Terex Corporation (TEX) Earnings & Analysis

Latest quarter

Terex reported third-quarter revenue of $2.2 billion, up 58.4% from $1.4 billion a year earlier and 1.44% above the consensus. Adjusted earnings per share were $1.50, above the consensus estimate of $1.42; reported diluted earnings per share were $1.00, compared with $0.98 a year earlier.

The filing said specialty vehicles contributed $657 million in sales following the REV transaction. Excluding specialty vehicles and the prior-year contribution from businesses Terex sold, the filing attributed sales growth to Aerials, Materials Processing and utilities products, partly offset by fewer refuse collection vehicle shipments.

Terex’s gross margin fell to 19.8% from 21.6%, while operating margin declined to 8.33% from 10.1%. The filing attributed gross-profit pressures in part to utilities production ramp-up inefficiencies, lower refuse vehicle production, inflation and tariffs.

The filing reported $209 million in quarterly free cash flow, compared with $130 million a year earlier, and attributed the increase to higher profitability excluding purchase accounting effects.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Simon Meester said demand was being supported by infrastructure, utilities, power and data centers, as well as municipal replacement of fire and emergency equipment. CFO Jennifer Kong said third-quarter bookings rose 53% year over year on a pro forma basis across all four segments, with consolidated bookings of $2.3 billion.

Kong said Aerials bookings were driven primarily by national customers serving large infrastructure projects. In Environmental Solutions, she said refuse collection vehicle orders improved for a second consecutive quarter, while utilities production ramp-up inefficiencies continued to limit near-term shipments.

Asked about the Environmental Solutions outlook, Meester said some anticipated purchases ahead of engine regulation changes had dropped out of the bookings forecast because equipment had been grandfathered into 2027. He described the expected recovery as “more of a U-shaped recovery” rather than the V-shaped recovery Terex initially anticipated.

On an analyst’s question about margins, Kong said seasonal shipment timing would affect Aerials and specialty vehicles in the fourth quarter, while Materials Processing would face an unfavorable product mix. She said freight inflation incurred in the third quarter would continue into the fourth, and that Waukesha ramp-up inefficiencies were expected to ease in early 2027. Kong said Terex was pursuing cost mitigation and customer surcharges, with timing varying by business.

Meester said Terex was expanding specialty vehicle capacity in selected categories to reduce lead times. He also said the company was beginning to build utility trucks at Fort Payne, giving it flexibility between refuse and utility demand.

On the Aerials separation, Meester said Terex had advanced the carve-out work and moved to “active engagement with multiple strategic counterparties.” He said the company would not identify individual counterparties or establish a specific timeline while discussions continued.

Guidance

Terex refined its FY2026 outlook to sales of $8.0 billion to $8.2 billion and adjusted pro forma EBITDA of $930.0 million to $960.0 million. Kong said the EBITDA outlook excludes Capacity and Lay-Mor.

Kong said Terex raised its free cash flow outlook to $360.0 million to $400.0 million, alongside an updated capital expenditure outlook of $145.0 million. She said the company reduced its Environmental Solutions full-year sales outlook from low-single-digit growth to approximately flat year over year.