Terex Corporation · NYSE:TEX
Terex — Q2 2017 Earnings Presentation
35 slides from Terex's earnings presentation, Aug 2, 2017
Slide 1: Q2 2017 Conference Call
Q2 2017 Conference Call August 2, 2017 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: Q2 Financial Highlights
Q2 Financial Highlights Results are Continuing Operations, Except Cash Figures • Sales of $1.2 billion • Cranes profitable in Q2 • EPS of $0.98 as reported, $0.51 as adjusted(1) • Updating FY adjusted EPS guidance to $1.05 to $1.15 • Net cash provided in operating activities of $37 million, free cas
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 Highlights
Strategy Deployment Highlights Focus Simplify Execute to Win Commercial Lifecycle Strategic Focus the Portfolio Rationalize Footprint and Reduce SG&A Excellence Solutions Sourcing Closed Coventry Closed Jinan facility Expanded sales execution LBH sale and pipeline management capabilities Exited Noid
Slide 6: Aerial Work Platforms
Aerial Work Platforms • North American market stronger than forecasted • Competitive global pricing and steel cost are headwinds • Backlog up 46%, up in all major regions AWP Previous Updated Guidance Net Sales Down ~12% Down ~4% Operating ~8% ~8.5% Margin FOCUS • SIMPLIFY • EXECUTE TO WIN 6
Slide 7: Cranes
Cranes • Cranes profitable in Q2; expected to be profitable in second half • Executing restructuring program • Backlog up 29% Cranes Previous Updated Guidance Net Sales Down ~11% Down ~6% Operating ~(2%) ~(1%) Margin FOCUS • SIMPLIFY • EXECUTE TO WIN 7
Slide 8: Materials Processing
Materials Processing • Strong financial performance continues • Growth in Fuchs® material handlers • Backlog up 33% MP Previous Updated Guidance Net Sales Up ~1% Up ~9% Operating ~9.5% ~11% Margin FOCUS • SIMPLIFY • EXECUTE TO WIN 8
Slide 9: Disciplined Capital Allocation
Disciplined Capital Allocation Cash Flow from Operations + • Monetized 7 million Konecranes After-tax Proceeds from Divestures shares for proceeds of $277 million, and a YTD total of $549 million Optimal Capital Structure • Repaid the $254 million remaining 6.5% notes • Repurchased ~9.4 million Tere
Slide 10: Q2 Operating Results
Q2 Operating Results USD Millions, except Earnings per Share Q2 2017 Q2 2017 Q2 2016 Q2 2016 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,181.7 $1,181.7 $1,297.7 $1,297.7 % Change vs 2016 (8.9%) (8.9%) Gross Profit $240.7 $226.9 $242.1 $264.6 % of Sales 20.4% 19.2% 18.7% 20.4%
Slide 11: 2017 Full Year Guidance Update
2017 Full Year Guidance Update USD Millions, except Earnings per Share Terex Segment Net Sales Operating Margin Previous Updated Guidance (1) Guidance (1) Previous Updated Previous Updated Down Down Net Sales Down ~12% Down ~6% AWP ~8% ~8.5% ~12% ~4% Operating Down Down ~4.5% ~4.75% Cranes ~(2%) ~(1
Slide 12: 2017 Full Year Guidance Bridge
2017 Full Year Guidance Bridge USD Millions, except Earnings per Share Down $1.05 ~(6%) to Down $1.15 $0.80 ~(12%) to $0.60 $0.95 to $0.80 ~4.75% ~4.5% (1) Excludes the impact of future divestitures, restructuring, transformation and other unusual items FOCUS • SIMPLIFY • EXECUTE TO WIN 12
Slide 13: Summary
Summary • Continued momentum in booking and backlog levels • Improved full year outlook • Met commitments on the Focus element of the strategic plan • Implementing plans in the Simplify and Execute to Win priority areas • Continue to return capital to shareholders FOCUS • SIMPLIFY • EXECUTE TO WIN 1
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 1,434 1,347 193 130 1,274 1,207 1,182 1,108 1,126 1,102 242 150 149 1,045 224 153 187 535 Sequential Year on Year 512 216 873 866 841 407 $ % $ % 128 169 773 139 407 636 459 514 398 203 323 AWP (126) (20%) 157 46% 401 355 Cranes 52 13% 104 29% 527 317 705 MP (18) (7%) 55 3
Slide 17: Global Sales
Global Sales Sales by Geography 2017 vs 2016 Western Europe Asia/ Pacific Actual FX-Adj. North America Actual FX-Adj. Q2 (11)% (6)% Q2 14% 16% Actual FX-Adj. Q2 E. Europe, Middle (1)% (1)% East & Africa Actual FX-Adj. Q2 (12)% (7)% LATAM Actual FX-Adj. 2017 Q2 YTD 2016 Q2 YTD Q2 (15)% (13)% Western
Slide 18: Aerial Work Platforms
