TEREX CORP 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS DESCRIPTION Terex is a global industrial equipment manufacturer of materials processing machinery, waste and recycling solutions, mobile elevating work platforms (MEWPs), and equipment for the electric utility industry. We design, build, and support products used in maintenance, manufacturing, energy, minerals and materials management, construction, waste and recycling, and the entertainment industry. We provide lifecycle support to our customers through our global parts and services organization, and offer complementary digital solutions, designed to help our customers maximize their return on their investment. 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. Our products are manufactured in North America, Europe, and Asia Pacific and sold worldwide. We engage with customers through all stages of the product life cycle, from initial specification to parts and service support. We report our business in the following segments: (i) Materials Processing (“MP”) and (ii) Aerial Work Platforms (“AWP”). Further information about our reportable segments appears below and in Note B – “Business Segment Information” in the Notes to Condensed Consolidated Financial Statements. Non-GAAP Measures In this document, we refer to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Management believes that presenting these non-GAAP financial measures provide investors with additional analytical tools which are useful in evaluating our operating results and the ongoing performance of our underlying businesses because they (i) provide meaningful supplemental information regarding financial performance by excluding impact of one-time items and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results. We do not, nor do we suggest that investors consider, such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP measures also include translation effect of foreign currency exchange rate changes on net sales, gross profit, selling, general & administrative (“SG&A”) expenses and operating profit. As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating current period results using rates that the comparable prior periods were translated at to isolate the foreign exchange component of fluctuation from the operational component. We calculate a non-GAAP measure of free cash flow. We define free cash flow as Net cash provided by (used in) operating activities less Capital expenditures, net of proceeds from sale of capital assets. We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations. We discuss forward-looking information related to expected earnings per share (“EPS”) excluding the impact of potential future acquisitions (other than ESG), divestitures, restructuring and other unusual items. Our 2024 outlook for EPS is a non-GAAP financial measure because it excludes unusual items. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the exact timing and impact of such items. The unavailable information could have a significant impact on the Company’s full-year 2024 GAAP financial results. This forward-looking information provides guidance to investors about our EPS expectations excluding these unusual items that we do not believe are reflective of our ongoing operations. Working capital is calculated using the Condensed Consolidated Balance Sheet amounts for Receivables (net of allowance) plus Inventories, less Trade accounts payable and Customer advances. We view excessive working capital as an inefficient use of resources, and seek to minimize the level of investment without adversely impacting ongoing operations of the business. Trailing three months annualized net sales is calculated using net sales for the most recent quarter end multiplied by four. The 25 ratio calculated by dividing working capital by trailing three months annualized net sales is a non-GAAP measure we believe measures our resource use efficiency. Non-GAAP measures also include Net Operating Profit After Tax (“NOPAT”) and annualized effective tax rate as adjusted, which are used in the calculation of our after tax return on invested capital (“ROIC”) (collectively the “Non-GAAP Measures”), which are discussed in detail below. Overview Safety is a top priority, not only for our team members, but also our customers. All Terex team members contribute to our effort of continuing to provide products and services for our customers, while maintaining a safe working environment. We remain focused on executing our multi-year growth plan and continue to invest in new technologies and products across our businesses. Our strategic operational priorities of execution, innovation and growth continue to strengthen our operations and allow us to capitalize on the demand in our end-markets. The recently completed acquisition of Environmental Solutions Group ("ESG") strengthens our portfolio. ESG adds a non-cyclical, financially accretive, and market-leading business to our portfolio with tangible synergies in the fast-growing waste and recycling end market. Our operations teams adapted quickly to changing market