- Net sales increased over 30 percent to a new record of $554 million
- Cash flow from operations reached $70 million
WESTPORT, Conn.--(BUSINESS WIRE)--April 26, 2000-- Terex Corporation (NYSE:TEX) today announced first quarter 2000 net income of $20.1 million, or $0.71 per share, on an after-tax basis. Last year's first quarter net income, applying this year's effective tax rate of 32%, was $18.2 million, or $0.81 per share. As a result, on a comparable tax basis, this year's first quarter net income rose 10.4%. The reported first quarter of 1999 net income was $26.0 million, or $1.16 per share. Net sales increased 30.8% to a new record of $553.5 million in the first quarter of 2000 compared with year ago net sales of $423.3 million. Operating margin increased to 9.9% versus 9.6% in the first quarter of last year.
A financial summary is shown below:
Terex Corporation:
-----------------
First Quarter
--------------------------------------------
(Dollars in millions,
except per share amounts)
2000 1999
--------------------- ---------------------
% of Sales % of Sales
----------- -----------
Sales $ 553.5 $ 423.3
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Gross profit $ 96.7 17.5% $ 70.9 16.7%
SG&A 41.7 7.5% 30.4 7.2%
-------- --------
Operating profit 55.0 9.9% 40.5 9.6%
Interest and other (25.5) 4.6% (13.7) 3.2%
Income taxes (9.4) 1.7% (0.8) 0.2%
-------- --------
Net income $ 20.1 3.6% $ 26.0 6.1%
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Earnings per share $ 0.71 $ 1.16
Backlog $ 392.2 $ 385.1
EBITDA $ 65.3 11.8% $ 45.8 10.8%
Shares outstanding 28.4 22.5
First Quarter 2000
"We are pleased with Terex's performance during the first quarter of 2000 as it reflects the changes in our tactics and the markets we compete in," said Ronald M. DeFeo, Terex Chairman and Chief Executive Officer. "We are benefiting from the acquisitions we made in 1999 and from our business model which minimizes fixed costs and provides us with the speed and agility to react as markets change. The generation of $70 million of operating cash flow during the first quarter should indicate that we are well on our way towards our objective of generating at least $200 million of free cash flow this year. Furthermore, this quarter's performance is consistent with our estimated earnings of $3.25 to $3.50 per share for 2000."
Mr. DeFeo added, "Like the rest of the industry, we have been affected by slowing machinery markets. However, our portfolio management, diversification and low cost structure are showing their benefits. Specifically, 1999 acquisitions contributed an incremental $193 million of revenues and $21 million of operating profit during the first quarter. Excluding 1999 acquisitions, our revenues in the first quarter of 2000 declined 15% from the first quarter of 1999. Despite this decline in revenues, our operating margin excluding 1999 acquisitions was 9.4%, or only 0.2 percentage points less than last year. We believe that our ability to hold margins while experiencing a 15% decline in revenues is primarily the result of the Terex business model."
Operating profit increased to $55 million, or 35.8% over the first quarter of last year, led by the impact of the 1999 acquisitions and the continued strength of several Lifting and Earthmoving product lines. Operating expenses as a percentage of sales increased from 7.2% to 7.5% reflecting the impact of the 1999 acquisitions and the completion of the Coal India order. Diluted shares increased to 28.4 million for the quarter compared to last year's quarter, reflecting mainly the offering of 5.5 million shares during 1999.
During the fourth quarter of 1999, as a result of the favorable resolution of its IRS audit for the years 1987 through 1989, the Company was able to capitalize certain deferred tax assets, which resulted in a change in the reported tax rate from 3% in the first quarter of 1999 to 32% in the first quarter of 2000. However, as a result of the continued availability of the deferred tax assets, taxes to be paid in cash remain minimal.
