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Operator: Greetings, and welcome to the Terex Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jon Paterson, Vice President and Treasurer. Please go ahead.

Jon Paterson : Good morning, and welcome to the Terex second quarter 2024 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 by Simon Meester, President and Chief Executive Officer; and Julie Beck, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by Q&A. Please turn to Slide 2 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 materials and in our reports filed with the SEC. In addition, we will be discussing non-GAAP financial information, which is useful in evaluating the company’s operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials. Please turn to Slide 3, and I’ll turn it over to Simon.

Simon Meester : Thanks, John, and good morning. I would like to welcome everyone to our earnings call and appreciate your interest in Terex. I first want to thank and recognize the Terex team for their extraordinary commitment and dedication to our customers, our company and our people. We closed another strong quarter and I continue to be impressed by our team members and their passion to do what’s best for our stakeholders, while keeping each other safe and healthy at the same time. Please turn to Slide 4. Over the past five years, we transformed Terex into a strong diversified agile company with significantly improved financial performance. We’re posting another strong quarter generating revenue of $1.4 billion and delivering adjusted earnings per share of $2.16, and we’re on track to deliver full year adjusted EPS in the range of $7.15 to $7.45.

I’m proud of our global team that continues to perform at a high level, achieving our near-term objectives and implementing our long-term strategy of execute, innovate and grow to make Terex an even stronger company in the future. Turning to Slide 5, we’re seeing a mixed set of global economic variables playing out on what we believe is still a very solid long term macro backdrop for Terex. We like the resiliency of the U. S. economy, GDP continues to outperform expectations and inflation continues to recede, including a monthly decline in June. Construction spending remains high in certain regional and local soft spots are more than offset by the ramp up of mega projects. Our U.S. rental customers are highly disciplined capital managers and as the operating environment normalizes, we are seeing them return to more customary ordering patterns.

In MP, many of our dealers are rebalancing their inventory as more of their customers are renting machines, while the interest rate outlook remains uncertain and more predictable and shorter lead times are allowing more precise inventory management. Overall, we expect demand in the U.S. market to remain robust. The European economic situation is less clear with conflicting indications. That said, I like our market position across the EU, which was further enhanced by the recent anti-dumping decision. We expect to outperform the market as the macro situation unfolds. We also remain encouraged to see emerging markets such as India, Southeast Asia, the Middle East and Latin America increasingly adopt our product. Please turn to Slide 6. We believe Terex is poised for consistent sustainable growth, long-term opportunities driven by mega trends and continue to be bullish on our long-term outlook.

This is being driven by strong market dynamics in the U.S. such as onshoring, technology advancements and federal investments including the Infrastructure Investment and Jobs Act, CHIPS Act and Inflation Reduction Act. This legislative environment is driving record levels of mega projects in data centers, EV and battery manufacturing plants, semiconductor plants and others, with more projects expected to come online from 2025 to 2027. We anticipate increased activity from infrastructure investments from roads and bridges to airports, railways and the power grid. We expect to continue driving growth on top of our current baseline through innovation, while continuing to optimize our business operations. Please turn to Slide 7. Our execute, innovate and grow strategy underpins our strong financial performance and positions us well for accelerated growth.

We have a very strong portfolio of businesses that are leaders in their respective markets. My predecessor did a great job leading our effort to clean up the portfolio, so we are in a strong position when you look at the fundamental makeup of Terex. Now later on the work that we’ve done in the execute pillar of our strategy, focused around implementing our Terex operating system, principles like ensuring alignment of manufacturing and sales plans and reducing fixed costs, help make our financial performance more consistent and predictable.. I’m proud to say that we’re on track to deliver more than $7 of earnings per share and more than $300 million in free cash flow for a second year in a row. When it comes to innovation, we think about it in two broad ways: First, how do we leverage technology externally to deliver more value to our customers.

Over 20% of our sales are related to products that we have introduced in the past three years. This is something of which we are particularly proud. We have a very exciting new product development pipeline that will continue to bring new products to market that increases our customers’ ROI. When our customers are more successful using our equipment, we will be more successful. Second, we’re leveraging technology internally making investments in robotics, automation, digitizing work streams to make us more efficient and more flexible. Our roadmap to continuously make us more competitive and more resilient regardless of market dynamics. And last but not least growth. Over the past several years under the leadership of its President, Kieran Hegarty, MP has grown at a double-digit CAGR and is now a $2 billion business with consistent strong financial performance.

