What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-02 · 177 added, 91 removed, 230 unchanged (54% of the section changed)

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We report our business in the following segments:

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

(i) Aerials, (ii) Materials Processing (“MP”) 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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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 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.

Macro cross-currents continue to impact end market demand and channel dynamics.

We view the One Big Beautiful Bill Act as largely positive as key provisions, particularly the reinstatement of 100% bonus depreciation, are supportive of equipment demand and increased U.S.

industrial activity.

Moreover, the bill includes new bonus depreciation for Qualified Production Property, allowing newly constructed non-residential real estate to benefit from 100% bonus depreciation, which we believe will support increased US manufacturing capital expenditures.

The bill also allocates significant funds to construction spending, particularly border infrastructure and defense.

Running counter to these policy tailwinds are persistently high interest rates and tariff-related uncertainty that continue to impact capital decisions in certain areas.

A key strength of the Terex portfolio is the diversification of our end markets.

Last year’s Environmental Solutions Group (“ESG”) acquisition significantly expanded our exposure to the waste and recycling end market.

Waste and Recycling now represents approximately 30% of our global revenue and is characterized by low cyclicality and steady growth.

Utilities makes up about 10% and is growing due to the need to expand and strengthen the power grid.

About 15% of our business is related to Infrastructure where significant investment continues to be put in place in the United States and around the world.

These three markets, representing more than half of our revenue, are highly resilient and less exposed to macroeconomic or geo-political dynamics than other areas.

Another benefit of the ESG acquisition was the opportunity to unlock considerable synergy value across Terex.

We are running well ahead of our initial targets and continue to find more opportunities for leverage across our portfolio of businesses.

Our overall performance in the quarter was in line with our expectations, despite tight monetary policies, changing trade policies and geopolitical tensions.

This is a testament to the strength of the Terex portfolio that headwinds faced by Aerials were offset by continued strong performance in ES and MP delivering on its planned sequential improvements.

Net sales of $1.5 billion grew 8% year over year.

Excluding ESG, our legacy sales declined by 12%, consistent with our expectation.

Our operating margin was 8.7%, down 530 basis points year over year, consistent with our planned sequential improvement.

Stronger ES margins offset lower than expected margins in Aerials.

Our bookings trends have returned to normal seasonal patterns.

Our backlog remains healthy at $2.2 billion and supports our outlook for the second half of 2025.

Aerials second quarter 2025 sales of $607 million was consistent with our expectations but the customer mix was more heavily weighted to our national customers than we anticipated.

Independent customers were cautious and held back on capital expenditure deployment given the high degree of macro uncertainty.

National customers continue to benefit disproportionately from mega-projects and infrastructure construction and they continued to execute their replacement-focused capex plans.

Aerials operating margin improved sequentially on better manufacturing absorption, but was lower than we expected largely because of customer mix.

MP second quarter 2025 sales of $454 million were 9% lower than last year, but in line with our expected increase from first quarter 2025.

We continue to see high fleet utilization rates in the United States and normalization of dealer stock levels.

However, macro uncertainty and high interest rates remain a headwind for rent to own conversions and the European market remained weak in the quarter.

As expected, MP began to improve operating margins from the first quarter levels, increasing to 10.8% in the second quarter.

Most of the improvement was in the Aggregates vertical while the Cranes and Handling businesses remained challenging.

Our ES segment had another strong quarter, generating $430 million in sales with year over year and sequential growth in both ESG and Terex Utilities.

Within ESG, operational improvements drove margin gains on Heil refuse collection vehicles and Marathon compactors.

Utilities benefited from a positive customer and product mix and improved operational execution.

In the second 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.

Based on 2025 outlook, approximately 75% of our U.S.

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.

We continued to maintain ample liquidity and as of June 30, 2025, we had $1.2 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.

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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.

Moreover, we initiated mitigation actions last year and in the first half 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.

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– “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.

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 legacy sales.

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

Our outlook assumes that tariffs broadly remain at current rates and reasonable deals are made with key countries.

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.

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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 March 31, 2025 was 15.0%.

As the tables below show, our ROIC at June 30, 2025 was 12.3%.

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.

