Terex Corporation

Greetings and welcome to the Tarek's first quarter 2026 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Please go ahead.

Good morning and welcome to the Terex first quarter 2026 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. We are joined today by Simon Meester, President and Chief Executive Officer, and Jennifer Kong, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by a Q&A. Please turn to slide two of the presentation, which reflects our safe harbor statement. Today's conference call contains forward-looking statements, which are subject to 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 material and in our reports filed with the SEC. 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. Please turn to slide three, and I'll hand 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. We're off to a good start for the year, including our new specialty vehicle segment, which was in the portfolio for two months of the period and already making a meaningful contribution to the group. We grew sales by 11% on a pro forma basis, including growth in all four segments, led by specialty vehicles, which grew 20% compared to the same period last year. Derks Utilities was our fastest growing business this quarter. The utilities team is doing an excellent job ramping up production in a very bullish market. And EPS increased 18% year over year to 98 cents or 6% improvement with a normalized tax rate. Quarter ending backlog increased to $7.1 billion, which includes strong bookings trends, particularly in materials processing, aerials and Terex utilities, providing good forward visibility and consistent with our expectations for the year. As a result, we are reiterating our full year outlook and with the recent additions to our portfolio, remain laser focused on execution and integration. Which brings me to slide four. The REV integration is progressing as planned. We are executing the same playbook we used for the ESG integration, which we completed ahead of schedule and within budget with synergies above target. For the synergies with REV, we are on track to realize approximately $28 million in 2026 by eliminating duplicate overhead and have line aside to achieving a $75 million run rate within our 24-month target. With regards to the integration effort, all work streams are at or ahead of schedule, In addition, I'm particularly encouraged by the way the Legacy Terex and Legacy Rev teams are working together and the two cultures are meshing really well. Last week, the specialty vehicles team showcased our ThirdEye digital solution at the Fire and Emergency Trade Show in Indianapolis and we're very pleased with the level of interest it created. ThirdEye is an AI-based solution that awareness around the vehicle and add tangible commercial and operational benefits. It's an integral part of what is now referred to as smart truck technology in the waste collection sector. Our digital team has already developed applications that leverage this technology for utility vehicles, cement mixers, and have now added fire and emergency vehicles to their scope. So good progress on the REV integration and the synergies front. We're also pleased with the progress we are making with the strategic review of our aerial business. We continue to engage with multiple interested parties and are working towards an outcome that maximizes value for our shareholders. We do not have any specific details to share at this time, but we will continue to update you as the process unfolds. Moving to page five. Over the past two years, we deliberately shifted our portfolios and market exposure to more US-based resilient and predictable sectors with attractive growth profiles. As a result, Terex is far less exposed to global macro dynamics and trade policy than in the past. Based on proforma 2025 results, about 80% of our revenue was generated in North America of which roughly 85% was manufactured in the United States. Our end markets are more stable and our supply chain is more durable. Touching briefly on our primary verticals, demand for fire and emergency vehicles continues to be strong. We are making strategic investments to improve production efficiency and increase capacity in key areas such as ladder trucks, where we are increasing capacity by 35% at our Ocala, Florida plant. And in South Dakota, we're increasing capacity for the pre-engineered S180 pumpers. Both investments will help to reduce lead times and with the S180 bumper, provide our customers with a lower cost alternative that we can deliver in about nine months. In waste and recycling, our customers are indicating that 2026 demand will be more skewed towards the second half, including anticipated pre-buys ahead of the 2027 EPA changes. Heil is well positioned to outperform the market again this year due to its product portfolio, production quality, and its lead times. We continue to anticipate growth in aftermarket, retrofits, and digital sales this year, and of course, The long-term fundamental growth drivers for the segment remain intact. Utilities is poised for strong growth for 2026 and beyond, as demand on the U.S. grid continues to increase, particularly from data center expansion and AI use cases. Industry forecasts call for 8% to 15% annual capex growth through 2030, and we're making good progress with our phased investment strategy. to bring 30% more capacity online by the end of next year. And finally, in construction, we see robust infrastructure activities supported by government funding. The pipeline of megaprojects provides a tailwind through 2030. MP continues to grow its business in India, and we are starting to see improvements in Europe and Australia, although oil prices can potentially hamper some of that growth given the more vulnerable state both of those markets are currently in. In summary, in the past two years, we have built a highly resilient portfolio of businesses that enable us to navigate short-term macro and market-specific dynamics and deliver on our financial objectives predictably and consistently going forward. And with that, I'll turn it over to Jen.

