credit suisse industrials conference€¦ · credit suisse industrials conference december 3, 2015...

Credit Suisse Industrials Conference

December 3, 2015

Forward-Looking Statements

& Non-GAAP Measures

2

This presentation contains forward-looking information regarding future events or the Company’s future financial performance based on the current expectations of Terex Corporation. In addition, when included in this presentation, the words “may,” “expects,” “intends,” “anticipates,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. The Company has based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the control of Terex, include among others: Our business is cyclical and weak general economic conditions affect the sales of our products and financial results; the effect of the announcement and pendency of the merger on our customers, employees, suppliers, vendors, distributors, dealers, retailers, operating results and business generally, and the diversion of management’s time and attention while the proposed merger is pending; our ability to successfully integrate acquired businesses; our ability to access the capital markets to raise funds and provide liquidity; our business is sensitive to government spending; our business is highly competitive and is affected by our cost structure, pricing, product initiatives and other actions taken by competitors; impairment of the carrying value of goodwill and other indefinite-lived intangible assets; a material disruption to one of our significant facilities; our retention of key management personnel; the financial condition of suppliers and customers, and their continued access to capital; our providing financing and credit support for some of our customers; we may experience losses in excess of recorded reserves; our ability to obtain parts and components from suppliers on a timely basis at competitive prices; the need to comply with restrictive covenants contained in our debt agreements; our ability to generate sufficient cash flow to service our debt obligations and operate our business; our business is global and subject to changes in exchange rates between currencies, regional economic conditions and trade restrictions; our operations are subject to a number of potential risks that arise from operating a multinational corporation, including compliance with changing regulatory environments, the Foreign Corrupt Practices Act and other similar laws, and political instability; possible work stoppages and other labor matters; compliance with changing laws and regulations, particularly environmental and tax laws and regulations; litigation, product liability claims, intellectual property claims, class action lawsuits and other liabilities; our ability to comply with an injunction and related obligations imposed by the United States Securities and Exchange Commission (“SEC”); disruption or breach in our information technology systems; and other factors, risks and uncertainties that are more specifically set forth in our public filings with the SEC. Non-GAAP Measures: Terex from time to time refers to various non-GAAP (generally accepted accounting principles) financial measures in this presentation. Terex believes that this information is useful to understanding its operating results and the ongoing performance of its underlying businesses without the impact of special items. See the appendix at the end of this presentation as well as the Terex third quarter 2015 earnings release on the Investor Relations section of our website www.terex.com for a description and/or reconciliation of these measures.

3

Continuing to Deliver Solid Results in a

Challenging Environment

Notable year-on-year improvements in the quarter:

• AWP and MP continued to improve profitability, delivering strong incremental

margins in the quarter

• Operating margin up 70 basis points, on an adjusted basis

• Bookings up in AWP, Cranes, MHPS and MP

Shifting global market conditions:

• US market remains flat, negatively impacted by oil and gas investment

• European markets mixed

• China growth slowing, Brazil falling, Australia flat to down

• Pricing remains a headwind, but benefiting from material cost reductions

4

Net Sales Bridge Q3-14 to Q3-15

USD Millions

800

1,000

1,200

1,400

1,600

1,800

1,810

(25)(27)

(8) (102)

3 (10)

1,641

Q3 Net Sales

5

OP Bridge Q3-14 to Q3-15

USD Millions

*As adjusted

AWP

Construction

Cranes

MHPS

MP

Terex Total

40

60

80

100

120

140

128 127

11 (5)

8

1(17)

1

Q3 Operating Profit*

11.4%

0.8%

5.2%6.0% 5.6%

7.0%

13.8%

1.5%

4.1%3.0%

10.7%

7.7%

0%

4%

8%

12%

16%

AWP Construction Cranes MHPS MP Terex Total

Operating Margin* Q3-14 Q3-15

In Summary

6

• Solid performance in a challenging environment

• Staying focused on internal improvement initiatives and taking

steps to align business structures with markets

• Full year outlook at or near the low end of the previously

announced earnings guidance

• Merger with Konecranes progressing, targeting a first-half

2016 close

Questions?

