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terex 08_06_04_JP_Morgan_Conf

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  • 1. JPMorgan Basics & Industrials Conference Tim Ford President, Terex Aerial Work Platforms June 4, 2008
  • 2. Forward Looking Statements & Non-GAAP Measures The following presentation contains forward-looking information based on the current expectations of Terex Corporation. 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 highly cyclical and weak general economic conditions may affect the sales of its products and its financial results; our business is sensitive to fluctuations in interest rates and government spending; the ability to successfully integrate acquired businesses; the retention of key management personnel; our businesses are very competitive and may be affected by pricing, product initiatives and other actions taken by competitors; the effects of changes in laws and regulations; our business is international in nature and is subject to changes in exchange rates between currencies, as well as international politics; our continued access to capital and ability to obtain parts and components from suppliers on a timely basis at competitive prices; the financial condition of suppliers and customers, and their continued access to capital; our ability to timely manufacture and deliver products to customers; possible work stoppages and other labor matters; our debt outstanding and the need to comply with restrictive covenants contained in our debt agreements; our ability to maintain adequate disclosure controls and procedures, maintain adequate internal controls over financial reporting and file its periodic reports with the SEC on a timely basis; the previously announced investigations by the SEC and the Department of Justice; compliance with applicable environmental laws and regulations; product liability claims and other liabilities arising out of our business; and other factors, risks, uncertainties 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 those and other risks, uncertainties and significant factors. The forward-looking statements speak only as of the date of this presentation. Terex expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement included in this presentation 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. 2
  • 3. Our Purpose To improve the lives of people around the world Our Mission To delight construction, infrastructure, mining and other customers with value added offerings that exceed their current and future needs To achieve our mission we must attract the best people by creating a Terex culture that is safe, exciting, creative, fun and embraces continuous improvement Our Vision Customer – to be the most responsive company in the industry as determined by the customer Team Member – to be the best place to work in the industry as determined by our team members Financial – to be the most profitable company in the industry as measured by ROIC 3
  • 4. Strong Sales Growth 12 year compounded annual sales growth of 27% … Sales ($M) Operating Profit (%) 9,488 10,000 12.0% 9,138 9,000 7,648 10.0% 8,000 7,000 6,157 8.0% 6,000 4,799 5,000 6.0% 3,910 4,000 2,817 4.0% 3,000 2,000 2.0% 1,000 0 0.0% 2002 2003 2004 2005 2006 2007 LTM Q1 2008 2008 Sales guidance between $10.5 - $10.9 billion 2008 EPS guidance between $6.85 - $7.15 per share 4
  • 5. Where We Are Today TEREX is the 3rd largest manufacturer* of construction equipment in the world… $29.4 $16.4 $9.5 $8.6 $7.7 $6.7 $5.1 $5.0 $5.0 $4.5 $4.4 $3.8 Caterpillar (1) Volvo Hitachi (3) Sandvik (10) CNH Global (8) Deere (5) JCB (7) Doosan (6) (4) Komatsu (2) Terex Liebherr (7) Oshkosh (9) (1) Represents total sales before Power Products and Financing and Insurance Services sales. (6) Represents 2007 Construction equipment sales of $1.5 billion based on exchange rate at (2) Represents Komatsu’s Construction and Mining Products segment as of December 31, 2007. December 31, 2007 of KRW/USD 936.07 plus estimated 2007 Bobcat sales of $2.9 billion Exchange rate of 111.445 as of Dec 31, 2007 (7) Estimated, as these are privately owned companies (3) Exchange rate used as of December 31, 2007 of USD/JPY 111.445 JCB: 2007 revenue of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of 1.9870 (4) Represents Volvo’s Construction segment as of Dec 31, 2007 plus prorated annual sales of $864 Liebherr: 2006 Construction segment revenue of EUR 4.6 billion converted at a more current rate, million acquired from Ingersoll Rand’s Roadbuilding business in May 2007 for the 4 months not owned using Dec 31, 2007 EUR/USD rate of 1.45983 in 2007 of approximately $300 million; Rate of USD/SEK 6.464 (8) Represents CNH Global’s Construction Equipment Segment (5) Represents Deere’s Construction and Forestry segment as of January 31, 2008 (9) Includes Access sales of $2.54 billion for the year ended September 30, 2007 plus Commercial (concrete mixer trucks, concrete plants and refuse trucks/systems) sales of $1.25 billion. (10) Represents 2007 Mining & Construction sales converted at SEK/USD 6.46 *Based on last twelve months of available Construction Equipment Sales ($’s in Billions) 5
  • 6. Terex Business Segments Terex operates in five business segments: Slice 1 Slice 2 Aerial Work Platforms Slice 3 Slice 4 Construction Cranes Materials Processing & Mining Roadbuilding, Utility Products and Other $1,949 6
