Executive Summary

Q3 delivered mixed results: adjusted EPS of $1.50 beat consensus by ~24% while revenue of $1.39B modestly missed Street expectations; Environmental Solutions strength and a discrete $18M Aerials item lifted earnings, offsetting softer Aerials/MP demand and tariff headwinds .
Management maintained full‑year outlook (net sales $5.3–$5.5B; adj. EPS $4.70–$5.10; EBITDA ~$640M; FCF $300–$350M; segment OP margin ~12%), despite expanded 232 tariffs now expected to impact FY EPS by ~-$0.70 .
Strategic pivot: announced merger with REV Group and intent to exit Aerials to reduce cyclicality; synergy target of $75M run‑rate by 2028 (~50% within 12 months of close). REV backlog cited at ~$4.5B with 2–2.5 years duration in specialty vehicles, supporting earnings visibility .
Cash execution was a positive catalyst: free cash flow of $130M (200% conversion), liquidity of $1.3B, capex $24M, and continued capital returns (YTD $87M through dividends/buybacks); quarterly dividend of $0.17 was declared in October .

What Went Well and What Went Wrong

What Went Well

Environmental Solutions continued to outperform: net sales $435M (+13.6% pro forma YoY) and adj. OP margin 18.3% (+160 bps vs pro forma Q3’24), driven by strong refuse collection vehicle throughput; Utilities remained solid .
Cash generation and balance sheet: Q3 free cash flow of $130M (200% conversion) and $1.3B of liquidity, supporting both investment and shareholder returns .
Portfolio transformation momentum: merger with REV and planned Aerials exit to rebalance toward less cyclical end‑markets; synergy plan of $75M run‑rate by 2028 with ~50% in first 12 months post‑close .

What Went Wrong

Aerials softness persisted: net sales -13.2% YoY to $537M as North American rental customers curtailed growth capex; OP margin compressed to 8.4% (9.2% adj.) on lower volumes, mix, and tariffs (partly offset by a discrete ~$18M customs‑related benefit) .
Materials Processing declined: net sales down 6.1% YoY to $417M on lower North America concrete volumes; adj. OP margin slipped to 12.4% vs 13.3% in Q3’24 .
Tariffs escalating: expanded mid‑August 232 steel/aluminum measures to drive higher Q4 costs; management now expects ~-$0.70 EPS full‑year headwind from tariffs .

Financial Results

Headline vs prior periods and Street

Metric	Q3 2024	Q2 2025	Q3 2025 Actual	Q3 2025 Consensus*
Revenue ($B)	$1.21	$1.49	$1.39	$1.41*
Diluted EPS ($)	$1.31	$1.09	$0.98	$1.21*
Adjusted EPS ($)	$1.46	$1.49	$1.50	—
Operating Margin (%)	10.1%	8.7%	10.1%	—
Adjusted Operating Margin (%)	10.5%	11.0%	12.1%	—

Surprise (Actual vs Consensus): Revenue -$0.03B (~~-1.9%); Adjusted EPS +$0.29 (~~+24.5%). Actuals from company; consensus from S&P Global. Values marked with “*” are S&P Global.

Segment performance

Segment	Q3 2024	Q2 2025	Q3 2025
Aerials Net Sales ($M)	$619	$607	$537
Aerials Adj. OP Margin (%)	10.5%	8.0%	9.2%
MP Net Sales ($M)	$444	$454	$417
MP Adj. OP Margin (%)	13.3%	12.7%	12.4%
ES Net Sales ($M)	$151 (ex‑ESG)	$430	$435
ES Adj. OP Margin (%)	13.2%	19.1%	18.3%

Note: Q3’24 ES excludes ESG (pro forma comparisons referenced in text) .

KPIs and cash/returns

KPI	Q3 2025
Bookings ($B)	$1.00 (book‑to‑bill 72%)
Free Cash Flow ($M)	$130; conversion 200%
Liquidity	$1.3B
Capex + Investments ($M)	$24
ROIC	11.9%
YTD Shareholder Returns	$87M; 1.4M shares at $38.74; $183M buyback capacity remaining
Dividend	$0.17/sh declared 10/16/25 (paid 12/19/25)

Consensus detail (S&P Global)*

Metric	Q3 2025 Street	Q3 2025 Actual
Primary EPS Consensus Mean	$1.21*	$1.50
Revenue Consensus Mean ($B)	$1.41*	$1.39
EBITDA Consensus Mean ($M)	$169.5*	$181.0*
EPS # of Estimates	11*	—
Revenue # of Estimates	9*	—

Values marked with “*” are S&P Global.

Guidance Changes

Metric	Period	Previous Guidance (Q2’25)	Current Guidance (Q3’25)	Change
Net Sales	FY 2025	$5.3–$5.5B	$5.3–$5.5B	Maintained
Segment Operating Margin	FY 2025	~12%	~12%	Maintained
EBITDA	FY 2025	~$640M	~$640M	Maintained
Adjusted EPS	FY 2025	$4.70–$5.10	$4.70–$5.10	Maintained
Free Cash Flow	FY 2025	$300–$350M	$300–$350M	Maintained
FCF Conversion	FY 2025	>120%	>120%	Maintained
Aerials Sales (Directional)	FY 2025	Down LDD	Down LDD	Maintained
MP Sales (Directional)	FY 2025	Down HSD	Down HSD	Maintained
ES Sales (Directional)	FY 2025	Up LDD	Up LDD	Maintained
Tax Rate (Assumption)	FY 2025	~17.5%	~17.5%	Maintained
Interest/Other Expense	FY 2025	~$170M	~$170M	Maintained
D&A	FY 2025	~$160M	~$160M	Maintained
Share Count	FY 2025	~66M	~66M	Maintained
Dividend	Near term	—	$0.17/sh declared 10/16/25	Initiated/Declared

