Terex Corporation · NYSE:TEX
Terex — Q3 2023 Earnings Presentation
30 slides from Terex's earnings presentation, Oct 27, 2023
Slide 1: Q3 2023 Earnings Conference Call
Q3 2023 Earnings Conference Call October 27, 2023 EXECUTE • INNOVATE • GROW
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information in this presentation includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995)
Slide 3: Strong Commitment to Zero Harm Culture and Terex Values
Strong Commitment to Zero Harm Culture and Terex Values Total Recordable Incident Rate (TRIR) 3.4 3.2 3.2 3.0 2.8 2.6 3.82 3.27 2.98 2.09 1.52 1.77 1.93 2.08 1.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q3 YTD Target TRIR Machinery Manufacturing Average TEREX WAY VALUES... SUPPORT A STRONG COMP
Slide 4: Q3 2023: Strong Performance in Dynamic Operating Environment
Q3 2023: Strong Performance in Dynamic Operating Environment Driving Sales and EPS Growth SALES OPERATING PROFIT $1.3B $163M 15% 35% OPERATING MARGIN EPS 12.7% $1.75 A Prostack Ranger 6-24LS stockpiling 190 bps 46% aggregates at a site in the Netherlands EPS OUTLOOK RAISING FULL-YEAR TO ~$7.05 Note:
Slide 5: Positioned to Capitalize on Global Megatrends
Positioned to Capitalize on Global Megatrends WELL-CONNECTED TO DURABLE DRIVERS OF SUSTAINABILITY 5
Slide 6: Megatrends Boost Terex End Markets
Megatrends Boost Terex End Markets DIVERSE PORTFOLIO SUPPORTS PERFORMANCE THROUGH THE CYCLE (1) Estimated sales by end use; (2) Infrastructure end market includes maintenance work; (3) On a trailing 12 month basis 6
Slide 7: Customer Demand Remains Strong
Customer Demand Remains Strong USD Millions Backlog elevated at $3.3B, 3x historical average Bookings reflect return to more normal seasonality • Improved customer deliveries and lead times have • $2.1B booked for 2024 / 2025 providing strong allowed us to reduce backlog visibility into next year •
Slide 8: Innovation: MP's Broad Portfolio of Recycling Equipment
Innovation: MP's Broad Portfolio of Recycling Equipment MP Products Enabling Recycling of Various Types of Waste Construction & Demolition (C&D) Waste Metals Waste Windmill Blades EvoQuip shredder designed for Ecotec TMS 320 extracts metals CBI 6800 grinds blades to be demanding C&D applications fro
Slide 9: Continued Commitment to Strong Sustainability Practices
Continued Commitment to Strong Sustainability Practices STRONG ENVIRONMENTAL SOCIAL GOVERNANCE STEWARDSHIP RESPONSIBILITY Providing innovative solutions, people engagement and sustainable operations Electric / Hybrids Options Supporting Decarbonization Utilities business offers a leading portfolio t
Slide 10: Continued Execution of Strategy
Continued Execution of Strategy Execute / Operational Excellence • Well-positioned to achieve Investor Day targets • Reduced hospital inventory $43M or 68% from prior year • Transfer into permanent Genie Mexico facility on time and on budget ◦ The new facility has earned the prestigious LEED Gold ce
Slide 11: Strong Execution in Dynamic Environment
Strong Execution in Dynamic Environment USD Millions, except Earnings per Share Q3 2023 Q3 2022 Q3 2023 Financial Call-Outs Net Sales $ 1,290.1 $ 1,120.5 Other Income • Mark-to-market gain of $2 million on third-party investments % Change vs 2022 15.1% Gross Profit 292.5 237.1 FX Commentary % of Sal
Slide 12: Materials Processing: Consistent Strong Performance
Materials Processing: Consistent Strong Performance USD Millions Sales Operating Margin Backlog +18.2% YoY +230bps YoY (27%) YoY 16.9% 1,213 541.1 14.6% 457.9 890 Q3 '22 Q3 '23 Q3 '22 Q3 '23 Q3 '22 Q3 '23 Results Drivers • Sales up 16% on FX neutral basis • Continued strong margin performance with o
Slide 13: Aerial Work Platforms: Strong Year-over-Year Improvement
Aerial Work Platforms: Strong Year-over-Year Improvement USD Millions Sales Operating Margin Backlog +13.3% YoY +290bps YoY (10%) YoY 2,720 12.5% 2,456 751.0 662.6 9.6% Q3 '22 Q3 '23 Q3 '22 Q3 '23 Q3 '22 Q3 '23 Results Drivers • Sales up 11% on FX neutral basis due to strong customer demand and impr
Slide 14: Strong Balance Sheet and Liquidity Supports Growth
Strong Balance Sheet and Liquidity Supports Growth USD Millions Highlights Q3 Liquidity • Ample liquidity of $846; Net leverage of 0.5x Undrawn Revolver $494 • Free cash flow conversion of 89% Cash 352 Total Liquidity $846 • ROIC of 29.2% • Dividend up 31% since start of 2023 Net Debt & Leverage • R
Slide 15: Raising Full-Year 2023 Outlook
