Terex (NYSE:TEX) executives used the company’s fourth-quarter 2025 earnings call to highlight the recent close of its merger with REV Group, discuss progress integrating its 2024 ESG acquisition, and outline an outlook for 2026 that reflects a newly combined portfolio.
REV merger closes; synergy targets laid out
CEO Simon Meester said Terex concluded its merger with REV Group “last week,” calling it a “defining milestone” that creates a leading specialty equipment manufacturer with premium brands, a broad manufacturing footprint, and “clear tangible synergies across the portfolio.” Meester said REV generated approximately $2.5 billion of revenue and $230 million of adjusted EBITDA in its recently completed fiscal year, with the majority tied to “essential low-cyclical end markets.”
Strategic review of Aerials continues
Management reiterated that its strategic review of the Aerials business remains underway. Meester said Terex has received “strong inbound interest” from multiple parties and that the company is being deliberate in evaluating options to maximize shareholder value. In response to questions, Meester noted the process is active and he could not disclose details, but said the company was “very pleased” with inbound interest.
Fourth-quarter and full-year results reflect mix of growth and headwinds
CFO Jennifer Kong said fourth-quarter performance was “largely in line with our expectations,” with Environmental Solutions continuing to grow and generate strong margins, Materials Processing (MP) posting its highest operating margin of the year, and Aerial sales returning to year-over-year growth after four quarters of declines.
- Q4 net sales: $1.3 billion, up 6% year-over-year (legacy sales up 5% excluding ESG)
- Q4 operating margin: 9.3%, up 150 basis points year-over-year
- Q4 EPS: $1.12, up $0.35 from the prior year quarter
- Q4 EBITDA: $141 million (10.6% of sales), up 140 basis points year-over-year
- Q4 free cash flow: $172 million, up $43 million year-over-year
For the full year, Kong said net sales rose 6% to $5.4 billion, driven by a full-year contribution from ESG that more than offset declines in Aerials and MP. Legacy sales declined 11% for the year. Operating margin was 10.4%, down 90 basis points from 2024 due to lower volumes in Aerials and MP and higher tariff costs that mainly impacted Aerials. Full-year interest and other expenses rose to $172 million, up $89 million, reflecting financing costs associated with acquiring ESG.
Terex reported full-year EPS of $4.93, EBITDA of $635 million (11.7%), and free cash flow of $325 million with a cash conversion rate of 147%, which management said was in line with expectations.
Segment performance and orders show improving momentum
In Environmental Solutions (ES), Terex reported fourth-quarter sales of $428 million, up 14.1% year-over-year on a pro forma basis, driven by improved throughput and deliveries of utility and refuse trucks. Fourth-quarter operating margin was 18.5%, up 90 basis points, while full-year ES sales rose 12.7% pro forma to $1.7 billion and full-year operating margin reached 18.8%.
MP posted fourth-quarter sales of $428 million, down 2.5% year-over-year, though sales increased 2.8% on a like-for-like basis excluding divested Queen businesses. Aggregates growth was cited as the primary driver, with the strongest growth in Europe. MP’s fourth-quarter operating margin improved to 13.7% as efficiency initiatives and pricing actions took hold.
Aerials delivered fourth-quarter sales growth of 6.9% year-over-year, including growth in North America and EMEA, and fourth-quarter operating margin of 2.6%, which Kong said was consistent with expectations and 200 basis points better than the prior year. Kong noted tariff headwinds, including the expanded Section 232 tariff implemented in August, could not be fully mitigated in the period.
Bookings were a key theme for management entering 2026. Kong said fourth-quarter bookings were $1.9 billion, up 32% year-over-year on a pro forma basis, with growth across segments:
- Environmental Solutions: bookings up 16% year-over-year; backlog of $1.1 billion
- Materials Processing: bookings up 24% year-over-year (or 32% excluding divested Queensland business)
- Aerials: bookings of $971 million, up 46% year-over-year; backlog of $906 million entering 2026
2026 outlook reflects combined company and synergy contribution
Terex’s 2026 outlook reflects 11 months of REV results and excludes purchase accounting impacts, cost-to-achieve synergies, and other non-recurring items. The company expects pro forma sales of $7.5 billion to $8.1 billion, about 5% growth, and pro forma EBITDA of $930 million to $1.0 billion, up about $100 million year-over-year. Terex’s EBITDA outlook includes approximately $28 million of synergies in 2026.
The company guided to 2026 EPS of $4.50 to $5.00, noting the REV merger has a “modest 3% diluted effect on EPS” due to higher shares outstanding. Kong said the share count assumption is 111 million shares on a weighted-average basis, with about 15% of full-year EPS expected in the first quarter due to seasonality and only two months of Specialty Vehicles earnings in Q1.
Management expects cash conversion of 80% to 90% of net income, including transaction and synergy costs, and said net leverage should improve over the year. Terex expects interest and other expense of about $190 million and an effective tax rate of about 21%.
By segment, Terex expects single-digit growth in Environmental Solutions led by Utilities, while ESG is expected to be roughly flat with potential upside in the second half depending on fleet requirements and EPA emissions regulations. The company expects MP to return to high-single-digit growth on a pro forma basis (excluding Queensland), with improved margins driven by volume, productivity, and pricing. For the new Specialty Vehicles segment, Terex expects high-single-digit sales growth off a pro forma prior-year base of $2.2 billion (excluding divested RV businesses) and “meaningful” margin improvement driven by throughput, pricing, and operational improvements. Aerials is expected to be similar to 2025 in both sales and margins, with management describing tariff impacts as higher in 2026 but offset by productivity and pricing actions.
About Terex (NYSE:TEX)
Terex Corporation is a global manufacturer of lifting and material-handling plant and equipment, serving a range of industries that includes construction, infrastructure, energy, manufacturing and shipping logistics. Its product portfolio encompasses aerial work platforms, rough terrain and tower cranes, port and cargo handling equipment, material processing machinery and utility products. These offerings are marketed under well-known brands such as Genie®, Terex® AWP, Terex® Cranes, Demag®, and Powerscreen®, and are designed to meet diverse application requirements from building sites to industrial facilities and ports.
Headquartered in Westport, Connecticut, Terex traces its roots back to 1933 and has grown through strategic acquisitions and organic expansion.
