes our company.

Speaker Change: What it is and it gives us a competitive advantage.

Stanley Stoker Elliott: Perfect. Thanks so much. Congratulations and best of luck.

Speaker Change: <unk>.

Speaker Change: Perfect. Thanks, so much congrats and best of luck.

Speaker Change: Thank you.

Okay.

Operator: Our next question comes from Steven Fisher from UBS. Please go ahead; your line is open.

Speaker Change: Our next question comes from Steven Fisher from UBS. Please go ahead. Your line is open.

Speaker Change: Okay.

Steven Fisher: Thanks. Good morning.

Steven Fisher: Thanks, Good morning.

Steven Fisher: You mentioned, Julie, a benefit from price versus cost management. Can you maybe just give us some quantification of that in the quarter? How did it compare to your expectations? And what do you have embedded in there for the rest of the year on price versus cost?

You mentioned Julien a benefit from price versus cost management.

Steven Fisher: Can you just give us some quantification of that in the quarter.

Steven Fisher: How does it compare to your expectations and what do you have embedded in there for the rest of the year on price versus cost.

Julie A. Beck: Thanks for the questions. In the first quarter, the team really performed well, particularly in AWP. We saw improvement in the supply chain. We were able to bring in the labor that we needed in Washington State, as well as in Monterey, which was terrific, and we were able to ship more than we expected. Of course, that helps with the overall margin. When we talk about pricing and price-cost, we always talk about our price-cost being price-cost neutral, and we're anticipating pricing for the year in about that low-mid single-digit range. That's where we are for price-cost. We continue to monitor price-cost. As you know, the MP business is very dynamic in its pricing, as they're quoting virtually every piece of equipment.

Speaker Change: Thanks for the question.

Speaker Change: Is it in the first quarter.

Speaker Change: Can you just.

Speaker Change: Really are performed well, particularly in AWP you know they they were able to we saw improvement in the supply chain, we were able to bring in the labor that we need it.

Speaker Change: Washington State as well as in Monterey Wechat.

Speaker Change: With that terrific and we were able to ship more EMEA expected and of course.

Speaker Change: You know that that helps with the overall margin.

Speaker Change: Can we talk about pricing and price cost as you know we always talk about you know are priced at cost I am being price cost neutral and we're anticipating pricing through the year and about that mid low mid single digits.

Speaker Change: Range.

Speaker Change: So that's that's where we're at from a price cost we continue to monitor price cost and as you know the MP business is very dynamic and their pricing.

Speaker Change: Quoting virtually every every.

Speaker Change: A piece of equipment.

Simon A. Meester: That's helpful. And then just you mentioned, Simon, I think the utilities orders for 2025. Can you just talk a little bit more about how the discussions around 2025 have evolved in utilities and also more broadly for the company?

Speaker Change: That's helpful. And then just you mentioned Simon I think the utilities orders for 2025 can you just talk a little bit more about how the discussions around 2025 have evolved.

Speaker Change: Utilities and also more broadly for the company.

Simon A. Meester: Yeah, it really is...

Speaker Change: Yes really.

Simon A. Meester: Yeah, really, we're not there definitely for MP because MP is returning more to kind of a book-to-bill cadence, typically with about three or four months of forward visibility. We have a lot of materials mostly covered for 2024. You know, we could take some more bookings probably in 2024 if we could find the labor for it. But then, yeah, utilities are already actively taking orders for 2025. Just a lot of demand. We're still struggling with a little bit of throughput because of bodies and chassis.

Speaker Change: So we're not there definitely for MP, because mp's returning more to kind of a book to bill agents typically with about three or four months forward visibility.

Speaker Change: <unk>.

Speaker Change: Mostly coverage for 2024.

Speaker Change: It could take some more bookings probably in 2020 for it we would find the labor and material for us.

Speaker Change: We expect to start discussions.

Speaker Change: For 2025, typically as we do in Q3 and Q4.

Speaker Change: But then yeah utilities is already actively thinking.

Speaker Change: Orders for 2025.

Speaker Change: Just a lot of demand, we're still struggling with a little bit of throughput because of bodies and chassis chassis, but.

Simon A. Meester: But overall, that business just has a lot of upside for the next couple of years. You know, everything equal, you know, obviously the mega projects alone. But, you know, grid upgrades that need to happen, grid expansion. And I spoke about AI, and I know it's a little bit of a buzzword. But thinking about AI applications that will make their way into the market, they're all, you know, very power intensive. Power intensity means grid upgrades, means grid expansion, and they're exactly in our wheelhouse. So that's why, you know, we're very excited about that business going forward.

Speaker Change: Overall that business, just because a lot of.

Speaker Change: A lot of upside for the next call.

Speaker Change: A couple of years.

Speaker Change: Every everything everything equal.

Speaker Change: Obviously, the Mega Mega projects alone.

Speaker Change: But grid.

