Terex Corporation

Good morning. Welcome to Terex Corporation second quarter 2020 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Randy Wilson, Director of Investor Relations for Terex Corporation. Thank you. Mr. Wilson, you may begin.

Good morning and welcome to the Terex second quarter 2020 earnings conference call. A copy of the press release and presentation slides are posted on our investor relations website at investors.terex.com. In addition, the replay and slide presentation will be available on our website. I'm joined by John Garrison, Chairman and Chief Executive Officer, and John Duffy Sheehan, Senior Vice President and Chief Financial Officer. Their prepared remarks will be followed by Q&A. Please turn to slide two of the presentation, which reflects our safe harbor statement. Today's conference call contains forward-looking statements which are subject to risks that could cause actual results to be materially different from those expressed or implied. In addition, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials. Please turn to slide three and I'll turn it over to John Garrison.

Good morning. Thank you for joining us and for your interest in Terex. Safety is and will remain the top priority of the company. Globally, very few of our team members have tested positive for the COVID-19 virus. This reflects our zero harm safety culture of think safe, The vigilance of our team members, both inside and outside of work, and the rigorous COVID-19 safety protocols we implemented early on have made a real difference and have helped us to avoid any significant impact to our operations. We will keep our guard up as we remain focused on protecting the health and safety of our team members, Their families and communities. Turning to slide four. After suspending production in most of our facilities around the world in March, we resumed manufacturing in all of our plants globally beginning in late April and increasing in May and June. This resumption was accomplished with a rigorous focus on safety protocols and production that has been calibrated to meet customer demand. Our teams are continuing to work closely with our customers to understand their demand, proactively manage their production operations, closely partner with suppliers to control the incoming supply of materials and maintaining supply chain continuity, and utilize available government furlough programs. These and other actions have enabled us to tightly manage are variable manufacturing expenses, which make up over 80% of our cost of goods sold and dramatically reduce our cost base. In addition to rigorous cost control, we have remained focused on having ample liquidity to operate the business. As of June 30th, we had approximately $1 billion of available liquidity. We may not be able to control The macroeconomic factors that drive the demand of our products, but we are aggressively executing on the levers that are within our control. Please turn to slide five. Q2 sales stabilized, but were below pre-COVID-19 levels. As a result, we continue to take swift action in response to changing and market demand. In addition, we delivered strong Overall decremental margin performance of approximately 20%. During our last earnings call, I discussed the actions that we were taking to right-size our cost structure, highlighting that we were taking out at least $100 million of cost. We implemented these and other actions during April, and our decremental margins reflect these decisive actions. To be specific, in the second quarter, We took out over $40 million of SG&A cost, which was down 30% year over year, from furloughs, permanent layoffs, team member salary reductions, and deferral of merit increases. Finally, we generated positive free cash flow of $71 million in the quarter. We achieved this by reducing net working capital by $180 million, are more than 20%, reflecting great teamwork by our supply chain, commercial, and financial teams. We will execute and are focused on delivering positive free cash flow for the second half of 2020. Turning to slide six. In the first half of 2020, we transitioned our strategy to execute, innovate, and grow. The natural evolution The focus and simplify elements were essentially completed and it was time to emphasize execution, driving innovation and growth, specifically focused on profitable growth. Terex has done a great job of innovating our products and technology. Our innovation needs to include lowering our manufacturing costs, and what it cost customers to operate our equipment. Our ANSI compliant J-BOOM is an excellent example of this purposeful innovation, offering operators the essential performance they need to get work done at height with an unrestricted platform capacity of 660 pounds. It offers rental companies the opportunity to increase their return on invested capital by mixing their fleet with a range of Genie booms, matching the right boom to the right application. In addition, our innovation will improve our ease of doing business through the life cycle of the product by delivering industry-leading customer service. In parts and service, we are providing our distribution partners easy-to-use digital tools which are highly integrated and consolidated into a convenient and optimized digital portal, helping them serve our customers more efficiently. Terex is well positioned for future growth. We have clear objectives to deliver on our execute, innovate, grow strategy by driving continuous improvement in execution, winning with more customers around the world, driving profitability in shareholder returns, and equipping the organization to win in the global marketplace. This will result in Terex emerging as an even stronger company. And with that, let me turn it over to Duffy.