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Terex : Q4 2019 Terex Corporation Earnings Conference Call Presentation

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02/14/2020 | 09:51 am

Q4 2019 Conference Call

February 14, 2020

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

Forward Looking Statements

This presentation contains forward-looking information regarding future events or the Company's future financial performance based on the current expectations of Terex Corporation. In addition, when included in this presentation, the words "may," "expects," "intends," "anticipates," "plans," "projects," "estimates" and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward- looking. The Company has based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance.

Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the control of Terex, include among others: Our business is cyclical and weak general economic conditions affect the sales of our products and financial results; changes in import/export regulatory regimes and the escalation of global trade conflicts could continue to negatively impact sales of our products and our financial results; our financial results could be adversely impacted by the United Kingdom's departure from the European Union; changes affecting the availability of the London Interbank Offer Rate may have consequences on us that cannot yet reasonably be predicted; our need to comply with restrictive covenants contained in our debt agreements; our ability to generate sufficient cash flow to service our debt obligations and operate our business; our ability to access the capital markets to raise funds and provide liquidity; our business is sensitive to government spending; our business is highly competitive and is affected by our cost structure, pricing, product initiatives and other actions taken by competitors; our retention of key management personnel; the financial condition of suppliers and customers, and their continued access to capital; exposure from providing financing and credit support for some of our customers; we may experience losses in excess of recorded reserves; we are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases; our business is global and subject to changes in exchange rates between currencies, commodity price changes, regional economic conditions and trade restrictions; our operations are subject to a number of potential risks that arise from operating a multinational business, including compliance with changing regulatory environments, the Foreign Corrupt Practices Act and other similar laws and political instability; a material disruption to one of our significant facilities; possible work stoppages and other labor matters; compliance with changing laws and regulations, particularly environmental and tax laws and regulations; litigation, product liability claims, and other liabilities; our ability to comply with an injunction and related obligations imposed by the United States Securities and Exchange Commission ("SEC"); disruption or breach in our information technology systems and storage of sensitive data; our ability to successfully implement our Execute to Win strategy; and other factors, risks and uncertainties that are more specifically set forth in our public filings with the SEC.

Actual events or the actual future results of Terex may differ materially from any forward-looking statement due to these and other risks, uncertainties and significant factors. The forward-looking statements speak only as of the date of this release. Terex expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement included in this release to reflect any changes in expectations with regard thereto or any changes in events, conditions, or circumstances on which any such statement is based.

Non-GAAP Measures: Terex from time to time refers to various non-GAAP (generally accepted accounting principles) financial measures in this presentation. Terex believes that this information is useful to understanding its operating results and the ongoing performance of its underlying businesses without the impact of special items. See the appendix at the end of this presentation as well as the Terex fourth quarter 2019 earnings release on the Investor Relations section of our website www.terex.com for a description and/or reconciliation of these measures.

Total amounts in tables of this presentation may not calculate due to rounding.

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

2

Q4 Highlights

Results are Continuing Operations

  • Driving Zero Harm Culture
    1. Improved Workplace Safety Recordable Rate by 39%
  • Global industrial equipment market remains challenging
  • Overall Q4 2019 resultsin-line with expectations
    1. Continued pressure on AWP sales and margins
    1. MP maintained double digit marginsoParts & Service currency neutral
      sales growth of 7%
  • Continued, positive cash flow generation driving strong balance sheet and liquidity

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

3

Terex Strategy

Genie S-85 Booms at New Utilities Facility

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

4

2019 Strategy Deployment Highlights

Focus

High

Performing

Portfolio

Simplify

Reduce

Complexity

and G&A

Commercial

Excellence

Execute Winto

Lifecycle

Solutions

Strategic

Sourcing

Exited low performing, capital intensive business

Continuing portfolio of businesses each out-earning their cost of capital throughout the cycle

Completed re-segmentation and reduced corporate G&A

New manufacturing facilities progressing as planned

Completed Terex-wide CRM deployment

Launched Customer Dealer Integration (CDI) solution

Benefiting from Waves 1 & 2, launching new strategic projects

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

5

2020 Strategic Operational Priorities

Operational Excellence

Operationalize

Innovation

Growth

Zero Harm Environmental, Health & Safety Culture

New Terex Ecotec TDS 825 Slow Speed Shredder

Big 5: Safety, Quality, Delivery, Cost, Morale

Execute commercial excellence plan

Digital innovation to better respond to customer needs

Accelerate new product introductions to drive customer value

New FDC400 Charger Series at Concrete Works

Continuous process improvement

Commence production at new Utilities facility

Expanding Changzhou, China facility

Create a competitive advantage through industry leading parts & services solutions