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

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

Annualized effective tax rate as adjusted (1)

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(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 %

June 30, 2025 ROIC 12.3 %

NOPAT as adjusted (last 4 quarters) $ 421

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$ 129 69 $ 53 $ 122

Accelerated vesting / severance

Restructuring and other

Purchase price accounting

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Litigation related

Tariff related

Operating profit as adjusted

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Effects of adjustments, net of tax:

Accelerated vesting / severance

Restructuring and other

Purchase price accounting 67 50 32 — —

1 unchanged sentence

Litigation related

Mark-to-market

Equity security related

Stockholders’ equity as adjusted $ 2,094 $ 1,947 $ 1,899 $ 1,974 $ 1,830

Three Months Ended

March 31, 2025

Six Months Ended

June 30, 2025

Income (loss) before income taxes

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Effect of adjustments:

Accelerated vesting / severance

Restructuring and other

Purchase price accounting

Mark-to-Market

Equity security related

Litigation related

Tariff related

Tax related benefit (1)

Tax related to full-year effective tax rate expectation — 3

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As adjusted $ 190 $ (30) 15.7 %

(1) The amount represents tax benefit arising from tax planning associated with restructuring activity.

RESULTS OF OPERATIONS

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

Three Months Ended March 31,

Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024

Three Months Ended June 30,

Sales % Change In

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129 8.7 % 193 14.0 % (33.2) %

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 March 31,

Net sales for the three months ended June 30, 2025 increased $105 million when compared to the same period in 2024, primarily due to sales generated from the recently acquired ESG business, partially offset by lower end-market demand across most product lines and geographies within Aerials and MP’s North America Aggregates business.

Gross profit for the three months ended June 30, 2025 decreased $38 million when compared to the same period in 2024, primarily due to the impact of lower sales volume within Aerials and MP, as well as unfavorable mix and tariffs within Aerials, partially offset by strong ESG performance.

SG&A expenses for the three months ended June 30, 2025 increased $26 million when compared to the same period in 2024, primarily due to additional compensation cost related to the recently acquired ESG business, as well as higher restructuring and integration costs, partially offset by lower compensation cost within Aerials and MP.

Operating profit for the three months ended June 30, 2025 decreased $64 million when compared to the same period in 2024, primarily due to the impact of lower legacy sales volume, as well as unfavorable mix and tariffs in Aerials, partially offset by strong ESG performance and cost reduction actions within Aerials and MP.

Three Months Ended June 30,

Sales % Change In

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46 7.6 % 115 15.7 % (60.0) %

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,

Net sales for the three months ended June 30, 2025 decreased $125 million when compared to the same period in 2024, primarily due to lower end-market demand across most product lines and geographies as rental customers deployed less capital expenditures, focusing primarily on replacement requirements.

Operating profit for the three months ended June 30, 2025 decreased $69 million when compared to the same period in 2024, primarily due to lower sales volume, as well as unfavorable mix and tariffs, partially offset by cost reduction actions.

Sales to independent rental customers were down proportionately more than sales to national rental customers.

Materials Processing

Three Months Ended June 30,

Sales % Change In

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49 10.8 % 77 15.4 % (36.4) %

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.

Net sales for the three months ended June 30, 2025 decreased $45 million when compared to the same period in 2024, primarily due to lower channel requirements and end-market demand in our North America Aggregates business.

Operating profit for the three months ended June 30, 2025 decreased $28 million when compared to the same period in 2024, primarily due to lower sales volume and higher restructuring costs, partially offset by cost reduction actions.

Environmental Solutions

Three Months Ended March 31,

Three Months Ended June 30,

Sales % Change In

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61 14.2 % 19 12.5 % 221.1 %

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.

Net sales for the three months ended June 30, 2025 increased $278 million when compared to the same period in 2024, primarily due to sales generated by the recently acquired ESG business and growth driven by strong throughput and delivery of refuse collection vehicles and strong book-to-bill installs in Terex Utilities.

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

Operating profit for the three months ended June 30, 2025 increased $42 million when compared to the same period in 2024, primarily due to operating profit generated by the recently acquired ESG business and continued margin improvements in both ESG and Terex Utilities.

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

Corporate and Other / Eliminations

Three Months Ended March 31,

Three Months Ended June 30,

Sales % Change In

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* Not a meaningful percentage

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.

