Q1 2025 Terex Corp Earnings Call
Unknown Executive: Greetings and welcome to the Terex First Quarter 2025 results conference call.
Greetings and welcome to the Keryx first quarter 'twenty twenty-five results conference call. At this time, all participants are in a listen only mode.
Unknown Executive: 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.
Speaker Change: Brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded and it is now my pleasure to introduce your host Derek Everett Vice President Investor Relations. Please go ahead.
Derek Everett: And it is now my pleasure to introduce your host, Derek Everett, Vice President, Investor Relations. Please go ahead.
Derek Everett: Good morning and welcome to the Terex First Quarter 2025 earnings conference call. A copy of the press release and presentation slides are posted on our Investor Relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website.
Speaker Change: And welcome to the <unk> first quarter 2025 earnings conference call a copy of the press release and presentation slides are posted on our Investor Relations website investors thought Terex dotcom.
Speaker Change: In addition, a replay and slide presentation will be available on our website.
Derek Everett: We are joined today by Simon Meester, President and Chief Executive Officer, and Jennifer Kahn, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by a Q&A.
Speaker Change: We are joined today by Simon Mr President and Chief Executive Officer, and Jennifer Collins, Senior Vice President and Chief Financial Officer.
Speaker Change: Their prepared remarks will be followed by Q&A.
Unknown Executive: Please turn to slide two of the presentation, which reflects our Safe Harbor Statement. Today's conference call contains overbooking 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 earnings materials and in our reports filed with the SEC.
Speaker Change: Please turn to slide two of 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.
These risks are described in greater detail.
Speaker Change: Earnings materials and in our reports filed with the SEC.
Unknown Executive: On this call, we will be discussing non-GAAP financial information, including adjusted figures that we believe are useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in the conference call material.
Speaker Change: On this call we will be discussing non-GAAP financial information, including adjusted figures that we believe are useful in evaluating the company's operating performance reconciliations for these non-GAAP measures can be found in the conference call materials.
Speaker Change: Please turn to slide three and I'll turn it over to Simon Easter.
Simon Meester: Please turn to slide three and I'll turn it over to Simon Meester. Thanks, Derek, and good morning. I would like to welcome everyone to our earnings call and appreciate your interest in Terex.
Simon Easter: Thanks, Derek and good morning, I would like to welcome everyone to our earnings call and I appreciate your interest in Terex.
Simon Meester: A fundamental part of our journey to becoming a world-class operating company is achieving world-class safety performance. I want to thank our global team members for their ongoing commitment to safety and our Terex values. As we grow and transform our company, our values will continue to include keeping each other safe, treating each other with respect and dignity, and being stewards of our environment and our community.
Simon Easter: A fundamental part of our journey to becoming a world class operating company achieving world class safety performance.
Simon Easter: I want to thank our global team members for their ongoing commitment to safety and our current values.
Simon Easter: We grow and transform our company our values will continue to include keeping each other safe treating each other with respect and dignity and being stewards of our environment and our community.
Simon Meester: Turn to slide four. Our overall Q1 financial performance exceeded our initial outlook. We delivered earnings per share of $0.83 on sales of $1.2 billion and return on invested capital of 15%.
Simon Easter: Turning to slide four.
Simon Easter: Our overall Q1 financial performance exceeded our initial outlook, we delivered earnings per share of 83 cents on the sale of $1 $2 billion and return on invested capital of 15%.
Simon Easter: Aerials in M. P operating margins were impacted by production cuts in the past two quarters and exceeded the decline in sales for that period.
Simon Meester: Aerials and MP operating margins were impacted by production cuts in the past two quarters that exceeded the decline in sales for that period. Those actions were necessary to manage inventory and rebalance supply with demand. The impact is largely behind us and we expect to see margins improve in Q2.
Simon Easter: Those actions were necessary to manage inventory and rebalanced supply with demand.
Simon Easter: The impact is largely behind us and we expect to see margins improve in Q2.
Simon Easter: Environmental solutions, which includes ESG in Terex utilities accounted for one third of our global sales in the quarter and earned <unk> 19, 4% operating margin strong execution by our U S team.
Simon Meester: Environmental solutions, which includes ESG and Terex utilities, accounted for one third of our global sales in the quarter and earned 19.4% operating margin, strong execution by our ES team.
Simon Easter: Looking ahead in the current environment, it's difficult to predict where we're going to land in terms of tariffs.
Simon Meester: Looking ahead in the current environment, it's difficult to predict where we're going to land in terms of tariffs. The good news is that we have been proactive in terms of forward placing inventory and are, like everyone else, working around the clock to mitigate what is currently right in front of us. We are maintaining our full-year EPS outlook of $4.70 to $5.10, including the assumed impact of the recently announced tariffs, fully realizing that things can change fast.
Simon Easter: Good news is that we have been proactive in terms of forward, placing inventory and are like everyone else working around the clock to mitigate what is currently right in front of us.
Simon Easter: We are maintaining our full year EPS outlook of $4 70.
Simon Easter: $5 10, including the assumed impact of the recently announced tariffs fully.
Realizing that things can change fast.
Simon Easter: For our full year sales outlook, we continue to expect lower year over year skills in aerials and N. P. In line with our previous 2025 outlook and slightly better growth in the environmental solutions.
Simon Meester: For our full-year sales outlook, we continue to expect lower year-over-year sales in aerials and NP, in line with our previous 2025 outlook, and slightly better growth in environmental solutions.
Simon Meester: Moving to slide five. and in ESG make Terex a more US centric company, which is obviously helping in the current environment. Approximately 75% of our 2025 US machine sales are expected to be generated by products that we produce in at least one of our 11 US manufacturing facilities. Environmental solutions, full line of refuse collection vehicles, utility vehicles, compactors, and digital solutions are all designed and made in America. Genie Manufacture is the vast majority of the boons and scissors sold in the U.S. in Washington State, representing about 70% of its U.S. sales. cell handlers and other products manufactured in Monterrey, Mexico, totaling approximately 20% of its U.S.
Simon Easter: Moving to slide five.
Simon Easter: Adding ESG make terrorists a more U S centric company, which is obviously, helping in the current environment.
Simon Easter: Approximately 75% of our 2025 U S machine sales are expected to be generated by products that we produce and at least one of our 11 U S manufacturing facilities.
Simon Easter: Environmental solutions full line of refuse collection vehicles utility vehicles contractors and digital solutions are all designed and made in America.
Simon Easter: Genie manufacturers the vast majority of the booms and scissors sold in the U S. In Washington State, representing about 70% of its U S sales.
Simon Easter: And my handlers and other products manufactured in Monterrey, Mexico.
Simon Easter: Approximately 20% of its U S sales qualify, but MCA trade agreement.
Simon Meester: sales, qualify under the U.S.-MCA trade agreement and are currently exempted from the recently announced tariffs. Materials Processing has our most globally diverse footprint, approximately 40% of the segment's 2025 U.S. sales, including cement mixers and certain environmental and aggregate products are made in the United States.
Simon Easter: Currently exempted from the recently announced tariffs.
Simon Easter: Materials processing is our most globally diverse footprint approximately 40% of the segment's 2025 U S sales, including cement mixers and certain environmental and aggregate products are made in the United States.
Simon Meester: It is important to note that our primary aggregates product lines are produced in Northern Ireland, which is part of the United Kingdom and not expected to be the target of long term trade action. In total, about 85% of Envy's 2025 US sales are generated by products made in the US or the UK. Cranes and material handlers manufactured in the European Union represent less than 10% of MPs U.S. sales. Like other industrial companies, we have a global supply base and exposed to tariffs on imported materials. The key element of our tariff mitigation plan was working closely with our global suppliers to absorb the added costs and forward-place inventory to buffer the impact.
Simon Easter: It is important to note that our primary aggregates product lines are produced in Northern Ireland.
Simon Easter: As part of the United Kingdom, and not expected to be the target of long term trade action.
Simon Easter: In total about 85% of Mp's clean 25 U S sales are generated by products made in the U S or the U K.
Simon Easter: Cranes and material handlers manufactured in European Union represented less than 10% defense piece of U S sales.
Simon Easter: Like other industrial companies, we have a global supply base and exposed to tariffs on imported material.
Simon Easter: A key element of our tariff mitigation plan was working closely with our global suppliers to absorb the added costs and forward placed inventory to buffer the impact.
Simon Meester: We are leveraging our global sourcing capabilities to rebalance supply to more favorable sources, among other actions. We will work to mitigate as much cost inflation as we can to limit the burden on our customers. That said, the cornerstone of our pricing strategy will continue to be maintaining price cost neutrality.
Simon Easter: We are leveraging our global sourcing capabilities to rebalance supply to more favorable sources among other actions.
Simon Easter: We will work to mitigate as much cost inflation as we can to limit the burden on our customers that said the cornerstone of our pricing strategy will continue to be maintaining price cost neutrality.
Simon Easter: Continuing to page six.
Simon Meester: Continuing to phase six. Our portfolio of businesses compete across an attractive and diverse set of end markets. Waste and recycling, which represents approximately 25% of our global revenue, is characterized by low cyclicality and steady growth. About 20% of our business is related to infrastructure, where significant investment continues to be put in place in the United States and around the world. Utilities is about 10% and growing due to the need to expand and strengthen the power grid. These three markets, representing more than half of our revenue, are highly resilient and less exposed to macroeconomic or geopolitical dynamics than any other area.
Simon Easter: Our portfolio of businesses compete across an attractive and diverse set of end markets.
Simon Easter: Waste and recycling, which represents approximately 25% of our global revenue is characterized by low cyclicality and steady growth.
