What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-10-28 · 92 added, 284 removed, 507 unchanged (43% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales $ 1,235.7 $ 1,002.5

6 unchanged sentences

Interest expense ( 14.9 ) ( 10.6 )

Loss on early extinguishment of debt — — ( 0.1 ) ( 27.7 )

Other income (expense) – net ( 1.6 ) ( 0.3 )

20 unchanged sentences

(in millions, except par value)

September 30,

2023 December 31,

1 unchanged sentence

Cash and cash equivalents $ 254.2 $ 304.1

Trade receivables (net of allowance of $ 9.0 and $ 9.7 at September 30, 2022 and December 31, 2021, respectively)

Trade receivables (net of allowance of $ 10.1 and $ 9.4 at March 31, 2023 and December 31, 2022, respectively)

Inventories 1,083.2 988.4

11 unchanged sentences

Trade accounts payable 686.7 624.6

Accrued freight 47.3 36.2

Other current liabilities 361.7 372.1

7 unchanged sentences

Common stock, $ 0.01 par value – authorized 300.0 shares;

issued 84.0 and 83.4 shares at September 30, 2022 and December 31, 2021, respectively

issued 84.6 and 84.0 shares at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 868.9 881.6

1 unchanged sentence

Accumulated other comprehensive income (loss) ( 315.3 ) ( 341.6 )

Less cost of shares of common stock in treasury – 17.1 and 14.2 shares at September 30, 2022 and December 31, 2021, respectively

Less cost of shares of common stock in treasury – 17.3 and 17.2 shares at March 31, 2023 and December 31, 2022, respectively

( 562.8 ) ( 560.3 )

24 unchanged sentences

67.3 $ 0.9 $ 868.9 $ 1,302.9 $ ( 315.3 ) $ ( 562.8 ) $ 1,294.6

Net income (loss) — — — 74.1 — — 74.1

Other comprehensive income (loss) – net of tax — — — — ( 72.4 ) — ( 72.4 )

Issuance of common stock related to compensation 0.1 — 1.8 — — — 1.8

Compensation under stock-based plans – net ( 0.1 ) — 4.3 — — 0.1 4.4

Dividends — — 0.2 ( 9.1 ) — — ( 8.9 )

Acquisition of treasury stock ( 1.9 ) — — — — ( 64.3 ) ( 64.3 )

Other — — — 0.1 — — 0.1

Balance at June 30, 2022

67.4 $ 0.9 $ 867.0 $ 1,044.6 $ ( 320.9 ) $ ( 542.7 ) $ 1,048.9

Net income (loss) — — — 81.8 — — 81.8

Other comprehensive income (loss) – net of tax — — — — ( 80.4 ) — ( 80.4 )

Issuance of common stock — — 0.4 — — — 0.4

Compensation under stock-based plans – net — — 6.4 — — — 6.4

Dividends — — 0.2 ( 9.0 ) — — ( 8.8 )

Acquisition of treasury stock ( 0.5 ) — — — — ( 13.6 ) ( 13.6 )

Balance at September 30, 2022

66.9 $ 0.9 $ 874.0 $ 1,117.4 $ ( 401.3 ) $ ( 556.3 ) $ 1,034.7

The accompanying notes are an integral part of these condensed consolidated financial statements .

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions)

Shares Common

15 unchanged sentences

Acquisition of treasury stock ( 0.5 ) — — — — ( 19.8 ) ( 19.8 )

Other — — — ( 0.2 ) — — ( 0.2 )

Balance at March 31, 2022

69.3 $ 0.9 $ 860.7 $ 979.5 $ ( 248.5 ) $ ( 478.5 ) $ 1,114.1

Net income (loss) — — — 73.9 — — 73.9

Other comprehensive income (loss) – net of tax — — — — 15.5 — 15.5

Issuance of common stock related to compensation — — 0.4 — — — 0.4

Compensation under stock-based plans – net — — 7.8 — — 0.1 7.9

Dividends — — 0.1 ( 8.5 ) — — ( 8.4 )

Acquisition of treasury stock — — — — — ( 1.4 ) ( 1.4 )

Other — — — ( 0.1 ) — — ( 0.1 )

Balance at June 30, 2021

69.2 $ 0.9 $ 844.0 $ 847.0 $ ( 200.0 ) $ ( 458.0 ) $ 1,033.9

Net income (loss) — — — 48.1 — — 48.1

Other comprehensive income (loss) – net of tax — — — — ( 29.3 ) — ( 29.3 )

Issuance of common stock — — 0.2 — — — 0.2

Compensation under stock-based plans – net — — 6.5 — — — 6.5

Dividends — — 0.1 ( 8.5 ) — — ( 8.4 )

Acquisition of treasury stock — — — — — ( 0.2 ) ( 0.2 )

Other — — — — — ( 0.1 ) ( 0.1 )

Balance at September 30, 2021

69.2 $ 0.9 $ 850.8 $ 886.6 $ ( 229.3 ) $ ( 458.3 ) $ 1,050.7

The accompanying notes are an integral part of these condensed consolidated financial statements .

2 unchanged sentences

(in millions)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities

2 unchanged sentences

Depreciation and amortization 12.1 11.7

Loss on early extinguishment of debt 0.1 27.7

Stock-based compensation expense 7.8 9.4

15 unchanged sentences

Proceeds from issuance of debt 118.8 65.0

Payment of debt extinguishment costs — ( 16.9 )

Share repurchases ( 3.3 ) ( 17.7 )

11 unchanged sentences

Basis of Presentation and Principles of Consolidation.

The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X.

