Terex (US:TEX)2026-02-11 14:32Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $4.93 for the year, consistent with expectations, and EBITDA of $635 million, representing an 11.7% margin [10][15] - Free cash flow improved by 71% to $325 million, achieving a cash conversion rate of 147% [15] - Total net sales for Q4 were $1.3 billion, a 6% year-over-year increase, while full-year net sales grew to $5.4 billion [12][13] Business Line Data and Key Metrics Changes - Environmental Solutions segment sales grew 14.1% year-over-year in Q4, driven by utility and refuse trucks, with full-year sales increasing 12.7% [16] - Materials Processing (MP) segment sales decreased by 2.5% in Q4 but increased by 2.8% on a like-for-like basis when excluding divested businesses [17] - Aerials segment saw a 6.9% year-over-year sales growth in Q4, with strong bookings of nearly $1 billion, up 46% from the prior year [18][11] Market Data and Key Metrics Changes - The company noted strong demand in utilities, with industry forecasts predicting 8%-15% annual CapEx growth through 2030 [9] - The construction market is supported by government funding, with a growing pipeline of megaprojects expected to provide tailwinds through at least 2030 [9] - The company has a significant addressable market, collectively spending $200 billion per year on capital equipment across municipalities in the U.S. [9] Company Strategy and Development Direction - The merger with REV Group is seen as a defining milestone, creating a leading specialty equipment manufacturer with premium brands and clear synergies [5][6] - The company aims to achieve $75 million in run-rate synergies within two years, with $37.5 million expected within the next 12 months [7] - A strategic review of the Aerials business is ongoing, with strong inbound interest from potential buyers [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, citing strong bookings and backlog across segments [20] - The outlook for 2026 anticipates sales growth of approximately 5% on a pro forma basis, with EBITDA expected to grow by about $100 million [20] - The company is navigating a complex environment with macroeconomic variables and geopolitical uncertainties, but remains focused on execution and integration [22] Other Important Information - The effective tax rate for 2026 is expected to be higher at 21%, driven by increased USD income [21] - The company plans to invest over $118 million in capital expenditures to fuel organic growth [24] - The merger has a modest 3% diluted effect on EPS in 2026 due to a higher number of shares outstanding post-merger [21] Q&A Session Summary Question: What is the pricing outlook for the MP segment? - Management indicated that pricing improvements are expected to flow through the P&L, with a progressive step-up in margin profile anticipated throughout 2026 [29] Question: How will tariffs impact the Aerials segment? - Management expects more headwinds from tariffs in 2026, translating to about $16 million more in costs, but plans to offset this through productivity and pricing [31] Question: What is the plan for the REV integration? - The focus is on maintaining throughput and operational momentum, with a strong backlog in the specialty vehicle segment [40] Question: How is the Environmental Solutions segment performing? - The segment recorded outstanding performance, with growth expected to continue, particularly in utilities [42] Question: What is the expected capacity increase in the Utilities business? - The company plans to expand capacity by 20%-30% over the next two years, with some capacity coming online in 2026 [88]