TEX - Earnings call transcript Q4 2021

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Operator

Greetings, and welcome to the Terex Corporation Fourth Quarter and Full Year of 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. sir. you, Thank

begin. You may

Randy Wilson

Investor and year-end welcome the fourth morning on the release investors.terex.com. to earnings conference and our posted XXXX are of presentation quarter website call. at and Good slides Terex Relations A press copy

the subject of slide replay Officer. be different statement. Garrison, actual X our Vice John which that will be and slide President Beck, reflects contains Their Senior Chief harbor will to turn Executive and In be from website. and Please available by joined Financial I'm prepared addition, cause safe remarks presentation, followed Today's implied. or forward-looking our Q&A. materially could presentation the expressed to results Julie statements, Chief to call those conference by Chairman which are on Officer, and risks

In turn slide in non-GAAP be evaluating can Garrison. company's that operating is non-GAAP to over believe conference Reconciliations the I'll discussing call be the John we to measures useful for X, Please these and in performance. turn it found addition, we'll information materials.

John Garrison

communities. you, of priority members safe, harm culture and top the and safety driven I'd of proud welcome I our all team values. their zero towards earnings remains customers safe, team members company, to to our Terex. keeping the are work our would you like helping thank safe. by for Terex like commitment around And meeting interest of the And home morning. continued world the Safety thank Thank think way everyone call. We're for Terex to others your good safe, themselves who Randy. in and needs

of harm over testament team recordable rates, metrics, members. turn five This the zero slide which hard dedication to has to Please our a driving is commitment safety total improved improvement incident the and is such X. past years. work significantly to as strong of Our

foundation ESG drives A and social few our on stakeholder journey. as we Our progress strong value. environmental, governance highlights

their option. an sustainability scissors, goals. booms customers of have to of Terex Genie XX% help products meet and electric one-third Genie Two-thirds products environmental. First, our of Processing Materials

Turning throughout to inclusion equity being is organization. and driven Diversity, and social. embraced the

leading governance. Next, strong with

senior Our from of management with ESG directors. led are board efforts our by oversight

We points XX% quadrupled backlog XXXX by up by and members of year-over-year. performance a were operating strong and margin in driven Please around good matching this sustainable slide year. our recognizes citizens. X important nearly diversity, continued, there's The equity team operating Please management producing or billion, topic, ended promoting products, challenging whether environment. the resulting XXXX believers updates inclusion, global words, quarter in review it's dynamic Sales XXX quarter. $X.XX of highlights. our the strong turn are and excellent fourth our financial improvement. up basis to our cost execution year-over-year global we provide do to And to We we more had with demonstrated actions throughout Overall, of demand. and will turn record financial customer an in focused XXX%m, firm slide QX being EPS to X. team a work $X

producing as deliver up. XXXX. temporary aggressively our a year-over-year, Genie's the and sales, ramp strengthened managed has facility to execution, as and a point managed growth Our in in Mexico deliver team execute, improvement basis innovate business of SG&A telehandlers future improved competitiveness costs XXX growth disruptions operations chain now strategy to our XX% cost percent supply and proactively sales to continues of On is

Materials recycling and utilities. new solutions Turning electric to in and innovation, environmental products, including in Genie, new offerings in we electric grid Processing, introduced products

and capabilities our and better the Please is facilities, high growth. consistent is future in inorganically. continued new to expansion business customers, for of dealer Materials crushing integration portfolio in in product invest both production capabilities, diversification. customers. service customers. leading turn growth, continues have adjacent for digital and performing International, for our markets Ireland, of such Northern MDS with and It telematics in for continue segment products offering a businesses, Processing X. strong enterprise slide performer. acquired to invest to expanded invested such China location respective as geographic market screening brands MP a We end mobile to which Houston, connected serve their organically our and Texas diversified, customer MP across and of We future The assets and equipment utilities team positions as excellent

customers. XXXX. and and have recycling, and integration service or of with infrastructure. and X,XXX MP's than of construction, segment development global expanding machines diversification through and focus innovation, it's remains telematics CDI into dealers for dealer a end doubled hardware to in including product great MP's to fitted organically washing, the develop as adjacencies, number customer for has continues digital a whether it dealers grow is a and product service conveying, environmental offerings More We opportunity strength, Parts recycling. aggregates, are or using market the

with X turn business, review of excellent growth drive grow XG had and growing. our need to these it the are markets rollout AWP demand. and Starting offerings will to utilities will All maintain with and I multiyear electric grid slide continued Please end prospects. markets. along The

grids. allows called Viatec's bucket the Some of trucks, and trucks, This tree used Takeoff trimmers SmartPTO. digger idling. utility solution lines environmentally-friendly without recently technologies we maintenance utility Terex to booms Smart battery for include Power for derricks invested or for key product Also, our truck electrical expansion operate utilities and in

emissions. As a result, our customers maintenance carbon can reduce vehicle and

and cost we industrial to to Genie's I telehandler responding applications rental turn supply brand free slide is cost The performance. a listening products demand. replacement boom materials, drive short of America most new supplier product. Turning and named scissors for XX The infrastructure and J Top will indoor quiet discuss to Contractors Like site of growth in increasing labor. in offers are with and capacity the the COVID and innovative cases beginning Further, job on a Hybrid great the the Please power logistics, North significant and booms industrial we're and lower Genie's increased outdoor Options our impacting and and ownership. emission term. multiyear our chain other companies, provide Genie products. And headwinds markets. markets pressures January and February constrained These freight X in end new of shortages at world globally are our the was These have cycle environment. products. production European facing XX-foot around deliveries. and in and construction, recognized will flexibility demonstrate industry-leading Genie our strength business. customers new with lift

