Date post: | 14-Jan-2015 |
Category: |
Economy & Finance |
Upload: | finance42 |
View: | 610 times |
Download: | 0 times |
Terex Investment Analyst Meeting
WelcomeWelcomeSeptember 4, 2008
Laura KiernanDirector, Investor Relatons
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: ourmaterially. 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 p y y p g, p y p ;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 ourapplicable 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 orthis 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 understandingprinciples) 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.
Overview and StrategyOverview and StrategySeptember 4, 2008
Ron DeFeoChairman & Chief Executive Officer
Agenda
8:30 – 9:00 Registration and Breakfast9:00 9:30 Opening Remarks and Strategic Overview9:00 – 9:30 Opening Remarks and Strategic Overview9:30 – 10:00 Financial Update
10:00 – 10:30 Operations Overview0 00 0 30 Ope at o s O e e10:30 – 10:45 Break10:45 – 11:15 Developing Markets11:15 – 11:45 Terex Materials Processing and Mining11:45 – 12:45 Luncheon 12 4 1 1 f12:45 – 1:15 Terex Aerial Work Platforms1:15 – 1:45 Terex Construction1:45 – 2:15 Terex Cranes1:45 – 2:15 Terex Cranes2:15 – 2:30 Break2:30 – 3:00 Terex Roadbuilding, Utility Products & Otherg y3:00 – 4:00 Closing Remarks and Q&A
Who is Terex?
Purpose • To improve the lives of people around the world
Mission • To delight construction, infrastructure, mining and other customers with value-added offerings thatother customers with value-added offerings that exceed their needs
• To attract the best people by creating a culture that is p p y gsafe, exciting, creative, fun, and embraces continuous improvement
Vision • To be the most responsive company in the industry as determined by the customer
• To be the most profitable company in the industry as measured by Return on Invested Capital (ROIC)
T b h b l k i i d• To be the best place to work in our industry as determined by our team members
Who is Terex?
• Diversified Portfolio of Equipment Businesses• Positioned for Continuing Long - Term Trendsg g• Leader In Our Categories and Our Industry• Leveraging the Power Of One Company
AERIAL WORK PLATFORMS CRANES MATERIALS PROC.
AND MINING
CONSTRUCTION ROADBUILDING AND UTILITIESUTILITIES
Why Invest?
Diversified Portfolio of Equipment Businesses
Terex sales percentage is based on last twelve months of sales through June 30 2008
Broadest portfolio in the industry
Terex sales percentage is based on last twelve months of sales through June 30, 2008
Why Invest?
Diversified Portfolio of Equipment Businesses
Commodity Extraction Building and
IndustrialInfrastructure Construction Residential Operations/
Maintenance
Mining
Matls. Proc.
X
X X
Construction
Roadbuilding
X X X
X X X
X
Utilities
Cranes
XX
X XX XCranes
AWP
X XX X
X X X X
Exposure to Commodity, Construction, and Post - Construction Drivers
Why Invest?
Diversified Portfolio of Equipment Businesses
2007 SALES BY GEOGRAPHY2007 SALES BY BUSINESS
RBU
AWP 25%
7%Developing
Markets 25%Construction
21%W. Europe
37%Japan / ANZ 7%
22%
Cranes 24%
MP&M 23%
USA / Canada
34%
$ 9.1 B $ 9.1 B
34%
Balanced by business; Balanced geographically
Why Invest?
Positioned for Continuing Long - Term Trends
WORLD PRIMARY ENERGY DEMAND*
• Beneficial to multiple Terex categories
* Source: International Energy Agency
• Particularly positive for Cranes and Mining
Why Invest?
Positioned for Continuing Long - Term Trends
EXAMPLE: NON-FERROUS METALS EXPLORATION (1989 – 2007), $B*
12
EXPENDITURES BY TOP 40 MINING COMPANIES
$176180200
$5160
OPEX ($B)** CAPEX ($B)**
6
8
10
$75
$95
$125$134 $141
80100120140160180
$28
$37
$51
30
40
50
0
2
4$ 5
020406080
0
10
20
'89 '90'91 '92'93 '94'95 '96'97 '98'99'00 '01'02 '03'04 '05'06 '07 '02 '03 '04 '05 '06 '07 '05 '06 '07
Gl b l ti d i i d t d l l f i t t• Global consumption driving unprecedented levels of investment
• Outlook for mining equipment remains positive and the corresponding industrial growth is a driver for other businessescorresponding industrial growth is a driver for other businesses
* Source: Metals Economics Group; **Source: PWC: “Mine: As Good as it Gets?”, 2008 – capex excludes acquisitions
Why Invest?
Positioned for Continuing Long - Term Trends
$6,000
$7,000
GLOBAL NON-RESIDENTIAL CONSTRUCTION (REAL 2007 $)*
$B
5.6 % $3,500
$4,000
GLOBAL RESIDENTIAL CONSTRUCTION (REAL 2007 $)*
$B
4.4 % CAGR
$3,000
$4,000
$5,000
1.6 % CAGR
CAGR
$1 500
$2,000
$2,500
$3,000
5.1 % CAGR
1.3 % CAGR
5.6 % CAGR
-0.8 % CAGR
$0
$1,000
$2,000
$0
$500
$1,000
$1,500
$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
Infrastructure Industrial Other Non-residential
$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
Total Residential
• Global construction strong, despite weakness in developed markets
• Terex is increasingly well positioned to capitalize with 22% of sales overTerex is increasingly well positioned to capitalize, with 22% of sales, over 4,000 team members, and more than 30 locations now in developing countries
* Source: Global Insights, July ‘07; 69 countries tracked by GI + 5% to account for rest of world … consistent with global GDP’s
Why Invest?
Leader in Our Categories and Our Industry
$30.4
Terex is one of the Largest Manufacturers of Construction Equipment in the World
Based on last twelve months of available Construction Equipment Sales ($’s in Billions)
$19.0
( )
$10.1 $9.1 $8.7 $8.1 $5.2 $5.1 $4.9 $4.5 $4.4 $3.7
(1) R t t t l l b f P P d t Fi i d I S i l (6) R t 2007 C t ti i t l f $1 5 billi b d h
Caterpillar (1) Komatsu (2) Terex Deere (5)Hitachi (3) Volvo (4) CNH Global (8) Oshkosh (9)Liebherr (7) JCB (7) Doosan (6)Sandvik (10)
(1) Represents total sales before Power Products, Financing and Insurance Services sales for the 9 months ended March 31, 2008 plus Building Construction Products, EAME Operations, Heavy Construction & Mining and Infrastructure Development sales for the 3 months ended June 30, 2008.
(2) Represents Komatsu’s Construction and Mining Products segment as of March 31, 2008. Exchange rate of 99.691 as of Mar 31, 2008
(3) E h t d f J 30 2008 f USD/JPY 106 18
(6) Represents 2007 Construction equipment sales of $1.5 billion based on exchange rate at December 31, 2007 of KRW/USD 936.07 plus estimated 2007 Bobcat sales of $2.9 billion
(7) Estimated, as these are privately owned companies:JCB: 2007 sales of GBP 2.25 billion converted at Dec 31, 2007 GBP/USD rate of 1.9870Liebherr: 2007 Cranes/Mining/Construction sales of EUR 5.5 billion converted at Dec 31 2007 EUR/USD t f 1 4598(3) Exchange rate used as of June 30, 2008 of USD/JPY 106.18
(4) Represents Volvo’s Construction segment as of June 30, 2008. Rate of USD/SEK 6.0241
(5) Represents Deere’s Construction and Forestry segment as of April 30, 2008
31, 2007 EUR/USD rate of 1.4598(8) Represents CNH Global’s Construction Equipment Segment as of June 30, 2008(9) Represents Access & Concrete Placement equipment sales for the 9 months ended
June 30, 2008 plus Access & Commercial (both concrete & refuse trucks) for the 3 months ended Sep 30, 2007.
(10) Represents 2007 Mining & Construction sales converted at SEK/USD 6.46
Why Invest?
Leader in Our Categories and Our Industry
Approximately 75% of 2007 sales were generated in markets where Terex has significant market presence
• Articulated boom lifts (top 2)
AERIAL WORK PLATFORMS
• All Terrain Cranes (top 2)
CRANES
• Hydraulic Excavators (top 3)Mi i T k (#3)
MP&M
( p )• Telescopic boom lifts (top 2)• Scissor lifts (top 3)• NA Telehandlers (#2)
• Rough Terrain Cranes (top 3)• Tower Cranes (#3)• Large Crawlers (#1)• Port Cranes (top 2)*
• Mining Trucks (#3)• Surface Drills (# 3)• Crushing & Screening (#1)**• Highwall Miners (#1)
CONSTRUCTION
( p ) g ( )
ROADBUILDING AND UTILITIES
• Compact Track Loaders (#1)• Material Handlers (#2 or 3)
• Front Discharge Mixers (#1)• Insulated Aerials (#2)
UTILITIES
* Including pro forma impact of Fantuzzi acquisition; ** Mobile Equipment
Why Invest?
Leader in Our Categories and Our IndustryLTM After-Tax ROIC-Machinery Industry
• In-line with larger, more vertically
• Better than diversified
integrated competitors
LTM After-Tax ROIC-Diversified Industrialsindustrials with higher valuations
ROIC is calculated by dividing the sum of the last four quarters’ net operating income after tax by the average of the sum of total stockholders’ equity plus debt less cash and cash equivalents for the last five quarters ended. DE and JOYG as of Apr 30, 2008 and the remainder are as of Jun 30, 2008; OSK includes $175.2 million goodwill impairment charge incurred during their Q3 2008; *Does not include finance arm of company
Why Invest?
Leveraging the Power of One Company
• Our framework to build a stronger Terex
• Process improvements will assure long term success
Why Invest?
