Good morning. My name is Vanessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Terex Corporation Third Quarter 2014 Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Ronald DeFeo, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, Vanessa, and good morning, ladies and gentlemen. As always, we appreciate your interest in our company today. On the call with me is Kevin Bradley, our Chief Financial Officer; and Kevin O'Reilly, Vice President of Operational Finance; Tom Gelston, Vice President of Investor Relations; and our segment presidents that many of you already know. I won't name them by name, but they're either on the call or in the room here with me this morning. As usual, a replay of this call is available on the Terex website under Audio Archives in the Investor Relations section. I'm going to begin with some overall commentary and highlights, and Kevin is going to follow with a detailed financial report. I'll also then follow up with some specific improvement targets and an overall summary before we open it up to your questions. We'll be following the presentation that accompanied the earnings release and it's available on our website. Not included in this presentation is the recently announced JV with Manitex. However, I will make a few remarks on this before taking your questions. [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 material we will be discussing today does include forward-looking information. So now let me begin. Turning to Page 3. The third quarter results for Terex on an unadjusted basis were earnings per share of $0.59, and on a reported basis, EPS of $0.51. This was substantially in line with our most recent guidance of $0.55 to $0.65 for the quarter that we gave in mid-September. The adjustments were for workforce reduction and restructuring charges in our MHPS segment, along with accelerated amortization charges…

Thanks, Ron, and good morning, everyone. I'll be reviewing results for the third quarter, as well as year-to-date 2014 and comparing them to the prior year results. All comparisons that I'll be calling out are using as-adjusted figures. Let's turn to Page 6, which provides Q3 results. There were no adjustments in Q3 of '13. Adjustments made in the current period to our GAAP results included the impact of a restructuring charge taken in MHPS segment, as well as the loss on the early extinguishment of debt related to our refinancing of the senior credit facility. Details on these adjustments are included in the appendix of the presentation. Net sales for the quarter of $1.8 billion increased from the prior year by 3% or approximately $53 million. Changes in foreign exchange accounted for almost half of the increase. Our AWP business posted 12% growth, and Construction was up 10%. MHPS and MP were up modestly compared to the prior year at 2% and 5%, respectively. Our Cranes business was down just over 7% as the mobile cranes component of this segment has experienced a decline in market demand. Gross margin decreased 1.4 percentage points to 20.3% from the prior year, driven largely by our AWP and MP businesses. SG&A as a percentage of sales decreased from 13.8% in 2013 to 13.3% for the quarter. Income from operations decreased $11.1 million compared to the prior year. As a percentage of sales, operating margins decreased from 7.9% to 7% for the quarter with Cranes, MP and AWP driving the year-over-year decline. Net interest and other expense decreased versus the prior year, driven largely by lower outstanding debt and lower rates under our new credit facility. The effective tax rate was approximately 32% for Q3 compared to 21.4% in the prior year quarter.…

Thank you, Kevin. So now let me discuss our corporate improvement initiatives, and frankly, everything we talk about will be improved by a better market or diminished by a worse market. But we, of course, need to initiate change irrespective of external events, and at times, react to those external events. Sometimes improvements are recognizing and changing what you did yesterday because it was either wrong or based upon incorrect assumptions. We have more work to do, but I think you'll know that Terex has significantly changed over the past 5 years. I will not recount portfolio changes of the past right now. I want to focus on the change assignments we've made within the company by segment and by category. Within this, as you will see, more can be developed. But any organization has a finite change capacity and it's up to the leadership to stretch this capacity but with care not to stretch beyond capability. Page 11 specifies anticipated improvements over the next 2 years by segment and category. The categories: supply chain, productivity/headcount, restructuring/footprint, design/product simplification, and new products and markets will all be the categories that we work across the organization to find new improvement initiatives and drive performance improvements. Now these won't happen evenly, but we will report to you specific progress or disappointments. You should not assume that all these get achieved, but new projects will be added to the list as well. But to get on this list, there needed to be specific projects already being worked intensely with realizable benefits of this magnitude on an annualized basis, if not more, and some of these will also pay out well beyond 2016. More than 50 projects make up this list, which you can see adds up to about $200 million of operating profit…

[Operator Instructions] Your first question comes from the line of Nicole DeBlase from Morgan Stanley.

So I'd like to ask a question on the self-help plan. I guess, first, is this truly independent of end market performance? And the reason I'm asking is we're now looking at a year of very little earnings growth on very little revenue growth in '14, so I guess I'm trying to figure out what's different going forward. And then any more thoughts on cadence so that we're able to hold you guys accountable to your plans for the next 2 years specifically?

