Terex Aerial Work Platforms · 2018-08-21 · Terex expressly disclaims any obligation or...

1 1 FOCUS • S IMPLIFY • EXECUTE TO WIN

Terex Aerial Work Platforms

Analyst Visit

August 21, 2018


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,” “anticipates,” “plans,” “projects,” “estimates” and the negatives

thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the

statement is not forward-looking. The Company has based these forward-looking statements on current expectations and projections about future events. These

statements are not guarantees of future performance.

Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the

control of Terex, include among others: Our business is cyclical and weak general economic conditions affect the sales of our products and financial results; the need to

comply with restrictive covenants contained in our debt agreements; our ability to generate sufficient cash flow to service our debt obligations and operate our business;

our ability to access the capital markets to raise funds and provide liquidity; our business is sensitive to government spending; our business is highly competitive and is

affected by our cost structure, pricing, product initiatives and other actions taken by competitors; our retention of key management personnel; the financial condition of

suppliers and customers, and their continued access to capital; our providing financing and credit support for some of our customers; we may experience losses in

excess of recorded reserves; we are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases; the imposition of tariffs and

related actions on trade by the U.S. and foreign governments; our business is global and subject to changes in exchange rates between currencies, commodity price

changes, regional economic conditions and trade restrictions; our operations are subject to a number of potential risks that arise from operating a multinational

business, including compliance with changing regulatory environments, the Foreign Corrupt Practices Act and other similar laws and political instability; a material

disruption to one of our significant facilities; possible work stoppages and other labor matters; compliance with changing laws and regulations, particularly environmental

and tax laws and regulations; litigation, product liability claims, intellectual property claims, class action lawsuits and other liabilities; our ability to comply with an

injunction and related obligations imposed by the United States Securities and Exchange Commission (“SEC”); disruption or breach in our information technology

systems and storage of sensitive data; our ability to successfully implement our Execute to Win strategy; and other factors, risks and uncertainties that are more

specifically set forth in our public filings with the SEC.

Actual events or the actual future results of Terex may differ materially from any forward-looking statement due to these and other risks, uncertainties and significant

factors. The forward-looking statements speak only as of the date of this release. Terex expressly disclaims any obligation or undertaking to release publicly any

updates or revisions to any forward-looking statement included in this release to reflect any changes in expectations with regard thereto or any changes in events,

conditions, or circumstances on which any such statement is based.

Non-GAAP Measures: Terex from time to time refers to various non-GAAP (generally accepted accounting principles) financial measures in this presentation. Terex

believes that this information is useful to understanding its operating results and the ongoing performance of its underlying businesses without the impact of special

items. See the appendix at the end of this presentation as well as the Terex second quarter 2018 earnings release on the Investor Relations section of our website

www.terex.com for a description and/or reconciliation of these measures.


John Garrison

President and Chief Executive Officer

Terex Strategy:

Execution Update


Team Member Safety Commitment to Zero Harm

Safety is our number #1 Priority and our #1 Responsibility


Focus

Simplify

Execute to Win

Terex Strategy


Developing core competencies across the company

Aerial Work

Platforms Cranes

Materials

Processing

Lifecycle

Solutions

Services and Solutions

Spare Parts

Technology and Innovation

Commercial

Excellence

Customer Offerings and Value Propositions

Sales and Pricing Execution

Dealer Management

Strategic

Sourcing

Global Sourcing Organization

Standard Sourcing Processes, Tools and Training

Supplier Development and Management

Execute to Win: 3 Priorities


Focus

Simplify

Execute to Win

Strategy Deployment – 2017 Highlights

Completed sale of:

