Terex Corporation · NYSE:TEX
Terex — Q3 2024 Earnings Presentation
36 slides from Terex's earnings presentation, Oct 30, 2024
Slide 1: Q3 2024 Earnings Conference Call
Q3 2024 Earnings Conference Call October 30, 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 TEREX WAY VALUES... SUPPORT A STRONG COMPANY CULTURE Integrity • Guide team members' actions with all stakeholders, so the Company Respect performs at the highest level Improvement • Drive our unwavering focus on Zero Harm safety, strong govern
Slide 4: Terex Completes ESG Acquisition
Terex Completes ESG Acquisition 1 Revenue split estimated as of LTM Q1’2024 2 Refer to the appendix for GAAP to non-GAAP reconciliation. 4
Slide 5: Q3 2024: Financial Highlights
Q3 2024: Financial Highlights $1.2B 10.5% 11.6% 23.7% $1.46 Sales Adjusted Adjusted ROIC* Adjusted Operating EBITDA EPS* Margin* Margin* EPS OUTLOOK Full-Year Adjusted EPS Outlook of $5.85 to $6.25* *Refer to the appendix for GAAP to non-GAAP reconciliation. 5
Slide 6: Market Strength in Infrastructure, Utilities, Manufacturing & Recycling
Market Strength in Infrastructure, Utilities, Manufacturing & Recycling Macro Tailwinds Macro Headwinds • The average American generates 4.9 • Economic weakness in Europe impacting pounds of trash per day1 scrap material handling demand • Only 21% of U.S. waste is recycled2 • Slow permitting and app
Slide 7: Well-Positioned for Sustained Growth
Well-Positioned for Sustained Growth Sources: McKinsey Global Institute; J.P. Morgan; Precedence Research; C&D Recycling Market: Municipal Waste Recycling Market 7
Slide 8: Strategic Priorities
Strategic Priorities Build on Strong Foundation and Accelerate Profitable Growth Execute Innovate Grow • Leverage Terex Operating • Bring new products and • Integrate ESG acquisition System services to market that maximize customer ROI • Leverage diverse portfolio to • Optimize footprint – Continued
Slide 9: Terex Equipment Doing Amazing Work
Terex Equipment Doing Amazing Work Terex Powerscreen building the world's highest roadway, 19,000 ft above sea level Zen Robotics & Terex Recycling delivering fully automated AI powered waste recycling Terex Utilities trucks on the front lines of Hurricane Helene power restoration efforts 9
Slide 10: Q3 Financial Performance
Q3 Financial Performance USD Millions, except Earnings per Share Q3 2024 Q3 2023 Q3 2024 EPS Net Sales $ 1,212 $ 1,290 GAAP $1.31 Accelerated vesting / severance 0.06 % Change vs 2023 (6.0%) Deal related 0.09 Adj. Gross Profit* 249 292 Adjusted $1.46 % of Sales 20.5% 22.6% Adj. SG&A* (122) (129) % o
Slide 11: Returning to Normal Ordering Patterns
Returning to Normal Ordering Patterns Backlog remains elevated at $1.6B Bookings reflect return to more normal seasonality • Delivery schedules impacted by channel adjustments • Channel activity reflecting macro factors including uncertainty in upcoming election and rate outlook • 2024 backlog cover
Slide 12: Materials Processing Financial Highlights
Materials Processing Financial Highlights (17.9%) YoY (370) bps YoY (58%) YoY Results Drivers • Lower sales due to softer demand and dealer inventory rebalancing across multiple businesses • Q3 margins impacted by unfavorable product and geographic mix • Backlog is broadly in line with historical,
Slide 13: Aerial Work Platforms Financial Highlights
Aerial Work Platforms Financial Highlights (130) bps YoY (50%) YoY +2.4% YoY Results Drivers • Q3 sales growth was less than anticipated due to channel adjustments and shorter delivery lead times • Margins impacted by unfavorable product mix and higher freight costs • Backlog remains elevated, trend
Slide 14: Strong Balance Sheet and Agile Capital Structure
Strong Balance Sheet and Agile Capital Structure *Refer to the appendix for GAAP to non-GAAP reconciliation. 14
Slide 15: Full-Year Adjusted EPS Outlook of $5.85 to $6.25
Full-Year Adjusted EPS Outlook of $5.85 to $6.25 Terex Adjusted Outlook2 Segment Adjusted Outlook4 Net Sales Operating Margin Net Sales $5.0 - $5.2 billion MP ~$1.9 billion 14.1% - 14.3% Operating Margin 11.4% - 11.7% AWP ~$3.0 billion 11.5% - 11.8% EBITDA $635 - $670 Interest / Other Expense ~$9
Slide 16: 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 business positioned to benefit from megatrends Operating system enables profitability through cycles and high ROIC Strong balance sheet and cash flow suppor
Slide 17: Appendix
Appendix
Slide 18: Backlog Trend
Backlog Trend Sequential Year on Year MP $ (187) (34%) $ (519) (58%) Backlog remains elevated, trending towards AWP (577) (32%) (1,216) (50%) historical norms Total $ (764) (32%) $ (1,735) (52%) Figures in USD Millions; Backlog includes deliveries beyond 12 months which reflects continuing operation