Okay, Nicole. I think there's a couple of questions in that, and I think the first thing I want to do is set to rest 2014 a little bit and to say that we did expect the market to improve somewhat. We structured ourselves for the market to improve and it cost us money. So while the net-net earnings overall year-over-year will only be up marginally or a small amount, the reality is we made a wrong assumption, thinking that the business would be stronger. In particular, that's the case in Cranes. And in particular, we assumed more growth in AWP, and to a degree, also in our Materials Processing business. So fair criticism. We accept that criticism, but it's what has helped us rechange our assumptions going forward into the next couple of years. All right. So now there's a continuation of some of the -- we don't want to call them self-help because self-help assumes that we can completely deliver these absolutely the way they are, irrespective of market change. The reality is that market change impacts our outcomes. So what we've attempted to do is frame these on the basis of flat market conditions and positive market will help, a weaker market won't. But overall, we have very specific projects by segment that are highlighted here. Now let me talk a couple of -- about a couple of these things. Within supply chain at AWP, this is a combination of materials sourcing projects already underway, including some sourcing changes to China, that while in the next couple of years may only have a $15 million impact, over the remaining several years, are going to have multiples of that in an impact. But we're just looking at this in the next couple of years. With regard to productivity…

Okay, Ron. That was really, really helpful detail. But for my follow-up, kind of on the same topic, the one thing that's missing from the slide is the costs that you guys will incur to deliver on the restructuring plans. So is it kind of 1-for-1, like, cost you $200 million to deliver on the plan? And will you be adding back those restructuring costs to earnings?

At this stage, on the projects we have laid out, all of the restructuring costs, with the exception of only a few million dollars, have already been taken. That's not to say we won't have an additional project or 2 with some associated restructuring costs in the future. But that would be additive to this list, okay, additive to this list. So for the most part, we've announced the restructuring costs associated with the list that I've presented here.

Your next question comes from the line of Mig Dobre. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Ron and team, I have a couple of questions on AWP. The layoff that you mentioned here, maybe you can provide us with a little more color because, at least to me, 500 people seems like a large number and I remember visiting your facilities roughly a year ago in Washington and what I saw there impressed me as a pretty lean and well-ran operation. So I'm trying to understand where is it that this headcount is coming from. And why is it that we've seen, frankly, escalating costs here over a short period of time?

Well, I think, Mig, and I'll turn this back to Matt in a second, but I think the simple answer is that while we delivered 12%, let's say, quarter-over-quarter, year-over-year improvement in revenue, we were thinking that the revenue was actually going to be stronger than that. And so we were staffed and organized for a little bit even stronger revenue. That's one side of it. The other side of it is that we actually have some variability in our workforce and having more people in the March through September period is not unusual. So I wouldn't expect all 500 of those people to be gone forever, okay? But Matt, why don't you take it from there?

Yes. In Q3, business didn't come in as strong as we anticipated. It was still strong, as you can see from our top line growth, but the orders were slowing and the backlog was dropping quickly. So we made a conscious decision to level our production out and reduce our inventory. That was one of our key focuses, was to take the finished goods inventory we had and make sure that we didn't get stuck with it. As we got deeper into the quarter, we decided to release the temporary workers and to settle into a capacity position that matches the actual demand that we expect to see for the balance of the year. And we see this type of seasonality every year, although this year I'd say it feels a little bit more compressed. We got off to a slow start at the beginning of the year. March took off, and then about July, we started to think -- see things drop off. So we feel like we reacted appropriately. We're sized appropriately for the Q4 that we're in right now. Inventory is where we want it and we're anticipating a good 2015. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Well, then, I guess my follow-up here, you're singling out 3 categories of costs that impacted the margin here. How do you think these costs progress going forward? Should we continue to think of them as a headwind in the fourth quarter like the factory start-up costs, for instance? Or does that shake out at a point in time?

Well, let me answer that, Mig, and I'll pass it on to Matt to start with. From my perspective, I would take, of the $17 million we identified, I'd say in under-absorption, I'd say roughly half of that is probably something that was pretty unusual for us in the quarter. I'd take the currency translation and, as I said, that related to an intercompany payable and it took place virtually on the last day or so of the quarter, the last -- because the Brazilian currency devalued almost 10% in the last couple of weeks. So we had a large intercompany payable that caused us to write down -- write it down, and that's upwards to $9 million. Now that affected AWP. There were some other currency benefits in the company that were positive in other areas. But since everyone's focused on the AWP margin, I think it's important to say exactly why and what that is, and frankly, that's not the kind of thing that I would expect to be repeated. Could it happen again? Possibly, but not to that level of magnitude and it's certainly a fairly unusual item. And the last point, the start-up of the Oklahoma City facility and the variances at our facility in Moses Lake, which relate to the movement of our telehandler production. That's unusual, probably going to continue a little bit in the fourth quarter, but we expect to be at efficient production rates in 2015. So -- and what we're doing is we're really rearranging our manufacturing footprint at AWP over a period of time in order to prepare for some longer-term change to our Redmond footprint and to do it as efficiently as we possibly can. So I probably answered the question, Matt, for you, so I apologize.

Your next question comes from the line of Alex Blanton from Clear Harbor Asset Management.

I'd like to just ask you what the reasons are that you did this spinoff with Manitex of ASV. I followed ASV before you bought it. It's a great company. And you said in the -- I think Manitex said in their release it had current sales of $128 million. Do you remember what the sales were when you bought it in 2008?

I don't off the top of my head. They were -- it was clearly bigger than $128 million, but not by a huge amount. I don't think that's really the relevant point today because that was pre-crisis, Alex. So I think in the simplest of terms, if you can sell a business or divest the majority of the business and end up with $125 million of transactional cash benefits and have positive earnings accretion and remain in the business because you've got a good partner that's committed to growing the business in a company that has a good history of product and product support, it seems like a pretty positive transaction for everybody. So that's the net-net of it. I don't really think we ought to spend a lot of time dissecting the products of ASV at this stage. But...