9 unchanged sentences

Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022.

Cash and cash equivalents include $ 3.4 million and $ 3.7 million at September 30, 2022 and December 31, 2021, respectively, which were not immediately available for use.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023.

Cash and cash equivalents include $ 8.2 million and $ 3.5 million at March 31, 2023 and December 31, 2022, respectively, which were not immediately available for use.

These consist primarily of cash balances held in escrow to secure various obligations of the Company .

Recently Issued Accounting Standards to be Implemented.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met to ease an entity’s financial reporting burden as the market transitions from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The FASB further issued ASU 2021-01 in January 2021 to clarify the scope of Topic 848.

Subsequently, the FASB issued ASU 2021-01 to clarify the scope of Topic 848 and ASU 2022-06 to defer the sunset date of Topic 848.

The guidance was effective upon issuance and may be applied through December 31, 2024.

8 unchanged sentences

Provision for credit losses 0.7

Balance as of September 30, 2022

(1) Includes utilization of established reserves, net of recoveries and the impact of foreign exchange rate changes.

Balance as of March 31, 2023

The Company issues guarantees to financial institutions related to financing of equipment purchases by customers.

1 unchanged sentence

Reserves are recorded for expected loss over the contractual period of risk exposure.

See Note L – “Litigation and Contingencies” for additional information regarding guarantees issued to financial institutions.

See Note K – “Litigation and Contingencies” for additional information regarding guarantees issued to financial institutions.

Accrued Warranties .

15 unchanged sentences

Foreign exchange effect/other ( 0.2 )

Balance as of September 30, 2022

Balance as of March 31, 2023

Assets Held for Sale .

Long-lived assets expected to be sold or otherwise disposed of within one year are classified as assets held for sale and included in Other assets in the Consolidated Balance Sheet.

The Company classified a facility as an asset held for sale in its Aerial Work Platforms (“AWP”) segment with a carrying value of approximately $ 31 million at March 31, 2023 and December 31, 2022.

In April 2023, the Company completed the sale of the facility and expects to recognize a gain of approximately $ 2 million.

Fair Value Measurements.

Assets and liabilities measured at fair value on a recurring basis under the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosure” (“ASC 820”) include commodity swaps, cross currency swaps and foreign exchange contracts discussed in Note I – “Derivative Financial Instruments” and debt discussed in Note J – “Long-Term Obligations”.

Assets and liabilities measured at fair value on a recurring basis under the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosure” (“ASC 820”) include commodity swaps, cross currency swaps and foreign exchange contracts discussed in Note H – “Derivative Financial Instruments” and debt discussed in Note I – “Long-Term Obligations”.

These instruments are valued using observable market data for similar assets and liabilities or the present value of future cash payments and receipts.

10 unchanged sentences

The Company designs, builds and supports products used in construction, maintenance, manufacturing, energy, recycling, minerals and materials management applications.

Certain Terex products and solutions enable customers to reduce their environmental impact including electric and hybrid offerings that deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste.

Certain Terex products and solutions enable customers to reduce their impact on the environment including electric and hybrid offerings that deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste.

The Company’s products are manufactured in North America, Europe, Australia and Asia and sold worldwide.

Terex engages with customers through all stages of the product life cycle, from initial specification and financing to parts and service support.

Terex engages with customers through all stages of the product life cycle, from initial specification to parts and service support.

The Company identifies its operating segments according to how business activities are managed and evaluated, and has identified three operating segments:

Materials Processing (“MP”), Aerials and Utilities.

As Aerials and Utilities operating segments share similar economic characteristics, these operating segments are aggregated into one operating segment, Aerial Work Platforms (“AWP”).

As Aerials and Utilities operating segments share similar economic characteristics, these operating segments are aggregated into one operating segment, AWP, for the purpose of determining reportable segments.

The Company operates in two reportable segments:

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

MP $ 553.8 $ 452.7

7 unchanged sentences

Total $ 147.7 $ 74.5

September 30,

2023 December 31,

4 unchanged sentences

Total $ 3,281.2 $ 3,118.1

(1) Increase primarily due to higher inventory and fixed assets.

Sales between segments are generally priced to recover costs plus a reasonable markup for profit, which is eliminated in consolidation.

1 unchanged sentence

Three Months Ended

September 30, 2022

March 31, 2023

Three Months Ended

September 30, 2021

MP AWP Corporate and Other / Eliminations Total MP AWP Corporate and Other / Eliminations Total

Net sales by region

North America $ 189.9 $ 444.8 $ 7.4 $ 642.1 $ 159.8 $ 377.5 $ 8.3 $ 545.6

Western Europe 137.1 98.4 0.1 235.6 117.9 81.8 0.2 199.9

Asia-Pacific 95.0 65.9 0.5 161.4 95.5 80.5 0.5 176.5

Rest of World (1)

35.9 53.5 ( 8.0 ) 81.4 45.5 32.7 ( 6.4 ) 71.8

$ 457.9 $ 662.6 $ — $ 1,120.5 $ 418.7 $ 572.5 $ 2.6 $ 993.8

(1) Includes intercompany sales and eliminations.

(2) Total sales include $ 568.6 million and $ 490.3 million for the three months ended September 30, 2022 and 2021, respectively, attributable to the U.S., the Company’s country of domicile.

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

March 31, 2022

MP AWP Corporate and Other / Eliminations Total MP AWP Corporate and Other / Eliminations Total

7 unchanged sentences

(1) Includes intercompany sales and eliminations.

