TEX - Earnings call 4 2023 | Terex Corporation

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Operator

Greetings, and welcome to the Terex Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paretosh Misra, Head of Investor Relations. Please go ahead.

Paretosh Misra

Good morning, and welcome to the Terex fourth quarter 2020 earnings conference call. press Relations presentation website the on are of Investor our at copy release slides and posted A investors.terex.com.

In presentation addition, will slide be available the on our replay and website.

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

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

Simon A. Meester

in our everyone Thank and appreciate you, to like Paretosh, interest welcome would and morning. call earnings I Terex. to good your

of road you but this As over Garrison now, excited Terex CEO call to first earnings and I'm little my of the humbled and years know, as a John honored at many about take company, five is ahead. and over I've from been the very for

in We are attractive have company a financially great operating and markets strong.

We're XXX after XXXX will Harm team and We improvement points year its strategic accelerate position our XX% part in basis significant Terex ahead, I Please we in The over improvement do. increase XX% Zero on great Terex starting on our have our growth. everything my in team.So Way continue gross in the exceptional be in embedded of sales, making X. important in margins, operating a model to on these And years. businesses focus global demonstrate our and and an made delivered the a we've helping initiatives. strength slide we and turn Terex culture which XX.X% on Terex Values, over invested would grow, improved focus safety results our the are outstanding last market-leading capital we the XXX of basis looking and an expect points.These the to progress much of return few EPS as progress by of

provide Over the grown consistently creative care as XX.X% by margins strong a year, new year-over-year offering illustrated and that diverse management by near will business very XX.X%. a piece comprehensive XXX business years, digits solutions.Our XXXX; as points at launch executed Terex basis brand build and on MP grew Green-Tec, our to year MP sales its well portfolio a of of product seven find and improved to in XX% margin. last has strong closed operating by to team continues becoming double of Terex the The success story the vital tree recent the ever ways and per vegetation AWP operating

mostly through Monterrey to the and made. been built the ramp reasons performance. continues improve in planned, for the Terex, we're of built state-of-the-art new cycle progress largest facility team Our facility facility This ever to it's we've proud of and margin have and they very competitive up Genie's has as

next share goals. turn slide XXXX. in with like team slides, the of first very Terex with capitalize achieve to XXXX, Please In started on few facilities accomplishments invested customers investment our we some manufacturing of proud help our example, facilities accelerating expanded in our adopting with an battery and XX continue invest We and Monterrey.As now I'd of portfolio position are Apptronik to in great I'm members' products a building diverse to a both. is X. During technology in robotics, we new and besides in designed operating our with their zero prototypes the Acculon to our the net examples. trend emissions. to

Our maximize products. in geographies and investment and investment is across multiple return competitive brands highlighting products of cost received we for for the our on their and ownership.Our In to received XXXX, awards goal friendly on delivering marketplace. market-leading the safe environmentally many return on our focus recognition customers while reputation

We are as are to different in globe, committed provide at that equipment exciting continuing customer our and grid recycling to centers.Other products and from to expansion a around airport technologies to Terex in to illustrated and Denmark is customers. slide here the handling vertical used differentiated Please farming projects. turn data waste stadium develop examples many and value X. and applications

strategy project reuse. focus team cycle our environment.We're development and We're play execute achieve America's many our on maintenance an Sustainability projects building, our goals innovation of sustainability where in of to Please Most member globe. of Companies. that and community of recognized proud eventual responsible product for to all the business enable required essential to strategy, customers our users stages and life to are repair, the ways, the recycling from in the end X. and slide is sustainable that engagement we report around foundation, products turn on role products second commitment and operations one part our a Newsweek essential the for sustainable Our impact with materials to our safe year, proud in operate our naming of Responsible and to Terex practices and minimize consecutive

important perfect X. score review been team is ensure Index a has to team inclusive a where an environment the in work of doing in Terex our Additionally, all Please to Rights valued. first-ever work Human Equality members feel our and slide recognition awarded Council turn

markets. in market-leading and waste benefit megatrends.Investments recycling global are clearly is In world end from addition and to spending electrification infrastructure, support for the that company favorably years impacting Federal and the will in our around diverse our digitalization, positioned markets portfolio, ahead. products our incentives towards a demand

capitalize portfolio product opportunities. on to Our these well-positioned is

like recycling year, Ecotec, infrastructure growing this Systems and and have and Powerscreen the and and Terex and the solutions. in have recycling growing Recycling environmental XX% growth grown positions screening associated leading for aggregates by brands For and markets global demand brands CBI demand both waste driven the development MP from product for example, benefit new and demolition the projects.MP in that Finlay from crushing

Our turn very on continues power. U.S. are well-positioned move as And demand beyond. Utilities grid our support infrastructure slide is world more electrical products from accelerating events and data to for and upgrade benefiting the to industrial capitalize to manufacturing the demand use from the investments trends to the Genie to business and required XXXX position well mega Please electrical centers, X. entertainment.These to projects, us of

is going into historical healthy highest history, momentum XXXX. providing $X.X above recent Our billion levels the second of QX still significantly backlog and in is

normal to to Our times. issues continue continue navigate chain improve deliveries return and successfully customer year team supply last to members more worked and to lead hard on-time

