Terex Corporation

Greetings and welcome to the Terex Corporation first quarter 2021 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Randy Wilson, Director of Investor Relations for Terex Corporation. Thank you, sir. You may begin.

Good morning and welcome to the Terex first quarter 2021 earnings conference call. Copy 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. They're 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 risk that could cause actual results to be materially different from those expressed or implied. In addition, we'll 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, and thank you for joining us and for your interest in Terex. Most importantly, I hope you and your families are remaining safe and healthy. Throughout these challenging times, we are proud of all Terex team members who are keeping themselves and others safe, meeting the needs of customers, and helping our communities. I would like to recognize and thank our team members around the world for their continued commitment to our zero harm safety culture and Terex Way values. Safety remains the top priority in the company, driven by think safe, work safe, home safe. All Terex team members have contributed to our effort to continue to produce for our customers while following the protocols and maintaining a safe working environment. Please turn to slide four. Before I discuss our Q1 results, I would like to review our commitment to ESG. Environment, social, and governance is not a new concept at Terex. It has been front and center for many years through our Zero Harm Safety Program and our commitment to maintaining a vibrant and supportive working environment. ESG is foundational to the Terex culture. Our company purpose is to help improve people's lives. Through our Territory Way values, we are focused on strong governance, a commitment to diversity, equity, and inclusion at every level, and supporting the communities where we live and work, including being responsible environmental stewards. First, strong governance and leadership. Our independent and engaged board with diverse backgrounds, perspectives, and experience adds value for all stakeholders. Second, we've enhanced our DEI governance, and we are energized by the engagement of our team members. And third, electrification, by introducing sustainable products such as our new GE electric drive scissors. We've made good progress in our sustainability program, including publishing our first annual ESG report, which enhances our ESG communications. We are working on standard reporting frameworks which a group of company senior leaders are charged with implementing. We will keep stakeholders apprised through our investor conferences and quarterly earnings calls. We believe companies that recognize the importance of ESG are better able to identify strategic opportunities and meet competitive challenges. Turning to slide five. We're off to a very strong start to 2021. Customer demand continued to increase during the quarter. resulting in revenues exceeding our expectations. We increased operating margins and backlog in AWP and MP year over year. We significantly improved our first quarter earnings per share compared to last year. And we are increasing our full year sales, operating profit, cash flow, and EPS outlook. Despite having to address supply chain challenges, AWP delivered improved margins in Q1. Materials processing continued its strong execution by overcoming supply disruptions and delivering increased sales and profitability. As a result of the improved execution in both segments, year-over-year operating margin for the company improved by 800 basis points. Our intense focus on networking capital management and improved profitability drove $40 million of positive free cash flow in the quarter. which is an excellent start to the year. During the first quarter, our team continued to meet increased customer demand, tightly managed all costs, and delivered outstanding positive free cash flow. Overall, our Q1 financial performance demonstrated strong execution by our global team in the face of increasing supply chain challenges. Please turn to slide six. We continue to improve Terex's global cost competitiveness. Our SG&A cost reduction initiative with a target of full year 2021 of approximately 12.5% or better SG&A to sales remains on track. We are maintaining strict cost discipline. In addition, during the quarter we announced the planned move of our Oklahoma City telehandler production to Monterey, Mexico. This action will position us with cost-competitive telehandler products for the North American market. The team is addressing increasing supply chain disruptions. Our operations team are demonstrating adaptability and flexibility to overcome the dynamic supply chain environment. Turning to innovation, we continue to listen to our customers, ensuring our products and services offer the features and benefits that provide value. We'll also invest in our connected assets and digital capabilities to better serve customers. For example, our new Genie eDrive scissors are designed to offer significant performance improvement and reduce maintenance costs by 35% over the life of the machine. Customer and dealer integration, or CDI, is a global initiative spearheaded by our parts and service organization. Dealers are sharing their data which allows the team to better serve customers. Finally, we continue to invest for future growth. Our MP team is in the process of executing our localization plans in China to meet growing demand for industry-leading crushing and screening products, as it is the world's largest aggregate market. Terrace is well positioned for growth in 2021 and beyond because we have strong businesses, strong brands, and strong market positions. We continue to invest, including in new products, digital capabilities, and manufacturing capacity. Turning to slide seven, I'll provide some comments about our end markets and what we are seeing today. In our genie business, in North America, fleet utilization continues to improve, rental rates are improving, used equipment pricing is strong, which are all positive signs of a recovering and growing rental industry. In Europe, the market continues to demonstrate improvement. And in China, adoption of working safely at height with Genie equipment is driving significant growth. Globally, the secular trend towards rental continues. Turning to our utilities business, demand is strong across its end markets of tree care, rental, and investor-owned utilities. Next in materials processing, We expect global demand for crushing and screening equipment to continue to grow. Broad-based economic growth, construction activity, and aggregate consumption are the primary market drivers. We're seeing continued improvement in our cement mixer, material handler, and environmental businesses. Overall, we're seeing improved market conditions around the world for industry-leading products and solutions. And with that, let me turn it over to Debbie.