RBC Capital Markets
Global Industrials Conference
September 9, 2015
Forward-Looking Statements
& Non-GAAP Measures
2
This presentation contains forward-looking information regarding future events or the Company’s future financial performance based on the current expectations of Terex Corporation. In addition, when included in this presentation, the words “may,” “expects,” “intends,” “anticipates,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. The Company has based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. 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 cyclical and weak general economic conditions affect the sales of our products and financial results; our ability to successfully integrate acquired businesses; our ability to access the capital markets to raise funds and provide liquidity; our business is sensitive to government spending; our business is highly competitive and is affected by our cost structure, pricing, product initiatives and other actions taken by competitors; impairment of the carrying value of goodwill and other indefinite-lived intangible assets; a material disruption to one of our significant facilities; our retention of key management personnel; the financial condition of suppliers and customers, and their continued access to capital; our providing financing and credit support for some of our customers; we may experience losses in excess of recorded reserves; our ability to obtain parts and components from suppliers on a timely basis at competitive prices; the need to comply with restrictive covenants contained in our debt agreements; our ability to generate sufficient cash flow to service our debt obligations and operate our business; our business is global and subject to changes in exchange rates between currencies, regional economic conditions and trade restrictions; our operations are subject to a number of potential risks that arise from operating a multinational corporation, including compliance with changing regulatory environments, the Foreign Corrupt Practices Act and other similar laws, and political instability; possible work stoppages and other labor matters; compliance with changing laws and regulations, particularly environmental and tax laws and regulations; litigation, product liability claims, intellectual property claims, class action lawsuits and other liabilities; our ability to comply with an injunction and related obligations imposed by the United States Securities and Exchange Commission (“SEC”); disruption or breach in our information technology systems; and other factors, risks and uncertainties that are more specifically set forth in our public filings with the SEC. 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 appendix at the end of this presentation as well as the Terex second quarter 2015 earnings release on the Investor Relations section of our website www.terex.com for a description and/or reconciliation of these measures.
3
Solid Quarter… Challenging Environment
Q2 performance improved slightly from prior year:
• AWP and MP returned to double-digit operating margins, with 36% and 51%
sequential incremental margins respectively
• FX translation reduced reported sales by approximately 9%
• Convertible notes retired and TFS securitization facility in place
Full year outlook:
• AWP and MP expected to make year over year margin improvements in the
second half
• Pricing and mix trends impacting second half forecasts
• Accelerating improvement initiatives to help offset headwinds
• Moderating full year EPS outlook to $1.90 - $2.10
4
Net Sales and OP Bridge Q2-14 to Q2-15
USD Millions
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,055
1,829
(41) (43)
(40) (64)
(15) (23)
Q2 Net Sales
50
70
90
110
130
150
170
161 148
(10)
(7)(1)
(3)(1) 9
Q2 Operating Profit
Q2 Continuing Operations Results
5
USD Millions, except Earnings per Share
Q2 2015 Q2 2014
Net Sales $1,828.5 $2,055.1
% Change Q2 2014 (11.0%)
Gross Profit 384.2 423.8
Gross Margin 21.0% 20.6%
SG&A (235.9) (262.9)
% Net Sales (12.9%) (12.8%)
Income From Operations 148.3 160.9
Operating Margin 8.1% 7.8%
Other Income (Expense) (29.0) (32.5)
Effective Tax Rate 27.7% 31.2%
Earnings per Share $0.78 $0.76
EBITDA $183.0 $199.5
% Net Sales 10.0% 9.7%
Net Working Capital $1,805.9 $2,012.1
As a % of annualized sales 24.7% 24.5%
ROIC 9.9% 10.6%
Q2 Liquidity Bridge
6
USD Millions
Free Cash Flow
$76 million
TFS Net Cash
Impact
$73 million
200
400
600
800
1,000
840
99(129)(23)
(114)
41
146 (17) (33)8
818
North America Western Europe
Asia/ Oceania
Other
LATAM
Sales by Geography 2015 vs 2014
7
(8)%
(2)%
(16)%
(16)%
(16)%
Q2 FX-Adj.
Q2
Q2
Q2
Q2 (7)%
(1)%
FX-Adj.
FX-Adj.
FX-Adj.
FX-Adj.
