Greetings, and welcome to the Terex Corporation first quarter 2021 results conference call. At this time, all participants are in listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Randy Wilson, Director of Investor Relations for Terex Corporation. Thank you, sir. You may begin. Good morning, and welcome to the Terex second quarter 2021 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. I'm joined by John Garrison, Chairman and Chief Executive Officer, and John Duffy Sheehan, Senior Vice President and Chief Financial Officer. The prepared remarks will be followed by Q&A. Please turn to slide two 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'll be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliation for these non-GAAP measures can be found in the conference call materials. Please turn to slide three, and I'll turn it over to John Garrison. Good morning. Thank you for joining us and for your interest in Terex. I want to take a moment and emphasize once again that Terex actions are always guided by our values. We consistently act with integrity, operate with excellence, and care for our team members, customers, and communities. That is true every quarter, but it has been especially important in the past 18 months as the world has dealt with unprecedented challenges brought on by the COVID-19 pandemic. While risks remain, many of the world's economies are moving forward. I would like to thank our team members around the world for their continued commitment to our zero harm safety culture and Terex Way values. Safety remains the top priority in the company, driven by think safe, work safe, home safe. All Terex team members have contributed to our effort to continue to produce and service equipment for our customers while following the protocols and maintaining a safe working environment. I would like to offer my gratitude to our team members and distributors that worked through so many unique circumstances over the last year. We owe our results to the incredible efforts of our operations and parts team members who kept our facilities running. Our sales and service team members, along with our distributors, have also gone above and beyond to meet the needs of our customers. Finally, we are proud to be a values-based company with process leadership in environmental, social, and governance practices. This past quarter, we spent time speaking to some of our investors regarding ESG. If you'd like to learn more about our initiatives, please see our investor relations website. We would welcome the opportunity to speak with you regarding our ESG program. Please turn to slide four. Let me recap some of our results, which Duffy will describe in greater detail. We continue to deliver positive results as customer demand remains strong during the quarter. While revenues were below our expectations due to supply chain challenges limiting production output, we increased operating margins and bookings in both AWP and MP dramatically year-over-year. We significantly improved our second quarter EPS compared to last year, and we are increasing our earnings and free cash flow outlook for full year 2021. AWP and MP continue to effectively manage supply chain disruptions. As a result of the strong execution in both segments, second quarter 2021 operating margins improved dramatically to 11.8% for the company, with both segments delivering double-digit operating margins. This represents 170 basis point adjusted operating margin improvement on revenues 20% lower than the second quarter of 2019. Our intense focus on net working capital management and improved profitability drove $101 million of positive free cash flow in the quarter, and more than $140 million of free cash flow year to date. During the second quarter, our team continued to respond to increased customer demand, effectively managed supply chain and logistics disruptions, tightly managed all costs, and delivered improved margins and outstanding positive free cash flow. Our financial results demonstrate that our strategic priorities are working to improve the company and deliver positive financial results for shareholders. Please turn to slide five. We delivered strong financial results as our strategic operational priorities of execute, innovate, and grow continue to make excellent progress. First, we continue to improve Terex's global cost competitiveness. We expect our SG&A as a percent of sales to be below our target of 12.5% for the full year 2021. We are maintaining strict cost discipline while recognizing that growth in the business will necessitate investment spending. In the first quarter, we announced the planned move of our Oklahoma City telehandler production to Monterrey, Mexico. This action is on track and will reduce the cost of manufacturing our telehandler products for the North American market. The team is addressing continued supply chain disruptions across various supply inputs and product lines. Suppliers and logistics providers are currently working hard to ramp up and meet our production requirements, and we are committed to meeting customer demand. Our team members in both segments have worked hard to adapt and maintain production schedules. Turning to innovation. We continue to listen to our customers, ensuring our products and services have the features and benefits that provide value. We have also invested in our connected assets and digital capabilities to better serve customers. For example, our new Genie micro scissors increases on-the-job productivity. Terex Utilities recently introduced a new digger derrick for construction and maintenance of the electric grid. MP continues to develop, implement, and roll out digital solutions such as connected dealer inventory, telematics, and e-commerce. Finally, we are