Leveraging the Power of One Company
Tom Riordan, President & Chief Operating Officer
Phil Widman Senior Vice President & Chief Financial Officer
Tim Ford, President
Terex AWP
Bob Isaman, President
Terex Construction
Rick Nichols, President
Terex Cranes
Eric Nielsen, President
Terex MP&M
George Ellis, President
Terex RBU
Steve Filipov, President
Developing Markets
Goals for 2010
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
t & TBSmanagement, & TBS initiatives
15% Working Capital to Sales 22.1% Optimize supply chain planning and execution
“12 by 12 in ’10”is our medium term stretch goalis our medium - term stretch goal
* LTM = Last Twelve Months
Summary
Continue Building a Better Company• Improved capabilities• Improved capabilities• Diverse end market exposure• ROIC focused• ROIC focused
Positioned for the Attractive Growth Opportunities• Right sectors and segments• Right geographies• Delivering unique value to customers• Targeted acquisitions
Execute, Execute, Execute• Do what we sayy• Overcome challenges that are often hard to predict
Terex Investment Analyst Meeting
Supporting Profitable GrowthSupporting Profitable GrowthSeptember 4, 2008
Phil WidmanSenior Vice PresidentChief Financial Officer
Summary
• 5+ years of strong growth, driven by favorable market y g g , yconditions and an increasingly robust portfolio
C itt d t fi i l i i l• Committed to core financial principles Growth with modest debt leverageI d t l di ROICIndustry leading ROICGenerate cash to enable capital investments, targeted acquisitions and share repurchasesacquisitions and share repurchases
• Near term outlook is mixed but long term remains positive
• Improving performance via core business initiatives that will enhance long term resultswill enhance long-term results
Terex to Date:Consistent Sales Growth
Sales growth from 2003 to 2007 was ~90% organic
$10.0$1 0
$1.2
Sales (USD billions) Operating Income (USD billions)
$6 0
$8.0$0.8
$1.0
$4.0
$6.0
$0.4
$0.6
$0.0
$2.0
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Q2$0.0
$0.2
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Q2LTMAcquisitions: Simon
O&KPPM
Powerscreen, CedarapidsReedrill
ASVPowerscreen, CedarapidsFermec
CMI, AtlasSchaeff, Demag, Genie
SHM
ASVHydra
Terex to Date: Balanced Sales Growth
2010 Goal $12BSales (USD billions)
$8 0
$10.0
CAGR 26%
$6.0
$8.0 CAGR 26%
$2.0
$4.0
$0.02002 2003 2004 2005 2006 2007 LTM Q2 2008
Aerial Work Platforms Construction Cranes
Material Processing & Mining Roadbuilding, Utilities & Other
Sales balanced between segments
Terex to Date: Broad-based Profit Growth
$1 2
Operating Income (USD billions) 2010 Goal $1.44B
$1.0
$1.2
$0.6
$0.8 CAGR 82%
$0.2
$0.4
$0.02002 2003 2004 2005 2006 2007 LTM Q2 2008
Aerial Work Platforms Construction Cranes
Material Processing & Mining Roadbuilding, Utilities & Other
Operating income growth outpacing sales growthOperating income growth outpacing sales growthIncreasingly evenly distributed (AWP, MPM, Cranes)
Terex to Date:Growth with Minimal Leverageg
$10 1
$9.1
$10.1
$7 6
Net DebtSales
($ in billions)
$4 8
$6.2
$7.6($ in billions)
$2 0
$2.8
$3.9
$4.8
$1.9 $2.0 $1.8
1999 2000 2001 2002 2003 2004 2005 2006 2007 Q2 2008*
Net leverage of .7x in Q2 provides flexibility
• Q2 2008 sales is based on last 12 months sales as of June 30, 2008; Net Debt is as of June 30, 2008• Net leverage ratio is defined as debt less cash and cash equivalents divided by last twelve months EBITDA
Net leverage of .7x in Q2 provides flexibility
Terex to Date: Cash Flow
120
140WORKING CAPITAL DETAIL (DAYS)FREE CASH FLOW ($M)
400
450
60
80
100
120
250
300
350
0
20
40
60
50
100
150
200
0Q4'03
Q1'04
Q2'04
Q3'04
Q4'04
Q1'05
Q2'05
Q3'05
Q4'05
Q1'06
Q2'06
Q3'06
Q4'06
Q1'07
Q2'07
Q3'07
Q4'07
Q1'08
Q2'08
Inventory Days Receivable Days Payable Days
02004 2005 2006 2007 Q2 '08 LTM
• Steady improvement in cash generation, with 2007 shift
l i d b tili ti f t l
• Working capital has remained consistent but presents a i ifi t t it t iexplained by utilization of tax loss
benefits
• Targeting further improvement as
significant opportunity to improve
• Working capital (particularly inventory) can and should
Free Cash Flow is defined as Cash from Operations less Capital Expenditures
g g pour business continues to grow
y)decrease with higher scale and improved processes
Priorities for Cash Utilization
Internal investment• Manufacturing capability / footprint• Human capital• Systems
Value generating acquisitionsValue generating acquisitions• Geographic expansion• Category diversification• Category diversification • Bolt-ons
R t i h t h h ldReturning cash to shareholders• Current program in place• $1.2 billion authorized through June 2009
Terex to Date: Return on Invested Capital
43%50%
40%38%
43%
35%
40%
45%
25%27% 27%
21%25%
30%
35%
Pre-tax ROICf O C
14%
25%
12%
21%
15%
20%
5%After-tax ROIC
10%3%5%
10%
0%2003 2004 2005 2006 2007 Q2 LTM
ROIC growth driven by operating income growth faster than invested capitalg y p g g pRecent acquisitions of SHM and ASV dampen returns in the short term
ROIC is calculated by dividing the sum of the last four quarters’ net operating income after tax by the average of the sum of total stockholders’ equity plus debt less cash and cash equivalents for the last five quarters ended.
Terex to Date: Shareholder Returns
$161 $183 $173 $150 $143 $129 $100 S&P 500®
$922 $1,177 $1,159 $533 $428 $256 $100 Terex Corp.
Jun-08Dec-07Dec-06Dec-05Dec-04Dec-03Dec-02
$373 $434 $280 $228 $196 $163 $100 Custom Composite Index (8 Stocks)
Current Valuation versus Peer Group
ENTERPRISE VALUE TO EBITDA 16
(Trailing 12 Months)
12
14
8
10 Sector Average 9.1x
4
6
0
2
Terex Manitow oc Oshkosh Astec CNH CAT Deere Joy Bucyrus
Trading well below average industry valuation, despite i i fcontinuing strong performance
Near Term Outlook - 2008
Continuing favorable trends in Cranes and Mining
AWP and Construction anticipating weakness near term• Difficult market conditions in the US
E ft i f t th ti i t d• Europe softening faster than anticipated• Material costs increasing in advance of offsetting pricing actions
2008 l id $10 2 t $10 6 billi2008 sales guidance $10.2 to $10.6 billion
2008 earnings per share guidance:g p g• $6.35 to $6.65 • 9% to 14% increase over 2007
2008 quarterly earnings per share guidance: • 3rd quarter: $1.26 to $1.38• 4th quarter: $1 20 to $1 33• 4th quarter: $1.20 to $1.33
All EPS amounts are on a fully diluted basis
Goals through 2010
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 chain15% Working Capital to Sales 22.1% Optimize supply chain planning and execution
“12 by 12 in ’10”is our medium - term stretch goalg
* LTM = Last Twelve Months
Sales Growth Drivers
Active and relevant in high growth marketsGlobal Market
Doing business efficiently and effectively
Positioned to support product after sale
Global Market Participation
Aligned with local market needs
Delivered at local market price points“Local” Products
Optimized production with global supply chainProducts
Clear product, service, or other advantages in all markets
Value-adding relationships with customers
L i th P f O C
Competitive Differentiation
Leveraging the Power of One Company
20% developing and 5% developed world20% developing and 5% developed world growth would achieve ~$12B in 2010
Operating Income Drivers
Ensure Terex is receiving appropriate value for its productsg pp p p
Optimize product mix
Offset rising commodity costs with commensurate pricing actions
Pricing / Mix
Coordinate supply efforts to leverage the scale of TerexSupply
Facilitate common designs and components
Sourcing centers – China and India
pp yManagement
Terex Business System (TBS) & Terex Management System (TMS)
Optimize manufacturing footprintProductivity
Sales and production planning methodology
G l 2 3% i t l iGoal: 2-3% incremental margin
Cash Flow Drivers
Grow Sales
E h P fit bilitProduct Enhance Profitability Product Margin
Integrated and aligned approach to tax planning
More tax efficient business structure(s)Tax Planning
Processes and resources to assure tax minimization
Continued diligence around AP / AR
Aggressive inventory management
Capital expenditures to enhance profitable growth
Capital Efficiency
15% working capital / trailing sales by 2010Capex between 1 5% and 2 0% of salesCapex between 1.5% and 2.0% of sales
Cash taxes will approximate tax expense
Enabling Initiative: Terex Financial Services (TFS)
’03 – ’05 ’06 - ’08 ’09 +
Launch Transform ExpandImpact
• Limited • Reflect Terex
Impact
• True Global CaptiveLimited Geography
• Low Coverage & Penetration
Reflect Terex Global Footprint
• Segment Coverage & Penetration
True Global Captive
• Enable Terex Growth Globally
O ti i P t hiPenetration
• Functions Outsourced
& Penetration
• Influence Customer Experience
• Optimize Partnerships
• Expand Customer Touch Pointspe e ce
Protect balance sheet while supporting growth of business, especially in developing markets
TFS: Path Forward
Owning More of the Customer Experience 2010
• Tap into Broader Risk Appetite from Multiple Sources
Owning More of the Customer Experience 2010$2.5B
• Tap into Broader Risk Appetite from Multiple Sources
• Responsiveness – “Take the Deal Off the Street”TFS
O i i t d• Increase Avenues to Competitive CapitalOriginate
& Sell
Originated
20073rd PartyFunding
2007$1.3B
2004$0.5B
D l Fi
Dealer Finance
Dealer Finance
Enabling Initiative: Information Systems & TMS
Infrastructure enhancements• E-mail standardized across the globe• Collaboration tools deployed to share information
St d di d WAN i f t t t t Vid V i d D t• Standardized WAN infrastructure to support Video, Voice, and Data
Value-added solutions• Supply Management analytics• Human Resource Standardization
Service Part Demand Planning• Service Part Demand Planning• Customer Relationship Management (CRM)
T M t S t (TMS)Terex Management System (TMS)• Multi-year ERP Implementation• 1/3 of sales addressed by end of 2009• 1/3 of sales addressed by end of 2009• Rest of company to follow
Terex Management Systems: Progress
Legacy Systems ArchitectureLegacy Systems ArchitectureLegacy Systems ArchitectureLegacy Systems ArchitectureLegacy Systems ArchitectureLegacy Systems Architecture Single Integrated System
PRMSKBM
SPCS Avantage
Great PlainsData3
MKDIAPASON
MotherwellMotherwell CoventryCoventry
PRMSKBM
SPCS Avantage
Great PlainsData3
MKDIAPASON
MotherwellMotherwell CoventryCoventry
PRMSKBM
SPCS Avantage
Great PlainsData3
MKDIAPASON
PRMSKBM
SPCS Avantage
Great PlainsData3
MKDIAPASON
MotherwellMotherwell CoventryCoventryMotherwellMotherwell CoventryCoventryMotherwellMotherwell CoventryCoventryMotherwellMotherwell CoventryCoventryMotherwellMotherwell CoventryCoventry
SAP R2SAGE
RedmondRedmond ZweibrZweibrüückencken
SAP R2SAGE
RedmondRedmond ZweibrZweibrüückencken
SAP R2SAGE SAP R2SAGE
RedmondRedmond ZweibrZweibrüückenckenRedmondRedmond ZweibrZweibrüückenckenRedmondRedmond ZweibrZweibrüückenckenRedmondRedmond ZweibrZweibrüückenckenRedmondRedmond ZweibrZweibrüückencken
SAP R3Omnis
PBS
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
SAP R3Omnis
PBS
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
SAP R3Omnis
PBS
SAP R3Omnis
PBS
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
Germiston LangenburgLangenburg
SouthavenSouthaven Brisbane
Coalville
• Complete systems overhaul implementing a single integrated ERP system
SAP R3Fourth Shift AUDITOR
Germiston LangenburgLangenburg SAP R3Fourth Shift AUDITOR
Germiston LangenburgLangenburg SAP R3Fourth Shift AUDITOR
SAP R3Fourth Shift AUDITOR
Germiston LangenburgLangenburgGermiston LangenburgLangenburgGermiston LangenburgLangenburgGermiston LangenburgLangenburgGermiston LangenburgLangenburgCoalville
• Complete systems overhaul - implementing a single, integrated ERP system
• 3 businesses have “gone live” and the pace of implementation is accelerating
• Implementation will enable more effective and efficient business practices
Tax Planning Objectives
36% 36% 35% 34%
40%
EFFECTIVE TAX RATE – TEREX VS. INDUSTRY PEERS (Q2 2008)
35% 34% 33% 33% 32% 31%29% 28%
25% 25%23%25%
30%
35%
TAX STRATEGIES
10%
5%
10%
15%
20% • Traditional Planning and Execution
0%
5%
ASTE OSK DE JOYG TEX BUCY CAT KMT UTX MTW DHR PKI IR ETN
• Statutory Rate Reduction
• Global Expansion and • Reduce effective tax rate in line with leading
industry peers
• Industry minimums only achievable through
Optimization
• Operationally Aligned Tax • Industry-minimums only achievable through aggressive structural change, but meaningful improvement can come through improved
p y gStrategies (OATS)
processes and practices
Tax Strategy
• OATS* can increase simplification, standardization, l bilit d i t T
One Terexscalability and process improvement across Terex.
