Terex Corporation (TEX) Q3 2015 Earnings Report, Transcript and Summary

Ronald M. DeFeo - Chairman & Chief Executive Officer Kevin P. Bradley - Chief Financial Officer & Senior Vice President Matthew Fearon - President-Terex Aerial Work Platforms Kenneth D. Lousberg - President, Terex Cranes, Inc. Stoyan Filipov - President-Material Handling & Port Solutions

Ted Grace - Susquehanna Financial Group LLLP Andrew M. Casey - Wells Fargo Securities LLC Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker) Robert Wertheimer - Barclays Capital, Inc. Nicole DeBlase - Morgan Stanley & Co. LLC Seth R. Weber - RBC Capital Markets LLC David Raso - Evercore ISI Institutional Equities Ross P. Gilardi - Bank of America Merrill Lynch Chad Dillard - Deutsche Bank Securities, Inc. Ann P. Duignan - JPMorgan Securities LLC Jerry David Revich - Goldman Sachs & Co. Stephen Edward Volkmann - Jefferies LLC Eli Lustgarten - Longbow Research LLC Steven Michael Fisher - UBS Securities LLC Joe J. O'Dea - Vertical Research Partners LLC Mig Dobre - Robert W. Baird & Co., Inc. (Broker) Joel G. Tiss - BMO Capital Markets (United States) Michael David Shlisky - Global Hunter Securities, LLC

