Greetings, and welcome to the Terex Third Quarter 2023 Results Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paretosh Misra, Head of Investor Relations.

Good morning, and welcome to the Terex third quarter 2023 earnings conference call. A copy of the press release and presentation slides are posted on our Investor Relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website. We are joined by John Garrison, Chairman and Chief Executive Officer; and Julie Beck, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by Q&A. Please turn to Slide 2 of the presentation, which reflects our safe harbor statement. Today's conference call contains forward-looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied. In addition, we will be discussing non-GAAP information we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials. Please turn to Slide 3, and I'll turn it over to John Garrison.

Thank you, Paretosh, and good morning. I'd like to welcome everyone to our earnings call and appreciate your interest in Terex. I would like to begin by thanking all Terex team members around the globe for their exceptional efforts in this challenging global macroeconomic environment and for their continued commitment to our Zero Harm safety culture and Terex Way values. Safety remains the top priority of the company driven by Think Safe, Work Safe, Home Safe. I'm proud of the Terex team members resilience as they continue to work tirelessly to improve our performance for our customers, dealers, and shareholders while maintaining a safe working environment. Please turn to Slide 4 to review our strong third quarter financial results. This quarter, the team delivered sales of $1.3 billion, up 15% from last year. Operating margins of 12.7%, and an expansion of 190 basis points from the prior year, and earnings per share of $1.75, up 46% on a year-over-year basis. As a result of solid execution by our team members throughout the year, a robust backlog, we are increasing our full-year earnings outlook to approximately $7.05 per share. Please turn to Slide 5. Terex products have leading positions in diverse and attractive end markets. The global focus on sustainability is driving increasing investments in infrastructure, digitization, waste recycling and electrification. These megatrends provide additional growth opportunities for all of our businesses. Our MP aggregate business led by Powerscreen and Finlay have leading positions in global mobile crushing and screening markets that will benefit from growth in the demand for construction materials. Mobile aggregate equipment has the benefits of reducing unnecessary material handling and the ability to recycle material at the point of use. MP brands, including Ecotec, CBI, and Terex Washing systems are at the forefront of developing innovative solutions…

Thanks, John, and good morning, everyone. Let's take a look at our third quarter financial performance found on Slide 11. Sales of $1.3 billion were up 15% year-over-year on higher volume and improved price realization necessary to mitigate rising costs. Sales in constant currency were up 13% as foreign currency translation positively impacted sales by $25 million or approximately 2%. Gross margins increased by 150 basis points in the quarter as volume, pricing, improved manufacturing efficiencies, cost-out initiatives, and strict expense discipline helped to offset cost inflation. SG&A Increased over the prior year due to inflation, incremental spend on new acquisitions, and increased marketing, engineering, and technology expenses. SG&A was 10% of sales, a decrease of 40 basis points from the prior year, with business investment offset by continued strict expense management throughout the company. Compared to last year, income from operations of $163 million increased 35%, operating margin of 12.7% was up 190 basis points, and our incremental margin was 25%. Interest and other expense of $14 million increased $1 million from the prior year as higher interest rates were partially offset by favorable mark-to-market adjustments. The third quarter global effective tax rate was 20%. Third quarter earnings per share of $1.75 increased 46%, representing a $0.55 improvement over last year. This strong performance was driven by increased volume, disciplined pricing, and continued cost management. Free cash flow for the quarter was $106 million representing a $53 million improvement over the prior year, primarily driven by increased operating profit. Hospital inventory at the end of the third quarter was $20 million, a decrease of $3 million from the second quarter and a 68% improvement from the prior year. Free cash flow conversion was 89% in the quarter. On a year-to-date basis, our sales were up 23% over the prior…

Thanks, Julie. Turning to Slide 16 to conclude my prepared remarks. Terex is well positioned for growth to deliver long-term value for our stakeholders because we have a strong portfolio of diverse market-leading businesses that operate in attractive growth markets and are well positioned for long-term profitable growth. This growth is going to be bolstered by attractive global mega trends. We deployed our operating systems across the businesses, improving our execution, allowing us to generate consistent profitability and superior return on our invested capital. We have a strong balance sheet and cash flow to support our growth plan. And we have a global, experienced and resilient leadership team that has clearly demonstrated the ability to create value. It has been an honor to the company positioned for sustainable, profitable growth and to make progress towards becoming a workplace where all team members feel included with a voice in the enterprise. Leading Terex has been the highlight of my career. Without a doubt, our success and achievements have been driven by our dedicated, engaged team members who live our Terex Way values and Zero Harm safety culture each and every day. Terex is in a strong position and now it is the time to begin the transition to the next leader. I've had the privilege of working closely with Simon for a number of years. He has proven to be a global strategic thinker with a natural ability to team and drive results. I have great confidence that he is the right leader for Terex as the company focuses on delivering long-term value for our stakeholders. And with that, let me turn it back to Paretosh.

