Terex (TEX) - 2025 Q2 - Quarterly Results

Executive Summary Q2 2025 Performance Highlights Terex reported Q2 2025 sales of $1.5 billion, up 7.6% year-over-year, with adjusted EPS at $1.49 Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.5B | $1.38B | +7.6% | | Operating Profit (GAAP) | $129M | $193M | -33.2% | | Operating Margin (GAAP) | 8.7% | 14.0% | -530 bps | | Adjusted Operating Profit | $164M | $195M | -15.9% | | Adjusted Operating Margin | 11.0% | 14.1% | -310 bps | | EPS (GAAP) | $1.09 | $2.08 | -47.6% | | Adjusted EPS | $1.49 | $2.16 | -31.0% | - Bookings of $1.1 billion grew 19% year-over-year on a pro forma basis, with a book-to-bill ratio of 73%, consistent with seasonal patterns[6] - Excluding the contribution from the new Environmental Solutions Group (ESG), legacy revenue declined by 12% year-over-year, driven by channel adjustments and backlog conversion timing[6] - The Board of Directors authorized a new $150 million share repurchase program, signaling confidence in the company's long-term strategy[5][11] Management Commentary Management highlighted strong ES performance offsetting Aerials headwinds, while maintaining the full-year EPS outlook - CEO Simon Meester emphasized that the Environmental Solutions segment's strong sales and margin performance more than offset headwinds in Aerials[3] - CFO Jennifer Kong-Picarello highlighted strong free cash flow generation of $78 million, achieving a 108% cash conversion rate in Q2[12][13] - The healthy backlog and 19% year-over-year pro forma booking growth support the sales outlook for the second half of the year[13] - The company is maintaining its full-year EPS outlook of $4.70 to $5.10, assuming tariffs remain broadly at current rates[13] Business Segment Review Aerials Segment Aerials segment net sales declined 17.1% to $607 million, with operating margin at 7.6%, impacted by reduced rental capex Aerials Segment Q2 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $607M | $732M | -17.1% | | Operating Profit | $46M | $115M | -60.0% | | Operating Margin | 7.6% | 15.7% | -810 bps | | Adjusted Operating Profit | $49M | $115M | -57.4% | | Adjusted Operating Margin | 8.0% | 15.7% | -770 bps | - The sales decline was driven by rental customers deploying less capex and focusing on replacement requirements Sales to independent rental customers were down proportionately more than to national customers[12] Materials Processing (MP) Segment MP segment net sales declined 9.0% to $454 million, with operating margin at 10.8%, due to lower channel and end-market demand Materials Processing Segment Q2 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $454M | $499M | -9.0% | | Operating Profit | $49M | $77M | -36.4% | | Operating Margin | 10.8% | 15.4% | -460 bps | | Adjusted Operating Profit | $58M | $78M | -25.6% | | Adjusted Operating Margin | 12.7% | 15.6% | -290 bps | - The sales decline was attributed to lower channel requirements and end-market demand across most product lines and geographies[12] Environmental Solutions (ES) Segment ES segment delivered strong results with net sales of $430 million, up 12.9% pro forma, and an adjusted operating margin of 19.1% Environmental Solutions Segment Q2 Performance | Metric | Q2 2025 | Q2 2024 (Pro Forma) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $430M | $381M (Est.) | +12.9% | | Operating Profit | $61M | $19M | +221.1% | | Operating Margin | 14.2% | 12.5% | +170 bps | | Adjusted Operating Profit | $82M | N/A | N/A | | Adjusted Operating Margin | 19.1% | 16.8% (Est.) | +230 bps | - Growth was driven by strong delivery of refuse collection vehicles (RCVs) and strong book-to-bill installs in Terex Utilities[12] Financial Position and Capital Allocation Liquidity and Cash Flow Terex maintained $1.2 billion in liquidity and generated $78 million in free cash flow, achieving a 108% cash conversion rate - Total liquidity was $1.2 billion as of June 30, 2025[12] Q2 Cash Flow Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Free Cash Flow | $78M | $43M | | Cash Conversion Rate | 108% | 30% | Capital Allocation Company deployed $24 million in capex, returned $75 million to shareholders, and authorized a