I don't know. But I was wondering, do you expect Manitex to be able to sell -- do a better job of distributing and selling the product than you can? Is that the reason?

No. In fact, I think we're going to continue to do the same job we've been doing, if not more. But I expect Manitex to be additive, okay? So it's not better, it's just a new way to grow the business.

Who proposed that? Was it you or Manitex?

I don't think that's a relevant question, Alex.

Okay, okay. My follow-up is on AWPs. You were up about 12% in sales for the quarter. What had you expected to be up?

I think we expected to be up more.

And what is that shortfall? What part of the market was it geographically? And also, was it national rental companies or independents?

Matt, what -- do you want to comment on that?

Yes, I think that the -- where the North American market is -- has been and continues to drive our volumes, and the North American market is good and it's strong. The question was how strong and how long would it last through the year, and what it turned out was it was very compressed, that the buying season was shorter than we anticipated. It's still good. And if you look at the rest of the world, Europe continues to be very, very strong, as well as Asia Pac. The only place that's soft at all is Latin America, in particular Brazil. So really, it was North America not continuing as strong as we expected through the seasonality.

I understand. But what part of North America? Was it national rental companies or independents?

It's both. The national accounts are a larger percentage of our sales this year than they were in prior years, but the independents are still buying in a similar cycle as the large ones.

But they bought less than they normally do seasonally?

Alex, we don't want to -- we're not going to give a split between national and independents. Both are doing fine by us, okay? We don't see an unusual thing to disclose there.

Your next question comes from the line of Jerry Revich from Goldman Sachs.

I'm wondering if you could just flesh out a little bit more the supply chain opportunity in AWP. You mentioned some of that is sourcing to China. Can you just provide more color of what proportion of total AWP cost you expect to move, what's the impact on working capital and then maybe touch on the corporate expense savings that you're targeting, $50 million, and if you could just provide some more color there?

Sure. Matt, why don't you talk about supply chain opportunities. Look at this number, but even bigger opportunities longer term?

Yes, the supply chain opportunities have been an ongoing activity from our supply chain team and of our engineering teams. Some of the opportunity that Ron mentioned in China is we have our factory in China continuing to make more and more of our product line, and in that process, we're using a Chinese supply chain and we're getting very familiar and very comfortable with the quality levels. In particular, the big area that we're targeting is around steel. If you look at North American plate costs, which is a huge part of our supply chain, they went up -- year-to-date, they've gone up 14%. If you look at the cost of plate in China, it's significantly less. So we are starting to look at some major components coming from China and they will feed our factories here. So that's probably the biggest thing. The other things are a combination of trying different suppliers and value engineering to take costs out of the products.

How about the next question? I'll move that to Kevin Bradley on the $15 million of cost reduction from corporate. That was Jerry's question.

Yes, Jerry. The majority of that, roughly $12 million is coming out of our IT spend. So the 2 parts that we've identified right now are shared services for accounting at roughly $3 million and IT cost reduction at about $12 million. Obviously, there's more things within my basket to go after, but those are the 2 that are represented on this page. The IT piece is largely from looking at what are the things that we're doing directly versus where can we maybe more efficiently and effectively get those things accomplished outside the company by competent third parties. So there's a little bit of things moving to more of an outsourced model, a more cloud-based technology profile for the company, and it's driving a fairly meaningful drop in our costs over the next couple of years.

Okay. And then on the steel cost transition, can you just talk about over what time period do you expect to ramp it up? How much of a tailwind should we look for in 2015? And longer term, what proportion of your steel do you expect to source from China?

Matt, do you want to comment on that?

Well, that's in process now. It's going -- we'll ramp into it. I don't have the exact percentages of the BOM that I can give you, but I can tell you that we have active -- we have parts coming in already. And we have a longer list of parts that we're actively quoting. So it'll transition through 2015 and we'll really see a larger benefit in '16.

So of that $15 million that we laid out, $12 million of which related specifically to building [ph] material optimization and $3 million on logistics, okay? But the $12 million actually is a much larger number over the next several years and it relates to a series of those projects that Matt laid out. So I think we're being actually fairly conservative in taking $12 million at this stage to put into our plan.

Your next question comes from the line of Rob Wertheimer from Vertical Research Partners.

So one quick question. I don't know if you'll be able to comment, but there's another crane OEM out there that sort of has a similar order pattern to you and referenced relatively high crane utilization rates, including on towers. And I just didn't know if you were seeing the same thing in the market with pretty high underlying customer health and their reluctance to order or whether the utilization is more patchy in your view?

I'm going to pass that on to Tim Ford. Tim?

Rob, thanks for the question. Over the past few weeks, I've actually had a number of conversations with many of our dealers and I would characterize the conversations -- they go something like this: "We're having a really good year. Our rental utilizations are high, and we're making a lot of money." And when you probe into that, you start to wonder, well, why aren't they buying? I'll give you a little vignette from a conversation I had with one of our better dealers the other day. He said to me that over the past several years, he's seen his customer profile go from putting machines out on rent with the idea of rent-to-own happening in a 6- to 12-month period, and now it's more like a 24- to 36-month period where he's -- so he's making a lot of money on the rental but he's not actually selling the machine. And I think that pattern is pretty consistent around the overall market. That's primarily a North American comment, but it's pretty universally true across the board.

