Terex Corporation (TEX) Earnings Call Transcript & Summary

Okay. Thanks, everyone, for coming. Next up, we have the team from Terex, who has been great supporters and loyal supporters of this conference. We appreciate that. From the team, we have John Garrison, who's the Chairman and CEO, here to my right; Julie Beck, newly appointed CFO, who came from Nova, I believe, right? I spent some time at Joy Global. So maybe we'll sneak in a mining question here. And then Randy Wilson, who wears many hats, including IR, is in the audience. So I think we'll just jump right into Q&A. And if anyone has any questions, you can -- there's instructions you just type it in, and then I'll see them and I'll get those answered.

But John, maybe would this kind of open it up a little bit more high level. Going back to the fourth quarter call, you identified 3 growth priorities that you've identified here for '22 parts and service, market expansion, M&A before delving too far into the segments, maybe just if you wanted to touch on each of those in terms of the priorities as you're thinking about here for '22?

Thanks, and thank you for your interest in Terex. And my lawyers wouldn't be happy if I didn't say with forward-looking statements, so please review our forward-looking statements that are online. So Tim, on the Parts & Service side, that's been an initiative that we're investing in over the last couple of years. And really, it was an area that, frankly, didn't have the focus that frankly deserved. And so we've been investing in people, process and tools to expand our Parts & Services business across all of our businesses, our MP businesses as well as our AWP businesses, up to an including service center, opening 2 new service centers last year in our utilities business. And it's just an opportunity for us to apply some technology, so we invested in technology. I talked about what we call CDI, Customer Dealer Integration, in our MP business, where we actually tie into our distribution network that then ties into the end customer. Think about the fact that now there's 8,000 machines aligned with telematics. So we have real-time information about the machine, machine usage. It allows us to be close to that customer. We can foreshadow maintenance and maintenance requirement needs, scheduled maintenance activities. And so those are the types of things that we're doing, improving our digital experience for our customers' online experience for our customers is -- we're a little bit slow adapters in the industrial space, but it is moving towards an online experience. So we've made investments in that. And then some product development. So we have an uptime brand in our Genie business, which is not Genie specific, but enables us to potentially go after non-Genie-related equipment in the channel. So those are some things that we've done from a people process and tool standpoint, to grow the parts business. And the parts business for all industrial companies is incredibly important because, number one, that's your daily interface with your customers. They buy a piece of equipment and then it last for years. They interface with your dealer organization or with us directly through our Parts & Service operations. So we think that's really important. And then it does drive profitable growth. And it's also a lot more stable than some of the cyclical parts of the OEM side of the business. So that's why it's ahead of our attention as an organization for the last couple of years, and the team has really done a good job in a challenging environment to drive both top and bottom line growth in our Parts business.

Is it safe to assume that the opportunity is greater on the MP than it is AWP where you just don't have as much little to no ground engaging?

That's correct, Tim. If you look at the duty cycle of the aerial equipment as compared to the duty cycle of a crusher or screen, yes. The parts revenue generation capability as a percent of sales, we don't publish it. We think there's competitive reasons for that. But it is higher in the MP business than it is in the AWP business. Now with that said, there's still opportunity to drive improvement in growth in our AWP business. But you're right, it's not ground engaging and so the intensity of the parts usage is not the same except for telehandlers. Telehandlers do consume a lot of parts because they've got a pretty tough duty cycle in North America.

Is the lift that's sitting in the corner of the building side, consuming much...

Yes, yes.

And maybe touch on M&A, and I'm curious, does the likelihood and the prospect of potentially significantly higher rates? Does that -- impact your return thresholds at all? Or maybe just talk to that?

