Let's begin here. We'll try and stay on time. Adam Seiden Machinery and Construction, thanks for joining us again here. For this session, we are glad to have the folks here from Terex. Joining from Terex, CEO John Garrison, CFO Julie Beck, who you guys, I'm sure know pretty well. The format of this session here is we're gonna pass it to John in a second here for just some opening comments around Terex. We'll have our dialogue here. We'll move to audience response a bit later in, you know, in the session. We appreciate your participation rather. We'll wrap up with your Q&A. With that. Good. Mr. Garrison, good to see you again. Thank you. Great to see you again, Adam, and for all of you out there, thanks for your interest in Terex. We've just got a couple slides from our quarterly earnings call on our investor deck, and then we'll throw it open to your questions. Sure. We do have forward-looking statements. I'd encourage you to read those. My lawyer is now happy. We start every meeting at Terex with our Zero Harm safety culture and the performances against that and our Terex Way values. We take it incredibly seriously at the company. As you'll see over the last couple years, when we started, we've done some dramatic improvement in our safety performance, you've seen it's plateaued, 2021 and in 2022. I think this is not just with us, but also with machinery manufacturing averages. This is another example of the supply chain disruption that we're all experiencing and the multiple times that you have to work on machines to get them ready to ship to our end customers. We're not proud of the fact that we've gone backwards. We're gonna work hard to get back on track, but I do think it's another good indicator of the level of disruption that we in the manufacturing world are experiencing. On the Terex Way values, incredibly happy, pleased with the team and their demonstration of citizenship and their ability to demonstrate resiliency and adaptability in a very challenging global marketplace. Thrilled with the Terex team members and what they try to do day in and day out to meet the needs of our customers and our team members. In 2022, just to look back very briefly, our execute, innovate, and grow strategy. On the execution side, I believe the team did demonstrate resiliency and adaptability on managing the supply chain. We, you know, we called what we thought we were gonna be able to do, and we delivered on what we said we were gonna be able to do. That's the team overcoming a lot of obstacles in a challenging environment and demonstrating some strong execution in that environment. Continue to very aggressively manage our expenses. Also during the course of the year, and I'm sure we'll talk more about this, is the start up this year of our Monterrey, Mexico facility. That team has been able to deliver that construction on schedule and on budget in this environment. We're looking forward to the ramp-up of the new facility here starting early in the second quarter. On the innovate side, we continue to invest in our product and service offering. We think that continues to help us drive that organic growth as we go forward. We like to be first in a lot of things. We were the first to bring an all-electric bucket truck to the utilities market. Continue to invest in electrification in our product offerings, both for Genie and for our MP business. It range from anywhere from 60%-70% of the offerings we provide are electric, and that helps our customers achieve their ESG objectives as they go forward. We continue to invest in digital, enhancing the interface between us and customers, us and dealers as we go forward. Made several acquisitions over the course of the year. Several of the acquisitions were in the technology space where we can take technology and apply it to our product and service offerings as we go forward. Some capacity expansions in areas where we were tight. You know, again, we have a very strong balance sheet and have the ability to grow now via M&A. You see the bottom line results, quite proud of the, you know, driving sales, but really it's driving the operating income and the EPS improvement on a year-over-year basis. I would call people's attention to, you know, north of 21% return on invested capital. That, you know, we're proud of that. That was one of the objectives that we set out for the team, and we've returned capital to shareholder. You know, over the course of the last six years or so, we've returned about $1.8 billion of capital to shareholders. You know, I think the team executed well in 2022, and we delivered on the commitments that we made. As we look forward, that's good yesterday, but where do we think we can go forward? We laid out some targets over the next five years. This first concept of capitalizing on the megatrends, we feel that we're in a really good position with our portfolio in terms of the circular economy. Think about recycling. Recycling industries really started in Europe, but it's growing across the globe. We're well-positioned there. All things electrification with our utilities business, we're well-positioned there. Then infrastructure investments. You know, I'm sure we'll talk here in the U.S. about what's going on, but the rest of the world has been investing in infrastructure, and now the U.S. is catching up, and the physical stimulus of some of those bills for the next several years is frankly staggering in terms of what we've spent historically. Continue to grow our Materials Processing business. This is the point, you hear us talk about it a lot. Materials Processing is 60% of the operating earnings of Terex and is consistent through time, has grown through time, and consistent operating margin through time. They do a great job of growing organically, moving into adjacent categories, geographic areas, good geographic distribution, customer distribution, end market around the world, and do a really good job there. 