WESTPORT, Conn.--(BUSINESS WIRE)--April 25, 2007--Terex
Corporation (NYSE: TEX) today announced income from continuing
operations for the first quarter of 2007 of $113.8 million, or $1.09
per share, compared to income from continuing operations of $76.9
million, or $0.75 per share, for the first quarter of 2006. Income
from continuing operations for the first quarter of 2007 included a
$12.5 million pretax charge related to the early extinguishment of the
Company's 9-1/4% Senior Subordinated Notes, which negatively impacted
earnings per share by $0.08. Net sales reached $2,012.7 million in the
first quarter of 2007, an increase of 18.8% from $1,693.9 million in
the first quarter of 2006. The increase in net sales versus the prior
year period was favorably impacted 1.7% by an acquisition and 4.7% by
the effect of currency exchange rates. Debt, less cash and cash
equivalents, increased in the first quarter of 2007 by $187 million
from December 31, 2006 levels. All per share amounts are on a fully
diluted basis.
"We continue to be very pleased with the strong performance of our
overall business," commented Ronald M. DeFeo, Terex's Chairman and
Chief Executive Officer. "Terex continues to mature, strengthen and be
a more capable enterprise in all facets of its business. Given these
continued steps forward, and a global economy that we anticipate to
remain robust for the foreseeable future, we remain positive in the
outlook for our financial performance."
"We gauge our financial progress as an organization by certain key
metrics," added Mr. DeFeo. "Of note this quarter, we made a 2.3
percentage point improvement in our gross margin, driven by a
combination of better manufacturing leverage and the positive impact
of pricing initiatives in excess of cost pressures. This results in an
incremental gross margin of almost 33%. The improvements in gross
margin translated to a strong increase in overall operating
profitability, with operating margin increasing 1.6 percentage points
over the comparable 2006 quarter, and results in a Return on Invested
Capital ("ROIC") of approximately 39.7% for the twelve months ended
March 31, 2007."
Tom Riordan, Terex's President and Chief Operating Officer,
commented, "While the overall performance of our business was
positive, we need to increase our vigilance and focus on reducing
working capital in our businesses. Our working capital remains higher
than we would like, highlighting the operational and production
challenges that we need to face going forward, including improving
production and supplier scheduling coordination and capability.
Working capital increased in the first quarter of 2007 due to the
preceding items, as well as to support the rapid increase in demand
expected for the upcoming seasonally strong delivery period."
Mr. Riordan continued, "We continue to benefit from an operating
environment that is poised to produce another year of significant
growth, as evidenced by our backlog of approximately $3.4 billion at
the end of the first quarter of 2007, up 56% from our backlog at March
31, 2006. Our North American Crane businesses, specifically rough
terrain cranes and boom trucks, rebounded sharply in terms of demand
compared with this same time last year, and the backlog for our German
large crawler cranes has increased in response to large infrastructure
projects in Asia, the Middle East and Africa. Our Mining business
backlog reflects the impact of recent large equipment orders from
China and Australia. Both our Construction and Aerial Work Platforms
businesses are experiencing rapidly increasing European demand. While
backlog is an indicator that highlights demand and production
capabilities, both good and bad, we are encouraged by the high level
of order activity surrounding Terex products."
"In February, we provided earnings guidance for our 2007
performance, indicating that we anticipated earnings per share to be
between $5.00 and $5.40 per share, including the impact of certain
one-time items such as the costs associated with the early retirement
of debt, and we expected net sales to be between $8.2 and $8.5
billion," Mr. DeFeo added. "This would represent a 29-39% EPS increase
versus 2006. Given our performance this quarter, balanced with the
uncertainties surrounding a few of our end markets, we now anticipate
sales and earnings per share for 2007 to be at the high end of our
previously provided range. We remain confident about our business
prospects for the remainder of 2007."
In this press release, Terex refers to various non-GAAP (U.S.
generally accepted accounting principles) financial measures. These
measures may not be comparable to similarly titled measures being
disclosed by other companies. Terex believes that this information is
useful to understanding its operating results and the ongoing
performance of its underlying businesses. Non-GAAP financial measures
are shown in italics the first time referenced and are described in a
Glossary at the end of this press release.