Total Solution • Proactively integrate business change with operational and legal structures to place earnings in low tax countries.
C h i OATS tl i l tProven Strategy • Comprehensive OATS are currently in place at our competitors and other leading multinationals.
Material Tax Savings • Structural ETR# reductions average between 6% and 12% depending on industry and geographical footprint.
Sustainable Benefits • Structural ETR reduction improves the ROI of business initiatives, increasing EPS and cash flow.
* Operationally Aligned Tax Strategies; # Effective Tax Rate
Summary
• 5+ years of strong growth, driven by favorable market y g g , yconditions and an increasingly robust portfolio
C itt d t fi i l i i l• Committed to core financial principles Growth with modest debt leverageI d t l di ROICIndustry leading ROICGenerate cash to enable capital investments, targeted acquisitions and share repurchasesacquisitions and share repurchases
• Near term outlook is mixed but long term remains positive
• Improving performance via core business initiatives that will enhance long term resultswill enhance long-term results
Terex Investment Analyst Meeting
Operations OverviewOperations OverviewSeptember 4, 2008
Tom RiordanPresident and Chief Operating Officer
Safety First
Safety is ingrained in our culture through constantSafety is ingrained in our culture through constant emphasis, training and tracking
4.5
Lost Time Days continue to improve
3.5
4.0
2.5
3.0
Tere
xLT
R
1.5
2.0
Jan 07 Jun 08 Dec 08
Operational Update
• Progress towards an integrated operating companyog ess o a ds a eg a ed ope a g co pa y
• Integration examplesg
Customer Satisfaction
S l M tSupply Management
New Product Development
Terex Business Systems
• Other progress and path forward
Transformation Underway
• Transitioning from a holding company to an operating company• Upgrading capabilities to drive business and functional performance
OBJECTIVES
E i d l d hi d i t t hGOALS
• Upgrading capabilities to drive business and functional performance
Right Talent
• Experienced leadership, driven to create change
• Resources and mandate required to succeed
Clear Metrics
• Measurements defined and goals established
• Alignment within and across businesses
Good Process
• Well defined and well executed business processes
S t th t bl tiProcess
Res lts
• Systems that enable execution
• Clear, permanent shifts in performanceResults
• Ability to sustain and improve
Progress to Date
AREARight Talent
Clear Metrics
Good Process Results
AREASafety
Human Resources
Talent Metrics Process
Human Resources
Information Technology
Supply Management
Product Development
Manufacturing
M k tiMarketing
Finance/ Financial Services
Distribution/ Logistics
Aftermarket Support
Process Improvement (TBS)
Talent in place – progress underway
Progress Examples
• Customer SatisfactionCustomer Satisfaction
• Supply ManagementSupply Management
• Product Development• Product Development
• Terex Business System (TBS)• Terex Business System (TBS)
Customer Satisfaction: Objectives
Vision: Most Responsive Company in the Industry as Determined by the Customer
P l t P l S l ti M k M J b E iC t D fi d V l“Relationships that I can depend
on to help me ”
People to People SolutionsRelationships that I can depend
on to help me ”“Make it easy for me to run my
business”
Make My Job Easier“Make it easy for me to run my
business”“Deliver highly competitive entry,
operating and exit value”
Customer-Defined Value“Deliver highly competitive entry,
operating and exit value”
• Ensure initial experience with products is positive
CUSTOMER ENABLERS
Ensure initial experience with products is positive
• Improve aftermarket service and support
• Deliver effectively through multiple channelsDistribution/ BranchesRentalDirect
• Build long-term value proposition
Customer Satisfaction: Actions
• Multiple activities in progress to:Understand customer purchase driversMeasure current levels of satisfactionIdentify improvement actions for TerexBuild meaning and value for the Terex brand
• Supporting changes are underway:Product/ offering developmentg pDistribution improvementGlobal aftermarket
• We have a long way to go but, increasingly, we have the right people and processes in place to deliver thethe right people and processes in place to deliver the results we are targeting
Customer Satisfaction Example: Net Promoter Score
METHODOLOGY STATUS
• Piloted in Terex Fuchs in 2007 and extended into company-wide roll-out in 2008
1. Target
2. Listen
√ Current customer list√ Decision makers & key influencers
Conduct survey: √ Core questions√ Approved third party wide roll out in 2008
• Revealing significant opportunities to improve
3. Understand
4. Detractor Follow Ups
√ Approved third party
√ Sr. Management calls detractors
• Revealing opportunities to better position in our markets
Part of an on going process
p
5. Act √ Cross function team action plan meetings√ Determine priorities
6. Communicate √ To customers √ To team members• Part of an on-going process
that will continue in our company
7. Use to secondary number to validate
8. Repeat & monitor
√ Correlate with business results
√ Once a year for relationshipSatisfaction studies
NPS to be implemented in all Terex businesses by mid-2009
Customer Satisfaction Example: Terex Brand of the Future
METHODOLOGY STATUS
• Findings revealed several key insights regarding our customers, our company and our industry
• 1,268 interviews
• Addressed a broad cross section of the our company, and our industry
• Currently using these findings to refine long-term objectives for the
Addressed a broad cross section of the industry
End-users, dealers and rental housesAll b i g j
Terex brand
• Actions are already underway to dd d l i d i
All businessesMultiple geographies
• Sample included owners and non address some underlying drivers of long-term brand value
• Sample included owners and non-owners of Terex equipment
Committed to building a strong brand that d i t f f d tdrives customer preference for our products
Progress Examples
• Customer SatisfactionCustomer Satisfaction
• Supply ManagementSupply Management
• Product Development• Product Development
• Terex Business System (TBS)• Terex Business System (TBS)
Supply Management: Objectives
Create competitive advantage in the supply chain while minimizing the impact of rising material and component costs
2007 2008 2009 2010
the impact of rising material and component costs
Build the Foundation
Expand the Core
A hi E ll
Establish consistent sourcing processes
Build the Common objectives Achieve Excellenceorganization
Enhance sourcing tool set
Common objectives
International Sourcing Infrastructure
Deeper supplier integrationDrive savings and mitigate inflation
eepe supp e eg a o
TBS initiatives
Continual focus on savings d iti ti t i fl tiand mitigating cost inflation
Supply Management: Priorities
Teams activity engaged in major material cost elements
15%
Expectedaverage savings
Fittings & adaptors
Clamps, ties & strapsPlastic,
polymers& rubber
Valves, hydraulic
Paint & coatingsDocumentation
Other consumables,tools & dispatch kits
15%
Expectedaverage savings
Fittings & adaptors
Clamps, ties & strapsPlastic,
polymers& rubber
Valves, hydraulic
Paint & coatingsDocumentation
Other consumables,tools & dispatch kits
10%
Transmissions,hydrostatic
Pumps & pumpassemblies, hydraulic
Gearboxes& gears
Other hydraulic & pneumatic
componentsOther
electrical & control
components
Cabs, accessories& ropes
Otherhardware
Othermech.
Aluminum
Machined components, steel
Bearings, bushings & accessories
Indirectspend10%
Transmissions,hydrostatic
Pumps & pumpassemblies, hydraulic
Gearboxes& gears
Other hydraulic & pneumatic
componentsOther
electrical & control
components
Cabs, accessories& ropes
Otherhardware
Othermech.
Aluminum
Machined components, steel
Bearings, bushings & accessories
Indirectspend
Motors,hydraulic
Other
Cylinders
components
Hoseassemblies
Fluid transfer& control,
non-hydraulic Fasteners & retainer rings
p
Product identification & labeling
Other structural fabricated components
Controllers, timers, control
Motors,hydraulic
Other
Cylinders
components
Hoseassemblies
Fluid transfer& control,
non-hydraulic Fasteners & retainer rings
p
Product identification & labeling
Other structural fabricated components
Controllers, timers, control
5%
Engine,diesel
Other powerplants, IC engine
Axlespowertrain
Other running gear
Complexassemblies
Tire &wheel
modules & PBC
Steel
Batteries
Castings &forgings
Tires,rubber
Crawler trackassemblies
5%
Engine,diesel
Other powerplants, IC engine
Axlespowertrain
Other running gear
Complexassemblies
Tire &wheel
modules & PBC
Steel
Batteries
Castings &forgings
Tires,rubber
Crawler trackassemblies
0%
High prioritySecond
priorityThird priority
diesel wheelassemblies Weldment,
steel
assemblies
0%
High prioritySecond
priorityThird priority
diesel wheelassemblies Weldment,
steel
assemblies
Size of bubble: Total spend of respective commodity
EasyDifficult Ease of ImplementationSize of bubble: Total spend of respective commodity
EasyDifficult Ease of Implementation
Building a Solid Foundation through Integrated Information Management
COSTeCOSTData warehouse Spending by BU, supplier, commodity, part, etc.
