Slide 1: Q2 2019 Conference Call
Q2 2019 Conference Call July 30, 2019 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 press release, the words “may,” “expects,” “intends,” “an
Slide 3: Q2 Highlights
Q2 Highlights Results are Continuing Operations • Continued global growth, FX-neutral revenue up 8% • MP continues excellent performance +44% • Global AWP market generally +40% stable at a healthy level • Strong cash flow generation – cash provided by operating activities of $217 million and Free Ca
Slide 4: Terex Strategy: Focus, Simplify, Execute to Win
Terex Strategy Focus Simplify Execute to Win FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 5: Strategy Deployment Progress
Strategy Deployment Progress Demag® Mobile Crane sale expected Focus High to close in the coming days Performing Portfolio Completed sale of boom truck, truck crane and crossover product lines Simplify G&A reduction underway Reduce Complexity New manufacturing facilities and G&A progressing as plann
Slide 6: 2019 Guidance Update
2019 Guidance Update Continuing Operations Guidance (1) • Net sales of ~$4.6 billion • Operating margin of 8.8% to 9.3% • EPS of $3.40 to $3.80 • Reaffirming full year free cash flow of ~$165 million Returning Capital to Shareholders • Quarterly dividend increase of 10%, to $0.11 per share • ~$200 m
Slide 7: Q2 Segment Highlights
Q2 Segment Highlights Aerial Work Platforms • Global sales of $870 million up 2%, FX neutral up ~5% • Operating margin 9.9%, 10.5% as adjusted • Bookings of $506 million and backlog of $746 million were stable Materials Processing • Global sales of $365 million up 9%, FX neutral up ~13% • Operating
Slide 8: Q2 Operating Results
Q2 Operating Results USD Millions, except Earnings per Share Q2 2019 Q2 2019 Q2 2018 Q2 2018 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,306.9 $1,306.9 $1,253.0 $1,253.0 % Change vs 2018 4.3% 4.3% Gross Profit $271.8 $274.6 $278.6 $278.7 % of Sales 20.8% 21.0% 22.2% 22.2% SG&A
Slide 9: Disciplined Capital Allocation
Disciplined Capital Allocation • Q2 Free Cash Flow of $168 million – more than double the Cash Flow from Operations + prior year After-tax Proceeds from Divestures • In addition to FCF - generating cash through portfolio actions including sale of Demag® Mobile Cranes and ASV stock, expect ~$150 mill
Slide 10: 2019 Guidance Update
2019 Guidance Update USD Millions, except Earnings per Share and otherwise noted Net Sales Operating Margin Terex 2019 Segment 2019 2019 Guidance (1) Guidance (1) Previous Updated Previous Updated Previous Updated AWP Up 3% - 6% Up 0% - 1% 10.5% - 11.5% 9% - 9.5% Net Sales Up 3% - 6% Up 1% - 3% MP U
Slide 11: Aerial Work Platforms
Aerial Work Platforms Genie® SX-180 Super Boom Terex® TL55 Aerial at China State Grid • Global bookings and backlog stable • Increasing product adoption in Asia- Pacific • Innovative new products and services • Continued strength in Utilities Genie® S-85 XC FOCUS • SIMPLIFY • EXECUTE TO WIN 11
Slide 12: Materials Processing
Materials Processing EVOQUIP® COBRA 290 Impact Crusher, Powerscreen® Digital Dealer Forum Processing material at the new MP site in Northern Ireland Material Processing Equipment at work • Consistent strong execution in Asia • Healthy backlog of $364 million • Innovative new products and services •
Slide 13: Summary
Summary • Excellent quarter for MP, AWP continued to grow • Strong cash flow generation • Focused the portfolio on high-performing businesses • Continue to implement Simplify and Execute to Win priorities • Continue to execute our disciplined capital allocation strategy FOCUS • SIMPLIFY • EXECUTE TO
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 1,661 1,651 1,612 51 64 62 1,298 513 Sequential Year on Year 449 1,234 1,263 499 58 58 1,158 65 1,059 49 $ % $ % 329 51 929 916 468 416 AWP (342) (31%) (8) (1%) 60 824 364 62 249 737 47 659 219 229 MP (135) (27%) (52) (13%) 90 70 270 170 1,100 1,098 1,088 Corp & Other (15)
Slide 17: Q2 Global Sales