AWP is on track to generate about $3.2 billion in revenue this year. Both businesses are now posting strong operating margins. And when looking at the market fundamentals are well positioned for long-term growth. Then, when you layer on the recently announced agreement to purchase Environmental Solutions Group or ESG, which further diversifies our portfolio and is accretive to our performance. We’re truly transforming and growing the company. Please turn to Slide 8. Pictured here is Terex’s first fully electric minerals processing multi plant operation. Our customer a leader in sustainable building materials, road construction and building products was looking for a solution that met its output requirements and was eco conscious. Our design dramatically reduced emissions and diesel consumption, while improving output material shape and throughput rates.

A great example of the Terex value proposition, where we add tangible value in real world applications. Slide 9, the recently announced agreements to purchase ESG, the largest in Terex’s history accelerates long-term shareholder value growth. This acquisition checks all of our boxes. It adds a non-cyclical financially accretive and market leading business to the Terex’s portfolio with tangible synergies in the fast growing waste and recycling markets. We’re very excited about the transaction and feel privileged to soon welcome the ESG team to the Terex family. They have truly built a remarkable business. And with that, let me turn it over to Julie.

Julie Beck: Thanks, Simon, and good morning, everyone. Let’s look at our second quarter financial performance on Slide 10. Before I dive into our results, I’d like to remind everyone that the second quarter of 2023 was a historically strong quarter, primarily due to sales growth and operational efficiencies executed this time last year. Our net sales were approximately $1.4 billion a slight decrease of 1.5% year-over-year with strength in North America offset by declines in the rest of the world. We experienced strength in our AWP segment with rental activity and equipment replacement product cycles remaining strong. AWP net sales were up nearly 7% year-over-year and 14% sequentially. Our MP segment was impacted by continued softness in the European market.

Gross profit of 23.8% declined due to unfavorable product mix and anticipated manufacturing inefficiencies as we ramp up production in the Monterrey facility. Our SG&A expenses are comparable to prior year and approximately $2 million favorable to prior year when adjusted for the $2 million one-time gain related to the sale of our Oklahoma City facility last year, and this year’s $2 million severance investing charges. Corporate SG&A is down $4 million from the prior year. Income from operations was $193 million with an operating margin of 14%. Interest expense was relatively consistent with the previous year, while other expense increased $2 million from the prior year, primarily due to deal related costs. The second quarter global effective tax rate was 19.2% compared to 16.7% in the second quarter of 2023, due to the reversal of a state tax valuation allowance in the second quarter of 2023.

We reported second quarter GAAP EPS of $2.08 per share. We believe adding adjusted EPS to our disclosures provides investors with a better view of our operating performance. Adjusted EPS, which excludes non-recurring and unusual items, was $2.16 per share. Free cash flow for the second quarter was $42 million. The second quarter of 2023 free cash flow included the one-time proceeds on the sale of our Oklahoma City facility. Turning to bookings and backlog on Slide 11, the quarter played out as expected. Our current backlog at $2.4 billion is approximately 2x our historical norms. We expect our bookings and backlog to continue to transition to normal patterns as lead times stabilize, including AWP customers returning to customary seasonality with bookings highest in the first and fourth quarters.

Our AWP segment backlog is approximately 2.4x normal Q2 levels. Our MP backlog is also slightly higher than pre-pandemic levels. For perspective, normalized backlog for MP hovers around $400 million to $500 million. Let’s take a look at our segment results. Please turn to Slide 12. Over the past few years, MP’s operational excellence delivered higher top line growth and double-digit margins in the mid-teens. For the second quarter, MP continued to demonstrate operational excellence by performing well in a dynamic market with sales of $499 million. Sales were impacted by market pressures in our German based Fuchs materials handling business and dealer inventory rebalancing in our aggregates business. MP reported operating profit of $77 million with strong OP margins of 15.4%.

The change in operating profit was due to reduced volume and unfavorable product mix, partially offset by expense discipline. MP is taking action to protect our strong margins, including reduced work schedules, factory layouts and further cost reduction activities. MP ended the quarter with backlog of $558 million. Please turn to Slide 13, which details our AWP performance. We delivered solid performance in the Q2 with sales of $882 million, up nearly 7% from last year, primarily reflecting higher demand in North America. In fact, AWP is up 9.5% in sales on a year to date basis. AWP reported second quarter operating profit of $134 million. Operating margins were consistent with prior year when adjusting for Monterrey manufacturing start up inefficiencies and a one-time gain recorded in 2023 for the sale of our Oklahoma City facility.

