TEREX CORP 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS DESCRIPTION Terex is a global industrial equipment manufacturer of materials processing machinery, waste and recycling solutions, mobile elevating work platforms (MEWPs), and equipment for the electric utility industry. We design, build, and support products used in maintenance, manufacturing, energy, 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. Certain Terex products and solutions enable customers to reduce their impact on the environment including electric and hybrid offerings that deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste. Our products are manufactured in North America, Europe, and Asia Pacific and sold worldwide. We engage with customers through all stages of the product life cycle, from initial specification to parts and service support. We report our business in the following segments: (i) 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. Non-GAAP Measures In this document, we refer to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Management believes that presenting these non-GAAP financial measures provide investors with additional analytical tools which are useful in evaluating our operating results and the ongoing performance of our underlying businesses because they (i) provide meaningful supplemental information regarding financial performance by excluding impact of one-time items and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results. We do not, nor do we suggest that investors consider, such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP measures also include translation effect of foreign currency exchange rate changes on net sales, gross profit, selling, general & administrative (“SG&A”) expenses and operating profit. As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating current period results using rates that the comparable prior periods were translated at to isolate the foreign exchange component of fluctuation from the operational component. We calculate a non-GAAP measure of free cash flow. We define free cash flow as Net cash provided by (used in) operating activities less Capital expenditures, net of proceeds from sale of capital assets. We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations. We discuss forward-looking information related to expected earnings per share (“EPS”) excluding the impact of potential future acquisitions, 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. 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. 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 31 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. Overview 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 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. 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 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. 32 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 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 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. 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 legacy sales. 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. 33 ROIC ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Stockholders’ equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying 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. We calculate ROIC using the last four quarters’ NOPAT as this represents the most recent 12-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters’ ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital. In the calculation of ROIC, we adjust 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. We believe ROIC measures return on the amount of capital invested in our businesses and is an accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents to Stockholders’ equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at September 30, 2025 was 11.9%. Amounts described below are reported in millions of U.S. dollars, except for the annualized effective tax rate as adjusted. Amounts are as of and for the three months ended for the periods referenced in the tables below. Sep '25 Jun '25 Mar '25 Dec '24 Sep '24 Annualized effective tax rate as adjusted (1) 15.6 % 15.6 % 15.6 % 15.6 % Operating profit as adjusted $ 168 $ 164 $ 111 $ 97 Multiplied by: 1 minus annualized effective tax rate as adjusted 84.4 % 84.4 % 84.4 % 84.4 % Net operating income (loss) after tax as adjusted $ 142 $ 138 $ 94 $ 82 Debt $ 2,593 $ 2,593 $ 2,586 $ 2,584 $ 628 Less: Cash and cash equivalents (509) (374) (298) (388) (352) Debt less Cash and cash equivalents 2,084 2,219 2,288 2,196 276 Stockholders’ equity as adjusted 2,166 2,088 1,941 1,893 1,968 Debt less Cash and cash equivalents plus Stockholders’ equity as adjusted $ 4,250 $ 4,307 $ 4,229 $ 4,089 $ 2,244 (1) The annualized effective tax rate as adjusted for each 2024 period represents the adjusted full-year 2024 effective tax rate. September 30, 2025 ROIC 11.9 % NOPAT as adjusted (last 4 quarters) $ 456 Average Debt less Cash and cash equivalents plus Stockholders’ equity as adjusted (5 quarters) $ 3,824 34 Three months ended 9/30/2025 Three months ended 6/30/2025 Three months ended 3/31/2025 Three months ended 12/31/2024 Reconciliation of operating profit: Operating profit as reported $ 140 129 $ 69 $ 53 Adjustments: Restructuring and other 5 12 6 4 Purchase price accounting 20 20 21 38 Deal related 3 3 5 2 Litigation related — — 10 — Operating profit as adjusted $ 168 $ 164 $ 111 $ 97 As of 9/30/2025 As of 6/30/2025 As of 3/31/2025 As of 12/31/2024 As of 9/30/2024 Reconciliation of Stockholders’ equity: Stockholders’ equity as reported $ 2,017 $ 1,965 $ 1,844 $ 1,832 $ 1,957 Effects of adjustments, net of tax: Restructuring and other 27 23 13 8 4 Purchase price accounting 84 67 50 32 — Deal related 26 22 19 14 — Litigation related 8 8 8 — — Equity security related 4 3 7 7 7 Stockholders’ equity as adjusted $ 2,166 $ 2,088 $ 1,941 $ 1,893 $ 1,968 Nine Months Ended September 30, 2025 Income (loss) before income taxes (Provision for) benefit from income taxes Income tax rate Reconciliation of annualized effective tax rate: As reported $ 209 $ (51) 24.5 % Effect of adjustments: Restructuring and other 22 (5) Purchase price accounting 62 (13) Deal related 14 (4) Equity security related (3) 1 Litigation related 10 (2) Tax related benefit (1) — 13 Tax related to full-year effective tax rate expectation — 6 Tax related to Swiss deferred tax asset — 6 As adjusted $ 314 $ (49) 15.6 % (1) The amount represents tax benefit arising from foreign tax legislative changes, in addition to tax planning associated with restructuring activity. 