In $X.X increased order robust patterns. sequentially, I it Demand reasons fact, supply laid the continues chain, in to normal still improve. billion is typical QX bookings at with trends seasonal on XX% more disruptions slides.We to but the the some consistent for and however, previous out return consolidated a see,

outlook business Genie above positive MP backlog Overall, backlog our book-to-bill quarter these business and a with levels give our is are strong Utilities order our activity strong in booking XXXX. for XXXX. and XXX%, has of locked Our that a taking and AWP us with having bookings trends above ratio norms business in the for a orders historical

Let's XX. turn to slide

clean double-digit in increasing combined and but markets in our and market. which the rates adoption energy very cycle trends our favorable tailwinds approximately upgrades in for goals. grid products equipment and utilities battery extension rates These the end positive. seen in with softening business.Additionally, XX% high a fourth such expected see transportation, broadband. main India positive investment especially continue non-residential projects. and on The manufacturing months. end Spending up market India, markets, been quarter.The North of in last by of related trends at increasing decline to Genie grow, spending climate zero-carbon our and driven another up in growth period, for is in to projects have These continue market XX,XXX is semiconductor projects make grid and slight are by beneficial power-related two-thirds as in recent announced manufacturing, projects mega replacement some to XX-month needed emerging in is U.S., electrification reported the U.S. EV has than government In to We sales has the utilization supported America the Europe, more

and from will benefit chassis screening shortages.Strength will MP's business we markets expect and businesses. to concrete be and growing benefit utilities demand, end continue to crane crushing body by this infrastructure general construction Our while in and constrained U.S.

expect We higher European with softness the offset of some in the to exposure. businesses these tailwinds

for expect increasing continue waste Environmental growth its We business recycling. MP's by driven demand to

end our turn and over offset Julie. in Our positive softness. markets. new Fuchs exceptional geographies our into XXXX.And an Overall, we had the that, of and it with business to expect is demand markets are me let about on focused products in We strength most to near-term XXXX expanding

Julie Beck

Thanks, Simon, everyone. and morning, good

Let's quarter normal were a softening a for pattern. deliveries demand offset our XX. products look expectations strength $X.X found in with take on European markets in North at billion slide reflecting to consistent healthy performance of prior financial America and our seasonal Sales year, returned more fourth our and as some

onetime accelerated a verdict to excluding sales the and due expenses increased of product to SG&A initiatives in and of pricing to increased started manufacturing inflation was margins wage other efficiencies prior compensation $X the prior year XXX over onetime incentive liability and included ease.Gross as XX.X%, MP. fourth XXXX quarter inflation cost year were margins basis expenses. year Gross offset that costs. reduction to due XX.X% $XX over Monterrey million start-up and million Our constraints points supply charges strongest vesting chain the and helped of by improved as cost

items, from $XXX SG&A operations these sales of was XX%.Income as percent million. a was Excluding

and million prior mark-to-market charges, asset the onetime million a deferred more a tax rates. other of Switzerland, company's The the operations tax of effective XXX MP. recognition was fourth of expense to $X.XX million to gain than year. quarter establishment a from $X.XX impact and including Excluding investments, associated a favorable $XX from improvement $X.XX adjustments as on interest basis to million liability prior with operating was global margin $X share items, XX.X%, benefit nonrecurring quarter the charge other offset of a vesting a XX% in Switzerland.Fourth points a declined expenses over mark-to-market related in tax of charge in a a onetime net our higher year of verdict income $XX benefit $X.XX $XXX Interest related included of from related third-party product to in accelerated operations due rate tax operating favorable earnings with and the the $X.XX per attribute $X.XX

XXXX in share quarter our profits as inventories million well offset our full fourth results, lingering $XXX items, nonrecurring execution. disruption.Let's segment to solid to was and a quarter delivered support the XX% on at with production Free margin was slide year once these moves demonstrates by XX.X%. were take increased for look earnings basis per sales partially flow as in $X.XX. Excluding starting segment operating operational cash were XX% as found as performance chain excellent XX. up supply Materials points of incremental margins XXXX XX expanded continued MP's operating again MP Processing added

from compared and million, $XX and For million a and return margin the $XXX expanded over up verdict. price of sales $X year full Monterrey norm. mix, cost Europe the million, quarter management backlog very by financial million efficiencies is great environmental an a by disciplined did as and unfavorable due solid $XXX our in activities, bookings unfavorable operating of XX% The improvements, sequentially. facility. historical XX, XX% segment customers. of with to AWP Xx to increase while $XXX and backlog reported fourth for driven for sales was in quarterly charges.AWP basis increased our XXX you cost XXXX up regional XX%.The were which XX% bookings with operating ended efficiency by severance see MP results. a XXXX, points its seasonal the an million, as strong of reduction discipline, strength $X.X billion, profit Work initiatives, quarter liability slide had sequentially, seasonal reported softness offset above manufacturing operating driven in $XXX delivered is of were at performance offset was Platforms by year. fourth increase product excellent sales million prior returning order quarter, historical slightly efficiencies AWP Aerial by partially of prior approximately our still down team MP On all job an improved aggregates patterns cost the norms, to demand exceptional the increased XX% quarter year ramping X% margins incremental the of to was fourth impressive on profit manufacturing patterns. by an to cost strong up delivery product down while the of AWP products.MP's and with million $XX Strong reduction