Grid upgrades that need to happen and grid expansion and I spoke about AI and I know, it's a little bit of a buzzword, but thinking about AI applications that will make their way into the market. They are all.

Speaker Change: Very power intense power intensity means grid upgrades means grid expansion into exactly in our wheelhouse. So that's why.

Speaker Change: We're very excited about that business going forward.

Speaker Change: Terrific. Thank you.

Operator: Our next question comes from David Raso from Evercore ISI. Please go ahead; your line is open.

Speaker Change: Our next question comes from David Raso from Evercore ISI. Please go ahead. Your line is open.

David Michael Raso: Hi, thank you. Following up on the order conversation, I think clearly 24 people are going to try to figure out why can't we do it maybe a little better on the margins given what's already visibility with the backlog. And you mentioned some of the manufacturing challenges that could arise, maybe parts of Europe within the AWP. But can you help us understand sort of what's in the backlog today when it comes to mix?

David Michael Raso: Yeah, Hi, Thank you following up on the order conversation I think clearly 24 people are going to try to figure out why can't we do maybe a little better on the margins given whats already on visibility with the backlog.

David Michael Raso: You mentioned some of the manufacturing challenges that could arise maybe parts of Europe within the AWP, but can you help us understand sort of what's in the backlog today when it comes to mix product type, which channel you're selling too just so we can better understand.

David Michael Raso: product type, which channel you're selling to, just so we can better understand, in particular, why the margin should be lower the rest of the year versus the first quarter. I know you said the second quarter, the number you provided will be better than the first quarter, but I'm talking about the rest of the year, the implied margins are below the first quarter, which is a little surprising.

David Michael Raso: In particular, why the margins should be lower the rest of the year.

David Michael Raso: Versus the first quarter I know you said the second quarter.

David Michael Raso: The number you provided it will be better than the first quarter, but I'm talking to the rest of the year the implied margins are below.

David Michael Raso: The first quarter, which is a little surprising. So again is there something in the mix or just conservatism on some some manufacturing issues and then on the 25 order conversation anything you can help us with on mix. The end markets. You. Just described are those more big booms mid sized booms I'm just trying to get at.

David Michael Raso: So again, is there something in the mix or just conservatism on some manufacturing issues? And then, on the 25 order conversation, anything you can help us with on the next set of end markets you just described? Are those more big booms, midsize booms? Just trying to get a sense of, you know, TVs versus aerials. Just trying to set up a little bit wider margins for the rest of the year. And also, and the talks are around 25 from next.

David Michael Raso: Sense of <unk> versus aerials, just trying to set up a little bit wider margins lower the rest of the year.

David Michael Raso: And also any thoughts around twenty-five from mix. Thank you.

Julie A. Beck: So, you know, when we think about the operating margins for the year, we're expecting, you know, improvement from year over year, and we're expecting a 30% incremental margin. So, you know, we see margins improving over last year, and we see margins improving sequentially in Q2, Q3, and then, of course, they come down in Q4, because we have seasonal patterns and lower production days in the fourth quarter, but we're anticipating higher margins and a 30% overall incremental for the year. Yeah, I would just say no big material swings in the backlog that should be accounted for, off the top of my head. But, yeah, we're just going back to a more normal kind of seasonal swings.

David Michael Raso: Hum.

Speaker Change: So when we when we think about the operating margins for the year, we're expecting improvement.

Speaker Change: From year over year, and we're expecting a 30% incremental margin.

Speaker Change: So we see margins improving over last year, and we see margins improving sequentially in Q2, Q3, and then of course, they come down in Q4, because many of us.

Speaker Change: Due to seasonal patterns and lower production days.

Speaker Change: In the in the fourth quarter, and but we're anticipating higher higher margins and a 30% overall incremental for the year. Yeah. I would just say I would just say no no big material swings in the backlog.

Speaker Change: That should be accounted for.

All of my head, but yes, we're just going back to more normal kind of seasonal behavioral square, our Q2 and Q3 are going to be from a top line are probably going to be our stronger quarters.

Simon A. Meester: Q2 we just have a little bit of a headwind because we're ramping up in Monterey, and that's how we account for it. We don't see, we see sequential improvement, David, with the exception of...

Speaker Change: Q4, because of Julie what Julie said less working days is going to be traditionally probably one of our below average quarters. So that will just make its way in terms of incrementals.

Bottom line and then Q2, we just had a little bit of headwinds because we're ramping up in Monterrey.

Speaker Change: That's how we account we don't see we see sequential improvement David.

Speaker Change: Okay.

Julie A. Beck: For AWP specifically, the rest of the year is implied at 13.6% margins, and we just did 13.9.

Speaker Change: Or for AWP, specifically the rest of the year is implied at 13, 6% margins. We just did 13 nine I know the fourth quarter seasonally can be lower than the first quarter, but I'm just making sure. We understand is there some well it's understandable Europe all the risks that are out there.

