Greetings and welcome to the Tarek's third quarter 2026 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. 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.

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 two 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 three, and I'll hand it over to Simon.

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, Ariel's 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 Backlock reaching $7 billion. Bookings were higher in all four 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 two-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 four. 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. US commercial and residential construction remain below historical levels, but have largely stabilized while Europe is mixed. Turning to execution on slide five. 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 and many others. 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 Electro, 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 lift were named product of the year in the scissors lift and vertical mass 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 investment where we see the greatest long-term opportunity. The exits from capacity and laymore 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 brand, 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 timeline. Across Terex, our focus remains straightforward, advanced operating performance, realize the synergies of the transformed 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.

Thank you, Simon, and good morning, everyone. Let's review our third quarter results, starting with consolidated performance on slide six. 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 a prior year. Adjusted EBITDA rose 35 million to 286 million supported by higher sales Operation Execution and Realize Synergies, which more than offset year-over-year tariff and inflation hit wins. Adjusted diluted EPS was $1.50. Higher volume, synergies, and operation 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 Rapture. We generated 241 million of operating cashflow and 209 million of free cashflow 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 seven. Environmental solution 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 Tarex utilities. Utility sales benefited from the expansion at the Birmingham facility. where Waukesha is transitioning from a service center to a full installation facility. The segment reported an adjusted EBITDA margin of 15.3%, down 390 basis point 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 assumptions in ESG. Moving to materials processing on slide eight. Materials processing sales grew 11.3% of 44 million to 434 million driven by healthy equipment utilization and demand, particularly for mobile crashes and screeners in the US, 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 nine. 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 makes, operating efficiencies, and price-cost discipline, partially offset by inflationary pressures. Turning to arrows on slide 10. Arrow 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 four 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 explained 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 Raffi's 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 a full-year sales outlook for the segment to be approximately flat year-over-year. In materials processing, brought base demand and a two-year high backlog support our existing full-year forecasts. 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 two years, providing approximately five 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 Brennan 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 the typical approximately 15% sequential decline. Our high single-digit full-year sales growth outlook remains unchanged despite the impact of capacity laymore divestiture. Finally, 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 a proud outlook for low double-digit revenue growth, which we approximate as meet-teams. 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 non-recurring items. Today, we are refining our full-year outlook. We now expect 2026 pro forma sales growth of approximately 8% at a 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 areas. Proforma EBITDA is expected to grow approximately 10% year-over-year to a range between $930 million and $960 million, excluding capacity laymore, representing an 11.7% EBITDA margin at the midpoint. Our EBITDA outlook includes approximately $28 million of realized synergies in line with our commitment 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.

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 two-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.

Question and Answer Session Your first question comes from the line of Angel Castile with Morgan Stanley. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my question. I 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, you know, for legacy tariffs, I would have said sequential kind of move in EBITDA makes sense, but I think just, you know, 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 that would be helpful and just any color as to, you know, 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 think, be thinking about like what to kind of, you know, underwrite in terms of the run rate or the exit rate of this year for 2027.

Hey, Angel. This is good morning. This is Jen. So to your questions, yes, typically we see a Q3 to Q4 seasonal step down and our EBITDA margins. Two of our segments out of the four is last shipment. So it's all shipment related, driven by seasonality like aerials and SV because of the holidays and the factory shutdown and also the nationals 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 that you'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 discreet and how much of them will be carried forward? What we see here is that the inflation, it's 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 three to nine months life 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 walk or shop 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.

Yeah, I would just add, if you just look at, if you look at Q3, you know, I think all four segments are really well positioned for continued margin expansion going forward in 2027, 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 four segments I think are well positioned especially ES to continue to expand margins going to 2027 because obviously we have a very healthy backlog and strong booking so volumes will be a nice tailwind for us in 2027.

Thank you. And actually just, you know, 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 three years? Just help us understand, you know, the cadence into next year. It sounds like, again, some of that is just inefficiencies in timing, but if Refuse is also seeing kind of good uplift and 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?

