Ronald M. DeFeo - Executive Chairman and Chief Executive Officer Kevin Bradley - Chief Financial Officer and Senior Vice President Timothy A. Ford - President of Terex Cranes George Ellis - President of Terex Construction Matthew Fearon - President of Terex Aerial Work Platforms Stoyan Filipov - President of Terex Material Handling & Port Solutions Kieran Hegarty - President of Terex Materials Processing

Eli S. Lustgarten - Longbow Research LLC Jamie L. Cook - Crédit Suisse AG, Research Division David Raso - ISI Group Inc., Research Division Robert Wertheimer - Vertical Research Partners, LLC Ted Grace - Susquehanna Financial Group, LLLP, Research Division Christopher Schon Williams - BB&T Capital Markets, Research Division Andrew M. Casey - Wells Fargo Securities, LLC, Research Division Andrew Kaplowitz - Barclays Capital, Research Division Ross P. Gilardi - BofA Merrill Lynch, Research Division Jerry Revich - Goldman Sachs Group Inc., Research Division Eric Crawford - UBS Investment Bank, Research Division Adam Nielsen - RBC Capital Markets, LLC, Research Division

Good morning. My name is Holly, and I'll be your conference operator today. At this time, we'd like to welcome everyone to the Terex Corporation Second Quarter 2013 Financial Results Conference Call. [Operator Instructions] I'd now like to turn today's conference over to Ron DeFeo, Chairman and CEO. Sir, you may begin.

Thank you, Holly, and good morning, ladies and gentlemen. We appreciate your interest in Terex today. On the call with me this morning is Kevin Bradley, Senior Vice President and Chief Financial Officer. With him is Kevin O'Reilly, Vice President of Operational Finance; Tom Gelston, Vice President of Investor Relations; and several of our leadership team members, including our business segment presidents. As usual, a replay of this call will be archived on the Terex website, www.terex.com, under Audio Archives in the Investor Relations section. I'll begin with some overall commentary and highlights, and Kevin will follow with a more detailed financial report, and then I'll give some comments and summarize before we open it up to questions. We will be following the presentation that accompanied the earnings release and is available on our website. [Operator Instructions] Let me direct your attention to Page 2, which is the forward-looking statement and non-GAAP measures explanation. We encourage you to read this, as well as other items in our disclosures, because the information we will be discussing today does include forward-looking materials. So now let me begin. Turning to Page 3. The second quarter results for Terex reflected the lighter order environment for many of our products that we highlighted in our earnings revision back in June. We did end the month of June fairly strong, accounting for our modestly better results versus the $0.50 to $0.60 EPS range that was anticipated. On an adjusted basis, that is, we achieved earnings per share of $0.65 and a reported EPS of $0.18. The difference is primarily for charges for reductions in workforce and restructuring activities in our MHPS, Cranes and Construction segments, along with charges taken in relation to the retirement of $220 million of debt in the quarter and the accounting impact…

Thanks, Ron, and good morning, everyone. Turning to Page 5, I'll take us through the financial results for the quarter. Our net sales for the quarter of $1.9 billion declined from the prior year period by 5.1% or approximately $104 million. Our AWP segment led, with growth of 17% versus the prior year. And our Crane segment posted 3% growth. The balance of the segment showed year-on-year declines as the softer-than-anticipated macro environment continue to dampen our commercial efforts. Gross margin as adjusted decreased 40 basis points to 20.9% from the prior year period, as improved price realization and manufacturing efficiencies in our AWP segment were more than offset by the impact of net sale declines in our Construction and MHPS segments. Negative sales mix in our Crane segment also contributed to the reduction. SG&A as adjusted increased to 13% of net sales from 12.6% in the prior year quarter. On a dollar basis, SG&A spending levels declined, as we continued to cut costs in both Construction and MHPS. These reductions were partially offset by increased engineering investment in both AWP and Cranes. Income from operations as adjusted declined $25 million to $150 million or 7.9% of sales from $175 million or 8.7% of sales in the prior year quarter. Our AWP segment posted solid incremental margins during the quarter, approximately 26%. However, performance declined in the balance of the company, driven primarily from volume reductions. We are taking aggressive action to reduce future costs and remove complexity from our operations as evidenced in our reported numbers. Net interest and other expense was down roughly $13 million when compared with the prior year quarter. Net interest expense reduction, stemming from the refinancing and deleveraging actions executed in 2012 accounted for, substantially, all of the improvement. In the second quarter, we…

Thank you, Kevin. And now I'll review the segment detail. I'll go through these charts somewhat quickly. Starting on Page 7. And beginning with a conversation on Terex Aerial Work Platforms. A pretty good second quarter. We've got reasonable visibility to the second half of 2013. Global demand, we feel, continues to strengthen. Our margins are pretty solid. We're happy with the reported 17% operating margin in the second quarter. Our backlog is up compared to prior year, about 38%. We see some expansion happening through our telehandler product line, as we're adding a few new products and improving our capacity. A couple of noteworthy points on revenue mix. You see our North American business represents 68% of our total business, down from 71% last year and a flat European percentage of 13%. Encouraging to us, because 13% this year versus 13% last year on a business that's up 17% means that our European business is growing, which is a good sign for an overall difficult market in many of our other product categories. Latin America also had a very strong period for this business. Turning to Page 8, our Construction business. The Construction business, as many of you on the call clearly recognize, has had some difficult end-market performance. Certainly, our performance reflects that. Global markets remained soft for dirt and scrap handling equipment. Our revenue was down 29% compared with the prior year. We're focusing this business on some simplification and cost structure reductions. We sold our compact component businesses, as we said we would. We're restructuring further cost initiatives to take some people and related expenses out, $2.7 million of charge and a $3.4 million benefit. We've eliminated 4 facilities with a 12% reduction in team members. Of note on the numbers, we've lost $2 million on…

[Operator Instructions] And your first question will come from the line of Eli Lustgarten, Longbow.

