Good morning, and welcome to the Terex fourth-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. 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 the 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.

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.

Last week, we concluded our merger with REV Group, a defining milestone in Terex's transformation. With this combination, we've created a leading specialty equipment manufacturer with premium brands across multiple industries, with a strong manufacturing footprint, a leading technology play, and clear, tangible synergies across the portfolio.

What began with our 2024 acquisition of ESG, which delivered value immediately, is now being amplified by bringing Terex and REV together, creating greater scale and an even more resilient new company. REV generated approximately $2.5 billion of revenue and $230 million of adjusted EBITDA in its recently completed fiscal year, with the majority coming from essential, low-cyclical end markets.

Beyond strengthening the predictability of our growing earnings and free cash flow, the merger also reduces our overall capital intensity, giving us greater flexibility to create additional shareholder value. I want to thank both the Terex and REV teams for their tireless efforts to close this transaction ahead of schedule.

It's only been a few days since closing, but the teams are already working hand-in-hand to execute our integration and synergy plans. We completed the ESG integration in Q3 of 2025, and captured synergies ahead of expectations.

We're using the same integration playbook for the merger with REV. The integration will be straightforward.

REV's businesses are joining Terex as a stand-alone operating segment with no organizational changes outside our corporate functions. Our new Specialty Vehicles segment will include Emergency Vehicles, and will continue to be led by Mike Vernick, and Recreational Vehicles, which will continue to be led by Gary Gunter.

Both Mike and Gary bring deep REV experience, assuring continuity while driving further improvements. We expect to deliver roughly half of the $75 million run-rate synergies within the next 12 months, and the full amount by 2028.

Most early savings will come from eliminating duplicate corporate costs, but the synergy potential goes much deeper. Over the last 16 months, we have reshaped the Terex portfolio, creating what I believe is the most intrinsically synergistic, resilient, and competitive portfolio in our history.

We now have significant scale in specialty vehicles that share similar operational and go-to-market characteristics. This creates not only near-term efficiencies, but also meaningful opportunities for operational improvement and long-term growth across Terex.

With regards to the strategic review of the Aerials business, which we announced during our last call, we have been receiving strong inbound interest from a number of interested parties. We're being deliberate in our evaluation of the interest and the best approach to maximize shareholder value.

Turning to slide four. Combining with REV significantly shifts our end-market exposure.

We now serve a large, diverse, addressable market with stable, attractive growth profiles. Customers across these verticals value life-cycle services, creating sizable opportunities to expand our aftermarket and digital offerings.

Emergency vehicles benefit from stable and growing municipal budgets tied to maintaining required response times among the growing population. In Waste & Recycling, growth is fueled by population and recycling trends coupled with ongoing fleet replacements.

Customers also accelerate upgrades to unlock the value of new vehicle innovations and digital solutions, where we are the clear industry leader. Utilities are poised for strong growth from 2026 onward as demand on the US electrical grid increases, particularly from data center expansion.

Industry forecasts call for 8% to 15% annual CapEx growth through 2030. Altogether, we now have multiple channels into nearly every municipality in the United States, which collectively spend $200 billion per year on capital equipment, a tremendous long-term opportunity.

In construction, we continue to see robust infrastructure activity supported by government funding. The pipeline of megaprojects continues to expand, providing a tailwind through at least 2030.

We're seeing momentum building in Europe, and strong growth continues in the Middle East and India, where MP already has a solid foundation. Let's move to a summary of our financial results on slide five before handing it over to Jen to go into more detail.

I'm proud of our team for delivering on our 2025 expectations, navigating numerous challenges throughout the year. Their performance and the strength of our portfolio enabled us to deliver: earnings per share of $4.93, consistent with our outlook; EBITDA of $635 million, or 11.7%; free cash flow of $325 million; and a cash conversion of 147%, all in line with our expectations.

Looking to 2026, we see positive momentum across most of our segments to varying degrees. Environmental Solutions bookings grew 16% year-over-year in Q4, led by Utilities.

MP achieved its highest margins of the year in Q4 as efficiency and tariff mitigation initiatives took hold, and bookings accelerated, particularly in Aggregates and Material Handling. Aerials secured nearly a billion dollars of new orders in Q4, up 46% from the prior year.

