Terex Corporation (TEX) Earnings Call Transcript & Summary

Greetings, and welcome to the Terex Second Quarter 2026 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Drew Konop, Vice President of Investor Relations.

Good morning, and welcome to the Terex Second Quarter 2026 Earnings Conference Call. A copy of the press release and presentation slides are posted on our Investor Relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website. We are joined today by Simon Meester, President and Chief Executive Officer; and Jennifer Kong, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by 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 our earnings materials and in 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 3, and I'll hand it over to Simon.

Thanks, Drew. Good morning, and thank you for joining us today. Terex delivered a strong second quarter with revenue of $2.2 billion, increasing 8.5% compared to last year on a pro forma basis. The quarter's performance reflects revenue growth in all segments, improved earnings conversion and progress against the strategic priorities we've laid out in the past 2 years. Today, I'll begin with our consolidated performance and the demand backdrop we are seeing across the portfolio. I'll then discuss how each segment is executing against those market conditions before providing an update to our full year guidance, and Jen will then take you through the detailed financials. At the consolidated level, second quarter performance was supported by revenue growth and improved earnings conversion, both sequentially and year-over-year. Adjusted EBITDA of $269 million increased $26 million or 10.7% versus last year on a pro forma basis, driven by meaningful improvements, especially in the Materials Processing and Specialty Vehicle segments. Bookings increased 25% year-over-year on a pro forma basis. Our backlog of $6.9 billion provides solid coverage and supports our confidence in the second half and today's updated full year outlook. From a macro perspective, the demand environment for our business is positive and improving in many of our verticals. U.S. nonresidential construction is benefiting from the ongoing transition of planned projects to new starts, supporting demand across multiple segments. Year-to-date, U.S. nonresidential construction starts rose 18% to $368 billion, driven by momentum in data centers, energy investments and civil projects such as bridge, water and sewage infrastructure. Mega project starts totaled approximately $80 billion year-to-date through May, creating increased opportunities for many of our businesses. Across our end markets, we're seeing higher utilization rates for our products, increasing capital expenditures by our customers and positive sentiment from channel partners. These indicators and our bookings trends support our view that demand is growing in many of our verticals. Looking ahead, policy and infrastructure activity in Washington also provides a promising backdrop, including enactment of the 21st Century Road to Housing Act and introduction of the Build America 250 Act. The timing and implementation of these programs may vary, but the direction of public and private investment is supportive. Healthy municipal budgets and replacement needs support demand for fire apparatus, ambulances, refuse collection vehicles and related equipment. Within specialty vehicles, during the quarter, the city of Chicago approved the purchase of 80 fire trucks and 40 ambulances as part of its fleet replacement plan. The breadth of our specialty vehicle portfolio allows us to serve communities of all sizes and because these are essential assets that municipalities replace on a regular cycle, they provide a recurring source of replacement demand. In Environmental Solutions, long-term demand is supported by a large installed base of refuse collection vehicles, digital and aftermarket activity and robust transmission demand in utilities. While the segment is navigating a temporary softness in refuse collection vehicles, ESG's second quarter bookings increased versus the prior year, the first year-over-year increase since the first quarter of 2025, indicating that the momentum could