7

Appendix

8

Q3 Continuing Operations Results

9

USD Millions, except Earnings per Share

*Please see reconciliation to US GAAP on pages 20 and 24

Q3 2015

As Reported

Q3 2015

As Adjusted*

Q3 2014

As Reported

Q3 2014

As Adjusted*

Net Sales $1,641.3 $1,641.3 $1,809.8 $1,809.8

% Change Q3 2014 (9.3%) (9.3%)

Gross Profit 336.6 342.8 357.3 367.4

Gross Margin 20.5% 20.9% 19.7% 20.3%

SG&A (224.7) (216.0) (240.5) (239.9)

% Net Sales (13.7%) (13.2%) (13.3%) (13.3%)

Income From Operations 111.9 126.8 116.8 127.5

Operating Margin 6.8% 7.7% 6.5% 7.0%

Other Income (Expense) - Net (35.0) (26.4) (30.4) (27.8)

Effective Tax Rate 40.1% 35.6% 32.1% 32.0%

Earnings per Share $0.41 $0.58 $0.51 $0.59

EBITDA $137.4 $152.3 $153.2 $163.9

% Net Sales 8.4% 9.3% 8.5% 9.1%

Net Working Capital $1,829.8 $1,876.1

As a % of annualized sales 27.9% 25.9%

ROIC 9.7% 9.8%

Q3 Liquidity Bridge

10

USD Millions

Free Cash Flow

$62 million TFS Net Cash

Impact

($24) million

200

400

600

800

1,000

818

87(85)

(25)

2734 (7) (12) (8)

829

*

*Net cash provided by operating activities plus increase in TFS assets, plus decrease in cash for securitization settlement

North America Western Europe

Asia/ Oceania

Other

LATAM

Sales by Geography 2015 vs 2014

11

(2)%

(20)%

(21)%

(17)%

Q3 FX-Adj.

Q3

Q3

Q3

Q3 (1)%

FX-Adj.

FX-Adj.

FX-Adj.

FX-Adj.

3%

12%

5%

30%

12%

10%5%

43%

2015 Q3

Western Europe

Asia/ Oceania

Other

LATAM

North America

33%

13%

8%6%

40%

2014 Q3

13%

(2)%

31%

(10)%

(3)%

Aerial Work Platforms

12

USD Millions

304 637 571 517 342 451 799 603 382 936 500 374 439

70%

177%

114%

87%

65%

97%

139%

85%

65%

207%

100%

56%

80%

0%

50%

100%

150%

200%

250%

0

200

400

600

800

1,000

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2

'15

Q3

'15

Net Bookings Book-to-Bill Ratio

312

214

298

150

200

250

300

350

2013 2014 2015

Q3 Backlog (<12 mo.)