So healthy customers will result in new crane orders, so we like the fact that there's healthy customers. We are just frustrated a bit because it hasn't translated into those orders. So rather than planning for them, we've decided -- after taking our lumps -- that we're not going to plan for them and we're going to just plan for a flat environment. And hopefully, the net-net of health among our customers will result in more orders down the road.

Makes sense. If I can ask one small question. It seems like you did an effective monetization of an embedded loss on AWP, so you get the tax. Are you able to say do you get half the tax loss that's embedded in there or all of it? I mean...

Yes, we'll get a substantial portion of it. What is really happening here is that it's Terex overall. And remember that we have embedded positions. We wrote down the goodwill a number of years ago on ASV, when we bought the business. But obviously, you don't get to write down the goodwill for U.S. tax purposes. But we have a huge gain from the sale of some of our other assets. So I think you can put those 2 things together and see how these things work out.

Your next question comes from the line of David Raso from ISI Group.

I mean, with AWP the last 4 years being 40% to 60% of your operating earnings, the significance of the business, obviously, can't be overstated. So just seeing the way the backlogs fell, I mean, there's always some seasonal decline, but down almost 50% at a minimum raises an eyebrow on the comment that you have confidence 2015 will be a good aerial demand profile. So just knowing the way the business, usually when it picks up, it really picks up, and when it slows down, it doesn't necessarily perk right back up. Can you help us a bit with the conversations you're having with your customers in the U.S. and Europe to not look at that backlog decline, and at a minimum, get nervous that why are we even thinking '15 has a decent demand profile?

Okay, I'll pass that on to Matt, David, but I want to reference the 2012, 2013 and 2014 Q3 ending backlogs. In 2012, it was $232 million. In 2013, it was $312 million, and 2014 it was $214 million. I put that within the margin of error in terms of our backlog. Yes, it would be better to have more backlog at this point in time, but I think we really need to frame this with the color that Matt will now give you about each one of the customers.

Yes, that's a great question because when you look at the backlog number by itself without any other context, it can be a little bit spooky this time of year. But we're feeling good about next year, really comes down to talking with our customers. And if you just start by looking at the fundamentals, their time utilization -- most of the rental companies in North America are at their record time utilizations. Rental rates are coming up. Used equipment market is healthy, there's not much out there. And so the rental companies, when we talk to them about, "Hey, how does this year look compared to next year?" Most people are saying about on par, that the CapEx that they're planning on spending is going to be about the same. What's going on in the market right now is what the rental companies are doing is they're getting the equipment right when they need it because there's a lot of capacity in the market. This time of year, what they're doing is they're running it at high utilization rates and they're defleeting, if they need to, so they can get through the slower months. And then they're planning on coming right back in because the market continues to look good. So when we say flat, flat is good, especially for North America. The rates that we're at, if you look at the historic piece, we're at a really good spot. Then, when you move over to Europe, our next biggest market, it's a little bit different and it's actually a little bit more positive because their fleets are older, so they're much heavier into the replenishment cycle. And when we talk to the rental companies there, they're talking about really having to up their CapEx. So it's not as big as North America, but it's an encouraging thing. So on the backlog, I think that as we move through fourth quarter, we'll see that it's climbing and it will be in a normal seasonal pattern where we get hit with a lot of orders in fourth quarter and early first quarter.

Okay. So exiting the year, you expect the backlog to be higher than where we just exited 3Q, just to be clear?

Yes, that's typically the pattern we follow.

And the margin progression, obviously, we just came in at 11.4%. How should we think about, including some of the initiatives underway for cost and supply chain, how should we think about the progression of margins to get back to the full year? This year, it's going to end around 13%, 13.5%. To get us back to where even margins are flat, we are obviously going to need to ramp it back up because your first half comps are a bit hard on the margins. Can you walk us through a bit on how, at least framework-wise, you're thinking of the progression of margins from here?

Well, David, we said in our press release that we expect to get back to the mid-teens margins within the next 12 months. Obviously, that is a fairly general statement because we didn't want to give quarterly margin guidance. But second quarter is almost always the strongest margin quarter in the AWP business, so we would expect Q2 to be very strong. Q4 is actually one of the weaker quarters. The fact that Q3 is weaker is more because of the items we mentioned, okay, but it actually would be significantly better than Q4 in a normal environment. So I think that, that should provide you some color. The basics here is that we don't see a huge amount of price competition. We see some, but we don't see a huge amount of opportunity to take prices up. So net-net, pretty flat from that perspective. So the difference will be our ability to execute somewhere in the range of this $69 million opportunity, a portion of which will happen in '15 and a portion of which will happen in '16.

That was the spirit of the question. I mean, 2Q has got to be in mid-teens or you don't have really much of a chance to get the full year margin to flat, '15 versus '14, at a minimum but...

No question about it.

Yes, okay. Then, quickly just on the tax rate, the 300 bps, can you give us a little help on 2015? I know there's a lot of moving parts geographically, but just giving us some framework within the company you're working on to get the tax rate lower. Can you at least give us some suggestion around 2015 tax rate versus '14?