Can you give me some idea -- on a different topic [ph] you talked about a little stronger June at the end, which held above yet, obviously, the guidance was -- the June 17 guidance was held despite the beat. And as I look through the new segment forecast, you said that one of the questions is, obviously, we have risk in some places. Can you talk about the segment, the ways your confidence level in this new guidance. I mean, particularly, AWP, do you actually have the margin going down in the second half of the year, I believe, versus what you had in the first half, despite the little stronger markets? And then the other markets, there's some uncertainty, particularly, in Cranes and the European outlook. So can you give me some color on what's going on as you look to the rest of the year?

Okay, Eli. And I think you've kind of hit on the main opportunities and risks, for sure. I think the AWP forecast is really structured in how this business would traditionally perform, with the fourth quarter being the most uncertain quarter of all, as customers really like to get delivery of products in the first and second quarters, with a slowdown of their deliveries in the third and fourth quarters. So we structured our information here fairly traditionally. Having said that, the marketplace is telling us that they need equipment, they want equipment in general, and that may be enough upside. But at this stage, it's hard to tell. On the flip side, we, obviously, got to go get some business in our Cranes area. I think we did $992 million of revenue in the first half, and the midpoint of that guidance we're providing is $2.1 billion. So, obviously, there's $100 million to $125 million of incremental revenue performance that we have to go get. And we realize that, and we realize that the current backlog probably doesn't support that. However, our team is pretty dedicated. We've got good lines of sight to opportunities. That doesn't mean we'll win those opportunities, but we've got good lines of sight to those things. And, clearly Tim can comment later on, if you want. But those are a bit of the yin and yang, so to speak, of the business. I do want to also point out the importance of the Material Handling & Port Solutions turnaround, and our forecast is for that business to actually be profitable in the second half of the year and to show meaningful revenue growth in the second half of the year. And, clearly, the backlog supports that. If you look at the backlog and examine the third quarter of 2012, that business' backlog really bottoms out, and that is really what resulted in the weakness of the first and second quarters in the revenue from that side. So it's a bit of a mixed story. We know the end markets aren't going to help us a whole heck of a lot. But I think you hit on the basic issues and opportunities.

And then just a quick follow-up. As you go after business in the second half of the year or so, can you talk a little bit about what you're seeing in pricing? Can you walk us [ph] -- were you surprised a little bit with Caterpillar talking about some very competitive-priced market, particularly outside North America? And, particularly, as it reflects to getting better margins in Cranes and, of course, the other businesses, but can you talk a bit about the pricing environment?

Yes. I think pricing is different by business and, obviously, the stronger markets will have the stronger pricing environments. But the one that's most probably on peoples' minds would be the Cranes area. So why don't I ask Tim to comment on that.

Yes. Thanks, Ron. Eli, one of the things we've been focused on for the last couple of years is improving margins in our Crane business. And if you look at our performance on a quarterly basis and on a year-to-date basis, year-over-year, price is actually slightly positive. And if you look at it on a sequential basis, we're also slightly positive. So I feel pretty good about the discipline that we're maintaining in the marketplace. I see our competitors being relatively disciplined. There's always a deal that you lose here or there based on price. But generally speaking, it feels to me like the market is fairly disciplined even in an environment where it's a challenge to get the orders.

And the next question will come from the line of Jamie Cook, Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: Ron, a couple of questions. One, back on the Aerial side, I guess, still, if I could just dig a little deeper, because your margins in the second half versus the first half assume you're down. I think your margins go from 15.5% in the first half to 13.5% in the second half with United Rentals coming out, saying that their CapEx forecast could be positive. And I would also assume that material costs probably are a tailwind for you in the second half versus the first half? So I just want to make sure I'm thinking about this correctly. And then, also, I think last year, people came out and announced price increases for -- in August. So are you going to do that again this year, because it could have implications for ordering trends? And then, I guess, my second question relates to the Construction business. Just trying to understand at what point -- I mean, first of all, I think you guys sold the Components business within Construction, so is that a benefit in the back half of the year and how much? And if so, I guess, I'm just disappointed that we'll still be losing money if that is a benefit. And after that, I'll get back in queue.

