Terex Corporation (TEX) is a global industrial equipment manufacturer that has been at the forefront of the materials processing, waste and recycling, mobile elevating work platforms (MEWPs), and electric utility equipment industries for decades. With a diverse portfolio of market-leading brands and a commitment to innovation, Terex has established itself as a reliable partner for customers across a wide range of industrial sectors.
Company History
Founded in 1925 as the Trump, Demag, and Browning Manufacturing Company, Terex has a rich history of growth and evolution. The company started by producing industrial equipment such as hoists, cranes, and excavators, gradually expanding into the construction equipment market. In the 1960s, Terex made a major acquisition of Northwest Engineering Company, significantly expanding its capabilities in the construction equipment and materials processing industries. This laid the foundation for the company's current Materials Processing (MP) and Aerial Work Platforms (AWP) business segments.
The 1980s and 1990s saw continued growth and diversification for Terex, as it acquired companies in the waste management, recycling, and utility equipment sectors, broadening its product portfolio and customer base. However, the company faced challenges navigating the cyclical nature of the construction and infrastructure markets it served. In the early 2000s, Terex underwent a restructuring, divesting several non-core businesses to focus on its materials processing, aerial work platforms, and utility equipment operations. This streamlining effort helped improve the company's financial performance and competitiveness, although it still had to grapple with the impacts of the global financial crisis in the late 2000s, which significantly depressed demand in many of its end markets.
Business Segments
Today, Terex operates through three main business segments: Materials Processing (MP), Aerial Work Platforms (AWP), and Environmental Solutions Group (ESG). The MP segment provides equipment such as crushers, screens, conveyors, and wood processors, while the AWP segment offers aerial work platforms, utility equipment, and telehandlers. The ESG segment, acquired in 2024, is a market leader in waste and recycling solutions, further diversifying Terex's product portfolio and end-market exposure.
The MP segment designs, manufactures, services, and markets materials processing and specialty equipment, including crushers, washing systems, screens, trommels, apron feeders, material handlers, pick and carry cranes, rough terrain cranes, tower cranes, wood processing, biomass and recycling equipment, concrete mixer trucks and concrete pavers, conveyors, and related components and replacement parts. Customers in construction, infrastructure and recycling projects, various quarrying and mining applications, as well as in landscaping and biomass production industries, material handling applications, maintenance applications to lift equipment or material, moving materials and equipment on rugged or uneven terrain, lifting construction material and placing material at point of use utilize these products.
The AWP segment designs, manufactures, services, and markets aerial work platform equipment, utility equipment and telehandlers as well as their related components and replacement parts. Customers use these products to construct and maintain industrial, commercial, institutional and residential buildings and facilities, for purposes within the entertainment industry, for construction and maintenance of transmission and distribution lines, tree trimming, certain construction and foundation drilling applications, and for other commercial operations, as well as in a wide range of infrastructure projects.
Financials
Terex's financial performance has been solid, with the company reporting annual revenue of $5.1 billion and earnings per share of $6.11 in 2024, the second-highest in the company's history. The company's diverse end-markets, focus on innovation, and strategic acquisitions have contributed to its resilience and ability to navigate challenging economic conditions.
For the most recent quarter, Terex reported revenue of $1.241 billion, a decrease from the prior year quarter due to lower end-market demand across most geographies. The company reported a net loss of $2 million for the quarter. Operating cash flow was $177 million, and free cash flow was $128 million, both decreasing year-over-year due to lower profitability.
Looking at the segment performance for the third quarter of 2024, the MP segment reported net sales of $444 million, a decrease of 17.9% compared to the prior year period. The segment's income from operations was $56 million, or 12.6% of net sales, down 440 basis points from the prior year period. The decline was primarily due to lower sales volume and unfavorable product and geographic mix, as well as higher severance costs.
The AWP segment reported net sales of $769 million for the third quarter of 2024, an increase of 2.4% compared to the prior year period. Income from operations was $83 million, or 10.8% of net sales, down 160 basis points from the prior year period. The decrease was primarily due to unfavorable mix and higher freight costs.
Overall, Terex's consolidated net sales for the third quarter of 2024 were $1.21 billion, down 6.0% compared to the prior year period. Gross profit was $245 million, or 20.2% of net sales, versus $292 million, or 22.6%, in the prior year quarter. The company's income from operations was $122 million, or 10.1% of net sales, compared to $163 million, or 12.6%, in the same period last year. The decline was driven by lower sales volume, unfavorable mix, and higher freight and severance costs, partially offset by lower SG&A expenses.
Liquidity
Terex maintains a strong financial position with $352 million in cash and cash equivalents as of the most recent quarter. The company has a $600 million revolving credit facility, which was undrawn at the end of the quarter. The debt-to-equity ratio stands at 0.32, with $624 million in long-term debt and $1,960 million in stockholders' equity. The company's current ratio and quick ratio are both 2.39, indicating a healthy short-term liquidity position.
Global Presence
One of Terex's key strengths is its global footprint, with manufacturing facilities in North America, Europe, and Asia-Pacific, and a presence in over 100 countries worldwide. This global reach allows the company to capitalize on growth opportunities in various regions and mitigate the impact of regional economic fluctuations.
Innovation and Technology
Terex's commitment to innovation is also a critical component of its success. The company continuously invests in developing new products and technologies that improve customer productivity and sustainability. For example, the recently launched Genie slab scissor family features industry-leading quality, performance, and lower total cost of ownership, while the all-electric refuse collection body from Heil delivers fuel savings of up to 38% and supports sustainability objectives.
Future Outlook
Despite the challenges posed by macroeconomic uncertainty, Terex remains well-positioned for the future. The company's diversified portfolio, strong balance sheet, and focus on operational excellence position it to capitalize on long-term industry trends, such as the growing demand for infrastructure investment, the need for sustainable waste management solutions, and the ongoing transition to renewable energy.
In the near term, Terex is navigating a complex environment, with the company's guidance for 2025 reflecting the impact of industry-wide channel adjustments and global macroeconomic factors. The company expects overall growth in 2025, driven by the full-year contribution of the ESG acquisition, while its legacy segments manage through the current portion of the cycle.
For 2025, Terex anticipates net sales of approximately $5.4 billion, with segment operating margin expected to be about 12% and EBITDA roughly $660 million. Earnings per share is projected to be between $4.70 and $5.10, down from 2024 due to lower legacy volume, partially offset by accretive ESG growth. Free cash flow is expected to increase significantly to between $300 million and $350 million in 2025, driven by working capital reduction and a full year of ESG cash generation, while continuing to invest in the business with expected CapEx of approximately $120 million.
Looking at segment outlooks for 2025, Aerials (Genie) sales are expected to be down low-double digits compared to 2024, with full year margins consistent with the 25% decremental target. MP sales are expected to be down high-single digits compared to 2024, with margins well within the 25% decremental target. Environmental Solutions (ESG + Terex Utilities) is expected to generate mid-single digit sales growth, with continued strong margin performance.
Strategic Initiatives
Terex's management team is taking proactive steps to address these near-term challenges, including cost-reduction initiatives, production adjustments, and a continued focus on operational efficiency. The company's strong balance sheet and ample liquidity, with $952 million in available liquidity as of September 30, 2024, provide the financial flexibility to navigate the current environment and invest in long-term growth opportunities.
Overall, Terex's combination of diversified end-markets, innovative product portfolio, global reach, and financial strength positions the company well to weather the current economic uncertainty and capitalize on the long-term trends driving growth in its core industries. As Terex continues to execute on its strategic initiatives, the company remains an attractive investment opportunity for those seeking exposure to the industrial equipment manufacturing sector.