Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $1.49 on sales of $1.5 billion, with an operating margin of 11% [5][20] - Free cash flow reached $78 million, a significant increase from the previous year, representing a cash conversion of 108% [6][23] - The effective tax rate for the quarter was 18.3%, about 170 basis points better than planned due to favorable discrete items [21][22] - EBITDA was $182 million, up 12.2% of sales [22] Business Line Data and Key Metrics Changes - Aerials segment sales were $607 million, with an operating margin improvement of 500 basis points sequentially, but about 200 basis points lower than expected due to customer mix [23][24] - Materials Processing (MP) sales were $434 million, down 9% year-over-year, with an operating margin of 12.7%, showing a sequential improvement from 10% in Q1 [24][25] - Environmental Solutions (ES) generated $430 million in sales, with a 12.9% year-over-year growth and a 19.1% operating margin, reflecting strong performance [26] Market Data and Key Metrics Changes - Waste and recycling now represents approximately 30% of global revenue, characterized by low cyclicality and steady growth [14] - Utilities account for about 10% of revenue, with growth driven by the need to expand the power grid [14] - General construction has decreased to less than one-third of total markets, with strength in large projects and infrastructure, while local private projects remain soft [15] Company Strategy and Development Direction - The company is focused on leveraging synergies across its portfolio, particularly following the ESG acquisition, and is ahead of initial synergy targets [16][19] - The company plans to maintain its full-year EPS outlook of $4.7 to $5.1, expecting stronger performance in Environmental Solutions in the second half [6][30] - The company is exploring digital revenue streams, particularly through the Third Eye platform, which enhances operational efficiency and safety [17][120] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic factors, including high interest rates and tariff-related uncertainties, continue to impact capital decisions [13][15] - The company expects a significant increase in free cash flow compared to 2024, anticipating between $300 million and $350 million in 2025 [31] - Management expressed confidence in the resilience of its diversified end markets, particularly in waste and recycling, utilities, and infrastructure [14][15] Other Important Information - The company ended the second quarter with $1.2 billion in liquidity and plans to deleverage in the second half of the year [27] - A new $150 million share buyback program was authorized, with $33 million remaining from the previous authorization [28] Q&A Session Summary Question: What is driving the strong ES margins? - Management attributed the strong ES margins to operational efficiencies, better execution in utilities, and favorable customer and product mix, although the favorable mix is not expected to recur in the second half [39][40][42] Question: What drove the $20 million adjustment in EBITDA guidance? - The adjustment was driven by stronger performance in ES, offset by unfavorable mix in Aerials and higher tariffs [47][49] Question: How do you view the margin outlook for Aerials? - Management expects Aerials' operating margin to be mid-single digits in Q3, driven by tariffs and unfavorable customer mix [55][56] Question: What is the impact of tariffs on the cost profile? - The company does not expect material impact from steel inflation due to hedging and local sourcing, but tariffs are included in the $0.50 guidance for the year [106][108] Question: How is the company addressing customer caution in the market? - Management noted that larger customers are maintaining their cadence for negotiations, while smaller customers remain cautious due to economic uncertainty [64][94]