Q1 2025 Earnings Conference Call May 2, 2025 Forward Looking Statements Certain information in this presentation includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including those discussed in our Annual Report on For ...

Financial Performance - Terex reported Q1 2025 sales of $1.2 billion, with an operating margin of 5.6% and adjusted operating margin of 9.1%[5]. - The company achieved EPS of $0.31 and adjusted EPS of $0.83, compared to $1.60 and $1.74 in Q1 2024 respectively[6]. - Net sales for Q1 2025 were $1,229 million, a decrease of 4.9% compared to $1,292 million in Q1 2024[30]. - Gross profit for Q1 2025 was $230 million, representing a gross margin of 18.7%, down from 23.0% in Q1 2024[35]. - Operating profit decreased to $69 million in Q1 2025, with an operating margin of 5.6%, compared to $158 million and 12.2% in Q1 2024[30]. - Net income for Q1 2025 was $21 million, a significant decline from $109 million in Q1 2024, resulting in earnings per share of $0.32 compared to $1.62[30]. - Adjusted EBITDA for the three months ended March 31, 2025, was $128 million, with an adjusted EBITDA margin of 10.4%[40]. - The company's ROIC as of March 31, 2025, was 15.0%, indicating effective capital utilization[42]. - Operating profit as adjusted for the three months ended March 31, 2025, was $111 million, compared to $97 million in the previous quarter[44]. - The company reported an EBITDA margin of 8.7% for the three months ended March 31, 2025[40]. Sales and Bookings - Bookings increased by 5.3% sequentially to $1.5 billion, resulting in a book-to-bill ratio of 124%, led by Aerials at 144%[6]. - Net sales in the Aerials segment were $450 million, down 27.8% year-over-year, while Materials Processing saw net sales of $382 million, down 26.5%[11]. - Environmental Solutions Group contributed approximately one-third of Q1 sales, with net sales of $399 million, reflecting a 10.5% increase on a pro forma basis compared to Q1 2024[11]. - The Aerials segment saw net sales drop to $450 million in Q1 2025 from $623 million in Q1 2024, with an operating profit of only $2 million[30]. Financial Outlook - Terex maintains its full-year adjusted EPS outlook of $4.70 to $5.10 for 2025[5]. - The company expects full-year net sales between $5.3 billion and $5.5 billion, with an EBITDA of approximately $660 million[12]. - The company anticipates organic sales to decline by 8%-12% compared to 2024, with segment net sales outlooks indicating low to high single-digit changes across various segments[12]. - The company expects a free cash flow of $325 million for the year ending December 31, 2025, based on an outlook of $445 million in net cash provided by operating activities[34]. Liquidity and Capital Structure - As of March 31, 2025, Terex reported liquidity of $1.1 billion and returned $43 million to shareholders through dividends and share repurchases[11]. - Total assets increased to $5,840 million as of March 31, 2025, up from $5,730 million at the end of 2024[26]. - Cash and cash equivalents decreased to $298 million at the end of Q1 2025, down from $388 million at the beginning of the period[27]. - Total debt was $2,586 million as of March 31, 2025, with cash and cash equivalents of $298 million[44]. - Stockholders' equity as adjusted was $1,957 million as of March 31, 2025, compared to $1,908 million as of December 31, 2024[46]. Tax and Other Considerations - The effective tax rate for Q1 2025 was 20.3%, compared to 20.5% in Q1 2024[35]. - The annualized effective tax rate as adjusted for March 31, 2025, was 17.5%, up from 15.6% in the previous quarter[44]. - Terex is closely monitoring geopolitical and macroeconomic factors, including potential tariff impacts, while positioning itself as a more US-centric company[3]. Operational Strategy - The company plans to continue focusing on operational improvements and capital investments to drive future growth[42]. - The company reported a net cash used in operating activities of $21 million for Q1 2025, compared to $34 million used in Q1 2024[27].

