What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-07 · 122 added, 150 removed, 313 unchanged (46% of the section changed)

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We report our business in the following segments:

(i) MP, (ii) AWP, and (iii) ESG.

(i) ES, (ii) MP, and (iii) Aerials.

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

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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 provides 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.

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, SG&A expenses and operating profit.

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.

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We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations.

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

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.

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 Consolidated Balance Sheet amounts for Receivables (net of allowance) plus Inventories, less Trade accounts payable and Customer advances.

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

Our 2026 outlook for EBITDA and 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 2026 GAAP financial results.

This forward-looking information provides guidance to investors about our EBITDA and EPS expectations excluding these unusual items that we do not believe are reflective of our ongoing operations.

Working capital is calculated using the 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.

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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, income (loss) from operations as adjusted, effective tax rate as adjusted and stockholders’ equity as adjusted, which is used in the calculation of our after tax return on invested capital (“ROIC”) (collectively the “Non-GAAP Measures”), which are discussed in detail below.

Safety is a top priority, not only for our team members, but also our customers.

All Terex team members contribute to our effort of continuing to provide products and services for our customers, while maintaining a safe working environment.

We remain focused on executing our multi-year growth plan and continue to invest in new technologies and products across our businesses.

Our strategic operational priorities of execution, innovation and growth continue to strengthen our operations and allow us to capitalize on the demand in our end-markets.

The recently completed acquisition of ESG strengthens our portfolio.

ESG adds a non-cyclical, financially accretive, and market-leading business to our portfolio with tangible synergies in the fast-growing waste and recycling end market.

The implementation of the Terex Operating System (“TOS”) is an important part of our execution improvement journey.

We are evaluating our global footprint, focusing on opportunities to reduce fixed costs while improving operating performance.

When it comes to innovation, we have a very exciting new product development pipeline focused on maximizing return on investment for our customers.

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

This represents an important part of our roadmap to continuously become more competitive and more resilient regardless of market dynamics.

Overall, 2024 financial performance demonstrated continued, strong execution and focus on delivering for our customers and dealers despite continued macroeconomic volatility resulting in the second highest full-year earnings per share performance in our history.

Our MP and aerials businesses adapted quickly to channel adjustments in the second half of the year, reducing costs and stepping down production levels to align with demand.

ESG executed very well in the fourth quarter, their first quarter as a part of Terex.

We saw more challenging macro dynamics as the trajectory of future interest rate cuts and the U.S.

election cast a shadow of uncertainty leading to more cautious decision-making as 2024 progressed.

Although U.S.

construction continues to grow, the rate of growth has slowed, and we are seeing local projects being deferred until investors have more clarity on the macro environment.

Another important factor, particularly in aerials, is that lead times for new equipment have come down, largely back to pre-pandemic levels.

This allows our rental customers to align their equipment delivery schedules more precisely with their requirements.

In MP, we continue to see dealers re-balance inventory levels as more of their customers are renting their machines longer.

When the machine is on rent it remains on the dealer’s balance sheet and limits their ability to order new machines.

Our backlog of $2.3 billion is consistent with historical norms and lower lead times.

Bookings also reflect a return to more normal seasonality.

Non-GAAP measures also include Net Operating Profit After Tax (“NOPAT”) as adjusted, operating profit as adjusted, 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 remains a top priority for Terex, not only for our team members but also our customers.

In 2025, our teams delivered our strongest safety performance to date while maintaining reliable delivery of equipment and services.

We remain focused on executing our strategic priorities by investing to expand our presence in resilient and profitable end markets.

As part of our ongoing portfolio evaluation to reduce business cyclicality, we completed the divestiture of our tower and rough terrain cranes businesses.

We continue to deploy the Terex Operating System (“TOS”) to further enhance the efficiency of our operational footprint, reduce fixed costs, and drive sustained improvements in operational execution.

In addition, we completed the integration of ESG and are ahead of our commitment to deliver $25 million of synergies.

Overall, 2025 financial performance demonstrated continued focus on our customers and our operational performance while navigating through a very dynamic environment, including tariffs.

Net sales grew by 5.7% to $5.4 billion as the full year contribution from the ESG acquisition more than offset declines in Aerials and MP driven by channel adjustment.