Net sales for the three months ended June 30, 2025 decreased $3 million when compared to the same period in 2024, primarily due to changes in intercompany eliminations.

Operating loss for the three months ended June 30, 2025 increased $9 million when compared to the same period in 2024.

The increase in operating loss is primarily due to integration costs and unfavorable impact of changes in foreign exchange rates.

Interest Expense, Net of Interest Income

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

Interest expense, net of interest income, for the three months ended June 30, 2025 and 2024 was $42 million and $13 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 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.

Other income (expense) – net was an income of $2 million and an expense of $6 million for the three months ended June 30, 2025 and 2024, respectively.

The increase in income is primarily due to net gains recorded on equity securities.

During the three months ended June 30, 2025, we recognized income tax expense of $17 million on income of $89 million, an effective tax rate of 18.5%, as compared to income tax expense of $33 million on income of $174 million, an effective tax rate of 19.2%, for the three months ended June 30, 2024.

The lower effective tax rate for the three months ended June 30, 2025 when compared with the three months ended June 30, 2024 is primarily due to an increase in favorable discrete items.

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.

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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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) (H.R.1) was signed in to law by the President of the United States.

The OBBBA contains significant provisions impacting corporate taxation in the U.S.

with multiple effective dates.

Among the changes effective in 2025 are modifications to capitalization of domestic research and development costs, accelerated depreciation of fixed assets and other qualifying property, as well as limitations on deductions for interest expense.

Changes effective in 2026 include, among others, modifications to certain international tax provisions.

We are currently evaluating the provisions of the OBBBA to assess their impact on our financial position, results of operations and cash flows.

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Six Months Ended June 30,

Sales % Change In

Reported Amounts

($ amounts in millions)

Net sales $ 2,716 — $ 2,674 — 1.6 %

Gross profit 521 19.2 % 626 23.4 % (16.8) %

SG&A expenses

323 11.9 % 275 10.3 % 17.5 %

Operating profit

198 7.3 % 351 13.1 % (43.6) %

Net sales for the six months ended June 30, 2025 increased $42 million when compared to the same period in 2024, primarily due to sales generated from the recently acquired ESG business, partially offset by lower end-market demand across most product lines and geographies within Aerials and MP.

Gross profit for the six months ended June 30, 2025 decreased $105 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 Aerials and MP, as well as tariffs within Aerials, partially offset by strong ESG performance.

SG&A expenses for the six months ended June 30, 2025 increased $48 million when compared to the same period in 2024, primarily due to additional compensation cost related to the recently acquired ESG business, a one-time litigation related charge, and higher restructuring and integration costs, partially offset by lower compensation cost within Aerials and MP.

Operating profit for the six months ended June 30, 2025 decreased $153 million when compared to the same period in 2024, primarily due to the impact of lower sales volume, production adjustments and unfavorable mix within Aerials and MP, as well as tariffs within Aerials, partially offset by strong ESG performance and cost reduction actions within Aerials and MP.

Six Months Ended June 30,

Sales % Change In

Reported Amounts

($ amounts in millions)

Net sales $ 1,057 — $ 1,355 — (22.0) %

Operating profit

49 4.6 % 207 15.3 % (76.3) %

Net sales for the six months ended June 30, 2025 decreased $298 million when compared to the same period in 2024, primarily due to lower end-market demand across most product lines and geographies and a return to a more customary seasonal delivery pattern.

Operating profit for the six months ended June 30, 2025 decreased $158 million when compared to the same period in 2024, primarily due to lower sales volume, unfavorable mix, increased tariff expenses, production adjustments and a one-time litigation related charge, partially offset by cost reduction actions.

Materials Processing

Six Months Ended June 30,

Sales % Change In

Reported Amounts

($ amounts in millions)

Net sales $ 836 — $ 1,019 — (18.0) %

Operating profit

85 10.2 % 149 14.6 % (43.0) %

Net sales for the six months ended June 30, 2025 decreased $183 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 six months ended June 30, 2025 decreased $64 million when compared to the same period in 2024, primarily due to lower sales volume, production adjustments, unfavorable mix and higher restructuring costs, partially offset by cost reduction actions.