Business Unit Operating Performance
Terex Lifting:
-------------
First Quarter
--------------------------------------------
(Dollars in millions)
2000 1999
--------------------- ---------------------
% of Sales % of Sales
----------- -----------
Net Sales $ 223.7 $ 241.4
======== ========
Gross profit $ 38.6 17.3% $ 39.4 16.3%
SG&A 16.1 7.2% 14.9 6.2%
-------- --------
Operating profit $ 22.5 10.1% $ 24.5 10.1%
======== ========
Backlog $ 181.8 $ 222.5
First quarter 2000 revenues in the Lifting segment were $223.7 million, down 7.3% versus 1999. The decline in revenues was driven mainly by the softness in hydraulic mobile cranes caused by the continued fleet consolidation of the customer base, and the reduced level of activity in aerial work platforms due to last year's closing of the Milwaukee facility. Outside of those two product lines, tower cranes, lattice boom cranes and utility aerial devices continued to deliver strong performance in North America. The tower crane business continues to make further inroads in the U.S. as the versatility of the product is demonstrated. Continued strong results at the tower cranes and material handlers businesses and the impact of the 1999 acquisitions of Moffett and Kooi drove the improved performance in the European Lifting business.
Operating profit reached $22.5 million and operating margin was 10.1% for the first quarter of 2000, unchanged versus the first quarter of 1999 despite the reduced level of business activity at Terex's crane facilities and a modest increase in operating expenses. Operating expenses as a percentage of revenues increased from 6.2% in the first quarter of 1999 to 7.2% this quarter. The increase in operating expense ratio was driven primarily by the relatively higher level of operating expenses associated with the acquisitions made in late 1999.
"We are pleased with the first quarter results because our diversification strategy is working," said Fil Filipov, President of Terex Lifting. "We expect our revenue performance to continue to outpace our markets, reflecting continued market penetration for several of our product lines. We operate in a dynamic marketplace where we need to continuously expand our customer base in order to grow our markets, and the current slowdown in the hydraulic mobile crane markets gives us the opportunity to do just that. Despite the fact that we have grown our revenues tenfold over the past five years, we know there are substantial opportunities to further grow our franchise both internally and through acquisitions."
Terex Earthmoving:
-----------------
First Quarter
--------------------------------------------
(Dollars in millions)
2000 1999
--------------------- ---------------------
% of Sales % of Sales
----------- -----------
Net Sales $ 316.2 $ 180.7
======== ========
Gross profit $ 55.6 17.6% $ 31.7 17.5%
SG&A 24.2 7.7% 14.2 7.9%
-------- --------
Operating profit $ 31.4 9.9% $ 17.5 9.7%
======== ========
Backlog $ 209.5 $ 162.6
First quarter 2000 revenues in the Earthmoving segment reached $316.2 million, a 75.0% increase from last year's $180.7 million. The performance of the Powerscreen and Cedarapids acquisitions, as well as the continued growth and market penetration of Terex articulated and rigid trucks drove these results. The screening and crushing business generated $117.5 million of revenues as both Powerscreen and Cedarapids delivered better than expected revenues. The construction truck business (TEL) had a strong quarter, increasing 24% in the first quarter of 2000 versus the first quarter of 1999. The U.S. market led this performance followed by the European markets. Excluding last year's first quarter impact of $45 million from Coal India, the mining business posted a 40% increase in revenues.
Operating profit increased 79.4% to $31.4 million during the quarter, led by the impact of the acquisitions, higher volumes at TEL and continued focus on expense control. Operating margins benefited from all of the above improvements and grew to 9.9% this quarter from 9.7% last year. Operating expenses as a percent of revenues dropped from 7.9% during the first quarter of 1999 to 7.7% this quarter as a result of the volume leverage at TEL, the impact of the fourth quarter 1999 headcount reduction at O&K and the positive impact of the Powerscreen and Cedarapids integration actions.