Thanks, John. As a reminder, during the question-and-answer session, we ask you to limit your questions to one and a follow-up to ensure we answer as many questions as possible this morning. With that, I would like to open it up for questions. Operator?

[Operator Instructions]. Our first question comes from Stanley Elliott from Stifel. Please go ahead. Your line is open.

Good morning everyone. John for starters, congratulations on the transformation that's been impressive to watch. First question here on the backlog, still incredibly healthy. Can you talk about the visibility that you have? I mean I'm assuming you guys are close to fully booked for '24. Maybe what sort of visibility does that give you into 25? And then maybe any commentary on pricing or mix in those numbers.

Yes. Thanks, Stan. If we look at our overall backlog of $3.3 billion, it's 3 times our historical norms and total bookings of about $900 million in the quarter were solid and actually slightly higher than our historical averages that we've experienced. Our book-to-bill, I think, has been consistent with improving supply chain and customer deliveries. And really, the thing will be beginning to return to a more normal seasonal pattern, both for our customers and for our deliveries. As we mentioned, we continue to see minimal order cancellations and pushouts, which I think expresses the strength that we have in that backlog. And the coverage is right. We've got more than approximately $2 billion booked for 2024, and we believe that does drive momentum into 2024 across the enterprise. And if I look at the risk of segments, if you look at MP, they've got a backlog of about $900 million, and that remains high. It's high our historical norms. Historically, our MP business is much more of a book-to-bill and usually only has about one-quarter of visibility. We have substantially more than that as we go forward. And again, their bookings were slightly higher than our historical averages. So, looking into 2024, the order book varies by business. For example, our aggregate order book for Q2 2024 really didn't open in Q3. It opened here in Q4. And so that -- again, as things return to more normal seasonality, we'll see that flow going forward. We think dealer inventories, especially in certain brands are relatively low and need to be replenished as well as some of their rental fleet. So, we think that provides some tailwind for us as we go forward as well. And then our opening comments and just the investments, especially in North America on…

Perfect. And kind of sticking on the MP business. When would you guess like dealer inventories might actually normalize given the infrastructure spending on the horizon? And then also, any commentary on some of the newer products and on the recycling products that you guys have been working on are tracking with customers?

Yes. So, in terms of normalizing inventory, it will vary by business. And I think our aggregates businesses would say kind of things continue on this pace middle of next year, probably our Fuchs business. We can talk about that. They do have higher levels of inventory that have been impacted by scrap metal prices. So, it does vary by business. But over the course of time, we would expect those to normalize as we move through 2024, Stan.

Our next question comes from Steve Volkmann from Jefferies. Please go ahead. Your line is open.

Good morning. Thank you, and congrats, John. My question is about margins in AWP, and it sounds like there were a couple of -- kind of temporary headwinds in the quarter. I think we mentioned Monterrey start-up utility business kind of below normal. Is there any way to kind of ballpark the impact of that on the AWP margin in the third quarter?

Sure. Thanks for the question, Steve. AWP had operating margins of 12.5% in the third quarter, and it was up 290 basis points from last year. The improvement was really strong execution by the Genie team. We had higher sales volumes. The supply chain is improving and disciplined pricing and that offset some of the cost increases. Strong execution and successful cost-out management. We continue to see the hard work by the Genie team showing up in our financials and initiatives as well. But these positives were partially offset by the expected inefficiencies due to the Monterrey ramp-up. So that was included in our outlook, and we've talked about that on previous calls. But additionally, this quarter, we were disappointed in supplier performance in the utilities business, which caused unfavorable manufacturing inefficiencies and related unfavorable product mix. We were able to get sales out but less favorable margin sales in the quarter in the utilities business, and that had an unfavorable impact and probably about $0.12 a share in the quarter. And so overall, our Q3 incremental margin was 34% and AWP increased our profit by almost 50% and margins improved by 290 points because of GE's strong execution in the quarter.

