Terex Corporation (TEX) Q4 2012 Earnings Report, Transcript and Summary

Good morning, my name is Keena, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Terex Corporation Fourth Quarter and Year End 2012 Financial Release Conference Call. [Operator Instructions] Ronald DeFeo, Chairman and CEO, you may begin.

Thank you, and good morning, ladies and gentlemen. And thank you for your interest in Terex today. On the call with me this morning is Phil Widman, Senior Vice President and CFO. This will be Phil's last conference call for Terex, which as you know, is due to his planned retirement. We thank Phil for his more than 10 years of service to Terex and Terex's investors. Kevin Bradley, our incoming CFO, is also participating. As you know, Kevin was recently the President of Terex Cranes. Also on the call is Tom Gelston, Vice President of Investor Relations; and our segment leadership, including our group presidents for each one of our businesses. As usual, a replay of this call will be archived on the Terex website, under Audio Archives in the Investor Relations section. I'll begin with some overall comments, Phil will follow with a more detailed financial report, and then I'll provide some additional commentary before opening it up to your questions. We'll follow the presentation that accompanied the earnings release and is available on our website. [Operator Instructions] Let me direct your attention to Page 2, 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'll be discussing today is forward-looking material. So I encourage you to read that as well as our risk factors. So now let me begin on Page 3. Where are we and where are we headed? First, to reflect upon the year 2012 that we just completed. We set some very specific goals for execution in 2012, and we think we made some excellent progress. And in the area of margin improvement, on an adjusted basis, we achieved a 340 basis-point improvement in operating margin, basically doubling last year. Next, in cash generation, we generated approximately $554 million in free cash flow. And from an adjusted earnings per share performance perspective, we achieved $1.83 compared with the year-ago adjusted EPS of $0.46. In a few minutes, Phil will detail the differences between our adjusted and reported numbers. During the year, we meaningfully delevered the company and took some strategic actions to position us for a better 2013 and beyond. That's one of the reasons why we're optimistic overall about our business and the individual segment performances that we will detail. Our outlook for the year will be for earnings per share of between $2.40 and $2.70 on net sales of between $7.9 billion and $8.3 billion, returning free cash flow of more than $500 million, and we expect to focus on further debt reduction as the year progresses. We're also communicating 2015 goals, that are goals not guidance, as we have established these internally and felt it appropriate to communicate them externally. We believe the company can achieve net sales of approximately $10 billion, earnings per share of $5 plus and a return on invested capital of at least 15% in 2015. We're not anticipating significant acquisitions as our focus is on operational improvements. Turning to Page 4. Our fourth quarter results reflected the slower economic environment that was evident in our reduced backlog at the end of the third quarter. We had an adjusted fourth quarter EPS of $0.19, but our margin improvements were key to staying positive. We had an adjusted operating margin of 4.5% compared with 3.8% in the 2011 fourth quarter. We continue to realize better pricing, as well as making cost reduction progress. The interesting point here is that despite about a $260 million decline in net sales, our gross profit in absolute dollars remained unchanged. We were not happy with the net sales decline, which we believe was mostly market-based, except in Cranes, where we likely traded some share for profit improvement. This represents a better operating profile in our view, as now we're in a stronger position to capture growth from a higher margin level. And if you reflect on the year in total, we started 2012 with a stronger economic environment and we ended it with a bit weaker environment, but our operating performance continued to progress. This is highlighted by the free cash flow performance of $140 million in the quarter. And from a segment perspective, most performed as expected. AWP, Cranes and Materials Processing delivered strong operating performance with improved margins despite some net sales softness in Cranes and Materials Processing. And at AWP, we were out of the telehandler business for most of the fourth quarter as we were doing a product changeover at our Moses Lake facility. MHPS and Construction underperformed. And in the Material Handling & Port Solutions segment, we had a net sales decline of about 15%, with a majority of it coming from our Port business. But our European-based Material Handling business also showed some significant softness. This puts further pressure on the integration efforts, which we are on -- which are on track but now need to increase as our costs are likely too high for the net sales at this point in time. And lastly, the Construction business remains a work in progress as we are exiting underperforming businesses as a top priority, as well as continuing to lower our cost and finding new ways to build our business through alliances. Now let me turn it over to Phil, who will review the quarter and the annual performance as he has for the past 10 years. Phil?

