0
Goldman Sachs Global Industrials
Conference
November 5, 2008          Eric Nielsen
                          President,
  ...
Forward Looking Statements & Non-GAAP Measures

The following presentation contains forward-looking information based on t...
Where We Are Today

                            Leader in Our Categories and Our Industry
                                ...
Segment and Geographic Diversification

      Diversified Portfolio of Equipment Businesses
                              ...
Terex MP&M in Summary


        • $2.6 B*provider of surface mining and aggregate equipment
          solutions sold to mi...
Growing Profitability


               MP&M RESULTS
  $B
                                                 30%
$2.5
       ...
Materials Processing & Mining Products

                                       Mining
                       Mining       ...
Annual Mining Equipment Industry of $20 B

                          Discontinuous Mining                         $B    Co...
Mining End Market Equipment Usage

Industry                                                                               ...
Mining Product Mix

 Industry                                                                          Terex
             ...
Mining sales by region

 Industry                                                                                        T...
Looking Forward


                 Roadbuilding and
  Segment:                                 Quarries/ Small Mines      ...
Appendix
Market Environment for Mining


                                                                                          ...
Market Environment for Materials Processing

                         Positioned for Continuing Long - Term Trends
       ...
Distribution & Aftermarket Priorities


            OBJECTIVES
                                          Installed base co...
MP&M: Manufacturing Footprint



                                  Crushing and
                                  Crushing...
Hydraulic Excavators


• Superior mobility as compared to an
  electric rope shovel
• Leadership position in electric driv...
Full Range of AC Drive Hauling Solutions

• Leadership position in high efficiency AC
  drive trucks
     • Higher up time...
Mobile Materials Processing


• Portable and maneuverable for
  smaller spaces and between job
  sites
• Minimizes need fo...
Questions?
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terex Goldman110508

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Transcript of "terex Goldman110508"