3%
12%
5%
27%
12%
10%5%
46%
2015 Q2
Western Europe
Asia/ Oceania
Other
LATAM
North America
29%
11%
10%6%
44%
2014 Q2
349 304 637 571 517 342 451 799 603 382 936 500 374
68% 70%
177%
114%
87%
65%
97%
139%
85%65%
207%
100%
56%
0%
50%
100%
150%
200%
250%
0
200
400
600
800
1,000
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Net Bookings Book-to-Bill Ratio
Aerial Work Platforms
8
• Solid backlog
• Year over year
margin
improvement
planned for
second half
• New products
gaining traction
• Pricing and
currency remain
a headwind
USD Millions
497
418 436
200
250
300
350
400
450
500
2013 2014 2015
Q2 Backlog (<12 mo.)
Construction
9
• Concrete mixer and dumper
businesses strengthen
• Backhoe loader business
remains soft
• Indian and
German
compact
business
weak
USD Millions
152
188
164
28
18
50
100
150
200
2013 2014 2015
Q2 Backlog (<12 mo.)
ASV
124
170
186 164 237 184 194 139 224 223 183 128 191 198 122
72%82%
130%
95%
93%
82%
127% 126%
89%69%
103%
149%
75%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
50
100
150
200
250
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Q3
'13
Q4
'13
Q1
'14
Q2
'14
Q3
'14
Q4
'14
Q1
'15
Q2
'15
Net Bookings Book-to-Bill Ratio
Cranes
10
• Consistent
performance in
Utilities
• Improving NA
Services business
• Geographic and
product mix
impacting margins
581 661
540
200
300
400
500
600
700
800
2013 2014 2015
Q2 Backlog (<12 mo.)
552 357 473 458 460 363 512 533 499 286 457 375 433
113%
70%
93%98%
89%
81%
108%
138%
100%69%
97% 98%
95%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
100
200
300
400
500
600
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Net Bookings Book-to-Bill Ratio
USD Millions
*
*Adjusted for Q1 2015 Utilities acquisition
Material Handling & Port Solutions
11
• Solid bookings activity
• On-going cost base
reduction
• Strong second half
performance expected 728
663 590
132 202
41
100
200
300
400
500
600
700
800
900
1,000
2013 2014 2015
Q2 Backlog (<12 mo.)
Port
Automation860 865
631
631 396 374 496 393 510 375 398 418 303 354 309 395
144%
90% 90%
148%
107%
112%
71%
109%
98%
66% 70%
97%
109%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
100
200
300
400
500
600
700
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Net Bookings Book-to-Bill Ratio
USD Millions
Materials Processing
12
• Acquisitions strengthen the MP
portfolio
• Stability in North America; continued
softness in Australia and Russia
• Year over year margin improvement in
second half expected
61 67 64
20
30
40
50
60
70
2013 2014 2015
Q2 Backlog (<12 mo.)
*Adjusted for Q2 2015 MP acquisition
USD Millions
170 131 155 168 151 139 159 163 174 144 153 171 135
90%
87%
103%110%
86%
94%
106% 109%
96%
93%98%
119%
81%
0%
20%
40%
60%
80%
100%
120%
140%
0
40
80
120
160
200
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Net Bookings Book-to-Bill Ratio
*
13
Improvement Initiatives
Increasing focus on improvement initiatives in the face of market headwinds. Targeting $100M
of the $202M total program to impact 2015
Headwinds
• Volume
• Pricing
• Product &
geographic mix
• Manufacturing
inefficiencies
first half
-
20
40
60
80
100
2015
Supply Chain
Productivity /Headcount
Restructuring /Footprint
New Products /Markets
Design / ProductSimplification
1st Half
2nd Half
$100M
Targeted
$40M benefit
first half 2015
$60M benefit
planned second
half 2015
Category
Progress
USD Millions
Merger Summary
Structure and
Exchange
Ratio
Stock-for-stock merger of equals
Terex shareholders receive 0.80 Konecranes shares for each existing share
€1.4bn / $1.5bn share buyback plan intended to be executed within 24 months after closing
Ownership 60% by Terex shareholders; 40% by Konecranes shareholders
Governance
Konecranes Chairman to become Chairman
Terex CEO to become CEO
9 member Board (5 directors to be nominated by Terex and 4 to be nominated by Konecranes)
Name /
Listing /
Location(s)
Company name: Konecranes Terex
Expected dual listing: Nasdaq Helsinki and NYSE
Incorporation: Finland
Main offices: Hyvinkää (Finland), Westport (United States)
Operational &
Financial
Benefits
Adj. 2014 sales of €7.5bn / $10.0bn and adj. EBITDA of €636m / $845m (excl. synergies)
Accretive to both companies’ shareholders in first full year
At least €110m / $121m incremental EBIT from industrial and operational synergies, implemented within 3 years from closing; €110m / $121m implementation expenses
Additional €32m / $35m post-tax income benefit from financing, cash management and structure optimization, implemented within first year after closing
Conditions /
Timing
Terex and Konecranes shareholder votes
Regulatory authority approvals and other closing conditions described in the announcement release
Expected closing during the first half of 2016
USD:EUR exchange rate of 0.91 as at 7 August 2015. 2014 financials converted at average 2014 USD:EUR exchange rate of 0.75.