(2) Total sales include $ 1.6 billion and $ 1.4 billion for the nine months ended September 30, 2022 and 2021, respectively, attributable to the U.S., the Company’s country of domicile.

(2) Total sales include $ 628.8 million and $ 487.7 million for the three months ended March 31, 2023 and 2022, respectively, attributable to the U.S., the Company’s country of domicile.

The Company attributes sales to unaffiliated customers in different geographical areas based on the location of the customer.

1 unchanged sentence

Three Months Ended

September 30, 2022

March 31, 2023

Three Months Ended

September 30, 2021

MP AWP Corporate and Other / Eliminations Total MP AWP Corporate and Other / Eliminations Total

Net sales by product type

Aerial Work Platforms $ — $ 505.5 $ 0.3 $ 505.8 $ — $ 413.7 $ 0.2 $ 413.9

Materials Processing Equipment 277.3 — — 277.3 245.5 — — 245.5

Specialty Equipment 179.7 — 0.3 180.0 173.1 — 0.3 173.4

Utility Equipment — 116.7 — 116.7 — 94.0 — 94.0

0.9 40.4 ( 0.6 ) 40.7 0.1 64.8 2.1 67.0

Total $ 457.9 $ 662.6 $ — $ 1,120.5 $ 418.7 $ 572.5 $ 2.6 $ 993.8

(1) Includes other product types, intercompany sales and eliminations.

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

March 31, 2022

MP AWP Corporate and Other / Eliminations Total MP AWP Corporate and Other / Eliminations Total

8 unchanged sentences

NOTE C – INCOME TAXES

During the three months ended September 30, 2022, the Company recognized income tax expense of $ 25.6 million on income of $ 107.4 million, an effective tax rate of 23.8 %, as compared to income tax expense of $ 13.9 million on income of $ 61.4 million, an effective tax rate of 22.6 %, for the three months ended September 30, 2021.

The higher effective tax rate for the three months ended September 30, 2022 when compared with the three months ended September 30, 2021 is primarily due to higher tax related to the geographic distribution of income partially offset by lower U.S.

tax on foreign income.

During the nine months ended September 30, 2022, the Company recognized income tax expense of $ 52.6 million on income of $ 260.8 million, an effective tax rate of 20.2 %, as compared to income tax expense of $ 36.0 million on income of $ 195.5 million, an effective tax rate of 18.4 %, for the nine months ended September 30, 2021.

The higher effective tax rate for the nine months ended September 30, 2022 when compared with the nine months ended September 30, 2021 is primarily due to higher tax related to the geographic distribution of income and lower favorable discrete benefits partially offset by lower U.S.

tax on foreign income in the current year period.

As of September 30, 2022, the Company determined that it was appropriate to retain its valuation allowance on its German interest expense deferred tax asset.

However, it is reasonably possible that, in the near term, continuing improvement in operating performance and other positive evidence could change the Company’s assessment of the realizability of the German interest expense deferred tax asset resulting in the reversal of all, or part of, the related valuation allowance.

NOTE D – ACQUISITIONS

On April 22, 2022, the Company acquired a 100% ownership interest in Steelweld Fabrications Limited (“Steelweld”), a manufacturer of heavy fabrications based in Northern Ireland, to facilitate manufacturing of certain MP products.

Total cash consideration was approximately $ 6 million.

On July 29, 2022, the Company acquired a 100% ownership interest in ProAll International Mfg.

and ProAll UK Limited and related assets (“ProAll”), a manufacturer of volumetric mixers based in Canada, to expand the Company’s concrete product offering.

Total consideration, including estimated contingent consideration from earnout provisions, was approximately $ 39 million.

These transactions were recorded as business combinations using the acquisition method which requires measurement of identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.

Goodwill was calculated as the excess of the aggregate of the fair value of the consideration transferred over the fair value of the net assets recognized.

The results of operations associated with these businesses are consolidated within the MP segment in the Condensed Consolidated Financial Statements from the respective dates of acquisition.

See Note H – “Goodwill and Intangible Assets” for additional information regarding goodwill recognized as a result of these acquisitions.

NOTE E – EARNINGS PER SHARE

During the three months ended March 31, 2023, the Company recognized income tax expense of $ 23.3 million on income of $ 133.2 million, an effective tax rate of 17.5 %, as compared to income tax expense of $ 11.9 million on income of $ 64.2 million, an effective tax rate of 18.5 %, for the three months ended March 31, 2022.

The lower effective tax rate for the three months ended March 31, 2023 when compared with the three months ended March 31, 2022 is primarily due to reduced tax expense on permanent items partially offset by lower favorable discrete items.

NOTE D – EARNINGS PER SHARE

(in millions, except per share data) Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Income (loss) from continuing operations

1 unchanged sentence

Gain (loss) on disposition of discontinued operations – net of tax

— 0.6 ( 0.4 ) 2.6

Net income (loss) $ 112.6 $ 51.9

10 unchanged sentences

Restricted stock awards

0.6 1.1 0.8 1.1

Diluted weighted average shares outstanding 68.8 70.9

5 unchanged sentences

Non-vested restricted stock awards and restricted stock units (“Restricted Stock Awards”) granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share using the treasury stock method.

Weighted average Restricted Stock Awards of approximately 0.5 million and 0.1 million were outstanding during the three months ended September 30, 2022 and 2021, respectively, but were not included in the computation of diluted shares as the effect would be anti-dilutive or performance targets were not expected to be achieved for awards contingent upon performance.

Weighted average Restricted Stock Awards of approximately 0.6 million and 0.1 million were outstanding during the nine months ended September 30, 2022 and 2021, respectively, but were not included in the computation of diluted shares as the effect would be anti-dilutive or performance targets were not expected to be achieved for awards contingent upon performance.