be building going into 2027. Long-term demand for refuse collection vehicles is intact, including a regular replacement cycle and customer interest in technologies such as automated site loaders, third eye camera systems and back-office software that can improve productivity and safety for our customers and their operators. Terex Utilities is benefiting from demand tied to grid modernization, renewable energy investments, data center-related power needs and storm hardening activities, which we expect to support the business over the next several years. In Materials Processing, the U.S. mobile crushing and screening market is showing growth in fleet utilization and rent to purchase conversions. We also saw increased bookings for material handling and concrete mixers, which supports our view that the segment's overall demand is broadening. In aerials, customer demand is supported by nonresidential construction activity with customer mix in the quarter skewed toward national accounts that have greater exposure to mega projects. Turning to execution. I believe it is important to point out that after we completed the two largest transactions in our history in just the last 2 years, both the ESG acquisition and the merger with REV are trending above their respective business cases to date. Across our new and bigger portfolio, our focus is to convert backlog more profitably, improve throughput, realize synergies and continue to bring exciting new products to market for our customers. The second quarter demonstrated our progress in all those areas. Starting with Specialty Vehicles, the REV Group integration is proceeding well, and the segment delivered record earnings performance. The teams are executing against the integration plan and synergy realization is progressing as expected. Our near-term priorities for the segment are to improve throughput, reduce lead times and expand capacity in targeted product categories. During the quarter, we made significant progress with the expansion of our ladder truck plant in Ocala, Florida, and we're nearing completion of the expansion in Brandon, South Dakota. The Brandon investment is intended to increase capacity of the S-180 semi-custom pumper and further reduce lead times directly supporting our longer-term growth objectives. We expect the first deliveries from our Brandon expansion within the fourth quarter. In Environmental Solutions, ESG is making progress with its ongoing manufacturing efficiency improvements in an already world-class facility. In utilities, we are aggressively ramping up shipments to keep up with the accelerating demand and are executing our planned capacity expansion. Utilities also introduced the TRX product line, including 4 different models with different working heights, eliminating the need for a commercial driver's license, giving our customers more flexibility to operate their fleet. The product line is an industry first with a production unit of a 50-foot aerial on a Class 6 chassis. In aerials, the team continued to navigate tariff headwinds and execute mitigation efforts in their supply chain and improve operational efficiency. As expected, our price/cost position improved in the second quarter, and we believe the full year will be price/cost neutral based on the visibility we have within our backlog and our ongoing cost-out actions. Before turning to our 2026 guidance, let me provide an update on our strategic review of the Aerials segment. We are pleased with the progress we are making. We have interest from multiple parties and are working towards an outcome that maximizes value for our shareholders. We do not have any specific details to share at this time, but we will update you as the process unfolds. Based on our second quarter performance, our backlog coverage and synergy pipeline, we are raising our full year guidance. The increase reflects strong first half execution overall, increased volume in Aerials and improved performance in Materials Processing. We now expect sales of $7.9 billion to $8.2 billion, adjusted EBITDA of $960 million to $1 billion, adjusted EPS of $4.70 to $5.10. And with that, I'll turn it over to Jen to walk through the financials in more detail.