Core Insights - Terex Corporation reported strong financial results for Q1 2025, exceeding initial expectations, primarily due to the performance of its newly acquired Environmental Solutions Group (ESG) [2][5][6] - The company anticipates a competitive position moving forward, with a focus on U.S. production to mitigate geopolitical risks [2][9] Financial Performance - Net sales for Q1 2025 were $1.229 billion, a decrease of 4.9% compared to Q1 2024 [6][29] - Adjusted EPS for Q1 2025 was $0.83, down from $1.74 in Q1 2024 [6][29] - Operating profit was $69 million, representing 5.6% of net sales, compared to $158 million or 12.2% in the prior year [6][29] Business Segment Performance - Environmental Solutions segment net sales reached $399 million, up 10.5% year-over-year, driven by strong demand for refuse collection vehicles [5][29] - Aerials segment net sales were $450 million, down 27.8% year-over-year, attributed to seasonal delivery patterns [6][29] - Materials Processing segment net sales were $382 million, down 26.5% year-over-year, reflecting lower channel requirements and end-market demand [6][29] Bookings and Outlook - Bookings for Q1 2025 were $1.5 billion, a sequential increase of 5.3%, with a book-to-bill ratio of 124% [6][29] - The company maintains its full-year adjusted EPS outlook of $4.70 to $5.10 for 2025 [10][11] Capital Allocation and Liquidity - As of March 31, 2025, Terex had liquidity of $1.1 billion, with $36 million deployed in capital expenditures during Q1 [14][29] - The company returned $43 million to shareholders through dividends and share repurchases in Q1 2025 [14][29]

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 supports renewable energy and aids in the recovery of useful materials from various types of waste [3] Upcoming Financial Results - Terex Corporation will host a conference call to review its first quarter 2025 financial results on May 2, 2025, at 8:00 a.m. Eastern Time [1] - The financial results will be available on the company's investor relations website prior to the call [1]

Core Insights - Terex's international operations are crucial for assessing its financial strength and growth potential, given the interconnected nature of the global economy [2][3] - The company's total revenue for the recent quarter was $1.24 billion, reflecting a 1.5% increase year-over-year [4] International Revenue Breakdown - Western Europe generated $157 million, accounting for 12.65% of total revenue, which was a 32.19% miss against the consensus estimate of $231.54 million [5] - Asia-Pacific contributed $137 million, representing 11.04% of total revenue, falling short by 18.2% compared to the projected $167.48 million [6] Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to reach $1.36 billion, a 5.1% increase from the same quarter last year, with Western Europe expected to contribute $257.14 million and Asia-Pacific $153.7 million [7] - For the full year, total revenue is anticipated to be $5.39 billion, also reflecting a 5.1% increase, with Western Europe and Asia-Pacific expected to contribute $987.49 million and $623.95 million, respectively [8] Market Context - The reliance on international markets presents both opportunities and challenges for Terex, necessitating close monitoring of revenue trends to accurately project future performance [9] - Financial analysts are increasingly focused on international developments and geopolitical factors that may influence earnings estimates for companies like Terex [10]

Financial Performance - Full-year 2024 net sales were $5.1 billion, slightly down from $5.2 billion in 2023, primarily due to industry-wide channel adjustments[9]. - Adjusted earnings per share (EPS) for full-year 2024 was $6.11, the second highest in Terex history, compared to $7.06 in the prior year[5][9]. - Fourth quarter 2024 net sales reached $1.2 billion, a 2% increase year-over-year, driven by the addition of Environmental Solutions Group (ESG)[6]. - Net sales for Q4 2024 were $1,241 million, a slight increase from $1,223 million in Q4 2023, while total net sales for the year were $5,127 million, down from $5,152 million in 2023[25]. - For FY 2024, net sales totaled $5,127 million, with a gross profit of $1,112 million, achieving a gross margin of 21.7%[38]. - Q4 2024 earnings per share (EPS) improved to $0.77, compared to a loss of $0.03 in Q4 2023[37]. - FY 2024 EPS was reported at $6.11, up from $4.96 in FY 2023[38]. Profitability and Margins - Adjusted operating margins for ESG in Q4 2024 were 21.9%, contributing significantly to overall performance[5][12]. - Gross profit for Q4 2024 was $197 million, compared to $263 million in Q4 2023, resulting in a gross margin decrease from 21.5% to 15.9%[25]. - Income from operations for Q4 2024 was $53 million, significantly lower than $116 million in Q4 2023, reflecting a decrease in operating margin from 9.5% to 4.3%[31]. - The company reported a net loss of $2 million in Q4 2024, contrasting with a net income of $127 million in Q4 2023, leading to a loss per share of $0.03 compared to earnings of $1.89 per share in the prior year[25]. - Q4 2024 operating income was $97 million, leading to an operating margin of 7.8%[37]. - FY 2024 operating income increased to $582 million, with an operating margin of 11.3%[38]. - Adjusted EBITDA for Q4 2024 was $114 million, with an adjusted EBITDA margin of 9.2%[45]. - Adjusted EBITDA for FY 2024 reached $642 million, with an adjusted EBITDA margin of 12.5%[45]. Cash Flow and Investments - Full-year 2024 free cash flow was $190 million, lower than the previous year due to reduced operating income and higher interest expenses[12]. - Capital expenditures for 2024 were $137 million, slightly higher than $127 million in 2023, indicating ongoing investment in operations[29]. - The company expects 2025 earnings per share to be impacted by potential future acquisitions and restructuring, with an outlook of $445 million in net cash provided by operating activities[35]. Debt and Equity - Long-term debt rose significantly to $2,580 million as of December 31, 2024, compared to $620 million in 2023, indicating increased leverage[26]. - Total debt as of December 31, 2024, was $2,584 million, with cash and cash equivalents of $388 million[48]. - Debt less cash and cash equivalents amounted to $2,196 million as of December 31, 2024[48]. - Stockholders' equity as adjusted was $1,918 million as of December 31, 2024, an increase from $1,682 million in December 2023[49]. Taxation - The effective tax rate for full-year 2024 was 17.8%, up from 10.9% in the prior year, reflecting changes in tax benefits[9]. - The effective tax rate as adjusted for Q4 2024 was 15.6%, consistent across the previous quarters[48]. - The company reported an effective tax rate of 15.6% for the full year 2024, down from 17.8% as reported[49]. Future Outlook - The company expects 2025 net sales between $5.3 billion and $5.5 billion, with EPS guidance of $4.70 to $5.10[3][13]. - Aerial Work Platforms segment net sales for 2025 are expected to decline in low double digits, while Environmental Solutions is projected to grow in mid single digits[13]. - The company plans to focus on deleveraging and investing in business growth while maintaining a flexible balance sheet in 2025[12]. - The company is facing challenges from increased international tariffs, economic conditions, and competitive pressures, which may affect future performance[23].