Yes. So we did get back from an even higher level go to capital allocation. For the last couple of years, our capital allocation really wasn't around in the businesses that we had sold. We redeployed that capital to repurchase shares. Over the last 6 years, we've reduced the number of share count outstanding by approximately 35%. So we devoted a lot of capital to that. We devoted capital to organic growth with a pretty large CapEx budget. We can talk about projects like that, like our Mexico project. We built a new factory in Watertown, South Dakota. So we've been investing for organic growth. And then in the past year, we actually paid down over $500 million of debt. And so our net debt-to-EBITDA ratio is 1. We still hold 2.5x through cycle. And so we've generated good cash. Our balance sheet is in good shape. And so now we do have the opportunity to grow via M&A. We did 2 small transactions, smaller transactions in 2021. We closed 1 here in 2022. And both of those transactions in 2021 were in and around our MP business. And we like the MP business. We like all of our businesses. I tell I have to love all my children, right? But the MP business is really important to us. It's 60% of the corporation's operating earnings, and we like the margin profile. And so we did 2 small acquisitions, 1 MDS International. It's a classic example of what we think we can do to grow inorganically in the MP space because the verticals that we compete, the aggregates, the concrete, the lifting, material handling, recycling, there's still a pretty high degree of fragmentation in many of those segments. And this was a business where it was not a product that we currently offer as a large-scale scalpers and screens, and we're able to take that product through our global distribution network and pretty substantially grow sales almost immediately. We have to expand the production capability of that. And we can also use not just our distribution organization but we can use that company's distribution organization for our portfolio of products. So we get some immediate revenue synergies. And then operationally, we have an operating system that the teams developed that we can go into a business and say, this is what it means to be part of Terex, this is what it needs to be part of the Material Processing segment. Here is our operating system and implement that operating system to drive underlying improvement in the business. And it's early on, but we're doing better than we had forecasted in terms of the growth now. It's small. We want to work on some larger transactions that would move the needle. But it's a classic example of what the art of the possible is. And in this particular case, it's only 1.5 hours. It's in Republic of biomes. It's so only 1.5 hours from our -- some of our Northern Ireland facilities. We're able to use some of the operational talent to drive pretty sustained improvement pretty quickly in the company that we acquired. So that's an example of the M&A that we think we can do going forward. Again, I'd like to do larger, we'd like to do larger, we have the capacity. We made an acquisition in China of a manufacturing plant. We basically took the plant and the people. They had previous experience with crushing equipment, and we're going to develop for the China market, a huge market for CD&E construction, demolition waste and put a couple of power screen models through that factory locally built, locally sourced to take advantage of the growth potential there. So that was an example of where we brought some capacity that we needed to accelerate the growth potential in China. And then just here recently, we invested in Series B, a much smaller transaction, but we invested in a company called Viatec, and it really goes with the Terex Utilities business and what it is, is a SmartPTO. So think about our trucks now, they have to idle to operate the equipment, the booms, the lifts and all that. What this is, is basically an electrical system, so you don't have to idle the truck. So reduce maintenance wear and tear and you reduce admissions and it's driven electrically. And that SmartPTO solution, it's Duke Energy also was in as a Series B investor and that's attracting attention, especially in the electrical industry because our electrical customers want electrification. And anything that reduces admissions is a positive thing. It helps them achieve their sustainability goals at a very small scale given their scope. So there are some examples of some M&A that we've started back into the M&A space. We do believe we have the balance sheet capacity. We have -- we'll be disciplined about it. You're right, multiples, in some cases, are elevated now. Valuation expectations are high. And we will be disciplined because as an industrial company, if you overpay to start with, you've got to have a very high degree of conviction that you're going to get the synergies you need to get the return on capital that our shareholders demand and expect. So more to come on that, but it's a good period for us because we've got good organic growth potential, and we think we can augment it via M&A activity, which we had not been doing in the last couple of years.

Interesting. Maybe we'll start on the MP segment. I think it's -- there's a lot in there. I think we had -- Volcan was up here earlier, and I think there's a perception that that's just crushing and screening, but I know there's a lot in there. Maybe just -- you've got...