Q2 Global Sales Sales by Geography 2019 vs 2018 Western Europe Asia/ Pacific Actual FX-Adj. North America Actual FX-Adj. -2% 5% 16% 24% Actual FX-Adj. E. Europe, Middle 5% 6% East & Africa Actual FX-Adj. -7% - LATAM Actual FX-Adj. 2019 Q2 YTD 2018 Q2 YTD - 12% 23% 24% Western Europe Asia / Pacific E
Slide 18: Aerial Work Platforms
Aerial Work Platforms USD Millions Net Bookings Book-to-Bill Ratio $1,200 200% 178% 180% $1,000 157% 160% 126% 140% $800 120% 97% 98% $600 86% 81% 100% 80% 60% 59% $400 60% 40% $200 20% $569 $502 $932 $923 $501 $695 $962 $700 $506 $0 0% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2 '19 Q2
Slide 19: Materials Processing
Materials Processing USD Millions Net Bookings Book-to-Bill Ratio $500 160% 139% $450 140% $400 120% 117% 113% 113% 120% $350 95% 96% 90% 100% $300 $250 80% 64% $200 60% $150 40% $100 $50 20% $275 $303 $352 $429 $293 $365 $398 $331 $231 $0 0% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2
Slide 20: Q2 2019 Adjustments
Q2 2019 Adjustments USD Millions, except Earnings per Share Q2 2019 Q2 2019 Restructuring Tax & Interim As Reported & Related Transformation Deal Related Other Period As Adjusted Net Sales $ 1,306.9 - - - - - $ 1,306.9 Gross Profit 271.8 2.8 - - - - 274.6 SG&A (145.8) 5.9 4.0 (7.0) - - (142.9) Incom
Slide 21: Q2 2018 Adjustments
Q2 2018 Adjustments USD Millions, except Earnings per Share Q2 2018 Restructuring Tax & Interim Q2 2018 As Reported & Related Transformation Other Period As Adjusted Net Sales $ 1,253.0 - - - - $ 1,253.0 Gross Profit 278.6 0.1 - - - 278.7 SG&A (146.2) 2.5 6.8 - - (136.9) Income (loss) from Operation
Slide 22: Q2 Adjusted OP by Segment
Q2 Adjusted OP by Segment USD Millions Q2 2019 Q2 2018 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 86.3 $ 5.1 $ 91.4 $ 111.6 $ 0.7 $ 112.3 MP 56.3 - 56.3 44.3 - 44.3 Corporate & Other (16.6) 0.6 (16.0) (23.5) 8.7 (14.8) Continuing $ 126.0 $ 5.7 $ 131.7 $ 132.4 $ 9.4
Slide 23: Q2 YTD Operating Results
Q2 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 $2,443.5 $2,443.5 $2,369.6 $2,369.6 % Change vs 2018 3.1% 3.1% Gross Profit $509.6 $513.4 $507.2 $507.4 % of Sales 20.9% 21.0% 21.4% 21
Slide 24: YTD 2019 Adjustments
YTD 2019 Adjustments USD Millions, except Earnings per Share YTD 2019 YTD 2019 Restructuring Tax & Interim As Reported & Related Transformation Deal Related Period As Adjusted Net Sales $ 2,443.5 - - - - $ 2,443.5 Gross Profit 509.6 3.8 - - - 513.4 SG&A (283.9) 6.6 8.1 (6.8) - (276.0) Income (loss)
Slide 25: YTD 2018 Adjustments
YTD 2018 Adjustments USD Millions, except Earnings per Share YTD 2018 Restructuring Extinguishment Tax & Interim YTD 2018 As Reported & Related Transformation of Debt Other Period As Adjusted Net Sales $ 2,369.6 - - - - - $ 2,369.6 Gross Profit 507.2 0.2 - - - - 507.4 SG&A (280.5) 3.5 13.1 - (2.8) -
Slide 26: 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 $ 145.9 $ 6.7 $ 152.6 $ 181.8 $ 1.0 $ 182.8 MP 105.5 - 105.5 84.2 (2.8) 81.4 Corporate & Other (25.7) 5.0 (20.7) (39.3) 15.8 (23.5) Continuing $ 225.7 $ 11.7 $ 237.4
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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. Jun'19 Mar '19 Dec '18 Sep '18 Jun'18 Annualized effective tax rate, as adjusted (1),(2) 21.0% 21
Slide 33: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three Three Three Three months months months months ended ended ended ended 6/30/19 3/31/19 12/31/18 9/30/18 Reconciliation of income (loss) from operations: Income (loss) from operations, as reported $ 126.0 $ 99.7 $ 81.6 $ 104.2 Adjustments: Deal Related (7.0)
Slide 34: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Income (loss) from (Provision for) Six months ended continuing operations benefit from Income tax June 30,2019 before income taxes income taxes rate Reconciliation of annualized effective tax rate: As reported $ 177.1 $ (38.3) 21.6% Effect of Adjustments: Deal R
Slide 35: 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