Thank you, Simon, and good morning, everyone. Let's review our second quarter results, starting with consolidated performance on Slide 4. Consolidated sales, including the results of Specialty Vehicles were $2.24 billion, up $751 million or 51% as reported. On a pro forma basis, excluding the sale of the Cranes and Amicoest businesses, sales increased $175 million or 8.5% with growth across each of our segments. Adjusted EBITDA margin was 12% compared to 11.8% on a pro forma basis in the prior year. Adjusted EBITDA increased by $26 million, driven by healthy demand for our products, operational execution and realized synergies in spite of significantly higher tariffs compared to this time last year. Adjusted earnings per share was $1.37, including a net benefit of $8 million from IPA tariff refunds plus a onetime unfavorable customs-related accrual. Working capital continues to improve. Net working capital declined to 13.2% of sales compared to 16.7% in the first quarter and 22.8% a year ago, primarily driven by the merger with REV Group. We generated $128 million of operating cash flow and $101 million of free cash flow within the quarter. Net debt ended the quarter with $2.28 billion, including $407 million of cash on hand and net leverage improved to 2.3x net debt of 12-month adjusted EBITDA. We also returned $20 million to shareholders through dividends in the quarter. Turning to segment performance, starting with Environmental Solutions on Slide 5. Environmental Solutions sales increased by $26 million or 5.9% versus the prior year to $456 million. Growth was driven by strong demand and increased shipments in tariff utilities, which more than offset temporary softness in demand for ESG. Despite the temporary unfavorable mix, the segment reported an adjusted EBITDA margin of 17.5%, down 250 basis points year-over-year due to the aforementioned unfavorable mix, coupled with production ramp-up inefficiencies and lower adoption in ESG. Moving to Material Processing on Slide 6. Materials Processing sales increased 11.1% or $47 million to $464 million, driven by healthy demand, possibly for mobile crushers in the U.S., supported by infrastructure, data centers and other industrial projects. Adjusted EBITDA margin expanded 440 basis points to 18.8%, reflecting a favorable product mix and price cost discipline. Onetime benefits contributed approximately 180 basis points to the margin performance within the quarter. Turning to Specialty Vehicles on Slide 7. Specialty Vehicles sales increased $38 million or 6.2% to [ $615 ] million, driven by improved throughput and fire. the adjusted EBITDA margin improved 210 basis points to 14.5% compared to last year, reflecting favorable mix, operational efficiencies and price realization, partially offset by cost inflation. Turning to Aon on Slide 8. Aerials sales increased 10.9% year-over-year to $673 million, driven by demand from national accounts as supported by mega projects. Adjusted EBITDA margin was 5.7% in the quarter, down 340 basis points from last year, which had significantly less tariff impact. As expected, Aerials improved margin sequentially in the second quarter by 560 basis points, reflecting improving price cost dynamics and higher production volume. We are on track to be price cost neutral for the year. The IEA refunds we received in the quarter were offset by a onetime unfavorable customs accrual. Please note, Terex is not accruing for future refunds not yet received. Turning to bookings on Slide 9. As Simon mentioned, consolidated second quarter bookings were $2 billion, up $400 million or 25% year-over-year on a pro forma basis. In Environmental Solutions, bookings were $417 million, an increase of 18% versus last year's quarter, mostly driven by utilities. We expect bookings in utilities to be solid for years to come, and our focus is to ramp throughput to meet the accelerating demand. In ESG, bookings were up year-over-year, which could indicate momentum building going into 2027. Having said that, given the conversations with our customers and suppliers, we no longer expect a material second half prebuy of RPVs ahead of 2027 EPA regulations. As a result, we're updating our second half year segment revenue outlook to low single-digit growth. Materials Processing second quarter bookings of $469 million increased 18% on a pro forma basis. While aggregates demand was the main driver, bookings also increased meaningfully in Material Handling. MP ended the quarter with $599 million of backlog, up $232 million or 63% year-over-year, supporting an updated full year outlook of low double-digit sales growth. This implies high single-digit year-over-year growth in the second half. Specialty Vehicles bookings were $588 million in the quarter, up 9% versus the prior year, led by the previously announced City of Chicago order. Increased throughput drove higher sales and lowered the segment's backlog as intended. We expect this segment will execute against this backlog and our outlook remains high single-digit revenue growth for the year. Finally, ARRIS second quarter bookings of $530 million reflects 71% growth versus last year, possibly from national customers tied to large funded projects and infrastructure and nonresidential construction. ARRIS ended the quarter with $914 million in backlog, an increase of $200 million or 28% versus the prior year. Given ARRIS first half performance, healthy bookings and backlog visibility, we are updating the full year outlook to low double-digit sales growth. Now turn to Slide 10 for our update to the consolidated 2026 outlook. We're operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, and results could change negatively or positively. The outlook we are providing today reflects our current portfolio and does not account for any cost to achieve the synergies, purchase accounting adjustments or other nonrecurring items. Today, we are increasing our outlook for the year with 2026 sales expected to grow approximately 7.4% at the midpoint on a pro forma basis to a range of $7.9 billion to $8.2 billion. We now expect pro forma EBITDA to grow by approximately $124 million or 14.5% year-over-year to between $960 million and $1 billion or 12.2% EBITDA margin at the midpoint. Included in our EBITDA outlook is approximately $28 million of synergies that we're well on our way to realizing. Updated guidance reflects 22% incremental adjusted EBITDA margin conversion at the midpoint pro forma despite a dynamic tariff environment. We anticipate interest and other expenses to approximately $185 million based on average debt outstanding of $2.7 billion. The effective tax rate for the full year is still expected to be 21% despite favorability in the first half of the year. We now expect 2026 EPS between $4.70 and $5.10 with slightly more earnings per share in the third quarter and a typical seasonal step down expected in the fourth quarter. Please note, the share count for the second half will be approximately [ 114 ] million. Finally, we expect to deliver $300 million to $350 million of free cash flow in 2026. With that, I'll turn it back to Simon for his closing remarks.

