Terex Corporation · NYSE:TEX
Terex — Investor Day (December 2016)
112 slides from Terex's investor day presentation, Dec 13, 2016
Slide 1: Terex Investor Day
Terex Investor Day New York City December 13, 2016 FOCUS • SIMPLIFY • EXECUTE TO WIN
Slide 2: Forward Looking Statements
Forward Looking Statements 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,” “ant
Slide 3: Today's Agenda
Today’s Agenda Introduction John Garrison Terex Strategy: 2016-2020 John Garrison, Scott Hensel, Paul Caldarazzo BREAK Segment Overviews ▪ Aerial Work Platforms Matt Fearon ▪ Cranes Steve Filipov ▪ Materials Processing Kieran Hegarty Financial Summary and Outlook Kevin Bradley BREAK Q&A Leadership T
Slide 4: Key Messages
Key Messages 1 Transforming to a high performance enterprise through Focus, Simplify and Execute to Win 2 Actions already taken and more underway 3 New and experienced leadership team to drive execution and results 4 Significant operational improvements 5 Substantial return of capital to shareholder
Slide 5: Major Actions in Past Year
Major Actions in Past Year ▪ Divestiture of MHPS ▪ Divestiture of German Compact Construction ▪ $40 million G&A cost reductions ▪ Manufacturing footprint rationalization – eight closures announced in 2016 ▪ Additional restructuring announced today FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 6: Our Leadership Team
Our Leadership Team New to role or company John Garrison in last year President and CEO Business Leaders Functional Leaders Matt Fearon Steve Filipov Kieran Scott Hensel Kevin Barr Kevin Bradley Paul Eric Cohen Derek Everitt Brian Henry President, President, Hegarty President, SVP, Chief SVP, Chief
Slide 7: Safety: Zero Harm
Safety ZERO HARM FOCUS • SIMPLIFY • EXECUTE TO WIN 6
Slide 8: Terex Strategy: 2016-2020
Terex Strategy: 2016-2020 John Garrison President and Chief Executive Officer FOCUS • SIMPLIFY • EXECUTE TO WIN 7
Slide 9: Terex Strategy: 2016-2020
Terex Strategy: 2016-2020 Terex Today Terex in 2020 Legacy M&A Improved Focus Margin Maximize shareholder value by focusing and simplifying Respected the company, driving Strong Brands, Strong process discipline and ROIC Market executing to win in globally Positions competitive markets Foundation of
Slide 10: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 11: Transformation Objectives
Terex Strategy: 2016-2020 Transformation Objectives Organic Growth ~1% revenue growth1 CAGR from 2016 to 2020 Operating Margins >10% by 2020 Return on >20% ROIC by 2020 Invested Capital2 Free Cash Flow >100% net income to FCF conversion by 2020 Substantial return of capital to shareholders 1 Based o
Slide 12: Path to Achieving 2020 ROIC Objective
Terex Strategy: 2016-2020 Path to Achieving 2020 ROIC Objective Terex Return on Invested Capital1 (Percent of Invested Capital) ~7-8% >20% ~4-5% ~3% ~6% Terex Focus Simplify Execute 2020 Today to Win Target Transformation priorities 1 See Appendix for ROIC definition FOCUS • SIMPLIFY • EXECUTE TO WI
Slide 13: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 14: Terex Today: Legacy M&A Focus
Terex Today Legacy M&A Focus (2002) EPAC Pacific Utilities Advance Mixer Compact Germany (2015) (1997) (2000) Fuchs (2006) Dueco Simon Coleman Demag Mobile (2004) Halco (2009) CBI Engineering Fermec Genie Acuna CJ Crane Fantuzzi Ecotec Acquisitions (1999) Amida (1998) Powerscreen (2005) O&K Mining C
Slide 15: Terex Today: Business Mix
Terex Today Business Mix Sales by Segment Sales by Region Sales by End Use Market (2016, Estimated) (2016, Estimated) (2016, Estimated) Other Residential Other Scrap Metal construction Cranes Mineral Asia 7% 6% mining 27% Pacific 3% 19% 2% 12% Electricity 7% Latin America 3% Main- AWP 45% 51% 15% te
Slide 16: Respected Brands and Strong Market Positions
Terex Today Respected Brands and Strong Market Positions Aerial Work Platforms Cranes Materials Processing # 1 / 2 in Aerials # 3 in Mobile Cranes # 1 in Mobile Crushing & Screening # 2 in North America # 3 in Tower Cranes Telehandlers # 2 in US Mixer Trucks # 2 in US Utility Equipment # 3 in Scrap