Okay. I'm going to ask Matt and George to comment on this in a second. But I do want to make a point about the Construction business. And we are very conscious of what we need to do in Construction to get this business to a more respectable profit performance. The 2 principal businesses in Construction that have the greatest historical profit contribution are TEL trucks business, that's Terex Equipment Limited trucks business in Scotland -- headquartered in Scotland; and our material handler business or what is traditionally been called, our Fuchs business. Both of these businesses have a good history of profitability more years than not. Having said that, the current outlook in trucks is -- has been very challenged, in particular, because we bump up against a small mining size and in the Non-Residential Construction and articulated trucks. And a substantial portion of this business also went into China through our Chinese joint venture and the kits and products that we sold into China. All of those product categories, industry-wide, for this year at least, have been pretty challenged. And the Fuchs product line is a steel scrap product. And frankly speaking, the price of steel is a real benefit to Terex overall. But for Fuchs, in particular, embedded in our Construction business, it's a real headwind. And has -- so all the work that we've done within the Construction segment to get our breakeven cost down and to address a fairly poor end-market environment, we're still not able to capitalize on because of those 2 primary end markets of those historically, fairly strong contributors. So I think we'll keep working this. We understand the issues, but that's kind of a nutshell of -- on the Construction. Maybe Matt, you can comment on first half, second half AWP and the pricing environment, et cetera, to answer Jamie's question there? Jamie L. Cook - Crédit Suisse AG, Research Division: But just to be clear, Ron, when you -- just the Components business, was that losing money? Is that a benefit in the second half or no?

George, do you want to answer that?

Yes, Jamie. Thank you for the question, and the answer is yes. With that sale completed, it was losing money. And the Construction business in total, Ron mentioned the 2 main drivers being down in the first half. We are definitely seeing some improvement on the truck business as we look into the second half of the year, which will help. And also, the losses have been mitigated on the Component business sale. And also, we're still working through the remaining Roadbuilding businesses that had been losing that will flush through as we go forward for the rest of the year. So when you say what is the clearer picture, the Compact business is doing well. We hope for some improvement on the truck side. And also, the relief from the Roadbuilding improvements will take effect in the second half.

One of the things, Jamie, on the Components business is that it relieves us of several hundred people in Germany. And while it was losing money, it is not going to be the change that turns the segment from negative to positive. So it's a net positive, but it's a big change relative to the amount of people liabilities that we had going forward in that operation and provides an ability of our team to clearly focus on the product itself of mini and mid excavators and small-wheel loaders, so that we can be the best we can be in that and get out of all the component nonsense where we really don't have a lot of value that we can add. So I hope I've answered that question completely for you. Okay. And Matt?

Yes. Jamie, thanks for the question. In regards to the margins in the second half versus the first half, as Ron said, the -- we set the margins traditionally. And it's an obvious question when we're expecting strong top line growth. Some of the things that come into as we move into the back half of the year, we've been adding quite a bit of capacity on our telehandler line, and they are traditionally a lower-margin product. So there's a mix component in there. In addition to that, we are starting to prepare for a big 2014, and we're adding second shifts. So with that, there's a little bit of -- as you do the switchover, there's a little bit of operational inefficiency. The other piece on the pricing environment, it's remained stable and predictable. And the biggest price increase that customers will experience next year will be related to the Tier 4 engines. We're starting to do that conversion and it'll carry through 2014. With that being said, we are considering a modest price increase for 2014. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And when will you -- and when will that go out to the market? I mean, you'll announce it before January, right? So I'm just trying to figure out whether or not that would create a pre-buy ahead of the price increase?

Yes, it'll be similar to last year. It'll be effective for January 1. Jamie L. Cook - Crédit Suisse AG, Research Division: But when will you announce it? Would you announce it January 1 or August, September, before that?

No, it will be before that. It will be before that. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And do you get a material cost benefit in the back half?

Material cost has been favorable this year. Year-to-date, the commodities have been flat; in particular, steel plate has been flat. We have seen coil start to tick up a little bit. But in general, you're right, it is a tailwind for us.

Your next question will come from the line of David Raso, ISI Group.

You're not -- you weren't breaking completely new ground with the comment by any means, but I just want to make sure I'm reading it properly. You seem to be emphasizing the portfolio management pruning commentary a little bit stronger this morning. Am I reading that properly? Are there some things afoot that there's going to be further actions coming in the next 6 months or so?

David, I'm dedicated to managing our business in our portfolios appropriately. And I think if you know me a long time, you know that every day I wake up in the morning, I look at our portfolio as critically as I possibly can and say, "Where can we be a winner? Where will we not be a winner?" And even though these things take time, and they take energy, we're going to continue the emphasis. I wouldn't read that my desires and emphasis has changed at all, okay? But I would say that it's an important thing to emphasize, because we look at the realities of the market. And markets tell us something, we're listening to those markets. Our performance tells us something. We're listening to those performances. And if there are things that we can do to improve or accelerate or adjust, we're going to do those things. Now the problem we have is we can't tell you when we fail at trying to do something. We only tell you when we succeed. But the only thing I can say to you is please have confidence that we look at the same numbers you look at.

My direct question. MHPS, the second half of the year, and I know it's a lumpy business with some of the port shipping and so forth in the second half and into early next year, but trying to get a feel looking into '14 how you're thinking about this business on a profitability level? The back half of the year, the revenues are implied at $940 million, a lot higher than the $710 million or so you had in the first half. In the second half of the year, the business is slightly profitable implied in the guidance. Just, roughly speaking, frame it first to some degree, knowing what's afoot with the work councils in Europe and other actions you're taking. If the second half of this year became ideally somewhat run rate revenue, $1.8 billion kind of annualized, $1.9 billion, knowing the actions afoot, how should we think about -- I'm not trying to ask for '14 margin guidance exactly for MHPS, but how should we think about the profitability of that business in 2014 if you could have similar revenues as the second half of the year?