75% of that business goes through dealers. Most of those dealers are specialized dealers where we're a considerable part of their overall business, it really gives us a competitive advantage around the world. Continue to invest. We're market leaders in the categories where we compete in innovation. Next, this is critical, it's right in the middle 'cause it's fundamental to what we're gonna do over the next five years, is really drive optimized Genies through margin performance. You know, we'll accept our margin performance in the midst of the pandemic was not acceptable. We've been very aggressive of taking action to correct that. We've taken already $90 million of cost out of that business in that period of time. With the investments we're making, in low-cost manufacturing in Monterrey, we think that's gonna add 200 basis points to our margin as we go forward. Really optimizing Genie. It's a great company, a great brand. We needed to do a better job through cycle margin and take the action so that we could deliver that consistency through the cycle, and we believe we've got a plan, and the team is executing to that plan to do it. On utilities, we made a sizable investment in our Watertown facility to increase capacity. It's been challenged by supply chain. We'll acknowledge that. If you look at the investments that are required, for us to get anywhere close to what has been set out for the net zero and electrification goals, it's staggering. It's staggering on what needs to be done in terms of generation, transmission, and distribution in order to achieve the elec--. That's just in the U.S. We think there's opportunity also for us, globally in that space. Last, but certainly not least, 'cause this has been really important, is we've been able to grow our parts and service business. That's critical to our customers. Every one of our products is a capital good. It has to function. It has to work. Being able to ensure that that product is always up and running is critical to the customers, and it provides that constancy of revenue for us with good margin contribution to the business. You know, we were able to grow that, and we think we're gonna be able to continue to grow that going forward. We think we're well-positioned as we look forward here over the coming years. Why we talk about this mega-trend. At the center of that is this thing called sustainability. The world is changing and has to change about the way in which we think about sustainability. A big part of that is infrastructure investments. If you're inefficient on your infrastructure, you know, you're gonna adversely impact on the sustainability side. Huge investments around the world. Here in North America, in the U.S. for certain, and I'm sure we'll talk about that. Next, we talked about electrification. The investment required to achieve what we're trying to do from an electric vehicle standpoint is staggering in order to have the capacity to do that. We like where we're positioned there. Digitization. There's two things here. One is you think about the CHIPS Act here in the U.S., the onshoring of chip manufacturing back to the States. Those are multi-billion dollar, multi-year projects. All things, you know, all this news here lately on AI. The, you know, data centers and the building of data centers, again, multi-billions of dollars of investment helps us in the construction phase, also Genie products stay in those facilities longer term. All things digitization we think helps. Waste and recycling. A major global initiative, again, started in Europe, it's the recognition that you just can't dump things, you know, into waste and recycling. You have to recycle products. We have products that take waste, construction demolition, that used to just go in the landfill. Now you can process that, create aggregates that can be reused in the construction cycle, things like that, around the world. Regulation's changing, that's gonna help us over the coming years as we go, as we go forward. You kind of put all that together and, you know, where we are today to where we think we can go. We think we can get, you know, north of six. This is all organic. Inorganic would add to this. All on the organic side, you know, $6+ billion in sales. I did say this at the conference. I know you all do your math. That's 7.5% CAGR during that period of time. I'm pretty confident in the starting point and the ending point, it probably won't be exactly linear. I'm willing to guess on that. The bottom line is strong background as we go forward. Significant margin expansion. Our MP segment, you know, incremental 100 basis points over that period of time 'cause they're in a good place, but substantial margin improvement through the cycle in our AWP and our Genie business. That's both utilities as well as Genie delivering $8-$9+ in EPS and also significant return on invested capital. We come back to that as a machinery manufacturer and as an equipment manufacturer, we do believe that return. Shareholders give us their capital to put to use. We think high return on an invested capital is important, so we think we can drive north of 25% ROIC on our organic efforts. We said in Investor Day, we think we could add to this $1 to, you know, $3 a share type of thing in terms of inorganic growth. Why can we do that? Is because our balance sheet's probably in the best shape that it's ever been in the history of the company. Our current net debt is less than 1 time. We do have the balance sheet capacity to grow. I call Julie my hammer. She'll make sure the CEO stays in line, and that we achieve our financial objectives when it comes to the M&A work. The good news is we have the next generation. We've got the strong balance sheet. We're in good markets. We think we can deliver this organically, on top of that, add the inorganic