  1. 1. Goldman Sachs Global Industrials Conference November 5, 2008 Eric Nielsen President, Materials Processing & Mining
  2. 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. 3. Where We Are Today Leader in Our Categories and Our Industry Terex is one of the Largest Manufacturers of Construction Equipment in the World $31.6 Based on last twelve months of available Construction Equipment Sales ($’s in Billions) $19.9 $10.4 $9.2 $8.7 $8.1 $5.3 $5.1 $4.8 $4.5 $4.4 $4.1 Caterpillar (1) Hitachi (3) Volvo Liebherr (7) Sandvik (10) CNH Global (8) Deere (5) JCB (7) Doosan (6) (4) Komatsu (2) Terex Oshkosh (9) (7) Estimated, as these are privately owned companies: (1) Represents Machinery sales for the last twelve months ended Sep 30, 2008; excludes JCB: 2007 sales of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of Engine and Financial Product sales. 1.9870 (2) Represents Komatsu’s Construction, Mining & Utility Equipment segment as of Sep 30, Liebherr: 2007 Cranes/Mining/Construction sales of EUR 5.5 billion converted at Dec 2008 converted at an exchange rate of JPY/USD of 106.35 31, 2007 EUR/USD rate of 1.4598 (3) Exchange rate used as of Sep 30, 2008 of USD/JPY 106.35 (8) Represents CNH Global’s Construction Equipment Segment as of Sep 30, 2008 (4) Represents Volvo’s Construction Equipment segment as of Sep 30, 2008 converted at (9) Represents Access & Commercial (both concrete & refuse trucks) for the 12 months an exchange rate of USD/SEK 6.9252 ended Sep 30, 2008. (5) Represents Deere’s Construction and Forestry segment as of July 31, 2008 (10) Represents Mining & Construction sales through Sep 30, 2008 converted at an (6) Represents 2007 Construction Equipment sales of $1.5 billion converted at an exchange exchange rate of SEK/USD 6.9252 rate at Dec 31, 2007 of KRW/USD 936.07 plus estimated 2007 bobcat sales of $2.9 billion 3
  4. 4. Segment and Geographic Diversification Diversified Portfolio of Equipment Businesses 2007 Sales by Geography 2007 Sales by Segment RBU 7% Developing AWP Markets 25% W. Europe 22% Construction 37% Japan / ANZ 21% 7% USA / Cranes MP&M Canada 24% 23% 34% $ 9.1 B $ 9.1 B $ 9.1 B $ 9.1 B Balanced by business; Balanced geographically 4
  5. 5. Terex MP&M in Summary • $2.6 B*provider of surface mining and aggregate equipment solutions sold to mining, quarrying, and construction customers worldwide • Solid foundation of products, geographic presence and team member talent • Profitable growth from machinery and aftermarket business • Undertaking actions to accelerate growth and better serve our customers * Last 12 months through September 30, 2008 5
  6. 6. Growing Profitability MP&M RESULTS $B 30% $2.5 • Sales up 31% since 25% 2004 (CAGR) $2.0 20% • Operating Profit up $1.5 51% (CAGR) 15% $1.0 • Robust demand for 10% mining and $0.5 5% quarrying 0% $0.0 2004 2005 2006 2007 Q3 '08 (LTM) Sales Gross Margin Op. Margin 6
  7. 7. Materials Processing & Mining Products Mining Mining Highwall Surface Trucks Excavators Miners Mining Drills Top 3 Top 3 Top 3 #1 Parts/ Mobile Materials Static Materials Tools Processing Processing #1 Technology High Margin Industry leading range of equipment for construction, mining and infrastructure industries 7
  8. 8. Annual Mining Equipment Industry of $20 B Discontinuous Mining $B Continuous Mining $B Bucket Wheel Excavators, etc. 2.0 Blast hole Drill 1.4 Surface Miners (Easy Miners) 0.2 Hydraulic Excavators 1.7 Electric Mining Shovel 1.3 Highwall Miners 0.1 Wheel Loaders (large) 0.5 Surface Trucks 2.5 Mining Tractors (Dozers) 1.0 Draglines 0.3 (44%) 8.7 (12%) 2.3 Development & Production Drill (Ore) 1.5 Long wall Face Support 2.0 Load Haul Dump (LHDs Ore) 2.0 Long wall Face Conveyor (AFC) 1.3 Continuous Miner / Roadheader 0.6 Long wall Shearer 0.7 Underground Shuttle Car (Coal) 0.6 Mining (20%) 4.7 (24%) 4.0 Focus is on highest value adding surface mining processes of drilling, digging, and hauling 8 2007 Data: International Press, Mining Companies, OEMs, Goldman Sachs; Analysis: RWTH Aachen, BGMR
  9. 9. Mining End Market Equipment Usage Industry Terex ( Mining Trucks and Hydraulic Excavators) ( Mining Trucks, Hydraulic Excavators, Electric .Shovels & Wheel Loaders) 20054 Years 2005 Years avg 4 - 2008 - 2008 avg Other, Other, 16% 16% Oil Sands, Oil Sands, 1.3% 5% Coal, 38% Coal, 46% Iron Ore, Iron Ore, 19% 13% Copper, 16% Gold, 11% Gold, 11% Copper, 7% • Market growth from $6 B to $ 9.6B over 3 • 85+ % of Terex mining equipment used by years large multinational companies or large state owned companies • Equipment investment focused in surface mining industry • Current offering well suited for metal and coal production • For China coal production, beginning of shift from underground to surface mining • Focused penetration of oil sands underway • Demand from developing world driving investments in coal, iron ore, and copper 9 Source : Percentage of units shipped by end market, Parker Bay 2005- 2008, 2008 Data until June.
  10. 10. Mining Product Mix Industry Terex ( Mining Trucks and Hydraulic Excavators) ( Mining Trucks, Hydraulic Excavators, Electric .Shovels & Wheel Loaders) 20054 Years 20054 Yearsavg - 2008 - 2008 avg Highwall Miners, 2% Drills, 17% Drills, 13% Wheel Tools, 4% Loaders, Tools, 20% 6% Trucks, Electric 21% Shovels, 1% Hydraulic Hydraulic Excavators, Excavators, 56% 15% Trucks, 46% • Industry leading performance and strong • One loading tool is required for every three global channel driving excavator sales or four trucks • Truck volume growing in line with channel • Move towards hydraulic excavators due to improvements flexibility of electric or diesel power • Addition of drills, tools, and high wall miner depending on mine requirement. business provides total solutions offering • Tire capacity constraints has moderated growth of large surface mining equipment during past four years 10 Source : Parker Bay 2005-2008, 2008 Data until June.