Thank you, Simon, and good morning, everyone. Let's look at our Q1 results on slide six. Our operational performance was in line with our expectations. We grew sales to 1.7 billion, an increase of 505 million, or 41% compared with the prior year on a reported basis. The growth was due to the merger with Rafeu that closed on February 2nd. and growth in each of our legacy segments. On a pro forma basis, we grew 10.8%, led by strong growth in specialty vehicles, material processing, and Terex utilities. Excluding the impact of the merger and the sale of our crane and meatwebs businesses, organic revenue increased 8.1%, with increased sales across all legacy segments. Q1 EBITDA margin was 9.9% down 50 basis point versus the prior year, primarily driven by tariffs, which were not in effect in the prior year period, partially offset by improved performance in NP and SV. Interest and other expenses of $44 million was $1 million lower than Q1 last year. And the first quarter effective tax rate was 11%. driven by favorable one-time tax attributes. EPS for the quarter was $0.98, which included approximately $0.10 of one-time tax benefit when the Q1 tax rate is compared to our 2026 full-year expected tax rate of 21%. Our operational EPS improvement was $0.05 compared to last year, despite the tariff payments. Notably, Our current Q1 EPS is based on 96.1 million shares outstanding, up from 66.9 million in the first quarter of 2025. Free cash outflow in a quarter was 57 million, consistent with Q1 last year. Tarek's historical cash generation is seasonally weighted towards the back half of the year, with first quarter cash outflows reversing as volume through the remaining of the year. Importantly, our newer businesses, particularly specialty vehicles, have a more favorable working capital profile with significantly less seasonality. As a result, our Q1 net working capital as a percentage of sales improved to 16.7% compared to 26% in the same period last year. We also reduce our net leverage ratio to 2.4x and remain disciplined with our capital structure, focused on maximizing value for our shareholders. Please turn to slide seven to review our segment results, starting with environmental solutions. As expected, sales growth of 3.3% in EOS was driven by Terex utilities, as they began to ramp up to meet strong demand for bucket trucks, degoderics, and parts and services. Q1 EBITDA margin of 18% was lower than the prior due to a higher mix of utilities volume, where margins continue to improve, coupled with lower ESG volume, partially offset by higher synergy realization. Turning to slide eight. MP had a very good first quarter, growing bookings and sales and expanding operating margin. Sales of 419 million were 18.3% higher than prior on a pro forma basis, or 12% higher, excluding the impact of foreign exchange rates. Growth in aggregates was the primary driver as sales grew in every region. the handling and environmental verticals also grew in the quarter. MP EBITDA margin continued to improve, reaching 15% in the quarter as higher volume, efficiency improvements, and pricing actions drove the 310 basis point increase over the prior year. The margin actions and increasing bookings and backlog sets MP up well for the balance of 2026. Moving to slide nine, our new specialty vehicle segment got off to a great start, generating $436 million of revenue in February and March, representing growth of 20% compared with the same period last year. The growth was a combination of price realization and higher unit deliveries across all product lines, partially due to weather-related delivery timing. EBITDA margin increased by 160 basis point to 14.2% driven by higher throughput, price realization, and improved operational efficiency. Turning to page 10, ARIS had another strong bookings quarter with 132% book-to-bill, generating a $1 billion backlog, giving us forward visibility as we head into the annual selling season. Sales in the quarter were $469 million, up 4.2% year-over-year, largely due to positive foreign exchange rates. As suspected, our risky beta was breakeven because Q1 is typically a seasonally low-volume quarter and due to tariffs, which the business did not incur this time last year. In addition, the business faced some temporary unfavorable mix but expects favorable price-cost dynamics for the remaining of the year. Turning to bookings on slide 11. Before going into each segment, for Terex overall, Q1 pro forma bookings of $2.1 billion represented 109% book-to-bill ratio. and led to modestly higher backlog on a sequential and year-over-year basis. In environmental solutions, Q1 bookings were 347 million, slightly lower than prior quarters due to the timing of several large utilities bookings that were recorded in Q4. We expect bookings level and utilities to remain strong, and our focus remains on ramping up throughput to meet demand. On the ESG side, we expect orders to be more heavily weighted to the second half of the year, including additional orders for delivery in advance of the new 2027 EPA regulations. NP bookings