Slide 1: Q4 2018 Conference Call
Q4 2018 Conference Call February 25, 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: 2018 Financial Highlights
2018 Financial Highlights Results are Continuing Operations Q4 Full Year • Increased sales by 16% to $1.2 billion • Increased sales by 18% to $5.1 billion • Increased as reported Operating Profit • Increased as reported Operating Profit by $6 million, and as adjusted by $113 million, and as adjusted
Slide 4: Terex Strategy: Focus, Simplify, Execute to Win
Terex Strategy Focus Simplify Execute to Win FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 5: Focusing the Portfolio
Focusing the Portfolio • Agreement to sell Terex’s Demag® Mobile Crane business, for enterprise value of ~$215 million ‒ Subject to customary regulatory approvals ‒ Expect to close mid-year 2019 • Strong industrial logic • Exiting OKC-produced mobile crane product lines • Significantly improves fina
Slide 6: 2018 Strategy Deployment Highlights
2018 Strategy Deployment Highlights New performance management Simplify system, ERP Upgrade Reduce Complexity and G&A Initiated global strategic footprint expansion Trained ~60% of sales force in the Terex Proven Sales Process Commercial Excellence Execute to Win Deployed CRM, pricing tools, and Dea
Slide 7: 2019 Strategic Priorities
2019 Strategic Priorities Complete Demag® Mobile Focus High Crane sale Performing Portfolio Exit OKC-manufactured mobile cranes product lines Implement re-segmentation Simplify Reduce and G&A reductions Complexity and G&A Execute global strategic footprint expansion Commercial Complete Terex Proven
Slide 8: 2019 Guidance Highlights
2019 Guidance Highlights Continuing Operations Guidance (1) • Net sales of ~4.7 billion • Operating margin of 9.0% to 10.0% • EPS of $3.60 to $4.20 Returning Capital to Shareholders • Planned quarterly dividend increase of 10%, to $0.11 per share • $200 million remaining on previous share buy-back a
Slide 9: Q4 Segment Highlights
Q4 Segment Highlights AWP • Increased sales 19% • Operating margin impacted by higher material costs, including tariffs • Increased backlog 14% Cranes • Increased sales 12% • Returned to profitability • Increased backlog 6% MP MP • Increased sales 20% • Increased operating profit 34% • Increased bac
Slide 10: Q4 Operating Results
Q4 Operating Results USD Millions, except Earnings per Share Q4 2018 Q4 2018 Q4 2017 Q4 2017 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,233.1 $1,233.1 $1,063.6 $1,063.6 % Change vs 2017 15.9% 15.9% Gross Profit $223.8 $225.6 $204.0 $204.4 % of Sales 18.1% 18.3% 19.2% 19.2% SG
Slide 11: Full Year Operating Results
Full Year Operating Results USD Millions, except Earnings per Share • Increased sales in every 2018 2018 2017 2017 (1) As Reported As Adjusted As Reported As Adjusted(1) Net Sales $5,125.0 $5,125.0 $4,363.4 $4,363.4 segment, up 18% overall % Change vs 2017 17.5% 17.5% Gross Profit $966.8 $969.8 $816
Slide 12: Disciplined Capital Allocation
Disciplined Capital Allocation • 2018 Free Cash Flow of $15 million – increased Cash Flow from Operations + inventory in anticipation of 2019 demand After-tax Proceeds from Divestures • Making strategic investments in high-performing businesses – 2018 capex investment of $83 million(1). Expecting ~$
Slide 13: 2019 Guidance
2019 Guidance USD Millions, except Earnings per Share and otherwise noted 2019 Continuing Operations Guidance (1) 2019 Continuing Operations Guidance (1) Segment(2) Net Sales Operating Profit Net Sales ~$4.7 Billion AWP ~$3.1 Billion 10.5% - 11.5% Operating Margin 9% - 10% MP ~$1.4 Billion 13.0% - 1
Slide 14: Aerial Work Platforms
Aerial Work Platforms USD Millions • Growth anticipated in 2019 • Healthy Q4 bookings of $961 million(1) • Grew Q4 backlog 21% to $1.1 billion(1) • Pricing actions to offset higher material costs • Innovative new products • Utilities manufacturing strategy New Terex Utilities Manufacturing Center in
Slide 15: Materials Processing
Materials Processing USD Millions Fuchs®®MHL MHL375 375 • Stable global markets Fuchs MaterialHandler Handler Material • Increased Q4 backlog 55%(1) • New product development • Global manufacturing strategy Powerscreen® TRAKPACTOR 550SR MP 2019 Guidance Net Sales ~$1.4 Billion Operating Margin 13.0%
Slide 16: Summary
Summary • Significant growth and improvements realized in 2018 • Expecting further growth, margin expansion, increased earnings per share, ROIC and Free Cash Flow in 2019 • Focusing the portfolio on high-performing businesses • Continue to implement Simplify and Execute to Win priorities • Continue
Slide 17: Questions?
