Terex Corporation · NYSE:TEX
Terex — Q1 2018 Earnings Presentation
33 slides from Terex's earnings presentation, May 2, 2018
Slide 1: Q1 2018 Conference Call
Q1 2018 Conference Call May 2, 2018 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: Q1 Financial Highlights
Q1 Financial Highlights Results are Continuing Operations, Except Cash Figures • Increased sales by 25% to $1.3 billion • Increased as reported Operating Profit by $76 million, and as adjusted Operating Profit(1) by $57 million or ~350% • EPS of $0.59 as reported, $0.55 as adjusted(1) • Increased bo
Slide 4: Terex Strategy: Focus, Simplify, Execute to Win
Terex Strategy Focus Simplify Execute to Win FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 5: Q1 Strategy Deployment Highlights
Q1 Strategy Deployment Highlights Approved Utilities Simplify Reduce Manufacturing Strategy Complexity and SG&A Reduced G&A while investing in priority areas Developed and piloted the Terex Proven Sales Process Commercial Excellence Execute to Win Deployed CRM at Powerscreen® Enhanced pricing waterf
Slide 6: 2018 Updated Guidance
2018 Updated Guidance Guidance Improvements(1) • Net sales increased to up ~15% from up ~10% • Operating margin increased to ~7.1% from ~7% • EPS increased to $2.70 - $3.00 from $2.35 - $2.65 (1) Excludes the impact of future divestitures, restructuring, transformation and other unusual items; Updat
Slide 7: Q1 Segment Highlights
Q1 Segment Highlights AWP • Increased sales 35% • Increased operating margin 480 bps, incremental margin ~22%(1) • Increased backlog 43% (1) Excluding the impact of non-recurring tax charge of $2.2 million in Q1 2017 Cranes • Increased sales 19% • Supply base challenges in mobile cranes impacted pro
Slide 8: Q1 Operating Results
Q1 Operating Results USD Millions, except Earnings per Share Q1 2018 Q1 2018 Q1 2017 Q1 2017 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,260.9 $1,260.9 $1,006.9 $1,006.9 % Change vs 2017 25.2% 25.2% Gross Profit $230.9 $228.9 $152.3 $162.7 % of Sales 18.3% 18.2% 15.1% 16.2% SG
Slide 9: 2018 Guidance Update
2018 Guidance Update USD Millions, except Earnings per Share Net Sales Operating Margin Terex 2018 Segment (1) 2018 2018 (1) Guidance Guidance Original Updated Original Updated Original Updated AWP Up ~10% Up ~18% 9.5% - 10.5% 10.3% - 11.3% Net Sales Up ~10% Up ~15% Operating Cranes Up ~12% Up ~12%
Slide 10: Disciplined Capital Allocation
Disciplined Capital Allocation • Improved Q1 free cash flow by ~$90 million(1) Cash Flow from Operations + • Repriced USD term loan, reducing interest rate spread by After-tax Proceeds from Divestures 0.25% to Libor +200 bps • Increased quarterly dividend 25% to $0.10 per share • Improved overall li
Slide 11: Aerial Work Platforms
Aerial Work Platforms • Strengthening global markets ARA Show 2018 • Steel surcharge helping to offset Section 232 steel increases • Innovative new products • Increased backlog 43% to $891 million AWP 2018 Guidance Original Updated Net Sales Up ~10% Up ~18% Operating Genie® S-85 XC 9.5% - 10.5% 10.3
Slide 12: Cranes
Cranes • Stable global markets Terex® OptimaTM TC55 • Mobile Cranes supply base challenges • Growing Utilities business • Increased backlog 58% Demag® AC-220-5 Cranes 2018 Guidance Original Updated Net Sales Up ~12% Up ~12% Operating ~2% ~0% Margin FOCUS • SIMPLIFY • EXECUTE TO WIN 12
Slide 13: Materials Processing
Materials Processing Powerscreen® Global Conference • Global Crushing & Screening growth • Growth in Fuchs® and Environmental • Increased backlog 77% CBI® Magnum Force 6800 BT MP 2018 Guidance Original Updated Net Sales Up ~8% Up ~15% Operating 11.5% - 12.5% 11.5% - 12.5% Margin FOCUS • SIMPLIFY • E
Slide 14: Summary
Summary • Strong start in AWP and Materials Processing • Addressing Mobile Cranes operational challenges • Raising full year 2018 guidance • Continue to implement plans in the Simplify and Execute to Win priority areas • Strong execution of our disciplined capital allocation strategy FOCUS • SIMPLIF
Slide 15: Questions?