investing in inorganic opportunities for future growth. We recently completed two actions. First, we acquired a facility in China to localize production to meet increasing demand for our industry-leading mobile crushing and screening products, and we are excited about the growth prospects in China. Second, we completed a bolt-on acquisition, purchasing MDS International, which is a well-established business of heavy-duty aggregate trommels that broadens our product offerings. While this is not a financially significant investment, it demonstrates our progress with inorganic growth via bolt-on acquisitions, as we've previously communicated. Terex is well-positioned for growth in 2021 and beyond because we have strong businesses, strong brands, and strong market positions. We continue to invest, including in new innovative products, digital capabilities, and manufacturing capacity. Turning to slide six. Our AWP and MP segments continue to perform well, allowing us to capture the benefits from the positive market fundamentals that we are seeing. First, in Genie. The current market dynamics point to a multiyear replacement cycle for access equipment. The average age of fleets globally is increasing, and customers need to replenish their fleets, so the replacement cycle is kicking in. We are beginning to see positive indicators for non-residential investment, as well as continued strong order activity. Before wrapping up my comments regarding Genie, I am pleased that we announced earlier this week that Simon Meester was named President of Genie. I thoroughly enjoyed working with Simon and the Genie team over the past year. Simon is the right leader for the Genie business. Turning to our Utilities business. Demand is strong across its end markets of tree care, rental, and investor-owned utilities. In addition, we are experiencing strong growth in our utilities parts and service business. Next, to materials processing. We expect global demand for crushing and screening equipment to continue to grow. Broad-based economic growth, construction activity, and aggregate consumption are the primary market drivers. We are seeing strong markets for the cement mixer, material handling, and environmental businesses. In addition, global monetary and fiscal stimulus programs have supported stronger demand in our end markets. Overall, we are seeing robust market conditions around the world for our industry-leading products and solutions. With that, let me turn it over to Duffy. Thanks, John. Turning to slide seven, let's look at our second quarter results. Overall, revenues of $1 billion were up 50% year-over-year with both of our operating segments revenues up significantly. For the quarter, we recorded an operating profit of $123 million compared to only $7 million in the second quarter of last year. We achieved an operating margin of approximately 12% through disciplined cost control and fulfilling as much customer demand as possible given the realities of the global supply chain during the quarter. The second quarter operating profit does include $4 million of benefits from the release of a financing receivable reserve and the recording of a bad receivable related to prior years, offset by a $1 million charge for a business impairment and restructuring. Improved gross margin and lower SG&A as percentage of sales allowed Terex to expand operating margin significantly year-over-year. Interest and other expense was approximately $22 million higher than Q2 of last year, driven by $26 million of cost in connection with the refinancing of a significant portion of our capital structure, while offset by $4 million in interest savings. Our second quarter 2021 global effective tax rate was approximately 17%, driven by a mix of discrete items in the quarter. Our tax rate estimate for the full year remains 19%, consistent with our previous outlook. Finally, our reported EPS of $1.02 per share includes $23 million of interest charges and other call-outs that I just discussed, and amounted to a $0.26 per share reduction in EPS in the quarter. Turning to slide eight and our AWP segment financial results. AWP sales of $595 million were up 44% compared to last year, driven by a dramatic improvement in all our global markets. The utilities market improved significantly, as evidenced by strong customer bookings. AWP delivered double-digit operating margins in the quarter, driven by increased production and aggressively managing all costs. Second quarter bookings of $747 million were up dramatically compared to Q2 2020, while backlog at quarter end was $1.4 billion, close to three times the prior year. Turning to slide nine and material processing's Q2 financial results. MP had another great quarter. Sales of $441 million were up 67% compared to last year, driven by strong customer sentiment across all end markets and geographies. The MP team has been aggressively managing all elements of cost as end markets improve, resulting in an operating margin above 16%. It is a testament to the MP team's operational strength to deliver these robust operating margins. Backlog of $868 million more than tripled from last year and was up 22% sequentially. MP saw its businesses strengthen through the quarter with bookings up approximately 160% year-over-year. Customer demand in both segments is very positive. Equipment is being ordered, utilized, and serviced as end market demand continues to remain strong. Turning to slide 10. I will now review our updated financial outlook for the full year. This outlook takes into consideration the current end market demand environment, as well as the supply chain headwinds that we have discussed today. As for commercial demand, we have seen our end markets remain robust over the course of the second