The quarter missed a market bar that was already subdued. Adjusted diluted EPS was $0.67 versus a published consensus of roughly $0.73, while revenue was $3.41 billion versus approximately $3.50 billion expected. The result also deteriorated year over year, with adjusted EPS down from $0.84 and parts-and-services organic revenue down 5.1% (Financial Highlights; Revenue Change Attributable to).
| Metric | Q2 2026 | Q2 2025 / expectation |
|---|---|---|
| Revenue | $3.408B (Income Statement) | $3.513B, down 3.0% (Income Statement) |
| Parts and services organic revenue | -5.1% (Revenue Change Attributable to) | — |
| Adjusted diluted EPS | $0.67 (Adjusted EPS reconciliation) | $0.84 prior year; ~$0.73 consensus |
| Segment EBITDA | $349M, 10.2% margin (Segment results) | $414M, 11.8% margin (Segment results) |
| Operating cash flow | $111M Q2; $55M six months (Cash Flow statement) | $296M Q2; $293M six months prior year |
| Free cash flow | $60M Q2; $(36)M six months (Cash Flow statement) | $243M Q2; $186M six months prior year |
Europe was the decisive shortfall, not a minor offset. European revenue fell 9.6% and segment EBITDA dropped 27.8%, reducing margin to 7.5% from 9.4% (Segment results — Europe). Management attributed the weakness to the German ERP implementation and lower UK and Benelux volumes; the filing explicitly says Europe fell short of expectations. North America returned to 0.5% growth and Specialty rose 5.0%, but their improvement was not enough to offset Europe’s earnings drag (Revenue Change Attributable to; Segment results).
The guidance cut is the larger signal than the quarterly miss. Full-year adjusted EPS was reduced to $2.60–$2.90 from $2.90–$3.20, organic parts-and-services growth shifted to negative 3.0% to negative 1.0% from negative 0.5% to positive 1.5%, and free-cash-flow guidance fell to $625–$775 million from $700–$850 million (2026 Updated Full Year Outlook). That reframes the European disruption as a longer recovery and lowers the earnings and cash-generation base the market had been using.
Operational improvement is real but currently overwhelmed by weaker profitability and cash conversion. North America’s return to positive organic growth and Specialty’s growth are constructive, but consolidated Segment EBITDA margin compressed 160 basis points to 10.2%, while six-month free cash flow turned negative at $36 million despite $4.0 billion of debt and 2.8x leverage (Segment results; Cash Flow statement; Financial Highlights). The active strategic review and unchanged $0.30 quarterly dividend add potential optionality, but neither changes the immediate earnings read because no transaction or timetable was announced (Strategic Review; Capital Allocation).
Read the original 8-K on SEC EDGAR ↗