expanding taken inflation, half to we and these actions, communication which minimize have challenges the have aggressively supply the components been continues anticipate However, production headwinds managing team by to of of existing accelerated half cost customers, XXXX. availability in we they first cost staying and mitigate are The maximize to not of to in to of offset XXXX. suppliers Redesign provide challenges. inputs our We delivery and back and to pressures our disruption critical transparent these to pricing production, base. our sufficient and but improve close material logistics unprecedented continue

we cost improves price year, anticipate neutral for year. realization the the throughout full as material stabilizing being However, and costs price

flexibility supply turn first Julie with customer it Terex. that, chain are production to her deliveries. increase members earnings for I'll They resilience with working Our and to over and team And demonstrating Julie? tirelessly. call are

Julie Beck

cash to John. forward And and excited and with working sheet. have Terex look great good operational balance flow I with way to values, to I history for morning team growth stakeholders. very brand, drive Thanks, enhancing everyone. value all generation, strong joined the to free am improvement, Terex its margin strong

I fourth results. to the congratulate Now on turning to posting slide XX. excellent want quarter team

fourth up as XX% sales remained demand were million of Looking $XXX year-over-year year-end quarter, at market strong. the

the in Operating approximately quarter, operating last $XX due operating quarter, callouts. and financial we For Operating of our margins basis $X profit strong the of the increased quarter actions double improved $XX than XXX profit points by profit year. to million more an fourth driven in million to sales positive of recorded positive related million, of due results gain this Genie the disciplined levels. reduced of administrative to and Interest fourth our and prudently office quarter We a expense a environment. cost the was through market million than XXXX manage debt control, operating dynamic and relocation $X other adapting while costs. reduce to to of achieved lower

benefited items, the Our discrete audit. effective including XX% approximately from resolution of tax of rate tax favorable

a representing $X.XX quarter. Our our earnings benefit times, the fourth callout represent the quarter per in over quarter $X.XX share financial nearly a below highlighted $X.XX in increased flow year. slide was this expectations. The for cash Free last four of improvement

and First, IRS received second, approved we an not have logistics disruption inventories million and $XX delays. refund, increased due to yet

of double This continues $X that fourth which nearly to geographies. XXXX up by ago. a $XXX sales in business year segment operating while managing growth, of strong markets Processing These to Materials delivered year our results were ended costs by very is and and XX material manufacturing a customer MP margins compared continued slide the a well the billion, driving sales end financial all to quarter MP perform to demand execution. of backlog XX.X% with XX% and with driven headwinds. team's testament the operational results. and of the is Turning million,

million AWP by slide our market XX XX% and strong by fourth to financial increased management. driven compared year-over-year, segment backlog sales to year, quarter-end Platforms at the million XXX% billion, demand of from bookings year. and Turning of operating in $XXX nearly strong by X.X% AWP XX% while customer quarter results. prudent Work demand. $XXX of Aerial up expense last margin AWP was up the driven improved delivered were $X prior and quarter, global

XXXX XX slide to Turning highlights. financial and full-year

and of target. basis $X.XX strict a Our to we $X.X was billion year-over-year at of expanded margin, Sales strong members. times. XXX a target. $X.XX of meeting increased were XX% improvement efforts We $XX And our from SG&A leverage Earnings up points, lower billion year-over-year by X.X% sales, performance team XX% of XX.X% as in significantly the debt, $X.XX share spending a per million of exceeding business reflected XX% expense incremental improvement. our end repaid to XX% recovered. reducing $X.X X.X margin discipline. Operating extraordinary in markets our XXXX delivered or driven net the

charges office callouts. slide associated our gain and $X Turning million by cash debt callouts. of to financial profit to of Included in a $XX term results offset our This were non-cash there refinancing were summarizes partially This XXXX administrative and loan Below our related $XX line, was Genie with the operating relocation. XX. million slide positive million repayment. our

sheet to Turning I cash reaffirm balance allocation capital including flow strategy, want strong free enable a and generation growth. to to XX. slide disciplined our

costs, the vigilant of cash free aggressively year. members team in $XXX generating million all Our remain manage and flow

billion $X.X and resulting of debt flow services sale February our from proceeds times. cash X.X allowed generation to free in the of financial of portfolio leverage strong repay year, XXXX net this Our in us Terex

As a have no reminder, we maturities. near-term

maturity next Our is in XXXX.

continued invest XXXX the expenditures. of in $XX in business with We to million capital

flow balance our and a for reinstate sheet cash of XXXX. Board allowed to strong Our Directors quarterly free generation pay dividend and out

board cash to Just as the of this $X.XX per our has shareholders. an we return week, increased share to approved continue dividend

We at have available grow ample liquidity, can with manage $XXX we year-end, so business. us and million the to