quarter. All other things being equal, we expect continued end market strength in both segments over the remainder of the year and increasing levels of AWP customer fleet replenishment. Our full-year revenue outlook is limited, though, as a result of the availability of components from our supply chain. From a quarterly perspective, we now expect revenues for the full year to be slightly higher in the second half than the first half of the year, with the third quarter being the strongest of the year. We continue to expect both our operating profit and margins to increase each quarter year-over-year in 2021. However, as a result of commodity cost increases outpacing customer price increases, the absolute amount of operating profit in the second half of 2021 is expected to be lower than the actual operating profit achieved in the first half 2021. We continue to plan for total company incremental margins for the full year 2021, which meet or exceed our 25% target. As a result of positive first half call-outs, corporate and other costs are expected to be slightly higher in the second half versus the first half of the year. Including $0.26 per share of cost for refinancing of our capital structure and the other call-outs in Q2, our full-year EPS outlook is increased to $2.85-$3.05 per share, based on sales of approximately $3.9 billion. Quarterly earnings per share are expected to be generally consistent with the development of operating profits during the year. For the full year 2021, we are estimating free cash flow of approximately $200 million, reflecting a strong year of positive cash generation. Full-year free cash flow includes approximately $75 million from income and VAT tax refunds, which are not expected to reoccur. During the first half of 2021, we received approximately $35 million of these refunds. We continue to plan for capital expenditures, net of asset disposition, of approximately $90 million. The largest project including capital expenditures is for the Genie Mexico manufacturing facility. Turning to slide 11, I'll summarize our updated 2021 EPS outlook. We expect the strong customer sentiment demonstrated in Q2 by our AWP and MP customers to continue throughout 2021. Our 2021 full year EPS outlook reflects, first, our outperformance over the first half of the year. Second, the operating profit contribution on additional revenue for Q3 and Q4. Third, net cost pressures from material cost headwinds. Overall, our 2021 outlook represents a significant improvement in operating performance when compared to 2020. We will continue to aggressively manage costs while positioning our businesses for growth. Turning to slide 12, I'll review our disciplined capital allocation strategy. Our team members remain vigilant and will continue to efficiently manage production and scrutinize every expenditure. The strong positive free cash flow of $101 million in the quarter demonstrates the focus and discipline our team members continue to demonstrate to tightly manage net working capital. Terex has ample liquidity. We have over $1.1 billion available to us with no near-term debt maturities, so we can manage and grow the business. Our strong liquidity position and cash generation allowed us to prepay $83 million of term loans during Q2, which is in addition to the $196 million of term loans prepaid in early February. In addition, we continue to pay our quarterly dividend. We are committed to strengthen Terex's balance sheet while maintaining flexibility to execute on our organic and inorganic growth plans. With that, John, I'll turn it back to you. Thanks, Duffy. Turning to slide 13 to wrap up our remarks. Terex team members around the world are focused on the right things: safety, health, customers, and improved productivity. End markets are strong, and the team is managing supply chain headwinds. We are driving positive free cash flow. We are continuing to invest in innovative products to meet increased customer demand. We are focused on both organic and inorganic growth. As a result of these actions, Terex is well-positioned to deliver strong 2021 results. With that, let me turn it back over to Randy. 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'd like to open up for questions. Operator? Your first question comes from Mig Dobre with Baird. Yes, thank you. Thanks for taking the question. Good morning. Good morning, Mig. I guess where I'd like to start, in AWP, very good order intake. You've got about $1.4 billion in backlog, but obviously based on your updated guidance here, sales in the back half expected to be only about $1.1 billion. You talked about the supply chain being challenging, obviously, and having some issues with parts availability. We heard that from one of your competitors as well. I guess I'm wondering how much of this discrepancy backlog versus second half revenue is driven by this element as opposed to just customer deliveries being scheduled into 2022 and showing up in a backlog at this point? Yeah. Thanks, Mig, for the question. I would say almost all of the deliveries in the AWP group now, specifically Genie, really are a result of the supply chain disruptions that we're seeing and production schedules sliding as a result of the disruptions that we are seeing. Our team's staying in very close contact, and we can talk more about that on the supply side and with customers. I would say most of that is a result of the supply chain disruptions and sliding of production schedules as it pertains specifically to the Genie business. I see. Okay. Looking at slide 11, you detailed $0.10 of cost pressure there. By my math, this is what, call it $8 million-$9 million of pressure. To me, at least, that seems like a relatively low number given your revenue base and all the things that