Well, I'm going to throw that to Mr. Filipov. Steve?

Yes, thanks for the question, David. For sure, we've got a big back half of the year. And as Ron said, we're going to be profitable in the back half of the year, but we're starting in a pretty big hole from the first half of the year. So for sure, 2014 is going to be a better year for MH&PS. And as you know, the 2015 target is to get to 7.5% operating profit. So, I think it's fairly easy to kind of do the math there on where we need to be in '14. What I will say is on the other point of the works council negotiations and the restructuring, you're right, that's going to take some time. But that's why we're doing that today, because we want to get it done with by the end of this year, so that we're set up for a good '14. So, hopefully, that gives you some color. And I think you also should consider that next year, we still have a couple of hundred million dollars of large automation projects that we're going to be delivering to the tune of probably about $300 million. So that's going to help us in '14. Now we're starting to deliver...

Steve, is that the Rotterdam?

So we have -- so we've got 3 projects right now. We have two in Rotterdam, one is Rotterdam World Gateway, the other one is APMT. And then we've got Long Beach, California, which is the third one. And Long Beach really won't start until '14 through '16 and '17. So there's a big nut there. But we're -- we've got those 3, I would say that there's some other projects that are on the table. I think the other thing is we tend to think of the automation business as a one-off business, but the reality is it's an ongoing business for us. I mean, there's probably 11 ports that are running our automated guided vehicles throughout the globe today. And we're the market leader in that business. So it does tend to be lumpy, but the market is really moving towards automation.

So I mean, what I was sort of fishing for is the idea of the business doesn't get a ton of attention, except for some negative news the last couple of quarters. But if this business does have those shipments in place for next year, and you're modestly profitable in the second half, so let's take the guidance for face value the rest of the year, if you could even do 3% margins next year on $1.9 billion of revenue, it's almost a $0.50 per share earnings swing year-to-year just on MHPS. And I'm just trying to get some framework for us here on how you're thinking about the business at that revenue level -- is -- even a 3%, which is not even halfway to the long-term target. Is that even realistic? Or am I not appreciating maybe some of the pricing was challenging to win the Rotterdam or the other projects?

I think the other piece, David, is the MH business, the Material Handing business, the Industrial Crane business, I mean, we're off substantially from last year, 13%, 15%. That is the real question that we've got to address. We're going to have some challenges there, because half of that business is in Europe, so we've got to fix that business, why it's so critical for us to really lower that breakeven point, and that's what we're focused on. So MH and PS is really 2 businesses, the MH business is the bigger piece of it, to be honest with you. So those are -- that kind of question mark. I think port, we've got good visibility to what's going on. And at the same time, I am really pushing to get margins up. And we're going to pass on some deals, because we have to get our margins up in the port business, as we do in the Material Handling business. So we're going to be selective on getting the deals.

And last two quick things. Matt, you mentioned preparing for a big 2014. Was that just a telehandler comment, or was that a division comment?

Well, in general, we continue to see that the market is going to continue on the growth pattern that it has, looking at our guidance that we provided out to 2015. That sets us up that we have to see steady growth over the next couple of years. So telehandlers continue to be the strongest of the product categories, but we expect that'll slow down, and the rest of the product portfolio will continue to grow.

Is this based off of your theory on how the industry should play out? Or are you already getting some indications for customers on 2014 for teles and aerials?

It's both. In other words, we have modeling that goes out longer term. Typically, when we're talking to customers, it's 6 to 9 months out where those conversations are. So we use combination of conversations with customers and some modeling that we do internally.

Also, David, I'll make a point, because we spend a bunch of time around this. The point I want to make is Terex is not a one-trick pony, okay? There are opportunities in each of our segments to meaningfully change that 2014 and '15 performance and we don't have to hit on all cylinders to make really good progress, whether that's the point you made on MHPS, opportunity in Construction, opportunity in Cranes. And, in general, there are more positive opportunities than there are negative, but there's clearly some negative places. So I think this continues to be some of the challenge that we have, but we're -- we've got, really, some decent things that we feel we can accomplish, if we just stay focused on our basic execution.

Our next question will come from the line of Rob Wertheimer, Vertical Research.

Just wanted to -- I guess this is for Tim. The nature of the decision you made on a little bit of restructuring in Cranes, is there anything, as you continue to sort of move into the business that you see that is more structural and you're seeing opportunities to take? Or was this really a cyclical decision?

Thanks for the question, Rob. The decision that we took in Germany, in particular, really was one where our -- we had to make a decision on how we want to structure our workforce. For the last couple of years, we've been using a methodology to manage our workforce called short work, which includes temporary reductions and shorter work weeks for our team members. By law, in Germany, you run out of time, and you've got to make a decision on how you want to manage that. And our view was that we'd be better to take the action now and the hard decision to reduce our workforce, basically to the level we've been operating at, but to do it in a permanent way. So this may, on the surface, look like we're reducing or restructuring our overall capacity, but the reality is what we're doing is aligning our workforce with the way we've been running the business for the last couple of years.

And we think this will be more cost effective.

Absolutely.

Makes sense. And do you see many more opportunities or situations rather, like that right now, or do you wait and see when it arises?

