• Revenue: $1.2 billion, a 4.9% decrease from the prior year.
• Earnings Per Share (EPS): $0.83.
• Operating Margin: 9.1%, a decrease of 350 basis points from the prior year.
• Return on Invested Capital: 15%.
• Backlog: $2.6 billion, up 13% sequentially.
• Book-to-Bill Ratio: 124%.
• Environmental Solutions Operating Margin: 19.4%.
• Interest and Other Expenses: $41 million, $26 million higher than last year.
• Effective Tax Rate: 21%.
• Free Cash Flow: Improved compared to Q1 last year.
• Liquidity: $1.1 billion.
• Share Repurchase: $32 million in Q1.
• Dividends Paid: $11 million in Q1.
• Full Year EPS Outlook: $4.70 to $5.20.
• Full Year Sales Outlook: $5.3 billion to $5.5 billion.

• Warning! GuruFocus has detected 6 Warning Signs with TEX.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Terex Corp (NYSE:TEX) exceeded its initial Q1 financial outlook, delivering earnings per share of $0.83 on sales of $1.2 billion.
• The Environmental Solutions segment achieved a strong operating margin of 19.4%, contributing significantly to the company's overall performance.
• The company maintained a strong backlog of $2.6 billion, up 13% sequentially, indicating robust demand.
• Terex Corp (NYSE:TEX) is leveraging its US-centric manufacturing footprint, with approximately 75% of its 2025 US machine sales expected to be generated by products made in the US.
• The company is on track to deliver more than $25 million in operational run rate synergies by the end of 2026, driven by the integration of ESG.

Negative Points

• Terex Corp (NYSE:TEX) experienced a 4.9% decline in total net sales compared to the prior year, with organic sales declining by 25% year-over-year.
• Operating margins were impacted by production cuts in the Aerials and MP segments, resulting in a 350 basis point decline compared to the prior year.
• The company faces challenges from tariffs, with an assumed $0.40 net tariff impact included in the full-year outlook.
• The European market remains weak, posing a headwind for the Materials Processing segment.
• Interest and other expenses increased by $26 million year-over-year due to interest on ESG reposition financing.

Q & A Highlights

Q: I was really impressed by the ES margin improvement in the quarter. Can you expand on the margin outlook for the coming quarters? A: Jennifer Kong-Picarello, Senior VP & CFO: The strong Q1 ES performance was driven by a 6% sequential increase in sales, record Q1 throughput, and integration synergies. We expect margins to moderate back to normalized rates due to upcoming expenses for ramping up production and supporting expansion.

Q: How are you handling orders with the current dynamic environment and tariffs? Is there a surcharge mechanism in place? A: Simon Meester, President & CEO: We are in full mitigation mode, pulling forward material and reducing discretionary spend. Pricing is a lever we use, and we have implemented surcharges in certain areas. Our strategy is to maintain price-cost neutrality, focusing on supply chain mitigation.

Q: Can you explain the puts and takes of the guidance, especially with the $0.40 headwind related to tariffs? A: Jennifer Kong-Picarello, Senior VP & CFO: We beat our Q1 outlook by $0.30, driven by ES, which offsets the $0.40 tariff impact. We also expect operational efficiencies and reduced SG&A to help maintain our guidance.

Q: Are there product lines where you have a competitive advantage due to your manufacturing footprint in the US? A: Simon Meester, President & CEO: We have a strong position in Environmental Solutions, with products made and sold in the US. In Aerials, 95% of products are built in North America for North America. In Materials Processing, we have an advantage over some Asian competitors.

Q: Can you provide more details on the Aerial margin progression from Q1 to Q2 and the full-year outlook for Materials Processing? A: Simon Meester, President & CEO: We expect a normal seasonal jump in Aerials, with a ramp-up in Q2 leading to double-digit operating margins. For Materials Processing, we anticipate a gradual ramp-up throughout the year, with Q1 being the lowest margin quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.