8-K: Terex Caps Transformational 2025, Eyes Strong 2026 Growth

Terex Corporation reported full-year 2025 sales of $5.4 billion and adjusted EPS of $4.93, while projecting 2026 sales of $7.5-$8.1 billion and EBITDA of $930 million-$1 billion, driven by the REV merger and strong Q4 bookings.

Summary

• Full-year 2025 net sales reached $5.4 billion, a 5.7% increase year-over-year, primarily due to the ESG acquisition, offsetting an 11.0% decline in legacy revenue.
• Full-year 2025 adjusted EPS was $4.93, down from $6.11 in 2024, while GAAP EPS was $3.33, down from $4.96.
• Operating profit for full-year 2025 was $475 million (8.8% of sales), with adjusted operating profit at $566 million (10.4% of sales), both lower than the prior year.
• Fourth quarter 2025 bookings surged 32% year-over-year on a pro forma basis to $1.9 billion, resulting in a book-to-bill ratio of 145%.
• Fourth quarter 2025 net sales increased 6.2% to $1.3 billion, with adjusted operating profit rising to $123 million (9.3% of sales) from $97 million (7.8% of sales) in Q4 2024.
• Full-year 2025 free cash flow significantly improved to $325 million, up from $190 million in 2024, achieving a 147% cash conversion rate.
• The company provided a 2026 outlook projecting net sales of $7.5 billion to $8.1 billion (up ~5% pro forma) and EBITDA of $930 million to $1 billion (up ~12% pro forma), with an expected EPS of $4.50 to $5.00.
• The 2026 outlook includes an 11-month impact from the new Specialty Vehicle segment (REV) and anticipates ~$28 million in realized synergies, targeting a $75 million annual run-rate within two years.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report. While full-year GAAP and adjusted EPS declined, the company met its 2025 guidance, demonstrated strong Q4 bookings, significantly improved free cash flow, and provided a robust 2026 outlook driven by strategic acquisitions and synergies.

Positives

• Strong fourth quarter 2025 bookings of $1.9 billion, up 32% year-over-year on a pro forma basis, indicating future revenue strength.
• Robust book-to-bill ratio of 145% in Q4 2025 across all three segments.
• Significant improvement in full-year 2025 free cash flow to $325 million, up from $190 million in 2024, with a high cash conversion rate of 147%.
• Successful integration of ESG and initiation of the merger with REV Group, Inc., transforming the company's portfolio.
• Improved Q4 2025 operating profit to $137 million (10.4% of sales) and adjusted operating profit to $123 million (9.3% of sales) compared to the prior year.
• Environmental Solutions segment showed strong performance with full-year 2025 net sales up 12.7% pro forma and adjusted operating profit margin improving by 220 basis points to 18.8%.
• Materials Processing segment's Q4 operating profit margin significantly increased to 22.7% (GAAP) and 13.7% (adjusted) due to cost productivity, mix, and pricing actions.
• Strong liquidity position with $1.6 billion in cash and revolving line of credit availability as of December 31, 2025.
• Positive 2026 outlook with projected sales growth of ~5% pro forma to $7.5-$8.1 billion and EBITDA growth of ~12% pro forma to $930 million-$1 billion.
• Anticipated ~$28 million in realized synergies for 2026 from the REV merger, on target for a $75 million annual run-rate within two years.

Negatives

• Full-year 2025 GAAP EPS decreased to $3.33 from $4.96 in 2024, and adjusted EPS decreased to $4.93 from $6.11.
• Full-year 2025 operating profit declined to $475 million (8.8% of sales) from $526 million (10.3% of sales) in 2024.
• Legacy revenue (excluding ESG) decreased by 11.0% for the full-year 2025.
• Aerials segment experienced a significant decline in full-year 2025 net sales, down 14.5% or $350 million, and adjusted operating profit margin decreased to 6.0% from 11.4%.
• Materials Processing segment's full-year 2025 net sales were down 11.6% or $221 million.
• The full-year 2025 adjusted operating profit for Materials Processing decreased to $206 million (12.3% of sales) from $258 million (13.6% of sales) in 2024.
• Higher effective tax rate for full-year 2025 at 24.3% compared to 17.8% in 2024 (GAAP).
• Dilution of 3% expected in 2026 due to a higher number of shares outstanding (111 million) following the REV merger.
• Tariff headwinds, including the expanded 232 tariff implemented in August 2025, could not be fully mitigated in the Q4 2025 Aerials segment.