  11. 11. Mining sales by region Industry Terex ( Mining Trucks and Hydraulic Excavators) ( Mining Trucks, Hydraulic Excavators, Electric .Shovels & Wheel Loaders) 2005 -Years avg 4 2008 20054- Yearsavg 2008 Asia Asia Australia/ 15% Africa Africa 6% Indonesia 14% 10% 26% Australia/ Indonesia North Europe 31% America North 9% Europe 19% America Russia/CIS 2% Latin 27% Latin 5% America Russia/CIS America 13% 7% 17% • North America and Australia continue to be • Solid strength in largest mining equipment significant markets for mining equipment markets • Significant growth in Africa, Latin America • Increasing focus on growing Asia markets and Asia • Opportunity to grow the business in Americas through channel improvements 11 Source : Percentage of units shipped by end market, Parker Bay 2005-2008, 2008 Data until June.
  12. 12. Looking Forward Roadbuilding and Segment: Quarries/ Small Mines Large Mines Construction Contractors Mobile Materials Processing MP&M Mobile Materials Processing Offering: Static Materials Processing Static Materials Processing Shovels and Trucks Shovels and Trucks Drills/ Drilling Tools Drills/ Drilling Tools Construction Equipment Other Terex Construction Equipment Offerings: Rigid and Articulating Trucks Rigid and Articulating Trucks • Leading solutions provider to targeted industries & applications • Strength/consistency of global distribution, service & support • Leverage opportunities across the Terex product portfolio 12
  13. 13. Appendix
  14. 14. Market Environment for Mining Key Trends • New green field Number of Mining Projects by Project Phase projects 450 Pre-feasibiliy Feasibility 400 • Focus on quick start ups Under Construction 350 Expansion, Brownfield • Prefer to minimize CAPEX, New Production Starts e.g. no electrification 300 • Very well suited for hydraulic 250 excavators 200 • Shift towards larger 150 size machines 100 50 • Higher rate of production 0 • Lower cost per ton 2000 2001 2002 2003 2004 2005 2006 2007 2008 • Helps in overcoming the Source: Raw Materials Group, Sweden challenges of the shortage of skilled operators 14
  15. 15. Market Environment for Materials Processing Positioned for Continuing Long - Term Trends GLOBAL RESIDENTIAL GLOBAL NON-RESIDENTIAL $T $T CONSTRUCTION (REAL 2007 $)* CONSTRUCTION (REAL 2007 $)* $7,000 $7,000 $6,000 $6,000 5.6 % CAGR $5,000 $5,000 4.4 % -0.8 % CAGR $4,000 $4,000 1.6 % CAGR 5.6 % CAGR CAGR $3,000 $3,000 1.3 % 5.1 % CAGR CAGR $2,000 $2,000 $1,000 $1,000 $0 $0 '90'91 '92'93 '94'95 '96'97 '98'99 '00'01 '02'03'04 '05'06 '07'08 '09'10 '11'12 '13'14 '15'16 '90 '91'92 '93 '94'95 '96 '97'98 '99 '00 '01'02 '03 '04'05 '06 '07 '08'09 '10 '11'12 '13 '14'15 '16 Infrastructure Industrial Other Non-residential Total Residential • Global growth in construction continues, despite weakness in US • Construction driving high need for quarrying and aggregates • Flexibility of mobile equipment is increasingly valued 15 * Source: Global Insights, July ‘07; 69 countries tracked by GI + 5% to account for rest of world … consistent with global GDP’s
  16. 16. Distribution & Aftermarket Priorities OBJECTIVES Installed base continues to grow, • Strengthen Global Distribution driving aftermarket service opportunities – Raising the bar for standards – Improving distribution capabilities – Improved support for larger EXAMPLE: HYDRAULIC EXCAVATOR INSTALLED BASE customers – Extend into new geographies • Greater Aftermarket Participation – Improve aftermarket capabilities internally and in the channel – Increase perceived value for Terex branded parts & service – Add/improve maintenance & service capabilities 2002 2003 2004 2005 2006 2007 16
  17. 17. MP&M: Manufacturing Footprint Crushing and Crushing and Screening Screening Products, UK Products, UK Drills, Crushing Drills, Crushing Excavators Excavators and Screening and Screening Germany Germany Equipments, USA Equipments, USA New Factory New Factory Excavators Excavators High Wall High Wall Tianjin, China Tianjin, China Mining Trucks Mining Trucks Miners, USA Miners, USA Acuna, Mexico Acuna, Mexico New Factory New Factory Crushing and Crushing and Screening Screening Products Products Hosur, India Hosur, India • Adding footprint in India (Materials Processing) • Adding small excavator capability in China (Mining) • Evaluating acquisitions to accelerate global progress 17
  18. 18. Hydraulic Excavators • Superior mobility as compared to an electric rope shovel • Leadership position in electric drive • Well suited for rapid mine start-ups • Largest hydraulic excavator with bucket size up to 50 cubic meters • Hydraulic excavators beginning to replace electric rope shovels • Price range is ~ $1.5 - $16.0 million with most popular about $9.0 million Higher mobility provides greater flexibility in mining operations 18
  19. 19. Full Range of AC Drive Hauling Solutions • Leadership position in high efficiency AC drive trucks • Higher up time • Lower operating cost • Higher payload • Better operating performance compared to mechanical drive in • starting torque • travel speed • braking • 120 ton to industry leading 400 ton capacity AC electric drive trucks • Price range is ~ $2.0 - $6.5 million, with most popular about $3.0 million Lower total cost of ownership and superior performance 19
  20. 20. Mobile Materials Processing • Portable and maneuverable for smaller spaces and between job sites • Minimizes need for transportation of aggregate • Low cost solution for meeting re- use/recycling laws • Attractive for larger operators in times of market uncertainty due to mobility between sites or ability to use for a limited period of time and then sell • Price range is approximately $75,000 to over $600,000 Mobility and flexibility is highly desired by customers 20
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