特雷克斯 (TEX) 2026年第三季度业绩电话会：订单增长53%，调整业绩展望

特雷克斯公司（Terex Corporation，纽约证券交易所代码：TEX）在2026财年第三季度业绩电话会议上宣布，在物料处理、特种车辆和高空作业平台部门的推动下，销售额、调整后EBITDA及现金流均实现增长。尽管管理层因业务组合、运费通胀和产能爬坡成本而微调了全年预期，但所有四个部门的新增订单均大幅增长。

核心要点

• 第三季度销售额为22亿美元，按报告数据同比增长58%，按形式（pro forma）计算增长11.6%。调整后EBITDA增至2.86亿美元，利润率为13.0%。
• 按形式计算的新增订单同比增长53%至23亿美元。积压订单达到70亿美元，而综合订单出货比约为103%。
• 物料处理部门的调整后EBITDA利润率为19.3%，提升530个基点；特种车辆部门的利润率拓展300个基点至16.0%。
• 高空作业平台部门销售额增长32%至7.09亿美元，主要受与重大基础设施项目相关的美国大客户需求推动。其利润率环比改善300个基点至8.7%。
• 管理层目前预计2026财年销售额为80亿美元至82亿美元，调整后形式EBITDA为9.30亿美元至9.60亿美元，调整后每股收益为4.80美元至5.00美元。
• 特雷克斯将其2026财年自由现金流预期上调至3.60亿美元至4.00亿美元，并批准了一项新的5亿美元股票回购授权。

核心财务数据

业务与运营表现

物料处理部门：销售额增长11.3%至4.34亿美元。在基础设施、数据中心及其他施工项目的支持下，美国市场对移动式破碎机和筛分机的需求领跑。受销量增长、有利的业务组合、定价纪律以及固定成本吸收改善推动，调整后EBITDA利润率提升530个基点至19.3%。新增订单增长41%至5.11亿美元，而积压订单几乎翻倍至6.76亿美元，可提供约五个月的产能覆盖。

特种车辆部门：销售额增长8.1%至6.57亿美元，主要由消防车以及在较小程度上由休闲车拉动。调整后EBITDA利润率拓展300个基点至16.0%。新增订单增长30%至6.65亿美元，尽管出货量提高，积压订单仍持续增长。特雷克斯正在南达科他州布兰登和佛罗里达州奥卡拉扩充产能，以将消防和救援车辆的交货周期从24个月以上缩短至约12个月的可持续水平。

高空作业平台部门：销售额增长32%至7.09亿美元，主要反映了与重大基础设施项目相关的美国大客户需求。受关税、通胀和客户结构影响，调整后EBITDA利润率为8.7%，同比下降180个基点，但环比提升300个基点。新增订单激增194%至6.46亿美元，积压订单增加4.55亿美元至8.52亿美元。

环境解决方案部门：销售额下降8%至4.00亿美元，原因在于垃圾收集车渠道调整抵消了公用事业设备出货量的增加。受公用事业产品组合、沃基肖产能爬坡效率低下以及固定成本吸收下降影响，调整后EBITDA利润率下降390个基点至13.3%。新增订单增长14%至4.45亿美元，其中垃圾收集业务增长36%，新定单量创下七个季度以来新高。

特雷克斯表示，扩大后的业务组合的整合工作正从基础性活动转向价值释放。公司已组建集中采购部门，并在其2026财年EBITDA展望中计入了2800万美元的已实现协同效应。

公司还剥离了Capacity和LayMor业务，这两项业务历史上的年收入约为1.25亿美元至1.50亿美元，EBITDA利润率处于中高单数字区间。

管理层业绩指导

该展望囊括了当前的业务组合、第四季度正常的季节性影响、环境解决方案部门的产能爬坡、关税和通货膨胀因素。它不包含与协同效应相关的实施成本、收购会计调整以及其他非经常性项目。

按部门划分，管理层维持物料处理部门低两位数的年度增长预期，高空作业平台部门约为15%左右的增长预期。特种车辆部门预计将实现高单数字增长，而环境解决方案部门的销售额目前预计与去年同期基本持平。

风险与关注要点

• 关税、运费成本和更广泛的通胀仍是显著的压力来源。管理层表示，定价及应对举措可能需要三到九个月的时间才能抵消上涨的成本。
• 沃基肖工厂产能爬坡效率低下的问题预计将持续至2026财年第四季度，随后在公司进入2027财年时恢复正常。
• 第四季度的季节性因素预计将减少高空作业平台和特种车辆部门的出货量，而物料处理部门则面临相对不利的产品组合。
• 美国商业和住宅建筑市场仍低于历史水平，不过管理层表示情况已基本稳定。欧洲市场需求依然参差不齐。
• 高空作业平台部门的分拆进程已推进至与多家战略对手方进行实质性接触的阶段，但管理层尚未给出明确的交易时间表或对交易结果提供保证。

分析师问答亮点

管理层将EBITDA展望下调原因的约50%归因于部门组合变化，包括环境解决方案部门预期下调和高空作业平台部门收入增加。运费上涨约占25%，其余部分与公用事业设备产能爬坡效率低下以及剔除Capacity和LayMor业务有关。

关于2027财年的利润率，管理层未给出正式指导，但表示所有四个部门都具备进一步拓展利润率的基础。管理层特别提醒不要将物料处理和特种车辆部门第三季度的利润率用作基准，因为两者均包含一些有利的一次性因素。