Now and we turning how on I XXXX a full-year and supply outlook. financially. unprecedented you develop like XX XXXX our an operating chain slide would realize in is environment we to currently important to are to anticipate pandemic. It to update

billion supply latest $X.X chain suppliers. sales as $X.XX is to With change to of environment based We today. deliveries. approximately our sales Traditional $X.X estimate or anticipate of sales in positively. that earnings of results as This outlook could with extended billion. best the outlook the product negatively has dialogue said, our XXXX on per of applicable less share reflects this represents $X.XX So, seasonality

XXXX ability not function demand, Our deliver sales are rather to of supply the the chain a components. of

to the but capacity of demonstrated of past. such more billion to sales presented MP by have billion the the and sales supply billion and produce AWP $X.X to chain. $X.X with reflect We the customer billion strong have in internal $X.X demand, $X.X constraints

in the XXXX, expected and in is margin for to XXXX abate pricing half the the to higher the to be as reflects XXXX, low-single the rate To compared cost X.X% we we X.X% challenged see X.X% operating but help backlog. XXXX. peaking year. the range year of first lower margins rest shipped. MP's to the are in in operating to margin through we the In expect be operating by AWP of of supply headwinds as AWP throughout XX.X% XXXX lower US pressures first XX.X% laws, half the improving of of digits will the a throughout X.X%. of we first and is backlog income. XX% and input be first relatively Operating margin, will constraints. quarter the throughout offset in XXXX quarter costs, tax to second will improving development be operating in XXXX, quarter, expect quarter local on supply the discrete with to chain approximately by expect of due lower upon margins margin income to and first significantly margins actions and year Based meaningfully Turning the fourth realization work as global increased world of chain frame higher of higher benefits, quarter of effective tax US realized taken tax the balanced partially price

generation. of million flow to XXXX, reflecting are year cash of another million, $XXX free For positive estimating $XXX we cash

Corporate largest million, of being other evenly compared are costs throughout XXXX the our when facility. asset our planned will expenditures XXXX challenging to capital Mexico approximately the Overall, $XX represents improvement the be estimate guidance a Genie occur environment. supply in continued component to also year. performance chain relatively operating and We disposition net despite

investment engineering impacts XX% slide remains of actions, pressures. and along earnings an to perspective, operational customer when development, outlook euro per as manufacturing efficiencies, prudent to cost XXXX headwinds assumptions. including demand the sales our compared and strong. lower From Turning with will remains exchange reflects initiatives, will following business, new the a Pricing increase rate digital at sales. XX, offset SG&A reflects share product non-operational include XXXX. exchange Further, foreign to unfavorable due in our

addition, have full-year expected not as unfavorable $X.XX XXXX together discrete amount to is normalize we effective items to repeat. rate two to expected approximately impact share from These favorable In tax headwind. our as a tax XX.X% an items per are to

to debt Next, expense levels favorable and lower other interest interest in due rates.

are related negative, expected Genie relocation both and bond items, reoccur. refinancing positive one-time our to administrative and not Finally, to office

of is these how assumptions Taken the on to can view or XXXX. $X.XX XXXX chain This time this earnings our $X.XX. together, in result outlook share depending best and per positively impacted at outlook supply be the in develops negatively,

Before I such And his leaving Terex me things Duffy. finance to like to I turn Sheehan Happy and will strong John would support that, and with it teaching a all thank me for you, team. back finish, over I retirement, John.

John Garrison

Thanks, Julie.

Turning to XX. slide

customers our and Execution our drive execute, provide me foundation grow a our few to members, to and ahead will to the to and Looking you must highlights let XXXX, on from commitments shareholders. strategy. innovate is continue We deliver team operational improvements.

with of we enhancing our market innovation, electrification new whether products the doing in investing team environmental. end digital Turning facets to as are processes business product in Terex members. all of development, and business, also internal focus multiple investing such in new it's and the Growing improving ease We're applications, or for our Terex. is of a recycling business

manufacturing We capacity to and are expanding service customers. parts investing capabilities as our serve better look in and we

from grow are to disciplined looking acquisitions. a and have We process M&A

XX, Terex because have value market well which brands, remarks. to we strong slide positioned shareholder to businesses, upon in to Turning grow. can XXXX and is strong conclude deliver increased strong we prepared positions my

turn manufacturing will even we products, will it And and am that, in We continue in a including with Randy. an calls new adaptability being for, let capacity to where me have Terex demonstrated and invest, this stronger to resiliency challenging demand in result environment. confident company. I in back

Randy Wilson

Thanks, John.

like Operator? ask to that, As one a a you as With as question-and-answer up to session, ensure we this questions morning. it to the for follow-up and possible questions reminder, many we to during limit open questions. answer I'd your

Operator

[Operator Instructions].