AWP backlog is at $1.8 million approximately 2.4x higher than normal levels for the second quarter. Please turn to Slide 14. We have a very healthy balance sheet that enables us to continue to grow and invest through the cycle. Terex has ample liquidity with net leverage of 0.5x. We are reaffirming our 2024 free cash flow outlook range of $325 million to $375 million. Our strong balance sheet and expected free cash flow generation continues to provide significant capacity to fuel our strategic growth initiatives, including our agreements to purchase ESG as well as return capital to shareholders. As we close on the ESG transaction, we anticipate a net debt to EBITDA leverage of 2.2x, which is below our 2.5x target through the cycle. And we will utilize our enhanced free cash flow position to further deleverage.

We’re planning for capital expenditures this year of approximately $145 million or about 2.8% of sales at the expected midpoint, with the largest investment related to our Monterrey facility. We would expect CapEx to take a step down next year and to be a benefit to free cash flow conversion in 2025. Through July 29, 2024, Terex has returned $50 million to shareholders through share repurchases and dividends, essentially offsetting equity compensation dilution. We have approximately $105 million remaining under our share repurchase authorization. We reported a return on invested capital of 25.9%. Terex remains in a very strong financial position to continue investing in our business and executing our strategic initiatives, while returning capital to shareholders.

Now turn to Slide 15 and our full year outlook. It is important to realize, we are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties and results could change negatively or positively. With that said, this outlook represents our best estimate as of today. Our outlook does not incorporate any ESG activity. Our sales forecast range has been updated to $5.1 billion to $5.3 billion with strength in the AWP business helping to offset some of the weakness in our MP business. For Terex overall, we continue to expect the first half sales to be slightly higher than the second half, with the third quarter sales higher than the fourth quarter, as we return to more seasonal customer delivery patterns. We are pleased to increase our full year operating margin for Terex overall to a range of 12.9% to 13.2%, solidly above our full year 2023 performance.

We have lowered our corporate and other expenses to $18 million per quarter in the second half of the year. We expect interest and other expenses of $55 million for the full year. In addition, we are lowering our effective tax rate to 21%. Due to strong operational execution, cost out activities and prudent expense management, our outlook is an EPS range of $7.15 to $7.45 on an adjusted basis. This is the second year in a row we expect to deliver earnings per share over $7. Let’s review our segment outlook. We expect MP sales to be $1.95 billion to $2.05 billion for the full year, with margins in the range of 15.1% to 15.4%. Sales for the third and fourth quarters will be consistent with Q2 sales, while operating margins are expected to improve slightly from Q2 levels due to management actions taken.

For AWP, we expect our 2024 sales range to be $3.15 billion to $3.25 billion and operating margin in a range of 13.7% to 14% for the full year. We expect the second half sales to be lower than the first half with the third quarter higher than the fourth quarter as we return to normal seasonal shipping patterns. We expect margins in the second half to be approximately 200 basis points higher than in 2023 as moderate inefficiencies abate and we realize the benefits of our new facility. We are anticipating a full year AWP incremental margin greater than 25%. Now I will turn it back to Simon.

Simon Meester : Thanks, Julie. I will now turn to Slide 16. Overall, Terex is well positioned and we’re excited about our long-term future. Terex is a very different company than five years ago, let alone 10 years ago. We are a diversified leader in many different industrial segments. We’re more agile and less vulnerable to cyclicality with a strong portfolio, strong operating system and last but not least, a highly engaged competitive team. I’m incredibly proud and feel blessed to have been given the trust to lead this company and I’m very excited about the years ahead, expect a lot more to come from Terex. And with that, I would like to open it up for questions. Operator?

Operator: [Operator Instructions] Your first question will come from Stanley Elliott with Stifel.

Stanley Elliott : Can you guys talk about, I mean with some of the near-term softening you’re seeing in Europe and some of the general construction markets, how does that impact? How you all are thinking about pricing really across the portfolio with the context of the past couple of years have been so strong?

Simon Meester : So, yes, I mean, we stick to our target of being price cost neutral. That’s what we’re aiming for. There’s still very much cost inflation in the market, steel is coming down, but value add components still showing signs of inflation like electronics and hydraulics, logistics, labor costs. So we’re still in an inflationary environment and as such we’re still striving for price cost neutrality at this point in the journey.

Stanley Elliott: And in terms of the MP business, is the softness exclusively Europe? Are you seeing anything in the Americas? And then curious, where do you think inventory in the channel is today? I understand there’s a reluctance, I guess, for some to hold on to it and a lot of these kind of on a more of a rent to own sort of an operation. But just curious kind of the health of the channel and then also kind of what you’re seeing in North America?