Specialty Vehicles recorded strong bookings the last three months with a roughly two-year backlog coverage coupled with strong momentum on margin expansion. This positions Terex for a strong 2026.

With that, I will turn it over to Jen.

Thank you, Simon, and good morning, everyone. Let's look at our Q4 results on slide six.

Our fourth-quarter financial performance was largely in line with our expectations. Environmental Solutions continued to grow and deliver consistently strong margins.

Materials Processing achieved its highest operating margin of the year, and Aerials sales grew year-over-year in the quarter following four quarters of decline. Total net sales of $1.3 billion grew 6% year-over-year.

Excluding ESG, our legacy sales grew by 5%. Q4 operating margin was 9.3%, up 150 basis points versus the prior year due to improved performance in all three segments.

Interest and other expenses of $43 million was $4 million higher than Q4 last year. The fourth-quarter effective tax rate was 8.1%, driven by favorable one-time tax attributes.

EPS for the quarter was $1.12, or 35 cents higher than last year. EBITDA was $141 million, or 10.6% of sales, 140 basis points better than last year.

We generated $172 million of free cash flow in Q4, which was $43 million greater than last year due to higher operating income and improved working capital performance. Let's turn to slide seven for our full-year results.

Net sales grew 6% to $5.4 billion as the full-year contribution from ESG acquisition more than offset declines in Aerials and MP. Legacy sales declined 11%.

Operating margin of 10.4% was 90 basis points lower than 2024 due to lower volumes in Aerials and MP and higher tariff costs, which mainly impacted Aerials. This was partially offset by improved margins in Terex Utilities and the accretive addition of ESG.

Interest and other expenses of $172 million increased by $89 million due to financing costs associated with acquiring ESG. Our full-year effective tax rate of 17.2% was consistent with last year, as favorable one-time tax attributes from the green divestiture offset higher US sourced income.

Earnings per share of $4.93 was consistent with the outlook we provided for the entire year. We improved our full-year free cash flow by 71% to $325 million, representing a conversion rate of 147%.

Despite volume and tariff headwinds throughout the year, our teams continue to execute working capital improvement plans and delivered on our full-year free cash flow expectations. ESG incremental cash flow more than offset the interest expense associated with the financing.

We continue to improve our operating cash flow and working capital efficiency, giving us more options to return value to shareholders. Please turn to slide eight to review our segment results, starting with Environmental Solutions.

Our ES segment finished 2025 with another excellent quarter, generating $428 million of sales, representing 14.1% year-over-year growth on a pro forma basis. The strong growth was driven by improved throughput and delivery of utility and refuse trucks.

For the full year, sales increased 12.7% on a pro forma basis to $1.7 billion. Q4 operating margins of 18.5% were 90 basis points better than the prior year, driven by improved performance in Utilities, while ESG margins were consistent with the prior year.

On a full-year basis, the segment achieved 18.8% operating margin, 220 basis points better than the pro forma 2024 results, driven by improvements in both businesses. I was very pleased with the ES segment performance in 2025, particularly the high degree of collaboration between the ESG and Utilities teams, executing synergies and operational improvements that will benefit Terex going forward.

Turning to slide nine. MP fourth-quarter sales of $428 million were 2.5% lower than last year.

Excluding the divested cranes businesses, MP sales increased by 2.8% in Q4 on a like-for-like basis. Growth in Aggregates was the primary driver, as sales grew in every global region, with the strongest growth coming from Europe.

On a full-year basis, sales of $1.7 billion were 11.6% lower than 2024, mainly due to channel adjustments we experienced in the first half of the year. MP operating margins continued to improve, reaching 13.7% in the quarter, as efficiency improvements and pricing actions ramped up in the quarter.

The positive margin trajectory and increased bookings set MP well heading into 2026. Please turn to slide 10.

Aerials closed out 2025 on a positive note, with year-over-year sales growth of 6.9%, including growth in North America and EMEA. Aerials Q4 operating margin of 2.6% was consistent with our expectations, 200 basis points better than prior year.

