Terex (NYSE: TEX) reported Q3 2026 net sales of $2.197 billion, up 58.4% from $1.387 billion a year earlier, while diluted EPS increased to $1.00 from $0.98 and adjusted diluted EPS remained flat at $1.50. On a comparable pro forma basis, sales grew 11.6%, with Materials Processing and Specialty Vehicles driving adjusted EBITDA growth as Environmental Solutions and Aerials faced margin pressure.
Core Earnings Results
The reported sales increase reflects Terex’s expanded portfolio, including the Specialty Vehicles segment. Using a pro forma 2025 revenue base of $1.968 billion, which adjusts for Specialty Vehicles and the divested Materials Processing cranes business, quarterly growth was 11.6% rather than the reported 58.4%.
Profit dollars increased, but margins were mixed. GAAP gross margin declined to 19.8% from 21.6%, and operating margin fell to 8.3% from 10.1%. Adjusted EBITDA increased 13.9% on a pro forma basis, slightly faster than comparable sales, due mainly to improvements in Materials Processing and Specialty Vehicles.
| Metric | Q3 2026 | Q3 2025 | Year-over-Year Change |
|---|---|---|---|
| Net sales | $2,197 million | $1,387 million | +58.4% reported; +11.6% pro forma |
| Gross profit | $435 million (19.8%) | $299 million (21.6%) | About +45.5% |
| Operating profit | $183 million (8.3%) | $140 million (10.1%) | About +30.7% |
| Net income | $114 million | $65 million | About +75.4% |
| Diluted EPS | $1.00 | $0.98 | About +2.0% |
| Adjusted diluted EPS | $1.50 | $1.50 | Flat |
| Adjusted EBITDA | $286 million (13.0%) | $186 million (13.4%) | +13.9% pro forma |
| Free cash flow | $209 million | $130 million | Up $79 million |
Adjusted results are non-GAAP measures. Terex’s reported results reflect continuing operations.
Business and Segment Performance
Demand indicators improved across the portfolio. Bookings reached $2.3 billion, up 52.7% on a pro forma basis, producing a book-to-bill ratio of 103%. Backlog rose by $802 million, or 12.9% pro forma, to $7.0 billion.
Segment performance was uneven. Materials Processing and Specialty Vehicles expanded margins, while Environmental Solutions recorded lower sales and profitability. Aerials delivered the fastest reported sales growth but experienced margin compression.
| Segment | Q3 2026 Sales | Sales Growth | Adjusted EBITDA | Adjusted EBITDA Margin |
|---|---|---|---|---|
| Environmental Solutions | $400 million | -8.0% | $61 million | 15.3% |
| Materials Processing | $434 million | +4.1% reported; +11.3% pro forma | $84 million | 19.3% |
| Specialty Vehicles | $657 million | +8.1% pro forma | $105 million | 16.0% |
| Aerials | $709 million | +32.0% | $62 million | 8.7% |
Environmental Solutions was affected by lower refuse collection vehicle shipments, partly offset by higher utilities product sales. Its margin declined from 19.2% to 15.3% because of unfavorable mix, inefficiencies related to the Utilities production ramp, lower absorption from reduced refuse vehicle output, and inflation.
Materials Processing produced the largest margin improvement. Its adjusted EBITDA margin increased from 13.5% to 19.3%, supported by higher shipment volumes, favorable mix, price-cost discipline, and better production absorption. Aggregates shipments in North America provided the largest sales contribution.
Specialty Vehicles benefited from increased shipments of fire apparatus and recreational vehicles. Operational efficiency and price-cost discipline lifted its pro forma adjusted EBITDA margin to 16.0% from 13.0%, despite inflationary pressure.
Aerials sales rose 32.0% as national customers increased orders and capital spending on large projects. Adjusted EBITDA rose to $62 million from $56 million, but its margin declined to 8.7% from 10.5% because unfavorable customer mix, inflation, and tariffs offset part of the benefit from higher volume and cost reductions.