Risks

• Inability to successfully integrate acquired or merged businesses, including REV Group, Inc., and failure to realize anticipated benefits.
• Inability to effectively manage expanded operations following the completion of the REV transaction.
• Potential negative impact on the business from divestitures and any retained liabilities.
• Uncertainty regarding the timing and amount of benefits from strategic initiatives.
• High industry competitiveness and pricing pressure, potentially leading to ineffective competition.
• Disruptions within the dealer network.
• Imposition of new, postponed, or increased international tariffs.
• Impact of general economic conditions, government spending priorities, and the cyclical nature of markets served.
• Risks associated with outstanding debt and the need to comply with debt agreement covenants.
• Inability to generate sufficient cash flow to service debt obligations and operate the business.
• Limited access to capital markets and borrowing capacity.
• Cancellations, reductions, or delays in customer orders, customer breaches of purchase agreements, backlog reductions, or inability to meet customer delivery schedules.
• Currency exchange and translation risk.
• Financial condition of customers and dealers and their continued access to capital.
• Exposure from providing credit support for some customers and dealers.
• Potential for losses in excess of recorded reserves.
• Common stock may be affected by factors different from previously, and may decline as a result of the transaction with REV.
• Political, economic, and other risks arising from operating a multinational business.
• Changes in the availability and price of certain materials and components, potentially resulting in supply chain disruptions.
• Consolidation within the customer base and suppliers.
• Failure of equipment to perform as expected.
• A material disruption to one of the significant facilities.
• Failure of a key information technology system or a breach of information security from increased cybersecurity threats and more sophisticated computer crime.
• Issues related to the development, deployment, and use of artificial intelligence technologies in business operations, information systems, products, and services.
• Increased regulatory focus on privacy and data security issues and expanding laws.
• Product liability claims, litigation, and other liabilities.
• Compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar worldwide anti-corruption laws.
• Compliance with environmental, health, and safety laws and regulations and failure to meet sustainability requirements or expectations.
• Compliance with an injunction and related obligations imposed by the U.S. Securities and Exchange Commission (SEC).
• Ability to attract, develop, engage, and retain qualified team members.
• Possible work stoppages and other labor matters.

Future Outlook

Terex projects 2026 net sales to grow approximately 5% on a pro forma basis, reaching $7.5 billion to $8.1 billion. EBITDA is expected to increase by about $100 million or 12% year-over-year pro forma, ranging from $930 million to $1 billion, with a 12.4% EBITDA margin at the midpoint. The company anticipates 2026 EPS between $4.50 and $5.00 and free cash flow conversion of 80% to 90%, driven by the 11-month impact of the new Specialty Vehicle segment (REV) and ~$28 million in realized synergies.

Management Comments

• "We concluded a transformational year for Terex, with the successful integration of ESG and the initiation of the merger with REV, coupled with solid execution by our legacy businesses in a very dynamic environment. The team navigated multiple macro and market headwinds to deliver financial results in line with our original 2025 guidance, while transforming our portfolio for the long-term." Simon Meester, President and CEO.
• "I am very proud of our team adapting quickly to changes in trade policy and market dynamics throughout the year while continuing to innovate, improve operations and deliver exciting new products to our customers. We head into 2026 with considerable momentum from strong Q4 bookings and backlog levels. We will focus on execution, successfully integrating REV and delivering on our synergy targets." Simon Meester, President and CEO.
• "I am very pleased that we delivered on all our key 2025 financial expectations, including $325 million of free cash flow reflecting 147% cash conversion. By completing the REV merger, we enter 2026 with even more opportunities to create value for our shareholders." Jennifer Kong-Picarello, Senior Vice President and Chief Financial Officer.

Industry Context

StockSavvy.ai notes that Terex's strategic focus on essential sectors like emergency services, waste and recycling, utilities, and construction positions it in resilient, high-demand markets. The successful integration of ESG and the ongoing merger with REV Group reflect a broader industry trend towards portfolio optimization and diversification to capture long-term growth potential, especially in specialized vehicle markets. The strong Q4 bookings and positive 2026 outlook suggest a robust demand environment for specialized equipment, despite ongoing macro and market headwinds such as tariffs and inflation that have impacted some segments.

Legal Proceedings

• Compliance with an injunction and related obligations imposed by the U.S. Securities and Exchange Commission (SEC) is a continuing risk.

Stakeholder Impact

• Shareholders: Potential for value creation through the REV merger and synergies, continued share repurchases ($183 million remaining), but also dilution (3% in 2026) and stock price volatility risk due to the merger.
• Employees: Risk related to attracting, developing, engaging, and retaining qualified team members, and potential for work stoppages.
• Customers: Risk of order cancellations, reductions, or delays; potential for equipment failure; and impact of financial condition on their ability to access capital.
• Suppliers: Risk of changes in availability and price of materials/components, leading to supply chain disruptions, and consolidation within the supplier base.
• Creditors: Need to comply with covenants contained in debt agreements and the company's ability to generate sufficient cash flow to service debt obligations.

Next Steps

• Successfully integrate REV Group, Inc.
• Deliver on synergy targets from the REV merger, aiming for a $75 million annual run-rate within two years.
• Focus on execution in 2026.
• Continue to innovate, improve operations, and deliver new products to customers.
• Host a conference call on February 11, 2026, to review results and outlook.

Key Dates

Recommendation

The company delivered on its 2025 guidance and presented a strong 2026 outlook, driven by strategic acquisitions and anticipated synergies. However, the full-year 2025 GAAP and adjusted EPS declined, and there are integration risks associated with the REV merger, along with ongoing tariff and macroeconomic headwinds. The positive Q4 bookings and free cash flow are encouraging, but the dilution from the merger and the decline in legacy revenue suggest a 'hold' until the successful integration of REV and realization of synergies are more evident.

Keywords

Terex, TEX, Earnings, Q4 2025, Full-Year 2025, 2026 Outlook, Specialized Equipment, Emergency Services, Waste and Recycling, Utilities, Construction, REV Group Merger, ESG Integration, Free Cash Flow, EBITDA, EPS, Bookings, Backlog, Aerials, Materials Processing, Environmental Solutions, Tariffs, Synergies, Share Repurchase