Tariff headwinds, including the expanded 232 tariffs that was implemented in August, could not be fully mitigated in the period, as ongoing supply chain and cost reduction actions will continue in 2026. Please turn to slide 11.

Q4 bookings of $1.9 billion grew 32% compared to last year on a pro forma basis, with positive trends across all segments. In Environmental Solutions, we continue to see positive momentum in bookings, which grew 16% year-over-year, up 13% on a trailing 12-months basis, led by strong demand for Utilities vehicles.

A healthy backlog of $1.1 billion provides strong forward visibility for the segment heading into 2026. MP bookings increased 24% year-over-year, or 32% when you exclude the divested cranes business.

The growth was led by Aggregates and Material Handling, more than offsetting some moderation in concrete. MP ended 2025 with $71 million more backlog than the prior year, or $100 million higher when you adjust out the divested cranes businesses from 2024.

Finally, Aerials bookings of $971 million was up 46% compared to prior year, driven by replacement demand from our national customers. While growth was strongest in North America, we also saw growth in EMEA and Asia-Pacific, providing good visibility into 2026.

Now, turn to slide 12 for our 2026 outlook. We are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, and results could change negatively or positively.

The outlook we're providing today reflects our current portfolio and does not account for any costs to achieve the synergies or case accounting adjustments, nor other nonrecurring items. Following the close of REV transaction last week, our 2026 outlook reflects the newly combined company, including 11 months of REV, with positive momentum from strong Q4 bookings and backlog in every segment.

We 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.

Our EBITDA outlook includes approximately $28 million of synergies for 2026, in line with our goal to achieve $75 million of run-rate synergies within two years. We 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 is expected to be higher at 21%, driven by higher US sourced income. As expected, the merger has a modest 3% dilutive effect on EPS in 2026 due to higher number of shares outstanding post-merger.

We expect 2026 EPS between $4.50 and $5, with a share count of 111 million shares, as compared to a legacy Terex range of $4.80 to $5.20. For modeling purposes, approximately 15% of our full-year EPS is expected in the first quarter, as it will only include two months of Specialty Vehicles earnings and seasonally lower volume in legacy Terex.

We expect 2026 cash conversion of between 80% and 90% of net income, including transaction costs and costs to achieve synergies. 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 see strong demand for bucket trucks and digger derricks used in the electric power market. We are currently anticipating roughly flat sales on ESG, with upside potential in the second half as we get more clarity on fleet requirements and EPA emission regulations for a second-half pre-buy.

We continue to see growth in our market-leading digital solutions in the waste sector, and expanding into Utilities and concrete. We will explore opportunities to expand this technology into emergency vehicles during integration.

ES achieved strong profitability in 2025, and we anticipate similar full-year margins in 2026, as synergy execution and productivity offsets the unfavorable mix from higher Utilities growth. Turning to MP: we expect the segment to inflect back to full-year growth in the high single-digit range in 2026 on a pro forma basis, excluding cranes.

Fleet utilizations and aging equipment resulted in strong bookings in aggregates, handling, and environmental. We also expect margins to improve in 2026 due to higher volume, productivity, and pricing action.

Our new Specialty Vehicles segment enters 2026 with roughly two years of backlog. We expect sales growth of high single digits from a comparable pro forma prior-year total of $2.2 billion, excluding the divested Lance and Midwest RV businesses.

We also expect meaningful margin improvement in SV compared to the prior-year period. EBITDA margins of approximately 12.5% on a pro forma basis due to higher throughput, price, and ongoing operational improvements.

Finally, in Aerials, we anticipate 2026 sales and margins to be similar to 2025. We have good visibility heading into 2026, with $906 million backlog following strong Q4 bookings.

Overall, I'm very excited about our opportunity to grow and continue to improve the financial performance of our new company in 2026. Turning to slide 13.

In 2025, we maintained our commitment to invest in our businesses to fuel organic growth, with over $118 million in capital expenditures targeted at automation, innovation, throughput, and efficiency improvements, among other growth accelerants. As expected, we returned $98 million to shareholders through dividends and share buybacks last year.

We purposefully structured the merger to maintain a strong balance sheet and flexible capital structure to enable organic investments and lower net leverage. That said, we have not assumed any significant debt repayments, as it do not mature until 2029.