ESG continued to execute very well from higher throughput and profitability.

We achieved operating profit of $475 million and free cash flow of $325 million, which translates to 147% of free cash flow conversion.

Working capital reductions remain a key priority of our capital allocation strategy to deliver value to shareholders while investing for longer-term organic growth.

Our ES segment sales increased 12.7% year over year on a proforma basis to $1.7 billion driven by improved throughput and delivery of refuse collection vehicles and utilities trucks.

ES delivered strong operating margins of 13.8%, driven by improved operational execution, positive customer and product mix and synergies.

MP executed well in 2025 despite a challenging macro environment.

MP sales declined in 2024 by 15% to $1.9 billion compared to 2023, driven by channel adjustments and challenging macroeconomic factors in Europe, especially in the second half of 2024.

Full year sales of $1.7 billion were 11.6% lower than 2024 due to macro uncertainty, high interest rates which remain a headwind for rent to own conversions and weak European demand.

On the aggregates side, we saw machines on rent longer than usual, impacting dealers' replenishment of new units.

In addition, the European market was weak throughout 2024 which initially impacted Material Handling, Cranes and eventually Aggregates.

MP delivered an operating margin of 13.2% for the year, down 290 basis points as compared to the prior year, which was driven by lower sales volume and unfavorable geographic and product mix.

MP is continuing to take actions to reduce cost, including factory and other layoffs, reduced work schedules and other cost reduction initiatives.

AWP’s 2024 sales were up 3% compared to the prior year, with similar growth rates in Aerials and Terex Utilities.

Growth in the first three quarters more than offset the declines we saw in the fourth quarter when deliveries to rental customers were lower than the prior year.

We were encouraged to see market share gains resulting from new products and other customer-focused improvements made by the team.

AWP delivered operating margins of 11.4% for 2024, down 130 basis points compared to the prior year, driven by second half channel adjustments, production cuts and unfavorable mix.

Despite the headwinds, MP delivered an operating margin of 13.9% from tight cost control and gain on the sale of its tower and rough terrain cranes businesses.

MP ended 2025 with $71 million more backlog than the prior year providing positive momentum heading into 2026.

Aerials 2025 sales declined by 14.5% year over year driven by less demand from independent rental customers who are more exposed to smaller interest rate sensitive projects.

We are encouraged to see year over year 7% growth in the fourth quarter driven by replacement demand from mega projects.

Aerials full year operating profit of 5.0% is 620 basis point lower than prior year driven by deliberate production cuts in Q1, unfavorable customer mix and tariffs.

In 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 and down in all other major geographies.

We continued to execute our capital allocation strategy in 2024 as we funded the ESG acquisition at favorable rates and terms and maintained our corporate ratings, made strategic investments in our businesses and we returned capital to shareholders.

We continued to invest in our businesses with $137 million deployed for capital expenditures in the 2024 to support business growth.

We generated $190 million of free cash flow in 2024.

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

We continued to execute our capital allocation strategy in 2025 by driving more operational cash through tighter net working capital management and redeploying it to repurchase our shares opportunistically.

Our net working capital as a percentage of trailing three- month annualized sales improved from 24.0% in December 2024 to 20.8% in December 2025.

We continue to invest in our businesses with $118 million deployed for capital expenditures to support business growth.

We also returned $98 million to shareholders through share repurchases and dividends in 2025.

We continued to maintain ample liquidity and as of December 31, 2024, we had $1,188

million in available liquidity, with no near-term debt maturities.

See “Liquidity and Capital Resources” for a detailed description of liquidity and working capital levels, including the primary factors affecting such levels, as well as a reconciliation of net cash provided by (used in) operating activities to free cash flow.

In connection with the ESG acquisition, we up-sized and extended our revolver and obtained $2 billion of proceeds from long-term financing.

See Note J – “Long-Term Obligations” for a detailed description of our financing terms.

Looking at our global markets for 2025, we continue to see strength in Waste and Recycling, Utilities and Infrastructure, while the General Construction and Industrial and Commercial sectors are generally stable with upside potential.

We are encouraged by the improved sentiment that followed the U.S.

election in November.