Three months ended March 31,
----------------------------
2007 2006
------------- -------------
(in millions, except per
share amounts)
----------------------------
Net sales $ 2,012.7 $ 1,693.9
------------- -------------
Gross profit $ 412.0 $ 307.5
SG&A 211.3 165.6
------------- -------------
Income from operations 200.7 141.9
Interest and other (6.2) (21.2)
Loss on early extinguishment of debt (12.5) -
------------- -------------
Income before income taxes from
continuing operations 182.0 120.7
Income taxes (68.2) (43.8)
------------- -------------
Income from continuing operations 113.8 76.9
Income from discontinued operations-net
of tax - 1.9
------------- -------------
Net income $ 113.8 $ 78.8
============= =============
Earnings per share $ 1.09 $ 0.77
EBITDA $ 218.5 $ 159.7
Backlog $ 3,413.0 $ 2,181.1
Average Fully Diluted Shares Outstanding 104.7 102.4
Segment Performance
All segment performance data for both 2007 and 2006 is presented
in accordance with U.S. GAAP, other than backlog, which is a non-GAAP
measure that is further described in the Glossary included at the end
of this release. The 2006 results exclude the performance of the Tatra
heavy duty on and off road truck business, which was sold in September
2006, and is now included in the financial statements as a
discontinued operation.
Terex Aerial Work Platforms
Three months ended March 31,
-----------------------------------------
(in millions)
-----------------------------------------
2007 2006
-------------------- --------------------
% of % of
Net Sales Net Sales
--------- ---------
Net sales $ 547.7 $ 458.5
========== ==========
Gross profit $ 146.4 26.7% $ 117.0 25.5%
SG&A 47.1 8.6% 37.1 8.1%
---------- ----------
Income from operations $ 99.3 18.1% $ 79.9 17.4%
========== ==========
Backlog $ 675.5 $ 763.7
Net sales for the Terex Aerial Work Platforms segment for the
first quarter of 2007 increased $89.2 million, or 19.5%, to $547.7
million from $458.5 million in the first quarter of 2006. Strong
international demand, particularly from Europe, drove the net sales
increase, supported by solid demand fundamentals in the U.S. market.
Gross margin for the quarter was 26.7%, compared to 25.5% for the
quarter ended March 31, 2006, and was favorably impacted by continued
production efficiencies, increased net sales volume and the effect of
prior pricing actions in international markets. SG&A expenses for the
first quarter of 2007 were $47.1 million, or 8.6% of net sales,
compared to $37.1 million, or 8.1% of net sales, for the first quarter
of 2006. The increase was due to expenditures to support the growth of
the European market and the recently opened Middle East sales and
service office, combined with increased trade show expenses incurred
primarily in the United States. Income from operations increased to
$99.3 million, or 18.1% of net sales, in the first quarter of 2007,
from $79.9 million, or 17.4% of net sales, in the first quarter of
2006.
"The Terex AWP team is pleased with the overall results achieved
for the first quarter," said Tim Ford, President - Terex Aerial Work
Platforms. "With regard to the U.S. market, demand remains quite
favorable. However, unlike the previous two years, where customers
ordered early in the year to ensure delivery, industry wide supply has
generally come into balance with demand. International demand is
exceedingly strong. In response, we allocated a significant amount of
our first quarter production to international markets, particularly
Western Europe. We continue to forecast strong international growth
for 2007, favorably driving results for our segment. One of our
challenges, however, is the time required to ship products from U.S.
manufacturing sites to our overseas customers. We are addressing this
by producing aerial work platforms in Europe. We began production this
April of a Z-boom product at our facility in Italy, and a second
Z-boom model is slated to begin production there later in the year."
Mr. Ford continued, "Reflective of this shift in demand, our
working capital has increased as the amount of finished goods in
transit to international markets has increased. We expect to operate
with a higher level of working capital than we have historically
required until we achieve a more significant level of production in
Europe."
Terex Construction
Three months ended March 31,
-----------------------------------------
(in millions)
-----------------------------------------
2007 2006
-------------------- --------------------
% of % of
Net Sales Net Sales
--------- ---------
Net sales $ 407.8 $ 333.5
========== ==========
Gross profit $ 50.4 12.4% $ 37.9 11.4%
SG&A 44.3 10.9% 34.9 10.5%
---------- ----------
Income from operations $ 6.1 1.5% $ 3.0 0.9%
========== ==========
Backlog $ 598.8 $ 250.2
Net sales in the Terex Construction segment for the first quarter
of 2007 increased $74.3 million, or 22.3%, to $407.8 million from
$333.5 million in the first quarter of 2006. Strong global
non-residential construction trends drove the net sales increase, with
particular strength in Europe for compact construction equipment and
globally for heavy trucks. In addition, the impact of currency
exchange rates accounted for approximately one third of the net sales
increase. Backlog increased $348.6 million as compared to the first
quarter of 2006, impacted by both strong customer demand, particularly
in Europe, and certain supplier constraints that limited the Company's
production capability in the quarter. Gross margin for the first
quarter of 2007 of 12.4% improved from the prior year's first quarter
gross margin of 11.4% due to production cost efficiencies from
increased volume as well as favorable pricing actions, offsetting
currency challenges resulting from selling products into the North
American market that are manufactured in Terex's European locations.