Thank you, Ron, and good morning. As we turn to Slide 5, I'll review our financial results for the quarter. Our net sales of $1.7 billion declined from the prior year quarter by 13% or $261 million. More than half the reduction occurred in the Construction segment as we experienced softening order intake in the second half, particularly in the Compact and Material Handling equipment in Europe, as well as rigid trucks in developing markets. MHPS sales declined due primarily to softer demand for Port Equipment, and to a lesser extent, industrial Material Handling cranes largely in Europe. We continue to benefit from improved replacement fleet demand of AWP products and overall market recovery for Cranes in North America. And lastly, Europe remains soft for the remaining Cranes and Materials Processing product lines. We continue to make good progress on adjusted gross margin, improving to 20.2%, 270 basis points better than Q4 of 2011, by focusing on price realization and the benefits of prior cost reduction actions, which fully offset the impact of the net sales decline on adjusted gross profit. We continue to remain vigilant on SG&A. Necessary investments in new product development and expanded market coverage for both sales and product support offset the ongoing cost-reduction activities. Adjusted income from operations for the fourth quarter of $77 million or 4.5% of net sales increased close to 70 basis points when compared to Q4 of 2011. Net interest and other expense were favorable over the prior year quarter, mainly due to the effect of interest rate decline. The effective tax rate after adjustments was 45% in Q4 of '12 compared to 16% in the prior year quarter, which negatively impacted the year-over-year comparison. This was mainly due to discrete benefits in the prior year period that did not reoccur and the higher impact in the current period of losses for which no tax benefit was realized. For the quarter, earnings per share as adjusted was $0.19 compared to $0.25 in 2011. The as-reported loss per share for Q4 of 2012 was $0.28 and we had a loss of $0.04 for the prior year quarter. I will walk through our bridge, detailing the adjustments in a moment. Net working capital as a percentage of annualized sales was 27%, an increase from 25% reported in Q4 of 2011. The increase was largely due to the year-over-year sales decline and softening demand, mainly in Construction and Cranes. Given the significance of customer advances, we have now included this in the calculation of working capital for all periods. Return on invested capital of 8% increased from 3.7% as our profitability continues to be the main improvement factor when compared to the prior year period. Turning to Page 6. We focused on some major initiatives in 2012 that position us for improving results in the future. We opportunistically restructured the majority of our debt to reduce the average cost and extend maturities by roughly 4 years. Our improved profitability and debt actions reduced our adjusted net debt-to-EBITDA ratio from 4.9x in 2011 to 2.3x in 2012. The debt restructuring charges impacted earnings per share in the fourth quarter by $0.18 and $0.40 for the full year. We have taken major significant actions in the Construction segment. These included the announced agreement to sell our Brazilian and U.S. asphalt product businesses and the attempt to divest the remaining Roadbuilding product lines manufactured in the Oklahoma City facility. We took charges in the fourth quarter of approximately $0.09 per share. We will likely have some additional charges in 2013 related to these divestitures when they are finalized. We have also announced the intent to exit or sell certain Compact Construction equipment component manufacturing businesses in Germany. This impacted the fourth quarter by approximately $0.10 per share. Lastly, we have developed a plan to distribute our Compact Construction products through alternative channels, providing needed manufacturing capacity utilization. The ongoing integration of the MHPS businesses positively impacted results for 2012 by approximately $13 million. And we are on track to exceed our annual savings target of $35 million by 2013. We had a $0.04 per share charge in the fourth quarter and $0.08 for the full year related to projects in this integration effort. Turning to Page 7. We have displayed the reconciliation of the fourth quarter adjustments, most of which I have just discussed. But in the other items column, we had $0.05 per share of the total $0.06, relates to the accruals for Brazilian postemployment benefits, where the government requirements have just recently been clarified. This impacted the MHPS segment operations. Page 17 in the appendix displays the adjustments related to the fourth quarter of 2011. So turning to Page 8 to discuss backlog. Our backlog for orders that are deliverable during the next 12 months was approximately $2 billion at the end of 2012, an increase of roughly 17% from Q3 of '12 and a decrease of approximately 7% from the end of 2011. The sequential increase was driven largely by the recurring fleet orders in AWP, where AWP had its highest booking levels in more than 4 years. The Construction segment backlog increased by approximately 56% from the September 30, 2012, period, primarily due to a large annual order from material handlers in Germany, increased demand for the company's redesigned concrete mixer trucks and initial orders from the previously announced distribution agreement for skid steer loaders. The Cranes backlog decreased primarily due to lower demand for all-terrain cranes in most European markets due to macroeconomic headwinds. This was largely offset by continued strong demand in North America for rough terrain and truck cranes. The MHPS backlog decreased primarily due to a decrease in orders for mobile harbor cranes and industrial cranes, mostly due to a dampened European economic environment. This was partially offset by a portion of the large automated Port Equipment orders placed in July of 2012 now being recognized within the reported 12-month backlog. The company's MP segment experienced a sequential increase in backlog, mainly due to increased demand in North America. The year-over-year backlog decline reflected continued weakness in orders from European customers as compared to the end of 2011. On Page 9, we have displayed the full year results from continuing operations. Net sales increased 13% for the year. But excluding the effect of Demag Cranes AG acquisition, the base businesses increased only 3% as we focused more on what we felt we could control in an inconsistent market. Margin improvement through price realization and cost reduction supported the strong results and operating margin improvement of 340 basis points over the prior year to achieve 6.4% from 3% in 2011. Adjusted earnings per share were $1.83 in 2012 compared to $0.46 in 2011. The adjustments, which are detailed on Pages 18 and 19 for the full year '12 and 2011 largely reflect the impact of the debt restructuring and other improvement activities we undertook to position ourselves for a stronger future. Before I turn it back to Ron, I wanted to supplement his outlook commentary for 2013 with some basic assumptions. We expect a tax rate of 36%, which is slightly higher than the 35% in 2012, due to increased income in higher tax jurisdictions, particularly in the United States. Other expense is anticipated to be approximately $40 million, which includes the Demag Cranes shareholder guaranteed payment, debt amortization costs and other items. Share count is expected to be 117 million and we expect capital expenditures of roughly $130 million. Cash taxes are expected to be roughly $180 million. And with that, let me turn it back to Ron.