Thanks, Jen. I would like to thank everyone again for joining today's call just to quickly summarize what we shared today. We see strong demand from most of the markets we compete in, and we see clear momentum from the execution of our strategy. The REV integration is progressing as planned. Our synergy pipeline is building and the new Specialty Vehicle segment is improving throughput quarter after quarter. Environmental Solutions is well positioned with its manufacturing know-how, digital offering and multiyear demand in utilities. Materials Processing is executing effectively and together with Aerials benefiting from investments in infrastructure, data centers, manufacturing and overall power generation. We are raising our full year guidance because of the performance we delivered in the first half and the visibility we have in the backlog and the momentum we're building. Taken together, these results demonstrate the strength of the new Terex, a more diversified, more resilient and higher-performing company with clear opportunities to grow, improve margins, generate cash and create value. I want to thank our global team members for their dedication, our customers and dealers for their partnership and our shareholders for their confidence in Terex. And with that, we'll turn the call over to the operator for questions.

[Operator Instructions] Your first question is from the line of Mig Dobre from Baird.

Maybe I would like to start with double-clicking a little bit on Environmental Solutions here. Can you give us a little perspective as to what's embedded in that low single-digit revenue outlook -- revenue growth outlook, I should say, how you think about the refuse business versus utility? And I guess the second part here, just the guidance seems to imply compression -- revenue compression in the second half. How should we think about the effect that would have on margins for this segment?

Yes. Nick, I'll take the first one, and I'll let Jen weigh in on your second question. So yes, from a top line perspective, for the segment overall, obviously, strong bookings, 18% year-over-year, sequential also growth in bookings, 20% versus prior quarter. I know you asked about refuse, but part of Environmental Solutions is obviously also utilities. We see a lot of accelerating demand in utilities, and we're expanding capacity to keep up. In ESG, which is the refuse collection vehicle business within Environmental Solutions, we actually saw bookings were up as well year-over-year and sequentially. And we do see momentum building for 2027. And when we look at -- when we look at that business, we look at bookings trends, we look at fleet utilization, we look at telematics, we look at what customers are telling us. And we clearly see that in the first half, maybe even starting late last year, there was probably a little bit too much fleet in the system. It's not that America is producing less waste or that there are less garbage trucks on the road. But clearly, there was a little bit of rethinking that needed to happen between supply and demand. And we think that, that happened in the first half and is now mostly behind us as we see bookings coming back up. That's the first piece. The second piece in our initial guide, we assumed there was going to be some prebuy activity in the second half of 2026 going into 2027 when the new engine emission regulations come out. We now think that, that will actually spill over in 2027 as some of those changes are grandfathered and delayed by a couple of months. So we don't see as much of an uptick in pre-buys in the second half as originally assumed. We still think that bookings will sequentially recover. We still think that 2027 is most likely a growth year for refuse. We just see it being delayed by a couple of months because of the delayed in prebuys. Jen, do you want to weigh in on the margins?

So from a margin perspective, we expect, I would say, for Q3 to be very similar based on Q2 given that it's going to be driven the top line growth is going to be -- continue to be driven by the utilities, and they have a very different margin profile. But we do expect that from Q3 to Q4 to be a step-up in the margins at the segment level, driven by favorable product mix favorable customer mix and then the inefficiencies that I mentioned in my prepared remarks, especially in utilities to be behind us. So those are the big three drivers in terms of the step-up in the margin.

I appreciate that. That's helpful. And my follow-up, maybe on Specialty Vehicles, and this is kind of a bigger picture question. As you're starting to operate this asset and working with the REV team, I'm curious as to what you're discovering in terms of opportunities for either manufacturing efficiencies or being able to use some of the scale that Terex has that could bring to this business on a go-forward basis. And I do understand that you have communicated on the synergies near term and also the capacity additions that you have. So my question, I guess, extends beyond that, if possible.

Yes. I'll let Jen talk about the synergies. But yes, very pleased with how the integration is going. It's been 5 months now. We're very pleased that they booked a record quarter in terms of EBITDA performance. And Mig, you know this business. You know the momentum that, that team was building and has been building over the last 2 to 3 years before we merged with REV. So we were obviously very keen and very focused on making sure we would maintain that momentum, that continuous improvement momentum, if you will. And that's exactly what has been happening so far in the first 5 months. It's the exact same leadership team operationally that runs SV today that was running before the merger. And we continue to improve. We continue to improve throughput. We were up again in units produced in the second quarter. But then to your point, with the acquisition of ESG, we think we acquired one of the best specialty vehicle manufacturers in the industry. And so what we see -- what our game plan is and has been and will be is we see that manufacturing excellence in high mix, low volume of ESG now helping Terex Utilities. So you see Terex Utilities margins coming up. And we expect that same manufacturing know-how to help SV going forward. At the end of the day, it's all about continuous improvement and continue to try to reduce the number of hours per truck. But the most immediate focus is on just making sure we keep that momentum that we have in SV, and we're very pleased with how the integration is going and how the synergy pipeline is building. Jen, any context?

Yes. So Mig, from a financial standpoint, we committed that $28 million of synergies for the 11 months post merger. We have -- and they are largely corporate, and that's what I said in my previous call. We have realized about 20% of that in Q2 with a very good visibility of converting the remaining 80% in the second half of the year with a sequential step-up quarter-over-quarter. So like what Simon said, we're very confident of the integration that now translates to synergies that drops to the bottom line.