to to included favorable share XXXX in year from improvement earnings earnings our we increased nonrecurring billion Turning our the performance of discussed Sales XX% increased team financial efforts of Full a $X.XX earlier full the businesses $X.XX. from $X.XX extraordinary per up the highlights; $X.XX. of to slide $X.XX call.Excluding net items, XX% items on impact and year-over-year share that per were in these XX year-over-year. reflected year significant and Earnings XXXX members. our XX%

nonrecurring driven consistent the as of million point price realization. as XX%, nonrecurring year income explained effective the rate our nonrecurring which SG&A of operating of XX.X% expectations.The prudent tax a with XX%, a year cost establishment expansion deferred as is million excluding XXX year over Incremental were basis excluding charges, was for reflects Swiss $XX margin earlier. which tax prior excluding was Our $XXX by Full sales, items. margins management of the well impacted strong was operating by assets with XX.X%, XX.X%, items,

net Excluding conversion tax Please over cash resulting been slide overview XX capital of see strategy. an our the million million XX% rate flow increased prior would a impact, our $XXX have $XXX Free the of for effective year, in to allocation income. XX.X%.

production We facility. navigate flow for $X and from share our our were revolver chain million million from third quarter.Capital of up our year, our supply million level $XXX debt free of the to at was end inventory We repurchases $XX the continue but the support reduced to to and investments in the representing sequentially inventory bonds cash our a $XX decade. higher million, down returned our Hospital dividends. disruptions. large million, rate moves down a year as we fixed a carry We our XX% prior related $XXX shareholders expenditures investment Monterrey to with paid $XXX the and are of until and X% have of million

below at leverage remains net through our X.Xx Our target low X.Xx cycle. the

increase the business. million, profitably $XXX position basis a value on and of liquidity of XXX ample year-over-year.Terex up an excellent have to and capital in continue reported we We invested points XX.X%, to return shareholder is grow

anticipate which negatively per to Investor With of billion, represents $X.XX of consistent our billion and of outlook; change Now great outlook turning many as positively. to committed slide of year excellent with in to $X.X performance solid that best $X.XX realize, said, team results to Day XXXX delivering to uncertainties, XX a operating we and year important our our our was members the are year macroeconomic or environment on an $X.X based could full Terex, for are today.We geopolitical complex earnings reflects year this variables another ahead in targets. XXXX. of another well It's estimate sales share and

customer but Europe. as and around chain reflects incorporates also well as softening labor constraints volumes supply Our by in caution sales outlook supported demand, healthy

for neutral use inefficiencies. the XX.X% the start-up emphasize reduction expect half in operating want in when second each year-over-year other remain delivery to as than more sales to the do second first half cost offset activities Monterrey higher year to first making with stronger the year be full to and the We fourth aim to price-cost improved first as XXXX range third and the customer margin quarter sales XX.X% to we of and and we comparable anticipate patterns.We seasonal to comparisons. return We quarter

including expenses a XX% we approximately throughout tax rate million estimate approximately with component normalized expect the effective upon of Based our of of XXXX Mexico to million, be $XXX global our to facility. corporate of the rate laws, year. and million, evenly XXXX expenditures tax expect other being flow XX.X%.We free versus Genie spread We $XXX largest cash capital $XXX

sales businesses. year. be We to the range anticipated in of segment sales continued full XX.X% outlook. realign billion, year, supply be to and prior the in product the billion our Compared to lower margins to $X.X our are to MP due Crane for of and to quarter mix.Sales consistent XX.X% lower QX levels unfavorable to margins are of first are remainder basis and and in margins to the strong relatively Let's points QX increase and review from demand for Fuchs anticipate be with $X.X expected the XXX anticipated regional approximately the year.

the billion anticipate will with partially as Terex expect for are operating operating QX, XX.X% XXXX.And lower activity, team the to margin plants, AWP anticipate geographic with to We strong be said, $X.X favorable you, inefficiencies. also continued offset profitability mix higher in cost-out Simon. will year. by sales billion and and historical year sales to and is prior our that QX margins mature volumes full patterns year drive expansion with slightly absorption of by of We $X to sales offset to of be year highest quarters. the be I another it We turn for in sales due due closer unfavorable than expect start-up.We to which XX.X% back QX product full improved to the the at to higher to inefficiencies AWP Monterrey increased and those quarterly The cadence our delivering committed to start-up margins