[indiscernible] we built a new business called our conveying systems that's in there. And we've seen substantial growth. And the thing that's important, Tim, is that other areas of the world have been investing in infrastructure. It's been in the U.S., we can talk about. The U.S. is the part of the world that's been a deficit in infrastructure, and that's going to change as the Infrastructure Bill comes online. So we've seen substantial growth in our Aggregates business across the world, our Lifting business. So what we have in Lifting is our Franna business down in Australia, fabulous business. I always wish it was bigger because it's a great business and our towers and our key cranes. We actually have seen a rebound now in towers and RTs that was hurt pretty badly by the pandemic, and we've seen an increase. But our Franna business down in Australia basically went powered right through the pandemic because of the strength of the mining sector. It's a tool that's used in a multitude of applications. But the mining sector is one, we saw great growth with that business there. And so we've been pleased with that. And then our next business is -- and that's about, call it, 15% to 18% of the segment. The next area is our Material Handling business, and that's a brand called Fuchs. It's been around for over 100 years. And it's principally in the scrap waste handling marketplace today, and its backlogs up fourfold. Now part of that has heard me say on calls, if there's one positive about high steel prices is that, it's a high scrap prices. And so that's been a driver, but we've also diversified into other applications. We've had some success. What I like about our MP business, they take our Fuchs material handler paint it white, call it Ecotec, marry that with our recycling piece of equipment, Ecotec line it would develop. It's about 8% of our sales, didn't exist 3 to 4 years ago. Put that together as a solution and go to the customer. So we expand the opportunity for the material handler by tying it with the solution that we have on the recycling side. So that's an example of how this business thinks about how do I meet the needs from a solution standpoint for the customer, and that's been successful. Next up is our Concrete business, that of all the businesses in the MP segment, most -- all the other rest of them are global businesses. With the exception of Concrete, our Concrete business really is our front discharge mixer business and a business that we have bridge paver called Bid-Well. It is a North American-based business, but we've seen a dramatic increase in recovery in that business over the last couple of years, and it's driven by residential construction, which is still strong, as well as infrastructure investments. And so that business is also had an exceptional increase in its backlog, obviously been impacted by the supply chain disruptions that we're dealing with. But again, substantial growth in the Concrete business, and we think there's some opportunities, some specialized players in and around concrete that could provide opportunity for us going forward. And last but not least, is a business that really didn't exist that we've created over time, one small acquisition and then applied technology from our Aggregates business in the recycling space. And now that business is about 8%, doesn't enjoy the same margin as our Aggregates does because it's in the growth phase. But again, rapid growth, and we think there's real opportunity for us, again, globally for that business. And what -- what's great about the MP segment is it does have global distribution, global specialized distribution that gives us the opportunity to pretty rapidly get our products around the world, and that provides the ebbs and flows as one market is doing better than another market, it kind of balances out that segment. And that's why you've seen consistent performance in that segment throughout time. It just was buried within our portfolio, frankly. It's been a gem for a long time. It just didn't have the visibility. And now it's getting the visibility, it's 60% of our operating earnings.

The -- and with distribution typically comes a little bit more and better pricing flexibility. Maybe talk through that and there's a lot of focus on which we'll get to access in terms of the price/cost imbalance. How has that behaved -- performed just on that perspective?

Great question. So from a pricing standpoint, the other part of the MP business is about 75% of the business, Tim, goes through distribution, distribution channels. And so with the distribution channel, you have the ability to be more dynamic in your pricing. And so they have been more dynamic in the pricing as we went through 2021, they'll continue to be. They were pretty close to price cost neutral in 2021, and we anticipate they will be price cost neutral in 2022. So that distribution channel, the type of equipment, the specialized equipment we have, it's never easy to get price increases, but the industry structure does lend itself to more dynamic pricing, and they were able to do that. And it showed up in their operating margin performance in a challenging year in 2021.

Just speaking -- staying with that on margins, I mean, at the high end of the guidance for this year, I think 14.5%.

Right.

It's a little tricky here because you have some big European competitors, but they compete only a portion of where you compete. So what is the -- with the assumption that if revenues can go higher from here, is that just normal incremental volume leverage can potentially take the margins higher? Or is there -- because I know you've done a lot of work on the cost side over time. So we're just -- I wouldn't think you're going to say this is a limit, but just to take margins higher...

My team would like me to say it's a limit...

[indiscernible]...

