Core Insights - Terex Corporation reported strong financial performance in Q2 2025, driven by the Environmental Solutions segment, which exceeded expectations despite challenges in the Aerials segment [2][5][6] - The company maintains its full-year adjusted EPS outlook of $4.70 to $5.10, reflecting confidence in its growth strategy and operational resilience [8][9] Financial Performance - Net sales for Q2 2025 were $1.5 billion, a 7.6% increase from Q2 2024, with adjusted operating profit at $164 million, or 11.0% of net sales [5][6][29] - Net income was $72 million, or $1.09 per share, compared to $141 million, or $2.08 per share in the same quarter last year [6][22] - The company generated strong free cash flow of $78 million, up from $43 million in the prior year, achieving a cash conversion rate of 108% [6][8] Business Segment Performance - The Aerials segment reported net sales of $607 million, down 17.1% year-over-year, with an operating profit margin of 7.6% [6][29] - Materials Processing segment net sales were $454 million, down 9.0% year-over-year, with an operating profit margin of 10.8% [6][29] - Environmental Solutions segment net sales increased by 12.9% year-over-year to $430 million, with an operating profit margin of 14.2% [6][29] Strategic Initiatives - The Board of Directors authorized a new share repurchase program of up to $150 million, reflecting the company's commitment to returning capital to shareholders [7] - The company continues to focus on long-term organic growth while balancing capital allocation strategies [8] Outlook - For the full year 2025, Terex expects net sales between $5.3 billion and $5.5 billion, with a segment operating margin of approximately 12% [9][10] - The company anticipates a healthy backlog and normal seasonal booking patterns to support its sales outlook for the second half of the year [8]

Company Overview - Terex Corporation is a global industrial equipment manufacturer specializing in materials processing machinery, waste and recycling solutions, mobile elevating work platforms (MEWPs), and equipment for the electric utility industry [3] - The company designs, builds, and supports products used across various sectors including maintenance, manufacturing, energy, minerals and materials management, construction, waste and recycling, and the entertainment industry [3] - Terex provides lifecycle support through a global parts and services organization and offers digital solutions to maximize customer investment returns [3] Environmental Initiatives - Certain Terex products and solutions are designed to reduce environmental impact, including electric and hybrid offerings that provide quiet and emission-free performance [3] - The company also offers products that support renewable energy and aid in the recovery of useful materials from various types of waste [3] Financial Results Announcement - Terex Corporation will host a conference call to review its second quarter 2025 financial results on July 31, 2025, at 8:30 a.m. Eastern Time [1] - The financial results will be available on the company's investor relations website prior to the call [1]

Core Viewpoint - Terex Corp. (TEX) is given a sell rating due to significant macroeconomic challenges, particularly in its legacy MP and Aerials segments, and the current forward P/E valuation of 9.5x is deemed insufficient [1] Company Analysis - The investment approach emphasizes understanding the core economics of a business, including competitive moat, unit economics, reinvestment opportunities, and management quality, which are crucial for long-term free cash flow generation and shareholder value creation [1] - The focus is on sectors with strong secular tailwinds, indicating a preference for industries that are expected to grow over time [1] Investment Philosophy - The analysis is rooted in fundamental research, aiming to identify businesses with potential for scaling and unlocking significant terminal value [1] - The goal is to provide insights that help investors concentrate on factors that drive long-term equity value [1]

Group 1 - The article discusses the impact of the acquisition of the Environmental Solutions Group by Terex (NYSE: TEX) from Dover (DOV), indicating that this acquisition aimed to create a more diversified business for Terex [1] - It is noted that the timing of the acquisition coincided with a period of softness in Terex's shares, suggesting potential challenges in the market environment following the deal [1] - The investing group "Value In Corporate Events" provides insights and actionable ideas related to major corporate events such as earnings reports, M&A, and IPOs, with a focus on identifying the best investment opportunities [1] Group 2 - The article emphasizes that the coverage includes 10 major events per month, highlighting the group's commitment to finding lucrative investment opportunities in the corporate sector [1] - There is a mention of the group's services being available through a premium subscription, which includes a free trial for potential members [1] - The analyst's disclosure states that there are no current stock or derivative positions in the companies mentioned, indicating an unbiased perspective in the analysis provided [1]