NOTE F – INVENTORIES

Weighted average Restricted Stock Awards of approximately 0.1 million and 0.3 million were outstanding during the three months ended March 31, 2023 and 2022, respectively, but were not included in the computation of diluted shares as the effect would be anti-dilutive or performance targets were not expected to be achieved for awards contingent upon performance.

NOTE E – INVENTORIES

Inventories consist of the following (in millions):

September 30,

2023 December 31,

4 unchanged sentences

Inventories $ 1,083.2 $ 988.4

Work-in-process inventory includes approximately $ 63 million and $ 10 million of substantially completed inventory awaiting installation of final components at September 30, 2022 and December 31, 2021, respectively.

Reserves for lower of cost or net realizable value and excess and obsolete inventory were $ 55.6 million and $ 57.8 million at September 30, 2022 and December 31, 2021, respectively.

NOTE G – PROPERTY, PLANT AND EQUIPMENT

Work-in-process inventory includes approximately $ 48 million and $ 36 million of substantially completed inventory awaiting installation of final components at March 31, 2023 and December 31, 2022, respectively.

Reserves for lower of cost or net realizable value and excess and obsolete inventory were $ 64.4 million and $ 61.0 million at March 31, 2023 and December 31, 2022, respectively.

NOTE F – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment – net consist of the following (in millions):

September 30,

2023 December 31,

7 unchanged sentences

Property, plant and equipment – net $ 478.9 $ 465.6

NOTE H – GOODWILL AND INTANGIBLE ASSETS

NOTE G – GOODWILL AND INTANGIBLE ASSETS

An analysis of changes in the Company’s goodwill by business segment is as follows (in millions):

4 unchanged sentences

185.0 99.4 284.4

Acquisitions 21.9 — 21.9

Foreign exchange effect and other 2.5 0.3 2.8

Balance at September 30, 2022, gross

Balance at March 31, 2023, gross

210.7 138.3 349.0

Accumulated impairment ( 23.2 ) ( 38.6 ) ( 61.8 )

Balance at September 30, 2022, net

Balance at March 31, 2023, net

$ 187.5 $ 99.7 $ 287.2

During the nine months ended September 30, 2022, the Company recognized goodwill of $ 3.5 million in connection with the Steelweld acquisition and $ 18.4 million in connection with the ProAll acquisition.

The goodwill associated with these transactions was attributable primarily to the assembled workforce and expected synergies from the business combinations.

The goodwill was assigned to the MP segment and is not expected to be deductible for income tax purposes.

See Note D – “Acquisitions” for additional information regarding the acquisitions.

Intangible assets, net were comprised of the following (in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Weighted Average Life

8 unchanged sentences

$ 78.2 $ ( 61.4 ) $ 16.8 $ 77.9 $ ( 60.5 ) $ 17.4

During the nine months ended September 30, 2022, the Company recognized customer relationships of $ 0.6 million with an estimated useful life of three years in connection with the Steelweld acquisition and customer relationships of $ 3.2 million with an estimate useful life of nine years and trademarks of $ 3.7 million with an estimated useful life of ten years in connection with the ProAll acquisition.

See Note D – “Acquisitions” for additional information regarding the acquisitions.

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2023 2022

1 unchanged sentence

Estimated aggregate intangible asset amortization expense for each of the next five years is as follows (in millions):

NOTE I – DERIVATIVE FINANCIAL INSTRUMENTS

NOTE H – DERIVATIVE FINANCIAL INSTRUMENTS

The Company operates internationally, with manufacturing and sales facilities in various locations around the world.

7 unchanged sentences

Commodity Swaps

Derivatives designated as cash flow hedging instruments include commodity swaps with outstanding notional value of $ 18.6 million and $ 22.5 million at September 30, 2022 and December 31, 2021, respectively.

Commodity swaps outstanding at September 30, 2022 mature on or before August 31, 2024.

Derivatives designated as cash flow hedging instruments include commodity swaps with outstanding notional value of $ 27.8 million and $ 22.5 million at March 31, 2023 and December 31, 2022, respectively.

Commodity swaps outstanding at March 31, 2023 mature on or before November 30, 2024.

The Company uses commodity swaps to mitigate price risk for hot rolled coil steel.

3 unchanged sentences

Cross Currency Swaps

Derivatives designated as net investment hedging instruments include cross currency swaps with outstanding notional value of $ 29.4 million and $ 68.2 million at September 30, 2022 and December 31, 2021, respectively.

Derivatives designated as net investment hedging instruments include cross currency swaps with outstanding notional value of $ 121.7 million and $ 121.4 million at March 31, 2023 and December 31, 2022, respectively.

The Company uses these cross currency swaps to mitigate its exposure to changes in foreign currency exchange rates related to a net investment in a Euro-denominated functional currency subsidiary.

4 unchanged sentences

The Company enters into foreign exchange contracts to manage variability of future cash flows associated with changing currency exchange rates.

Foreign currency exchange contracts, whether designated or not designated as cash flow hedges, are used to mitigate exposure to changes in foreign currency exchange rates on recognized assets and liabilities.

Fair values of these contracts are derived using quoted forward foreign exchange prices to interpolate values of outstanding trades at the reporting date based on their maturities.

Foreign exchange contracts outstanding at September 30, 2022 mature on or before July 2023.

The Company had $ 8.6 million and $ 19.4 million notional value of foreign exchange contracts outstanding that were designated as cash flow hedging instruments at September 30, 2022 and December 31, 2021, respectively.

