What changed in this filing

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Item 1A. Risk Factors

2024-10-30 compared with 2024-07-31 · 36 added, 16 removed, 25 unchanged (68% of the section changed)

The risk factors entitled “We may be unable to successfully integrate acquired businesses, including the recently announced agreement to purchase Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the recently announced agreement to purchase ESG.” updates and replaces the risk factor entitled “We may face limitations on our ability to integrate acquired businesses.” We have also updated the risk factor entitled “We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.” There have been no other material changes in our risk factors previously disclosed in Part I, Item 1A.

The risk factors entitled “We may be unable to successfully integrate acquired businesses, including Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the acquisition of ESG.

Our results of operations going forward may differ materially from any pro forma financial data provided.” updates and replaces the prior risk factors entitled “We may face limitations on our ability to integrate acquired businesses.” We have also updated the risk factors entitled “Our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve.” and “We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.” There have been no other material changes in our risk factors previously disclosed in Part I, Item 1A.

– “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023.

We may be unable to successfully integrate acquired businesses, including the recently announced agreement to purchase Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the recently announced agreement to purchase ESG.

We may be unable to successfully integrate acquired businesses, including Dover Corporation’s Environmental Solutions Group (“ESG”).

We may not realize the anticipated benefits of such acquisitions, including the acquisition of ESG.

Our results of operations going forward may differ materially from any pro forma financial data provided.

From time to time, we engage in strategic transactions involving risks, including the possible failure to successfully integrate and realize the expected benefits of such transactions.

We have consummated many acquisitions in the past and anticipate making additional acquisitions in the future.

On July 21, 2024, we entered into a transaction with Dover Corporation to acquire its ESG business for $2 billion.

Our ability to realize the anticipated benefits of the purchase, including the expected combination benefits, will depend, to a large extent, on our ability to integrate the businesses of both companies.

In addition, the consummation of the acquisition is not assured and is subject to certain conditions, including regulatory clearance and other customary closing conditions.

On October 8, 2024, we acquired ESG for $2 billion.

Our ability to realize the anticipated benefits of the acquisition, including the expected tax benefits and synergies, will depend, to a large extent, on our ability to integrate the businesses of both companies.

The management of both companies will be required to devote significant attention and resources to the integration process, which may disrupt the business of either or both of the companies and, if implemented ineffectively, could preclude realization of the full benefits we expect.

9 unchanged sentences

The successful integration of any previously acquired or newly acquired business also requires us to implement effective internal control processes in these acquired businesses.

While we believe we have successfully integrated acquisitions to date, we cannot ensure that previously acquired or newly acquired companies will operate profitably, that the intended beneficial effect from these acquisitions will be realized and that we will not encounter difficulties in implementing effective internal control processes in these acquired businesses, particularly when the acquired business operates in foreign jurisdictions and/or was privately owned.

While we believe we have successfully integrated acquisitions to date, we cannot ensure that previously acquired or newly acquired companies, including ESG, will operate profitably, that the intended beneficial effect from these acquisitions will be realized and that we will not encounter difficulties in implementing effective internal control processes in these acquired businesses, particularly when the acquired business operates in foreign jurisdictions and/or was privately owned.

See the risk factor disclosed in Part I, Item 1A.

– “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 entitled “We must comply with an injunction and related obligations resulting from the settlement of an SEC investigation” for additional consequences if we were to commit a violation of the reporting and internal control provisions of the federal securities laws.

While our evaluation of any potential transaction includes business, legal, compliance and financial due diligence with the goal of identifying and evaluating the material risks involved, these due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks of a particular

acquisition or costs associated with any quality issues with an acquisition target's products or services.

In addition, to the extent that we seek or make acquisitions in machinery and industrial businesses that are significantly different from our existing operations, there will be added risks and challenges for managing and integrating these businesses.

addition, to the extent that we seek or make acquisitions in machinery and industrial businesses that are significantly different from our existing operations, there will be added risks and challenges for managing and integrating these businesses.

Further, we may need to consolidate or restructure our acquired or existing facilities, which may require expenditures related to reductions in workforce and other charges resulting from the consolidations or restructurings, such as the write-down of inventory and lease termination costs.

3 unchanged sentences

We also may not realize the expected benefits of any newly acquired business, including expected synergies.

For instance, if we are unable to realize expected synergies from the recently announced agreement to purchase ESG, or the cost to achieve these synergies is greater than expected, then the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.

For instance, if we are unable to realize expected synergies from the ESG acquisition, or the cost to achieve these synergies is greater than expected, then the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.