Thanks, Phil. Turning to Page 10. I wanted to provide some detail relative to our 2013 outlook. We're expecting net sales of between $7.9 billion to $8.3 billion, which is an 8% to 13% increase, a gross margin of about 21%, slightly up from the adjusted 2012 levels, an SG&A rate of about 13%, slightly down from 2012, and an income from operations of between $600 million to $650 million, which results in an earnings per share of $2.40 to $2.70 or an EPS growth of approximately 30% to 45%. We expect about 40% to 45% of the annual EPS to be in the first half of the year, with the second quarter of that first half representing about 75% to 80% of the first half's earnings. So that's how we expect the year to develop. Now turning to Page 12. We will detail how we anticipate net sales will develop by the year and by segment. I'd like to highlight that I believe net sales will start slowly in 2013, and will have a relatively weak first quarter. But we expect to strengthen significantly in the second quarter with a strong third and fourth quarter, particularly compared to 2012. Our Aerial Work Platforms business is expected to be our strongest segment overall with net sales growing from 15% to 25%, driven primarily from a positive replacement cycle in North America and Europe. In addition, we expect some positive pricing. We are encouraged by the positive signs we are seeing in Europe. These come directly from customer inputs and customer conversations. The Construction business, conversely, will continue to be under net sales pressure, particularly from Europe. And we may not grow at all or on a more optimistic basis, with Developing Markets in North America expanding, we have a up to 10% growth potential. We will focus this business on select products and in select markets, and we will continue to look for developing deeper relationships with new selling partners. In Cranes, we are expecting 10% to 20% improvement in net sales. The strength will come from North America Developing Markets and new products. We are expecting Europe to bottom out and not to be the negative drag it was in 2012 but no growth. In the Material Handling & Port Solutions business, we expect growth of about 5% to 10%, mainly from a large port projects later in the year and some stabilization on our Material Handling or overhead Cranes business. It is the European Material Handling business that is the softest. And we expect to be working on ways to reduce costs further and to adapt to the realities of a softer overall market while focusing on growth in the Developing Markets. And lastly, in the Materials Processing business, we expect a 5% to 15% growth, with new products, continued expansion of the North American operations and a relatively stable business elsewhere. Turning to Page 12. Let me highlight our margin -- our operating margin outlook. Obviously, net sales growth of 8% to 13% noted on the prior page, coupled with a 1 to 2 percentage point margin improvement has a significantly positive bottom line impact. We expect a good portion of this improvement to come from our AWP business, where we see increased price realization and net sales volume. We're expecting the 2013 margin to be in the 11% to 14% range. While that's a rather large range, we do not want to make -- we do want to make sure we achieve both growth and profitability. As we get deeper into the recovery, it is more critical to protect share. Construction. We are expecting a very moderate 1% to 3% margin as we do not expect to benefit much from the divestiture and restructuring until later in the year and in 2014. And in the Cranes business, where we achieved 10.4% adjusted operating margin in 2012, we're expecting a 10% to 12% operating margin as we benefited from the cost reductions and margin improvement efforts that took place in 2012. But now we will focus on growth again, particularly in the non-EU markets. Material Handling & Port Solutions business will not see big margin improvements in 2013, but we are expecting margins of 3% to 5%. And let me remind you that this business carries a higher D&A than many of our other businesses, and we are seeing the EBITDA margin for this business in the range of 6% to 8% for the year. However, there will be further changes during the year that adapt to the structural cost realities of the current market. There may be some charges for these changes that we have not yet anticipated. In the Materials Processing business, we are expecting an 11% to 13% margin compared with the 11.3% achieved in 2012. So overall, we are expecting a 7% to 8% operating margin compared with an adjusted 6.4% in 2012. Turning to Page 13. And probably the most important strategic page in the presentation is what does this really mean for who we are at Terex. Essentially, we have transitioned ourselves to becoming a lifting and material handling solutions company. That company is focused on operational improvement, not acquisitions, as the main driver of future financial performance. The businesses that we are managing today are leaders in substantially all of the product categories where we compete. We are very geographically diverse, which will allow us to capture global opportunities and focus our company as we continue to concentrate on profitable growth with consistent cash generation. So turning to Page 14. This is how we expect to drive the company's performance toward the goals of 2015 mentioned earlier in this call. We will spend more detailed time on this at our planned investor day on March 20 in New York City. The bottom line is net sales is expected to grow from $7.3 billion in 2012 to approximately $10 billion. And our operating profit from about $468 million as adjusted in 2012 to about $1 billion in 2015. You can see where we expect this performance to come from relative to each segment. Obviously, segment-by-segment forecasting at this stage is difficult and may change over time, but we're committed to the overall objectives for the company. There may be some additional things that change here. But frankly, as we look at the company, we believe these goals are reasonable and achievable, and again without acquisitions. So let me summarize on Page 15. We have solid execution in 2012 of the goals that we set at the beginning of the year. There were clearly challenging market conditions, particularly in the back half, but the company continued to focus on operations and is much stronger today than a year ago. We repositioned ourselves as a lifting and material handling solutions company and are optimistic about our 2013 guidance, which indicates net sales will grow between 8% to 13% and an EPS of $2.40 to $2.70. Free cash flow of $500 million will be very positive and we'll continue to use that free cash flow to pay down debt. As we reflect overall on the 2015 goals of $10 billion and a $5-plus EPS with a 15% return on invested capital, we think the company is on a pathway to sustained prosperity for the coming several years. We remain focused on improving the things that we can control and addressing the strategic and structural issues of our underperforming businesses. Now operator, I'd like to open it up for questions. Thank you.

[Operator Instructions] Your first question comes from Andy Kaplowitz, Barclays.

It's Alan Fleming standing in for Andy this morning. I wanted to start with a little bit more color on your outlook for the Crane segment. The sales guidance of the 10% to 20% seems like a sizable contrast versus what the Crane backlog has done over the last several quarters. So can you tell us what you're seeing that gives you confidence in these growth levels and maybe what products lines you're seeing the demand in the strongest today and where you're seeing the increase broaden to other product lines?

Sure. We're going to do this in 3 ways. First, I'm going to provide just a couple of comments. Then I'm going to turn it over to the outgoing President of Cranes, and then we'll allow the incoming President of Cranes, Tim Ford, to comment because he's most recently in the market. From my perspective, we really did try to make 2012 about getting our operating margins to a level that was satisfactory for this business. During the course of that year, we watched our North American business improve quite nicely, giving us a pretty confident backlog and a pretty confident perspective on this portion of the world. In contrast, the European market remained pretty weak and pretty negative overall but we think frankly bottomed out in many respects for that period of time. And we were able to move up our margin despite that environment. I think Kevin Bradley has accomplished a good portion of that, but there's a lot more work to do. And why don't I let Kevin comment further on the things that will contribute to the revenue growth?

Two things I would add that aren't reflected here is the quoting activity. The quoting activity that we're seeing over the last 60 days has been increased in a positive way. The other thing I would add is new product introductions that Ron mentioned, specifically the SL Superlift 3800, which is a 650-ton crawler crane. We're getting a lot of positive energy in the market about it. It's just become in the last 3 months commercially available to order. Also our AC1000, it's a all-terrain crane, 1,000-ton, is also getting some good pin action in the market. And then lastly, we talked about having a strong rough terrain market. One of the weaker areas for us historically in the North American market within that product line has been the 100-ton class. And we're just now announcing a new product, the Quadstar 1100, which is 110-ton class rough terrain crane that we think will really solidify our entire product line for rough terrain cranes.

And Tim Ford, you've been out in the market, learning the business, meeting all our internal people, but also importantly, meeting some of the big crane customers around the world. What can you add to this?

Yes, Ron. So since this change was announced on January 14, I've been in the marketplace visiting our U.S. dealers. I've spent a fair bit of time with the European rental customers, and of course, visiting our operations. What I'm hearing overall is a consensus that the market is improving in pockets around the world. The U.S. market is admittedly stronger today than the European market. But there are certain categories of products that are stronger than others, notably the rough terrain category in North America. Kevin mentioned the quote activity. I'm hearing that kind of thing even this week, as I'm out in the marketplace. And the products that Kevin referenced as well are generating a fair bit of excitement. In fact, we've already sold 40% of our planned production on the Superlift 3800 and 50% of our planned production on the AC1000 for 2013. So I'm pretty excited about the products as I learn the business. But as we go forward, we're going to balance our margin requirements with growth and align the opportunity with the profit potential. So overall, I think the business has good growth potential and our job is going to be to capitalize on it.

And most of that production that you cited is not quoted in the backlog as is out in the market at this point in time.

That's correct.

That's helpful. If I could just, as a follow-up, shift gears to the Construction business. Now that you're exiting the Roadbuilding business, how far from breakeven levels is the remaining Construction business? And can you talk about when you might see a return to profitability there?