of $623 million reflects 38% year-over-year growth on a pro forma basis. While RVS was the main driver, bookings also increased in concrete, material handling, and environmental. MP ended the quarter with $594 million in backlog, up $205 million, or 53% versus the prior year, setting it up for strong performance through 2026. As fee bookings came in at $501 million. As you can see on the chart, orders can be lumpy in the segments. But overall, the backlog remains elevated and the team is focusing on bringing lead times down with calculated investments. Finally, ARI's bookings of $620 million in Q1 combined with $971 million in Q4 is 21% higher than the same six months period a year ago. While growth was strongest in North America, we also saw modest growth in EMEA. providing good visibility for the balance of 2026. Now turn to slide 12 for our 2026 outlook. We're operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, and results could change negatively or positively. The outlook we are providing today reflects our current portfolio and does not account for any cost to achieve the synergies. purchase accounting adjustments, nor other non-recurring items. Our first quarter performance, booking trends, and backlog of 7.1 billion supports reconfirming the full year 2026 outlook that we provided in February. Overall, we continue to expect 2026 sales to grow approximately 5% on a pro forma basis to 7.5 to 8.1 billion. We further expect pro forma EBITDA to grow by approximately 100 million or 12% year over year to between 930 million and 1 billion or 12.4% EBITDA margin at the midpoint. Included in our EBITDA outlook is approximately 28 million of synergies that we're well on our way to realizing. This is in line with our goal to achieve 75 million run rate synergies within two years of closing the merger. We continue to anticipate interest and other expenses to be approximately 190 million, consistent with pro forma 2025, based on average debt outstanding of about 2.7 billion. The effective tax rate for the full year is still expected to be 21%. We expect 2026 EPS between $4.50 and $5. Please note, the share count for quarters two through four will be approximately 115 million. For modeling purposes, approximately 25% of a full-year EPS is anticipated in the second quarter as we expect profitability in areas and environmental solutions to improve in the second half. We expect 2026 free cash conversion and 90% of our net income. Our net leverage is expected to improve over the course of the year. Looking at our segments, we expect environmental solutions to grow mid-single digits in 2026, led by utilities where we continue to ramp up production to meet strong demand. We expect margin to improve in the second half due to a higher volume, including digital and aftermarket, productivity improvements, and improved customer mix. We do not foresee a material impact from the recent tariff changes on ES performance. Turning to MP, the strong start to the year and growth in bookings and backlog gives us confidence in a high single-digit pro forma growth outlook for the segment, largely driven by aggregates. We also expect margins to improve through 2026 due to higher volume, productivity, and favorable price costs. It's important to understand that mobile crashing and screening equipment, the primary products in the aggregate vertical that we import from the UK, are not subject to 232 tariffs. Our new specialty vehicle segment got off to a great start, and with roughly two years of backlog, provides very good visibility for the balance of the year. We continue to expect sales growth of high single digits from an 11th month pro forma prior total of 2.2 billion. We also continue to expect meaningful margin improvement compared to the prior EBITDA margin of approximately 12.5% due to a higher throughput, price realization and ongoing operational improvements. From a modeling perspective, we expect run rate revenue and margins in Q2 and Q3 to be similar to Q1, with a modest seasonal step down in Q4 due to fewer working days. We do not foresee a material impact from recent tariff changes on SV performance. Finally, in areas, we continue to anticipate 2026 sales and margin to be similar to 2025. we have good visibility with over 1 billion backlog following back-to-back quarters with strong bookings. Margins are expected to improve sequentially in the second and third quarters with higher volume, price realisation, favourable customer mates and disciplined cost management. Even with a higher impact of tariffs versus last year, we expect areas to be largely price-cost neutral for the full year. With Q1 behind us, healthy backlog and fleet utilization, we expect the business to have bottomed and start its path to cyclical recovery. In summary, given that we are only one quarter into the year and there are macro variables that we do not control, we believe it is prudent to hold our 2026 outlook at this point in time. We will obviously refine our outlook as the year unfolds. Please turn to slide 14 and I'll turn it back to Simon.

