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Patrick Watson, VP & CFO, explained that while rising tungsten costs will be passed on via pricing, the typical margin benefit is muted because it is not accompanied by higher end-market volumes this cycle. Sanjay Chowbey, President, CEO & Director, stated that the company's performance is in line with or better than peers, attributing headwinds to broad market weakness. He also confirmed that portfolio optimization, including improving underperforming areas, is an ongoing priority.

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CEO Paulo Ruiz indicated a potential mix shift toward the defense market in Aerospace but noted the overall backlog is solid. CFO Olivier Leonetti added that there are still a few hundred basis points of margin opportunity from resolving inefficiencies. On eMobility, Ruiz stated the long-term electrification trend is delayed but intact, with current headwinds related to specific customer ramp-ups.

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Chair and CEO Jennifer Rumsey attributed the strong margins to sustained operational improvements and robust market demand, noting the pace of improvement has likely stabilized. CFO Mark Smith confirmed there were no one-time items boosting the results. Jennifer Rumsey added that the business has a backlog of about two years and that pricing is generally set at the time of order, with the exception of ongoing tariff recovery negotiations.

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Chair and CEO Jennifer Rumsey attributed the strong margins to multi-year operational improvements and robust demand, noting the pace of improvement has likely stabilized. CFO Mark Smith confirmed there were no one-time items boosting the results. Rumsey added that the segment has a two-year backlog and that pricing is generally set at the time of order, with the exception of ongoing tariff recovery negotiations.

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Chair and CEO Jennifer Rumsey clarified that the Accelera restructuring aims to streamline the business by focusing investments on promising areas like battery electric solutions while pacing investments in electrolyzers and fuel cells. For the HELM platform, she noted its fuel flexibility is key, with a goal of reaching 8% penetration for the natural gas version, but stated that adoption rates depend on variable factors like fuel prices and regulations.

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CEO Joe Creed stated that the company is focused on its own customers and is pleased with the response to its merchandising programs, which are driving strong sales to users in Construction Industries, particularly in North America. He expressed confidence in the company's competitive momentum.

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Joe Creed, COO and incoming CEO, confirmed that Caterpillar is 'pretty full' on large engine capacity for data centers this year but has some flexibility to shift production from weaker well servicing applications. He affirmed confidence in the demand outlook, citing constant communication with hyperscalers. Chairman and CEO Jim Umpleby added that they are very encouraged by strong order and inquiry activity for Solar Turbines to provide prime power for data centers, particularly for the new Titan 350 model.

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Executive D. Umpleby confirmed that demand for reciprocating engines and gas turbines for data centers remains very strong, with customers placing multi-year orders. He highlighted a planned 125% capacity increase for large engines over several years and strong market acceptance for the new Titan 350 turbine, reinforcing a positive outlook.

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Chairman, President & CEO Eric Hansotia clarified that the PTX precision ag business is performing according to plan, driven by innovation and channel development. He described the TAFE resolution as a significant strategic win, allowing AGCO to cash out its stake, remove a board member, and increase focus on its core Farmer First strategy with fewer distractions.

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CFO Damon Audia confirmed AGCO is on track with its restructuring, having expensed ~$160M of the planned $150M-$200M and is confident in achieving $100M-$125M in run-rate savings. CEO Eric Hansotia added that the program is being managed in detail. Damon Audia noted that while structural cost-outs should improve future incremental margins, some variable costs would naturally return in a recovery.

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CFO Damon Audia confirmed that North America would likely post a negative margin in Q1 due to significant underproduction. He added that Europe is expected to be in the low double-digits, South America slightly negative, and Asia Pacific in the low single-digits. He also clarified that approximately 35% of North American sales are sourced from overseas, with 25% of that portion originating from the EU.

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Eric Hansotia, Chairman, President & CEO, explained that while PTx Trimble dealer sign-ups are on track, a 'last-time buy' from a former major customer is delaying new orders. Damon Audia, SVP & CFO, added that the CNH business wind-down will be a headwind on reported sales. Regarding TAFE, Hansotia stated it is a small part of the business (1% of sales) being handled by a small team, and that AGCO has made generous offers to resolve the matter.

