Terex Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Terex Corporation Q4 2019 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Mr. Randy Wilson, Director of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for participating in today's fourth quarter 2019 financial results conference call. Participating on today's call are John Garrison, Chairman and Chief Executive Officer, and John Duffy Sheehan, Senior Vice President and Chief Financial Officer. Following the prepared remarks, we will conduct a question and answer session. We have released our fourth quarter 2019 results, a copy which is available on terex.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call, and it's also available on our website. All adjusted per share amounts in a presentation are on a fully diluted basis. We'll post a replay of this call on the Terex Investor Relations website under Events and Presentations. Let me direct your attention to slide two, which is our forward-looking statement and description of non-GAAP financial measures. We encourage you to read this as well as other items in our disclosures because the information we will be discussing today does include forward-looking material. With that, please turn to slide three and I will turn it over to John Garrison.

Good morning and thank you for joining us and for your interest in Terex. For Terex, operating within a zero-harm environmental health and safety culture is an absolute way of life. I am proud of our team's dedication, commitment, and focus on a zero harm safety culture. The global team made great progress during the year, reducing our recordable injuries by 39%, a significant accomplishment. But we realize we can and will continue to make further progress in our zero harm culture. The fourth quarter completed a year where we faced considerable market-driven and operational headwinds principally within our AWP segment. Our Q4 results reflect the headwinds of the challenging global industrial equipment market. And our operating results were generally in line with our expectations on lower revenue. AWP's fourth quarter revenue was down 21% from Q4 2018. This demonstrates the cautious customer sentiment in our largest markets in North America and Europe. AWP's revenue decline, coupled with the need to produce below retail demand to reduce inventories, adversely impacted operating margins. Our MP team continued to execute well, maintaining 12% operating margins, despite Q4 revenues being down 10% in the quarter. Driving parts and service growth is one key element of our Execute to Win initiatives. Despite the challenging global equipment markets, Our parts and service teams drove 7% sales growth on a currency neutral basis. Over time, continued growth from this initiative will help reduce our cyclicality. Given the environment in which we are operating, we have maintained our absolute focus on our disciplined capital allocation strategy. We generated positive free cash flow in the fourth quarter and generated $86 million of positive pre-cast flow during 2019. Combined with 160 million of cast proceeds from dispositions, Terra extended 2019 with a strong balance sheet, including over $1.1 billion of liquidity. Our global team continues to be committed to generating cash and improving our working capital efficiency. Turning to slide four. Terex remains committed to its goal of establishing a corporate culture based on process, discipline, and accountability that will consistently deliver high performance in all phases of the business cycle. Turning to slide five, now let me share some 2019 highlights that continue to move Terex forward. We essentially completed the focus element of our strategy by finalizing two significant portfolio actions in our former crane segment. The remaining businesses in our portfolio have industry leading competitive positions. They have also demonstrated their ability to consistently out earn their cost of capital over the course of multiple cycles. At the start of this year, we moved the tower and rough terrain crane businesses to the material processing segment. These moves complete the transformation of Terex into a two segment organization. We have brought online New manufacturing capabilities, including our TAMC facility in Northern Ireland, and expanded our Hosur India MP facility, allowing Terex to be even more responsive to global demand. Our new utilities facility will consolidate multiple production buildings into one state-of-the-art, world-class manufacturing and engineering facility. Commercial excellence begins and ends with the customer. We completed our global rollout of Salesforce, increasing process discipline throughout the entire sales process. Technology is a critical part of our global parts and service business. To deliver industry leading customer service, we're providing our distribution partners easy to use digital tools that help them to service their customers more efficiently, maximizing their opportunity to win business. This is allowing Terex to build a competitive advantage and accelerate parts growth. Strategic sourcing finished 2019 with strong momentum as the team continues to implement ways one and two in launching a new round of strategic projects. With our high quality portfolio of specialized equipment businesses, our strong financial position, and the investments in our facilities and systems, we are well positioned to perform throughout the cycles. Looking ahead to 2020, we recognize that we must drive improvement in our operational excellence so that we can consistently deliver on our commitments to our team members, customers, and shareholders. At Terex, we are driving towards a zero harm safety culture. We are doing this with open communication, reporting, and putting our team members first. Terex is also committed to a responsible environmental stewardship Through energy and water conservation efforts in our facilities and by developing innovative products that reduce emissions. Turning to innovation, we're continuing to invest in innovative products to serve our specialized markets. A few examples are the Terex Ecotech Shredder expands our offering in recycling markets. Also, the Terex Advanced Mixture Truck reflects improved performance, value, and entry into new markets. In addition to expanding our product offerings, we are investing in our manufacturing capabilities, which leads to future growth. The new utilities manufacturing facility in South Dakota remains on schedule and within budget. Another important facility for Terex's future global growth is our Changzhou China facility, which will undergo an expansion in 2020 to accommodate the market growth in China for aerial products. In addition, MP and utility product lines will be added. We are localizing manufacturing to take advantage of increasing adoption of these products. Our parts and service team is focused on growth by delivering a best-in-class experience for our customers. These investments enable improved manufacturing productivity, industry-leading customer offerings, and growth. As we communicated during our Q3 earnings call, We expect the global industrial markets to remain challenging in 2020. We expect sales to be down 8% to 11% from 2019 to a midpoint of $3.9 billion. The lower anticipated sales will result in lower production levels, which will have an adverse effect on operating margins. Based upon this current outlook for 2020, we are anticipating full-year earnings of $1.85 to $2.35 per share. We will continue to enhance shareholder value by executing our disciplined capital allocation strategy, which includes dividend increases in each of the last four years. With that, let me turn it over to Duffy.