• Solid backlog

and book-to-bill

• Some softening

in NA, pricing

and currency

are headwinds

• Benefits from

material cost

and productivity

Construction

13

• Dumpers and concrete products

backlog up year on year

• Terex® Fuchs material handlers

flat to prior year

• Compact

equipment

businesses in

India and

Germany

remain weak

USD Millions

164 237 184 194 139 224 223 183 128 191 198 122 109

82%

130%

95%93%

82%

127% 126%

89%

69%

103%

149%

75%

71%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0

50

100

150

200

250

Q3'12

Q4'12

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Q4'14

Q1'15

Q2'15

Q3'15


95

123 119

25

9

50

100

150

2013 2014 2015


ASV

120

132

Cranes

14

• Encouraging booking

activity in tower cranes

and European mobile

cranes

• Utilities business

steady, but some signs

of softening

• Global crane market

remains challenging

USD Millions

*

357 473 458 460 363 512 533 499 286 457 375 433 303

70%

93% 98%89%

81%

108%

138%

100%

69%

97% 98% 95%

76%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0

100

200

300

400

500

600

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2

'15

Q3

'15


485

552

427

200

300

400

500

600

2013 2014 2015


665 631 532

162120

44

200

300

400

500

600

700

800

900

2013 2014 2015


PortAutomation

827

751

576

Material Handling & Port Solutions

USD Millions

396 374 496 393 510 375 398 418 303 354 309 395 335

90% 90%

148%

107%

112%

71%

109%

98%

66% 70%

97%

109%

93%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0

100

200

300

400

500

600

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2

'15

Q3

'15


• Material Handling

backlog steady on

FX neutral basis

• Sluggish Port

Equipment market

with some

momentum in mobile

harbor cranes

15

Materials Processing

16

• Integrating new acquisitions

• Benefiting from material costs,

pricing is a headwind

• Persistent weakness in mining

sector remains a headwind

131 155 168 151 139 159 163 174 144 153 171 135 155

87%

103%110%

86%94%

106% 109%

96% 93%98%

119%

81%

99%

0%

20%

40%

60%

80%

100%

120%

140%

0

40

80

120

160

200

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2*

'15

Q3

'15


52 55

62

30

35

40

45

50

55

60

65

2013 2014 2015


Backlog Trend

Backlog shown is less than 12 months

USD Millions

17

$ % $ %

Terex (353) (19%) (222) (13%)

MP (2) (3%) 7 12%

MHPS (55) (9%) (175) (23%)

Cranes (113) (21%) (125) (23%)

Constr. (45) (27%) (13) (10%)

AWP (138) (32%) 84 39%

Sequential

Change

Year on Year

Change

312 295

523 418

214

698 699

436 298

120 166

214

188

132

138 204

164

119

485501

673

661

552

539563

540

427

827 805

879

865

751

575

596

631

576

52 61

75

67

55

51

79

64

62

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

AWP Construction Cranes MHPS MP

2,141

1,704

2,001

1,8351,828

2,364

2,199

1,796

1,482

$ %

Terex (101) (6%)

MP 11 20%

MHPS (120) (16%)

Cranes (94) (17%)

Constr. (6) (5%)

AWP 108 50%

Year on Year

Change

312 295

523 418

214

698 699

436 322

120 166

214

188

132

138 204

164

126

485501

673

661

552

539563

540

458

827 805

879

865

751

575

596

631

631

52 61

75

67

55

51

79

64

66

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

AWP Construction Cranes MHPS MP

2,141

1,704

2,001

1,8351,828

2,3642,199

1,796

1,603

Backlog Trend – Currency Neutral

- Currency Neutral

USD Millions

18 Backlog shown is less than 12 months

YTD Continuing Operations Results

19


YTD Q3 2015

As Reported

YTD Q3 2015

As Adjusted*

YTD Q3 2014

As Reported

YTD Q3 2014

As Adjusted*

Net Sales $4,965.4 $4,965.4 $5,519.5 $5,519.5

% Change YTD 2014 (10.0%) (10.0%)

Gross Profit 997.4 1,003.6 1,114.5 1,124.6

Gross Margin 20.1% 20.2% 20.2% 20.4%

SG&A (693.0) (684.3) (761.8) (761.2)

% Net Sales (14.0%) (13.8%) (13.8%) (13.8%)

Income From Operations 304.4 319.3 352.7 363.4

Operating Margin 6.1% 6.4% 6.4% 6.6%

Other Income (Expense) (98.1) (89.5) (94.9) (92.3)

Effective Tax Rate 36.5% 34.9% 30.7% 30.8%


EBITDA $396.2 $411.1 $464.5 $475.2

% Net Sales 8.0% 8.3% 8.4% 8.6%

Net Working Capital $1,829.8 $1,876.1

As a % of annualized sales 27.9% 25.9%

ROIC 9.7% 9.8%

*Please see reconciliation to US GAAP on pages 21 and 25

Q3 2015 Adjustments

20

Net Sales $1,641.3 — — — $1,641.3

Gross Profit 336.6 — 3.7 2.5 342.8

SG&A (224.7) — 8.7 (216.0)

Income From Operations 111.9 — 12.4 2.5 126.8

Interest Income (Expense) (23.6) — — — (23.6)

Other Income (Expense) (11.4) 8.6 — — (2.8)

Income (Loss) from Cont. Ops before Taxes 76.9 8.6 12.4 2.5 100.4

Benefit from (Provision for) Income Taxes (30.8) (0.7) (3.3) (0.9) (35.7)

Non Controlling Interest (1.3) — — — (1.3)

Income (Loss) from Continuing Operations $44.8 7.9 9.1 1.6 $63.4

Earnings per Share $0.41 0.07 0.08 0.02 $0.58

Q3 2015

As Adjusted

Product

Campaign

Restructuring &

Related

Merger

Related

Q3 2015

As Reported


YTD 2015 Adjustments

21

Net Sales $4,965.4 — — — $4,965.4

Gross Profit 997.4 — 3.7 2.5 1,003.6

SG&A (693.0) — 8.7 — (684.3)