The new administration’s focus on easing the regulatory environment for new projects and encouraging growth and investment in the U.S.

are stimulants for many of our end markets.

With over two-thirds of our revenue coming from North America, a strong U.S.

economy is an important overall tailwind for us.

We are closely following the administration’s approach to international trade policy.

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

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

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

See Part I, Item 1A.

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

Another important macro headwind is the elevated level of interest rates and uncertainty around the Fed’s outlook.

We continue to see strong public sector spending on infrastructure, manufacturing and utilities, but rate-sensitive private projects continue to be impacted by the higher rates.

Turning to Europe, we continue to see a generally weak economic environment.

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

We expect the channel dynamics that impacted our Aerials and MP businesses in the back half of 2024 to carry into the first half of 2025.

We also expect ESG and Terex Utilities to carry strong momentum into 2025 and continue to grow.

We expect overall growth in 2025 as a result of the full-year contribution of ESG, anticipating net sales of [$5.3] to [$5.5] billion.

We expect 2025 earnings per share of between [$4.70] and [$5.10] on lower legacy operating profit, partially offset by ESG accretion.

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

Our outlook excludes the potential impact of recently announced tariffs.

We ended the year with $1.6 billion of liquidity with no near-term debt maturities, repriced our term loan lowering interest rate by 25 basis points and maintained our corporate ratings.

Our key end markets remain resilient with reliable replacement and aftermarket demand, strengthened by the opportunity to differentiate through quality, technology and life-cycle support.

Waste & recycling market is expected to be fueled by population and economic growth, disciplined fleet replacement vehicle innovation that lowers operating costs, and digital solutions.

We anticipate Utilities market growth to be sustained by increasing demand for the U.S.

electrical grid with majority of data center related growth still to come.

Within Infrastructure, we believe there is plenty of runway with previously allocated government spending, with a need for more investments ahead.

We completed the REV Transaction on February 2, 2026 and our 2026 outlook includes REV for the period following the closing of the transaction.

We expect 2026 sales of between $7.5 billion and $8.1 billion, EBITDA between $930 million to $1 billion and earnings per share between $4.50 to $5.00 based on the higher share count resulting from the completion of the transaction.

We are operating in a complex environment with many macroeconomic variables and geo-political uncertainties and results could change negatively or positively.

The outlook we are providing does not account for any potential future acquisitions or divestitures that have not been previously disclosed.

ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations.

ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Stockholders’ equity for the previous five quarters.

NOPAT for each quarter is calculated by multiplying Income (loss) from operations by one minus the full year 2024 effective tax rate as adjusted.

NOPAT for each quarter is calculated by multiplying Operating profit by one minus the full year 2025 effective tax rate as adjusted.

Debt is calculated using amounts for Current portion of long-term debt plus Long-term debt, less current portion.

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In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters’ ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.

In the calculation of ROIC, we adjust income (loss) from operations, 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.

In the calculation of ROIC, we adjust operating profit, 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 use ROIC as one measure to assess operational performance, which is also included in certain compensation programs.

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13.5 % 13.5 % 13.5 % 13.5 %

Income (loss) from operations as adjusted

Operating profit as adjusted

123 168 164 111

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Three months ended 3/31/25

Reconciliation of income (loss) from operations:

Income (loss) from operations as reported $ 53 $ 122 $ 193 $ 158

Accelerated vesting / severance

Reconciliation of operating profit:

Operating profit as reported

$ 137 $ 140 $ 129 $ 69

Restructuring and other

Purchase price accounting

Deal related 2 3 3 5

Income (loss) from operations as adjusted $ 97 $ 127 $ 196 $ 162

Litigation related

Operating profit as adjusted

$ 123 $ 168 $ 164 $ 111

As of 12/31/25 As of 9/30/25 As of 6/30/25 As of 3/31/25 As of 12/31/24

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Effects of adjustments, net of tax:

Accelerated vesting / severance

25 21 17 14 11

Restructuring and other

Purchase price accounting

Product liability

Mark-to-market

102 85 68 50 32

37 26 23 19 14

Litigation related

Equity security related

(3) (3) (4) 1 —

Stockholders’ equity as adjusted $ 2,231 $ 2,156 $ 2,079 $ 1,931 $ 1,881

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Effect of adjustments:

Accelerated vesting / severance

Restructuring and other

Purchase price accounting

Mark-to-Market

Equity security related

Litigation related

Tax related benefit (1)

Tax related to Swiss deferred tax asset

Foreign tax redetermination UTP

As adjusted $ 394 $ (53) 13.5 %

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

RESULTS OF OPERATIONS

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SG&A expenses 576 10.6 % 542 10.6 % 540 10.5 % 6.3 %

Income from operations 526 10.3 % 637 12.4 % 420 9.5 % (17.4) %

Net sales for the year ended December 31, 2024 decreased $25 million when compared to 2023 primarily due to lower end-market demand across certain product lines and geographies within MP, partially offset by sales generated from the newly acquired ESG business and increased demand for booms and telehandlers in North America.

Gross profit for the year ended December 31, 2024 decreased $109 million when compared to 2023 primarily due to the impact of lower sales volume, unfavorable absorption and mix, and higher severance costs, partially offset by cost reductions.

SG&A expenses for the year ended December 31, 2024 increased $2 million when compared to 2023 primarily due to higher severance costs, technology expenses and a prior year facility sale gain, partially offset by lower compensation cost.

Income from operations for the year ended December 31, 2024 decreased by $111 million when compared to 2023 primarily due to the impact of lower sales volume, unfavorable absorption and mix, and higher severance costs, partially offset by cost reduction and lower compensation cost.

Materials Processing

Operating profit

475 8.8 % 526 10.3 % 637 12.4 % (9.7) %

Net sales for the year ended December 31, 2025 increased $294 million when compared to 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 year ended December 31, 2025 decreased $17 million when compared to 2024, primarily due to the impact of Aerials and MP’s lower sales volume and unfavorable absorption due to production adjustments as well as tariffs within Aerials, partially offset by strong ES 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 year ended December 31, 2025 increased $34 million when compared to 2024, primarily due to additional compensation costs related to the recently acquired ESG business, a one-time litigation related charge and higher restructuring and integration costs, partially offset by gain on the sale of the tower and rough terrain cranes businesses within MP and cost reductions within Aerials and MP.

Operating profit for the year ended December 31, 2025 decreased by $51 million when compared to 2024, primarily due to the impact of Aerials’ lower sales volume, production adjustments and unfavorable tariffs, partially offset by strong ES performance, gain on the sale of the tower and rough terrain cranes businesses within MP, an Aerials discrete item and cost reduction actions within Aerials and MP.

Environmental Solutions

2025 2024 2023

Sales % Change in Reported Amounts 2025 vs 2024

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Net sales $ 1,691 — $ 822 — $ 578 — 105.7 %

Income from operations 252 13.2 % 359 16.1 % 298 15.3 % (29.8) %

Net sales for the year ended December 31, 2024 decreased by $325 million when compared to 2023 primarily due to channel adjustments and lower end-market demand across certain product lines and geographies.

Income from operations for the year ended December 31, 2024 decreased $107 million when compared to 2023 primarily due to lower sales volume and unfavorable product and geographic mix as well as higher severance costs, partially offset by cost reductions.

Aerial Work Platforms

Operating profit

234 13.8 % 82 10.0 % 50 8.7 % 185.4 %

Net sales for the year ended December 31, 2025 increased $869 million when compared to 2024 primarily due to sales generated by the acquired ESG business and growth driven by strong throughput and delivery of refuse collection vehicles and utilities trucks.

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

Operating profit for the year ended December 31, 2025 increased $152 million when compared to 2024 primarily due to operating profit generated by the acquired ESG business and continued margin improvements in both ESG and Terex Utilities.

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

Materials Processing

2025 2024 2023

Sales % Change in Reported Amounts 2025 vs 2024

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Net sales $ 1,681 — $ 1,902 — $ 2,227 — (11.6) %

Income from operations 342 11.4 % 371 12.7 % 196 7.9 % (7.8) %

Net sales for the year ended December 31, 2024 increased $74 million when compared to 2023 primarily due to increased demand for booms and telehandlers in North America.