SG&A expenses for the first quarter of 2007 were $44.3 million, or
10.9% of net sales, compared to $34.9 million, or 10.5% of net sales,
in the first quarter of 2006. Increased SG&A expenses, as compared to
the 2006 period, reflect increased engineering costs associated with
product improvements, the impact of currency exchange rates and
increased selling costs resulting from improving the global sales and
support network. Income from operations for the quarter was $6.1
million, or 1.5% of net sales, compared to income from operations of
$3.0 million, or 0.9% of net sales, for the first quarter of 2006.
"The markets for our construction equipment are favorable and
demand is strong, particularly in Europe and Africa," commented Robert
Isaman, President - Terex Construction. "We need to concentrate on
supply chain management, demand planning, and production efficiencies
to lower our total cost structure. Some of our suppliers have not been
able to increase their production to the rates we require,
particularly for our material handlers and hydraulic excavators. We
continue to work with these suppliers, as well as evaluating and
establishing alternative supplier arrangements, including sourcing
from lower cost suppliers throughout the world."
Mr. Isaman added, "Overall, demand for our products remains
strong. We are seeing a continued general softening in the U.S. market
for compact construction equipment, but this has been more than offset
by strong demand for compact construction equipment in Germany and
Europe in general. The Terex Construction segment has a much stronger
presence in Europe than in North America, so we should continue to
benefit from the strong and growing demand in Europe as these
economies continue to expand."
Terex Cranes
Three months ended March 31,
-----------------------------------------
(in millions)
-----------------------------------------
2007 2006
-------------------- --------------------
% of % of
Net Sales Net Sales
--------- ---------
Net sales $ 500.8 $ 368.7
========== ==========
Gross profit $ 99.6 19.9% $ 55.2 15.0%
SG&A 46.6 9.3% 29.2 7.9%
---------- ----------
Income from operations $ 53.0 10.6% $ 26.0 7.1%
========== ==========
Backlog $ 1,285.9 $ 634.2
Net sales in the Terex Cranes segment for the first quarter of
2007 increased $132.1 million to $500.8 million from $368.7 million in
the first quarter of 2006, reflecting improvement in all product
categories and expansion into the Asian market, as well as the
favorable impact of currency exchange rates. Terex's acquisition of a
controlling 50% ownership interest in a Chinese crane manufacturer in
April 2006 accounts for approximately one-fifth of the growth in net
sales in the quarter. Excluding the impact of currency exchange rates
and this acquisition, net sales grew approximately 22%. SG&A expenses
increased in the first quarter of 2007 to $46.6 million, or 9.3% of
sales, higher as a percentage of sales when compared to the first
quarter of 2006 rate of 7.9% on $29.2 million of SG&A expenses. This
was mainly due to increased investment in sales and administrative
infrastructure to support increasing sales and production volumes, a
$4.5 million increase in the corporate expense allocation, the impact
of currency exchange rates, and the Chinese crane acquisition. Income
from operations was positively impacted by higher sales volume and
prior pricing actions and increased $27.0 million to $53.0 million, or
10.6% of sales, for the first quarter of 2007, from $26.0 million, or
7.1% of sales, for the first quarter of 2006.
"Overall, the Terex Cranes segment continued to build on the
significant internal growth experienced in 2006," commented Steve
Filipov, President - Terex Cranes. "The market for cranes worldwide
remains outstanding, with increasing global demand for our products
resulting in a historically high level of backlog. More specifically,
demand in North America continues to be strong, and increasing
infrastructure and energy related requirements in emerging economies
are also driving demand."
Mr. Filipov continued, "The challenge we face is meeting this
demand. Our factory performance continues to improve, best reflected
by our income from operations for the first quarter of 2007 having
more than doubled from the first quarter of 2006 on sales growth of
36%. Despite factory performance improvements in all crane product
categories, the unprecedented current demand continues to stress our
supply chain and our internal operations, such as welding
capabilities. We have addressed and will continue to address the
limited supply of certain components and production bottlenecks
through improved coordination with our suppliers and implementation of
lean principles to better utilize our manufacturing footprint. Our
ability to rapidly succeed on these productivity improvement
initiatives creates continued room to drive significant financial
improvements going forward."