Your next question comes from the line of Jamie Cook at Truist Securities.

I guess two questions. First one on Specialty. Could you just sort of elaborate what you're seeing in the fire truck business? I think backlog for total specialty was down about 1%. Your peers are experiencing declines. Just your growth has been better. So if you could elaborate there in terms of backlog orders and the outlook for fire truck. And then my second question is on Aerials. Just trying to understand where the margins in the quarter were relative to your expectations. And given we're raising the outlook for Aerials, how are you thinking about the setup for margins in the back half of the year?

All right. I'll talk about the fire truck backlog and then Jen can talk about Aerials margins. Yes. So quite honestly, Jamie, we want that backlog to come down because, obviously, our customers are waiting for a very long time for their truck, and we are focusing on ramping up -- continue to ramp up our throughput, which is what we're doing. And we're making another step in Q4 when our capacity in Ocala comes online for ladder trucks and our capacity for S-180 pumpers, which is a low lead time product, if you will, a semi-custom product when that capacity comes online in Brandon, South Dakota. So we're pleased with our bookings. We -- as I mentioned, we secured a large order from the City of Chicago. Our bookings continue to grow. But quite frankly, what's more important for us and what you should be expecting if the backlog is to come down is that actually our book-to-bill should stay below 100% in SV just by the virtue of lead times improving. And that's -- that's the mission is to get our lead times down. And we think a more sustainable number for us and for the industry is to get lead times back to about a year or so. And that's the mission, and we think that that's what the trend will be over the next 24 months or so where you will see a consistent below 100% book-to-bill just because lead times are improving.

Jamie, on [ Aerials' ] question, from a margin perspective for Q2, they came in better than expected. As I mentioned in my prepared remarks, the -- in Q2, we had -- we took in on favorable customer accruals in Aerial. Without that accrual, we would have achieved 8.3% of adjusted EBITDA. Overall, it's going to be from a year-over-year perspective, still a relatively tough comp because last year was the liberation day was actually April, but we didn't really see the P&L impact hitting us until June last year. So it was 1 month of tariff impact last year versus 3 months of tariff impact this quarter. What we believe that it's important that we show from a like-for-like basis with the same kind of tariff impact is a sequential improvement that I mentioned in my prepared remarks of 560 basis points quarter-over-quarter sequential improvement, and that is despite an unfavorable mix. Like what Simon mentioned, we saw more nationals coming in, in terms of our shipments as well for Q2. For the second half of the year, we do expect that we continue to see a quarter-over-quarter improvement in our margin expansion from Q2 to Q3 and a seasonal step down from Q3 to Q4 driven by less [ scheduled ] deliveries. We expect that the -- that we will be able to continue to drive the improved price/cost dynamics such that we are full year price/cost neutral for the [ ARRIS ] business. And year-over-year, that taking into consideration that with a higher tariff because this year, we will have 12 months versus last year, 7 months, plus the onetime customer accrual, that's actually a $70 million tailwind that we're actually absorbing and driving the cost actions and also price cost neutrality throughout the rest of the year.

Yes. We just see -- we see a lot of positive momentum in Aerials purely from a top line perspective, and we see that continuing into 2027. And so our focus is just on sequential improvement and that's what the team is delivering at the moment.

Your next call is from the line of Angel Castillo from Morgan Stanley.

Aerials string here. Just you talked about some of the incremental bookings largely being from nationals. So just I guess a couple of things. One, what are you hearing from the independents timing or just general kind of demand underlying those customers and the implications that might have to your margins here in the second half? And then separately, are you seeing anything as we think about the nationals in particular, as this demand starts to pick up from their CapEx, any ability to take market share or just general shifts in market share there?

Yes. So on the independents, and we said we saw the first signs in the first quarter, and we continue to see those in the second quarter where independents bookings sequentially continue to improve. And as you know, Angel, they're a little bit more tied to private construction and commercial jobs, which tend to be more interest rates and input cost sensitive. And so we'll have to see kind of what the long-term impact is going to be on inflation and so on. And we, quite frankly, think that Europe is probably in a little bit more of a vulnerable spot where we see some markets kind of hinting with stagflation. We think the -- we see the U.S. market as being a lot more resilient. And as such, we think that, that independent bookings pattern will continue to improve. So that's encouraging. But as Jen said, the nationals just grew faster than we had originally assumed in the first half, and that's where the revised top line guide is coming from. And with that, obviously, comes a little bit of unfavorable mix. Yes, in terms of market share, we typically don't talk about market share on public calls. I do believe in the Genie value prop, and I know I sound biased, but I do believe the team has made tremendous progress with their value proposition, the customer-centric approach. And I do believe they are on a great run commercially. So I'll just leave it there for now.

