Terex (TEX) Q3 2026 earnings review
Terex raises its cash outlook, but cuts its profit target
Terex, the maker of fire trucks, garbage trucks, rock crushers and construction lifts, grew third-quarter orders and cash flow while cutting its full-year operating profit plan. Comparable sales rose 12% and free cash flow reached $209 million, letting finance chief Jennifer Kong-Picarello pay down debt, restart buybacks, and raise the cash flow outlook. However, an 8% sales drop in garbage and utility trucks dragged that division's margin down, forcing management to trim its full-year adjusted EBITDA target.
| Comparable sales growth | +11.6% $2.20B total; +58.4% as reported |
|---|---|
| Adjusted EBITDA | $286M +13.9% from a year ago on a comparable basis |
| Free cash flow | $209M $130M a year ago; full-year outlook raised $55M |
| Full-year Adjusted EBITDA outlook | Cut $35M middle of the range: $945M (11.7% margin) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because strong cash generation and a rebound in orders balanced out the profit cut in Environmental Solutions. Last quarter's main worry was that garbage-truck buyers were delaying orders while utility-truck factories faced bottlenecks, and that risk worsened enough to lower the company's full-year margin target. On the other side, orders exceeded shipments again, rock-crushing and fire-truck margins expanded, and chief executive Simon Meester moved into active talks with strategic buyers for the low-margin Aerials lift business.
The question now is whether Terex's profit margins are structurally rising as it shifts toward specialty vehicles or stalling because its garbage-truck and lift divisions keep losing margin. If utility factory bottlenecks clear and Aerials is sold, company margins move toward the 16% to 19% levels of its best divisions; if garbage-truck demand stays weak and Aerials lingers, the company stays near 12%. Fourth-quarter Environmental Solutions margins and a signed Aerials deal will tell.
🐂 Bull Case
Crushing and Fire Trucks Lifted Segment Profit
Two of Terex's four divisions carried its profit growth in the third quarter. Materials Processing, which makes rock-crushing and screening machines for construction sites, and Specialty Vehicles, the fire truck, ambulance and recreational vehicle business acquired with REV Group in February, both expanded their margins by at least 3 percentage points from a year ago on a comparable basis.
- Materials Processing sales: $434 million, up 11.3% from a year ago on a comparable basis, led by North American aggregates
- Materials Processing adjusted EBITDA margin: 19.3%, up 5.3 percentage points from a year ago on a comparable basis
- Specialty Vehicles sales: $657 million, up 8.1% from a year ago on a comparable basis and up from $650 million last quarter
- Specialty Vehicles adjusted EBITDA margin: 16.0%, up 3.0 percentage points from a year ago on a comparable basis
The gains came from "increased shipments of fire apparatus and recreational vehicles", better factory use as production volumes rose, and prices staying ahead of costs, the company said. Both divisions kept their full-year sales targets unchanged.
What to watch: fourth-quarter deliveries from the expanded fire-truck factories in Florida and South Dakota. Higher shipments there would show that Specialty Vehicles can keep lifting output and margins at the same time.
Cash Surge Funded Debt Paydown and Buybacks
"Improved working capital efficiency contributed to $241 million of operating cash flow and $209 million of free cash flow during the quarter," finance chief Jennifer Kong-Picarello said. Free cash flow rose 60.8% from $130 million a year ago, after generating only $44 million across the first six months of the year. That third-quarter cash collection removed the risk that full-year cash generation would fall short, and the industrial group raised its full-year free cash flow plan by $55 million at the middle of the range, to $360–400 million.
Terex used the cash to restart share buybacks after four quarters without any. It spent $72 million buying back stock, paid $19 million in dividends, and cut debt by $113 million during the quarter. The board also approved a new $500 million buyback plan, bringing the total available to $611 million.
What to watch: fourth-quarter share count against the forecast of 113 million diluted shares. A drop below 113 million would show management is using the new $611 million authorization right away.
Orders Rebounded Across All Four Divisions
Customer orders (bookings) reached $2.3 billion in the third quarter, up 52.7% from a year ago on a comparable basis. Orders exceeded shipments by 3%, lifting the total order backlog to $7.0 billion, up 12.9% from a year ago and up from $6.9 billion last quarter. Chief executive Simon Meester said order activity rose across all four divisions.
Last quarter the backlog shrank by about $200 million because orders ran at 90% of shipments, as Terex worked down two-year waiting lists for fire trucks. Returning above 100% in the third quarter, usually a slower season for orders, shows demand outside fire trucks is growing fast enough to expand the total order book again.
What to watch: the segment breakdown of the $7.0 billion backlog in the quarterly filing. Rising backlogs in Environmental Solutions and Materials Processing alongside a smaller Specialty Vehicles backlog would confirm that fire-truck wait times are shortening while demand elsewhere strengthens.
🐻 Bear Case
Garbage Truck Slump Forced a Profit Cut
Three months ago Terex told investors that Environmental Solutions — its garbage truck and electric-utility equipment division — would grow sales slightly in the second half and keep its third-quarter profit margin near 17.5%. Instead, third-quarter division sales fell 8.0% from a year ago to $400 million, and its adjusted EBITDA margin dropped 3.9 percentage points to 15.3%, the lowest since Terex bought the garbage-truck business.
The company blamed "lower shipments of refuse collection vehicles" and "inefficiencies related to a production ramp up in Utilities". Because garbage trucks carry higher margins than utility trucks, selling fewer garbage trucks and more utility trucks hurts the division's profit rate while leaving garbage-truck factories underused. That drop forced management to cut the division's full-year sales plan to flat and lower the company's full-year adjusted EBITDA outlook by $35 million at the middle of the range.
