Citigroup Global Industrial Manufacturing Conference March 6, 2007

Transcription

1 Citigroup Global Industrial Manufacturing Conference March 6, 2007

2 Forward Looking Statements & Non-GAAP Measures The following presentation contains forward-looking information based on TEREX s current expectations. Because forwardlooking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond TEREX s control, include among others: TEREX s business is highly cyclical and weak general economic conditions may affect the sales of its products and its financial results; the sensitivity of construction, infrastructure and mining activity and products produced for the military to interest rates and government spending; the ability to successfully integrate acquired businesses; the retention of key management personnel; TEREX s 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; TEREX s business is international in nature and is subject to changes in exchange rates between currencies, as well as international politics; TEREX s 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; TEREX s ability to timely manufacture and deliver products to customers; TEREX s significant amount of debt and its need to comply with restrictive covenants contained in TEREX s debt agreements; the SEC investigation of TEREX; compliance with applicable environmental laws and regulations; and other factors, risks and uncertainties more specifically set forth in TEREX s 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 herein 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 TEREX s 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 for a complete reconciliation. 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 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

4 Recent Highlights Fiscal year ended December 31, 2006 net income increased 112% versus 2005 on 24% higher sales 28% CAGR 11-year compounded annual growth rate (CAGR) of 28% $8, Net Sales guidance is for a range of $8.2 $8.5 billion $7,000 $6,000 $5, EPS guidance is for a range of $ $5.40 per share, (1) an increase of between 29% - 39% as compared to 2006 results (1) EPS estimates include costs related to the early extinguishment of the 9 ¼% Notes in January 2007 (about $0.10/share) '95 '96'97'98 '99 '00'01'02 '06 '03 '04'05 $4,000 $3,000 $2,000 $1,000 Note: Net Sales in millions of dollars 4

5 Diversification of Sales $ billions $ % CAGR F $10.0 $7.5 18% CAGR 2003 to 2006 ROW $5.0 Europe $2.5 North America $

6 Terex s Global Presence Increase manufacturing presence in the emerging countries (China, India, Brazil, etc.) Emphasis on Terex manufacturing locations producing multiple products 6

7 Where We Are Today TEREX is the 3 rd largest manufacturer of construction equipment in the world Based on last twelve months of available Construction Equipment Sales ($ s in Billions) $26.1 $12.4 $7.7 $6.1 $5.8 $5.7 $5.2 $4.3 $3.7 $3.2 Caterpillar (1) Komatsu (2) Terex (3) Hitachi (4) Volvo (5) (6) Deere (6) Liebherr CNH Global (8) Ingersoll-Rand (9) (7) JCB (7) 7 (1) Represents total sales before Power Products and Financing and Insurance Services sales. (2) Represents Komatsu s Construction and Mining Products segment. Exchange rate as of 12/31/06 (3) LTM as of December 31, 2006 (4) Exchange rate used: Hitachi JPY Volvo SEK (5) Represents Volvo s Construction segment (6) Exchange rate used: Hitachi JPY Volvo SEK (6) Represents Deere s Construction and Forestry segment (7) Estimated, as these are privately owned companies (8) Represents CNH Global s Construction Equipment segment. (9) Represents Ingersoll-Rand s Construction Technologies and Compact Vehicle Technologies segments excluding estimated sales for Club Car

8 Competitive Landscape TEREX competes largely with smaller niche players or with industrial conglomerates where construction equipment is not the primary focus Approximately 2/3rds of TEREX s sales are derived from markets where the competitor is smaller CRUSHING & SCREENING KEY TEREX PRODUCT PLATFORMS / % OF TOTAL SALES * COMPACT CONSTRUCTION EQUIPMENT HEAVY CE & MINING EQUIPMENT AWP & TELE- HANDLERS CRANES UTILITY EQUIPMENT TEREX 10% 8% 26% 27% 23% 4% The Majors Caterpillar X X Komatsu X X CNH Global X X Hitachi Construction Machinery X X Deere X X The Industrial Conglomerates Ingersoll-Rand (Blaw-Knox / Bobcat) X Volvo Construction Equipment X X Metso (Svedala / Nordberg) X Sumitomo (Link-Belt) X The Niche Players Liebherr X X JCB X Manitowoc (Cranes Business) X JLG X Tadano X Astec X X Altec X * Other product categories not shown include the roadbuilding and concrete mixing truck product lines 8 Total sales represents fiscal year 2006

9 Goals To be the MOST PROFITABLE company in our industry as measured by Return on Invested Capital Com petitor ROIC (LTM) 60.0% 50.0% 51.0% 40.0% 30.0% 20.0% 38.4% 32.3% 32.1% 26.9% 24.7% 20.2% 20.2% 17.1% 10.0% Joy Global Terex Bucyrus Cat erpillar Manit owoc Ast ec OSK Ingersoll Rand Deere* 9 * Excludes finance arm

10 Goals To be the MOST PROFITABLE company in our industry as measured by Return on Invested Capital basis To become the MOST CUSTOMER RESPONSIVE company in our industry Become the PREFERRED PLACE TO WORK in our industry These, collectively, provide the foundation to our Terex Business System 10

