Terex Corporation · NYSE:TEX
Terex — Q4 2023 Earnings Presentation
33 slides from Terex's earnings presentation, Feb 9, 2024
Slide 1: Q4 2023 Earnings Conference Call
Q4 2023 Earnings Conference Call February 9, 2024 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 2.8 2.6 3.82 3.27 2.98 2.09 1.52 1.77 1.93 1.98 1.40 2016 2017 2018 2019 2020 2021 2022 2023 2026 Target TRIR Machinery Manufacturing Average TEREX WAY VALUES... SUPPORT A STRONG COMPANY
Slide 4: Full-Year 2023: Delivered on our Strategy
Full-Year 2023: Delivered on our Strategy EXECUTE INNOVATE GROW • Achieved price cost neutrality and • Introduced innovative new • Environmental and Aggregate proactively managed supply products throughout the year recycling sales increased 23% constraints • Increased electrified product • $151M inv
Slide 5: Terex Brands Recognized Around the World
Terex Brands Recognized Around the World Providing Greater Productivity, Efficiency and Safety Recognized globally for product quality and performance Delivering value to customers through our technology Maximizing customer return on investment in diverse end markets Genie's GS E-Drive Lithium-Ion s
Slide 6: Terex Products Support Diverse End Markets
Terex Products Support Diverse End Markets Leading Portfolio Supports Development Across the Globe Terex products used in diverse industrial and development applications Equipment used in all phases of project life cycle End market demand supported by global megatrends Utilities maintaining and mode
Slide 7: Sustainability Strategy Supports Long-Term Value
Sustainability Strategy Supports Long-Term Value Key areas of focus: Product Innovation and Customer Solutions Team Members and Community Engagement Responsible Operations 7
Slide 8: Well-Positioned To Benefit ...
Well-Positioned To Benefit ... 8
Slide 9: Strong Customer Demand
Strong Customer Demand USD Millions Backlog at $3.4B, ~3x historical average Book to Bill ratio of 105% • Improved customer deliveries and lead times have • Bookings reflect return to more normal seasonality allowed us to reduce backlog from peak levels with strong national account demand in Q4 • Mi
Slide 10: Robust 2024 Market Outlook
Robust 2024 Market Outlook Diverse Portfolio Supports Performance Continued Strength in Infrastructure, Utilities, Manufacturing and Recycling Markets (1) Estimated sales by end use 10
Slide 11: Continued Solid Operating Performance
Continued Solid Operating Performance USD Millions, except Earnings per Share Q4 2023 Q4 2022 Q4 2023 Financial Call-Outs Inc. / (Exp.) EPS Operating Profit Net Sales $ 1,222.6 $ 1,217.6 Accelerated vesting / other ($13) ($0.17) % Change vs 2022 0.4% Product liability verdict ($4) ($0.05) Gross Prof
Slide 12: Materials Processing: Consistent Strong Performance
Materials Processing: Consistent Strong Performance USD Millions Sales Operating Margin Backlog +0.8% YoY +14.7% YoY (70) bps YoY +80 bps YoY (35%) YoY 2,227 16.1% 15.8% 15.1% 15.3% 1,174 1,942 767 550 555 Q4 '22 Q4 '23 FY '22 FY '23 Q4 '22 Q4 '23 FY '22 FY '23 Q4 '22 Q4 '23 Results Drivers • Solid
Slide 13: Aerial Work Platforms: Strong Margin Improvement
Aerial Work Platforms: Strong Margin Improvement USD Millions Sales Operating Margin Backlog (1.8%) YoY +17.6% YoY +120 bps YoY +480 bps YoY (9%) YoY 2,922 12.7% 2,897 2,644 2,484 9.2% 8.0% 7.9% 672 660 Q4 '22 Q4 '23 FY '22 FY '23 Q4 '22 Q4 '23 FY '22 FY '23 Q4 '22 Q4 '23 Results Drivers • Q4 sales
Slide 14: Strong 2023 Performance in Dynamic Operating Environment
Strong 2023 Performance in Dynamic Operating Environment USD Millions, except Earnings per Share FY 2023 FY 2022 FY 2023 Financial Call-Outs Inc. / (Exp.) EPS Operating Profit Net Sales $ 5,151.5 $ 4,417.7 Accelerated vesting / other ($13) ($0.17) % Change vs 2022 16.6% Product liability verdict ($4
Slide 15: Strong Balance Sheet and Liquidity Supports Growth
Strong Balance Sheet and Liquidity Supports Growth USD Millions 2023 Highlights Q4 Liquidity • Ample liquidity of $971; Net leverage of 0.4x Undrawn Revolver $600 Cash $371 • Free Cash Flow of $366 up 141%; conversion of 71% Total Liquidity $971 • ROIC of 28.5% Net Debt & Leverage • Dividend up 31%