Ladies and gentlemen, thank you for standing by and welcome to the Terex Corporation Third Quarter 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the call over to Ron DeFeo, Chairman and CEO. Please go ahead, sir. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you, Lori, and good morning, ladies and gentlemen. We certainly appreciate your interest in Terex today and on the call with me this morning is Kevin Bradley, our Senior Vice President and Chief Financial Officer; Kevin O'Reilly, Vice President of Operational Finance; Tom Gelston, Vice President of Investor Relations and several leadership team members including our business segment presidents prepared for any of your follow-up questions. As usual the replay of this call will be archived on the Terex website, www.terex.com under Audio Archives in the Investor Relations section. I'm going to begin with some overall commentary. Kevin Bradley will follow with a more detailed financial report. I'll then provide some specific segment information 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 is available on our website. I'd like to request that you ask one question and a follow-up in order to give everyone a chance to participate. So now let me direct your attention to page two, which is the forward-looking statement and non-GAAP measures explanation. I would encourage you to read this as well as other items in our disclosures because the information we will be discussing today does include forward-looking material. So now let me begin, turning to page three. The third quarter of 2015 was a solid quarter overall. Several areas actually showed notable year-on-year improvements. Our Aerial Work Platform business, our Materials Processing businesses had excellent profitability with strong incremental margins. For the company overall, the adjusted operating margin was 70 basis points above last year, which supports progress from our internal cost and productivity initiatives. Lastly, bookings were up in four of our five segments compared with year-ago, but clearly the environment remains challenging. Looking forward, we continue to experience shifting global market conditions. The U.S. market is flat overall for us, although in key categories such as cranes, it is quite negative. The market in general continues to be negatively impacted by lower oil and gas investments. Europe is mixed and has been for a while. China growth is slowing, Brazil falling and Australia is bouncing along the bottom. The overall pricing environment remains a headwind for the industry and we are not immune nor are our suppliers. Consequently, material cost reductions remain ahead of expectation, offsetting some of the price-driven margin squeeze we've experienced. In total, we had a respectable quarter in a challenging environment. Kevin will now walk you through the detailed operating performance summaries beginning on page four. Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Thanks, Ron, and good morning, everyone. I'll be reviewing results for the third quarter 2015 and comparing them to the prior year. Let's turn to page four which bridges the change in net sales. Net sales for the quarter of $1.64 billion decreased from the prior year by 9% or $169 million, driven primarily by changes in foreign exchange rates which accounted for about 90% of the decline. Given the significance of currency on the year-over-year comparison, I will discuss net sales on a constant currency basis to provide a better understanding of the underlying performance of the business. In our AWP segment, excluding the impact of currency, sales were essentially flat. The business recorded growth in many markets around the world including China, the Middle East and continued growth in Europe, to name a few. This growth, however, was offset by a decline in North America primarily driven by the impact of oil and gas as large rental companies continue to rebalance their fleets. The Brazilian economy continued to present a challenge for the quarter in AWP. If we remove the impact of the ASV divestiture, the Construction segment is up on a year-over-year basis under constant currency conditions. This improvement was primarily driven by the concrete mixer business in that segment. The Cranes segment, excluding the impact of currency, is up 9% compared to the third quarter of 2014. This is driven by growth in our crane products in Europe and a small acquisition in our utilities business. The MHPS segment, excluding the impact of currency, was down 9%, driven by a combination of lower port automation sales during the quarter as well as reduced demand in China, Brazil and South Africa in our Material Handling business. We also had a small divestiture in our MH Australia business in 2014 which negatively impact the year-over-year comparable. The MP segment, excluding the impact of currency and acquisitions, is up year-over-year, driven primarily by sales growth in India. Page five slows that despite the decline in sales, operating profits on an as-adjusted basis for the quarter was essentially flat at $127 million compared to last year of $128 million as operating margins expanded 70 basis points to 7.7% in the quarter. For AWP, increased productivity and lower material cost more than offset lower sales and pricing headwinds. A less favorable product mix and continued pricing pressure in our Cranes segment drove margins down 1.1 percentage points with lower RT and pick-and-carry crane sales. For MHPS, the primary drivers of operating profit decline were lower sales and an unfavorable mix in both the Material Handling and Port Solutions businesses. These headwinds more than offset the benefits of restructuring and improvement initiative savings in the quarter. The MP segment produced a strong quarter with margins expanding to 10.7%, nearly doubling year-over-year. Increased productivity and a positive impact from acquisitions in MP drove the improvement in operating profit. Page six shows the comparative quarterly income statement on both an as-reported and as-adjusted basis. During the quarter, we had $18.6 million in adjustments or $0.17 per share. These adjustments related to merger costs associated with the Konecranes transaction, certain restructuring costs, as well as an historical product campaign. This compares to an adjustment of $9.1 million or $0.08 per share in the third quarter of last year. My comments will focus on the as-adjusted comparisons. Gross margin increased 0.6 percentage points to 20.9% from the prior year as gains in our AWP and MP businesses were partially offset by unfavorable product mix in our Cranes and MHPS businesses. SG&A as a percentage of sales, was essentially flat at 13.2% for the quarter versus 13.3% in the prior year, but declined $24 million in line with the sales decline. You can also see that operating profit expanded 70 basis points, as we discussed on the prior page. Net interest and other expense decreased versus the prior year, driven largely by lower interest rates under our new credit facility and the maturity of our converts this past June. The effective tax rate was 35.6% in the third quarter compared to 32% in the prior-year quarter. This difference was mainly due to the current period's increase in provision for uncertain tax positions, other discrete items and the impact of losses not benefited. For the full year, we still see the tax rate being in the previously provided guidance range of 30% to 32%. For the quarter, earnings per share was $0.58, down $0.01 from the prior year. EBITDA for the quarter was $152.3 million or 9.3% of net sales, compared to 9.1% in the prior-year quarter. Net working capital as a percentage of annualized sales remained high at 27.9%, up from the prior-year quarter of 25.9%. The biggest driver is a decrease in customer advances normally associated with our Port Solutions business. Return on invested capital was essentially flat at 9.7%, compared to 9.8% in the prior year. Page seven provides a bridge breaking down the $11 million increase in liquidity for the quarter. Free cash flow, which we define as cash from ops less CapEx but excluding the impact of Terex Financial Services, was $62 million in the quarter. During the quarter we had a usage of $24 million in our Terex Financial Services business as we continued to expand and improve this business. Our dividend represented a use of cash of $7 million. We completed M&A activities in the quarter, primarily in our MP business, representing a use of cash of approximately $12 million. And lastly, the change in the value of the U.S. dollar versus other currencies negatively impacted liquidity by $8 million in the period. With that, let me turn it back to Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Kevin. On page 8, we've presented our geographic revenue footprint. Our largest market remains North America which showed a decline of 2% for the quarter on a year-over-year basis but makes up 43% of our revenue base, compared with 40% in the year-ago quarter. Most of our markets were down year-over-year, with the lone exception being what we classify as the "Other" category which largely was influenced by large equipment sales in the Middle East. And as you can see, revenue on a straight basis was up 13% in that category and FX-adjusted 31%. When the impact of currency is removed, the major markets of North America, Europe and Latin America were generally in line or just slightly below the prior year's results. Europe continues to represent about 30% of our business overall, and the Asia Oceana about 12%. Revenue results from the rest of the world markets remain stable at 27% of total sales. Now I'd like to take a few minutes and review each of our segments, beginning with Aerial Work Platforms on page 9. AWP's reasonably well positioned going into the fourth quarter with a higher backlog than a year ago at $298 million, including the headwind from currency. Both the net bookings and the book-to-bill ratio are the highest they have been for a Q3 reported period dating back several years, including the four data points highlighted on the chart on the lower right-hand-side of this page. However, we are watching our markets very closely, particularly North America where the ripple effect of the oil and gas impact is clearly being felt. We do expect some customers to be more cautious going into 2016, but there's also some offsetting optimism among some other customers. We are seeing some pricing intensity, which we expect to be more or less offset by improvements in material costs, lower costs from our supply base. Overall this business continues to perform as expected. Next, our Construction business is highlighted on page 10. Backlog for the business stands at $119 million down from $132 million achieved in the prior-year's third quarter or $123 million, if you pull out ASV. Adjusted for the impact of currency in the backlog, the Construction business actually shows an improvement compared with year ago excluding ASV. Similar to the first two quarters of this year, Construction's improvement is from the North America concrete truck business and to a lesser extent, the site dumper business both of which products are represented on the photos you see on this page. The Material Handling business has stabilized, but at a relatively low level mainly due to very low scrap steel pricing. As mentioned last quarter, our European compact construction business remains soft, especially in Germany and in Central Europe. And our backhoe product, in general, and in India, specifically, was fairly weak in the quarter. On page 11, we show our Crane business which continues to operate in a fairly weak demand environment. Although backlog is down versus the prior-year, the book-to-bill in the quarter was a small improvement over the prior-year's results at 76% versus 69%. In absolute terms, bookings were up 6% despite significant year-over-year currency headwinds. Rough terrain cranes remains weak overall. The strongest performer in this segment continues to be our utilities division, although, the rate of growth is moderating. Lastly, we don't expect to see much change in the challenging markets of the Americas and Australia for our main mobile crane products. Order levels from these markets remain disappointing. We have to continue to work on improving competitiveness in this segment which is being led by Ken Lousberg, the new segment president. Turning to page 12, our Material Handling & Port Solutions business that backlog decline reflects the delivery of the substantial port automation projects that took place in 2014. Our backlog is down versus the third quarter of 2014 by about 23% but much of that change can be isolated to the automation product order book and as illustrated by the shaded part of the bar graphs on this page. Automation orders are hard to come by, frankly, and difficult to predict, it's a lumpy business. For perspective the total backlog declined about 7% as a result of the currency alone. Both bookings and the book-to-bill ratio were meaningfully better than year-ago levels, up 11% on bookings and up to 93% of the prior-year and 66% book-to-bill ratio, 93% compared with 66%. Our Material Handling business remained steady with an order book and entered the fourth quarter with an FX-neutral backlog about equal to last year. We're making positive change in that business including the recent launch of a new modular Demag rope hoist that you can see pictured on this page. This pretty exciting new product we've just introduced reflects a year and a half of development and we expect it to be a highly competitive and sought-after product in the coming year. We continue to see demand for port equipment below expectations with the exception of the mobile harbor crane that is gaining some momentum but after a weak first quarter. The softness in port equipment will be mostly offset with improvement initiatives and we expect the fourth quarter of 2015 to have operating margins similar to last year despite lower sales. Lastly on page 13, we discuss the Materials Processing business. This business continues to perform steadily in terms of demand, posting a relatively strong book-to-bill ratio for the third quarter and an improved backlog versus the prior year. In 2014 we invested in new products to expand our portfolio and to aggregate washing systems and recycling, and the integration of these products and some targeted acquisitions continues on track. The North American market is the principal driver for the improved performance. However, low commodity prices and the general persistent weakness in the mining sector remain a headwind for this business, especially in markets such as Australia and Russia. Turning to page 14, in summary, we have performed reasonably well in a challenging environment. Generally speaking, we do not see our markets improving in the near term but as mentioned previously, our improvement initiatives are offsetting these challenges and perhaps adding a little extra. Regarding the full-year outlook, we are expecting to be at or near the low end of the previously announced earnings guidance. The merger with Konecranes continues, and it is progressing as planned. We continue to target a first half 2016 closing. Let me end by saying that it has been a privilege for me to lead and help build Terex for the last 23 years. For some of you new to this journey, it has been a short and perhaps a bit rocky over the past few years. This is both a reflection of our industry and what it takes to compete in a cyclical low barrier to entry business. But for others of you that have been around a little bit longer, you've seen this company built and rebuilt numerous times. I'm delighted that we've been able to attract such a competent and excellent leader as John Garrison, and I'm excited to have many of you meet him in the coming months. But I'm also proud of the work that has been done over the years by the Terex team at large, my executive leadership team, as well as the other 22,000 team members of the Terex family across the world. And of the support that the investment community has extended to us, I am also gracious and thank you very much for that. A thank you though is not enough, but it is a good beginning to the next chapter. So with that, I'd like to open it up for questions. Operator?

Your first question comes from the line of Ted Grace of Susquehanna.

Hi. Good morning, gentlemen. Ronald M. DeFeo - Chairman & Chief Executive Officer: Hi, Ted.

Ron, congrats on a good quarter. And more importantly, congrats on really the incredible accomplishments of building Terex. And we'll miss you. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you, Ted.

You kind of wrapped up your commentary talking about I think markets remaining challenging, at least in the near term. And I know you haven't given formal 26 (sic) [2016] guidance on the business and I know there are multiple factors. John joining the company, you've got the merger with Konecranes. But I was just wondering if maybe you could step through the markets, particularly Aerials, Cranes and MHPS, and a little more granularity on kind of what you think next year might hold? And if you might be able to give any kind of bookends on growth potential on a consolidated basis, I think that would be super helpful at this point of the year, as everybody's kind of really focused on 2016. Ronald M. DeFeo - Chairman & Chief Executive Officer: Yeah. It's difficult for me to do, Ted, as we are right in the middle of our budgeting process. And frankly John is going to be the key reviewer of that information in the coming month or two. But in general, I don't see 2016 being a strong revenue-driven year. I see 2016 having some challenges in some of our core markets around the world. But I also don't see it as a year where things will come apart. We've had a rough year in North America in our Crane business. The crane markets are down somewhere between 20% to 40%, depending upon the product category. That's not going to happen again. It'll bottom out and it'll – our crane customers are actually beginning – are quite healthy in general and I think their attitude will be positive going into 2016. But that might not – that might take a little bit longer to be reflected in our business. The AWP business is going to be a little harder to handicap and we've said it that we expect it to be down in the range of 5% to 10% and now at this stage we don't see anything that really would change that. Our Construction business will evolve. We're working on that business and I think that story will play out as the business solidifies a little bit in some of our better categories. Our MHPS business, that could change with a reasonable automation order, but we don't have a reasonable automation order as we sit here today. So net-net, Ted, without really giving you the kind of meat that you'd like to have from me, I'd say the team will have its work cut out for it. It will have to drive more productivity and cost savings but those things are available and are on our docket for implementation and being implemented. And then the exciting part will be to make sure when the gun goes off with the Konecranes Terex merger that we are implementing as opposed to analyzing. And I think that's the commitment that I will have in turning the baton over to John, that the team will have, and that I believe is also shared by the Konecranes company as well.