David Michael Raso: I know the fourth quarter seasonally can be lower than the first quarter, but I'm just making sure we understand that there's some, understandable, Europe, all the risks that are out there. I'm just making sure there isn't something we're missing where... It's logical without just trying to be a little cautious, which I appreciate. Why would the rest of the year's margins be below the first quarter? Because that's what the implied numbers are. I just want to make sure we're not surprised a quarter or two from now with a big mix issue where the first quarter had a unique price cost that

Speaker Change: I'm, just making sure there isn't something we're missing where.

Speaker Change: It's logical without just trying to be a little cautious, which I appreciate why would the rest of the year margins to be below the first quarter because that's what the implied numbers are I just want to make sure we're not surprised a quarter or two from now with.

A big mix issue, where the first quarter had a unique price cost that were giving back in the rest of the year I just want to make sure we understand that.

Julie A. Beck: Yeah, thank you. What we would say, David, is that, you know, we would have, you know, Q2, as Simon mentioned, would be, and we mentioned in our remarks, would be impacted by more, you know, inefficiencies in Monterey, but really, the first quarter would be a stronger quarter than the fourth quarter, I guess, and that would be the only reason. There's nothing else other than, you know, some further startup inefficiencies, and that's about it. But overall, again, for that AWP, it's...

Speaker Change: Yes here. Thank you.

Speaker Change: Yeah. Thank you I mean, what we would say David is that you know that we would have.

Speaker Change: Q2, as Simon mentioned with <unk>, and we mentioned in our remarks would be impacted by that.

Speaker Change: Inefficiencies in Monterrey.

Speaker Change: Really the first quarter would be a stronger quarter than the fourth quarter, I guess and that would be the.

Speaker Change: The only reason.

Speaker Change: Theres nothing else other than some.

Speaker Change: Further startup inefficiencies and and that's about it.

Speaker Change: But overall again for that AWP.

Speaker Change: Gonna have.

Speaker Change: Incremental margins.

Speaker Change: Yeah.

Speaker Change: Approaching at 35% for that for the year.

David Michael Raso: Okay, I just want to make sure. I really appreciate it. Thank you.

Speaker Change: Yeah, Okay, I just want to make sure I really appreciate it. Thank you.

Operator: Thank you, David. Our next question comes from Steve Volkmann from Jeffries. Please go ahead, your line is open.

Speaker Change: Thanks, David.

Speaker Change: Our next question comes from Steve Volkmann from Jefferies. Please go ahead. Your line is open.

Stephen Edward Volkmann: Thanks, guys. Just a couple of cleanups from me. Julie, have you changed at all your view of the sort of total startup cost impact in 2024?

Stephen Edward Volkmann: Thanks, guys just a couple of cleanups for me truly have you changed at all your view of the sort of total startup cost impact on 2024.

Julie A. Beck: We would say that we guided to that $15 to $20 million number. It came in a bit favorable in the first quarter. I would say it was probably about a $5 million impact. We would expect that to increase and be higher in the second quarter, as we mentioned. And then we would expect that to go down through the rest of the year, more first half weighted than second half.

Stephen Edward Volkmann: We would say that we guided to that 15% to $20 million number.

Stephen Edward Volkmann: Came in a bit favorable in the first quarter. It was probably about $5 million impact and we would expect that to increase and be higher in the second quarter. As we mentioned and then we would expect.

Stephen Edward Volkmann: That's it to go down through the rest of the year more first half weighted than second half.

Stephen Edward Volkmann: But for the full year, kind of in that same range that you've been talking about. Yeah, exactly.

Speaker Change: But for the full year tennis that same range that you've been talking about right. Yes, exactly okay. And then I had a question on the utilities business as well because if I remember correctly you had some very specific and I think significant margin.

Julie A. Beck: Okay. And then I had a question on the utilities business as well, because if I remember correctly, that had some very kind of specific and, I think, significant margin headwinds through the COVID interruptions and supply chain and so forth. So I'm just curious if you can sort of bring us up to date. How are margins in that utility business now? Is there still some sort of meaningful upside as we go forward? Just have a think about that.

Speaker Change: Wins through the Covid interruptions in supply chain and so forth. So I'm just curious if you can sort of bring us up to date.

Speaker Change: How are margins in that utility business now is there still sort of a meaningful upside as we go forward just how to think about that.

Simon A. Meester: We had a tough Q3 last year, and since then, we've kind of gradually, the team has continued to improve. So we're actually very pleased with how the team performed in the first quarter.

Speaker Change: Yeah, Yeah, we had a tough Q3 last year and since when we kind of gradually the teams to continue to improve so we are exited very pleased with how the team executed in the first quarter, yeah, I add to that.

Julie A. Beck: Yeah, in the third quarter, as Simon mentioned, they had a supplier quality issue that impacted them significantly and recovered from that. And so we're expecting some improvement in that business as well. That business still does have some more supply disruption due to bodies and chassis, but we are expecting improvement in that business as we go as well. And we're, as Simon mentioned earlier, we think there's that business that just has a tremendous amount of potential, and we like that business going forward. There's still functional supply, though, that's the challenge. And there are some big swings, you know, like custom bodies and truck chassis. We thought we were out of the woods.