Raising Full-Year 2023 Outlook USD Millions, except Earnings per Share PREVIOUS UPDATED Terex Outlook (1) PREVIOUS Outlook UPDATED Outlook Outlook Outlook Segment Outlook (1) Operating Operating Net Sales ~$5,100 ~$5,150 Net Sales Net Sales Margin Margin SG&A % to Sales ~10.5% ~10.3% Materials ~$2,2
Slide 16: Positioned for Growth to Deliver Long-Term Value
Positioned for Growth to Deliver Long-Term Value ▪ Diversified industrial leader well-positioned for profitable growth ▪ Excellent portfolio of market-leading businesses positioned to benefit from secular megatrends ▪ Operating system enables profitability through cycles and high ROIC ▪ Strong balan
Slide 17: Appendix
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Slide 18: Q3 2023: Financial Highlights
Q3 2023: Financial Highlights EPS $1.75 Sales $1.3 Billion Backlog $3.3 Billion +46% YoY +15% YoY (15%)YoY SG&A % of Sales 10.0% NWC % of Sales 20.6% Operating Margin 12.7% (40)bps YoY +60bps YoY +190bps YoY 18
Slide 19: Backlog Trend
Backlog Trend USD Millions 4,149 4,083 4,071 4,137 3,933 3,742 3,331 1,295 1,265 1,174 1,162 3,346 1,213 2,957 1,074 1,047 890 2,408 1,062 2,041 926 1,370 714 2,854 2,818 2,897 2,975 2,720 2,668 2,284 2,456 781 528 1,895 1,327 1,482 293 842 488 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22
Slide 20: Q3 Sales by Geography (2023 vs. 2022)
Q3 Sales by Geography (2023 vs. 2022) North America Western Europe Asia-Pacific Rest of World Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. 22% 21% 4% (2%) 4% 5% 16% 10% 7% 7% 13% 14% North America Western Europe Q3 2023 Q3 2022 Asia / Pacific 58% 19% 61% 21% Rest of World Results show
Slide 21: YTD Sales by Geography (2023 vs. 2022)
YTD Sales by Geography (2023 vs. 2022) North America Western Europe Asia-Pacific Rest of World Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. 29% 29% 14% 14% 6% 11% 34% 35% 8% 7% 12% 14% North America Western Europe YTD 2023 YTD 2022 Asia / Pacific 56% 21% 59% Rest of World 23% Results
Slide 22: Segment Results
Segment Results USD Millions MATERIALS PROCESSING AERIAL WORK PLATFORMS Q3 '23 Q3 '22 YTD' 23 YTD' 22 Q3 '23 Q3 '22 YTD' 23 YTD' 22 Net Sales $541.1 $457.9 $1,672.3 $1,391.3 Net Sales $751.0 $662.6 $2,261.8 $1,811.8 % Change vs. '22 18.2% 20.2% % Change vs. '22 13.3% 24.8% Operating Profit (Loss) $9
Slide 23: Glossary
Glossary In an effort to provide investors with additional information regarding the Company’s results, Terex refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures which management believes provides useful information to investors. These non-GAAP meas
Slide 24: Glossary: Free Cash Flow
Glossary: Free Cash Flow USD Millions Free Cash Flow - 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
Slide 25: Glossary: Debt & Net Debt
Glossary: Debt & Net Debt USD Millions Debt is calculated using the Condensed Consolidated Balance Sheet amounts for Current portion of long- term debt plus Long-term debt, less current portion plus debt from liabilities held for sale. Net Debt is calculated as Debt less Cash and cash equivalents, i
Slide 26: Glossary: EBITDA
Glossary: EBITDA USD Millions EBITDA is defined as earnings, before interest, other non-operating income (loss), income (loss) attributable to non-controlling interest, taxes, depreciation and amortization. The Company calculates this by subtracting the following items from Net income (loss): (Gain)
Slide 27: Glossary: ROIC
Glossary: 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 Sto
Slide 28: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Amounts described below are reported in millions of U.S. dollars, except for the Effective Tax Rate. Amounts are as of and for the three months ended for the periods referenced in the tables below. Sep '23 Jun '23 Mar '23 Dec '22 Sep '22 Annualized effective tax
Slide 29: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Nine Months Ended September 30, 2023 Income (loss) from continuing (Provision for) benefit from operations before income taxes income taxes Income tax rate Reconciliation of annualized effective tax rate: As reported $ 474.0 $ (85.2) 18.0% Effect of Adjustments:
Slide 30: Glossary: Working Capital
Glossary: Working Capital USD Millions Working Capital is calculated using the Consolidated Balance Sheet amounts for Receivables (net of allowance) plus Inventories less Trade accounts payable and Customer advances. The Company views excessive working capital as an inefficient use of resources, and