Breaking Down Terex Corporation (TEX) Financial Health: Key Insights for Investors

You're looking at Terex Corporation (TEX) and trying to figure out if their strategic pivot toward less-cyclical businesses is actually paying off, especially as industrial demand gets spotty; the short answer is that the company is demonstrating real resilience, but it's defintely a tale of two segments right now. Despite macro headwinds, management is holding firm on its full-year 2025 adjusted earnings per share (EPS) outlook of $4.70 to $5.10, and they expect to generate a healthy $300 million to $350 million in free cash flow, which is a strong sign of capital discipline. The Q3 2025 results show exactly where the strength lies: while the Aerials segment saw net sales decline 13.2% as rental customers pulled back on capital expenditures (capex), the Environmental Solutions segment surged, delivering $435 million in net sales and an impressive 18.3% adjusted operating margin, effectively cushioning the overall impact and driving total Q3 net sales to $1.4 billion. The portfolio is proving more resilient than in past cycles. To be fair, maintaining that full-year outlook requires the Environmental Solutions growth to keep compensating for the cyclical pressure still hitting their legacy equipment, so we need to dig into the sustainability of those segment margins.

Revenue Analysis

You need to know where Terex Corporation (TEX) is making its money, especially with the strategic shifts underway. The direct takeaway is that while the company projects full-year 2025 revenue to be robust, between $5.3 billion and $5.5 billion, the growth engine has fundamentally changed, with the new Environmental Solutions segment now offsetting declines in traditional segments like Aerials and Materials Processing.

The overall revenue picture for the trailing twelve months (TTM) ending September 30, 2025, shows total revenue at $5.34 billion, which represents a respectable year-over-year growth of 4.6%. However, this growth is not uniform across the business; it's a story of strategic portfolio rebalancing. Here's the quick math on the segment contributions based on recent quarterly performance, which illustrates the shift:

• Environmental Solutions (ES): This segment, which includes the recently acquired Environmental Solutions Group (ESG) and Terex Utilities, is the clear growth driver. It accounted for roughly one-third of global sales in Q1 2025 and saw Q2 2025 net sales of $430 million, a 12.9% pro forma increase year-over-year.
• Aerials: This segment is facing headwinds, with Q3 2025 net sales of $537 million reflecting a 13.2% decline year-over-year, as independent rental customers deploy less capital expenditure (capex).
• Materials Processing (MP): Sales here are also down, with Q2 2025 net sales of $454 million, a 9.0% decrease year-over-year, due to lower channel requirements and end-market demand.

This tells you that the company's legacy businesses are contracting, but the new, less-cyclical waste and recycling market exposure is picking up the slack. You can defintely see this as a pivot toward more resilient revenue streams. For a deeper dive into the market's reception of this strategy, you should check out Exploring Terex Corporation (TEX) Investor Profile: Who's Buying and Why?

The company's geographic revenue streams also show a strong US-centric focus, which helps limit exposure to geopolitical risks and currency fluctuations. Approximately 75% of the company's 2025 U.S. equipment sales are expected to be produced in the United States. The TTM revenue breakdown by region ending June 30, 2025, highlights this concentration:

The most significant change in revenue streams is the strategic move to exit the Tower and Rough Terrain Cranes businesses and the planned exit of the Aerials segment, which is a massive shift away from highly cyclical heavy equipment. The Environmental Solutions segment is expected to be a key driver of mid-single-digit sales growth for 2025, making it the most critical area to monitor for sustained performance.

Profitability Metrics

You need to know if Terex Corporation (TEX) is translating its sales into real profit, and the quick answer is yes, but with a clear shift in where that profit is coming from. The company's overall profitability is holding steady in 2025, largely thanks to strategic acquisitions, even as some legacy segments face headwinds. This is a story of portfolio resilience, not explosive organic growth.

For the trailing twelve months (TTM) ending June 30, 2025, Terex Corporation's Gross Profit Margin stood at 18.63%. This is the first check on operational efficiency-how much is left after the cost of goods sold (COGS). The margin is strong, especially when you compare it to the Auto Manufacturers industry average gross margin of 18.1%, suggesting Terex Corporation is effectively managing its direct manufacturing and sourcing costs. That's a tight race, but they're winning it.