Slide 16: 2024 Outlook: Expecting Another Strong Year
2024 Outlook: Expecting Another Strong Year USD Millions, except Earnings per Share Operating Margin Expansion Offset by Higher Tax Rate FY 2023 FY 2024 Outlook FY 2023 FY 2024 Outlook Terex Outlook (1) GAAP / Non-GAAP Outlook (1) Operating Operating Net Sales Net Sales Margin Margin Net Sales $5,15
Slide 17: Positioned to Deliver Long-Term Value
Positioned 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 balance sheet and cash f
Slide 18: Appendix
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Slide 19: Full-Year 2023: Financial Highlights
Full-Year 2023: Financial Highlights EPS $7.56* Sales $5.2 Billion Backlog $3.4 Billion +75% YoY +17% YoY (16%) YoY SG&A % of Sales 10.5%* NWC % of Sales 20.4% Operating Margin 12.4%* +30 bps YoY +240 bps YoY +290 bps YoY Note: Arrows represent year-over-year change. * Excluding the financial call-o
Slide 20: Backlog Trend
Backlog Trend USD Millions 4,149 4,083 4,071 4,137 3,933 3,742 3,331 1,162 3,346 3,411 1,295 1,265 1,174 1,213 2,957 1,074 767 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 2,644 2,284 2,456 528 1,895 1,327 1,482 842 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Se
Slide 21: Q4 Sales by Geography (2023 vs. 2022)
Q4 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. 3% 2% (4%) (10%) 7% 5% (14%) (18%) 9% 10% North America 15% 14% Western Europe Q4 2023 Q4 2022 Asia / Pacific 58% 57% Rest of World 18% 19% Note
Slide 22: Full-Year Sales by Geography (2023 vs. 2022)
Full-Year 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. 21% 21% 9% 9% 8% 11% 17% 16% 8% 8% 13% 14% North America Western Europe FY 2023 FY 2022 Asia / Pacific 56% 59% 20% Rest of World 22% Note
Slide 23: Segment Results
Segment Results USD Millions MATERIALS PROCESSING AERIAL WORK PLATFORMS Q4 '23 Q4 '22 FY '23 FY '22 Q4 '23 Q4 '22 FY '23 FY '22 Net Sales $554.7 $550.3 $2,227.0 $1,941.6 Net Sales $659.9 $671.8 $2,921.7 $2,483.6 % Change vs. '22 0.8% 14.7% % Change vs. '22 (1.8%) 17.6% Operating Profit (Loss) $83.8
Slide 24: 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 25: 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 26: Glossary: Debt and Net Debt
Glossary: Debt and 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,
Slide 27: Glossary: EBITDA
Glossary: EBITDA USD Millions EBITDA is defined as earnings, before interest, other non-operating income (loss), income (loss) attributable to non-controlling USD Millions interest, taxes, depreciation and amortization. The Company calculates this by subtracting the following items from Net income (
Slide 28: 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 29: 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. USD Millions Amounts are as of and for the three months ended for the periods referenced in the tables below. Dec '23 Sep '23 Jun '23 Mar '23 Dec '22 Effective t
Slide 30: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Twelve Months Ended December 31, 2023 Income (loss) from continuing (Provision for) benefit from operations before income taxes income taxes Income tax rate Reconciliation of the full year 2023 effective tax rate: As reported $ 579.7 $ (63.0) 10.9% Effect of Adj
Slide 31: 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
Slide 32: Q4 2023 Adjustments
Q4 2023 Adjustments USD Millions, except Earnings per Share Accelerated Product Q4 2023 Vesting / Liability Mark-to- Q4 2023 GAAP Other Verdict Market Tax Non-GAAP Net Sales $1,222.6 – – – – $1,222.6 Gross Profit 262.5 0.2 4.0 – – 266.7 % of Sales 21.5% 21.8% SG&A (146.8) 12.8 – – – (134.0) % of Sal
Slide 33: FY 2023 Adjustments
FY 2023 Adjustments USD Millions, except Earnings per Share Accelerated Product FY 2023 Vesting / Liability OKC Sale Mark-to- FY 2023 GAAP Other Verdict Gain Market Tax Non-GAAP Net Sales $5,151.5 – – – – – $5,151.5 Gross Profit 1,176.6 0.2 4.0 – – – 1,180.8 % of Sales 22.8% 22.9% SG&A (540.1) 12.8