Mr. Filipov added, "Our Chinese crane manufacturer had a terrific
quarter and is launching a new 50-ton truck crane at Bauma, the
world's largest construction industry trade show, targeting the
African, Middle Eastern and South American markets. This will enable
us to better position ourselves in these markets through improved
availability and a product suited for current demand."
Terex Materials Processing & Mining
Three months ended March 31,
-----------------------------------------
(in millions)
-----------------------------------------
2007 2006
-------------------- --------------------
% of % of
Net Sales Net Sales
--------- ---------
Net sales $ 395.3 $ 380.9
========== ==========
Gross profit $ 90.3 22.8% $ 76.3 20.0%
SG&A 43.9 11.1% 35.3 9.3%
---------- ----------
Income from operations $ 46.4 11.7% $ 41.0 10.8%
========== ==========
Backlog $ 700.1 $ 323.5
Net sales for the Terex Materials Processing & Mining segment for
the first quarter of 2007 increased $14.4 million to $395.3 million
from $380.9 million in the first quarter of 2006. The increase in net
sales was attributable to the continued growth of the mobile crushing
and screening product lines, as well as increased sales from drilling
products, and the impact of currency exchange rates, offset by a
softer than anticipated first quarter for larger mining equipment.
While strong demand continued, net sales for mining products were
lower than in the first quarter of 2006 due to the timing of
deliveries, mainly due to supplier constraints. Strong demand
contributed to the 116% growth in backlog, including the recently
announced order for approximately $93 million of large mining
equipment from Fortescue Metals Group Ltd. SG&A expenses increased in
the first quarter of 2007 to $43.9 million as compared to $35.3
million in the first quarter of 2006, primarily due to increased costs
to build support infrastructure and assist with sales growth, as well
as a $2.8 million increase in the corporate expense allocation.
Overall, income from operations increased to $46.4 million, or 11.7%
of sales, in the first quarter of 2007, from $41.0 million, or 10.8%
of sales, in the first quarter of 2006, reflecting a more favorable
sales mix and the impact of prior pricing actions.
"Overall, we are pleased with our first quarter results,"
commented Rick Nichols, President - Terex Materials Processing &
Mining. "The materials processing businesses have posted strong sales
growth of 16.9% over the prior year quarter, excluding the impact of
currency movements, and backlog has grown significantly. While sales
in the North American markets have been flat compared to the first
quarter of 2006, we are continuing to see strong global demand.
Emerging economies, such as China, India, Latin America and Russia,
are expected to continue to grow at a significant rate. These
economies have fueled demand, driven by increased infrastructure
spending associated with non-residential and municipal activities, and
we remain optimistic about future growth and the related impact on our
businesses."
Mr. Nichols continued, "With regard to our mining products, in the
quarter we saw significant contribution from our parts business on our
installed base of equipment. We expect this trend to continue, and
this should be instrumental in delivering strong incremental margin
going forward. However, we did experience a slowdown in new mining
equipment sales in the quarter. We continue to see all of the elements
that support an extended mining cycle, with our views influenced by
the overall strength of the global economy and the significantly
increasing demands of both industrial and emerging economies for
energy and raw material, but we will monitor the unfolding trends
carefully."
Terex Roadbuilding, Utility Products and Other
Three months ended March 31,
-----------------------------------------
(in millions)
-----------------------------------------
2007 2006
-------------------- --------------------
% of % of
Net Sales Net Sales
--------- ---------
Net sales $ 178.8 $ 179.0
========== ==========
Gross profit $ 24.1 13.5% $ 24.0 13.4%
SG&A 21.7 12.1% 16.5 9.2%
---------- ----------
Income from operations $ 2.4 1.3% $ 7.5 4.2%
========== ==========
Backlog $ 152.7 $ 209.5
Net sales for the Terex Roadbuilding, Utility Products and Other
segment for the first quarter of 2007 were essentially flat at $178.8
million, versus $179.0 million for the first quarter of 2006. SG&A
expenses for the first quarter of 2007 were $21.7 million, or 12.1% of
sales, compared to $16.5 million, or 9.2% of sales, in the first
quarter of 2006, reflecting increased engineering costs for product
development, an increase in the corporate expense allocation, as well
as continued investment in the administrative support functions in
this segment, mainly in the Terex Financial Services operation. Income
from operations decreased to $2.4 million, or 1.3% of sales, from $7.5
million, or 4.2% of sales, in the first quarter of 2006.
