Terex Corporation · NYSE:TEX
Terex — Q1 2017 Earnings Presentation
33 slides from Terex's earnings presentation, May 3, 2017
Slide 1: Q1 2017 Conference Call
Q1 2017 Conference Call May 3, 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: Terex Strategy
Terex Strategy Focus Simplify Execute to Win FOCUS • SIMPLIFY • EXECUTE TO WIN 3
Slide 4: Focus: Portfolio Actions
Focus: Portfolio Actions Closed MHPS sale Closed Coventry LBH sale Announced sale of India LBH business FOCUS • SIMPLIFY • EXECUTE TO WIN 4
Slide 5: Simplify: Cost Reduction Actions
Simplify: Cost Reduction Actions Footprint Rationalization SG&A Volume Closed / Sold(1) In Process • Functional • Reduce cost restructuring structure to • Coventry • Betim match 2017 • Crailsheim • Bierbach • Delayering volume • Gerabronn • Noida • Targeting levels • Jinan • Pecs G&A • Cranes focus
Slide 6: Execute to Win: Priority Areas
Execute to Win: Priority Areas Aerial Work Materials Platforms Cranes Processing Services Lifecycle Spare Parts Solutions Technology and Innovation Customer Offerings and Value Propositions Commercial Sales and Pricing Execution Excellence Dealer Management Global Sourcing Organization
Slide 7: Disciplined Capital Allocation
Disciplined Capital Allocation Cash Flow from Operations + • Monetized 7.45 million After-tax Proceeds from Divestures Konecranes shares, proceeds of $272 million Optimal Capital Structure • Repaid $1.15 billion of Senior Notes(1). Issued $600 million at lower rate Organic Growth Investments • Refin
Slide 8: Financial Summary
Financial Summary Results are Continuing Operations, Except Cash Figures • Sales down 9.6% • EPS of ($0.57) as reported, $0.05 as adjusted(1) • Net cash used in operating activities of $196 million, free cash flow(1) of ($209) million • Backlog up 10% year on year • Updating FY adjusted EPS guidance
Slide 9: Q1 2017 Adjustments
Q1 2017 Adjustments USD Millions Restructuring & • Primarily Cranes Related $9.0 restructuring • Execute to Win Transformation $8.4 priority areas • Sale of KCR stock Deal Related $32.8 • KCR investment • Gain on sale of business Extinguishment of • Redemption premium $45.9 Debt • Transaction expens
Slide 10: Q1 Operating Results
Q1 Operating Results USD Millions, except Earnings per Share Q1 2017 Q1 2017 Q1 2016 Q1 2016 As Reported As Adjusted(1) As Reported As Adjusted(1) Net Sales $1,006.9 $1,006.9 $1,114.3 $1,114.3 % Change vs 2016 (9.6%) (9.6%) Income From Operations (6.3) 14.7 11.3 28.8 Operating Margin (0.6%) 1.5% 1.0
Slide 11: ConExpo 2017
ConExpo 2017 FOCUS • SIMPLIFY • EXECUTE TO WIN 11
Slide 12: Aerial Work Platforms
Aerial Work Platforms • Global sales down 9% • Underlying NA construction demand relatively strong • Growth in Asia • Margins compressed on lower sales, strong USD, and non-US tax issue • New products well received at ConExpo and ARA shows • Strong bookings and backlog FOCUS • SIMPLIFY • EXECUTE TO
Slide 13: Cranes
Cranes • Global cranes markets remain challenging • North American market stabilizing • Mobile cranes restructuring making progress • Positive order activity for new Demag AC models, encouraging North American launch at ConExpo • Bookings up 17%, backlog up 2% versus prior year FOCUS • SIMPLIFY • EX
Slide 14: Materials Processing
Materials Processing • Excellent financial performance, driven by 11% revenue growth • Growth in Crushing & Screening • Continued growth in Concrete • Fuchs® sales down in the quarter, improvement in market outlook • New crushers attracting customer interest • Growing bookings and backlog FOCUS • SI
Slide 15: Summary
Summary • Significantly improved capital structure • Positive momentum in booking and backlog levels • Substantial progress to Focus and Simplify the company • Expanding capabilities in Execute to Win priority areas • Updating FY Adjusted EPS Guidance to $0.80 to $0.95 FOCUS • SIMPLIFY • EXECUTE TO
Slide 16: Questions?