Great. So, the $0.12 would just be the utility business?

Right. And that would be offset. We had favorable performance in the quarter by the MP business, of course, was up by about $0.10, and the Genie business up about $0.07 as well compared to the outlook.

Okay. That's helpful. And then just a sort of follow-on there, I guess, is it feels like utility has been a bit of a focus, shall we say, for a few quarters now. What's the outlook for kind of getting that where it needs to be?

Yes. Thanks. So, the team, we have to be straightforward. We're disappointed in our performance in the quarter. Supplier related. The team -- on the good news side, the supply chain is improvement on the specific issues that we had in the third quarter created significant inefficiencies for us, but that's continued to improve. So, the operational execution improvement needs to occur, will occur. We're anticipating an improvement in Q4. The good thing, Steve, is that the backdrop for that business is incredibly strong. And they're booked out through 2025 for the most part in most product categories -- I'm sorry, through 2024. Let me rephrase that through 2024. And so, the market demand for that business is quite strong. We just need to improve our operational execution in deliveries, which we will as we go forward.

That business has been really hampered by supply chain issues.

Our next question comes from Seth Weber from Wells Fargo. Please go ahead. Your line is open.

Everybody. Good morning, and John congrats and enjoyed working with you. So [indiscernible]. Yes. I wanted to get a better understanding for the implied fourth quarter MP margin, which is down year-over-year and it's down sequentially a bunch even though revenue looks like it's going to be up a little bit. I'm just wondering if you could give us some more details on what's going on there, whether it's a mix issue or a product region issue or what? Just any more color there on MP margin.

Thanks, Seth. MP had operating margins of 16.9% in the third quarter, up 230 basis points from last year. I mean they just continued to perform extremely well. They continue to invest in the business as well, and we made prudent investments to grow the business. But the margins benefited in the quarter from favorable regional and product mix and improved manufacturing efficiencies. And also, they had in the quarter, we received about $3 million of R&D credits. We get this annually, it came in Q3. And so that was a favorable amount received in Q3. Going forward, we expect strong MP full year sales over $2.2 billion. We expect Q4 sales to be up slightly from the third quarter. We did increase our outlook to 16.1% as the team continues to have their excellent performance. And the margin of the 15% in the Q4 will be strong, but sequentially lower due to a less favorable geographic and product mix. As well as some higher sequential engineering expense because of the R&D credit that we received in Q3 will repeat itself. But overall, MP continues to deliver consistent and strong operating performance.

That's helpful. And then just maybe just the commentary around Europe. Can you just expand on the softness that you're seeing there? Is that across both MP and AWP? And that's the source of the cancellations that you've been seeing?

Thanks, Seth. In terms of cancellations, again, we've had minimal cancellations and pushouts. But we have seen and we did call out some softness in the European market. We've actually been pleasantly surprised how well it's held up. But if we look at Europe in our MP business, on the aggregate side, our sales were up and backlogs are quite high there. Both customer sentiment in Europe is not nearly as strong as the customer sentiment in North America. Our Foods business was -- we saw some softness in the food business, again, associated with falling scrap metal prices. Now the good news for that business. The team has worked hard over the years to diversify. We're seeing some of the sales into our environmental business with the Fuchs machine branded Ecotec. So again, a mix there, but clearly, Fuchs saw some softness. And I would say, in general, softness in Germany where Fuchs is headquartered and has a long -- a strong market. And then we called out last quarter, our tower crane sales softness, and we saw continued softness in the tower crane business in Europe. And on the Genie side, sales and bookings were holding. But again, it's that customer sentiment is not quite as strong. And so, we're just -- we're highlighting that the European market especially in the U.K. and Germany, we're seeing some softness there. Again, we believe it's going to be offset by the strength we're seeing in North America, but Europe is in a different place due to the geopolitical risk, the inflation than North America right now. So those are the businesses that we're seeing softness. We're watching closely the bookings in those respective business segments. But again, it's really about the customer sentiment being very different in Europe right now, especially in the U.K. and Germany, especially as compared to North America, where customer sentiment is quite strong.

Our next question comes from Steven Fisher from UBS. Please go ahead. Your line is open.

