Terex Net Income Halves Amid Soaring Interest Costs

TL;DR

**Terex's profit plunge, driven by massive interest expense hikes, makes it a hard pass for now; wait for better cost control.**

AI Summary

TEREX CORP reported a significant decline in net income for both the three and nine months ended September 30, 2025. Net income for the three months decreased by 26.1% to $65 million from $88 million in the prior year, despite a 14.4% increase in net sales to $1,387 million from $1,212 million. For the nine-month period, net income plummeted by 53.1% to $158 million from $337 million, even as net sales rose by 5.6% to $4,103 million from $3,886 million. This decline was primarily driven by a substantial increase in interest expense, which surged by 246.2% to $45 million for the quarter and by 200% to $132 million for the nine months. Gross profit for the nine months also decreased by 7.8% to $803 million, and selling, general and administrative expenses increased by 16.8% to $465 million. The company's cash and cash equivalents increased to $509 million as of September 30, 2025, from $388 million at December 31, 2024, with net cash provided by operating activities rising to $235 million from $149 million.

Why It Matters

Terex's substantial drop in net income, despite rising sales, signals a significant challenge for investors, primarily due to escalating interest expenses. This could impact dividend sustainability and future growth investments, making the stock less attractive compared to competitors with stronger financial leverage management. For employees, a less profitable company might lead to slower wage growth or hiring freezes. Customers could face higher prices if Terex attempts to offset increased costs, potentially affecting its competitive position in the heavy equipment market. The broader market may see this as a bellwether for industrial companies facing rising borrowing costs, potentially dampening sentiment in the sector.

Risk Assessment

Risk Level: high — The risk level is high due to the significant increase in interest expense, which rose by 246.2% to $45 million for the three months and 200% to $132 million for the nine months ended September 30, 2025. This directly contributed to a 53.1% decline in net income for the nine-month period, indicating substantial pressure on profitability from debt servicing, especially with long-term debt remaining high at $2,580 million.

Analyst Insight

Investors should consider holding off on new investments in TEX until there's clear evidence of improved interest expense management or a significant reduction in debt. Current shareholders should monitor upcoming earnings calls for strategies to mitigate rising financing costs and assess the impact on future profitability and dividend policy.

Financial Highlights

debt To Equity

2.06

revenue

$4,103M

operating Margin

8.24%

total Assets

$6,166M

total Debt

$2,593M

net Income

$158M

eps

$2.38

gross Margin

19.57%

cash Position

$509M

revenue Growth

+5.6%

Key Numbers

• $1,387M — Net sales (3 months) (Increased from $1,212M in 2024)
• $65M — Net income (3 months) (Decreased from $88M in 2024)
• $4,103M — Net sales (9 months) (Increased from $3,886M in 2024)
• $158M — Net income (9 months) (Decreased from $337M in 2024)
• $45M — Interest expense (3 months) (Increased from $13M in 2024)
• $132M — Interest expense (9 months) (Increased from $44M in 2024)
• $509M — Cash and cash equivalents (Increased from $388M at Dec 31, 2024)
• $2,580M — Long-term debt (Remained constant from Dec 31, 2024)
• $0.98 — Diluted EPS (3 months) (Decreased from $1.31 in 2024)
• $2.38 — Diluted EPS (9 months) (Decreased from $4.98 in 2024)

Key Players & Entities

• TEREX CORP (company) — Registrant
• New York Stock Exchange (regulator) — exchange where common stock is registered
• U.S. Securities and Exchange Commission (regulator) — regulator imposing injunction and related obligations
• Environmental Solutions Group (company) — acquired business
• FASB (regulator) — Financial Accounting Standards Board
• ASU 2023-09 (regulator) — Accounting Standard Update on Income Taxes
• ASU 2024-03 (regulator) — Accounting Standard Update on Disaggregation of Income Statement Expenses
• ASU 2025-05 (regulator) — Accounting Standard Update on Financial Instruments—Credit Losses

FAQ

Risk Factors

• Increased Interest Expense [high — financial]: Interest expense surged by 246.2% to $45 million for the three months ended September 30, 2025, and by 200% to $132 million for the nine months ended September 30, 2025. This significant increase is a primary driver for the decline in net income.
• Declining Net Income and EPS [high — financial]: Net income for the three months ended September 30, 2025, decreased by 26.1% to $65 million from $88 million in the prior year. Diluted EPS for the same period fell to $0.98 from $1.31. For the nine months, net income plummeted by 53.1% to $158 million from $337 million, with diluted EPS dropping to $2.38 from $4.98.
• Rising SG&A Expenses [medium — operational]: Selling, general and administrative expenses increased by 16.8% to $465 million for the nine months ended September 30, 2025, compared to $398 million in the prior year. This rise in operating expenses further pressured profitability.
• Decreasing Gross Profit [medium — financial]: Gross profit for the nine months ended September 30, 2025, decreased by 7.8% to $803 million from $871 million in the prior year, indicating potential pressure on pricing or increased cost of goods sold.
• Market Demand Fluctuations [medium — market]: While net sales increased for both periods, the significant drop in net income suggests that the company may be facing challenges in translating sales growth into profitability, potentially due to market conditions or competitive pressures impacting margins.

Industry Context

Terex Corporation operates in the heavy equipment manufacturing industry, serving sectors like construction, infrastructure, and material handling. The industry is cyclical and sensitive to global economic conditions, infrastructure spending, and commodity prices. Competitors include major players like Caterpillar, John Deere, and Komatsu, all vying for market share through product innovation, distribution networks, and pricing strategies.

