Terex Took a $40 Million Q4 Haircut—and Raised the Buyback Anyway
The quarter was fine; the guide wasn't. The Genie sale is 'active,' the stock is down 28% from its June peak, and the cash story is doing the heavy lifting.
TEX · Earnings Call · 2026-10-28
A Good Quarter With a Fourth-Quarter Problem
Terex's third quarter was not the problem. Sales hit $2.2 billion, adjusted EBITDA $286 million, margin 13%, adjusted EPS $1.50; pro forma sales rose 11.6%, orders jumped 53%, and backlog reached $7 billion. The problem was the shape of the year: management trimmed full-year pro forma EBITDA to $930 million-$960 million and EPS to $4.80-$5.00, effectively taking $30 million-$40 million out of Q4. CFO Jennifer Kong-Picarello broke the cut into three pieces: half from segment mix (Environmental Solutions guided from low-single-digit growth to flat, Aerials up to mid-teens), a quarter from freight inflation, and a quarter from Waukesha production ramp inefficiencies plus the Capacity/Lay-Mor divestitures. “So, yes, our Q3 performance came in largely in line with our expectations... 50% of that is driven by the change in the mix of our segment... another 25%, that is driven by higher freight... the remaining 25% is driven by the TEU ramp up inefficiencies...” — Jennifer Kong-Picarello, Chief Financial Officer · 2026-10-28 That is not a demand miss. It is a cost-and-timing miss, which is better—but not harmless. The stock has already voted: TEX is down 21.4% over 90 days and 28.4% from its June 25 peak of $74.58. Reported revenue reached $2.2 billion, up 29% sequentially and 51% year over year, but the market is treating the guide cut, not the top line, as the signal. Gross margin was 19.8%, down 0.9pp year over year.The Cash Story Is Carrying the Equity Story
The odd part is that Terex raised free cash flow guidance to $360 million-$400 million while cutting EBITDA. Q3 operating cash flow was $241 million and free cash flow $209 million; net working capital fell to 15% of sales from 18.1% a year ago. Management also authorized a new $500 million buyback, added to $111 million remaining, for $611 million of capacity, and paid down $113 million of debt. “I am very pleased with the operational and the free cash flow performance that we have done in Q3... we want to do it on a very staged approach.” — Jennifer Kong-Picarello, Chief Financial Officer · 2026-10-28 Free cash flow less stock comp was $113 million in the latest quarter. The balance sheet is less comforting: Effective net cash was negative $2.3 billion, and net leverage was 2.3x. That is why the buyback size drew a direct challenge from David Raso, who called $611 million "a little low" relative to potential Genie proceeds. CFO's answer—don't read too much into it—is fair, but it keeps the capital-return debate open.Genie: Active Process, Still No Timeline
The Aerials sale is the strategic swing factor. Simon Meester said Terex has moved "from evaluating inbound interest to active engagement with multiple strategic counterparties," and that much of the carve-out work is behind it.But this is an escalation, not a resolution. On the Q2 call, Meester said: “There is no predetermined time line. We're focused on making the right decision and properly go through this review.” — Simon Meester, Chief Executive Officer · 2026-07-30 And on the October 2025 merger call, the sale books were "not out." So the market has now heard "active" and "multiple parties" for several quarters without a price or date. The new twist is portfolio pruning elsewhere: Lay Mor and Capacity are being sold, worth $125 million-$150 million of annual revenue and mid-to-high-single-digit EBITDA. That is small, but it reinforces the high-mix, low volume portfolio story—and it removes a bit of cyclicality before the bigger Genie decision.Since our last update, we have made good progress advanced the carve out work and moved from evaluating inbound interest to active engagement with multiple strategic counterparties.