Thanks, and good morning. John, best wishes. It's been a pleasure. Just to confirm the utilities impact, you reduced the AWP segment margin guidance by 50 basis points for the year. I think the $0.12 you called out would translate directly to that $0.50. I think so just to confirm, you haven't assumed any impact on native utility supply chain for Q4.

Well, we're expecting it to improve in Q4 from Q3, but we're not expecting it to return to pre-pandemic levels. We're expecting it to return to more of our normal patterns in the first and second quarter.

Okay. Great. That's helpful. And then at this point, I know it's early, but I'm curious about the signals that you look at -- I know you talked a lot about backlog and visibility for next year. But I guess, overall, did the signals suggest that you could have a year of growth in your two businesses? Are there any subsegments that you can say with sort of most confidence that demand should be growing in '24?

Thanks, Steven. As you know, in Q3, we will provide -- the team will provide a detailed outlook on our Q4 earnings call. And as you know, our customers and us right now are in the middle of our plan cycle. But with the strong backlog we have with the $2 billion booked, we do believe that, that drives momentum into 2024. We did just discuss some of the offset, if you will, with some softness in Europe. But in the U.S. market, it's quite strong. In my opening comments, you heard me talk about the tailwinds that's occurring because of these three legislative acts. The significant increase in nonresidential construction spending if you listen to, especially in the Genie business, if you listen to the rental customers, they're buoyant. They're seeing growth in their business because of these incredible amounts of physical stimulus that's occurring, the mega products, the size of the projects, the duration of the projects. So that provides a very nice tailwind. And we believe that's a rising tailwind across our businesses in North America as we go into 2024. So, I would say customer feedback, especially in North America, is strong. Our bookings are at or near our kind of historical levels. So that's a good signal. Backlog is significantly higher than historical levels. And then just leading indicators around construction and construction spending and the type of construction spending, i.e. public finance, and then these onshoring projects are going to occur irrespective of what interest rates are. As I said in my opening comments, that's the reduced geopolitical risk to control the supply chain going forward. And so that's going to continue. So, it does give us confidence and some momentum going into 2024. But again, at $2 billion of backlog, that's good for us historically. It provides that momentum into 2024. And for all the team will provide a 2024 outlook in our Q4 earnings call.

Our next question comes from David Raso from Evercore ISI. Please go ahead. Your line is open.

Thanks, very much. John, best of luck, and obviously, congratulations to Simon. The spirit of the question is just trying to frame the potential incremental margins in AWP for next year. Just thinking about trying to leverage that backlog. The numbers I'm running for the impact on utilities on the segment for 3Q and 4Q. It feels like ex the utility impact you wouldn't really have changed much to the AWP guidance much, right, a little up on the revenue, but the margins still feel like they would have been about the $13.8 million -- and I know that was your guidance, but I think people are looking for a little more leverage, some upside in the profitability. Can you take us through just your thoughts around what's different in '24 versus '23? What could impact the margins? And I'm thinking about Monterrey, I'm thinking about the mix, the price cost. I think people are just trying to figure out, as you know, one of your competitors had decent leverage yesterday in that segment. Just trying to get a sense of how we should think about the puts and takes on incrementals '24 versus '23?

Yes. So, I'll jump in, and then Julie can jump in. So, at the highest level, from a price cost standpoint, again, our pricing strategy is not going to change. We price to offset material freight and labor cost increases. We are seeing continued inflationary pressures. Our team is working hard to offset that, David. But we do believe that there is pricing and there's pricing in our backlog for 2024. So, price cost, price cost neutral is what we've been driving for. Our job is to control cost, push costs get the price that we need in the marketplace to offset that. So that's how I'd comment on price costs, no significant difference as we transition from '23 into '24. We've spoken about Monterrey. Monterrey, as we ramp up over the course of the next 18 months and through 2024. That does create some inefficiencies with the product line moves. And again, our Q3 forecast the Monterrey team delivered what we expected. They were right on. We expected that in our outlook. We would expect that continuing, David, through 2024 and as we enter into 2025, that's that 200 basis point overall kind of margin improvement for the Genie business as we go forward. Within that AWP segment, we do need to see, and that's on us. We do need to see improved performance on our utility segment because that -- we did not get leverage. Actually, it was quite negative leverage in the quarter. And so, we need to get that business to that 25% incremental margin target that we set. So, we would expect our utilities business to improve performance from '23 to '24. So that should give us some leverage. And then on our MP business, I mean, they are rock solid, consistent. And we're going to continue to invest on that. Sometimes our incremental margins above David, our 25% target. Some quarters, it's below based on where we are from in investment profile, but they deliver consistent strong operating margin performance. And so that's how I'd answer the question. As you know, David, we're in the middle of the planning process. We'll be pushing the team. Obviously, for our cost-out initiatives, we'll be pushing the team to drive manufacturing efficiency improvements as the supply chain. And again, I think it's a reasonable assumption to assume the supply chain continues to improve, we're not all the way back yet but we have seen improvement in '23. So, I think it's a reasonable assumption to say we should see some manufacturing efficiency improvements as supply chain improves and disruptions decline into 2024. So just macro high level from a CEO standpoint, I think that's how I'd answer the question, David.