Slide 17: Foundation of Core Values
Terex Today Foundation of Core Values Terex Way Values FOCUS • SIMPLIFY • EXECUTE TO WIN 16
Slide 18: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 19: Challenging Global Markets
Challenging Global Markets ▪ Replacement cycle headwinds in AWP Replacement Cycles ▪ Low utilization and low rental rates in Cranes ▪ Continuing replacements in Materials Processing ▪ Significant driver of demand Energy and Commodities ▪ Beginning to stabilize ▪ Not assuming major recovery in planni
Slide 20: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 21: Focus
Focus Focus on businesses best positioned to generate returns above our cost of capital through the cycle FOCUS • SIMPLIFY • EXECUTE TO WIN 20
Slide 22: Strategic Portfolio Review
Focus Strategic Portfolio Review Aerial Work Materials Cranes Criteria Platforms Processing ▪ Specialized global attractiveness markets Market ▪ Scale benefits ▪ Consistency of customer demand ▪ Top 3 player Competitive position ▪ Respected brands ▪ Differentiated offerings FOCUS • SIMPLIFY • EXECUT
Slide 23: Portfolio Actions Taken
Focus Portfolio Actions Taken Completed sale of German Compact Construction business On-track to close MHPS sale in early 2017 Negotiating additional non-core divestitures FOCUS • SIMPLIFY • EXECUTE TO WIN 22
Slide 24: Focus: Path to Achieving 2020 ROIC Objective
Focus Path to Achieving 2020 ROIC Objective Terex Return on Invested Capital1 (Percent of Invested Capital) ~7-8% >20% Focus ▪ Divest MHPS and ~4-5% German Compact Construction ~3% ▪ Focus portfolio on ~6% higher ROIC businesses ▪ Finalize additional non-core divestitures Terex Focus Simplify Execut
Slide 25: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 26: Simplify
Simplify Simplify company structure, systems and footprint to improve efficiency and enhance global competitiveness FOCUS • SIMPLIFY • EXECUTE TO WIN 25
Slide 27: SG&A Cost Reduction
Simplify SG&A Cost Reduction SG&A Spending Outlook: 2016-2020 (Percent of Sales) ~14% ~12.5% Reduced SG&A costs in 2016 by ~$40 million: General & Aggressively reduce Administrative G&A functional cost ▪ Streamlined operating structure (5 3 segments) ▪ Reduced spans and layers in corporate and seg
Slide 28: Finance Function Example
Simplify Finance Function Example Number of General Ledger Systems Number of Legal Entities 64 165 125 29 ~90 1-3 Terex Post 2020 Terex Post 2020 Today Divestitures Target Today Divestitures Target FOCUS • SIMPLIFY • EXECUTE TO WIN 27
Slide 29: Current Manufacturing Footprint
Simplify Current Manufacturing Footprint Manufacturing locations Aerial Work Platforms Cranes Materials Processing Corporate/Other Shared Europe Footprint Strategy AWP Cranes 1 6 Asia-Pacific ▪ Produce where we AWP 1 MP 5 Cranes 2 sell Corp/Other 1 MP 2 Total 13 Corp/Other 1 ▪ Rationalize overall To
Slide 30: Manufacturing Footprint Actions
Simplify Manufacturing Footprint Actions 2016 Proforma1 Revenue per Square Foot Percent ($ Dollars) Change $625 +37% $574 $456 Proforma1 Footprint after Footprint after Footprint at actions completed additional actions start of 2016 or in-process in planning phase Facility square 9,606 7,121 6,542 -
Slide 31: Simplify: Path to Achieving 2020 ROIC Objective
Simplify Path to Achieving 2020 ROIC Objective Terex Return on Invested Capital1 (Percent of Invested Capital) ~7-8% >20% Simplify ▪ Streamline structure, systems and legal entities ~4-5% ▪ Aggressively reduce G&A functional costs ~3% ~6% ▪ Reinvest in organic growth and process capabilities ▪ Ratio
Slide 32: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 33: Execute to Win
Execute to Win Drive process discipline, execution rigor, and accountability in core management and operational processes in order to Execute to Win FOCUS • SIMPLIFY • EXECUTE TO WIN 32