Regulatory Implications

As a global manufacturer, Terex is subject to various regulations including environmental standards, safety regulations (e.g., mine safety disclosures), and international trade policies. Changes in these regulations, particularly those related to emissions or tariffs, could impact manufacturing costs, product design, and market access, requiring ongoing compliance efforts and potential adjustments to business operations.

What Investors Should Do

1. Monitor interest expense trends
2. Analyze SG&A and Cost of Goods Sold
3. Evaluate the impact of increased sales on profitability
4. Assess cash flow generation and liquidity

Glossary

Net sales

The total revenue generated from the sale of goods or services, net of returns, allowances, and discounts. (Indicates the company's top-line performance and market demand for its products.)

Gross profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Measures the efficiency of production and the ability to control direct costs.)

Operating profit

Profitability from a company's core business operations, before accounting for interest and taxes. (Shows how well the company is managing its operating expenses relative to its revenue.)

Interest expense

The cost incurred by an entity for borrowed funds. (A significant factor impacting net income, especially when it increases substantially.)

Diluted EPS

Earnings per share calculated by dividing net income by the total number of diluted shares outstanding, including all convertible securities, options, and warrants. (A key profitability metric for shareholders, reflecting the earnings attributable to each share of common stock.)

Cash and cash equivalents

The most liquid assets held by a company, including physical currency, coin, and cash in bank accounts, as well as short-term, highly liquid investments. (Indicates the company's ability to meet short-term obligations and fund operations.)

Long-term debt

Financial obligations that are due more than one year from the balance sheet date. (Represents the company's leverage and long-term financing structure.)

Stockholders' equity

The residual interest in the assets of an entity that remains after deducting liabilities. (Represents the owners' stake in the company.)

Year-Over-Year Comparison

Compared to the prior year, Terex Corporation has experienced a significant downturn in profitability despite an increase in net sales for both the three and nine months ended September 30, 2025. Net sales grew by 14.4% for the quarter and 5.6% for the nine months, but net income declined sharply by 26.1% and 53.1%, respectively. This divergence is largely attributed to a substantial 246.2% surge in interest expense for the quarter and a 200% increase for the nine months. Additionally, gross profit decreased by 7.8% for the nine-month period, while selling, general and administrative expenses rose by 16.8%, further pressuring margins. The company's cash position has improved, but the overall financial performance indicates increased financial risk.

Key Financial Figures

• $0.01 — ange on which registered Common Stock ($0.01 par value) TEX New York Stock Exchange

Filing Documents

• tex-20250930.htm (10-Q) — 1990KB
• tex9302025-ex311.htm (EX-31.1) — 9KB
• tex9302025-ex312.htm (EX-31.2) — 10KB
• tex9302025-ex32.htm (EX-32) — 10KB
• tex-20250930_g1.jpg (GRAPHIC) — 55KB
• 0000097216-25-000160.txt ( ) — 10496KB
• tex-20250930.xsd (EX-101.SCH) — 49KB
• tex-20250930_cal.xml (EX-101.CAL) — 64KB
• tex-20250930_def.xml (EX-101.DEF) — 346KB
• tex-20250930_lab.xml (EX-101.LAB) — 701KB
• tex-20250930_pre.xml (EX-101.PRE) — 543KB
• tex-20250930_htm.xml (XML) — 2208KB

Financial Statements

Financial Statements 4 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 45 Item 4

Controls and Procedures

Controls and Procedures 46 PART II OTHER INFORMATION 47 Item 1

Legal Proceedings

Legal Proceedings 47 Item 1A

Risk Factors

Risk Factors 47 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 49 Item 3 Defaults Upon Senior Securities 49 Item 4 Mine Safety Disclosures 49 Item 5 Other Information 49 Item 6 Exhibits 50

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS TEREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (unaudited) (in millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net sales $ 1,387 $ 1,212 $ 4,103 $ 3,886 Cost of goods sold ( 1,105 ) ( 967 ) ( 3,300 ) ( 3,015 ) Gross profit 282 245 803 871 Selling, general and administrative expenses ( 142 ) ( 123 ) ( 465 ) ( 398 ) Operating profit 140 122 338 473 Other income (expense) Interest income 3 3 7 9 Interest expense ( 45 ) ( 13 ) ( 132 ) ( 44 ) Other income (expense) – net ( 4 ) ( 13 ) ( 4 ) ( 28 ) Income (loss) before income taxes 94 99 209 410 (Provision for) benefit from income taxes ( 29 ) ( 11 ) ( 51 ) ( 73 ) Net income (loss) $ 65 $ 88 $ 158 $ 337 Earnings (loss) per share Basic $ 0.99 $ 1.32 $ 2.40 $ 5.03 Diluted $ 0.98 $ 1.31 $ 2.38 $ 4.98 Weighted average number of shares outstanding in per share calculation Basic 65.6 66.9 65.9 67.0 Diluted 66.2 67.4 66.4 67.7 Comprehensive income (loss) $ 57 $ 152 $ 256 $ 345 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 TEREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) (in millions, except par value) September 30, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 509 $ 388 Receivables (net of allowance of $ 10 and $ 9 at September 30, 2025 and December 31, 2024, respectively) 821 643 Inventories 1,207 1,147 Prepaid and other current assets 206 142 Total current assets 2,743 2,320 Non-current assets Property, plant and equipment – net 738 714 Goodwill 1,089 1,093 Intangible assets – net 1,048 1,107 Other assets 548 496 Total assets $ 6,166 $ 5,730 Liabilities and Stockholders' Equity Current liabilities Current portion of long-term debt 13 4 Trade accounts payable 696 580 Accrued compensation and benefit

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