针对环境解决方案部门，管理层将垃圾收集业务的复苏描述为呈“U型”而非先前预期的“V型”反弹。渠道调整已基本完成，但一些与发动机法规相关的预期提前购买需求已转移至2027财年。

管理层表示，特种车辆部门继续受益于市政更换需求和44亿美元的积压订单。布兰登的新产能预计将于2026财年第四季度开始出货，而奥卡拉的生产预计将于2027财年第二季度启动。两处设施的目标都是在2027年底前达到成熟的生产速率。

特雷克斯表示，其目标仍是保持价格-成本中性。公司正在采取采购举措、运费优化和向客户收取附加费等手段，同时假设2027财年通胀不会出现实质性改善。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Greetings, and welcome to the Terex Third Quarter 2026 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Drew Konop, Vice President of Investor Relations. Drew, please go ahead.

Drew Konop

Good morning, and welcome to the Terex Third Quarter 2026 Earnings Conference Call. A copy of the press release and presentation slides is posted on our Investor Relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website. We are joined today by Simon Meester, President and Chief Executive Officer; and Jennifer Kong, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by Q&A.

Please turn to Slide 2 of the presentation, which reflects our safe harbor statement. Today's conference call contains forward-looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied. These risks are described in greater detail in our earnings material and in reports filed with the SEC. On this call, we will be discussing non-GAAP financial information, including adjusted figures that we believe are useful in evaluating the company's operating performance. Reconciliations of these non-GAAP measures can be found in the conference call materials.

Please turn to Slide 3, and I'll hand it over to Simon.

Simon Meester

Thanks, Drew. Good morning, and thank you for joining us. Today, I'll cover our third quarter performance, the demand environment across our businesses and our updated full year outlook.

I'll also discuss the process around the separation of the Aerial segment before Jen takes you through the financial results in more detail. At a consolidated level, Terex delivered higher sales, adjusted EBITDA and cash flow in the third quarter versus prior year, while expanding margins and further strengthening the balance sheet. Sales of $2.2 billion increased approximately 12% year-over-year and adjusted EBITDA of $286 million rose approximately 14% on a pro forma basis.

Materials Processing and Specialty Vehicles delivered strong performance. Aerials improved again sequentially and Environmental Solutions continued investing in utilities capacity to support rapidly growing customer demand. Consolidated earnings also increased sequentially despite slightly lower sales, demonstrating improving execution and earnings conversion. Order activity improved significantly during the quarter with pro forma orders up 53% year-over-year and backlog reaching $7 billion.

Bookings were higher in all 4 segments and orders exceeded sales in Materials Processing, Specialty Vehicles and Environmental Solutions. Consolidated book-to-bill was approximately 103%, which is greater than our typical seasonality, providing an optimistic forward outlook across the portfolio. Specialty Vehicles continues to provide particularly good forward visibility. Materials Processing backlog reached a 2-year high and Environmental Solutions backlog increased from the second quarter. Jen will cover the segment level bookings and backlog trends in more detail later.

Turning to Slide 4. The underlying demand drivers remain attractive across infrastructure, utilities, power and data centers, while municipal replacement demand supports fire and emergency equipment in the United States. Refuse collection vehicle demand is improving sequentially. U.S. commercial and residential construction remain below historical levels, but have largely stabilized, while Europe is mixed.

Turning to execution on Slide 5. We're making progress integrating the expanded portfolio with foundational work across all work streams now completed. More of our attention is shifting towards value capture. The launch of our centralized procurement organization was an important next step. By coordinating sourcing across the enterprise, we can better leverage our scale, simplify the supply base and reduce product complexity.

These actions should support our synergy commitments and enhance earnings power over time. We're also applying a more consistent execution discipline across the company. As integration activities mature, our focus is increasingly shifting towards operational improvement opportunities. We are deploying proven operating practices, digital manufacturing tools and standardized operating routines to improve throughput, productivity and quality.

Early results are encouraging, and we see a growing synergy pipeline. As reflected in the results I outlined earlier, that operating discipline supported growth and margin expansion in Materials Processing and Specialty Vehicles as well as sequential improvement in Aerials. In Environmental Solutions, demand remains healthy, and we are expanding utilities production capacity to support secular growth. As expected, the expansion created temporary ramp-up inefficiencies that affected near-term profitability. The team, however, is making progress improving production flow, throughput and cost absorption, and we remain confident in the long-term opportunity to accelerate earnings.

Alongside these operating initiatives, we continue to invest in our strongest businesses and brands through product development and innovation. Heil recently introduced its next-generation automated side loader for residential refuse collection. It was designed to improve safety, efficiency and productivity while establishing a foundation for fully autonomous operation when paired with our Third Eye digital offering.

Finlay also introduced Elektro, a new range of hybrid crushing equipment designed to reduce fuel consumption and operating costs while supporting more sustainable customer operations. Our commitment to product development is also receiving external recognition. Earlier this month, Genie's next-generation slab scissor lifts were named Product of the Year in the Scissors Lifts and Vertical Masts category, reflecting our continued focus on quality, productivity and total cost of ownership for customers.

The third quarter also marked significant milestones for several of our brands, including the 60th anniversaries of Powerscreen and Genie and the 50th anniversary of Road Rescue ambulances. These milestones reflect decades of customer relationships, large installed bases and application expertise that support repeat purchases, aftermarket growth and enduring brand value.