GBTTSTNEW NEW
Terex Sourcing TooleSourcing system used to efficiently manage RFI RFP d R
Global Benefit TrackerDetailed tracking and
l i f i i hNEW
TPTTerex Project Tracker
RFIs, RFPs and Reverse Auctions
analysis of pricing changes
jSystem used by sourcing teams to manage implementation steps following supplier award decisions
Hydraulics Value Engineering
Dramatic cost savings and efficiency improvement achieved by consolidating multiple component suppliers into a single, preferred g p p pp g , psystem supplier. Many similar opportunities currently being evaluated.
Value analysis and supplier consolidation• Value analysis and supplier consolidation
• Annual spending on initial in scope• Annual spending on initial in scope components: $2.6 million
• Savings by sourcing as a complete system: over $1.5 million, 59%
I l t d J l 2008• Implemented July 2008
Steel Fabrication Sourcing in India
Five-year agreement executed with a large, well positioned Indian fabricators to produce large fabrications for Terex operations world-wide.fabricators to produce large fabrications for Terex operations world wide.
• 5-year fixed labor, overhead and profit marginsAdvantage: favorable labor cost environmentAdvantage: favorable labor cost environment
• Linkage to published local Indian steel price index Advantage: favorable Indian steel market dynamicsAdvantage: favorable Indian steel market dynamics
• Local Terex sourcing & SQA presence to support supplierpp pp
One-Terex approach• Build business presence in India• Six initial business units, annual
spend: $16.8 million• Initial annual savings:
$3.1 million
Progress Examples
• Customer SatisfactionCustomer Satisfaction
• Supply ManagementSupply Management
• Product Development• Product Development
• Terex Business System (TBS)• Terex Business System (TBS)
Product Development: Process
Customer Insights/ Feedback
New Technologies Competitive Benchmarking
New P d t
Ideas for New Products / Product Enhancements
“Doing the Right Things”
• Customer drivenNew Product &
New Product Identification (NPI) method
• Customer driven• Innovative NOT
Inventive• Profitability based
Process Development (NPPD) method
Gate 0 • Cross-functional• Clear upfront
objectives
Profitability basedR
ight
”
objectives• Detailed plans• Progress metrics• Rapid escalation and ng
Thi
ngs
pdecision-making
“Doi
Product Development: Objectives
SITUATION: INCREASING DEMAND
OBJECTIVE: ENHANCE CAPABILITY AND CAPACITY
New GlobalTier 4 Regulations
New Global Markets
Standardization andStandardization and Collaboration
• Powertrain• Electrical & Electronics
H d li
Global R&D Centers
• Hydraulics• MetalsProcess Efficiency
Improvements
• Major new regulatory requirements (Tier 4) and new market opportunities will place increasing demand on existing product development capacity
• Improve processes, collaboration and standardization within and across businesses
• Utilize existing resources more efficiently and effectively
• Access incremental staffing with the right skills through R&D Centers in India and China
Product Development: Status
• VP of Technology added in late 2007
• Launched New Product and Process Development Process in early 2008Process in early 2008
• Roll-out of New Product Identification Process dunderway
• Actively migrating existing product programs toActively migrating existing product programs to new process and new phase-gate discipline
Upgrading engineering and cross functional• Upgrading engineering and cross-functional product development capabilities in parallel
• Realizing clear benefits as we go
Progress Examples
• Customer SatisfactionCustomer Satisfaction
• Supply ManagementSupply Management
• Product Development• Product Development
• Terex Business System (TBS)• Terex Business System (TBS)
Terex Business System (TBS)
The Terex Business System is our framework to build a stronger Terexto build a stronger Terex
TBS: Objectives
• Improve margin from efficiency/productivity gains
• Increase production capacity within existing manufacturing footprint
• Improve customer satisfaction and reduce warranty costs due to improved quality
• Lower inventory, particularly raw materials and work-in-process, leads to improved cash flowp
• More easily move or replicate production lines around the globe
• Empower team members, enriching their work experience
• Develop team member skill sets, knowledge, and capabilities
TBS Operational Diagnostic
• Terex facilities are at various stages of TBS implementation – diagnostic tool will:
Determine progressEnable team member education and developmentProvide a roadmap for deploying TBS conceptso de a oad ap o dep oy g S co cep s
• Provides a consistent framework for measuring improvement over time
TBS: Recent Improvements
TEREX CRANES - WAVERLY, IOWA TEREX UTILITIES – WATERTOWN, SD
• From poorly lit, inventory laden facility to a l t t f t fl ith fl
Before After
• Moving line for Tree Trimmers and TL Mi d M d l Li d i d f i
After After
clean, transparent factory floor with flow and visual controls
• Increased throughput by 4 – 5 x
Mixed Model Line, designed for ergonomic build activity and attached to a moving line
• Parts CartsP t ll d d kitt d i t b ild
• Cut working capital days by 2/3
• Now turning inventory at 11-12 times per year vs 2 3 at the beginning of 2005
– Parts pulled and kitted prior to build– Visual Management for unit status and
identification of part shortages– Carts follow build sequence adding ayear vs. 2-3 at the beginning of 2005 Carts follow build sequence, adding a
visual quality step
• Andon System/ Escalation Procedure
On time delivery improved by 50%• On-time delivery improved by 50%
TBS: Recent Improvements
Material Processing – Omagh, N. Ireland Mining Trucks – Acuna Mexico
After Photo
• Implement a factory wide system to
Portable crane in use to rotate frame
Before After Before AfterNew “craneless” production line
• Implement a factory wide system to smooth production levels to standard takt times and implement visual controls
• Redesign of mining truck production line to dramatically increase throughput, on-time delivery and team member safety.
• Additional improvements will now be based on the established standards
• Production increased almost 50% over
• Eliminated the use of cranes, improving productivity, quality and safety
• Monthly production levels increased by a two years within the existing manufacturing footprint
• Inventory turns improved 35% over a two
factor of 4 times within existing manufacturing footprint
Inventory turns improved 35% over a two year period to mid-teens
TBS and Global Manufacturing Footprint
• Developing shared production campuses in India and China
45 acre site near Chennai India currently under construction45 acre site near Chennai, India currently under constructionScheduled to begin producing crushing equipment in early 2009Other products to follow in late 2009/ early 2010
Expansion of existing facility in Tianjin, ChinaWill produce crane and mining componentsProduction begins in 2010
shipping
MINING – PHASE I
g
• Each campus will house up to 3 Terex segments, leveraging shared capabilities MINING PHASE I
MINING – PHASE I I
CRANES
g , g g p
• Designing facilities from the ground-up based on TBS principles
stock
CRANES• Using TBS to plan and execute line moves to replicate successes from other global locations
TBS and Global Manufacturing Footprint
DEVELOPED WORLD DEVELOPING WORLD
Improve effectiveness at existing locations applying TBS to
Increase presence in developing t ilocations – applying TBS to
streamline operations
Rationalize developed market
countries
Leverage product and cost positions globally
footprint
• Significant progress is underway, but change will require investmentg p g y, g q
• Balancing opportunity for change with market and other factors
Other Progress
• Impossible to cover the amount of improvement underway at Terex in a 30 minute presentations
• Parallel progress continues on multiple fronts:p g pTalent Recruitment and DevelopmentDiversity and InclusionyTerex Management Systems implementationBranding/ Marketing/ and Customer Satisfaction Terex Financial ServicesGlobal LogisticsGl b l S i d S tGlobal Service and Support
• Positioned to take our performance to the next level
Terex Operations Summary
• Continuing our journey to be an effective global operating company
• Significant talent now invested and beginning to deliver the results that we expect
• Progress is significant
• We remain excited about the transformation that is underway in our company and about the value that it can deliver both near and long term
Terex Investment Analyst Meeting
Terex Developing MarketsTerex Developing MarketsSeptember 4, 2008
Steve FilipovPresident, Terex Developing Markets and Strategic AccountsMarkets and Strategic Accounts
Developing Markets Summary
• ~$2 2B* of sales were from developing countries growing at• ~$2.2B of sales were from developing countries, growing at more than 3x our overall growth rate
• 4,000 team members operating from more than 30 company and joint venture facilities in developing marketsj p g
• The Developing Markets Team will enable and drive our• The Developing Markets Team will enable and drive our continued success
• Goal of $4B sales at the end of 2010
* Latest 12 months sales as of Q2 ‘08
What is a developing market?What is a Developing Market?
15%
’06–’07 Growth in GDP/Capita
(i.e., “development”) $25k/head15% “Developed”“Developing”
• Low but increasing prosperity
10% HighGrowth • Increasing
construction spending
5%Moderate Growth
spending
• Increasing commodity
0%
($10) $0 $10 $20 $30 $40 $50 $60GDP/C it
Low Growth
yconsumption
• Conditions favoring
-5%
GDP/Capita(i.e., “prosperity”)
W E N A i ANZ M E t Af i
sustained, long-term growth
W. Europe N. America ANZJapan Asia E. Europe S/C America
M. East Africa
Source: Analysis of data from the Economist eiu; Bubbles represent countries. Bubble size is proportioned to country GDP
What is a developing market?What is a Developing Market?
REAL GDP ($Trillion, ’07)
REAL GDP PER CAPITA($000, ‘07)
China
India
Other Asia
Russia
E. EuropeE. Europe
Brazil
Other S/C America 2007
$0 $2 $4 $6 $8 $10 $12
Middle East
Southern Africa
2017
2027
$0 $2 $4 $6 $8 $10 $12 $0 $5 $10 $15 $20
• China and India are important, but we are at least as bullish on other economies where total GDP is smaller but average wealth is increasing rapidlywhere total GDP is smaller but average wealth is increasing rapidly
• Strong potential both within and outside of “BRIC” countries
Source: Analysis of data from the Economist eiu; + Terex internal estimates
What is a Developing Market? Shenzhen
1992 2007Source: http://www.tongz.net/life/bulletin.asp Source: http://www.tongz.net/life/bulletin.asp
20072007Source: http://urbancom.blogspot.com/2007_07_01_archive.htmlSource:
http://urbancom.blogspot.com/2007_07_01_archive.html
Source: http://urbancom.blogspot.com/2007_07_01_archive.html
What is a Developing Market? Dubai
1990
2007
2003 No attribution – can be found on numerous websites regarding Dubai
What is a Developing Market? Mexico Cityy
~ 1970 ~ 2007Source: MEXonline.com® LLC Source: www.wikipedia.com
Long-Term Global Infrastructure Need
W ld t d• World to spend >$40T on infrastructure
• 65 % will be in developing countries
• Opportunity to benefit from this trend and thetrend and the subsequent building and operating activityoperating activity that it creates
Terex: Developing Markets Growth to Date
DEVELOPING MARKET SALES GROWTH ($)
DEVELOPING MARKET SALES BY BUSINESS ($)SALES GROWTH ($) SALES BY BUSINESS ($)
AWPRBU
Africa
MP&M
Construction
S/C America
Middle East
MP&M
Russia/ E. Europe
2004 2005 2006 2007 2004 2005 2006 2007
CranesAsia, ex. Japan
2004 2005 2006 2007
22% of 2007 sales
2004 2005 2006 2007
Broad Based Global Growth42% CAGR 2004 - 2007 Strongest In 3 Businesses
Developing Markets - Goal
Developed Markets Developing Markets
Current Sales GoalCurrent Sales Goal2007 ~$ 2B 2010 $ 4B
Developing Markets – How?