"Despite continued weakness in the mining industry, our Earthmoving business posted record results," said Ernie Verebelyi, President of Terex Earthmoving. "Our mining business continues to demonstrate the strength of its franchise with new orders. During the quarter we received a significant order in excess of $13 million for the delivery of several MT4400 260-ton trucks and of the new MT5500 360-ton trucks and we also delivered our fourth RH400 hydraulic excavator to a Canadian customer. Our construction truck business continues to break new records in terms of orders and market penetration, and the acquisitions of Powerscreen and Cedarapids have created a very profitable business that is expected to show meaningful growth going forward."
Outlook
"We expect this year to continue to be a challenging one requiring outstanding execution to achieve our results," said Ron DeFeo. "We believe we are up to the challenge and are buoyed by the integration success we are having at both Powerscreen and Cedarapids, although neither is yet fully hitting on all cylinders. Certain customer order patterns, especially in the crane business, have been sporadic and we have reduced manufacturing schedules accordingly. However, in other areas we are increasing production schedules. From a seasonal standpoint, due to the timing of certain large orders that are expected to be delivered during the second half of this year, we expect the financial performance for the second half of the year to be slightly better than the first half. Our full year expectations remain unchanged."
Capital Structure
"We made significant progress during the first quarter in delivering on our commitment to reduce working capital and generate free cash flow," said Joseph F. Apuzzo, Chief Financial Officer. "Of the cash flow, approximately half was generated through operating income and depreciation (EBITDA) and half through management of operating assets and liabilities. Cash flow from operations was $70 million, leaving net debt at the end of the first quarter at approximately $946 million."
Safe Harbor Statement
The above contains forward-looking information based on the Company's current expectations. Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond Terex's control, include, among others, the sensitivity of construction and mining activity to interest rates, government spending and general economic conditions; the success of the integration of acquired businesses; the retention of key management; foreign currency fluctuations; pricing, product initiatives, and other actions taken by competitors; the effect of changes in laws and regulations; the continuing use of net operating loss carryovers; the effect of debt and restrictive covenants; and other factors, risks and uncertainties more specifically set forth in Terex's public filings with the SEC. The forward-looking statements herein speak only as of the date of this release. Terex expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement included in this release to reflect any changes in Terex's expectations with regard thereto or any changes in events, conditions, or circumstances on which any such statement is based.
Terex Corporation is a diversified global manufacturer based in Westport, Connecticut, with 2000 pro forma annual revenues in excess of $2 billion. Terex is involved in a broad range of construction, infrastructure and mining-related capital equipment operating in two segments -- Terex Earthmoving and Terex Lifting. Terex Earthmoving manufactures and sells heavy-duty off-road trucks and high-capacity surface mining trucks under the brand names of Terex, Unit Rig and Payhauler, as well as large hydraulic mining shovels under the brand name O&K. Terex recently entered the infrastructure building business with the acquisitions of Powerscreen and Cedarapids. Terex Lifting manufactures and sells telescopic mobile cranes, lattice boom cranes, tower cranes, aerial work platforms, utility aerial devices, telescopic material handlers, truck mounted lift trucks, truck mounted cranes, and related products, under the brand names Terex, Lorain, PPM, P&H, Franna, Marklift, Koehring, Bendini, Simon, RO, Telelect, Square Shooter, Holland Lift, American, Italmacchine, Peiner, Comedil, Matbro, Moffett, Kooi and Princeton.