Slide 34: Three Core Management Processes
Execute to Win Three Core Management Processes ▪ Situational insight and alternatives Strategy ▪ Strategic choices Development ▪ Strategy deployment ▪ Talent assessment ▪ Commercial ▪ Training and system development ▪ Operating ▪ Team member system engagement Operational Talent ▪ Management system E
Slide 35: Transformation Priorities
Execute to Win Transformation Priorities Aerial Work Materials Platforms Cranes Processing Services and Solutions Lifecycle Spare Parts Solutions Technology and Innovation Customer Offerings and Value Propositions Commercial Sales and Pricing Execution Excellence Dealer Management Glob
Slide 36: Execute to Win: Scott Hensel
Execute to Win Scott Hensel President, Services, Parts and Customer Solutions FOCUS • SIMPLIFY • EXECUTE TO WIN 35
Slide 37: Execute to Win: Lifecycle Solutions
Execute to Win: Lifecycle Solutions …To Solutions- From Equipment- focused – Providing focused – “Selling “Lifecycle Solutions” Big Iron”… that maximize customer ROI FOCUS • SIMPLIFY • EXECUTE TO WIN 36
Slide 38: Customer View of Equipment Lifecycle
Execute to Win: Lifecycle Solutions Customer View of Equipment Lifecycle Customer’s View of Equipment Lifecycle Acquire Retire/Resell Use Equipment Equipment Equipment Customer Attractive High Productivity & Low Total Cost Strong Return on Cost/ Equipment Uptime of Ownership Residuals Investment Ben
Slide 39: Lifecycle Solutions: Key Priority Areas
Execute to Win: Lifecycle Solutions Key Priority Areas Service and Technology and Spare Parts Solution Offerings Innovation ▪ Lifecycle Solution Design ▪ Growth and Market Share ▪ Telematics and Development ▪ Strategic Sourcing and ▪ Customer Portals ▪ Technical Service and Inventory Planning Custom
Slide 40: Execute to Win: Commercial Excellence
Execute to Win: Commercial Excellence From inconsistent …To consistent commercial practices, commercial practices, processes and tools processes and tools across the company… across the company FOCUS • SIMPLIFY • EXECUTE TO WIN 39
Slide 41: Commercial Excellence Opportunity Areas
Execute to Win: Commercial Excellence Opportunity Areas Investing in our ability to… common processes, tools and systems to drive 1 … define consistent execution products, services and solutions that generate strong 2 … develop return on investment for customers the most attractive product markets,
Slide 42: Commercial Excellence: Example Actions
Execute to Win: Commercial Excellence Example Actions – Sales Execution ▪ Targeted sales training ▪ Standard sales and pipeline ▪ Aligned sales incentives management People processes ▪ Individual development plans ▪ “Daily Management System” ▪ Real-time dashboards ▪ Sales review Commercial cadence E
Slide 43: Commercial Excellence Implementation Plan
Execute to Win: Commercial Excellence Implementation Plan Wave 3: Wave 2: Drive Continuous Accelerate Improvement Wave 1: Build the Foundation Performance Standard skill matrices and Common sales and Scaled-up capability competency models pricing processes building Standard commercial Cons
Slide 44: Execute to Win: Paul Caldarazzo
Execute to Win Paul Caldarazzo Vice President, Strategic Sourcing and ETW FOCUS • SIMPLIFY • EXECUTE TO WIN 43
Slide 45: Execute to Win: Strategic Sourcing
Execute to Win: Strategic Sourcing From inconsistent …To consistent processes and processes with fragmented, under- centrally coordinated leveraged spend… and leveraged spend $2.6 Billion in Addressable Direct and Indirect Spend FOCUS • SIMPLIFY • EXECUTE TO WIN 44
Slide 46: Strategic Sourcing Opportunity Areas
Execute to Win: Strategic Sourcing Opportunity Areas Investing in our ability to… 1 … define systematic and standard process 2 … follow process and take the time to do the full process properly for lowest total overall cost, exploring all 64 negotiable 3 … negotiate elements rather than focusing sol
Slide 47: Strategic Sourcing Objectives
