Fourth Quarter and Year End 2013 Earnings Release Conference Call
February 19, 2014

Ron DeFeo - Terex Corporation - Chairman and Chief Executive Officer
Good morning ladies and gentlemen and thank you for your interest in Terex Corporation today. On the call with me is Kevin Bradley, Senior Vice President and Chief Financial Officer; Kevin O'Reilly, Vice President of Operational Finance; and Tom Gelston, Vice President of Investor Relations. Also participating on the call and available for your questions is the Terex leadership team, including our business segment presidents.

As usual, a replay of this call will be archived on the Terex website,, under Audio Archives in the Investor Relations section. I will begin with some overall commentary and highlights. Kevin will follow with a more detailed financial report and then I will give some comments on where we are heading going forward and summarize before we open it up to your questions. We will be following the presentation that accompanied the earnings release and is available on our website. I would like to request that you ask one question and no more than one follow-up in order to give everyone a chance to participate.

Let me direct your attention to page 2 of the presentation, which is the forward-looking statement and non-GAAP measures explanation. We encourage you to read this as well as other items in our disclosures because the information we will be discussing today does include forward-looking material.

Let me begin with page 3. About twelve months ago, I stated that Terex was going to focus on improvement by concentrating on things we can control. Namely, portfolio management, simplification and financial efficiency. Now looking back on the year, we feel satisfied with the improvements we were able to deliver to our shareholders. While the year started slowly, we have seen recent improvement in net sales growth, with the second half growing over 6% versus prior year, and the fourth quarter growing over 12%. This led to substantially better earnings in the back half of 2013, up 59% from the first half and 84% from the same period in 2012. We made a number of portfolio decisions during 2013 that will help focus our energy and attention on those markets where we have a substantial presence and a likelihood to succeed. We were able to complete the process of acquiring 100% of the Terex Material Handling & Port Solutions AG (TMHPS AG) shares, which will also have the benefit of eliminating a guaranteed dividend payment to those shareholders. In addition, we made progress on our debt structure, paying back roughly $220 million of our bank debt.

Putting numbers to our quarterly and annual performance, we achieved an earnings per share (EPS) of $0.65, as adjusted in the quarter versus an as-adjusted result of $0.17 per share for the same quarter in 2012. For the full year, we achieved an as-adjusted EPS of $2.23 in 2013 versus an as-adjusted EPS of $1.58 in 2012. As a reminder, these results reflect our off-highway truck business as accounted for in discontinued operations due to the impending sale of that business. We believe the consensus numbers had included the truck business, both looking backward and forward.
In 2014, we will continue and accelerate our efforts on internal actions and improvements, and we fully expect this will be beneficial to our shareholders over the coming years. I will come back and provide some highlights, but first I would like to turn it over to Kevin who will go through the specific financial results for the quarter.

Kevin Bradley - Terex Corporation - Senior Vice President and Chief Financial Officer
Thank you, Ron. Good morning everyone. Turning to page 4, our net sales for the quarter of $1.8 billion increased $192 million or 11.9% when compared with the prior year quarter. Foreign currency exchange rates contributed approximately 1.6 percentage points of the increase. Our Aerial Work Platforms (AWP) and Material Handling & Port Solutions (MHPS) businesses led the segments with growth of 31% and 27%, respectively, while the Cranes segment decreased approximately 6%. Our Construction and Materials Processing (MP) segments remained relatively flat versus the prior year quarter.

Gross margin, as adjusted, was stable at 20.6% as the favorable mix of business and margin expansion in both AWP and MHPS was offset by the decline in the gross profit margin in our Cranes business which was negatively impacted by product mix in the quarter. SG&A, as adjusted, both in dollars and as a percentage of sales, decreased compared to the prior year quarter as we continue to focus on expense reductions. The restructuring efforts in Construction and MHPS are taking hold and we are leveraging our cost structure as we grow our AWP business.
Operating profit, as adjusted, increased approximately $50 million or close to 70%, as growth in AWP and MHPS and the improved financial performance in Construction was partially offset by a decline in our Cranes business. Operating margins increased 230 basis points to 6.7% for the quarter and our incremental margin was approximately 26%.

The following information was filed by Terex Corp (TEX) on Thursday, February 20, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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