Company Segments - The company operates in three segments: Materials Processing (MP), Aerial Work Platforms (AWP), and Environmental Solutions Group (ESG) [10] - The MP segment includes products such as crushers, washing systems, and material handlers, serving construction, mining, and recycling industries [11] - The AWP segment offers aerial work platform equipment, enhancing safety and productivity for various construction and maintenance applications [14] - The ESG segment focuses on waste and recycling equipment, including refuse collection bodies and compaction systems, targeting the solid waste industry [16] Financial Performance and Strategy - The company aims for a net leverage target of 2.5x through the cycle, balancing growth investments and efficient capital return to stockholders [27] - The total backlog as of December 31, 2024, was $2,291 million, a decrease of $1,120 million from $3,411 million in 2023 [44] - The Materials Processing (MP) backlog decreased approximately 58% from $767 million in 2023 to $320 million in 2024 [47] - The Aerial Work Platforms (AWP) backlog decreased approximately 45% from $2,644 million in 2023 to $1,451 million in 2024 [48] - The Environmental Solutions Group (ESG) backlog was $520 million as of December 31, 2024 [49] - The company expects second half sales in 2025 to be higher than first half sales, with stronger demand anticipated in the second quarter due to seasonal project spending [69] Innovation and Product Development - The company emphasizes digital transformation and innovation to improve product offerings and operational efficiency [25] - The company is focusing on product innovation and has established robust product development pipelines to introduce new differentiated products in the coming years [56] - The company is developing alternative power solutions across its product range, including battery-electric and fuel-electric hybrid options, to reduce carbon footprints [55] - The company is actively investing in alternative energy solutions and developing products that meet increasingly stringent environmental regulations [66] Safety and Environmental Commitment - The company aims to achieve a lost time injury rate of 0.4 and a total recordable injury rate of 1.4 by the end of 2026, with current rates at 0.37 and 1.49 respectively [71] - The company is committed to reducing greenhouse gas emissions and has developed all-electric utility bucket trucks, which support electrification and sustainability goals [66] - The company maintains a commitment to safety and environmental stewardship, ensuring compliance with health, safety, and environmental laws [63] - The company is committed to complying with environmental laws and regulations, conducting environmental audits at least once every five years [64][68] Workforce and Culture - The company has approximately 11,400 team members, with 88% participating in a global engagement survey, indicating a strong focus on team member engagement [73] - The company has a robust talent review process and offers a wide range of training programs to support team member development [74] - The company emphasizes a culture of inclusion and diversity, aiming to create a supportive and non-discriminatory workplace [77] Legal and Compliance - The company is engaged in various legal proceedings regarding intellectual property rights but does not expect a material adverse effect on its business [62] - The company’s engineering teams are focused on delivering customer-responsive solutions and complying with evolving regulatory standards [54] Customer Focus - In 2024, the largest customer accounted for less than 6% of consolidated net sales, and the top ten customers collectively accounted for less than 29% [60] - The company operates under a best value strategy, focusing on improving customer return on invested capital (ROIC) through quality by design [59] - The company offers a range of services for its products, including inspections, maintenance, and training services [39][43]