Core Insights - Terex's international operations are crucial for understanding its financial strength and growth potential, especially given the interconnected global economy [2][3] - The company's total revenue for the quarter ending March 2025 was $1.23 billion, reflecting a year-over-year decline of 4.9% [4] International Revenue Breakdown - Western Europe generated $162 million in revenue, accounting for 13.18% of total revenue, which was a significant miss of -33.91% compared to the projected $245.13 million [5] - Asia-Pacific contributed $102 million, representing 8.30% of total revenue, also falling short by -24.6% against the consensus estimate of $135.27 million [6] Revenue Forecasts - For the current fiscal quarter, total revenue is projected to reach $1.46 billion, an increase of 5.5% from the same quarter last year, with Western Europe expected to contribute 16.5% ($240.62 million) and Asia-Pacific 12.2% ($178.16 million) [7] - For the full year, total revenue is anticipated to be $5.32 billion, indicating a rise of 3.7% from the previous year, with Western Europe at 14.9% ($794.87 million) and Asia-Pacific at 11.8% ($629.27 million) [8] Market Context - The reliance on international markets presents both opportunities and risks, making it essential to monitor international revenue trends for forecasting the company's prospects [9] - Analysts are increasingly focused on international developments and their impact on earnings estimations, influenced by local market conditions [10]

Investment Rating - The industry investment rating is "Positive" and maintained [11] Core Viewpoints - Overseas companies are actively responding to the impact of US tariffs through various strategies such as inventory preparation, supply chain adjustments, price increases, and internal cost control [10][19] - Different companies are experiencing varying degrees of price adjustments, with Stanley Black & Decker already implementing price increases and expecting further hikes in Q3, while others like Amazon and Rational have yet to raise prices but may need to do so to alleviate cost pressures [10][19] - Companies have generally stocked up on inventory before the tariffs took effect to mitigate cost pressures [10] Summary by Relevant Sections Tools Sector - Stanley Black & Decker plans to mitigate tariff impacts through supply chain adjustments, price increases, and collaboration with the US government. Approximately 15% of its supply chain is from China, and the company aims to adjust this over 12-24 months [17][19] - The company has already raised prices in April 2025 and anticipates further increases in Q3 2025 [17] Aerial Work Platforms - Oshkosh manufactures nearly all its products sold in the US domestically and is using supply chain adjustments and cost control to mitigate tariff impacts. The company reports healthy market demand and order levels [22][23] - Terex's Genie brand sources about 90% of its AWP products from the US and Mexico, and the company is also taking steps to minimize tariff impacts through inventory preparation and supply chain adjustments [28][30] Technology Sector - Apple expects limited impact from tariffs on its Q1 2025 performance, with a projected cost increase of $900 million due to tariffs. The majority of its products sold in the US will be sourced from India and Vietnam [40][41] - Amazon has not seen significant price increases in retail goods but anticipates potential price adjustments in the future to manage costs [44][45] Commercial Kitchen Equipment - Rational's products exported to the US are affected by a 10% additional tariff, but the company is focusing on efficiency improvements to avoid price increases. The company has not yet adjusted prices but may need to pass on some costs [51][52]

Core Viewpoint - Terex Corporation reported a significant decline in adjusted earnings per share, down 52% year-over-year, despite beating consensus estimates, indicating challenges in sales volume and production adjustments due to weak demand [1][2][3]. Financial Performance - Adjusted earnings per share were 83 cents, surpassing the Zacks Consensus Estimate of 49 cents, but down from $1.74 in the prior-year quarter [1][3]. - Total revenues decreased by 5% year-over-year to $1.23 billion, slightly above the Zacks Consensus Estimate of $1.22 billion [3]. - Including one-time items, earnings were reported at 31 cents per share, down from $1.60 in the same quarter last year [3]. Segment Performance - The Materials Processing segment saw revenues fall by 27% year-over-year to $382 million, with operating income down 50% [8]. - The Aerial Work Platforms segment generated revenues of $450 million, a 28% decline, with operating profit plunging 98% [9]. - The Environmental Services segment, including the recently acquired Environmental Solutions Group, reported revenues of $399 million and an operating profit of $56 million [9]. Cost and Margin Analysis - Cost of goods sold increased by 0.4% year-over-year to $999 million, while gross profit fell by 23% to $230 million [6]. - Adjusted operating profit was $111 million, down from $163 million in the previous year, with an adjusted operating margin of 9.1%, a contraction of 350 basis points [7]. Cash Flow and Shareholder Returns - As of March 31, 2025, cash and cash equivalents were $298 million, down from $388 million at the end of 2024 [10]. - The company returned $43 million to shareholders through share repurchases and dividends during the quarter [11]. Outlook - Terex expects sales in the Materials Processing segment to decline in high single digits from a baseline of $1.9 billion, and AWP segment revenues to decrease in low double digits from a baseline of $2.41 billion [12]. - Projected net sales for 2025 are in the range of $5.3 billion to $5.5 billion, indicating a year-over-year growth of 6% at the midpoint [12]. - Adjusted earnings per share are expected to be between $4.70 and $5.10, reflecting a 20% drop at the midpoint from the previous year's earnings of $6.11 [13]. Stock Performance - Terex's shares have declined by 33.5% over the past year, compared to a 7.1% decline in the industry [16].