Simon A. Meester

Thanks, Julie.

results expect favorable diverse we leveraging XX; deliver on driven strong continued slide markets. portfolio by efficiency, end continued on and execution, to our the XXXX focus to Turning focus

and businesses have We brands industry-leading scale. with competitive

And for it look our come. back forward Terex's strong a I'm to continue about that, we future excited that committed customers years And the with diverse very and to me turn have is shareholders. to team let to engaged and highly to our value growth. our a have support sheet global and experienced, We to Paretosh. create balance

Paretosh Misra

Simon. Thanks,

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

Operator

Elliott [Operator line Instructions] of comes Stanley the first from Stifel. question Your with

Stanley Elliott

And Simon welcome.

about first you starting you business thing the Just little growth. off, how How component curious of I about versus you opportunities So helping that bit guess M&A organic a flesh was that mentioned thinking have? kind more? are out potentially the accelerate you the Could thinking overall. you're the

Simon A. Meester

Yeah. Stan. for week Obviously, Thanks the the fifth my job. I mean question, Yeah. on

So learning built a listening still and very over I significantly years, company to we've great appreciate past transformed and mode. I'm improved truly hope much ability portfolio our But we can in and you the several the execute.

We have a with a of margins, portfolio values strong operating strong strong now businesses balance market-leading and sheet. with

lot our and expect we're said obviously, our We to my market. CEO.So $XX on I billion and I And discipline agility. be business in our an billion So we that on play to obviously, many efficiency ballpark sure demonstrating strong a and a are and opportunities building $X mostly a incoming maintain operational we that with as out accelerate making our on focused why But growth. remain that's for addressable growth return organic capital. see invested focus

there's expand that or buybacks perhaps is X the needs to moat.But And obviously addressable incoming be to whatever or it But but years have X then affordable a share also financially versus the will think to least news, optionality provides versus our CEO accretive. were on shareholder But obviously at like we looking to that obviously, lot for things strong ago. that opportunity needs that and value. good our and at could it be of force have markets or pick we best table, where So anything opportunities, we dividends as It I widen me for strengthen we're we actionable. organic needs the growth. rank be everything just inorganic portfolio,

Stanley Elliott

color more, could the of roll volumes. market? bit of Any kind Yeah. margin, chain utilities out also of on And XXX maybe we flattish Is Mexico expect When to points the you supply I piece basis kind the would How more off? that very helpful. easing there is up? the be question the flesh a little guess, should Aerials kind

Julie Beck

all question, AWP, XXX and delivered Stan. did chain managed basis year-over-year strong disruptions margin fantastic successfully a in in still the [indiscernible] and year job the the supply XX% Thanks team sales they performance. projects up and through for expansion of OP longer-term points. with inflation The

square burden online, so the that facility feet facility. our largest run ever Our until an it's absorption in what inefficiencies favorable suppliers. unfavorable and In to is built.And completed. that million we've QX, outlook about approximately put Monterrey largest were come facility It's in-quarter efficiencies are we've supply manufacturing new starts moves X one on as our $X chain as to going million to of we with unfavorable the issue had had manufacturing product our or

In related the accelerated $X moves.It was to product addition, charge, assets some charge a -- depreciation Monterrey depreciation we took being of was not to million expense moved a facility. the to which due some

in some were there severance some AWP addition, In and charges unfavorable FX.

would disrupted a the and facility. and QX QX. into next improved margins confident and points, So efficiencies We is are in manufacturing QX million charges and in in in year.We next forward will most million, the margin in and charges and The utilities see a QX, first improvement we did year us go related $XX as basis million and we're outlook a related fourth online. team for the about the job Monterrey nonrecurring and to did in from fourth And QX the that charges as that efficiencies did $XX of we that chain -- our great about have forward behind half be XXX going expanding depreciation supply mostly perspective, would improve manufacturing improve issue issue by the plant yes, assume utilities of to to the these of margins quarter. $XX comes severance

Operator

comes of Weber Your Fargo. Seth next the from question Wells line with

Seth Weber

you're is I MP is just guess outlook how in Julie, the understand XXX just think mix? product/regional it year-over-year that margin it bps And will maybe as be to through bps to and is -- buying did, bit. gradual much that you that quarter to get much that -- better? going into flip now? acquisitions just of a said to suddenly year-over-year a you that of more lower margin dig of transitioning the stuff a that's or down second portfolio just kind trying get right wanted I'm little is of year-over-year some the compare that, lower I How margin we first gradual I that Is the into is XXX quarter.