Execute to Win: Strategic Sourcing Objectives Transform Build Execute Sourcing into a core Sourcing team Sequential waves strategic function capable of centrally targeting direct and coordinating spend indirect spend across the enterprise categories over the with local planning next 5 years and buyi
Slide 48: Global Sourcing Strategy
Execute to Win: Strategic Sourcing Global Sourcing Strategy Enterprise-led spend 10% Direct or indirect spend centrally coordinated 90% Segment-led spend Direct or indirect spend 90% managed in individual Segments and BUs 10% Terex Today Terex 2020 Centrally coordinated global strategic sourcing FOC
Slide 49: Consistent Process, Training, and Tools
Execute to Win: Strategic Sourcing Consistent Process, Training, and Tools TODAY Opportunity Profile Profile Negotiation Supplier Alliance Assessment Development Analysis Preparation Selection Management 1 2 3 4 5 6 7 8 9 10 11 Supplier Supplier Site Transition Research Visits Negotiations Presentat
Slide 50: Strategic Sourcing Implementation Plan
Execute to Win: Strategic Sourcing Implementation Plan 2017 2018 2019 2020 2021 Wave 1: ~$800 $800 MM M in Spend Addressable Opportunity Spend Wave 2: ~$800 $800 MM M in Addressable Spend Wave 3: ~$600 M in Addressable Wave 3: $700 MM Spend Wave 4 $400 M in Addressable Spend Wave 5 Balance speed, sa
Slide 51: Execute to Win: Path to Achieving 2020 ROIC Objective
Execute to Win Path to Achieving 2020 ROIC Objective Terex Return on Invested Capital1 (Percent of Invested Capital) ~7-8% >20% Execute to Win ▪ Strengthen management processes ~4-5% ▪ Invest in services, parts and lifecycle solutions ~3% ~6% ▪ Drive commercial excellence ▪ Build out strategic sourc
Slide 52: Timing of Transformation Impact
Terex Strategy: 2016-2020 Level of impact Timing of Transformation Impact More Less 2016 2017 2018 2019 2020 ▪ MHPS Divestiture Focus ▪ Compact Germany Divestiture ▪ Other non-core Divestitures ▪ Streamlined Corporate Structure Simplify ▪ Functional Cost Reduction ▪ Footprint Rationalization ▪ Servi
Slide 53: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 54: Disciplined Capital Allocation Strategy: Key Priorities
Disciplined Capital Allocation Strategy Key Priorities Cash Flow from Operations + After-tax Proceeds from Divestures ▪ Debt repayment from MHPS sale proceeds Optimal Capital Structure ▪ Through-cycle average of ~2.5X Net Debt to EBITDA ▪ Product and Service Development Organic Growth Investments ▪
Slide 55: Efficient Return of Capital to Shareholders
Disciplined Capital Allocation Strategy Efficient Return of Capital to Shareholders Cash Flow from Operations + After-tax Proceeds from Divestures Our Intent: Return Capital to Shareholders Optimal Capital Structure ▪ Dividends: Double-digit annual percentage increase in Organic Growth Investments d
Slide 56: Terex Strategy: 2016-2020 Transformation Roadmap
Terex Strategy: 2016-2020 Terex Today Transformation Roadmap Terex in 2020 Legacy M&A Improved Focus Challenging Global Markets Margin Strategic Priorities Respected ▪ Focus Strong Brands, Strong ROIC Market ▪ Simplify Positions ▪ Execute to Win Foundation of Shareholder Core Values Disciplined Capi
Slide 57: Aerial Work Platforms
Aerial Work Platforms Matt Fearon President, Aerial Work Platforms FOCUS • SIMPLIFY • EXECUTE TO WIN 56
Slide 58: Aerial Work Platforms
Aerial Work Platforms Aerials Telehandlers # 1 or 2 Globally #2 in North America Full Product Range Expanding Product Range Near term headwinds from US replacement cycle Increasing potential in Europe, China, and other markets FOCUS • SIMPLIFY • EXECUTE TO WIN 57
Slide 59: Aerial Work Platforms Segment Overview
Aerial Work Platforms Segment Overview Full Product Range and Market Leading Brand Telescopic Articulating Slab Rough Terrain Other Material Compact High Reach Light Booms Booms Scissors Scissors Aerials Lifts Telehandlers Telehandlers Towers Applications Footprint Customers/Channels ▪ Construction/