For effective hedging instruments, changes in the fair value of foreign exchange contracts are deferred in AOCI until the underlying hedged transactions settle.

Foreign exchange contracts outstanding at March 31, 2023 mature on or before February 2024.

The Company had $ 92.3 million and $ 7.8 million notional value of foreign exchange contracts outstanding that were designated as cash flow hedging instruments at March 31, 2023 and December 31, 2022, respectively.

For effective hedging instruments, changes in the fair value of foreign exchange contracts are deferred in AOCI until the hedged transactions affect earnings.

Gains or losses on foreign exchange contracts are reclassified to COGS in the Condensed Consolidated Statement of Comprehensive Income (Loss).

The Company had $ 241.6 million and $ 139.7 million notional value of foreign exchange contracts outstanding that were not designated as cash flow hedging instruments at September 30, 2022 and December 31, 2021, respectively.

The Company had $ 321.4 million and $ 241.1 million notional value of foreign exchange contracts outstanding that were not designated as cash flow hedging instruments at March 31, 2023 and December 31, 2022, respectively.

The majority of gains and losses recognized from foreign exchange contracts not designated as hedging instruments are offset by changes in the underlying exposures the contracts are intended to mitigate, resulting in no material net impact on earnings.

Changes in the fair value of these derivative financial instruments are recognized as gains or losses in COGS and Other income (expense) – net in the Condensed Consolidated Statement of Comprehensive Income (Loss).

Interest Rate Caps

In October 2021, the Company terminated all outstanding interest rate caps.

The Company used interest rate caps to mitigate its exposure to changes in interest rates related to variable rate debt.

Fair value of interest rate caps were based on the present value of future cash payments and receipts.

Changes in the fair value of interest rate caps were deferred in AOCI.

Gains or losses on interest rate caps were reclassified to Interest expense in the Condensed Consolidated Statement of Comprehensive Income (Loss) when the underlying hedged transactions occur.

The following table provides the location and fair value amounts of derivative instruments designated and not designated as hedging instruments that are reported in the Condensed Consolidated Balance Sheet (in millions):

September 30,

2023 December 31,

2 unchanged sentences

Foreign exchange contracts Other current assets $ — $ 1.2 $ — $ 1.7

Cross currency swaps - net investment hedge Other current assets 0.4 — — —

Commodity swaps Other current assets 2.2 — 0.3 —

Cross currency swaps - net investment hedge Other non-current assets 0.6 — — —

Foreign exchange contracts Other current liabilities ( 0.8 ) ( 0.4 ) ( 0.3 ) ( 2.0 )

8 unchanged sentences

Instrument Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2022 Income Statement Account Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2022

Foreign exchange contracts $ ( 0.2 ) $ ( 0.2 ) Cost of goods sold $ — $ 0.1

Commodity swaps ( 4.0 ) ( 10.9 ) Cost of goods sold ( 0.4 ) 6.9

Cross currency swaps - net investment hedge 2.4 6.1 Selling, general and administrative expenses — —

Total $ ( 1.8 ) $ ( 5.0 ) Total $ ( 0.4 ) $ 7.0

Gain (Loss) Recognized on Derivatives in OCI, net of tax Gain (Loss) Reclassified from AOCI into Income (Loss)

Instrument Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021 Income Statement Account Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

March 31, 2023 Three Months Ended

March 31, 2022 Income Statement Account Three Months Ended

March 31, 2023 Three Months Ended

March 31, 2022

Foreign exchange contracts $ ( 0.4 ) $ 0.1 Cost of goods sold $ — $ —

1 unchanged sentence

Cross currency swaps - net investment hedge ( 1.0 ) 0.7 Selling, general and administrative expenses — —

Interest rate caps 0.1 2.7 Interest expense ( 0.3 ) ( 0.9 )

Total $ 1.9 $ ( 1.0 ) Total $ ( 1.8 ) $ 5.0

3 unchanged sentences

Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2022 Three Months Ended

September 30, 2022 Nine Months Ended

September 30, 2022

Income Statement Accounts in which effects of cash flow hedges are recorded $ ( 883.4 ) $ ( 2,564.3 ) $ ( 13.5 ) $ ( 35.8 )

Gain (loss) reclassified from AOCI into Income (loss):

Foreign exchange contracts — 0.1 — —

Commodity swaps ( 0.4 ) 6.9 — —

Amount excluded from effectiveness testing recognized in Income (loss) based on amortization approach:

Cross currency swaps - net investment hedge — — — 0.3

Total $ ( 0.4 ) $ 7.0 $ — $ 0.3

Classification and amount of Gain (Loss) Recognized in Income (Loss)

Cost of goods sold Interest expense

Three Months Ended

September 30, 2021 Nine Months Ended September 30, 2021 Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

March 31, 2023 Three Months Ended

March 31, 2022 Three Months Ended

March 31, 2023 Three Months Ended

March 31, 2022

Income Statement Accounts in which effects of cash flow hedges are recorded $ ( 957.0 ) $ ( 816.7 ) $ ( 14.9 ) $ ( 10.6 )

Gain (loss) reclassified from AOCI into Income (loss):

Foreign exchange contracts — 0.1 — —

Commodity swaps ( 1.8 ) 5.0 — —

Interest rate caps — — ( 0.3 ) ( 0.9 )

Amount excluded from effectiveness testing recognized in Income (loss) based on amortization approach:

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Three Months Ended

September 30, Nine Months Ended

September 30,

Instrument Income Statement Account 2023 2022

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Total $ 0.7 $ ( 0.8 )

In the Condensed Consolidated Statement of Comprehensive Income (Loss), the Company records hedging activity related to commodity swaps, cross currency swaps, foreign exchange contracts and interest rate caps in the accounts for which the hedged items are recorded.