Speaker Change: Third quarter.

Speaker Change: As Simon mentioned.

Speaker Change: And a supplier quality issue, which impacted significantly and it recovered from that.

Speaker Change: And so we're expecting some improvement in that business as well.

Speaker Change: That business still does.

Speaker Change: You know it had some more supply chain disruption due to body and chassis that we are expecting improvement in that business.

Well and as Simon mentioned earlier, we think Theres that businesses is in terms of tremendous amount of potential or anything like that.

Speaker Change: Still a functional supply, though that's the challenge and there are some big swings like custom bodies and truck chassis. We thought we were out of the woods with truck chassis Senate kind of came back so.

Simon A. Meester: There was some truck chassis in it that kind of came back, so it's really, there's some uncontrollables there as well.

Speaker Change: It's really there are some uncontrollable there as well.

Operator: Our next question comes from Nicole DeBlase from Deutsche Bank. Please go ahead; your line is open.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from Nicole Nicole <unk> from Deutsche Bank. Please go ahead. Your line is open yes.

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

Nicole: Yeah. Thanks, good morning.

Nicole: Good morning, guys nickel.

Nicole Sheree DeBlase: Maybe just first, you raised the EPS guidance for the school year but left free cash flow as is. Is it just, you know, early in the year to be raising the free cash commitment? Is it more working capital investment? Can we just discuss that?

Nicole: Maybe just first you raised the EPS guidance for the full year, but less free cash flow as it is it just you know early in the year to be raising the free cash commitment is it more working capital investment can we just discuss that.

Julie A. Beck: Yeah, we kept the range because it is early in the year. Nicole, I agree with that.

Speaker Change: Yeah, I mean, we kept the range. It is early in the year, Nicole I agree with that.

Julie A. Beck: You know, we are carrying, we do expect inventory levels to come down through the year, and improved working capital management is incorporated in that. As we mentioned, we do carry some more inventory in the first quarter; we build inventory to support those higher sales volumes in the second and third quarters. And we have higher inventory right now for the production moves, and so on, but we are expecting that to come down, and networking capital will be a source of cash this year. And we expect, you know, cash flow to gradually improve throughout the year and be more traditional with our seasonality with the use of free cash flow in the first quarter and improving subsequently throughout the year.

Speaker Change: We are carrying we do expect inventory levels to come down through the year and improved working capital management incorporated in that.

Speaker Change: As we mentioned that we do carry some more inventory in the first quarter, we build inventory to support the second and third quarter higher sales volume and where we have higher inventory right now for the production moves.

Speaker Change: And so, but we are expecting that to come down in networking capital to be a source.

Speaker Change: The cash this year and we expect cash flow to gradually improve throughout the year and be more more traditional with our seasonality with the uses of free cash flow in the first quarter improving throughout the year.

Nicole Sheree DeBlase: Got it. Thanks, Julie.

Simon A. Meester: And then, I guess, can we just hear a little bit more about what you guys are seeing in Europe? This has definitely been a trend that we've heard from multiple companies, so it's not particularly surprising. But just, would you say things are, like, getting worse, just kind of bouncing along the bottom? It would be really helpful if you could characterize what you're seeing there. Thank you.

Speaker Change: Got it thanks, Julie and then I guess can we just hear a little bit more about what you guys are seeing in Europe. This has been definitely a trend that we've heard from multiple companies. So it's not particularly surprising but would you say things are like getting whereas just kind of bouncing along the bottom it would be really helpful. If you could characterize what you're seeing there. Thank you.

Simon A. Meester: Yeah, for us, the bright spot in that region, if you include the broader region, is the Middle East, but the parts where it's really affecting us are Germany, the UK, and France. And I guess technically, both the UK and Germany are hinting at, I think, a technical recession. I haven't seen their latest GDP numbers, but if Germany and the UK recover, and we think the UK might recover a little before Germany does, because Germany is overly dependent on exports. But, you know, our outlook currently confirms that it won't get worse in the U.K. and in Germany, but those are the two markets that are really hurting us the most.

For us.

Speaker Change: So the bright spot in that region. If you include the broader region is for US is middle east both the parts, where it where it's really affecting us, it's Germany, UK and France, and I guess technically both UK and Germany are advancing towards I think the technical.

Speaker Change: Recession, I havent seen their lease.

Speaker Change: GDP numbers, but.

Speaker Change: If Germany and the UK will recover and we think the UK might recover a little before Germany does because Germany is over overly dependent on exports.

Speaker Change: But our outlook currently confirms.

Speaker Change: And it doesn't get worse.

Speaker Change: In the UK and in Germany, but those are the two markets that are really hurting our earnings.

Speaker Change: Most.

