TEX — Terex Corporation

Terex Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Sales: Q1 sales reached $1.7 billion, up 41% year-over-year, driven by the merger with REV and growth across all legacy segments. On a pro forma basis, sales grew 10.8%.
• EPS: Earnings per share increased 18% year-over-year to $0.98, including a $0.10 one-time tax benefit.
• EBITA Margin: Q1 EBITA margin was 9.9%, down 50 basis points year-over-year, primarily due to tariffs.
• Backlog: The quarter-ending backlog increased to $7.1 billion, indicating strong demand and good visibility for future revenue.
• Free Cash Flow: Q1 free cash outflow was $57 million, consistent with the previous year, reflecting seasonality in cash generation.

2. Strategic Updates and Business Highlights:

• Specialty Vehicle Segment: Contributed significantly to growth, with a 20% increase in sales. The integration of the REV business is progressing well, with expected synergies of $28 million in 2026.
• Market Positioning: Terex has shifted its portfolio to focus more on U.S.-based sectors, reducing exposure to global macroeconomic volatility.
• Production Capacity Investments: Strategic investments are being made to enhance production efficiency in key areas, such as ladder trucks and pumpers, to meet increasing demand.
• Technological Advancements: The introduction of the 3rd Eye digital solution for situational awareness in vehicles has garnered positive interest.

3. Forward Guidance and Outlook:

• Terex reaffirms its full-year 2026 sales outlook of $7.5 billion to $8.1 billion, expecting approximately 5% growth on a pro forma basis.
• Pro forma EBITDA is anticipated to grow by about $100 million, reaching between $930 million and $1 billion.
• EPS guidance for 2026 is projected between $4.50 and $5. The company expects free cash conversion of 80% to 90% of net income.
• Segment-specific growth expectations include mid-single digits for Environmental Solutions, high single digits for Specialty Vehicles, and high single digits for Materials Processing.

4. Bad News, Challenges, or Points of Concern:

• Tariff Impact: The EBITA margin decline was partially attributed to tariffs, which are expected to have a negligible impact moving forward.
• Market Uncertainty: The company is cautious due to ongoing macroeconomic uncertainties and geopolitical risks, leading to a conservative approach in maintaining guidance.
• Seasonality in Cash Flow: Terex historically experiences seasonally weighted cash generation, with Q1 typically showing outflows.

5. Notable Q&A Insights:

• Management emphasized that the decision to maintain guidance was based on discipline and timing rather than a change in business fundamentals.
• There is strong demand in the Materials Processing segment, with a healthy dealer model and improved end-user demand, but the company is cautious about the sustainability of this momentum.
• The Specialty Vehicle segment is expected to see a step-up in production and throughput, but management anticipates a potential decrease in bookings as lead times improve.
• Questions regarding inflation management revealed that Terex has hedging strategies in place to mitigate cost increases, although higher inbound freight costs remain a concern.
• The Aerials segment is expected to improve in margins and performance in the second half of the year, with a focus on maintaining price/cost neutrality.

Overall, Terex reported a strong start to 2026, with solid growth across segments, but remains vigilant about external economic factors and their potential impact on future performance.