Julie Beck

for have the Thanks question, operating to the OP XX.X% year. Seth. margin slight to the to forecasted MP is an just a XX.X% It's in our mix. margin in due year-over-year product decline in

Our highest and than our business environmental sales, segment is they're a margin. bit the lower growth little

the that's business demand we at and QX so And basically. QX, down in our and a and to rebalancing a cranes lower be bit on is When supply how some volume to full due goes going of Fuchs margin just sales year bit. tower look

be so QX, QX And to they're remainder QX the of and expected and basis for XXX be are margins consistent the our increase expected QX, from but points relatively to lower year. in then

Simon A. Meester

Seth, these these margins. all businesses I strong businesses. They're are performing that And would add double-digit -- all all at operating

on last years. remarkable So about. been they've my businesses per double of journey to over we're are these And really the last mentioned years. talking in strong X how near X, all grow double-digit businesses. opening has able nuances as X now the are these MP's really been And I that X, over year digits remarks

XXXX. So this nuance for really a is

Seth Weber

guess for AWP seeing from you all have I can your that pushouts or talk that AWP. to the you business. customers the cancellations on any XXXX? And follow-up just -- of a is just just are Maybe can in backlog you it. you Got

Simon A. Meester

backlog, really very I strong with say Yeah. for issue, up Thanks AWP, question. Obviously, XX%, quarter. AWP, strong the record-high levels. it's booked demand for in not negotiations demand, the underlying all were historical bookings the would fourth nationals still sequential Xx not a in the

will Some quarter. of drop first the that in

We So gives to It's is book. order first bookings going into say would strong taking cancellations, more in for we a see the sticky. come us XXXX. within quarter. expect a confidence bookings some definitely lot AWP we strong XXXX. have don't I of Utilities

Operator

Your Fisher next question the from Steve of UBS. comes line with

Steven Fisher

Simon. Congrats, Great.

on get some down a pricing, few assume sales they volumes American is your to expected I'm of Are in Europe to percent. expectations kind kind the broad with American are guess we telling curious rental framing sentiment what have just for positive AWP their I a North volume context? trying they're parts assume digits, the and up, I and you I spending XXXX. you and cyclical Are overall flat Just year that is? in or of that sense is be growth utility. the down how thinking channel of some fleet up North broader mid-single this flat,

Simon A. Meester

Yeah.

in the You still got first little a of it into bit very strong supply underlying probably backlog -- has very, bookings, little America, they're customers our a is demand a it Europe disruption, bullish. can't strong strong. North North some strong all us year shipment Still right There's chain beginning the as -- versus of very terms greatly about one it though on complete said, part that that They even we the to a nationals, with up, assumption, in yeah, America America going first stop for activity XXXX. our on XXXX improved of large Overall, the but year. feel takes your all only down. demand another I caution Europe, North product.But

well. matter be of strong a to fact, seems As as XXXX

their product it to seems global of a to a into mix. overall, would little with And XXXX, terms because say our bit standpoint impact But from exposure doesn't in us just just globally geographic carry and as we mix it kind projects. a mega really out it because the forward. going nationals business, see do I probably So of of washes more activity overall,

Steven Fisher

and on it very stabilizing? any Did it That's And the quarter? is helpful. then is particular of factor a there? part get Europe How Europe. Is how worse in a follow-up localized competition Okay. it just

Simon A. Meester

you Are about talking AWP Yeah. or?

Steven Fisher

yes. would good. be AWP, Both

Simon A. Meester

Yes. Okay.

with So I'll AWP. start

and So it's non-res-related, -- that little mostly slow where Scandinavia UK, mostly AWP Germany mostly a starts Germany actually MP UK. down, is for It's Scandinavia. it's resi, and the matter. bit for mostly impacting both it and businesses, it's it's and the to

have tied bit terms MP, little it's to that In European mostly more the businesses exposure. of a

for market, Fuchs, Cranes with think So specifically facing business, headwinds. are market example, the obviously Tower scrap tied business some our Fuchs Cranes but to that also our is to exposure the European their

would So exposure. European out in that's I terms of what call

Operator

from line next question David comes Raso the ISI. of Evercore with Your

David Raso

a shipping to some for you current talking you about getting a moment, has answer would of then in industry the of the what might simply a straddling that you're saying we dollars 'XX capacity way trying that but supply of some loosened the the and mature are you give can unfortunately, of can't.And if AWP. been? would guide pushed in just be some maybe simply 'XX expect do AWP revenue have lost Mexico follow-up the incremental plants, be that more that had the Might of hard think and I'm see you or at elsewhere up in hundred sale. couple that you to just be could running no initially for 'XX you curious, question I'm the idea us be demand constraints to labor 'XX

the do inability what the think 'XX. to ship to trying right and cycle -- the and to of about AWP does for now, the arc 'XX just I'm that So tightness

Simon A. Meester

Yeah. Thanks David. the question, for

backlog there math, to everyone's for million $XXX all, carried of first AWP XXXX. the over about already So is in that's

XXXX. XXXX, already million of not So all numbers $XXX to for about allocated it's we're that the reporting backlog that is

it's In very commitment the about I backlog case Monterrey, think built, sales could remarks, to have that supply with XXXX in XX we ever ramping in And obviously basis mentioned, a say large early said terms believe, happy strong what a to current made I and the and was for of would will And we we've year today, the of the coverage we're in X end there's a say the to be our still outlook, we're too year, large of to we're guidance opening we by a we're the a seeing remainder on that improvement. we months I trends, -- progress strong XXXX. the XXXX in XXXX, for continues speculate currently on definitely to we But And Julie facility upper as year. upside see the I facility, up and XXX that year. much strong XXXX would as to else improve, that for what still would be the point margin deliver operating towards very in of track very year. our my making.We're So chain range. if I