Material Handling & Port Solutions

German Compact Construction

Coventry LBH business

India LBH business

Exited 12 manufacturing facilities, reducing

global footprint by 2.6M square feet, 27%

Reduced administrative expenses, while

investing in innovation, sourcing, and sales

Eliminated 26, or 20% of legal entities

Launched innovative new products

Deployed first phase of sales pipeline

management

Bolstered commercial leadership

Established global sourcing organization

Launched Wave 1 strategic sourcing teams


Sim

pli

fy

Exe

cu

te t

o W

in

Broke ground on new Utilities

facility in South Dakota

Commercial

Excellence

Reduce

Complexity

and G&A

Completed initial Terex Proven

Sales Process training sessions

Deployed CRM at Powerscreen,

AWP AsiaPac, Mobile Cranes NA

and Asia, and MP Environmental

On-boarded global Parts & Services

leader

Invested in parts pricing system

Awarded NA and EU cut parts, off-

highway engines, certain hydraulic,

indirect and logistics categories

Launched Wave 2

Lifecycle

Solutions

Strategic

Sourcing

Continued to implement Finance

simplification program

Strategy Deployment – 2018 Update


8%

16%20%

2017 2018 Est. 2020 Plan

Cash Flow from Operations +

After-tax Proceeds from Divestures

Optimal Capital Structure

Organic Growth Investments

Restructuring Investments

Efficient Returns of Capital

to Shareholders

ACCOMPLISHMENTS SINCE DEC ’16 INVESTOR DAY

• Monetized Konecranes shares for ~ $770 M

• Completed recapitalization

‒ Reduced debt by ~ $600M

‒ Lowered interest rates

• Reduced NWC % to the lowest level in 10 years

• Generated $189M in cash from operations(1)

• Increased quarterly dividend twice (43% in total)

• Repurchased 34 M shares (~1/3 of outstanding)

(1) Q1 ’17 – Q2 ’18, (2) See ROIC definition in Terex quarterly filings, “NWC” = “Net Working Capital”

~

Return on Invested Capital(2)

Disciplined Capital Allocation


Matt Fearon

President, Aerial Work Platforms

Aerial Work

Platforms


Aerial Work Platforms Overview

Full Product Range and Market Leading Brand

Applications Footprint Customers/Channels

▪ Construction/Maintenance

▪ Aviation

▪ Industrial

▪ Entertainment

▪ Government & Military

▪ Warehouse & Retail

▪ Redmond, WA (US)

▪ Moses Lake, WA (US)

▪ Oklahoma City (US)

▪ Rock Hill, SC (US)

▪ Perugia, Italy (EU)

▪ Changzhou, China (Asia)

▪ General Rental (>90%)

▪ Direct Sales

▪ Third Party Distribution

▪ Catalogue

Rough Terrain

Scissors

Material

Lifts

Runabouts

High Reach

Telehandlers

Light

Towers

Compact

Telehandlers

Slab

Scissors

Articulating

Booms

Telescopic

Booms

Full product portfolio, high product quality, respected brand

Strong relationships with General Rental


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2017 2018 Guidance

AWP Revenue ($M)

~ $ 2,550~ $ 2,070

0%

2%

4%

6%

8%

10%

12%

2017 2018 Guidance

AWP Operating Profit (%)

8.2 %

11 - 11.5 %

Aerial Work Platforms Current Situation

• Growth in 2017, accelerating in 2018

• Margins improving as revenues grow

• “Execute to Win” impact is increasing

• Genie brand, global footprint, new products and operational

execution are all key to continued success


0

500

1,000

1,500

2,000

2,500

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

All Aerial Fleet (000 Units): World

112138

161

2013 2018 2023 (fcst)

Global Fleet/ Global Construction Spend(Units per $B)

3.6% 3.5%

'13 to '18 '18 to '23 (fcst)

Real Global Construction Spending (CAGR)

Aerial Work Platforms Demand Logic (Fleet Growth)

Construction

Spending Growth

Aerials

Adoption

Aerials

Fleet Growth

Aerials support construction spending

Size of fleet is driven by construction growth and global adoption

+ =

• Resurgent US growth

• Recovery in Europe

• Strength in ROW

• Continuing US adoption

‒ New Products

‒ New Applications

• Adoption increasing in

non-US markets

• Steady, long-term

expansion anticipated

• Outlook consistent with

historical trends

Sources: IHS Global Insights, AIA Consensus Construction Forecast, Terex fleet modeling


$0

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Real Residential Construction per Capita

North America Western Europe Rest of WorldReal 2017 $

BJH 2 pct

$0

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$1,500

$2,000

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$3,000

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Real Non-Residential Construction per Capita

North America Western Europe Rest of WorldReal 2017 $

BJH 2 pct

$0$100$200$300$400$500$600$700$800$900

$1,000

19

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20

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20

23

North America Construction Spending ($B)

Residential Non-Residential

2% CAGR

3.5% CAGR

BJH 2 pct

Real 2017 $

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

19

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20

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20

20

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20

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20

23

Western Europe Construction Spending ($B)


1.7% CAGR

1.8% CAGR

BJH 2 pct

Real 2017 $

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

19

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19

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99

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19

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20

22

20

23

Rest of World Construction Spending ($B)


4.4% CAGR

3.7% CAGR

BJH 2 pct

Real 2017 $

Aerial Work Platforms Demand Logic (Construction Spending Growth)