conditions and continued to execute at a high level throughout the third quarter. Fixed cost management is an area where we have made improvements, for example shifting higher cost production to our Monterrey, Mexico facility. We will continue to focus on reducing fixed costs by leveraging technology, improving efficiency, and re-thinking operating norms where better approaches are available. We also continue to leverage technology internally, making investments in robotics, automation, and digitizing workstreams to make us more efficient and more flexible. This represents an important part of our roadmap to continuously become more competitive and more resilient regardless of market dynamics. We adapted quickly to in-quarter channel adjustments and executed at a high level throughout the third quarter. We saw more challenging macro dynamics as the trajectory of future interest rate cuts and the upcoming U.S. election are casting a shadow of uncertainty leading to more cautious decision-making. Although U.S. construction continues to grow, the rate of growth has slowed, and we are seeing local projects being deferred until investors have more clarity on the macro environment. Another important factor, particularly in aerials, is that lead times for new equipment have come down, largely back to pre-pandemic levels. This allows our rental customers to align their equipment delivery schedules more precisely with their requirements. In MP, we continue to see dealers re-balance inventory levels as more of their customers are renting their machines longer. When the machine is on rent it remains on the dealer’s balance sheet and limits their ability to order new machines. Our backlog of $1.6 billion remains above historical levels. Bookings reflect a return to more normal seasonality and we expect our backlog to normalize to pre-pandemic levels as our lead times have reduced due to global supply chain improvements. MP executed well in the quarter despite a challenging macro environment. For the third quarter, MP sales declined by 18% to $444 million compared to the third quarter of 2023, driven by channel adjustments and lower end-market demand in certain areas. MP delivered an operating margin of 12.6% for the quarter, down 440 basis points as compared to the prior year, which was driven by lower sales volume and unfavorable geographic and product mix. MP is continuing to take actions, including factory and other layoffs, reduced work schedules and other cost reduction initiatives. AWP’s third quarter 2024 net sales were up 2% compared to the prior year, however that was lower than we had previously anticipated due to delivery adjustments from our U.S. rental customers as our customers adjusted delivery schedules to align with fleet productivity and shorter equipment lead times. Our Utilities business benefits from grid modernization and hardening efforts across the U.S. AWP delivered operating margins of 10.8% for the quarter, down 160 basis points compared to the prior year, driven by unfavorable mix and higher freight costs. In the third quarter of 2024, our largest market remained North America, which represented approximately 67% of our global sales. As compared to the prior year, sales were up in North America and down in all other major geographies. We continued to execute our capital allocation strategy in the third quarter of 2024 as we made strategic investments in our businesses and we returned capital to shareholders. We continued to invest in our businesses with $29 million deployed for capital expenditures in the third quarter of 2024 to support business growth. We generated $88 million of free cash flow in the third quarter of 2024. Through September 30, 2024, we have returned $66 million to shareholders through share repurchases and dividends. We continued to maintain ample liquidity and as of September 30, 2024, we had $952 million in available liquidity, with no near-term debt maturities. See “Liquidity and Capital Resources” for a detailed description of liquidity and working capital levels, including the primary factors affecting such levels, as well as a reconciliation of net cash provided by (used in) operating activities to free cash flow. 26 In connection with the ESG acquisition, we up-sized and extended our revolver and obtained $2 billion of proceeds from long-term financing. See Note J – “Long-Term Obligations” for a detailed description of our financing terms. As a result of the changing market conditions and the recent ESG acquisition, we anticipate achieving an adjusted EPS for 2024 of $5.85 to $6.25 on sales of $5.0 to $5.2 billion. Our sales outlook incorporates the latest dialogue with our customers and our suppliers and our current supply chain expectations. It is important to realize we are operating in a challenging macroeconomic environment with many variables and geopolitical uncertainties, so results could change, negatively or positively. 