  • 7. Product and Geographic Diversity Balanced product line revenue …not dependent on any one region of profile… the world Sales by Segment Sales by Geography - 2007 (Last 12 months thru Mar 31, 2008, $ in millions) RBUO Asia/ 7% AWP Australia $666 USA 25% 14% MP&M 30% $2,377 23% $2,261 Construction Europe/Africa Cranes 20% Middle East Other Americas $1,949 48% 8% 25% $2,366 Balance and diversity 7
  • 8. Goals for 2010 GOAL 2007 What we must accomplish $12.0B in Sales $9.1B Implies 9.5% CAGR 12% Operating Margin 10.5% Execute on supply chain management, pricing process discipline & lean initiatives 15% W.C. to Sales 18.5% Optimize use of assets, particularly inventory A “12 by 12 in ’10” A is our medium term stretch goal 8
  • 9. Focus on AWP Segment Boom lifts Scissor lifts Telehandlers Light construction products A a 9
  • 10. Focus on AWP Segment Four key messages about AWP today… Aerial work platform category continues to be a secular growth story – despite short term economic concerns Achieving our growth ambition requires globalizing the business Significant opportunity to extend the value proposition beyond products Lean has long been at the core of our success…and we are “upping” the ante 10
  • 11. Secular Growth Story Favorable trends driving AWP growth… Global infrastructure growth creating unprecedented demand Rising cost of labor and drive for productivity Increasing focus on worker safety Construction, maintenance and specialty applications Ease of access to work spaces at height Strong profit contributor to channel partners Developing markets increasingly adopting aerial products A A Fundamentals likely to exist for foreseeable future 11
  • 12. Global Product Line Expansion Fundamentals are driving global acceptance… 2007 Sales by Geography - 2002 Future Goal Asia/ Asia/ Australia Australia 8% 5% Americas Asia/ EMEA 33% Australia 27% EMEA Americas 33% 35% Americas 57% 68% EMEA 33% Value proposition of safety and productivity A translates around the world A 12
  • 13. Terex AWP 2008 Demand Forecast Dynamics Market Demand • Big boom demand is strong North America +/- Flat • Scissors solid, telehandlers weak • Rental houses tightly managing cap ex Latin America Strong • Small market but growing • Work at height regulations in Brazil Europe, ME, Strong • Certain Western Europe markets softening, Africa and Russia but most markets remain strong • Middle East continues to be white hot • Continued emergence of Eastern Europe and Russia Asia Pacific Weak • Australia off to a very slow start due to channel consolidation and January flooding • Asian markets growing, shipbuilding strong, rental channel developing 13
  • 14. What’s Different from “Last Time” Aerial market dynamics have changed in this decade… 2000 – 2002 2008 Significantly fewer manufacturers 25+ manufacturers Some rental channel consolidation Little rental channel consolidation Growing global demand for aerials Largely a U.S. market Older fleet age on average Younger fleet age on average Broadening application profile for Narrow application usage aerials Weak rental house fleet Much stronger management teams management combined with readily combined with sophisticated fleet available capital for rapid fleet management that drives purchasing expansion discipline A Industry is structurally more sound A 14
  • 15. AWP Strategy Three elements of our strategy… Strengthen Maximize Extend Extend Maximize High Growth, product revenue and Strengthen High Margin offering profit from and globalize Contributor to beyond our installed our business 12 x 12 x ‘10 aerials base Aligned around a clear strategy 15
  • 16. AWP Manufacturing 2010 From a U.S. exporter… Local 50% local production production 30% local production • Closer to the customer Import • Shorten lead times • Reduce working capital A To a global manufacturer A 16
  • 17. Services Recent growth has created a large installed base of equipment… • Equipment must be maintained to Installed Base ensure safety and “curb appeal” • Finding, training and retaining technicians is increasingly challenging for customers • Customers seeking refurbishment ~ 10X Increase solutions in 10 Years - N.A. acquisition of Phoenix Equipment • Global planning underway 1997 1999 2001 2003 2005 2007 Big service opportunity 17
  • 18. Extend Beyond Aerials AWP products represent 23% of rental customer capital expenditures….. Cross Selling Opportunities • Utility trucks • Backhoe loaders • Compact track loaders Current AWP • And more … Other Products Compact Equipment Big Dirt Presenting one face to the customer to more deeply penetrate the rental channel 18
  • 19. Taking Lean Beyond The Factory Floor Lean principles drive better results….. Lean with Customers for deeper relationships Lean with Suppliers Lean in Manufacturing Lean for for better cost for lower costs and Administrative Processes and quality better working capital delivers better efficiency More applications of Lean inside and out! 19
  • 20. Summary – AWP Segment • AWP is, and will continue to be, a growth engine for Terex • We are actively putting the pieces in place to globalize our business, with more to come • As customer needs change, we believe that creates the potential to support them with downstream services • Lean is a “way of life” at AWP, and we believe we can extend to customers and suppliers 20
  • 21. Questions? 21