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

6

2020 Guidance Highlights

2020 Continuing Operations Guidance (1)

  • Net sales down 8 - 11%
  • Operating margin of 6.3 - 7.3%
  • EPS of $1.85 to $2.35
  • Full year free cash flow of $140 million
    Returning Capital to Shareholders
  • Quarterly dividend of $0.12 per share
  • ~$195 million remaining on share buy- back authorization

(1) Excludes the impact of unusual items; EPS guidance based on an average diluted share count of ~73 million

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

7

Q4 Segment Highlights

Aerial Work Platforms

  • Global sales of $500 million, down 21%
  • Operating margin 0.9%, 1.2% as adjusted
  • Bookings of $755 million and backlog of $753 million

Materials Processing

  • Global sales of $321 million, down 10%
  • Operating margin of 12.1%
  • Bookings of $352 million and backlog of $295 million

Corporate & Other

  • Lower volumes impacted Towers operating margin
  • RTs marginin-line with expectations on reduced volume

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

8

Q4 Operating Results

USD Millions, except Earnings per Share

Q4 2019

Q4 2019

Q4 2018

Q4 2018

As Reported

As

As Reported

As

Adjusted(1)

Adjusted(1)

Net Sales

$885.0

$885.0

$1,048.8

$1,048.8

% Change vs 2018

(15.6%)

(15.6%)

Gross Profit

$168.6

$169.0

$214.6

$213.9

% of Sales

19.1%

19.1%

20.5%

20.4%

SG&A

($145.7)

($132.7)

($133.0)

($128.3)

% of Sales

(16.5%)

(15.0%)

(12.7%)

(12.2%)

Income (loss) from Operations

$22.9

$36.3

$81.6

$85.6

Operating Margin

2.6%

4.1%

7.8%

8.2%

Interest & Other Income (Expense)

($20.4)

($19.4)

($75.8)

($18.5)

Earnings (loss) per Share

$0.26

$0.36

$0.26

$0.80

EBITDA(1)

$32.7

$46.1

$91.5

$95.5

% Net Sales

3.7%

5.2%

8.7%

9.1%

Note: Results shown are for Continuing Operations

(1) See the appendix for reconciliation to U.S. GAAP

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

9

FY'19 Operating Results

USD Millions, except Earnings per Share

FY 2019

FY 2019

FY 2018

FY 2018

As Reported

As

As Reported

As

Adjusted(1)

Adjusted(1)

Net Sales

$4,353.1

$4,353.1

$4,517.2

$4,517.2

% Change vs 2018

(3.6%)

(3.6%)

Gross Profit

$887.8

$892.2

$961.9

$961.4

% of Sales

20.4%

20.5%

21.3%

21.3%

SG&A

($552.8)

($528.6)

($549.4)

($520.9)

% of Sales

(12.7%)

(12.1%)

(12.2%)

(11.5%)

Income (loss) from Operations

$335.0

$363.6

$412.5

$440.5

Operating Margin

7.7%

8.4%

9.1%

9.8%

Interest & Other Income (Expense)

($87.5)

($86.9)

($125.4)

($70.2)

Effective Tax Rate

(15.3%)

(15.6%)

(15.8%)

(16.0%)

Earnings (loss) per Share

$2.92

$3.25

$3.14

$4.04

EBITDA(1)

$376.4

$405.0

$453.3

$481.3

% Net Sales

8.6%

9.3%

10.0%

10.7%

Note: Results shown are for Continuing Operations

(1) See the appendix for reconciliation to U.S. GAAP

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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2020 Guidance Update

USD Millions, except Earnings per Share and otherwise noted

Net Sales

Operating Margin

Terex

2019

2019

2020

Segment

2019

Guidance (1)

Reported

Adjusted

Guidance (6)

2019

2020

2019

Adjusted

2020

Net Sales

$4,353

$4,353

Down 8% - 11%

Guidance (1,2)

Recast

Guidance

Recast

Recast

Guidance (6)

Down

Operating

7.7%

8.4%

6.3% - 7.3%

AWP

$2,727

7% - 10%

7.2%

7.5%

6% - 7%

Margin

Down

EPS

$2.92

$3.25

$1.85 - $2.35 (3)