Volkmann comes from first question Your Stephen Jefferies. from

Stephen Volkmann

the sort in could you of get about talked if out XXXX door. more more you Difficulty] demand [Technical

is, little question improve from my things a guess bit the looks and I supply a companies. in it from chain perspective like other that quarter hearing did we're fourth of So kind

firm by XXXX? us Or So, conservative kind can kind about guidance through suppliers? you in plays commitments up being through you chain? the backed out take of how maybe And curious seeing your I'm of you're is from what of this actually supply kind if just are revenue

John Garrison

not If has supply production the look we Demand back supply the chain. at really we're and outpaced just chain, unique. take a step across

disruptions continue to component a improvement. fourth similar actually an see supplier The other modest number persistent reality the to delays. plants logistics quarter, deliveries, parts. of decrease, frankly, didn't companies, we in We our related in So, we'll to and was, Stephen, due shortages see saw key like metrics, in on-time

so, did it going us and forward. that impact to And impact our output, continues

engaged. this, organization about doing we the are is everybody in what Now, first, is,

we We frankly, spent have with because and I a over way dealing that's than, frankly, customer-related in an with level. last the our And redesigns. engineering the of around helped, year is on my related all what more available marketplace. what especially lot our electronic process, have up that's chain really the suppliers make to escalation use supply We've issues time issues to availability, are. done I've working or components,

we As sourcing a strategic our expand result base. supply of our did initiatives,

So, we go third suppliers now for where and parts. for secondary know to

And then, schedule of as continue team The our daily, and out frankly become implement for and execute heck it schedules. competent we modifying is job, So, modifying at just number much so that doing has that. as schedules adaptable changes can teams are a to customers. really our to being get have of the we pretty a to

suppliers. we are. We're so, staying of communicating And with terms we're very customers with in close our our where

but our supply we'll would extent. performance, is based The than some Steve. chain what current you outlook, Steve, hedging I suppliers into our will, higher say is if previous telling to plan their Our factor will, material on outlook, have are hedging, us you are because, we by outlook, we constraints. guided that if that are we

supply deliver. our will to able for of as in our look we be is going best to have terms able we believe able more we And because this driven of customers today is what this situation. a if it's is supply be to more, chain the deliver is chain to again, the – supply chain So, deliver that really

other we're and interaction and my the in extended for XXXX, drive demand improvement our we up driving our believe in working supply with chain to I just strong our comment a teams chain businesses. think pretty supply the is with around chain supply across important we're environment CEOs setting not

XXXX not it's so, the need availability It's that And for supply. we just increase XXXX to beyond. and of

a this We an And the in is go But see that the so, focused to improvement as didn't QX. we through improvement year. we're team. going on believe incredibly effort we see

have we So, to and team a significant done heck prepared resilient to being changes basis. job be to again, absorb on the it. the And, they've had to for day day adaptable a of has a

that's again. companies industrial Stephen, around much most I'd think different that today. than the the it's So, world situation describe how manufacturing don't I

Stephen Volkmann

is For how were. kind see the much XXXX your how protected just And down, it long I'm steel, to a of get benefit. quick of be that on steel steel obviously, would specifically, until prices kind of as trying follow-up, as curious of go you sense it I'm

John Garrison

but, steel We Stephen, program, HRC, for or really US. coil, is just again, for have it hedging a the rolled hot

XX% for not business, market a plates. There's AWP Our about Genie, that. specifically of uses hedge

hedged. we So, been have

And price the in but is the hedge We an steel visibility, fourth the quarter year to especially continue into middle of to high, to and the to $X,XXX news in hedge, good Europe, we was, $X,XXX. America that incredible and was is, North have in speculate. not

markets off go indices as anticipating come of that high, And thankfully. steel the XXXX. that we in seeing are We into continues we're

Operator

Dobre Your comes Mig with from next Baird. question

Mircea Dobre

all detail that slide the I on is question appreciate My here. bridge and XX.

in So, kind those that And then, efficiency on any if for of you question of the in of to sort here. just raw $X.XX, would thinking beyond XXXX, delineate do XXXX? can major – It terms component I'm make where cost helpful own gains and terms from you us give on materials something here, in to that $X.XX is freight. sort of is, of some hang to you buckets things have versus the pressure. the to back that of we the things. of you've second be have that got what's this our worth assumptions curious there's part beyond here two way Or we're will of you it's can slide? think go price

John Garrison

please them try back jump I'll if And don't, in. sequence. take to in you

indices, it In substantial in components terms this both materials, XXXX. is in abatement believe, we our half the forward that especially seen is looking and at material of what outlook and do what again, elements, And cost of in seems increase actions pricing rapid the freight, both to going if in case, that's our the we've And reflect are you costs. continues. then it of And does the – cost and we some that action to see which, increases, current pressure back included – look reflects. pricing

our our So, into cost been take actions across and easy inflation logistics with and global material the transparent increases. now, showing back, obviously, actions but pricing basically all we're and taking seeing, businesses been level XXXX. designed of step you partners taken And just that way very really offset customers have These have pricing a XXXX. to down with customers, throughout pricing our our are showing actions not the conversations invoices. Mig, distribution we we've

action we've And that's taken. so, the

Mig, the a on of combination pricing look considered respective businesses, you our side, we've AWP surcharges. If at and

in If the in we pricing. XXXX, further we backlog results some increased offset had year the to deliver in In with did improves we pricing, at that and shift it at XXXX as throughout didn't, saw and that was we're freight the the material, that XXXX, realization XXXX, you price inflation we those believe the and was of an not actions back XXXX, half. at all cost increases we look pricing of acceleration supposed

that improve. will we realization So price believe

logistics globally. our that business, a job they've material seeing inflation at we're offsetting and really the of look good done MP You most

were if and their they've the price XXXX. and pretty updating nature XXXX, basis. And they neutral in more that of to neutral been got inflation ongoing they've half be business, to look of dynamic, you their in spiking the cost their they pricing with we results, able said, close expect an With And be year. in challenges at second of cost on will price

half could the in of we So, the be challenge. a that of little year. of bit think first a back the more half year And improves the