What to watch: fourth-quarter Environmental Solutions sales and margin, which the full-year plan implies at roughly $424 million by our math. Another margin drop below 15.3% would show that utility factory bottlenecks are getting worse rather than clearing.
Aerials Sale Advances While Tariff Drag Lingers
Terex plans to exit Aerials, its division that makes mobile elevating work platforms for construction and maintenance. Meester said the process has moved "from evaluating inbound interest to active engagement with multiple strategic counterparties". After three quarters without a milestone, naming strategic talks is a step toward a deal, though the company still gave no timeline or structure.
Inside the business, third-quarter sales jumped 32.0% from a year ago to $709 million on "strong demand from national customers and increased customer capital spending on large projects". Yet its adjusted EBITDA margin fell 1.8 percentage points from a year ago to 8.7% (though up from 5.7% last quarter) because big national rental fleets get lower prices and steel tariffs plus inflation raised costs.
What to watch: a signed sale or spin-off agreement for Aerials, or fourth-quarter segment margins. Until a deal is signed, Terex still owns a business making an 8.7% margin on nearly a third of company sales.
Merger Accounting Takes Half of Operating Profit
Terex highlights profit figures excluding one-offs, where third-quarter operating profit was $260 million, or 11.9% of sales. Under standard accounting (GAAP), operating profit was $183 million, or 8.3% of sales, down 1.8 percentage points from a year ago. Cost of goods sold rose 1.8 percentage points of sales to 80.2%, and amortization of acquired intangible assets rose 1.2 points to 2.4%, while selling and overhead costs fell 1.2 points to 9.1%.
Over the first nine months, $265 million of acquisition accounting charges and $90 million of deal costs cut standard operating profit to $288 million, less than half the $655 million figure excluding one-offs. Issuing shares to buy REV Group also pushed the third-quarter diluted share count up 72.2% from a year ago to 114.0 million, leaving profit per share excluding one-offs unchanged at $1.50 despite 71% higher adjusted net income.
What to watch: full-year purchase accounting charges and deal costs in the annual report. As one-time deal fees end, standard profit will still carry more than $200 million a year of intangible amortization.
💲 Other KPIs
Total debt fell by $109 million from last quarter to $2,578 million (management cited $113 million of debt reduction), while cash stayed at $407 million. That brought net debt down to $2,171 million by our math, from $2,280 million in June. Total liquidity — cash plus available credit lines — rose by $100 million from last quarter to $1.2 billion.
Diluted shares dipped by 0.2 million from the second quarter as the equipment maker restarted stock buybacks, but remained 72.2% higher than the 66.2 million shares a year ago because Terex issued 47.9 million shares to buy REV Group in February. The company plans for about 113 million diluted shares in the fourth quarter and 110 million for the full year.
🔮 Guidance
Raised. Terex lifted the bottom of its full-year sales range by $100 million, putting the middle of the range up $50 million at $8.1 billion, or about 8.5% comparable growth. It is the second raise this year (+$250 million in the second quarter, +$50 million now). By our math, that leaves $1,931 million for the fourth quarter, or about 3.3% comparable growth, down from 11.6% in the third quarter.
Cut. Management lowered the middle of the range by $35 million to $945 million (an 11.7% margin, down from 12.2% planned last quarter), or about 10% comparable growth. After raising the middle of the range by $15 million in the second quarter, the weaker Environmental Solutions margin forced a reversal. By our math, the plan leaves $218 million for the fourth quarter, an 11.3% margin against 13.0% in the third quarter.
Unchanged at the middle of the range. The US manufacturer narrowed the band by $0.10 on each side, keeping the middle at $4.90 per share. Lower expected interest costs (about $180 million vs $185 million prior), a lower effective tax rate (about 19% vs 21% prior), and a slightly lower fourth-quarter share count (113 million vs 114 million) offset the operating profit cut. By our math, that leaves $1.00 per share for the fourth quarter.
Raised. The middle of the range moved up $55 million to $380 million after working capital improvements delivered $209 million in the third quarter alone. With $248 million of free cash flow generated through September ($338 million of operating cash flow minus $90 million of capital spending), the full-year target requires $132 million at the middle of the range in the fourth quarter by our math, down from $172 million in last year's fourth quarter.
Cut for Environmental Solutions, unchanged for the other three divisions. Environmental Solutions is now planned to be flat against its $1,691 million prior-year base, down from low-single-digit growth planned last quarter and mid-single-digit growth at the start of the year. Materials Processing and Aerials remain at low-double-digit growth (off $1,578 million and $2,060 million bases), and Specialty Vehicles remains at high-single-digit growth (off $2,179 million).
❓ Key Questions
When will garbage truck orders and utility factory costs recover?
Environmental Solutions sales fell 8.0% and its margin dropped 3.9 percentage points to 15.3% on lower garbage-truck shipments and utility production bottlenecks. Investors need to know how much each problem hurt the margin and whether the fourth quarter marks the bottom.
What is the structure and timeline for the Aerials exit?
Chief executive Simon Meester said Terex is in active talks with multiple strategic parties to separate Aerials. Because Aerials brings in nearly a third of sales at an 8.7% margin, the price, tax bill, and use of cash between debt and buybacks will reshape the company.
How did each division contribute to the $7.0 billion backlog?
The release gave total backlog of $7.0 billion and total orders of $2.3 billion, but omitted the segment backlog table included in prior quarters. Without segment figures, readers cannot check whether Specialty Vehicles is trimming its two-year wait times as planned.
How much of the $28 million synergy target has landed?
Last quarter management said 20% of the $28 million in 2026 REV Group merger savings arrived in the second quarter, leaving 80% for the second half. The third-quarter release kept the $28 million full-year figure without saying how much landed in the quarter.