are happening out there. Can you give us a sense for what's behind this in terms of how you came up with this figure? Is this sort of a number that we can carry into next year, or are there things that can mitigate this cost pressure within about 2022? Thank you. I'll start there, Mig. It's Duffy. We certainly have mounting inflationary material cost pressures over the course of this year. If you go back to Q1 and our updated outlook at the end of Q1, we had included about $0.55 of cost pressure at that time. That was really mostly steel-related, we've seen the inflationary cost pressure expand to other products such as resin-based products, freight, other commodities. As a team, we're working hard to mitigate those price increases by suppliers. The $0.10 a share that you see outlined on chart 11 represents our best estimate at this point in time of the amount that would need to be absorbed in order to meet the production in the second half of the year. To the second part of your question about 2022, certainly we talked in Q1, and it certainly continues to be true here at the end of Q2, is that our price cost for 2021 is not level, it's negative. We didn't reprice the backlog when we increased prices in the first quarter of the year. As we go into 2022, it certainly would be our objective to be price cost neutral. That will, of course, depend upon what develops with respect to material costs during the second half of 2021. Thanks, Mig. Operator, next question. Your next question comes from the line of Nicole DeBlase with Deutsche Bank. Yeah, thanks. Good morning, guys. Good morning, Nicole. Can we just talk a little more about the supply chain constraints? What I'm curious about is, has this actually caused production stoppages? We've had to shut value streams down for a couple of days, awaiting parts. A lot of overtime, as you can imagine, on the rework, and it impacts our productivity. The team is focused on meeting the needs of the customer, overcoming disruption. The supply chain will continue to improve, but as we look forward over the next two quarters, quarter to two, we are seeing this level of disruption on a day-to-day basis that our team is doing a masterful job of overcoming, but it does impact our ability to ship, and it does impact our cost position in terms of our labor productivity. Yes, we are doing that literally around the globe. The team can figure out what we can build, we build it, and sometimes we build it partially and have to bring it back into the shop, back into the line, put on the parts, and then ship it. Again, the team did a great job in the second quarter. Over time, we think this is going to improve, but that is the world that we're operating in today from a supply disruption and supplier uncertainty standpoint. Got it. Thanks, John. Maybe just as a follow-up on the SG&A guidance, taking it down to 11.75%. I guess, what is the biggest driver of that? Is that anything to do with the temporary cost cuts not coming back as quickly or maybe just return to work happening slower? Just trying to get a sense of if we should be expecting a return to the 12.5% target as we move into 2022. Thanks, Nicole. I'd say there's two factors that go into the SG&A, I'll say, movement versus our guidance at the beginning of the year. The first is obviously the top-line revenue that is the denominator in the calculation has increased, which brings the percentage down. That said, as we went into the year, the incentive compensation was planned at 100% of achievement, or let's call it target. With the increase in our outlook for the year, we are accruing incentive compensation for the team at above target levels, which increases the amount of SG&A. In fact, the absolute increase in SG&A is virtually 100% attributable to increased incentive compensation. I think that's important to note because we're really treating SG&A for this year as a fixed cost. Irrespective of the revenue increasing, other than the incentive compensation which we would owe under the plan, the team is maintaining really strict cost discipline. In future periods, to your point about in the future, I do believe that there will be investment that will be required to grow our business and to maintain the customer relationships to invest in systems. Our objective is to continue to be a 12.5% SG&A or lower. I would expect that if we're looking at a positive commercial environment, demand environment again in 2022, that we would be on the lower end of our target. Thanks, Nicole. Operator, next question. Next question comes the line of David Raso with Evercore ISI. Hi, thank you for taking the time. John, for you to pass the baton on to Simon at AWP, obviously, the second quarter margin's pretty strong. You obviously had gained comfort. It's time for you to sort of back away from that role, and obviously confidence in Simon to move forward. Curious, given how big the backlog is right now, extending into 2022 more than we normally would see right now. If you had to frame how you think about what you know from visibility, but also how you left the business, the condition it was in. If we had to think about incremental margins for AWP next year, how should we think about that? Thanks, David. Well, first, actually, across Terex, the team's done an incredible job dealing with the uncertainty and the challenges associated with the pandemic. Simon is the right leader, as I said in my prepared comments, got a great team at Genie, and they've got a strategy in place to drive improved operating performance in our Genie business. At the macro level, the secular trends, David, as you know, in the rental industry, are positive, and we can talk about the positive nature of the replacement cycle that's forthcoming. We think there's a