Questions? FOCUS • SIMPLIFY • EXECUTE TO WIN 15
Slide 16: Appendix
Appendix FOCUS • SIMPLIFY • EXECUTE TO WIN 16
Slide 17: Backlog Trend
Backlog Trend USD Millions 1,962 1,631 428 1,434 Sequential Year on Year 318 1,274 193 1,182 $ % $ % 1,108 1,126 1,102 1,115 643 1,045 242 153 149 224 550 535 187 866 259 AWP 128 17% 266 43% 841 216 773 407 139 407 169 514 398 459 Cranes 93 17% 236 58% 203 323 499 401 355 891 MP 110 35% 186 77% 317
Slide 18: Q1 Global Sales
Q1 Global Sales Sales by Geography 2018 vs 2017 Western Europe Asia/ Pacific Actual FX-Adj. North America Actual FX-Adj. 54% 35% 19% 11% Actual FX-Adj. E. Europe, Middle 17% 16% East & Africa Actual FX-Adj. 42% 25% LATAM Q1 2018 Q1 2017 Actual FX-Adj. 72% 64% 24% Western Europe 28% Asia / Pacific E.
Slide 19: Aerial Work Platforms
Aerial Work Platforms USD Millions $1,000 250% Net Bookings Book-to-Bill Ratio 195% $800 200% 170% $600 150% 125% 121% $400 83% 80% 82% 100% 70% 75% $200 50% $418 $409 $378 $619 $579 $467 $402 $845 $764 $0 0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1 '18 Q1 '17 Net Sales $ 638.9 $ 472
Slide 20: Cranes
Cranes USD Millions 135% $450 Net Bookings Book-to-Bill Ratio 140% 133% 118% 117% 113% 120% 102% 97% 100% 82% 83% 80% $250 60% 40% 20% $293 $279 $228 $318 $343 $352 $343 $366 $424 $50 0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1 '18 Q1 '17 Net Sales $ 314.0 $ 263.9 % Change vs. '17 19
Slide 21: Materials Processing
Materials Processing USD Millions Net Bookings Book-to-Bill Ratio 137% $350 140% 119% 118% 121% 111% 111% 120% $300 100% 94% 95% $250 100% $200 80% $150 60% $100 40% $50 20% $261 $236 $265 $236 $272 $264 $286 $339 $407 $0 0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1 '18 Q1 '17 Net Sal
Slide 22: Q1 2018 Adjustments
Q1 2018 Adjustments USD Millions, except Earnings per Share Q1 2018 Restructuring Extinguishment Tax & Interim Q1 2018 As Reported & Related Transformation of Debt Other Period As Adjusted Net Sales $ 1,260.9 - - - - - $ 1,260.9 Gross Profit 230.9 (2.0) - - - - 228.9 SG&A (159.6) (0.2) 7.3 - (2.8) -
Slide 23: Q1 2017 Adjustments
Q1 2017 Adjustments USD Millions, except Earnings per Share Q1 2017 Restructuring Extinguishment Tax & Interim Q1 2017 As Reported Deal Related & Related Transformation of Debt Period As Adjusted Net Sales $ 1,006.9 - - - - - $ 1,006.9 Gross Profit 152.3 6.2 4.2 - - - 162.7 SG&A (157.0) (2.6) 4.8 8.
Slide 24: Q1 Adjusted OP by Segment
Q1 Adjusted OP by Segment USD Millions Q1 2018 Q1 2017 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 60.1 $ - $ 60.1 $ 21.7 $ 0.1 $ 21.8 Cranes (9.7) (2.6) (12.3) (31.9) 12.4 (19.5) MP 38.9 (2.8) 36.1 25.6 - 25.6 Corporate & Other (18.0) 7.7 (10.3) (20.1) 8.5 (11.6) C
Slide 25: 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 26: 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 leases
Slide 27: 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 28: 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 29: Glossary: ROIC
Glossary: ROIC ROIC and 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 Terex Cor
Slide 30: 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. Mar '18 Dec '17 Sep '17 Jun '17 Mar '17 Annualized effective tax rate, as adjusted (1),(2) 23.0%
Slide 31: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three Three Three Three months months months months ended ended ended ended 3/31/18 12/31/17 9/30/17 6/30/17 Reconciliation of income (loss) from operations: Income (loss) from operations, as reported $ 71.3 $ 41.0 $ 65.9 $ 77.7 Adjustments: Deal Related - 7.1 (
Slide 32: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Income (loss) from (Provision for) continuing operations benefit from Income tax 2018 before income taxes income taxes rate Reconciliation of annualized effective tax rate: Income tax rate, as reported $ 59.0 $ (11.4) 19.3% Effect of Adjustments: Restructuring &
Slide 33: 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