That's super helpful. The second one if I could just squeeze it in. Could you just talk about the cadence of business across the quarter, maybe through October, maybe focusing on orders? And the question really is I feel like there's some sense that markets in general may have taken a turn for the worse, more recently September/October versus trends maybe in July/August. And I'm just wondering if that's anything that you've seen across any of the businesses or more broadly? And I'll jump back in queue after that. Ronald M. DeFeo - Chairman & Chief Executive Officer: Ted, no doubt that the stock valuations took a turn for the worse. We saw that. But our business pretty much played out as planned. I wouldn't characterize our business as hitting any kind of short-term wall. I do think that there's still a lot of wood to chop to deliver the final quarter. But we were facing this same thing in 2014 and frankly the same thing in 2013. And if I look back on my over 90 quarterly conference calls, I probably would say that's been the case more often than not.

Okay. Well that's super helpful. Again, most importantly, congrats to you and your family and best wishes. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Ted.

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

Thanks a lot and sending our good luck to you as well, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Andy.

Sorry if I missed this, but can you help us understand what run rate cost savings you guys realized in Q3 compared to the $100 million target you expected for 2015 as of the second quarter? Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Yeah, Andy. It's Kevin. In the quarter we had announced a year-to-date number of roughly $40 million realized in savings in the first half of the year. We close to doubled that, so it was in the area of another $40 million that was realized in improvement initiatives in Q3. So we're well on track to attain the new number that we gave last quarter which was $100 million for the year and maybe even slightly up from that. Obviously as Ron explained we need it, right? It's not showing as incremental but we're happy with our focus on it and so far the businesses are realizing it.

Great. Thanks, Kevin. And then if I could ask one related to the Konecranes merger. They talked about a submittal of regulatory files a little bit earlier today and I'm wondering if you could give us a road map to really help us interpret potential future regulatory approvals, meaning what country or countries do you expect to encounter the biggest challenge? So if we see those approvals we can gain more confidence the merger's going to actually take place. Ronald M. DeFeo - Chairman & Chief Executive Officer: Sure. Well we always expected this to be the longest pole in the tent, so to speak, and handicapping regulatory approvals is not something that any of us including those people that professionally do this, would venture into. So the question you're asking me is really hard to give a concrete answer to. What I would characterize, Andy is that our expectation is kind of early 2016, meaning the first couple of months of 2016. The European approvals will be pretty important for us but the North American approval or the U.S. approval is not insignificant also. But it's not unusual for some of the Asian countries, particularly the biggest one to take long, not necessarily because there's a problem, but simply process-wise. But all of those things have to come together and I think they are. Filings have either happened or are happening and our conclusions from those filings are that what we're presenting is consistent with what we expected to present.

Okay. Once again best of luck, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks a lot.

Your next question comes from the line of Jamie Cook of Credit Suisse. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning and, Ron, once again congrats and best wishes to you and your family. I guess, though, a couple questions. One, Ron, you did mention on the call some of your customers are rebalancing their portfolio as it relates to oil and gas headwinds. Can you talk about how – where are we in this process and to what extent does this push into 2016, both on the Aerial and on the Crane side? And then my second question relates to the competitive pricing environment which you started talking about early on. Can you talk about whether or not that's deteriorated relative to last quarter? And also one of your competitors on the Aerial side has talked about having too much inventory at this point it will take several quarters for them to right-size that. Has that contributed to additional pricing pressure? Thanks. Ronald M. DeFeo - Chairman & Chief Executive Officer: Okay, Jamie. As usual you give me a mouthful of questions to try and dissect but... Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Well, I only – there's only so much time left with you, Ron, so I have to get them all in there. Ronald M. DeFeo - Chairman & Chief Executive Officer: That's all right, Jamie. I appreciate it. Hey, Matt, why don't you try and take that a little bit and I'll try and address the Crane side of it. That's a pricing question and an inventory question and a market question, Matt, all right?

Sure. Good morning, Jamie. The customer rebalancing due to oil and gas definitely is one of the variables with the Aerial Work Platforms. But most of that transpired through Q1. Everybody faced into it and the rental companies realized they had certain product categories, too many of them out in the oilfields, they were coming out. They moved them around the country and that's mostly behind us. And I think that everybody's kind of settled in. They've got the fleet where they want it. Still, the overall decline of investment in oil and gas, that's going to have an impact. It was driving a lot of use. But it feels like most of that is behind us. From a competitive pricing environment, we have been getting pricing pressure throughout the entire year. The non-U.S. manufacturers, they've had a currency advantage and they're using it and also the inventory that you referenced in certain product categories in certain regions. That's driving some model-specific discounting. So we've been feeling that. But our efforts on material costs, productivity and new products are more than offsetting that pressure and you can see that in our results. So the way the year's played out we've said that we are focused on what we can control and on margin improvement. And we can't drive margin improvement if we're not disciplined about price. So we're choosing when and where we go fight back and, yeah, there are some headwinds from that. But I don't think it's going to continue to get worse and worse. That's where I'm at now. Ronald M. DeFeo - Chairman & Chief Executive Officer: Okay. And let me cover the crane business because Ken is still relatively new, seven weeks or so into that leadership position. Oil and gas has been a real issue and an impact for the crane business in North America, and to a degree in parts of the world like the Middle East. Oil and gas is one of the biggest consumers of cranes. So when things change, it does impact the business. However, cranes are long-lived products. So what it does is it moves the utilization around perhaps not as fast of an impact as you would see in the AWP business but it still moves the product around. And our customers become a little bit more cautious, don't buy equipment. So when you have an engine change like we have gone through and are going through coupled with a pullback in a key consumption category, you see a disruption in the overall market. So, non-residential construction is a primary driver of the crane business globally. We know it. It's historical. And now we're in about the third or fourth year of a relatively weak crane business. I could point back to 2012 and say, hey that looks like it was the last somewhat strong year. But that was the last strong year of commodity prices. So I don't think we should get discouraged here by the crane market and by the oil and gas impact because I don't expect tomorrow to get weaker. But I don't think we can be encouraged because I don't expect it was going to get a whole hell of a lot stronger in the short term either. There is some inventory in the channel, that inventory will have to be worked through. That causes some pricing pressure and I think that will impact what our forward forecast is. While that is all ongoing, Ken will be working to build our franchise capability. We've got new products on the horizon. We've got lower cost executions of our current products about to be introduced. So overall, I think we'll come out of this with a crane franchise that's more capable of global competition than it was a couple of years back. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): All righty. I appreciate it and best of luck again to you, Ron. Thank you. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Jamie.

