Terex Corporation

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, Pertosh Mishra, Head of Investor Relations.

Good morning and welcome to the TARIC per quarter 2023 earnings conference call. A copy of the press release and presentation slides are posted on our Investor Relations website at investors.tarex.com. In addition, the replay and slide presentation will be available on our website. We are joined by John Garrison, Chairman and Chief Executive Officer, and Julie Beck, 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 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. Thank you, Prakash, and good morning.

I'd like to welcome everyone to our earnings call and appreciate your interest in Terex. I'd like to begin by thanking all Terex team members around the globe for their exceptional efforts in this challenging global macroeconomic environment and for their continued commitment towards zero harm safety culture and Terex Way values. Safety remains the top priority of the company, driven by Think Safe, Work Safe, Home Safe. I'm proud of the Terex team members' resilience as they continue to work tirelessly to improve our performance for our customers, dealers, and shareholders while maintaining a safe working environment. Please turn to slide four to review our strong third quarter financial results. This quarter, the team delivered sales of $1.3 billion, up 15% from last year. Operating margins of 12.7%. an expansion of 190 basis points from the prior year, and earnings per share of $1.75, up 46% on a year-over-year basis. As a result of solid execution by our team members throughout the year and a robust backlog, we are increasing our full-year earnings outlook to approximately $7.05 per share. Please turn to slide five. Terex products have leading positions in diverse and attractive end markets. The global focus on sustainability is driving increasing investments in infrastructure, digitization, waste recycling, and electrification. These megatrends provide additional growth opportunities for all of our businesses. Our empty aggregate business, led by PowerScreen and Finley, have leading positions in global mobile crushing and screening markets, that will benefit from growth in the demand for construction materials. Mobile aggregate equipment has the benefits of reducing unnecessary material handling and the ability to recycle material at the point of use. MP brands including Ecotech, CBI, and Terex washing systems are at the forefront of developing innovative solutions to meet rising demand for recycling technologies. Our utilities business offers a wide portfolio of products to support strengthening demand from electrification investments. And our genie booms, scissors, verticals, and telehandlers are essential components of any infrastructure or on-going project. Let's turn to slide six. We remain encouraged by the favorable trends in our key markets, especially in North America. The U.S. is investing in infrastructure. with the three federal stimulus programs that were passed in 2021 and 2022. These investments provide a source of resilient demand visibility over the next several years. More than 35,000 projects representing an excess of $120 billion in funding have been announced or awarded. U.S. non-residential construction spending is up 16% year-over-year, while manufacturing spending is up 63% in the last 12-month period, driven by multibillion-dollar and multi-year investments related to semiconductor manufacturing, clean energy, and EV battery projects. In addition, the biggest growth areas in construction will be publicly financed or built by manufacturers who are onshoring to reduce geopolitical risk, and these investments are less sensitive to interest rates. Our end market diversification is a strength, and we are excited about the opportunities to grow our business. Please turn to slide seven to review our backlog. Our Q3 backlog of 3.3 billion remains significantly above historical levels and is the second highest in recent history, providing healthy momentum going into 2024. Although backlog has declined sequentially from Q2 levels, This is a function of improved manufacturing production volumes and customer deliveries. Consolidated Q3 bookings remain solid at approximately $900 million and reflects a return to more normal ordering patterns for our dealers and customers. Importantly, we are seeing minimal customer and dealer pushouts and cancellations. The higher interest rates, inflation, and geopolitical uncertainties have had an impact on Europe. and we are seeing softening in that market, but it's important to emphasize demand in North America is very strong. For more than two years, our backlog levels have increased as we've been constrained in our production ability due to supply chain challenges. As we and the industry improve deliveries and lead times, our backlog will eventually return to normalized levels, which is a good thing for our customers. In addition, Elevated customer fleet ages and low dealer inventory levels continue to provide encouraging signs for the demand environment. In our Genie business, the industry replacement cycle and significant global investments in infrastructure, onshoring, and electrification creates a clear opportunity for future growth. In our MP segment, in addition to these favorable trends, dealer inventory levels remain low in several businesses. Overall, Our customer feedback, bookings, significant backlog, and leading indicators give us confidence going into 2024. Please turn to slide eight. The global demand for waste recycling solutions is increasing, driven by involving regulations and consumer preferences. The MP segment is well positioned to capitalize on these opportunities. Our Evoquip brand recently added a shredder capable of handling multiple applications, including construction and demolition waste. Our Ecotech metal separator can efficiently extract valuable metals from a variety of waste sources. And, our CBI business continues to find new market applications for our equipment, such as recycling of windmill blades. This eliminates the need for landfill disposal when blades are decommissioned and replaced. I am confident the MP business will continue to provide innovative solutions to support the increasing demand for recycling technologies. Please turn to slide nine. Our sustainability practice deliver stakeholder value. During each quarterly investor call, we feature one of the pillars of our ESG strategy. This quarter, we are highlighting environmental stewardship. Our 2023 sustainability report, published earlier this week, highlights products and solutions that enable our customers to operate in sustainable ways. Approximately 70% of our MP and GENIE products are now offered with electric or hybrid options, while 10 of our sites are operating using 100% renewable energy. We reached our 2024 greenhouse gas targets two years early, and reduced our admissions intensity by 15% from our 2019 levels. We are proud of our team members' accomplishments in helping build a more sustainable economy. Turning to slide 10 for an update on our strategic operational priorities. We continue to make great progress on our execute, innovate, and grow strategic initiatives. Our operations teams executed well during the third quarter. maintaining their focus on improving deliveries for our customers and continuing with cost reduction and productivity improvement initiatives. On a year-to-date basis, our sales are up 23% and operating margins are up 400 basis points, demonstrating the strength of our operating model and the improvements we've made over the last several years. Supply chain performance has improved throughout the year, but we continue to experience disruptions in the system. In the third quarter, our Monterey, Mexico team members were focused on increasing production, startup of our in-house paint systems, and process improvements. I want to congratulate our Genie Monterey team members for earning the prestigious LEED Gold certification, demonstrating our commitment to sustainable practices in design, construction, and operations. Our investments in new products and technologies will enable us to take advantage of the sustainability trends such as recycling, electrification, and decarbonization. We remain confident in our ability to execute our strategy to deliver long-term shareholder value. And with that, let me turn it over to Julie.