You said it, inefficiencies in utilities and timing of bookings in ESG. You may remember that we had initially assumed at the start of the year that there would be some tailwinds coming in terms of pre-buys because of the change in engine regulations in 2027. A lot of that is now grandfathered well into 2027, so some of those pre-buys 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. 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, and that's what is driving the guide.

Understood, thank you.

Your next question comes from the line of Mick Dobre with Baird. Your line is open, please go ahead.

Yes, good morning everyone. 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 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? Is it more evenly spread, or are there a couple of segments that are really bearing the brunt of this?

Hey, Mike. Good morning. This is Jen. So, yes, our Q3 performance come in largely in line with our expectation. Very strong performance. Three of our four 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 meet teens. So that explains for about 50% of the volume changes from the segment mix. and then another 25% that's driven by higher rate, like I mentioned earlier to Angel, that we have incurred in Q3 and we expect that to continue into Q4. That's the 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 in Lamar. from our Q4 guidance, just because of the divestiture announcement that we made on my earlier part. So those are the three big drivers.

That was really helpful. Thank you for that. 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?

Yeah, so, and thank you, Mick, for asking the question. You know, I'm very pleased with the operational and the 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 say we will through all our strategic portfolio transformation that started with the ESG acquisitions and then the RAF merger, pruning our business, including the Cleanside Bachelor that we did late last year and now with Capacity and Lamar. 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 about making sure that we have a very strong balance sheet. And then the second half of the year is then to make sure that we return the value to the shareholders, which is what we are exactly doing. While we're 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.

All right. Appreciate it. Thank you. Thanks, Meg.

Your next question comes from the line of Jamie Cook with Truist Securities. Your line is open. Please go ahead.

Hi, good morning. 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... Thanks for the question, Jamie. So on SV, I'm very pleased with the

The bookings, bookings coming in strong, you know, backlog actually going up again a little bit sequentially and SB is still very much all about trying to bring lead times down for us. So that's why we're tactically expanding capacity in two locations in Brennan, 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 Thank you very much. Thank you very much. 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 I'm 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.

Thank you. I appreciate the call.

Thanks, Jamie.

Your next question comes from the line of David Rosso with Evercore ISI. Your line is open. Please go ahead.

Hi, thank you very much. 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. 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. I'm just trying to figure out, is that a signal a little bit of, you know, use of the net proceeds? I mean, this kind of number feels like it's almost 50-50 debt versus a repo. 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.

So I'll take the first. Jen, you want to take the second question on the share repurchases? So yeah, on the genie, on the aerials process, yeah, 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, and many others. 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. So I'm going to pass on that particular question.

And David, I think your two follow-up questions is on the cop-out work. I'm very pleased to say that we have done a lot of the work up front in the, I would call it the last nine months. As you know, the Aries business has been with, as part of Terex for a while, and the legal entity that we are untangling, we have done a lot of that 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 cost of business. We have deployed $72 million to share repurchase in Q3. We expect that share repurchase will remain part of our disciplined capital allocation framework, and we will continue to opportunistically repurchase share that's with or without the aerosol. So I wouldn't say you want to read too much into it.

All right, that's helpful. Thank you very much.

You're welcome.

Thanks, David.

Your next question comes from the line of Mike Schliske with DA Davidson. Your line is open. Please go ahead.

Hey, good morning. I was under the impression that you weren't going to be doing much to researchers until you got the aerials deal done, but you did. just divest capacity and lay more 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?

Hey, Mike, good morning. Thanks for the question. Yeah, we are at the tail end of the The integration of our new SP segment, which required a lot of work. We're obviously also in active discussions around our aerial segment. So we have kind of a full slate at the moment. Now, the capacity in L.A. Mar 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 two main large work streams that I called out just now. But yeah, we will always look for opportunities to continue to optimize and we are committed to our strategic objective of building a highly synergistic, you know, high-mix, low-volume portfolio. And so we'll always be looking for opportunities to further improve. Okay, great.