Income from operations for the year ended December 31, 2024 decreased $29 million when compared to 2023 primarily due to unfavorable product mix, and unfavorable absorption from reduced production in the second half of the year, partially offset by incremental profit achieved on higher sales volume and reduced SG&A expenses.

Environmental Solutions Group

Operating profit

234 13.9 % 252 13.2 % 359 16.1 % (7.1) %

Net sales for the year ended December 31, 2025 decreased by $221 million when compared to 2024, primarily due to lower channel requirements and end-market demand across most product lines and geographies.

Operating profit for the year ended December 31, 2025 decreased $18 million when compared to 2024, primarily due to lower sales volume, partially offset by gain on sale of tower and rough terrain cranes businesses and cost reductions.

2025 2024 2023

Sales % Change in Reported Amounts 2025 vs 2024

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Net sales $ 2,060 — $ 2,410 — $ 2,352 — (14.5) %

Income from operations 12 5.3 % — * — * *

* Not a meaningful percentage

Net sales and Income from operations represent the results of operations from acquisition date of October 8, 2024 through December 31, 2024 related to the newly acquired ESG business.

See Note D - “Acquisitions and Dispositions” in our Consolidated Financial Statements for additional information regarding this transaction.

Operating profit

103 5.0 % 271 11.2 % 321 13.6 % (62.0) %

Net sales for the year ended December 31, 2025 decreased $350 million when compared to 2024, primarily due to lower end-market demand across most product lines and geographies.

Operating profit for the year ended December 31, 2025 decreased $168 million when compared to 2024, primarily due to lower sales volume, 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.

Corporate and Other / Eliminations

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* Not a meaningful percentage

Loss from operations for the year ended December 31, 2024 decreased $13 million when compared to 2023.

The decrease in operating loss is primarily due to lower compensation cost and the favorable changes in foreign exchange performance, partially offset by higher severance costs.

2024 2023 2022

Net sales for the year ended December 31, 2025 decreased $4 million when compared to 2024, primarily due to changes in intercompany eliminations and lower sales for government programs.

Loss from operations for the year ended December 31, 2025 increased $17 million when compared to 2024.

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

2025 2024 2023 % Change in Reported Amounts 2025 vs 2024

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Interest Expense, Net of Interest Income

During the year ended December 31, 2024, interest expense, net of interest income, was $76 million or $20 million higher when compared to 2023 primarily due to the issuance of additional debt to finance the ESG acquisition, partially offset by reduced borrowing from the revolving line of credit and higher interest income in the current year.

During the year ended December 31, 2025, interest expense, net of interest income, was $165 million or $89 million higher when compared to 2024, primarily due to the issuance of additional debt in the fourth quarter of 2024 to finance the ESG acquisition.

Other Income (Expense) – Net

Other income (expense) – net for the year ended December 31, 2025 was an expense of $18 million, compared to $42 million in 2024.

The increase in expense was primarily due to transaction costs related to ESG acquisition and higher mark-to-market losses recorded on an equity investment in 2024 compared to gains recorded in 2023, partially offset by favorable impact of changes in foreign exchange rates and lower non-service cost portion of pension expense in 2024.

The decrease in expense was primarily due to net gains recorded on equity securities and lower deal related costs in 2025.

During the year ended December 31, 2025, we recognized income tax expense of $71 million on income of $292 million, an effective tax rate of 24.3%, as compared to income tax expense of $73 million on income of $408 million, an effective tax rate of 17.8%, for the year ended December 31, 2024.

The higher effective tax rate for the year ended December 31, 2024 when compared to the year ended December 31, 2023 was primarily due to one-time tax benefit in 2023 derived from recording of a deferred tax asset in relation to our Swiss operations.

Gain (Loss) on Disposition of Discontinued Operations – Net of Tax

During the year ended December 31, 2023, we recognized a gain (loss) on disposition of discontinued operations - net of tax of $1 million.

The gain in 2023 primarily relates to post-closing adjustments related to the sales of our former MHPS and mobile cranes businesses.

The higher effective tax rate for the year ended December 31, 2025 when compared to the year ended December 31, 2024 was primarily due to an increase in unfavorable discrete items of which the most significant relates to change in German tax legislation.

