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President and CFO Harrie Schippers pointed to higher costs, including some supplier issues and operating expenses, as the primary reason for the margin change. CEO Preston Feight added that current margins are healthy for this point in the cycle. For the Parts business, Feight praised the team's performance, highlighting 5% revenue growth and strong margins despite a smaller overall aftersales market.

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CEO Preston Feight attributed the margin pressure mostly to tariffs rather than volume. He noted that North American and European deliveries are expected to be flat, with the main sequential change coming from a pause in the Mexico market. He affirmed that PACCAR's investment appetite remains unchanged, with high confidence in its long-term product plans.

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CEO Preston Feight clarified that R&D spending is expected to increase by about 5% year-over-year. For the Amplify JV, he confirmed a phased approach where building construction will be followed by scaling battery capacity installation based on market demand. Regarding the TL market, he pointed to soft indicators like improving spot rates, capacity rationalization, and low used truck inventories as signs of a potential turn.

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President and CEO Sanjay Chowbey stated that market trends remain steady, with EMEA being the weakest region, and noted the company is confident in fully mitigating the tariff impact through supply chain optimization and surcharges. CFO Pat Watson added that Q4 sequential sales will see a ~$13 million tailwind from FX, normalizing the underlying performance.

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CEO Sanjay Chowbey confirmed the order improvement was broad-based across end markets and regions, including EMEA. CFO Pat Watson clarified that the strong implied Q4 guidance is primarily driven by the realization of savings from the new restructuring program, combined with normal Q4 seasonality which is typically the company's strongest quarter, rather than an assumption of a significant market rebound.

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CEO Sanjay Chowbey described the near-term outlook as stable, with ongoing pressure in European Transportation and mining. CFO Pat Watson noted that tungsten prices have been steady, anticipating no significant price-cost impact, and added that general inflation continues to moderate. Sanjay Chowbey confirmed a price increase was implemented to offset inflation.

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CFO Mark Smith noted that the tariff impact was immaterial in Q1 but will build through Q2, with the main concern remaining the broader economic demand. He clarified that the strong Power Systems aftermarket growth is not primarily from data centers but from broad-based demand across mining, oil & gas, marine, and general power generation, including rebuilds and pricing actions.

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Chair and CEO Jennifer Rumsey explained that the power generation growth is driven by a capacity ramp-up for larger engines for data centers, with some strategic pricing also contributing. The $200 million investment aims to double capacity by year-end. Regarding EPA27, Rumsey stated that Cummins expects the regulations to remain, anticipating an economic recovery and prebuy in the second half of the year.

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CEO Jennifer Rumsey noted that while some states have pushed out regulations, Cummins still anticipates a pre-buy likely starting sometime in 2025 ahead of the 2027 nationwide rules. Regarding Power Generation, she stated that demand remains strong and future growth is primarily a function of capacity and supply chain execution. CFO Mark Smith added that the strong Power Gen backlog provides confidence heading into the new year.

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CFO Jennifer Kong-Picarello reiterated that Q1 ES margins were boosted by non-recurring favorable factory absorption and that one-off expenses will be incurred to support volume growth. CEO Simon Meester noted the MP backlog growth reflects a return to normal patterns and replacement demand in North America, but cautioned that the outlook remains gradual as tariff talk could impact confidence.

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President and COO Timothy Boswell explained the divergence is due to large project activity from enterprise accounts driving all of the order book's year-over-year growth, offsetting weakness in local accounts. CFO Matthew Jacobsen noted it is 'early days' for working capital initiatives but highlighted a $30 million reduction in total AR during Q1 as an encouraging start.

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Chief Financial Officer Matt Jacobsen stated that a good general number for maintenance CapEx is around $200 million. He noted that incremental investments in 2025 for cold storage, clearspan structures, and perimeter solutions are driving the total higher. Jacobsen also confirmed that the modular spot-to-AMR spread was around 11% in Q4, consistent with the prior quarter, and the company expects to continue pushing rates.

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President and CFO Timothy Boswell clarified the spread contraction is due to the cycling of old, lower-rate leases, not a decline in spot rates, which he reiterated have been sequentially flat. For 2025, he noted H1 growth would likely be flatter, but the full year should see modest growth and margin expansion driven by multiple internal levers.