Slide 19: Q3 Sales by Geography (2024 vs. 2023)
Q3 Sales by Geography (2024 vs. 2023) North America Western Europe Asia-Pacific Rest of World Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. 4% 4% (23%) (23%) (24%) (24%) (13%) (11%) Q3 2024 Q3 2023 19
Slide 20: YTD Q3 Sales by Geography (2024 vs. 2023)
YTD Q3 Sales by Geography (2024 vs. 2023) North America Western Europe Asia-Pacific Rest of World Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. Actual FX-Adj. 8% 8% (15%) (16%) (13%) (13%) (12%) (12%) YTD YTD Q3 2024 Q3 2023 20
Slide 21: Segment Results
Segment Results MATERIALS PROCESSING AERIAL WORK PLATFORMS Q3 '24 Q3 '23 YTD' 24 YTD' 23 Q3 '24 Q3 '23 YTD' 24 YTD' 23 Net Sales $444 $541 $1,463 $1,672 Net Sales $769 $751 $2,423 $2,262 % Change vs. '23 (17.9%) (12.5%) % Change vs. '23 2.4% 7.1% Adj. Operating Profit Adj. Operating Profit $59 $92 $
Slide 22: Glossary
Glossary In this document, Terex refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non- GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Management believes that presenting these non-GAAP
Slide 23: Glossary: Free Cash Flow
Glossary: Free Cash Flow 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 provides mana
Slide 24: Glossary: Net Leverage
Glossary: Net Leverage Net Leverage is defined as Net Debt divided by adjusted last twelve months (LTM) EBITDA. We believe that this measure reflects its ability to cover its net debt obligations with results from core operations. September 30, 2024 Net Debt $ 276 Divided by: Adjusted LTM EBITDA 679
Slide 25: Glossary: Debt & Net Debt
Glossary: Debt & Net Debt 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, including amou
Slide 26: Glossary: EBITDA and Adjusted EBITDA
Glossary: EBITDA and Adjusted EBITDA 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):
Slide 27: Glossary: EBITDA and Adjusted EBITDA
Glossary: EBITDA and Adjusted EBITDA Three Months Ended LTM Ended September 30, September 30, 2024 2023 2024 Net income (loss) $88 $119 $464 (Gain) loss on disposition of discontinued operations - net of tax — — 1 Income (loss) from continuing operations 88 119 465 Provision for (benefit from) incom
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: 2024 ROIC Continued
Glossary: 2024 ROIC Continued 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 '24 Jun '24 Mar '24 Dec '23 Sep '23 Annualized effective tax rate as
Slide 30: Glossary: 2024 ROIC Continued
Glossary: 2024 ROIC Continued Nine Months Ended September 30, 2024 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 $ 410 $ (73) 17.8% Effect of Adjustments: Tax related
Slide 31: GAAP to Non-GAAP Reconciliation: Q3 2024
GAAP to Non-GAAP Reconciliation: Q3 2024 Accelerated Q3 2024 Q3 2024 Vesting / Deal Mark-to- Adjusted GAAP Other Related Market (non-GAAP) Net Sales $1,212 $ — $ — $ — $1,212 Gross Profit 245 4 — — 249 % of Sales 20.2% 20.5% SG&A (123) 1 — — (122) % of Sales (10.1%) (10.1%) Income (Loss) from Operat
Slide 32: GAAP to Non-GAAP Reconciliation: YTD Q3 2024
GAAP to Non-GAAP Reconciliation: YTD Q3 2024 YTD YTD Accelerated Q3 2024 Q3 2024 Vesting / Deal Mark-to- Adjusted GAAP Severance Related Market (non-GAAP) Net Sales $3,886 $— $— $— $3,886 Gross Profit 871 5 — — 876 % of Sales 22.4% 22.5% SG&A (398) 6 — — (392) % of Sales (10.2%) (10.1%) Income (Loss
Slide 33: GAAP to Non-GAAP Reconciliation: Q3 2023
GAAP to Non-GAAP Reconciliation: Q3 2023 Accelerated Q3 2023 Q3 2023 Vesting / Deal Mark-to- Adjusted GAAP Other Related Market (non-GAAP) Net Sales $1,290 $ — $ — $ — $1,290 Gross Profit 292 — — — 292 % of Sales 22.6% 22.6% SG&A (129) — — — (129) % of Sales (10.0%) (10.0%) Income (Loss) from Operat
Slide 34: GAAP to Non-GAAP Reconciliation: YTD Q3 2023
GAAP to Non-GAAP Reconciliation: YTD Q3 2023 YTD YTD Q3 2023 Q3 2023 Mark-to- OKC Sale Adjusted GAAP Market Gain (non-GAAP) Net Sales $3,929 $ — $ — $3,929 Gross Profit 914 — — 914 % of Sales 23.3% 23.3% SG&A (393) — (2) (395) % of Sales (10.0%) (10.1%) Income (Loss) from Operations $521 $ — (2) 519
Slide 35: GAAP to Non-GAAP Reconciliation: Operating Income
GAAP to Non-GAAP Reconciliation: Operating Income Three Months Ended September 30, Nine Months Ended September 30, 2024 2024 Consolidated operating income (GAAP) $ 122 10.1 % $ 473 12.2 % MP Adjustments 3 0.3 % 4 0.1 % AWP Adjustments 2 0.1 % 3 0.1 % Corporate & Other Adjustments — — % 4 0.1 % Adjus
Slide 36: ESG: Adjusted EBITDA Reconciliation
ESG: Adjusted EBITDA Reconciliation 1. ESG incurred elevated warranty expenses related to certain YTD YTD LTM non-recurring issues in 2023. This adjustment normalizes warranty 2022 2023 6/30/2023 6/30/2024 6/30/2024 expense by using historical actual warranty settlements as a Net Income (Loss) $57 $