CRITICAL ACCOUNTING ESTIMATES

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If the qualitative assessment indicates a quantitative analysis should be performed or a quantitative analysis is directly elected, we evaluate goodwill for impairment by comparing the fair value of each of our reporting units to its carrying value, including the associated goodwill.

To determine the fair values, we use an income approach, along with other relevant market information, derived from a discounted cash flow model to estimate fair value of our reporting units.

We use a combination of the income approach (discounted cash flows) and market approach (market multiples) in estimating the fair value of our reporting units.

When preparing discounted cash flow models under the income approach, we estimate future cash flows using the reporting unit’s internal multi-year forecast, and a terminal value calculated using a growth rate that we believe is appropriate in light of current and expected future economic conditions.

To discount these cash flows, we use our expected weighted average cost of capital, determined using a capital asset pricing model.

When using the market method under the market approach, we apply comparable publicly traded companies’ multiples (e.g., earnings, revenues) to our reporting units’ operating results.

An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized.

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In connection with the annual impairment test conducted as of October 1, 2025, we bypassed the qualitative assessment and proceeded directly to the quantitative impairment test.

The quantitative assessment indicated that each reporting unit had an estimated fair value which substantially exceeded its respective carrying amount at the annual impairment test date.

The quantitative assessment indicated that each reporting unit had an estimated fair value which exceeded its respective carrying amount at the annual impairment test date.

Business Combinations – We use the acquisition method of accounting for acquired businesses that meet the criteria to be accounted for as a business combination, whereby the fair value of total consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition.

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Given the subjective nature of applicable tax laws, results of an audit of some of our tax returns could have a significant impact on our consolidated financial statements.

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 are 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 we determined the impact of enacted Pillar Two legislation on our financial statements is not material, we 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.

RECENT ACCOUNTING STANDARDS

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At December 31, 2025, we had cash and cash equivalents of $772 million and undrawn availability under our revolving line of credit of $800 million, giving us total liquidity of approximately $1,572 million.

During the year ended December 31, 2024, our liquidity increased by approximately $217 million from December 31, 2023 primarily due to an increase in our revolving line of credit.

During the year ended December 31, 2025, our liquidity increased by approximately $384 million from December 31, 2024, primarily due to cash generated from operations, proceeds from sale of business and 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.

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Our ability to generate cash from operations is subject to numerous factors, including the following:

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

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

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

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Deterioration in our credit rating may influence suppliers’ willingness to extend terms and in turn accelerate cash requirements of our business.

• Sales of our products are subject to general economic conditions, weather, competition, translation effect of foreign currency exchange rate changes, and other factors that in many cases are outside our direct control.

• Sales of our products are subject to general economic conditions, tariffs, weather, competition, translation effect of foreign currency exchange rate changes, and other factors that in many cases are outside our direct control.

For example, during periods of economic uncertainty, our customers have delayed purchasing decisions, which in turn reduces cash generated from operations.

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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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Pursuant to terms of our trade accounts receivable factoring arrangements, during the year ended December 31, 2025, we sold, without material recourse, approximately $702 million of trade accounts receivable to enhance liquidity.

Working capital as a percent of trailing three month annualized net sales was 24.0% at December 31, 2024.

Working capital as a percentage of trailing three month annualized net sales was 20.8% at December 31, 2025.

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

5 unchanged sentences

Trade accounts payable

Customer advances

Customer advances and Short-term unearned revenue

Working capital

We remain focused on use of TFS to drive incremental sales by facilitating customer financing solutions in key markets.

On October 8, 2024, we acquired ESG for cash consideration of $2,010 million.

See Note D - “Acquisitions and Dispositions” in our Consolidated Financial Statements for additional information regarding this transaction.

The Company financed the purchase price and related fees and expenses using the net proceeds from senior notes, new term loan borrowings and cash on hand.

See Note J – “Long-Term Obligations” for additional details on financing transactions.

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

During the year ended December 31, 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.

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As of December 31, 2025, the Company had outstanding debt of $2,552 million, with no payment due within 12 months, exclusive of minimum lease payments for capital lease obligations and secured borrowings.

Future interest payments associated with the outstanding debt are approximately $645 million with $152 million payable within 12 months.