Your next question comes from the line of Rob Wertheimer of Barclays.

Hi. Ron, congratulations on having built Terex to where it is, outstanding career. So a quick question on emerging markets, you guys give a lot of detail which is great. One of the surprises in the quarter for me was just relative stability in Latin America, maybe in some of the other markets incorporated in the Middle East. So I wonder if you can kind of take a spin through emerging markets and just talk about whether you think there's real stability there or signs of weakness ahead or why LatAm was so good. Ronald M. DeFeo - Chairman & Chief Executive Officer: Yeah. Well, Rob, I wouldn't quite characterize it as stability but I would – well let's put it this way, I would characterize it as stability at a low level. Okay? And part of the reason it's not falling much from here is because it's fallen quite a bit. Our business in Latin America on an FX-adjusted basis is down 3%. I don't think we're going to see FX move quite as much as it has in the foreseeable future but beats me really to be a forecaster of FX and, fundamentally, there's a lot of work still needs to be done down in Latin America. Russia's a different story. I wouldn't want to handicap a positive move in Russia at this stage, it's just too uncertain. India? India I think will still unfold to be a positive story in the near future but short term, it's a mixed bag for us. Our Materials Processing business is doing quite well, our compact construction business which is highly competitive in India is – the whole market is quite weak. And if you turn to China, I am really proud of our Chinese team because we've picked our spots and while the business on an FX-adjusted basis is down 10% in the quarter, our Aerial Work Platform business is doing very well there. The products that we're focusing on are doing well and we're making a pretty positive return. So we're not competing in the most competitive categories in China where there's strong domestic players. So overall, I think developing markets has been in the past three years for us a headwind. That will turn around, but probably not in 2016.

That was great. Thank you. Just one quick one. I'm sorry. the Middle East, did you see cancellations there? There's been, I guess, maybe some indications of that? Ronald M. DeFeo - Chairman & Chief Executive Officer: Let me turn it over to Ken Lousberg. Do you – have you heard any cancellations in cranes in the Middle East, Ken?

No, Ron. We would have had a few cancellations in the first quarter and third quarter, but none that I'm aware of in the third quarter. Ronald M. DeFeo - Chairman & Chief Executive Officer: Okay.

Thanks much.

Your next question comes from the line of Nicole DeBlase of Morgan Stanley. Nicole DeBlase - Morgan Stanley & Co. LLC: Yeah. Good morning. And, Ron, I'll add my good luck wishes to you as well. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Nicole. Nicole DeBlase - Morgan Stanley & Co. LLC: You're welcome. And so I guess maybe let's start with free cash flow. It was a bit weaker than expected and I know you guys mentioned the MHPS segment in particular there, but you also said that there's still hope that we could get to the $200 million to $250 million range for the full year. So I'm just curious about the puts and takes on free cash flow in the fourth quarter? Ronald M. DeFeo - Chairman & Chief Executive Officer: Yeah. I would correct you from the standpoint of hope. Okay? Nicole DeBlase - Morgan Stanley & Co. LLC: Okay. Ronald M. DeFeo - Chairman & Chief Executive Officer: We've planned to. Okay? Nicole DeBlase - Morgan Stanley & Co. LLC: Okay. Ronald M. DeFeo - Chairman & Chief Executive Officer: And I think it's important and we're focused on this, and part of the issue so far was customer advances were not as strong. But we've got an active plan. Kevin, you want to commentary... Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Yes. Ronald M. DeFeo - Chairman & Chief Executive Officer: Comment on that? Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Sure I'll add a little bit to that, Ron. What the – I guess the disappointing piece of where we are year-to-date is largely around working capital. Right? And Ron mentioned the largest issue has been the decrease in customer advances. We've also been seeing some expansion in receivables and inventory, which are kind of related to the selling environment. So if we go out in a pretty difficult market and try to expand our sales, we are using some tools in terms of structures: rentals, RPOs, operating leases. Well underwritten products, but tend to be heavy on the working capital side. But as Ron said, we do see the opportunity to get into the range. We are working across the company to make sure we do that. There's a fair amount of things. You'll remember that last year, the vast majority of our free cash flow came in the fourth quarter. I think this will be very similar to that as we get focused and get the inventory out of the system towards the last two months of the year. Nicole DeBlase - Morgan Stanley & Co. LLC: Okay. Thanks. That's helpful. And then my second question is just on AWP margins. So we've spent a lot of time talking about backlog and top line but you guys did deliver pretty strong margins this quarter. I know a lot of that was driven by material cost productivity. So I'm curious, can that strength continue into the fourth quarter or is there a risk to Q-on-Q margin performance? Ronald M. DeFeo - Chairman & Chief Executive Officer: Matthew?

Sure. We're really pleased with the margin improvement that we have seen in Q3. We knew all along that we would get the largest benefits from the productivity in the third quarter and we expect it to carry in through Q4. Some of it is volume related and fourth quarter is typically our lowest quarter of the month. Ronald M. DeFeo - Chairman & Chief Executive Officer: ...year.

But if you look at the bookings and the backlog, we're real pleased with where we're at. And so although some of that backlog is for 2016 deliveries we will be building it, because a lot of it's Europe-destined. And that will help us from a productivity standpoint. So we certainly are very focused on that and we don't intend to give up any ground that we've gained on productivity. The teams have done a fantastic job. We've been very disciplined with inventory, and so as we come into fourth quarter we know it's going to be a light quarter. But we're not going to change the focus that we've had all year. Nicole DeBlase - Morgan Stanley & Co. LLC: Okay. Thanks, Matt. And good luck again, Ron. I'll pass it on. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Nicole.

Your next question comes from the line of Seth Weber of RBC Capital Markets.

Hey, good morning and I'd echo everybody's congratulations to you, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Seth.

I just wanted to actually, Matt, the comment that you just made about the AWP backlog, what I think I heard you say was a lot of that shipment is going to Europe. Is that what you said and should we assume that a lot of the booking strength in the quarter was related to customers from outside North America?

If you look at our business, it's high 60% in North America. So you're always, when you look at the backlog there's always going to be a high percentage of North America. So I wouldn't characterize the backlog that we have as all being Europe-destined. It is heavy in Europe because they, first of all the European market is very strong. We've been working with them on planning early and they want to get the equipment in time for the height of the season. So yes, it is strong with Europe, but that's not the only place that we're seeing strength. Ronald M. DeFeo - Chairman & Chief Executive Officer: It's important that we get the product to Europe at the beginning of the selling season. So sometime when the North American market is really strong, we're always struggling, who do we ship first? Right now I think that's why our European team has got the orders in. But our third quarter, FX adjusted for AWP was up about 20% businesswise in Europe. So we had a very good Q3 AWP performance. Maybe it won't stay that strong next year but it's a good indicator.

Okay. And would you say that the relative resilience in the North American order activity is that coming from the national customers or more the independent local guys? Ronald M. DeFeo - Chairman & Chief Executive Officer: Matt?

Yeah. Well, the nationals are always the largest but as you get to the later parts of the year, Q3 and Q4, the independents the percentage that we sell them typically shifts to more to the independents. So it's pretty much what we see every year. It's a mix of both. So independents as a percentage grows in fourth quarter in North America.