Sure, David. The progress on tax rate coming from the areas that we've called out historically, we do expect to see an improvement in jurisdictional mix, which includes the investment we've made and the transition we've made towards a Global Trading model. That will increase -- that benefit will increase in 2015. Also, some of the restructuring that we've done historically, including in MHPS, specifically addressing losses not benefited territories, should be improved in 2015 as well. So those 2 things make up the majority of the improvement we're seeing.

Again, I apologize, just some quantifications. Should we expect 100 of the 300 bps next year? I'm not trying to hold you to an exact number, but we should see a lower tax rate in '15 than '14?

Yes, I would expect to see at least half of it.

Your next question comes from that line of Jamie Cook from Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: I guess a couple of questions. One, I guess the one positive on the quarter was the margin progression we saw in MHPS. So Ron, can you just talk about how comfortable you feel there, whether the margin improvement that we've seen is sort of sustainable? And with the other businesses not doing so well, sort of do you think you can get margin improvement year-over-year and potentially you could quantify the Material Processing margin? Obviously, it was disappointing. But in a flat sort of environment, do you think you can get back to sort of the low teens as we think of '15? And then my third question, just as longer term, Ron, I'm just trying to understand how you're managing the business over the next 2 to 3 years. And getting back to the Aerial Work Platform issue, with 2015 sort of flattening out and businesses are never flat in these markets, are you running the business for 2016 potentially being down in Aerial Work Platform?

Okay, Jamie. I'm going to answer the last question first and then provide a little highlight to Steve and then get Kieran a chance on that. A lot of questions there. But I think the last question first is, I'm not managing the company today for a flat -- I mean, for a declining AWP business in 2016, okay? We don't have any indication that that's going to happen. Our view is that what's really happening is the rental companies broadly are managing their business in a much more careful way. The fact that they're not adding huge amounts of fleets and are continuing to have high utilizations, in fact, even diversifying to a degree away from AWP, can only prolong the cycle for us. And the fact that Europe is still at its very early stages of recovery and we're seeing some pretty meaningful growth in our business in China, I mean, is not -- it's not out of the realm of possibilities that we'll have a $100 million business in Aerial Work Platforms in China in the very near term when the most we ever did there was $20 million, $25 million, okay? So -- and we believe we're the market leader in that market. So I think AWP is always a bit choppy. As Matt said, it's always a bit scary depending upon how things view at a certain time of the year. But I think the real change versus history is that we've got strong, well-capitalized, profitable customers that are diversifying and growing in a healthy way. That could not have been said that aggressively 5 years ago, 7 years ago, and that really is a positive for that business. So hopefully, I've given you some confidence. And then how do I manage the company? We…

Yes. Thanks, Ron. Thanks, Jamie, for the question. And I'll talk about the 2 businesses because, again, they're very different, and I'll start with where Ron left off on port. And the challenge in port is for us to fill -- this year, we'll probably do about $250 million, $260 million of automation orders, which most of that they're going to deliver probably in the fourth quarter. So we've delivered this -- in Q3, there's about $80 million. Next quarter, we need to deliver about $100 million. So that's not going to come back, but we are going to get some automation for next year. We have, I think, probably 1 or 2 orders that we will sign in Q4. Some of that will be deliverable in 2015 of next year, some of it will go into '16. So that's the challenge is really managing that. But this year, we've made substantial changes in improving our product portfolio in the Port Solutions business. We're launching a new reach stacker. We're launching a new, next year, a new empty and a full container from our -- a full container handler from our Italian businesses. We've launched some new mobile harbor cranes. So we're really changing, I think, the portfolio of our Port Solutions business. But our big challenge is, how do we fill that? How do we fill that gap? So that's probably going to be a bit of a negative drag on us next year. On the MH side, I'm more positive. I do think that the profitability is sustainable on a flat market. I don't think a lot of these markets are going to grow, and I want to talk a little bit about what happened this year because we do mention that we took a lot of cost…

Net-net, Jamie, I think we're on track with what we said for a multiyear plan for the MHPS improvements. Kieran, why don't you comment on that?

Yes, I think the question was explaining whether -- was asked whether MP could get back to sort of traditional double-digit margins, right? Obviously, on a quarter-on-quarter basis, we've had a decline, right? Just to highlight some of the primarily reasons for the decline on a quarter-on-quarter basis was primarily product mix-driven. Historically, we have filled some of our larger, more quarrying-focused products into markets like Latin America, Africa, Eastern Europe, primarily Russia, and also Australia. So you had a mixture. We've experienced -- obviously unforeseen in terms of the extent of it, a mixture of some political uncertainty around, for example, the Russian thing. And then, basically, the rest of it was primarily commodity-driven. You see a lot of it, as we've seen commodities at sort of 5-year lows around iron ore. So that mineral, that shift in the commodity's driven what we call our mineral-related markets -- that's changed the product mix. That's been offset by more of sales that we sell primarily into Western Europe, which is more of our contractor products, which are much more competitive, always have been. They attract much more competition, and therefore, we get lower margins. So clearly, going forward, we were somewhat taken -- didn't expect the mineral-driven margins to be under pressure and didn't forecast a lot of the geopolitical issues that occurred, whether it's in the Middle East and the sort of periphery countries, right? Obviously, as that settles down, we'll be fairly confident that, that demand for the larger products comes back. The other big area, just moving on, would be the SG&A, and I think as Ron pointed out in the presentation overall, we're obviously running the business for the longer term. We've made significant investments primarily in our engineering part of our SG&A, primarily focused on product development. Key areas that we're developing products in, in addition to our traditional crushing and screening business where we're spending a lot of money on dual power electric products, right, which we would expect to drive revenues into next year, but the other big things would be we're making meaningful product developments into new areas of Material Processing, primarily around the environmental space. And when I say environmental space, I'm talking about waste processing and wood processing equipment. So a number of new products that will hit the marketplace early into Q1 and into Q2. We expect that to drive revenue over the longer term -- obviously it's a short-term investment. And we've also made some investment, additional investment. We believe we're making good traction in mineral washing in our Terex Washing business and we've also done a lot of engineering product development underway there. So obviously, we need some help from the market, but we're also making some investments for the longer term.