For detailed debt information see Note J – “Long Term Obligations” in Notes to Consolidated Financial Statements.

Future interest payments associated with such outstanding debt are approximately $707 million with $150 million payable within 12 months.

For detailed debt information see Note I – “Long Term Obligations” in Notes to Consolidated Financial Statements.

The Company has leases for real property, vehicles and office and industrial equipment.

As of December 31, 2025, the Company had contractual fixed costs primarily related to lease commitments of approximately $165 million, with $46 million payable within 12 months.

For detailed lease information see Note K – “Leases” in Notes to Consolidated Financial Statements.

For detailed lease information see Note J – “Leases” in Notes to Consolidated Financial Statements.

Purchase Obligations

The Company had purchase obligations of approximately $536 million, with substantially all purchase obligations payable within 12 months.

Purchase obligations include non-cancellable and cancellable commitments.

In many cases, cancellable commitments contain penalty provisions for cancellation.

As of December 31, 2025, the Company had purchase obligations of approximately $618 million, with substantially all purchase obligations payable within 12 months.

Purchase obligations predominantly include cancellable and some non-cancellable commitments which may contain cancellation penalty provisions.

We reported a liability of $20 million related to unrecognized tax benefits as of December 31, 2025.

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Changes in market conditions, changes in our funding levels or actions by governmental agencies may result in accelerated funding requirements in future periods.

In 2025, we expect approximately $120 million in capital expenditures, with our largest expenditures related to our manufacturing facility in Mexico and transformation initiatives.

In 2026, we expect approximately $185 million in capital expenditures, including capital expenditures in the REV business, with our largest expenditures related to our manufacturing facility in the U.S.

and transformation initiatives.

On February 2, 2026, we completed the REV Transaction where REV shareholders received 0.9809 share of Terex and $8.71 in cash consideration for each share of REV (representing total cash consideration of $426 million).

In connection with the REV Transaction, there were an additional 48.1 million shares of Terex issued upon conversion.

Cash provided by operations was $440 million and $326 million for the years ended December 31, 2025 and 2024, respectively.

The decrease in cash provided by operations was primarily driven by lower operating profitability.

Cash used in investing activities was $2,127 million and $114 million for the years ended December 31, 2024 and 2023, respectively.

The increase in cash used in investing activities relates primarily to the acquisition of ESG.

Cash provided by financing activities was $1,837 million for the year ended December 31, 2024, compared to cash used in financing activities of $288 million for the year ended December 31, 2023.

The increase in cash provided in financing activities was primarily due to higher debt borrowing and lower debt repayments.

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

Cash provided by investing activities was $32 million for the year ended December 31, 2025, compared to cash used in investing activities of $2,127 million for the years ended December 31, 2024.

The increase in cash provided by investing activities in the current year related primarily to proceeds from the sale of the tower and rough terrain cranes businesses, the 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.

The decrease in cash provided by investing activities in the prior year related primarily to the acquisition of ESG.

Cash used in financing activities was $123 million for the year ended December 31, 2025, compared to cash provided by financing activities of $1,837 million for the year ended December 31, 2024.

The increase in cash used in financing activities was primarily due to lower debt borrowing.

OFF-BALANCE SHEET ARRANGEMENTS

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Our ability to recover losses experienced from our guarantees may be affected by economic conditions in used equipment markets at the time of loss.

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

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

CONTINGENCIES AND UNCERTAINTIES

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Our products are sold in over 100 countries around the world and, accordingly, our revenues are generated in foreign currencies, while costs associated with those revenues are only partly incurred in the same currencies.

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

We purchase hedging instruments to manage variability of future cash flows associated with recognized assets or liabilities due to changing currency exchange rates.

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

purchase hedging instruments to manage variability of future cash flows associated with recognized assets or liabilities due to changing currency exchange rates.

See Risk Factors in Part I, Item 1A.

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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 Consolidated Financial Statements for further information regarding our derivatives and Item 7A.

– “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.

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 N – “Litigation and Contingencies” in the Notes to Consolidated Financial Statements for more information regarding contingencies and uncertainties.

See Note L – “Litigation and Contingencies” in the Notes to 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.

15 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-K

Item 7. Management’s Discussion and Analysis