Slide 60: Aerial Work Platforms Business Mix
Aerial Work Platforms Business Mix Sales by Product Line Sales by Region Sales by End Use Market (2016, Estimated) (2016, Estimated) (2016, Estimated) Small aerials and light towers Asia Other Residential Western Other Main- Construction Tele- 7% Europe 8% tenance 10% 11% 20% handlers 14% 20% 25% 47
Slide 61: Construction Spending: North America
Aerial Work Platforms Construction Spending: North America Real Construction Spending: North America ($Billions) 1,100 Forecast 1,000 Non-Residential 900 800 700 Residential 600 500 400 300 200 100 0 1995 2000 2005 2010 2015 2020 North America construction spending is expected to strengthen over the
Slide 62: Demand for New Equipment: North America
Aerial Work Platforms Demand for New Equipment: North America Annual Industry Units Sold: North America (000 Units) 120 Forecast 100 80 60 40 20 0 1995 2000 2020 10 96 97 98 99 01 02 03 04 05 06 07 08 09 12 13 14 15 16 17 18 19 11 Low new equipment purchases in 2009-10 will result in lower replaceme
Slide 63: Aerial Adoption Rates: Global Markets
Aerial Work Platforms Aerial Adoption Rates: Global Markets Aerial Units per $1B of Construction Spend (Number of Units) 800 Forecast 700 North America 600 500 400 300 EMEAR 200 South America 100 Asia-Pacific 0 China 1995 2000 05 10 15 2020 Steady growth expected outside of North America as aerial a
Slide 64: Demand for New Equipment: Global Markets
Aerial Work Platforms Demand for New Equipment: Global Markets Annual Industry Units Sold: Global Markets (000 Units) 250 Forecast 200 150 100 50 0 1995 2000 2020 10 96 97 98 99 01 02 03 04 05 06 07 08 09 12 13 14 15 16 17 18 19 11 Growth in international markets should partially offset North Americ
Slide 65: 50 Years of Product Innovation
Aerial Work Platforms 50 Years of Product Innovation Industry Leader in Product Innovation for 50 Years 100ft+ Class of Booms Hybrid Technology Scissor Development Full Telehandler Offering FOCUS • SIMPLIFY • EXECUTE TO WIN 64
Slide 66: Product Innovation – XC Booms
Aerial Work Platforms Product Innovation – XC Booms Introducing the Genie XC Family Concept for Booms Consistent strategy for capacity, range of motion and user interface on NEW Genie booms ▪ XC stands for XtraCapacity ▪ 660-lb (300 kg)/1,000-lb (454 kg) dual platform capacity standard ▪ Up to 3-per
Slide 67: Product Innovation – XC Booms
Aerial Work Platforms Product Innovation – XC Booms New Genie SX-135 XC Boom Lift The first boom in the Genie XtraCapacity (XC) family Add Specific New Product Example from Matt FOCUS • SIMPLIFY • EXECUTE TO WIN 66
Slide 68: Product Innovation – Telehandlers
Aerial Work Platforms Product Innovation – Telehandlers Full Line Telehandler Family From our popular compact model to high reaching models - Genie telehandlers are ready for all jobsites FOCUS • SIMPLIFY • EXECUTE TO WIN 67
Slide 69: Product Innovation – Drive Technology
Aerial Work Platforms Product Innovation – Drive Technology Technology for All Jobsites Z-60/37 DC- All Electric ▪ Zero emissions ▪ Low noise Z-60/37 FE- Fuel Electric Hybrid ▪ Switch between low emissions hybrid operation to zero emissions all electric operation FOCUS • SIMPLIFY • EXECUTE TO WIN 68
Slide 70: Aerial Work Platforms Lifecycle Solutions
Aerial Work Platforms Lifecycle Solutions Full suite of Lifecycle Solutions to drive rROIC (rental ROIC) FOCUS • SIMPLIFY • EXECUTE TO WIN 69
Slide 71: Manufacturing Footprint in 2016
Aerial Work Platforms Manufacturing Footprint in 2016 Redmond, Coventry, WA UK Changzhou, Moses Lake, Booms CN Scissors WA Scissors Scissors Booms Booms Umbertide, IT Rock Hill, Telehandlers SC Booms OKC, OK Booms Light Telehandlers Towers = Volume/Mix Production by Region % Revenue Locally Produced
Slide 72: Manufacturing Footprint in 2021