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SVP & CFO Jennifer Kong-Picarello attributed the 19% margin to strong throughput at ESG, improved execution at Terex Utilities, and a favorable, non-recurring product mix in Utilities. President & CEO Simon A. Meester clarified that margins would likely moderate by about one percentage point in the second half as this favorable mix is not expected to repeat.

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Executive Julie Beck confirmed that Q1 production will be lower year-over-year and "fairly consistent" with Q4 2024 levels. Executive Simon Meester characterized the 2025 AWP market as resilient in the U.S., driven by replacement demand for mega-projects, while Europe remains soft. He suggested upside could come from lower interest rates boosting smaller private projects.

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CFO Michael Larsen clarified that core incremental margins are currently running significantly above the historical 35-40% average. He attributed the Construction segment's impressive 140 basis point margin expansion, reaching 30.8%, primarily to enterprise initiatives, which contributed 160 basis points. CEO Christopher O'Herlihy added that strong brands and technology also supported this resilience.

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CFO Michael Larsen provided a detailed Q2 outlook, expecting flat year-over-year organic growth, a significant sequential margin step-up, and flattish year-over-year margins, leading to an EPS in the mid-$2.50s. He also noted a previous $0.30 currency headwind has dissipated. Larsen confirmed the full-year tax rate guidance is being lowered to 24%, but this benefit is not being added to the EPS guide to de-risk the forecast against macro uncertainty.

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CFO Michael Larsen detailed the enterprise initiative impact, noting the highest benefit of 190 basis points is in the Automotive OEM segment, while lower-end benefits of around 60 basis points are in high-margin segments like Welding. CEO Christopher O'Herlihy highlighted the Welding segment as a prime example of CBI's success, noting it contributed over 3% to growth in 2024 despite a difficult market.

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CFO John Guthrie explained that 'focus branches' were defined as those under 6% EBITDA margin and that the current pace of improvement is a reasonable assumption for the coming years. Regarding acquisitions, EVP Scott Salmon and CEO Doug Black clarified that the smaller deal size is a result of the timing of when sellers choose to sell, describing it as a 'small sample size' and not a long-term strategic shift. They remain confident in their pipeline of deals of all sizes for future years.

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CEO Doug Black detailed the turnaround efforts for Pioneer, including system integration, staffing, and logistics optimization, and noted that improving focused branches is a multi-year effort expected to yield significant benefits in 2025 and 2026. Both Doug Black and John Guthrie reiterated that investing in the business and strategic M&A remains the top priority for capital, with share repurchases considered for excess capital.

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Chairman & CEO David Gitlin stated that the company is in 'good shape' on capacity, having more than doubled its North American applied capacity in recent years and possessing a global footprint to meet demand. To achieve the 6-8% growth target, Gitlin reiterated the three-pronged strategy of differentiated products, double-digit aftermarket growth, and integrated systems solutions, with each segment expected to contribute.

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CEO David Gitlin defended the forecast, stating that while North American trailer forecasts are down, Carrier expects its truck and trailer business to be up mid-single digits, supported by an aging fleet. He also highlighted expected strength in container and double-digit growth in aftermarket. CFO Patrick Goris projected CST margins would increase from 15% in Q1 to around 17% for Q2 and Q3 before moderating slightly in Q4.

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CFO Michael Quenzer clarified that mix was strongly positive, not negative, and is blended with price in their reporting. CEO Alok Maskara stated that while there are signs of consumers trading down and seeking more quotes, the primary driver of the repair-vs-replace trend was dealer confidence being impacted by the R-454B canister shortage, rather than significant consumer price elasticity.

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CEO Alok Maskara explained that while having R-410A inventory provides a competitive balance, the ideal scenario for dealers is a clean industry transition to R-454B. He stated the new factory's start-up costs should fade by Q2 2025, with the facility reaching its planned initial capacity by mid-year. This will improve the supply balance but may not fully meet demand, as capacity is being added incrementally.