MP

$1,603

8% - 11%

14.2%

14.2%

12.3% - 13%

Interest/Other

$88

$87

~$75

Expense

Corporate &

Other

$24

~($5)

($89)

($70)

~($80)

Tax Rate

15%

16%

~19%

Depreciation/

$41

$41

~$43

Amortization (4)

Free Cash Flow

$86

$86

~$140 (5)

  1. Excludes the impact of future divestitures, restructuring, transformation and other unusual items
  2. Reflects RT & Tower Cranes businessesre-segmented into MP. See the appendix for recast financials.
  3. Based on an average diluted share count of ~73 million
  4. Depreciation / Amortization excludes ~$5 million of bank fee amortization not included in Income/(Loss) from operations
  5. Includes impact ofone-time funding of ~$25 million of retirement obligation
  6. Assumes renewal of certain existing Section 301 tariff exclusions

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

11

Disciplined Capital Allocation

Cash Flow from Operations +

After-tax Proceeds from

Divestures

Optimal Capital Structure

Organic Growth Investments

Restructuring Investments

Efficient Returns of Capital

to Shareholders

SINCE ANALYST DAY IN 2016

  • Refinanced senior notes and senior secured credit facility
  • Re-pricedUSD term loan (50 bps rate reduction)
  • Q3 '16 - Q4 '19 debt reduction of $512 million
  • Q4 '19 net debt to EBITDA ~1.6x (vs. target of
    2.5x)
  • Reduced net pension obligation by $316 million via Sales / Annuitization
  • Reduced TFS Assets by $136 million
  • Made capex investments totaling $265 million
  • Reduced weighted average diluted net share count by ~38 million shares (~34%)
  • Increased quarterly dividend by 71% to $0.12/share

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

12

Aerial Work Platforms

Genie Innovation at Work with Safety Arrest Bar

  • Increasing product adoption in China
  • Innovative new products and services
  • ANSI standard implementation delayed
  • Continued strength in Utilities

New Terex Utilities TL-80 Series

AWP

2019

2019

2020

Reported

Adjusted

Guidance

Net Sales

$2,727

$2,727

Down

7% - 10%

Operating Margin

7.2%

7.5%

6% - 7%

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

13

Materials Processing

New Innovation with the Evoquip®Colt 1600 Scalping Screen

  • Consistent, strong execution through uncertain global industrial equipment market
  • Developed new products and services for global end markets
  • Effective for 2020, RT & Tower Cranes businesses placed with MP leadership team

MP

2019

2019

2020

Reported

Adjusted

Guidance (1)

Net Sales

$1,371

$1,371

Down

8% - 11%

Operating Margin

14.4%

14.4%

12.3% - 13%

(1) Reflects RT & Tower Cranes businesses re-segmented into MP guidance

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

14

Summary

  • Challenging environment for industrial equipment
  • Excellent liquidity, strong balance sheet and business portfolio
  • Continue to drive improvement in Operational Execution
  • Maintaining our disciplined capital allocation strategy

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

15

Questions?

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

16

Appendix

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

17

Backlog Trend

USD Millions

1,612

1,661

1,651

51

64

1,298

62

1,263

513

499

Sequential

Year on Year

449

$

%

$

%

1,234

58

58

1,158

1,059

65

1,081

329

49

33

AWP

259

52%

(345)

(31%)

916

51

929

468

824

416

364

295

60

809

62

249

MP

31

12%

(218)

(42%)

47

219

229

51

270

264

Corp & Other

(18)

(35%)

(18)

(35%)

1,100

1,098

1,088

911

759

639

754

738

746

753

635

508

Total

272

34%

(580)

(35%)

494

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

Mar-18

Jun-18

Sep-18

Dec-18

Mar-19

Jun-19

Sep-19

Dec-19

AWP MP Corp & Other

Backlog shown is deliverable in less than 12 months which reflects continuing operations. Total amounts may not add due to rounding.

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

18

Q4 Global Sales

Sales by Geography 2019 vs 2018

Western Europe

Actual

FX-Adj.

North America

-13%

-10%

Actual

FX-Adj.

E. Europe, Middle

-22%

-21%

East & Africa

Actual

FX-Adj.

-21%

-19%

LATAM

Q4 2019

Actual

FX-Adj.