Thanks, Jen. We delivered a solid start to 2026 with strength in materials processing and utilities and a strong initial contribution from our new specialty vehicle segment. Integration execution is progressing as planned and we are on track to deliver our synergy commitments. Our portfolio is more resilient and predictable with greater North America exposure and less sensitive to macro volatility and tariff changes than in prior years. Our teams are focused on disciplined execution against our strategy and our annual plan as we build on the progress that we've made to date. And with that, I would like to open it up for questions. Operator?

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Angel Castillo with Morgan Stanley. Your line is open. Please go ahead.

Hi, good morning and happy Friday. And thanks for taking my question. Just wanted to start, I guess, you delivered a very solid Q1 here in EPSB. You had very strong bookings and improving margins in all the segments. And yet, I guess you chose to hold the full year guidance constant. So You know, Jennifer, I know you kind of qualified it as prudent, but curious, I guess, is this primarily a function of macro tariff uncertainty or just more about conservatism? And then, you know, curious if you could add to the extent that there is conservatism in the guide, I guess, where are you seeing most areas of kind of uncertainty within the business or where do you see the most kind of room for upside risk in terms of, you know, the segments or the products?

Yeah, morning, Angel. Thanks for the question. Yeah, the short answer is, as Jen said in her prepared remarks, that it's much more about discipline and timing than any change in how we feel about the fundamentals of the business. We're very pleased with how the year started. Q1 execution strong, bookings and backlog improved, and we are seeing good momentum across the board. That said, We're only one quarter into the year. We're operating in an environment that still has a fair amount of uncertainty around macro conditions and tariffs. And so we believe that at this point, it's most prudent to confirm the outlook that we set in February, which already contemplated solid growth and margin expansion and synergy realization. And we feel like it reflects our confidence in delivering those commitments while also basically allowing us to through the system. Importantly, I think is, you know, nothing that we've seen here to date has changed our confidence in the underlying trajectory of the business. And as the year progress will, you know, we'll gain additional visibility and we'll, we'll continue to evaluate the outlook based on how we execute and how, how things evolve at the macro level. But for now we think reaffirming is the right and responsible approach.

That's totally fair. And I guess as a follow-up to that, Simon, I was hoping you could unpack the backlog and bookings trends a little bit more, I guess. First, just curious how orders have progressed through your segments in March and April. I think you just noted that maybe you haven't seen anything change so far, but just a little bit more color on that. And also, if you could expand on the MP bookings and backlog, I think that's the strongest we've seen in a couple of years here. So just Can you talk about what you're seeing in terms of demand there and whether that was maybe more of a one-time step up or if it's just kind of a continuation that you anticipate in terms of demand?

No, I mean, we're very encouraged by the bookings in MP. We think there's strong momentum. MP, as you know, is mostly a dealer model. We see fleets at a healthy level. We see utilization at a healthy level. We see RPOs coming back in. which were being a little delayed in the last couple of quarters, but we're seeing the RPOs picking back up. So we're very, very pleased with the momentum that we see building in MP and we expect that to carry forward in the remainder of the year. Pleased with the bookings in aerials. We've got about six of the nine months covered. And with... you know, some of that price cost coming our way for the remainder of the quarters. We feel good about where that's going. And then on ES, very strong environmental solutions, very strong bookings, continued bookings in utilities. Although when the slide that we show shows a little bit of a dip in Q1, that's mostly because we had bookings that we lumpy and secondly we see the center of gravity for esg bookings more in the second half tied to new product introductions fleet replacements and potential pre-buys so that explains a little bit the booking pattern in es and then last sv continues to be you know moving strong on bookings although as lead times gradually and slowly start to improve, we expect bookings to start to come down at some point. Because as you can see from our appendix in the earnings deck, the backlog basically in that business has been going up consistently for the last three years. And as an industry, we've been very focused on bringing that down, hence the investments that I spoke about in my prepared remarks. So we should be seeing bookings come down. NSV and see us working that backlog down. So I think booking strong story this quarter and particularly encouraged with some of our, you know, like MP and aerials that we see some early cycle signs here. You know, we see some Indies independence picking up in aerials, which is typically a sign for us that, you know, there might be some early cycle momentum building here that we're encouraged by for the year.

Very helpful. Thank you. Thank you.

Your next question comes from the line of Kyle Menjes with Citigroup. Your line is open. Please go ahead.

Great. Thank you. I was hoping if you could just talk about any changes to how you're thinking about margins across the segments for the year and tariff impacts. I think you said in the press release fairly negligible, but are tariffs at least somewhat of an incremental headwind weighing on the guidance?

