Terex Corporation (TEX) | The Buildout — AI Infrastructure

The Verdict

Terex is a global manufacturer of heavy equipment: utility bucket trucks and digger derricks, mobile crushers and screens, aerial work platforms, refuse collection bodies, and fire apparatus and ambulances. It is not an AI company and does not pitch itself as one, but it sells into the buildout at one remove. Data-center power demand feeds U.S. grid capex, which buys utility fleet equipment, and data-center sites buy mobile crushing equipment for site work and aggregate. It also builds 3rd Eye, an AI-based vehicle-awareness product for waste and utility fleets, and holds an early stake in Apptronik, though neither is material to the P&L today.

Earnings Beat

Terex reported Q2 2026 sales of $2,238M, up 50.5% as reported from $1,487M a year earlier and up 8.5% on a pro forma basis excluding the sold Cranes and Midwest businesses. Gross margin was 19.8% and EBITDA was $273M, a 12.2% margin. Bookings were the standout at $2.0B, up 25% pro forma, with every segment booking more than a year earlier. Adjusted EPS was $1.37, including a net $8M IEEPA tariff refund benefit and a one-time unfavorable customs accrual.

Management tone: Tone shifted from disciplined reaffirmation to a confident raise. In Q1 management said it was 'prudent to maintain' full-year guidance and cited 'discipline and timing'; in Q2 it raised the full-year outlook, citing first-half performance, backlog visibility and momentum. Management also volunteered unwelcome specifics — the mix dilution behind the raise, the reversal of the RCV prebuy assumption, and the ex-accrual Aerials margin — while declining questions on market share, 2027 Environmental Solutions margin targets and the Aerials review timeline.

Management Guidance

Management raised FY2026 guidance to sales of $7.9B–$8.2B, adjusted EBITDA of $960M–$1B (12.2% margin at the midpoint) and adjusted EPS of $4.70–$5.10. Segment guidance: Environmental Solutions cut to low single-digit growth, Materials Processing raised to low double-digit, Specialty Vehicles reaffirmed at high single-digit, and Aerials raised to low double-digit sales growth with price/cost neutral for the year. Management said the raise is mix-driven — higher-margin Environmental Solutions came down while lower-margin Aerials came up — and framed incremental adjusted EBITDA margin conversion at 22% at the midpoint on a pro forma basis. Roughly $28M of REV synergies are included, unchanged.

Trajectory

Revenue stepped up over the last two quarters, to $1,734M in Q1 and $2,238M in Q2, though both figures include the REV Group merger that closed on 2026-02-02; on a pro forma basis Q2 sales rose 8.5%. The mix moved the other way — the higher-margin Environmental Solutions segment was cut to low single-digit growth and posted a 17.5% segment margin, down 250 bps, while lower-margin Aerials grew on a 5.7% segment margin. Q1's 11.9% gross margin was distorted by a $112M inventory step-up from REV purchase accounting; Q2 gross margin was 19.8%. Net working capital fell to 13.2% of sales from 22.8% a year earlier, and net leverage was 2.3x.

The Model

The model's locked projections are FY+1 revenue of $8,120M with EBITDA of $991M (12.2% margin), and FY+2 revenue of $8,828M with EBITDA of $1,183M (13.4% margin). FY+1 sits inside management's raised FY2026 guide of $7.9B–$8.2B sales and $960M–$1B adjusted EBITDA. FY+2 implies roughly 9% revenue growth over FY+1 and a margin step-up to 13.4%, which lines up with the dated Q4 2026 cost-absorption turn and the 2027 run rates management expects on the Utilities, Ocala and Brandon capacity projects.

Projections are the median of 5 independent model runs. The model’s revenue sits 3.2% above analyst consensus.

Management raised FY2026 guidance to sales of $7.9B–$8.2B, adjusted EBITDA of $960M–$1B (12.2% margin at the midpoint) and adjusted EPS of $4.70–$5.10. Segment guidance: Environmental Solutions cut to low single-digit growth, Materials Processing raised to low double-digit, Specialty Vehicles reaffirmed at high single-digit, and Aerials raised to low double-digit sales growth with price/cost neutral for the year. Management said the raise is mix-driven — higher-margin Environmental Solutions came down while lower-margin Aerials came up — and framed incremental adjusted EBITDA margin conversion at 22% at the midpoint on a pro forma basis. Roughly $28M of REV synergies are included, unchanged.

What Could Go Right — and Wrong

Looking Ahead

Over the next twelve months, three dated items drive the story. Q4 2026 is when the Utilities, Ocala and Brandon capacity programs are expected to stop dragging margin and start absorbing favorably, with first deliveries from Brandon and Ocala ladder capacity coming online. In H2 2026, roughly 80% of the REV synergies are expected to land sequentially, and management points to a new technology launch in refuse. The Aerials strategic review carries no predetermined timeline, so an outcome could arrive at any point — or not at all.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Terex is a global industrial equipment manufacturer. Its 10-K describes materials processing machinery, waste and recycling solutions, mobile elevating work platforms and equipment for the electric utility industry. In practice the products are the machines that build and service physical infrastructure — mobile crushers and screens, aerial work platforms, refuse collection bodies, fire apparatus and ambulances, and utility bucket trucks and digger derricks. The AI-infrastructure link runs through the utility and crushing lines, not through anything sold directly to a data-center operator or chipmaker.

The company has changed shape in two years. The REV Group merger closed on 2026-02-02 and created a fourth segment, Specialty Vehicles; the Cranes and Midwest businesses were sold; and Aerials is under a live strategic review. Reporting is now four segments: Aerials, Specialty Vehicles, Materials Processing and Environmental Solutions. About 80% of revenue is generated in North America, and roughly 85% of that is manufactured in the United States. The named plant footprint stretches from Alabama, South Dakota and Wisconsin to Northern Ireland, Italy, Mexico, India and China, making utility products, mobile crushers and screens, and aerial work platforms.

Business Segments

Competitive Landscape

The 10-K lists competitors by product line, and three patterns stand out. First, Terex competes against software companies in one line: the on-board vehicle technology table behind 3rd Eye names AMCS, Geotab, Lytx, Routeware and Samsara — pure-play telematics. Second, the highest-volume aerial categories carry low-cost Chinese entrants including Dingli, Sinoboom, XCMG, Zoomlion and LGMG. Third, Oshkosh is a documented competitor on several fronts at once: JLG against Genie in aerials, Pierce against REV in fire trucks, and McNeilus against Heil in refuse bodies and in concrete mixers.

Supply Chain

Terex is a machinery assembler, buying truck chassis, steel, hydraulics and diesel engines and selling finished equipment to rental fleets, municipalities and utilities. No neighbor in the source set mentions Terex by name, and the supplier mapping carries weak provenance.