Core Insights - Terex reported revenue of $1.23 billion for Q1 2025, a year-over-year decline of 4.9%, with EPS of $0.83 compared to $1.60 a year ago, indicating a significant drop in profitability [1] - The revenue exceeded the Zacks Consensus Estimate of $1.22 billion by 0.64%, while the EPS surprised positively by 69.39% against the consensus estimate of $0.49 [1] Financial Performance - Net sales for Aerial Work Platforms (AWP) were $450 million, surpassing the average estimate of $431.38 million, but reflecting a year-over-year decline of 41.8% [4] - Net sales for Materials Processing & Mining (MP) were $382 million, slightly below the average estimate of $401.61 million, with a year-over-year decline of 26.5% [4] - Net sales for Corporate and Other / Eliminations were -$2 million, compared to an average estimate of $0.24 million, showing a year-over-year increase of 900% [4] - Net sales for ESG were $399 million, slightly above the estimated $389.63 million [4] Operational Metrics - Income from Operations for AWP was $2 million, significantly lower than the average estimate of $17.14 million [4] - Income from Operations for MP was $36 million, exceeding the average estimate of $28.10 million [4] - Income from Operations for Corporate and Other / Eliminations was -$25 million, worse than the average estimate of -$18.87 million [4] - Income from Operations for ESG was $56 million, below the average estimate of $65.71 million [4] Stock Performance - Terex shares returned +1.6% over the past month, outperforming the Zacks S&P 500 composite, which declined by -0.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201%20Financial%20Statements) For the first quarter ended March 31, 2025, Terex reported net sales of $1.23 billion, a decrease from $1.29 billion in the prior-year period, with net income declining to $21 million from $109 million and total assets increasing to $5.84 billion, reflecting the impact of the recent ESG acquisition Condensed Consolidated Statement of Comprehensive Income (Loss) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net sales** | $1,229 million | $1,292 million | | **Gross profit** | $230 million | $297 million | | **Operating profit** | $69 million | $158 million | | **Net income (loss)** | $21 million | $109 million | | **Diluted EPS** | $0.31 | $1.60 | Condensed Consolidated Balance Sheet Highlights | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $2,436 million | $2,320 million | | **Total assets** | $5,840 million | $5,730 million | | **Long-term debt, less current portion** | $2,582 million | $2,580 million | | **Total liabilities** | $3,996 million | $3,898 million | | **Total stockholders' equity** | $1,844 million | $1,832 million | Condensed Consolidated Statement of Cash Flows | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | ($21 million) | ($34 million) | | **Net cash provided by (used in) investing activities** | ($26 million) | ($36 million) | | **Net cash provided by (used in) financing activities** | ($50 million) | $71 million | | **Net Increase (Decrease) in Cash and Cash Equivalents** | ($90 million) | ($6 million) | [Note B – Business Segment Information](index=11&type=section&id=Note%20B%20%E2%80%93%20BUSINESS%20SEGMENT%20INFORMATION) Effective January 1, 2025, Terex realigned its segments into Materials Processing, Aerials, and Environmental Solutions, with North America comprising 73% of total sales - Effective January 1, 2025, the company realigned its business into three reportable segments: **Materials Processing (MP)**, **Aerials**, and **Environmental Solutions (ES)**, with the ES segment now including the aggregated Environmental Solutions Group (ESG) and Utilities operating segments[39](index=39&type=chunk) Segment Performance (Q1 2025 vs Q1 2024) | Segment | Net Sales Q1 2025 | Operating Profit Q1 2025 | Net Sales Q1 2024 | Operating Profit Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Materials Processing (MP)** | $382M | $36M | $520M | $72M | | **Aerials** | $450M | $2M | $623M | $92M | | **Environmental Solutions (ES)** | $399M | $56M | $151M | $15M | Net Sales by Region (Q1 2025) | Region | Net Sales (in millions) | | :--- | :--- | | North America | $898 | | Western Europe | $162 | | Asia-Pacific | $102 | | Rest of World | $67 | [Note D – Acquisitions](index=16&type=section&id=Note%20D%20%E2%80%93%20ACQUISITIONS) Terex acquired the Environmental Solutions Group (ESG) for $2.01 billion in cash, allocating $792 million to goodwill and $1.114 billion to identifiable intangible assets - The company acquired the Environmental Solutions Group (ESG) from Dover Corporation on October 8, 2024, for a purchase price of **$2.01 billion in cash**[52](index=52&type=chunk) - The goodwill of **$792 million** resulting from the acquisition was assigned to the ES segment and is attributed to assembled workforce and expected synergies[58](index=58&type=chunk) Preliminary Fair Value of Net Assets Acquired (ESG) | Assets/Liabilities | Fair Value (in millions) | | :--- | :--- | | **Goodwill** | $792 | | **Identified intangibles subject to amortization** | $1,114 | | **Total assets acquired** | $2,248 | | **Total liabilities