Aerial Work Platforms Manufacturing Footprint in 2021 TBD - 2020 Redmond, Moses Lake, Changzhou, WA WA Scissors CN Booms Scissors Booms Scissors Booms Umbertide, Rock Hill, IT SC Telehandlers OKC, OK Booms Booms Light Telehandlers Towers = Volume/Mix Production by Region % Revenue Locally Produced ▪
Slide 73: Aerial Work Platforms Summary
Aerial Work Platforms Summary ▪ Excellent long-term business with well-respected products and a powerful brand ▪ Temporary replacement cycle headwinds followed by expected healthy growth ▪ Driving transformation priorities to maximize results FOCUS • SIMPLIFY • EXECUTE TO WIN 72
Slide 74: Cranes
Cranes Steve Filipov President, Cranes FOCUS • SIMPLIFY • EXECUTE TO WIN 73
Slide 75: Cranes
Cranes Mobile Cranes Tower Cranes Utilities # 3 Globally1 # 3 Globally1 # 2 in North America Competitive market positions across all product lines Near-term focus on turning around Mobile Cranes 1 Global market, excluding China FOCUS • SIMPLIFY • EXECUTE TO WIN 74
Slide 76: Cranes Business Mix
Cranes Business Mix Sales by Product Line Sales by Region Sales by End Use Market (2016, Estimated) (2016, Estimated) (2016, Estimated) Tower Residential US and Cranes Construction Canada Rest of Electricity 9% 11% Utilities World T&D 25% 31% 28% 42% Main- 9% tenance 55% 62% 60% 30% Mobile Cranes We
Slide 77: Cranes Current Market Environment
Cranes Current Market Environment Europe ▪ Stable ▪ Wind energy impact ▪ Slight recovery in North America Southern Europe ▪ Oil and gas impact ▪ Rental rates/utilization ▪ Non-residential construction Asia/India/China Middle East ▪ Dependent on large ▪ Oil impact projects ▪ Continued geopolitical ri
Slide 78: Cranes Historical Financial Performance
Cranes Historical Financial Performance Sales: 2012-2016E Operating Profit1: 2012-2016E ($Millions) (Percent) 10 8.5% 1,875 1,789 8 6.4% 1,657 1,567 5.1% 6 1,253 3.9% 4 2 0 -2 -2.5% -4 2012 13 14 15 2016E 2012 13 14 15 2016E Significant decline in financial performance driven by both market and oper
Slide 79: Cranes Path to Break-even in 2017
Cranes Path to Break-even in 2017 Operating Profit1 Waterfall: 2016-2017E ($Millions) ~0 ~10 ~20 ~(30) ~10 ~(20) ~10 Sourcing and Volume Commercial 2016E Loss / Mix Warranty SG&A Footprint Excellence 2017E Simplify Execute to Win Defined plan to achieve breakeven in 2017 1 Excludes the impact of non
Slide 80: Manufacturing Footprint – Start of 2016
Cranes Manufacturing Footprint – Start of 2016 Americas Europe Asia-Pacific Waverly Watertown Zweibrücken Bierbach Jinan Waukesha Huron Montceau les Mines PECS Brisbane Oklahoma City Betim (Brazil) Crespellano Fontanafredda Note: Oklahoma City is a multi-segment manufacturing facility FOCUS • SIMPLI
Slide 81: Manufacturing Footprint – After Announcements
Cranes Manufacturing Footprint – After Announcements Americas Europe Asia-Pacific Watertown Zweibrucken Jinan Huron Crespellano Brisbane Oklahoma City Fontanafredda Note: Eliminating an office building in Zweibrücken; Oklahoma City is a multi-segment manufacturing facility FOCUS • SIMPLIFY • EXECUTE
Slide 82: Cranes Manufacturing Footprint Actions
Cranes Manufacturing Footprint Actions 2016 Revenue per Square Foot ($ Dollars) Percent Change $614 +87% $477 $328 Footprint at Footprint after Footprint after start of 2016 actions completed additional actions or in-process in planning phase Facility square 3,764 2,546 1,967 -48% footage (000) FOCU
Slide 83: Cranes Commercial Excellence
Cranes Commercial Excellence Rebuild Customer Fix Product Quality Improve Commercial Relationships Issues in the Field Processes ▪ Strengthen sales team ▪ Deploy focused teams ▪ Strengthen selling and against product issues negotiation skills ▪ Enhance “Person-to- Person” Relationships ▪ Develop rea
Slide 84: Cranes Brand Development
Cranes Brand Development New dual branding strategy Customer response “Demag “Demag is is a global a global brand – brand – great great that that it is it is back” back” “It will bring new movement in the market” “’A Legend is Reborn’ captures it well” Demag Branded Crane Orders Since Relaunch (Cum.
