Slide 1: Q3 2019 Conference Call
Q3 2019 Conference Call October 31, 2019 FOCUS • SIMPLIFY • EXECUTE TO WIN 1
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 press release, the words “may,” “expects,” “intends,” “an
Slide 3: Q3 Highlights
Q3 Highlights Results are Continuing Operations • Industrial equipment market softening • Pressure on AWP sales • AWP production declines impacting margins • MP continues strong performance • Excellent cash flow generation • Strong balance sheet and liquidity FOCUS • SIMPLIFY • EXECUTE TO WIN 3
Slide 4: Terex Strategy
Terex Strategy FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 5: Strategy Deployment Progress
Strategy Deployment Progress New Utilities Facility in Watertown, South Dakota Completed sale Demag® Mobile Cranes Focus High Performing Portfolio Completed transition to a two-segment organization Simplify Aggressively reducing cost structure Reduce Complexity and G&A New manufacturing facilities p
Slide 6: 2019 Guidance / 2020 Operations Outlook
2019 Guidance / 2020 Operations Outlook 2019 Continuing Operations Guidance (1) • Net sales of ~$4.4 billion • Operating margin of 8.3% to 8.5% • EPS of $3.00 to $3.20 • Anticipating full year free cash flow of ~$110 million 2020 Operations Outlook • Operationally planning for revenue down approxima
Slide 7: Q3 Segment Highlights
Q3 Segment Highlights Aerial Work Platforms • Global sales of $628 million down 14% • Operating margin 7.3%, 7.4% as adjusted • Bookings of $367 million and backlog of $494 million Materials Processing • Global sales of $339 million up 8% • Operating margin of 15.5%, 15.6% as adjusted, 240 b.p. impr
Slide 8: Q3 Operating Results
Q3 Operating Results USD Millions, except Earnings per Share Q3 2019 Q3 2019 Q3 2018 Q3 2018 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,024.6 $1,024.6 $1,098.8 $1,098.8 % Change vs 2018 (6.8)% (6.8)% Gross Profit $209.6 $209.8 $240.1 $240.1 % of Sales 20.5% 20.5% 21.9% 21.9%
Slide 9: Disciplined Capital Allocation
Disciplined Capital Allocation • Q3 Free Cash Flow of $104 million Cash Flow from Operations + After- tax Proceeds from Divestures • In addition to FCF, generated $150 million of liquidity through portfolio actions including sale of Demag Mobile Cranes and ASV stock. ◦ Strengthened balance sheet by
Slide 10: 2019 Guidance Update
2019 Guidance Update USD Millions, except Earnings per Share and otherwise noted Net Sales Operating Margin 2019 2019 2019 Terex Segment Guidance (1) Previous Updated Guidance (1) Previous Updated Previous Updated Net Sales Up 1% - 3% Down 2% - 4% AWP Up 0% - 1% Down 6% - 7% 9% - 9.5% 7.25% - 7.75%
Slide 11: Aerial Work Platforms
Aerial Work Platforms Terex Utilities @ 2019 International Construction & New Genie® GS-4655 Slab Scissor Lift Utility Equipment Exposition • Global bookings and backlog reflect end market softening • Increasing product adoption in Asia- Pacific • Innovative new products and services • Continued str
Slide 12: Materials Processing
Materials Processing Terex MP India Team Celebrating 10 Years of Growth in India • Consistent strong execution • Global market uncertainty • Innovative new products and services • Global manufacturing strategy Recently Launched Powerscreen® Premiertrak® 330 Jaw Crusher FOCUS • SIMPLIFY • EXECUTE TO
Slide 13: Summary
Summary • In a softening environment for industrial equipment • Generating cash and aggressively managing working capital • Excellent liquidity, strong balance sheet and business portfolio • Continue to implement Simplify and Execute to Win priorities • Maintaining our disciplined capital allocation
Slide 14: Questions?
Questions? FOCUS • SIMPLIFY • EXECUTE TO WIN 14
Slide 15: Appendix
Appendix FOCUS • SIMPLIFY • EXECUTE TO WIN 15
Slide 16: Backlog Trend
Backlog Trend USD Millions Sequential Year on Year $ % $ % AWP (252) (34%) (244) (33%) MP (100) (27%) (204) (44)% Corp & Other 2 4% (7) (12)% Total (349) (30%) (454) (36)% Backlog shown is deliverable in less than 12 months which reflects continuing operations. Note that backlog as of September 2018
Slide 17: Q3 Global Sales
Q3 Global Sales Sales by Geography 2019 vs 2018 Western Europe Actual FX-Adj. Asia/ Pacific North America -7% -2% Actual FX-Adj. -1% 4% Actual FX-Adj. E. Europe, Middle -7% -7% East & Africa Actual FX-Adj. -27% -24% -24% LATAM 2019 Q3 YTD 2018 Q3 YTD Actual FX-Adj. xx41% 46% 41% Western Europe Asia
Slide 18: Aerial Work Platforms
Aerial Work Platforms USD Millions Q3 '19 Q3 '18 YTD'19 YTD'18 Net Sales $628.2 $729.4 $2,226.5 $2,319.2 % Change vs. '18 (13.9%) (4.0%) Operating Profit (Loss), as reported $45.9 $81.6 $191.8 $263.4 Operating Margin % 7.3% 11.2% 8.6% 11.4% Operating Profit (Loss), as adjusted (1) $46.3 $82.7 $198.9
Slide 19: Materials Processing
Materials Processing USD Millions Q3 '19 Q3 '18 YTD'19 YTD'18 Net Sales $338.6 $313.6 $1,050.0 $964.7 % Change vs. '18 8.0% 8.8% Operating Profit (Loss), as reported $52.4 $41.4 $157.9 $125.6 Operating Margin % 15.5% 13.2% 15.0% 13.0% Operating Profit (Loss), as adjusted (1) $52.8 $41.4 $158.3 $122.