Core Insights - Terex Corporation reported adjusted earnings per share of 77 cents, exceeding the Zacks Consensus Estimate of 76 cents, but a significant decline of 45% from the prior-year quarter due to lower volumes [1][2] - Revenues increased by 1.5% year over year to $1.24 billion, surpassing the Zacks Consensus Estimate of $1.23 billion, aided by the acquisition of Environmental Solutions Group (ESG) [3][15] - The company experienced margin contraction, with gross profit falling 11.5% to $236 million and operating profit plunging 54% to $53 million [5][6] Financial Performance - The cost of goods sold rose 8.7% year over year to $1.04 billion, leading to a decline in gross profit [5] - Adjusted operating profit was $97 million, down from $132.7 million in the previous year, with an adjusted operating margin of 7.8%, a contraction of 310 basis points [6] - Terex's adjusted earnings per share for 2024 declined 13.5% year over year to $6.11, beating the Zacks Consensus Estimate of $6.09 [13][14] Segment Performance - The Material Processing segment's revenues fell 21% year over year to $439 million, attributed to channel adjustments and weak end-market demand [7] - The Aerial Work Platforms segment generated revenues of $573 million, down 13.2% from the previous year, impacted by delivery schedule adjustments [9][10] - The ESG segment reported revenues of $228 million, with an operating profit of $12 million, both figures exceeding initial estimates [10] Cash Flow and Balance Sheet - As of December 31, 2024, Terex had cash and cash equivalents of $388 million, an increase from $371 million a year earlier [12] - The company generated $326 million in cash from operating activities in 2024, down from $459 million in the prior year [12] 2025 Outlook - Terex expects sales for the Materials Processing segment to decline by high single digits from a baseline of $1.9 billion, while the AWP segment's revenues are projected to decline in low double digits from a baseline of $2.41 billion [16] - Net sales are projected to be between $5.3 billion and $5.5 billion, indicating a potential year-over-year growth of 6% at the midpoint [16] - Adjusted earnings per share guidance for 2025 is set between $4.70 and $5.10, reflecting a year-over-year drop of 20% at the midpoint [17]

Financial Performance - The company reported earnings per share of $6.11 on sales of $5.1 billion for the full year, marking the second highest EPS performance in its history [10][37] - In Q4, total net sales were $1.2 billion, slightly up from the prior year due to the addition of ESG, while legacy segment sales were down 17% [31][32] - Gross margin for Q4 was 19%, reflecting lower margins in legacy segments, partially offset by accretive margins from ESG [32] - Full year gross margin was 21.7%, down 120 basis points year-over-year due to volume and unfavorable mix in legacy segments [35] - Free cash flow for Q4 was $129 million, down from $135 million in Q4 2023, while full year free cash flow was $190 million, down from the previous year [34][38] Business Segment Performance - Aerial Work Platforms (AWP) sales for the year were $3 billion, representing 3% growth compared to 2023, with an operating margin of 11.6% [38] - The Material Processing (MP) segment saw full year sales of $1.9 billion, down 14.6% due to industry-wide adjustments and macroeconomic challenges in Europe [41] - ESG achieved a 21.9% operating margin on net sales of $228 million in Q4, indicating strong growth and profitability improvement [43] Market Insights - The company noted a strong public sector spending on infrastructure and utilities, but private projects are being impacted by elevated interest rates [16][17] - North America accounts for over two-thirds of revenue, and a strong U.S. economy is seen as a tailwind [17] - Europe is expected to remain weak, although there are signs of improvement in emerging markets like India and Southeast Asia [19][92] Strategic Direction - The company is focused on integrating ESG and expects to deliver at least $25 million in operational run rate synergies by the end of 2026 [14][25] - The revised strategy emphasizes evaluating the global footprint, reducing fixed costs, and enhancing operational efficiency [22][23] - The company anticipates a $40 billion addressable market with significant growth potential across its segments [25] Management Commentary - Management expressed confidence in the long-term growth outlook despite short-term adjustments in legacy markets [20] - The company is optimistic about the impact of the new administration's focus on infrastructure investments [21] - Management highlighted the importance of maintaining a disciplined pricing strategy in light of potential tariffs [120] Other Important Information - The company maintained a solid balance sheet with a year-end leverage ratio of 2.6 times and plans to deleverage as cash flow increases [45] - The current backlog stands at $2.3 billion, with $520 million attributed to ESG, indicating strong future demand [48] Q&A Session Summary Question: Comments on ESG margin sustainability - Management noted that ESG is performing exceptionally well, with no significant mix issues affecting margins [66][68] Question: Impact of tariffs on sourcing - Management emphasized the company's U.S.-based manufacturing capabilities and optionality to mitigate potential tariff impacts [74][75] Question: AWP order trends and customer fleet management - Management indicated a return to normal seasonal patterns, with strong order intake and healthy fleet utilization [84][86] Question: Outlook for Europe - Management expects Europe to remain soft in 2025, with some signs of demand for replacement equipment [91][92] Question: ESG growth expectations - Management confirmed that the ESG segment is expected to continue strong performance, with no changes to the initial growth outlook [118] Question: Clarification on decremental margins - Management clarified that while Q1 may see lower margins, they expect to return to within the 25% decremental margin target in subsequent quarters [133][134]