David Raso

it your said, customers And 'XX. into though. can ask get third asking just inherently not you but it in let's it in relative want up, somewhere so on, give can to year, you the things curious I'm we AWP, fine, there second with the know kind and I 'XX we that for what's can't half of do just or it sense particular, about the a I'm 'XX I going of can loosen answer does of again quarter upside. I as your from guide, can X just say, if it push years 'XX? those you else you, dynamics are Then for maybe look, torque of if get number a in, us conversation to what Is thinking so just the like get don't hey, the it

Simon A. Meester

what important I customers is What that And to you answer we're don't an can in give is our to, committing think us actually we're Yeah. on. what today, I David. for delivering XXXX is

currently want our that's committing we're to, over that first to And XXXX. eventually end What we so up in over of will how And don't spilling into priority. much spill XXXX?

to. example. And a Currently, we we middle have upper upside could want end to we want I what we the think can't range, that's have could to so but we're give the build, hit that we of we ship. that and year, that's towards the you what number what the of to That's like when what -- look committing eventually of for

Operator

Your comes Steve from line of next the with Jefferies. question Volkmann

Stephen Volkmann

I two to capacity don't adding full this is How the in Can this running facility whenever are know, years or ballpark much us steam. and in, you AWP going with up little sort roughly? I'm stay in you theme bit. Monterrey product is for a of

Simon A. Meester

competitiveness wanted reason Monterrey, was the overall we building business. So are Monterrey, because improve to of the main the built we we

capacity terms City some in bring very you Rock Hill. facilities be really focused cycle will number, a to We're to performance. be mostly us Genie's well. like It's of our was you. hard the actually offline to mean and a that goes improve higher-cost kind it a supply also America.What Oklahoma facility margin expansion, can't as project I that give on I honest through And mentioned, supporting it's it So facility with that's and mostly mostly of North expanding will helped base,

built So facility cost obviously, for us, is mostly grow. but and it play, to competitiveness was the

And so, but capacity forward, we for going now higher-cost bring can to mostly it's offline. expand

Stephen Volkmann

million I year for full correct thinking there the competitor. wrong. kind start-up sort I'm said think, to you costs of expected please And million And in be other me Are kind you we AWP that there should $XX aware your in the I'm of if about any 'XX, headwinds biggest in with $XX of kind margin down just bridging gap of of XXXX? of Julie,

Julie Beck

the think Monterrey, related more million the Yeah, XXXX, first $XX primarily in of I saying inefficiencies, to when about guess, million year. centered $XX you to the to that's but half we're

expect becomes efficient in production improve And and facility, is down. to more QX go so, the that more as going inefficiencies it through and margins QX we

in Monterrey difference.And I'd of at and up I time the of you started to of first compare. you second just -- talk as So that's half half when they're XXXX, not QX the year-over-year, primary about, comparisons the this these the guess our it in impacted margins, QX we look take so XXXX our

first were the and second in year. those through half won't half your -- that of be the then, have quarter, And the helps much that XXXX the fourth will of And in half in running margins the inefficiencies those second in calcs. will as of improve, so, inefficiencies if we'll XXXX,

Operator

question of with line P. Zakaria J. from Morgan. Tami the Your comes next

Tami Zakaria

So, question Monterrey again. my the on is first facility

when let's you improvement that number. would in how the points a margin down, improvement target? margin volume-dependent needed points is capacity see XXX get is understand it XXX still let's So, probably for XXXX, assumption, ramps, margin it to given trying Just in utilization basis big that improvement to say operating it's basis say, facility, a if was volumes, XXXX

to capacity XXX utilization the points versus volume target. about trying dependency that just basis think So of

Julie Beck

that variables we're we Well, Tami, an point would lot all Simon basis a things time. expect, there's anticipate the happen, always wouldn't issue at but have point same, this being in expect XXX a improvement. seeing the to demand said, we that a so in of marketplace, And strong being we would as

plan points XXX XXXX. improvement on basis margin And so, would we the in

Tami Zakaria

it. Got

are about timeline That's back And some been has are helpful. thinking in Okay. recovery opportunistic with Europe. some maybe you on market? more go and here for very market lends down, then, going acquisitions growth for some any Europe to it quarters how well wanted Europe of And be that with color you Sitting that to ambitions? a your on if thoughts potential to now. weak Europe? to So, today,

Simon A. Meester

fourth some least for quarter terms I of be as wouldn't soft landings, us of further speak, of their Well, we like about I of at terms speculate. be I Commission in want able obviously, wouldn't most in economies.Yeah, to specific, active recovery? the to in to have of going time terms Tami, year. Europe and for over action, we in is an certainly the the think spill I eager to of have behind seems inorganic other their it opportunities. first this first of European quarter, and second than especially mentioned get we seems landing. What's the like landing of pipeline in hit sort UK, happen certainly couple But little you It landing, it talk Germany bit so soft Yeah. managing and is Actually, you the see hard seen say it can landing, no to the a quarters, mostly earlier.

we anything As very shareholder invested investing And help faster, all have grow own we're at moat or I versus in look capital again, will other increase widen on as that strong but current the rank to stronger, could just we we our activity. return us everything on make us mentioned, should our value. posting we options

all also it of Europe, have we options versus lot that and a of looking force optionality, rank but we're So, other we always we the will course, have. at

So nothing specific out to call there.

