Terex (TEX) The Stifel 2024 Cross Sector Insight Conference summary

Business overview and strategy

• Safety and servant leadership are core values, with a focus on Zero Harm and strong team culture.

• Operates in two segments: Materials Processing (MP) and Aerial Work Platforms (AWP), with a $5B business in a $34B addressable market.

• 20% of annual sales come from products introduced in the last three years, reflecting strong innovation.

• Portfolio optimization since 2015 led to divestitures, $1.7B in share repurchases, and a 38% reduction in share count.

• Strategy centers on executing, innovating, and growing in high-return, high-growth areas.

Financial performance and outlook

• Q1 sales rose 5%, operating profit up 7%, and margins improved by 20 basis points.

• Return on invested capital is nearly 28%, with a 700 basis point margin improvement since portfolio changes.

• MP segment now delivers 16% operating margins, double-digit sales CAGR, and 60% of operating profit.

• 2024 outlook remains robust, with strength in North America and infrastructure, but softness in Europe and scrap markets.

• Net leverage reduced to 0.5x, down 74% from prior levels, supporting ample liquidity and flexibility.

Growth drivers and market opportunities

• Positioned to benefit from $1.2T in U.S. infrastructure investments over the next decade.

• Mega trends like digitalization, data centers, and electrification drive demand for products.

• Waste and Recycling business leverages MP products for new applications, including municipal waste sorting and vegetation management.

• Expansion in India with locally produced pick-and-carry cranes targets the world’s largest market for this product.

• Electrification and hybrid technology investments span 70% of product offerings, with ongoing battery technology development.