Terex Corporation · NYSE:TEX
Terex — Q2 2020 Earnings Presentation
31 slides from Terex's earnings presentation, Jul 31, 2020
Slide 1: Q2 2020 Conference Call
Q2 2020 Conference Call July 31, 2020 FOCUS EXECUTE • SIMPLIFY • INNOVATE • EXECUTE • GROW TO WIN 1
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,” "should," “inte
Slide 3: Terex Way Values
Terex Way Values Safety is an absolute way of life Global team members are social whether you work for us, supply us, distancing and following safety use our equipment, or receive our protocols to safely serve customers services EXECUTE • INNOVATE • GROW 3
Slide 4: Q2 Operational Updates
Q2 Operational Updates Operations Team Members Liquidity • Closely following • Committed to safety • Tightly managing COVID-19 safety culture of "work safe" expenses and incoming protocols and "home safe" materials • Successfully returned to • Aligned workforce with • Full availability on $600 work
Slide 5: Q2 Financial Highlights
Q2 Financial Highlights • Sales stabilized during the quarter • Aggressively managed SG&A down $46 million or 32% year-over-year • Overall Decremental Margins of ~20% • Positive Free Cash Flow of $71 million ◦ Net Working Capital reduced $180 million year-over-year EXECUTE • INNOVATE • GROW 5
Slide 6: 2020: Updated Operational Priorities
2020: Updated Operational Priorities Operational Excellence • Continue driving Zero Harm Culture and Big 5: Safety, Quality, Delivery, Cost and Morale • Simplify company structure, systems and footprint to improve efficiency and enhance global competitiveness Operational Innovation • Committed to di
Slide 7: Q2 2020: Operating Results
Q2 2020: Operating Results Q2 2020 Q2 2019 Q2 2019 USD Millions, except Earnings per Share Reported Reported Adjusted COVID-19 & Other Financial Impacts Net Sales $ 690.5 $ 1,306.9 $ 1,306.9 Gross Profit % Change vs 2019 (47.2%) • Reduced by $22MM primarily due to fixed manufacturing facility charge
Slide 8: Q2 2020: Segment Results
Q2 2020: Segment Results Aerial Work Platforms Materials Processing • Global sales of $414 million • Global sales of $264 million down 52% down 39% Results • Operating margin (1.2%) • Operating margin 8.9% • Decremental margin • Decremental margin performance of 20% performance of 25% • North Americ
Slide 9: 2020 Outlook
2020 Outlook Sales & Margins ◦ Sales in the 2nd half similar to 1st half ◦ Decremental margin target of 25% Commercial Demand ◦ Actively engaged with our customers to fullfill their needs ◦ Producing to meet customer demand Free Cash Flow Generation ◦ Expect to be free cash flow positive for the yea
Slide 10: Disciplined Capital Allocation
Disciplined Capital Allocation 1 Cash Flow: Positive Q2 free cash flow generation of $71 million Optimal Capital Structure: Ample liquidity of ~$1 billion and no significant 2 debt maturities before 2024 Organic Growth: Reduced capital expenditures by approximately 35% for 3 2020, but investing for
Slide 11: Aerial Work Platforms
Aerial Work Platforms J-Series Boom Strategic Highlights • Leadership transition • Continued product innovation demonstrated by shipping of J-Boom • Ramped down production and safely returned to work to meet demand • Manufacturing at new Utilities facility New Utilities facility in Watertown, South
Slide 12: Materials Processing
Materials Processing Terex Ecotec TSS 390 Shredder Strategic Highlights • Strong operational results despite challenging market conditions • Committed to delivering innovative, high quality products supporting growth • Successfully executing on global adoption of leading products Franna Pick & Carry
Slide 13: Summary
Summary • Challenging market environment showing signs of improvement • Tightly managing production while safely meeting customer demand • Aggressively right sizing cost structure to achieve 25% decremental margins • Generating cash and aggressively managing working capital to achieve strong liquidi
Slide 14: Questions?