Operator

line from DeBlase Bank. the next Deutsche Your of Nicole question comes with

Nicole DeBlase

question the focusing free first cash flow. around Just some on dynamics of

normalizes roll can you as working little XXXX? think about bit expectations CapEx where 'XX, we a guys into So, for your Monterrey investments? And capital then, post for you talk do

Julie Beck

facility, conversion XX% our cash free a year for about And a so of from $XX City of forecasting of had or to Thanks, benefited free This of net $XXX which Nicole. million We cash flow which million, income. we're sale year. was next $XXX Oklahoma was flow million.

last or of don't Monterrey guided on our and in We in capital expect $X our Monterrey Investor Day XXXX. foot million X% we've have coming million expenditures. to year the -- X% in to facilities XXXX that any the X higher that -- new -- for square we end into We've been sales of facility due and this to major

continue cash free the in forecasted slight capital, would have of a so, But we flow to seeing going performance come disruption all we'll of make improvement XXXX working supply percentage into stronger we're moves working we terms higher carry to of in a team our all just part because in net were that of forward. and improvement. and that compensation down essentially net have really some in still working inventory year. capital So, chain, -- incentive production net everyone in And XXXX.And management capital the our bit to sure that and a expect conversion forward going is just the understands the

focused is on net very working team the improving capital. So

Simon A. Meester

and Monterrey year upside going conversion definitely the I third on of XXXX into of have say we because But investment. last cash would the

Nicole DeBlase

of I dynamics contraction. if underlying the just MP margin when you Got Just revenues basis being it. sense year-on-year the to behind spoke points nitpicky magnitude there? one? And about Julie, the then, any XXX ask the quarter, down understand could a first of in trying

Simon A. Meester

Yeah.

Yeah. the -- sorry, In was terms of right? revenue, on question

catch started that So quarter improve, to to up I our I it's quarter the started important and that thing a because XXXX of to chain add was XXXX the think on would we our is shipments. quarter was remember fourth the in the strongest when lot supply really first first of

especially in Europe that the our to is in I So makes mentioned in little little quarter then come MP the off. MP a the started businesses, kind fourth a bit. as earlier, we that and really year-over-year But see XXXX, slowdown where impacted comps of of

Julie Beck

in Fuchs would X% Nicole, and sales that the first in in decline quarter roughly a quarter. to first the in expect rebalancing due we Towers

Operator

Your next Steve the from KeyBanc. line Barger of comes question with

Steve Barger

low just try to understand are of swap near high-cost think footprint terms so for another revenue trying it in more years I'll units or in everything to will the be flattish I up in two following have capacity if way. is peak running, expect the all dollars questions revenue 'XX and XXXX and 'XX? dollars what cost you capacity you in we're and After do out

Simon A. Meester

We capacity, to do upside our yes. have in expect

Steve Barger

frame magnitude you at Can all?

Simon A. Meester

No, I can't.

Julie Beck

mean, the I to you have can shifts, when capacity ability Steve, that etcetera, about well. so think step it, as go add you functions into

not easy that. always it's So, to review

Simon A. Meester

I in can't most, all hard you facilities, not if shifts of number Yeah. I mean, running but now. a we're single our give

Julie Beck

about And about talking customers when as in we And indicated, are XXXX have think we it, and XXXX. XXXX. Simon strong Steve, years

Steve Barger

Right.

is if near-term that low the basis XX talked kind efficiency about, points? runs margin XXX points $X or And improvement? from programs? productivity points range, mid XX What's issues, expansion can issues in this what again, you basis if you there think of basis to or you achievable billion near-term revenue from And we I do Okay. continuous drive understand margin from of step but back

Julie Beck

so nice a So continuous where talk pretty Steve, -- And part remarks, of time. our needs targets to of Day -- this in our we're of company, slightly this XXXX of we at said as point when we're we as improved out target, manufacturing about, we ahead some gave DNA. improvement from our be Investor prepared we part and our at investor margins in point,

as have we margin grow. we can improvement So sequential we to that continue think

Operator

Thein from question comes next Your of line Citigroup. the Tim with

Timothy Thein

[Technical pricing do and in you Difficulty] to expect relative to you -- how impacts 'XX? guess what fares relative experienced in and what the that expect On I you from 'XX, that what cost

