Terex (TEX) Q2 FY26 earnings call: guidance and Q&A

What's embedded in the low single-digit revenue growth outlook for Environmental Solutions, particularly regarding refuse vs. utilities, and how will H2 revenue compression affect segment margins?

H2 revenue growth will be driven by utilities, which have a different margin profile. Q3 margins are expected to be similar to Q2, with a step-up in Q4 due to favorable product/customer mix and resolution of production ramp-up inefficiencies.

“But we do expect that from Q3 to Q4 to be a step-up in the margins at the segment level, driven by favorable product mix favorable customer mix and then the inefficiencies that I mentioned in my prepared remarks, especially in utilities to be behind us.”

asked by Mircea Dobre · answered by Jennifer Kong-Picarello

Beyond stated synergies and capacity additions, what further opportunities are being discovered for manufacturing efficiencies or leveraging Terex's scale within Specialty Vehicles?

The integration is going well, maintaining momentum. The manufacturing excellence from ESG (Environmental Solutions Group) is expected to help Specialty Vehicles, similar to how it's aiding Terex Utilities. The focus is on continuous improvement and reducing hours per truck, with current leadership maintaining operational momentum.

“And so what we see -- what our game plan is and has been and will be is we see that manufacturing excellence in high mix, low volume of ESG now helping Terex Utilities. So you see Terex Utilities margins coming up. And we expect that same manufacturing know-how to help SV going forward.”

asked by Mircea Dobre · answered by Simon Meester

Can you elaborate on the fire truck business, given total specialty backlog was down 1% and peers are seeing declines, but Terex's growth has been better?

The company aims for backlog reduction to improve customer lead times, targeting a sustainable lead time of about one year. Book-to-bill is expected to remain below 100% for the next 24 months as lead times improve. Bookings continue to grow, including a large order from Chicago.

“But quite frankly, what's more important for us and what you should be expecting if the backlog is to come down is that actually our book-to-bill should stay below 100% in SV just by the virtue of lead times improving.”

asked by Jamie Cook · answered by Simon Meester

How did Aerials margins in Q2 compare to expectations, and what is the setup for H2 margins given the raised outlook?

Q2 Aerials margins were better than expected, at 5.7% (8.3% excluding a one-time unfavorable customs accrual). Sequential improvement of 560 bps was seen despite higher tariffs. H2 expects continued sequential improvement from Q2 to Q3, with a seasonal step-down in Q4. The business aims for full-year price/cost neutrality, absorbing a $70 million tariff/accrual headwind.

“Without that accrual, we would have achieved 8.3% of adjusted EBITDA. Overall, it's going to be from a year-over-year perspective, still a relatively tough comp because last year was the liberation day was actually April, but we didn't really see the P&L impact hitting us until June last year.”

asked by Jamie Cook · answered by Jennifer Kong-Picarello

What are the demand trends from independent customers in Aerials, and are there any market share shifts with nationals picking up demand?

Independent bookings continue to improve sequentially, tied more to private construction and commercial jobs, which are sensitive to interest rates and input costs. The U.S. market is seen as more resilient than Europe. Nationals grew faster than expected, leading to some unfavorable mix. The company believes in the Genie value proposition and its commercial run, but does not discuss market share.

“But as Jen said, the nationals just grew faster than we had originally assumed in the first half, and that's where the revised top line guide is coming from. And with that, obviously, comes a little bit of unfavorable mix.”

asked by Angel Castillo Malpica · answered by Simon Meester

Excluding the 180 bps one-time benefit in Q2, is sequential margin improvement still expected for MP in H2, or did factors pull performance into Q2?

MP's Q2 performance was strong, with 270 bps year-over-year improvement excluding the one-timer. A normalized EBITDA margin of around 17% is expected. There might be a marginal step-down due to an uptick in lower-margin material handling orders, but overall, healthy margin expansion is anticipated, with full-year incremental margins above normalized levels.

“As we look into the second half of the year, that would say a normalized EBITDA of like that 17%, excluding the Q2 one-timers. I would only see potentially a little bit of marginal step down just because we have seen an uptick in the material handling orders, like what Simon mentioned, and that's from a margin perspective, a little bit lower.”

asked by Timothy Thein · answered by Jennifer Kong-Picarello

Can you provide any sense of the timeline for a potential announcement regarding the Aerials strategic review, whether it's a 2026 event or potentially next year?

There is no predetermined timeline for the strategic review. The focus is on making the right decision and maximizing shareholder value. While positive momentum in Aerials is encouraging, it does not impact the long-term strategic view.

“There is no predetermined time line. We're focused on making the right decision and properly go through this review. As I said in my prepared remarks, we're pleased with the progress we're making. We have interest from multiple parties, and we're just laser-focused on working towards what is the best outcome for our shareholders.”

asked by Timothy Thein · answered by Simon Meester

Given the $250 million revenue guide increase but only $15 million EBITDA increase, is this solely due to mix, or have other margin views changed?

The modest EBITDA increase relative to revenue is entirely due to mix. The top-line growth is primarily from Aerials (lower margin) increasing from flat to low double-digit growth, while Environmental Solutions (higher margin) is coming down from mid-single-digit to low single-digit growth. No negative change in margin view, just a mix effect.

“The change -- the top line growth that you see there is primarily driven by our areas coming up from flat to low double digit and Ohio's most profitable segment coming down from mid-single digit to low single digit. That mix change is entirely explaining for that drop-through in the margin profile.”

asked by David Raso · answered by Jennifer Kong-Picarello