Please turn to slide 14, and I'll turn it back to Simon.

Thanks, Jen. 2025 was a consequential year in the long history of Terex.

We successfully completed the integration of ESG, navigated multiple macro and market headwinds, and ultimately delivered on our original 2025 guidance. We also announced, and have now completed, our merger with REV.

With this merger, we have created a leading specialty equipment manufacturer with a highly complementary and synergistic portfolio, serving a diverse set of attractive, resilient, and growing end markets. Our focus has already shifted to executing the REV integration, capturing at least $75 million of synergies, and delivering on the commitments we've made across each of our segments.

I'm excited about the road ahead, and I know our team is energized as we continue to build the new Terex together. With that, I would like to open it up for questions.

Operator?

Great. Thank you.

Good morning. First question: the MP segment, and you highlighted strength in Aggregates and Material Handling within the order comments, which if sustained would, or should be good in terms of product mix.

I'm curious on the pricing side, and kind of your visibility in terms of what you have in the backlog with respect to crushing and screening being an important piece there, some of your larger international competitors are facing some sizable tariff headwinds in North America. Maybe you can just talk about what you're seeing and the expectations just around that pricing tailwind that you highlighted in the fourth quarter, how that's kind of influencing your outlook for '26.

Hey, Tim. Good morning.

This is Jen. The pricing, as we do not disclose specifically on the segment basis, but you could see that we have a progressive step-up in our margin profile in Q4 versus Q3 for MP, and a large portion of that is driven by price going through the P&L.

We expect that with the strong backlog that we ended in December, that to flow through and a progressively step-up against throughout the year for 2026 by quarter.

Okay. Good.

Jen, apologies if I missed it, but within Aerials specifically, the kind of the interplay with tariffs and how you're expecting price/cost to play out just more broadly for Aerials in '26? I'm guessing it's more of a second-half story, but maybe you can just comment on that.

Again, apologies if I missed that. Thank you.

Right. The Aerials, in the prepared remarks we said that we're expecting kind of flat revenue and also kind of flat margin profile.

We expect that in 2026 that we have more headwinds in the Aerials given that the tariff is going to be 12 months of impact versus about approximately six months of impact in 2025. That translates rounding on a number standpoint about $16 million more, and we are offsetting that to productivity and price for a net impact of flat throughout the year.

In first half of the year, we expect that that's the price/cost neutrality to be more skewed towards the second half of the year, but at the end of the year, we're going to be flat, holding our margin with a flat top line.

A little less favorable in the first half, a little bit more favorable in the second half.

Got it. Thank you.

Thanks, Tim.

Yes. Hi.

Good morning, everyone.

Hey. Good morning.

Simon, hi. Simon, I wonder if you just talk about the REV integration.

Saw the divestiture, the business has been operating really well in terms of driving higher efficiency rates. Can you just talk about the plan for the business from here relative to what we heard from the REV team maybe six to nine months ago, and any update on order cadence and expectations for bookings as well?

It sounds like there's more opportunity from a manufacturing standpoint, but I'm wondering if you just expand on that, please.

Yeah. No, thanks for the question.

It's been nine days now since we closed, we're very excited. Obviously it's mostly a throughput story, because again going into 2026, our Specialty Vehicles segment, legacy REV if you will, still operates with about a two-year backlog.

They did report relatively strong bookings again in their last fiscal quarter. It's mostly just to make sure that we keep burning that backlog down as much as we can.

It's going to be all about throughput. Now, there's obviously price in that backlog, it's going to be a combination of price and volume that's going to drive the margin improvement in 2026.

It's mostly just making sure we keep the operational momentum. That's why we were so eager on making sure that we keep the organization intact, and that we can just purely focus on making sure we keep that momentum going into 2026.

Super. Separately, in ESG, I was pleasantly surprised with the bookings.

It sounds like within the Heil part of the portfolio, are more resilient than what I would have thought three months ago given what the waste companies have been talking about, truck plans. Can you just expand on what you're seeing?

Is that the impact of the EPA 2027 certainty, or just if you wouldn't mind just double-clicking on the really good performance within Heil?

