Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $20.7 billion | Up 17% |
| Adjusted EPS | $7.20 | Up 45% |
| Adjusted Operating Margin | 20.6% | Up 310 basis points |
| Backlog | $78 million | Up 96% |
| Power and Energy Sales | $8.8 billion | Up 18% |
| Construction Industries Sales | $8 billion | Up 18% |
Guidance and outlook
- Full-year 2026 sales and revenues are expected to grow in the mid- to high teens.
- Full-year adjusted operating profit margin, excluding IEEPA tariff recoveries, is expected to be near the bottom of the target range.
- MP&E free cash flow is expected to be in the top half of the annual target range.
- Fourth quarter sales are expected to see moderate growth versus the prior year.
How management sounded
Positive (+6 on our -10 to +10 scale). Management delivered record sales and backlog while maintaining full-year guidance, though they noted capacity remains the primary constraint for growth. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Power Gen Backlog
Asked: Are you selling out capacity or leaving room for future orders?
Answer: Management noted they are taking orders into 2029 and 2030, but are ramping capacity as quickly as possible to meet customer needs.
Backlog Duration
Asked: Is the record backlog the new normal?
Answer: Management noted that 58% of the backlog is expected to be sold within the next 12 months, which is similar to the previous quarter.
Margin Targets
Asked: When will margins return to the mid-to-high end of the target range?
Answer: Management aims to work toward the midpoint of the range over the next couple of years as volume increases and capacity expansion costs are absorbed.
Q4 Revenue
Asked: Why is Q4 revenue growth modest despite capacity adds?
Answer: Management cited tough year-over-year comparisons and a $1.6 billion dealer inventory drawdown in Construction Industries.
What to watch before the next call
- Capacity expansion progress in Power and Energy, which remains the primary pacing factor for growth.
- The impact of the $1.6 billion dealer inventory drawdown in Construction Industries during the fourth quarter.
- Operational execution and ramp-up challenges in the Resource Industries segment.
