Terex Aerial Work Platforms

Transcription

1 Terex Aerial Work Platforms Analyst Visit August 21,

2 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 for a description and/or reconciliation of these measures. 2 2

3 Terex Strategy: Execution Update John Garrison President and Chief Executive Officer 3 3

4 Team Member Safety Commitment to Zero Harm Safety is our number #1 Priority and our #1 Responsibility 4 4

5 Terex Strategy Focus Simplify Execute to Win 5 5

6 Execute to Win: 3 Priorities Aerial Work Platforms Cranes Materials Processing Commercial Excellence Customer Offerings and Value Propositions Sales and Pricing Execution Dealer Management Lifecycle Solutions Services and Solutions Spare Parts Technology and Innovation Strategic Sourcing Global Sourcing Organization Standard Sourcing Processes, Tools and Training Supplier Development and Management Developing core competencies across the company 6 6

7 Strategy Deployment 2017 Highlights Simplify Focus Execute to Win 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 7 7

8 Execute to Win Simplify Strategy Deployment 2018 Update Reduce Complexity and G&A Broke ground on new Utilities facility in South Dakota Continued to implement Finance simplification program Commercial Excellence Lifecycle Solutions Strategic Sourcing 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, offhighway engines, certain hydraulic, indirect and logistics categories Launched Wave 2 8 8

9 Disciplined Capital Allocation Cash Flow from Operations + After-tax Proceeds from Divestures Optimal Capital Structure 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) Organic Growth Investments Increased quarterly dividend twice (43% in total) Repurchased 34 M shares (~1/3 of outstanding) Restructuring Investments Return on Invested Capital (2) ~ 16% 20% Efficient Returns of Capital to Shareholders 8% Est Plan (1) Q1 17 Q2 18, (2) See ROIC definition in Terex quarterly filings, NWC = Net Working Capital 9 9

10 Aerial Work Platforms Matt Fearon President, Aerial Work Platforms 10 10

11 Aerial Work Platforms Overview Full Product Range and Market Leading Brand Telescopic Booms Articulating Booms Slab Scissors Rough Terrain Scissors Runabouts Material Lifts Compact Telehandlers High Reach Telehandlers Light Towers 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 Full product portfolio, high product quality, respected brand Strong relationships with General Rental 11 11

12 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 AWP Revenue ($M) AWP Operating Profit (%) $3,000 12% $2,500 10% $2,000 8% $1,500 $1,000 ~ $ 2,070 ~ $ 2,550 6% 4% 8.2 % % $500 2% $ Guidance 0% Guidance 12 12

13 Aerial Work Platforms Demand Logic (Fleet Growth) Sources: IHS Global Insights, AIA Consensus Construction Forecast, Terex fleet modeling Construction Spending Growth + = Aerials Adoption Aerials Fleet Growth Real Global Construction Spending (CAGR) Global Fleet/ Global Construction Spend (Units per $B) 2,500 All Aerial Fleet (000 Units): World 2,000 1, % 3.5% , '13 to '18 '18 to '23 (fcst) (fcst) 0 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 Aerials support construction spending Size of fleet is driven by construction growth and global adoption 13 13

14 Aerial Work Platforms Demand Logic (Construction Spending Growth) Sources: IHS Global Insights, AIA Consensus Construction Forecasts Real Residential Construction per Capita BJH 2 pct Real Non-Residential Construction per Capita BJH 2 pct $3,000 $3,000 $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 $500 $500 $0 $0 Real 2017 $ North America Western Europe Rest of World Real 2017 $ North America Western Europe Rest of World North America Construction Spending ($B) BJH 2 pct Western Europe Construction Spending ($B) BJH 2 pct Rest of World Construction Spending ($B) BJH 2 pct $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2% CAGR 3.5% CAGR $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 1.7% CAGR 1.8% CAGR $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 4.4% CAGR 3.7% CAGR Real 2017 $ Residential Non-Residential Real 2017 $ Residential Non-Residential Real 2017 $ Residential Non-Residential Continued Recovery in Global Construction Spending is Anticipated 14 14

15 Aerial Work Platforms Demand Logic (Aerial Adoption) Sources: Terex fleet modeling, Terex estimates Boom & Scissor Units per $B of Non-Res Construction BJH 2 pct Telehandler Units per $B of Total Construction BJH 2 pct North America Western Europe Rest of World North America Western Europe Rest of World North America fleets continuing to expand while adoption elsewhere increases 15 15

16 Aerial Work Platforms Demand Logic (Aerials Fleet Growth) Sources: Terex modeling of historical fleet size; Terex fleet forecasts Global Fleet Size (000 Units): Booms + Scissors Global Fleet Size (000 Units): Telehandlers 1, ,600 1,400 1,200 CAGR ( 03 18) = 7.5 % CAGR ( 18 23f) = 7.4 % CAGR ( 03 18) = 5.6 % CAGR ( 18 23f) = 5.0 % 1, Future fleet forecast is consistent with long-term rate of growth Combined global aerials fleet should exceed 2.1M units by