55%

59%

Western Europe

20%

Asia / Pacific

E. Eu, ME, Africa

54%

LATAM

18%

North America

5%

3%

Excludes discontinued operations

Asia/ Pacific

Actual FX-Adj.

-2%2%

Q4 2018

20%

58%15%

5%

2%

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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FY Global Sales

Sales by Geography 2019 vs 2018

Western Europe

Actual

FX-Adj.

North America

-4%

2%

Actual

FX-Adj.

E. Europe, Middle

-6%

-5%

East & Africa

Actual

FX-Adj.

-20%

-16%

LATAM

FY 2019

Actual

FX-Adj.

40%

48%

Western Europe

22%

Asia / Pacific

E. Eu, ME, Africa

57%

LATAM

14%

North America

5%

2%

Excludes discontinued operations

Asia/ Pacific

Actual FX-Adj.

9% 16%

FY 2018

22%

58%

13%

5%

2%

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Aerial Work Platforms

USD Millions

Net Bookings

Book-to-Bill Ratio

$1,200

200%

178%

157%

180%

$1,000

153%

160%

$800

126%

140%

97%

98%

120%

$600

100%

60%

59%

60%

80%

$400

60%

$200

40%

20%

$932

$923

$501

$695

$962

$700

$506

$367

$755

$0

0%

Q4'17

Q1'18

Q2'18

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q4'19

Q4'18

FY'19

FY'18

Net Sales

$500.1

$631.2

$2,726.6

$2,950.4

% Change vs. '18

(20.8%)

(7.6%)

Operating Profit (Loss), as reported

$4.4

$37.1

$196.2

$300.5

Operating Margin %

0.9%

5.9%

7.2%

10.2%

Operating Profit (Loss), as adjusted (1)

$6.2

$36.4

$205.1

$301.9

Operating Margin %

1.2%

5.8%

7.5%

10.2%

Backlog

$753

$1,098

% Change vs. '18

(31%)

(1) See further in the appendix for reconciliation to U.S. GAAP

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

21

Materials Processing

USD Millions

Net Bookings

Book-to-Bill Ratio

$500

160%

$450

139%

140%

120%

$400

117%

113%

110%

120%

$350

96%

90%

100%

$300

$250

64%

70%

80%

$200

60%

$150

40%

$100

$50

20%

$352

$429

$293

$365

$398

$331

$231

$236

$352

$0

0%

Q4'17

Q1'18

Q2'18

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

Q4'19

Q4'19

Q4'18

FY'19

FY'18

Net Sales

$321.4

$357.9

$1,371.4

$1,322.6

% Change vs. '18

(10.2%)

3.7%

Operating Profit (Loss), as reported

$38.9

$50.4

$196.8

$176.0

Operating Margin %

12.1%

14.1%

14.4%

13.3%

Operating Profit (Loss), as adjusted (1)

$38.9

$50.4

$197.2

$173.2

Operating Margin %

12.1%

14.1%

14.4%

13.1%

Backlog

$295

$513

% Change vs. '18

(42%)

(1) See further in the appendix for reconciliation to U.S. GAAP

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Q4 2019 Adjustments

USD Millions, except Earnings per Share

Q4 2019

Restructuring

Transformation

Other

Tax & Interim

Q4 2019

As Reported

& Related

Period

As Adjusted

Net Sales

$885.0

-

-

-

-

$885.0

Gross Profit

168.6

0.4

-

-

-

169.0

SG&A

(145.7)

9.4

3.4

0.2

-

(132.7)

Income (Loss) from Operations

22.9

9.8

3.4

0.2

-

36.3

Net Interest (Expense)

(17.2)

-

-

-

-

(17.2)

Other (Expense)

(3.2)

-

-

1.0

-

(2.2)

Income (loss) from Cont. Ops. Before Taxes

2.5

9.8

3.4

1.2

-

16.9

Benefit from (Provision for) Income Taxes

16.0

(1.9)

(0.9)

(0.1)

(4.3)

8.8

Income (Loss) from Continuining Operations

$18.5

7.9

2.5

1.1

(4.3)

$25.7

Earnings (Loss) per Share

$0.26

$0.11

$0.03

$0.02

($0.06)

$0.36

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Q4 2018 Adjustments

USD Millions, except Earnings per Share

Q4 2018

Restructuring

Transformation

Pension

Other

Tax & Interim

Q4 2018

As Reported

& Related

Annuitization

Period

As Adjusted

Net Sales

$1,048.8

-

-

-

-

-

$1,048.8

Gross Profit

214.6

-

-

-

(0.7)