Aerial Work Platforms USD Millions $800 180% Net Bookings Book-to-Bill Ratio 170% 160% 162% 140% $600 125% 120% 100% 80% $400 80% 80% 83% 82% 57% 70% 60% $200 40% 20% $383 $444 $701 $418 $409 $378 $619 $579 $467 $0 0% Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q2'17 Q2 '17 Q2 '16 YTD '17
Slide 19: Cranes
Cranes USD Millions Net Bookings Book-to-Bill Ratio $450 133% 140% $400 120% 103% 102% 118% $350 97% 100% $300 95% 83% 74% 80% $250 82% 60% $200 40% $150 $100 20% $400 $272 $416 $293 $279 $228 $318 $343 $352 $50 0% Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q2'17 Q2 '17 Q2 '16 YTD '17 YT
Slide 20: Materials Processing
Materials Processing USD Millions Net Bookings Book-to-Bill Ratio 320 140% 280 118% 120% 104% 119% 240 100% 94% 111% 95% 100% 200 93% 80% 160 77% 60% 120 40% 80 40 20% $183 $214 $244 $261 $236 $265 $236 $272 $264 0 0% Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q2'17 Q2 '17 Q2 '16 YTD '17
Slide 21: Q2 2017 Adjustments
Q2 2017 Adjustments USD Millions, except Earnings per Share Q2 2017 Restructuring Extinguishment Asset Tax & Interim Q2 2017 As Reported Deal Related & Related Transformation of Debt Impairment Period As Adjusted Net Sales $ 1,181.7 - - - - - - $ 1,181.7 Gross Profit 240.7 1.9 (15.7) - - - - 226.9 S
Slide 22: Q2 2016 Adjustments
Q2 2016 Adjustments USD Millions, except Earnings per Share Q2 2016 Restructuring Tax & Interim Q2 2016 As Reported Deal Related & Related Period As Adjusted Net Sales $ 1,297.7 - - - $ 1,297.7 Gross Profit 242.1 3.9 18.6 - 264.6 SG&A (168.7) 1.7 9.1 - (157.9) Income (loss) from Operations 73.4 5.6
Slide 23: Q2 Adjusted OP by Segment
Q2 Adjusted OP by Segment USD Millions Q2 2017 Q2 2016 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 60.8 $ 0.3 $ 61.1 $ 72.5 $ 1.1 $ 73.6 Cranes 14.5 (11.4) 3.1 (12.8) 18.3 5.5 MP 35.4 0.1 35.5 28.6 0.7 29.3 Corporate & Other (34.8) 17.2 (17.6) (14.9) 13.2 (1.7) Cont
Slide 24: YTD Operating Results
YTD Operating Results USD Millions, except Earnings per Share YTD 2017 YTD 2017 YTD 2016 YTD 2016 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $2,188.6 $2,188.6 $2,412.0 $2,412.0 % Change vs 2016 (9.3%) (9.3%) Gross Profit $393.0 $389.6 $423.8 $449.9 % of Sales 18.0% 17.8% 17.6% 1
Slide 25: YTD 2017 Adjustments
YTD 2017 Adjustments USD Millions, except Earnings per Share YTD 2017 YTD 2017 Deal Restructuring & Extinguishment Asset Tax & Interim As Reported Related Related Transformation of Debt Impairment Period As Adjusted Net Sales $ 2,188.6 - - - - - - $ 2,188.6 Gross Profit 393.0 8.1 (11.5) - - - - 389.
Slide 26: YTD 2016 Adjustments
YTD 2016 Adjustments USD Millions, except Earnings per Share YTD 2016 Restructuring Tax & Interim YTD 2016 As Reported Deal Related & Related Period As Adjusted Net Sales $ 2,412.0 - - - $ 2,412.0 Gross Profit 423.8 3.9 22.2 - 449.9 SG&A (339.1) 4.7 20.0 - (314.4) Income (loss) from Operations 84.7
Slide 27: YTD Adjusted OP by Segment
YTD Adjusted OP by Segment USD Millions YTD 2017 YTD 2016 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 82.5 $ 0.4 $ 82.9 $ 110.6 $ 7.1 $ 117.7 Cranes (18.3) 1.0 (17.3) (29.4) 21.1 (8.3) MP 60.9 0.1 61.0 44.4 1.1 45.5 Corporate & Other (55.5) 25.7 (29.8) (40.9) 21.5 (
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 (“TFS”) assets, plus (minus) decreases (increases)
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) attribu
Slide 32: Glossary: ROIC
Glossary: ROIC Return on Invested Capital (“ROIC”) continues to be a metric we use to measure our performance. ROIC and Non-GAAP Measures assist in showing how effectively we utilize capital invested in our operations. After-tax ROIC is determined by dividing the sum of NOPAT for each of the previou
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. Jun '17 Mar '17 Dec '16 Sep '16 Jun '16 (1),(2) Annualized effective tax rate 10.4% 10.4% 27.4% 2
Slide 34: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three Three Three Three months months months months ended ended ended ended 6/30/17 3/31/17 12/31/16 9/30/16 Reconciliation of income (loss) from operations: Income (loss) from operations $ 75.9 (6.3) (272.1) 39.6 Income (loss) from discontinued operations — — 5
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