That's helpful. And then [ 2027 ] dynamics that you mentioned essentially led to the push out of that prebuy on the refuse. Very good color there. But just curious on a broader perspective, just do those changes, including the penalties or phased kind of rollout of those engines from the OEMs, does that have any implications on, one, your ability to kind of standardize certain equipment or certain vehicles on the fire side? I think one of the strategies was to be able to kind of create a more standardized vehicle around some of these new engines. I don't know if it's the X10. But just curious if any implications on the ability to actually deliver on those -- on the kind of standardization. And then separately, just as we think about any potential penalties or implications of cost of those engines, does that have any material impact on your financials? Or is that just all a pass-through and any ability to kind of get that across?

So you cut out at the beginning of your question, I assume you're talking about SV?

Yes. I'm talking just generally about the EPA27 and the engine implications there to particularly your SV standardization of equipment.

Yes, yes. So yes. So as I said earlier is that we think that, that's all kind of pushed out a little bit. It's not canceled. So we still very much think and it's confirmed by multiple sources that the engine switchover will take place in 2027. It will be probably more of a phased approach. Some engines, to your point, like the X10 or some of the other engines might go sooner or later. It really depends on what engine platform. Yes, we knew that this was coming for quite some time, and I need to give the legacy REV team a lot of credit that they kind of started designing on where the puck was going. And so as those engines are being introduced, it will actually allow us to further optimize kind of our bill of material and our designs and our commonality. So that will be an efficiency gain for us. I think that was the first part of your question. And then, Jen, you...

And Angel, from a financial standpoint, there's no material impact to tariffs as what Simon mentioned. And as the -- those benefits will be in 2027 when the EPA regulation gets affected, the -- you're right that the cost is passed through from OEMs, so we don't bear them. In ES, if and when that EPA gets affected, there's some potential benefit again with regards to the suppliers having additional flexibility. No impact from a financial standpoint for [ ARRIS ] and MP on this EPA regulation just because they are largely also proposals on. So hopefully, that helps.

Your next question is from the line of Tim Thein at Raymond James.

The first question is just on the MP segment. If we think about kind of the margin progression for the year, I believe the expectation coming into the year was to have sequential margin improvement as we go through the year. But obviously, you've got a bit of a bump here in the second quarter. If we exclude the 180 basis point benefit that you called out, is that still a reasonable assumption? Or are there some factors that may have pulled some of the performance into the second quarter? Just how are we thinking about the shape for the balance of the year, [indiscernible] of the question.

Yes, we're very pleased with the MP, I would call it not just Q2, but first half of the year performance. As you rightfully said, our Q2 year-over-year margin expansion for MP was 450 basis points. Excluding the onetimer, it's still a very strong 270 basis point year-over-year improvement better than Q1 as well. And that's driven by two factors, mainly on the favorable mix and also geography mix as well and price cost discipline. As we look into the second half of the year, that would say a normalized EBITDA of like that 17%, excluding the Q2 one-timers. I would only see potentially a little bit of marginal step down just because we have seen an uptick in the material handling orders, like what Simon mentioned, and that's from a margin perspective, a little bit lower. So -- but overall, still a very healthy margin expansion. We expect that the full year from an incremental perspective without the onetimers for MP to be above our normalized incremental margin.

It's mainly just been a very strong year for MP in terms of execution. They're really executing in a very disciplined manner on price cost, and that's really helping the segment benefiting from the uptick that they're seeing in bookings.

Okay. Makes sense. And I get it, Simon, you want to keep the comments tight. But just on the review of aerials, I mean just as investors think about the potential timing of a potential movement on that, is it any sense for -- I mean, is this a '26 event in terms of an announcement or potentially it slips into next year? I'm sure there are a number of factors at play here, but just any sense for the time line that folks should be thinking about?

Yes. No, I appreciate the question, Tim. There is no predetermined time line. We're focused on making the right decision and properly go through this review. As I said in my prepared remarks, we're pleased with the progress we're making. We have interest from multiple parties, and we're just laser-focused on working towards what is the best outcome for our shareholders.

Your next question comes from the line of David Raso at Evercore ISI.