Simon Easter: About 20% of our business is related to infrastructure, where significant investments continues to be put in place in the United States and around the world.
Simon Easter: Utilities is about 10% and growing due to the need to expand and strengthen the power grid.
Simon Easter: These three markets representing more than half of our revenue are highly resilient and less exposed to macro economic or geopolitical dynamics and any other area.
Simon Easter: General construction, which in the past had represented the majority of our end markets is now less than a third.
Simon Meester: General Construction, which in the past had represented the majority of our end markets, is now less than a third. Megaprojects and publicly funded demand remain healthy, while private sector demand is costly.
Simon Easter: Mega projects in publicly funded demand remains healthy while private sector demand as cautious.
Simon Easter: Turning to Europe, we continue to see a generally weak economic environment in the near term with a more encouraging outlook for infrastructure and related spending growth in the medium to longer term.
Simon Meester: Turning to Europe, we continue to see a generally weak economic environment in the near term with a more encouraging outlook for infrastructure and related spending growth in the medium to longer term.
Simon Meester: We also remain encouraged by increasing adoption of our products in emerging markets such as India, Southeast Asia, the Middle East, and Latin America.
Simon Easter: We also remain encouraged by increasing adoption of our products in emerging markets, such as India Southeast Asia, The Middle East and Latin America.
Simon Meester: Please turn to slide 7. We continue to implement our updated Execute, Innovate and Grow strategy. Integrating ESG into Terex is on track and we fully expect to deliver more than $25 million in operational run rate synergies by the end of 2026. We are leveraging ESG's expertise to improve throughput and increase capacity for certain utilities product lines that have backlog strength stretching into 2027.
Simon Easter: Please turn to slide seven.
Simon Easter: We continue to implement our updated execute innovate and grow strategy.
Simon Easter: Integrating ESG into Terex is on track and we fully expect to deliver more than $25 million in operational run rate synergies by the end of 2026.
Simon Easter: We are leveraging <unk> expertise to improve throughput and increase capacity for certain utilities product lines that have backlog strength stretching into 2027.
Simon Meester: A clear demonstration of synergy within our ES sector. We continue to evaluate our global footprint, focusing on opportunities to reduce fixed costs while improving operational performance, efficiency, and flexibility. When it comes to innovation, we have an exciting new product development pipeline focused on maximizing return on investment for our customers. And we are expanding our suite of digital solutions. We are investing in robotics, automation, and digitizing work streams for the benefit of our customers and to make our operations more flexible and efficient at the same time.
Simon Easter: A clear demonstration of synergy within our Es segments.
Simon Easter: We continue to evaluate our global footprint focusing on opportunities to reduce fixed costs, while improving operational performance efficiency and flexibility.
Simon Easter: When it comes to the innovation, we have an exciting new product development pipeline focused on maximizing return on investment for our customers and we are expanding our suite of digital solutions.
Simon Easter: We are investing in robotics automation and digitizing work streams for the benefit of our customers and to make our operations more flexible and efficient at the same time.
Simon Easter: Turning to growth.
Simon Meester: Turning to growth, completing the ESG acquisition was a significant step forward. We fully expect organic growth in that business to continue, driven by demographics, product technology adoption, share gains, and further penetration of our digital solutions. Our aerials and MP businesses continue to execute their growth strategy by accelerating adoption and exploring new channels and markets. Overall, we have a $40 billion addressable markets with significant upside for our business.
Simon Easter: Leasing the EMC acquisition was a significant step forward, we fully expect organic growth in that business to continue driven by demographics product technology adoption share gains and further penetration of our digital solutions.
Simon Easter: Our aerials and MP businesses continue to execute their growth strategy by accelerating adoption and exploring new channels and markets.
Simon Easter: Overall, we have a $40 billion addressable market with significant upside for our businesses.
Simon Easter: Turning to slide eight.
Simon Meester: Going to slide 8. At the core of our product development process is working with our customers to develop solutions that address their challenges and capitalize on their opportunities. A great example is ESG's Third Eye digital suite of on-board applications for waste collection vehicles. In addition to revenue generation and operating efficiency applications, Third Eye helps our customers improve safety performance.
Simon Easter: At the core of our product development process is working with our customers to develop solutions that address their challenges and capitalize on their opportunities.
Simon Easter: A great example is ESG spirit <unk> digital suite of onboard applications for waste collection vehicles.
Simon Easter: In addition to revenue generation and operating efficiency applications third eye helps our customers improve safety performance.
Simon Meester: The middle picture is a great shot from atop a Genie Superboom at a recent PGA event. We see growth in sports and entertainment applications as Genie products provide safe, stable, and flexible solutions. The image on the right is our new CBI woodchipper. The CBI team worked with their customers to design a machine with exceptional performance and industry leading ease of maintenance. DBI is part of our MP Environmental Vertical, providing solutions to the growing biomass, wood processing, and vegetation management sector. Each of these examples demonstrate the strength and leverage of the Terex portfolio to maximize ROI for our customers.
Simon Easter: The middle picture as a great shock from the top a genie Super boom at the recent PGA event, we see growth in sports and entertainment applications SUV products provide safe stable and flexible solutions.
Simon Easter: The image on the right is our new CBI wood chipper.
Simon Easter: The CPI team worked with our customers to design and machine with exceptional performance and industry, leading ease of maintenance.
Simon Easter: CPI is part of our MP environmental vertical providing solutions to the growing biomass food processing and vegetation management sectors.
Simon Easter: Each of these examples demonstrate the strength and leverage of the tariffs portfolio to maximize ROI for our customers.
Jennifer Kahn: And with that, I'll turn it over to Jim. Thank you, Simon, and good morning, everyone. Let's look at our Q1 financial results in five minutes. Quota net sales of $1.2 billion were 4.9% lower than prior years. or negative 3.6% at constant. Excluding ESG, our organic sales declined by 25% year-over-year in line with our expectations, driven by continued channel adjustments coupled with timing of a backlog conversion. A vote to bill was 124%, demonstrating a second consecutive quarter of votes to bill above 100%. and our backlog remains strong at $2.6 billion, up 13% sequentially. EF delivered a strong quarter, representing one-third of Terex fields, confirming Simon's point that we are becoming a more resilient and less cyclical crop.
Jim: And with that I'll turn it over to Jim.
Jim: Thank you Simon and good morning, everyone, let's look at Q1 financials and perhaps on slide nine.
Jim: Hold on that sell for $1 2 billion.
Jim: Depending on what's implied here.
Jim: A multiple of three 6% at constant exchange rates.
Jim: Excluding ESC organic sales declined by 25% year over year in line with expectations driven by continued channel adjustments.
Jim: Timing I'll come back with some person.
Jim: Our book to Bill was 124.
Jim: Demonstrating the faculty.
Jim: Our book to Bill about how it sounds.
Jim: And our backlog remains strong at $2 six.
Jim: Hum.
Jim: 19% sequentially.
Simon Easter: Yes, you'll note that our strong quarter Rocky backfill one series of tab cel to final Simon's claim that we are becoming a more of a challenge.
Jim: That's a cyclical company.
Jim: Our operating margin was nine 1%.
Jennifer Kahn: Operating margin was 9.1%. 350 basis point lower than prior year. This is slightly better than anticipated due to strong performance in ES. I do want to mention that while our Q1 operating margin was lower than prior year, it was 130 basis points sequential improvement versus Q4-24 on similar volume. Excluding EFG, our organic operating margin declined by 760 basis Approximately 75% of the organic margin decline is driven by volume, with the remaining 25% margin decline driven by unfavorable absorption. partially offset by $20 million of SG&A reduction and cost production. Interest and other expenses were $41 million, $26 million higher than last year due to interest on ESG acquisition financing.
Jim: We are at 50 basis points lower than prior year, this was slightly better than that.
Jim: Can you just talk the Farmington yeah.
Jim: I do want to mention that while our Q1 operating margin was nowhere to project, what the 130 basis points sequential improvement versus Q4, 2004 and similar model.
Jim: Excluding ESG organic operating margin declined by 760 basis points.
Jim: Approximately 75% of our bottled margin decline is driven by volume with the remaining 25% margin decline driven by unfavorable absorption.
Jim: Firstly offset by training and I've asked it.
Jim: Absolute cost productivity.
Jim: And shows and other expenses were 41 million 26 million higher than last year due to the entrance on ESG acquisition finance.
Jim: The first quarter effective tax rate was 21%.
Jennifer Kahn: The first quarter effective tax rate was 21%. slightly higher than price. EPS for the quarter was $0.83 and EBITDA was $128. It is important to note the impact of factory under-absorption associated with the production rate takedowns in areas and MP was approximately $0.31 per share in Tijuan.
Jim: Slightly higher than prior year.
Jim: EPS for the quarter was 83.
Jim: And to deal with having 28 now.
Jim: It is important to note the impact of factory under absorption associated with the production areas.
Jim: Our N and M P. What's approximately 31 cents per share.
Jim: Yeah.
Jim: Free cash flow improved compared to Q1 lakh here due to better working capital coupons.
Jennifer Kahn: Pre-cash flow improved compared to Q1 last year due to better working capital performance despite lower earnings.
Jim: All right.
Jim: Please turn to slide 10 to review, our second without starting with <unk>.
Jennifer Kahn: Please turn to slide 10 to review our second results, starting with Ariel. Those of $415 million were consistent with our Approximately half of the sales were generated in March, as our rental customers began to ramp up their delivery, heading into the seasonally higher construction period. That pattern is continuing.
Jim: Sales of 415 million were consistent with that.
Jim: Approximately half of the sales were generated in March as a rental customers began to ramp up their delivery heading into the seasonally highest construction Carol.
