Terex’s second quarter saw mixed market reaction, despite the company exceeding Wall Street’s revenue and adjusted EPS expectations. Management highlighted robust performance in Environmental Solutions, which helped counteract headwinds in Aerials and declining operating margins. CEO Simon Meester emphasized that “strong performance in Environmental Solutions offset industry-wide headwinds in Aerials,” while CFO Jennifer Kong-Picarello cited improved throughput and operational efficiencies as key drivers within the Environmental Solutions division. However, the company faced significant margin compression, with operating margin dropping from last year, largely due to an unfavorable mix and tariff-related inflation.
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Terex (TEX) Q2 CY2025 Highlights:
- Revenue: $1.49 billion vs analyst estimates of $1.44 billion (7.6% year-on-year growth, 3.4% beat)
- Adjusted EPS: $1.49 vs analyst estimates of $1.40 (6.5% beat)
- Adjusted EBITDA: $181.4 million vs analyst estimates of $192.9 million (12.2% margin, 6% miss)
- The company reconfirmed its revenue guidance for the full year of $5.4 billion at the midpoint
- Adjusted EPS guidance for the full year is $4.90 at the midpoint, beating analyst estimates by 4.8%
- EBITDA guidance for the full year is $640 million at the midpoint, below analyst estimates of $687.2 million
- Operating Margin: 8.7%, down from 14% in the same quarter last year
- Organic Revenue rose 6.6% year on year vs analyst estimates of 4.9% growth (177 basis point beat)
- Market Capitalization: $3.32 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Terex’s Q2 Earnings Call
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Stephen Volkmann (Jefferies): Asked about drivers behind Environmental Solutions margin outperformance and whether the favorable customer mix would persist. CFO Jennifer Kong-Picarello explained that margins benefited from throughput and mix, but expected moderation in the second half.
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Mircea Dobre (Baird): Sought clarity on the $20 million EBITDA guidance reduction and tariff mitigation plans. Kong-Picarello cited unfavorable Aerials mix and higher tariffs; CEO Simon Meester outlined mitigation efforts, including supplier negotiations and in-sourcing.
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David Raso (Evercore): Inquired about customer order timing and replacement demand for 2026. Meester stated that large customers follow normal order cycles, while smaller customers remain cautious due to macro uncertainty.
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Kyle Menges (Citi): Questioned the details of increased tariff impact and early signs of bonus depreciation driving demand. Kong-Picarello broke down tariff changes; Meester noted that bonus depreciation could spur future investment, but impact will be limited in the near term.
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Angel Castillo (Morgan Stanley): Asked about the risk that independent rental customers further delay purchases and whether rental conversion is shifting structurally. Meester said delays are due to interest rates and confidence, not a lasting structural change.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of Environmental Solutions’ margin and revenue growth as operational synergies from the ESG acquisition materialize, (2) the effectiveness of tariff mitigation strategies and how quickly cost savings are realized, and (3) signs of a rebound in Aerials and Materials Processing as macro uncertainty and end-market caution persist. The impact of recent U.S. tax incentives and infrastructure spending will also be key indicators to track.
Terex currently trades at $50.60, up from $49.87 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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