Profitability, Cash Flow, and the Balance Sheet
Operating cash flow increased to $241 million from $154 million, with management attributing the improvement partly to more efficient working capital. After $32 million of net capital expenditures, free cash flow reached $209 million, up from $130 million.
Terex used $113 million to reduce debt during the quarter. At September 30, 2026, the company had $407 million in cash and cash equivalents, approximately $2.578 billion of total debt, and $1.2 billion of liquidity, including available revolving credit.
The company returned $91 million to shareholders, consisting of $72 million in share repurchases and $19 million in dividends. Its board also approved a new $500 million repurchase authorization, bringing total available authorization to $611 million. The authorization provides capital-allocation flexibility but does not by itself indicate management’s view of the stock’s valuation.
A Larger Share Count Absorbed the Increase in Adjusted Net Income
Adjusted net income increased to $171 million from $100 million, but adjusted diluted EPS stayed at $1.50. The main mathematical reason was the increase in weighted-average diluted shares to 114.0 million from 66.2 million. GAAP net income similarly rose about 75%, while GAAP diluted EPS increased only about 2%.
The gap between GAAP net income of $114 million and adjusted net income of $171 million also remained significant. Terex’s reconciliation included purchase-price accounting, divestiture-related items, deal costs, and restructuring or other adjustments. Investors therefore need to distinguish between growth in total earnings and growth attributable to each diluted share.
2026 Guidance
Based on Q3 performance, backlog visibility, and synergy realization, Terex refined its full-year 2026 outlook. The release did not provide the previous ranges, so the exact magnitude of the revision cannot be quantified from the supplied information.
| Metric | 2026 Outlook |
|---|---|
| Net sales | $8.0 billion–$8.2 billion |
| Adjusted EBITDA | $930 million–$960 million |
| Adjusted EBITDA margin | 11.7% at the midpoint |
| Adjusted diluted EPS | $4.80–$5.00 |
| Free cash flow | $360 million–$400 million |
The outlook implies approximately 8.5% pro forma sales growth and about 10% pro forma adjusted EBITDA growth. Segment guidance calls for Environmental Solutions sales to remain flat, Materials Processing and Aerials to grow at low double-digit rates, and Specialty Vehicles to grow at a high single-digit rate.
The forecast includes 11 months of Specialty Vehicles, approximately $28 million of realized synergies, current tariff rates, about $180 million of interest expense, a roughly 19% tax rate, and approximately 110 million average diluted shares. Terex remains on target for a $75 million annual synergy run rate within two years.
Management Perspective
CEO Simon Meester said bookings increased across all four segments and that the $7.0 billion backlog provides forward visibility. Management is continuing to integrate the expanded company, capture synergies, and apply more consistent operating discipline.
Terex has also advanced work to separate the Aerials segment. The company has moved from evaluating inbound interest to engaging actively with multiple strategic counterparties, although no transaction terms or timetable were disclosed.
Risks Investors Should Monitor
- Segment margin pressure: Environmental Solutions’ margin fell because of lower refuse vehicle production, mix, ramp inefficiencies, and inflation. Aerials also experienced margin compression despite substantial sales growth.
- Tariff and inflation exposure: The outlook assumes tariffs remain broadly at current rates. Higher tariffs or input costs could further pressure margins, particularly in Aerials.
- Integration and synergy execution: The full-year outlook incorporates acquisition synergies, while the company is still integrating its expanded operations. Delays in reaching the targeted $75 million annual run rate could affect profitability.
- Aerials separation uncertainty: Terex is engaging with potential strategic counterparties, but the timing, structure, and financial outcome of a separation remain unresolved.
- Backlog conversion: The $7.0 billion backlog supports visibility, but operating performance still depends on converting orders into deliveries while managing production ramps and customer schedules.
Summary
Terex’s Q3 2026 results showed higher comparable sales, bookings, adjusted EBITDA, and cash flow, led by Materials Processing and Specialty Vehicles. However, lower consolidated margins and a much larger diluted share count limited per-share earnings growth. The main issues to monitor are margin recovery in Environmental Solutions and Aerials, delivery of integration synergies, backlog conversion, tariff costs, and progress on the proposed Aerials separation.
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