Jim: That pattern that's.
Jim: Continuing on to <unk>.
Jim: Operating margin was up 3% with dots in Marc yeah, but slightly higher sequentially.
Jennifer Kahn: Offering a margin of 3% Wisconsin large. but slightly higher sequence. Half of the margin deterioration was driven by lower sales, while the remaining was due to under-absorption from the production cuts that are largely behind us. We expect areas to return to double-digit operating margins in the second quarter as we ramp up production in line with seasonal demand.
Jim: How about the margin deterioration was driven by lower pounds, rather remove them with due to under absorption from the production cuts that have largely behind that.
Jim: We expect areas can be trying to double digit operating margins in the second quarter as we ramp up production in line with seasonal demand.
Jim: Turning to slide 11.
Jennifer Kahn: returning to spike 11. MPs' sums of $382 million were in lines with our 2025 We continue to see a high fleet utilization rate in the United Quotation activity across our DOA network as positive, with DOA stock levels declining at the slowest. However, MAC-1 certainty and higher entrance rates remains a headwind for land-to-own converse.
Jim: <unk> sales of $282 million were in line with our 2025.
Jim: We continue to see high fleet utilization.
Jim: In the United States.
Jim: Completion activity of course aren't doing that well Austin with Delek stock levels declining.
Jim: Yes.
Jim: However.
Jim: Macro uncertainty and higher interest rates move Hoffman.
Jim: <unk> entre person.
Jennifer Kahn: and the European market remains. Our concrete business delivered a solid Q1 with improved margins driven by new capital. Despite lower volume and unfavorable abductions in the quarter, MP was able to maintain double-digit margins due to cost-reduction actions, including reducing SG&A by 12 percent, or $0.06 million as compared to last year. We expect Q1 to be the lowest margin quarter for MPs as we anticipate sequential improvements over the quarter.
Jim: I think European market remains weak.
Jim: Our concrete business delivered a solid Q1 with improved margins driven by new customers.
Jim: Despite lower volume and unfavorable absorption in the quarter and he was able to maintain double digit margins due to cost reduction actions.
Jim: <unk>, reducing SG&A by 12%.
Jim: Oh, no actually passed law school.
Jim: We expect Q1 to be the lowest margin quarter for M. P. As we anticipate sequential improvements over the course of the game.
Jim: Please turn to slide 12 to review environmental solutions.
Jennifer Kahn: Please turn to slide 12 to review the environment facility. Our ES segment had an excellent quarter, generating approximately $400 million in sales, which represents a third of our total tariff sales in Q1. As Simon mentioned, BFG achieved record throughput resulting in record sales.
Speaker Change: Sackman kind of excellent quarter generating approximately 400 million pounds, which represents a third of our total capex telescopes you want.
Speaker Change: As Simon mentioned <unk> achieved record here could be bothering them backwards.
Speaker Change: Q1 shipments from hot suddenly high or some try yes.
Jennifer Kahn: If you want shipments from Harvard, set assembly higher than price. Operating margin for EF was 19.4%, which included consistent year-over-year margin performance in parrots utility and meaningful improvement at EF. On a proforma basis, this translates to a year-over-year 420 basis point margin improvement when we include ESG in our Q1 2024 basis. We expect margins to remain strong going forward, but slightly moderating from the RQ1 level.
Speaker Change: Operating margin for <unk> was 19, 4%, which included a consistent year over year margin performance compact utility.
Speaker Change: And look for improvement at ESG.
Speaker Change: On a pro forma basis this translates to a year over year.
Speaker Change: 420 basis point margin improvement when we include <unk> in our Q1 2024 baseline.
Speaker Change: We expect margins to remain strong going forward, but slightly moderating <unk> Q1 level.
Jennifer Kahn: I look forward to consistent strong performance from this sector.
Speaker Change: I look forward to consistent strong performance from this segment.
Jennifer Kahn: Please turn to slide three. We continue to maintain strong liquidity and a flexible capital structure with the right mix of secure and unsecured debt and variable versus As stated previously, we can prepay or reprice a certain portion of the debt, and we do not have any maturities until 2020. We ended Q1 2025 with $1.1 billion of liquidity.
Speaker Change: Please turn to slide 13.
Speaker Change: We continue to maintain strong liquidity and a flexible capital structure with the right mix.
Speaker Change: Secure and Unsecure at that example versus next to me.
Speaker Change: As stated previously we can pre pay a repriced a porsche.
Speaker Change: Portion of it that I think do not have any maturities until 2029.
Speaker Change: We ended Q1 2025 with $1 1 billion of liquidity consistent with that outlook.
Jennifer Kahn: Consisting with that. We plan to be leveraged in the second half of the year as we generate increased cash flow from our We will also continue to invest in our business.
Speaker Change: We plan to deleverage in the second half of the year as we generate increased cash flow from operations.
Speaker Change: We've also continued to invest in our businesses.
Jennifer Kahn: Fueling Organic Growth and Prosperity in In Q1, we reported a return on investment capital of 15%. Well, both our projects have. Returning capital to shareholders remain a priority. In the first quarter, we re-purchased 32 million of carrot stocks and paid $11 million. We will continue to take advantage of market conditions to repurchase shares at a favorable price level.
Speaker Change: And organic growth and profitability improvement.
Speaker Change: In Q1, we reported a return on invested capital of 15%.
Speaker Change: Well above our cost of capital.
Returning capital to shareholders remain a priority.
Speaker Change: In the first quarter, we repurchased 32 millions of tax.
Speaker Change: 11 nominees at the helm.
Speaker Change: We will continue to take advantage of market conditions to repurchase shares at a favorable price muscle.
Speaker Change: Terex is in a strong financial position to continue investing in our business and executing our strategy initiatives.
Jennifer Kahn: Terex is in a strong financial position to continue investing in our business and executing our strategic initiative. while returning capital to Seattle.
Speaker Change: Returning capital to shareholders.
Speaker Change: Turning to Vulcan some backlog on slide 14.
Jennifer Kahn: Turning to Bokingham backlog on slide 14. Our votings and backlog trends have returned to seasonal patterns, supported by strong votings in areas in the first quarter. Our current backlog of $2.6 billion is up $300 million, or 13% higher than prior quarter, as you can see in the backlog chart in the appendix.
Speaker Change: Our bookings and backlog trends have returned to seasonal pattern supported our strong bookings in the first quarter.
Speaker Change: Our current backlog of coupons.
It's up to me in here at nine or 13% higher than prior quarter as you can see in the backlog chart, India panels.
Jennifer Kahn: It is consistent with CUNY's historical level and supportive of our We continue to see strong errors book-to-bill of 144% in the quarter, predominantly driven by replacement. MP's backlog increased 33% sequentially and is in line with pre-COVID. MP has returned to his traditional book-to-bill with approximately three months of backlog.
Speaker Change: It is consistent with <unk> historical levels and supportive of our outlook.
Speaker Change: We continue to see strong Arris book to Bill of 44% in the quarter predominantly driven by replacement demand.
Speaker Change: <unk> backlog increased 32% sequentially and is in line with people that moms.
Speaker Change: N P. As we tried to as traditional book to Bill was approximately three months of backlog.
Speaker Change: Environmental solutions backlog of $1 1 billion continued to demonstrate strong demand in both E&C and taxi Tony.
Jennifer Kahn: Environments as Solutions' backlog of $1.1 billion continues to demonstrate strong demand in both ERG and tech Now turn to slide 15 for our 2025 outline.
Speaker Change: Now turning to slide 13 for 2025 outlets.
Jennifer Kahn: We are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties. and results could change negatively or positively. Our outlook assumes approximately 40 cents of net parish impact, which includes easing of the current We continue to expect school year 2025 sales of between $5.3 and $5.5. representing between 200 to 400 million higher sales than prior year as the ESG acquisition more than offset 8 to 12 percent lower organic consistent with our previous up. We continue to expect segment operating margin of approximately 12 percent, resulting from the planned improvements in areas and MP, continued strong performance in ES and ongoing actions to largely mitigate the impact of tariff.
Speaker Change: We are operating in a complex environment with many macro economy viable and geopolitical uncertainty.
Speaker Change: That could change Mechanistically a positive point.
Speaker Change: Our outlook assumes approximately 40 of Matt Harrison pack, which includes easing off the current rate.
Speaker Change: We continue to expect full year 2025 sales of between five point C and $5 five style.
Speaker Change: Representing between 250.
Speaker Change: <unk> not only in higher sales in the prior year as the.
Speaker Change: ESG acquisition more than offset.
Speaker Change: At 12% lower organic sales consistent with our previous outlook.
Speaker Change: We continue to expect segment operating margin of approximately 12%.
Resulting from the planned improvements in August and M. P.
Speaker Change: Continued strong performance in EES and ongoing actions to largely mitigate the impact of Paris.
Speaker Change: We also continue to expect insurance and other expenses of about 175 million and effective tax rate of 20%.
Jennifer Kahn: We also continue to expect interest and other expenses of about $175 million, an expected tax rate of $20 billion. As a result, we are maintaining a full-year EPS outlook of $470 to $500. From the quarterly EPF perspective, we still expect Q2 and Q3 to be stronger than Q1 and Q4.
Speaker Change: As a result, we are maintaining our full year EPS outlook of $4 75.
Speaker Change: From a quarterly EPS perspective, we still expect Q2 and Q3 to be stronger in Q1 and Q4.
Jennifer Kahn: We continue to expect a significant increase in free cash flow compared to 2024, anticipating between $300 million and $350 million in 2025 driven by working capital reductions and a full year of ESG cash generation.