Okay. Yes. We are probably 60% of the way through a divestiture of the road business. The product lines that we announced are not 100% of our Roadbuilding product lines. There are some additional product lines that we have to work on. I think the road business has been a fairly substantial drag on us for the past several years. And I think the charge we took plus a little bit more activity in this area this year, we'll get the vast majority of that behind us in the first 3 quarters of 2013. I think the remaining Construction business in aggregate will be positive and profitable. And it's just a matter of how high, high is. At this point in time, our scrap steel handler, the Fuchs product line, is profitable but substantially down in the range of 40%, 50% of volumes from what it was 2 years ago. But it's still nicely profitable. Our rigid truck and articulated truck line had a very difficult second half of 2012 with very little business. But the backlogs have increased quite substantially early this year and we're much more confident. And that business has a reasonable history of profitability. The North American Compact business, with the Takeuchi supply agreement is certainly headed in the right direction. And we've gotten some positive inquiries from major rental companies and additional business in North America, which leaves us with the Compact European product line, which has been a bit of a drag. In that business, we are planning -- one of the charges we took in the fourth quarter was planning to sell off or exit some of the component businesses that we don't think add to our profitability whatsoever and have added to the complexity of our German operations. So those decisions are mostly underway but probably don't become net profit additive in a substantial way until 2014. So that's why we provided the 2000 guidance the way we provided it, which means we're on our way to improvement and we think we'll be in the 1% to 3% operating margin in 2013. But we believe a higher number is possible, and that's why we have the 2015 number set out there. And I think that's a reasonable expectation, given what we're doing today that's announced with the business.

Your next question comes from Jamie Cook, Credit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: Two questions on the Aerial side. One, can you guys just quantify how much the inventory issue in the planned production shutdown hurt margins in the fourth quarter? The 9.3% was a little lighter than I thought. And I guess, that sort of leads me to my follow-up question, is the margin guidance for Aerials, the 11% to 14%, I'm surprised on the low end, given the top line growth that you're expecting. So is there anything -- is there a mix issue? What are you assuming for pricing? If you could just help me with the margin guidance on Aerials, and I'll get back in queue.

Okay. I'll let Phil handle the inventory question in a second. But the overall margin guidance of 11% to 14%, I think, Jamie, we compete in a pretty reasonable oligopoly. And it is our expectation that the marketplace will have a solid pricing environment. I think Matt would confirm that. Matt's here, Matt Fearon. And he can comment on that in a second. And so if that pricing and positive pricing environment happens, we're probably conservative on the low end of that margin guidance for sure. On the other hand, we want to be clear that we do want to grow our business and will not allow market share erosion at this stage of a cycle improvement. And so we want to be clear with expectations overall that this is a balance between growth and profit improvement. I don't think the 9.3% operating margin should be a reflection of what we -- a major concern and part of that is the inventory issue and part of that is the shutdown that we had in our plan of the telehandler business. We shift virtually no telehandlers in the back -- in the fourth quarter of this past year, whereas we're ramping that business up today. Jamie L. Cook - Crédit Suisse AG, Research Division: What are you assuming though for price increases? I think on Oshkosh's call, they said 5% to 8% on select product lines.

Well, Matt, why don't you answer the pricing question first?

Okay. As far as pricing goes, we announced a 3.4% average price increase in August, effective on January 1. And as Ron stated, we have a positive pricing environment. In addition to that, I would add that our input costs have stabilized, so we're feeling good about the cost of our materials. And also our manufacturing absorption is in a good place because we're getting the benefits of being at higher production rates and we've had ongoing cost reductions that we're going to start to see the benefits of. So when I look at margins, looking forward, I'm very optimistic about where we're headed. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And then just on the quarter, how much the inventory and the shutdown hurt the margins?

Jamie, it's Phil. The inventory charge was $6.2 million. And Matt, if you want to comment on the absorption impact. I don't know if you know a specific number, but...

Yes. What Ron was alluding to on the telehandlers is in the fourth quarter, we did a major product changeover, where we were introducing a new 8K. So we basically took the line down, retooled it. But what we're doing is we're setting up for a much bigger 2013. And if you look at our overall production volumes for telehandlers in 2013 versus 2012, we're almost double.

Almost double. Right. Jamie L. Cook - Crédit Suisse AG, Research Division: And congrats, Phil. Best of luck to you.

Thank you, Jamie.

Your next question comes from Rob Wertheimer, Vertical Research Partners.

So you guys touched on this a little bit, but I wanted to talk on Aerials. Could you remind us what your geographic mix, U.S., Europe, was at peak and what it is kind of now and what the order flow felt like from Europe in that segment? I mean, it was a great order quarter. I just want to understand how the mix has shifted up.

Okay. I'll comment on the backlog and the -- well, not the backlog, but the relative mix of the business and turn it over to Matt to give you some specific color on what we're hearing from Europe. On Page 21 of our appendix on the material, we released a split of our business between 2006 to 2012. And if you notice here, in 2006, 67% of our business was North America. Today, it's 69%. But Europe is 13% today versus back in 2006-2007, where it was 22% and 28%, respectively. So Europe is substantially down even in the 2012 period, with the developing markets and the rest of the world being at 18%. However, as we look forward and have good conversations with our European rental companies, their attitudes are surprisingly positive. So Matt, why don't you comment on that?

Yes. And as you can see from the chart, the North American market is the strongest. But what we're seeing is that Europe has been down a lot longer than North America. And we're starting to see the same trend that we saw in North America when the market came back. The large rental houses have -- their fleets have been aged and they're starting to have to refresh them. So as we look at fourth quarter, the Europe Q4 growth rate exceeded the year-to-date growth rate. And as we go through January and February, we're having conversations with all the large rental houses, and they're starting to be much more optimistic. And so we're feeling good about the growth in Europe.

And that would be additive as well because we expect our Latin American operations and rest of the world, Australia, to continue to be reasonably strong. So this is part of the reason why we're quite encouraged by the overall volume outlook of our AWP business. Ultimately, there isn't a lot of real end-market growth in Europe and there's not a lot of real end-market growth in the United States. What we're seeing though is that stability levels, the fleets have to be replaced because time is our greatest benefit right here. Because as things age, you've got to find a new person -- I mean, not a new person, I think, products. You have to find -- you've got to replace that equipment. So everybody is replaceable.

That was great. And then one more quick question on Aerials again. Just a shift from the large -- you mentioned the large rental houses started over in the U.S. and then that's moved to Europe. But has the smaller rental houses, feeling that same confidence, that access to credit to really keep this replacement cycle going for another year or 2 or 3 using that strength?

Yes. And over the last couple of years, clearly, the national accounts have been the ones that took the lead. But I just came back from the ARA show in Las Vegas. And what we saw there was a great mix of customers, both the big ones, the mid-size and the smaller ones. And we are seeing the smaller independents, they're still significant and important to our business. And they are able to start to get funding and they're getting back in the game. What we see is that as we went through the second half of the year in 2012, we saw that more of them will come to the table, and we think that trend is going to continue.