-

213.9

SG&A

(133.0)

-

4.7

-

-

-

(128.3)

Income (Loss) from Operations

81.6

-

4.7

-

(0.7)

-

85.6

Net Interest (Expense)

(18.6)

-

-

-

-

-

(18.6)

Other (Expense)

(57.2)

-

-

50.5

6.8

-

0.1

Income (loss) from Cont. Ops. Before Taxes

5.8

-

4.7

50.5

6.1

-

67.1

Benefit from (Provision for) Income Taxes

13.8

(0.5)

(1.2)

(18.4)

(0.2)

(1.3)

(7.8)

Income (Loss) from Continuining Operations

$19.6

(0.5)

3.5

32.1

5.9

(1.3)

$59.3

Earnings (Loss) per Share

$0.26

($0.01)

$0.05

$0.44

$0.08

($0.02)

$0.80

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Q4 Adjusted OP by Segment

USD Millions, except Earnings per Share

Q4 2019

Q4 2018

As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted

AWP

$4.4

1.8

$6.2

$37.1

(0.7)

$36.4

MP

38.9

-

38.9

50.4

-

50.4

Corporate & Other

(20.4)

11.6

(8.8)

(5.9)

4.7

(1.2)

Terex ConOps

$22.9

13.4

$36.3

$81.6

4.0

$85.6

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FY 2019 Adjustments

USD Millions, except Earnings per Share

FY 2019

Restructuring

Transformation

Deal Related

Other

Tax & Interim

FY 2019

As Reported

& Related

Period

As Adjusted

Net Sales

$4,353.1

-

-

-

-

-

$4,353.1

Gross Profit

887.8

4.4

-

-

-

-

892.2

SG&A

(552.8)

18.0

13.7

(7.7)

0.2

-

(528.6)

Income (Loss) from Operations

335.0

22.4

13.7

(7.7)

0.2

-

363.6

Net Interest (Expense)

(81.4)

-

-

-

-

-

(81.4)

Other (Expense)

(6.1)

-

-

0.2

0.4

-

(5.5)

Income (loss) from Cont. Ops. Before Taxes

247.5

22.4

13.7

(7.5)

0.6

-

276.7

Benefit from (Provision for) Income Taxes

(37.8)

(4.7)

(2.8)

0.2

(0.1)

2.0

(43.2)

Income (Loss) from Continuining Operations

$209.7

17.7

10.9

(7.3)

0.5

2.0

$233.5

Earnings (Loss) per Share

$2.92

$0.24

$0.15

($0.10)

$0.01

$0.03

$3.25

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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FY 2018 Adjustments

USD Millions, except Earnings per Share

FY 2018

Restructuring

Transformation

Extinguishment

Pension

Other

Tax & Interim

FY 2018

As Reported

& Related

of Debt

Annuitization

Period

As Adjusted

Net Sales

$4,517.2

-

-

-

-

-

-

$4,517.2

Gross Profit

961.9

0.2

-

-

-

(0.7)

-

961.4

SG&A

(549.4)

4.9

26.4

-

-

(2.8)

-

(520.9)

Income (Loss) from Operations

412.5

5.1

26.4

-

-

(3.5)

-

440.5

Net Interest (Expense)

(64.1)

-

-

-

-

-

-

(64.1)

Other (Expense)

(61.3)

(0.6)

-

0.7

50.5

4.6

-

(6.1)

Income (loss) from Cont. Ops. Before Taxes

287.1

4.5

26.4

0.7

50.5

1.1

-

370.3

Benefit from (Provision for) Income Taxes

(45.4)

(1.1)

(4.8)

(0.1)

(18.4)

0.7

9.8

(59.3)

Income (Loss) from Continuining Operations

$241.7

3.4

21.6

0.6

32.1

1.8

9.8

$311.0

Earnings (Loss) per Share

$3.14

$0.04

$0.28

$0.01

$0.42

$0.02

$0.13

$4.04

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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FY Adjusted OP by Segment

USD Millions, except Earnings per Share

FY 2019

FY 2018

As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted

AWP

$196.2

8.9

$205.1

$300.5

1.4

$301.9

MP

196.8

0.4

197.2

176.0

(2.8)

173.2

Corporate & Other

(58.0)

19.3

(38.7)

(64.0)

29.4

(34.6)

Terex ConOps

$335.0

28.6

$363.6

$412.5

28.0

$440.5

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary

In an effort to provide investors with additional information regarding the Company's results, Terex refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures which management believes provides useful information to investors. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Terex believes that this non-GAAP information is useful to understanding its operating results and the ongoing performance of its underlying businesses. Management of Terex uses both GAAP

and non-GAAP financial measures to establish internal budgets and targets and to evaluate the Company's financial performance against such budgets and targets.