Yes, I would say that we're always looking at aligning our workforce and our production volumes with our outlook in the marketplace. So where markets are soft or need to be managed, we will adjust workforce accordingly. You can look around and see where the markets have been softer this year -- have been -- a little bit in Australia, and we've taken some modest actions with our team there. The North American market, which has been very strong in the first half, is going through a little bit of a pull back, as inventories get aligned, and we're evaluating our production needs out of our North American factories. So you can look around and see how those markets are playing out. And we're trying to be much more disciplined and much more aligned in our sales, what we call, sales-value production, really, the production value and managing it on a very close basis to our outlook from a revenue standpoint.

If I can ask just one small follow-up. Is there any competitive or market overspill in Materials Processing? Ronnie mentioned on the arctic trucks, just the tiniest bit of maybe interaction with low into the mining side. Do you think there's any forward-looking risk in Materials Processing from other folks in mining?

Kieran Hegarty, do you want to answer that?

Yes. I mean, clearly, we have, as Ron pointed out earlier in the piece, some exposure to minerals. But the majority, again -- the majority of our mineral production is actually what we would consider periphery mineral production, so it tends to be construction roads and mine sites, et cetera. Overall, the biggest correlation to our business is general construction activity. So it's probably -- to be honest, probably more aligned better with just broad construction, whether that's commercial or housing, because the vast majority, probably 90% of our products, actually produce aggregate, which is used in construction, as opposed to a non-mineral aggregate. So whilst we have some mineral exposure, we have much greater exposure to the general construction cycle.

And sure. And I'm sorry if I wasn't clear, but is there any competitive impact as folks who might have more overlap in both markets see mining off?

In terms of any -- in terms of what respect, sorry?

Pricing pressure from your competitors.

I mean, similar to the other segments in Construction, we get -- our competitive landscape varies tremendously by market. There's reasonable -- there's a good pricing environment in North America based on demand and Europe again, and it's competitive-specific so there's not a uniform picture. It depends on the country. U.K. is at the moment, highly price-sensitive. You have other markets are a bit more conservative. So there's -- there's not a uniform picture. Overall, there's probably a reasonable degree of stability in pricing, but it can vary dramatically by market.

Your next question will come from the line of Ted Grace of Susquehanna.

Ron, I realize the focus at this point is on the back half of this year and that's the realities of where we are in the backlog front, kind of limited visibility. But in a couple of discussions around segments, there's been a brief kind of commentary on 2014. Could give us maybe just kind of a framework, since I realize you haven't introduced any kind of formal guidance on '14? And then kind of how we should be thinking about the 2015 goals that you introduced at the Analyst Day? You've got a lower trajectory. For sure, there's a lot of time between now and then. But just any kind of framework or commentary would be helpful.

Okay. I don't really want to do this by segment and with a tremendous degree of specificity, because our process requires that we go through each of our businesses towards the end of the year, reflect upon what's doing well, what's not doing well. In order to provide guidance for 2014, it'll be a more detailed analysis. The goals we have for 2015 haven't changed. And in my opinion, there's a reasonably big difference between goals and guidance. And I think the goals are set out there because we believe that's the potential we have in our business. And I think that potential would add up to a $10 billion company with $1 billion of operating income and approaching $5 a share of earnings. In order to do that, we obviously have to perform substantively better in a couple of our key segments, continuing the positive trend in AWP, turning our Cranes business into a little bit more growth-oriented. Although I do want to point out that the Cranes revenue is not expected to get back to the prior peak, nor is the revenue in our Material Handling & Port Solutions business intended to get back to the prior peak. So I think having lowered our guidance in 2013, it obviously makes that 2015 goal seem a little bit harder to achieve. Having said that, about 2/3 of what we have to do, we feel, is within our own control, while about 1/3 having to come from better markets. I can't predict better markets, but we're going to keep working on those things that we can control. And if we can get some better markets, Cranes, for Material Handling & Port Solutions products, for some of our Construction Products, et cetera, I think we've got a good chance of making those 2015 goals. I can't tell you at this moment whether it's a direct line, a hockey stick or a minor hockey stick between '14 and '15. But we're going to do our best to try, and none of the members of our management team, at all, have given up on trying to achieve those goals. The key to those goals: Portfolio management, simplification and financial efficiency.

That's helpful. And so in terms of the 2/3 of the improvement that you have more control over, how should we think about the cadence of the benefits of the restructuring in terms of what you think you'll realize in the back half of this year from across every standpoint versus what we should anticipate and build into our expectations for next year?

We've got some minor benefits on the back half of this year, but almost all of those benefits will take place in 2014. And that's nearly $65 million, maybe $50 million of which will be incremental in 2014.

Okay, that's great. And then the last question I just wanted to ask is to get to the $5, can you just remind us, do you have -- is there any need for incremental restructuring beyond kind of what we're aware of today?

If I was aware of the restructuring I'd have to do, I've already have done it. So I think that's one of our real challenges. But I do think we -- as part of this, we've got to keep working on our balance sheet as well. By that, I mean pay down some more debt. I think the opportunity to get at that convert in 2015 is possible. So I think that's an element of what we have to do also.