growth. We're excited about. You know, it's been a challenging couple of years, no doubt about it, but we like where we are, and we like the tailwinds. Now, we are, and we're gonna ask a lot of questions about the current macro and all the forces there, but if you take a step back, there's some secular macro trends that we think are in our favor as we look forward over the next couple of years. Adam Seiden, with that, I'll open it up to you for questions. Sounds good. That was a mic drop right there. Yeah. on the long-term strategy. Just as long as you don't punch me, Adam. actually maybe we'll do a reverse order. Okay. Because you did talk about some of the long-term trends, as a whole. You know, maybe going all the way backwards. On the M&A side, so you mentioned the $1 to, you know, $3. You know, how does that contemplate, you know, in an ideal world, of course, does that contemplate many deals that, you know, can give you a $1 to $3? Mm-hmm. Is that, you know, ideally, are you looking to add one big leg to a stool that, you know, that could get you more? Thanks, Adam. We would love to have another leg at Terex and grow, it would be great. You know, most likely it'll probably be a series of smaller investments as we go through. But if we could get something large, that would be nice. We're very interested in growing the company at the right metrics as with discipline, with our capital discipline. Got it. You guys would be willing to go over, you know, the 2.5x for that as we go? We would, but we also wanna make sure that we can articulate and have a clear plan of how we get back down to 2.5, you know, at, within a relatively short period of time. Got it. You guys have done a couple of smaller deals... Mm-hmm. lately. Mm-hmm. You know, would you say there's any learnings that you've taken from there that, you know, as you start thinking about how you're gonna deploy to, you know, get to that $1-$3 number? Yeah, no, that's a great question 'cause we were, you know, we were focused internally to driving the improvements and not doing M&A for a couple of years. Yeah. We were returning capital to shareholders. We've got, you know, got the business in a good place, and so we started small. You know, we did a nice bolt-on acquisition in MDS. It's perfect if, you know, we can do, you know, lots of these, it would be great. It was a product line manufactured in Ireland, a product line that we didn't currently offer. We could use our operating system in MP, our strategic sourcing, and then put that through our global distribution network, and it's been a home run. That's an example of a tuck-in, a bolt-on into a product offering that we weren't currently in. We have made three technology investments. Let me be clear here, I understand our shareholders are not paying us to be venture capitalists. We're clear about that. What we can do with the investments that we've made is we can, you know, the Viatec investment that we made enabled us to influence their product development path, get some engineering services, enabled us to bring the first all-electric bucket truck to the market. Without that investment in Viatec, that doesn't happen. We made an investment in a company called Acculon. What are they really good at? Electrification certification. It's great to have great ideas, but if it takes forever to certify it to get it to the marketplace, you haven't created value. We have engineering services in terms of what we're doing and what we're putting on our product offering, working through Acculon going forward. The last one we just made here is Apptronik, and I'll acknowledge this is a little further out on the development curve, but what they are is really a robotics company. If you think about utilities, you think about construction work sites with Genie equipment. Why do you need to put two or three human beings up in a basket? What if you could only put one up in a basket with a robot arm to assist in the application? We have the knowledge of Genie in utility space. They have the knowledge of robotics. Can we work together to find a solution that, you know, that addresses a real need, which is tight labor markets in construction space? Those are some of the types of investments we've made on the technology frontier. Then we will, you know, if it's capacity needed, we'll make some investments there. That's what we've done. As Julie said, we have a funnel priority in and around the MP space, utility space. We'll look in the aerial space for the right asset, right market, right value. We do think we can grow, but we think we can deliver that. What I showed you earlier, that's the organic side. Mm-hmm. We believe the M&A is upside to the organic side as we go forward. Got it. Oh, sorry, Julie. Continue. No. You guys had that nice chart up with the organic growth priorities and so forth. John, you just referenced it here. You just talked about the electric bucket truck. Right. Mm. When you think about electrification across the broader portfolio, I think you've given like a 60% number in MP, you know, that's electrified. Just I'm curious, when you think about broadly across AWP and Genie really, and then, you know, utilities- Right. Where does that stand as a percent? it's currently, you know, 60% of MP-related products can be offered in electric or ICE. Offered. Okay. On the Genie side, it's about 70% of the products can either be hybrid. Yeah. -and/or electric. We think that's gonna grow over time. It really frankly started in Europe in regulatory change. As we get down the cost curve and the electrical offerings come down in acquisition costs, provide life cycle cost savings, I think we're gonna begin to see that accelerate as we go forward with electric offerings. We're very well positioned. We're first to market in several product categories. Mm-hmm. I think over time, the adoption's gonna continue. As we say on