Terex Corporation Q2 FY2025 earnings call

• Simon welcomes everyone, thanks the team, notes Q2 performance with EPS of $1.49 on $1.5B sales, 11% operating margin, $78M free cash flow. - Highlights portfolio evolution: ES strong, Aerials facing headwinds, MP executing well. Synergies from ESG acquisition running ahead of targets, digital platform expansion, sourcing savings. - Discusses macro environment: Impact of Big Beautiful Bill, high interest rates, tariff uncertainty, diversified end markets. - Jennifer reviews Q2 financials: Sales growth, operating margin, EPS, free cash flow, capital allocation including share buybacks and dividends.

Aerials: Sales of $607 million, customer mix more heavily weighted to national customers than anticipated. Operating margin improved sequentially but was lower than expected due to customer mix. Materials Processing (MP): Sales of $454 million, 9% lower than last year, in line with expected step-up from Q1. Generated 12.7% operating margin in Q2, a 270 basis point sequential margin improvement from Q1, with aggregates vertical improving and cranes/handling challenging. Environmental Solutions (ES): Sales of $430 million, 12.9% YOY growth pro forma, 8% sequential growth vs Q1. Delivered 19.1% operating margin, driven by throughput in ESG, utilities execution, and favorable customer/product mix in Q2.

• Maintains full-year EPS outlook $4.70 to $5.10, including $0.50 net tariff impact. - Expects full-year 2025 sales $5.3B-$5.5B, segment operating margin ~12%. - Anticipates interest and other expenses ~$170M, effective tax rate ~17.5%. - Q4 EPS expected higher than Q3 due to tariff mitigation actions and MP margin improvement in Q4.

• Persistently high interest rates. - Tariff-related uncertainty. - Macroeconomic variables and geopolitical uncertainties impacting capital decisions.

Q: Stephen Volkmann asks about ES margins, drivers and moderation in second half.

A: Jennifer Kong-Picarello says ES Q2 OP driven by throughput, utilities execution, and favorable customer/product mix in Q2, with moderation expected in second half as favorable mix not recurring.

Q: Mig Dobre asks about EBITDA guidance adjustment and tariff mitigation.

A: Jennifer Kong-Picarello says $20M lower EBITDA driven by unfavorable mix in Aerials and higher tariffs; Simon Meester discusses tariff mitigation efforts like pulling material forward, working with suppliers, alternative supply solutions.

Q: Mircea Dobre asks about AWP margins and back half top line guidance.

A: Jennifer Kong-Picarello says Aerials margins expected to step down in second half due to Trump tariff, lower sequential volume, and unfavorable customer mix; Simon Meester says Aerials backlog coverage is good with normal seasonality and confidence in outlook.

Q: David Raso asks about 2026 customer conversations, timing, and EPS in second half.

A: Simon Meester says larger customers stick to cadence, smaller customers more hesitant; Jennifer Kong-Picarello says Q4 EPS expected slightly higher than Q3 due to tariff mitigation and cost recovery actions.

Q: Tami Zakaria asks about MP incremental updates.

A: Simon Meester says MP margins expected to sequentially rise with gradual improvement, healthy fleet utilization; Jennifer Kong-Picarello says MP margin skewed to Q4 due to higher factory absorptions and favorable geography mix.

Q: Kyle Menges asks about tariff impact changes.

A: Jennifer Kong-Picarello says $0.50 tariff impact now includes EU reciprocal tariff increase, secondary tariff impact, and 232 steel tariff doubling, offset by lower China reciprocal tariffs.

Q: Angel Castillo asks about risk into second half and MP production.

A: Simon Meester says risk from smaller local private projects; Simon Meester says MP production has early signs of recovery, customers cautious on rent conversion due to interest rates and sentiment.

Q: Michael Feniger asks about tariffs and ESG bookings.

A: Jennifer Kong-Picarello says steel tariff impact immaterial; Simon Meester says ESG bookings strong with 8 months backlog coverage, strong demand for ESG and utility products.

Q: Stephen Berger asks about ESG margin normalization and digital revenue streams.

A: Jennifer Kong-Picarello says ESG margin expected to be lower in back half but operational efficiencies to continue; Simon Meester says 3rd Eye digital platform expanding with more use cases.

Q: Tim Thein asks about higher Q4 EPS and tax rate reduction.

A: Jennifer Kong-Picarello says Q4 EPS higher due to tariff mitigation, timing of tariff impact, and MP margin improvement; Jennifer Kong-Picarello says effective tax rate expected to normalize around 19% range as global tax attributes are utilized.