Simon Meester : We don’t think the inventory is necessarily the issue here and it’s a little bit of a mixed bag. In Europe, it’s very much end demand driven. And what I mean by that is, there’s just lower productivity because there’s less projects. And we think that the inventory in general has been right sized for it. In North America, it’s a little bit more complicated. There’s still a lot of fleet productivity. We just see less rental conversions. Inventory again is not necessarily a problem. We think that most of the rightsizing has been done. But what’s happening is that we sell especially in MP a lot through rent to purchase contracts and typically they converge, let’s say within six months and our customers are just holding on to their rental units for just few more months to see what’s going to happen with interest rates.

So in North America, it’s mostly interest rate anxiety, if you will, caution for what’s going to happen with interest rates before they convert rent to purchase. But if we look at fleet utilization, still very high in North America, there’s still a lot of work and our units are working in North America. That’s kind of the next story here.

Operator: Your next question will come from Jamie Cook with Truist Securities.

Jamie Cook: I guess, two questions. One, Julie, on access equipment, your margins it sounds like had a 100 bps headwind because of Monterrey, yet you’re still able to raise your margins and you’re talking about an incremental margin greater than 25%, which is better than your target. So what’s driving that and to what degree do we think Monterrey can help structurally improve incremental margins? I’m just wondering if there’s a better longer term story here. And then my second question just on materials processing. To what degree I mean, I’ve never seen a 10% — I think your guide implies sales down 10%. I’ve never seen the business down this much. To what degree do you think this business is over earning or the declines could continue into 2025? So I guess I’ll stop there.

Julie Beck: So our second quarter margins latency, we’re really when you adjust for the Monterrey inefficiencies, which were about $5 million which was better than we anticipated for quarter. The Monterrey facility is just going extremely well. We’re very excited about the facility. And so as we go through the rest of the year, our margins improve because those inefficiencies start to abate. Those go down. Last year, we also had the gain of Oklahoma City facility. So if you take those two items out, our margins were relatively consistent from last year to this year for AWP. So going forward, we would expect to experience less disruption and that this facility completes and gets to where the original intention at the end of fourth quarter or/and so we would expect to start to see those margins improve.

And indeed, we put in a 200 basis point margin improvement in the second half of the year from where we were a year ago. So again, we’re still at target to achieve those 200 basis points of margin improvement as we go forward.

Jamie Cook: But my question is, is there a reason to believe your incremental margins in this business can structurally be higher than the 25%?

Julie Beck: Well, so for this year, they’ll be higher than 25%, Jamie. We’re working our outlook implies roughly 26%. And so, we’ll continue to work on improving margins as we go.

Jamie Cook: And then sorry, the follow-up on materials processing.

Simon Meester : Yes, MP is a collection of five verticals, if you will. And within those verticals there’s a lot of things happening. If I take Fuchs for example, our material handling or scrap handling business is very biased to Germany, very biased to Europe, very biased to scrap prices and that business is clearly struggling. That was what we called out in the first quarter still what we’re calling out now in the second quarter is the business that is probably struggling the most within the MP portfolio. And because if you look at the European economy overall, it’s Germany and Italy that are struggling. UK and France are seemed to be coming back a little bit and then Spain is the positive outlier. So it’s a little bit of a double whammy if you will for our Fuchs business.

Although, we are encouraged to see that Germany steel production has been creeping up since February. Our rolling three months book-to-bill is actually greater than one in June for that business and then also our quoting activity seems to pick up. Too early to call for signs of a bottom, but we do see some positive signals in Fuchs. And then the other business that has been struggling is also a business tied to Europe, which is our cranes business and they are headquartered as you know in Italy, which is the second European market that’s currently struggling and both those countries, Germany and Italy are just very manufacturing focused the exports, because Europe is down overall. But I would just say MP overall in the last ten years, that business has grown almost double-digit consistently for the last 10 years.

And it’s been a very, very steady performer for us. Again, north of 15% operating margins in the current environment, we think it’s great performance for their business. And the reason we’re still very encouraged is because of what we’re seeing in North America, high utilization and we believe that if the right thing happens with interest rates and we are actually heading towards soft landing, there’s plenty of upside in North America coming from the mega projects alone. So that’s a little bit story around MP.

Operator: Your next question will come from David Raso with Evercore ISI.