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EVP Kevin Baney described the European market as relatively strong, with DAF's market share up year-to-date. CEO & Director R. Preston Feight added that DAF's new truck, designed for new regulations, is providing a competitive advantage. He characterized the vocational market not as 'weaker' but as moving from 'frothy' to 'good,' supported by ongoing infrastructure spending.

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EVP Kevin Baney described the European market as relatively strong, with PACCAR's DAF brand gaining share. CEO & Director R. Preston Feight added that the new DAF truck provides industry-leading fuel economy. He characterized the vocational market not as weaker, but as moving from 'frothy' to 'good,' supported by ongoing infrastructure spending.

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CEO Preston Feight was reluctant to forecast beyond Q2 but suggested that as the market strengthens in the second half, it's a fair supposition that margins could improve. He does not envision a pre-buy scenario around tariffs but acknowledged that a 2027 NOx standard change could drive customer buying patterns in 2026.

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President and CFO Harrie Schippers attributed the lower revenue per truck to a stronger regional mix towards Europe in Q4 and unfavorable foreign exchange rates, which accounted for about half of the decline. CEO Preston Feight confirmed that PACCAR is having general conversations with customers about 2027 regulations, estimating a potential price increase in the $10,000 to $15,000 range.

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CEO Preston Feight stated that truck pricing was flat in Q3 while costs rose 3%. He noted that while the truckload segment has stabilized, the vocational and less-than-truckload markets remain strong. Feight suggested 2025 could be a 'mirror image' of the current year, starting at a similar pace to late 2024 and accelerating, which could improve the price-versus-cost dynamic.

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CFO Vik Kini explained that the pricing actions were commensurate and proportional across both segments. He clarified that the margin impact was mitigated in Q2 because pricing actions were implemented in two tranches (April 1 and May 1), which helped offset the tariff costs as they folded in, while the benefits from cost actions are expected to materialize over a longer period.

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CFO Vik Kini confirmed that incremental margin expectations are broadly similar for both segments. CEO Vicente Reynal addressed the M&A question by stating that not all acquisitions are dilutive, citing a past deal (ABI) that was highly accretive. He emphasized that the M&A strategy is balanced, and the current funnel includes targets that could be accretive to PST's fleet average margin.

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David Schulz, EVP and CFO, explained that the outlook does not include any tariff-related price increases from Q1 or Q2, consistent with the company's standard practice of waiting for price changes to impact revenue, which typically has a two-quarter lag. He also confirmed that the financial benefit from the preferred stock redemption was already factored into the original and reaffirmed guidance for the year.

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CEO John Engel explained that while the initial direct-ship phases of data center projects carry lower gross margins, profitability normalizes and improves over the project lifecycle as WESCO provides more products and higher-margin services. EVP and CFO David Schulz added that working capital is expected to grow at half the rate of sales in 2025, driving further efficiency, though some inventory builds for new contracts will occur in Q1.

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CEO John Pfeifer explained that while Oshkosh retains pricing power, the company's primary strategy is to mitigate tariff impacts through its supply chain first and use price increases as a last resort to avoid impacting demand. He noted that the company has more contractual flexibility now than during the last inflationary period and is focused on targeted mitigation efforts.

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CFO Matt Field explained that the Defense segment's 4% average margin for 2025 reflects a transition year, with margins expected to start lower and ramp up throughout the year with NGDV production. CEO John Pfeifer added that the telehandler business is performing well, with recent share gains and optimism from a new agricultural line and the AUSA acquisition. He noted the change in the CAT agreement was a known 'speed bump' and the company will continue to supply CAT dealers.

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CFO Rocky Kraft stated that price increases are expected to be fully in place by July 1. He confirmed that a dollar-for-dollar pass-through will negatively impact the margin rate by approximately 300 basis points long-term. Kraft noted that recovering to the previous 47% structural margin target would be challenging and likely require a substantial reduction in tariffs.

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COO John Michael Adinolfi explained that new ocean freight contracts take effect May 1, 2025, but due to inventory turn times, any financial impact would be nominal and not materialize until late in Q4 2025. CEO Doug Cahill added that the expected return to growth of the high-margin RDS segment provides a natural floor for the overall gross margin rate, giving them confidence in maintaining the 47%+ level for the foreseeable future, even as mix shifts within the HPS business.

