Terex Q3 Earnings Call Highlights

Terex NYSE: TEX reported higher third-quarter sales, adjusted EBITDA and cash flow, while order activity accelerated across all four business segments. The company also refined its 2026 outlook, citing strong performance in Materials Processing and Specialty Vehicles, offset in part by lower near-term expectations for Environmental Solutions and normal fourth-quarter seasonality.

Consolidated sales totaled $2.2 billion, up 58% as reported, reflecting the addition of Specialty Vehicles. On a pro forma basis excluding the sold Cranes and Midwest businesses, sales increased 11.6% from a year earlier. Adjusted EBITDA rose $35 million to $286 million, producing a 13% margin, compared with 12.8% on a pro forma basis in the prior-year period. Adjusted diluted earnings per share were $1.50.

Jen Kong-Picarello, Terex's senior vice president and chief financial officer, said higher sales, operating execution and realized synergies more than offset tariff and inflation pressures. The company generated $241 million in operating cash flow and $209 million in free cash flow during the quarter.

Orders and backlog strengthen

Third-quarter consolidated bookings were $2.3 billion, up 53% year over year on a pro forma basis. Orders grew across all four segments, and the company reported a consolidated book-to-bill ratio of about 103%. Backlog reached $7 billion.

Management said the company continues to see favorable underlying demand from infrastructure, utilities, power and data-center projects, as well as municipal replacement demand for fire and emergency equipment. Commercial and residential construction in the U.S. remained below historical levels but has largely stabilized, while European conditions were described as mixed.

• Materials Processing: Sales increased 11.3% to $434 million, driven by demand for mobile crushers and screeners in the U.S. Adjusted EBITDA margin expanded 530 basis points to 19.3%. Bookings increased 41% to $511 million, while backlog nearly doubled to $676 million, a two-year high.
• Specialty Vehicles: Sales rose 8.1% to $657 million, led by fire apparatus and, to a lesser degree, recreational vehicles. Adjusted EBITDA margin increased 300 basis points to 16%. Bookings rose 30% to $665 million, with growth across end markets.
• Aerials: Sales increased 32% to $709 million, primarily due to U.S. national-account demand tied to large infrastructure projects. Segment adjusted EBITDA margin was 8.7%, down 180 basis points year over year but up 300 basis points sequentially. Bookings rose 194% to $646 million, and backlog increased $455 million from a year earlier to $852 million.
• Environmental Solutions: Sales declined 8% to $400 million as channel adjustments affected refuse collection vehicles. Adjusted EBITDA margin fell 390 basis points to 15.3%, reflecting unfavorable mix, ramp-up inefficiencies at the Waukesha utilities facility and lower volume absorption. Still, bookings grew 14% to $445 million, including 36% growth in the Environmental Solutions Group business.

Capacity investments and operational initiatives

Terex said it is expanding Utilities production capacity to support demand, though the Waukesha facility's transition from a service center to a full installation facility has created temporary inefficiencies. Kong-Picarello said the ramp-up effects are expected to continue through the fourth quarter and normalize as the company enters 2027.

Management also said it has begun building utility trucks at its Fort Payne, Alabama, facility, providing more flexibility between utility and refuse production. The company is expanding Specialty Vehicles capacity in Brandon, South Dakota, and Ocala, Florida, to reduce lead times in specific product categories. Management expects initial units from Brandon in the fourth quarter and units from Ocala in the second quarter of 2027.

The company has completed foundational integration work related to its expanded portfolio and is shifting more attention toward value capture. Terex launched a centralized procurement organization intended to coordinate sourcing, simplify its supplier base and reduce product complexity. Management said it is also applying digital manufacturing tools and standardized operating practices to improve throughput, productivity and quality.

During the quarter, Terex introduced new products including Heil's next-generation automated side loader for residential refuse collection and Finlay's Elektro hybrid crushing equipment range. Genie’s next-generation Slab Scissor Lifts were named Product of the Year in the Scissor Lifts and Vertical Mast category, according to management.

Updated 2026 outlook and capital allocation

Terex now expects 2026 sales of $8 billion to $8.2 billion, representing pro forma growth of about 8% at the midpoint. It expects adjusted pro forma EBITDA of $930 million to $960 million, excluding Capacity and LayMor, with an EBITDA margin of 11.7% at the midpoint. The forecast includes approximately $28 million of realized synergies.

The company expects full-year adjusted earnings per share of $4.80 to $5.00 and raised its free-cash-flow outlook to $360 million to $400 million. It anticipates capital expenditures of about $145 million for the year and an effective tax rate of 19%.

Kong-Picarello said the reduction in the EBITDA outlook was driven roughly equally by portfolio and segment mix changes, higher freight costs, and Utilities ramp-up inefficiencies along with the removal of Capacity and LayMor following the divestiture. Terex said freight inflation has affected all segments, though it passes through part of its outbound freight costs to customers and is pursuing sourcing and logistics initiatives to reduce inbound freight expenses.

Net debt stood at $2.2 billion at quarter-end, including $407 million of cash, while net leverage was 2.3 times pro forma adjusted EBITDA. Terex repaid $113 million of debt and returned $91 million to shareholders during the quarter, including $72 million in share repurchases and $19 million in dividends. The board approved a new $500 million repurchase authorization, bringing total available repurchase capacity to $611 million.

Aerials separation remains in progress

Terex said it has advanced carve-out work for its Aerials segment and moved from evaluating inbound interest to active discussions with multiple strategic counterparties. Management did not identify potential counterparties or provide a timeline for a transaction.

Simon Meester said the company is focused on achieving an outcome that reflects Genie’s brand, global footprint and product portfolio while maximizing value for shareholders. Terex also said it will continue to assess its portfolio following the exits from Capacity and LayMor, but described integration of Specialty Vehicles and the Aerials process as its principal ongoing workstreams.

About Terex (NYSE:TEX)

Terex Corporation NYSE: TEX is a global manufacturer of equipment used in construction, infrastructure development, utilities, recycling and material processing. The company designs and produces machinery intended to help customers build, maintain and improve transportation networks, commercial sites, utility systems and industrial facilities.

Terex operates primarily through its Aerial Work Platforms and Materials Processing businesses. Its products include aerial lifts, telehandlers and other access equipment, as well as crushing, screening, conveying, washing, recycling and environmental-processing machinery.

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