David Raso: I’m trying to figure out the initial look into ‘25 and AWP with how you think about your book-to-bill and AWP the rest of the year? I’m just trying to think through before the last few years, where you had a huge backlog starting the new year, the backlog would usually end the year, call it 40% of the following year sales. And I’m just trying to figure out to get lower than that, right? To feel ‘25 is more at risk of a down AWP year than normal given your starting the year with a low backlog, it would imply your book-to-bill, even in the fourth quarter, really can’t even be above one. But historically it’s well above one. So I guess the direct question is to get a sense of where the backlog could end the year.

From your conversation so far, I know it’s early. Is there any reason to believe your book-to-bill in the fourth quarter for AWP should not be comfortably above one? I just want to know how hesitant your conversations have been already on commitment at all for ‘25 on AWP demand.

Simon Meester : Yes, I mean, it’s a tough question to answer. Obviously we get qualitative data points, not really quantitative and we’re not guiding for 2025 first and foremost. But yes, generally speaking, the discussions are that have just started, David, as you know, we typically start discussions for the next year in Q3, and then it will hit the backlog in Q4 and very often in Q1 as well. So I would say a general response to your question is we do expect, obviously, Q4 book-to-bill to be better than Q3. But what is the exact number is going to be, it all depends on how 2025 is going to pan out and it’s too early for us to really peg that down. So far the discussions that we’ve had with our customers are positive for 2025. Whether that’s up, down, slightly flat that’s too early for us to tell.

David Raso: I know it’s a bit of an unfair question, but just the whole idea of how much goodness of the large backlog that we went into ‘24 with, we can still leave ‘24 with, at least relative to history. In that same conversation, are we already at least getting customers bringing up the idea of there’s a lot more capacity coming to the industry in 2025? Or are we starting to have those conversations where clearly you want to drive and see with price in the last couple of years and now the pendulum power is swinging to other direction? I’m just curious the industry capacity issue bit, Chinese manufacturing in Mexico, JCB opening up San Antonio, I mean, you name it. I’m just curious how that’s playing out in conversation so far.

Simon Meester : Yes. We don’t we don’t share that concern overcapacity in North America and in Europe for that matter. Now China is a different story. There’s definitely overcapacity and undisciplined price management in our mind or irresponsible price management I would almost say. But in North America and Europe, we don’t share that concern in terms of capacity. We can only speak for ourselves and we’ve shared on our last call kind of where we stand in terms of capacity, we’re not adding, we’re just changing. But, yes, we see some of the headlines as well. We don’t think it necessarily adds up to a massive over capacity of the industry. So I did not have any personal discussions with customers where they kind of turn that back on us saying what’s going on here, is it excessive. We haven’t seen that.

Operator: Your next question will come from Jerry Revich with Goldman Sachs.

Jerry Revich: Congratulations again on the acquisition announcement. Simon, I just want to ask you if you wouldn’t mind just expanding on your comments on the European Union ruling. How does that impact the competitive landscape at face value? It looks like everyone except the French manufacturers getting hit by similar amount, but I’m wondering if you could just peel back the onion for us and just talk about the competitive landscape if the suggested tariffs are implemented?

Simon Meester : I mean, we’re very excited by the ruling. We were encouraged that two of the industry players filed a complaint and that the commission ruled favorably. I think it was mid-June that it came out. We were very pleased with the evidence that the commission found that there was actually dumping happening in the European market and as such they imposed tariffs. So we think it’s the right thing for the industry. We obviously encourage level playing field. We don’t necessarily change think it will change much going forward. It would just in our mind avoid that the market would go down this negative spiral. So we’re happy that the ruling was made and we continue to be price leaders for the European market going forward. And we think we’re in a great position to compete going forward. So happy with the results.

Jerry Revich: And would you mind just commenting on how the utilization numbers are looking at in the U. S. based on your telematics data? It looks like based on a couple of rental company reports, pricing for AWP is still positive, but time you might be dipping year-over-year. I’m wondering if you just talk about what your data shows on utilization specifically.

Simon Meester : Yes. As a general statement, utilization is holding. We do see that particularly products that are more commonly used in mega projects doing better than projects that are used in more of the local projects, the smaller projects. So there is a little bit of a divergence happening there, but if you add them together, still strong utilization year-over-year.

Operator: Your next question will come from Tami Zakaria with JPMorgan.

Tami Zakaria: So my first question is on the current backlog. Can you give us a sense of how much do you expect to deliver or work down by the end of this year for both AWP and MP? I’m basically trying to understand if the backlog can provide support to sales even next year.