Accelerate • Remove roadblocks accelerateAccelerate progress we are already making
• Remove roadblocks, accelerate investments, etc. to enable faster growth where traction has already been achieved
Broaden benefits from the progress we make
• Leverage synergies between businesses to achieve greater overall benefit from
we make
Establish traction in high potential but
market progress that is made
• Facilitate entry by Terex businesses intohigh potential but under-penetrated geographies
• Facilitate entry by Terex businesses into high growth developing markets where we are currently under-represented
Pursue “white space” opportunities that might have been
i d
• Identify and pursue opportunities in developing markets that offer growth potential but sit outside the domain ofmissed potential but sit outside the domain of current Terex businesses
Developing Markets: First Steps
‘One Terex’ StrategiesChi I di S/C A i R i / E t E Af i• China, India, S/C America, Russia/ Eastern Europe, Africa
Great Talent – Organized to WinTop talent in key country roles• Top talent in key country roles
• Local “back-office” Support teams • Clarity of roles and responsibilities
Global Network with Local Relevance• Global Supply and Manufacturing, positioned to deliver locally
L ll d i b t l b ll i t t l i d t• Locally driven but globally consistent sales, service, and support• Terex Financial Services
Integrated Execution that leverages the Power of OneIntegrated Execution that leverages the Power of One Company• Visibility from the top• Aligned approach to maximize outcomes
Specifics by Market: China
PATH FORWARD IN CHINA
• Build-out leadership and support structure– Shared service in BeijingShared service in Beijing– Local business teams
• Strengthen local presence in
TEREX TODAY
g pexisting high-growth product areas– Construction products– Mining productsTEREX TODAY
• # 1 in >100 t trucks (2007)• # 1 in <100 t trucks (minority position)
– Mining products– Cranes
• Develop emerging opportunities• # 3 in truck mounted cranes (JV)• # 1 in a small current market for AWPs
5 f t i l ti *
p g g pp– Aerials– Mining Excavators
M t i l P i• 5 manufacturing locations*
* Includes JVs and minority owned facilities; also includes Fantuzzi at Xiamen
– Materials Processing
Specifics by Market: India
PATH FORWARD IN INDIA
• Build-out leadership and support structure– Shared service in Delhi– Shared service in Delhi– Local business teams
• Establish manufacturing andEstablish manufacturing and engineering center in Hosur– Materials Processing
Tower Cranes
TEREX TODAY• # 1 in mobile materials processing
– Tower Cranes– Technology
• Develop distribution and• # 1 in mobile materials processing• # 4 in backhoe loaders• Long sales history in mining (trucks)
• Develop distribution and strengthen local alliances– Vectra distributiong y g ( )
• Positioning for future growth
* Includes JVs and minority owned facilities; also includes Fantuzzi at Xiamen
– Local partners
Hosur, India – Regional Presence
Specifics by Market: South & Central America
PATH FORWARD IN SOUTH AND CENTRAL AMERICAAND CENTRAL AMERICA
• Build-out leadership and support structurestructure– Sao Paulo– Mexico City
Continue momentum with “One-Terex” offering concept
TEREX TODAY
• Increase local manufacturing content/ presence – Porto Allegre
• # 1 in aerial work platforms
• # 1 in asphalt paving
Strong recent growth in construction
g– Other?
• Increase exposure to local centers • Strong recent growth in construction
and mining productsof demand (mining, Panama, …)
Specifics by Market: Russia/ E. Europe
PATH FORWARD IN
Russia
RUSSIA AND EASTERN EUROPE
• Build-out leadership and support structure– Shared service in Moscow– Local business teams
TEREX TODAY
• Develop and strengthen local distribution
TEREX TODAY• ~$400M in 2007 sales• Excellent growth across multiple
• Access local components –especially for use in W. European
f t ibusinesses (Construction, Cranes, Materials Processing, …)
• Primarily succeeding via strong local
manufacturing
• Develop options around local/ regional manufacturingy g g
distributionregional manufacturing
Developing Markets Summary
• ~$2 2B* of sales were from developing countries growing at• ~$2.2B of sales were from developing countries, growing at more than 3x our overall growth rate
• 4,000 team members operating from more than 30 company and joint venture facilities in developing marketsj p g
• The Developing Markets Team will enable and drive our• The Developing Markets Team will enable and drive our continued success
• Goal of $4B sales at the end of 2010
* Latest 12 months sales as of Q2 ‘08
Terex Investment Analyst Meeting
Terex Materials Processing & MiningTerex Materials Processing & MiningSeptember 4, 2008
Eric NielsenPresident, Terex MP&M
Terex MP&M in Summary
• $2.4 B* provider of surface mining and aggregate p g gg gequipment solutions sold to mining, quarrying, and construction customers worldwide
• Capitalizing on continuing favorable trends in global commodity and aggregate demand
• Addressing constraints globally while investing in people and capabilities that improve the customer experienceand capabilities that improve the customer experience
• Well positioned to deliver excellent value to Terex shareholders in the years to comeshareholders in the years to come
* Last 12 months through June 30, 2008
MP&M: Products
Mining Trucks
Surface Mining Drills
Highwall Miners
Mining Excavators
# 3Top 3 # 1Top 3
Parts/Mobile Materials Static Materials Parts/ Tools
Mobile Materials Processing
Static Materials Processing
High Margin# 1 Technology
MP&M: Mix
PRODUCT MIX ($) GEOGRAPHIC MIX ($)
29% 35%58%
47%
22%
15%21%
13%
58%
34% 25%
19%
29% 27%
13% 13%
2004 2008 Q2 YTD
D l i M k t
2004 2008 Q2 YTD
Developing MarketsJapan / ANZW. EuropeUSA / Canada
Materials ProcessingDrills/ OtherTrucksShovels
MP&M: Growth
MP&M RESULTS$B
$2 0
$2.5
25%
30%
$B
• Sales up 31% since (C G )
$1.5
$2.0
15%
20%
25% 2004 (CAGR)• Operating Profit up
51% (CAGR)
$0.5
$1.0
5%
10%
15% 51% (CAGR)• Robust demand for
mining and
$0.02004 2005 2006 2007 Q2 '08
0%
5%quarrying
(ltm)
Sales Gross Margin Op. Margin
MP&M: Market Environment in Mining
120REAL IRON ORE PRICES SINCE 1900 (’07 $/TON)
1983 45005000
REAL ALUMINUM PRICES SINCE 1900 (’07 $/TON) 14000
REAL COPPER PRICES SINCE 1900 (’07 $/TON)
60
80
1001983
Reagan steel tariffs
200025003000350040004500
6000
8000
10000
12000
Omitted aluminum pre WWII
0
20
40
898
908
918
928
938
948
958
968
978
988
998
008
0500
10001500
898
908
918
928
938
948
958
968
978
988
998
008
0
2000
4000
898
908
918
928
938
948
958
968
978
988
998
008
pre-WWII
18 19 19 19 19 19 19 19 19 19 19 20 18 19 19 19 19 19 19 19 19 19 19 20 18 19 19 19 19 19 19 19 19 19 19 20
140016001800
REAL GOLD PRICES SINCE 1900 (’07 $/troy oz)
50
60REAL SILVER PRICES
SINCE 1900 (’07 $/troy oz)
400600800
10001200
20
30
40
0200400
1898
1908
1918
1928
1938
1948
1958
1968
1978
1988
1998
2008
0
10
1898
1908
1918
1928
1938
1948
1958
1968
1978
1988
1998
2008
GDP growth in developing markets driving price growthSource: Analysis of USGS Historical Statistics for Mineral and Material Commodities
MP&M: Market Environment
$7 000
GLOBAL NON-RESIDENTIAL CONSTRUCTION (REAL 2007 $)*
$B$4 000
GLOBAL RESIDENTIAL CONSTRUCTION (REAL 2007 $)*
$B
$5,000
$6,000
$7,000 CONSTRUCTION (REAL 2007 $)
5.6 % CAGR
$2 500
$3,000
$3,500
$4,000 CONSTRUCTION (REAL 2007 $)
5.6 %
-0.8 % CAGR
4.4 % CAGR
$2,000
$3,000
$4,0001.6 % CAGR
$1 000
$1,500
$2,000
$2,5005.1 % CAGR
1.3 % CAGR
CAGR
$0
$1,000
'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$0
$500
$1,000
'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
Fl ibili f bil i i i i l l d
Source: Global Insights, July ‘07; *69 countries tracked by GI + 5% to account for rest of world … consistent with global GDP’s
• Flexibility of mobile equipment is increasingly valued
MP&M: Outlook
• Underlying drivers for global mining and aggregate demand y g g g gg gare intact and are likely to continue
Developing markets driving increased global demand p g g gDemand driving increased investment and activityExpanding need for equipmentExpanding need for equipment
• Competition will intensify, but we are well positioned to p y pcapitalize on strong global markets
Strong product franchisesg pQuality of global distributionImproving aftermarket capabilitiesImproving aftermarket capabilities
MP&M: Strategy
K f h h 2010Key focus areas through 2010
1 N P d t I t d ti1. New Product Introductions
2 Strength/ Consistency of Global2. Strength/ Consistency of Global Distribution, Service and Support
3. Globally Optimized Footprint & Cost Structure
4. Leveraging our Portfolio of Businesses
MP&M: New Product Introductions
MT 6300 SK-LElectric Drive
• Increased focus on electric drive
t t l
• Ultra-capacity truck (400 t)
• Large capacity drill to complement large h l d h lexcavators to lower
fuel cost
• New markets for
• Built with Terex-designed drive system
haul and shovel products
• Electric drive option• New markets for large excavators
• Work in progress on
system
• Trucks in operation in Australia and
• Electric drive option to lower fuel cost
• Work in progress onWork in progress on automation Canada
Work in progress on automation
MP&M: New Product Introductions
XA 750 984 SCREEN
• Large Crusher, capable of producing 800 tons per hour
• Large capacity mobile horizontal screen
XA 750 984 SCREEN
p g p
• Targeting large quarries and small mines
• Designed to work in conjunction with higher output
hi l t t fsmall mines
• Market launch scheduled for October/ November 2008
crushing plant as part of a “mobile system”
• Target customers will be largeOctober/ November 2008 • Target customers will be large quarries and mines
MP&M: Distribution, Service, and Support Prioritiespp
OBJECTIVES Installed base continues to growOBJECTIVES• Strengthen Global Distribution
– Increased standards
Installed base continues to grow, driving aftermarket service
opportunities
EXAMPLE: HYDRAULIC– Renewal of distribution capabilities – Improved support for larger, more
sophisticated customers
EXAMPLE: HYDRAULIC EXCAVATOR INSTALLED BASE
p– 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
capabilities2002 2003 2004 2005 2006 2007
MP&M: Manufacturing Footprint
Crushing and Crushing and Screening
Products, UK
New FactoryExcavators
ExcavatorsGermany
Drills, Crushing and Screening
Equipments, USA
Mining TrucksAcuna, Mexico
Tianjin, China