Questions? EXECUTE • INNOVATE • GROW 14
Slide 15: Appendix
Appendix EXECUTE • INNOVATE • GROW 15
Slide 16: Backlog Trend
Backlog Trend USD Millions Sequential Year on Year $ % $ % AWP (208) (29%) (237) (32%) MP (10) (4%) (150) (36)% Total (217) (22%) (386) (33)% Backlog shown is deliverable in less than 12 months which reflects continuing operations. Total amounts may not add due to rounding. EXECUTE • INNOVATE • GROW
Slide 17: Q2 Global Sales
Q2 Global Sales Sales by Geography 2020 vs 2019 Western Europe Actual FX-Adj. Asia/ Pacific North America Actual FX-Adj. -57% -58% Actual FX-Adj. E. Europe, Middle -25% -23% -48% -48% East & Africa Actual FX-Adj. -50% -50% LATAM -24% Actual FX-Adj. 2020 Q2 YTD 2019 Q2 YTD -45% -37% Western Europe As
Slide 18: Aerial Work Platforms
Aerial Work Platforms USD Millions Q2 '20 Q2 '19 YTD'20 YTD'19 Net Sales $413.9 $870.4 $925.6 $1,598.3 % Change vs. '19 (52.4%) (42.1%) Operating Profit (Loss), as reported ($5.0) $86.3 ($10.9) $145.9 Operating Margin % (1.2)% 9.9% (1.2)% 9.1% Operating Profit (Loss), as adjusted ($5.0) $91.4 ($10.9
Slide 19: Materials Processing
Materials Processing USD Millions Q2 '20 Q2 '19 YTD'20 YTD'19 Net Sales $263.6 $430.9 $579.2 $841.4 % Change vs. '19 (38.8%) (31.2%) Operating Profit (Loss), as reported $23.4 $65.3 $48.4 $124.8 Operating Margin % 8.9% 15.2% 8.4% 14.8% Operating Profit (Loss), as adjusted $23.4 $65.3 $48.4 $124.8 Op
Slide 20: Q2 2019 Adjustments
Q2 2019 Adjustments USD Millions, except Earnings per Share Q2 2019 Restructuring Tax & Interim Q2 2019 As Reported Transformation Deal Related Other As Adjusted & Related Period 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) Income
Slide 21: Q2 YTD Operating Results
Q2 YTD Operating Results USD Millions, except Earnings per Share YTD 2020 YTD 2019 YTD 2019 As Reported As Reported As Adjusted(1) Net Sales $1,524.1 $2,443.5 $2,443.5 % Change vs 2019 (37.6)% Gross Profit $243.8 $509.6 $513.4 % of Sales 16.0% 20.9% 21.0% SG&A ($243.5) ($283.9) ($276.0) % of Sales (
Slide 22: YTD 2019 Adjustments
YTD 2019 Adjustments USD Millions, except Earnings per Share YTD 2019 Restructuring Tax & Interim YTD 2019 As Reported Transformation Deal Related As Adjusted & Related Period 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) fr
Slide 23: 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 24: 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 25: Glossary: Debt & Net Debt
Glossary: Debt & Net Debt USD Millions 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, in
Slide 26: 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 27: 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 28: 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 '20 Mar '20 Dec '19 Sep '19 Jun '19 Annualized effective tax rate, as adjusted (1),(2) 19.8 %
Slide 29: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three months Three months Three months Three months ended 6/30/20 ended 3/31/20 ended 12/31/19 ended 9/30/19 Reconciliation of income (loss) from operations: Income (loss) from operations, as reported $ 7.4 $ (7.1) 22.9 86.4 Adjustments: Deal Related — — — (0.9)
Slide 30: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Income (loss) from (Provision for) Six Months Ended June 30, 2020 continuing operations benefit from Income tax before income taxes income taxes rate Reconciliation of annualized effective tax rate: As reported $ (31.7) $ 3.8 12.0% Effect of Adjustments: Tax rel
Slide 31: 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