What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-31 compared with 2025-07-31 · 112 added, 122 removed, 285 unchanged (45% of the section changed)

24 unchanged sentences

Our 2025 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 2025 GAAP financial results.

We are not able to reconcile these forward-looking non-GAAP financial measures to our most directly comparable forward-looking GAAP financial measures without unreasonable efforts because we are 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 our full-year 2025 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.

5 unchanged sentences

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.

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.

Safety remains a top priority for Terex, both for our team members and our customers.

Our global team continues to execute well in a dynamic environment, delivering products and services while maintaining a safe and efficient workplace.

Terex is well positioned from a manufacturing footprint standpoint as about 75% of our 2025 US machine sales are expected to be generated by products that we produce in at least one of our 11 US manufacturing facilities.

That said, higher tariff rates continue to have a transitory impact on our 2025 financial performance.

The most notable tariff-related change during the quarter occurred in mid-August when the U.S.

Bureau of Industry and Security added 407 HS codes to the scope of the Section 232 tariffs on steel and aluminum.

Unlike other tariffs, the 50% rate under the Section 232 tariffs only applies to the value of the non-US steel content in an imported item.

On a macro level, we view the One Big Beautiful Bill Act and more accommodative monetary policy to be stimulative for our domestic end markets which may help mitigate headwinds from tariffs and other external challenges.

Our overall performance in the quarter continued to be solid despite on-going tariff challenges, headwinds in certain markets, and macro uncertainty.

ES continued to grow and deliver strong margins.

MP achieved over 12% operating margin at trough-level volumes, and Aerials delivered better than expected margins in the quarter.

Net sales of $1.4 billion grew 14% 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.

Excluding ESG, our legacy sales declined by 8%.

Operating margin improved sequentially to 10.1%, flat year over year.

Our backlog remains healthy at $1.8 billion, providing visibility into the fourth quarter and supporting our full-year outlook.

Aerials third quarter 2025 sales of $537 million were consistent with our expectations.

Aerials operating margin of 8.4% was up compared to Q2, but down 180 basis points year over year, due to lower volume and unfavorable customer mix, partially offset by a favorable discrete item of approximately $18 million and cost reductions.

Tariff-related impacts, particularly from the expanded scope of Section 232 steel and aluminum tariffs, began to affect Aerials machines and components manufactured in Monterrey, Mexico.

Despite this, Aerials maintains a strong competitive position as one of only two U.S.-based aerial manufacturers with significant domestic production.

Approximately 70% of Aerials products sold in the U.S.

are manufactured domestically, including nearly all booms and scissors.

The Aerials team continues to execute cost reduction and supply chain action plans to mitigate tariff-related inflation.

MP third quarter 2025 sales of $417 million were 6% lower than last year, consistent with our expectations.

Global Aggregates sales were modestly higher than last year, growing in all regions, while Concrete and Cranes sales declined.

MP generated 12.5% operating margin in Q3, consistent with our expectations as cost control and pricing actions largely offset the tariff impact.

We expect to see margin improvement in MP as we close out 2025.

Our ES segment had another excellent quarter, generating $435 million of sales with 14% year-over-year growth on a pro forma basis.

The strong growth was driven by improved throughput and delivery of refuse collection vehicles and utilities trucks.

ES delivered 13.3% operating margin, with continued sequential margin expansion at Utilities.

In the third quarter of 2025, our largest market remained North America, which represented approximately 72% of our global sales.

As compared to the prior year, sales were up in North America, driven by the ESG acquisition, slightly up in Western Europe, and down in Asia Pacific and other regions.

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 U.S.

machine sales is generated by products that we produce in our 11 manufacturing locations in the United States.

We are seeing more signs of stability in construction markets, with a more encouraging outlook for infrastructure and industrial related spending growth in the medium to longer-term.

We are also encouraged by increasing adoption of our products in emerging markets such as India, Southeast Asia, the Middle East, and Latin America.

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 June 30, 2025, we had $1.2 billion in available liquidity, with no near-term debt maturities.

We continued to maintain ample liquidity and as of September 30, 2025, we had $1.3 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.

1 unchanged sentence

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 half of 2025 in anticipation of additional tariffs, leveraging our global capabilities to manage the impact.

Moreover, we initiated mitigation actions 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.

A key element of our tariff mitigation plan is 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.

3 unchanged sentences

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.

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

We now expect the full year net unfavorable impact of tariffs on EPS to be approximately $0.70, assuming tariffs broadly remain at current rates.

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.

10 unchanged sentences

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 June 30, 2025 was 12.3%.

As the tables below show, our ROIC at September 30, 2025 was 11.9%.

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

1 unchanged sentence

Amounts are as of and for the three months ended for the periods referenced in the tables below.