And Now, think Mig. is other across first, industries. why good is, that? prices answer your the these I yes, we And we're stick? question inflation to do are multiple broad-based going believe Well, seeing

our So, They're are the from price price increases not spectrum. customers seeing just us. across increases seeing

And so, been transparent. we've very

world if a going little And we not around across place discipline pricing we've that would stay. reflecting of business, good actions, again, price. do in I seeing the material pricing aggressive look to Mig, discipline I But I Frankly, say AWP are less in on increases that prices line dynamic industry. say say, I far, cost MP the good significant offset pricing be competitors are seen reasonable the trading say, believe discipline business, price Our America, across designed forward seeing. only environment we're we're China. everyone increases able North the costs, Europe. very would Chinese are Thus I would in going businesses, that we're especially the is the we're and these strong seeing and freight in now. to we've seeing given the price seen in inflation, to And seeing the would is that discipline,

Mircea Dobre

here. progressing [Technical maybe see on get you demand Difficulty] more a little color how

at and forward. what this kind going that looking softer bit I'm orders, this outlook the the drove little of quarter. a wondering optically to Just

John Garrison

backlog. that's is too I'm Actually, product because, backlog strong orders and customer going In a to prior time to MP our ship yes, is repeat world. our seeing this We see seeing more customer. our at at doubled If large to the screening timing. record little strong not but tremendously. demand growth our softening we crushing too we the did some really business, year. orders, and high. more year the take on the did across our markets end concrete had several global our want than portfolio. good ago, on one up versus backlog we around have Frankly, we year we're business, A backlog look of We're that and the

And for off bookings falling so, slightly. that was the partial reason a

handling benefit backlog prices business, prices heard only this, materials Fuchs, almost steel is up high scrap have is Our fourfold. metal of up me what's the are and you say called that

down literally we're believe In environmental business, And there, grow around a rebound so, demand seeing And businesses, lifting saw RTs we're our Fuchs standpoint. strong then, business. our has Australia we seeing up the we've we're the carry our and We made businesses and be our pandemic. And continue backlog throughout that Franna to actually for our going our pick business backlog and able world investments significantly. tower been great the from rate in order a in to our products. to an

is exceptionally seeing And believe, bookings that decline. So, backlog any those overall, with strong. – we're seeing we timing, not frankly, around businesses we're the strength. We did see some any across The and of again, weakness, just it's world. the

Operator

with comes Your next Elliott from Stan Stifel. question

Stanley Elliott

and looks happening Quick margins the Could performing a help the and little question about are Materials from AWP bit a like businesses it us the same what's both two about the understand think of for business. you. When we you margin the Processing the the perspective, dynamics for between incremental two? kind

Julie Beck

Just some strong XX% in business. incremental AWP as XXXX we And think has been terms about had incremental margins, in absolute the performance performance. really our in margin strong MP the particularly strong we of margins, business obviously, with

started incremental And what as material saw XXXX at in want then that remains increased margins costs. second half just our we was experience higher in to incremental you first XX% the target half to I emphasize lower So, and margin. in the

forward first the going comparison, in we back half about talk the So, the is XXXX it in framework and happens of the half the half first XXXX. you when look inflation accelerating into at as year-over-year continues XXXX, into and and of challenged

first we're of for we a Again, at. a the see business of of substantially by basis the a we're substantially of first half half, half second points improve looking If and where price year-over-year. we'll in collapse that's look XXXX. above below result incremental AWP, targets summary at as So our AWP in margin target our XXX XXXX to in our in the XXXX

and will business, level new well Northern products, XX% This margin, we're conveying, growth operating And first to It's environmental really pressures. places pressed like of MP's For investments capacity, absolute been maintaining and we're of business. and pleased strong as India. half they making such MP bit Ireland But recycling, China in margins. invest the a nice in the and too done offsetting be continuing performance the at again, they're We're inflationary operating a the with in about year. in has as as in job. business manufacturing little

So, the CFO, We're XX% achieve XX% new And working incremental the going support team margin hard incremental to fully margins target those forward. our of the goals. I understands long-term as framework.

Stanley Elliott

M&A kind Thanks neutral. we that the given growth I look the year. level we on at more side? temperature there? balance of lines, of sizable the hashing the it then, MP the getting growth of do really out lots what's a about go comments How for And sort of was side, of of being kind price investments or some the around Or an got deal? as next you've on cost those talk MP of because investment favorable the there's we into Could along

John Garrison

good very In strong sheets. – the the cash have on strong balance terms of so flow generation, leg, we first is news

sheet activities. balance related M&A capacity have to do We

and Our MP around focus the is business. in

the that still high a different fragmentation. compete of markets pretty structure there's we the at in, different look of degree and you If verticals

is XXXX. It's to out did – terms and Northern we Ireland. pipeline, in as which Southern our to International The plants is near adjacencies good. build smaller Ireland, products. great two our in around in pipeline also in It's it's space. the So, MP looks acquisitions a example. But We nearer in our MDS of