Yeah. Obviously, I would say the Environmental Solutions segment recorded outstanding performance in 2025, and a lot of that was driven by Heil, by ESG.

Also we saw synergies kicking in with Utilities. We saw the Utilities business stepping up as well.

ESG was leading the charge, if you will, in terms of top line. Now in 2026, we see that kind of flipping, Utilities is now accelerating a little bit more than ESG.

We're expecting ESG to be kind of flattish from a top-line perspective, and most of the growth coming from Utilities. We feel that that segment has a lot of momentum.

We don't see that slowing down anytime soon, we're very pleased with how ES is performing.

Thank you.

Good morning, and thanks for taking my question. Just wanted to unpack a little bit more on the Aerials side, too.

You had a very strong quarter for bookings there, and you talked about replacement demand from rental customers. Can you just talk a little bit more what you're hearing from the customer base broadly in this space?

I think one of your competitors talked about a little bit of pull-forward potentially into the fourth quarter. Did you see any of that, or how are you seeing in particular maybe orders in January and February, kind of following that stronger fourth quarter and continuing that?

Yeah. If you look at last year, we had strong book-to-bill in both Q4 and Q1.

I think average both quarters was about 150%. This year, Q4 coming in over 200%.

We expect Q1 to be somewhat north of 100%, but it's probably fair to assume that both quarter will average again at about 150% book-to-bill. That kind of sets our guidance being flat, because we expect Q1 to be a little softer than Q1 of last year, still north of 100%.

Overall, yeah, going into the year with five to six months of coverage is obviously a good forward visibility. The reality is most of the demand is still just coming from megaprojects, coming from the nationals.

Europe is ticking up a little bit, not that material, but we haven't baked any major recovery with the independents into our guide for 2026. We expect that to happen more in 2027.

That's very helpful. Thank you.

Then, could we just unpack a little bit more just on the commentaries around ES? I think if you could talk about the backlog there as well.

It sounds like Utilities is seeing a nice uplift, just the shape of that into next year. Then if you could, I guess, Jen, if you could just unpack the margin dynamic a little bit.

It sounds like Utilities should be a positive for margins, a nice tailwind there. You expect, I think, if I heard correctly, ESG flattish, but it sounds like there's some factors maybe weighing on that margin and keeping the full segment more flattish for the full year.

If you could just unpack the puts and takes and maybe talk about on a quarterly basis, that'd be helpful.

Good morning. I'll take the margin question, and then I'll let Simon to take the backlog question.

You're right, for the margin, when we said in the prepared remarks that the margin is flattish, I'm referring to a percentage-wise, and value-wise is still increasing. The higher top-line growth coming from Utilities will drive an unfavorable mix.

However, it's been offset by the synergies flowing through in the ES reportable segment, and also driven by the productivity that they have been working through. In 2025, we communicated that the Utilities division within the ES segment has demonstrated progressive growth in the margin profile.

We expect that to continue into 2026 as the team actually relay out the Watertown factory, and also looking at standardizations.

Yeah. On the backlog: so yeah, ESG did an outstanding job in 2025, leading the industry, quite frankly, in terms of throughput and reducing lead times.

Going into 2026, we see lead times now kind of have normalized in ESG. We're back to kind of pre-COVID levels backlog coverage, three, four months forward visibility.

We didn't put any EPA pre-buys into our outlook for ESG, and that's why we're kind of holding them flat. Utilities is actually the backlog continues to increase, hence the reason we're expanding our capacity in that particular segment, which is already ramping up as we speak.

We're expecting to add about 20% to 30% capacity in Utilities just to keep up with the rising demand.

Very helpful. Thank you.

Hi. Good morning.

I guess two questions: first, Simon, on the specialty business or REV Group, it sounds like the backdrop for 2026 is good, with the extended visibility, backlog two years out. I'm just wondering if there's, obviously it's a new acquisition, to what degree is there conservatism in your forecast for specialty?

If there was, what would that come from? Is it just burning through more backlog, just sort of your assumptions around there where there would be upside.

