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    terex Wachovia062508 terex Wachovia062508 Presentation Transcript

    • Wachovia Nantucket Equity Conference June 25, 2008
    • 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
    • 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 3
    • Strong and Diversified Revenue Base Income from operations for 2007 increased 36% versus 2006 on 19% higher sales Income from operations for Q1 2008 increased 28% versus Q1 2007 on 17% higher sales Sales are geographically diverse with almost 70% of 2007 sales generated outside of the USA Asia / Australia Sales ($M) Operating Profit (%) 14% USA 9,488 10,000 12.0% 9,138 30% 9,000 7,648 10.0% 8,000 7,000 6,157 8.0% 6,000 4,799 5,000 6.0% 3,910 4,000 2,817 4.0% 3,000 Other Americas 2,000 8% 2.0% Europe / Africa / 1,000 Middle East 0.0% 0 48% 2002 2003 2004 2005 2006 2007 LTM Q1 2008 12 year compounded annual growth rate for Sales of 27% 4
    • Where We Are Today TEREX is the 3rd largest manufacturer of construction equipment in the world Based on last twelve months of available Construction Equipment Sales ($’s in Billions) $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 5
    • Strong Market Presence Approximately 75% of 2007 sales were generated in markets where Terex is larger than our competitors and/or Terex has a significant market presence Hydraulic Mining Cranes Aerial Work Excavators ~$14 billion market Platforms ~$2.6 billion market Terex is one of three ~$ 6 billion market Terex is one of four major global Terex is one of two major global competitors major global competitors competitors Mobile Crushing & Material Handlers Utilities Screening equipment ~$1.4 billion market ~$1 billion market (USA) Terex is one of four ~$3.5 billion market Terex is one of two major global Terex isA one of three major major competitors competitors global competitors A * Market size approximations based on internal estimates and data from Yengst and Off Highway Research 6
    • 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 “12 by 12 in ’10” is our medium term stretch goal 7
    • Terex Business Segments Aerial Work Platforms • Construction • Slice 1 Cranes • Slice 2 Slice 3 Materials Processing & Mining Slice 4 • Roadbuilding, Utility Products • and Other Sales by Segment (Last 12 months thru Mar 31, 2008, $ in millions) 7% $666 25% $2,377 23% $2,261 20% $1,949 25% $2,366 AWP Construction Cranes MP&M RBUO 8
    • Aerial Work Platform Segment Highlights Sales by Geography - 2007 Increasing labor rates and tightening worker 9% 8% safety regulations are driving demand in 48% developing markets 35% Mature market demand remains strong USA Europe/Africa/Middle East Asia/Australia Other Americas Opportunities European production capacity expansion => reduce transit time and inventory levels China manufacturing facility initially for sourcing Manf. by Geography - Mid-term Goal Manufacturing by Geography - 2007 ~10% <10% Americ as Americ as ~30% Europe/Africa/Middle Europe/Afric a/Middle East A East ~60% Asia/Australia Asia/Australia 90+% A 9
    • Construction Segment Highlights Sales by Geography - 2007 3% 5% 11% European focused business Large market potential 8 1% Weak dollar hurts N. American distribution USA Euro pe/A frica/M iddle East Opportunities A sia/A ustralia Other A mericas Sales/service focus in developing markets Emphasis on sourcing and production in low cost countries ASV acquisition provides N. American distribution for compact equipment and global growth opportunity for compact track loaders Manf. by Geography - Mid-term Goal Manufacturing by Geography - 2007 p.f. 9% ~30% ~30% Americas Americas A Europe/Africa/Middle Europe/Africa/Middle East A East Asia/Australia 91% Asia/Australia ~40% 10
    • Crane Segment Sales by Geography - 2007 Highlights 6% USA Strong demand through 2010 19% 15% Europe/Africa/Middle East Market leader above 300-ton capacity Asia/Australia 60% Other Americas Pricing and volume leverage are driving margin improvement Opportunities Chinese investment for cost and strategic reasons Selective expansion of manufacturing footprint Manf. by Geography - Mid-term Goal Manufacturing by Geography - 2007 ~10 % ~25% ~25% ~2 5 % Americas Americ as A Europe/Africa/Middle Europe/Afric a/Middle A East East Asia/Australia Asia/Australia ~50% ~6 5 % 11
    • Material Processing & Mining Segment Sales by Geography - 2007 Highlights 13% Strong commodity demand through at least 2010 USA 20% Europe/Africa/Middle Market leader: hydraulic shovels and mobile East Asia/Australia 32% 35% crushing & screening equipment Other Americas Opportunities Manufacturing in India for Material Processing Focus on Aftermarket Growing installed base of shovels Manf. by Geography - Mid-term Goal Manufacturing by Geography - 2007 ~3 % ~15% Americas Americas ~35% A ~3 5 % Europe/Africa/Middle Europe/Afric a/Middle East East A ~6 2 % Asia/Australia Asia/Australia ~50% 12