Nicole Sheree DeBlase: Thank you. I'll pass it on. Thank you. Our next question comes from Tami Zakaria from J.P. Morgan. Please go ahead, your line is open.

Thank you I'll pass it on.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Tami Zakaria from Jpmorgan. Please go ahead. Your line is open.

Tami Zakaria: de-stalking Thank you. So yeah, we yeah, that is largely done. Our dealer inventories are where they need to be. So it's an interesting dynamic because obviously, you know, when backlogs come down, and in the case of Fuchs, where demand came down because of scrap prices, we have to do some adjustments in supply. That that's largely done; that's behind us now. And so from a dealer inventory and pipeline standpoint, we think we are where we need to be going forward.

Tami Zakaria: Hi, good morning, Thank you so much.

Tami Zakaria: So could you comment on the inventory in the channel.

Tami Zakaria: And I think I remember you expected some destocking.

Tami Zakaria: In the first quarter is that largely done.

Tami Zakaria: Destocking.

Tami Zakaria: Yeah.

Speaker Change: Okay, sorry. Thank you. So yes that is largely done our dealer inventories are where they need to be.

Speaker Change: So it's an interesting dynamic because obviously when backlog has come down and indications of Fuchs, where demand came down because of scrap prices, we have to do some adjustments in supply.

Speaker Change: Largely done this behind us now.

Speaker Change: And so from a dealer inventory and pipeline standpoint.

Speaker Change: We are where we need to be going forward.

Simon A. Meester: Thanks, Tami. Our next question comes from Jerry Revich from Goldman Sachs. Please go ahead, your line is open.

Got it okay. That's all from me. Thank you.

Speaker Change: Thanks, Dan.

Speaker Change: Yes.

Speaker Change: Our next question comes from Jerry Revich from Goldman Sachs. Please go ahead. Your line is open.

Operator: Yes, hi. Good morning, everyone. Good morning.

Jerry David Revich: Yes, hi, good morning, everyone.

Jerry David Revich: Good morning.

Jerry David Revich: Simon, in your prepared remarks, you spoke about the company's opportunity in leveraging digital and technological advancement. Can you just expand on that? What are the opportunities with your telematics offerings and elsewhere? If you don't mind fleshing out for us, what exactly do you have in mind in terms of the most significant opportunities for you folks, given the existing installed base of telematics and any other developments you're focused on?

Jerry David Revich: Simon in your prepared remarks, you spoke about the company's opportunity.

Jerry David Revich: Leveraging.

Jerry David Revich: Digital and technology Advancement can you just expand on that what are the opportunities would your telematics offerings.

Jerry David Revich: Square.

Speaker Change: What exactly if you want.

Speaker Change: Mind fleshing out what exactly you have in mind in terms of the most significant opportunities.

Speaker Change: For you folks given existing.

Speaker Change: Installed base telematics and any other developments you're focused on.

Simon A. Meester: Yeah, thank you. So, I see external opportunities for us, and I think it's important that we

Speaker Change: Yeah. Thank you so I see I see external opportunities for us in IC internal opportunities for us.

Simon A. Meester: I see external opportunities for us, and I see internal opportunities for us. External, but besides just what makes its way into our products today, I talked about hybrids. I talked about the first all-electric clock and truck, EPTO, and so on and so forth.

Speaker Change: External besides just what makes its way into our products I talked about hybrid I talked about.

Speaker Change: First of all electric or contract <unk>, and so on and so forth, but we also maybe some longer term technology investments in.

Simon A. Meester: But we also made some longer-term technology investments in Axilon and Eptronic, which we both announced last year, and I believe late 2022. We believe we're very excited about our Axilon investment because that will give us control over an important EV supply chain for us, and then Eptronic, we're excited because that's kind of the next generation of robotics, and we can start applying that to some of the applications in not just aerials but in other areas of T.A.R.E.X. as well

Speaker Change: In <unk>, which we both announced last year and I believe late.

Speaker Change: Late 2022, we believe we're very excited about our exelon investment because that will give us control over that.

Speaker Change: Important EV supply chain for us in an App trauma, we're excited because that's kind of the next generation of robotics.

Speaker Change: And we can start applying that in some of the applications in not just <unk>, but in other areas as well so it would be a long term technology investments.

Simon A. Meester: So the long-term technology investment is just as exciting as what we're currently applying. But then, internally, we see AI as just that next opportunity to drive efficiency, drive productivity, and drive real-time decision-making. The way we balance supply and demand with AI, we can make that a real-time process. So we're excited about how we can leverage that both externally and internally. We mostly see it as opportunities for us.

Speaker Change: Is just as exciting as what were currently planning, but then internally.

Speaker Change: We see AI as you said that next.

Speaker Change: The next opportunity to just drive efficiency drive productivity.

Speaker Change: Drive real time decision, making you know the way, we balance supply and demand with AI. We can we can make that a real time process. So we're excited on how we can leverage both external and internal legal we mostly see it as opportunities for us.