35 RESULTS OF OPERATIONS Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024 Consolidated Three Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,387 — $ 1,212 — 14.4 % Gross profit 282 20.3 % 245 20.2 % 15.1 % SG&A expenses 142 10.2 % 123 10.1 % 15.4 % Operating profit 140 10.1 % 122 10.1 % 14.8 % 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 $18 million when compared to the same period in 2024, primarily due to strong ESG performance, an Aerials discrete item and cost reductions within Aerials and MP, partially offset by the impact of lower legacy sales volume, as well as unfavorable mix and tariffs in Aerials. Aerials Three Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 537 — $ 619 — (13.2) % Operating profit 45 8.4 % 63 10.2 % (28.6) % 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 $18 million pertaining to the release of a customs-related contingency and cost reductions. 36 Materials Processing Three Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 417 — $ 444 — (6.1) % Operating profit 52 12.5 % 56 12.6 % (7.1) % 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 $4 million when compared to the same period in 2024, primarily due to lower sales volume, partially offset by cost reductions. Environmental Solutions Three Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 435 — $ 151 — 188.1 % Operating profit 58 13.3 % 20 13.2 % 190.0 % 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 September 30, 2025 increased $38 million when compared to the same period in 2024, primarily due to operating profit generated by the recently acquired ESG business. See Note D - “Acquisitions and Dispositions” in our Condensed Consolidated Financial Statements for additional information regarding the acquisition of ESG. Corporate and Other / Eliminations Three Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ (2) — $ (2) — — % Operating profit (loss) (15) * (17) * 11.8 % * Not a meaningful percentage 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. 37 Interest Expense, Net of Interest Income 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 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. Income Taxes 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. 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. 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. 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 Consolidated Nine Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 4,103 — $ 3,886 — 5.6 % Gross profit 803 19.6 % 871 22.4 % (7.8) % SG&A expenses 465 11.3 % 398 10.2 % 16.8 % Operating profit 338 8.2 % 473 12.2 % (28.5) % 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. 38 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 $135 million when compared to the same period in 2024, primarily due to the impact of lower sales volume, production adjustments and unfavorable mix within Aerials and MP, as well as tariffs within Aerials, partially offset by strong ESG performance, an Aerials discrete item and cost reduction actions within Aerials and MP. Aerials Nine Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,594 — $ 1,974 — (19.3) % Operating profit 93 5.8 % 270 13.7 % (65.6) % 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 $18 million pertaining to the release of a customs-related contingency and cost reductions. Materials Processing Nine Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,253 — $ 1,463 — (14.4) % Operating profit 137 10.9 % 205 14.0 % (33.2) % 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 $68 million when compared to the same period in 2024, primarily due to lower sales volume, production adjustments and higher restructuring costs, partially offset by cost reductions. 39 Environmental Solutions Nine Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ 1,264 — $ 454 — 178.4 % Operating profit 175 13.8 % 54 11.9 % 224.1 % 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 nine months ended September 30, 2025 increased $121 million when compared to the same period in 2024, primarily due to operating profit generated by the recently acquired ESG business and continued margin improvements in both ESG and Terex Utilities. See Note D - “Acquisitions and Dispositions” in our Condensed Consolidated Financial Statements for additional information regarding the acquisition of ESG. Corporate and Other / Eliminations Nine Months Ended September 30, 2025 2024 % of Sales % of Sales % Change In Reported Amounts ($ amounts in millions) Net sales $ (8) — $ (5) — (60.0) % Operating profit (loss) (67) * (56) * (19.6) % * Not a meaningful percentage 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 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. 40 Other Income (Expense) – Net 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. Income Taxes 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 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. We have no significant debt maturities until 2029. Our actions to maintain liquidity include disciplined management of costs and working capital. We believe these measures will provide us with adequate liquidity to comply with our financial covenants under our bank credit facility, continue to support internal operating initiatives and meet our operating and debt service requirements for at least the next 12 months from the date of issuance of this quarterly report. See Part I, Item 1A. – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 and Part II Item 1A – “Risk Factors” of this Quarterly Report for a detailed description of the risks resulting from our debt and our ability to generate sufficient cash flow to operate our business. Our ability to generate cash from operations is subject to numerous factors, including the following: • The duration and depth of the global economic volatility resulting from 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. • Many of our customers fund their purchases through third-party finance companies that extend credit based on the creditworthiness of customers and expected residual value of our equipment. Changes either in customers’ credit profile or used equipment values may affect the ability of customers to purchase equipment. There can be no assurance that third-party finance companies will continue to extend credit to our customers as they have in the past. • Our suppliers extend payment terms to us primarily based on our overall credit rating. Deterioration in our credit rating may influence suppliers’ willingness to extend terms and in turn accelerate cash requirements of our business. • Sales of our products are subject to general economic conditions, 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. • Availability and utilization of other sources of liquidity such as trade account receivables sales programs. Typically, we have invested our cash in a combination of highly rated, liquid money market funds and in short-term bank deposits with large, highly rated banks. Our investment objective is to preserve capital and liquidity while earning a market rate of interest. We seek to use cash held by our foreign subsidiaries to support our operations and continued growth plans through 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. Incremental cash repatriated to the U.S. would not be expected to result in material foreign income and withholding, U.S. federal or state income tax cost. We will continue to seek opportunities to tax-efficiently mobilize and redeploy funds. 