Slide 85: Cranes New Product Development
Cranes New Product Development AT40 Re-establish technology leadership in the category FOCUS • SIMPLIFY • EXECUTE TO WIN 84
Slide 86: Cranes New Product Development
Cranes New Product Development Re-entering All Terrain City-Class Significant demand in Europe LOI’s from 32 customers for a total of 68 machines Fill product gaps, rebuild credibility, and win-back market share FOCUS • SIMPLIFY • EXECUTE TO WIN 85
Slide 87: Cranes Summary
Cranes Summary ▪ Re-establishing strong relationships with customers ▪ Aggressively reducing manufacturing footprint ▪ Rightsizing SG&A cost structure ▪ Investing in product and service development FOCUS • SIMPLIFY • EXECUTE TO WIN 86
Slide 88: Materials Processing
Materials Processing Kieran Hegarty President, Materials Processing FOCUS • SIMPLIFY • EXECUTE TO WIN 87
Slide 89: Materials Processing Business Overview
Materials Processing Business Overview Material Crushing and Scrap and Handling Screening Adding Value to Materials Environmental Concrete FOCUS • SIMPLIFY • EXECUTE TO WIN 88
Slide 90: Materials Processing Crushing and Screening
Materials Processing Crushing and Screening Major Brands and Products Mobile Crushing and Screening Static Crushing and Screening Washing Systems Customers and End Markets Terex Advantages ▪ Mines and Quarries ▪ Contract Crushers ▪ Flexible equipment deployed to point of use ▪ Land Clearing ▪ C&D Re
Slide 91: Materials Processing Concrete
Materials Processing Concrete Major Brands and Products Customers and End Markets Terex Advantages Mixers Bidwell Mixers Bidwell ▪ Ready-mix (RM) ▪ Road Contractors ▪ Driver efficiency ▪ Flexibility Concrete Providers ▪ Bridge Contractors ▪ Maneuverability ▪ Accessory Range ▪ Construction ▪ Flatwork
Slide 92: Materials Processing Environmental
Materials Processing Environmental Major Brands and Products Chippers Grinders Shredders Screens Trommels Other Products Customers and End Markets Terex Advantages ▪ Waste Transfer ▪ Biomass producers ▪ Flexible equipment capable of processing Centers wide range of materials ▪ Pulp & Paper ▪ Compost
Slide 93: Material and Scrap Handling
Materials Processing Material and Scrap Handling Major Brands and Products Port Recycling Logging Scrap Customers and End Markets Terex Advantages ▪ Scrapyards ▪ Waste to Energy ▪ Purpose built products Plants ▪ Steel Mills ▪ Differentiated features ▪ Transfer Stations ▪ Lumber Yards ▪ Safety and Se
Slide 94: Materials Processing Business Overview
Materials Processing Business Overview End Markets Mining, Land Green Material Road & Rail C&D Quarrying, Clearing & Forestry Waste/ and Scrap Construction Recycling & Concrete Demolition Compost Handling Applications Crushing and Screening Environmental Scrap Size Reduction Separation Concrete Down
Slide 95: Materials Processing Business Mix
Materials Processing Business Mix Sales by Product Line Sales by Region Sales by End Use Market (2016, Estimated) (2016, Estimated) (2016, Estimated) Residential Environmental Other Rest of Construction US and Material 10% World Scrap Metal 8% Canada 14% Handlers 21% 11% 14% Mineral 44% Mining 11% 5
Slide 96: Materials Processing Market Environment
Materials Processing Market Environment Real Construction Spending ($B, 2006 to 2020) Driver 2016 Outlook $3,500 US Construction Stable Improving $3,000 2016 2016 $2,500 EU Construction Stable Improving 2016 $2,000 ROW Varies Varies Construction 2016 $1,500 Scrap Metal Low Improving Prices $1,000 Ot
Slide 97: Product Innovation – Crushing and Screening
Materials Processing Product Innovation – Crushing and Screening I-140 PT 600 Expanding mobile range and production capacities Greater customer efficiencies and lower cost of ownership FOCUS • SIMPLIFY • EXECUTE TO WIN 96
Slide 98: Product Innovation – Environmental
Materials Processing Product Innovation – Environmental V20 620 Trommel New mid-speed class Unrivaled application flexibility, Replaces two machines with one production rates and serviceability versatile solution FOCUS • SIMPLIFY • EXECUTE TO WIN 97