At the same time, we continue to simplify the portfolio and direct investments where we see the greatest long-term opportunity. The exits from Capacity and LayMor further reduce complexity and cyclicality and allow us to concentrate resources on businesses with stronger market positions and more attractive long-term returns. Combined with our cash generation, these actions preserve our capacity to return capital to shareholders.

With that strategic and operating context, let me turn to our updated full year outlook. Based on our third quarter results and updated expectations, we are refining our full year outlook. We now expect sales in the range of $8 billion to $8.2 billion and adjusted pro forma EBITDA of $930 million to $960 million, reflecting typical fourth quarter seasonality. The updated outlook reflects our current assumptions for fourth quarter demand, production and costs. Looking beyond the near term, integration savings, operating improvements and portfolio mix provide a foundation for sustainable earnings growth.

Before turning it over to Jen, I want to update you on the Aerial separation process. Since our last update, we've made good progress, advanced the carve-out work and moved from evaluating inbound interest to active engagement with multiple strategic counterparties. While the process continues, the team remains focused on serving customers, growing the business and improving performance.

Our priority is to achieve a successful outcome that reflects Genie's strong brands, global footprint and differentiated products and maximizes value for Terex shareholders. And given the active nature of the discussions, we will not comment on individual counterparties or establish a specific time line. Across Terex, our focus remains straightforward: advance operating performance, realize the synergies of the transform portfolio and translate the strength of our brands and end markets into higher earnings and cash flow.

With that, I'll turn it over to Jen to walk through the financials and our updated outlook in more detail.

Jennifer Kong-Picarello

Thank you, Simon, and good morning, everyone. Let's review our third quarter results, starting with consolidated performance on Slide 6. Consolidated sales, including Specialty Vehicles, were $2.2 billion, up $810 million or 58% as reported.

On a pro forma basis, excluding the sale of the Cranes and Midwest businesses, sales grew $229 million or 11.6% as growth in Aerials, Materials Processing and Specialty Vehicles more than offset lower sales in Environmental Solutions. Adjusted EBITDA margin was 13% compared with 12.8% on a pro forma basis in the prior year. Adjusted EBITDA rose $35 million to $286 million, supported by higher sales, operational execution and realized synergies, which more than offset year-over-year tariffs and inflation headwinds.

Adjusted diluted EPS was $1.50. Higher volume, synergies and operational execution drove improved earnings, while working capital efficiency supported stronger cash generation. As a percentage of sales, net working capital was 15% compared to 18.1% a year ago on a pro forma basis, primarily driven by lower inventory and the merger with REV Group.

We generated $241 million of operating cash flow and $209 million of free cash flow during the quarter. Capital expenditures of $32 million included maintenance and growth investments aimed at increasing production at select sites, efficiency and safety. Net debt at quarter end was $2.2 billion, including $407 million of cash on hand and net leverage was 2.3x net debt to 12 months adjusted EBITDA on a pro forma basis.

During the quarter, we returned $91 million to shareholders, including $72 million of share repurchases and $19 million of regular cash dividends. In addition, we paid down $113 million of debt. Finally, the Board approved a new $500 million share repurchase authorization, adding to the $111 million remaining under our prior authorizations as we exited the third quarter for a total of $611 million capacity. The new program provides management flexibility to remain opportunistic within a balanced capital allocation framework.

Turning to segment performance, starting with Environmental Solutions on Slide 7. Environmental Solutions sales decreased $35 million or 8% from the prior year to $400 million. The decline was driven by industry channel adjustments in Refuse Collection Vehicles, partially offset by healthy demand and higher shipments in utilities.

Utility sales benefited from the expansion at the Birmingham facility, while Waukesha is transitioning from a service center to a full installation facility. The segment reported an adjusted EBITDA margin of 13.3%, down 390 basis points year-over-year. The decline was primarily due to the unfavorable mix from high utility sales, inefficiencies related to the Waukesha production ramp and lower volume absorption in ESG.

Moving to Materials Processing on Slide 8. Materials Processing sales grew 11.3% or $44 million to $434 million, driven by healthy equipment utilization and demand, particularly for mobile crushers and screeners in the U.S., supported by infrastructure, data center and other construction projects. Adjusted EBITDA margin expanded 530 basis points to 19.3%, driven by higher shipment volume, favorable mix, price cost discipline and improved absorption related to higher production volumes.

Turning to Specialty Vehicles on Slide 9. Specialty Vehicle sales rose $49 million or 8.1% to $657 million, driven by increased sales of fire apparatus and to a lesser degree, recreation vehicles. Specialty Vehicles adjusted EBITDA margin improved 300 basis points to 16% compared with last year, supported by favorable mix, operating efficiencies and price cost discipline, partially offset by inflationary pressures.

Turning to Aerials on Slide 10. Aerials sales grew 32% year-over-year to $709 million, driven largely by national account demand in the U.S. associated with large infrastructure projects. Adjusted EBITDA margin was 8.7% in the quarter, down 180 basis points from the prior year when tariff impacts were lower, but 300 basis points higher versus the second quarter due to higher production volumes and cost reduction actions. Mitigation actions were partially offset by unfavorable customer mix, tariffs and other inflationary pressures.

Turning to bookings on Slide 11. Consolidated third quarter bookings were $2.3 billion, up $781 million or 53% year-over-year on a pro forma basis with growth across all 4 segments. In addition, the bookings for all segments are trending up, providing us with an optimistic outlook for future demand.