So, we're distribution our that able line and to the a product put in through sales. increase existing really substantial get

the may we're we now, We're and our M&A. MP going growth So, look to looking we're perhaps associated AWP our and with parts more right businesses, some there. business for service across would And looking think and to growth. MP, be because business inorganic we around drive there and pipeline do organic opportunities both

Operator

with Evercore Raso ISI. David from comes question next Your

David Raso

you're the still XXXX. XX%, American My to related XXXX even in the business of AWP question is By were thinking math, North you not XX% about my AWP where ended within how back cycle.

capacity It's backlog cost. when seem on locked about and sales your this floor you're for guide XXXX. your XX% as you is going where in where inflation, but Mexico, Aerials, thinking when you're investing not to which going that is ended think business, be still loaded about So were you almost utilities the looks it just just factory North right, versus below well, the of relatively of the and I like when think to in you price XXXX, execution American year, it's it obviously, XXXX. for you're But need,

not to qualitative just invest much growth quantification XXXXX a and but for beyond curious, the trying I'm these willingness with the not qualitatively, some get Mexico? and thinking actions, to how XXXX you cycle in description. XXXX, just obviously XXXX exiting capacity is are flavor are about investments with about thinking and your in confidence your So, just just in how we We're

John Garrison

speak both Genie utilities. within I'll and AWP,

you As on businesses are go our indicated, capacity XXXX. in back – based below we substantially those to let's demonstrated clearly

As since for our a result our capacity, increased example. now, and expanded China facility, and we've have Changzhou, we XXXX,

we're rightly in you Now, out, call as Mexico. investing

sized not So, are we near capacity I'll going business, utilities, XXXX. capacity since in to added were And that? going Why we've believe installed talk the we're going is then forward. we capacity, for talk grow. installed be doing AWP do I'll and specifically believe we Because anywhere appropriately then. we to We're Genie where

business look constraints being somewhat and for US, Europe, AWP replacement the by it's across delayed Genie pandemic. the the the North and If the David, industry. And cycle, now delayed America, specifically replacement think you frankly, business by was and just at cycle,

the If great, they're fleets rental you their at rental great. doing are aging, fleets look companies, doing grow, are growing, need are equipment they their values used rates to

industry or the other business. strong are been seven, with we're growth markets in the doing growth And we the a in cycle. year. Genie beginning entering economics to what in half David, exactly you've of long such a so, quarter we a the in cycle the believe replacement that are that as time, replacement period difficult, It's of predict that replacement always But pretty this what you coupled that in eight-year It's know, cycle.

is growth a David, we're business. next believe the give in to the bit with us was That growth, with, in made other in strong a several So, little going the coupled we phase of we utilities And a do that cycle, tailwind really replacement for business. years. investment our

new XX a buildings to brand there. from facility went have X. We We

well. So we've as increased our capacity installed there

the supply same issues. we've chain Now, got

But infrastructure infrastructure utilities business of there's look maintenance. constraints. significant growth in the the break the transmission, without electrical investment to distribution if you the got prospects those at even bill, utilities bill, we've grid, and through required business, So the and

in And we're so, as strong period a we in well utilities growth think business.

capacity I Northern going five segments good that and over our committed capital our Mexico substantial expand also CapEx the with into we in years for add, positive of the last have good as we've business manufacturing might in our of doing for the budget the MP improve to Ireland, continue capacity, in segment. a on we And a bullish We've couple improve growth couple years. a of believe tailwind believe do MP we're growth in macro capacity both forward. going our three result, we India, we're our opportunities It's believe we And there's because last fairly that time because MP going we're next are investment. trends in capability, to had business. for expansions also AWP so to investing to a XXXX fashion those entering manufacturing expansions years So in we're made and And business. made we've period because

David Raso

just my numbers this quantify revenues, the were your know it not already are help XXXX where But XX% right, end in And and were at where's Like, little we're lower by we were of capacity. still almost is of incremental the end right? of capacity Watertown on trying year? XXXX, below – a these with I if can us some efficient, cost bit, more to There you manufacturing. moves XX%? and essentially built, similar? versus fully just exiting the year. peak? it's adding that up be your of XXXX? ballpark? sense XXXX up cycle revenues the and a kind I'm running and you must getting running. last of this by capacity end viewing Where's Mexico, more exiting Is it to I of Just are XXXX capacity versus efficient? how where Just that XX%, it assume be Is your

John Garrison

Right.

months So, next it's chain. again, David, term and XX the near or supply really so, for

substantially China a export capacity a team, you've above time. look and at facility on, the expanded that that's and that utilities We right? achievable magnitude got we for the as much, we're Mexico Watertown, our the an growing facility we're in say period will on market be export want you temporary business. David, We our team our over I for order couple-year thing, only We've there of there. good us now. telehandlers gives the Changzhou just right got believe XX% to increased for of clear said, place, So, demonstrated – how our sit producing market. facility up But to we've want don't necessarily I our and if we've said of capacity business, our

Mexico. take We in center building two are special a to three that years the to complete next will purpose

we believe we're that's not XXXX. the for of a needs, just we given XXXX, just chain, growth and XXXX, capacity cycle the working we've our immediate, why hard we're plenty XXXX with market got David. but in that strong And them need the have so to CEOs believe suppliers understand of supply but on not and product working So, we