27 ROIC ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Stockholders’ equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying Income (loss) from operations by one minus the annualized effective tax rate, as adjusted. Debt is calculated using amounts for Current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters’ NOPAT as this represents the most recent 12-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters’ ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital. In the calculation of ROIC, we adjust the annualized effective tax rate to reflect management’s expectation of the full-year effective tax rate and amortize the one-time tax benefit derived from recording of a deferred tax asset in relation to our Swiss operations in 2023 to create a measure that is more useful to understanding our operating results and the ongoing performance of our underlying business as shown in the tables below. Our management and Board of Directors (“Board”) use ROIC as one measure to assess operational performance, including in connection with certain compensation programs. We use ROIC as a metric because we believe it measures how effectively we invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive operational improvement. We believe ROIC measures return on the amount of capital invested in our businesses and is an accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents to Stockholders’ equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at September 30, 2024 was 23.7%. 28 Amounts described below are reported in millions of U.S. dollars, except for the annualized effective tax rate as adjusted. Amounts are as of and for the three months ended for the periods referenced in the tables below. Sep '24 Jun '24 Mar '24 Dec '23 Sep '23 Annualized effective tax rate as adjusted (1) 17.3 % 17.3 % 17.3 % 18.2 % Income (loss) from operations $ 122 $ 193 $ 158 $ 116 Multiplied by: 1 minus annualized effective tax rate 82.7 % 82.7 % 82.7 % 81.8 % Net operating income (loss) after tax $ 101 $ 160 $ 131 $ 95 Debt $ 628 $ 666 $ 724 $ 623 $ 709 Less: Cash and cash equivalents (352) (319) (365) (371) (352) Debt less Cash and cash equivalents 276 347 359 252 357 Stockholders’ equity 1,957 1,824 1,732 1,672 1,496 Debt less Cash and cash equivalents plus Stockholders’ equity $ 2,233 $ 2,171 $ 2,091 $ 1,924 $ 1,853 (1) The annualized effective tax rate for Dec ’23 period represents the adjusted full-year 2023 effective tax rate. September 30, 2024 ROIC 23.7 % NOPAT as adjusted (last 4 quarters) $ 487 Average Debt less Cash and cash equivalents plus Stockholders’ equity (5 quarters) $ 2,054 Nine Months Ended September 30, 2024 Income (loss) from continuing operations before income taxes (Provision for) benefit from income taxes Income tax rate Reconciliation of annualized effective tax rate: As reported $ 410 $ (73) 17.8 % Effect of adjustments: Tax related to full-year effective tax rate expectation — (5) Tax related to Swiss deferred tax asset — 7 As adjusted $ 410 $ (71) 17.3 % 29 RESULTS OF OPERATIONS Three Months Ended September 30, 2024 Compared with Three Months Ended September 30, 2023 Consolidated Three Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,212 — $ 1,290 — (6.0) % Gross profit 245 20.2 % 292 22.6 % (16.1) % SG&A expenses 123 10.1 % 129 10.0 % (4.7) % Income from operations 122 10.1 % 163 12.6 % (25.2) % Net sales for the three months ended September 30, 2024 decreased $78 million when compared to the same period in 2023, primarily due to lower end-market demand across most geographies, partially offset by healthy demand for telehandlers and utility products in North America. Gross profit for the three months ended September 30, 2024 decreased $47 million when compared to the same period in 2023, primarily due to the impact of lower sales volume and unfavorable mix as well as higher freight and severance costs. SG&A expenses for the three months ended September 30, 2024 decreased $6 million when compared to the same period in 2023, primarily due to lower compensation cost. Income from operations for the three months ended September 30, 2024 decreased $41 million when compared to the same period in 2023, primarily due to the impact of lower sales volume and unfavorable geographic and product mix as well as higher freight and severance costs, partially offset by lower SG&A expenses. Materials Processing Three Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 444 — $ 541 — (17.9) % Income from operations 56 12.6 % 92 17.0 % (39.1) % Net sales for the three months ended September 30, 2024 decreased $97 million when compared to the same period in 2023, primarily due to channel adjustments and lower end-market demand across certain product lines and geographies. Income from operations for the three months ended September 30, 2024 decreased $36 million when compared to the same period in 2023, primarily due to lower sales volume and unfavorable product and geographic mix as well as higher severance costs. 30 Aerial Work Platforms Three Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 769 — $ 751 — 2.4 % Income from operations 83 10.8 % 93 12.4 % (10.8) % Net sales for the three months ended September 30, 2024 increased $18 million when compared to the same period in 2023, primarily due to increased demand for telehandlers and utility products in North America, partially offset by lower demand for aerial work platforms as customers adjusted delivery schedules to align with fleet productivity and shorter equipment lead times. Income from operations for the three months ended September 30, 2024 decreased $10 million when compared to the same period in 2023, primarily due to unfavorable mix as well as higher freight and severance costs. Corporate and Other / Eliminations Three Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ (1) — $ (2) — * Loss from operations (17) * (22) * 22.7 % * Not a meaningful percentage Loss from operations for the three months ended September 30, 2024 decreased $5 million when compared to the same period in 2023. The decrease in operating loss is primarily due to lower compensation cost. Interest Expense, Net of Interest Income Interest expense, net of interest income, for the three months ended September 30, 2024 and 2023 was $10 million and $15 million, respectively. The decrease in expense is primarily due to lower average borrowings, lower receivable sales and higher interest income. Other Income (Expense) – Net Other income (expense) – net was an expense of $13 million and income of $1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in expense is primarily due to transaction costs related to ESG acquisition, higher mark-to-market losses recorded on equity investment, and the negative impact of changes in foreign exchange rates. Income Taxes During the three months ended September 30, 2024, we recognized income tax expense of $11 million on income of $99 million, an effective tax rate of 11.1%, as compared to income tax expense of $30 million on income of $149 million, an effective tax rate of 20.0%, for the three months ended September 30, 2023. The lower effective tax rate for the three months ended September 30, 2024 when compared with the three months ended September 30, 2023 is primarily due to an increase in favorable discrete items, partially offset by higher tax related to geographic distribution of income. 31 Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023 Consolidated Nine Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 3,886 — $ 3,929 — (1.1) % Gross profit 871 22.4 % 914 23.3 % (4.7) % SG&A expenses 398 10.2 % 393 10.0 % 1.3 % Income from operations 473 12.2 % 521 13.3 % (9.2) % Net sales for the nine months ended September 30, 2024 decreased $43 million when compared to the same period in 2023, primarily due to lower end-market demand across most geographies, partially offset by increased demand for aerial work platforms, telehandlers and utility products in North America. Gross profit for the nine months ended September 30, 2024 decreased $43 million when compared to the same period in 2023, primarily due to the impact of lower sales volume and unfavorable mix as well as higher severance costs, partially offset by cost reductions and improved manufacturing throughput. SG&A expenses for the nine months ended September 30, 2024 increased $5 million when compared to the same period in 2023, primarily due to higher severance costs, technology expenses and a prior year facility sale gain, partially offset by lower compensation cost. Income from operations for the nine months ended September 30, 2024 decreased $48 million when compared to the same period in 2023, primarily due to the impact of lower sales volume, unfavorable mix, higher severance costs and increased SG&A expenses, partially offset by cost reduction and improved throughput. Materials Processing Nine Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,463 — $ 1,672 — (12.5) % Income from operations 205 14.0 % 275 16.4 % (25.5) % Net sales for the nine months ended September 30, 2024 decreased $209 million when compared to the same period in 2023, primarily due to channel adjustments and lower end-market demand across certain product lines and geographies. Income from operations for the nine months ended September 30, 2024 decreased $70 million when compared to the same period in 2023, primarily due to lower sales volume and unfavorable product mix and geographic mix as well as higher severance costs, partially offset by cost reductions. 32 Aerial Work Platforms Nine Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 2,423 — $ 2,262 — 7.1 % Income from operations 324 13.4 % 310 13.7 % 4.5 % Net sales for the nine months ended September 30, 2024 increased $161 million when compared to the same period in 2023, primarily due to increased demand for aerial work platforms, telehandlers and utility products in North America. Income from operations for the nine months ended September 30, 2024 increased $14 million when compared to the same period in 2023, primarily due to incremental profit achieved on higher sales volume and improved manufacturing throughput, partially offset by unfavorable mix, Monterrey start-up inefficiencies, higher severance costs and a prior year facility sale gain. Corporate and Other / Eliminations Nine Months Ended September 30, 2024 2023 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ — — $ (5) — 100.0 % Loss from operations (56) * (64) * 12.5 % * Not a meaningful percentage Loss from operations for the nine months ended September 30, 2024 decreased $8 million when compared to the same period in 2023. The decrease in operating loss is primarily due to lower compensation cost and the negative impact of changes in foreign exchange rates in the prior year, partially offset by higher severance costs. Interest Expense, Net of Interest Income During the nine months ended September 30, 2024, our interest expense, net of interest income, was $35 million, or $7 million lower when compared to the same period in 2023, due primarily to lower average borrowings, higher interest income and lower receivable sales, partially offset by receivable sales at higher interest rates. Other Income (Expense) – Net Other income (expense) – net for the nine months ended September 30, 2024 and 2023 was an expense of $28 million and $5 million, respectively. The increase in expense is primarily due to transaction costs related to ESG acquisition, higher mark-to-market losses recorded on equity investments, and the negative impact of changes in foreign exchange rates. Income Taxes During the nine months ended September 30, 2024, we recognized income tax expense of $73 million on income of $410 million, an effective tax rate of 17.8%, as compared to income tax expense of $85 million on income of $474 million, an effective tax rate of 18.0%, for the nine months ended September 30, 2023. The lower effective tax rate for the nine months ended September 30, 2024 when compared with the nine months ended September 30, 2023 is primarily due to an increase in favorable discrete items. 33 Gain (Loss) on Disposition of Discontinued Operations - net of taxes During the nine months ended September 30, 2023, the gain (loss) on disposition of discontinued operations - net of tax, primarily relates to post-closing adjustments related to the sales of our former MHPS and mobile cranes businesses. LIQUIDITY AND CAPITAL RESOURCES We are focused on generating cash and maintaining liquidity (cash and availability under our revolving line of credit) for the efficient operation of our business. At September 30, 2024, we had cash and cash equivalents of $352 million and undrawn availability under our revolving line of credit of $600 million, giving us total liquidity of approximately $952 million. During the nine months ended September 30, 2024, our liquidity decreased by approximately $19 million from December 31, 2023 primarily due to cash used in capital expenditures, dividends and share repurchases, partially offset by cash generated from operations. Our main sources of funding are cash generated from operations, including cash generated from the sale of receivables, loans from our bank credit facilities and funds raised in capital markets. We have no significant debt maturities until 2029. Our actions to maintain liquidity include disciplined management of costs and working capital. Additionally on October 8, 2024, our existing revolving line of credit was increased from $600 million to $800 million and the maturity was extended from April 1, 2026 to October 8, 2029. See Note J – “Long-Term Obligations” for additional details on financing transaction. We believe these measures will provide us with adequate liquidity to comply with our financial covenants under our bank credit facility, continue to support internal operating initiatives and meet our operating and debt service requirements for at least the next 12 months from the date of issuance of this quarterly report. See Part I, Item 1A. – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II Item 1A – “Risk Factors” of this Quarterly Report for a detailed description of the risks resulting from our debt and our ability to generate sufficient cash flow to operate our business. Our ability to generate cash from operations is subject to numerous factors, including the following: • The duration and depth of the global economic volatility resulting from inflationary pressures, foreign exchange rate volatility, geopolitical uncertainty and high interest rates. • As our sales change, the amount of working capital needed to support our business may change. • Many of our customers fund their purchases through third-party finance companies that extend credit based on the creditworthiness of customers and expected residual value of our equipment. Changes either in customers’ credit profile or used equipment values may affect the ability of customers to purchase equipment. There can be no assurance that third-party finance companies will continue to extend credit to our customers as they have in the past. • Our suppliers extend payment terms to us primarily based on our overall credit rating. Deterioration in our credit rating may influence suppliers’ willingness to extend terms and in turn accelerate cash requirements of our business. • Sales of our products are subject to general economic conditions, weather, competition, translation effect of foreign currency exchange rate changes, and other factors that in many cases are outside our direct control. For example, during periods of economic uncertainty, our customers have delayed purchasing decisions, which in turn reduces cash generated from operations. • Availability and utilization of other sources of liquidity such as trade account receivables sales programs. Typically, we have invested our cash in a combination of highly rated, liquid money market funds and in short-term bank deposits with large, highly rated banks. Our investment objective is to preserve capital and liquidity while earning a market rate of interest. We seek to use cash held by our foreign subsidiaries to support our operations and continued growth plans through funding of capital expenditures, operating expenses or other similar cash needs of worldwide operations. Most of this cash could be used in the U.S., if necessary, without additional tax expense. Incremental cash repatriated to the U.S. would not be expected to result in material foreign income and withholding, U.S. federal or state income tax cost. We will continue to seek opportunities to tax-efficiently mobilize and redeploy funds. 34 We had free cash flow of $88 million and $61 million for the three and nine months ended September 30, 2024, respectively. The following table reconciles net cash provided by (used in) operating activities to free cash flow (in millions): Three Months Ended 9/30/2024 Nine Months Ended 9/30/2024 Net cash provided by (used in) operating activities $ 117 $ 149 Capital expenditures, net of proceeds from sale of capital assets (29) (88) Free cash flow (use) $ 88 $ 61 Pursuant to terms of our trade accounts receivable factoring arrangements, during the nine months ended September 30, 2024, we sold, without material recourse, approximately $523 million of trade accounts receivable to enhance liquidity. Working capital as a percent of trailing three month annualized net sales was 26.3% at September 30, 2024. The following tables show the calculation of our working capital and trailing three months annualized sales as of September 30, 2024 (in millions): Three Months Ended September 30, 2024 Net sales $ 1,212 x 4 Trailing three month annualized net sales $ 4,848 As of September 30, 2024 Inventories $ 1,222 Receivables 670 Trade accounts payable (593) Customer advances (24) Working capital $ 1,275 We had no revolving line of credit (the “Revolver”) borrowings at September 30, 2024. For information regarding debt, see Note J – “Long-Term Obligations” in Notes to Condensed Consolidated Financial Statements. We remain focused on the use of Terex Financial Services to drive incremental sales by facilitating customer financing solutions in key markets. During the nine months ended September 30, 2024, we repurchased 562,371 shares of common stock for $31 million leaving approximately $101 million available for repurchase under our share repurchase programs. Our Board declared a dividend of $0.17 per share in each of the first, second and third quarters of 2024, which were paid to our shareholders. In October 2024, our Board declared a dividend of $0.17 per share, which will be paid on December 19, 2024 to our shareholders of record as of November 8, 2024. Our ability to access capital markets to raise funds, through sale of equity or debt securities, is subject to various factors, some specific to us and others related to general economic and/or financial market conditions. These include results of operations, projected operating results for future periods and debt to equity leverage. Our ability to access capital markets is also subject to our timely filing of periodic reports with the Securities and Exchange Commission. In addition, terms of our bank credit facilities and senior notes contain restrictions on our ability to make further borrowings and to sell substantial portions of our assets. Cash Flows Cash provided by operations was $149 million and $269 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in cash provided by operations was primarily driven by lower operating profitability and higher working capital. 35 Cash used in investing activities was $80 million and $54 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in cash used in investing activities relates primarily to lower proceeds from the sale of capital assets and higher capital expenditures, partially offset by lower acquisition and investment activity and proceeds from sale of marketable securities. Cash used in financing activities was $88 million and $161 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in cash used in financing activities was primarily due to debt repayments in 2023. OFF-BALANCE SHEET ARRANGEMENTS Guarantees We may assist customers in their rental, leasing and acquisition of our products by facilitating financing transactions directly between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions, providing recourse in certain circumstances. The expectation of losses or non-performance is evaluated based on consideration of historical customer assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other factors. Many of these factors, including the assessment of a customer’s ability to pay, are influenced by economic and market factors that cannot be predicted with certainty. Our maximum liability is generally limited to our customer’s remaining payments due to the third-party financial institutions at the time of default. In the event of a customer default, we are generally able to recover and dispose of the equipment at a minimum loss, if any, to us. Reserves are recorded for expected loss over the contractual period of risk exposure. There can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our ability to recover losses experienced from our guarantees may be affected by economic conditions in used equipment markets at the time of loss. See Note L – “Litigation and Contingencies” in the Notes to Condensed Consolidated Financial Statements for further information regarding our guarantees. CONTINGENCIES AND UNCERTAINTIES Foreign Exchange and Interest Rate Risk Our products are sold in over 100 countries around the world and, accordingly, our revenues are generated in foreign currencies, while costs associated with those revenues are only partly incurred in the same currencies. Primary currencies to which we are exposed are the Euro, British Pound, Chinese Yuan, Indian Rupee, Australian Dollar and Mexican Peso. We purchase hedging instruments to manage variability of future cash flows associated with recognized assets or liabilities due to changing currency exchange rates. We manage our exposure to interest rate risk by establishing a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintain a ratio of floating and fixed rates on this mix of indebtedness using interest rate derivatives when necessary. See Note I – “Derivative Financial Instruments” in the Notes to Condensed Consolidated Financial Statements for further information regarding our derivatives and Item 3 “Quantitative and Qualitative Disclosures About Market Risk” for a discussion of the impact changes in foreign currency exchange rates and interest rates may have on our financial performance. 36 Other We are subject to a number of contingencies and uncertainties including, without limitation, product liability claims, workers’ compensation liability, intellectual property litigation, self-insurance obligations, tax examinations, guarantees, class action lawsuits and other matters. See Note L – “Litigation and Contingencies” in the Notes to Condensed Consolidated Financial Statements for more information regarding contingencies and uncertainties. We are insured for product liability, general liability, workers’ compensation, employer’s liability, property damage, intellectual property and other insurable risks required by law or contract with retained liability to us or deductibles. Many of the exposures are unasserted or proceedings are at a preliminary stage, and it is not presently possible to estimate the amount or timing of any liability. However, we do not believe these contingencies and uncertainties will, individually or in aggregate, have a material adverse effect on our operations. For contingencies and uncertainties other than income taxes, when it is probable a loss will be incurred and possible to make reasonable estimates of our liability with respect to such matters, a provision is recorded for the amount of such estimate or for the minimum amount of a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur. We generate hazardous and non-hazardous wastes in the normal course of our manufacturing operations. As a result, we are subject to a wide range of environmental laws and regulations. All of our employees are required to obey all applicable health, safety and environmental laws and regulations and must observe the proper safety rules and environmental practices in work situations. These laws and regulations govern actions that may have adverse environmental effects, such as discharges to air and water, and require compliance with certain practices when handling and disposing of hazardous and non-hazardous wastes. These laws and regulations would also impose liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances, should any such events occur. We are committed to complying with these standards and monitoring our workplaces to determine if equipment, machinery and facilities meet specified safety standards. Each of our manufacturing facilities is subject to an environmental audit at least once every five years to monitor compliance. Also, no incidents have occurred which required us to pay material amounts to comply with such laws and regulations. We are dedicated to ensuring that safety and health hazards are adequately addressed through appropriate work practices, training and procedures. We are committed to reducing injuries and working towards a world-class level of safety practices in our industry. RECENT ACCOUNTING STANDARDS Please refer to Note A – “Basis of Presentation” in the accompanying Condensed Consolidated Financial Statements for a summary of recently issued accounting standards. 37