In the Condensed Consolidated Statement of Comprehensive Income (Loss), the Company records hedging activity related to commodity swaps, cross currency swaps and foreign exchange contracts in the accounts for which the hedged items are recorded.

On the Condensed Consolidated Statement of Cash Flows, the Company presents cash flows from hedging activities in the same manner as it records the underlying item being hedged.

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Management continues to monitor counterparty risk and believes the risk of incurring losses on derivative contracts related to credit risk is unlikely and any losses would be immaterial.

See Note M - “Stockholders’ Equity” for unrealized net gains (losses), net of tax, included in AOCI.

Within unrealized net gains (losses) included in AOCI as of September 30, 2022, it is estimated that approximately $ 2 million of losses are expected to be reclassified into earnings in the next twelve months.

NOTE J – LONG-TERM OBLIGATIONS

See Note L - “Stockholders’ Equity” for unrealized net gains (losses), net of tax, included in AOCI.

Within unrealized net gains (losses) included in AOCI as of March 31, 2023, it is estimated that approximately $ 1 million of losses are expected to be reclassified into earnings in the next twelve months.

NOTE I – LONG-TERM OBLIGATIONS

Credit Agreement

On January 31, 2017, the Company entered into a credit agreement with the lenders and issuing banks party thereto and Credit Suisse AG, Cayman Islands Branch (“CSAG”), as administrative agent and collateral agent, to provide the Company with a multi-currency revolving line of credit and senior secured term loans.

This was subsequently amended to include (i) a $ 600 million revolving line of credit (the “Revolver”) and (ii) senior secured term loans totaling $ 600 million with a maturity date of January 31, 2024 (the “Term Loans”).

On April 1, 2021, the Company entered into an amendment and restatement of the credit agreement (as amended and restated, the “Credit Agreement”) which included the following principal changes to the original credit agreement:

(i) extension of the term of the Revolver to expire on April 1, 2026, which maturity will spring forward to November 1, 2023 if the principal outstanding under the $ 400 million senior secured term loan (the “Original Term Loan”) is not repaid or its maturity date is not extended, (ii) reinstatement of financial covenants that were waived in 2020, (iii) decrease in the interest rate on the drawn Revolver by 25 basis points and (iv) certain other technical changes, including additional language regarding the potential cessation of LIBOR as a benchmark rate.

On March 7, 2019, the Company entered into an Incremental Assumption Agreement and Amendment No.

3 (“Amendment No.

3”) to its credit agreement.

Amendment No.

3 provided the Company with an additional term loan (the “2019 Term Loan”) in the amount of $ 200 million.

The Company recorded a loss on early extinguishment of debt related to the amendment and restatement of the Credit Agreement of $ 2.4 million in the second quarter of 2021.

During the first quarter of 2021, the Company prepaid the 2019 Term Loan prior to its maturity date to reduce the Company’s outstanding debt and lower its leverage.

The Company recorded a loss on early extinguishment of debt related to prepayment of $ 2.1 million for accelerated amortization of debt acquisition costs and original issue discount.

The 2019 Term Loan bore interest at a rate of LIBOR plus 2.75 % with a 0.75 % LIBOR floor.

The Original Term Loan bears interest at a rate of LIBOR plus 2.00 % with a 0.75 % LIBOR floor.

During the second quarter of 2022 and 2021, the Company prepaid $ 23.0 million and $ 83.0 million, respectively, of the amount outstanding on the Original Term Loan prior to its maturity date to reduce the Company’s outstanding debt.

During the second quarter of 2022 and 2021, the Company recorded a loss on early extinguishment of debt related to prepayment of $ 0.1 million and $ 0.7 million, respectively, for accelerated amortization of debt acquisition costs and original issue discount.

(i) extension of the term of the Revolver to expire on April 1, 2026, (ii) reinstatement of financial covenants that were waived in 2020, (iii) decrease in the interest rate on the drawn Revolver by 25 basis points and (iv) certain other technical changes, including additional language regarding the potential cessation of LIBOR as a benchmark rate.

In 2019, the Company entered into an Incremental Assumption Agreement and Amendment to its credit agreement that provided the Company with an additional term loan (the “2019 Term Loan”) in the amount of $ 200 million.

The Company prepaid the 2019 Term Loan during 2021 and the $ 400 million senior secured term loan during 2022 prior to their maturity date to reduce the Company’s outstanding debt and lower its leverage.

Unlimited incremental commitments may be extended at the option of the existing or new lenders and can be in the form of revolving credit commitments, term loan commitments, or a combination of both, with incremental amounts in excess of $ 300 million as long as the Company satisfies the maximum permitted level of senior secured leverage as defined in the Credit Agreement.

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The Credit Agreement also contains customary default provisions.

The Company was in compliance with all covenants contained in the Credit Agreement as of September 30, 2022.

As of September 30, 2022 and December 31, 2021, the Company had $ 54.9 million and $ 77.8 million, net of discount, respectively, in Term Loans outstanding under the Credit Agreement.

The weighted average interest rate on the Term Loans at September 30, 2022 and December 31, 2021 was 4.67 % and 2.75 %, respectively.

The Company had $ 173.7 million of revolving credit amounts outstanding as of September 30, 2022 and no revolving credit amounts outstanding as of December 31, 2021.

The weighted average interest rate on the revolving credit amounts at September 30, 2022 was 4.01 %.