Your next question comes from Schon Williams, BB&T Capital Markets. Christopher Schon Williams - BB&T Capital Markets, Research Division: I wondered if we could just focus on Q4 for a little bit. I mean, ultimately, the quarter came in kind of below our expectations and even kind of the low end of where you guys were guiding at. I just wanted to make sure I understood exactly, what were the surprises in the quarter and what caused the most kind of variance versus where we were kind of entering the fourth quarter?

It's Phil. I'll give some of the comments, and Ron can add to it. I think the fourth quarter issues that we had, we did miss our expectations on revenue, and the fourth quarter oftentimes we think December is a big period. We had some delays in shipments, but it really was some of the weakening order intake we saw going into the last couple of months of the year was one of the major impacts that we had in Construction, in Material Handling & Port Solutions and a little bit in Cranes as well. The performance in Material Handling & Port Solutions, we had some areas in the world, mainly India, Brazil and Central Europe that we missed our expectations on profitability and we had some charges there that we don't call out that are operational in nature that we incurred as well. I would say largely AWP, other than the inventory charge, pretty much met the expectations we had. Cranes did well from a profitability standpoint in the quarter, and so did Materials Processing. So really Construction and MHPS were the areas of concern. And our tax rate, frankly, which something that we finalized very close to the end of the process also was unfavorable to our expectations.

I think what I would add is the Construction miss is really a substantial miss in revenue as the market just wasn't there in the fourth quarter and we were scrambling to try and get business. But we were trying to be disciplined and not just price down, take prices down to move inventory. So we ended up more or less intentionally keeping some inventory on hand. And I think this is going to be a smart decision because the backlog is beginning to improve in that business today. MHPS is a little bit more complicated. It's a little bit more of a concentration in European story. It's a little bit of a big project story. And it's a little bit of a transition from being a publicly traded German company to being a subsidiary of a U.S. company. We still have some of the costs of the publicly traded German company that are rolling off. And under Steve Filipov's leadership, which is a new leadership for that operation, we're really going to run that business not as 1 business alone as Demag Cranes AG, but as a focused business on 2 primary product lines, overhead Cranes and Port business. The Port business has historically been a business of big projects with lower margins. And we want to keep the attitude toward the bigger projects but find the synergies to get the margins up. In the overhead Cranes business, we have been the premier supplier and we have lost market share over the years and we have made our profits in this business on the back of the service business. We need to get a little bit more energy in the upfront revenue side of the business and continue that service and parts support. But if then, then you back up from a financial point of view on the MHPS, it still did contribute over $100 million of EBITDA to the company. And despite the fact that the fourth quarter was a loss in that business, if you compare it to the year ago, it looks like it actually went down. But that differential is really last year, we didn't allocate any corporate costs. This year, we allocated a substantial number of corporate costs, about $6 million this year that wasn't there last year. So despite a 15% revenue decline in that business, the operating profit performance was about the same. And the fourth quarter in this business is always one of the weakest quarters of this segment. Christopher Schon Williams - BB&T Capital Markets, Research Division: Okay. And maybe just as a follow-up, I mean, certainly the revenues came in a bit lighter than what you expected. That led to some underabsorption at the SG&A line. But when I look at kind of unallocated corporate costs, came in much higher than I expected, I mean, I wonder if you could just -- can you quantify maybe how much of either SG&A costs or unallocated corporate overhead, how much of that in -- do you, not necessarily call out as a charge, but maybe as more of a one-time issue in nature and shouldn't repeat as we move into 2013?

Well, in the $17 million that's in corporate and other, we have some small businesses in there, like our government programs business or Financial Services organization, our shared service group and so on. And we have things rolling through there like currency movement regarding transactions that go around the world. So that fluctuates quarter-to-quarter. It was unfavorable in the fourth quarter but over a magnitude, $3 million. We also have made investments in some of our Developing Market areas. And that would show up in corporate and other in India, in China, Brazil, that are investments for the future that we would think would not necessarily continue. But there weren't significant one-off charges per se in that number. But it's really related more not so much corporate overhead as you would call it, as opposed to some of our Developing Market initiatives.

And in the future, the 2013 period, the vast majority of those will be reallocated and are contained within our segment guidance.

That's right.

Because our philosophy at Terex is to try and allocate all the corporate segments with only a small piece being unallocated.

Your next question comes from Eli Lustgarten, Longbow Securities.

Longbow Securities. Can I get some insight or color on how you intend to run the business this year? You've got a big volume forecast for AWP and a big volume forecast for Cranes, with a very weak, as you said, first quarter it has been and developing. Can you give some insight on how you're gearing up to produce the product for this? Are you reducing all 4 quarters? Are you prebuying the material for the 15% to 25% gain at AWP and Cranes? Because I'm just wondering, how do you manage the process particularly when your forecast is literally almost twice what the industry pundits that I hear are telling me for the markets?

Okay, Eli. I think I'm going to let Matt comment on the production side of AWP because this is a critical point of the production side. And then maybe Kevin Bradley and Tim can comment on the Crane side. And this is not -- by the way, this problem is not unusual in the growth side of our business. And it is a little bit more complicated for a company like Terex that doesn't have the traditional distribution network that buys on floor planning or is financed with an order writing program like a big dealer network would have. So we sell direct to rental companies. And those rental companies like to buy when they need the product and don't like to buy when they don't need the product. So it does put a burden on our manufacturing process, which is one of the very, very important parts of the lean business model of the AWP business. And if there's anybody on the call that has never visited the Genie AWP lean processes, I really urge you to go there because it's kind of a state-of-the-art manufacturing process. And it really helps us here. But Matt, I kind of set you up.

Yes. That's a great question. And especially at this time of year, this is kind of the main thing that we're focused on. Because as you know, the way that the buying season is, it spikes up in Q1, peaks in Q2 and typically starts to drop off in Q3 and then further down in Q4. So this is nothing new to us. And when we talk about 15% to 25% growth rates, we plan on that. We work diligently with our supply chain to manage those kind of swings. We have very flexible manufacturing lines, where we can adjust our rates quite significantly because we try not to overproduce and put a ton of inventory out into the yards. We will do some of that but not a lot because it always ultimately ends up being the wrong stuff. So this isn't new to us. We've done it before at even higher rates than what we're projecting out here. So we're feeling good about being able to handle it.

