Terex Corporation (TEX) Cash Flow Statement

The 2026Q3 conversion ratio is elevated because a $195.0M working capital inflow lifted operating cash flow well above reported profit. The prior quarter shows the reverse, with negative operating cash flow of -$31.0M against a -$89.0M net loss in 2026Q1, suggesting conversion has been dominated by timing swings. Investors should monitor whether the ratio normalizes toward 1.0x once working capital movements stabilize.

The swing from negative to strongly positive free cash flow is large enough that a single quarter cannot establish a trend. The 2025Q4 FCF of $171.0M also relied heavily on a $154.0M working capital inflow, which suggests a meaningful share of recent free cash flow may be non-recurring in nature. Further quarters of cash generation excluding working capital release would be needed to assess underlying FCF capacity.

Large alternating inflows and outflows in working capital indicate the company's cash results depend heavily on the timing of collections, inventory, and payables rather than on steady operating performance. The 2024Q4 inflow of $158.0M followed by the 2025Q1 outflow of -$94.0M reinforces this pattern. This volatility warrants further investigation into receivables and inventory cycles before treating recent cash generation as sustainable.

Capex intensity at these levels is modest for an industrial manufacturer, which leaves a larger share of operating cash available for distribution or debt reduction. Depreciation and amortization of roughly $77.0M to $86.0M per quarter in 2025 and 2026 exceeds capex in most periods, which may suggest the asset base is being maintained at or below replacement cost. Investors should verify whether this understates required reinvestment over a full cycle.

The scale of acquisition spending suggests management has prioritized inorganic growth over shareholder distributions during this period. Dividend and buyback payments are modest, indicating limited direct cash return to equity holders. Whether these acquisitions generate returns above the cost of capital cannot be determined from the cash flow data alone and warrants further investigation.