No, it's not a limit. We do think there's opportunity to continue to grow margin expansion. We still have the framework when we talk about that for Terex, about 25% incremental margins on an incremental dollar of revenue. I will be honest. I've been a little less dogmatic with the MP team. And the reason, Tim, is that we're investing in certain parts of those businesses. And so we're allowing them to invest at a little bit higher rate because the growth and they've demonstrated that we can get the growth and have demonstrated we can get consistent margins. So the absolute level of margins is at a reasonable level. Obviously, we have to drive continuous improvement to continue to improve them. But we're going to give them the resources they need on the technology side and the product development side, on the SG&A side to drive the growth that we need. And so that will ameliorate to some extent, some of the expansion of the margin because we are investing for the growth, and they have clearly demonstrated, it's been a great investment. Could we get 50 or 100 basis point mark if we squeeze the investment side? Yes, but that's a short-term focus. We think this is long-term growth potential. So 25% overall for Terex, I'll say I don't -- I'm not quite as dogmatic with my MP team, but we need to continue to drive margin expansion. But that's what's going on there.

Got it. Going back to your point about the Parts & Services and the predictability and just in terms of maintenance and the like, it all makes sense, but who is that -- who's capturing that Parts & Service dollars today that you're going after?

There's a lot of well fitters, gray market well fitters in the space. And so the way in which you combat that is to have better service capabilities, better reliability, parts on the shelf because pricing is important in parts, but availability is usually more important. So if we can establish that closer tie with the distribution channel that closer to tie with the end-use customer, it gives us an opportunity to get a broader basket of the parts that they use in that type of equipment. So that's what that focus is on. And it's good from a customer service standpoint, and it's really good from a margin standpoint. So I would say it's taking what we deem to be our machines why we shouldn't be getting a higher percentage of the parts that the machines consume. So really coming from the gray market and the...

And digital investment to support that as well.

Yes. Okay.

And a lot of interface with the customers.

Yes. I think Metso or whatever they're called now. I think they've flagged that as well in terms of the growth in their service business.

Yes.

Yes.

Okay. Maybe we'll switch to AWP unless there's anything else you wanted to flag on just from a high level?

No, I just think we, as a management team, need to do a better job explaining our MP business and really get away from kind of the old Terex. That's looking at 3-year, 5-year, 10-year multiples in EBITDA in the business, it's fundamentally different portfolio today. And with 60% of your business is in this NPE-related space, generating the type of operating returns and cash flow as it is, we need to do a better job of explaining that to investors. So that's why we're spending a lot of time on that.

Yes. Got you. All right. Well, but AWP...

I love all my children now. So I don't want you saying, I didn't love all my kids.

Divesting that, right? So you had one of your major peers up here, so I'll ask a question or 2 that I ask them. But if you think about the -- a lot of industrial markets from a unit perspective, their cycle over cycle, as they mature, they've actually been lower from a unit perspective. AWP is a little bit -- it's less of a developed product. And as you look back on the last several cycles, each one has been higher than the last again, which stands out a bit. Do you think we -- have we reached closer to a saturation point that limits that? Or do you think there's enough product substitution and other cases where you're displacing lower capacity cranes or what have you, whereby we can still -- again, not in a dollar, but on a unit perspective basis?

On a unit basis. So on the aerial space, specifically around Genie and then we'll talk the utilities, but just talk Genie for right now. First strong dynamic is that is the replacement cycle that you mentioned. Equipment lasts 7 for 8 years, and it gets replaced at that time period. And the reason being is that the sweet spot for operating costs beginning to increase, residual value declines. And so the rental companies know that's a good time to replace the equipment. We're entering a period where a bit of constraint, the pandemic delayed it and then a bit of industry constraint from a supply standpoint. So we're going to have a multiyear run of replacement. Just what was bought 7 to 8 years earlier, needs to be replaced. So that's going to be strength and a good tailwind going forward. And then on top of that, you look at the growth aspect. So that's what you're asking is, is there a greater penetration that can be done with booms and scissors and telehandlers. And I think the short answer is yes. And part of that is because if you look at the success that the rental companies are having, they're going deeper into many more different verticals with the rental equipment, maintenance side and so on and so forth. And they're penetrating that. That creates growth demand for them [indiscernible]. Closer as we go forward, Tim, sure, especially in North America and Europe, but there's still -- we're still seeing incremental utilization of the equipment. We're modifying things differently. Scissors that can go between a door. We didn't have that before. Scissors that can easily go on an elevator. So we're modifying our product development to create that incremental demand based on customer feedback. So that will continue. And then you have the rest of the world that's still in the developing phase. So China, Asia, South America has been dead for years, frankly. We're starting to see that come back. And so the outside of North America and Europe, you really still have the adoption of that technology -- work-at-height-safe technology that helps to drive growth as well. So again, we feel like we're in a good space for growth on the Genie business, both for replacement demand as well as some growth element to that going forward.