And then my follow-up was, Jen, you called out those two businesses, Capacity and Laymore, as part of the reasons for the deep end-to-out reduction for the full year, mostly in the fourth quarter, of course. I never thought those were that big of businesses that didn't generate that much. So could you just help us figure out for our modeling for 2027, whether there's a pretty decent sized number or halfway, you know, important number we should be taking out of our models for 2027 for those businesses and whatever cash you received, you know, will just be plowed right back into the into the share buyback here in the fourth quarter.

Yeah. Hey, Mike, you know, I think you're familiar with the capacity and laymore businesses overall, you know, and an analyzed basis through cycles anywhere between 125 to 150 million of top line revenue and we have always said that is 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 Thanks so much. You're welcome. Your next question comes from the line of Kyle Menges with Citigroup. Your line is open. Please go ahead. Thank you.

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

Hey, Kyle. Kyle, did you say SV, specialty vehicles?

I guess fire and emergency.

Okay, thank you. I wasn't sure. Because we cover municipalities with multiple segments, I just wanted to make sure I heard you clearly. Yeah. As I said earlier, we're very pleased with 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 yeah, 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.

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?

Yeah, 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. Yeah, 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.

Thank you. Your next question comes from the line of Jerry Revich with Wells Fargo. Your line is open. Please go ahead.

The margin execution and the orders have both been, I think, well ahead of plan this year. And, you know, when you folks made the acquisition based on the pipeline, you spoke about multi-year margin improvement opportunity in the business. And so obviously we'll hear more about 27 in about three 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 that performance to date?

Thanks for the question, Jerry. I need to give the team a lot of credit here because Legacy Red 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. Now, having said that, there's 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 segment today. And they're doing a great job in terms of execution. We do expect knowing there's 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. Okay, super.

And then can I ask in environmental solutions, obviously a transition year for utilities and, you know, a lumpy production in Heil. As we think about the margin opportunity, you know, 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're talking about this year potentially lingering into next year.

Yeah, 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 two reasons. First of all, bookings are picking up in the 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, 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 Thank you for joining us. A business that does high teams EBITDA margin and then, you know, 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.

Thank you, Sean.

Your next question comes from the line of Stephen Volkman with Jefferies. Your line is open. Please go ahead.

Good morning, guys. 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 exactly these headwinds to margin go away. You want to take that, Jen?

Yeah. Hey, Steve. This is Jen. 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, you know, the ramp-up and the units in a new facility that historically

Yeah, 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, you know, how we can manage absorption in our probably most competitive plant in our network, which is the ESG facility, 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.

Great. Thanks. That's helpful. And then you had mentioned earlier, I think, that you had expected some pre-buy 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 non-compliance 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.

So we don't see a major impact because first of all most of that is just We don't take the title on those chassis. 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 you know in Q2 we were assuming that there were going to be some pre-buys in the second half and we don't see those pre-buys now happening we see more of a back to a 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 kind of have have kind of been rationalized and are back up at normal utilization. So we now see the path cleared for more normal sequential growth in ESG. It's still an essential service. So America hasn't started producing less waste. I mean, that's still a very consistent growth pattern. It's more like how the fleet has been flexing based on supply and demand, purely on vehicle manufacturing. But Yeah, back to the engine regulations. The engines have been, some of the engines have been 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.

Great, I appreciate it. Thank you.

Your next question comes from the line of Tammy Zacharia with JP Morgan. Your line is open. Please go ahead.

Hey, good morning. Thank you so much. 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.

Good morning, Tammy. Thanks for the question. Yeah, it's the latter of what you said. Cassies are bought by our customers.

Understood. That's very helpful. And then I wanted to clarify, given all the comments on Thank you very much.

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 Thank you. You're welcome.

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.

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