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CEO David Graziosi explained that Allison is well-prepared, as its products require minimal modification to comply with the new engine standards. While acknowledging uncertainty around the final regulations and potential pre-buy activity, he noted continued strong OEM interest in Allison's existing fuel efficiency features, such as FuelSense 2.0, positioning the company well regardless of the outcome.

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G. Bohley, COO, CFO & Treasurer, highlighted the India capacity expansion as a key project to drive operational efficiencies and enable best-cost country production. He expressed confidence that Allison is well-positioned for potential policy changes due to its significant North American manufacturing footprint. A primary focus is restoring operational efficiency to pre-pandemic levels.

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CFO Fred Bohley explained that the primary variable is top-line revenue, which depends heavily on OEM production schedules. The guidance midpoint assumes a return to normal pre-pandemic seasonality, with about 6-7 fewer OEM workdays in Q4. Performance would reach the high end if OEMs work more days than anticipated, while the low end reflects the expected seasonal softness and tough year-over-year comparison.

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Chair and CEO Ward Nye highlighted strong Q1 pricing, noting that organic pricing was up 7.4%, higher than the reported 6.8%, indicating room to raise prices on recently acquired assets. He stated that the company's guidance does not assume any mid-year price increases, but he expects to see them in a number of markets. Nye concluded that he anticipates full-year pricing to be at the higher end of the guided range and will provide a formal update at mid-year.

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CEO Ward Nye and CFO Jim Nickolas confirmed the end-market growth figures were inclusive of acquisitions and reiterated that the overall guidance is intentionally measured. Regarding pricing, Nye clarified that the 2025 guidance does not assume mid-year increases, but he believes some will occur, similar to last year, particularly in newly acquired businesses. The potential for mid-year hikes will depend on market dynamics, including the timing of cement price increases next year.

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CFO James Nickolas stated that underlying cost inflation was approximately 5% in the quarter, in line with expectations. For 2025, he anticipates continued mid-single-digit cost inflation, which is expected to be well below the mid-to-high single-digit pricing growth, ensuring the price-cost spread should continue to trend favorably.

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CEO James Hill addressed pricing first, stating it's too early to comment on mid-year outcomes but that the conversations are underway as expected. Regarding power generation, he described it as a late 2026/2027 opportunity that will be 'extremely aggregates intensive' and could last for about five years. He expects more gas-fired plants than nuclear initially, located in markets with high data center growth like Texas, Georgia, and Arizona.

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CEO Tom Hill explained that while non-residential shipments will be down in 2025, he sees 'green shoots' from strong data center activity and a flattening decline in warehouse starts. He also revealed significant pent-up demand, noting that Vulcan has quoted a large volume of non-residential work over the last six months that is currently 'sitting on the sideline' as customers await factors like lower interest rates.

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Chairman and CEO James Hill offered a broad view that most aggregates operators, public and private, understand the value of their finite resources and the need to earn a return, which fosters a rational pricing environment. He believes growing demand further supports this discipline. He did not provide specifics on pricing disparities with M&A targets.

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Joe Creed, COO and incoming CEO, reported that while dealer rental fleet loading was down slightly as expected in Q1, dealer rental revenue continued to grow. He stated that Caterpillar is well-positioned to serve customers whether they choose to rent or buy and that the company sees rental as a significant long-term opportunity. He noted no massive shift in the rent-versus-buy trend.

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Executive Andrew R. Bonfield noted that merchandising programs are partly controlled and that a lower interest rate environment could lessen their impact. Executive D. Umpleby added that potential deregulation could boost economic growth, which would be a positive for Caterpillar, but it is too early to determine specific outcomes.

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Chairman and CEO Jim Umpleby attributed the quarterly sales decline to lower rental fleet loading by dealers and a non-recurring large pipeline deal from the prior year. He highlighted that dealer rental revenue continues to grow. For the future, he expressed a positive outlook on government infrastructure projects, citing ARTBA data that only 27% of IIJA funding had been spent as of August 2024.