    • Roadbuilding, Utilities & Other Segment Highlights Sales by Geography - 2007 1% Inadequate U.S. Government funding for 14% 3% infrastructure 82% Under-investment in fleet for many years by U.S. based utilities USA Europe/Africa/Middle East Asia/Australia Other Americas Opportunities Utilize Roadbuilding manufacturing capacity for Construction Segment products Focus on infrastructure with recent acquisition of Hydra International potential for Utilities Manf. by Geography - Mid-term Goal Manufacturing by Geography - 2007 ~1% ~10% ~5% Americ as Americ as A Europe/Afric a/Middle Europe/Africa/Middle East East A ~9 9 % Asia/Australia Asia/Australia ~85% 13
    • Terex Product & Geographic Diversity The Terex strategy of product and geographic diversity carries across the entire economic cycle with balance throughout Early-Cycle Late-Cycle 10% of Net Sales 34% of Net Sales Compact Construction Equipment (6%) Cranes (26%) Telehandlers & Concrete Mixers (4%) Light Construction (3%) Utility Equipment (3%) Roadbuilding (2%) Mid-Cycle 33% of Net Sales Aerial Work Platforms (21%) Heavy Construction Equipment (12%) Commodity driven based on Global Economics Material Processing & Mining (23%) 14 Note: Percentages are based on 2007 sales
    • We Still Have Opportunities to Improve Margin Ensure Terex is receiving appropriate value for its products Offset rising commodity costs with commensurate pricing actions Pricing Build a more sophisticated sales process through training and education Coordinate supply efforts to leverage the scale of Terex Supply Coordinate common platform design Management Sourcing centers – China and India Lean initiatives Optimize manufacturing footprint Productivity Sales and production planning methodology A 2-3% incremental margin improvement is a reasonable objective 15
    • The Terex Way Our values are defined in The Terex Way, which is our collective commitment on what it means to be part of Terex Integrity: Honesty, ethics, transparency and accountability • Respect: Concern for safety, health, teamwork, diversity, inclusion and • performance Improvement: Elimination of waste & focus on continuous improvement • Servant Leadership: Service to others, humility, authenticity and • leading by example Courage: Willingness to take risks, responsibility, action & • empowerment Citizenship: Social responsibility and environmental stewardship • 16
    • Financial Overview A A 17
    • Sales and Backlog – LTM through March 31, 2008 AWP Sales up 9% Cranes Sales up 26% Backlog up 4% Backlog up 70% $3,000 $3,000 $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 $500 $500 $0 $0 2007 Sales 2008 Sales2008 Sales Backlog 2008 Backlog 2007 1 2007 Sales 2008 Sales 2007 Backlog 2008 Backlog $2,261 Construction MP&M Sales up 18% Sales up 38% Backlog up 48% Backlog up 27% $3,000 $3,000 $2,366 $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,000 $1,000 RBUO Sales down 23% $500 $500 Backlog down 2% $0 $0 $3,000 2007 Sales 2008 Sales 12007 Backlog 2008 Backlog 2007 Backlog 2008 Backlog 2007 Sales 2008 Sales 1 $2,500 $2,000 $1,500 $1,000 $500 * LTM stands for Last Twelve Months $0 2007 Sales 2008 Sales 2007 Backlog 2008 Backlog 1 18
    • Return on Invested Capital (trailing 12 months) LTM After-Tax ROIC – Construction Equipment 35.0% 33.2% 29.2% 27.8% 30.0% 27.3% 24.9% 25.0% 19.3% 18.7% 20.0% 15.0% 9.8% 10.0% 5.0% 0.0% Manitow oc Joy Global Caterpillar * Terex Deere * Bucyrus Astec OSK LTM After-Tax ROIC – Diversified Industrials 30.0% 27.3% 25.0% 20.2% 20.0% 16.9% 13.7% 15.0% 12.4% 10.0% 5.0% 0.0% Terex United Illinois Tool Works Dover Corp. Danaher Corp Technologies *Does not include finance arm of company Deere and Joy Global as of Jan 31, 2008 19
    • Working Capital Opportunities Working capital as a % of sales is comparable to our peers … … but the opportunity exists to release hundreds of millions of dollars from inventory. Competitor Working Capital as % of Sales 50.0% 45.7% 45.0% 40.0% Inventory as % of Sales 35.0% 31.4% 28.5% 30.0% 25.8% 35% 32.5% 24.9% 25.0% 21.3% 30% 20.0% 16.5% 23.3% 24.8% 15.0% 25% 22.6% 10.8% 21.9% 20.2% 10.0% 18.5% 18.7% 20% 5.0% 15% 15% 0.0% r* SK 10% * x ** * ** c re re ** lla te YG s* ee oc O Te pi As ru JO w er D cy i to at 5% Bu C an M 0% Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Mar-07 Mar-08 Target * Excludes CAT and DE Finance arms RAW WIP Finished Goods Aftermarket ** DE and JOYG as of Jan 31 *** MTW and BUCY combine accounts payable and accrued expenses, complicating a comparable analysis to peers 20
    • Looking Ahead……. Growth – Sales and Profit Leveraging global presence, consolidating vendors and pricing actions Continue the TEREX business system implementation Lean manufacturing focus, customer-centric business approach, and human resource development Developing market opportunities China, India, Russia and Latin America ROIC focus 27.3% ROIC (after-tax) as of March 31, 2008 Investment Priorities Reinvest in the business Opportunistic and geographic acquisitions $700 million stock repurchase authorization; $218 million completed through Qtr 1 2008 A A 21
    • Questions? 22