Terex Corporation (NYSE:TEX) Q4 2019 Earnings Conference Call - Final Transcript

Feb 14, 2020 • 08:30 am ET


Terex Corporation (NYSE:TEX) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Terex Corporation Q4 2019 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Randy Wilson, Director of Investor Relations. Please go ahead.

Randy Wilson

Good morning, everyone, and thank you for participating in today's fourth quarter 2019 financial results conference call. Participating on today's call are John Garrison, Chairman and Chief Executive Officer and John Duffey Sheehan Senior Vice President and Chief Financial Officer. Following the prepared remarks, we will conduct a question-and-answer session.

We have released our fourth quarter 2019 results, a copy, which is available on Terex.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call, and it's also available on our website. All adjusted per share amounts in the presentation are on a fully diluted basis. We will post a replay of this call on the Terex Investor Relations website under Events and Presentations.

Let me direct your attention to Slide 2, which is our forward-looking statement and description of non-GAAP financial measures. 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.

With that, please turn to Slide 3, and I will turn it over to John Garrison.

John L. Garrison

Good morning, and thank you for joining us and for your interest in Terex. For Terex operating within the Zero Harm environmental health and safety culture is an absolute way of life. I am proud of our team's dedication, commitment and focus on a Zero Harm safety culture. The global team made great progress during the year reducing our recordable injuries by 39%, a significant accomplishment. But we realize we can and will continue to make further progress in our Zero Harm culture.

The fourth quarter completed a year where we faced considerable market-driven and operational headwinds principally within our AWP segment. Our Q4 results reflect the headwinds of the challenging global industrial equipment markets and our operating results were generally in line with our expectations on lower revenue. AWP's fourth quarter revenue was down 21% from Q4 2018. This demonstrates the cautious customer sentiment and our largest markets in North America and Europe. AWP's revenue decline, coupled with the need to produce below retail demand to reduce inventories. Adversely impacted operating margins.

Our MP team continued to execute well, maintaining percent operating margins, despite Q4 revenues being down 10% in the quarter. Having parts and service growth is one key element of our Execute to Win initiatives. Despite the challenging global equipment markets our parts and service teams drove 7% sales growth on a currency neutral basis. Over time continued growth from this initiative will help reduce our cyclicality.

Given the environment in which we are operating, we have maintained our absolute focus on our disciplined capital allocation strategy. We generated positive free cash flow in