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 (TEX, Financial) 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 (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 (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.