Got it. Got it. I know this is a tricky one. But to size the potential of the Terex from an infrastructure program here in North America, obviously, MP will feel some of that. Have you tried to size the opportunity in terms of [indiscernible] gets more revenue dollars today from a dollar of infrastructure spending than it would have 10 or 15 to go. So is there a way to think about x billion dollars and how that flows into opportunities for Terex?

We're trying to model that. We don't have a great model. Our replacement model is better than the growth model because that's just based on some good analytical facts. So -- but the reality of it is it will create that demand. We have a hard time saying $1 infrastructure convert sort of main. So I can't give you a precise amount. But what I can say is that if you look in the U.S., we're not going to see that because we're operating under a continuing resolution right now. So it's going to be -- this is going to be a tailwind for us, but it really is not going to start until 2023 -- in the back half of 2023 when this begins. And when you look at the amount of money that needs to be spent and there's going to be more needs as we go forward, coupled with the state investments, that we think there's, again, another good tailwind for multiyear as a result of the Infrastructure Bill for Genie, for Utilities, and we can talk about that on the electrification side as well as the MP business -- across the portfolio of MP businesses. So the Infrastructure Bill is finally a good thing. I worked on AEM, I shared the Policy Committee. It was wonderful to actually finally see a bipartisan Infrastructure Bill passed. It's desperately needed in the country. And we see with the success of Genie, we see with the success internationally of MP, what infrastructure investments does for our business. We reap the benefits of it. So it's long overdue in our country.

Interesting. Maybe we'll switch to a just a bit of a kind of a customer mix question, but it relates to a comment you made about pricing discipline across your different major geographies. But I guess the question is, in a capacity-constrained environment, you, of course, want to and have to take care of your being national rental company customers. But is there an opportunity to kind of margin up in an environment where there is more demand presumably exceed supply?

So -- it's a great question. So demand is strong. So that's always helpful in a pricing environment. Unfortunately, we, like everyone else in the world is seeing significant inflation. So we're being very transparent with our customers and the inflation levels we're seeing and basically saying, we're seeking to be price cost neutral for material and freight increases that we're seeing. And frankly, we haven't been in our AWP segment. We weren't in 2021. And because we're delivering orders that we took in 2021 that we committed to deliver in 2021, but we couldn't because of the supply chain disruptions. We've got the first quarter and into the second quarter of this year with 2021 pricing, which is not good. So that's challenging us. The back half of the year, when our 2022 pricing is in full effect for everything that we're delivering, we'll see that price realization increase. So in this environment, we have had to get significantly more price than we have historically in this business. There's no doubt in the business of the rental channel. It's not any different than any other business. Volume purchasers have an advantage over less volume purchasers. And so there is a differential between that. And that has held as we've seen the prices increase that we need to charge our customers. That differential really hasn't changed.

Okay. Got it. Okay. And just thinking about the competitive dynamics in the -- and this is probably more of a developed market or is it more of a developed market comment. But the -- as you think on the customer side, you have seen -- and while it's still fragmented, the rental customer base is still fragmented, there definitely has been -- I mean, that you are seeing that...

Consolidation.

Consolidation, sorry. And again, I think it's happened in Europe and not nearly to the degree in North America. And then on the supply -- on the competitor side, again, in North America, I mean, it's hard to ignore. I mean, JCB has made some significant inroads here in last...

Especially in telehandlers, yes. Especially in tele.