Your next question comes from the line of Schon Williams, BB&T Capital Markets. Christopher Schon Williams - BB&T Capital Markets, Research Division: I wonder if we can just touch again and maybe dig a little deeper on the Crane margins in the quarter, a bit incremental margins, much weaker than I expected. Just kind of talk about -- I think you mentioned some mix issues. Does that continue into the back half? And then also, could you talk a little bit about maybe just addressing BAUMA and the orders. Obviously, not a lot of sequential improvement in orders in Q2 versus Q1. But if there's still opportunity to capture some orders as we go down the road here a little bit just from your discussions that you had back in Q2 at the BAUMA show?

Well, I'll turn this over to Tim in a second. But I'd say at BAUMA, we had a lot of love, but not a lot of conversion when we got home. And I think the emotion of the market was good, but you've got to work still pretty darn hard to convert that business. But Tim maybe want to comment about the margin and...

Yes, Schon, thanks for the question. I would characterize our cranes market as a choppy but recovering market. And I think we left -- to Ron's point, we left BAUMA with a false -- maybe a false sense of enthusiasm around where we were in the recovery. If I look at our order intake rate on a sequential basis, we're up from second half last year to first half this year. Our Crane products -- or sorry, our segment revenues -- orders are up about 10%. So second half last year, first half this year, our order intake is up about 10%. That's encouraging. In addition, I also look every Monday morning on a phone call with our sales leaders around the world at our quota activity. And since April, our quota activity is up 30% in Crane and on a year-over-year basis, it's up 13% in Utilities. So that gives me some degree of encouragement that there is -- there's an opportunity for growth out there. That being said, a lot of these deals are taking a very long time to close. These are big, complex transactions, and our customers are uncertain about where the economy is. So they're waiting until they're absolutely sure they have the business before they place an order with us. So I think that's kind of giving us a sense of encouragement on the one hand, but recognizing that it's a long gestation period to get these orders in the other. So from a margin standpoint, clearly, we were looking for and continue to look for a margin improvement. As I said, our pricing is up slightly on a year-over-year basis, as well as on a sequential basis. Where we've lost a little bit is on the product and margin mix -- product and geographic mix. Australia for us is down 20% to 25% year-to-date and Australia has been a very good market for us for the past couple of years. We've had some increase in some of our lower margin product categories and a slight decline in some of our higher-margin product categories. So I think from a mix standpoint, we've seen a little bit of decrement to our overall margin standpoint. I'm not overly concerned about it. I think as we go into the back half of the year, we'll see a more normal -- a more normalized balance. And I'm confident that we'll be able to get back to the levels that we would've expected. Christopher Schon Williams - BB&T Capital Markets, Research Division: Okay. And as a follow-up, could you just talk a little bit about the cadence of the quarters in the back half of the year? And then Material Handling, I believe had some large shipments going out in Q3. Can you just talk about what should we be expecting kind of Q3 versus Q4, again, kind of versus normal seasonality?

Yes, let me just quickly comment, because we're -- we've got a number of other people on the line that I think would like to get a question in here. But, I think, in general, we expect a little bit stronger performance in the back half of the year that's different than what might be a normal cadence. It varies by business. We've commented on AWP already. What I'll say about Material Handling and Port Solutions is the third quarter tends to be the strongest quarter from a standpoint of services and parts and -- but the fourth quarter will be better because of some bigger shipments. The third quarter in Cranes is likely to be a little bit weaker due to the traditional vacation periods. And this year will probably be no different than that, meaning we expect a little bit stronger fourth quarter. MH -- I mean, the Material Processing business is probably pretty normalized. Weaker third quarter, stronger fourth quarter kind of a situation. So I think those kind of even out. If I look at the company overall, I'd probably say a little bit weaker third quarter than fourth quarter, but that's not that unusual.

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

On Cranes, could you talk a little bit more about your comments related to North American adjustment? Is that related to any specific product areas? Is it basically all except crawlers? I'm just trying to understand that. And...

Andy, thanks for the question. North America is, for us, a large, rough terrain cranes market. I would say that North American market probably got a little ahead of itself in the first half of the year. Housing is improving, but there's really a second order effect in the Cranes business with housing. The housing development goes up as the retail, the school, the -- that sort of thing that drives the crane activity. Oil and gas has been particularly strong. And in the Cranes market, I think, Matt would also say the same thing for the AWP business as well. And it's particularly strong in the Gulf States right through the Midwest and the heartland of the U.S. and up into Canada, for that matter. So I talked about a bit of a pullback on the North American market, I think it had to do more with distribution, managing its inventory levels than any overall correction happening in the marketplace.

And could you also provide a little more color around the Latin American market? And then, lastly, on the back half opportunity, given everything in the commentary and the release, I'm just wondering, where -- what region should we look to for you to help fill the gap in terms of the opportunity described in the revenue guidance and then what we're seeing in the backlog right now?

Yes, Latin America has been weaker than we thought it would be year to date. We've been in that business or in that market, I should say, for several years now. And I think the overall tone and economic environment in Latin America is more uncertain today than it's been in several years, largely driven by Brazil. So I think the potential for that market still exists long term. But as we sit here today and try and handicap the second half of the year, it's very difficult to get a sense that, that particular market is going to be substantively better than it has been in the first half of the year. We've kind of baked in a relatively flat second half in our guidance, so I don't think the improvement is necessary -- or an improvement is necessary in Latin America for us to hit our revenue guidance.