Management noted tariffs now expected to reduce FY EPS by approximately $0.70, yet maintained all full‑year ranges .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs/Macro	Q1: monitoring tariffs; US‑centric production mitigates risk . Q2: warned higher tariffs could temporarily pressure margins .	Expanded 232 tariffs to raise Q4 costs; full‑year EPS headwind ~-$0.70 .	Headwind intensifying
Aerials demand	Q1: -27.8% YoY; reset to align supply/demand . Q2: -17.1% YoY; margin pressure .	-13.2% YoY; OP margin 8.4% (9.2% adj.); discrete ~$18M benefit helped .	Still weak, stabilizing sequentially
Environmental Solutions	Q1: strong, adj. OP margin 19.4% . Q2: adj. OP margin 19.1% .	Adj. OP margin 18.3%; strong RCV throughput .	Sustained strength
Bookings/Backlog	Q1: book‑to‑bill 124% . Q2: bookings +19% pro forma; b2b 73% .	Bookings $1.0B +57% pro forma; b2b 72% .	Seasonal normalization; YoY mix improving
Portfolio strategy	Q1: ESG integration benefits, less cyclicality . Q2: $150M buyback authorization .	Announced REV merger; plan to exit Aerials; completed Italian cranes sale post‑Q3 .	Transformational pivot
Digital/Technology	Limited prior disclosures.	ThirdEye digital platform highlighted for cross‑vertical expansion (e.g., fire/ambulance) .	Increasing focus
Utilities/AI data centers	Not a focus in Q1–Q2.	Grid upgrades & AI data centers cited as multi‑year utility tailwinds .	Emerging secular tailwind

Management Commentary

CEO: “Our ability to hold our outlook for the entire year, given the turbulent macro environment, market headwinds and changes in tariffs, is a testament to the growing resiliency of the Terex portfolio” .
CFO: “We now expect the full year net unfavorable impact of tariffs on EPS to be approximately $0.70… Assuming tariffs broadly remain at current rates, we continue to maintain our full year EPS outlook of $4.70 to $5.10” .
Strategy: On REV merger and Aerials exit—“We are creating a large‑scale specialty equipment manufacturer… reducing exposure to cyclical end markets,” with $75M synergy run‑rate targeted (about half within 12 months) .

Q&A Highlights

Rationale/timing for Aerials exit: Management emphasized re‑baselining toward less cyclicality and confidence in multiple suitors recognizing the through‑cycle value of the brand; no explicit timeline provided .
Synergies: $75M run‑rate by 2028, ~50% within 12 months post‑close; disclosed as net of contemplated Aerials exit .
REV backlog/visibility: ~$4.5B total backlog (about $4.2B specialty vehicles; ~$300M RV) with 2–2.5 years duration; pricing supports margins embedded in backlog .
Channels and go‑to‑market: No distribution channel overlap seen between Terex ES and REV specialty vehicles; integration to follow ESG playbook .
Digital: ThirdEye viewed as “plug‑and‑play” enhancer with software back‑end and telematics roadmap across municipal fleets .

Estimates Context

Q3 adjusted EPS beat: $1.50 vs $1.21 consensus (~+24.5%); driven by ES strength, cost actions, and a discrete ~~$18M Aerials item (~~$0.21/sh) .
Revenue slight miss: $1.39B vs $1.41B consensus (~-1.9%); Aerials/MP volume softness largely as expected, ES offset .
Street models likely to recalibrate Q4 tariff costs (~-$0.70 FY EPS headwind) against maintained guidance, and begin incorporating portfolio changes (REV merger, Aerials exit) into out‑year assumptions .

Consensus figures from S&P Global. Values marked with “*” in tables are S&P Global.

Key Takeaways for Investors

Mix shift continues: ES resilience and margin outperformance are increasingly central to the thesis; Aerials/MP remain cyclical headwinds near‑term .
Beat quality: Adj. EPS beat aided by ES and cost control, but also by a discrete Aerials benefit (~$18M, ~$0.21/sh); core demand in Aerials remains soft .
Guidance credibility: Maintaining full‑year ranges despite ~-$0.70 EPS tariff hit underscores discipline; watch Q4 margin cadence as expanded 232 tariffs flow through .
Strategic catalyst path: REV merger and planned Aerials exit could re‑rate the equity toward a less cyclical profile with synergy and backlog visibility tailwinds; execution on synergies and separation process are critical milestones .
Cash generation remains a support: FCF strength (200% conversion in Q3) and $1.3B liquidity underpin capital returns and organic investments; dividend declared at $0.17 underscores balance .
Near‑term watch items: Q4 tariff cost absorption, Aerials demand trajectory into 2026, ES throughput and margin sustainability, and regulatory/closing steps for the REV merger .

SOURCES: Q3’25 earnings release/8‑K, tables, and reconciliations; Q1/Q2’25 releases for trend/guidance; merger/divestiture/dividend press releases; earnings call Q&A for strategic and integration commentary .

TEREX CORP (TEX)·Q3 2025 Earnings Summary