"There were many things that impacted this reporting segment's
performance in the first quarter," commented Tom Riordan. "Overall,
our Roadbuilding and Utility Products businesses give us reason for
optimism moving forward. For our Utility Products business, market
conditions remain generally solid, and our ability to timely deliver
product is better now than it has been in some time, resulting from
both better capacity planning efforts and better flow lines at our
installation locations. For our Roadbuilding business, the demand for
our asphalt and concrete plants, along with paving equipment, continue
to show signs of strength. This can be attributed to the strong demand
for new commercial infrastructure and funding related to the domestic
U.S. highway bill that is beginning to impact the industry. However,
our concrete mixing truck business continues to reflect the impact of
a softer U.S. residential housing construction market, which we expect
to continue for the near term, and this has been the primary
contributor to the decline in backlog versus the prior year in this
reporting segment."
Mr. Riordan continued, "In the quarter, we recognized losses of
$3.5 million related to the continued wind down of the Company's
re-rental fleet and certain charges incurred with respect to a
distribution joint venture which we consolidate within this segment.
We would anticipate the results of this business segment in the future
to more closely reflect the improving trends of the roadbuilding and
utility product end-markets."
Terex Corporate / Eliminations
Three months ended March 31,
-----------------------------
(in millions)
-----------------------------
2007 2006
-------------- --------------
Net sales $ (17.7) $ (26.7)
============== ==============
Loss from operations $ (6.5) $ (15.5)
============== ==============
The reduction in loss from operations versus the prior year
reflects the increase of approximately $12 million in allocation of
corporate costs to the business segments in 2007 versus the prior
year. Corporate expense before allocations to the business segments
increased, as Terex continues to invest in Company-wide initiatives,
including supply management, manufacturing strategy, an enterprise
management system, marketing, and the Terex Business System.
Capital Structure and Taxes
"Debt decreased $85 million in the first quarter compared to the
December 31, 2006 level, reflecting the pay down of the remaining $200
million of the Company's 9-1/4% Senior Subordinated Notes in January
2007," commented Phil Widman, Senior Vice President and Chief
Financial Officer. "However, debt, less cash and cash equivalents,
increased $187 million to $273 million at the end of the first quarter
of 2007, from $86 million at the end of 2006, as the Company invested
in working capital in preparation for seasonally strong second quarter
sales and due to the payment of certain longer term incentive
compensation and taxes in the first quarter. Cash usage in the first
quarter is consistent with our comments provided at the beginning of
the year that cash flow will continue to closely reflect the seasonal
trends of our business. Debt, less cash and cash equivalents, was $342
million lower when compared with the same period last year, reflecting
the strong cash flow of 2006. Our interest expense in the quarter was
down $10.3 million versus the first quarter of 2006, reflecting the
payoff of $500 million of senior subordinated notes in the past year."
Mr. Widman continued, "Working capital as a percent of trailing
three month annualized sales was approximately 22% at the end of the
first quarter of 2007, as compared to approximately 19% at the end of
the first quarter in 2006. This reflects the impact of the increased
level of international business which is causing longer transport
times for finished goods, investment ahead of our traditionally
seasonally strong second quarter and supplier disruptions at certain
production locations. We are focused on improving our efficiency in
working capital management to enhance cash flow performance, where we
feel we have not yet reached our potential. We continue to target a
15% working capital to trailing three month annualized sales goal,
although this level is more challenging as we increase the
international aspects of our business. The Company's performance has
led to a ratio of Debt less cash and cash equivalents to total
capitalization of 12.9% at the end of the first quarter of 2007,
meaningful progress when compared to the approximate 32.6% result
achieved at March 31, 2006."
Commenting on the effective tax rate used in this release, Mr.
Widman stated, "The effective tax rate for continuing operations for
the first quarter of 2007 was 37.5%, compared to the effective tax
rate for continuing operations of 36.3% for the first quarter of 2006.
Discrete items during the first quarter of 2007 increased the
effective tax rate, due mainly to the tax expense associated with the
repayment of an intercompany loan and the early extinguishment of
debt. We continue to forecast a full year effective tax rate for
continuing operations of 36%. The effective tax rate can fluctuate
quarter to quarter as a result of discrete items and changes in the
assumptions related to the jurisdictional mix of income and valuation
allowances."