Your next question comes from the line of Steven Fisher with UBS.

To what extent did you engage customers directly in determining what you're choosing to do versus your own internal assessments? I'm just kind of wondering how much these programs are intended to improve customer satisfaction versus just the operational improvements.

Well, thank you. There's a line on Page 11 called new products and markets and $63 million of improvements are identified there: $24 million from AWP; $20 million from Cranes, being the largest portion; but certainly some in Construction and the other areas. We're very engaged with customers on those. In fact, most of what we've identified here are products that we are either already -- have already introduced and are in their second and third years of growth or we'll soon to be introducing. So we've got some exciting new products. Kieran mentioned a couple of that his whole organization has done. The AWP includes new telehandler products. It includes continuing our super boom category, where we made great progress with our SX-180 introduction, making us a real leader in that category. So a lot of customer engagement.

Okay. And then just to follow up since you mentioned the AWPs. On that $24 million, can you just split out maybe how much is more the new products, telehandlers versus new markets, maybe China?

Yes, it's virtually all new products, okay, continuation of new products. We haven't assumed a lot from new geography at this stage. Maybe we'll get a positive there, but at this stage we haven't assumed that.

Your next question comes from the line of Andy Casey with Wells Fargo Securities.

On these improvement initiatives, I want to try to clarify what the base levels are that you want us to consider. First, could you help us understand a little bit -- ballpark, what is the base tax rate level x discrete items that we should use before deducting the 300 bps?

Andy, we're staying with the 2014 at 30% to 33% as the guide range, so that would be the base assumption that we're working from.

Okay. And then second, if I could return to part of Jamie's question, but from a higher level. I'm trying to gauge how to view the overall potential improvement plan impact to earnings. This year, you have some puts and takes. Your comment that investment in these projects has basically already been taken. And then if we assume a flattish market for the next couple of years, do you suggest that we add the benefit to something like a mid-$2 number? Or if it's different, is it lower or higher?

Well, $200 million of pretax improvement, okay? That's what we expect to achieve in the next couple of years. In addition, there'll be some debt reduction and some effective tax improvement. I think we don't want to deliver you 2015 guidance at this stage because we're going through our process. So maybe 2015 we'll have some moderately different assumptions on market conditions when we finish our budget process. So as I said, that's one of the important ways to frame self-help. If you take self-help as only taking the positives without assuming that there'll be some negatives, you end up in a bad place. So -- but I think for the most part, these projects are things that are well underway, mostly all invested in and you should expect that we can -- coming out of 2000 -- I'd really be disappointed if, exiting 2016, we didn't have all $200 million pretax done, okay? Frankly, it would be better -- I think that would be the worst circumstance from how I look at this. That would be the worst circumstance.

Okay. Ron, just one follow-up on that. The investment in the projects that you've already taken, did that dampen the 2014 number?

Well, we called out a couple of the big ones, the Wiesenthal [ph] or the closure of our German factory and there's a couple that we don't call out in each one of the business. But I think in fairness, that's kind of normal, so I don't think we ought to use that as an excuse. We didn't use as an adjusted number the currency or the productivity challenges at AWP. That's really not fair to adjust out. So in a certain sense maybe, but I think the best thing we -- what I could say to you is use 2014 as our base period. That's our base period from a cost and improvement point of view, and these initiatives should build off of that.

Your next question comes from the line of Ann Duignan from JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: My question is around the working capital, Ron. Just curious how that ended up getting inverted back. It's just kind of basic blocking and tackling that you pay your customers and your suppliers at about the same pace. I'm curious, what happened along the way to reverse it?

Kevin, why don't you take that? I've been around longer than you, but I think you can provide some...

I'll start and maybe you can add, Ron. But Ann, obviously, you can see the time of the inflection really was through the crisis, and candidly, there were a lot of things driving our behavior and the marketplace behavior during that period to get through it. So clearly, there were accommodations made to our customers in terms of the ones that were buying during that period in terms of access to terms, where they maybe couldn't get financing. And likewise, in order for many of our suppliers to keep them in the game, we were fairly lenient. And so the problem is we're way past the crisis, and we're looking at this and saying this is a significant opportunity that we have to capture. So getting focused on, as Ron said, very deliberately and very granularly -- Ron mentioned, on the AP side alone, already that's an annualized benefit, that $50 million that he referred to. But just to give you some context, that incorporates 700 suppliers. So it's broad-based and meaningful impact that on an annualized basis, we get to achieve. We think we're just getting started on this and that a significant percentage of that $300 million is available to us as long as we stay focused and execute.