strong market environment coming forward with the AWP team. Simon and the team are implementing a strategy to continue to drive improvement so that we're globally cost competitive as we compete in a global marketplace for the aerial business. We're going to continue to drive margin improvement in our operations, in our sales and marketing, in our product developing offerings, all driving towards, David, we're not going to back away from at least a 25% incremental margin improvement in the business. It's a business that can continue to drive over time, can continue to drive margin improvement so that we consistently deliver double-digit operating margins in the business. We're not there right now. As you look through the quarter, the seasonality is not going to change. Over time, that's what we're focused on as a team, is to drive the margin of that business consistently to the double-digit range. Regarding the increased visibility on 2022, just trying to quantify it a bit, and of course, if you can give us any insights on the mix geographically, pricing on the new equipment, the product type. It's just because the backlog's huge. I mean, normally this time of year, the backlog for AWP is anywhere from 40% to, say, 60% of the second half AWP revs. Right now, it's 130% of what you're guiding. Obviously, that's a huge incremental visibility for the following year. Again, open to you, any color you can give us on that extra visibility, what it looks like. Thanks, David. You're right. We're absolutely encouraged by the strength that we're seeing across our Genie, our Terex Utilities for that matter as well, David. If you look at North America, you asked about customer mix. We're seeing strength across our independents and the national accounts. Product mix, we're not seeing any fundamental change in the product mix in growth that we've seen in terms of our backlog and orders in North America. Likewise, David, in Western Europe, we're seeing a nice strong recovery there from an order standpoint. Again, nothing substantially different in terms of customer or product mix. We're seeing growth in China. China didn't dip like the western part of the world did, we'll continue to experience growth in China. In China, for us, it's primarily a boom market, that's what we're seeing there. In terms of the visibility, David, yes, the backlog is great. As we go into 2022, and we're having those conversations now, I think customers are buoyant. They're seeing strong utilization. They're seeing improving rates. They're seeing strong used equipment values. We're engaging in the conversations for 2022, and we're starting to have the pricing conversations. Because as Duffy indicated earlier, our price cost ratio this year hasn't been what we would like to have, and we need to get an improved price cost ratio given the material increases that we're seeing as we go forward into 2022. Now, David, the backlog that slips because we couldn't produce, that will be at 2021 pricing. The commitment to deliver 2022 products will be at 2022 pricing, and that work is underway. Operator, next question. Your next question comes from the line of Stephen Volkmann with Jefferies. Hi. Can you hear me okay? Yeah, we can hear you fine. Okay. Sorry, must be on my end. Question on MP, actually. Can you just provide a little more color on sort of specifically which of your MP product lines are kind of the strongest and where the demand is robust there? I have a quick follow-up with margin. Sure. I'll take the demand, and Duffy, you can comment on the margin side as we go. Stephen, the good news is we're seeing strong global momentum really across our businesses, our product lines within the MP business and really across the globe. On the core crushing and screening business, we saw significant growth in orders. Dealers' inventory levels are low. There is high utilization on their rental fleets, and they're ordering back. Again, across our product portfolio in aggregates, and again, across the globe, we're seeing strong orders. In our concrete business, which is our Terex Advance concrete trucks, very strong growth in that segment associated with the residential construction that we're seeing in the U.S. That business has rebounded quite strongly. Our materials handling business, our Fuchs business, one of the only positives of high steel prices is that we're seeing high scrap steel prices. A big part of that business services that market, we're seeing that globally recover in terms of orders in backlog. We're also investing in new products and capacity expansion to branch out into other segments. Again, the Fuchs business has recovered quite nicely. Our environmental business within MP, that's a newer business for us. Again, we're seeing really strong growth there. Again, Western Europe, North America, Asia Pacific, we're seeing growth across that business. Our pick and carry business down in Australia. Australia really weathered the pandemic pretty well, and we're seeing strong order activity and consistent order activity through the pandemic in our pick and carry business. Last but not least, our RTs and tower business, especially in the European area, we saw some good recovery and strength with orders. Last but not least, despite the significant COVID challenges in India, we're seeing strong orders and strong bookings in India as they come out of the depths of the pandemic. As we look at the MP business, Stephen, we see strong growth across the product portfolio and literally across the globe. We're pleased at what we're seeing on the demand side for the MP. Duffy, you had a question about the margin? Yeah, the margin. The follow the margin. Yeah, go ahead. Yeah. Obviously very big margin in the second quarter. It seems to step down, I