• Gross Margin (TTM Q2 2025): 18.63%
• Adjusted Operating Margin (Q3 2025): 12.1%
• Adjusted Net Profit Margin (Q3 2025): $\approx$ 7.14%

Operating and Net Profit Margins: The 2025 View

Drilling down to the third quarter of 2025, the Adjusted Operating Margin was 12.1% on net sales of $1.4 billion. This is a solid improvement from the 10.5% adjusted operating margin reported in the same quarter of 2024, showing management's cost-control and integration efforts are working. The Environmental Solutions (ES) segment is the clear margin leader, posting an exceptional 18.3% adjusted operating margin in Q3 2025, which is materially higher than the company average and a 160 basis point improvement year-over-year. This is where the operational efficiency is truly shining.

The bottom line-the Adjusted Net Income-was $100 million for Q3 2025, which translates to an approximate 7.14% net profit margin. This is a slight uptick from the $98 million adjusted net income in Q3 2024. To be fair, a 7.14% net margin is comfortably above the 4.5% average net profit margin for the Auto Manufacturers industry, indicating Terex Corporation is better at controlling its non-operating expenses like interest and taxes, or simply has a structurally better business model than the typical heavy equipment maker. This is defintely a key metric to watch as they execute their strategy.

Operational Efficiency and Trend Analysis

The trend in profitability for Terex Corporation is one of strategic portfolio management offsetting cyclical weakness. While the Aerials and Materials Processing (MP) segments faced lower sales volume and unfavorable mix, leading to revenue declines in legacy businesses of 8.2% year-over-year (excluding the ES acquisition), the overall company margins still expanded. Here's the quick math: the addition of the higher-margin Environmental Solutions Group (ESG) is structurally improving the consolidated profitability ratios, making the entire company more resilient.

What this estimate hides is the underlying pressure on the legacy segments. If you're an investor, you need to see the Materials Processing segment's adjusted operating margin dip from 13.3% in Q3 2024 to 12.4% in Q3 2025 as a risk. The margin expansion is currently an inorganic story driven by the new, higher-margin ES business. The full-year 2025 adjusted earnings per share (EPS) outlook is maintained at $4.70 to $5.10, a testament to this strategic shift. For more on the long-term vision, check out the Mission Statement, Vision, & Core Values of Terex Corporation (TEX).

Debt vs. Equity Structure

Terex Corporation (TEX) is currently operating with a moderately leveraged balance sheet, a strategic position driven by the significant debt funding used for its recent Environmental Solutions Group (ESG) acquisition. Your key takeaway is that the company's Debt-to-Equity (D/E) ratio of approximately 1.29 as of Q3 2025 is elevated compared to some peers, but still sits within the acceptable range for a capital-intensive industrial manufacturer.

The company's financing strategy clearly favors a balance of debt and equity, but the near-term focus, following the 2024 acquisition, is squarely on deleveraging. Management has been clear: they plan to reduce debt as they generate substantial free cash flow, which is anticipated to be between $300 million and $350 million for the full 2025 fiscal year. This cash generation is what makes the current debt load manageable.

Overview of Debt and Equity Levels (Q3 2025)

As of September 30, 2025, Terex Corporation's total debt stood at approximately $2.59 billion, a level that reflects the financing for the strategic ESG acquisition. This debt is overwhelmingly long-term, which is a positive sign for near-term liquidity, but it does mean a large principal repayment is scheduled for the future.

Here's the quick math on the balance sheet components (in millions USD):

The small current portion of long-term debt, just $13 million, shows that the company has minimal principal obligations coming due in the next 12 months, which provides defintely a lot of breathing room in the current high-interest rate environment.

Debt-to-Equity Ratio and Industry Context

Terex Corporation's Debt-to-Equity ratio, calculated as Total Debt divided by Total Stockholders' Equity, is approximately 1.29 ($2,593M / $2,017M). This ratio tells you that for every dollar of equity financing, the company has taken on $1.29 in debt.

