TEREX CORP Q1 FY2025 earnings call

• Safety is a core focus, with the team committed to Terex values. - Q1 financial performance exceeded initial outlook: EPS $0.83, sales $1.2B, ROIC 15%. - Aerials and MP margins affected by production cuts but expected to improve in Q2. - ES had strong operating margin, representing 1/3 of sales. - Implemented 'execute, innovate, grow' strategy, aiming for $25M operational synergies by 2026. - Product development focused on customer solutions, e.g., ESG's 3rd Eye digital suite.

Aerials: Sales of $450 million. Operating margin impacted by past production cuts but expected to improve in Q2. Environmental Solutions (ES): Accounted for 1/3 of global sales in Q1, with 19.4% operating margin. Organic sales growth expected driven by demographics, product technology, etc. Materials Processing (MP): Sales of $382 million. Backlog coverage at 3 months, fleet utilization healthy but cautious on tariffs' impact on small projects.

• Maintains full-year EPS outlook of $4.70 to $5.10, including assumed tariff impact. - Full-year sales expected $5.3B to $5.5B, with ESG acquisition offsetting organic sales decline. - Segment operating margin expected ~12%, with Aerials and MP margins improving, ES sales outlook increased. - Free cash flow expected $300M to $350M in 2025, driven by working capital reductions and ESG cash generation.

• Uncertainty around tariffs and their impact on costs and pricing. - Macro-economic and geopolitical uncertainties affecting market conditions. - Potential negative impact on customer confidence if tariff issues persist.

Q: Impressed by ES margin improvement, expand on margin outlook.

A: Strong Q1 due to sales increase, record throughput, and integration synergies; moderating in remaining quarters.

Q: Handling orders and surcharges for tariffs.

A: In full mitigation mode, pulling forward material, exploring supply chain alternatives, and using pricing as a lever while maintaining price-cost neutrality.

Q: Puts and takes of guidance, tariff impact on Aerials.

A: Q1 beat, $0.40 tariff headwind offset by ES growth and operational efficiencies; Aerials expected to return to double-digit margins in Q2.

Q: Tariff impact on 2Q Aerials, MP backlog.

A: Tariff impact mostly on raw materials from China, expected de-escalation; MP backlog normalized, fleet utilization healthy but cautious on small projects.

Q: ES margin sustainability, MP backlog.

A: Synergies expected to improve margins further by 2026; MP backlog normal, driven by North American replacement demand and infrastructure projects.