Yes. I also would add that, we work at AWP 4 10-hour shifts, giving us the fifth day to pick up and clean up. I think we have a very sophisticated hiring program, where we call it the foundations program, where we put people through a couple of weeks of training before we ever get them on the assembly line so that we can rotate people through that already know what they're going to do, already know our safety requirements, et cetera. And in some product lines, where we're doubling production and we expect the output to be twice what it was at the end of the fourth quarter, and that production will stay high and then begin to drop down over the course of the year. In addition, it also tells us where our selling opportunities are. So if we can find customers that are willing to take equipment in the third and fourth quarter and if we can introduce new products that will be available in the third and fourth quarter, that also begins to balance our production. So being smart about this. And I know I just talked just about the AWP business. But maybe, Kevin, you want to comment on Cranes?

Yes. Just to give you an idea of where the growth is coming from, although we have 9 global manufacturing areas, it's really concentrated into 2. Our largest facility is Zweibrücken, Germany as far as the growth, and our Waverly, Iowa facility. And we have the physical plant capacity, we also have the access to the trained, talented individuals to come in and do it. So we've known this is coming, given our new product introductions. So we're in pretty good shape to ramp up. We've also been focusing on shortening both our supplier lead times and our manufacturing lead times to specifically be able to ramp up quickly. So capacity shouldn't be an issue for us.

And have you in buying material -- I know material has been basically [indiscernible]. Have you basically set up prebuys of materials for this year at probably maybe more favorable prices than last year? Give us some idea of how you're planning material costs for 2013.

Yes. I'll answer that. And what I'd say is we do expect more favorable material pricing in 2013 than 2012. We are one of the growth areas from our supply base as opposed to what used to be other areas. And I've always said, the kind of if you look over a course of a recovery, in the beginning of the recovery, we have little leverage. We have little leverage with our supply base and we have little leverage with our customers. But as the recovery begins to mature, our customers need the products and our suppliers, the component makers, have now begin -- beginning to see their recovery wane a little bit, so we begin to have leverage backward and begin to have leverage forward. And that's the period we're entering, whether it's in AWP or in Cranes. Probably not the case yet in a couple of our other businesses, but those are a couple of important drivers of our margin improvement.

Your next question comes from Jerry Revich, Goldman Sachs.

Steve Filipov or Ron, I'm wondering if you could just comment on where are we in the Material Handling & Port Solutions integration of the legacy Terex Port Solutions business. I know there's some opportunities to integrate the service centers. And just broader, if you can comment on where are we in the broader $35 million cost-cutting program and how we should expect the savings to filter in over the course of '13.

Sure. Steve, do you want to comment on that?

Yes, sure. Thanks for the question, Jerry. So we have set out a target to hit $35 million of savings. We implemented 14 of that in last year. And I'm pretty confident that we'll get the remainder of that, if not more, this year. So what we've been working on with the team in the integration team is to further that $35 million to a bigger number. I don't have the final number yet, but I'm pretty confident that we'll overachieve that in '13. On the Port Solutions integration, I think things are going well. We're really reorganizing our sales team to sell the complete portfolio of products. As you know, we had separate businesses with the Mobile Harbor Cranes and the legacy TPE business. So we're moving the organization to a more regional focus so that we can sell across the portfolio in different regions of the world. So I think from a sales perspective, we're doing well. I think we're seeing some good visibility on orders at the beginning of this year on the bigger machines. But again, we're really focused on the margin improvement side. And I think one area is, for sure, the material cost reductions that we're focused on. And then on pricing, we need to really look at getting the right businesses for Terex, so we're going to have to make some choices on the deals that we're doing today. But I think progress is going pretty well in Port Solutions.

What I would add to what Steve just said is just really to clarify. The savings that Steve referenced in 2012 were actually achieved in 2012. All of the $35 million was implemented but not realized. The balance will be realized this year. But I also want to point out that, and as I said in my remarks, that given the softer economic conditions, particularly in the Material Handling, in the overhead Cranes side of the business, we're going to have to take additional cost out to react to that market, which is what is happening today.

Okay. And just a clarification, so the exit year run rate is going to be greater than the $35 million in savings by the fourth quarter. Is that right, Steve? And then separately, Ron, you were very clear about the company switching to an operating from an acquisition focus front here. Can you just talk about the divestiture side with the announcements in Construction equipment? Are you comfortable with the rest of the portfolio? Or are other strategic options on select product lines still possible from here?

Steve, take the cost savings, and I'll do the strategic question.

Yes. No, for sure, Jerry, we're looking to overachieve that $35 million number. Can't give you a number now, but for sure, we're pushing to go further than $35 million.

Okay. And on the strategic question, what I would say there is we're pursuing, led by George and George's team, a whole variety of approaches to deliver better operating performance in the Construction segment. The Roadbuilding product line divestitures to Fayat was a complicated process involving a complicated negotiation with them. And the supply agreement for a period of time in 2013 that will cause us to lose a little bit more money but eventually get us in a place where we're exiting from those losses. So that's a piece of that. There's several other product lines in the Roadbuilding area, some of which we will keep and some of which we will not keep. And we're not going to disclose that precisely sitting here today. The balance of the business is our businesses, we believe, can be grown and improved individually. So the Fuchs Material Handling product, the scrap handling, it's a first-class product line with a first-class market position in a bad market today. And the rigid trucks and the articulated trucks is not a top-tier but is not a bottom-tier product line. It's a historic Terex business with a huge parts stream and a #1 player joint venture in China, okay? So likely going to continue to keep that business and keep it and grow it. But there are other ways to grow it through other customer bases that we'll pursue. The Compact business, that's the business where we have found the alliance with Takeuchi. We may explore other alliances. And we will also explore broadening our sales approach through rental channels on a continuous basis, where we've had good cross-selling experience with AWP that's only getting better. And the divestitures of the component businesses in Germany allow us to get better focus on just the Compact Construction business and exit the tunneling business that we're in and exit the component tank business that we were in that we made hydraulic tanks for ourselves and not very cost effectively. So complicated set of activities, we clearly will spend some more time at our investor call, but that's -- this is the building blocks to the guidance in '13 and the longer-term view in '15.

Your next question comes from Ann Duignan, JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Most of my questions have been answered by now. But Ron, just on your outlook for pricing, and AWP is 3.4% on average versus an Oshkosh of 5% to 8% on certain products. On your commentary, are you saying that you're at the point in the cycle now where you're kind of switching back from focusing on profitability and from now on, market share is more important?