guess, in the second half. Just what's the right way longer term? Is this a mid double-digit kind of margin business going forward, or was there something special in the second quarter? No, I think that if you look back over the last four quarters for our materials processing segment, they've demonstrated maybe not full mid-teens margins, but certainly let's call it in the 13%-15% range. I think that, as you noted, the second half of the year does reflect the uncertainty surrounding supply chain disruption and material costs. That is bringing it slightly down below the 13 number I just referenced. Still, they're a consistent double-digit margin. They're consistent in the teens performer, and we would expect that to continue in 2022 and beyond. All right. Thank you. Thanks, Steve. Operator, next question. Your next question comes on the line of Jerry Revich with Goldman Sachs. Yes, hi. Good morning, everyone. Good afternoon. John, now that the turnaround of AWP is complete, can you just talk about your strategic priorities from here and if the answer's capital deployment towards M&A, maybe just give us a bit more on the parameters that you're looking at and the pipeline, if that's the biggest focus from here. Thanks, Jerry. Again, the team, we have work to be done at our Genie business, and I'm confident in our Genie team to continue to execute the strategy that we have going forward. Your broader question is a really good one. As we look at our disciplined capital allocation that we've been focused on the last several years, one was to improve the cash flow capabilities of the business, and we've done that. Second was to improve our balance sheet. We further paid down debt this quarter after paying down debt in the first quarter as well. Our balance sheet is in really good shape, good cash flow generation. Now we're looking at how do we grow the business via inorganic activities. We do believe that there will be opportunity in that area to deploy capital to grow. Specifically, we're looking in and around our MP businesses. Jerry, if you look at the market verticals that we compete in, there's still a pretty high degree of fragmentation in those specialized equipment and specialized markets around the MP segment. We're building a pipeline there. We believe in the utilities area, given what's needed around the world for electrification, that there's opportunities in the utility space, and then also on lifecycle solutions. We are building a pipeline. As again, we did two transactions here in the second quarter. We're spinning up the pipeline to deploy capital for inorganic growth. We think the business is positioned now for us to be able to do that. We're actively pursuing things in those three areas that I just spoke. I will say, we're going to be very disciplined about it, but we absolutely believe there's going to be opportunities for growth via inorganic. Okay. Separately, in the last steel inflation cycle, once steel inflation slowed, you folks essentially wound up getting pricing that made you whole on the cycle. Can you talk about the plan here? As we think about what 2022 pricing actions will look like, will you look to fully recap the price cost headwinds from this year in your initial 2022 pricing, or anything that's changed in the industry structure or otherwise that would prevent you from doing what you did in the last cycle? No. Across all the businesses, we're being transparent with our customers and their distributors about the input costs we're seeing. We did, as Duffy said, take some pricing action, continue to take pricing actions. We will look to offset the material cost increases that we're seeing to include steel in our 2022 pricing, and at least see price cost neutrality, whereas this year, as Duffy said, we're a bit upside down on price cost. As we go forward, we will look to offset those cost increases with pricing actions. Again, it will vary by business, by region around the world. The strategy is we provide value-added products that provide significant value over a duration of a lifetime for our customers, and we do have to pass on the cost that we cannot absorb, and that's what we're going to be working on. Very difficult conversations, I know that, but that's what we need to do going forward, because we're having those same difficult conversations with our suppliers, and we're pushing back hard on their cost increases that they're trying to pass on to us. Some of them that we're going to have to accept, and we're going to have to pass that through to our customers, and they're going to have to pass it through to their customers. That's just the nature of the cycle, I think, that we're in right now. It's not going to be easy, but that's what we need to do. Thanks, Jerry. Operator, next question. Your next question comes from Steven Fisher with UBS. Great. Thanks. Good afternoon. Just on the supply chain. Hey, guys. I know there's a real high degree of uncertainty here on the supply chain, but John, do you have any thoughts on when is really the kind of peak pain point for this and when we could start to see some improvements there? I couldn't tell from your earlier comments if you're already seeing signs that it's getting better or if it's just an expectation that at some point it will get better. That's a great question. I'm chuckling. Peak pain. It just depends on what day and what product and what supplier. No, it is going to get better. As the system gets back in sync, the logistics system is creating a big disruption right now, and that's going to work itself out. We ended up with containers in the wrong place, ships in the wrong place, no ability to air freight. That's starting to improve. The logistics side is going to take some time to get everything back in