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terex BofA091708

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  • 1. Bank of America 38th Annual Investment Conference September 17, 2008 Robert Isaman President, Terex Construction
  • 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. See the Investors section of our website www.terex.com for a complete reconciliation. 2
  • 3. Who is Terex? Terex is one of the Largest Manufacturers of Construction Equipment in the World Materials Processing & Aerial Work Platforms Cranes Mining Roadbuilding & Utility Construction Products 3
  • 4. Who is Terex? 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 customer responsive company in the industry as determined by the customer Financial – to be the most profitable company in the industry as measured by ROIC Team Member – to be the best place to work in the industry as determined by our team members 4
  • 5. Where We Are Today • Leader In Our Categories and Our Industry • Leveraging the Power Of One Company • Well Positioned for Continuing Long - Term Trends $30.4 $19.0 $10.1 $9.1 $8.7 $8.1 $5.2 $5.1 $4.9 $4.5 $4.4 $3.7 Caterpillar (1) Hitachi (3) Volvo Liebherr (7) CNH Global (8) Sandvik (10) Deere (5) JCB (7) Doosan (6) (4) Oshkosh (9) Komatsu (2) Terex Based on last twelve months of available Construction Equipment Sales ($’s in Billions) (6) Represents 2007 Construction equipment sales of $1.5 billion based on exchange (1) Represents total sales before Power Products, Financing and Insurance Services sales rate at December 31, 2007 of KRW/USD 936.07 plus estimated 2007 Bobcat sales of for the 9 months ended March 31, 2008 plus Building Construction Products, EAME $2.9 billion Operations, Heavy Construction & Mining and Infrastructure Development sales for the 3 (7) Estimated, as these are privately owned companies: months ended June 30, 2008. JCB: 2007 sales of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of (2) Represents Komatsu’s Construction and Mining Products segment as of March 31, 1.9870 2008. Liebherr: 2007 Cranes/Mining/Construction sales of EUR 5.5 billion converted at Dec Exchange rate of 99.691 as of Mar 31, 2008 31, 2007 EUR/USD rate of 1.4598 (3) Exchange rate used as of June 30, 2008 of USD/JPY 106.18 (8) Represents CNH Global’s Construction Equipment Segment as of June 30, 2008 (4) Represents Volvo’s Construction segment as of June 30, 2008. Rate of USD/SEK (9) Represents Access & Concrete Placement equipment sales for the 9 months ended 6.0241 June 30, 2008 plus Access & Commercial (both concrete & refuse trucks) for the 3 (5) Represents Deere’s Construction and Forestry segment as of April 30, 2008 months ended Sep 30, 2007. (10) Represents 2007 Mining & Construction sales converted at SEK/USD 6.46 5
  • 6. Goals for 2010 “12 by 12 in ’10” is our medium - term stretch goal • $12.0B in Sales • 12% Operating Margin • 15% Working Capital to Sales GOAL June 30, 2008 LTM* What we must accomplish $12.0B in Sales $10.1B Implies 7.2% CAGR 12% Operating Margin 10.9% Execute on pricing process discipline, supply chain management, & TBS initiatives 15% Working Capital to Sales 22.1% Optimize supply chain planning and execution * LTM = Last Twelve Months 6
  • 7. Segment and Geographic Diversity 2007 SALES BY GEOGRAPHY 2007 SALES BY BUSINESS RBU 7% Developing AWP Markets 25% 22% W. Europe Construction 37% 21% Japan / ANZ 7% USA / Cranes MP&M Canada 24% 23% 34% Terex has Portfolio Diversity… … Balanced by business; Balanced geographically 7
  • 8. Terex Construction Segment Material Compact Heavy Off-Road Handling Equipment Equipment Trucks Robust Filling Global 1 of 4 Portfolio Gaps Growth 8
  • 9. Terex Construction: Segment Update CONSTRUCTION RESULTS $B • Sales up 14% since 30% $2.0 2004 (CAGR) 25% • US and W. Europe $1.5 20% soft, but global 15% growth solid $1.0 10% • Strengthening/ $0.5 improving 5% performance in 0% $0.0 advance of recovery 2004 2005 2006 2007 Q2 '08 (ltm) Sales Gross Margin Op. Margin 9
  • 10. Terex Construction Segment Mix PRODUCT MIX ($) GEOGRAPHIC MIX ($) 13% 17% 20% 28% 1% 1% 19% 13% 65% 17% 28% 63% 42% 36% 21% 16% 2004 2008 Q2 YTD 2004 2008 Q2 YTD Developing Markets Trucks Japan / ANZ Material Handling W. Europe Heavy USA / Canada Compact 10
  • 11. Terex Construction: Key Focus Area Supply chain efficiency Production effectiveness Margin expansion/ Pricing productivity Acquisition integration Regionally focused product/service innovations Marketing effectiveness – closer to the customer Growth Aftermarket investments BRIC+ 7 expansion Asset velocity Cash generation Working capital Fixed asset productivity 11