Sources: IHS Global Insights, AIA Consensus Construction Forecasts

Continued Recovery in Global Construction Spending is Anticipated


0

20

40

60

80

100

120

140

19

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20

23

Telehandler Units per $B of Total Construction

North America Western Europe Rest of World

BJH 2 pct

0

100

200

300

400

500

600

700

800

900

19

95

19

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19

97

19

98

19

99

20

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20

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20

23

Boom & Scissor Units per $B of Non-Res Construction

North America Western Europe Rest of World

BJH 2 pct

Aerial Work Platforms Demand Logic (Aerial Adoption)

North America fleets continuing to expand while adoption elsewhere increases

Sources: Terex fleet modeling, Terex estimates


0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

19

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20

23

Global Fleet Size (000 Units): Booms + Scissors

0

100

200

300

400

500

600

19

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19

96

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23

Global Fleet Size (000 Units): Telehandlers

Aerial Work Platforms Demand Logic (Aerials Fleet Growth)

Future fleet forecast is consistent with long-term rate of growth

Combined global aerials fleet should exceed 2.1M units by 2023

CAGR (’03 – ’18) = 7.5 %

CAGR (’18 – ’23f) = 7.4 %

CAGR (’03 – ’18) = 5.6 %

CAGR (’18 – ’23f) = 5.0 %

Sources: Terex modeling of historical fleet size; Terex fleet forecasts


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

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All Aerial Industry Revenue: World ($M)

Replacements Growth Including 2% Annual Inflation

BJH 2 pct

Note: Category-level Units x Constant 2018 Prices per Unit

Bars are @ 2018 Prices

$0

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Annual Replacement Demand ($M)

@ 2018 Prices

$0

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$7,000

$8,000

$9,000

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Annual Fleet Growth ($M)

@ 2018 Prices

Annual

Replacement Demand

Aerial Work Platforms Demand Logic (Annual Demand)

+ Annual Fleet

Growth

Total

Annual Demand =

Sources: Terex modeling of global aerial demand

• Based on rental

company replacement

cycles (~ 8 yrs)

• Replacement keeps

fleet from shrinking

• Varies based on

market conditions

• Supported by

continuing adoption

• Combined demand

outlook is robust

• Replacement is an

important driver

Anticipating multiple years of strong demand


Aerial Work Platforms Replacement Demand Example

Sources: United Rentals Quarterly Financial Review, Q4 2017, page 17

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

<= 1

1 -

2

2 -

3

3 -

4

4 -

5

5 -

6

6 -

7

7 -

8

8 -

9 > 9

Tota

l

URI Fleet Composition ($M OEC, Dec. 2017)

FLEET AGE - YEARS

$M

OEC

Several years of stong

replacement

Typical Replacement Window

Customer Fleet Reporting Confirms Terex Replacement Forecast


65%

67%

69%

71%

73%

75%

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2016 2017 2018

Sunbelt Fleet UtilizationFleet on Rent ($B) Physical Utilization (%)

Source: Ashtead Group

68.0%69.7% 70.1%

65%

67%

69%

71%

73%

75%

2016 2017 2018

URI Pro Forma Time Utilization (June)

Source: URI Financial Reports

-15%

-10%

-5%

0%

5%

10%

Q1

'08

Q2

'08

Q3

'08

Q4

'08

Q1

'09

Q2

'09

Q3

'09

Q4

'09

Q1

'10

Q2

'10

Q3

'10

Q4

'10

Q1

'11

Q2

'11

Q3

'11

Q4

'11

Q1

'12

Q2

'12

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2

'15

Q3

'15

Q4

'15

Q1

'16

Q2

'16

Q3

'16

Q4

'16

Q1

'17

Q2

'17

Q3

'17

Q4

'17

Q1

'18

Q2

'18

United Rentals Quarterly Rental Rate Growth

Source: ISI analysis of URI Financial Reports, Quarterly growth is change versus prior year

100.0 104.0 110.2 116.9 123.9 130.1

2016 2017 2018 2019 2020 2021

US Rental Revenue (2016 = 100)