Questions? FOCUS • SIMPLIFY • EXECUTE TO WIN 16
Slide 17: Appendix
Appendix FOCUS • SIMPLIFY • EXECUTE TO WIN 17
Slide 18: Backlog Trend
Backlog Trend USD Millions 1,524 1,476 1,406 90 144 1,320 Sequential Year on Year 60 193 1,275 Change Change 113 130 1 156 1,182 1,178 1,160 $ % $ % 150 74 52 58 1,072 242 149 27 944 153 187 Terex 203 19% 115 10% 512 535 883 920 216 71 54 652 42 806 407 128 Corp & Other (26) (96%) (57) (98%) 139 407
Slide 19: Global Sales
Global Sales Sales by Geography(1) 2017 vs 2016 Asia/ Pacific Western Europe Actual FX-Adj. North America Actual FX-Adj. Q1 (29)% (25)% Q1 34% 35% Actual FX-Adj. Q1 E. Europe, Middle (4)% (4)% East & Africa Actual FX-Adj. Q1 15% 19% LATAM Actual FX-Adj. Q1 2017 Q1 2016 Q1 (65)% (66)% Western Europe
Slide 20: Aerial Work Platforms
Aerial Work Platforms USD Millions $800 170% 180% Net Bookings Book-to-Bill Ratio 160% 162% 140% $600 125% 120% 100% 100% $400 70% 80% 83% 80% 57% 80% 60% $200 40% 20% $512 $383 $444 $701 $418 $409 $378 $619 $579 $0 0% Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q1 '17 Q1 '16 Net S
Slide 21: Cranes
Cranes USD Millions Net Bookings Book-to-Bill Ratio $450 140% $400 133% 120% 103% 102% $350 95% 100% $300 97% 97% 83% 82% 74% 80% $250 60% $200 40% $150 $100 20% $340 $400 $272 $416 $293 $279 $228 $318 $343 $50 0% Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q1 '17 Q1 '16 Net Sales
Slide 22: Materials Processing
Materials Processing USD Millions Net Bookings Book-to-Bill Ratio 320 140% 119% 118% 280 130% 120% 111% 240 94% 100% 93% 104% 100% 200 80% 160 77% 60% 120 40% 80 40 20% $266 $183 $214 $244 $261 $236 $265 $236 $272 0 0% Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1'17 Q1 '17 Q1 '16 Net S
Slide 23: Q1 2017 Adjustments
Q1 2017 Adjustments USD Millions, except Earnings per Share Q1 2017 Restructuring Extinguishment Tax & Interim Q1 2017 Deal Related Transformation As Reported & Related of Debt Period As Adjusted Net Sales $ 1,006.9 - - - - - $ 1,006.9 Income (loss) from Operations (6.3) 3.6 9.0 8.4 - - 14.7 Interes
Slide 24: Q1 2016 Adjustments
Q1 2016 Adjustments USD Millions, except Earnings per Share Q1 2016 Restructuring Tax & Interim Q1 2016 Deal Related As Reported & Related Period As Adjusted Net Sales $ 1,114.3 - - - $ 1,114.3 Income (loss) from Operations 11.3 3.0 14.5 - 28.8 Interest & Other Income (Expense) (29.4) 7.5 - - (21.9)
Slide 25: Q1 Adjusted OP by Segment
Q1 Adjusted OP by Segment USD Millions Q1 2017 Q1 2016 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted AWP $ 21.7 $ 0.1 $ 21.8 $ 38.1 $ 6.0 $ 44.1 Cranes (32.8) 12.4 (20.4) (16.6) 2.8 (13.8) MP 25.5 - 25.5 15.8 0.4 16.2 Corporate & Other (20.7) 8.5 (12.2) (26.0) 8.3 (17.7) Co
Slide 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 '17 Dec '16 Sep '16 Jun '16 Mar '16 (1),(2) Annualized effective tax rate 6.4% 27.4% 27.4% 27
Slide 32: Glossary: ROIC Continued
Glossary: ROIC Continued USD Millions Three Three Three Three months months months months Ended Ended Ended Ended 3/31/17 12/31/16 9/30/16 06/30/16 Reconciliation of income (loss) from operations: Income (loss) from operations $ (6.3) (272.1) 39.6 73.4 Income (loss) from discontinued operations — 50
Slide 33: Glossary: Working Capital
Glossary: Working Capital 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 resources, and seeks