  • 12. Terex Construction: Process Improvement Focus North America Western Europe *Source MAPI 2008 North America & Western • Demand weaker Europe Geographies Soft • Volume and material costs impacting margin Developing Market • Excellent growth in Eastern Europe, Africa, Middle East and other developing geographies Geographies Strong • China, India, and South America are continuing opportunities 12
  • 13. Terex Construction: Process Improvement Focus MOTHERWELL, SCOTLAND – ARTICULATED AND RIGID TRUCKS Before After After • Integration of TA30 and TA40 articulated truck lines into a single, mixed model line • Cycle times reduced by 38% • Lead time reduced by 20 – 30% • Released $750k of work in process inventory Higher Quality and Shorter Delivery Times through implementation of Leader Standard Work 13
  • 14. Terex Construction: Customer Value Progress Customer Value Customer Value Proposition Proposition •• We will “never leave aa We will “never leave customer with aaproblem” customer with problem” •• We will drive down the We will drive down the total lifecycle cost of total lifecycle cost of ownership ownership •• Focusing on building Focusing on building products that increase products that increase jobsite productivity jobsite productivity High local machine population drives both higher Customer Value and dealer ROIC 14
  • 15. Terex Construction: Dealer Development and Support Focus 3 Crown: Measuring Dealer Performance/ Implementing Best/ Improving Capabilities Dealer Capabilities include… •Staffing 3 Crown •Training •Marketing •Service Infrastructure •Parts Infrastructure 2 Crown Performance Metrics include… •Business Management •Facility • Market Share • Customer satisfaction • Number of Terex lines carried 1 Crown • Parts sales • Equipment sales • Year over year growth • Utilization of Terex Financial Services 0 Crown “Qualifying” • Rental Investing in Support Systems to Improve our Channels 15
  • 16. Terex Construction: Emerging Emerging Markets Update Markets Focus Russia/ Russia/ South Africa China India Latin America South Africa China India Latin America Eastern Europe Eastern Europe • Commodities, • Significant heavy • Strengthening • Largest • Transition of energy, and position in developing Eastern equipment infrastructure- backhoes country for European market with driven growth Terex economies opportunities to • Opportunity to Construction penetrate • Large, multi- penetrate in • Affinity for other categories year projects in • Promising Western • Emerging pipeline (e.g., as strong future outlook European opportunities in Panama) market growth products compact continues • Excellent growth to date Emerging markets helping to sustain business as developed markets soften 16
  • 17. Terex Construction: Improvement Roadmap 1 2 3 Build-out long- Build around the Optimize the profitability term through strongest and most attractive a repeatable of the current portfolio businesses system Fix the overall costDevelop and expand • Roll-out winning • • winning, repeatable models organically and asset structure business model for across best markets • Implement our strongest redesigned business • Evaluate and pursue markets processes focused M&A targets • Evaluate a disruptive that leverage and • Focus investments business model in enhance our best and redesign around attractive market geographic, product, stronger/attractive areas where you are and customer markets and weaker/not present segments products today Three phase path toward achieving full potential… 17
  • 18. Terex Construction: Improvement Roadmap 40 % of Total Manufacturing Footprint EMEA 30 % of Total Manufacturing Footprint 30 % of Total Americas Manufacturing Asia Footprint Sourcing Manufacturing Engineering …future Operations Footprint aligned with Markets 18
  • 19. Terex Construction: Summary • $1.9 B* provider of construction-related equipment • On-going operations and market-based transformation • Near term performance is challenging but long-term potential has never been higher Recent addition of acquisitions furthers an already strong growth platform in compact High growth in scrap, quarries, and other segments where Terex products create unique value Continuing opportunity to change the game in more crowded, heavy equipment categories • Positioning Terex for segment and geographic leadership as conditions improve over the coming 2-3 years * Last 12 months through June 30, 2008 19
  • 20. Questions?