Slide 20: Q3 2019 Adjustments
Q3 2019 Adjustments USD Millions, except Earnings per Share Q3 2019 Restructuring Tax & Interim Q3 2019 Transformation Deal Related Other As Reported & Related Period As Adjusted Net Sales $1,024.6 — — — — — $1,024.6 Gross Profit 209.6 0.2 209.8 SG&A (123.2) 2.0 2.2 (0.9) (119.9) Income (loss) from
Slide 21: Q3 2018 Adjustments
Q3 2018 Adjustments USD Millions, except Earnings per Share Q3 2018 Restructuring Tax & Interim Q3 2018 Transformation Other As Reported & Related Period As Adjusted Net Sales $1,098.8 — — — — $1,098.8 Gross Profit 240.1 — — — — 240.1 SG&A (135.9) 1.5 8.7 — — (125.7) Income (loss) from Operations 10
Slide 22: Q3 2018 Adjustments
Q3 2018 Adjustments The company has included a presentation from the financial results for the quarter ended September 30, 2018 as reported on November 1, 2018 to the financial results for the quarter ended September 30, 2018 as reported today, as the Company believes this presentation more fully hi
Slide 23: Q3 Adjusted OP by Segment
Q3 Adjusted OP by Segment USD Millions Q3 2019 Q3 2018 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 45.9 0.4 $ 46.3 $ 81.6 $ 1.1 $ 82.7 MP 52.4 0.4 52.8 41.4 — 41.4 Corporate & Other (11.9) 2.7 (9.2) (18.8) 9.1 (9.7) Continuing $ 86.4 $ 3.5 $ 89.9 $ 104.2 $ 10.2 $ 11
Slide 24: Q3 YTD Operating Results
Q3 YTD Operating Results USD Millions, except Earnings per Share YTD 2019 YTD 2019 YTD 2018 YTD 2018 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $3,468.1 $3,468.1 $3,468.4 $3,468.4 % Change vs 2018 (0.01)% (0.01)% Gross Profit $719.2 $723.2 $747.3 $747.5 % of Sales 20.7% 20.9% 21
Slide 25: YTD 2019 Adjustments
YTD 2019 Adjustments USD Millions, except Earnings per Share YTD 2019 Restructuring Tax & Interim YTD 2019 Transformation Deal Related Other As Reported & Related Period As Adjusted Net Sales $3,468.1 — — — — — $3,468.1 Gross Profit 719.2 4.0 — — — — 723.2 SG&A (407.1) 8.6 10.3 (7.7) — — (395.9) Inc
Slide 26: YTD 2018 Adjustments
YTD 2018 Adjustments USD Millions, except Earnings per Share YTD 2018 Restructuring Debt Tax & Interim YTD 2018 Transformation Extinguishment Other As Reported & Related Period As Adjusted Net Sales $3,468.4 — — — — — $3,468.4 Gross Profit 747.3 0.2 — — — — 747.5 SG&A (416.4) 4.9 21.7 — (2.8) — (392
Slide 27: YTD Adjusted OP by Segment
YTD Adjusted OP by Segment USD Millions YTD 2019 YTD 2018 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $191.8 $7.1 $198.9 $263.4 $2.1 $265.5 MP 157.9 0.4 158.3 125.6 (2.8) 122.8 Corporate & Other (37.6) 7.7 (29.9) (58.1) 24.7 (33.4) Continuing $312.1 $15.2 $327.3 $330.
Slide 28: 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 29: 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, plus (minus) increases (decreases) in Terex Financial Services finance receivables consisting of sales-type lease
Slide 30: Glossary: Debt & Net Debt
Glossary: Debt & Net Debt USD Millions Debt is calculated using the Condensed Consolidated Balance Sheet amounts for Notes payable and 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 ca
Slide 31: 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 32: 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 Ter
Slide 33: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions See reconciliation of adjusted amounts below on the following ROIC tables. Amounts are as of and for the three months ended for the period referenced in the tables. Sep '19 Jun '19 Mar '19 Dec '18 Sep '18 Annualized effective tax rate, as adjusted (1),(2) 20.0%
Slide 34: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three months Three months Three months Three months ended 9/30/19 ended 6/30/19 ended 3/31/19 ended 12/31/18 Reconciliation of income (loss) from operations: Income (loss) from operations, as reported $ 86.4 $ 126.0 99.7 81.6 Adjustments: Deal Related (0.9) (7.0
Slide 35: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Income (loss) from (Provision for) Nine Months Ended September 30, 2019 continuing operations benefit from income Income tax before income taxes taxes rate Reconciliation of annualized effective tax rate: As reported $ 245.0 $ (53.8) 22.0% Effect of Adjustments:
Slide 36: Glossary: Working Capital
Glossary: Working Capital USD Millions Working Capital is calculated using the Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus Inventories less Trade accounts payable and Customer advances. The Company views excessive working capital as an inefficient use of resource