But we're going to see some benefits in some markets like the Middle East and in some other areas that we've been working hard on. Those are where some of our opportunities are.

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

Ron, you've talked about a pretty quick payback on restructuring across the company and in your MHPS business. How realistic is it that you get that sort of one-year payback? What's your confidence level about that, given it's Europe, it's hard to sort of do these kinds of things? So how confident are you that you can get it here in 2014?

Highly confident. These are definable, already determined individuals for the most part. And we're well on the road to having negotiated conclusions with virtually all of what we've announced. This is why in the previous quarter -- on the previous quarter conference call, we gave you the indication that we were going to do this, because we already started the process.

Got you. And then maybe a follow-up on MHPS. One of your main competitors has talked about a pretty big pickup, maybe even a record intake in its service business in overhead Cranes in 2Q. Have you seen any of that yet? I mean, you talked about 1Q being pretty weak. Did you see any rebound in that service business as we went into 2Q?

Steve, do you want to comment on that?

Yes, sure. Andrew, our business has pretty much been flat quarter -- Q1 this year to Q1 -- Q2 this year. Q2 last year to Q2 this year, services was a little bit off, but single digits minor stuff, mainly driven by some of the slowness in Europe. So I pay attention to my business, I don't know who the competitor is, but I'd be surprised if they're not seeing some slowdown in that side of the business also.

Steve, are you seeing -- how is your share? Are you maintaining share? Or have you still been losing share in that business?

I think we're probably maintaining share. I think we lost some share in the past couple of years, but I think we're maintaining that at this point.

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

Just -- if you look at Slide 15, I mean, your Crane backlog, Ron, has been shrinking pretty steadily for the last 2 years, and it fell again in the second quarter, and you cited negative product mix. Can you just talk a little bit more about what's happening with the long-term steady downtick in the Crane backlog. Getting away from the noise of what's happened in -- since April and what's expected in the third quarter, why does the backlog for the Cranes business seem to go down every single quarter? And on the back of that, your new guidance is implying -- it seems to be implying second half earnings acceleration for Cranes. I realize that you highlighted some of the challenges but why forecast earnings acceleration for Cranes if you've got some notable headwinds and don't know necessarily when some of the orders are going to come through?

Well, a funny thing's happened here. Our backlog has gone down, but our shipments have stayed fairly flat. That's kind of odd, don't you think? I mean, backlog is an indicator, it is not the indicator. It is really how we convert an order taken in today to a shipment delivered tomorrow, okay? So we said, and I don't know how many times we can say this that the $815 million backlog of last year at this time included over $100 million of prepositioned orders by our customers, thinking that they would get pricing for the future year, and we canceled their orders. Our initiative is to get margins up and to get a return for the business that we have, okay? And that's what we continue to try and achieve, okay? I am not that focused just on backlog. We have to focus on geographic mix, we have to focus on product mix, and we have to focus on getting value out of our customer base. This is a business where historically, many of our customers expected us to inventory product for them and hold it after we produced it. Kevin Bradley started to change some of that, and Tim is continuing to execute on that, okay? So I realize, and I said this at the beginning, one of the hardest numbers we had was to achieve the incremental revenue in the back half of the year. That's why Tim Ford went through a painstaking analysis of the amount of quotes that he sees, the activity, how that compares with what it was 3 months ago. But we're not getting the complete closure on some of those deals. We think we can, but we're not completely sure. A business is about managing the broad spectrum of opportunities that we have, okay? We're probably a little bit aggressive in the Crane business, maybe we're not aggressive enough in the AWP business, okay? If you inspect each one individually, you'll find a speckle or a problem, and that's there. But, in general, please be careful about the backlog, because backlog is a indicator, it is not the indicator. And what you really want me to do is convert and have a healthy book-to-bill ratio, okay? That's what we're after and that's what we're trying to achieve. We share the backlog, because it's something that, historically, has been important to the company. But you could take a simultaneous position on here, and "Gee, look at that Material Handling & Port Solutions backlog, it's grown from $228 million to $860 million. My god, that business must be increasing tremendously." It's not, okay? So please, please, I've talked about this a lot. I want to make sure we don't misunderstand this.

But just Ron, on that point about trying to get the best mix you can, you did cite negative mix in your commentary. So what is -- what's happening there? Is that a competitive issue? Can you just elaborate a bit more on what's driving negative mix if you're trying to optimize the mix?

Yes, well, Tim said, our Australian business is down 25%. He said it's one of our more profitable businesses. That's the answer.

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

Ron or George, a lot of progress on the construction manufacturing footprint over the past 6 to 12 months. I'm wondering if you could just give us an update on any initiatives you have on the distribution side and any longer-term targets for distribution? And then Ron, on the portfolio discussion earlier, you didn't touch on ASVI. I am wondering if you could just talk about how that business has tracked in opportunity set?

George, do you want to comment on that?

Jerry, thank you very much for the question. And your point is well taken. Last year, we talked quite a bit about focusing on different channels to market. And I must say through the first half of the year, particularly in the U.K. and North America, we have really focused on the rental market on our Compact Equipment. And what you're seeing, even though our total segment sales are off by 29%, we have significant uptick on the compact side, specifically into the rental market and then also with our private label initiatives that we've been successful to close on in the first half of the year. And you can see the contribution that it's making. And this is also helped by our relationship with our AWP friends. So it's really helping the compact piece of our business, and we're going to continue on that as we go forward with those initiatives as we continue to work on some support from our larger equipment in the Construction segment.