Okay. If I could just ask a question on the MHPS margin commentary that you gave, just to clarify. Did you say that the margin for the fourth quarter for that category should be about flat year-over-year? I'm just trying to understand how you get there from the 3%-ish number that you put up in the third quarter which is usually a strong service quarter which usually has good margin. Ronald M. DeFeo - Chairman & Chief Executive Officer: Well, we think that – the fourth quarter will be a little bit stronger relative to the third quarter this year, but consistent with last year. Steve, you want to add to that? Stoyan Filipov - President-Material Handling & Port Solutions: Yeah, sure. Good morning, Seth. Yeah, as we've said, we should be right around that 5% operating profit business in the business. And in Port, it's really about execution. I think if you go look at the book-to-bill rates over the past couple of quarters you see some stability there. So we have the orders and just like last year it's going to be about executing on those orders. On the MH side, order intake was a bit slower in the first half of the year. But really in the – I'd say after the 15th of September, we really saw the order intake starting to pick up. And the Components business, there's about a four week to six week lead-time to get that product out to market. So I think as long as there's stability in the MH side, which we think that there's going to be, we should be able to hit those numbers. So that's kind of how we're going to get back to that operating profit is getting the Port orders out and then getting the backlog out of the system for the year and from the Material Handling side.

Was the Service business as you would have expected in the third quarter or is that a little bit lower than expected? Stoyan Filipov - President-Material Handling & Port Solutions: I'd say, Seth, it was – I'll use a metric of book-to-bill, I think that's probably the best way to look at it. But book-to-bill was about one-to-one in the quarter. The first part of the quarter was a bit slower. There was still a bit more shut down. Obviously we mentioned in a couple of the commentaries, Brazil is a tough market right now, South Africa is a tough market right now. But the ordered intake started to pick up really after I'd say the middle of September and we saw that kind of pick up through the end of the quarter so that's what gives me a bit more confidence even on the services business.

Great. Perfect. Thank you very much, guys, and congrats again, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you.

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

Hi. Good morning. The question's on AWP margin looking at 2016, I know you're not thinking of guidance but just trying to think of the moving parts that we know. For the European market you're trying to help offset the currency by moving more production content to your facilities in Europe, right? So that's a positive. You've got the restructuring savings for 2016 versus 2015. The key negatives of course are pricing and let's for base case assume overall volumes are down a bit. What we're missing is the mix and I know you don't have a backlog that goes that far into 2016 but could you help us with what is the mix inside the current backlog? And maybe even highlight a little bit how pricing is in that backlog right now? Ronald M. DeFeo - Chairman & Chief Executive Officer: You want me to do this, Matt? Or do you want to do it?

No. I can take it. That's a loaded question, David. Ronald M. DeFeo - Chairman & Chief Executive Officer: As usual.

Yeah. And I mean... Ronald M. DeFeo - Chairman & Chief Executive Officer: After all these years. He's still...

It's Ron's last call, come on...

Okay. So the question focuses around margins in 2016. Just starting at – before I get into the mix what I would say that we should expect for next year is that margins, we would be able to keep margins at the low teen level as we move into next year despite the headwinds that we have from FX and from the pricing pressure. And where we're going to get that is by our continued focus on the margin improvement, the material costs, the productivity that we've been driving, we're going to continue to do that and we've also got new products that are going to come in. The transfer of production over to Europe, that will help but it takes a long time. So we've already started production of one model in Europe that wasn't in production at the beginning of the year. At the end of the year we'll have another one and we're going to continue as we move through 2016. So that will help some of the FX headwinds that we're having. As far as the mix in the backlog, the backlog is – it's a snapshot in time and we already talked about the content right now. There's a fair amount from Europe but we also have a lot from other parts of the world and a lot from North America. When you're referring to mix, if you're talking about product mix there have been some shifts in product mix, in particular the large telehandlers. We're not expecting them to come back next year which from a revenue standpoint hurts, but from a margin standpoint those are ones that have a lower margin. Also the larger booms what we saw as we went through the oilfield fleet coming out, we saw that the demand for the largest booms went down but it transferred down to the smaller and mid-sized booms and we expect that to carry through next year. And we expect scissors to stay strong. So there are some, when you talk mix it could be product mix, it can be region mix. It can be a lot of different things. So hopefully I answered your question, David.

You did. Obviously low-teens, I think the Street would take that if you can really pull that off in what could be a down volume year. Can you help us a bit though because pricing obviously can be particularly damaging on margins, right? I mean 100% decremental and you lose price. Can you help us a bit with how the pricing is in the backlog today versus say a year ago?

Well, it's down. If you look at just in Q3 where the pricing went, there was more pressure because of what I referenced before, inventory pockets in non-U.S. manufacturers. It's down a little. I wouldn't say it's spiraling down by any means. Fourth quarter people are always looking for orders, and you're going to see people pushing for deals. But in the height of the season, they'll be much more disciplined so as you come back into first and second quarter. So there's nobody doing what I would consider desperate acts. The big players, the main players continue to be disciplined. They are going after some deals and they're moving the inventory they have but I expect that there'll be good discipline next year.

And that all is wrapped in – you're still saying low-teens next year with all that incorporated? Ronald M. DeFeo - Chairman & Chief Executive Officer: Yeah, we're not saying low-teens, David, yet, but that's what your analysis would suggest then we're not going to argue with you.

Okay, that's good to hear. One quick one if you could for Steve. On the Port side of MHPS, you mentioned the mobile harbor cranes have been one of the stronger areas. Those are above average margins I know, but how significant is that as a positive mix? And if you can help us a little bit on Port looking into next year, can we think of it as a year where mobile, at least at the moment appears to be what will be the driver for whatever equipment sales you do have? I'm just trying again to get a feel for a mix. Stoyan Filipov - President-Material Handling & Port Solutions: Yeah, David. I'd say, so the mobile harbor crane business, I can probably better if I tell you in units. So in 2014 we did I'd say about 35 mobile harbor cranes. This year we'll deliver about 62. So a significant improvement is coming from the mobile harbor crane business. And the margins are okay, but they're not great which is why we're taking some restructuring, some costs out of the port organization and we're also looking at some cost reduction alternatives. So we've got to improve our margins in the mobile harbor crane business so I think that's something that the team next year is going to have to work on, but it's significant from a shift perspective in the revenue side. I don't want to comment too much on 2016, David, other than the automation, as Ron mentioned, still going to be kind of a big question. And I think we have line of sight to three or four different projects that are out there. But I think mobile harbor cranes will be okay, straddle carriers is still planned to be a pretty good business for us moving into next year, so those will be kind of the key pieces of the business. And our business in China in Xiamen has been a really good business for us this year also, so I think we'll just see some stability out there and not a major shift in the product portfolio.

That's helpful. I appreciate it. Thank you very much.

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

Hey. Good morning. Thank you. Just a couple questions. I was just hoping you could maybe clarify just that the source of the modest guidance revision for 2015? What geography and what business? Ronald M. DeFeo - Chairman & Chief Executive Officer: I don't think we will clarify it – that, Ross, because it generally applies to a combination of things: tax rate, corporate spending, a little bit of spread geography around all of our businesses. So it's not that big of a change from where we've been, but there's a little bit of negativity across a range of things. I guess that's – rather than try to say, it's all coming from here. Okay?

Yep. Got it. Thanks, Ron. And then I wanted to just understand your – Matt's comments a little bit more on the rental companies because, Matt, you were commenting that you think the fleet has already largely been reallocated out of the oil patch and that's kind of behind us. If that's the case, where do you think the incremental weakness is coming from?

