Simon Meester: Yes. No — it’s a tight correlation between what our customers are telling us and what we’re seeing from the data. And that when I mentioned leading indicators in one of my opening remarks, this is one of the leading indicators that obviously, we look at telematics, because we see what the utilization of the fleet is. And all of our customers are reporting high utilization and that’s what telematics is kind of confirming. I’m talking North America in Europe, we see some lower utilization, again, confirmed by what our customers are telling us. So the telematics data correlates with the high use that we’re seeing in North America.
Jerry Revich: Thank you.
Operator: Our next question comes from Steve Barger from KeyBanc Capital Markets. Please go ahead. Your line is open.
Steve Barger: Thanks. I just want to look forward a little bit to accelerating profitable growth on Slide 9. When the team modeled out opportunities in mega trends, emerging technologies and outgrowth initiatives, what’s the range of organic growth you envision in the next three years to five years?
Simon Meester: Yes. So for now, we’re still sticking to our Investors Day targets, Steve. So we have a commitment of $6 billion. We’re ahead of that trajectory. We’re comfortably ahead on both the top and the bottom on $6 billion and 13% to 14% operating margin is the commitment we made. We made that commitment 5 quarters ago. It’s a five year commitment. We’re 5 quarters in. We don’t think that we should start talking about raising that kind of commitment because we would like to have a few more quarters under our belts before we reassess where we want to be in 2027 and beyond.
Steve Barger: Yes. That was really the motivation for the question. You only need a 3.5% CAGR. If you hit the high end of your guidance range this year to get to $6 billion. So I guess if you have to frame it up from a growth perspective, is that what you expect? Or is $6 billion too low? Or when do you think you might update that?
Simon Meester: Well, everything else equal. I mean, obviously you could argue that we are probably in a comfortable place to beat that expectation. But there are more variables at play in. As I said, we would like to get a few more quarters under our belt before we start looking at changing our longer-term outlook.
Steve Barger: And then with Terex being a product company, as you noted, when you think of mega projects like semi-fabs, EV plants, renewables, is there room to differentiate with a new purpose-built machine for specific markets or is it really more about modifying existing machines? And then just — I don’t want to downplay it — but quality and delivery to take share?
Simon Meester: No, yes, to both. So we’re applying testing products. For example, our Green Tech offering, we’re basically applying existing products to a new segment with the visitation management business. And so we are leveraging our portfolio — existing portfolio in new markets. And the other way around, we are also developing based on certain platforms that we already have. We’re providing — we’re expanding our recycling portfolio and embedding new technologies in our crushers and shutters and repurpose them to broaden our reach in the recycling space. So we’re applying technology, and we’re leveraging the existing portfolio. That’s kind of what I believe is the strength of the MP vertical is that we have so much white space just to leverage the existing portfolio.
And I think the MP business has demonstrated just that in the last seven years, eight years, they’ve booked on a double-digit growth margins consistently every year for the last eight years, nine years. And one of the things that they did was just finding new use cases for their portfolio.
Steve Barger: Thanks.
Simon Meester: Thanks Steve.
Operator: Our last question today will come from Angel Castillo from Morgan Stanley. Please go ahead.
Angel Castillo: Thanks for taking my questions. So just going back to the first quarter performance, and you noted kind of stronger throughput, a number of kind of points here. I just wanted to do back a little bit. Could you just give us an update on just kind of hospital inventories and where that’s kind of at? It seems like some of this might have improved just throughout the quarter. If you could give us a little bit more color along with that on the supply chain? And then just last point on this, as you gave better throughput and stronger deliveries in the first quarter, generally it sounds like what we’re hearing from some of the public rental companies is that they’re really taking deliveries on a more kind of normal cadence. So was this more driven by independents in the first quarter? Or what are you seeing from a customer mix perspective? And in terms of taking deliveries of kind of the stronger [company] (ph)?
Julie Beck: Okay. So it’s left there. So let me help — if you think about our customer mix, our customer mix, in general things relatively consistent over time. There may be puts and takes in any one given quarter. But I wouldn’t say that customer mix had anything to do with who took delivery in the first quarter, if you will, or deliveries. I would say that we are returning to those — the more seasonal patterns with the large national accounts — one things in Q2 and Q3 that we’re moving back to that where in the past when we were so constrained, they were taking the equipment when we could make it. So we’re returning to those more normal delivery patterns that supply chain improves. And then when you asked about margins in the first quarter, what allowed us — yes, with supply chain improves, we were able to get labor in our Washington state locations, as well as our Monterrey facility which certainly that more manufacturing throughput, of course, helped margins in the quarter as well.
So that was all very helpful. We still have a hospital inventory. We’re still dealing with issues that were part issues, but they vary. And of course supply chain has much improved over a year ago.
Angel Castillo: That’s very helpful. Thank you. And then I wanted to go back to one of the earlier questions around the 2027 targets. Maybe I was just kind of doing the math a little different, but I was just looking at the CAGR imply between 2023 [and rate] (ph) in 2027, it seems to be closer to kind of 4% top-line CAGR. And I think the guide for this year at the midpoint puts it at 2024 CAGR or 2024 growth of kind of 3%. So as we think about kind of getting to that 4% CAGR for 2027 delivering on the targets, you mentioned you feel you’re comfortably ahead of the range. So given 2024 seems to be a little bit below that despite pretty strong backlogs and pretty kind of good visibility, should we anticipate that ’25, ’26 and ’27 accelerate for some, I guess, underlying factors organically? Or is that 1% kind of difference generally what you think about kind of the M&A that you’re trying to kind of work back towards to get to kind of a 2027?
Julie Beck: So Angel, we had a significant growth in 2024. 16%, 17%, we had really strong growth in sales 2023 and so that puts us ahead of the target. But when we think about the — going out to 2027. It’s still early to upgrade — update those targets. It is — and so we remain ahead of those, and that is just where we are right now.
Angel Castillo: Appreciate. Thank you.
Operator: We are out of time for questions today. I would like to turn the call back over to Simon Meester for closing remarks.
Simon Meester: Thank you, operator. If you have any additional questions, please follow up with Julie or Neil. And with that, thank you very much for your interest in Terex. Operator, please disconnect the call.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