I appreciate that, and I don't mean to push on your -- maybe your last call here. But maybe the CFO…, David. You will be listening to the call the next time I ask the question.

Yes, I will.

But Julie, just so we can frame it. Obviously, utility is hurting right now. But when I think of the size of that business, call it, $550 million, $575 million of revs. Can we see a swing back in that business worth 400 basis points, 500 basis points in that segment year-over-year? Just -- I know it wasn't quite that big a hit for them right now, but for the year.

I would say that we would expect improvement in the utilities business, which will impact the segment. So, let's talk about -- and so they were -- when you think about the margins, we talked about the impact of $0.12 a share in the quarter. And you think about that, that they were significantly below the run rate in Q1 and Q2. So, in Q4, we're expecting that to come back. And they still have an opportunity. We still want to return this business to low double-digit margins. And we do think that that's within sight. And so, we'll continue to strive for that.

And Monterrey and the impact, just to think about the path to the 200 bps. What would you expect '24 versus '23 that framework? What's the add '24 versus '23?

So, I would expect that we'll see disruption. Remember, when you think about it, you think about it, there's a disruption for the receiving location in Monterrey as well as the sending -- but I think that we'll see that, but the benefit of that is the 200 basis points when we come out of 2025. So, the Monterrey team was right on target, and we'll continue to work hard to eliminate that -- to do better than what we've guided to, and we've talked about that it could be somewhere between $10 million and $15 million impact in 2023. And we would expect some of that to continue into 2024.

And lastly, for me, any broad thoughts with Simon to think about where the balance sheet is. I mean I would argue Terex's balance sheet is about as strong as we've ever seen it. So just trying to think about any capital allocation commentary that you or Simon or the transition might provide investors how to think about the use of the balance sheet. Thank you.

Yes. I think from our -- so yes, we do have a strong balance sheet. We have ample liquidity. We have $846 million and net leverage is at 0.5 times. And as we discussed, the first thing we like to do is organic growth, and we're investing in our facilities, in particular Monterrey right now. And those investments are paying off with a 29% return on invested capital. Of course, we've talked about even in my prepared remarks, the increase of the dividend and we've increased it 31% since the start of the year. So, we'll do that. And then we'll look at what we do. It will generate significant cash and we'll look at whether we do inorganic or share repurchases. So inorganic, we've made some smaller investments, and we've discussed them earlier. We have an active pipeline. We'll continue to look at those. We'll be disciplined in that process. And we'll also look at share repurchases. And so, we have repurchased $34 million worth of shares year-to-date at the end of the quarter. We had $159 million remaining on that authorization. Our goal -- we always state that we want to offset dilution from incentive comp and also make opportunistic prices. And at these prices, we believe our shares are an attractive investment and we're out purchasing shares. So, our strong balance sheet allows us flexibility and allows us to invest for future growth.

All right. I appreciate the answer. And again, congratulations. Thank you, so much.

Our next question comes from Tami Zakaria from JPMorgan. Please go ahead. Your line is open.

Hi, good morning. Thank you, so much for taking my question. So, on your slide, you noted about over 35,000 projects approved or awarded in infrastructure, probably more to come. And one of your competitors is increasing capacity in assets equipment. How are you thinking about growing market share if demand accelerates because of these tailwinds?