And Ron or Tim, can you talk about, within the Crane business, what your customers are seeing in terms of utilization levels and pricing? Through the first quarter in the U.S., we're starting to see excellent price realization in crawlers. I'm wondering if that continued into the second quarter based on your customer discussions? And if you could, just touch on what your customers' seeing, utilization and pricing in Europe as well?

Jerry, I would say the utilization rates are commensurate to the overall economic condition of the geography. So North America utilization rates and pricing -- utilization rates are high and pricing is improving. Europe utilization rates are mediocre and pricing is challenging. Middle East, they're very high, and pricing is very strong. So I think it depends on which market you're focusing on, And you can almost draw a straight line between the kind of economic conditions of that geography and the utilization rate and the pricing.

And Tim, just briefly, on Latin America, a lot of volatility in that market for Cranes. Can you just talk about how much visibility you have there? And 6- to 12-month outlook.

Well, I have as much visibility there as I have in any other market. As I mentioned earlier on the call, I hold a weekly sales meeting with our global sales leaders to review their quotations and activities. And I would say, the opportunity that we see in Latin America, it's been modestly improving over the past couple of months, but it's not robust at this point for sure.

Your next question comes from the line of Eric Crawford, UBS.

On AWP, the commentary on improvement in Europe's positive clearly, but with North America, the key driver -- I'm just curious, the longer term AWP growth you see equally spread out between geographies and if there's any -- if you see any potential risk that demand in North America plateaus?

Yes. Eric, the indications we have from the customer base today is that the environment -- market environment utilizations, age of fleet, all indicate continued positive trends in the North American market. And certainly, that's built into what we think is going to happen. Having said that, I think, you go back to what are a couple of irrefutable facts. One, they bought a ton of equipment between 2004 through 2008. That equipment is now getting older by the minute and in order to just maintain the average age of their fleet, they got to buy a bunch of equipment. So that factor, as long as there's not a fundamental decline in demand, is going to drive replacement. The second factor that's important is rate of growth. We've now seen the Architectural Billing Index, which is an important indicator for this business, remain strong and get better. If you couple growth over a extended period of time with age of fleet, you end up with a pretty good market, and that's what we expect. And then if you add to that a developing and strong Latin American market, maybe not a great recovering European market but at least, a no-longer-declining market and a moderately improving market, with an Asian business opportunity, you end up with a pretty darn strong AWP business. And that's what gives us confidence. And unless there's a substantive, global economic downturn, I think this business is in for a number of really decent years.

That's great. And then, lastly, just not to beat a dead horse on portfolio management, but I'm curious if you could speak a bit more about the pruning geographies comment. Does that refer only to selling businesses to another player? Or does it also include winding down via lack of investment? Maybe just how you're framing the puts and takes more broadly.

Well, Eric, I don't ever want to think that we've got a dead horse around here. Once it's dead, we'll tell you it's buried. But I think it's a question. We've made substantial investments in geographies, okay? And it's paid good dividends for us. However, we've seen meaningful changes in some geographic performance. The Indian outlook or the outlook for the country of India isn't very good. So we're going to examine our cost structure in India and make some changes. The same thing could be said in Latin America. So we want to be responsive to those things. I think our investment in China is for the long term, but we want to examine all of our areas of investment to make sure where we've got them properly positioned. So all I'm trying to say to everyone on the call here is that we're sensitive to the realities of the market. Where we've made investments, and we have gotten returns, we'll keep those investments in place, and where there's pullbacks, we have a responsibility to make adjustments.

And your final question will come from the line of Seth Weber with RBC Capital Markets.

Adam on here for Seth. Two quick ones here. One on the mix of independent rental companies stepping up right now. What you're seeing now -- you're seeing in backlog, in your quotation activity there? And just, secondly, on MHPS, the service component. Is there some catch-up that might come? Or is that sort of track with the activity of the ports?

Yes, I'll answer the last question, then I'll turn the first question over to Matt. I don't think there's any catch up here. I think that opportunity is behind us. I don't think people catch up on service, in general. I do think as utilization improves in overhead cranes, et cetera, in factories, they will get them serviced again. So I don't think there's a catch up implied in our forward outlook. But there's a more realistic assessment of what our forward outlook is. In AWP, why don't you answer that question, Matt?

Yes. They're independents, they continue to be significant and important to us. And if you look at year-over-year, the percentage of independents actually improved in the first half, which is a good sign for us in the -- if you look at them, they are the niche players, and they typically -- they continue to buy through Q3 and Q4, where some of the large consolidators are heavy in the first half of the year. So the other thing with the independents is they are able to get financing down. So we continue to see them in the market, and we see them being healthy.

Very good. All right. Well, I want to thank everybody for participating in our call today. Obviously, Tom, Kevin, myself and the rest of the management team are here to respond to any additional follow-up questions you have. We look forward to answering and addressing any and all of those questions. Thank you very much for your interest.

Thank you for your participation in today's Terex Corporation Second Quarter 2013 Financial Results Conference Call. You may now disconnect. Speakers, hold the line.