Yes. But it's a legitimate question is why did it take us so long to get on this, Ann. I think that it's no surprise that this was an issue for us. We felt that at the time we sold our Mining business, we had a lot of cash and we were attempting to improve our margin. So we actually did an exchange for some of our suppliers to improve our margins, but that's history. And moving to a shared services strategy, we were paying our bills and changing the way we're going to pay our bills through a shared services process, we weren't so sure we could implement this kind of a change. Frankly, we are surprising our own organization in how much we can actually affect the outcomes here. So shame on us for taking a little bit longer than we should have. We certainly knew it was there. We were beating people up over it, but we weren't getting anywhere. So we implemented a more aggressive process and we are getting somewhere now. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Yes, I appreciate your candid answer, Ron, I really do. It just struck me as surprising, just given how you do really focus on the balance sheet. And then just on these improvement initiatives, some of these items, like supply chain, are notoriously difficult to execute. We always find that it's not as easy to force everybody to buy the same kind of steel, et cetera, et cetera. Could you rank order the 5 initiatives in order of how comfortable you feel on ease of execution to hardest-to-execute?

Yes, okay, I'll give that a shot, Ann. But I just want you to know, to get on this list, we had to have a very high level of confidence that we could execute, okay? So just to get on this list, I mean, there are a lot of other things we looked at in the company, but I just -- I want to make sure you don't get a sense that this is -- this list is a bunch of stuff we just assembled for this conference call. So the AWP number on supply chain, Matt talked about, those are projects already identified, very specific. But you notice in Cranes, the $3 million in supply chain looks like an exceptionally small number. But the reality is that down in the design product simplification of Cranes, $30 million, not -- speaking for Tim here, a lot of what's going to happen there is actually going to come from the supply chain. So we've got -- but his team is actually redesigning a number of the products we have in order to get at that cost chain. So that's why we started this probably 6, 9, 12 months ago and it's going to pay dividends '15 and '16. But I wouldn't really know how to rank order, in terms of priority, these 5 categories. I think these things we're all in on.

Your next question comes from the line of Eli Lustgarten from Longbow Research.

Just a clarification. I think we're all sort of at the point of thinking about next year and the question is how much estimate's going to drop. Is it $180 million that has to be made up in the Port Solutions? Is that the void for next year? And can you give us some color? You said that AWP is sort of probably a flattish to up market next year with flat profitability. Give us some sense of where our risks are for next year? Because the fear is not for having issue. We accept it, and we applaud your movement in your programs to -- for self-help. But just to get some ideas so people can come out and have reasonable space for next year because -- I mean, that's going to be the key thing, is to determine where the stock goes right now.

Yes, we understand, Eli. So I'm going to answer kind of overall but I do want to point it off to you, Steve, and maybe to Tim because of some meaningful changes in these areas. I guess, net-net, I believe we'll have some positives and some negatives in our revenue base. But bottom line is, it'll be flat. That's the right planning environment and that's the right situation. We're going to have some cost increases that are natural. People expect to get salary increases. People expect to get salary increases, we're going to have to offset that with other activities within the company to give salary increases. Not that we won't, but maybe we won't give them as much and maybe they won't happen at the same time, okay? They may happen a little bit later. So we're going to pay attention to that level of detail. If the markets are better, we'll be more generous. If the markets aren't better, we won't be. We know a couple of negative headwinds we have. The biggest one is the negative that Steve mentioned in the port business, so I'll put that off to Steve. Then Tim is going to follow because he's already experienced most of the negatives we expect in the crane market. I don't see the crane market declining much more. Rough terrains are down 25% category-wise in North America this year, so I don't think we're going to see that continuation. So Steve, why don't you comment about port. I don't think it's a $180 million delta.

No. Thanks, Eli. On port, I'd say, right now, the gap is probably about $150 million. I mean, we're going to, I think, do at least $100 million of automation next year. We have some of the rollover that -- if you remember the first quarter I mentioned the $50 million that we thought we were going to get, which actually rolled over. So that equipment is at the port and we're going to get it. It probably flows through in Q1 and Q2. We're going to get at least another order in Q4, potentially 2. So I think that, that gap, I'd put around $100 million to $150 million. Now I think as Ron said, we're still going to show improvement as an MHPS business. So the port revenue is going to drop a little bit. We're going to plan for MH being flat, but the profitability of the business is going to go up. So we're doing things to make sure that we can continue to show progress from a profitability of the MHPS segment.

So Eli, in the Crane business, I would characterize it as very mixed. We have some markets that are hanging in there and other markets that are very, very challenged. I think as Ron said, and he framed the answer, we really felt the decline significantly this year, a little bit last year in certain markets. So if I take a longer view, from an orders standpoint, we're disappointed in the third quarter order intake. But if you look over the course of the year, our book-to-bill is about 1. So through the year, we're managing the order book. And if you look at an R6, rolling 6 order basis, we're up about 4.5%, and on a rolling 12 basis, we're up about 2%. So overall, in a very difficult environment, we're scraping some orders out along the way. Will it get better or worse? I think that's the $64 million question. But as we sit here today, I think we've taken most of our lumps from a market standpoint.