Operator

Jamie Your with from Suisse. Cook next Credit comes question

Jamie Cook

question I your Aerial. to top trying guess is, line guide just square I'm my for

I the midpoint at think to X% it's like up X%. implied

assuming it of in you your growth. to competitor assuming So, think, is, forecast. price who just – sort versus of little And square volume? double-digit that not relative or a are I for implying I'm what lot volume trying to

question. flow I that's guess in happened of you sort I during what's inventory cash the free And inventory question, talked short about more color XXXX know strategy on – can second a then, little my quarter? little just a So, the first provide for of build, just and the expectations. my was We

Julie Beck

seeing those that again, production. constraints. due it's When price some more we and look far And to holding again, are to XXXX, XXXX, volume increase, than supply at volume are the chain increase we're we increase. They compared of back

more volumes. So, again, than far on price

In we refund. free disappointment had of an We for in shortfall a approved terms flow, QX. cash had IRS yes,

to have haven't supply disruptions. in an receive had those letter we that. million yet for the And due again, and increase chain to And $XX quarter. inventory We this, still then, approval for also we is

inventory well. a waiting a production had we in that and water in shown And yet. more machine ship, parts have We It's ready up past. being the on as to in disruptions have for we sitting than the hospital haven't have lot transit the causing

we terms inventory year. working row cash inventory. we increase, did expecting, anticipating fourth right expect we an our capital that. cash we flow. to sales when another have And earnings. level we have that And talk talk about working with capital, in of XXXX, – if about along increase it, strong a So, in When free look year flow free we'll and of increased strong We're in increase

Jamie Cook

price share. It's more market John, going is not you're just of on out conservative clear, to you're you Just be more assuming clear, being volume. this to as of there. function to – versus lose up, the because or that just with line – challenges guide, the though, follow top a be of or it's the to are more well, guide

John Garrison

XXXX. In market can think, market product in market share. market gain held throughout any market terms in significant assuming couple lines, a erosion. the not Genie share, And of some share we share any we or we share business We're actually

our that. base some was This category, improve one with significant to telehandlers. in we're have we did And For supply disruption. product working

work changes So, not the It's market basically any constraints. current constrained in to to based a break those year-over-year no, basis. on environment significant got we're share we've supply anticipating on and chain

Operator

Your next question with comes from UBS. Steven Fisher

Steven Fisher

and in AWP in quarter like the highest of margin you I in margin or double-digit agree be QX with your half on a digit the you the as low-single half/second for color seems first should likely the the to year. that? margin it Julie, year, not Thanks, applicable QX, do with have incrementals. for somewhere guess it a in what year seasonality are this AWP? Would you as what is you normal And planning think with

Julie Beck

correct. a on each In basis we exactly first year. and digits sequential AWP margins be improve the expect to You're low throughout the single quarter the quarter, in meaningfully

So, it just improves every as quarter. we go

Steven Fisher

So, year you the quarter then. fourth the think quarter should of highest be

Julie Beck

Yes.

Steven Fisher

of expecting this be is backlog target any constraint a are that orders of are is on to you to booked supply how going if just end point? And going Or chain And revenue supply little you on take I March? XXXX revenues. upside, date XX% chain just Your them? that guess AWP kind your backlog revenue doesn't and stop XXXX of you almost of orders? sort for taking plan at XXXX, much for guess more if of the to are very just fully for allow by is I because your the the give delivery of on

John Garrison

So right. you're

of terms [indiscernible]. constraints coverage, In our high it's on historically the based

months. XX of backlog, report our terms for In we backlog only that's

Excuse our months. deliver we that. we say because me, we next XX not some in extends so, backlog have do only And backlog the that beyond to in it's expect what

objective we and actions through is increases. XXXX. be as go to freight pricing cost We material offset Again, taking will pricing our

So, those as would price a XXXX not we're level. XXXX price at at level, into a booking be XXXX, deliveries

Operator

Your next from Deblase Deutsche question comes with Nicole Bank.

Nicole Deblase

of where and similar cadence during it better? quarterly revenue look going this this the margin on is to quarter point sense. it So, you the Is what the that different low same path feels which like year, progression off kind prepared you each the revenue? makes mentioned gets remarks, for Julie, to is of start a Is

Julie Beck

half. about strength is revenue to The me

price/cost first that consistent. is year. happens gets are relatively really The half throughout second better the half What and really mix

really prices, have we higher XXXX still stuff we at costs in ship some the we're backlog experiencing as things that's quarter, is first and in again, the – QX. So, challenged

the half. price relatively They're mix. as So, But more cost to improves throughout first really, revenue year. opposed it and in half of the the second equal the the because it's

Nicole Deblase

we On about the original little row that below so second guidance to like How year do to looks think a the it bit This in below is XX% well of the SG&A XXXX. like beyond sustainability XX.X% sales, SG&A target. a sales XX% you're in XXXX? guiding the the

John Garrison

XX% would past. growing XX.X% actually efficient a a systems range, think Yes, gotten revenue lot a That more in were We've our we perhaps target. internal an environment, debate. in the processes. at XX.X%. reasonable that It's And we and is to was our more given

target change. would we to to XX.X% I XX% better us, is probably for XX.X% say subject at XX% to us a a as now, so, our say And more look for But range that would is than range plan realistic I the strategic XX.X%.