Speaker Change: We continue to expect a significant increase in free cash flow to pack for 2024.
Speaker Change: Being between 200 mm $350 million in 2025, driven by working capital reductions a full year of ESG cash generation.
Jennifer Kahn: What do you need to invest in our business with expected capex of approximately how much? Looking at our site. We're maintaining our areas and NP sales expectations and increasing our sales outlook for EA. In ARIU, we have planned conservatively with the assumption that our rental customers are primarily deploying replacement capital. Our bookings, actual deliveries, and ongoing discussions continue to give us confidence in the area's outlook of Down Low Double.
Speaker Change: <unk> continues to invest in our business with expected capex of approximately how many screens.
Speaker Change: Looking at our segments.
Speaker Change: Maintaining our artists and M T cells expectations, and increasing our sales outlook for it yet.
Speaker Change: And I know, we have planned conservatively with the assumption that our rental customers are primarily deploying replacement capex this year.
Speaker Change: Bookings actually delivery and ongoing discussions continues to give us confidence in the outlook.
Speaker Change: I'll note that potential.
Jennifer Kahn: We expect ARRA to return to double-digit margins in Q2. including the impact of power. and MP, albacore coverage as well as the underlying machine utilization. Art Consumption, and Code Activity continue to give us confidence in our down-high single-digit outlook. We expect MPs to achieve full-year document margins well within our 25% target.
Speaker Change: We expect <unk> to return to double digit margins in Q2, including the impact of tariffs.
Speaker Change: And M P a backlog harvest as well as the underlying machine utilization rates.
Speaker Change: Our consumption and quote activity continued to give us confidence in him down high single digit outlook for the year.
Speaker Change: We expect MP to achieve full year decremental margins well within a 25%.
Speaker Change: <unk> had a great first quarter and we are increasing our full year outlook up sales up high single digits.
Jennifer Kahn: CF had a great first quarter, and we're increasing our full-year outlook of sales up high single-digit.
Jennifer Kahn: And with that, I'll turn it back. Thanks, Jen.
Simon Easter: And with that I put it back to Simon.
Simon Easter: Thanks, Jim I will now turn to slide 16.
Simon Meester: I will now turn to slide 16. Terex is well positioned to navigate the current dynamic environment and deliver long term value to our shareholders. We have a strong, more synergistic portfolio of industry leading businesses across a diverse landscape of industrial segments with attractive end markets.
Simon Easter: <unk> is well positioned to navigate the current dynamic environment and deliver long term value to our shareholders. We have a strong more synergistic portfolio of industry, leading businesses across the diverse landscape of industrial segments.
Simon Easter: <unk> end markets.
Simon Meester: We will improve our through cycle financial performance as we integrate ESG and realized synergies across the company. As always, I want to close by thanking our team members around the world.
Simon Easter: We will improve our through cycle financial performance as we integrate ESG.
Simon Easter: And realize synergies across the company.
Simon Easter: As always I want to close by thanking our team members around the world. We have embarked on an exciting path forward building and growing and new tariffs.
Simon Meester: We have embarked on the exciting path forward, building and growing a new Terex.
Unknown Executive: And with that, I would like to open it up for questions. Operator?
Simon Easter: And with that I'd like to open it up for questions operator.
Speaker Change: Thank you. Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue and if you'd like to withdraw that question simply press Star. One again, we also ask that you limit yourself to one question and one follow up your first question comes from the line of.
Unknown Executive: Thank you.
Unknown Executive: We will now begin the question and answer session.
Unknown Executive: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, simply press star 1 again. We also ask that you limit yourself to one question and one follow-up.
Jerry Revich: Your first question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead. Yes, hi. Good morning, everyone. Hey, good morning. I was really impressed by the ES margin improvement in the quarter.
Jerry Revich: Jerry Revich with Goldman Sachs. Please go ahead.
Jerry Revich: Yes, hi, good morning, everyone.
Speaker Change: Hey, good morning.
Jerry Revich: Good morning.
Speaker Change: But I was really impressed by the Es margin improvement in the quarter I'm wondering if you could just expand on the comments you made Jennifer on the margin outlook in coming quarters. It looks like you were right at about 17% margins for most of last year. That's the cadence for this year it looks like operating profit for the busy.
Jennifer Kahn: I'm wondering if we could just expand on the comments you made, Jennifer, on the margin outlook in coming quarters. Looks like you were right about 17% margins for most of last year. If that's the cadence for this year, it looks like operating profit for the business would be up over 30%. So I just want to make sure I understand the moving pieces within that and drivers of the really strong margin performance in the first quarter.
Speaker Change: This would be up over 30%. So I just want to make sure I understand the moving pieces within that and drivers of the really strong margin performance in the first quarter.
Jennifer Kahn: Sure. Good morning, Jerry. So a strong Q1 performance is driven by three factors. That, of course, the 6% of sequential increase in sales from Q4 to Q1 on a per-format basis. And second, we did, like what Simon mentioned, we had a record Q1 in terms of throughput. So that actually drove very favorable factory absorptions in EMG. And also, we also had some integration synergies realizing in Q1.
Jerry Revich: Sure Good morning, Jerry shrunk.
Speaker Change: Strong Q1 performance was driven by three factors.
Speaker Change: According to the 6% a sequential increase in sales from Q4 to Q1 on a pro forma basis, and secondly, like what Simon mentioned, we had a record Q1 in terms of throughput.
Speaker Change: So that actually Joe very favorable factory absorption and EMG and <unk> and until we also had some integration synergies are realizing in Q1 as we go into the remainder of the three quarters, we see that moderating back to the normalized rates, mainly because we are.
Jennifer Kahn: As we go into the remaining of the three quarters, we see that moderating back to the normalized rate, mainly because we don't see that there were some expenses that we will be incurring to ramp up the production. and to support some of our One-Arm Expansion as well.
Speaker Change: We don't see that the there was some expense.
Speaker Change: Expenses that we will be incurring through I'm up in production.
Speaker Change: As a support something about what else on expansion as well.
Jerry Revich: Yeah, we had a couple of one-off items in the first quarter that we don't think will be in the next. So we did have a really good quarter. Well done.
Speaker Change: Yeah, we had a couple of one off items in the first quarter that we don't think repeats in the next three quarters.
Speaker Change: But we did have a really good quarter.
Speaker Change: Well done and then just to shift gears.
Simon Meester: And then just to shift gears, Simon, appreciate the comments you made about maintaining price cost neutrality. Can you just talk about how you're handling orders that you folks are booking today? Is there a surcharge mechanism in place? And, you know, I saw the guidance comments spoke about assumption around where tariffs move going forward. Can you just expand on those assumptions? And if tariffs are worse, how is what's priced in backlog going to play out to maintain price cost neutrality? Yeah, yeah, thanks for the question. Obviously, you know, we're in a very dynamic environment, and things change all the time.
Speaker Change: So I appreciate the comments you made about maintaining price cost.
Speaker Change: <unk> can you just talk about how you're handling orders that you folks are booking today is there a surcharge mechanism in place and.
Speaker Change: The guidance comments spoke about assumption around where tariffs.
Speaker Change: Going forward can you just expand on those assumptions of the tariffs are worse.
Speaker Change: Whats priced backlog.
Speaker Change: Going to play out to maintain price cost neutrality.
Speaker Change: Yeah.
Speaker Change: Thanks for the question obviously.
Speaker Change: You know, we're in a very dynamic environment and things change all the time and it's difficult with what will happen in the next couple of months.
Simon Meester: And it's difficult with what will happen in the next couple of months. And we laid out some assumptions that we are operating by, but obviously, you know, we are in full mitigation mode.
Speaker Change: We laid out some assumptions that we are operating by but obviously.
Speaker Change: We are in full mitigation mode.
Simon Meester: Actually, we have been in full mitigation mode for quite some time because as early as late last year, beginning of this year, we started pulling forward material. So we have a little bit, we bought ourselves a little bit of time there in material and finished goods. We also started to pull back on discretionary spend, and now the priority is fully on mitigating the net, the tariff impact through our supply chain and exploring alternatives. We're kind of pausing on the longer-term actions just to see things stabilize first. But then obviously, to your point, pricing is one of the leaders as well.
Speaker Change: Actually we have been in full mitigation mode for quite some time because as early as late last year beginning of this year, we started pulling forward.
Speaker Change: Material. So we have a little bit if we bought ourselves a little bit of time, they're material and finished goods. We also started to pull back on discretionary spend.
Speaker Change: And now the priority is fully on mitigating.
Speaker Change: The tariff impact through our supply chain and exploring alternatives.
Speaker Change: We're kind of pausing on the on the longer term actions just to see things stabilize first but then obviously to your point pricing is one of the leaders as well.
Simon Meester: And we have taken some surcharges in certain areas already. But, you know, the price-cost dynamics are very different by business, by segment, even by vertical, because you need to put it in the context, obviously, of how much we can mitigate by business, by segment, what our competitive position is, our market conditions, and so on and so forth. But overall, our strategy is to maintain that price-cost neutrality, and where price is one of our levers to pull. But the priority for now is to mitigate through supply chain.
Speaker Change: And we have we have taken some some surcharges in certain areas.
Speaker Change: Already but the price cost dynamics are very different by business by segment even by vertical.
Speaker Change: Because you need to put it in the context of it.
Speaker Change: As Lee of March we can mitigate by business by segment, what our competitive position is for market conditions, and so on and so forth, but overall our strategy is to is to maintain that price cost neutrality, and where price is one of our levers lever simple, but it would be the priority for now is to mitigate.
Speaker Change: Through supply chain.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Jamie Cook with Truest Securities. Please go ahead.