Yeah. The – we've been spending a lot of time with the rental companies around the world because we're in the budgeting process. And what I would say is that there's still some caution out there. There's mixed opinions about how next year is going to be, but no one is doom and gloom. And if you look at the fundamentals, non-residential construction, the time utilization, rental rates have slowed a little but where our concern for North America comes from is all around the – we refer to it as the donut hole or the echo effect from the 2008/2009 where they didn't buy much fleet at all, and the replacement cycle is going to get impacted by that. And so that's really the driver for our caution in the North American market. That being said, this is no surprise. We've known it's been coming for years and we've been talking with the rental companies and they're each dealing with it in a little bit different way. We've had an intense focus on new product development over the last four years and a lot of those are going to soften that. So our caution about the North American market is almost exclusively related to the fleet replacement, not the overall construction market health. And then we also have some good things going on with Europe. Ron gave you some of the numbers that we have there. That's going to help us, between – there's – you have the European market, we've got new products, and at those levels we can operate very efficiently and have good performance.

Got it. Thanks very much. Ronald M. DeFeo - Chairman & Chief Executive Officer: All right. Thanks, Ross.

Your next question comes from the Vishal Shah of Deutsche Bank.

Hi, this is Chad Dillard on for Vishal. Just wanted to go back to your comments about the utility weakness within Cranes. Can you just give a little bit more color on that? And how would that mix shift affect your margins going forward? Ronald M. DeFeo - Chairman & Chief Executive Officer: What I said was that the utilities business' rate of growth is moderating. It's been a very strong segment in general for us but growth in that utilities business won't continue forever, and it's been a substantial portion of the profitability in the Cranes segment. I think that's what we've said over the years. And we expect it going forward to basically stay that way. The expectation into the future is that eventually the Crane business will strengthen itself and we'll have an underlying base upon which to build to go forward. So, we don't usually describe each of the component pieces of our business within the segment and I'm not going to start today other than to give that general kind of commentary.

Got it. And then just going back to the material cost benefits. You have about 200 basis points to 300 basis points of upside opportunity here. Just trying to weigh the balance with the pricing pressure and to see if you have – how much more room you have before you start to feel any pricing pressure and won't be able to offset it with the materials cost? Ronald M. DeFeo - Chairman & Chief Executive Officer: Kevin, do you want to... Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Yeah. So material cost, certainly one of the better parts of our story this year and really gaining traction, I'll give an example on steel. Our total steel purchase is in the area of $1 billion a year. As you know the steel prices have dropped in the U.S. roughly 30% year-on-year and that bleeds in over time into our results but whether it's raw, fabrications or castings, we're starting to realize an accelerated benefit from steel pricing. For example in AWP, I would say roughly half of the year-to-date benefit from steel drop was in the third quarter so we would expect that to continue to improve as the indexing bleeds into our cost of sales.

Great. That's it for me. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you.

Thanks. And good luck and congratulations, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: All right. Thanks, Chad.

Your next question comes from the line of Ann Duignan of JPMorgan.

Hi. Good morning. And good luck, Ron, we've known each other for a long time. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you, Ann.

I just wanted to take a step back to the $100 million in cost savings that that will not be incremental. Could you talk about $100 million plus gross savings, what would you expect to fall to the bottom line heading into 2016? Ronald M. DeFeo - Chairman & Chief Executive Officer: Well, Ann, we're 70 basis points ahead of last year. I'm sure that wouldn't have happened had we not put the kind of pressure on cost that we have. The real question becomes does the pricing environment stabilize? There's two sides to that, if the pricing environment stabilizes that's good news for our business in general because that means the end markets are going to stabilize and eventually we'll get revenue growth. So this is a little bit of a Rubik's cube to try and figure out and I think you know that just from your in-depth experience in the business. We are going to continue to try and outperform whatever the market does, though, in the coming year or two. I think the $202 million of savings we said we would exit 2016 at that rate or greater, if we exit this year at $100 million, we're ahead of schedule. I would expect that same level of pressure to stay on and I would think there's more than $202 million to get because there'll be new projects that get added. And I think that's what the team is going to go through when it goes through its budget planning process in the next month or two.

Okay. I appreciate the color on that. And then on the liquidity bridge, your Q3 liquidity bridge, could you just give some color on the Terex Financial Services, the buckets of cash used and generated? Kevin P. Bradley - Chief Financial Officer & Senior Vice President: Yeah, I'll take that, Ann, it's Kevin. So we continue to increase our penetration of the sales at Terex. As you know we've got a full-service captive in the U.S. so we're actually originating that paper versus referring it to third parties who would originate it for us. We expanded that activity for about $85 million in the quarter. There's natural amortization that occurs which kind of bleeds that down during the quarter and also we've described our ability to kind of self-fund our U.S. book through securitizations. So the securitization activity is a way for us to bring in some liquidity to the company at a very efficient interest rate and match fund our receivables for TFS. So all-in, it was a net negative in terms of liquidity but it's a positive investment in TFS with a nice little return. We don't really talk about it much, but TFS was mildly profitable in the third quarter, a few million dollars of OP.

And so that $85 million of cash used to grow assets is that, if my understanding is correct, that's Terex equipment being sold to the Terex Financial Services, is that the way we should think about that, or is it (1:02:48)? Kevin P. Bradley - Chief Financial Officer & Senior Vice President: The vast majority are finance leases versus operating leases. So it's actually equipment being sold to third parties where TFS is providing the capital for the end user. So it's typically retail financing and we're selling the equipment to an end user, not operating leases. It's probably 90%-plus finance leases or loans. But we're providing the liquidity for the customer and charging an interest rate and a small margin. So classic captive activity in the U.S. for Terex Financial Services.

Okay, great. Thank you so much and good luck again, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Ann.

Your next question comes from the line of Jerry Revich of Goldman Sachs. Jerry David Revich - Goldman Sachs & Co.: Good morning, and Ron, congratulations as well. And appreciate you putting up with over 80 quarters of conference calls. Ronald M. DeFeo - Chairman & Chief Executive Officer: That's all right. Jerry David Revich - Goldman Sachs & Co.: I'm wondering if we could just talk about the visibility you have in MHPS. I know with a lot of the projects you have maybe bids out a couple of years. Steve, can you just flesh out what the broader pipeline looks like? And separately, can you touch on inquiry levels for industrial crane demand in Europe? Any signs of pick-up there at all? Thanks. Stoyan Filipov - President-Material Handling & Port Solutions: Okay. Yeah. Thanks. Good morning, Jerry. On the automation front, I think there's probably about four potential orders that are out there that are in the kind of Q1 to Q2 next year that we've got visibility to. I will say that we booked an automation order in September. It's a small one, but we'll take anything that we can get at this point. It's about a $15 million order for our automated stacking cranes in Europe. The other four that I mentioned are more in Europe and the Middle East, without going into too much detail. Yeah. I will tell you that we lost two orders in China this past quarter, really in Q2 and in Q3 which is unfortunate, but China is just a difficult market to judge what's really going on there. And the customers chose a competitor that has never delivered on an automation project which will be interesting to watch to see how that develops. So you never know. That may come back around at us. So hopefully that gives you a little bit of visibility as to what's out there in the quarter. Also our software business is doing better than last year, so they're getting orders for simulation and some of the automation projects that are out there. So the software business is doing okay. Hopefully that helps on the port business. Shifting to the industrial cranes in Europe, it's kind of flat, Jerry. No big changes or shifts there. The big drag for us, as we mentioned before, has been kind of the Middle East, Brazil, South Africa. Those markets are kind of tough for us right now. But in Europe, there's general stability there. Jerry David Revich - Goldman Sachs & Co.: Okay. Thank you. And, Ron, for the crane business, you characterized the quarter as impacted by product mix? So with rough terrain cranes down, I'm wondering if you'd just flesh out how we should think about product mix over the next couple of quarters. Any tailwinds for you, either high-capacity cranes or otherwise? Ronald M. DeFeo - Chairman & Chief Executive Officer: Generally speaking, the tower crane businesses remained pretty good and somewhat positive, but we're not that big of a player in the tower crane business. And the large crawler crane business, we have a very strong franchise in, but the end markets are pretty weak in a couple of places. The rough terrain business is a fairly profitable business for us, particularly in both our factories, Waverly, Iowa, and Crespellano in Italy. So with that market just generally weakening, both the European, Middle Eastern market and the North American market, it's a tough drag. And the last thing that I'd say is really challenged is our Australian business which has gone from – I think we'll be lucky this year to report as much revenue as we did in profit in 2012 from that business. So it's been just a big shift down. So it's really kind of across the board in the crane business with a couple of small pockets of strength. As I look to 2016, I see the business and the markets more bottoming than I see projected growth. But if there's any growth, it'll probably be in a couple of product categories where we have some strength such as large lattice booms. Jerry David Revich - Goldman Sachs & Co.: Okay. Perfect. Thank you very much.