assumed** | $248 | | **Net assets acquired** | $2,000 | [Note J – Long-Term Obligations](index=22&type=section&id=Note%20J%20%E2%80%93%20LONG-TERM%20OBLIGATIONS) To finance the ESG acquisition, Terex secured new credit facilities and issued senior notes, bringing total long-term debt to $2.58 billion as of March 31, 2025 - On October 8, 2024, the company amended its credit agreement, increasing the revolving credit facility to **$800 million** (maturing 2029) and adding a new **$1.25 billion term loan facility** (maturing 2031)[79](index=79&type=chunk) - The company issued **$750 million in 6.25% Senior Notes due 2032** to help fund the ESG acquisition[86](index=86&type=chunk) Fair Value of Debt (as of March 31, 2025) | Debt Instrument | Book Value | Fair Value | | :--- | :--- | :--- | | 5% Notes | $600M | $572M | | 6.25% Notes | $750M | $728M | | New Term Facility (net) | $1,244M | $1,244M | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 results exceeded expectations despite a 4.9% sales decline, supported by the ESG acquisition and a $2.6 billion backlog, leading the company to maintain its full-year outlook - Q1 net sales of **$1.2 billion were down 4.9% YoY**, as a 25% decline in organic business sales was partially offset by the addition of the ESG business[116](index=116&type=chunk) - The company's backlog stood at **$2.6 billion**, which supports the full-year outlook[116](index=116&type=chunk) - The full-year 2025 outlook is maintained, with expected net sales of **$5.3 to $5.5 billion** and EPS between **$4.70 and $5.10**[123](index=123&type=chunk) - Return on Invested Capital (ROIC) was **15.0%** as of March 31, 2025[126](index=126&type=chunk)[128](index=128&type=chunk) [Results of Operations](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated operating profit fell 56.3% to $69 million, as sharp declines in the MP and Aerials segments were partially offset by a 273.3% profit surge in Environmental Solutions - The decrease in MP operating profit was due to lower sales volume, unfavorable mix, and higher severance costs[136](index=136&type=chunk) - The sharp decline in Aerials operating profit was caused by lower sales volume, unfavorable absorption from lower production, and a one-time litigation charge[138](index=138&type=chunk) Segment Operating Profit Changes (Q1 2025 vs Q1 2024) | Segment | Operating Profit Q1 2025 | Operating Profit Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Materials Processing** | $36M | $72M | (50.0)% | | **Aerials** | $2M | $92M | (97.8)% | | **Environmental Solutions** | $56M | $15M | 273.3% | [Liquidity and Capital Resources](index=35&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintained total liquidity of $1.1 billion and experienced a free cash flow use of $55 million, while returning capital through share repurchases and dividends - Total liquidity was approximately **$1,098 million** at March 31, 2025, consisting of $298 million in cash and $800 million available under the revolving credit facility[146](index=146&type=chunk) - During Q1 2025, the company repurchased **798,723 shares for $33 million** and paid a dividend of **$0.17 per share**[102](index=102&type=chunk)[103](index=103&type=chunk)[153](index=153&type=chunk) Free Cash Flow (Q1 2025) | Item | Amount (in millions) | | :--- | :--- | | Net cash used in operating activities | $(21) | | Capital expenditures, net | $(34) | | **Free cash flow (use)** | **$(55)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign exchange, interest rates, and commodities, with a 10% currency fluctuation estimated to impact operating income by $4 million - A 10% strengthening or weakening of the U.S. dollar would have had an approximate **$4 million impact on operating income** for Q1 2025[168](index=168&type=chunk) - As of March 31, 2025, **48% of the company's debt was floating rate debt**, though a 10% rate increase was not deemed to have a material impact on interest expense[169](index=169&type=chunk)[170](index=170&type=chunk) - The company faces commodity risks, particularly from **steel price increases and tariffs** on imported components, which it mitigates through global sourcing and hedging[171](index=171&type=chunk)[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of March 31, 2025, with no material changes during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[174](index=174&type=chunk) - **No changes occurred** during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[175](index=175&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201%20Legal%20Proceedings) The company is involved in various routine legal proceedings, which are not expected to have a material adverse effect on its financial statements - Terex is involved in various legal proceedings (product liability, employment, commercial, etc) that have arisen in the normal course of operations[178](index=178&type=chunk) - The company believes the outcome of such matters **will not have a material adverse effect** on its financial statements[178](index=178&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A%20Risk%20Factors) Updated risk factors highlight potential adverse effects from