Jerry David Revich: And then, lastly, can I ask you to please comment on what you're seeing in terms of the telematics data for booms in North America in terms of where your utilization stands? It looks like used equipment inventories are rising off of a really low base, but I'm wondering what the utilization data shows, if you'd be willing to share it, please.

Speaker Change: Okay. Thank you and then lastly can I ask you to please comment on what Youre seeing in terms of the telematics data for <unk>.

Speaker Change: In North America in terms of where your where your utilization stands it looks like used equipment inventories are rising off of a really low base, but I'm wondering what the utilization data shows if you'd be willing to share. It. Please yes.

Simon A. Meester: Yeah, no, it's a

Simon A. Meester: Yeah, no, it's a tight correlation between what our customers are telling us and what we're seeing from the data. And when I mentioned leading indicators in one of my opening remarks, this is one of the leading indicators that we obviously look at. We look at telematics because we see what the utilization of the fleet is, and all of our customers are reporting high utilization, and that's what telematics is kind of confirming.

Speaker Change: No.

Speaker Change: It's a tight correlation between what our customers are telling us and what we're seeing from the data on this when I when I mentioned, leading indicators and one of my opening remarks. This is one of the leading indicators. Obviously, we looked at we looked at telematics, because we see with utilization of leases and all of our customers are reporting high utilization of Netflix allomap.

Speaker Change: So just kind of confirm I'm talking North America, and Europe, we see we see some lower utilization again confirmed by what our customers are telling us that the telematics data correlates with the high usage, we're seeing in North America.

Simon A. Meester: I'm talking about North America. In Europe, we see some lower utilization, again, confirmed by what our customers are telling us. So the telematics data correlates with the high usage we're seeing in North America.

Operator: Our next question comes from Steve Barger from KeyBank Capital Markets. Please go ahead; your line is open.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Steve Barger from Keybanc Capital markets. Please go ahead. Your line is open.

Robert Stephen Barger: Thanks. I just want to look forward a little bit to accelerating profitable growth on slide 9. When the team modeled out opportunities in megatrends, emerging technologies, and outgrowth initiatives, what's the range of organic growth you anticipate in the next three to five years?

Speaker Change: Thanks.

Robert Stephen Barger: Just wanted to look forward, a little bit to accelerating profitable growth on slide nine when the team modeled out opportunities and mega trends emerging technologies and outgrowth initiatives, what's the range of organic growth do you envision in the next three to five years.

Simon A. Meester: Yes, so for now, we're still sticking to our Investors' Day targets, Steve. So we have an commitment of $6 billion. We were ahead of that trajectory. We're comfortably ahead on both the top and the bottom on $6 billion.

Okay.

Robert Stephen Barger: Yes.

Speaker Change: For now we're still sticking to our investors day.

Speaker Change: It targets.

Speaker Change: Steve So we have a we have a commitment of.

Speaker Change: $6 billion, we were ahead of that trajectory.

Speaker Change: We're comfortably ahead on both the top and bottom.

Robert Stephen Barger: And 13% to 14% operating margin is the commitment we made. We made that commitment five quarters ago. It's a five-year commitment. We're five quarters in. We don't think that we should start talking about raising that kind of commitment, because we would like to have a few more quarters under our belt before we reassess where we want to be in 2027 and beyond.

Speaker Change: Six 6 billion.

Speaker Change: And 13, 14% operating margin as the commitments. We've made we made that commitment five quarters ago.

Speaker Change: The five year commitments were five quarters in we don't think that we should we should start talking about raising that.

Speaker Change: Kind of commitments, because we would like to have a few more quarters under our belt before we reassess where we want to be in 2027 and beyond.

Simon A. Meester: Yeah, that was really the motivation for the question. You only need a 3.5% CAGR if you hit the high end of your guidance range this year to get to $6 billion. So I guess if we have to frame it up from a growth perspective, is that what you expect, or is $6 billion too low? Or when do you think you might update that?

Speaker Change: Yes that was really the motivation for the question you only need a three 5% CAGR. If you hit the high end of your guidance range. This year to get to $6 billion. So I guess.

You have to frame it up from a growth perspective is.

Speaker Change: Is that what you expect or is 6 billion too low.

Speaker Change: Or when do you think you might update that.

Robert Stephen Barger: Well, everything else being equal, you could argue that we're probably in a comfortable place to beat that expectation. But, you know, there are more variables at play. And, as I said, we would like to get a few more quarters under our belt before we start looking at changing our longer-term outlook.

Speaker Change: Well everything else equal I mean, obviously.

You could argue that we're probably in a comfortable place to be set expectation but.

Speaker Change: There are more variables in play and as as I said, we would like to get a few more quarters under our belt before we start looking at.

Speaker Change: Changing our longer term outlook.