Your next question comes from the line of Stephen Volkmann of Jeffries.

Hey. Good morning. Ronald M. DeFeo - Chairman & Chief Executive Officer: Hey, Steve.

My congrats as well, Ron. I think I've been through most of those 90 conference calls with you, so thanks for putting up with me. Ronald M. DeFeo - Chairman & Chief Executive Officer: My pleasure, Steve. It's my privilege.

So most of this stuff's been answered but I guess I'm just curious, a couple of finer points. It sounds like price cost and I don't want to put words in your mouth but looking at both sides of that equation could still be kind of flat to positive next year given some tailwinds we're seeing on the cost side. And if you think pricing is sort of stabilizing and I don't know if that's just my interpretation or if that's your view, but could you comment on that? Ronald M. DeFeo - Chairman & Chief Executive Officer: Sure. I think your interpretation's pretty accurate from my perspective. I think we certainly see tangibly how we're achieving cost reductions from our supply base and from some discipline in our own productivity metrics and some minor and in a couple of cases major product change initiatives from a cost point of view. So that's things we can control and do. From a pricing point of view, I think Matt characterized it in general for the company at large. There's places where there's pretty intense price competition but it's not across the board, everything going down all at once, the only way you get a deal is when you lower your price, that's not the case. But certainly there's no upside in pricing, okay? So when there's no upside that means there's always a bit of an erosion. And when there's no upside in pricing, people expect salary increases. So that means you've got to find at least that cost reduction to stay even. So that's the general tone. But net-net, Steve, probably a little bit more on the positive side than on the negative side.

Great. That's real helpful. And then just the second thing: you talked a little bit about in the AWP segment the oil and gas shrapnel basically being absorbed across the rest of the industry. I'm wondering if you have a view, a similar view, for the Crane space. Ronald M. DeFeo - Chairman & Chief Executive Officer: You know, it takes more time to get absorbed across the Crane space, and I think by the end of this year it will have been absorbed. Whereas I think what Matt would have said is that it got absorbed in the early part of 2015 and my view is it'll take all of 2015 to flow through in the Cranes business. But that's a bit of a, how should I say it, an experienced educated perspective. There's not a lot of research that I could point to that would support that.

Thanks again. Appreciate that and I hope you have a good bucket list. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks a lot.

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

Good morning. Thanks for taking my questions and, Ron; it's been a pleasure all these years... Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you, Eli.

...working with you. Just a clarification, the material cost savings that we're seeing, you're sort of characterizing as that you're finally getting your fair share flow through the system. Is that what's going on as opposed to another step down of costs, of material cost prices, second wave of drop? Or it's just that it's finally flowing through to your income statement? And, more importantly, is it true – it sounds like that it won't anniversary, the benefits won't anniversary, until at least the middle of next year. Is that correct? Ronald M. DeFeo - Chairman & Chief Executive Officer: I think that's generally true, Eli. I think the savings we're getting today we worked on six months ago and it takes time for them to flow through. But in order for them to keep going we've got to be working on that same level, the next level of savings right now for next year, and I think our team is doing that, although it's harder to handicap at this stage.

So, the oil and gas market, we talked a lot about the conditions and working equipment through, we already know that the first half of 2016 will have negative oil and gas comparison versus 2015 because of the downturn it's hitting now. Even if it just stays there, it's a mathematical weakness. Are there any parts of your business that have production holes or backlog holes or something that we have to look at and as we go through particularly the first half of next year, from the impact of this downturn? Things may stabilize, but are we looking at any backlog issues that could cause some hiccups or a different kind of quarterly profile as we get into next year based on current conditions. Ronald M. DeFeo - Chairman & Chief Executive Officer: I don't see any overall, there's probably a product line or two that's small within our Cranes segment such as a boom truck or a couple of RT cranes that still will be impacted a little bit. But in general we experience more of those holes in late 2014 and early 2015. So I would open that up to my team to see whether or not they agree, if anybody disagrees, please feel free to come forward and disagree.

They shouldn't have. All right. Thank you very much and as I said, I wish you all the best in the future. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Eli.

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

Thanks, good morning. And certainly best wishes, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Steve.

Can you maybe discuss in a little more detail some of the things you're working on to improve the competitiveness of the Crane business? I think you mentioned two things, new products and lower costs. But maybe if there's any more granularity you can provide or maybe also the process you're going through to figure out what needs to be changed. Ronald M. DeFeo - Chairman & Chief Executive Officer: I'm going to give Ken a little test here because he's not new to the Cranes business. So that's the good news. He's spent a large portion of his time in cranes, and I think he's got a perspective add and he's excited about it. So why don't I turn it over to you, Ken?

Sure. Thanks, Ron. Well, Steven, the way I would answer that is I do feel like our team over the last couple of years has put a good strategy together. It's been very focused on customer satisfaction, on cost reduction and easier to do business with. And we're certainly, the way I would put it is it's really intensifying our efforts on execution with regard to that. So it's somewhat too just back to the basics of doing what we're good at. So we'll continue to work on our new product development, intensify our cost reduction efforts and do the basics around working capital efficiency and the really basic, basic things.

Okay, that's helpful. And then good progress on the construction business this quarter. I guess the bigger picture question is how is the strategy going and can this be a viable business that generates positive returns on capital consistently for you guys going forward? Ronald M. DeFeo - Chairman & Chief Executive Officer: Yeah. Well there are parts of the Construction business, the answer I would say on that is, yes. And there's other parts of the business, it's an open question and we're evaluating that.

Okay. I'll stay tuned on that. Thanks very much.

Your next question comes from the line of Joe O'Dea of Vertical Research Partners.

Hi. Good morning. First question, Matt, you talked about kind of the donut hole related to replacement on the Aerial side and obviously leads to a wide range of potential outcomes. And so I know it's a little sort of early to start giving any specific guidance, but don't know as you go through early conversations with some of the rental companies, if you can offer any kind of framework for thinking about what kind of a drag that is in markets that are otherwise maybe a little bit softer year-over-year?

Yeah. What we're expecting, for North America, is in the range of 5% to 10% down, primarily driven by the effect of the donut hole. The thing that we've got in our favor is that non-residential construction is still good and expected to remain good. If you look at the fleet ages, telehandlers are on the young side, whereas booms and scissors are – they haven't dropped significantly. So there's – the fleets are up there at an age where the little bit that they do have to turn in is going to need to be refreshed, so that's what we're expecting. And when I talk to the rental companies who are obviously all very focused on this, again no – when you talk year-over-year, what's your CapEx looking like? Nobody's saying that there's going to be a dramatic dive in their CapEx. They've known it's coming. They tried to feather it in, and so that's why we're putting it in the 5% to 10% range down in North America. And we have some other offsetting regions, Europe in particular. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thanks, Matt.