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
(Unaudited)
First Quarter
---------------------------
2000 1999
------------- -------------
Net sales $ 553.5 $ 423.3
Cost of goods sold 456.8 352.4
------- -------
Gross profit 96.7 70.9
Selling, general
and administrative
expenses 41.7 30.4
------- -------
Income from
operations 55.0 40.5
Interest and
other expenses, net (25.5) (13.7)
------- -------
Income before
income taxes 29.5 26.8
Provision for
income taxes (9.4) (0.8)
------- -------
Net income $ 20.1 $ 26.0
======= =======
PER COMMON SHARE:
Basic
Income before
extraordinary items $ 0.73 $ 1.25
Extraordinary loss
on retirement of debt -- --
------- -------
Net income $ 0.73 $ 1.25
======= =======
Diluted
Income before
extraordinary items $ 0.71 $ 1.16
Extraordinary loss
on retirement of debt -- --
------- -------
Net income $ 0.71 $ 1.16
======= =======
Weighted average number of
shares outstanding in per
share calculation:
Basic 27.5 20.8
Diluted 28.4 22.5
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In millions, except par value)
(Unaudited)
March 31, Dec. 31,
2000 1999
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $ 186.2 $ 133.3
Trade receivables (less allowance
of $5.6 and $5.8 as of
March 31, 2000 and
December 31, 1999, respectively) 417.7 429.2
Net inventories 635.6 665.6
Deferred Taxes 47.2 47.2
Other current assets 51.1 40.0
--------- ---------
Total Current Assets 1,337.8 1,315.3
LONG-TERM ASSETS
Property, plant and
equipment - net 155.3 172.8
Goodwill 547.0 554.7
Deferred Taxes 48.0 55.3
Other assets 78.3 79.4
--------- ---------
TOTAL ASSETS $ 2,166.4 $ 2,177.5
========= =========
CURRENT LIABILITIES
Notes payable and current
portion of long-term debt $ 62.3 $ 57.6
Trade accounts payable 317.6 297.0
Accrued compensation and benefits 32.9 27.3
Accrued warranties and product
liability 53.3 55.9
Other current liabilities 127.9 141.7
--------- ---------
Total Current Liabilities 594.0 579.5
NON CURRENT LIABILITIES
Long-term debt, less
current portion 1,069.8 1,098.8
Other 66.1 66.4
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Warrants to purchase
common stock 0.8 0.8
Equity rights 0.8 0.8
Common Stock, $0.01 par value --
Authorized 150.0 shares;
issued 27.6 and 27.5 shares at
March 31, 2000 and
December 31, 1999, respectively 0.3 0.3
Additional paid-in capital 356.0 355.0
Retained earnings 112.1 92.0
Accumulated other comprehensive
income (31.6) (16.1)
Less cost of shares of common
stock in treasury
(0.1 shares at March 31, 2000) (1.9) --
--------- ---------
Total Stockholders' Equity 436.5 432.8
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,166.4 $ 2,177.5
========= =========
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
March 31,
----------------------------
2000 1999
------------- -------------
OPERATING ACTIVITIES
Net income $ 20.1 $ 26.0
Adjustments to reconcile net
income to cash used in
operating activities:
Depreciation 5.8 3.2
Amortization 5.4 2.7
(Gain) loss on sale of
fixed assets (0.2) --
Deferred taxes 7.3 --
Changes in operating
assets and liabilities
(net of effects of
acquisitions):
Trade receivables 9.3 (108.3)
Net inventories 24.0 (17.3)
Trade accounts payable 21.3 32.8
Other, net (22.5) 9.2
------ ------
Net cash provided by
(used in) operating
activities 70.5 (51.7)
------ ------
INVESTING ACTIVITIES
Acquisition of businesses,
net of cash acquired (0.3) --
Capital expenditures (5.4) (4.4)
Proceeds from sale of assets 7.7 0.1
------ ------
Net cash provided by
(used in) investing
activities 2.0 (4.3)
------ ------
FINANCING ACTIVITIES
Net repayments under
revolving line of credit
agreements (15.3) (11.2)
Principal repayments of
long-term debt (2.5) (31.4)
Proceeds from issuance of
long-term debt, net of
issuance costs -- 94.9
Other (1.1) 0.1
------ ------
Net cash provided
by (used in) financing
activities (18.9) 52.4
------ ------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS
(0.7) 0.5
------ ------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 52.9 (3.1)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 133.3 25.1
------ ------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 186.2 $ 22.0
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