And just a quick follow-up on Construction because of its European context. The improvements, are they going to be taking pricing up to maintain profitability in that business to next year?

Yes, this is George. Thank you for the question. With what we've done over the last 2 years, resizing the businesses and getting them to a level of cost, I think the market just staying flat to a little down, we'll be able to maintain what we've achieved so far in the last 2 quarters.

Your next question comes from the line of Andrew Kaplowitz from Barclays.

Ron, so you've talked about a flat market in AWP but you are growing your telehandler presence quite a bit, starting this year, and I assume it'll continue to grow into next year. So does that mean the rest of the business is actually down? Or how do we -- I mean, I know telehandlers right now is a very small part of the business, but how do we think about the growth in that business versus the rest of the business in 2015?

Matt, why don't you answer that? I think you're closest to it.

Yes, so what we're talking about, Andy, is we're seeing the North American market level, and your question is right, we're growing our telehandler business. We've added -- over the last couple of years, we've added 3 models and that is helping offset some. But if you look at the product categories, one of the dynamics that we're seeing is the -- as the Tier 4s have been implemented on the boom product line in particular, we're seeing them not grow as fast. It's still growing, but not as fast as the scissors and the telehandler. So there's a bit of a mix change. But in general, altogether, it's going to be relatively flat. Do see on the improvement initiatives the benefit that we're going to get from the new products. So it gives you some kind of a reference on how we think that we're going to -- what we think we're going to get from that. But it is a bit of a mix shift.

Okay, that's helpful. And Ron, maybe I could ask you about the company's CEO succession plans. I mean, you've been doing this for a long time. We can all see sort of when your recent contract ends. So how do we think about that as we go over the next couple of years here?

That's a difficult question for me to answer, but I will say this. I feel very good about the company's succession planning process. Clearly, our board has been engaged in this topic for some time, for many years, in fact. Our board has a very deep knowledge of talent within the company and a deep knowledge of talent outside the company. And I feel very positive about the board's approach to succession planning. I'll also continue to serve the company aggressively and in a positive way hopefully, until we decide that somebody else ought to do that. And I am not going to give you a date. I do have a contract that ends at the end of 2015. But I'm 62 years old today, so we'll let you make your own judgments.

Your next question comes from the line of Ross Gilardi from Bank of America Merrill Lynch.

Most of my questions have been answered at this point. But I just still want to understand, Ron. I mean, you lowered your outlook back in September, and at the time, placed most of the blame on Cranes. And clearly, the weakness was more widespread than that in AWP and Material Processing. So why didn't you find the weakness in AWP and Material Processing back in September? Did something change dramatically in the last 2 weeks of the quarter?

Yes. Well, Ross, $9 million of currency hit us from AWP and that's a big difference just there. And so we -- the biggest delta versus our expectations was really Cranes. But we didn't expect the $9 million in currency. Had the $90 million in currency not happen, yes, we'll be talking a little bit about margin erosion in AWP, but not nearly to the degree.

But then in Material Processing, too, I mean, did you find that it just got worse as the quarter went on or...

No. I mean, no, Materials Processing, we knew had some weakness embedded in it and that was built into our view, and it wouldn't have been that significant overall. So it really -- the majority of the change was Crane-related, but you got pluses and minuses in this business all day long, and frankly, MHPS came in a little bit better. Construction came in as expected. The Construction is a business that's hard to handicap. So I think there's a few million dollar difference and there's $10 million or $15 million difference. And the Crane situation was more in the double digit and -- because we were expecting 3 months earlier perhaps the market was starting to improve in Cranes and we would see a lot more orders in the third quarter. Our third quarter orders in Cranes were weak. There's no way around it, and it was really weak in July and August.

What I would add to that, Ross, is it wasn't just about the third quarter, right? We were looking at all the segments and where we were as a company from the remaining part of the year and versus our internal expectations, where we were looking at, after a couple of strong months of orders in Cranes, we were inflecting much higher. Obviously, that wasn't going to be the case and it was the primary driver of the change.

Okay. And then I just want to explain -- understand a little bit better the start-up issues in Oklahoma City. And did that result in any market share erosion or anything like that as you had some difficulties? Maybe you could just flesh that out a little bit, but could that have been related at all to some of the modest demand slackening you saw in AWPs later in the quarter?

No, not at all. We were moving production of a new product to Oklahoma City. We weren't hitting our production rates at Oklahoma City, and we were shutting down and moving some other new products into Moses Lake. So we had inefficiencies in both Moses Lake and in Oklahoma City, and that we -- that had nothing to do with market share or revenue.

We have reached the allotted time for questions. I will now turn the call back over to the presenters for closing remarks.

Okay. Well, we apologize if we didn't get to your questions. Please follow-up with Tom or Kevin or myself. I hope you understand that we are very dedicated to improving the company and improving on the things that we laid out, which we think is the right set of assumptions and actions as we go forward. Thank you for your support.

This does conclude today's conference call. You may now disconnect. Presenters, please hold for your post conference.