That's really helpful. Thank you. And maybe a related follow-up is that – I mean we've seen kind of seasonal shifts in order patterns in AWPs over the last couple years, with last year 4Q as pretty heavy, the year before 1Q was pretty heavy. And so just as we get into that time period and you talked about some of the pricing pressure maybe in 4Q, should we expect that related to that maybe you do higher orders in 1Q of next year? But just to kind of get in front of any surprises on orders because you've got a tough comp year-over-year this year?

Yeah. And it's the timing, as you've pointed out. Whether it comes in fourth quarter or first quarter, sometimes it's hard to tell. What I would say sitting here now is that I expect that we're going to see probably not to the levels that we saw in 2014 Q4 but I think that we'll see a nice spike as we move through Q4 as the large North American rental companies prepare for the year. That being said, if anything spooks them between now and the end of the year and they decide to get more cautious then they would just push out in the first quarter but I'm expecting it more in fourth quarter. Ronald M. DeFeo - Chairman & Chief Executive Officer: Okay. Thanks, Matt.

Thanks very much.

Ladies and gentlemen, we ask that you please limit yourself to one question. Your next question comes from the line of Mig Dobre of Baird. Mig Dobre - Robert W. Baird & Co., Inc. (Broker): Yes. Good morning. Matt, maybe just kind of going back to that last question on AWP. I want to clarify that when you're talking about down 5% to 10% in North America you're talking about orders rather than Terex revenues into next year?

I'm talking about AWP North American revenues. Mig Dobre - Robert W. Baird & Co., Inc. (Broker): Revenues. Okay. And I'm asking that because obviously this year revenues have been running quite a bit ahead of orders just on backlog depletion. So... Ronald M. DeFeo - Chairman & Chief Executive Officer: Mig, but that always happens. I mean it's just a matter of turning over the orders. I mean to get 5% to 10% down in revenue you have to have 5% to 10% down in orders more or less. It's just a matter of timing, how the timing plays out. Don't try to misread anything in the comment between orders versus revenue. Because the Parts business which is the only other stable part of the product category generally is going to be fairly consistent but it's only 12% of the total revenue or something like that. Got it? Mig Dobre - Robert W. Baird & Co., Inc. (Broker): Okay. Okay. I think I understand that part. And then maybe looking at the Crane business, can you give us any color on any potential share shifts occurring out there? I mean your tone is pretty different than one of your bigger competitors, especially surrounding tower cranes. I don't know if this is a one-off or maybe a bigger trend. Ronald M. DeFeo - Chairman & Chief Executive Officer: Well again on tower cranes we have a smaller tower crane business. So our concentration on the tower crane business is going to be with a few customers in a few select markets and those just happen to be somewhat stronger for us. So I wouldn't try to characterize the overall global tower crane business the same way but for us it's been pretty positive. I would say Cranes – the share that we have has been fairly stable, we've lost a little bit of share to mostly a particular Japanese player who's a strong global player. But it's stabilized when I look at year-to-date results and most of that share loss took place in 2014 although the year isn't over yet. So part of what Ken is working on will be those things that help us get back some of that share. Mig Dobre - Robert W. Baird & Co., Inc. (Broker): All right, I appreciate it, and good luck, Ron. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you.

Your next question comes from the line of Joel Tiss of BMO.

Hey, I made it. Ronald M. DeFeo - Chairman & Chief Executive Officer: You did, Joel. We couldn't have done it without you.

Well, it's definitely been an adventure and a pleasure to work with you, Ron, all this time. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you, Joel.

Since everyone keeps asking the same question I wondered if you can talk a little bit about John Garrison. I just wondered what you see in him, or what the Board sees in him. And what would you think, I don't want you to speak for him, but you've been around this company for a long time. What would you think his first 100-day plan would be? Ronald M. DeFeo - Chairman & Chief Executive Officer: Well, it's going to be hard for me to say what his first 100-day plan is other than the basics. But I do appreciate the question and it gives me a chance to praise Mr. Garrison. First of all, he's a man of high integrity and high relevant experience in complicated capital goods, a highly engineered product categories. He's not afraid of the cyclicality that's embedded in our business. I'd say he is a disciplined thinker and a disciplined process implementer. And he's a good next leader for this company. This company will benefit from deepening process and lean implementation. John's got all of that and more. I think the other thing I'd like to emphasize about John is his integrity and his personal characteristics. He will relate well to our customers. He'll relate well to our team members. And I'm just excited that the investment community gets to know John a little bit. Relative to the 100 days, I think his first focus is going to be to meet the people, to learn the issues, to meet some of our customers and of course to meet the investment community and hear from the investment community what you believe is important. And he'll take a balanced view on that. The exciting part about adding John to the leadership team is he'll be very complementary with some of the strengths that we have in the executive leadership team of Terex overall. So, finding the right leader for this company has not been an easy challenge because we have to balance both our past with our future. But we always knew that I'd hand off leadership. It's been part of our plan to do it through the end of 2015 and I think John's got the experience and it's just a good time for him to take over this company. It's not a great environment to operate in but it's a great environment where if you put in place improvements in process discipline, go after cost, go after product innovation like I know he's enthusiastic about, and the merger integration as the leader of Konecranes Terex, which he will be, I think it's just an exciting, exciting time. To answer your question...

All right, thank you.

Your next question comes from the line of Mike Shlisky of Seaport Global Securities.

Morning, guys. Just wanted to touch quickly on your utility cranes business, just on another question. Can you give us a little more color on the used market for some of these cranes? Are you seeing any increased inventory from the channel? Are you seeing lower prices in the channel or perhaps both or perhaps a lot more cranes going through the auction channels? Just a little color there would be appreciated. Ronald M. DeFeo - Chairman & Chief Executive Officer: I think in general – Ken, you can correct me or just add to this if you like, but I think in general we have seen a pretty stable marketplace. It's slowing a little bit from its rate of prior growth. There's a number of distribution sources of equipment in the utilities business, but in general the business is a pretty strong one and a fairly stable one. I think the rate of growth will be less, but I don't see any massive change in auction prices or any of those concerns that you might see in a more-rapidly slowing kind of business. Am I – Ken, do you want to add to that?

Yeah, on the utilities side of the business I would say that's absolutely true. On the Crane side of the business, we've definitely seen RT prices on the used side decrease over the last, I would say, two to six months, with units coming out of the oilfields. The other thing I would say is we're seeing a lot more – a move to quality. So a lot of cranes were added into fleets of a poor quality or a lower quality level primarily from Asia, from China. And those are moving out quite quickly. For us, the only impact we would see would be around our RT pricing right now. Ronald M. DeFeo - Chairman & Chief Executive Officer: All right, Ken. Thank you.

Thanks. And, Ron, best of luck. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you very much, Mike.

Thank you. That does conclude the Q&A portion of today's call. I'll return the call to Ron DeFeo for any additional or closing remarks. Ronald M. DeFeo - Chairman & Chief Executive Officer: Just see everybody around the ranch. Appreciate everyone's interest in Terex and look forward to any future interactions we have together. Thank you.

Thank you. That does conclude today's Terex Corporation third quarter 2015 financial results conference call. You may now disconnect. Ronald M. DeFeo - Chairman & Chief Executive Officer: Thank you.