Simon A. Meester: Okay. And then, with Terex being a product company, as you noted, when you think about megaprojects like semi-fabs, EV plants, renewables, is there room to differentiate with a new purpose-built machine for specific markets, or is it really more about modifying existing machines and then, I don't want to downplay it, but quality and delivery. No, yes to both. So we're applying existing...

Speaker Change: Okay, and then with tariffs being a product company as you noted when you think about Mega projects like semi Fabs EV plants renewables is there room to differentiate with our new purpose built machine for specific markets or is it really more about modifying existing machines and then just.

Speaker Change: I don't want to downplay, it but quality and delivery to take share.

Yes to both so we are applying existing products for example, our green Tech.

Simon A. Meester: No, yes to both. So we're applying existing products. For example, our green tech offering, we're basically applying existing products to a new segment, which is the vegetation management business. And so we're leveraging our existing portfolio in new markets. And the other way around, we're also developing based on certain platforms that we already have. We're providing, you know, expanding our recycling portfolio and embedding new technologies in our crushers and shredders and repurposing them to broaden our reach in the recycling space.

Speaker Change: Offering we're basically applying existing products to a new segment, which the vegetation management.

Speaker Change: Our business and.

Speaker Change: And so we're leveraging our portfolio existing portfolio and new markets and the other way around we also developing based on certain platforms that we already have we providing we're expanding our recycling portfolio and embedding new technologies in our in our crushers instructors and repurpose them too.

Speaker Change: To broaden our reach in the recycling space. So we're planning technology and we're leveraging the existing portfolio.

Simon A. Meester: So we're applying technology, and we're leveraging the existing portfolio. And that's kind of what I believe is the strength of the DMP vertical, that we have so much white space just to leverage the existing portfolio. And I think DMP has demonstrated just that in the last seven, eight years. You know, they've booked double-digit growth margins consistently every year for the last eight, nine years. And one of the things that they did was just finding new use cases for their portfolio.

Speaker Change: That's kind of what I believe is the strength of DNP vertical as if we have so much white space just to leverage the existing portfolio and our <unk>.

Speaker Change: Businesses demonstrated just said in the last seven eight years.

Speaker Change: They've booked.

Speaker Change: Double digit growth margins consistently every year for the last eight nine years and one of the things that they did was just finding new use cases for for their for their portfolio.

Operator: Our last question today will come from Angel Castillo from Morgan Stanley. Please go ahead; your line is open.

Speaker Change: Thanks.

Speaker Change: Thanks, Steve.

Speaker Change: Our last question today will come from Angel Castillo from Morgan Stanley. Please go ahead. Your line is open.

Angel Castillo: Hi, thanks for taking my question. So just going back to the first quarter performance, you noted kind of stronger throughput. A number of points here that I just wanted to unpack a little bit. Could you just give us an update on just kind of hospital inventories and where that's kind of at? It seems like some of this might have improved just throughout the quarter. If you could give us a little bit more color along with that on the supply chain, that would be great.

Angel Castillo: Hi, Thanks for taking my question.

Angel Castillo: Just going back to the first quarter performance and you noted kind of stronger throughput a number of kind of.

Angel Castillo: Points here I, just wanted to unpack a little bit could you just give us an update on just kind of a hospital inventories and where that is kind of add it seems like some of this might have improved throughout the quarter.

Angel Castillo: Could you give us a little bit more color along with that on the supply chain and then just last point on this is you gave better throughput and stronger deliveries in the first quarter generally it sounds like what we're hearing from some of the public rental companies is that theyre really taken deliveries on a more kind of normal cadence. So was this more driven by independents in the first quarter.

Angel Castillo: And then just last point on this, as you get better throughput and stronger deliveries in the first quarter, generally, it sounds like what we're hearing from some of the public rental companies is that they're really taking deliveries on a more kind of normal cadence. So was this more driven by independence in the first quarter, or what are you seeing from a customer mix perspective in terms of who's taking deliveries of kind of the stronger throughput here? Okay.

Angel Castillo: Or what are you seeing from a customer mix perspective and.

Angel Castillo: In terms of taking deliveries.

Angel Castillo: Kind of a stronger company.

Julie A. Beck: Okay, Angel, there's a lot there, so let me help. You know, if we think about our customer mix, our customer mix, in general, stays relatively consistent over time. There may be puts and takes in any one given quarter, but I wouldn't say that customer mix had anything to do with, you know, who took deliveries in the first quarter, if you will, or deliveries. I would say that we are returning to the more seasonal patterns where, you know, the large national accounts want things in Q2 and Q3, you know, that we're moving back to that, where in the past when we were so constrained, they were taking the equipment when we could make it, so we're returning to those more normal delivery patterns, and the supply chain is improved.

Okay. So there's a lot there so let me help a little.

Angel Castillo: Yeah, but if you think about our customer.

Angel Castillo: Our customer mix, our customer mix in general stays relatively consistent overtime. There may be puts and takes in any one given quarter, but I wouldn't say that that customer mix had anything to do with it.