41 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 9/30/2025 Nine Months Ended 9/30/2025 Net cash provided by (used in) operating activities $ 154 $ 235 Capital expenditures, net of proceeds from sale of capital assets (24) (82) Free cash flow (use) $ 130 $ 153 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 September 30, 2025 Net sales $ 1,387 x 4 Trailing three month annualized net sales $ 5,548 As of September 30, 2025 Inventories $ 1,207 Receivables 821 Trade accounts payable (696) Customer advances and Short-term unearned revenue (47) Working capital $ 1,285 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, 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. These include results of operations, projected operating results for future periods and debt to equity leverage. Our ability to access capital markets is also subject to our timely filing of periodic reports with the Securities and Exchange Commission. In addition, terms of our bank credit facilities and senior notes contain restrictions on our ability to make further borrowings and to sell substantial portions of our assets. Cash Flows Cash provided by operations was $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 $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. 42 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 Guarantees We may assist customers in their rental, leasing and acquisition of our products by facilitating financing transactions directly between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions, providing recourse in certain circumstances. The expectation of losses or non-performance is evaluated based on consideration of historical customer assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other factors. Many of these factors, including the assessment of a customer’s ability to pay, are influenced by economic and market factors that cannot be predicted with certainty. Our maximum liability is generally limited to our customer’s remaining payments due to the third-party financial institutions at the time of default. In the event of a customer default, we are generally able to recover and dispose of the equipment at a minimum loss, if any, to us. Reserves are recorded for expected loss over the contractual period of risk exposure. There can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our ability to recover losses experienced from our guarantees may be affected by economic conditions in used equipment markets at the time of loss. See Note K – “Litigation and Contingencies” in the Notes to Condensed Consolidated Financial Statements for further information regarding our guarantees. CONTINGENCIES AND UNCERTAINTIES Foreign Exchange and Interest Rate Risk Our products are sold in over 100 countries around the world and, accordingly, our revenues are generated in foreign currencies, while costs associated with those revenues are only partly incurred in the same currencies. Primary currencies to which we are exposed are the Euro, British Pound, Chinese Yuan, 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. We manage our exposure to interest rate risk by establishing a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintain a ratio of floating and fixed rates on this mix of indebtedness using interest rate derivatives when necessary. See Note I – “Derivative Financial Instruments” in the Notes to Condensed Consolidated Financial Statements for further information regarding our derivatives and Item 3 “Quantitative and Qualitative Disclosures About Market Risk” for a discussion of the impact changes in foreign currency exchange rates and interest rates may have on our financial performance. Other We are subject to a number of contingencies and uncertainties including, without limitation, product liability claims, workers’ compensation liability, intellectual property litigation, self-insurance obligations, tax examinations, guarantees, class action lawsuits and other matters. See Note 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. Many of the exposures are unasserted or proceedings are at a preliminary stage, and it is not presently possible to estimate the amount or timing of any liability. However, we do not believe these contingencies and uncertainties will, individually or in aggregate, have a material adverse effect on our operations. For contingencies and uncertainties other than income taxes, when it is probable a loss will be incurred and possible to make reasonable estimates of our liability with respect to such matters, a provision is recorded for the amount of such estimate or for the minimum amount of a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur. 43 We generate hazardous and non-hazardous wastes in the normal course of our manufacturing operations. As a result, we are subject to a wide range of environmental laws and regulations. All of our employees are required to obey all applicable health, safety and environmental laws and regulations and must observe the proper safety rules and environmental practices in work situations. These laws and regulations govern actions that may have adverse environmental effects, such as discharges to air and water, and require compliance with certain practices when handling and disposing of hazardous and non-hazardous wastes. These laws and regulations would also impose liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances, should any such events occur. We are committed to complying with these standards and monitoring our workplaces to determine if equipment, machinery and facilities meet specified safety standards. Each of our manufacturing facilities is subject to an environmental audit at least once every five years to monitor compliance. Also, no incidents have occurred which required us to pay material amounts to comply with such laws and regulations. We are dedicated to ensuring that safety and health hazards are adequately addressed through appropriate work practices, training and procedures. We are committed to reducing injuries and working towards a world-class level of safety practices in our industry. RECENT ACCOUNTING STANDARDS Please refer to Note A – “Basis of Presentation” in the accompanying Condensed Consolidated Financial Statements for a summary of recently issued accounting standards. 44