In Environmental Solutions, the timing of the bookings explains the modest sequential sales increase outlook for the fourth quarter. Segment bookings increased 14% year-over-year to $445 million, led by 36% growth in ESG, where bookings reached a seventh quarter high as Refuse Collection Vehicles orders improved for a second consecutive quarter. Utilities demand remains healthy, although production ramp-up inefficiencies continue to limit near-term shipments. We're now seeing our full year sales outlook for the segment to be approximately flat year-over-year.

In Materials Processing, broad-based demand and a 2-year high backlog support our existing full year forecast. Third quarter bookings grew 41% on a pro forma basis to $511 million, with gains across each vertical and notable increase in concrete equipment orders. Backlog nearly doubled to $676 million, its highest level in 2 years, providing approximately 5 months of coverage. We continue to expect low double-digit sales growth for the year.

In Specialty Vehicles, demand remains healthy, while normal fourth quarter seasonality impacts sequential sales. Third quarter bookings rose 30% year-over-year to $665 million with growth across all end markets. Notably, backlog grew even as throughput and sales increased approximately 8% versus the prior year, reflecting continued strong demand.

To further shorten lead times and reduce backlog, we're expanding capacity in a measured way with the first units from the newly expanded Brandon facility expected to ship in the fourth quarter. Fourth quarter sales are typically lower because of fewer inspections and delivery days around the holidays, and we expect a typical approximately 13% sequential decline. Our high single-digit full year sales growth outlook remains unchanged despite the impact of Capacity, LayMor divestiture.

Finally, in Aerials, large project orders and higher backlog support our full year sales outlook. Third quarter bookings rose 194% year-over-year to $646 million, primarily attributable to national customers serving large infrastructure projects. Backlog increased $455 million from the prior year to $852 million, supporting confidence in future demand. Based on year-to-date results and current bookings and backlog, we're maintaining our prior outlook for low double-digit revenue growth, which we approximate at mid-teens.

Now turn to Slide 12 for our updated 2026 consolidated outlook. Our outlook incorporates the current portfolio, normal fourth quarter seasonality, the Environmental Solutions production ramp, tariffs and overall inflationary environment. It excludes cost to achieve synergies, purchase accounting adjustments and other nonrecurring items. Today, we are refining our full year outlook. We now expect 2026 pro forma sales growth of approximately 8% at the midpoint, with sales ranging from $8 billion to $8.2 billion.

Stronger year-to-date performance in Materials Processing and Specialty Vehicles, together with realized synergies is partially offset by lower near-term expectations in Environmental Solutions and fourth quarter seasonality in Aerials. Pro forma EBITDA is expected to grow approximately 10% year-over-year to a range between $930 million and $960 million, excluding Capacity, LayMor, representing an 11.7% EBITDA margin at the midpoint.

Our EBITDA outlook includes approximately $28 million of realized synergies in line with our commitments at the beginning of the year. We anticipate interest and other expenses to be approximately $180 million based on average debt outstanding of $2.6 billion. The effective tax rate for the full year is now 19%, benefiting from effective tax planning. This results in expected 2026 EPS of $4.80 to $5, including the typical seasonal step down in the fourth quarter. Finally, we're raising our free cash flow outlook to $360 million to $400 million for 2026, reflecting net working capital efficiency and an updated capital expenditure outlook of $145 million for the full year.

With that, I'll turn it back to Simon for his closing remarks.

Simon Meester

Thanks, Jen. The economic environment remains dynamic with tariffs and inflation creating meaningful pressure across the industrial sector. Even so, we delivered on our third quarter commitments. Materials Processing paired growth and margin expansion with a 2-year high backlog and Specialty Vehicles execute strongly against healthy demand and backlog while tactically increasing capacity to reduce lead times.

In Environmental Solutions, increasing bookings and the utilities capacity expansion create a path to better shipments, margins and cash generation. Our operational priorities are straightforward: execute our improvement plans, capture the benefits of integration and convert strong demand into higher earnings and cash flow. Delivering on those priorities will create meaningful value for our shareholders.

I want to thank our team members for their work, our customers, dealers and suppliers for their partnerships and our shareholders for their continued engagement. And with that, we'll turn the call over to the operator for questions.

Operator

[Operator Instructions] Your first question comes from the line of Angel Castillo with Morgan Stanley.

分析师问答

Angel Castillo Malpica

Just wanted to unpack a little bit more of kind of the margin progression here. Just if you could help us understand, I guess, margin expectations by segment in the fourth quarter. I guess, in a normal environment for legacy Terex, I would have said sequential kind of move in EBITDA makes sense. But I think just when I look at the current backdrop, I think most of us maybe outside of seasonality, expected a little bit more improvement in the fourth quarter.

So just a bridge by segment there would be helpful. And just any color as to the specific factors perhaps in quantifying those? Like what persists into 2027? What is more kind of near term and perhaps abates a little bit? And just how should we be thinking about like what to kind of underwrite in terms of the run rate or the exit rate of this year for 2027?

Jennifer Kong-Picarello

This is Jen. So to your question, yes, typically, we see a Q3 to Q4 seasonal step down in our EBITDA margins. Two of our segments out of the 4 is less shipments. So it's all shipment related driven by seasonality like Aerials and SV because of the holidays and the factory shutdown and also the national demand in terms of when they ship.