Simon Meester : It’s kind of hard to answer the question without getting into 2025 guidance. But if we look at overall backlog coverage today, and if you look at Terex, our outlook is $5.2 billion midpoint, which means we have another 2.5-ish to go for the remainder of the year. We have $2.4 billion in backlog, roughly, let’s say a third of that is already allocated to 2025. So that means we have two-thirds coverage for the remainder of the year. And that’s still higher than we are — than where we normally are in July in terms of backlog coverage. So we feel we have pretty good backlog coverage to get to our outlook. Now, what’s going to happen for 2025 is a little too early to tell and how that’s going to pan out, but we feel good about our backlog coverage, first of the output that we’ve currently laid out.

Tami Zakaria: And then the second question is probably for Julie. Just wanted to understand the updated EPS guide. I think you restated the first quarter EPS and margin. So how much of the new EPS guide is driven by restatements versus changes in the different line items for the rest of the year? It seems like EPS guided essentially the same extra restatement but am I thinking about the right way, or is there anything to think about there?

Julie Beck: I agree with you that. In essence, our adjusted EPS outlook is consistent with what we provided in the Q1 earnings outlook. If you take our Q1 midpoint and add in the Q1 call outs, you come pretty close to what our adjusted EPS midpoint is. So it’s relatively consistent.

Operator: Your final question will come from Angel Castillo from Morgan Stanley.

Angel Castillo : Just wanted to go back to the price cost neutral comment. You talked about some of the dynamics, perhaps within MP, but just more broadly, customer decisions to perhaps rent a little longer, driven by interest rate decisions, et cetera. Just curious from a price sensitivity perspective of your customers, as you’re seeing trends such as that, could you just talk about what gives you confidence in being able to pass through any incremental inflation if customers are showing kind of greater price sensitivity in both MP and AWP would be helpful.

Simon Meester : Yes, it all comes down to just being transparent and we’ve been transparent all along with our customers. And this is obviously a daily conversation. We are still seeing cost inflation in our industry and we need to be disciplined on how we treat the cost inflation. It was a very tough story, obviously, during the pandemic, but coming out of the pandemic, there’s still cost inflation, as I mentioned earlier, even those steel is coming down. And so that we’re just by being very transparent on the cost that we have to pass on as an industry. And as I mentioned, in electronics, in hydraulics, even in heavy fabs, there’s still cost inflation but also labor, obviously, as everyone can see and also in logistics and ocean freights, we’re still in an inflationary environment. So just by being transparent on [indecipherable]. Anything to add to Julie?

Julie Beck: No, that’s exactly right.

Angel Castillo : And maybe just another stab at kind of the 2025 question, just thinking about it, less so from maybe what you’re hearing today, but just more specific to kind of the age of the fleet that you’re seeing out there and some of the underlying factors that would typically drive kind of replacement demand for your products in particular. What do those kind of imply as you think about prepare for 2025 that replacement demand would be versus 2024?

Simon Meester : Yes. I mean, if you think about the last kind of wave, if you will, 2018 was a big wave of machines making their way into the market. And that’s now all hitting the five, six year mark. Theoretically, that is coming up for replacement, but I would say all our customers, as I mentioned in my opening remarks are very seasoned fleet managers and their fleet age is all within targets. It’s probably varying a couple of months here and there, but overall it’s in the 48 to 52 month range. So fleet age is where it needs to be. But there is a little bit of a replacement tailwind, if you will, because of that peak supply in 2018.

Operator: Your final question will come from Steve Barger with KeyBanc Capital Markets.

Steve Barger : Simon, going back to your comment on interest rate anxiety for rental conversion and MP, where do you think the interest rate sensitivity is? Meaning do people need to see 50 basis points over the next year? Are they looking for 100 basis points? Just trying to figure out what they’re waiting for?

Simon Meester : I really don’t know how to answer that, but I would say it’s maybe not so much the number other than the perception that the market is heading towards a soft landing. I think that’s more of the issue. And if that’s 25 basis points, 50 basis points or 100 basis points, whatever it takes. But I think we just need to get to a pace — a place where people feel confident that we’re going in the right direction. That would be my answer.

Operator: There are no further questions at this time. I will now turn the call back over to Simon for any closing remarks.

Simon Meester : All right, thank you, operator. If you have any additional questions, please follow-up with Julie or Jon. And with that, thank you very much for your interest in Terex. And operator, please disconnect the call.

Operator: Thank you. And ladies and gentlemen, that concludes today’s conference. Thank you for joining. You may now disconnect it.