Right. Hey, hey, Kyle. Good morning. This is Jen. So maybe I'll start with MP first. Given the great performance in Q1, we expect a further step up in our margin profile in Q2 and Q3, driven by the higher volume support of our backlog and the higher bookings and also favorable makes and price cost favorability in that segment. So we expect that to go up further. Now on ES, we expect that Q2 to be very similar than Q1. Our Q2 margin profile, our volumes continue to be driven by utilities. And then we expect a meaningful step up in our margin profile in second half of the year for ES versus first half of the year driven by ESG book to bill that Simon actually referenced in his prepared remarks. We expect higher margin digital and aftermarket to drop through into second half a year. And then finally, utilities continue to drive throughput as both of our Waukesha and Birmingham installed facilities continue to ramp up. So ending with maybe SV, on our SV margin, we expect, like I mentioned in the prepared remarks, the Q2 and Q3 run rate to be very similar to our Q1. And then a marginal step down in Q4 due to lower, less working days and due to customer inspections. Now, in terms of the areas segment, we do expect that Q2, we expect a natural step up driven by our seasonal demand at 25% incremental. We then expect Q3, a further step up driven by favorable customer makes. favorable capitalized variances, and cost actions. And then Q4, which is a natural step down, driven by seasonal lower demand, partially offset by realization of additional cost actions. So again, for areas, Q1 was price-cost unfavorable. For the rest of the year, it's price-cost favorable, which leads to a full year of price-cost neutral.

Got it. And I'm just curious your confidence level in aerials being price cost favorable for the rest of the year with maybe some incremental tariff impacts. I'm curious if there's any ability to get additional price or getting some help perhaps from a higher mix of independents. We'd just love to hear that.

And Carl, I forgot to address your question on tariff piece. From a sequential standpoint, I don't see additional hit when on our tariff. The reason why I mentioned that in the press release, it's negligible in a tariff is because the change in the 232 calculation is largely offset by the IEPA going away. So for us, for the areas business, we do have six months of backlog ready in our backlog And we can see what is the margin profile of those backlogs. We can see a favorable mix in our customer mix and also in these that is in our backlog and also the pipeline as well. So we are very comfortable with the price-cost favorability for the rest of the year.

Yeah. So to good forward visibility on price, cost, and mix, that's basically what's giving us confidence of the step up in margins and arrows.

Helpful. Thank you, guys. Thank you.

Thank you. Your next question comes from the line of Mig Dobre with Baird. Your line is open. Please go ahead.

Yeah, thank you so much. Appreciate the time here. I guess it's great to hear that tariffs are not having much of an impact, but I'm curious as to how you're managing inflation more broadly, right? I mean, we're seeing it in material costs. We're seeing it in energy freight components. So You know, where are you today versus maybe where you were back when you initially issued this guidance from an overall cost standpoint, and what are you doing to be able to maintain, you know, positive price costs like you talked about earlier? Is this a function of additional pricing adjustments on your end, or is there something else inherent in how you're operating this year that we should be aware of?

Hey, Meg. Good morning. This is Jan. So in terms of cost inflation, any of our CPI index changes, it usually has a three to six months lag due to the hedging program that we do have, the vendor contracts that we are locked in for three to 12 months ahead of time. The commodity inflation is really baked into our current outlook. What we see, you know, in terms of the only risk from a cost inflation standpoint, it's higher inbound freight costs that we might have to incur for some of our international routes. From the mitigation standpoint, as you know, our SV segment already baking 6% to 8% of value at a price in our backlog, which covers the CPI inflation based on delivery lead times. The SV segment also has commercial chassis that's on a pass-through pricing mechanism so that it doesn't really impact us at all. And MP and ESG is more of a book-to-bill business right now given the normalization, which means that if we cannot mitigate the cost ourselves, we have the ability to slow down them as a surcharge. Our 2026 guidance already conservatively accounts for the known energy and commodity hit-wins. And with North America now representing more than 80% of our revenue, where energy inflation is more moderate and end market fundamentals remain robust, I feel that we're well positioned to manage the energy price validity in 2026 without any mature downside risk to our current outlook.

All right, understood. My follow-up in materials processing, very good order of performance there. And I'm wondering if this is a function of dealers finally starting to restock. If that's the case, I'm wondering, relative to history, where do you think this process is? How many more innings do we have in terms of dealer restock? And how do you separate that from actual end-user demand at this point and how that develops?

Yeah, great question. It's a little bit of both. It's definitely end-user demand is picking up as well, particularly in the United States. We've had the tailwind of megaprojects for quite some time. But now data centers, we actually see more spend actually landing in terms of infrastructure and data. and road and bridge building, if you will. And all those are mobile crusher applications. Now, obviously, that drives some of the sentiment and that also drives some of the willingness of our dealers to replenish. But we also see RPO conversions picking up, as I think I mentioned earlier on this call. So it's a little bit of both. Fleets are where they need to be. They're not high, they're not low, but basically most of the bookings in crushing and screening is triggered by RPO conversion. So if a customer converts a rental into a procured unit, it turns it into a booking from our dealer onto us. So it's a little bit of mix of both of more end-user demand, a little bit better sentiment, and then fleets being in the right place. Appreciate it. Thank you. Thanks, Meg. Good luck with the construction.