Then my second question, just on Aerials: understanding you can't say that much, but it seems like the backdrop for selling that business is probably better versus when you initially announced it with a view that aerial markets have clearly bottomed, potentially positive upside surprise. Anything you can tell us, is that asset more interesting to people just because it sounds like we should be getting some cyclical tailwinds?

Thank you.

Yeah. Thanks for the question.

On Specialty Vehicles, yeah, there's obviously a lot going on. The team is working flat out to make sure that we can actually start bringing the backlog down a little bit.

Where we see any upside, the team actually performed really strongly year-over-year 2025 to 2024. We just want to make sure that we maintain that operational momentum.

I don't know if there's any particular upside I can call out. I'm very comfortable with the guide that we have laid out, and it comes down to execution.

On Aerials, yeah, we've said this in October: we believe it's a well-known asset. We believe it's well-documented how that business performs through the cycle.

It's a very strong brand, celebrating 60-year anniversary this year at ARA, which we're looking forward to. I can obviously not disclose too much, because it's an active process.

We were very pleased with the inbound interest that we received, and we're going to be very deliberate in evaluating the interest, and decide on the best approach for our shareholders going forward.

Jamie, if I could just add: in our new reportable segment of SV, the incremental margin on the higher volume is going to be in the range of 30% as a gauge, with the highest in Q2 and Q3, and tapering down into Q4 due to seasonally lower revenue due to the weather. I think while we have baked in very strong margin profile that's supporting our $100 million of EBITDA margin expansion in the midpoint of our range.

Thank you very much.

Thanks, Jamie.

Hi. Thank you.

First, on the dilution, a little bit less than I think the Street was thinking. I'm trying to notice the share count seemed to be a little bit lower when you said 111 for the year.

Maybe I missed it, is there some share repo in that number, just trying to get the math from now just doing the basic conversion of the roughly 49.3 million shares that REV Group had? Even the interest expense, a little bit lower than I would have thought.

I'm just trying to understand exactly the dilution being only about 25 cents.

Hey, David. Good morning.

The I think the two-part to your question: the first one, in terms of the 111 million of share count, that's because we only acquired that's a weighted average number, and because we only issued them in February. That equates to 111 million, but full year is at 115 million.

I think that's maybe where you're looking at. Second question in terms of the dilution: yes, in fact, during the merger, I would say we have alluded to the fact that it's going to be a mid single digit of EPS dilution given that the share count, the higher share count cannot be fully offset by the 11 months of REV earnings.

That translates to be to be about 3% just for share count alone, and then 2% based on a higher tax rate. That's where we are.

Oh, that's helpful. I read the slide on 12 as the share count 111 was for the full year, not just for the quarter.

That's

That's weighted average for the full year. Correct.

The 111 or the 115, just to be clear?

The 115, I'm sorry, 111 is the weighted average for the full year.

Okay. The proceeds from an Aerial sale, just curious now that you're a little bit further in the process, you own REV Group, the merger is done, you've obviously been able to move forward with some of the divestiture of a piece of the RV business, given where the state of the portfolio is, we can debate the right multiple you could get maybe for Aerials, but when you think of the proceeds for that sale, whatever it may be, can you give us a little more clarity how you're thinking about that now?

Yeah. Right now on day one, on day nine of our close, the immediate priority is to strengthen the balance sheet to preserve the flexibility given that we funded this merger through both shares and cash.

It's right now still too early to tell, depending when we actually find a strategic option for Aerials and where we're trading in terms of the share price. We will have several options, including a return value to the shareholders through the share buyback.

We could do an early debt paydown to strengthen our balance sheet, reduce interest, and further improve our leverage. Or we reinvest in our business, especially in Utilities and Specialty Vehicles that's growing, supported by the secular tailwinds.

At this point, I think it's still too early to tell.

Yeah. We really like the optionality that is ahead of us here, but our immediate focus, as you will appreciate, is on integrating REV, focusing on execution, focusing on delivering on our earnings and the cash conversion.

Then we really like the optionality that's at the end of the road here.

I appreciate it. Thank you.

Thanks, David.

Thank you.

Yes. Thank you for taking the question.

Good morning. Sticking with Specialty Vehicles here, I guess a couple questions.