No, I'm not saying it's more important. But I'm saying we're going to keep it in balance. I think our 3.4% increase and their 5% to 8% reflects the fact that our prices were higher than their prices, okay, particularly with some customers. So we're going to keep a balanced view. Now they may have to give up some market share to us, which is an upside opportunity for us. Furthermore, we've got margin improvement opportunity from our supply base. So I think that is going to help our margins. And the last piece is they have a big telehandler business and we have a small telehandler business. But our telehandler is just as good as their telehandler. And our new telehandler is more cost-effective, okay? It is a better product at an equal or lower price. And we think that will help grow our business. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay, that's helpful. And then on the orders, the strength in the orders, is there any concern that those were a pull forward of orders before the effective price increase and that orders could dissipate in the next couple of quarters?

Matt, why don't you comment on that?

No, the concern about it being pulled forward, that's not what's going on. We came out in August with the price increase and we said it was effective January 1 for everyone. And so we're not seeing that people have pulled their orders forward and we do expect that it's going to be sticking.

And it's deliveries after January 1.

Yes. Anything delivered after January 1.

And the other thing I would add to that is I think replacement rates are driving this. And what drives replacement rates is utilization. And if there's any comment we hear from our customers, and Matt heard it, Tim would have heard it, is that their utilization rates remain strong, okay? And so underlying -- the first thing we will see in a weakening AWP environment is utilizations begin to drop, okay? So right now, those remain pretty good. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Yes. I would have to say we're hearing the same thing, so I'll leave it there. Most of my questions were answered before this.

Your next question comes from Seth Weber, RBC Capital Markets.

I'm trying to get some more granularity on the AWP business. Can you give us a sense for today what percentage of that is from the large national rentals versus the IRCs [ph]. I mean, basically I'm trying to get a gauge for what you're implying for growth from the nonnational guys in your guidance.

Go ahead, Matt.

Yes. If you look at it, the nationals are stronger in the first half of the year. But the independents, they're still significant and important and they're getting back. The definitions are sometimes difficult, some of the people that are kind of on the edge of national accounts. But if you talk about the top 7 national accounts compared to the independents, it varies as you go quarter-to-quarter. But it's in the mid-50s percent. And it has -- it swings a little bit at the front end of the year, heavier towards the big accounts, and then it moves to the independents as you move through the year.

Matt, you ought to clarify that, that is of new machine sales. And if you look at the total segment revenues, that includes utilities and the services and parts and used and all the other stuff as well. So it's not 50% of total revenue.

That's right. We will be resegmenting the company at the first quarter results, which includes the utilities business and the services business that is staying with Tim, and it's going to be part of the Cranes segment. And the guidance and information we provided is still in our old definition, not in the go-forward definition.

Okay. And is it fair to assume that you're basically -- you think that the IRCs [ph] or the nonnational beyond the top 7, will they -- do you think that they're going to grow CapEx something like 30%, 40% this year? Is that a fair number to think about?

You mean the independents and the smaller...

Beyond the top 7 -- yes, I mean, to get to your midpoint 20% revenue guide.

I think the revenue base is recovering and it's recovering down the food chain. I think the independents have greater access to capital today than they did last year and than they did in the prior year. So I think the answer to that question is yes. We've got to see it play out. But I think it's yes. And we want to have a mix of business because the margin opportunity from one customer type is not exactly the same for the next customer type.

Right. Okay. If I could ask a follow-up on the Crane business. The incrementals that you're, I think, implying are a little bit below what we would've thought. Is that a function of you're not seeing an uptick in the crawler business? Or is it the high-margin products just aren't coming through? Or is there something else going on there?

I think it's probably me [ph] a bit to be frank because I think we'll get decent incrementals. But we had huge incrementals in 2012, okay? And so I'm kind of encouraged in the organization to go out and get business. And if we can get business in the 10% to 12% margin rate and recapture some of the growth in the company, I'm happy for that. But that will result in probably better incremental margins than are in the numbers. But let's just see it happen.

Okay. And can you comment on what you're seeing in the crawler space?

Yes. Anything specific to margins, we wouldn't share product-specific margins.

Just inquiries or demand?

Yes. I think we feel very good about the crawler space. But again, remember when we talk crawlers, we're not talking North American crawlers as much as we're talking rest of the world crawlers. Because North American crawlers are a small portion of our business, not a big portion.

Yes. So we're talking 400-ton class and up, Seth. And as Tim pointed out, the new product in that class, we're already seeing about 40% of our production taken up in the last 6 weeks of orders.

Your next question comes from Ted Grace, Susquehanna.

Just one quick point of clarity on the framework you gave for 2015. I'm just wondering if you could speak to kind of conceptually where you would think the U.S. construction cycle is in the scheme of recovery, third inning, sixth inning, seventh inning, et cetera, and how we should think about Europe? And also just maybe a little more granularity on how you would think about the timing of the inflection in the European construction cycle.

Sure. I think the 2015 -- again this is based on experience, it's nonscientific, although we do try in each one of our businesses to get as scientific as we can. What I would say is the North American construction, but for us, it's even more an industrial cycle because we're becoming less dependent upon construction, is probably in a mid-fifth inning kind of way by 2015, fifth, sixth inning kind of environment. We don't expect 2013 to be a strong economic recovery. It's replacement-cycle driven for us. But we do expect in '14 and '15 to begin to see the effects of housing on GDP, to see the effects of a non self -- a non -- unforced error environment because the economic environment we're in has got a bunch of unforced errors by policymakers that one would hope over a 2- to 3-year period finally gets worked out. So I think the underlying opportunity in the U.S. is quite significant, back to the primary drivers of economic recovery: demographics, a growing population, an immigrant population, an aged infrastructure. All of those things will contribute to a fairly robust environment for our kinds of products in North America. Now turning to Europe, I think we've got to be a bit more muted from an economic perspective. But the European opportunity has probably, on the upslope, the third or fourth inning to use a baseball analogy, in Europe because Spain isn't going to be in a good place still. Portugal, some of those countries still are going to be struggling. But Germany will be solid, the Nordic countries will be solid. We hope, and it's a hope, that U.K. will find its way. And that will keep us in general in a early-cycle recovery in Europe in 2015. But please do not forget Latin America. Latin America is going to be over $0.5 billion of business for us right now, and probably by 2015, over $1 billion of business. Asia, not necessarily just China, but the Pacific region in general, is going to be significant. Those are investments we've made that we think can harvest business for us in 2015.

Your next question comes from Ross Gilardi, Bank of America.

I just had a couple of questions. First, just thoughts on your capital structure. I mean, you're talking about a lot of free cash flow this year. You're talking about $5 of earnings by 2015. I would assume you've got the capacity to delever. So what is your net debt-to-EBITDA target really across the cycle going forward? And given the level of free cash flow assumed to be expecting, is there any serious consideration of a dividend in a year or 2?