new $150 million share repurchase program - A new share repurchase program of up to $150 million was authorized by the Board of Directors[11] - Year-to-date through June 30, 2025, Terex returned $75 million to shareholders via dividends and buybacks[12] - The company repurchased 1.4 million shares at an average price of $38.74 per share[12] Full-Year 2025 Outlook Full-Year 2025 Guidance Terex maintained its full-year 2025 guidance, projecting net sales between $5.3 billion and $5.5 billion and adjusted EPS of $4.70 to $5.10 Full-Year 2025 Financial Outlook | Metric | 2025 Outlook | | :--- | :--- | | Net Sales | $5,300M - $5,500M | | Segment Operating Margin (Adjusted) | ~12% | | EBITDA (Adjusted) | ~$640M | | EPS (Adjusted) | $4.70 - $5.10 | | Free Cash Flow | $300M - $350M | | FCF Conversion | >120% | 2025 Segment Net Sales Outlook vs. 2024 Baseline | Segment | 2024 Baseline | 2025 Outlook | | :--- | :--- | :--- | | Aerials | $2,410M | Down low double-digits (LDD) | | Materials Processing | $1,902M | Down high single-digits (HSD) | | Environmental Solutions | $1,500M | Up low double-digits (LDD) | Financial Statements Condensed Consolidated Statement of Operations Q2 2025 net sales increased to $1.487 billion, but operating profit declined to $129 million, resulting in diluted EPS of $1.09 Q2 Statement of Operations (in millions, except EPS) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $1,487 | $1,382 | | Gross profit | $291 | $329 | | Operating profit | $129 | $193 | | Net income | $72 | $141 | | Diluted EPS | $1.09 | $2.08 | Condensed Consolidated Balance Sheet As of June 30, 2025, total assets were $6.152 billion, total liabilities $4.187 billion, and stockholders' equity $1.965 billion Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,684 | $2,320 | | Total assets | $6,152 | $5,730 | | Total current liabilities | $1,293 | $1,073 | | Long-term debt | $2,583 | $2,580 | | Total liabilities | $4,187 | $3,898 | | Total stockholders' equity | $1,965 | $1,832 | Condensed Consolidated Statement of Cash Flows Net cash from operating activities for YTD Q2 2025 was $81 million, leading to a $14 million decrease in cash and equivalents Six-Month Cash Flow Summary (in millions) | Account | YTD Q2 2025 | YTD Q2 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $81 | $33 | | Net cash from investing activities | ($38) | ($52) | | Net cash from financing activities | ($84) | ($23) | | Net change in cash | ($14) | ($52) | | Cash at end of period | $374 | $319 | Segment Results Disclosure Q2 2025 segment sales: Aerials $607 million (7.6% margin), MP $454 million (10.8% margin), and ES $430 million (14.2% margin) Q2 2025 Segment Performance (in millions) | Segment | Net Sales | % of Total | Operating Profit | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Aerials | $607 | 40.8% | $46 | 7.6% | | MP | $454 | 30.5% | $49 | 10.8% | | ES | $430 | 28.9% | $61 | 14.2% | | Consolidated | $1,487 | 100% | $129 | 8.7% | Appendix: Non-GAAP Reconciliations GAAP to Non-GAAP Reconciliation Q2 2025 adjustments of $35 million increased operating profit from $129 million (GAAP) to $164 million (non-GAAP) and EPS to $1.49 Q2 2025 GAAP to Non-GAAP Reconciliation Summary (in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Profit | $129 | $35 | $164 | | Operating Margin | 8.7% | | 11.0% | | Net Income | $72 | $26 | $98 | | EPS | $1.09 | $0.40 | $1.49 | Segment Adjusted Operating Profit Reconciliation Q2 2025 segment adjustments led to adjusted operating margins of 8.0% for Aerials, 12.7% for MP, and 19.1% for ES Q2 2025 Segment Operating Profit Reconciliation (in millions) | Segment | Operating Profit (GAAP) | Adjustments | Adjusted Operating Profit | | :--- | :--- | :--- | :--- | | Aerials | $46 | $3 | $49 | | MP | $49 | $9 | $58 | | ES | $61 | $21 | $82 | Return on Invested Capital (ROIC) Terex reported a Return on Invested Capital (ROIC) of 12.3% as of June 30, 2025, reflecting effective capital utilization - The company's ROIC was 12.3% as of June 30, 2025[44][46] - ROIC is calculated using adjusted NOPAT of $421 million over the last four quarters and average invested capital of $3.414 billion over the last five quarters[46]