Your next question comes from the line of Tim Thien with Raymond James. Your line is open. Please go ahead.

Excellent. Thank you. Good morning. Yeah, just the first question on the specialty vehicle segment. With just a bit more time accrued under your belt owning Rev, I'm just wondering if there have been any notable takeaways or findings that inform you about just the outlook for the business and kind of the prospect for synergies as you look out. So maybe just kind of an update on Rev to start.

Yeah, no, I appreciate the question. Obviously, very excited. A lot of good things happening. They had a good start of the year. It's only two months. We actually had a slightly better start to the year than we had originally anticipated because of some of the weather in January. We weren't able to fly customers in for the final inspection of their trucks. So some of that kind of revenue that we were anticipating in January actually dropped into February. That's why they were up a bit more in February, March than I think they will be for the remainder of the year. That's why we're holding their guide to a high single digit, even though they were well into the double digits for the first two months. But yeah, I mean, it's obviously a lot of backlog to work through. So the focus needs to stay on production output, quality production output. And that's what the team has been focusing on. for the last six, seven quarters. And we want to make sure that we help them maintain that momentum. And that's really where the focus is. But at the same time, we are very inspired and encouraged by the synergies that we're seeing, not just from an overhead standpoint, but also operational synergies, looking at each other's supply chains. And there's a lot there. So we're very encouraged by the synergy pipeline as that is ramping up and that's building out. And then, as I said in my prepared remarks, we have eight or nine work streams to basically integrate the business and we're doing really well on all of those work streams. So far, it's been a great first couple of months and we're very excited with what that business can bring to our group overall.

Got it.

Okay. Probably a bit of a stretch to call this a related follow-up, but so be it. Maybe just to, I wanted to spend a minute for an update on your stake in Apptronic. You know, there's obviously lots of buzz these days around humanoid robotics, and there's been some speculation of additional funding rounds likely on the horizon, potentially at like a, you know, $15 or $20 billion. implied valuation for that company. So I was hoping you can just remind us of your ownership stake and I guess secondarily how, if at all, you're leveraging that technology within your operations. So thank you.

Yeah, thanks for the question. Maybe for context, Apptronic is a humanoid manufacturer and we made an investment in Apptronic several years ago because we believed that humanoids would have application in our business. And we're thinking about warehousing, manufacturing, maybe even job sites. And our stake has certainly nicely appreciated over the last couple of years. But yeah, we have an active technology pipeline with Eptronix. And we actually launched our first prototype of a zero-gravity arm that was co-developed by Apptronic and Genie at the Conexpo show a little over a month ago and proudly voted as one of the five best innovations shown at the show by, I believe it was Construction Weekly. And it's a great, that's an industry game changer, we think, because it significantly increased safety and it allows basically one person in the platform to install ceiling panels or drywall because the zero gravity arm holds it all in place effortlessly and you can really with just one finger, you know. So that's a great example of what Eptronic is bringing to our industry. And the feedback that we received from customers at that show was really encouraging. So those are the kind of things that we're working on with Eptronic, and we're very pleased with that partnership.

And Tim, this is Jen. If I could just add on that we account for that at the cost perspective, so. The valuation that we talk about is not recorded.

Your next question comes from the line of David Razo with Evercore ISI. Your line is open. Please go ahead.

Thank you for the time. Specialty vehicles. I appreciate the January month when you did not own it. there was less shipments and you sort of got the benefit that they shipped later in the quarter when you did own it. But let's just talk about the first quarter pro forma. It seems like specialty vehicle revenues pro forma, if you don't have the whole quarter or about, you know, $615 million, 620, something like that. When you say revenue run rate to be similar to the first quarter, is that sort of the revenue number you're referencing? I just want to follow up on that just so I get clarification first.

Yeah. It's probably, you're not far off on that number. It's probably going to step up a little bit in Q2, Q3, but then it's going to come down in Q4 because we have less working days in Q4. But you're not far off, David.

I guess the spirit of the question is your ability to bring better throughput to rev groups factories was a key aspect of maybe the opportunity to really leverage the backlog this year. And just curious why we would not see a step up. I understand if it's first quarter, we don't want to look out too far and change the guidance, but I'm just curious why we would think there's no throughput increase from that first quarter run rate, because it would imply the rest of the year has very little growth. So we are right from a year ago.

