Terex Corporation

Greetings and welcome to the TARIC second quarter 2024 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, John Patterson, Vice President and Treasurer. Please go ahead.

Good morning and welcome to the Terex second quarter 2024 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. We are joined by Simon Meester, President 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 presentations, 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. These risks are described in greater detail in the earnings materials and in our reports filed with the FCC. In addition, we will be discussing non-GAAP financial information, which 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 Simon.

Thanks, John, and good morning. I would like to welcome everyone to our earnings call and appreciate your interest in Terex. I first want to thank and recognize the Terex team for their extraordinary commitment and dedication to our customers, our company, and our people. We closed another strong quarter, and I continue to be impressed by our team members and their passion to do what's best for our stakeholders while keeping each other safe and healthy at the same time. Please turn to slide four. Over the past five years, we transformed Terex into a strong, diversified, agile company with significantly improved financial performance. We're posting another strong quarter, generating revenue of $1.4 billion and delivering adjusted earnings per share of $2.16. And we're on track to deliver a full-year adjusted EPS in the range of $7.15 to $7.45. I am proud of our global team that continues to perform at a high level, achieving our near-term objectives and implementing our long-term strategy of execute, innovate, and grow to make Terex an even stronger company in the future. Turning to slide five, we're seeing a mixed set of global economic variables playing out on what we believe is still a very solid long-term macro backdrop for Terex. We like the resiliency of the US economy. GDP continues to outperform expectations and inflation continues to recede, including a monthly decline in June. Construction spending remains high, and certain regional and local soft spots are more than offset by the ramp up of mega projects. Our U.S. rental customers are highly disciplined capital managers, and as the operating environment normalizes, we are seeing them return to more customary ordering patterns. In MP, many of our dealers are rebalancing their inventory as more of their customers are renting machines while the interest rate outlook remains uncertain and more predictable and shorter lead times are allowing more precise inventory management. Overall, we expect demand in the US market to remain robust. The European economic situation is less clear with conflicting indications. That said, I like our market position across the EU which was further enhanced by the recent anti-dumping decision. We expect to outperform the market as the macro situation unfolds. We also remain encouraged to see emerging markets such as India, Southeast Asia, the Middle East, and Latin America increasingly adopt our products. Please turn to slide six. We believe Terex is poised for consistent, sustainable growth, long-term opportunities driven by megatrends, and continue to be bullish on our long-term outlook. This is being driven by strong market dynamics in the U.S., such as onshoring, technology advancements, and federal investments, including the Infrastructure Investment and Jobs Act, CHIPS Act, and Inflation Reduction Act. This legislative environment is driving record levels of megaprojects and data centers, EV and battery manufacturing plants, semiconductor plants, and others, with more projects expected to come online from 2025 to 2027. We anticipate increased activity from infrastructure investments from roads and bridges to airports, railways, and the power grid. We expect to continue driving growth on top of our current baseline through innovation while continuing to optimize our business operations. Please turn to slide seven. Our execute, innovate, and grow strategy underpins our strong financial performance and positions as well for accelerated growth. We have a very strong portfolio of businesses, businesses that are leaders in their respective markets. My predecessor did a great job leading our effort to clean up the portfolio, so we are in a strong position when you look at the fundamental makeup of Terex. Now, later on, the work that we have done in the execute pillar of our strategy focused around implementing our Terex operating system, principles like ensuring alignment of manufacturing and sales plans and reducing fixed costs, helped make our financial performance more consistent and predictable. I'm proud to say that we're on track to deliver more than $7 of earnings per share and more than $300 million in free cash flow for a second year in a row. When it comes to innovation, we think about it in two broad ways. First, how do we leverage technology externally to deliver more value to our customers? Over 20% of our sales are related to products that we have introduced in the past three years. This is something of which we are particularly proud. We have a very exciting new product development pipeline that will continue to bring new products to market that increases our customers' ROI. When our customers are more successful using our equipment, we will be more successful. Second, we're leveraging technology internally, making investments in robotics, automation, digitizing work streams to make us more efficient and more flexible. our roadmap to continuously make us more competitive and more resilient, regardless of market dynamics. And last but not least, growth. Over the past several years, under the leadership of its president, Keir Hagerty, MP has grown at a double-digit CAGR and is now a $2 billion business with consistent, strong financial performance. AWP is on track to generate about $3.2 billion in revenue this year, both businesses are now posting strong operating margins. And when looking at the market fundamentals, are well positioned for long-term growth. Then, when you layer on the recently announced agreement to purchase Environmental Solutions Group, or ESG, which further diversifies our portfolio and is accretive to our performance, we're truly transforming and growing the company. Please turn to slide eight. Pictured here is Terex's first fully electric minerals processing multi-plant operation. Our customer, a leader in sustainable building materials, road construction, and building products, was looking for a solution that met its output requirements and was eco-conscious. Our design dramatically reduced emissions and diesel consumption while improving output material shape and throughput rates. A great example of the Terex value proposition, where we add tangible value in real-world applications. Slide 9. The recently announced agreement to purchase ESG, the largest in Terex's history, accelerates long-term shareholder value growth. This acquisition checks all of our boxes. It adds a non-cyclical, financially accretive, and market-leading business to the Terex portfolio with tangible synergies in the fast-growing waste and recycling market. We're very excited about the transaction and feel privileged to soon welcome the ESG team to the Terex family. They have truly built a remarkable business. And with that, let me turn it over to Julie.