Yes. So and I noticed, you and your competitor -- when your big competitors actually added a risk statement on that in the 10-K. But does that -- as you think about the changing market dynamics, does that limit? And in a more inflationary environment, as we talked about, does it limit your ability to expand margins, not just on an absolute level, but cycle to cycle? These dynamics weigh on your ability to expand more.

There's no doubt that the consolidation has led to customer purchasing power increases. And so that is a headwind to some extent on pricing. In this environment, we're being very transparent, and I'd say, reasonably successful in terms of getting the price increase. And so that's the kind of the negative. The positive side of that is that the business is being, I would say, the structure of the business and their underlying business is much stronger from a rate standpoint, from a utilization standpoint. So the analytical capability in business process improvement that they've bought to the rental channel has really helped the rental industry. And so yes, the pricing power does hurt volume purchasers.

It's a more stable.

But it's a much more stable market. And that, I think is the positive side of the consolidation. And they're winning. I mean, their business model is winning. And there -- and that is also helpful for us.

Yes. Okay. Good point. Maybe on the cost structure there, you've -- during your tenure, you've done a lot of work on strategic sourcing, more recently in SG&A. Now you're starting to go after the direct manufacturing a bit more on the Genie side. Talk about the -- we've looked at the local cost dynamics some on the labor side and just kind of cherry picked a few of your big competitor locations. And the Redmond area does kind of stand out on the high side. So maybe talk about what the opportunity in terms of shifting some of that production to Mexico? I know it's not a foreign concept to you from your days at Bell, but yes, maybe talk to that.

Yes. So our North American footprint needed to evolve to be globally cost competitive. And that means we need to take advantage of the capabilities that Mexico has. With the new tariff agreement in place, it gives you stability for a long period of time. And Mexico is an incredibly competitive place to manufacture. And it's not just cost, it's also quality. And so we made the decision to invest in Mexico and build a special purpose manufacturing facility that we started. I was just down there last week on Wednesday as a matter of fact. And so that construction is underway. In the intervening period of time, we decided to go ahead and lease a temporary structure building that's about 2, 3 kilometers more our permanent site is going to be. And we did that, Tim, because we needed to start up our management team. So we've been able to assemble an incredibly strong management team from the area and great direct labor. And so we're currently producing 2 lines of our telehandlers. At the end of the first quarter here, we will close Oklahoma City, and all of the telehandler manufacturing will be in Mexico at the temporary facility. We also made the decision to accelerate the movement and will occur over the course of this year, 2 product lines from Redmond into Mexico, beginning that migration or transition. And over time, you can expect that, that would continue. Now are we going to eliminate Redmond? Absolutely not. Are we going to reduce what the manufacturing that we do in Redmond over time? Absolutely. That's part of the process. It's a multiyear process. Construction of the main facility should going on schedule, which I missed [indiscernible] good thing, be the end of this year and moving over the course of the next couple of years. By the '24-'25 time frame, we think that adds 200 basis points to our margin potential in our AWP business over time. And that's sizable. And that gives you the opportunity to be globally cost competitive to compete in a competitive environment. Now again, Redmond will still exist, but it will be on a different scale than it is today. And part of the reason we decided to move these 2 units -- 2 product lines earlier was because one of the tight areas of labor that we have is in Redmond, Washington. And so it's difficult for us to attract the labor that we need for the volume increases that we are seeing. So one way to alleviate that is just move it directly right into Mexico, and we're doing that.

Just important just to add to that is that the supply chain is also part of the 200 basis points. So there's a really great supply chain, great fabricators that we can draw in Mexico as well, and that helps towards that. It's not just labor, it's supply chain as well.

Yes, and shortened supply chain. Julie being an industrial person most of her life is also very familiar with Mexico. And I had some other things going on early in my tenure, so it took a little time for us to get going, but it's the right move, and it's the right long-term move to solidify Genie's position as a global competitive leader because we've got great facility in China. We've got a great facility in Northern Ilya. We've got great facilities in the U.S. But our cost position wasn't competitive, and we needed to adjust that.