Further, we may be unable to achieve or maintain our long-term net leverage targets which could result in an event of default under our outstanding debt obligations.

See Risk Factor entitled, “We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.”

Additionally, in connection with the ESG acquisition, any unaudited pro forma financial data that may be provided is not necessarily indicative of what our actual financial position or results of operations may be.

Any unaudited pro forma financial data will be derived from our audited and unaudited financial statements and ESG’s audited and unaudited financial statements, and will reflect certain assumptions and adjustments.

The assumptions used in preparing unaudited pro forma financial data may not prove to be accurate, and other factors may adversely affect our financial condition or results of operations.

Our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve.

Demand for our products is affected by the general strength of the economies in which we sell our products, customers’ perceptions concerning the timing of economic cycles, customers’ replacement or repair cycles, prevailing interest rates, residential and non-residential construction spending, government spending priorities, capital expenditure allocations of our customers, the timing of regulatory standard changes, oil and gas related activity and other factors.

The last several years have been marked by geopolitical instability, including the conflict between Russia and Ukraine as well as Israel and Hamas, social concerns, supply chain and freight constraints, pandemic, labor shortages and wage increases, high inflation, high interest rates, foreign currency exchange volatility, and continuing concerns of recessions, all of which have increased ongoing economic uncertainty and instability in the global markets.

This instability can make it extremely difficult for our customers, our suppliers and us to accurately forecast and plan future business activities.

Some of our customers also depend substantially on government funding of highway construction, maintenance and other infrastructure projects.

Policies of governments attempting to address local deficit or structural economic issues could have a material impact on our customers and markets.

There is an expectation of significant infrastructure and government spending, including in relation to the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act.

Any decrease or delay in government funding of highway construction and maintenance, other infrastructure projects and overall government spending could cause our revenues and profits to decrease.

Recent channel adjustments reflect macro uncertainty, high interest rates, election and geopolitical uncertainties, and shorter delivery lead times.

We cannot provide any assurance that there will not be continued, increased global economic weakness and recessions based on the above uncertainties or other factors.

If economic conditions in the U.S., Europe and other key markets weaken, we may experience further negative impacts to our net sales, financial condition, profitability and cash flows, which could result in the need for us to record impairments.

We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.

We entered into a (i) Commitment Letter with UBS in which UBS committed to provide Terex with an aggregate principal amount of up to $1,545 million and (ii) an Incremental Assumption and Amendment Agreement and Amendment to our Credit Agreement which establishes delayed draw term loan commitments in the amount of $455 million to be provided by UBS, in connection with the recently announced agreement to purchase ESG.

Our total long-term debt at June 30, 2024 was $ 662.2 million, which means that following the acquisition of ESG our debt levels will increase significantly.

On October 8, 2024, we entered into an Incremental Assumption, Borrowing Subsidiary Agreement and Amendment No.

2 to our credit agreement which (i) increased the size of our existing revolving credit facilities to $800 million and extended the maturity of our existing revolving credit facilities to expire on October 8, 2029, and (ii) provided for a new seven-year term loan facility in an aggregate principal amount of $1,250 million with a maturity date of October 8, 2031.

We also issued an additional $750 million of senior unsecured notes on October 8, 2024, which will mature in 2032.

Our total long-term debt at September 30, 2024 was $ 624 million;

following the acquisition of ESG our debt levels have now increased significantly.

Our ability to make required payments of principal and interest on our increased debt levels will depend on future performance of our combined businesses, which, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control.

In addition, both our current and our future credit agreement contain financial and restrictive covenants that may limit our ability to, among other things, borrow additional funds or take advantage of business opportunities.

In addition, our credit agreement contains financial and restrictive covenants that may limit our ability to, among other things, borrow additional funds or take advantage of business

opportunities.

While we are currently in compliance with the financial covenants, increases in our debt or decreases in our earnings could cause us to fail to comply with these financial covenants.

Our failure to comply with such covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all our indebtedness or otherwise have a material adverse effect on our financial position, results of operation and debt service capability.

Our increased level of debt and the financial and restrictive covenants contained in our current and future credit agreements could have important consequences on our financial position and results of operations, including increasing our vulnerability to increases in interest rates because debt under our current and future credit agreements bear interest at variable rates.

Our increased level of debt and the financial and restrictive covenants contained in our credit agreement could have important consequences on our financial position and results of operations, including increasing our vulnerability to increases in interest rates because debt under our credit agreement bears interest at variable rates.

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 1A. Risk Factors