the ESG side, the biggest contribution, one of the biggest, if not the biggest contribution Terex can make is providing our customers with the solutions they need to achieve their ESG objectives. You can continue to see us bring those offerings to the marketplace. Got it. On parts and service, you know, on your slides from your Investor Day, I believe MP was, you know, two and a half times the opportunity, you know, from a, probably a TAM perspective. Is that growth, is that really based off of the dealers, supporting, you know, the parts and service opportunity? Then ultimately, what type of buy-in have you found from your dealers in order to push that initiative? Great question. You're right. If we look at the two segments, just the nature of the work that the MP products do. Yeah ... engaging and wear products, the opportunity is a little bit greater than, like, in Genie, just in terms of how the application. MP, we're focused across the enterprise of driving improvement in our parts and service offering. MP's done some great things with that distribution organization. We call it CDI, Connected Dealer Inventory. We've invested in some technology, and we piloted it with several dealers. That was we basically controlled their inventory and had visibility to their inventory. 'Cause what we're trying to do is improve the fill rate to that end customer, get that up. There was a little bit of resistance to start with sharing that information, but the pilots went so well that now we're spreading that across MP's portfolio across the world because the dealers recognized optimizing that inventory, making sure they had the right inventory at the right place, and we could pull from other spots. They were increasing their sales, we were increasing our sales, and the end customer was happy because their machine was up and operating. That's an example of where we've invested in some technology, worked with our dealers, and interfaced with the dealers, and it's been a good growth opportunity. We're also investing in some technology for pricing, the pricing dynamics being very dynamic and pricing on parts, being able to scrape the internet to understand what pricing's out there. The technology there has improved dramatically in the last couple years that we invested in. Our planning technology has helped. We have had good growth in parts and service, and we anticipate further growth. Yeah. It's good for the consistency of the revenue, and it's also good from a margin standpoint. It meets the needs of the customer to keep the machine running. Got it. Maybe, you know, thinking about the operational improvements and margin, you know, within the AWP segment, you brought up Watertown earlier on the utility side, Or sorry, and then Mexico as well, when you think about Monterrey. You know, both of those capacity changes and new openings that ultimately are gonna have a nice margin benefit. Just curious, is that running in line with your expectation from timing standpoint, from the amount of benefit standpoint, you know, versus where you guys had planned it? Yes. Go ahead, Julie. Why don't you add the expectation. I mean, I guess I would, it start, you know, for the Monterrey facility, yes. You know, it's on time, it's on budget. We're pleased with the progress and as we talked about in our earnings call, 2023 and 2024 are big years as we move from other production facilities to Monterrey and get the Monterrey plant set up. We still, you know, continue to, you know, 200 basis point margin improvement for the Genie business when that is up and running at the end of 2024, early 2025. When we talk about Watertown plant, you know, has really been impacted by chassis and body availability this year. The, the plant hasn't been as efficient, and it hasn't been able to because of all of that disruption. Once that clears, you know, we're, you know, we expect, you know, to meet those targets as well in Watertown. Got it. because you're talking about some of those, you know, supply issues and so forth within Watertown. when you look at the AWP backlog as a segment. Mm-hmm ... you know, it seemed like the over 12 months was starting to, you know, increase a bit there. Yeah. Is that that's mostly geared towards utilities at this point? No, it's a combination of all three businesses right now. Okay. Which is highly unique. Yeah. You know, Historically, we didn't talk about backlog delivered beyond 12 months 'cause we didn't have any. Yeah. Now we have $700 million, and it really is split amongst Genie, utilities for certain-. Yeah as well as some MP products. I think that speaks to the strength of the demand, the strength of the backlog. Again, we wanna work to bring it out because in the case of utilities, we're well booked out in 2024, and in some models even into 2025. We need to work on that. Connecting what we were saying earlier on parts, can you, 25% of utilities, I think, comes from parts, revenues comes from parts. Can that number go higher? it's 25% parts and service. Oh, service as well. Yeah. Mm-hmm. Utilities is one of the business. We have 21 service centers. Yeah ... the U.S., so that would be parts as well as labor. Yes, that business will continue to grow. I will tell you one of the constraints on growth is service technicians. Mm-hmm. It's one of the most difficult jobs to staff in the country, in the U.S., is service technicians. We're staffing that. We've got a plan. Yes, that business will continue to grow, and we have invested in service centers because there are some contracts with the large independent publicly owned utilities that if you don't have a service center in their network, you can't bid. We've done that. I will say that those service centers service not just utilities. I mean, they service Genie products, they service competitive products, so they're true service centers. Over time, we would like to continue