Financial Data and Key Metrics Changes - For Q4 2024, the company reported total net sales of $1.2 billion, slightly up from the prior year due to the addition of ESG [31] - Full year net sales reached $5.1 billion, generally in line with 2023, with a gross margin of 21.7%, which is 120 basis points lower year-over-year [35] - Earnings per share for the year was $6.11, marking the second highest in the company's history [37] - Free cash flow for the quarter was $129 million, down from $135 million in Q4 2023, while full year free cash flow was $190 million, a decrease from the previous year [34][38] Business Line Data and Key Metrics Changes - AWP sales for the year were $3 billion, representing a 3% growth compared to 2023, with an operating margin of 11.6% [38] - MP full year sales were $1.9 billion, down 14.6% from the prior year, with a solid operating margin of 13.6% despite lower volume [41] - ESG achieved a 21.9% operating margin on net sales of $228 million, indicating significant growth and profitability improvement [43] Market Data and Key Metrics Changes - Approximately 25% of revenue now comes from waste and recycling markets, characterized by low cyclicality and steady growth [14] - The company noted a generally weak economic environment in Europe, while emerging markets like India and Southeast Asia showed increasing adoption of their products [19] Company Strategy and Development Direction - The company is focused on integrating ESG into its operations and expects to deliver at least $25 million in operational run rate synergies by the end of 2026 [14][25] - The revised strategy emphasizes evaluating the global footprint, reducing fixed costs, and improving operational performance [22] - The company anticipates significant infrastructure investments in the U.S. and is optimistic about the long-term growth outlook despite current macroeconomic challenges [20][21] Management's Comments on Operating Environment and Future Outlook - Management highlighted the impact of elevated interest rates and uncertainty around the Fed's outlook as macro headwinds, but noted strong public sector spending on infrastructure [16] - The sentiment improved following the U.S. elections, with expectations for regulatory easing and growth encouragement from the new administration [17] - For 2025, the company expects net sales of approximately $5.4 billion and EBITDA of roughly $660 million, with a segment operating margin of about 12% [51] Other Important Information - The company maintained a solid balance sheet with a year-end leverage ratio of 2.6 times and plans to deleverage in future periods [45] - The current backlog stands at $2.3 billion, with a healthy $520 million for ESG and $1.8 billion for legacy businesses [48] Q&A Session Summary Question: Comments on ESG margin sustainability and share performance - Management confirmed strong ESG performance and indicated that margins are expected to remain robust moving into 2025, with no significant changes anticipated [65][68] Question: Impact of tariffs on sourcing and manufacturing - Management discussed the company's ability to adapt to potential tariff changes, emphasizing a strong U.S. manufacturing base and optionality in production [74][75] Question: AWP order trends and customer fleet management - Management noted a return to normal seasonal patterns for AWP, with expectations for strong order intake and healthy fleet utilization [84][85] Question: Outlook for Europe and demand dynamics - Management expects Europe to remain soft in 2025, with some signs of improvement in specific markets, but overall demand is anticipated to be weak [92] Question: ESG growth expectations and synergy capture - Management reiterated confidence in ESG's performance and the expected synergies from the acquisition, with no changes to the initial guidance [162] Question: Clarification on decremental margins and operating performance - Management clarified that while Q1 may see lower margins, they expect to return to within the 25% decremental margin target for the remainder of the year [133][138]