Yeah, we are guiding high single digits for the segment. And typically about two thirds of that is probably price. And one third of that is unit growth. Now, we do have I mentioned investments coming online, but those mostly will come online in the fourth quarter of the year. So they don't yet have a meaningful impact for uh, 2026, but that, you know, going from mid single to high single digit kind of unit growth, that's really, uh, the focus, um, uh, that, um, you know, that we have for that business for, uh, 2020, 2027. Now, obviously, uh, There's two years backlog. We think that that eventually will settle at a one-year kind of backlog level. That's what we think is the sustainable level. So that's the trajectory that we're working on, David.

Again, the sequential, I was just thinking the backlog seemed to get repriced well. There'd be a little more sequential from that first quarter run rate. I'm just trying to level set everybody just That seems like an area where, especially trying to get that backlog down, I mean, as you said, it's a huge backlog. It's two years of backlog. You know, I appreciate that'll be coming down. But just trying to understand the factory opportunity, the backlog repriced opportunity, just to make sure we understand the revenue. I guess it is what it is. You're saying even the revenue will be flat sequentially from a pro forma basis, kind of 1Q to 2Q, 3Q. I'm just making sure I understand fully.

Yeah, no, I uh so sorry q1 to q2 will be a step up and then q3 and then q4 will be a step down because of working base so the the units built per day is going to continue to step up um over the course of the year yeah so david if i could just add on comments jen that's why okay thank you the the earlier comment was revenue and margins 2q and 3q similar to 1q and i just

wanted to get clarification on that. All right. All right. Thank you so much. I appreciate it. All right. Thanks, David.

Your next question comes from the line of Jamie Cook with Truist Securities. Your line is open. Hi, good morning.

Hi, good morning and congratulations. Sorry, another question on specialty. Again, just want to make sure I understand the margins. you're going to do better than the 12.5% adjusted EBITDA margins for specialty, Jen. And I think last quarter you talked about sort of a 30% incremental. I guess, is that still the right way to think about it? And how are you thinking about specialty in terms of like where those margins can go longer term? It seems like we should be able to do better than what Rev Group talked about in terms of their, you know, margin expansion. So where can that actual EBITDA margin number go? And then my second question is on aerials. I guess, Simon, with aerial markets potentially getting better, I'm just trying to understand how that's impacting the bidding process in the sense that things are getting better. Does that mean more people are interested in it? Or to what degree would you want to hold off on the sale because markets are getting better? Perhaps maybe next year you can do better than the flat margin you're going to do this year. Just trying to understand how the market's inflecting or impacting the decision on the sale. Thank you.

Yeah. Hey, Jamie. Good morning. So in terms of margin profile for SV, maybe if I could just mentioned, you know, they did an investor day probably two years ago on committing to a 2027 investor day margin profile. In fact, they're right now in 2026, they will be achieving that one year in advance. So I'm very pleased with the performance. With regards to the margin step up over in Q2 and Q3, as you can see in our pro forma for just three months, January to March, the EBITDA margin is 13.1%, 100 basis point improvement versus last year. I expect this margin profile to continue to have a step up sequentially. more than 100 basis point year over year. So every single time that you look at year over year, it will be more than this 100% basis point margin improvement throughout the year, even with a step down in the delivery in Q4. Very comfortable with the price in the backlog, very comfortable with the throughput that we're seeing, And most importantly, what makes this business margin sustainable and keep on improving is on the sourcing that they do have a clawback mechanism with the vendor. There's a lot of centralized sourcing initiatives that have actually already started. And we do expect that that will improve through till the end of the year as well. At this point in time, the... What I shared in the margin profile does not include any other synergies outside of corporate. So I'm very comfortable with the margin expansion year over year throughout the year, more than Q1 pro forma basis.

Yeah, and I'll take your follow-up, Jamie, on the process. Yeah, it doesn't really change the process. We've always been very clear that... This is a through-cycle discussion, and that's exactly how, you know, the discussions with multiple parties have been. It's a long-term, it has a long-term nature. And the fact that, you know, I think it's well documented that aerials is a cyclical business, that, you know, historically aerials you know, five, seven years up, two years down. We're now at the end of the second year. The fact that it cycles up a little faster than maybe some anticipate. For us, the first quarter came in as we expected. The bookings came in as we expected. So it doesn't really change our view on the process and our view on the outlook. But it's obviously a good problem to have to see the early signs of progress. of a cycle. Thanks for the question.