to invest and grow that business as well. Got it. In the spirit of continuing to work our way backwards, now getting even more short term, on price. In AWP, just cumulatively, how much price have you taken in the AWP business, you know, since COVID, would you say? We really haven't disclosed that, Adam. Okay. You know, we've taken price, we've been price-cost neutral. Got it. ... you know, for the year in 2022, and that's our plan for 2023 as well. Wow. Got it. You know, maybe let's go to the audience response questions really quickly here. Do you currently own the stock? Yes, overweight, market weight, underweight, or no? Is the timer going in the back, guys? There you go. If you can enter again, please. Yes, I do own the stock. No? Okay. Good. Edge owners. Exactly. moving to the next question, please. What is your general bias towards the stock right now? Positive, negative, neutral. Just a public service announcement. Once the timer comes up, if you can enter your answer. Thank you. Sorry. All right. 50% positive. Okay. Good. Next one up. In your opinion, through cycle EPS growth for Terex will be above peers, in line, or below. What's it gonna be, John? I don't know. In line with peers. There you go. Okay. Next question. Mm-hmm. In your opinion, what should Terex Corporation do with excess cash? Bolt on M&A, larger M&A, repos, divvies, debt pay down, or internal investment. Do you have all the way above? Yeah. All right, now if you could enter... Sorry, the timing. All right, a little split, but more towards bolt ons. Moving to the next one. Coming up here. In your opinion, on what multiple of '23 earnings should Terex trade at? Less than 10x, and bands all the way up to higher than 21 times. Once that timer goes. Perfect. Higher than 40x, maybe. Yeah. There you go. See, this is a good commentary. Good. Okay. Mm-hmm. That's all. All right. Moving to the next one here. What do you see as the most significant share price headwind facing Terex? Core growth, margin performance, capital deployment, or execution? Core growth, number one. That's the most popular answer for the conference. Yeah. Mm-hmm. That makes sense. It's an industrials conference. Moving to the next one. Mm-hmm. Does ESG play an active role in your investment decision relating to the company? Yes, ESG is positive. Yes, ESG is negative. No, ESG doesn't play a role, or just no. Hmm, interesting. Mm-hmm. Okay. Resounding no. No. Okay, with this audience. Interesting. Yeah, maybe a sample size issue there. In any case, I will say that is fairly consistent so far with the conference, where we've seen around, call it 60%- 70% of responses are in that number three category there. Interesting. Which I think is we're all gonna do our, you know, introspective looks on the, on the analyst side after this. Yeah. Okay. Again, you know, going on some of the short-term stuff. I think, look, the biggest question that you guys probably get is around, you know, sales and, you know, some of the short-term stuff around sales, and you guys have a lot of backlog. Mm-hmm. When you look at your guidance that's out there, you know, how much of that is ultimately already kind of spoken for? It seems like a good chunk of it almost always. Does that change the way that you're planning for the full year? The reality of it is where we sit today, we're about 95% booked for the AWP segment. Yeah. We're 75% ± on the MP segment, which is unheard of. Yeah ... for us. You know, we're having very transparent conversations with customers in terms of where we are with the supply chain, what their needs are, and in most cases, customers are asking for more than we can deliver. We're being transparent. This is what we can commit to. If we can get more supply, we can then meet your needs. That's the difference of the environment that we're in with constrained supply right now, compressed compared to other years, Adam. Got it. Which is, you know, is pretty unique. Yeah. with Mexico, when that's up and running, will you have the capacity to produce the $3.3 billion, you know, in AWP sales by 2027? From a capacity standpoint. Yeah you know, if you go back to 2018, we produced 25% more than we're producing today. Monterrey, there's some incremental capacity that comes with that, but that really isn't a capacity play. It really is a cost play. We're reducing our costs. As we move to Monterrey, we've shut down a South Carolina factory, we've shut down Oklahoma factory, and then we're Redmond, where there's a shortage of direct labor. We're moving things from there too. It's not a capacity expansion, it's a cost expansion. Yes, we have demonstrated that we've been able to produce at that level in the past, and we can do that now by adding shifts as needed when supply chain comes back. That's right. all in at total capacity. fair enough. lastly, just, you know, we'll hopefully retire this question after this year. the hostel, you know, currently, where do we, where do we sit on that? The point being is- Yeah. Are we gonna be able to make our way through it over the first half of 2023? We ended Q3 at about $63 million-$64 million hostile inventory. In Q4, we got it down to a herculean effort by the team to about $36 million-$37 million. Unfortunately, in the month of January, it went back up to $45 million. We're not assuming that the hostile inventory goes to zero. We're not assuming it gets worse. But with the level of disruption we're continuing to experience, that our operating assumption is we're gonna be still talking about the hostel. Now, we wanna retire that conversation, there's no doubt about it. But again, that's where we are today in terms of the supply chain that we're, that we're dealing with. Excellent. All right. Well, thank you for the overview of the company. I appreciate everybody for. Thank you. Attending. Yeah. Thank you for your interest in Terex. Thank you, guys.