New FactoryCrushing andCrushing and
Screening Products
Hosur, India
• Adding footprint in India (Materials Processing)• Adding footprint in India (Materials Processing)• Adding small excavator capability in China (Mining)• Evaluating acquisitions to accelerate global progress
MP&M: Portfolio Leverage
Large MinesQuarries/ Small MinesRoadbuilding and Construction ContractorsSegment:
MP&M Mobile Materials ProcessingMP&M Offering:
g
Static Materials Processing
Shovels and Trucks
Drills/ Drilling Tools
Other Tere Construction EquipmentOther Terex Offerings:
Construction Equipment
Rigid and Articulating Trucks
• Potential synergy within MP&M and across Terex• Developing approaches to strategic accounts that• Developing approaches to strategic accounts that
provide value from a portfolio offering
Terex MP&M in Summary
• $2.4 B* provider of surface mining and aggregate p g gg gequipment solutions sold to mining, quarrying, and construction customers worldwide
• Capitalizing on continuing favorable trends in global commodity and aggregate demand
• Addressing constraints globally while investing in people and capabilities that improve the customer experienceand capabilities that improve the customer experience
• Well positioned to deliver excellent value to Terex shareholders in the years to comeshareholders in the years to come
* Last 12 months through June 30, 2008
Terex Investment Analyst Meeting
Terex Aerial Work PlatformsTerex Aerial Work PlatformsSeptember 4, 2008
Tim FordPresident, Terex AWP
AWP: Summary
• $2.3B* supplier of aerial booms, scissor lifts, and other $2.3B supplier of aerial booms, scissor lifts, and other products
Well recognized brands and productsStrong industry reputation
• Short term challenges exist – but the industry is better positioned than in previous cycles
• Long-term aerial work platform growth fundamentals remain strongstrong
• We are building a more diverse business to win globally• We are building a more diverse business to win globally
* Last 12 months through June 30, 2008
AWP: Products
Booms ScissorsPower & Other
ProductsTelehandlers & Portables
Growth Potential
GlobalLeader
StrongPosition
Growth Potential
AWP: Mix
PRODUCT MIX ($) GEOGRAPHIC MIX ($)8%5%
21% 29%
6% 4%8%5%
19%13%
9%29%
16%
68% 59%39%
56%
19%
2004 2008 Q2 YTD
39%
2004 2008 Q2 YTD
Developing MarketsJapan / ANZW. Europe
Portable, Power & OtherTelehandlersScissors
USA / CanadaBooms
• Less dependence on North America• Growth propelled by Booms and Scissors
• Growth in Western Europe and Developing Markets
Scissors• Telehandlers and Power Products
represent growth potential
AWP: Growth
AWP RESULTS$B
$2 0
$2.5
25%
30%
$B
• Sales up 30% since 2004 (CAGR)
$1.5
$2.0
15%
20%2004 (CAGR)
• Operating Profit up 48% (CAGR)
$0.5
$1.0
5%
10%48% (CAGR)
• 18.6 % Operating M i Q2 2008
$0.02004 2005 2006 2007 Q2 '08
(ltm)
0%Margin Q2 2008
(ltm)
Sales Gross Margin Op. Margin
AWP: Market Environment
U.S. near term construction market is challenging…
ARCHITECT BILLING INDEX
BUSINESS CAPITAL SPENDING CYCLE
AWP: Market Environment
• Near term weakness in North A i d W t EAmerica and Western Europe
2H08 and 1H09 rental cap ex to be down 15% - 30%Recovery beginning in 2H09Recovery beginning in 2H09
• No signs of weakness in Developing Markets
L ti A i i tLatin America remains strongAsia Pacific orders strengtheningEastern Europe, Middle East continue to growto grow
• Manufacturers responsibly reducing production
• Customers recognize need for manufacturers to raise prices
…But long term outlook is promising
AWP: Rental Industry Fleet
Large rental companies getting bigger…
• Top 50 rental companies are growing organically and
TOP 50 RENTAL COMPANY AERIAL FLEET SIZE *(Units)
growing organically and through acquisition
• Large fleets being managed176446400000
500000
332700
402900
446956
• Large fleets being managed with more discipline
• Growth cap ex likely to be81011 95096
151200
124942
200000
300000 266511 283071
332700
Growth cap ex likely to be reduced in the near term
• Replacement cap ex required 185500 187975 207758
251700 270510
100000
p p qto mitigate fleet aging 0
2004 2005 2006 2007 2008
Top 10 Next 40
* Source: Access International…Industry fleet management improving
AWP: What’s Different
Aerials industry has matured in this decade…
2000 – 2002 20084 5 j f t• 25+ manufacturers
• Little rental channel consolidation
• 4 – 5 major manufacturers
• 5 – 10 strong rental leaders in each region
• Largely a U.S. market
• Younger fleet age on average
N li ti
• Accelerating demand in new markets
• Broadening base of applications• Narrow application usage
• Weak fleet management practices
• Inconsistent purchasing behaviors
• Sophisticated fleet management
• More predictable purchasing b h i• Inconsistent purchasing behaviors behavior
More favorable industry structure
AWP: Vision
O i i i t b th tO i i i t b th tOur vision is to be the mostOur vision is to be the most
global trusted and responsiveglobal trusted and responsiveglobal, trusted and responsive,global, trusted and responsive,local solutions providerlocal solutions providerlocal solutions providerlocal solutions provider
in the access industry.in the access industry.yy
AWP: Strategy
Strengthen E t d i l High growthStrengthen and globalize our core business
Maximize the installed base
Extend aerial offering and channel penetration
High growth, high margin
contributor to 12 X 12 in ‘10business penetration 12 X 12 in 10
• Manage cost structure• Globalize
• Grow existing aftermarket business
• New “work at height” offerings
• More global enterprise• More diverse revenue
Terex Business System
• Globalize manufacturing and supply chain
• Extend global sales and service reach
aftermarket business• Expand services
business• Secure business
through TFS
offerings• “Non-aerial”
products for rental• Add new distribution
h l
• More diverse revenue profile
• Increased share of rental wallet
and service reach• Improve IT capability
through TFS channels • Continued industry leader in terms of revenues and returns
Strengthen the core, globalize the business and diversify the revenue
AWP: Terex Business System
Lean with CustomersTEREXLIFT ITALY Z-45
Lean with Customersfor deeper
relationships
Lean with Suppliersfor better cost
and quality Before After
Lean forAdministrative Processesdelivers better efficiency
• Approximately 1500 participants in over 170 TIP events
• Administrative Kaizen focus on forecast to cash;
Lean in Manufacturingfor lower costs and
• Administrative Kaizen focus on forecast–to-cash; over 10 TIP events run in support of the effort
• Japan Study Missions for continued developmentfor lower costs and
better working capitalNearly 100 Team Members sent over past two years
AWP Executive leadership participating end of September
AWP: Globalizing Manufacturing
EUROPE CHANGZHOU, CHINA
• Plans announced in April• Boom production in Italy in 2007
Scissor production in UK in 2007;• Operational mid next year
• Full product line over time
• Scissor production in UK in 2007; second line later this year
• Eastern European facility selection p
• Domestic consumption and exportprocess underway
AWP: Developing Markets
AWP resources deployed to capitalize on emerging opportunitiesopportunities…
MIDDLE EAST LATIN AMERICA CHINA
• Substantial construction investment in region
• Buoyant economic growth in South and Central
• Growing market beginning to adopt aerialsinvestment in region
• Team deployed since early 2007
• Dubai service center
in South and Central America
• Team deployed since 1999
• “One Terex” sales
to adopt aerials
• Team deployed since 1998
• Adding engineering and sourcingDubai service center One Terex sales
approach
• Brazil service center
sourcing
V l iti f “ f t d d ti it ”Value proposition of “safety and productivity” translates around the world…
AWP: Genie Fleet Growth
• 250% increase in Booms; 400% increase in ScissorsFl i d f “fi lif ”• Fleet nearing end of “first life”
• Customers seeking refurbishment and maintenance solutions
600
700
SALES GROWTH SINCE 2002 (Indexed)
Before
300
400
500
600
0
100
200
300
After02002 2003 2004 2005 2006 2007
Scissors Booms
S l h d d illi d ll l b lSeveral hundred million dollar global opportunity with attractive margins
AWP: Beyond Aerials
AWP products represent 23% of rental customer capital expenditurescapital expenditures….. Cross Selling Opportunities
• Utility equipmentB kh l d
Other Products
Current AWP
• Backhoe loaders• Compact track loaders• And more …
Other Products
Compact Equipment
Big Dirt
P t f t th t tPresent one face to the customer to more deeply penetrate the rental channel
AWP: Near Term Agenda
Several initiatives to drive continued performance…
• Align cost with volume• TBS investment
1. Continued cost reduction
• Product line rationalization• Strategic sourcing
2. Strengthen value proposition
• Strengthen sales leadership• Improve financial services offering• Improve parts performance and aftermarket capability
3. Globalize
p p p p y
• Local management teamsinfrastructure • Global sales, service and manufacturing
• Information systems
Terex AWP in Summary
• Leading position in key products and room to grow in• Leading position in key products and room to grow in others
M t i d t ill t h t t• More mature industry will prevent short term challenges from becoming a long term problem
• Value proposition translates around the world and developing markets are adopting aerials
• Focused management team in place to execute through near term challenges and deliver on longthrough near term challenges and deliver on long term strategy
Terex Investment Analyst Meeting
Terex ConstructionTerex ConstructionSeptember 4, 2008
Robert IsamanPresident, Terex Construction
Terex Construction in Summary
• $1.9 B* provider of construction-related equipment
• On-going operations and market-based transformation during a period of weakness in traditional core geographiesp g g p
• Near term performance is challenging but long-term potential has never been higherhas never been higher• Recent addition of ASV furthers an already strong growth platform
in compact• High growth in scrap, quarries, and other segments where Terex
products create unique value• Continuing opportunity to change the game in more crowded, heavyContinuing opportunity to change the game in more crowded, heavy
equipment categories
• Positioning Terex for segment and geographic leadership asPositioning Terex for segment and geographic leadership as conditions improve over the coming 2-3 years