To be fair, this is a capital-intensive industry. A D/E ratio between 0.5 and 1.5 is generally considered healthy for construction-related companies in 2025, so Terex is within that range. However, it is on the higher side. For comparison:

• A ratio below 1.0 is often preferred by sureties and lenders.
• The average D/E for general industrial machinery peers can be closer to 0.95.
• Some specialty heavy equipment manufacturers may operate near 2.0.

The 1.29 ratio is a direct result of the debt-funded acquisition, but it's not a crisis number. It signals a strategic use of leverage to grow the Environmental Solutions segment, a move that is expected to create a more resilient, less-cyclical earnings profile for the combined entity.

Recent Debt and Financing Activity

The current debt structure is largely defined by the late 2024 financing activities related to the ESG acquisition. This was a major capital event that reshaped the balance sheet, but it also secured long-term financing at a known cost:

• Senior Notes: Terex issued $750 million of 6.250% Senior Notes due 2032.
• Term Loan: They secured a new term loan facility of up to $1.25 billion.
• Revolving Credit: The revolving credit facility was expanded to $800 million, boosting liquidity.

The company is balancing debt financing with equity funding by consistently returning capital to shareholders. Through September 30, 2025, Terex returned $87 million to shareholders via dividends and share repurchases, with $183 million still available under its repurchase programs. This dual approach-using debt to fund growth while simultaneously returning capital-demonstrates confidence in their future cash flows to handle the leverage. If you want to dive deeper into who is buying and selling, you can check out Exploring Terex Corporation (TEX) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking for a clear signal that Terex Corporation (TEX) can handle its short-term bills and has the cash flow to weather any economic storms. Honestly, the 2025 fiscal year data shows a remarkably strong liquidity position, which should put your mind at ease. The company is defintely not scrambling for cash.

As of late 2025, Terex Corporation's liquidity metrics are healthy, signaling a strong ability to meet its near-term obligations without stress. The current ratio sits at 2.08, meaning the company has $2.08 in current assets for every dollar of current liabilities. A ratio above 2.0 is excellent for an industrial manufacturer. This is a solid buffer.

The quick ratio (or acid-test ratio), which strips out inventory-often the least liquid current asset-is also robust at 1.11. This tells you that even without selling a single piece of new equipment, Terex Corporation could cover all its short-term debts with its most liquid assets, like cash and accounts receivable. This is a clear strength.

Here's the quick math on their immediate cash access:

• Current Ratio: 2.08
• Quick Ratio: 1.11
• Total Liquidity (Cash + Revolving Credit): $1.3 billion as of September 30, 2025

The working capital story is equally compelling, and it's a key driver of their financial health. Management is actively reducing working capital to boost cash flow, a smart move in a capital-intensive business. The change in other working capital for the trailing twelve months ended June 2025 was an increase of $58 million, but the overall strategy is geared toward efficiency, which is translating directly into cash.

Looking at the cash flow statement overview for 2025, the trends are decisively positive, driven by operational discipline:

The significant increase in free cash flow, projected to hit between $300 million and $350 million for the full year 2025, is the most powerful indicator of financial strength. This is cash generated after all necessary capital expenditures (CapEx), which are expected to be around $120 million. This robust cash generation allows the company to return capital, with $87 million already deployed to shareholders through Q3 2025.

What this estimate hides is the potential impact of a slowdown in the Aerials segment, which saw lower sales volume. Still, the strong performance of the Environmental Solutions segment and the effective working capital management are more than compensating for it, keeping the overall liquidity picture bright. The $1.3 billion in available liquidity as of September 30, 2025, is a massive strength that provides flexibility for both organic growth and managing any market downturns. For a deeper dive into the company's strategic position, you can read the full post: Breaking Down Terex Corporation (TEX) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Terex Corporation (TEX) right now and asking the core question: is the market missing something, or is this stock priced just right? The short answer is that, based on near-term earnings projections for the 2025 fiscal year, Terex Corporation (TEX) appears undervalued compared to its historical and sector peers, despite a recent market pullback. The analyst consensus is a clear 'Moderate Buy.'