Jamie Cook: Your next question comes from the line of Jamie Cook with Truist Securities. Please go ahead. Hi, good morning, and congratulations on a nice, you know, start to the year.
Jamie Cook: Hi, good morning, and congratulations on a nice.
Jamie Cook: Start to the year just wanted to understand I guess, Jennifer the puts and takes of the guidance. Obviously, we beat the first quarter, but I think you said youre going to have a 40.
Jennifer Kahn: I just want to understand, I guess, Jennifer, the puts and takes of the guidance. Obviously, we beat the first quarter. But I think you said you're going to have a 40 cent headwind related to tariff. So if you can just walk us through, and I guess maybe ES is a little better, but just the puts and takes of how we're maintaining the guide given the different dynamics there.
Jamie Cook: Headwind related.
Jamie Cook: <unk> tariffs. So if you can just walk us through them and I guess, maybe ask this a little better but just the puts and takes of how we are maintaining the guide given the different dynamics there and then I guess my second question Scott.
Jamie Cook: And then I guess my second question what we know about Terex today and where you're manufacturing your products, because it's not looks like a lot of your products are manufactured in the U.S., which is just wondering if there's a there's a market share or competitive advantage for Terex in certain product lines or segments. And if so, could you just highlight where that could be? Just wondering if there's a market share or outperformance story here. Thank you.
Speaker Change: What we know about tariffs today, and where you're manufacturing your products because it's not it looks like a lot of your products.
Jamie Cook: Manufactured in the U S, which is a part.
Jamie Cook: Wondering if there's a there's a market share of competitive advantage for tariffs in certain product lines or segments and if so could you just highlight where they.
Jamie Cook: Where that could be just wondering if theres a market share outperformance story here. Thank you.
Simon Meester: Hey, Jamie, you broke up at the beginning of your second question. Can you repeat? Sorry. Yeah, sorry. The second question just, you know, based on what's going on with tariffs, and you're saying you manufacture 75% of your products in America are made in America. I'm just wondering if there's certain product lines where you have a competitive advantage because of your manufacturing footprint, and if so, where that would be so that you could potentially gain market share.
Jamie Cook: Hey, Jamie you broke up on the began at the beginning of your second question can you can you repeat it's over to you.
Jamie Cook: Yeah, sorry, the second question just you know.
Jamie Cook:
Speaker Change: Based on what's going on with tariffs and you're saying the manufacturer 75% of your products. In America are made in America I'm. Just wondering if there are certain product lines, where you have a competitive advantage because of your manufacturing footprint and if so where that would be so that you could potentially gain market share.
Jamie Cook: Thanks.
Speaker Change: Thank you Jamie and good morning, So I'll take the first question I'll, let Simon answer the second question, So our Q1 debt.
Jennifer Kahn: Hey, Jamie. Good morning.
Jennifer Kahn: So I'll take the first question.
Jennifer Kahn: I'll add Simon on to the second question. So our Q1s, we bid our original outlook by about $0.30. And that's largely, like you see, driven by ES, and we expect that to flow through the year. And that will offset partially the $0.40 tariff that we'll make into our outlook. And then we also offset that by our share count that will actually drive our EPS higher and also some of our operational efficiencies. As you can see, we continue to reduce our SG&A. So that actually walks back out how we actually maintain our guide.
Speaker Change: Our original outlook by about 30 seconds and that's nice to me like you seem to have them buy yet and we expect that to flow through the year.
Speaker Change: And that will offset partially the forties in Paris that was baked into our outlook.
Speaker Change: And then we also offset that by a share count that will actually drive them out EPS on a higher and also some of our operational efficiencies as you can see we continued to reduce our SG&A.
Speaker Change: SG&A itself.
Speaker Change: So that actually walk back out how we actually <unk> all got at this point in time.
Speaker Change: Yeah, and with regards to your question on market share and product lines that we are we like our overall position jamey, if I break it down by segment, starting with environmental solutions.
Simon Meester: Yeah, and with regards to your question on on market share and product lines, we like our our overall position, Jamie, if I break it down by segment starting with environmental solutions, I mean, it's all it's all made in the United States and sold in the United States. So obviously, we like our position there in aerials. 95% of you include USMCA, you know, built in North America, for North America. So we like our position there. And in materials processing, I don't see any major difference between us or our competitors, in terms of where we're sourcing from, maybe in the margin a little bit, but overall, I don't see, I don't see the global footprint to be actually, I actually think we're at an advantage more so than a disadvantage overall, but it would be hard for me to call out a specific product line.
Speaker Change: All made.
Speaker Change: The United States and sold in the United States. So obviously, we like our position there in aerials.
Speaker Change: 95%. If you include U S MCA build in North America.
Speaker Change: North America, so we like our position there and in materials processing.
Speaker Change: I don't see any major difference between us or our competitors in terms of where we're sourcing from.
Speaker Change: Maybe in the margin a little bit, but overall I don't see I don't see the global footprint.
Speaker Change: To be.
Speaker Change: I actually think we're at an advantage more so than a disadvantage overall, but it would be hard for me to call out a specific product line.
Simon Meester: We would certainly be at an advantage versus, obviously, some of our Asian competitors.
Speaker Change: You would certainly be an event. It is an advantage versus obviously some of our Asian competitors.
David Raso: Thank you.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of David Raso with Evercore ISI. Please go ahead.
David Raso: Your next question comes from the line of David Raso with Evercore ISI. Please go ahead. Hi, thank you. Two questions.
David Raso: Hi, Thank you two questions one on the aerial margin progression <unk> to <unk> and then the full year thoughts around material processing.
David Raso: One on the aerial margin progression, 1Q to 2Q, and then the full year thoughts around material processing. For aerials, can you give us some help on how you're viewing your revenue growth sequentially? I'm just trying to get a sense of what the sequential incremental margin is implied to go from the 3% operating margin in the first quarter to 10%. Yeah, so obviously, we were very pleased with our booked bill in the in the first quarter. So we were set up to make a nice jump going to Q2. It would be our normal seasonal jump up, David.
Ariel can you give us some help on how you're viewing your revenue growth sequentially.
David Raso: I'm, just trying to get a sense of what the sequential incremental margins implied to go from the 3% operating margin in the first quarter to 10%.
David Raso: Yeah. So obviously, we were very pleased with our.
David Raso: Book to Bill in the.
David Raso: In the first quarter. So we were set up to.
David Raso: To make a nice jump going going to Q2, it would be our normal seasonal jumbo.
David Raso: David.
Jennifer Kahn: And so overall, our full year sales outlook is still to be down low double digits, but with a nice ramp up in Q2. I don't think we have actually articulated specifically what the what the number is, but it's the normal seasonal jump up and that volume will obviously help us to get back to that double digit operating margin in aerials that we spoke about on the in the prepared remark.
David Raso: And so overall, our full year sales outlook is.
David Raso: It's still to be down low double digits, but with a nice ramp up in Q2.
David Raso: I don't think we have actually articulated specifically what the what the number is but it's the normal seasonal jump up that volume. So obviously helped us to get back to that double digit operating margin in the areas that we spoke about.
David Raso: On the in the prepared remarks.
Jennifer Kahn: And then on MP, yeah, MP has a three-month backlog coverage. We were pleased with our Q1 bookings in MP. But obviously, that's a slightly lower backlog coverage than in AERIALS. In AERIALS, we have more than seven months forward visibility. So with MP, the current sales outlook assumes kind of a sequential ramp up as we progress through the year. It's not going to be kind of a V-shape versus 2024, but more like a U-shape, if you will. But technically, what our outlook is implying is that Q1 would be a bottom for MP. Now, that's all within the context of, you know, what's going to play out with tariffs in the remainder of the year and what's that going to do to confidence.
David Raso: And then on M P.
David Raso: Yes.
David Raso: As of three months backlog coverage, we were pleased with our.
David Raso: Q1 bookings and M P.
David Raso: But obviously, that's a slightly lower backlog coverage spend an aerial scenarios, we have more than seven months forward visibility.
David Raso: With MP the current sales outlook assumes kind of a sequential ramp up.
David Raso: As we progress through the year, it's not going to be kind of a V shaped versus 2024, but.
David Raso: More like a U shape, if you will but technically what our outlook is implying is that Q1 would be a bottom for M. P.
That's all within the context of what's going to play out with tariffs in the remainder of the year and what's that going to do to confidence.
David Raso: Inventories are roughly where they need to be our fleet is being used in MP in aerials.
Jennifer Kahn: But inventories are roughly where they need to be. Our fleet is being used in MP, in aerials. And some of that fleet starts to age now in MP. So we're looking at a potential compounded replacement effect there as well. But the current assumption is a very gradual ramp up on the by-quarter in the MP sales output.
David Raso: So.
David Raso: And some of that fleet starts to age now in MP, So where we're looking at a potential compounded replacement effect there as well.
David Raso: But the currency assumption is a very gradual ramp up on the by quarter in the E&P sales outlook.
Speaker Change: Thank you I wanted to ask a question.
David Raso: I wanted to ask an MP question. I'm so sorry. I wanted to follow up on the 1Q to 2Q margin comment for aerials. When you say the normal ramp, obviously utilities pulled out, right? So I can go back and restate obviously, you know, some of the years. But are we saying about a 20 to 25% sequential on revenue roughly when you say normal? How do you define normal in the new aerial segment with utility? Just unclear. Yeah, I'll let Jen chime in on the margins. But if you think about what we said in the opening remarks is that half of our Q1 revenue was booked in March, and you just draw that forward.