Ross, it's Phil. The comment on leverage that I made historically has been that we'll average about 2.5x net debt-to-EBITDA over a business cycle. And as indicated, we're at about 2.3x right now in a good situation and improving as we go through 2013 and forward. So I think we'll manage the debt that we have, which is largely in the U.S. We have prepayable debt with a term debt out there. But we've extended the terms on our high yield, so looking at that debt in terms of prepayment. With the dividend comment, Ron will go after that.

Well, I don't want to comment on the dividend question at this point in time. But I would say if you look at our opportunity to generate meaningful cash, we will put some of that cash back into our business to lower our cost and improve our competitiveness. We will look for ways of sharing underutilized operations, factories that are underutilized in one part of the company with other parts of the company that may need additional capacity. So that will drive operating performance. But if we throw out $0.5 billion of cash for several years going, obviously, we'll pay down as much debt as we can and is reasonable. And our objective, of course, is to drive as much of the value to the equity as we possibly can. And we see the opportunity in our existing businesses, so we don't believe we need to add additional risk to the company by going out and making big acquisitions, okay? I would also say that the Material Handling & Port Solutions business is a very, very good business but in a tough economic environment right now. And we want to make sure we demonstrate that, that business is a very good business and demonstrate that it will generate the kind of cash and profitability that it has historically before we do anything else. So within our own reach, we think we've got great ways to take debt and turn it into value contribution in equity and to take the cash we've generated to improve the company internally.

Okay. That's helpful. And then I just wanted to ask you on your 2015 outlook for AWP, you show on your slide, you're expecting 57% top line growth in 2014, 2015. And clearly, by next year, we'll already be several years into a strong replacement cycle. So are you assuming substantial growth in the size of the fleet? Or is that continued replacement demand once you get past to 2013? Can you just talk a little bit about how you're thinking about that?

Sure. Well, first of all, this is a growing product category around the world still, okay? It's not just a North American and European product category. It's growing in popularity, maybe not as fast as we'd like in some places, but it is definitely a growing product category because it puts people to work at heights safely, okay? And so overall, we believe the product is finding new applications and new customers. Secondly, we're adding to our product portfolio on the higher end of the range and with our telehandler product line. So we're adding products to this company and business. Thirdly, within the $3.3 billion of revenue that's highlighted there or the 57% increase, as you mentioned, it is the utilities business that Tim and the team and the services business that Tim and the team are going to continue to grow and has -- and have synergy with the Crane business. And we believe the utility product category, for example, has growth potential in China. It has growth potential in Latin America. We made a strategic acquisition in Latin America on utilities. We're making new production investments in China to grow our utilities business there. So it's contained within AWP, but there are several elements of growth potential that we think will take us to new heights in this overall area. Tim Ford, do have anything you want to add to that?

No, I think you hit the high points, Ron.

Your final question comes from Alex Blanton, Clear Harbor Asset Management.

I wanted to ask a question about your incremental margins that you're assuming for 2015 from 2012 on the operating line. Based on the numbers in your slides, it comes to 19.6% over that 3-year period, as operating profit increase divided by sales increase at the midrange -- I've used the midrange. That seems a little bit light to me. And I know there've been a lot of questions about incremental margins on this call so far. But are you -- wouldn't you look for something a little bit better than a 20% incremental margin?

Well, Alex, I guess, I would say the Goldilocks scenario might suggest something better. But then I wake up every morning and remember I'm in the lifting capital goods business and material handling business, and I'm reminded of just how hard it is to make progress in margin in this business with a lot of things thrown at you that can be unanticipated. So I think when you put a realistic view on the operating margin, a 20% incremental operating margin in this kind of a difficult-to-predict economic environment is not that bad.

So you're anticipating it's going to continue to be difficult to predict through 2015?

Yes. Alex, I've been asked this question a variety of ways. And what I always tell people is I've been running Terex now for about 20, 21 years. Over that long period of time, there were 4 years that were really unusual. And that was kind of the period 2000 -- 2007, 2008, or 6 months either way on that, either side there, where you could do no wrong and everything seemed good, over the period of 2000 -- kind of 2009, 2010, where you could do no right, okay, because we were in a financial crisis. Aside from that, the operating environment that we're in today is much more like the other 16 years, okay? Things aren't always going right, things aren't always going -- things are going well, things aren't going well, and it's a more normal environment. So I don't want to be in the Goldilocks or the sky is falling kind of environment. We're going to find ourselves with good things and bad things. And that's the backdrop of how we're looking forward.

How do you think about the liquidity in the economies around the world? I mean, it is very large at the moment and that's one reason why stocks are going up. And in light of all the uncertainties is there's tremendous amount of money and it needs to go somewhere. And so what I've been seeing is on corporate executives on CNBC and other media saying since the end of the year, you know what, we have to go forward. We can't let Washington dictate what we're going to do anymore. We've been doing that for 4 years. It's over, we're going forward with our investment plans. And for that reason, I think that some people are looking for better-than-expected capital spending this year, regardless of the uncertainties. Do you see any of that in your -- from your customers, any of that attitude?

I don't think I could be that specific with the attitude from our customers. I mean, our customers are very focused on what their fleet issues are, what their product issues are. And they are not really the bigger macro kind of customers that might make that kind of a statement, okay? I do believe that in a low interest rate environment, return hurdles have come down. So a 15% return on invested capital target for us in 2015 is a much better return on invested capital number than it might have been when interest rates were 3x or 4x what they are today. I think you have to do an adjusted return calculation. And I think many other CEOs are doing the same thing.

Okay. One more minor housekeeping question. In the AWP business, where people have commented on that fact that your upper range of your margins is 14% versus 18% to 20% in the past, you do have a utility business in there, which I believe is a lower margin than the AWP. What part -- what percentage is that of the total sales? I mean, that's a part that JLG doesn't have. So it makes the 2 a little bit noncomparable, that's why I'm asking.

Yes. But JLG has other businesses, too, that they may put in those categories, so I think...

They have telehandlers and AWPs, but you also have this utilities business, which...

Well, I would say our utility business tends to be in the 15% range of our total AWP category. And I think that has been a fairly stable business. It is a lower margin business than the AWPs. And I would correct you that our peak margin was not 18% to 20%, it was probably more like 16% to 17% for a period of time. And I will also point out selfishly that I don't think the orange and beige can say they have that peak of a margin either.

No, they didn't. They did not. You were above them, no question.

That concludes our Q&A session. Are there any closing remarks?

No, thank you. We appreciate everybody's interest in Terex today.

This concludes today's Terex Corporation Fourth Quarter Year-End 2012 Financial Release Conference Call. You may now disconnect.