Then in the MP and the ES segment, we expect that there's going to be higher revenue in Q4 versus Q3 that will drive additional margins. However, for MP, the unique one for Q4 is that there's going to be unfavorable product mix, a little bit more material handling and concrete. So the -- that we're going to do a little bit more step down from Q3 to Q4 for material processing. And now our full year outlook here also includes the additional freight inflation that we saw in Q3, and then we'll bring that into Q4.

Your second question is how much of that will be discrete and how much of that will be carried forward. What we see here is that the inflation is a timing issue, whereby we're taking proactive actions either from a cost mitigation standpoint or from a price flow-down to the customers as a surcharge. So that generally will have a 3- to 9-month lag across depending on the different business dynamics. And the other one in the Q4, we also do expect that the ramp-up inefficiencies in our Waukesha facility that Simon mentioned in the prepared remarks to continue from Q3 into Q4 and that will ease out and will come up from that in 2027, early part of 2027.

Simon Meester

Yes. I would just add, if you look at Q3, I think all 4 segments are really well positioned for continued margin expansion going forward in 2027. We're obviously not guiding today for 2027. But I would just add that maybe MP and SV had a little bit of a few one-timers in the quarter. So I wouldn't quite baseline it on their Q3 margins. But other than that, all 4 segments, I think, are well positioned, especially ES, to continue to expand margins going into 2027 because obviously, we have a very healthy backlog and strong bookings. So volumes will be a nice tailwind for us in 2027.

Angel Castillo Malpica

And actually, just that's kind of a nice dovetail into my follow-up, which was just related to ES. I guess I'm a little bit confused there. It sounds like the lower volume, maybe there was a little bit of shipment move from 3Q to 4Q in the refuse side of the business. But utilities, it sounds like that's maybe what's driving a little bit of the inefficiencies or lowered top line guide.

Just how do we reconcile that with the bookings that was the strongest we've seen in, I think, like over 3 years. Just help us understand the cadence into next year. It sounds like, again, some of that is just inefficiencies and timing. But if refuse is also seeing kind of good uplift in demand, just like what is that telling you in terms of the ability for that to grow or the magnitude of that growth into 2027?

Simon Meester

Yes. You said inefficiencies in utilities and timing of bookings in ESG. You may remember that we had initially assumed at the start of the quarter -- at the start of the year, sorry, that there would be some tailwinds coming in terms of prebuys because of the change in engine regulations in 2027.

A lot of that is now grandfathered well into 2027. So some of those prebuys kind of dropped out of our bookings forecast. So we do see sequentially strong pickup in ESG bookings coming out of the channel adjustments that kind of drove some of the corrections at the beginning of the year. So I would just characterize it as we initially anticipated a V-shaped kind of recovery and now it's going to be more of a U-shaped recovery. So that's why we feel good about ESG and utilities for that matter, going into 2027, but it's just going to be pushed out by another quarter, and that's what is driving the guide.

Operator

Your next question comes from the line of Mig Dobre with Baird.

Mircea Dobre

I got to admit I'm a little bit confused with the guidance relative to your commentary here. It does sound like Q3 was maybe not all that different from what you were expecting, if anything, maybe MP, for instance, did a little better and Specialty Vehicles, too.

But we've taken $30 million to $40 million out of the EBITDA guide. So that's all coming from the fourth quarter. Can you be a little more specific in terms of, okay, all these EBITDA dollars, which segments are they really coming from? Are there -- is it more evenly spread? Or are there a couple of segments that are really bearing the brunt of this?

Jennifer Kong-Picarello

This is Jen. So yes, our Q3 performance came in largely in line with our expectations, very strong performance, 3 of our 4 segments securing double-digit EBITDA. What you mentioned here in terms of the revised guide on the EBITDA that's largely, I would call it, 50% of that is driven by the change in the mix of our segment.

Like I mentioned in the prepared remarks, we are reducing the top line for ES from low single digit to flat, and we're increasing a little bit in Aerials to mid-teens. So that explains for about 50% of the volume changes from the segment mix. And then another 25% that's driven by higher freight, like I mentioned earlier to Angel that we have incurred in Q3, and we expect that to continue into Q4. That's a big change versus the last guidance, the prior guidance. And then the remaining 25% is driven by the TU ramp-up inefficiencies and us excluding Capacity and LayMor from our Q4 guidance just because of the divestiture announcement that we made in the latter part...

Simon Meester

Last week.

Jennifer Kong-Picarello

Yes.

Simon Meester

So those are the 3 big drivers.

Mircea Dobre

That was really helpful. Then I wanted to ask a little bit about your free cash flow as well. It's a little unusual for me to sort of see the free cash flow guide go up while having to trim EBITDA. So maybe talk a little bit about that. And in terms of working capital management, maybe a general framework for how we should be thinking about Terex as we think about 2027, 2028, what do you see as the natural working capital level for the company?

Jennifer Kong-Picarello

Yes. So -- and thank you, Mig, for asking the question. I'm very pleased with the operational and free cash flow performance that we have done in Q3, which allow us to deploy the share repurchase opportunistically. We are driving the low capital intensity that we think we will through all our strategic portfolio transformation that started with the ESG acquisition and then the REV merger, pruning our business, including the Crane divestiture that we did late last year and now with Capacity and LayMor.