17 Aerial Work Platforms Demand Logic (Annual Demand) Sources: Terex modeling of global aerial demand Annual Replacement Demand + Annual Fleet Growth = Total Annual Demand Annual Replacement Demand ($M) Annual Fleet Growth ($M) All Aerial Industry Revenue: World ($M) BJH 2 pct $9,000 $8, Prices $9,000 $8, Prices $12,000 $10,000 Bars 2018 Prices $6,000 $5,000 $4,000 $6,000 $5,000 $4,000 $8,000 $6,000 $3,000 $2,000 $1,000 $3,000 $2,000 $1,000 $4,000 $2,000 $0 $0 $0 Based on rental company replacement cycles (~ 8 yrs) Replacement keeps fleet from shrinking Varies based on market conditions Supported by continuing adoption Note: Category-level Units x Constant 2018 Prices per Unit Replacements Growth Including 2% Annual Inflation Combined demand outlook is robust Replacement is an important driver Anticipating multiple years of strong demand 17 17

18 <= > 9 Total $M OEC Aerial Work Platforms Replacement Demand Example Sources: United Rentals Quarterly Financial Review, Q4 2017, page 17 $12,000 URI Fleet Composition ($M OEC, Dec. 2017) $10,000 $8,000 $6,000 $4,000 $2,000 $0 Several years of stong replacement Typical Replacement Window FLEET AGE - YEARS Customer Fleet Reporting Confirms Terex Replacement Forecast 18 18

19 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 Aerial Work Platforms Major Customer Demand Conditions Sources: United Rentals, Ashtead Group, ISI 75% 73% 71% 69% 67% 65% URI Pro Forma Time Utilization (June) Source: URI Financial Reports 69.7% 70.1% 68.0% $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 Source: Ashtead Group Sunbelt Fleet Utilization Fleet on Rent ($B) Physical Utilization (%) % 73% 71% 69% 67% 65% 10% United Rentals Quarterly Rental Rate Growth US Rental Revenue (2016 = 100) CAGR = 5.4% 5% 0% -5% % -15% Source: ISI analysis of URI Financial Reports, Quarterly growth is change versus prior year Source: Ashtead Group High Customer Fleet Utilization Supports Continued Growth 19 19

20 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

21 Aerial Work Platforms Business Objectives AWP SUCCESS METRICS Customer NPS Revenue Growth Margin Improvement REVENUE ENABLERS Product Leadership Footprint & Global Reach Responsiveness & Customer Support PROFIT DRIVERS Cost Discipline ETW Improvements Genie is Well Positioned to Capitalize on Anticipated Market Strength 21 21

22 Aerial Work Platforms Revenue Enablers Product Leadership Footprint & Global Reach Responsiveness & Customer Support AWP Vitality Index (%) Regional Sales by Source of Product (2023) AWP Customer NPS (%) 40% 35% 30% 25% 20% 15% 10% 5% 14.0% 13.5% 34.0% 28.0% 100% 80% 60% 40% 20% 60% 50% 40% 30% 20% 10% 39% 47% 52% 55% 0% Goal 2023 Goal % of Sales from Products introduced in the preceding 3 years 0% Sold In... Made In... North America Europe China/Asia LATAM North America Europe China/Asia 0% Goal 2023 Goal NPS = Net Promoter Score 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 Revenue Growth will be Driven by Sustained Development of Core Capabilities 22 22

23 Aerial Work Platforms Product Innovation - XC LAUNCHED PLANNED 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 23 23

24 Aerial Work Platforms Product Innovation Hybrid Drive Technology for All Jobsites Z-60/37 FE- Fuel Electric Hybrid Switch between low emissions hybrid operation to zero emissions all electric operation 24 24

25 Aerial Work Platforms 2018 Manufacturing Footprint Redmond, WA Booms Scissors Moses Lake, WA Booms Changzhou, CN Scissors Booms OKC, OK Telehandlers Rock Hill, SC Booms Light Towers Runabouts Umbertide, IT Telehandlers Booms 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 25 25

26 Aerial Work Platforms Terex Margin Drivers North America EMEAR China, AP, LATAM Commercial Excellence Salesforce.com Deployment Terex Proven Sales Process Back-office process and systems improvement Lifecycle Solutions Services and Solutions Spare Parts Technology and Innovation Strategic Sourcing Category team staffing and backfill Organization, process, equipment for implementation Clear prioritization and execution of change ETW benefits will accelerate in

27 Aerial Work Platforms Terex Margin Progress 30% 25% 20% 15% 10% 5% 0% AWP Quarterly Incremental Margins* 25.7% 23.0% 16.7% 11.8% Q3 '17 Q4 '17 Q1 '18 Q2 '18 * as adjusted Cost Leverage Demand planning Fixed cost discipline Labor management Execute to Win (ETW) Commercial Excellence Lifecycle Solutions Strategic Sourcing * as adjusted 27 27

28 Aerial Work Platforms Positioned for Growth Favorable demand outlook for 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 28 28