Income From Operations 304.4 — 12.4 2.5 319.3

Interest Income (Expense) (76.8) — — — (76.8)

Other Income (Expense) (21.3) 8.6 — — (12.7)

Income (Loss) from Cont. Ops before Taxes 206.3 8.6 12.4 2.5 229.8

Benefit from (Provision for) Income Taxes (75.4) (0.7) (3.3) (0.9) (80.3)

Non Controlling Interest (3.0) — — — (3.0)

Income (Loss) from Continuing Operations $127.9 7.9 9.1 1.6 $146.5

Earnings per Share $1.17 0.07 0.08 0.02 $1.34

YTD 2015

As Reported

Merger

Related

Restructuring &

Related

Product

Campaign

YTD 2015

As Adjusted


Q3 2015 Adjusted OP by Segment

USD Millions

22

Q3 2015 Gross Q3 2015

As Reported Profit As Adjusted

AWP 79.4 — — 79.4

Construction 2.7 — — 2.7

Cranes 12.4 3.8 0.6 16.8

MHPS 10.3 — 0.6 10.9

MP 13.9 2.4 0.7 17.0

Corporate (6.8) — 6.8 0.0

Consolidated 111.9 6.2 8.7 126.8

SG&A

YTD 2015 Adjusted OP by Segment

USD Millions

23

YTD 2015 Gross YTD 2015


AWP 226.6 — — 226.6

Construction (1.1) — — (1.1)

Cranes 38.6 3.8 0.6 43.0

MHPS 7.3 — 0.6 7.9

MP 46.6 2.4 0.7 49.7

Corporate (13.6) — 6.8 (6.8)

Consolidated 304.4 6.2 8.7 319.3

SG&A

Q3 2014 Adjustments

24

Q3 2014 Q3 2014

As Reported As Adjusted

Net Sales $1,809.8 — — $1,809.8

Gross Profit 357.3 10.1 — 367.4

SG&A (240.5) 0.6 — (239.9)

Income From Operations 116.8 10.7 — 127.5

Interest Income (Expense) (26.5) — — (26.5)

Other Income (Expense) (3.9) — 2.6 (1.3)

Income (Loss) from Cont. Ops before Taxes 86.4 10.7 2.6 99.7

Benefit from (Provision for) Income Taxes (27.7) (3.3) (0.9) (31.9)

Non Controlling Interest — — — —

Income (Loss) from Continuing Operations $58.7 $7.4 $1.7 $67.8


Debt

Refinance

Restructuring &

Related - MHPS


YTD 2014 Adjustments

25

YTD 2014 YTD 2014

As Reported As Adjusted

Net Sales $5,519.5 — — $5,519.5

Gross Profit 1,114.5 10.1 — 1,124.6

SG&A (761.8) 0.6 — (761.2)

Income From Operations 352.7 10.7 — 363.4

Interest Income (Expense) (86.1) — — (86.1)

Other Income (Expense) (8.8) — 2.6 (6.2)

Income (Loss) from Cont. Ops before Taxes 257.8 10.7 2.6 271.1

Benefit from (Provision for) Income Taxes (79.2) (3.3) (0.9) (83.4)

Non Controlling Interest 0.5 — — 0.5

Income (Loss) from Continuing Operations $179.1 $7.4 $1.7 $188.2


Restructuring &

Related - MHPS

Debt

Refinance


Q3 2014 Adjusted OP by Segment

USD Millions

26

Q3 2014 Gross Q3 2014


AWP 68.4 — — 68.4


Cranes 21.8 — — 21.8

MHPS 17.6 10.1 0.6 28.3

MP 8.7 — — 8.7

Corporate (1.3) — — (1.3)

Consolidated 116.8 10.1 0.6 127.5

SG&A

YTD 2014 Adjusted OP by Segment

USD Millions

27

YTD 2014 Gross YTD 2014


AWP 264.1 — — 264.1


Cranes 51.3 — — 51.3

MHPS 14.0 10.1 0.6 24.7

MP 42.4 — — 42.4

Corporate (19.7) — — (19.7)

Consolidated 352.7 10.1 0.6 363.4

SG&A

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