Safe Harbor Statement
The press release contains forward-looking information based on
Terex'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: Terex's business is highly
cyclical and weak general economic conditions may affect the sales of
its products and its financial results; Terex's business is sensitive
to fluctuations in interest rates and government spending; the ability
to successfully integrate acquired businesses; the retention of key
management personnel; Terex's businesses are very competitive and may
be affected by pricing, product initiatives and other actions taken by
competitors; the effects of changes in laws and regulations; Terex's
business is international in nature and is subject to changes in
exchange rates between currencies, as well as international politics;
Terex's continued access to capital and ability to obtain parts and
components from suppliers on a timely basis at competitive prices; the
financial condition of suppliers and customers, and their continued
access to capital; Terex's ability to timely manufacture and deliver
products to customers; possible work stoppages and other labor
matters; Terex's debt outstanding and the need to comply with
restrictive covenants contained in Terex's debt agreements; Terex's
ability to maintain adequate disclosure controls and procedures,
maintain adequate internal controls over financial reporting and file
its periodic reports with the SEC on a timely basis; the previously
announced investigations by the SEC and the Department of Justice;
limitations on Terex's ability to access the capital markets using
short form SEC documents; compliance with applicable environmental
laws and regulations; product liability claims and other liabilities
arising out of Terex's business; and other factors, risks,
uncertainties more specifically set forth in Terex's public filings
with the SEC. Actual events or the actual future results of Terex may
differ materially from any forward looking statement due to those and
other risks, uncertainties and significant factors. The
forward-looking statements 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 with 2006
net sales of approximately $7.6 billion. Terex operates in five
business segments: Terex Aerial Work Platforms, Terex Construction,
Terex Cranes, Terex Materials Processing & Mining, and Terex
Roadbuilding, Utility Products and Other. Terex manufactures a broad
range of equipment for use in various industries, including the
construction, infrastructure, quarrying, surface mining, shipping,
transportation, refining and utility industries. Terex offers a
complete line of financial products and services to assist in the
acquisition of Terex equipment through Terex Financial Services. More
information on Terex can be found at www.terex.com.
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months
Ended March 31,
---------------------
2007 2006
---------- ----------
Net sales $ 2,012.7 $ 1,693.9
Cost of goods sold 1,600.7 1,386.4
---------- ----------
Gross profit 412.0 307.5
Selling, general and administrative expenses 211.3 165.6
---------- ----------
Income from operations 200.7 141.9
Other income (expense)
Interest income 3.4 2.2
Interest expense (14.2) (24.5)
Loss on early extinguishment of debt (12.5) -
Other income (expense) - net 4.6 1.1
---------- ----------
Income from continuing operations before
income taxes 182.0 120.7
Provision for income taxes (68.2) (43.8)
---------- ----------
Income from continuing operations 113.8 76.9
Income from discontinued operations - net of tax - 1.9
---------- ----------
Net income $ 113.8 $ 78.8
========== ==========
PER COMMON SHARE:
Basic
Income from continuing operations $ 1.11 $ 0.77
Income from discontinued operations - 0.02
---------- ----------
Net income $ 1.11 $ 0.79
========== ==========
Diluted
Income from continuing operations $ 1.09 $ 0.75
Income from discontinued operations - 0.02
---------- ----------
Net income $ 1.09 $ 0.77
========== ==========
Weighted average number of shares outstanding in
per share calculation
Basic 102.2 99.8
========== ==========
Diluted 104.7 102.4
========== ==========
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
(unaudited)
March 31, December 31,
2007 2006
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 405.2 $ 676.7
Trade receivables (net of allowance of
$60.3 at March 31, 2007 and December
31, 2006) 1,137.7 950.5
Inventories 1,759.7 1,502.0
Deferred taxes 138.1 132.9
Other current assets 149.1 170.7
------------ ------------
Total current assets 3,589.8 3,432.8
LONG-TERM ASSETS
Property, plant and equipment - net 350.9 338.5
Goodwill 635.6 632.8
Deferred taxes 178.7 172.5
Other assets 195.6 209.3