So in terms of our 2026 priority, I've been always very clear that we want to do it on a very staged approach. First half of the year is always making sure that we have a very strong balance sheet. And then the second half of the year is to make sure that we return the value to the shareholders, which is what we are exactly doing. While we are not providing the guidance into 2027 and 2028, I expect that we continue to drive working capital to be lower. We continue to make sure that we optimize our CapEx and then continue to return shareholders value through either dividends, share repurchase or organic investments.

Operator

Your next question comes from the line of Jamie Cook with Truist Securities.

Jamie Cook

I guess my first question is just within Specialty. Can you speak to what you're seeing within that business in terms of the fire business, I guess, specifically where some of your peers have been -- I think your growth has been much better than some of your peers and also your margin performance was pretty good.

So any color you can give on what you're seeing there and your confidence that fire can grow into 2027 and anything you're seeing on market share? And then I guess my second question, again, set up for 2027. Simon, you sound fairly positive, but I'm just trying to understand where price -- as we look at the backlog, what's priced effectively versus sort of underwater as we look into 2027. It sounds like Aerials is the biggest issue, but I'm just wondering if price cost should start to improve more in 2027 with pricing actions we've taken in recent bookings.

Simon Meester

Yes. Thanks for the question, Jamie. So on SV, very pleased with the bookings, bookings coming in strong. Backlog actually going up again a little bit sequentially in SV. It's still very much all about trying to bring lead times down for us. So that's why we're tactically expanding capacity in 2 locations in Brandon, South Dakota and in Ocala, Florida.

Basically, we're trying to address specific categories with higher-than-average lead times with those investments, and we expect that the first units to be built this quarter in Brandon and then in the second quarter of 2027 in Ocala. And in both places, we expect that capacity to be at mature rates by the end of 2027. So it's still very much for us a story about trying to bring the backlog down. We think a sustainable lead time for this industry is about 12 months, and we're well over 24.

So pleased with the bookings. We see strong underlying demand. We still see a lot of municipalities that are replacing aged units. And we do have a couple of offerings in our portfolio like our semiconfigured pumper that is a low lead time item that is just picking up in popularity because it's a unit that we can deliver in 8 months as opposed to the average 24 months. So we're pleased with how things are evolving in SV, but it's still very much just a matter of us trying to get our lead times down from 24 months to 12.

Then in terms of inflation, obviously, it's top of mind for us for 2027. And Jen, keep me honest here, but we are not expecting -- we're not operating under the assumption that inflation is all of a sudden magically going to get much better in 2027. So we are preparing ourselves for at least kind of a flat year-over-year in terms of percentage continuation of inflation going into 2027.

Now again, we're not guiding for 2027, but we've always said and we continue to say is that our aim is to be price/cost neutral. That is our starting point. And we will try to offset as much as we can ourselves and mitigate as much as we can ourselves. But at some point, we'll have to be disciplined and pull the pricing lever as well in order to get to that ambition of price/cost neutrality. So still an active process as we continue in the quarter, and we expect to provide some more clarity on that when we start guiding for 2027 in February.

Operator

Your next question comes from the line of David Raso with Evercore ISI.

David Raso

I appreciate you don't want to call out any potential buyers on Aerials. But if you can just indulge us in a bigger picture view of what's developing. The carve-out work, is there really anything left to do there? And then is the holdup on the sale more regarding buyers what they're asking for regarding the structure of the deal? Or is it just simply a debate on price?

And then also the share repo authorization, you have a total now of $611 million. The authorization timing and also the size of it, I'm just trying to think through the use of the proceeds eventually from the sale of Genie. The authorization struck me as a little low, and I'm just trying to figure out, is that a signal a little bit of use of the net proceeds. I mean this kind of number feels like it's almost 50-50 debt versus repo. And I'd argue investors are probably leaning a little more wanting repo. And I just want to make sure we're reading into what you're describing today appropriately.

Simon Meester

So I'll take the first. Jen, you want to take the second question on the share repurchases. So yes, on the on the Genie on the Aerials process, yes, as I said, we made good progress in the last couple of months in terms of advancing our carve-out work. Aerials has been part of Terex for 25 years.

So there's obviously a lot of structure, a lot of tax, lot of legal entities associated to this segment that required quite substantial carve-out work, and we've been making good progress on those. In terms of process, David, I'm not going to comment on who the multiple strategic counterparties are. I'm not going to comment on what kind of the nature of the discussions are. I don't think that serves the best interest of our shareholders. I'm going to pass on that particular question.

Jennifer Kong-Picarello

Yes. And David, I think your 2 follow-up questions is on the carve-out work. I'm very pleased to say that we have done a lot of the work upfront in the, I would call it, the last 9 months. As you know, the Aerials business has been with us as part of Terex for a while, and the legal entity that we are untangling, we have done a lot of the work, and we're very comfortable with where we are in the process right now.

Your question on share repurchase, I think it's too premature to say anything. The $500 million of share repurchase authorization there is just on our normal course of business. We have exercised -- we have deployed $72 million to share repurchase in Q3. We expect that we will remain -- share repurchase will remain part of our disciplined capital allocation framework, and we will continue to opportunistically repurchase shares with or without the Aerials sale. So I wouldn't say you want to read too much into it.

Operator

Your next question comes from the line of Mike Shlisky with D.A. Davidson.

Michael Shlisky

I was under the impression that you weren't going to be doing much divestitures until you got the Aerials deal done, but you did just divest Capacity and LayMor in the last couple of days. I'm just kind of curious, are there any other areas you might look to divest, RVs or other small businesses that you currently still own between now and when Aerials may get addressed?