The amounts described below are unaudited, are reported in millions of U.S. dollars (except per share data and percentages), and are as of or for the period ended December 31, 2019, unless otherwise indicated.

As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating current period results at rates that the comparable prior periods were translated at to isolate the foreign exchange component of the fluctuation from the operational component. Similarly, the impact of changes in our results from acquisitions and divestitures that were not included in comparable prior periods may be subtracted from the absolute change in results to allow for better comparability of results between periods.

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: Free Cash Flow

USD Millions

Free Cash Flow -We calculate a non-GAAP measure of free cash flow. We define free cash flow as Net cash provided by (used in) operating activities, plus (minus) increases (decreases) in Terex Financial Services finance receivables consisting of sales-type leases and commercial loans ("TFS Assets"), less Capital expenditures, net of proceeds from sale of capital assets (excluding the acquisition of our Northern Ireland properties), plus the estimated level of net working capital in divested businesses at the closing date. We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations.

Twelve Months Ended December 31,

2019

2018

Net cash provided by (used in) operating activities

$

173.4

$

94.2

Increase (decrease) in TFS assets

(31.1)

3.4

Capital expenditures, net of proceeds from sale of capital assets

(94.4)

(1)

(101.0)

Acquisition of MP Northern Ireland properties

-

21.0

Deal related net working capital adjustment

38.5

-

Free cash flow

$

86.4

$

17.6

(1) Includes $10.2 million of proceeds from sale of capital assets within Other investing activities, net in the Condensed Consolidated Statement of Cash Flows

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: Debt & Net Debt

USD Millions

Debtis calculated using the Condensed Consolidated Balance Sheet amounts for Notes payable and current portion of long-term debt plus Long-term debt, less current portion plus debt from liabilities held for sale. Net Debtis calculated as Debt less Cash and cash equivalents, including amounts in assets held for sale. These measures aid in the evaluation of the Company's financial condition.

December 31,

December 31,

2019

2018

Long-term debt, less current portion

$

1,168.8

$

1,210.6

Notes payable and current portion of long-term debt

6.9

4.1

Debt included in liabilities held for sale

-

4.7

Debt

1,175.7

1,219.4

Less: Cash and cash equivalents

(535.1)

(339.5)

Less: Cash and cash equivalents in assets held for sale

(5.0)

(32.6)

Net Debt

$

635.6

$

847.3

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: EBITDA

USD Millions

EBITDAis defined as earnings, before interest, other non-operating income (loss), income (loss) attributable to non-controlling interest, taxes, depreciation and amortization. The Company calculates this by subtracting the following items from Net income (loss): (Gain) loss on disposition of discontinued operations- net of tax; and (Income) loss from discontinued operations - net of tax. Then adds the Provision for (benefit from) income taxes; Interest & Other (Income) Expense; the Depreciation and Amortization amounts reported in the Consolidated Statement of Cash Flows less amortization of debt issuance costs that are recorded in Interest expense.

Terex believes that disclosure of EBITDA will be helpful to those reviewing its performance, as EBITDA provides information on Terex's ability to meet debt service, capital expenditure and working capital requirements, and is also an indicator of profitability.

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2019

2018

2019

2018

Net income (loss)

$24.5

($33.0)

$54.4

$113.7

(Income) loss from discontinued operations - net of tax

3.6

50.2

155.4

130.4

(Gain) loss on disposition of discontinued operations- net of tax

(9.6)

2.4

(0.1)

(2.4)

Income (loss) from continuing operations

18.5

19.6

209.7

241.7

Provision for (benefit from) income taxes

(16.0)

(13.8)

37.8

45.4

Interest & Other (Income) Expense

20.4

75.8

87.5

125.4

Income (loss) from operations

22.9

81.6

335.0

412.5

Depreciation

9.4

9.4

39.6

39.0

Amortization

1.6

1.5

6.3

5.9

Bank fee amortization not included in income (loss) from operations

(1.2)

(1.0)

(4.5)

(4.1)

EBITDA

32.7

91.5

376.4

453.3

Operating profit adjustments

13.4

4.0

28.6

28.0

Adjusted EBITDA

$46.1

$95.5

$405.0

$481.3

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: ROIC

ROICand other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Terex Corporation stockholders' equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying Income (loss) from operations as adjusted by one minus the annualized effective tax rate.