First, how are you thinking about the recreation component of this business longer term? You're obviously in portfolio adjustment mode, which is why I'm asking.

When we're kind of thinking about the moving pieces to margin here, if I heard you correctly, embedded in your guidance about 12 12.5% operating margin. How do you view the longer-term potential here if we're thinking two to three years out?

Yeah. Thanks, Mig.

I'll take the first one, and Jen, maybe you can weigh in on the second question. On the RV business, yeah, first of all, the announcement that was sent out yesterday on Midwest, that process was already ongoing before we closed the merger.

Don't read too much into that that we are in portfolio adjustment mode. I would actually say we are in integration mode.

We are much more focused on what's right in front of us, and that is making sure that we integrate the two companies, that we build our synergy pipeline, that we focus on execution of the four segments that we now own. That's really our most immediate focus.

Now going into 2027 or beyond, I can't say we won't be continue to make some adjustments to our portfolio, but what's right in front of us is integrating REV and executing. You want to take the margin question?

Mig, I think your question on the EBITDA for 12.5%, you're referencing to the new reportable SV segment, and that is without Midwest and Lance, and that was last year on a pro forma basis, 11 months. As you're very familiar with REV, they have publicly disclosed a 2027 target at enterprise level ranging for that 280 basis point margin improvement from 2025 to 2027.

At this point, we see that they are at the top end of the range, and heading towards that direction. I think for modeling purpose, you could do model that out over the next two years.

They are in line with what they have communicated in their last December 2024 investor day, but at the top end of the range.

That's helpful. Thank you.

Lastly, you gave us some context on tariffs, which is good. I'm wondering more broadly from a price/cost standpoint how are you thinking about 2026, and what's embedded in here?

Steel has gone up quite a bit of late, and maybe you can comment on any hedges or the cadence of price/cost as the year progresses.

Right. In terms of steel, we do not import raw steel, and 70% of what we use is in HRC.

You're right, Mig, that the steel price has increased as expected as vendors try to source from the US. We will continue to monitor that closely and execute our hedging contracts.

Right now, we have our Q1 and Q2 of our HRC steel consumption hedged at a favorable rate of 10% to 15% lower than the forward price. Any of the imported steel on fabricated parts is already part of our $130 million of tariffs that was baked into our guide of this $4.50 to $5, and that includes REV.

Thank you.

You're welcome.

Hey. Good morning.

Thanks for taking the question. In terms the capacity increases within Environmental Solutions, how much are you expanding capacity?

When are you expecting those to come online? How has that split between the two businesses in the segment?

Just any kind of color you can give there?

Yeah. We're expanding capacity in our Utilities business, not in ESG per se.

We're ramping up our facility in Watertown, Wisconsin. We're adding about 20% to 30% capacity over the next two years, and maybe slightly less than half of that will come online in 2026.

Sorry, I forgot, what's the second part of your question?

It was really how is it split and what is the overall capacity increase that you're thinking of?

Utilities is the smaller segment within Environmental Solutions. We're adding about 20% to 30% over the next two years in Utilities.

The reason we feel that that's a justified investment is because I mentioned in my prepared remarks that we expect CapEx to grow 8% to 15% for the next five years in Utilities, just by the nature of upgrading the grid. Obviously, we sell and make products that will help upgrade the grid.

We expect that that market will be quite bullish for us for the next three to five years. That

makes sense. Then I guess on the second, I think you had said last year that you were looking at about $25 million of synergies from Environmental Solutions by the end of 2026.

Just kind of curious where you are on that progress and if that $25 million plus number is still how you're thinking about it for the exit rate for this year?

Yes. Hi.

Good morning. Yes, we actually exited our first year of integration above that $25 million of run-rate synergies.

That's the reason why that even with the higher Utilities growth in 2026 that cause an unfavorable mix in terms of the margin, we're still able to hold the margin percentage due to the synergies dropping through into 2026 within the Environmental Solutions segment.

All right. Got it.

Great. Thank you.

You're welcome.

Thanks.

Great. Thanks for taking the question, and congrats on closing the REVG deal.

I did want to just double-click on the ESG guidance a little bit. Talking about flat guide, and was thinking maybe that would imply that the OE sales portion of that could be down a little bit this year.