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CFO John Olin identified four drivers for the strong Q1 margin: mix, timing of expenses, strong productivity, and proactive cost management. He noted that productivity and cost control benefits are expected to persist, which is why guidance was raised. CEO Rafael Santana added that Wabtec is managing a balancing act of variables, including supplier shifts and pricing actions, to deliver on guidance and ensure profitable growth into 2026 and beyond.

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CEO Rafael Santana highlighted a strong pipeline of opportunities, especially robust international orders, which enhance visibility into 2026 and 2027. He noted that the combination of new locomotives and modernizations in North America is expected to grow at a high-single-digit rate in 2025, driven by customer investments in cost efficiency and reliability rather than a fundamental shift away from modernizations.

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CEO Rafael Santana stated it was too early for 2025 guidance but reiterated the long-term outlook for mid-single-digit organic growth and double-digit EPS growth. Regarding Integration 2.0, Santana confirmed the program is on track and slightly ahead of schedule, with savings materializing faster than anticipated, contributing to the Q3 guidance increase.

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CFO Amy Campbell noted it's too early to gauge customer price elasticity related to potential tariffs but highlighted that the non-discretionary, municipally-funded nature of the business supports consistent demand. On capital allocation, she affirmed that the stock remains an attractive investment and buybacks will likely continue, while the company builds its M&A pipeline with a disciplined and strategic approach.

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CFO Amy Campbell explained that the long-term free cash flow conversion target is approximately 50% of adjusted EBITDA, impacted by the normalization of customer deposits. She clarified that post-2027, the Specialty Vehicles segment is expected to grow at a 'GDP plus' rate with potential for 30-50 bps of annual margin expansion. For the FY25 EBITDA range, she cited a faster RV recovery and higher productivity at the high end, versus supply chain shocks or weaker-than-expected demand at the low end.

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CFO Amy Campbell projected low single-digit sequential revenue and EBITDA dollar growth for Specialty Vehicles in Q4, with a slight margin increase, and expects to maintain double-digit margins into 2025. She noted that 6-7% price increases are planned for next year to offset inflation. CEO Mark Skonieczny confirmed that REV Group is participating in industry-wide RV discounting, which impacted Q3 results, but noted that the level of discounting has decreased sequentially as dealer inventory health improves.

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CEO Eric Hansotia emphasized the strategic progress of the PTx integration. CFO Damon Audia added that PTx Trimble margins are expected to improve in 2025 and explained the impairment was a non-cash charge resulting from a discounted cash flow (DCF) analysis that was negatively impacted by the sharp near-term industry downturn. He expressed confidence in the FCF target, noting the 2024 shortfall was due to a Q4 sales miss that left inventory on the balance sheet, which is expected to be worked down in 2025.

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CEO Tarak Mehta confirmed that January's performance was in line with their plan. He reiterated the company's 'in region, for region' strategy, stating that investments like the new belts facility in Mexico remain compelling for the long term, and noted that the majority of U.S. revenue is served by its U.S. footprint, which mitigates some risk.

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CFO Matt Field indicated the Access sales decline is primarily volume-driven, especially in the first half, but did not provide a specific price/volume split. CEO John Pfeifer added that national customers benefit from mega projects, while independent customer performance varies by market exposure. He clarified that the customer mix, which favored independents in 2024, is expected to shift back towards nationals in 2025.

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CFO Brad Pogalz explained that the lower first-quarter cash conversion was expected and driven by strategic working capital investments, primarily in inventory, to improve on-time delivery. He anticipates conversion will normalize and improve as sales build throughout the fiscal year. Regarding Life Sciences, both Pogalz and CEO Tod Carpenter declined to provide specific business breakdowns but noted that Disk Drive's strong growth is a result of market recovery and share gains.

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CFO Gabriel Bruno explained that Lincoln Electric's strategic posture is to remain price-cost neutral and that they currently plan to maintain existing price levels. He noted that the 1% price increase in Q3 was from actions taken earlier in the year. Regarding automation, Bruno confirmed that organic sales were down low-double digits due to delayed capital decisions in the automotive sector, with project timelines shifting to 2027-2028, suggesting weakness will persist into 2025.

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