Here's the quick math: with the stock trading around $41.78 as of November 2025, the average analyst price target sits significantly higher at $56.20. That suggests a potential upside of nearly 35% over the next twelve months. This gap is often where opportunity lives, so let's dig into the core valuation multiples.

Key Valuation Multiples (FY 2025)

We use three fundamental ratios-P/E, P/B, and EV/EBITDA-to cut through the noise and see what you're actually paying for. For Terex Corporation (TEX), the forward-looking metrics are the most compelling story, suggesting earnings are set to ramp up while the stock price lags. This is a classic value signal.

• Price-to-Earnings (P/E): The trailing P/E is about 16.15, but the forward P/E, based on the expected 2025 earnings per share (EPS) of $4.83, drops sharply to just 8.96. That forward multiple is defintely attractive in the Industrials sector.
• Price-to-Book (P/B): At 1.39, the P/B ratio is low, meaning you are paying only 39 cents more than the company's net asset value for every dollar of book equity. This suggests the stock is not trading on high growth expectations, but rather on solid, tangible assets.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA ratio is 8.89, which is a reasonable multiple for a cyclical industrial company like this, factoring in its debt load.

What this estimate hides is the cyclical nature of heavy equipment sales; if a recession hits, even a low P/E can look expensive fast. Still, the current numbers point to a strong margin of safety.

Stock Price and Dividend Signal

The stock price trend over the last 12 months shows a clear opportunity born from volatility. Terex Corporation (TEX) has seen its share price fall by over 16%, dropping from a 52-week high of $58.66 to the current level. This decline, combined with strong earnings guidance, is the very definition of a potential value play.

The dividend provides a tangible return while you wait for the valuation to correct. The annual dividend is a steady $0.68 per share, translating to a dividend yield of approximately 1.54%. Importantly, the payout ratio is a very sustainable 29.01%, meaning the company is only using a small portion of its earnings to pay shareholders, retaining the rest for growth or debt reduction. This low payout ratio signals confidence in their cash flow, plus it gives them plenty of room to increase the dividend later without straining the balance sheet. For a deeper dive into the company's long-term strategy, you should review their Mission Statement, Vision, & Core Values of Terex Corporation (TEX).

Risk Factors

You're looking at Terex Corporation (TEX) and wondering what could derail the strong performance of their new Environmental Solutions segment. Honestly, the biggest near-term risk isn't internal; it's the classic industrial equipment cycle hitting their core businesses, plus a nasty tariff headwind you can't ignore.

The company is navigating a split-screen reality in 2025. While the Environmental Solutions (ES) segment is a star-expected to become roughly 30% of total revenue in the first half of 2025-the legacy segments, Aerials and Materials Processing (MP), are facing a cyclical downturn. This is an operational risk that shows up directly in sales: legacy revenue declined by 8.2% year-over-year in the third quarter of 2025 due to lower demand.

Here's the quick math on the external pressures, which are substantial:

• Macro Headwinds: High interest rates and weak European markets continue to persist, dampening capital expenditure for construction and rental fleets.
• Tariff Costs: The full-year net unfavorable impact of tariffs on 2025 Earnings Per Share (EPS) is now expected to be approximately $0.70, a significant hit to their adjusted EPS outlook of $4.70 to $5.10.
• Supply Chain: Specific supply constraints, especially in the Utilities segment, limit their ability to capitalize on strong demand and convert their backlog into revenue.

The company's debt is also a factor. As of June 30, 2025, Terex Corporation carried $2.586 billion in long-term debt. While their projected 2025 Free Cash Flow of $300 million to $350 million is strong, that debt load means higher interest rates cut into the bottom line, which is a financial risk.

To be fair, management isn't just sitting still. They've adopted clear mitigation strategies to combat these risks.

For the tariff risk, they are leveraging their U.S.-based manufacturing. The CEO noted they expect to produce approximately 75% of their 2025 U.S. equipment sales domestically, which helps limit exposure to geopolitical trade friction. Also, they've been proactive on the financial side, recently refinancing to cut the term loan rate from SOFR + 2.00% to SOFR + 1.75%, which preserves financial flexibilty and cushions against rising interest expenses.