* Last 12 months through June 30, 2008
Construction: Products
CompactEquipment
HeavyEquipment
Material Handling
Off-RoadTrucks
1 of 4GlobalGrowth
Robust Portfolio
Filling Gaps
Construction: Mix
PRODUCT MIX ($) GEOGRAPHIC MIX ($)
13% 20%1%
1%19%
28%17%
65%63%17% 28%
13%19%
21% 16%
42% 36%
2004 2008 Q2 YTD
D l i M k t
2004 2008 Q2 YTD
Developing MarketsJapan / ANZW. EuropeUSA / Canada
TrucksMaterial HandlingHeavyCompact
Construction: Growth
CONSTRUCTION RESULTS$B
$2.025%
30%
$B
• Sales up 14% since 2004 (CAGR)
$1.5
15%
20%
25%
• US and W. Europe soft, but global
th lid
$0.5
$1.0
5%
10%
15% growth solid
• Strengthening/ improving
$0.02004 2005 2006 2007 Q2 '08
0%
5% improving performance in advance of recovery
(ltm)
Sales Gross Margin Op. Margin
Construction: Market Environment
• Demand weakerCore Geographies Soft• Volume and material costs impacting
margin
• Excellent growth in Eastern Europe, Africa, and other developing geographies
• China, India, and South America are
Developing Geographies Strong
continuing opportunities
• Dollar appreciating, but denomination in Currency Improving but Euro is a continuing disadvantage
• Global Footprint criticalStill a Barrier
• Consolidation likely in a down market and global opportunities continue
• Focused on step-change transactions versus
Opportunities to accelerate via partnerships and/or acquisitions Focused on step change transactions versus
small bolt-ons that bring breadth vs. depthacquisitions
Construction: Strategy
Three phase path toward achieving full potential…
Optimize the profitability Build around the strongest and most
Build-out long-term through
21 3
Roll out winningDevelop and expandFix the overall cost
p p yof the current portfolio
strongest and most attractive businesses
ga repeatable
system
• Roll-out winning models organically across best markets
Evaluate and pursue
• Develop and expand winning, repeatable business model for our strongest
• Fix the overall cost and asset structure
• Implement redesigned business • Evaluate and pursue
focused M&A targets that leverage and enhance our best
our strongest markets
• Evaluate a disruptive business model in
redesigned business processes
• Focus investments d d i d enhance our best
geographic, product, and customer segments
business model in attractive markets areas where you are weaker/not present
and redesign around stronger/attractive markets and products
todayproducts
Construction Programs
Program Activity in Progress
Operations Improvement
d I t ti
• Improve existing manufacturing • Globalize and rationalize footprint
and Integration
Channel M t
• “3 Crown” dealer standards
Local Product Repeatable customer oriented approaches
Management • Integrate and upgrade network
Local Product Density
• Repeatable, customer-oriented approaches • Increase product densities to enable efficient support
Global Growth • Build-out presence in India and China• Continue growth in other developing markets• One-stop shopping where current presence is limited
Operations Improvement Example
MOTHERWELL, SCOTLAND – ARTICULATED AND RIGID TRUCKS
f f fBefore 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%y• Released $750k of work in process inventory
Operations Integration Plan
40 % of Total40 % of TotalManufacturing
Footprint
EMEA
30 % of TotalManufacturing
Footprint
Americas Asia30 % of Total
Manufacturing Footprint
Sourcing
Manufacturing
Engineering
Channel Management Progress
3 Crown: Measuring Dealer Performance/ Implementing Best/ Improving Capabilities
Dealer Capabilities include…•Staffing
Best/ Improving Capabilities
•Staffing•Training•Marketing•Service Infrastructure•Parts Infrastructure
3 Crown
•Parts Infrastructure•Business Management•Facility
Performance Metrics include…• Market Share• Customer satisfaction
Number of Terex lines carried
2 Crown
• Number of Terex lines carried• Parts sales• Equipment sales• Year over year growth
Utilization of Terex Financial Services
1 Crown
0 Crown • Utilization of Terex Financial Services• Rental
0 Crown“Qualifying”
I ti d d l i h l• Investing and developing our channel• Enabling partners to further drive our business
Local Density Objective and Progress
Customer Value Propositionp
• We will “never leave a customer with a problem”
We will drive down the• We will drive down the total lifecycle cost of ownership
Focusing on building• Focusing on building products that increase jobsite productivity
B ild l l hi l ti ffi i t t tt t d d lBuild local machine population sufficient to attract good dealers
Emerging Markets UpdateGlobal Growth
Emerging markets helping to sustain business as g g gdeveloped markets soften.
R ssia/South Africa China India Latin America
• Largest • Significant heavy • Strengthening • Commodities,
Russia/ Eastern Europe
• Transition of developing country for Terex Construction
g yequipment market with opportunities to penetrate
position in backhoes
• Opportunity to
energy, and infrastructure-driven growth
Eastern European economies
Construction
• Promising future outlook
penetrate
• Emerging opportunities in
t
pp ypenetrate in other categories as strong market growth
• Large, multi-year projects in pipeline (e.g., Panama)
• Affinity for Western European products compact market growth
continuesPanama) products
• Excellent growth to date
Terex Construction in Summary
• $1.9 B* provider of construction-related equipment
• On-going operations and market-based transformation during a period of weakness in traditional core geographies
• Near term performance is challenging but long-term potential has never been higherg
Recent addition of ASV furthers an already strong growth platform in compactHi h th i i d th t h THigh growth in scrap, quarries, and other segments where Terex products create unique valueContinuing opportunity to change the game in more crowded, heavy g pp y g g yequipment categories
• Positioning Terex for segment and geographic leadership as g g g g p pconditions improve over the coming 2-3 years
* Last 12 months through June 30, 2008
Terex Investment Analyst Meeting
Terex CranesTerex CranesSeptember 4, 2008
Steve FilipovPresident, Terex Developing Markets
Terex Cranes in Summary
• $2.6B* provider of mobile cranes, crawler cranes, and tower $ p , ,cranes sold through dealers and rental houses worldwide
• Benefitting from strong demand for energy, infrastructure, and industrial projects worldwide
• Generating excellent returns via well managed mix and pricing and via targeted productivity improvements in some g g ysegments of the business
W ll iti d i ti i t k t hil• Well positioned in a continuing strong market, while protecting the downside through investment discipline and through increased diversification of the portfoliog p
* Last 12 months through June 30, 2008
Cranes: Broad Product Portfolio
All Terrain Cranes
Crawler Cranes
Rough Terrain Cranes
Truck Cranes
# 2Large
it # 3 # 3
Tower Cranes
# 2 capacity leader
Boom
# 3
Pick & Carry Reach
# 3
Cranes Trucks Cranes (AU) Stackers
# 3 # 2 # 1 # 2*
* Including Fantuzzi
Fantuzzi: Diversity & Growth Opportunities
Ship To Shore Straddle Carrier Rail / Rubber Tire Gantry
Mobile Harbor CraneFixed Mast Container Handler Reach Stacker
$• World’s Number 2 in Port Cranes; 2007 sales of $650M • Market, geographic, and product diversification for Terex
Cranes: Mix
PRODUCT MIX* ($) GEOGRAPHIC MIX* ($)
6%7%
17%27%
15%6%
20%
11% 15%6% 3%
55% 40%
7%15%
15%
20%
22% 25%
62%47%
2004 2008 Q2 YTD
Developing Markets
2004 2008 Q2 YTD
Stackers Developing MarketsJapan / ANZW. EuropeUSA / Canada
StackersTowersCrawlersOther MobileATC / RT
Balanced and broad portfolio* Excluding Fantuzzi
Profitable Growth
CRANES RESULTS*$B
$2.525%
30%
$B
• Sales up 29%
$1.5
$2.0
15%
20%
25%(CAGR) since 2004
• Operating Income
$0.5
$1.0
5%
10%
15%up 92% (CAGR)
• Continuing strong
$0.0
$0.5
2004 2005 2006 2007 Q2 '080%
5%outlook
(ltm)
Sales Gross Margin Op. Margin
* Excluding Fantuzzi
Cranes: Energy Applications
WORLD WIND PENETRATION
ALTERNATIVESGl b l Wi d P
T ® D
PENETRATIONProjected Wind Consumption as % of Energy Consumption
Global Wind Power Opportunity**
20%22%
on ptio
n
Terex® Demag
CC 2800-1 NT
10%12%14%16%18%
Win
d G
ener
atio
ricity
Con
sum
p
Approximate Wind Penetration, end of 2007
Approximate Wind Penetration, end of 2006
0%2%4%6%8%
Proj
ecte
d W
as %
of E
lect
r
1981 1985 1990 1996 1999 2000 2005 2008 rotor diameter (in meters) 10 17 27 40 50 71 104 120 rated capacity (in kilowatts) 25 100 225 550 750 1,650 3,600 5,000
Den
mar
kSp
ain
Port
ugal
Irela
ndG
erm
any
Gre
ece
Net
herla
nds
Aus
tria
Indi
aU
KIta
lySw
eden
U.S
.Fr
ance
Aus
tral
iaC
anad
aN
orw
ayC
hina
Ja
pan
Bra
zil
TOTA
L
Source: Berkeley Lab estimates based on data from BTM Consult and elsewhere
Product applications: Crawler cranes and All-terrain cranes
Opportunity: Installation and maintenance
* Analysis of data from Oil and Gas Journal, ** AWEA 2007
Cranes: Construction Applications
INFRASTRUCTURE GENERAL CONSTRUCTION
• World to invest >$40T in infrastructure between now and 2030*
• Every dollar of infrastructure creates several dollars of subsequentEvery dollar of infrastructure creates several dollars of subsequent construction activity
• Continuing opportunity across all categories of construction, with Terex iti d t ti i t i i t ll lifti li tipositioned to participate in virtually every lifting application
* Booz Allen & Hamilton: “Lights!, Water!, Motion!”, Strategy and Business: Spring 2007
Cranes: Market Environment
Robust demand continues across most categoriesg
ChallengesStrained capacity• Strained capacity
• Continuing but easing supply constraints• High backlogsHigh backlogs• ‘Low spec’ products from China & India
O t itiOpportunities• Market shift to greater lifting capacity
Growing demand for ‘higher spec’ cranes from developing• Growing demand for higher spec cranes from developing markets
• Differentiate on product and global supportp g pp
Outlook: Remains solid
Cyclical Industry but mid-term outlook is bright
Product & geographic diversity helps mitigate specific market slow-downsmarket slow downs
End Market Strength• Energy demand remains a major driver • Repair/maintenance, population growth and rising
incomes driving infrastructure needs • Global non-residential construction outlook remains
strong - growth forecast 5-7% for next 8–10 years
Excellent time to be in the crane business!