Your next question comes from the line of Tammy Zakaria with JP Morgan Chase. Your line is open. Please go ahead.

Hi, good morning. Thank you so much for the time. I heard you say you're expecting some pre-rise in Ohio ESG in the back half. I was wondering how does that impact your view about orders and revenue growth potential for that segment in 2027 after you're done with the pre-buy related pickup?

Yeah, we don't. So this business doesn't really cycle, Tammy, very strongly. So we're talking, you know, it's all within the margin, if you will. We don't see a major uptick in terms of pre-buys either. In the second half, we think there's some. We actually think that 2027 looks pretty good just from a fleet expansion standpoint. What I did not mention, I believe, in my prepared remarks is that there's a lot of new technology coming out as well in the second half. that we think will drive a lot of momentum for us going into 2027. We're obviously not guiding today for 2027, but we're not concerned that whatever happens in the second half will have a material impact on 2027. There's a lot of momentum there.

Understood. That's very helpful. And so related to that, given you're expecting a lot of technology to be introduced in the back half, Should we expect stronger price realization as you price for these enhancements?

Well, I mean, our mantra has always been to be price-cost neutral and whatever value or cost we find or add is for the benefit of the shareholder. That's our mantra. And I don't think we should forget that this business is already operating in the high teams, performing really strongly. And part of the reason is because we're running a very efficient factory in Fort Payne, Alabama, and we're running a very accretive product portfolio that is well accepted by its customer base because of the benefits that it creates for our customers. So we'll take that same approach. We want to be market-based in terms of our pricing, and we want to continue to create value for our customers. That's what's going to drive that.

Understood. Thank you.

Thanks, Tammy.

Your next question comes from the line of Jerry Revich with Wells Fargo Securities. Your line is open. Please go ahead.

Yes, hi. Good morning, everyone. Good morning. Simon, I'm Hi, Simon, I'm wondering if we could just get your latest thoughts on capital deployment. If you do complete the aerials divestiture, what are you seeing in terms of the M&A landscape? How likely is it that we'll be looking at stock buyback versus additional opportunities to expand the portfolio? Can you just give us your updated views?

Yeah, I appreciate the question, Jerry. I really don't want to get ahead of myself here on this. Our immediate focus is on integration and execution, deliver on what we've committed to for the year. Really, if you think about it, we've gone through quite some change in the last two years. So making sure that all the workstreams get done in terms of the integration and building up our synergy is our primary focus. And whatever the balance sheet will look like as we move forward, as always, we will look at what is best for our shareholders. And we like the optionality. The optionality is only growing, is only getting better for Terex. which means that our opportunity to add value for our shareholders is only going to increase going forward. So we'll deal with it when it comes, but the tiebreaker will be whatever is best for our shareholders.

Super. And then separately on specialty, really good operating performance in the quarter, as you shared in the pro forma financials. I want to ask from a booking standpoint, can you just talk about what, kind of book to build we should be expecting for in 2Q and 3Q? What's the cadence based on the awards pipeline that the team is working towards in that line of business?

And you said specialty, didn't you, Jerry?

Yes, Simon.

Yeah, so the bookings are typically lumpy in specialty vehicles, so it's kind of touch and go. But if you look, I can probably give you maybe more of a trend answer. We expect that at some point the bookings will start to soften just because to David's question earlier, as we continue to ramp up throughput and lead times will start to slowly improve, naturally bookings become a function of lead time and availability and will have to come down because trucks being put to use is a consistent number that just grows you know, at a mid single digit CAGR every single year. So the bookings will evolve as a function of how lead times improve. So we expect bookings to slowly come down and eventually where supply demands will meet is where we're planning for is around that one year lead time. So that's how I see. I don't know if it will quite pick up this year yet, but certainly next year.

Thank you, Sam.

Thank you.

There are no further questions at this time. I would now like to turn the call back to Simon Meester for closing remarks.

Thank you, operator, and thank you all for the questions. Yeah, Tarek's off to a good start of the year, and the integration of the legacy red business is progressing as planned. In less than two years, we have effectively merged three businesses into a single, much stronger company. And given that we're still Early in the year, and in light of ongoing geopolitical uncertainty, we believe it's prudent to maintain our full-year guidance at this time, and we remain firmly focused on delivering against it. And I'm particularly proud of the 17,000 Terex team members who make it all possible day in, day out. Thank you for joining us today, and we look forward to speaking with you again next quarter.

This concludes today's call thank you for attending you may now disconnect.