international tariffs, economic sensitivity, and geopolitical instability, including trade conflicts involving Chinese imports - The risk factor concerning the imposition of new, postponed, or increased international tariffs was updated, noting that such tariffs could **materially and adversely affect business and results**[180](index=180&type=chunk)[181](index=181&type=chunk) - Demand is sensitive to economic conditions, government spending, and cyclical markets, with recent channel adjustments reflecting **macro uncertainty and high interest rates**[183](index=183&type=chunk)[185](index=185&type=chunk) - The company faces risks from operating a multinational business, including geopolitical instability, trade protection measures, and **anti-dumping/countervailing duty investigations** against Chinese competitors[186](index=186&type=chunk)[188](index=188&type=chunk)[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, Terex repurchased 758,843 shares for $31.7 million, leaving approximately $54 million available for future repurchases under its authorized programs - As of the end of the quarter, approximately **$54 million remained available for repurchase** under the company's authorized plans[192](index=192&type=chunk) Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | **Jan 2025** | 150,825 | $44.91 | | **Feb 2025** | 206,293 | $43.84 | | **Mar 2025** | 408,057 | $39.58 | | **Total** | **765,175** | **$41.78** |

Financial Performance - The company reported Q1 earnings per share of $0.83 on sales of $1.2 billion, with a return on invested capital of 15% [7][24] - Total net sales decreased by 4.9% year-over-year, or 3.6% at constant exchange rates, with organic sales excluding ESG declining by 25% [24][26] - The operating margin for the Environmental Solutions segment was 19.4%, showing strong execution and a significant improvement from previous periods [31][32] Business Line Performance - Aerials segment sales were $450 million, with operating margins expected to return to double digits in Q2 as production ramps up [27][28] - Materials Processing (MP) sales were $382 million, maintaining double-digit margins due to cost reduction actions despite lower volume [30][31] - Environmental Solutions generated approximately $400 million in sales, representing one-third of total sales, with record throughput contributing to strong margins [31][32] Market Dynamics - Approximately 75% of the company's 2025 U.S. machine sales are expected to come from products manufactured in the U.S., benefiting from the USMCA trade agreement [10][11] - The company sees a generally weak economic environment in Europe but is optimistic about infrastructure spending growth in the medium to long term [18][19] - The waste and recycling market, which represents about 25% of global revenue, is characterized by low cyclicality and steady growth [16] Strategic Direction - The company is focused on integrating ESG into its operations, expecting to deliver over $25 million in operational run rate synergies by the end of 2026 [19][90] - The strategy includes leveraging digital solutions and investing in robotics and automation to enhance operational efficiency [20][21] - The company maintains a strong financial position, planning to deleverage in the second half of the year while continuing to invest in growth [33][34] Management Commentary - Management expressed confidence in navigating the current dynamic environment and emphasized the importance of maintaining price-cost neutrality amid tariff challenges [9][52] - The company anticipates a gradual recovery in the MP segment driven by replacement demand in North America [124][125] - Management highlighted the need for ongoing investments to support demand and improve throughput in the Environmental Solutions segment [90] Other Important Information - The company ended Q1 with $1.1 billion in liquidity and plans to return capital to shareholders through stock repurchases and dividends [33][34] - The current backlog stands at $2.6 billion, up 13% sequentially, indicating strong demand across segments [35][36] Q&A Session Summary Question: Can you expand on the margin outlook for Environmental Solutions? - Management noted that strong Q1 performance was driven by increased sales and record throughput, but expects moderation in margins due to one-off factors and increased expenses in the coming quarters [46][47][118] Question: How are you handling orders in the current tariff environment? - The company is in full mitigation mode, having pulled forward inventory and implemented surcharges where necessary, while maintaining a focus on price-cost neutrality [52][54] Question: What is the impact of tariffs on your manufacturing footprint? - Management indicated that a significant portion of products is manufactured in the U.S., providing a competitive advantage, particularly in the Environmental Solutions and Aerials segments [64][65] Question: What are the expectations for the Materials Processing segment? - The company expects a gradual recovery in MP, driven by healthy fleet utilization and replacement demand, with a cautious outlook on macroeconomic factors [122][124]