Cranes: Strategy
• One TeamStrengthen
One Team• Shared Objectives• Common Approach• Common Approach
New Products• New Products• New Markets
I d Aft k t
Grow• Increased Aftermarket
• New Applications• Less dependent on the “crane cycle”
DiversifyLess dependent on the crane cycle
Cranes: Strengthen
More from our Facilities More from our Team Members
• Integrated, single business structure
• Factory-led organizations
TEREX CRANES - WAVERLY, IOWA NEW TALENT/ NEW STRUCTURE
• Targeted functional adds (marketing, manufacturing, …)
• Operating as one b i l b ll
g• Isolated functional
capabilities• Little sharing across
businesses in the business globallygroup
• Tripled factory throughput in 2 years, without major capital investment • Global product-management structure
that cuts across legacy businesses and
Before AfterBefore After
• Cut working capital days by 60%
• Turning inventory at 11-12 times per year vs 2-3 at Q1 2005
that cuts across legacy businesses and drives operation as One Terex
• Adding talent to drive best practices in marketing engineering and businessyear vs. 2 3 at Q1 2005
• Resources allocated to Germany to drive similar improvements in All Terrain and Crawler production
marketing, engineering, and business process improvement
• Driving efficiency while improving organizational effectivenessTerrain and Crawler production
processesorganizational effectiveness
Cranes: Grow
New Products New Geographies
CC 8800 TWIN BENDINI RC 60 DEVELOPING MARKETS GROWTH
• Long history of product introductions and 2004 2005 2005 2007improvements
• Recently introduced one of the world’s largest lattice boom crawler cranes, which can lift 3 200 metric tons and travel while
• Cranes continues to lead our company in terms of the percentage of sales derived from developing markets
can lift 3,200 metric tons and travel while carrying the load
• Incremental innovations continue, including a 60 ton Rough Terrain (the RC60) recently
• We continue to grow our global sales and service capabilities
• We are rationalizing our manufacturing a 60 ton Rough Terrain (the RC60), recently introduced by Terex Cranes Italy footprint to provide local products for local
markets
Cranes: Grow
Increased AftermarketNew Markets
CHIANGJIANG CRANES
• Increasing global aftermarket opportunity as the installed base grows• Joint venture with Chiangjiang Cranes in
L h Chi i th 3rd l t t kg
• Opportunity to strengthen value-proposition via improved service and support
• Strengthening core service infrastructure in
Luzhou, China is the 3rd largest truck crane manufacturer in China and has potential to grow into other markets
• Efforts are also underway in markets like • Strengthening core service infrastructure in developed markets
• Sales & Service facility developed in Dubai to serve the Middle East
• Efforts are also underway in markets like India, the Middle East, and elsewhere to further Terex participation in the world’s fastest growing geographies
• Other global investments in progress• Opportunities to acquire or enter via organic
market development
Cranes: Diversify
More Global FootprintNew Applications
PORT AND HARBOR CRANES
Sprinter Straddle CarrierMobile Harbor Crane
• Expansion of Terex facility in Tianjin, China for Cranes
• The acquisition of Fantuzzi provides an excellent example of the opportunities that for Cranes
• Fantuzzi provides additional Chinese based manufacturing capacity that can lead to additional growth opportunities for our
exist to add scope in new categories
• Terex has a long history of successful integration of acquisitions and turning acquired businesses into successful long company
• Local footprint, in many cases, is critical to developing markets growth so India represents a logical location for crane
acquired businesses into successful long-term franchises
• Continue to search for opportunities like Fantuzzi that offer high potential returns for represents a logical location for crane
productionFantuzzi that offer high potential returns for our shareholders
Terex Cranes in Summary
• $2.6B* provider of mobile cranes, crawler cranes, and tower $ p , ,cranes sold through dealers and rental houses worldwide
• Benefitting from strong demand for energy, infrastructure, and industrial projects worldwide
• Generating excellent returns via well managed mix and pricing and via targeted productivity improvements in some g g ysegments of the business
W ll iti d i ti i t k t hil• Well positioned in a continuing strong market, while protecting the downside through investment discipline and through increased diversification of the portfoliog p
* Last 12 months through June 30, 2008
Terex Investment Analyst Meeting
Terex Roadbuilding and Utility ProductsTerex Roadbuilding and Utility ProductsSeptember 4, 2008
George EllisVice President and General Manager, Terex Roadbuilding and Utilities
Roadbuilding and Utility Products Summary
• $0 7 B* portfolio of businesses serving two distinct business$0.7 B portfolio of businesses, serving two distinct business segments and mostly concentrated in North America
P f h ff d f i ifi t f ll ff i N th• Performance has suffered from a significant fall-off in North American mixer truck demand, but adjustments have been made and results are now improvingp g
• Improvements continue elsewhere in the business that should drive results going forwarddrive results going forward
• Eventual recovery in mixer trucks, including the opportunity for a now more focused business to take share as the market recovers
* Last 12 months sales through June 30, 2008
RBU: Products
Utility ProductsAsphalt/ Concrete Equipment
Asphalt / Concrete Plants
Concrete Mixer Trucks
Latin America
Front Discharge #1 Number 2
RBUO: Mix
PRODUCT MIX ($) GEOGRAPHIC MIX ($)
17%1%
1%1%
1%
4%
20% 13%4% 3%
94%81%
33%37%
81%
43% 47%
2004 2008 Q2 YTD2004 2008 Q2 YTD
Developing MarketsJapan / ANZW. EuropeUSA / Canada
OtherMixer TrucksAsphalt / ConcreteUtility Equipmenty q p
RBU: Growth
RBUO RESULTS$B
$0 8
$1.0
25%
30%
$B
• Dramatic fall-off in i t k b t
$0.6
$0.8
15%
20%
25% mixer trucks, but now stable
• Recent performance
$0.2
$0.4
5%
10%
15% • Recent performance improving
• Niche product$0.0
2004 2005 2006 2007 Q2 '080%
5% Niche product potential
(ltm)
Sales Gross Margin Op. Margin
RBU: Market Environment
N. AMERICA TRANSPORTATION INFRASTRUCTURE SPENDING1
($B ’07)
S. AMERICA TRANSPORTATION INFRASTRUCTURE SPENDING1
($B ’07)
N. AMERICA ELECTRICITY TRANSMISSION INVESTMENTS2
($B Nominal)
$50
$60
$70
$20
$25
$8
$10
$12($B, 07) ($B, 07) ($B, Nominal)
$20
$30
$40
$10
$15
$4
$6
$8
$0
$10
'02
'03
'04
'05
'06
'07
'08
'09
'10
$0
$5'0
2
'03
'04
'05
'06
'07
'08
'09
'10
$0
$2
'02
'03
'04
'05
'06
'07
'08
'09
'10
• Flat outlook for transportation
di
• 5-6% real growth in Latin America R db ildi
• Strong recent investment trends i Utilit P d tspending
• Higher pricing impacting volume
Roadbuilding
• Increasing trade between Brazil and
in Utility Products
• Continued spending on
1. Global Insights, 2. Edison Electric Institute
p gdemand other countries
p gmaintenance
RBU: Outlook
• Steady improvement, with mixer trucks now stabilized and other businesses improving
US residential appears near bottomOther drivers remain healthy to strongBusiness quality improved following actions to reduce costs
• Multiple attractive stories below the surface Healthy and growing utilities businessEffective and profitable business in North American asphaltExcellent trajectory in Latin America, based on domestic production in BrazilS ll b t fit bl b id b i Bid ll & H dSmall but profitable bridge business – Bidwell & Hydra
• Opportunities for portfolio and operations footprint improvement
RBU: Strategy
Key focus areas through 2010Key focus areas through 20101. Continue a successful turn-around in Utility Productsy
2. Build on niche strengths in Roadbuilding• North American asphalt• Bridge paving, inspection, and maintenance• Leadership and growth in Latin AmericaLeadership and growth in Latin America
3. Sustain then grow mixer trucks• Front discharge concept inherently advantaged• Expand the front discharge market
RBU: Utility Products
Operating Margin in Terex Utility Products
UTILITY PRODUCTS NEXT STEPSy
UTILITY PRODUCTS NEXT STEPS
• Execute on-going product enhancements and developmentsenhancements and developments
• Aggressive lean implementation
I t i d2004 2005 2006 2007 2008
LTM
• Improve parts, service, and support
• Leverage route to market for other• Streamlined distribution network
• Consolidated assembly activities
• Leverage route to market for other Terex products
• Explore opportunities for global• Strengthened product and pricing
• Increased sales to major customers
Explore opportunities for global growth (e.g., China)
j
RBU: Roadbuilding
NA ASPHALT BRIDGES LATIN AMERICA
• Technology driven • Full-line bridge • Increase localized• Technology driven growth in plants (super portable, warm mix)
G i d
• Full-line bridge construction and maintenance offering
T t t t
• Increase localized manufacturing
• Upgrade product ff i• Grow improved
distribution in asphalt equipment
• Target contractors, utilities and governments
offering
• Capitalize on market growth & infrastructure
• Expand internationallygdemands
RBU: Mixer Trucks – Front Discharge
INDUSTRY SALES BY REGION*Front
Discharge #1
70%51%
65%
Discharge #1
49%35% 30%
98% 98%
30%2%2%
Central Northeast Southeast Southwest West
Front Rear• Enhanced visibility, higher discharge
point and longer reach allow for accurate placement of concrete
• Preference for front vs. rear discharge is geographicp
• Faster turn around and single operator efficiency save time and money
g g g p
• Significant opportunity to drive market acceptance of front discharge advantages• All wheel drive and superior weight
balance provide excellent mobility
advantages
* Regions are approximately equal in annual truck sales
Roadbuilding and Utilities Summary
• $0.7 B* portfolio of businesses, serving two distinct business $0 po t o o o bus esses, se g t o d st ct bus esssegments and mostly concentrated in North America
• Performance has suffered from a significant fall off in North• Performance has suffered from a significant fall-off in North American mixer truck demand, but adjustments have been made and results are now improving
• Improvements continue elsewhere in the business that should drive results going forwarddrive results going forward
• Eventual recovery in mixer trucks, including the opportunity for a f d b i t t k h th k tnow more focused business to take share as the market
recovers
* Last 12 months sales through June 30, 2008
Terex Investment Analyst Meeting
Closing RemarksClosing RemarksSeptember 4, 2008
Ron DeFeoChairman & Chief Executive Officer
Summary
• Diversified Portfolio of Equipment Businesses• Positioned for Continuing Long - Term Trendsg g• Leader In Our Categories and Our Industry• Leveraging the Power Of One Company
AERIAL WORK PLATFORMS CRANES MATERIALS PROC.
AND MINING
CONSTRUCTION ROADBUILDING AND UTILITIESUTILITIES
Terex Investment Analyst Meeting