The Company was in compliance with all covenants contained in the Credit Agreement as of March 31, 2023.

The Company had $ 177.0 million of Revolver amounts outstanding at March 31, 2023 and December 31, 2022.

The weighted average interest rate on the Revolver amounts was 6.52 % and 6.10% at March 31, 2023 and December 31, 2022, respectively.

The Company obtains letters of credit that generally serve as collateral for certain liabilities included in the Condensed Consolidated Balance Sheet and guaranteeing the Company’s performance under contracts.

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Letters of credit outstanding (in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

$400 Million Facility $ — $ —

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Total $ 123.1 $ 118.4

Furthermore, the Company and certain of its subsidiaries agreed to take certain actions to secure borrowings under the Credit Agreement.

As a result, Terex and certain of its subsidiaries entered into a Guarantee and Collateral Agreement with CSAG, as collateral agent for the lenders, granting security and guarantees to the lenders for amounts borrowed under the Credit Agreement.

On January 31, 2017, the Company entered into a Guarantee and Collateral Agreement with CSAG, as collateral agent for the lenders, granting security and guarantees to the lenders for amounts borrowed under the Credit Agreement.

Pursuant to the Guarantee and Collateral Agreement, Terex is required to (a) pledge as collateral the capital stock of the Company’s material domestic subsidiaries and 65 % of the capital stock of certain of the Company’s material foreign subsidiaries and (b) provide a first priority security interest in substantially all of the Company’s domestic assets.

5-5/8% Senior Notes

On January 31, 2017, the Company sold and issued $ 600.0 million aggregate principal amount of Senior Notes Due 2025 (“5-5/8% Notes”) at par in a private offering.

The 5-5/8% Notes were jointly and severally guaranteed by certain of the Company’s domestic subsidiaries.

On March 15, 2021, the Company delivered a notice for the conditional redemption of all of its outstanding 5-5/8% Notes.

On April 5, 2021, the Company redeemed the 5-5/8% Notes in full for $ 622.9 million, including redemption premiums of $ 16.9 million and accrued but unpaid interest of $ 6.0 million.

The Company recorded a loss on early extinguishment of debt related to the redemption of the 5-5/8% Notes of $ 22.5 million in the second quarter of 2021.

On December 29, 2022, the Company entered into an amendment to the Guarantee and Collateral Agreement which included the following principal changes to the original agreement:

(i) enabling a subsidiary to enter into hedging derivatives with external counterparties and (ii) inclusion of Terex subsidiary entities’ cash management services provided by lending banks to be secured under the guarantee and collateral agreement.

5% Senior Notes

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The proceeds from the 5 % Notes, together with cash on hand, was used:

(i) to fund redemption and discharge of the 5-5/8% Notes and (ii) to pay related premiums, fees, discounts and expenses.

(i) to fund redemption and discharge of 5-5/8% Senior Notes and (ii) to pay related premiums, fees, discounts and expenses.

The 5 % Notes are jointly and severally guaranteed by certain of the Company’s domestic subsidiaries.

Fair Value of Debt

The Company estimates the fair values of its debt set forth below as of September 30, 2022, as follows (in millions, except for quotes):

The Company estimates the fair value of its debt set forth below as of March 31, 2023, as follows (in millions, except for quotes):

Book Value Quote Fair Value

5% Notes $ 600.0 0.92750 $ 556.5

Original Term Loan (net of discount) $ 54.9 0.99500 $ 54.6

The fair value of debt reported in the table above is based on adjusted price quotations on the debt instruments in an active market.

The fair value of debt reported in the table above is based on adjusted price quotations on the debt instruments in an inactive market.

The Company believes that the carrying value of its other borrowings, including amounts outstanding, if any, for the revolving credit line under the Credit Agreement, approximate fair market value based on maturities for debt of similar terms.

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See Note A – “Basis of Presentation” for an explanation of ASC 820 hierarchy.

NOTE K – RETIREMENT PLANS AND OTHER BENEFITS

NOTE J – RETIREMENT PLANS AND OTHER BENEFITS

The Company maintains defined benefit plans in France, Germany, India, Switzerland and the United Kingdom for some of its subsidiaries, as well as a nonqualified Supplemental Executive Retirement Plan in the U.S.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Pension Non-U.S.

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Pension Non-U.S.

Pension Other U.S.

Pension Non-U.S.

Pension Other U.S.

Pension Non-U.S.

Pension Other

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The Service cost component is included in the same line item or items as other compensation costs arising from services rendered by pertinent employees during the period.

NOTE L – LITIGATION AND CONTINGENCIES

The Company is involved in various legal proceedings, including product liability, general liability, workers’ compensation liability, employment, commercial and intellectual property litigation, which have arisen in the normal course of operations.

NOTE K – LITIGATION AND CONTINGENCIES

The Company is involved in various legal proceedings, including product liability, general liability, workers’ compensation liability, employment, commercial, intellectual property and tax litigation, which have arisen in the normal course of operations.

The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable risks required by law or contract, with retained liability or deductibles.

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TLA challenged the claim of Sao Paulo and learned in October 2019 that the Sao Paulo claim has survived the administrative tribunal process.

TLA anticipates that it will receive notice for an amount due from Sao Paulo and expects to protest the Sao Paulo claim in litigation.

While the Company believes the position of the state of Sao Paulo is without merit and continues to vigorously oppose it, no assurance can be given as to the final resolution of the ICMS litigation or that TLA will not ultimately be required to pay ICMS and interest to the state of Sao Paulo.