The biggest strategic mitigation is the shift to ES, a less-cyclical business that now insulates them from the worst of the Aerials and MP downturns. They've also implemented cost reduction actions to offset lower sales volumes in the legacy segments. You defintely need to watch the segment sales mix to see if ES can keep growing fast enough to carry the weight. For a deeper look at the long-term vision driving this shift, you can review the Mission Statement, Vision, & Core Values of Terex Corporation (TEX).

The table below summarizes the core financial risks and the company's stated actions as of late 2025:

Finance: Monitor the Q4 2025 earnings call for any change to the $5.3 billion to $5.5 billion revenue guidance, as that will signal if the legacy segment weakness is accelerating faster than ES growth.

Growth Opportunities

You're looking past the current market volatility and asking the right question: where is the real, sustainable growth coming from for Terex Corporation (TEX)? The answer is a decisive, strategic pivot away from cyclical businesses and directly into resilient, high-margin markets. This isn't just a tweak; it's a fundamental portfolio transformation.

The core of the growth story for 2025 hinges on two major moves: the full-year contribution of the Environmental Solutions Group (ESG) and the announced merger with REV Group, coupled with the planned exit of the Aerials segment. This shift is designed to create a far less cyclical earnings profile. Honestly, this is a smart move to de-risk the business.

2025 Financial Projections and Key Drivers

Management has maintained a clear outlook for the 2025 fiscal year, even with the strategic changes. They are confident the new portfolio mix will deliver on their targets. Here's the quick math on what they expect to hit:

• Net Sales: Projected between $5.3 billion and $5.5 billion.
• Adjusted EPS: Expected to land between $4.70 and $5.10.
• EBITDA: Forecasted to reach approximately $660 million.
• Free Cash Flow: Targeted between $300 million and $350 million, a significant improvement from the prior year.

What this estimate hides is the expected weakness in the Aerial Work Platforms (AWP) and Materials Processing (MP) segments in the first half of 2025 due to industry-wide channel adjustments. But the Environmental Solutions (ES) and Utilities segments are expected to carry strong momentum and continue to grow, offsetting those declines.

Strategic Initiatives: Merger and Portfolio Focus

The most significant near-term catalyst is the announced merger with REV Group, which will create a scaled specialty equipment manufacturer. This transaction is slated to unlock significant value-creating synergies of at least $75 million of run-rate value by 2028, with about 50% achieved just 12 months after closing. The combined company's pro forma revenue is estimated at $5.8 billion, establishing a major player in emergency, waste, and utility equipment.

To be fair, this is a clear doubling down on resilient markets. The simultaneous plan to exit the cyclical Aerials segment via a sale or spin-off further reinforces the strategy to create a more predictable earnings profile. This is a decisive move to get out of the high-risk, low-reward parts of the business.

Competitive Advantages and Long-Term Tailwinds

Terex Corporation is positioning itself for long-term growth by leveraging its new portfolio's inherent advantages and riding major macroeconomic tailwinds. The Environmental Solutions segment is the star here, boasting robust margins-adjusted operating margins hit 19.4% in Q1 2025-and a low cyclicality profile driven by steady demand in waste and recycling markets.

Plus, the company is benefiting from massive U.S. government spending. Federal spending on infrastructure projects under the IIJA and the Inflation Reduction Act (IRA) provides a strong tailwind for the utility and materials processing equipment. They are also mitigating trade risks by strategically shifting production; as of 2025, 75% of U.S. equipment sales are domestically produced. For more on who is buying into this strategy, you should check out Exploring Terex Corporation (TEX) Investor Profile: Who's Buying and Why?

The company's competitive edge is defintely rooted in this new, less-cyclical business mix and its focus on:

• Dominance in the growing waste and recycling market.
• Expanding aftermarket services with robust margins.
• Investing in electrification and digital solutions for its products.
• Gaining market share in emerging regions like India and Latin America.

The next concrete step is to monitor the progress of the REV Group merger integration and the execution of the Aerials segment exit, as both are critical to realizing the 2025 financial guidance.