------------ ------------
TOTAL ASSETS $ 4,950.6 $ 4,785.9
============ ============
CURRENT LIABILITIES
Notes payable and current portion of
long-term debt $ 17.2 $ 227.0
Trade accounts payable 1,143.1 1,034.3
Accrued compensation and benefits 148.2 169.3
Accrued warranties and product liability 113.5 107.6
Other current liabilities 494.7 489.0
------------ ------------
Total current liabilities 1,916.7 2,027.2
NON-CURRENT LIABILITIES
Long-term debt, less current portion 661.2 536.1
Other 520.8 471.6
------------ ------------
TOTAL LIABILITIES 3,098.7 3,034.9
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value - authorized
150.0 shares; issued 105.3 and 104.7
shares at March 31, 2007 and December
31, 2006, respectively 1.1 1.0
Additional paid-in capital 942.5 923.7
Retained earnings 784.6 707.3
Accumulated other comprehensive income 165.8 155.2
Less cost of shares of common stock in
treasury - 3.6 shares at March 31, 2007
and December 31, 2006 (42.1) (36.2)
------------ ------------
Total stockholders' equity 1,851.9 1,751.0
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,950.6 $ 4,785.9
============ ============
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Three Months
Ended March 31,
-------------------
2007 2006
--------- ---------
Operating Activities
Net income $ 113.8 $ 78.8
Adjustments to reconcile net income to cash used
in operating activities:
Depreciation 15.9 15.5
Amortization 2.4 3.2
Deferred taxes (2.6) 17.6
Loss on early extinguishment of debt 3.2 -
Gain on sale of assets (4.9) (0.6)
Stock-based compensation 15.7 13.7
Excess tax benefit from stock-based
compensation (10.8) (4.9)
Changes in operating assets and liabilities
(net of effects of acquisitions and
divestitures):
Trade receivables (182.3) (149.6)
Inventories (248.1) (92.6)
Trade accounts payable 102.8 65.3
Accrued compensation and benefits (30.4) 8.0
Income taxes payable 47.4 7.0
Accrued warranty and product liability 3.9 (4.1)
Other, net (16.8) 21.5
--------- ---------
Net cash used in operating activities (190.8) (21.2)
--------- ---------
Investing Activities
Acquisition of businesses, net of cash acquired - (15.2)
Capital expenditures (22.2) (14.1)
Investments in and advances to affiliates - (3.4)
Proceeds from sale of assets 8.9 -
--------- ---------
Net cash used in investing activities (13.3) (32.7)
--------- ---------
Financing Activities
Principal repayments of long-term debt (200.0) -
Excess tax benefit from stock-based compensation 10.8 4.9
Proceeds from stock options exercised 4.2 -
Net borrowings (repayments) under credit
facilities 115.1 (1.5)
Share repurchase (5.4) -
Other, net 2.3 (0.9)
--------- ---------
Net cash (used in) provided by financing
activities (73.0) 2.5
--------- ---------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 5.6 4.7
--------- ---------
Net Decrease in Cash and Cash Equivalents (271.5) (46.7)
Cash and Cash Equivalents at Beginning of Period 676.7 553.6
--------- ---------
Cash and Cash Equivalents at End of Period $ 405.2 $ 506.9
========= =========
GLOSSARY
In this press release, in an effort to provide investors with
additional information regarding the Company's results, Terex refers
to various non-GAAP (U.S. generally accepted accounting principles)
financial measures which management believes provides useful
information to investors. These measures may not be comparable to
similarly titled measures being disclosed by other companies. In
addition, the Company believes that non-GAAP financial measures should
be considered in addition to, and not in lieu of, GAAP financial
measures.
Terex believes that this information is useful to understanding
its operating results and the ongoing performance of its underlying
businesses. Management of Terex uses these non-GAAP financial measures
to establish internal budgets and targets and to evaluate the
Company's financial performance against such budgets and targets.
The amounts described below are unaudited, are reported in
millions of U.S. dollars, and are as of or for the period ended March
31, 2007, unless otherwise indicated.
Backlog is defined as firm orders that are expected to be filled
within one year. The disclosure of backlog aids in the analysis of the
Company's customers' demand for product, as well as the ability of the
Company to meet that demand. The backlog of Terex's business is not
necessarily indicative of sales to be recognized in a specified future
period.
Debt is calculated using the Consolidated Balance Sheet amounts
for Notes payable and current portion of long-term debt plus Long-term
debt, less current portion. It is a measure that aids in the
evaluation of the Company's financial condition.