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

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

June 30, 2025 ROIC 12.3 %

September 30, 2025 ROIC 11.9 %

NOPAT as adjusted (last 4 quarters) $ 456

20 unchanged sentences

Stockholders’ equity as adjusted $ 2,166 $ 2,088 $ 1,941 $ 1,893 $ 1,968

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

Income (loss) before income taxes

11 unchanged sentences

As adjusted $ 314 $ (49) 15.6 %

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

(1) The amount represents tax benefit arising from foreign tax legislative changes, in addition to tax planning associated with restructuring activity.

RESULTS OF OPERATIONS

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

Three Months Ended June 30,

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

Three Months Ended September 30,

Sales % Change In

7 unchanged sentences

140 10.1 % 122 10.1 % 14.8 %

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,

Net sales for the three months ended September 30, 2025 increased $175 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 in North America across most product lines within Aerials as well as the concrete business within MP.

Gross profit for the three months ended September 30, 2025 increased $37 million when compared to the same period in 2024, primarily due to strong ESG performance and a favorable discrete item of approximately $18 million pertaining to the release of a customs-related contingency in Aerials, partially offset by the impact of lower sales volume within Aerials and MP, as well as unfavorable mix and tariffs within Aerials.

SG&A expenses for the three months ended September 30, 2025 increased $19 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 cost reductions within Aerials and MP.

Operating profit for the three months ended September 30, 2025 increased $18 million when compared to the same period in 2024, primarily due to strong ESG performance, an Aerials discrete item and cost reductions within Aerials and MP, partially offset by the impact of lower legacy sales volume, as well as unfavorable mix and tariffs in Aerials.

Three Months Ended September 30,

Sales % Change In

4 unchanged sentences

45 8.4 % 63 10.2 % (28.6) %

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.

Net sales for the three months ended September 30, 2025 decreased $82 million when compared to the same period in 2024, primarily due to lower end-market demand in North America across most product lines as rental customers allocated less capital expenditures, focusing primarily on replacement requirements.

Operating profit for the three months ended September 30, 2025 decreased $18 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 a favorable discrete item of approximately $18 million pertaining to the release of a customs-related contingency and cost reductions.

Materials Processing

Three Months Ended June 30,

Three Months Ended September 30,

Sales % Change In

4 unchanged sentences

52 12.5 % 56 12.6 % (7.1) %

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.

Net sales for the three months ended September 30, 2025 decreased $27 million when compared to the same period in 2024, primarily due to lower end-market demand in our North America concrete business.

Operating profit for the three months ended September 30, 2025 decreased $4 million when compared to the same period in 2024, primarily due to lower sales volume, partially offset by cost reductions.

Environmental Solutions

Three Months Ended June 30,

Three Months Ended September 30,

Sales % Change In

4 unchanged sentences

58 13.3 % 20 13.2 % 190.0 %

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.

Net sales for the three months ended September 30, 2025 increased $284 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 utilities trucks.

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.

Operating profit for the three months ended September 30, 2025 increased $38 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 the acquisition of ESG.

Corporate and Other / Eliminations

Three Months Ended June 30,

Three Months Ended September 30,

Sales % Change In

5 unchanged sentences

* Not a meaningful percentage

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.

Operating loss for the three months ended September 30, 2025 decreased $2 million when compared to the same period in 2024.

The decrease in operating loss is primarily due to lower compensation costs, partially offset by intercompany eliminations.

Interest Expense, Net of Interest Income

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

Interest expense, net of interest income, for the three months ended September 30, 2025 and 2024 was $42 million and $10 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 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.

Other income (expense) – net was an expense of $4 million and $13 million for the three months ended September 30, 2025 and 2024, respectively.

The decrease in expense is primarily due to lower deal related costs and favorable impact of changes in foreign exchange rates.

During the three months ended September 30, 2025, we recognized income tax expense of $29 million on income of $94 million, an effective tax rate of 31.4%, as compared to income tax expense of $11 million on income of $99 million, an effective tax rate of 11.1%, for the three months ended September 30, 2024.

The higher effective tax rate for the three months ended September 30, 2025 when compared with the three months ended September 30, 2024 is primarily due to an increase in unfavorable discrete items of which the most significant relates to change in German tax legislation.

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.

8 unchanged sentences

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,

The impacts of OBBBA are reflected in our results for the quarter ended September 30, 2025.

There was no material effect on our income tax expense or effective tax rate.

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Nine Months Ended September 30,

Sales % Change In

7 unchanged sentences

338 8.2 % 473 12.2 % (28.5) %

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,

Net sales for the nine months ended September 30, 2025 increased $217 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 nine months ended September 30, 2025 decreased $68 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 and a favorable discrete item of approximately $18 million pertaining to the release of a customs-related contingency in Aerials.