Speaker Change: Oh, I'm, sorry, I wanted to follow up on the <unk> margin comment for aerials. When you say the normal ramp obviously utilities pulled out right. So I can go back and restate or obviously some of the years, but are we saying about a 20% to 25% sequential on revenue roughly when you say normal how do you.
Speaker Change: Define normal and the new aerial segment with utility just unclear.
Speaker Change: Yeah, I'll, let OLED.
Speaker Change: Jim chime in on the margins, but if you think about what we said in the opening remarks that half of our Q1 revenue was booked in March and you just draw that forward to this kind of the ramp up for Q2.
David Raso: So that's kind of the ramp up for Q2. Right.
Right, Hey, David Good morning.
Jennifer Kahn: Hey, David, good morning. So in terms of like walking from Q1 to Q2 on the double digit margin, we mentioned earlier that in Q1, we had about 550 basis points of impact and margin due to the deliberate production cuts that we poked. If you add that, that will not repeat again in Q2. And then on top of that, the step up in volume, that will get us to the double. Okay.
Speaker Change: In terms of like walking from Q1 to Q2 on the double digit margins. We mentioned earlier that in Q1, we had about 550 basis points of impact of margin due to the deliberate production class IV pump.
Speaker Change: So if you add that that will not repeat again in Q2, and then on top of that step up in volume that would get us to the double digits.
Speaker Change: Okay, and the idea of maybe some land at product I'm trying to get a sense of the tariffs impact on <unk> is it fairly light on aerials, particularly given another manufacturing base is already helpful. But.
Jennifer Kahn: And the idea of maybe some land at product, I'm trying to get a sense of the tariff impact on 2Q. Is it fairly light on aerials, particularly given, I know the manufacturing base is already helpful, but the idea, you sort of seem to get ahead of the curve a bit on steel and a variety of things. I'm just trying to get a sense of the things that can make that easier. And as you said, under absorption is reduced, you have some volume sequential, and then on price cost, if I remember correctly, you got a bit ahead on some of the cost issues too, just to gain more comfort, because obviously that's a big driver of the sequential EPS 1Q to 2Q.
Speaker Change: The idea you should assume to get ahead of the curve a bit on steel on a variety of things I'm just trying to get a sense of the things that can make that easier and you. As you said under absorption is reduced you have some volume sequential and then on price cost. It seemed like if I remember correctly you got a bit ahead on some of the cost issues to just just to gain more comfort.
Speaker Change: Because obviously, that's a big driver of the sequential EPS <unk>.
Jennifer Kahn: Yeah, I mean, it's a great question. When it comes to the net tariff impact, we spoke about 40 cents in the prepared remarks. That is mostly going to be on raw material imported from China, and it's mostly impacting aerials, and it's mostly in Q3, although some of it will hit Q2, and some of it will hit Q4. It's important to know what our assumptions are on the 40 cents, and that's that we're not assuming a dramatic change in any of the other tariffs other than the de-escalation of the China tariffs. So we've baked in some sort of conservative continuation on the tariffs of the rest of the world, but we do expect de-escalation of the China tariffs to kick in in the next month or two.
Speaker Change: Right, Yeah, I mean, it's a great. It's a great question when it comes to the net tariff impact.
Speaker Change: We spoke about 40.
Speaker Change: Baird remarks.
Speaker Change: That is mostly going to be on.
Speaker Change: Raw material imported from China, and it's mostly <unk>.
Speaker Change: Impacting aerials and it's mostly.
Speaker Change: In Q3, although some of it will hit Q2, and some of it will hit in Q4. It is important to know what our assumption assumptions are on the on the on the 41 to 40 and as said we are we're not assuming a dramatic change in any of the other tariffs other than the escalation of the China tariffs.
Speaker Change: So we baked in some.
Speaker Change: Some sort of conservative.
Continuation of the tariffs of the rest of the world, but we do expect.
Speaker Change: The escalation of the of the China tariffs.
Speaker Change: To kick in in the next month or two.
Jennifer Kahn: That's what that $0.40 is based on. And then obviously that USMCA qualified goods continue to remain tariff-free. That's based into that $0.40. But to answer your question directly, we do think we have line of sight to get back to double digits in aerials in Q2. We might just get there in Q3, maybe high single digits in aerials for Q3, and then back to normal decrementals in Q4. That's kind of the walk for aerial margins for now. I appreciate that. That's what I was thinking. You have enough cost, land it for 2Q, you get some volume ramp.
Speaker Change: What that 40 census, based on and then obviously that U S. MCA caused by qualified goods continued to remain a tariff free that's baked into the 40, but to answer your question directly we.
Speaker Change: Do think we have line of sight to get back to double digits in aerials in Q2, we might might just get there in Q3, maybe high single digits in aerials for Q3.
Speaker Change: And then back to normal Decrementals in Q4, that's kind of the walk for aerial margins for now.
Speaker Change: I appreciate that so I was thinking that you have enough cost land. It for <unk> you get some volume ramp.
David Raso: The tariff issues look more of a back half story for aerials, but maybe that gives you a little bit of time to try to push price where you can and mitigate in other ways. Okay, I got it. I really appreciate it. Thank you.
Speaker Change: Tariff issues more of a back half story for aerials, but maybe that gives you a little bit of time to try to push price, where you can and mitigate in other ways. Okay. I got it I really appreciate it. Thank you alright. Thanks, David.
Meg Dobre: Your next question comes from the line of Meg Dobre with Baird. Please go ahead. Thank you. Appreciate all the good color on what's baked into this 40 cent.
Speaker Change: Your next question comes from the line of make <unk> with Baird. Please go ahead.
Speaker Change: Thank you I appreciate all the good color on what's baked into this 40, but one thing that I can.
Simon Meester: But one thing that I guess I did not hear you talk about is any tariff on the UK. Now, I don't know if I have my facts straight here, but that reciprocal tariff of 10%. I guess it's there. And I'm wondering how that impacts MP and what's baked in it. Yeah, I mean, it's a fair question. As I mentioned earlier, our focus is to first and foremost, offset this through our supply chain and explore alternatives. So that's the lion's share of the 40 cents is just basically raw material on China. So then there are obviously also some finished goods tariffs that we're dealing with, and we're trying to absorb as much as we can to basically not burden our customers or our competitive position.
Speaker Change: Yes, I did not hear you talk about it.
Speaker Change: Any tariffs on the U K now I don't know if I have my facts straight here, but that reciprocal tariff of 10%.
Speaker Change: I guess, it's there and I'm wondering how that impacts empty of whats baked in at this point.
Speaker Change: Yeah I mean.
Speaker Change: It's a fair question as I as I.
Speaker Change: As mentioned earlier, our focus is to first and foremost.
Speaker Change: Offset this through our supply chain and explore alternatives.
Speaker Change: So that's the that's the lion's share of the 40 <unk> is just.
Speaker Change: Basically raw material on China. So then there are obviously also some finished goods tariffs that we're dealing with.
Speaker Change: We're trying to absorb as much as we can to.
Speaker Change: Basically not burden our customers or.
Speaker Change: Or our competitive position.
Simon Meester: But yeah, surcharges and pricing is one of the levers that will pull if we have to, if we can find the mitigation.
Speaker Change: But yes surcharges and pricing is one of the levers that we'll pull if we have to if we can find the mitigation.
Speaker Change: So just to be clear are you raising the price on MTN. This is this is basically the offset or is this impact is not factored into the 14th.
Simon Meester: So just to be clear, are you raising the price on MTN? This is this is basically the offset or is this impact just not factored into the 40? I'm not, I'm, I wasn't giving a specific comment on what we're actually doing, because we, we just want to, we just want to highlight the, you know, the difference in price cost dynamics by business. So, I'm not comfortable in actually going to into specific detail what we do for each business. Very well.
Speaker Change: At this time.
Speaker Change: I I wasn't giving a specific comment on what we're actually doing because.
Speaker Change: We just want to we just want to highlight.
Speaker Change: The difference in price cost dynamics by business, so I'm, not comfortable and actually going into specific detail of what we do for each business mix.
Speaker Change: Very well and then my last question is that yes.
Meg Dobre: And then my last question is on ES. Really good margin performance here. I guess, you know, going back to the way this business I recall performing under previous ownership some years back, the margin profile here is quite a bit better than what used to be here historically.
Speaker Change: Really good margin performance here I guess, you know going back to the way this business I recall performing under previous ownership. Some years back the margin profile here is quite a bit better than what used to be here historically.
Jennifer Kahn: Now that you're the owner of this asset, and you're kind of looking into what has happened from a cost perspective and margin perspective, how sustainable do you think current margins are beyond maybe 2025?
Speaker Change: I bet you are the owner of this asset and you're kind of looking into.
Speaker Change: What has happened from a cost perspective and margin perspective, how sustainable do you think current margins are beyond maybe two.
Jennifer Kahn: Is there something unique in the price cost dynamic or anything else that investors need to be aware of as they think maybe two to three years out?
Speaker Change: 2025 is there something unique in the price cost dynamic or anything else that investors need to be aware of as they think maybe two to three years out. Thank you.
Unknown Executive: Thank you.
Speaker Change: Hi, good morning, So yes, like what you saw what we disclosed the pro forma <unk>.
Jennifer Kahn: Hi, good morning. So, yes, like what you saw, what we just closed in the poll format, so you did see a big improvement in ES margins throughout the year. What and we also mentioned that the synergies just now, Simon mentioned 25 million, largely that's analyzed for 2026. So that you would see that to end to our profitability increase. However, right now, the Q1 is our record throughput. We will definitely need to make some investment to keep on continuing up and catching up with the demand. Our backlog is really strong in ES with about eight months, and we're good set up for a good start for the year.