balance. That is going to improve. Every supplier in the chain is doing the same thing we're trying to do, which is they're highly motivated to meet our needs so that we can meet our customer needs. I've been personally engaged with CEOs in the supply chain, tier one down to tier four. We're all working on the same thing. Our teams are working hard to mitigate the disruption, to produce what we can produce, and get back to what I would call normal operations. In terms of when that exactly happens, I think we're going to be in this challenging period of time for the next couple quarters. The other thing is we're a manufacturer. We need 100%. one part missing, we can't ship. Even though if I improve to 99, I need that final part before I can ship. That's what we're focused on as a team. It is going to get better. Everybody in the system is highly motivated to continue to drive the improvement. It's just going to take time. This global integrated supply chain, it was like a Swiss watch. It got stopped, and now it's starting back up. We're experiencing disruptions. Our suppliers are working hard. Our teams are doing incredible work to build what we can build as efficiently as we can build it. It is going to get better. When exactly? I don't know, but I'm absolutely confident that we'll get better over the next couple quarters. Steve, if I was to just give you a couple of data points. The supply chain is getting better. If you just measure it in terms of the production, for example, at our Genie. The production in Q2 of this year was more than double Q2 of last year and increased every quarter between Q2 of last year and Q2 of 2021. When you look at the production we had in the second quarter, it was still only, say, 60% of the production we had in the quarters of, call it Q2, Q3 of 2018. Our backlog is higher than we had in 2018. Demand increased exponentially overnight, and our ability to ramp up production from components from suppliers to be able to ramp up our production to meet that overnight demand has been what the challenge is. Very helpful. Just a follow-up in terms of the size of acquisitions. You guys have done a great job with cash flow and the balance sheet, and you'll have flexibility on doing some bigger deals if you wanted to. Can you maybe just give us any color on the range of sizes of deals you'd consider, or are the things available in your sites more just smaller bolt-ons? Thanks for the question. Given our improved balance sheet and our low leverage, especially as we continue to drive free cash flow and debt down, we will look at transactions and really look at where does our endpoint leverage end up. We haven't changed. We're consistent on that 2.5xtimes net debt EBITDA kind of through the cycle. That would be the gauge that could give an indication of what we would be willing to or comfortable taking on more debt for the size of this transaction. It does give us some flexibility in terms of size. Again, we're going to be very disciplined, but I feel good about our capabilities, our balance sheet capabilities, cash flow capabilities to do things larger than the two small transactions that were done. Think about the 2.5x net debt through EBITDA through the cycle, and that'll give you a range to think about. That's how we're thinking about it. Thanks, Steve. Operator, next question. Your next question comes from Jamie Cook for Credit Suisse. Hi. Good morning. Most of my questions have been answered. Just one. Can you just talk to, within the Aerial Work Platforms side, just with all the material costs and pricing that we're trying to get through, can you talk to the competitive environment and whether you're seeing everyone sort of act rationally, or are we trying to go for potentially market share? Just one quick follow-up on the backlog for AWP. What is the dollar amount associated with backlog going into 2022? Thanks. Yeah. Thanks, Jamie. The pricing dynamics in the industry, especially in the western part of North America and Europe, the pricing dynamics, I believe, are rational in that we are all experiencing material cost inflations, and we're all having those challenging conversations with customers about the need to seek pricing. The only potential exception to that, Jamie, is I will say the pricing dynamics inside of China are quite aggressive, and sometimes there's some pricing dynamics there that, frankly, we just won't participate in. I would say rational, reasonable competition is what we're experiencing in the western part of the world, North America and Europe. Asia as well. Within the confines of China, we're seeing some pricing at times that you would have to say that's not rational. That's the pricing dynamics as of now. Duffy? In terms of AWP backlog, at the end of Q2, the total segment backlog was about $1.4 billion. I would say that $200 million-$300 million of that represents amounts that would be for deliveries based upon the second half outlook that we provided would be deliveries in 2022. I would say most of that represents carryover from 2021. We will certainly be seeking to increase our production throughout the second half of this year and accelerate the delivery to customers into 2021 if at all possible. The only other thing I'd add on that, Jamie, is that does include our utilities business. Some of the utilities business is actually quartered out in 2022, but that would be at 2022 pricing. That's not unnatural for the utilities business. There are some longer lead vehicles in that segment within AWP. Okay. Thank you. Thanks. Operator, next question. Your next question comes from the line of Ross Gilardi with Bank of America. Hey, good morning, guys. Good afternoon. Good morning, Ross. Look, you guys have done a great job of turning around the free cash