SG&A expenses for the nine months ended September 30, 2025 increased $67 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 cost reductions within Aerials and MP.

Operating profit for the nine months ended September 30, 2025 decreased $135 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, an Aerials discrete item and cost reduction actions within Aerials and MP.

Nine Months Ended September 30,

Sales % Change In

4 unchanged sentences

93 5.8 % 270 13.7 % (65.6) %

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.

Net sales for the nine months ended September 30, 2025 decreased $380 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 nine months ended September 30, 2025 decreased $177 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 a favorable discrete item of approximately $18 million pertaining to the release of a customs-related contingency and cost reductions.

Materials Processing

Six Months Ended June 30,

Nine Months Ended September 30,

Sales % Change In

4 unchanged sentences

137 10.9 % 205 14.0 % (33.2) %

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.

Net sales for the nine months ended September 30, 2025 decreased $210 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 nine months ended September 30, 2025 decreased $68 million when compared to the same period in 2024, primarily due to lower sales volume, production adjustments and higher restructuring costs, partially offset by cost reductions.

Environmental Solutions

Six Months Ended June 30,

Nine Months Ended September 30,

Sales % Change In

4 unchanged sentences

175 13.8 % 54 11.9 % 224.1 %

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.

Net sales for the nine months ended September 30, 2025 increased $810 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 utilities trucks.

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.

Operating profit for the nine months ended September 30, 2025 increased $121 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,

Nine Months Ended September 30,

Sales % Change In

5 unchanged sentences

* 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.

Net sales for the nine months ended September 30, 2025 decreased $3 million when compared to the same period in 2024, primarily due to changes in intercompany eliminations and lower sales for government programs.

Operating loss for the nine months ended September 30, 2025 increased $11 million when compared to the same period in 2024.

The increase in operating loss is primarily due to changes in intercompany eliminations and lower sales for government programs.

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.

Interest expense, net of interest income, for the nine months ended September 30, 2025 and 2024 was $125 million and $35 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.

Other income (expense) – net was an expense of $4 million and $28 million for the nine months ended September 30, 2025 and 2024, respectively.

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

During the nine months ended September 30, 2025, we recognized income tax expense of $51 million on income of $209 million, an effective tax rate of 24.5%, as compared to income tax expense of $73 million on income of $410 million, an effective tax rate of 17.8%, for the nine months ended September 30, 2024.

The higher effective tax rate for the nine months ended September 30, 2025 when compared with the nine months ended September 30, 2024 is primarily due to an increase in unfavorable discrete items of which the most significant relates to change in German tax legislation.

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 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.

At September 30, 2025, we had cash and cash equivalents of $509 million and undrawn availability under our revolving line of credit of $800 million, giving us total liquidity of approximately $1,309 million.

During the nine months ended September 30, 2025, our liquidity increased by approximately $121 million from December 31, 2024 primarily due to cash generated from operations, proceeds from sale of equity securities and settlement of net investment hedges, partially offset by cash used in capital expenditures, share repurchases and dividends.

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.

23 unchanged sentences

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

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

We had free cash flow of $130 million and $153 million for the three and nine months ended September 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

9/30/2025 Nine Months Ended

Net cash provided by (used in) operating activities $ 154 $ 235

1 unchanged sentence

Free cash flow (use) $ 130 $ 153

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):

Pursuant to terms of our trade accounts receivable factoring arrangements, during the nine months ended September 30, 2025, we sold, without material recourse, approximately $492 million of trade accounts receivable to enhance liquidity.

Working capital as a percentage of trailing three month annualized net sales was 23.2% at September 30, 2025.

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

Three Months Ended

June 30, 2025

September 30, 2025

Trailing three month annualized net sales

June 30, 2025

September 30, 2025

Inventories $ 1,207

4 unchanged sentences

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

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.

During the nine months ended September 30, 2025, we repurchased 1,360,706 shares of common stock for $53 million leaving approximately $183 million available for repurchase under our share repurchase programs.

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

In October 2025, our Board declared a dividend of $0.17 per share, which will be paid on December 19, 2025 to our stockholders of record as of November 10, 2025.

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.

2 unchanged sentences

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 $81 million and $33 million for the six months ended June 30, 2025 and 2024, respectively.

Cash provided by operations was $235 million and $149 million for the nine months ended September 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.

Cash used in investing activities was $44 million and $80 million for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in cash used in investing activities relates primarily to proceeds from sale of equity securities, the 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 $98 million and $88 million for the nine months ended September 30, 2025 and 2024, respectively.

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

OFF-BALANCE SHEET ARRANGEMENTS

11 unchanged sentences

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.

Primary currencies to which we are exposed are the Euro, British Pound, Chinese Yuan, Australian Dollar, Indian Rupee 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.

20 unchanged sentences

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