Long term debt, less current portion $661.2
Notes payable and current portion of long-term debt 17.2
------------------------------------------------------- ---------
Debt $678.4
=========
EBITDA is defined as earnings before interest, taxes, depreciation
and amortization. The Company calculates this by adding the amount of
depreciation and amortization expenses that have been deducted from
Income from operations back into Income from operations to arrive at
EBITDA. Depreciation and amortization amounts reported in the
Consolidated Statement of Cash Flows include amortization of debt
issuance costs that are recorded in Other income (expense) - net and,
therefore, are not included in EBITDA. Terex believes that disclosure
of EBITDA will be helpful to those reviewing its performance, as
EBITDA provides information on Terex's ability to meet debt service,
capital expenditure and working capital requirements, and is also an
indicator of profitability.
Three months ended March 31,
-----------------------------
(in millions)
-----------------------------
2007 2006
-------------- --------------
Income from operations $ 200.7 $ 141.9
Depreciation 15.9 15.5
Amortization 2.4 3.2
Bank fee amortization not included in
income from operations (0.5) (0.9)
-------------- --------------
EBITDA $ 218.5 $ 159.7
-------------- --------------
Incremental Gross Margin is defined as the year over year change
in gross profit divided by the year over year change in net sales.
Stated as a percentage, it is one of several indicators that measures
efficiency of running a business, and Terex uses this as one measure
of improvement in profitability in excess of volume changes.
Three months ended March 31,
------------------------------- ---------
2007 2006 Change
--------------- -------------------------
Gross Profit $ 412.0 $ 307.5 $ 104.5
Net Sales $ 2,012.7 $ 1,693.9 $ 318.8
---------
Incremental Gross Margin 32.8%
---------
Return on Invested Capital, or ROIC, is calculated by Terex by
dividing the last four quarters' Income from operations by the average
of the sum of Total stockholders' equity plus Debt (as defined above)
less Cash and cash equivalents for the last five quarter ended
Consolidated Balance Sheets. ROIC measures how effectively the Company
uses money invested in its operations. For example, Return on Invested
Capital highlights the level of value creation when compared to the
Company's cost of capital. Terex management and the Board of Directors
of Terex use ROIC as one of the primary measures to assess operational
performance, including in connection with certain compensation
programs.
Mar 07 Dec 06 Sep 06 Jun 06 Mar 06
-------------------------------------------------
Income from
Operations $ 200.7 $ 169.4 $ 196.8 $ 213.2
========= ========= ========= =========
Debt (as defined
above) $ 678.4 $ 763.1 $ 791.7 $1,055.8 $1,122.3
Less: Cash and cash
equivalents (405.2) (676.7) (428.3) (525.7) (506.9)
-------------------- --------- --------- --------- --------- ---------
Debt less Cash and
cash equivalents $ 273.2 $ 86.4 $ 363.4 $ 530.1 $ 615.4
========= ========= ========= ========= =========
Total stockholders
equity $1,851.9 $1,751.0 $1,591.7 $1,490.5 $1,274.1
========= ========= ========= ========= =========
Debt less Cash and
cash equivalents
plus Total
stockholder's
equity $2,125.1 $1,837.4 $1,955.1 $2,020.6 $1,889.5
========= ========= ========= ========= =========
ROIC 39.7%
--------------------------------------------------------------
Income from operations (last 4 quarters) $ 780.1
Average Debt less Cash and cash equivalents plus
Total stockholder's equity (5 quarters) $ 1,965.5
--------------------------------------------------------------
Total Capitalization is a measure that aids in the evaluation of
the Company's balance sheet. It is an integral component of certain
financial metrics that are often used to evaluate the Company's
valuation, liquidity and overall health. Total capitalization is
defined as the sum of:
-- Total stockholders' equity; and
-- Debt (as defined above);
-- Less: Cash and cash equivalents.
Total stockholders' equity $1,851.9
Debt (as defined above) 678.4
less: Cash and cash equivalents 405.2
------------------------------------- -------------
Total Capitalization $2,125.1
=============
Working Capital is calculated using the Consolidated Balance Sheet
amounts for Trade receivables (net of allowance) plus Inventories less
Trade accounts payable. The Company views excessive working capital as
an inefficient use of resources, and seeks to minimize the level of
investment without adversely impacting the ongoing operations of the
business.
Inventory $ 1,759.7
Trade Receivable, net 1,137.7
Less: Trade Accounts Payable (1,143.1)
--------------------------------- -------------
Total Working Capital $ 1,754.3
CONTACT: Terex Corporation
Tom Gelston, 203-222-5943
Director, Investor Relations and
Financial Planning & Analysis
Fax: 203-222-0130
tgelston@terex.com
SOURCE: Terex Corporation