Environmental Solutions

Six Months Ended June 30,

Sales % Change In

Reported Amounts

($ amounts in millions)

Net sales $ 829 — $ 303 — 173.6 %

Operating profit

117 14.1 % 34 11.2 % 244.1 %

Net sales for the six months ended June 30, 2025 increased $526 million when compared to the same period in 2024, primarily due to sales generated by the recently acquired ESG business and growth driven by strong throughput and delivery of refuse collection vehicles.

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

Operating profit for the six months ended June 30, 2025 increased $83 million when compared to the same period in 2024, primarily due to operating profit generated by the recently acquired ESG business and continued margin improvements in both ESG and Terex Utilities.

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

Corporate and Other / Eliminations

Six Months Ended June 30,

Sales % Change In

Reported Amounts

($ amounts in millions)

Net sales $ (6) — $ (3) — (100.0) %

Operating profit (loss)

(53) * (39) * (35.9) %

* Not a meaningful percentage

Net sales for the six months ended June 30, 2025 decreased $3 million when compared to the same period in 2024, primarily due to changes in intercompany eliminations.

Operating loss for the six months ended June 30, 2025 increased $14 million when compared to the same period in 2024.

The increase in operating loss is primarily due to integration costs and unfavorable impact of changes in foreign exchange rates.

Interest Expense, Net of Interest Income

Interest expense, net of interest income, for the six months ended June 30, 2025 and 2024 was $83 million and $24 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 was $0 million and an expense of $16 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease in expense is primarily due to net gains recorded on equity securities and the favorable impact of changes in foreign exchange rates.

During the six months ended June 30, 2025, we recognized income tax expense of $22 million on income of $115 million, an effective tax rate of 18.9%, as compared to income tax expense of $62 million on income of $311 million, an effective tax rate of 19.8%, for the six months ended June 30, 2024.

The lower effective tax rate for the six months ended June 30, 2025 when compared with the six months ended June 30, 2024 is primarily due to an increase in favorable discrete items.

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 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.

At June 30, 2025, we had cash and cash equivalents of $374 million and undrawn availability under our revolving line of credit of $800 million, giving us total liquidity of approximately $1,174 million.

During the six months ended June 30, 2025, our liquidity decreased by approximately $14 million from December 31, 2024 primarily due to cash used in capital expenditures, share repurchases and dividends, 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.

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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.

We seek to use cash held by our foreign subsidiaries to support our operations and continued growth plans through the 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.

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

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

We had free cash flow of $78 million and $23 million for the three and six months ended June 30, 2025, respectively.

The following table reconciles net cash provided by (used in) operating activities to free cash flow (in millions):

Three Months Ended

6/30/2025 Six Months Ended

Net cash provided by (used in) operating activities $ 102 $ 81

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Free cash flow (use) $ 78 $ 23

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):

Pursuant to terms of our trade accounts receivable factoring arrangements, during the six months ended June 30, 2025, we sold, without material recourse, approximately $306 million of trade accounts receivable to enhance liquidity.

Working capital as a percentage of trailing three month annualized net sales was 22.8% at June 30, 2025.

The following tables show the calculation of our working capital and trailing three months annualized sales as of June 30, 2025 (in millions):

Three Months Ended

March 31, 2025

June 30, 2025

Trailing three month annualized net sales

March 31, 2025

June 30, 2025

Inventories $ 1,255

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We remain focused on the use of Terex Financial Services to drive incremental sales by facilitating customer financing solutions in key markets.

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.

During the six months ended June 30, 2025, we repurchased 1,360,706 shares of common stock for $53 million leaving approximately $33 million available for repurchase under our share repurchase programs.

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

In July 2025, our Board declared a dividend of $0.17 per share, which will be paid on September 19, 2025 to our stockholders of record as of August 11, 2025.

Additionally, our Board authorized an additional repurchase of up to $150 million of the Company’s outstanding shares of common stock.

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 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.

Cash provided by operations was $81 million and $33 million for the six months ended June 30, 2025 and 2024, respectively.

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

Cash used in investing activities was $38 million and $52 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease in cash used in investing activities relates primarily to proceeds from settlement of net investment hedges and the receipt of a post-closing purchase price adjustment related to the ESG acquisition.

Cash used in financing activities was $84 million and $23 million for the six months ended June 30, 2025 and 2024, respectively.

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

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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