In the calculation of ROIC, we adjust income (loss) from operations, annualized effective tax rate, and Terex Corporation stockholders' equity to remove the effects of the impact of certain transactions in order to create a measure that is useful to understanding our operating results and the ongoing performance of our underlying business without the impact of unusual items as shown in the tables below. Cash and cash equivalents and Debt are adjusted to include amounts recorded as held for sale. Furthermore, we believe returns on capital deployed in TFS do not represent our primary operations and, therefore, TFS assets and results from operations have been excluded from the Non-GAAP Measures. Debt is calculated using amounts for Notes payable and current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters' adjusted NOPAT as this represents the most recent 12- month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters' ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: ROIC Continued

USD Millions

See reconciliation of adjusted amounts below on the following ROIC tables. Amounts are as of and for the three months ended for the period referenced in the tables.

Dec '19

Sep '19

Jun '19

Mar '19

Dec '18

Annualized effective tax rate as adjusted

15.6 %

15.6 %

15.6 %

15.6 %

Income (loss) from operations as adjusted

$

35.3

$

86.2

$

127.9

$

104.8

Multiplied by: 1 minus annualized effective tax rate

84.4

%

84.4

%

84.4

%

84.4

%

Adjusted net operating income (loss) after tax

$

29.8

$

72.8

$

107.9

$

88.5

Debt as adjusted

$

1,175.7

$

1,175.6

$

1,351.9

$

1,477.8

$

1,219.4

Less: Cash and cash equivalents as adjusted Debt less Cash and cash equivalents as adjusted Total Terex Corporation stockholders' equity as adjusted

Debt less Cash and cash equivalents plus Total Terex Corporation stockholders' equity as adjusted

(540.1)

(475.5)

(394.6)

(330.2)

(372.1)

$

635.6

$

700.1

$

957.3

$

1,147.6

$

847.3

$

963.7

$

881.3

$

852.2

$

743.4

$

752.5

$

1,599.3

$

1,581.4

$

1,809.5

$

1,891.0

$

1,599.8

December 31, 2019 ROIC

17.6%

NOPAT as adjusted (last 4 quarters)

$

299.0

Average Debt less Cash and cash equivalents plus Total Terex

$

1,696.2

Corporation stockholders' equity, as adjusted (5 quarters)

(1) The 2019 annualized effective tax rate is based on management's full year 2019 projections

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

34

Glossary: ROIC Continued

USD Millions

Three

Three

Three

Three

months

months

months

months

ended

ended

ended

ended

12/31/19

9/30/19

6/30/19

3/31/19

Reconciliation of income (loss) from operations:

Income (loss) from operations as reported

$

22.9

$

86.4

$

126.0

$

99.7

Adjustments:

Deal related

-

(0.9)

(7.0)

0.2

Restructuring and related

9.8

2.2

8.7

1.7

Transformation

3.4

2.2

4.0

4.1

Other

0.2

-

-

-

(Income) loss from TFS

(1.0)

(3.7)

(3.8)

(0.9)

Income (loss) from operations as adjusted

$

35.3

$

86.2

$

127.9

$

104.8

As of

As of

As of

As of

As of

12/31/19

9/30/19

6/30/19

3/31/19

12/31/18

Reconciliation of Cash and cash equivalents:

Cash and cash equivalents - continuing operations

$

535.1

$

470.6

$

367.5

$

304.6

$

339.5

Cash and cash equivalents - assets held for sale

5.0

4.9

27.1

25.6

32.6

Cash and cash equivalents as adjusted

$

540.1

$

475.5

$

394.6

$

330.2

$

372.1

Reconciliation of Debt:

Debt - continuing operations

$

1,175.7

$

1,175.6

$

1,347.7

$

1,473.4

$

1,214.7

Debt - liabilities held for sale

-

-

4.2

4.4

4.7

Debt as adjusted

$

1,175.7

$

1,175.6

$

1,351.9

$

1,477.8

$

1,219.4

Reconciliation of Terex Corporation stockholders' equity:

Terex Corporation stockholders' equity as reported

$

932.3

$

866.3

$

860.1

$

781.8

$

860.5

TFS Assets

(154.0)

(159.0)

(180.2)

(204.6)

(185.1)

Effects of adjustments, net of tax:

Deal related

75.3

75.3

75.8

83.1

-

Restructuring and related

31.0

22.7

19.2

9.5

6.8

Transformation

23.5

20.6

18.4

13.9

9.1

Pension annuitization

56.3

56.3

56.3

56.3

56.3

Other

7.4

6.4

6.8

4.4

5.1

(Income) loss from TFS

(8.1)

(7.3)

(4.2)

(1.0)

(0.2)

Terex Corporation stockholders' equity as adjusted

$

963.7

$

881.3

$

852.2

$

743.4

$

752.5

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: ROIC Continued

USD Millions

Income (loss) from

(Provision for) benefit

Year Ended December 31, 2019

continuing operations

Income tax rate

before income taxes

from income taxes

Reconciliation of annualized effective tax rate:

As reported

$

247.5

$

(37.8)

15.3%

Effect of Adjustments:

Deal Related

(7.5)

0.2

Restructuring & related

22.4

(4.7)

Transformation

13.7

(2.8)

Other

0.6

(0.1)

Tax related

-

2.0

As adjusted

$

276.7

$

(43.2)

15.6%

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

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Glossary: Working Capital

USD Millions

Working Capitalis calculated using the Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus Inventories less Trade accounts payable and Customer advances. The Company views excessive working capital as an inefficient use of resources, and seeks to minimize the level of investment without adversely impacting the ongoing operations of the business. For the periods below, working capital was:

December 31,

2019

Inventories

$847.7

Trade Receivables

401.9

Less: Trade Payables

(508.1)

Less: Customer Advances

(17.9)

Total Working Capital

$723.6

Trailing Three Months Annualized Net Salesis calculated using the net sales for the quarter multiplied by four.

3 months Sales

$885.0

Number of quarters

x

4.0

Annualized Quarterly Sales

$3,540.0

WC % of Annualized Quarterly Sales

20.4%

The ratio is calculated by dividing working capital by trailing three months annualized net sales. The Company believes this measures its resource use efficiency.

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

37

Glossary: Recast Financials

USD Millions

Recast: Moves Cranes from Corp & Other to Materials Processing(1)

in (000's)

FY-18

Net Sales

AWP

$2,950.4

Materials Processing

1,576.8

Corp & Other/Eliminations

(10.0)

Total Net Sales

$4,517.2

Income from Operations

AWP

$300.5

Materials Processing

211.1

Corp & Other/Eliminations

(99.1)

Total Income from Operations

$412.5

Adjustments

AWP

$1.4

Materials Processing

(2.5)

Corp & Other/Eliminations

29.1

Total Adjustments

$28.0

Income from Operations (Adjusted)

AWP

$301.9

Materials Processing

208.6

Corp & Other/Eliminations

(70.0)

Total Income from Operations (Adjusted)

$440.5

Q1-19

Q2-19

Q3-19

Q4-19

FY-19

$727.9

$870.4

$628.2

$500.1

$2,726.6

410.5

430.9

382.7

378.5

1,602.6

(1.8)

5.6

13.7

6.4

23.9

$1,136.6

$1,306.9

$1,024.6

$885.0

$4,353.1

$59.6

$86.3

$45.9

$4.4

$196.2

59.5

65.3

58.4

44.7

227.9

(19.4)

(25.6)

(17.9)

(26.2)

(89.1)

$99.7

$126.0

$86.4

$22.9

$335.0

$1.6

$5.1

$0.4

$1.8

$8.9

-

-

0.4

-

0.4

4.4

0.6

2.7

11.6

19.3

$6.0

$5.7

$3.5

$13.4

$28.6

$61.2

$91.4

$46.3

$6.2

$205.1

59.5

65.3

58.8

44.7

228.3

(15.0)

(25.0)

(15.2)

(14.6)

(69.8)

$105.7

$131.7

$89.9

$36.3

$363.6

(1) Recast results presented above are unaudited

F O C U S • S I M P L I F Y • E X E C U T E TO W I N

38

Disclaimer

Terex Corporation published this content on 14 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 February 2020 14:50:05 UTC

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