Source: Ashtead Group

CAGR = 5.4%

Aerial Work Platforms Major Customer Demand Conditions

High Customer Fleet Utilization Supports Continued Growth

Sources: United Rentals, Ashtead Group, ISI


Aerial Work Platforms Demand Outlook: Summary

• Demand growth is driven by underlying fleet dynamics

‒ Construction spending and aerials adoption drive fleet growth

‒ Fleet growth + replacement = annual demand

• Construction spending outlook is favorable

• Global adoption continues to increase

• Strong replacement demand expected over the next several years

• Demand above 2018 levels is expected through 2023


Aerial Work Platforms Business Objectives

• Customer NPS

• Revenue Growth

• Margin Improvement

AWP

SUCCESS

METRICS

• Product Leadership

• Footprint & Global Reach

• Responsiveness &

Customer Support

REVENUE

ENABLERS

• Cost Discipline

• ETW Improvements

PROFIT

DRIVERS

Genie is Well Positioned to Capitalize on Anticipated Market Strength


39%47% 52% 55%

0%

10%

20%

30%

40%

50%

60%

2015 2017 2020 Goal 2023 Goal

AWP Customer NPS (%)

NPS = Net Promoter Score

0%

20%

40%

60%

80%

100%

North America Europe China/Asia LATAM

Regional Sales by Source of Product (2023)

North America Europe China/Asia

Sold In...

Made In...

14.0% 13.5%

34.0%28.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2015 2018 2020 Goal 2023 Goal

AWP Vitality Index (%)

% of Sales from Products introduced in the preceding 3 years

Aerial Work Platforms Revenue Enablers

Product

Leadership

Footprint &

Global Reach

Responsiveness &

Customer Support

Revenue Growth will be Driven by Sustained Development of Core Capabilities

• Major upgrades and net-new

products

• Application-specific safety

and productivity solutions

• Industry leadership in

connected assets and the

Internet of Things

• Global footprint development

• Regional/local market

development

• Work standards and

regulatory development

• Genie culture and value

proposition

• Global team member

development

• Process and systems

simplification


XC Product Family

S40/45 XC

S60/65 XC

S80/85 XC

Z45 XC

Z62 XC

Z85 XC

Z105 XC

ZX 135 XC

SX 105 XC / SX 125 XC

SX 135 XC

Aerial Work Platforms Product Innovation - XC

LAUNCHED PLANNED


Technology for All Jobsites

Z-60/37 FE- Fuel Electric Hybrid

▪ Switch between low emissions

hybrid operation to zero emissions

all electric operation

Aerial Work Platforms Product Innovation – Hybrid Drive


Aerial Work Platforms 2018 Manufacturing Footprint

Redmond,

WA Moses Lake,

WA

Rock Hill,

SC

Umbertide,

IT

Changzhou,

CN Scissors

Booms

Light Towers

Runabouts

Booms

Scissors

Booms

OKC, OK

Telehandlers

Booms

Booms

Telehandlers

• Global manufacturing capacity significantly greater than in 2007 and 2014

‒ Changzhou greenfield began production in 2011

‒ Italian factory capacity more than tripled

‒ Telehandlers relocated to OKC, freeing Moses Lake capacity for boom growth

Planned Facility Moves Largely Complete – Focusing on Capacity & Throughput


Aerial Work Platforms Terex Margin Drivers

North

America EMEAR

China, AP,

LATAM

Lifecycle

Solutions

Services and Solutions

Spare Parts

Technology and Innovation

Strategic

Sourcing

Commercial

Excellence

Salesforce.com Deployment

Terex Proven Sales Process

Back-office process and systems improvement

Category team staffing and backfill

Organization, process, equipment for implementation

Clear prioritization and execution of change

ETW benefits will accelerate in 2019 - 2021


11.8%16.7%

23.0%25.7%

0%

5%

10%

15%

20%

25%

30%

Q3 '17 Q4 '17 Q1 '18 Q2 '18

AWP Quarterly Incremental Margins*

* as adjusted

Aerial Work Platforms Terex Margin Progress

Cost Leverage

• Demand planning

• Fixed cost discipline

• Labor management

Execute to Win (ETW)

• Commercial Excellence

• Lifecycle Solutions

• Strategic Sourcing

* as adjusted


Aerial Work Platforms Positioned for Growth

• Favorable demand outlook for 2019 - 2023

• Well positioned to grow revenue

‒ Robust new product pipeline

‒ Advantaged global footprint

‒ Demonstrated customer responsiveness

• Margin outlook is strong

‒ Cost leverage as revenues strengthen

‒ Accelerating benefit from ETW execution

• Team is well prepared to perform and deliver

Terex Aerial Work Platforms · 2018-08-21 · Terex expressly disclaims any obligation or...

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Transcript of Terex Aerial Work Platforms · 2018-08-21 · Terex expressly disclaims any obligation or...