Simon Meester

Mike, thanks for the question. Yes, we are at the tail end of the integration of our new SV segment, which required a lot of work. We're obviously also in active discussions around our Aerials segment. So we have kind of a full slate at the moment. Now the Capacity and LayMor was a relatively small transaction. But I would just leave it today as in we will continuously assess the effectiveness of our portfolio. And some of that will be opportunistic in nature.

But at the moment, we're focused on those 2 main large work streams that I called out just now. But yes, we will always look for opportunities to continue to optimize, and we are committed to our strategic objective of building a highly synergistic, high mix, low-volume portfolio. And so we'll always be looking for opportunities to further improve.

Michael Shlisky

Okay. Great. And then my follow-up was, Jen, you called out those 2 businesses, Capacity and LayMor, as part of the reason for the EBITDA reduction for the full year, mostly in the fourth quarter, of course. I never thought of those as that big of businesses that didn't generate that much. So can you maybe just help us figure out for our modeling for 2027, whether there's a pretty decent sized number or halfway important number we should be taking out of our models for '27 for those businesses? And whatever cash you received, will this be plowed right back into the share buyback here in the fourth quarter?

Jennifer Kong-Picarello

Yes. Mike, I think you're familiar with the Capacity and LayMor businesses. Overall, in an annualized basis, through cycles, anywhere between $125 million to $150 million of top-line revenue. And we have always said that it's in the mid-single-digit to high single-digit EBITDA. So you could use that to adjust out your model. I think your second question is on the sales proceeds, and how we're going to deploy that cash. Again, we will make sure that we exercise a very disciplined capital allocation framework. In fact, we have received the cash already, so we absolutely is looking into that right now.

Operator

Your next question comes from the line of Kyle Menges with Citigroup.

Kyle Menges

In your presentation and in the prepared remarks, you mentioned the F&E fleet. It sounds like it's still aging, good replacement demand from municipalities. Would just love to hear your -- just, I guess, a little bit more color on what you're seeing in that market and in that fleet, if it is really aged and I guess, just didn't really see too much pull forward related to COVID stimulus or perhaps we did. Would just love to hear some more color there.

Simon Meester

Kyle, did you say SV, Specialty Vehicles?

Kyle Menges

I guess, fire and emergency.

Simon Meester

Yes. Okay. I wasn't sure. Because we cover municipalities with multiple segments, so I just wanted to make sure I heard you clearly. Yes, as I said earlier, we're very pleased with the bookings -- how the bookings continue to come in. We are very focused on just building as many trucks at the highest possible quality as we can just basically at this point to keep up with the backlog and with the bookings trend until we have additional capacity coming online.

We're also very surgical with our capacity because, obviously, we don't want to all of a sudden have idle capacity in our network either. So that's why we are addressing specifically the categories with higher-than-average lead times. But yes, to your point on the bookings, I don't think there is a particular silver bullet here other than we just continue to see municipalities that are coming in with replacement demand that have been running their fleet a little longer than they initially expected. And then I don't want to make any comments on market share, but we do get some good pull from the market on our lower lead time solutions that we're offering, as I mentioned earlier, with our semi-configured pumper. So it's probably a mixed bag of those variables.

Kyle Menges

Got it. And then just to follow-up on the Aerials sale process and that carve-out work. I'm curious how much more carve-out work there is to be done? And are you confident in getting that wrapped up by year-end?

Simon Meester

Yes. I'm not going to put any timing. We're running a disciplined process here. We're committed to the process. We're focused on value. We're focused on execution. We're focusing on certainty. Yes, a lot of that carve-out work is behind us, but I don't want to start getting into any kind of timing or deadline commitments. The focus for us is on discipline and making sure that we maximize value for our shareholders.

Operator

Your next question comes from the line of Jerry Revich with Wells Fargo.

Jerry Revich

The margin execution and the orders have both been, I think, well ahead of plan this year. And when you folks made the acquisition, based on the pipeline, you spoke about multiyear margin improvement opportunity in the business. And so obviously, we'll hear more about '27 in about 3 months, but any changes to how you're thinking about the margin upside relative to what you laid out at the time of the acquisition given the performance to date?

Simon Meester

Yes. I mean, thanks for the question, Jerry. I need to give the team a lot of credit here because Legacy REV laid out their EBITDA commitments in their Investor Day for 2027. And not only did they achieve that goal a year early, they also achieved the high end of their 2027 guide, which was 14% to 16% EBITDA.

Now having said that, there is a few one-offs in their Q3 that Jen spoke about that you shouldn't anchor to necessarily. But we're very, very pleased with the way the team is executing. And we mentioned this when we announced the merger that the leadership team that was running that particular segment is still running that leadership that segment today, and they're doing a great job in terms of execution.

We do expect knowing there is a $4.4 billion backlog to continue to drive productivity, to continue to drive down hours per truck. So we definitely do see opportunity for sequential improvement. And by the time we get to our guide, we'll be able to be a little bit more specific on what that means for 2027.

Jerry Revich

Okay. Super. And then can I ask in Environmental Solutions, obviously, a transition year for Utilities and a lumpy production in Heil. As we think about the margin opportunity, '27 plus, are we thinking about the 19% or so margins that we were able to hit in '25 as doable in the medium term? Just wondering to what extent are some of the transition issues we've spoken about this year potentially lingering into next year?