Yes. Great question. So, from a footprint standpoint, specifically in access with our Genie business, our Monterrey facility really helps us to be globally cost competitive. We are -- we'll have incremental capacity as we begin to ramp that facility as we go forward. And so, we believe we're in a good position from a capacity standpoint. I mean we're still producing significantly less in unit volumes than we did in the 2018 type time frame. So, from a capacity standpoint, we believe we'll have a market growth. From a market share standpoint, our market share has held relatively consistent this year. The team is focused on new product development. And as we look at new product development, we do believe that new product development will help us as we go forward that we've launched the new products that we've launched, we've seen a respective increase in the market position of those products that we launch. And I can assure you the team has a very active new product development program as we go forward. So, we'll have leading-edge products that deliver the best total cost of ownership in the industry, and we believe that will position us well going forward in the Genie business.

Got it. That's very helpful. A quick follow-up. Are you able to quantify the incremental capacity you expect from Monterrey? Is it like a 5% to 10%, 10%, 15%? Any numbers?

I would -- I'd quantify it this way and just say today, we're still at, call it, 15%, plus or minus, maybe even 20% less than we were in 2018, 2019 time frame, so on a unit volume basis.

Our next question comes from Nicole DeBlase from Deutsche Bank. Please go ahead. Your line is open.

John, congratulations on a very well-deserved retirement.

Thanks, Nicole.

Maybe just first on the backlog within AWP. Can you just talk a little bit about the mix of NRC versus IRC customers? And also, anything interesting that you've seen from a product perspective?

Nicole, I would say the mix is relatively consistent with what we've had historically. So, it ebbs and flows quarter-to-quarter with the larger customers in Q4 when you sign their annual agreements, you'll see that quarter bump up. But if you just look at the backlog, I'd say it's relatively consistent with historical norms, but it does ebb and flow quarter-to-quarter, especially when you book some of the larger national account orders.

Got it. And then just thinking about free cash flow into 4Q and then into 2024. I guess it seems like you guys still have quite a bit of opportunity from a working capital perspective. How do you think about that opportunity, particularly on the inventory side? Like can you get back to historical levels of inventory? Can you just walk through that? Thank you.

Sure. Thanks for the question, Nicole. Yes, the management team is focused on net working capital as a percentage of sales, and it's actually part of our incentive comp program. So, we're very focused on it. And we talk about inventory, in particular, a lot in our management meeting. We continue to have a hospital inventory today, but we have reduced that by 68% from last year. And so, it's at about $20 million. So certainly, that's an opportunity to inventory as well as we continue extra inventory, and we will continue to do that until the supply chain disruptions abate, but we're very focused on working capital, and we'll continue to be focused on it and generate cash.

Nicole, you probably heard me say in the past, just in time turned out to be just late. And so, in the channels, we're asking our suppliers will carry a little bit more inventory, again, to eliminate the disruptions that we've been seeing. And so -- but as Julie said, it's part of our incentive comp system. Return on invested capital is important to the company. And improving return on capital of our working capital, we're incentivized to drive improvement in that metric as well. And the only caveat I'll say is a little bit is keeping a little bit more inventory until we see more steady-state supply from the supplier. So -- but we're focused on it.

Our next question comes from Jerry Revich from Goldman Sachs. Please go ahead. Your line is open.

Good morning, and John, let me add my congratulations as well. When you took over in 2015, equipment, was at a pretty high point in the cycle and the company was earning sub $2 per share and over $7 today. So, congratulations on the strong transformation here.

Thank you, Jerry.

Can I ask in terms of the outlook for normalizing production rates now that logistics for the industry are catching up as we think about what the production cadence looks like in 2024? It feels like we should be looking for a heavier 2Q and 3Q as a mix of total compared to what we've seen over the past couple of years as we've given deliveries to customers at first quarter, fourth quarter that have been heavier. Is that right? Can we talk about that? Obviously, for Aerials, you're guiding to sales that are flattish year-over-year in the fourth quarter based on CapEx cadence, it sounds like first quarter is going to be down year-over-year potentially to your customers and bigger shipments in 2Q and 3Q. I just want to run that by and see if that's consistent with how you're thinking about normalization.

Yes. Jerry, I think that's a reasonable assumption. As we indicated, I think the business is all as supply chain continues to improve, we're going to return to more seasonal patterns. The underlying customer demand seasonal patterns didn't change. What changed was the industry's ability to meet those patterns. So, it's supply chains improved. I think as we transition into '24, we're going to see a return to more normal seasonal patterns on bookings, backlogs, deliveries customer order patterns, when customers would like to take equipment. So, I think that's a reasonable assumption as we head into 2024, Jerry.