Speaker Change: Improvement in Es margin throughout the years.
Speaker Change: And you also mentioned that the synergies just now.
Speaker Change: As I mentioned 25 novel Lastly, that's annualized for 2026, so that with feedback and our profitability increasing.
Speaker Change: However, right now the Q1 is our record Q3 that we will definitely need to make some investments to keep on continuing up and catching up with demand.
Speaker Change: Backlog is nearly summer yes.
Speaker Change: Eight months.
Speaker Change: With us on the setup for two sides to that yet, but we'll expect the synergies to come here in 2026 that will further increase our margin profile as well.
Jennifer Kahn: But we'll expect that the synergies to come to in 2026 that will further improve the margin profile as well.
Speaker Change: Okay. Thank you.
Tami Zakaria: Your next question comes from the line of Tami Zakaria with Jpmorgan. Please go ahead.
Tami Zakaria: Your next question comes from the line of Tami Zakaria with J.P. Morgan. Please go ahead. Hey, good morning. Thank you so much and very good results. So I wanted to follow up on that 40 cents comment. Is that assuming China tariffs stay at the 145% or what rate is assumed for China to get to that 40 cents? Because I think in the presentation you mentioned you expect some easing of tariffs. So I just wanted to clarify. Yeah, thanks for the question, Tami. Good morning. Yeah, so what is included in the 40 cent assumption is that there will be some level of easing on particularly the China tariffs to the tune of roughly, you know, 50% of where it is today.
Tami Zakaria: Hey, good morning, Thank you so much and very good results.
Tami Zakaria: So I wanted to follow up on that for this then comment.
Tami Zakaria: Is that assuming China tariffs stay at the 145% or what rate is assumed for China to get to that 40% because I think in the presentation. You mentioned you expect some easing of tariffs I just wanted to clarify.
Tami Zakaria: Yeah. Thanks for the question, Tim and good morning.
So what is included in the 40 <unk>.
Tami Zakaria: Assumption is that there will be some level of easing.
Tami Zakaria: Currently the China tariffs to the tune of roughly 50% of where it is today. So we don't expect to go all the way to zero, but there would be a significant escalation happening in the next month or two.
Jennifer Kahn: So we don't expect to go all the way to zero, but there would be a significant de-escalation happening in the next month. Understood. That's very helpful. And then my second question is on MP or broadly for Europe. I think there was a similar plan package that was passed for Germany. How big is Germany for you? And any thoughts on which end markets could benefit from a package like that and how that relates to your portfolio, especially MP, that might benefit in the coming quarters or even years? Yeah, great, great, great question. We were at the at the BOMA trade show a couple of weeks ago, and it was talking to customers and talking to dealers and partners.
Tami Zakaria: Understood that's very helpful and then.
Speaker Change: My second question is on MP or broadly for Europe, I think there was a stimulus plan package that was passed for Germany, How big is Germany for you and any thoughts on which end markets could benefit from a package like that and how that relates to your portfolio.
Speaker Change: Specialty M P that might benefit in the coming quarters or even years.
Speaker Change: Yeah, Great Great. Great question, we were at the <unk> trade show a couple of weeks ago and it was.
Talking to customers and talking to dealers and partners, who is the first time that.
Simon Meester: It was the first time that we really started to hear some some positive news coming out of coming out of Germany, to be very honest.
Speaker Change: We really started to hear.
Speaker Change: Some some positive news coming out of coming out of Germany to be very honest and.
Simon Meester: And yeah, it will, that will definitely a favorable impact, which, by the way, it's not baked into our sales outlook for now, because we think it will mostly start to kick in for us in 2026. But it would, it would directly benefit our material handling business, which is very Germany dependent. It would impact, favorably impact aerials, and it would favorably, favorably impact MP's aggregate business. So, and the German economy, as you know, very well, obviously being very important as part of the greater EU economy. So that was an encouraging bit of news that came out.
Speaker Change: Yes that will that will definitely.
Speaker Change: A favorable impact which by the way is not baked into our sales.
Speaker Change: Sales outlook for now because we think it will mostly.
Speaker Change: Sorry to kick in for Us in 2026, but it would it would directly benefit our material handling business, which is very Germany dependents.
Speaker Change: It would impact favorably impact the aerials and wood.
Speaker Change: They've really favorably impact.
Speaker Change: Mp's aggregate business. So in the German economy, as you know very well, obviously being very important as part of the greater EU economy, So that was encouraging.
Speaker Change: A bit of news.
Speaker Change: Came out so we're excited about that.
Simon Meester: So we're excited about that.
Speaker Change: Okay, great. Thank you.
Unknown Executive: Okay, great. Thank you.
Speaker Change: Your next question comes from the line of Tim <unk> with Raymond James. Please go ahead.
Tim Thein: Your next question comes from the line of Tim Thein with Raymond James. Please go ahead. Great. Thank you. Good morning. I'll just pack the two questions together. The first is on the ES performance in the quarter. I'm curious if there were any purchase price adjustments that were included in the in the quarter. And then the second question just is on operating costs and that separate from the The tariff discussion, just just curious how you are, I believe, hedged from a steel perspective for the year. Obviously, that that's just in North America, but maybe just a discussion regarding general operating costs, just in light of some of the fluctuations in commodity markets, how you're thinking about the balance of the year.
Tim: Great. Thank you good morning, all just a pack of two questions together. The first is on the E S.
Speaker Change: Performance in the quarter I'm curious if there were any.
Tim: Purchase price adjustments that were included in the quarter.
Tim: And then the second question just is on an operating cost and that's separate from the.
Tim: The tariff discussion just curious.
Tim: You are I believe hedged.
Tim: From a steel perspective.
Tim: The year, obviously that that's just in North America, but maybe just a discussion regarding <unk>.
Tim: General operating cost just in light of some of the fluctuations in commodity market.
Tim: Thinking about the balance of the year. Thank you.
Tim Thein: Thank you.
Simon Meester: Yeah, there was no, I'll take the first and then I'll ask Jen to, to take the steel hedge question. Yeah, there was no, no specific pricing action for the first quarter other than what was part of the normal annual negotiations that drove that overperformance in Q1 for, for ES. It was predominantly just execution. Execution drove the overdrive and there were a couple of one-off orders that we were able to fill in the first quarter that, that gave us the upside. It wasn't driven by any, any surcharge or anything. I'm sorry, I wasn't clear on that.
Tim: Yeah. There was those I'll take the first and then I'll ask Jim to.
Jim: Take the steel hedge question, yes, there was no no specific.
Tim: Pricing actions for the first quarter other than.
Tim: What was part of the normal annual negotiations that drove that over performance in Q1 for for Es. It was predominantly just execution execution drove.
Tim: The overdrive and there were a couple of one off orders that we were able to fill in the first quarter.
Tim: That gave us the upside that wasn't driven by any any surcharge or anything.
Tim: Genuine fixed.
Tim: Right.
Speaker Change: Yeah, I'm, sorry, I wasn't clear on that I I meant if there was an accounting adjustment.
Jennifer Kahn: I meant if there was an accounting adjustment, like a purchase price adjustment related to the merged accounting.
Speaker Change: Our purchase price adjustments related to that but the merger accounting that answer Jeff as well.
Jennifer Kahn: So, hi, Gibrani. So, yes, we have about $10 million purchase price adjustment in ES, just a typical base on the acquisition accounting. And so with regards to your second question on the spill, we do not have any material that impacts on spill inflation, because first of all, we do not import any raw spills. And then about 70% of what we use is HRC, and we also have 50% of that hatch at a very favorable rate. So, the imported film prefabricated parts are already part of our 40 cents and the others are not. Got it. Thank you.
Speaker Change: Hi, Good Friday, and so yes, we have about $10 million purchase price adjustments and yes, just a typical based on the acquisition accounting and so with regards to your second question on the scale.
Speaker Change: We do not have any material impact from steel inflation, because first of all we do not import any hartsville and then about 17% of what we use is <unk>.
Speaker Change: And we also have a 50% of that hash out a very favorable rating so b.
Speaker Change: And put up selling pre fabricated parts are really part of our 40.
Speaker Change: And the others are not material.
Speaker Change: Got it thank you.
Speaker Change: Okay.
Jennifer Kahn: Your next question comes from the line of Kyle Menges with Citigroup. Please go ahead. Thank you. Sounds like you guys are now expecting the ESG synergies to come in a little bit more than that 25 million target. So we just love to hear what's giving you confidence in that and just where so far synergies are looking to be a little bit better than expected. Yeah, thank you for picking up on that. That is correct. We just go by our pipeline of projects, which is going really well. So we're just very, very pleased with what ESG is already doing in terms of within its own segment, within environmental solutions and the synergies that it brings with the Terex utility business, but also what it brings with other parts of Terex.
Speaker Change: Your next question comes from the line of Kyle Mangus with Citigroup. Please go ahead.
Speaker Change: Thank you.
Kyle Mangus: So it sounds like you guys are now expecting the ESG synergies to come in a little bit more than that $25 million target. So we're just love to hear what's giving you confidence in that and just where so far synergies are looking to be a little bit better than expected.
Speaker Change: Yeah.
Speaker Change: Thank you for picking up on that that's that is correct.
Speaker Change: And we just go by our pipeline of projects, which is is going really well. So we're just very very pleased with what is G is already doing in terms of within its own segment within environmental solutions and as soon as you said it brings with the Terex utility business.
Speaker Change: But also what it brings with us with other parts of Terex is really unlocking the full tariffs portfolio and we see synergies everywhere, we look and we have adjusted our pipeline for profitability for execution for risk. So it's not that we are counting ourselves rich here and so we're.