flow. It looks like your conversion this year from EBITDA at your midpoint of the guide is going to be a little bit above 50%. Do you think that's a reasonable way to look at it going forward, or is there another sort of conversion metric that you think might be more appropriate? Yeah. Thanks for recognizing our free cash flow generation, Ross. You, in particular, have been a proponent for us getting better in that area and quite honestly, making me better. I think it's important, in the comments I provided, prepared remarks I provided, of the $200 million, there is a free cash flow outlook for the year. There is $75 million that represents our recovery of amounts of tax amounts from prior years. That amount that we had hit from Europe that had been outstanding for some time, as well as income tax refunds, carrybacks in the United States as a result of tax losses in the U.S. last year that we were able to carry back. Those two combined are about $75 million of the $200. We're going to continue to maximize free cash flow every single year. Ostensibly, our free cash flow target for the business over the cycle is 100% of net income. In some years, we've done better than that, like last year, for example. We are absolutely, I assure you, focused on free cash flow generation, which allows us then to use that free cash flow to grow the business organically and inorganically. Okay, thanks. That was helpful. Can you talk a little bit more about this utilities business and the drivers there? You've been in that business for a while, and it's done well by you, but can you give us a sense of how big it is within AWP and just how sustainable those growth drivers are? I know you talked about EV infrastructure and so forth, but just really more like the everyday drivers of the business, more like utility maintenance type activity or what else is it driving? Thanks. Terex Utilities is about $400 million, and we think it's a business that can grow. Part of the reason we made a substantial investment in Watertown was to have the capacity to grow. The underlying fundamentals and dynamics, especially in North America, but it really expands beyond North America, of the utility sector are strong. The reality of it is there needs to be investment in the electric grid to accomplish any of the electrification that we're talking about. That electric grid is distribution to the house as well as transmission. There is substantial investment required in, one, maintain the electric grid, and two, building out the electric grid. The other thing that's helped with the unfortunate situation out in California is that the, what we call the maintenance side, tree care, vegetation management. That has really caused utilities and rate regulators to ensure that they're making the appropriate investment in vegetation management and the appropriate investment in the grid so that you don't end up with a situation like they've had at PG&E. The underlying fundamentals of the utility business we think are quite strong and are going to be quite strong for some period of time. That also coupled with the 5G investment level. If you put a 5G repeating tower, and especially in rural America, that's going to have to go most likely on top of electrical poles. If it has to go on top of an electric pole, it has to be an insulated system. That's what we specialize in at Terex Utilities. We think that gives us an opportunity for growth. We've been in China. We've had some success with State Grid. We're localizing some of our production for the China market. The utilities area, we think is a strong area that we can grow organically. We also think there's going to be some opportunities, especially as we look globally around the world, because it's not dissimilar in other parts of the world as it is in North America, that this is a segment that we want to be in that can provide excellent growth and excellent returns going forward. Again, we've made a sizable investment in our utilities business, and the team's working hard to ensure we get a return, get the capacity out that we need going forward in that business. It's a business we like, it's a business we're invested in, and if opportunity presents itself, it will be a business that we continue to invest in. Thanks, Ross. Operator, last question. Will be from Steve Barger with KeyBanc Capital Markets. Hey, thanks guys for squeezing me in. No problem. With 3Q being the strongest revenue quarter, should we think that both segments will see sequential increases from 2Q or will regional shutdowns or anything else cause that not to happen for one segment? Sequential increases in revenue, right? Right. Yes. The answer to that question is generally yes. Probably more so in the AWP segment than the MP segment. Got it. The outlook suggests the margin steps down in both segments in the back half. Are the supply chain impacts or parts availability issues evenly distributed across the two segments, or is one more affected than the other? I would say more evenly. The Genie business is a faster cycle time business, higher volume, and so if we do have a disruption there, it does impact it. Across the globe in our MP business, they are experiencing disruption as well. Again, doing a great job overcoming it, but a little bit slower takt time on those, so they have the opportunity to make it up a little bit better than Genie, just given the takt time of the two assembly operations. Got it. Thanks for the time. Absolutely. Thanks, Steve. Thank you. If you have any further questions, please don't hesitate to reach out to Randy. Thank you for your interest in Terex, and as I sign off with all my team members, be safe and stay healthy. Thank you. Ladies and gentlemen, thank you for participating. You may now disconnect.