Angel Castillo: We took delivery in the first quarter deliveries I would say that that we.

Angel Castillo: Returning to the more seasonal patterns.

Angel Castillo: The large national accounts.

Angel Castillo: One thing is in Q2 and Q3.

Angel Castillo: That were moving back to that where in the past when we sell it is constrained they were taking the equipment. When we can when we can make it so we're returning to the.

Angel Castillo: More normal delivery patterns that supply chain improves.

Julie A. Beck: And then when you asked about margins in the first quarter, you know, what allowed us, you know, yes, you know, with, you know, that supply chain improved, we were able to get labor in our Washington State locations, as well as our monitoring facility, which certainly that more manufacturing throughput, of course, helped margins in the quarter as well. So that was all very helpful. So we still have a hospital inventory. You know, we're still dealing with, you know, you know, with, you know, issues that, you know, were parts issues, but, you know, they vary. And, and, and, of course, the supply chain is much improved over a year ago.

Angel Castillo: And then you asked about.

Angel Castillo: Margin came in at <unk>.

Angel Castillo: First quarter, what allowed it yes.

Angel Castillo: Supply chain improved we were able to get labor in our on our Washington State location as well as our Monterey facility.

Angel Castillo: We should certainly that more manufacturing throughput of course help margins in the quarter as well. So that was all very helpful. We still have a hospital inventory.

Angel Castillo: We're still dealing with.

Angel Castillo: Issues.

Issues.

Angel Castillo: We're price issues, but they vary and of course supply chain is much improved over what.

Angel Castillo: A year ago.

Speaker Change: Got it that's very helpful. Thank you and then I wanted to go back to one of the earlier questions around the 227 targets.

Angel Castillo: Maybe I was kind of doing the math a little different, but I was just looking at the CAGR implied between 2023 and rate in 2027, and it seems to be closer to kind of a 4% top line CAGR. And I think the guide for this year at the midpoint puts it at 2024 CAGR or 2024 growth of kind of 3%. So, as we think about, you know, kind of getting to that 4% CAGR for 2027 and delivering on the targets, you mentioned you feel you're comfortably ahead of the range.

Speaker Change: Maybe I was just kind of doing the math a little different but I was just looking at the CAGR imply between 2023 and.

Speaker Change: And Ray in 2027, and it seems to be closer to kind of a 4%.

Speaker Change: Top line CAGR and I think the guide for this year at the midpoint puts it at 2024 CAGR trying to my far growth of kind of 3%.

Speaker Change: We think about kind of getting to that 4%, 4% CAGR for 2027 delivering on the targets you mentioned an affiliate of comfortably ahead.

Angel Castillo: So, given 2024 seems to be a little bit below that, despite pretty strong backlogs and pretty kind of good visibility, should we anticipate that 2025, 2026, and 2027 accelerate for some, I guess, underlying factors organically? Or is that 1% kind of difference generally what you think about kind of the M&A that you're trying to kind of work back toward to get to kind of that 2027? So, Angelina, we had, we had, you know...

Speaker Change: The range, so given 'twenty 'twenty forward seems to be a little bit below that despite pretty strong backlogs and pretty.

Speaker Change: Good visibility.

Speaker Change: Should we anticipate that $25 26, and 27 accelerate for some I guess underlying factors organically or is that 1% kind of difference generally what you think about kind of the M&A that you are trying to kind.

Speaker Change: Kind of work back towards to get to kind of a 2027.

Speaker Change: But we had we had.

Julie A. Beck: So, Angel, you know, we had significant growth in 2024, you know, 16, 17 percent, you know, we had really strong growth in sales in 2023, and so, you know, that puts us, you know, ahead of the targets, but when we think about the targets going out to 2027, you know, it's still early to upgrade, to update those targets, it is. And so, you know, we remain ahead of them, and that's just where we are right now.

Speaker Change: Significant growth in 2024.

Speaker Change: In 16, and 17% Yeah, we had really strong growth in sales in 2023.

Speaker Change: And so for.

Speaker Change: So that puts US ahead of the targets, let me when we think about the.

Speaker Change: Going out to 2000 20000.

Speaker Change: Still early to upgrade and update those targets that it did.

Speaker Change: And so yes, we remain ahead of those and.

Operator: We are out of time for questions today. I would like to turn the call back over to Simon Meester for closing remarks.

Speaker Change: That's just where we are right now.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: We're out of time for questions today, I would like to turn the call back over to Simon Mr for closing remarks.

Simon A. Meester: Thank you, operator. If you have any additional questions, please follow up with Julie or Neil. And with that, thank you very much for your interest in Terex. Operator, please disconnect the call.

Simon: Thank you operator, if you have any additional questions. Please follow up with Julie or Neil and with that thank you very much for your interest in <unk> operator, please disconnect the call.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Simon: This concludes today's conference call. Thank you for your participation you may now disconnect.

Simon: Thank you.

Simon: Yeah.