I'm curious just what should give investors confidence that this might just be a blip here in 2026 versus maybe the first year of a softening of this refuse recycling cycle?

Just so we're aligned here: we're guiding mid single-digit growth for the Environmental Solutions as a whole, and then ESG within that Environmental Solutions, we're guiding flat for 2026, excluding potential pre-buys in the second half 2026 that would be upside to the guide. We see that end market as fairly noncyclical.

We actually see continued growth going into 2030. The only reason we see ESG within Environmental Solutions kind of slowing down the growth rate a little bit is just because we're caught up on lead times.

We're now back to largely being a book-to-bill business, which is where we were before COVID. We don't take that as a leading indicator that the business might be peaking.

It's quite the contrary. We think that business has a lot of upside, and for more reasons than just GDP growth.

There's also fleet modernization going on, there is all sorts of new technology going into that space. We see multiple angles for growth in that segment.

Great. Then just a couple questions on Aerials.

Sounds like you're planning some pricing for '26. Just would be good to hear how those negotiations have gone on as you're entering '26 with the customers.

Then just a quick one, just anything to call out in your mix in '26 versus '25 as far as nationals versus independents? Thank you.

Yeah. For 2026, we continue to see most demand coming from replacement in North America and in Europe, and mostly from the megaprojects.

We did not bake in any kind of meaningful recovery in local private construction spend in 2026. We see that more happening in 2027.

Fleet utilization is up year-over-year. Our national customers are quite bullish for the next couple years because of the megaprojects alone, but the real uplift for this segment will come when local and private construction comes back up.

We see that happening in 2027 and not in 2026. That's why the guide is kind of a little bit of moving sideways here because of the private construction spend not picking up until 2027.

Thank you.

Thank you.

Thanks. Good morning.

Morning.

Simon, on slide four, in the emergency vehicle section, there's a note that says there's a mandated replacement cycle. What category of vehicles is that, and what percentage of the fleet turns over annually because of mandates?

That's a good catch. I think that is, with every 10 years, I think you're talking refuse?

It says emergency vehicles.

Emergency vehicles. Let me just look that up.

On slide four, in the footnotes?

Let me get back there. It's, yeah, emergency vehicles.

The leftmost box, the second bullet, "Large installed base with consistent mandated replacement cycle."

Oh. I'm sorry.

I got you now. I thought I was looking in the footnotes.

You're talking on the slide. Got it.

Obviously fleet needs to stay fresh, and there is a mandated replacement cycle. There's not a real number tied to it per se, but yeah, within emergency vehicles, municipalities want to keep their fleet with the maximum uptime possible, and that's why they have specific kind of goals and targets around their replacement cycle.

That's what that means.

Okay. I know it's really early in owning REV, but you are maintaining leadership there.

My question is: just given the size of the backlog and where lead times in the industry are, do you see a path to accelerating production, which can result in a higher growth rate, maybe not this year, but as you look into '27 and '28?

Yeah. The industry is obviously investing in adding capacity and optimizing throughput as it should, because the backlogs need to come down.

They're at two years plus, and bookings continue to be strong. Just to make sure that we, as an industry, that we keep working on bringing our backlogs down, we're investing in capacity, and so are we.

Our main location in Florida, and our location in South Dakota, we're investing in capacity expansions and capacity upgrades. We think that the kind of the sustainable target for backlog coverage is about a year.

It might take another two years or so before we get to that kind of backlog level. Bringing down the backlog is what the focus is right now.

That will lead to a higher growth

rate. Right.

Is it possible that business could grow in double digits, assuming orders hold up and the backlog coverage is there while you try and bring those lead times down? Again, not this year necessarily, but at some point?

Yeah. For now, we are already ahead of Specialty Vehicles, the segment is already ahead of their investor day kind of commitments.

Kind of we don't want to count ourselves too rich here. We're guiding high single digits, and we think that that's probably a more realistic outlook, and that's what we're guiding today.

Understood. Thanks.

Yeah. Thank you.

Thank you, Operator. If you have any additional questions, please follow up with Jen or Derek.

With that, thank you for your interest in Terex. Operator, please disconnect the call.