“It's important to note, however, that this exposure will reduce over the next few years as we begin to roll out Deer design and U.S. manufactured excavators.”

In context

“on market commentary and how that's impacting our guide? Josh Rohleder: It's a great call out, Josh, and an important point to clarify. I'll start by reiterating that the majority of the margin compression seen in our updated C&F guide this quarter was driven by forecasted tariff impacts. That exposure is primarily driven by 3 areas: first, U.S. sales from our road-building business are exposed to the 10% global tariffs as production is located almost entirely in Germany. Second, we currently operate under a supply agreement with our former JV partner for excavators, a product line that makes up roughly 40% of the earthmoving market. This supply agreement applies to both complete goods sourced from Japan, along with Japanese source components for production in our North Carolina factory. It's important to note, however, that this exposure will reduce over the next few years as we begin to roll out Deer design and U.S. manufactured excavators. Finally, the earthmoving market is more exposed to China component sourcing than our Ag business, given the robust and mature supply base for construction equipment that developed in that region over the past 2 decades. Looking at the C&F industry, utilization of earthmoving equipment in our end markets remains healthy, while current uncertainty has weighed on new equipment replacement demand. Higher levels of price competition are also impacting the first moving market, which is reflected in our revised pricing outlook for the year. It's notable, though, that better-than-expected material favorability is helping to offset some of the margin impact of the additional pricing actions that we're taking. Josh Jepsen: This is Jepsen. One thing I'd like to add here relates to our road-building”