Simon Meester

Yes. So if you look at the Q3 EBITDA margin of 15%, even with ESG being at a -- let's just call it a bottom, they were still at the higher end of that number. And so Utilities was below the average because of the inefficiencies in the ramp-up. The reason we feel really good about that segment is for 2 reasons. First of all, bookings are picking up in the higher -- highest EBITDA margin of that particular segment, which is ESG.

And secondly, we know that these headwinds when you ramp up a new facility, it's basically a completely new facility in a couple of states over from our Watertown facility. And we have added already 25% more unit capacity in 12 months alone. We're building 250 trucks more in that facility in just 12 months. And then we want to go for another 250 trucks next year.

So just picture the start-up costs associated with increasing your capacity by 25% in just 12 months. So we feel very good by the way we have kind of set ourselves up for future growth. And yes, it comes at a little bit of a speed bump in Q3, but a business that does high teens EBITDA margin and then calling that a speed bump, I'll take that any day of the week. So I think both utilities and ESG are very well-positioned for 2027.

Operator

Your next question comes from the line of Stephen Volkmann with Jefferies.

Stephen Volkmann

Just a couple of quick follow-ups from me. Simon, on that last point, how do we think about the sort of quarterly cadence of the Utilities ramp-up? I'm sorry if I missed this, but I'm trying to think about when these -- when exactly these headwinds to margin go away?

Simon Meester

Do you want to take that, Jen?

Jennifer Kong-Picarello

Yes. Steve, this is Jen. So right now, based on our revised guidance, we expect that the ramp-up inefficiencies in Waukesha facility to continue into Q4. And then when we exit out of Q4 into 2027, we expect that to normalize. And again, like what Simon mentioned earlier, the ramp-up and the units in a new facility that historically has been a service facility, and we repurposed that to an install facility that's actually creating some of those headwinds.

Simon Meester

Yes. I just want to add, and I didn't mention this so far, is that we are now also starting to build utility trucks in our Fort Payne facility in Alabama. So that gives us another kind of tailwind in terms of how we can manage absorption in our probably most competitive plant in our network, which is the ESG -- the Heil facility in Fort Payne. So we're now building utility trucks in Fort Payne as well, so we can flex between refuse demand and utility demand in our Fort Payne facility, which is a very competitive facility for us.

Stephen Volkmann

Great. That's helpful. And then you had mentioned earlier, I think, that you expected some prebuy because of the emission change and then that sort of didn't happen. But what we're hearing sort of broadly across the truck space is that most suppliers are going to provide the 2026 technology with the noncompliance penalty, and that adds some revenue but with no margin as we move into '27. And I'm curious whether you think that will impact you as well.

Simon Meester

So we don't see a major impact because, first of all, most of that is just passed on. We don't carry -- we don't take the title on those chassis. It's -- they're purchased by our customers and directly invoiced to our customers. For us, it's more of a timing issue. And as I initially said, was in Q2, we were assuming that there were going to be some prebuys in the second half, and we don't see those prebuys now happening. We see more of a back to kind of a normal demand pattern. We see most of the channel adjustments are behind us. We see sequential improvements in bookings, combined with what we see in fleet utilization. Fleet utilizations, the fleets have kind of been rationalized and are back up at normal utilization.

So we now see the path clear for more normal sequential growth in ESG. It's still an essential service. So America hasn't started producing less waste. I mean it's still -- that's still a very consistent growth pattern. It's more like how the fleet has been flexing based on supply/demand purely on vehicle manufacturing. But yes, back to the engine regulations, the engines have been -- some of the engines that we pushed out to April, they need to be built by April, serialized by July and some of that will take effect on the timing of bookings. But other than that, financially, it's just passed on to our customers.

Operator

Your next question comes from the line of Tami Zakaria with JPMorgan.

Tami Zakaria

I wanted to follow up on Steve's question earlier. Given there will be noncompliance penalties on truck engines next year, are you preparing to reprice the backlog? Or was some level of penalties and high engine cost inflation already embedded when those orders were placed? Or is it that your customers buy the trucks directly from the OEMs and then you just upfit it for them, so the penalty will entirely bypass you? So if you could provide some clarity there.

Simon Meester

Tami, thanks for the question. Yes, it's the latter of what you said. The chassis are bought by our customers.

Tami Zakaria

Understood. That's very helpful. And then I wanted to clarify, given all the comments on freight inflation, which of your segments would need to increase prices more than others to remain margin neutral, or does freight impact all segments relatively equally?

Jennifer Kong-Picarello

Yes. Tami, freight impacts all segments across the board. But I also do want to mention that the -- we actually pass through a portion of the outbound freight to our customers. So like I mentioned, there's going to be a timing effect of when we incur it to when we flow it down to the customers as well. At the same time, we're taking very proactive actions as part of our sourcing synergy work stream to actually optimize and reduce our inbound freight costs either by scaling and renegotiating those contracts identifying new carriers and also providing a single pane of glass through more digitization so that we can optimize the lanes and those ocean fleets internationally. But I would say that that's across the board.

Operator

We have reached the end of the Q&A session. I would now like to turn the call back to Simon Meester for closing remarks.

Simon Meester

Thank you, operator. Thank you for the questions. If you have any additional questions, please follow up with Jen or Drew. Thank you for your interest in Terex today. Operator, please disconnect the call.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.