11 Terex Business System The TEREX Business System is our framework to build a stronger TEREX, and the TEREX Improvement Process was the foundation TEREX BUSINESS SYSTEM ACHIEVING INTENSE CUSTOMER FOCUS PLANNING EXCELLENCE AND ANNUAL DEPLOYMENT DEVELOPING OPERATIONAL EXCELLENCE ACROSS THE ENTIRE VALUE CHAIN RAPIDLY DELIVERING NEW PRODUCTS AND SERVICES CUSTOM ER DRIVEN BUSINESS PROCESS Continuous Improvement in Quality, Speed, and Simplicity SUPERB HUM AN RESOURCE PRACTICES LEAD ERS H IP C O M M ITM EN T FO R C O M P ETITIVE AD VAN TAG E The TEREX Improvement Process Talent Development Better Place To Work Margin Improvement Asset Management Easier To Do Business With Marketing Branding 11

12 Goals for 2010 GOAL FY 2006 What we must accomplish $12.0B in Sales $7.6B Implies 12% CAGR 12% Operating Margin 9.3% Execute on Supply Chain Management, Pricing & Lean Initiatives 15% W.C. to Sales 17.4% Optimize use of assets, particularly Inventory 12 by 12 in 10 is our medium term stretch goal 12

13 Financial Overview Phil Widman Chief Financial Officer 13

14 December 31, 2006 Net Sales Highlights Net Sales percentages by segment AWP 27% 20% MPM RBUO 10% 23% 20% Construction Cranes Backlog at December 31, 2006 $ % $ % $1, % $ % $ % Aerial Work Platforms Construction Cranes Material Proc. & Mining RB, Utilities & Other +41% +6% +37% +20% +12% 2006 vs Growth Net Sales 14

15 Improving Financial Metrics Inventory Turns ROIC (1) % 30.0% 20.0% 21.4% 38.4% % 13.7% % WC as a % of Revenue Net Debt/Cap & Gross Debt/Cap 40% 80% 30% 36% 60% 20% 10% 23% 19% 17% 17% 40% 20% 0% * % Net Debt to Cap Total Debt to Cap (1) ROIC is defined as: LTM Operating Earnings / Average (Net Debt + Book Equity) 15

16 EPS and Sales Growth Sales growth ( F) is 71% to 77% EPS growth ( F) is 313% - 346% Highlights a combination of strong end-markets and internal improvements 2007 Guidance is for Sales of $8.2 to $8.5 billion and EPS of $5.00 to $5.40 $ billions Sales Earnings per Share $9,000 Sales Growth of 71%-77% $6.00 EPS Growth of 313%-346% $6,000 $3,000 $0 $4,799 $6,157 $7,648 $8,200 to $8, e $4.00 $2.00 $0.00 $1.21 $1.84 $3.88 $5.00 to $ (1) e 16

17 Margin Improvement Opportunity Still There PRICING SUPPLY MANAGEMENT PRODUCTIVITY Ensure TEREX is receiving appropriate value for its products Create a more sophisticated sales force through training and education Coordinate supply efforts to leverage TEREX s scale Further integrate supplier into the production process Best practice sharing Review of non-core activities Sales and production planning methodology A 2%-3% incremental margin improvement is a reasonable objective, and if done very well, each category could contribute 2%-3% 17

18 Working Capital as a Percentage of Sales Working Capital as % of Sales (annualized) 35.0% 25.0% 15.0% 10.9% 11.0% 17.5% 22.1% 25.6% 27.8% 28.6% 31.6% 32.2% 5.0% Manit owoc Deere Terex Ingersoll Rand Ast ec Cat erpillar* Bucyrus JOYG OSK * Does not include financial arm of company 18

19 Return on Invested Capital (trailing 12 months) 60.0% 50.0% 51.0% Com petitor ROIC (LTM) 40.0% 30.0% 20.0% 38.4% 32.3% 32.1% 26.9% 24.7% 20.2% 20.2% 17.1% 10.0% Joy Global Terex Bucyrus Caterpillar Manitowoc Astec OSK Ingersoll Rand Deere* 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% Diversified Industrial Group ROIC 38.4% 26.4% 25.9% 20.6% 18.8% Terex Illinois Tool Works Unit ed Technologies Danaher Corp Dover Corp. 19 * Does not include financial arm of company

20 Terex Product & Geographic Diversity Terex s strategy of product and geographic diversity carries across the entire economic cycle with balance throughout Early-Cycle 14% of Net Sales Mid-Cycle 33% of Net Sales Aerial Work Platforms (21%) Heavy Construction Equipment (12%) Compact Construction Equipment (7%) Telehandlers (5%) Concrete Mixers (2%) Late-Cycle 33% of Net Sales Cranes (24%) Utility Equipment (4%) Light Construction (2%) Roadbuilding (3%) 20 Commodity driven based on Global Economics Material Processing & Mining (20%) Note: Percentages are based on 2006 sales, and does not include discontinued operations

21 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 Develop new market opportunities China, India, Russia and Latin America ROIC focus 38% ROIC in 2006, with continued meaningful improvement in this measure for senior management bonus plan is based on an ROIC target of 41.9%. Optimization of the balance sheet $200 million stock repurchase authorization Acquisitions 21

22 22 Questions