Questions? FOCUS • SIMPLIFY • EXECUTE TO WIN 17
Slide 18: Appendix
Appendix FOCUS • SIMPLIFY • EXECUTE TO WIN 18
Slide 19: Backlog Trend
Backlog Trend USD Millions 1,962 1,941 1,631 428 1,589 490 1,548 Sequential Year on Year 318 1,274 393 446 $ % $ % 1,182 1,126 1,102 1,115 643 1,045 242 583 149 224 550 AWP 331 62% 105 14% 187 259 866 216 773 407 602 606 Cranes (23) (4%) 33 6% 407 169 398 459 203 323 499 MP 44 10% 172 54% 355 317 89
Slide 20: Q4 Global Sales
Q4 Global Sales Sales by Geography 2018 vs 2017 Western Europe Asia/ Pacific Actual FX-Adj. North America Actual FX-Adj. 1% 4% 14% 20% Actual FX-Adj. E. Europe, Middle 25% 25% East & Africa Actual FX-Adj. 19% 24% LATAM Actual FX-Adj. 2018 Q4 QTD 2017 Q4 QTD 44% 53% 21% Western Europe 24% Asia / Paci
Slide 21: 2018 Global Sales
2018 Global Sales Sales by Geography 2018 vs 2017 Western Europe Asia/ Pacific Actual FX-Adj. North America Actual FX-Adj. FY 19% 13% FY 11% 11% Actual FX-Adj. FY E. Europe, Middle 22% 22% East & Africa Actual FX-Adj. FY 20% 15% LATAM Actual FX-Adj. FY 2018 FY 2017 FY 16% 18% 23% 24% Western Europe
Slide 22: Aerial Work Platforms
Aerial Work Platforms USD Millions Net Bookings Book-to-Bill Ratio $900 250% $800 195% $700 200% 170% 161% $600 150% $500 125% 121% $400 97% 82% 100% 75% $300 55% $200 50% $100 $619 $579 $467 $402 $845 $764 $406 $601 $831 $0 0% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4 '18 Q4 '17 FY '
Slide 23: Cranes
Cranes USD Millions Net Bookings Book-to-Bill Ratio $450 160% 133% 135% $400 140% 118% 117% $350 113% 120% 102% 102% 101% $300 87% 100% $250 80% $200 60% $150 $100 40% $50 20% $318 $343 $352 $343 $366 $424 $287 $304 $364 $0 0% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4 '18 Q4 '17 FY '1
Slide 24: Materials Processing
Materials Processing USD Millions Net Bookings Book-to-Bill Ratio $450 160% 137% $400 140% 121% 119% $350 111% 111% 113% 120% 100% $300 95% 89% 100% $250 80% $200 60% $150 40% $100 $50 20% $236 $272 $264 $286 $339 $407 $276 $348 $380 $0 0% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4 '18
Slide 25: Q4 2018 Adjustments
Q4 2018 Adjustments USD Millions, except Earnings per Share Q4 2018 Restructuring Pension Tax & Interim Diluted vs Basic Q4 2018 As Reported & Related Transformation Annuitization Other Period Shares As Adjusted Net Sales $ 1,233.1 - - - - - - $ 1,233.1 Gross Profit 223.8 2.4 - - (0.6) - - 225.6 SG&
Slide 26: Q4 2017 Adjustments
Q4 2017 Adjustments USD Millions, except Earnings per Share Q4 2017 Restructuring 2017 Tax Tax & Interim Diluted vs Basic Q4 2017 As Reported Deal Related & Related Transformation Act Period Shares As Adjusted Net Sales $ 1,063.6 - - - - - - $ 1,063.6 Gross Profit 204.0 3.2 (2.8) - - - - 204.4 SG&A
Slide 27: Q4 Adjusted OP by Segment
Q4 Adjusted OP by Segment USD Millions Q4 2018 Q4 2017 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 26.4 $ - $ 26.4 $ 30.3 $ - $ 30.3 Cranes (9.2) 12.3 3.1 2.7 (1.6) 1.1 MP 47.7 - 47.7 35.6 - 35.6 Corporate & Other (18.2) 5.9 (12.3) (27.6) 10.7 (16.9) Continuing $ 46
Slide 28: FY 2018 Adjustments
FY 2018 Adjustments USD Millions, except Earnings per Share FY 2018 Restructuring Pension Extinguishment FY 2018 As Reported & Related Transformation Annuitization of Debt Other Tax Related As Adjusted Net Sales $ 5,125.0 - - - - - - $ 5,125.0 Gross Profit 966.8 3.6 - - - (0.6) - 969.8 SG&A (673.5)
Slide 29: FY 2017 Adjustments
FY 2017 Adjustments USD Millions, except Earnings per Share FY 2017 Restructuring Extinguishment Asset 2017 Tax FY 2017 As Reported Deal Related & Related Transformation of Debt Impairment Act Tax Related As Adjusted Net Sales $ 4,363.4 - - - - - - - $ 4,363.4 Gross Profit 816.0 12.0 (13.8) - - - -
Slide 30: FY Adjusted OP by Segment
FY Adjusted OP by Segment USD Millions FY 2018 FY 2017 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 261.0 $ - $ 261.0 $ 170.3 $ 0.4 $ 170.7 Cranes (45.3) 17.0 (28.3) (14.1) 2.1 (12.0) MP 167.5 (2.8) 164.7 125.1 0.1 125.2 Corporate & Other (89.9) 33.6 (56.3) (101.4) 4
Slide 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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. Dec '18 Sep '18 Jun '18 Mar '18 Dec '17 (1),(2) Annualized effective tax rate, as adjusted 22.2%
Slide 37: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three Three Three Three months months months months ended ended ended ended 12/31/18 9/30/18 6/30/18 3/31/18 Reconciliation of income (loss) from operations: Income (loss) from operations, as reported $ 46.7 $ 71.9 $ 103.4 $ 71.3 Adjustments: Restructuring & rel
Slide 38: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Income (loss) from (Provision for) Year Ended continuing operations benefit from Income tax December 31, 2018 before income taxes income taxes rate Reconciliation of annualized effective tax rate: As reported $ 148.7 $ (37.4) 25.2% Effect of Adjustments: Restruc
Slide 39: 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