Konecranes reports under IFRS and Terex under U.S. GAAP – no adjustments have been made between IFRS and U.S GAAP
accounting standards.
Merger Summary
Terex Konecranes Konecranes Terex
The result is a stronger more competitive global lifting and material handling company
AWP 32%
Cranes 24%
MHPS 24%
MP 9% Construction
11%
Equipment &
Service
100% Business Mix
Service Intensity
Geographic Mix
Service
42%
Europe 38%
RoW 26%
Service
18%
Americas
36%
Europe 34%
RoW 28%
Americas
38%
Service
24%
Europe 36%
RoW 27%
Americas
37%
AWP 23%
Cranes 18% IL&PS
45%
Construction
8%
MP
6%
Based on 2014 financials; converted at average USD:EUR exchange rate of 0.75.
(1) “Industrial Lifting & Port Solutions” includes Terex MHPS and Konecranes.
(1)
Merger Summary
Run-Rate (After-Tax)
Corporate / Financial
SG&A
Operations
Overview of Synergies
Procurement
Supply chain optimization
Insourcing/ outsourcing
Freight and logistics efficiency
~30%
Operations Manufacturing footprint
Capacity utilization ~20%
SG&A
SG&A efficiencies
IT system consolidation
Engineering and R&D optimization
~20%
Corporate /
Financial
Corporate consolidation
Organizational/ structure optimization
Efficient capital structure
~30%
Cross-selling and
further corporate /
financial
synergies
Procurement
Expected run-rate
net income benefit
~ €109m / $119m
Incremental
Upside
Share of After-tax
Run-Rate
USD:EUR exchange rate of 0.91 as at 7 August 2015.
In Summary
17
• AWP and MP well positioned to carry momentum into the
second half
• Accelerating internal improvement initiatives to help offset
increased headwinds
• Challenging market dynamics led to revised full year outlook
• Expected full year EPS: $1.90 to $2.10
Questions?
18
APPENDIX
19
Backlog Trend
Backlog shown is less than 12 months
USD Millions
20
$ % $ %
Terex (306) (14%) (364) (17%)
MP (15) (19%) (3) (5%)
MHPS 35 6% (234) (27%)
Cranes (23) (4%) (121) (18%)
Constr. (40) (20%) (24) (13%)
AWP (263) (38%) 18 4%
Sequential
Change
Year on Year
Change
497
312 295
523 418
214
698 699
436
152
120 166
214
188
132
138 204
164
581
485501
673
661
552
539 563
540
860
827 805
879
865
751
575
596
631
61
52 61
75
67
55
51
79
64
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AWP Construction Cranes MHPS MP
2,001
2,199
1,704
2,141
1,796 1,828
2,364
2,151
1,835
$ % $ %
Terex (352) (15%) (153) (7%)
MP (16) (19%) 2 4%
MHPS 21 3% (151) (17%)
Cranes (27) (4%) (55) (8%)
Constr. (51) (22%) (6) (3%)
AWP (279) (37%) 57 13%
Sequential
Change
Year on Year
Change
497 312 295
523 418
214
698 754
475
152
120 166
214
188
132
138 233
182
581
485 501
673
661
552
539
633
606
860
827 805
879
865
751
575
693
714
61
52 61
75
67
55
51
85
69
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AWP Construction Cranes MHPS MP
2,001
2,199
1,704
2,398
1,796 1,828
2,364
2,1512,046
Backlog Trend – Currency Neutral
- Currency Neutral
USD Millions
21 Backlog shown is less than 12 months