Got it. What you hit on earlier on Utilities, but an important component of that AWP, and I mentioned earlier, we had a -- probably the largest customer for you here yesterday and just no question in terms of the demand strength they're seeing largely in the back of the T&D companies, which you can see in their contractor backlogs are quite strong. So maybe talk there in terms of the -- you've done a lot of work in terms of consolidating the footprint. What was -- if you're relying on chassis, it's probably been...

Yes, it's been, literally, it's been yes.

Where do you see in there in terms -- and what's baked into the outlook here for 2022?

Yes. So first of all, just big picture. We saw the opportunities. So we made a sizable investment in Watertown and built a state-of-the-art facility. We basically consolidated 11 facilities into a single facility. We decided that we competed in around the states. But South Dakota, one, great workforce, great work ethic. And so we believe that we're looking for -- and it's just put frame things up, Tim. It's about a $400 million business, 9% to 10% operating margin. It was a little less than that given the challenges in 2021. But we think just the capacity alone from the factory can add 50-plus percent to the capacity that we had. And so we've invested in the capacity. The near-term challenge is unequivocally supply chain. Their supply chain has perhaps been more disruptive than other supply chain businesses for -- within our portfolio. Chassis being a big driver in some of that disruption. But we view that as near term. As we work through these supply chain challenges, we're quoting things into '24 already for that business. And so we needed to dramatically increase our throughput. The market is there. There's 3 elements of the business that are doing great, Tim. The one that you spoke to, so that we call them the IOUs or the public power companies, the large ones. What you really like about them is their CapEx is very solid. It didn't decrease at all during the pandemic. And it's highly customized products, and that provides a great baseload for you as you go forward. So that customization for the IOU public power is a very strong market. The specialty contractor and specialty rental channel that you mentioned, that did see a dip during COVID, but it's come back incredibly strong. And why is that? You said T&D, but it's basically transmission and distribution for -- to use the acronym. The investment that we need to make in the United States and Canada, frankly, as well, and Mexico North American investment in transmission and distribution is enormous. There's a big part of the Infrastructure Bill that addresses that. And so the contractors, there's a lot of work today, and there's going to be a lot of work in the future because we can't accomplish the electrification that we would like to accomplish with our existing transmission and distribution grids. They have to be increased. The other part of that business that we like is what we call the vegetation of the tree care business. And that's where we -- and again, what we produce is insulated equipment that works around live lines. And think about what happened at PG&E basically ended up in bankruptcy around maintenance of their network, part of it was around vegetation management. And so we produce a line of equipment, and that has been red hot because there's not a utility or call up in a country that wants to be accused of not maintaining the vegetation. And so that business has been -- so all 3 elements of that business for us are very, very hot. The demand is there. Our job is now to dramatically increase production so that we can meet that demand. That, coupled with the investments we've made in our utility service centers, is important because in order to compete and win the bids with the larger IOUs public power companies, you have to have physical infrastructure to support them. Those service centers provide the service technicians we need, the space we need and they also service the aerial market. So they service Genies, they service competitor products. And so that's a good growth. The profitability on the service technicians isn't great, but you control the parts stream. And so that gives you the opportunity to control the parts stream and control the point of impact with your customers to drive that customer satisfaction that you need going forward. So that's also a big part of that business that -- and so I tell the team that I'm really excited about that part of the business because everything in the world is coming together for an incredible run, and everything is in front of us to take advantage of, and it is really strong of all of our businesses, the strength there is phenomenal.

Well, the shot clock says 20 seconds.

20 seconds.

You have 15 seconds on the supply chain. Getting -- not getting better...

Hopefully, it's going...

Yes, yes. It's not off quick. Any signs of glimmers of...

Actually, the opposite because COVID in January and February was high. So we saw some further disruption. That's the bad news. The good news has come down radically. The good news is lower hospitalizations, no fatalities for Terex. And so I would like to believe with this Omicron now, hopefully, behind us globally that we're going to see some improvement in the supply chain as we go forward. But we haven't seen it.

Ended there. Got it. Got it. Thank you. Thanks.

Thank you. Thanks, Tim.