Super. And John, in Europe, AWP, there's been ebbs and flows based on product availability. So recently, you folks have been able to ramp up deliveries from Asia that have driven the strong growth. This year, you had mentioned demand might be a touch softer. Can you just talk about how you view as normalized levels of demand in Europe AWP considering before this year, there has been more supply constraints for that part of your footprint?

Right. So, this year, supply constraints really started to alleviate in Europe actually ahead of North America. Our sales and bookings in Europe were holding pretty constant in Q3. But again, just going back to that customer sentiment, the customer sentiment is not nearly as buoyant. And so, we're watching that. We'll see. We're obviously there's some -- not as many large national accounts in Europe, but we're engaged in those conversations as they are in North America. So more to come, but we thought it was worth calling out that sentiment in Europe is definitely not nearly as strong as it is in North America.

Yes. I appreciate the transparency and the discussion. Thanks.

And Jerry, let me just say on that. And really as we look and it goes to our telematics data as well, U.K. and Germany. Other markets are holding up, but U.K. and Germany, we're seeing that sentiment.

Our last question will come from Mircea Dobre from Baird. Please go ahead. Your line is open.

Thank you. Appreciate it. And John, all the best congrats. I guess I have a general question and a specific follow-up. The general one is as you sort of look back at your tenure here, you've obviously done great things for this company. Is there anything that you sort of feel -- not to say that you left undone, but you wish you could have gotten to, but you just couldn't that Simon and the team you think need to follow up on?

Thanks, Mig. We're talking about this as a team. And the reality is when you sit where we sit, and you've got a value of continuous improvement, you look at all the things, man, we made a lot of progress. And it's hard not to acknowledge the progress, the portfolio of the businesses, the improvements in the operating side. And -- but when one of your values this continuous improvement, you're never satisfied. And so, continuing to drive that improvement in that area. I will say our safety performance, we were on a good curve that's flattened out. And so that's one thing I'll be encouraging the team to drive an improvement on. And clearly, with the balance sheet, the M&A activity has been slow here. This year, we've been on a couple of things that didn't work out -- and so we'd like to return to inorganic growth on the M&A side and hope not being a plan that we'll see that as we go forward. But again, we'll be disciplined and that would be an area that I think there will be opportunity. I think there is opportunity for the future, and we've got the balance sheet and the cash flow to support that and or share repurchase, if taking advantage, as Julie said it, these valuations at this share price, it's a pretty high ROI return to our shareholders to be buying shares.

Understood. My follow-up is on MP. And I'm struggling a little bit to make sense of kind of what's going on from a demand standpoint because look, if we're looking at your orders in the quarter, probably the lowest level of order intake that we've seen in several years here. And when I listened to what your European competitors like Sandvik or Epiroc were kind of saying about, say, the processing side of their businesses. They're kind of seeing softer orders and demand and infrastructure as well. So, I guess maybe an update for you as to sort of what's going on there? And do you expect demand to actually rebound in 2024? Or should we sort of prepare for this continued gradual order and backlog erosion? Thank you.

So again, backlog, I think, will trend to more normal levels as production levels increase. I think book-to-bill is going to return to more normal levels as our lead times gets to the other thing. Our lead times are still extended in certain product categories. Again, our aggregates business is strong. I mentioned the sentiment in Europe concrete has been strong in the U.S. I called out Fuchs. That's an area of potential softness. Environmental business though is strong, and it's offset that. our listing business. We mentioned lifting softness in tower cranes, but real strength in our Franna business down in Australia, they're booked out for the year. So overall, we're obviously very cognizant of what's going on, global business, global diversification and diversification within MP. I think there's going to be some puts and takes as we head into 2024. And I would say probably in the North American market, remains strong, given the customer sentiment on this side of the bond, which is much stronger than Europe right now, especially in the U.K. and Germany.

We have no further questions. I'd like to turn the call back over to John Garrison for closing remarks.

Thank you, operator. It has been a pleasure, and I appreciate all of the kind comments that the analysts had to interact with all of you in the investor community. I look forward to speaking with you over the coming months and introducing Simon as we transition responsibility over the coming months. If you have any additional questions, please don't hesitate to follow up with Julie, John or Paretosh. And again, as always, thank you for your interest in Terex. Operator, you can disconnect the call.

This concludes today's conference call. Thank you for your participation. You may now disconnect.