Simon Meester: It's really unlocking the full Terex portfolio, and we see synergies everywhere we look. And we have adjusted our pipeline for probability, for execution, for risk. So it's not that we are counting ourselves rich here. And so we're confident with our line of sight to exceed that $25 million run rate by the end of 2026. So yeah, it's going really well.
Speaker Change: Confidence with our line of sight to to exceed that $25 million run rate by the end of 2026.
Speaker Change: So yeah.
Speaker Change: It's going really well.
Speaker Change: And then just second question on the Monterrey facility, just how are you thinking about production shifts from the U S to Monterrey.
Simon Meester: And then just second question on the Monterey facility, just how are you thinking about production shifts from the U.S. to Monterey, assuming that you've kind of paused that for now. And then just how are you thinking about looking at alternative sources into that Monterey facility, just in the supply chain? And sorry if I misheard, but I thought you guys had said that only 20% of the products from the Monterey facility are USMCA compliant. I'm sorry if I misheard that, but just if you could comment on that as well. No, we said that 20% if you include the USMCA source that would fall under the USMCA would get us to 90% of what we sell in North America, comes out of North America.
Speaker Change: I'm, assuming that you've kind of parse that for now.
Speaker Change: And then just how are you thinking about looking at alternative sources into the Monterrey facility just in the supply chain and sorry, if I misheard, but I thought you guys had said that.
Speaker Change: Only 20% of the products from the Monterrey facility or U S. N C. A compliant I'm, sorry, if I misheard that but.
Speaker Change: If you could comment on that as well.
Speaker Change: No, we said that 20%.
Speaker Change: If you include.
Speaker Change: The U S MCA.
Speaker Change: Source that would fall under the U S MCA.
Speaker Change: Would get us to 90% of what we sell in in North America comes out of North America.
Speaker Change:
Simon Meester: So yeah, the Monterey facility, so obviously in the current environment, we're not going to take any drastic long term action until we see things stabilized first. So we have been kind of pacing ourselves a little bit on our product moves. You know, we're very happy with our Monterey facility because it's a world class state of the art facility and it's a very competitive facility. So that's another tool that we have in the toolbox to leverage and gives us optionality that once we see things stabilized that we can leverage that facility more than what we do today.
Speaker Change: So you have the Monterrey facility. So obviously in the current environment, we're not going to take any any drastic long term action until we see things stabilize first.
Speaker Change: So we have been kind of pacing ourselves a little bit.
Speaker Change: On a product moves.
Speaker Change: We're very happy with our Monterey facility, because it's a world class state of the art facility and it's a very competitive facility. So that's another tool that we have in the toolbox to leverage and gives us optionality at once we see things stabilize that we can that we can.
Speaker Change: Our leverage that facility more than what we do today, but yes at the moment, we're kind of taking a breather to see where things are going to pan out over the next couple of months.
Simon Meester: But yeah, at the moment, we're kind of taking a breather to see where things are going to pan out over the next couple of months.
Speaker Change: Makes sense. Thank you.
Speaker Change: Yeah.
Angel Castillo: Your next question comes from the line of Angel Castillo with Morgan Stanley. Please go ahead. Morning, and thanks for taking my question. I was hoping you could put a little bit of a finer point on the ES segment and just the margin moderation that you expect in 2Q.
Operator: Your next question comes from the line of Angel Castillo with Morgan Stanley. Please go ahead.
Angel Castillo: Good morning, and thanks for taking my question I was hoping we could you could put a little bit of a finer point on the Es segment and just the margin moderation that you expect in <unk> and as we think about.
Jennifer Kahn: And as we think about the progression of maybe tariffs as we get maybe toward the back half of the year, if you could just fold that in along with the maybe greater success on the synergies as well as maybe sizing the one-offs that you mentioned would be helpful. Thank you.
Angel Castillo: The progression of maybe tariffs as we gave maybe towards the back half of the year. If you could just for that and along with it maybe greater success on our synergies as well as maybe sizing. The one offs that you mentioned would be helpful. Thank you.
Angel Castillo: Hi, good morning, So, yes, when I say that is that moderating in Q2 and throughout the rest of the year.
Jennifer Kahn: Hi, good morning. So yes, when I say that it's moderating in Q2 and throughout the rest of the year, like what I mentioned, there are some one-offs, good guys that we took in Q1. We had a record output in Q1 that actually drove up the factory adoption really favorably. And we do not think that that would sustain itself till the end of the year. Second, in terms of when I say one-off, there are also one-off expenses that we'll be incurring for the next nine months that we're actually to drive up and support the volume growth that we will, to support the backlog conversion as well.
Angel Castillo: Like what I mentioned are awesome lineup. Good guys that we took in Q1, we had a record output in Q1 that actually drove up the factory absorption really say properly and we do not think that that would sustain itself till the end of the year.
Angel Castillo: And in terms of when I say one of them.
Angel Castillo: One off expenses that we're incurring for the next nine months are wacky.
Simon Easter: Drive up and support the volume so that we will see support the backlog conversion as well and then what I mentioned the synergies with the CFPB and the synergies coming through in Q1, but not material enough. Unlike what Simon mentioned, we expect the annualized 25 million synergies to come through in 'twenty.
Jennifer Kahn: And then when I mentioned the synergies, we did see a piece of the synergies coming through in Q1, but not mature enough. Like what Simon mentioned, we expect the annualized $25 million synergies to come through in 2020. Got it. That's helpful.
Angel Castillo: Thanks.
Speaker Change: Got it that's helpful. And then maybe just on I wanted to go back to M. P. I think this was the first quarter, where you saw him.
Simon Meester: And then maybe just on I wanted to go back to MP, I think this was the first quarter where you saw backlog growth since maybe kind of 2022. And I know that that's been normalizing, but just curious if there's anything specific, maybe even related to what you were talking about with Germany, or more broadly, any step change in that business that gives you maybe confidence that we've we found a bottom and maybe can even grow from here? Or just how should we read that improvement in the backlog and what you're hearing from customer Yeah, I wouldn't say that it's, it's coming from Germany.
Angel Castillo: Backlog growth since maybe 2022 and I know that's been the norm.
Angel Castillo: <unk>, but just curious if theres anything specific maybe even related to what you were talking about with Germany.
Angel Castillo: More broadly any step change in that business that gives you maybe confidence that we found a bottom and maybe you can even grow from here or just how should we read that improvement in the backlog and what you're hearing from customers.
Angel Castillo: Yeah.
Angel Castillo: I wouldn't say that it's more of it's coming from Germany.
Simon Meester: It's so we are at a three months backlog, which is our kind of normal season, from a historic standpoint, our normal backlog coverage. And so yeah, dealer inventories have been largely adjusted. This has been historically a book to bill business. So in that regard, it's, it's a pretty normal pattern. And Q1 bookings did come in, you know, favorably year over year. So we were pleased with that. Because, you know, quite frankly, that the fleet in North America, and that's what driving probably most of the upside, is the fleet utilization is still healthy, fleet starting to age.
Angel Castillo: So we are at a three months backlog, which is our kind of normal season.
Angel Castillo: The historic standpoint, our normal backlog coverage.
Angel Castillo: See our dealer inventories have been largely.
Angel Castillo: Just this has been historically a book to Bill business. So in that regard, it's it's a pretty normal.
Angel Castillo: In Q Q1 bookings did come in.
Angel Castillo: Favorably year over year. So we were pleased with that because quite frankly, the fleet in North America, and Thats, what driving probably most of the upside is.
Angel Castillo: Is the fleet utilization is still healthy.
Angel Castillo: Starting to age and there is there is work there is pull through from Mega projects from infrastructure projects to smaller projects are still kind of sluggish so to so to say, but what we're seeing is mostly that.
Simon Meester: And there is, there is work, there's pull through from mega projects from infrastructure projects, the smaller projects are still kind of sluggish, so to say. But what we're seeing is mostly that North America is ready for that replacement demand. Now, having said that, you know, we also obviously are cautious that the tariff talk doesn't become sort of some sort of self-fulfilling prophecy and, and will start to eat into confidence. So we'll have to see how that's going to pan out in the next couple of months. But the current outlook assumes that there will be a gradual slow recovery in MP and mostly driven by North America and driven by replacement demand.
Angel Castillo: North America is ready for that replacement demand now having said that yes.
Angel Castillo: We also obviously are cautious if the tariff talk doesn't become sort of some sort of self fulfilling prophecy in and will start to eat into confidence we'll have to see how that's going to pan out in the next couple of months with the current outlook assumes that there will be a gradual slow recovery in MP and mostly driven by.
Angel Castillo: North America, and driven by replacement demand.
Simon Meester: So just to be clear that that assumption is for is embedded in the 2025 cadence. Got it. Okay.
Angel Castillo: So just to be clear that assumption is what is embedded in the 2025.
Angel Castillo: Cadence.
Angel Castillo: Correct.
Angel Castillo: Got it okay. Thank you.
Unknown Executive: Thank And that concludes our question and answer session.
Angel Castillo: Thank you.
Speaker Change: And that concludes our question and answer session and I will now turn the conference back over to Simon Mr for closing comments.
Simon Meester: And I will now turn the conference back over to Simon Meester for closing comments. Thank you, operator.
Simon: Alright. Thank you operator, if you have any additional questions. Please follow up with Jim and Derrick. Thank you for your interest in Terex and with that operator. Please disconnect the call.
Jennifer Kahn: If you have any additional questions, please follow up with Jen and Derek. Thank you for your interest in Terex.
Unknown Executive: And with that, operator, please disconnect the call.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Simon: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Simon: Yeah.
Simon: Hum.
Simon:
Simon: [music].