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however, it cannot be reasonably estimated due to limited availability of the unique facts and circumstances of each arrangement, such as whether changes have been made to the structure of the contractual obligation between the funder and customer.

For credit guarantees outstanding as of September 30, 2022 and December 31, 2021, the maximum exposure determined was $ 120.7 million and $ 143.5 million, respectively.

For credit guarantees outstanding as of March 31, 2023 and December 31, 2022, the maximum exposure determined was $ 115.0 million and $ 121.4 million, respectively.

Terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years .

The allowance for credit losses on credit guarantees was $ 7.3 million and $ 6.3 million at September 30, 2022 and December 31, 2021, respectively.

The allowance for credit losses on credit guarantees was $ 6.0 million and $ 6.3 million at March 31, 2023 and December 31, 2022, respectively.

There can be no assurance that historical experience in used equipment markets will be indicative of future results.

The Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in used equipment markets at the time of loss.

NOTE M – STOCKHOLDERS’ EQUITY

NOTE L – STOCKHOLDERS’ EQUITY

Changes in Accumulated Other Comprehensive Income (Loss)

The table below presents changes in AOCI by component for the three and nine months ended September 30, 2022 and 2021.

The table below presents changes in AOCI by component for the three months ended March 31, 2023 and 2022.

All amounts are net of tax (in millions).

Three Months Ended

September 30, 2022 Three Months Ended

September 30, 2021

March 31, 2023 Three Months Ended

March 31, 2022

CTA Derivative Hedging Adj.

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$ ( 261.1 ) $ ( 4.5 ) $ ( 3.0 ) $ ( 46.7 ) $ ( 315.3 ) $ ( 206.9 ) $ 3.0 $ ( 1.7 ) $ ( 42.9 ) $ ( 248.5 )

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

CTA Derivative Hedging Adj.

Debt & Equity Securities Adj.

Pension Liability Adj.

Total CTA Derivative Hedging Adj.

Debt & Equity Securities Adj.

Pension Liability Adj.

Beginning balance $ ( 188.0 ) $ 4.0 $ — $ ( 44.5 ) $ ( 228.5 ) $ ( 145.2 ) $ ( 6.0 ) $ 1.2 $ ( 58.4 ) $ ( 208.4 )

Other comprehensive income (loss) before reclassifications

( 171.3 ) 0.5 ( 3.9 ) 6.8 ( 167.9 ) ( 38.5 ) 21.6 ( 0.8 ) 1.1 ( 16.6 )

Amounts reclassified from AOCI

( 0.4 ) ( 5.5 ) — 1.0 ( 4.9 ) — ( 5.8 ) — 1.5 ( 4.3 )

Net other comprehensive income (loss)

( 171.7 ) ( 5.0 ) ( 3.9 ) 7.8 ( 172.8 ) ( 38.5 ) 15.8 ( 0.8 ) 2.6 ( 20.9 )

Ending balance $ ( 359.7 ) $ ( 1.0 ) $ ( 3.9 ) $ ( 36.7 ) $ ( 401.3 ) $ ( 183.7 ) $ 9.8 $ 0.4 $ ( 55.8 ) $ ( 229.3 )

Stock-Based Compensation

During the nine months ended September 30, 2022, the Company awarded 0.7 million shares of Restricted Stock Awards to its employees with a weighted average grant date fair value of $ 40.33 per share.

During the three months ended March 31, 2023, the Company awarded 0.6 million shares of Restricted Stock Awards to its employees with a weighted average fair value of $ 59.59 per share.

Approximately 60 % of these awards are time-based and vest ratably on each of the first three anniversary dates of the grants.

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Approximately 13 % cliff vest and are based on performance targets containing a market condition determined over a three-year period.

Fair value of Restricted Stock Awards is based on the market price at the date of grant approval except for awards based on a market condition.

The Company used the Monte Carlo method to determine grant date fair value of $ 44.25 per share for awards with a market condition granted on March 17, 2022.

Fair value of time-based awards is based on the market price of our common stock at the date of grant approval.

The fair value of performance-based awards, except for awards based on a market condition, is based on the market price of our common stock at the date of grant approval, except fair values are multiplied by the probability of achievement as of the period-end date.

For awards based on a market condition, fair value is based on the Monte Carlo method at grant date.

The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award.

The following table presents the weighted-average assumptions used in the valuation:

The Company used the Monte Carlo method to determine grant date fair value of $ 63.33 per share for awards with a market condition granted on March 15, 2023.

The following table presents the weighted-average assumptions used in the valuations:

March 15, 2023

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In July 2018, Terex’s Board of Directors authorized the repurchase up to $ 300 million of the Company’s outstanding shares of common stock.

The table below presents shares repurchased, inclusive of transactions executed but not settled, by the Company under this program.

Nine Months Ended

September 30 Total Number of

In December 2022, Terex’s Board of Directors authorized the additional repurchase up to $ 150 million of the Company’s outstanding shares of common stock.

The table below presents shares repurchased, inclusive of transactions executed but not settled, by the Company under these programs.

Three Months Ended

Total Number of

Shares Repurchased Amount of Shares Repurchased

2 unchanged sentences

The table below presents dividends declared by Terex’s Board of Directors and paid to the Company’s shareholders:

Year First Quarter Second Quarter Third Quarter

2022 $ 0.13 $ 0.13 $ 0.13

2021 $ 0.12 $ 0.12 $ 0.12

In October 2022, Terex’s Board of Directors declared a dividend of $ 0.13 per share, which will be paid on December 19, 2022 to the Company’s shareholders of record as of November 10, 2022.

Year First Quarter

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements