What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-10-30 · 164 added, 162 removed, 157 unchanged (67% of the section changed)

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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 design, build, and support products used in maintenance, manufacturing, energy, waste and recycling, minerals and materials management, construction, 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.

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We report our business in the following segments:

(i) Materials Processing (“MP”) and (ii) Aerial Work Platforms (“AWP”).

(i) Materials Processing (“MP”), (ii) Aerials and (iii) Environmental Solutions (“ES”).

Further information about our reportable segments appears below and in Note B – “Business Segment Information” in the Notes to Condensed Consolidated Financial Statements.

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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.

We discuss forward-looking information related to expected earnings per share (“EPS”) excluding the impact of potential future acquisitions, divestitures, restructuring, tariffs, trade policies and other unusual items.

Our 2025 outlook for EPS is a non-GAAP financial measure because it excludes unusual items.

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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.

Working capital is calculated using the Condensed Consolidated Balance Sheet amounts for Receivables (net of allowance) plus Inventories, less Trade accounts payable, Customer advances and Short-term unearned revenue.

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.

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.

Trailing three months annualized net sales is calculated using net sales for the most recent quarter

end multiplied by four.

The 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”) as adjusted, operating profit as adjusted, annualized effective tax rate as adjusted and stockholders’ equity 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.

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.

We continue to implement our updated Execute, Innovate and Grow strategy.

We are evaluating our global footprint, focusing on opportunities to reduce fixed costs while improving operational performance, efficiency and flexibility.

We have a new product development pipeline focused on maximizing return on investment for our customers and we are expanding our suite of digital solutions.

We also continue to invest in robotics, automation, and digitizing workstreams to make our operations more efficient and flexible.

Completing the ESG acquisition last year was a significant step forward.

We expect organic growth in that business to continue, driven by demographics, product technology adoption, share gains, and further penetration of our digital solutions.

Integrating ESG into Terex is on track, and we continue to expect to deliver at least $25 million in operational run-rate synergies by the end of 2026.

Our overall financial results in the first quarter exceeded our expectations due to strong execution by ESG.

Net sales of $1.2 billion were 4.9% lower than the first quarter of 2024, as a 25% decline in organic business sales was partially offset by the addition of ESG.

The organic business sales decline was in line with our expectation driven by continued channel adjustment coupled with timing of our backlog conversion.

As we expected, our operating margins were impacted by the production cuts in Aerials and MP in the past two quarters that exceeded the revenue decline in the period.

Those actions were necessary to manage inventory and rebalance supply with demand.

Our current backlog of $2.6 billion is supportive of our outlook.

MP first quarter 2025 sales of $382 million was in line with our 2025 planning.

We continue to see high fleet utilization rates in the United States.

Quotation activity across our dealer network is positive with dealer stock levels declining albeit slowly.

However, macro uncertainty and higher interest rates remain a headwind for rent to own conversions and the European market remains weak in particular for Aggregates and Cranes.

Our Concrete business, led by Advance, delivered a solid first quarter with improved margins driven by new customers.

MP’s backlog increased 33% sequentially and is in line with pre-covid norms.

MP has returned to its traditional book-to-bill cadence supported by reliable lead times with backlog coverage of approximately three months.

Aerials first quarter 2025 sales of $450 million was consistent with our expectations.

Approximately half of the revenue was generated in March, as our rental customers began to ramp up their deliveries heading into the seasonally higher construction period.

That pattern is continuing into the second quarter.

We continued to see strong Aerials book to bill in the quarter as our rental customers are executing their capex plans focused largely on fleet replacement.

Our ES segment had a strong quarter, generating approximately $400 million in sales which represented a third of our total Terex revenue in the first quarter.

We produced and delivered more refuse collection vehicles in the first quarter than in any previous quarter in Heil’s history.

ES backlog of $1.1 billion continues to demonstrate strong demand in both ESG and Terex Utilities.

In the first quarter of 2025, our largest market remained North America, which represented approximately 73% of our global sales.

As compared to the prior year, sales were up in North America, driven by the ESG acquisition, and down in all other major geographies.

Adding ESG made Terex a more US-centric company, which we believe is advantageous in the current geopolitical environment.

Based on 2025 outlook, approximately 75% of our US machine sales is generated by products that we produce in our 11 manufacturing locations in the United States.

We continued to execute our capital allocation strategy as we made strategic investments in our businesses and we returned capital to shareholders.

We continued to maintain ample liquidity and as of March 31, 2025, we had $1.1 billion 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.

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.

We are closely following the administration’s approach to international trade policy and the responses from countries around the world.

The majority of the products we sell in the United States, we make in the United States which largely limits our exposure.

Moreover, we initiated mitigation actions last year and in the first quarter of 2025 in anticipation of additional tariffs, leveraging our global capabilities to manage the impact.

Like other industrial companies, we have a global supply base and are exposed to tariffs on imported material.

A key element of our tariff mitigation plan was working closely with our global suppliers to absorb the added cost and forward-place inventory in the United States to buffer the impact of the new tariffs.

In addition, we are leveraging the global sourcing capabilities we developed during the first Trump administration and the post-Covid supply chain crisis, to re-balance supply to more favorable sources, among other actions.

As a global company with a significant footprint in the United States and around the world, we have optionality and are ready to take additional actions if needed.

See Part II, Item 1A.

– “Risk Factors” for a detailed description of the risks resulting from the imposition of new, postponed or increased international tariffs.

We continue to expect growth in 2025, anticipating net sales of $5.3 to $5.5 billion, as a result of the ESG acquisition more than offsetting year-over-year declines in organic sales.

We are maintaining our full-year earnings per share outlook of $4.70 and $5.10 on lower organic operating profit, partially offset by ESG accretion.

Our outlook assumes easing of recently announced tariffs.

It is important to realize we are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, so results could change, negatively or positively.

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.

NOPAT for each quarter is calculated by multiplying Operating profit 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.

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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.

In the calculation of ROIC, we adjust operating profit, annualized effective tax rate, and stockholders’ equity to remove the effects of the impact of certain transactions in order to create a measure that is more useful to understanding our operating results and the ongoing performance of our underlying business excluding the impact of unusual items as shown in the tables below.

Our management and Board of Directors (“Board”) use ROIC as one measure to assess operational performance, which is also included in 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.

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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%.

As the tables below show, our ROIC at March 31, 2025 was 15.0%.

Amounts described below are reported in millions of U.S.

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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

Mar '25 Dec '24 Sep '24 Jun '24 Mar '24

Annualized effective tax rate as adjusted (1)

17.5 % 15.6 % 15.6 % 15.6 %

Income (loss) from operations $ 122 $ 193 $ 158 $ 116

Operating profit as adjusted

$ 111 $ 97 $ 127 $ 196

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

1 minus annualized effective tax rate as adjusted

82.5 % 84.4 % 84.4 % 84.4 %

Net operating income (loss) after tax as adjusted

$ 92 $ 82 $ 107 $ 165

Debt $ 2,586 $ 2,584 $ 628 $ 666 $ 724

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Debt less Cash and cash equivalents 2,288 2,196 276 347 359

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 %

Stockholders’ equity as adjusted

1,957 1,908 1,984 1,839 1,742

Debt less Cash and cash equivalents plus Stockholders’ equity as adjusted

$ 4,245 $ 4,104 $ 2,260 $ 2,186 $ 2,101

(1) The annualized effective tax rate as adjusted for each 2024 period represents the adjusted full-year 2024 effective tax rate.

March 31, 2025 ROIC 15.0 %

NOPAT as adjusted (last 4 quarters) $ 446

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

Average Debt less Cash and cash equivalents plus Stockholders’ equity as adjusted (5 quarters)

Three months ended 3/31/2025 Three months ended 12/31/2024 Three months ended 9/30/2024 Three months ended 6/30/2024

Reconciliation of operating profit:

Operating profit as reported

$ 69 $ 53 $ 122 $ 193

Accelerated vesting / severance

Purchase price accounting

Deal related 5 2 — —

Litigation related

Tariff related

Operating profit as adjusted

$ 111 $ 97 $ 127 $ 196

As of 3/31/2025 As of 12/31/2024 As of 9/30/2024 As of 6/30/2024 As of 3/31/2024

Reconciliation of Stockholders’ equity:

Stockholders’ equity as reported $ 1,844 $ 1,832 $ 1,957 $ 1,824 $ 1,732

Effects of adjustments, net of tax:

Accelerated vesting / severance

Purchase price accounting 50 32 — — —

Deal related 21 16 2 2 —

Litigation related

Mark-to-market

Stockholders’ equity as adjusted $ 1,957 $ 1,908 $ 1,984 $ 1,839 $ 1,742

Three Months Ended

March 31, 2025

Income (loss) before income taxes

(Provision for) benefit from income taxes Income tax rate

Reconciliation of annualized effective tax rate:

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Effect of adjustments:

Accelerated vesting / severance

Purchase price accounting

Mark-to-Market

Litigation related

Tariff related

Tax related to full-year effective tax rate expectation — 1

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2024 Compared with Three Months Ended September 30, 2023

Three Months Ended September 30,

Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024

Three Months Ended March 31,

Sales % Change In

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161 13.1 % 139 10.8 % 15.8 %

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.

Operating profit

69 5.6 % 158 12.2 % (56.3) %

Net sales for the three months ended March 31, 2025 decreased $63 million when compared to the same period in 2024, primarily due to lower end-market demand across most geographies within MP and Aerials, partially offset by sales generated from the recently acquired ESG business.

Gross profit for the three months ended March 31, 2025 decreased $67 million when compared to the same period in 2024, primarily due to the impact of lower sales volume and unfavorable absorption due to lower production volumes and mix within MP, partially offset by strong performance in our ESG business.

SG&A expenses for the three months ended March 31, 2025 increased $22 million when compared to the same period in 2024, primarily due to a one-time litigation related charge, additional compensation cost related to the recently acquired ESG business and higher severance costs, partially offset by lower compensation cost within MP and Aerials.

Operating profit for the three months ended March 31, 2025 decreased $89 million when compared to the same period in 2024, primarily due to the impact of lower sales volume, production adjustment, unfavorable mix within MP and higher severance costs, partially offset by strong performance in our ESG business and cost reduction actions within MP and Aerials.

Materials Processing

Three Months Ended September 30,

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.

Aerial Work Platforms

Three Months Ended September 30,

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,

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.

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.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Nine Months Ended September 30,

Three Months Ended March 31,

Sales % Change In

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Net sales $ 382 — $ 520 — (26.5) %

Gross profit 871 22.4 % 914 23.3 % (4.7) %

SG&A expenses

Operating profit

36 9.4 % 72 13.9 % (50.0) %

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,

Net sales for the three months ended March 31, 2025 decreased $138 million when compared to the same period in 2024, primarily due to lower channel requirements and end-market demand across most product lines and geographies.

Operating profit for the three months ended March 31, 2025 decreased $36 million when compared to the same period in 2024, primarily due to lower sales volume, unfavorable mix and higher severance costs, partially offset by cost reduction actions.

Three Months Ended March 31,

Sales % Change In

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Net sales $ 450 — $ 623 — (27.8) %

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.

Aerial Work Platforms

Nine Months Ended September 30,

Operating profit

2 0.4 % 92 14.8 % (97.8) %

Net sales for the three months ended March 31, 2025 decreased $173 million when compared to the same period in 2024, primarily due to a return to a more customary seasonal delivery pattern and the timing of our customers' expected equipment replacement schedule.

Operating profit for the three months ended March 31, 2025 decreased $90 million when compared to the same period in 2024, primarily due to lower sales volume, unfavorable absorption due to lower production volumes, and a one-time litigation related charge, partially offset by cost reduction actions.

Environmental Solutions

Three Months Ended March 31,

Sales % Change In

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Net sales 399 — 151 — 164.2 %

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.

Operating profit

56 14.0 % 15 10.1 % 273.3 %

Net sales for the three months ended March 31, 2025 increased $248 million when compared to the same period in 2024, primarily due to sales generated by the recently acquired ESG business.

See Note D - “Acquisitions and Dispositions” in our Condensed Consolidated Financial Statements for additional information regarding acquisition of ESG.

Operating profit for the three months ended March 31, 2025 increased $41 million when compared to the same period in 2024, primarily due to operating profit generated by the recently acquired ESG business.

See Note D - “Acquisitions and Dispositions” in our Condensed Consolidated Financial Statements for additional information regarding acquisition of ESG.

Corporate and Other / Eliminations

Nine Months Ended September 30,

Three Months Ended March 31,

Sales % Change In

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Net sales $ (2) — $ (2) — — %

Loss from operations (56) * (64) * 12.5 %

Operating profit (loss)

(25) * (21) * (19.0) %

* 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.

Operating loss for the three months ended March 31, 2025 increased $4 million when compared to the same period in 2024.

The increase in operating loss is primarily due to lower sales before intercompany elimination.

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.

Interest expense, net of interest income, for the three months ended March 31, 2025 and 2024 was $41 million and $11 million, respectively.

The increase in expense is primarily due to the issuance of additional debt in the fourth quarter of 2024 to finance the ESG acquisition.

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.

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.

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.

Other income (expense) – net was an expense of $2 million and $10 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease in expense is primarily due to lower mark-to-market losses recorded on equity investments, and the favorable impact of changes in foreign exchange rates.

During the three months ended March 31, 2025, we recognized income tax expense of $5 million on income of $26 million, an effective tax rate of 20.3%, as compared to income tax expense of $28 million on income of $137 million, an effective tax rate of 20.5%, for the three months ended March 31, 2024.

The lower effective tax rate for the three months ended March 31, 2025 when compared with the three months ended March 31, 2024 is primarily due to lower tax related to geographic distribution of income.

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% for large corporations, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework.

A number of countries in which we operate have adopted legislation, many of which were effective in 2024 subject to the OECD transitional safe harbor rules, while other countries are still in the process of introducing legislation.

In addition, the OECD continues to issue guidance on this matter including the technical documents released on January 15, 2025.

Among this release, the OECD issued Administrative Guidance on the application of the Global Anti-Base Erosion (GloBE) Model Rules.

While the Company has determined the impact of enacted Pillar Two legislation on its financial statements is not material, the Company will continue to evaluate the financial statement impacts as additional Pillar Two rules are enacted and OECD guidance is issued, including the documents recently released.

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.

At March 31, 2025, we had cash and cash equivalents of $298 million and undrawn availability under our revolving line of credit of $800 million, giving us total liquidity of approximately $1,098 million.

During the three months ended March 31, 2025, our liquidity decreased by approximately $90 million from December 31, 2024 primarily due to cash used in capital expenditures, share repurchases, dividends and operating activities.

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.

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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.

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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.

• The duration and depth of the global economic volatility resulting from tariffs, trade war, geopolitical uncertainty, inflationary pressures, foreign exchange rate volatility and high interest rates.

• As our sales change, the amount of working capital needed to support our business may change.

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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.

• Sales of our products are subject to general economic conditions, tariffs, 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.

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We will continue to seek opportunities to tax-efficiently mobilize and redeploy funds.

We had free cash flow of $88 million and $61 million for the three and nine months ended September 30, 2024, respectively.

We had free cash flow use of $55 million for the three months ended March 31, 2025.

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

Net cash provided by (used in) operating activities $ (21)

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Free cash flow (use) $ (55)

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):

Pursuant to terms of our trade accounts receivable factoring arrangements, during the three months ended March 31, 2025, we sold, without material recourse, approximately $132 million of trade accounts receivable to enhance liquidity.

Working capital as a percent of trailing three month annualized net sales was 26.0% at March 31, 2025.

The following tables show the calculation of our working capital and trailing three months annualized sales as of March 31, 2025 (in millions):

Three Months Ended

September 30, 2024

March 31, 2025

Trailing three month annualized net sales

September 30, 2024

March 31, 2025

Inventories $ 1,204

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Trade accounts payable

Customer advances

Customer advances and Short-term unearned revenue

Working capital

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.

During the three months ended March 31, 2025, we repurchased 758,843 shares of common stock for $32 million leaving approximately $54 million available for repurchase under our share repurchase programs.

Our Board declared a dividend of $0.17 per share in the first quarter of 2025, which was paid to our stockholders.

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.

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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 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.

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.

Cash used in operations was $21 million and $34 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease in cash used in operations was primarily driven by changes in working capital, partially offset by lower operating profitability.

Cash used in investing activities was $26 million and $36 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease in cash used in investing activities relates primarily to proceeds from settlement of net investment hedges.

Cash used in financing activities was $50 million for the three months ended March 31, 2025, compared to cash provided by financing activities of $71 million for the three months ended March 31, 2024.

The increase in cash used in financing activities was primarily due to lower borrowings and higher share repurchases.

OFF-BALANCE SHEET ARRANGEMENTS

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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.

See Note K – “Litigation and Contingencies” in the Notes to Condensed Consolidated Financial Statements for further information regarding our guarantees.

CONTINGENCIES AND UNCERTAINTIES

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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.

See Note K – “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.

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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 2. Management’s Discussion and Analysis