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CEO Peter Arvan explained that price competition is not new and often comes from competitors who lack POOLCORP's value proposition, forcing them to compete on price. He noted that the company responds strategically and will not chase unsustainable pricing. CFO Melanie M. Hart and CEO Peter Arvan clarified that unlike the pandemic's high-demand environment, the current weaker end-market for discretionary products limits the ability to expand margins from inflation, although they are positioned to take advantage of strategic pre-buy opportunities.

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Paul Johnston, an executive, clarified that first-quarter sales were predominantly 410A (75-80%), with the transition to A2L products accelerating in the second quarter. He noted that Q1 gross margin improvement was mainly due to a favorable sales mix, with significant OEM price increases occurring in April, which will impact future margins.

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CEO Daniel Florness stated that while there is no mathematical way to fully cushion a 145% tariff, the company's inventory serves as a buffer, providing time to explore sourcing optionality. CFO Holden Lewis clarified that pricing actions are aligned with when the higher costs impact the P&L. He noted that tariffs affect costs much faster than general inflation, which is why the company began implementing price changes in April following tariff announcements in February and March.

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CFO Holden Lewis stated that as growth reasserts itself, the company should be able to leverage operating expenses and achieve the high end of its 20% to 25% incremental margin target. He cautioned that in the first year of a recovery, the return of employee bonuses acts as a "shock absorber" on leverage, which is factored into that expectation.

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CEO Dan Florness stated he expects branch growth to resume in 2025 as the company anniversaries operational changes, noting the Eastern U.S. is already seeing positive growth. CFO Holden Lewis clarified that while a gross margin tailwind from inventory is expected, it likely won't materialize until mid-2025 as lower-cost imported product takes several quarters to arrive.

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CFO Kristen Actis-Grande attributed the Q2 price metric to unfavorable customer mix, noting same-item pricing was more positive. CEO Erik Gershwind addressed the broader question, stating that inflation is generally constructive for distributors and that MSC expects to pass on costs, supported by its Made in USA offering and productivity playbook. He cautioned, however, that the current environment is 'uncharted water' due to its fluidity and scope.

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Kristen Actis-Grande, Chief Financial Officer, confirmed that the company sees no reason why the dynamic would be different in this situation, implying it would likely be a positive for gross margins.

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CEO Ivo Jurek explained that distributor restocking is more of a "quick pass-through" tied to actual demand rather than sentiment. He attributed this to Gates' extremely high service levels and fill rates, which allow distributors to optimize their working capital and avoid restocking significantly in advance of a market recovery. They will likely wait to see a definitive turn before increasing inventory.

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CEO Tarak Mehta and CFO Philip Fracassa clarified that the cautious outlook is driven by persistent weakness in Europe and general demand uncertainty. Regarding tariffs, Fracassa stated that while they would create a short-term headwind, the company has a proven playbook from 2018 to mitigate the impact over time through pricing, surcharges, and supply chain adjustments.

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President and CEO Tarak Mehta stated that the wind market has stabilized at a low level and the company has walked away from some low-priced business, not expecting a pickup in 2025. He noted it's too early to comment on portfolio changes but reiterated a disciplined capital allocation approach with a bias towards M&A. CFO Philip Fracassa added that M&A has been key to diversifying the portfolio and improving growth and margins.

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CFO Marc Vandiepenbeeck provided a regional breakdown, stating North America is near capacity, EMEA/LA is at capacity and may need expansion, while Asia Pacific has significant spare capacity. He noted that while AI and other tools are improving technician productivity, continued investment in field labor is critical to support service growth.

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Executives Jennifer Parmentier and Todd Leombruno agreed there could be share gain opportunities, with Leombruno noting that for any business lost to tariffs, there's an opportunity to win other business. On capital allocation, Leombruno stated the increased repurchase was to manage leverage toward their 2.0x target, not because M&A is delayed. He reiterated that the M&A pipeline is active, but timing is hard to predict.

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