Simon A. Meester

Tim. Thanks, Yeah. Yeah.

in that see inflation So, lower levels we in inflation still although XXXX. XXXX,

continue to on operating to goal the price/cost close our to also to but still transparent. -- is improve customers margins. on our cost-out position the very But staying our pushing to same. is Our And obviously, ease to stay keep this. customers continuous stay impact on ourselves also We very our neutral, we're

And actually, do cost across than logistics, definitely so, but but inflation, level a lowering, input especially see we at we see XXXX, board, in the steel, labor, inflating -- XXXX. still some in lower components, also although integrated for although

Timothy Thein

it Presumably, a in XXXX was Okay. it that just? -- okay. But tailwind -- is was a Terex or for

Julie Beck

neutral that the cost-out would and we then price/cost Tim, So, and other continuous improvement. improvement say we're margin comes from

Timothy Thein

on then maybe Okay, don't the on any -- think MP, just understood. were And there I comments largest with we just business aggregates.

can Just -- what shrinking are in of dealers the There's in outlook some the rental -- assumed adding or in there their 'XX? whether terms what's have movement you be of always fleets. there terms what

outlook So, maybe in of a of I that two business, 'XX? how more for global know which aggregates, just shaping but up is the a you comment see in or terms

Simon A. Meester

slowdown in Aggregates against with for North working but definitely North strong in on of construction Thanks spending Yeah. bit in for question. benefits in Germany a infrastructure, and the our in of headwinds Europe. Definitely the little America with But in going a America, is bit tailwinds little the America, our business it. North business, UK Aggregates

Operator

Revich the with from comes Goldman line Sachs. question Your next Jerry of

Your line is open.

Jerry Revich

the Simon, to on just I'm we again. parameters. go M&A And comments could congratulations your around earlier call back if wondering Simon,

how you going I'm just you in folks you folks that -- like accretive lines. comments you couple a additional your of MP value find we've matches the M&A for You approach been do of How's you haven't a prior years? anything for looking expand and to are today parameters you and the couple at alluded bolt-ons evaluating terms evaluating product what's past for to years, It what of few looking proposition potentially for compared view to of over been forward. sounded what been the able have folks. the additional can wondering within on what's

Simon A. Meester

sheet, that -- market-leading would We're us businesses help definitely it's would margins, Strong run much of around obviously, other. pretty would look businesses digits each balance strengthening optionality. stronger, at grow that today, mean, so of Yeah. globe, diverse, all our operating to at Strong into earlier, widen have us would more portfolio I our us anything I double portfolio make a we make but now. if mentioned I would gives moat, us the the our going needs as synergistic, looking opportunities, we It at to then financially of And be in our again, that lot to looking existing opportunities opportunistic still obviously, reemphasize, because with also we lot be very what just also to to accretive. can have I our but go affordable, we portfolio.So we organically. our can still to have a addressable much expanding market of do be look a inorganic want we're be needs businesses, pipeline at actionable, after needs organically of look at nature. we faster,

I the CEO incoming say. a So, everything makes XXXX. a is on lot And of into operational lot is table we my have would what quite as job going easier, is momentum what frankly,

very as my first have But against momentum posted optionality, operating else but do have of have, going momentum. balance the with We versus into margin keep the would be points point, XX%. priority your improvements, have to that on have we growing sheet say on A And sure to it and strong lot we hold Terex make that operational up basis we I strong everything table. overall, we operational our will forward to XXX be XXXX. strong we'll should XXXX, XXXX

Jerry Revich

there's the ask for that and yourself can and investigation on for decision? and product China expect the about terms others Super. the timeline an I And your you you Appreciate that and anti-dumping risks just you investigation Simon. opportunities in talk of in see it, position potential that in Can Europe, AWP.

Simon A. Meester

any question. for overall against the about of in for illegal the in Yeah, in support or thanks the Yeah, dumping equipment Europe. market we We petition that petition learned Europe matter.

jobs, we're the level-playing so, that of of yeah, that petition made team we all the essential stakeholders, is is believe support market. were the aware whatever We're we the and that footprint. we European responding December. members, customers, their is shareholders.And with to in competition fair is in required. be. filed position was Our working have may suppliers, Commission case field any we're interest We best the and that in a eager the monitoring And outcome request are our strength We're global as and awaiting --

flexible. pretty are We

We have leverage.

footprint. We our have optionality in

forward to the we're we'll to be So, outcome whatever be, and will it, able looking respond.

Operator

to for will is have I That the all turn back for Simon questions. remarks. we time closing

Simon A. Meester

thank to for you with All Terex. want right. Thank you everyone questions. looking in operator. I forward you. the want your thank for I interest I'm working to

If John And have questions disconnect or the call. going that, forward, with please additional Julie, any operator, with follow-up please Paretosh. you

Operator

concludes Thank We you for today's This joining. you. thank call.

may now disconnect You your lines.

Terex (TEX) 9 Feb 242023 Q4 Earnings call transcript