Julie Beck

of add, here. team down It's a were And XXXX. just SG&A to the $XXX job great done cost lowering really they million in has from where

very going to And anything creating as value add add, well. that disciplined be forward so, going only we're and about on projects. always, very we in those management Very, prudent expense

Operator

Stanley. Yakavonis comes from with question next Morgan Courtney Your

Courtney Yakavonis

of your some we're to think pressures you the we could that see to improvement fourth as you John, going improvement we cost mentioned see didn't quarter. year, an the in in through the back, I just that If go go comments

an way have the the $X.XX baking is cost that So, third if from be fourth the right lapping you that or and were year. you're improvement the your that in carrying are or fourth pressures, improvement compares outlook to significantly is easier quarter's in that of higher, and mostly that you would the understand that's going to tough forward the quarter

John Garrison

on of XXXX. those increases Part we in expecting result the that of the we're increases as reflects saw cost of the back It the increases that the half cost year inflationary a year. were in

XXX it to You the days flow P&L. contracts, of the remember, in steel, a through example, it for or so takes for lot

basis we some key abatement it QX we their it cost reflects saw indices increases based and amelioration certain higher that reflects closely. in follow of so, that or we're on cost in And the that the anticipating

Courtney Yakavonis

just breakdown, And you of logistics the rate give that material baking so what's materials, where Or run clear, you're I it is asked logistics? baking be us, $X.XX, abatement. are in? in also it are Mig put expecting And our versus in of the had if assumptions to But on earlier the is you from the side not improvement? improvement could QX, you in that primarily some an own think we can

John Garrison

the would significant at in looking still the material. necessarily not is improvement material it It's underlying significantly – world any constrained. I assuming We're just now. logistics right say really the

a side, is material we'll really but on that's see assumption. the it our operating not So, material play,

Julie Beck

And if material and pressure there the that in a we for looked XXXX, at costs, what's of cost majority is not vast transportation.

Operator

today Sachs. with last Goldman from for Revich your And question comes Jerry

Jerry Revich

difference up of about talk or any onsite, if helping coming wondering the anything mix incremental comment, for implications within that opportunities between of you And as power I'm in as for mix margin up electrification those what electrified diesel? opportunity along the coming the the the growing the that's you're you in are you versus lines if electrification folks you portfolio? scaling there that with an there's folks any business, your portfolio is, rises? Are now trains terms charging profile could can

John Garrison

A Just term, electrified. longer already we changing from the going batteries. electric, electric across portfolio of the is lithium-ion deep-cycle are product our changing businesses looks Genie drives, lot What's at all as really to products electrification, batteries said. there

seeing business. you're the so, And battery Genie role evolution in that's a the playing technology of

their boom, we But technology As that, more that lines that well scissors, and will will think, even the that given evolution in the cycle. see you see be – in the continues, product be of telehandlers I future. someday, adopted duty as will into laggard

depends we that electric be to business, is mains to an well. our distribution electric product incremental friends lot development adoption electric then know continues I product for industries about. times across are move we'll remain large we – There line, with what continues other the would ion specific in If diesel towards on it electrification Irish our don't not, again, a it's to or the the lithium products on But as have see if electrification. talking going products every the or portfolio, if option MP adopted product have of So, you're not. industries, world across the really we're those plan say engines. available it's is as the an necessarily available. as In

that market and of expensive, lithium terms being to solutions curve internal ion combustion cost was coming ion so and solution because lithium in many the getting alternatives. moving. more basis is in then, other industries, as point is the just it's think on to cost it's frankly, margin where cost you're a other cost lifecycle side, how And now were the originally, the side expensive. alternatives, is competitive more the especially down battery I utilized But that engine

the I will So, continue, costs that as with that think precipitate greater move also electrification you as come see towards lifecycle the down it.

efforts that's across our XX next So, incorporated not at in I'm key development wouldn't what's X, to the X, sure. product it. handling looking a into I say part going And our our how business we're happen Incremental, that. development plan. lines, years. that's of It's Jerry,

it's think is I world the where going.

Jerry Revich

side, outlook talk you're what you can for Separately, about is are driving up components the that ramp supply you different to three on extent having from you of any And because concerned terms what's chain what ago? in ports, at months water, if to to critical the about cetera? that the today, components that's supplied over the production year on have et the visibility alluded

John Garrison

other board lot the a components, the had manufacturers I to have to about, and similar what Jerry, we've to do electronic think there chips, talked modify like. circuits

components choice continue is challenge. Tied electronic electronic used. is the be ECMs, manufacturer to to ECUs, components the whichever engines, a So,

our adversely out. systems it's business near-term with the constraints then, been availability business, chassis engine are near-term a a there hydraulic systems, right that think we have us. several now, where So, use caused constraint. constraint supplier. only But Hydraulic will I And a And chassis. that that's work that's is impacted was for utility That itself challenge. the

ends primary can the we dealing with. that to that There's are ones But our to So, up creep the improve so needs those well. increase are odds working those that production as meet on customers. we're of key of, our the the the commodities supply and we're that

Operator

have you all today. us. is joining the for This for time Thank we that

now disconnect. may You

Terex (TEX) 11 Feb 222021 Q4 Earnings call transcript