Slide 99: Product Innovation – Material and Scrap Handling
Materials Processing Product Innovation – Material and Scrap Handling MHL 350 F MHL 250 E New cabin design with higher driver comfort Optimized hydraulics, enabling efficiency and control Electrical software, enabling multiple engine options FOCUS • SIMPLIFY • EXECUTE TO WIN 98
Slide 100: Service Innovation – Lifecycle Solutions
Materials Processing Service Innovation – Lifecycle Solutions Fleet Management Productivity Monitoring Production Cost Control Uptime Maximization All mobile products now equipped with Telematics that help customers minimize cost of ownership and maximize ROI FOCUS • SIMPLIFY • EXECUTE TO WIN 99
Slide 101: Materials Processing Summary
Materials Processing Summary ▪ Strong portfolio of specialized machinery for high-value applications that add value to materials ▪ Investing for growth in new applications with similar characteristics ▪ Markets remain choppy, but demand is strengthening ▪ Product and service innovation central to ex
Slide 102: Financial Summary and Outlook
Financial Summary and Outlook Kevin Bradley Senior Vice President and Chief Financial Officer FOCUS • SIMPLIFY • EXECUTE TO WIN 101
Slide 103: 2017 Preliminary Outlook
2017 Preliminary Outlook $ Millions Net Sales(1) Operating Profit(1) AWP Down ~ 12% ~ 8% Cranes Down ~ 6% (1.5%) - Breakeven MP Up ~ 1% ~ 9.5% Corporate ~ $90 ~ ($35) and Other (1) Excludes the impact of future divestitures, restructuring and other unusual items; continuing operations FOCUS • SIMPLI
Slide 104: 2017 Preliminary Outlook
2017 Preliminary Outlook $ Millions 2017(1) Net Sales ~ $4 Billion Operating Margin ~ 5% Interest/Other Expense ~ ($65) Tax Rate ~ 27% Depreciation/Amortization ~ $70 Free Cash Flow $100 - $150 (1) Excludes the impact of future divestitures, restructuring and other unusual items; continuing operatio
Slide 105: Restructuring Summary
Restructuring Summary $ Millions Benefits Restructuring Charge 2016 2017 Run-Rate Q1-Q3 '16 Announced Footprint ($30) $0 $16 $20 SG&A (17) 22 32 32 Total ($47) $22 $48 $52 Planned Footprint ($75) $0 $15 $25 SG&A (70) - 17 48 (1) Volume/Other (30) - - - Total ($175) $0 $32 $73 Total Footprint ($105)
Slide 106: Pro Forma Capitalization - MHPS Divestiture
Pro Forma Capitalization - MHPS Divestiture $ Billions MHPS Pro Forma 2016 Sale 2016 Net debt $1.2 ($0.7) $0.5 Equity 1.9 0.3 2.2 Total capital $3.1 ($0.4) $2.7 Less TFS assets (0.3) (0.3) Less Konecranes shares (1) - (0.7) Invested Capital in Terex Operations $2.8 $1.7 Net debt/EBITDA 3.2 x 1.9 x (
Slide 107: Q&A Session
Q&A Session FOCUS • SIMPLIFY • EXECUTE TO WIN 106
Slide 108: Closing Remarks
Closing Remarks John Garrison President and Chief Executive Officer FOCUS • SIMPLIFY • EXECUTE TO WIN 107
Slide 109: Key Messages
Key Messages 1 Transforming to a high performance enterprise through Focus, Simplify and Execute to Win 2 Actions already taken and more underway 3 New and experienced leadership team to drive execution and results 4 Significant operational improvements 5 Substantial return of capital to shareholder
Slide 110: 2020 Transformation Objectives
2020 Transformation Objectives Organic Growth ~1% revenue growth1 CAGR from 2016 to 2020 Operating Margins >10% by 2020 Return on >20% ROIC by 2020 Invested Capital2 Free Cash Flow >100% net income to FCF conversion by 2020 Substantial return of capital to shareholders 1 Based on 2016 continuing ope
Slide 111: Appendix
Appendix FOCUS • SIMPLIFY • EXECUTE TO WIN 110
Slide 112: ROIC Definition
ROIC Definition Return on Invested Capital (“ROIC”) as defined herein is for the sole purpose of this presentation to assist in demonstrating how effectively we use capital invested in our businesses. ROIC is calculated by dividing the sum of “NOPAT” for each of the previous four quarters by the ave