WESTPORT, Conn., Apr 23, 2008 (BUSINESS WIRE) -- Terex Corporation (NYSE: TEX) today announced net income for the
first quarter of 2008 of $163.3 million, or $1.59 per share, compared
to net income of $113.8 million, or $1.09 per share, for the first
quarter of 2007, an increase in earnings per share of 46%. Net income
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 $2,362.7 million in the first quarter of
2008, an increase of 17.4% from $2,012.7 million in the first quarter
of 2007. The increase in net sales versus the prior year period was
favorably impacted by acquisitions and by the effect of currency
exchange rates (1.9% and 6.1%, respectively). All per share amounts
are on a fully diluted basis.
"We are pleased with the first quarter's results, with both net
sales and net income growth posting solid double digit percentage
increases versus the prior year," commented Ron DeFeo, Terex Chairman
and Chief Executive Officer. "The strength of international end
markets and the continued strength of the domestic U.S. 'in-the-air'
products yielded excellent results in our Aerial Work Platforms and
Cranes business segments. Continued demand for commodities drove
favorable results for our Materials Processing & Mining business
segment. The performance of the balance of our businesses, namely the
Construction, Roadbuilding and Utility operations, were somewhat
disappointing for the quarter. We believe, however, that the near term
outlook is positive for the Construction segment, and that its
operating margin will improve in the mid-year period and lead to good
margin expansion on a year-over-year basis in 2008. In general, we
think that all of our operations continue to have solid prospects
heading into the remainder of the year."
Tom Riordan, Terex President and Chief Operating Officer, added,
"We remain confident about our business outlook for the remainder of
2008. Looking forward, we can see challenges in material costs,
especially as we move into the second half of 2008. We intend to
address these cost increases through pricing actions to recover lost
margin arising from higher component costs. While we anticipate that
we will be able to implement these pricing actions timely and
effectively, we realize that there is a certain level of risk and
exposure that may materialize in the second half of the year."
Commenting on future earnings potential, Mr. DeFeo continued, "In
February, we provided earnings guidance for our 2008 performance,
indicating that we anticipated earnings per share to be between $6.65
and $7.15 and net sales to be between $10.0 and $10.5 billion. Given
our strong performance this quarter, balanced against the
uncertainties surrounding some of our end markets and increased input
costs, we now anticipate earnings per share for 2008 to be towards the
middle to high end of our previously announced range, or $6.85 to
$7.15 per share, on net sales of $10.5 to $10.9 billion."
Highlights for the First Quarter of 2008
In this press release, Terex refers to various GAAP (U.S.
generally accepted accounting principles) and non-GAAP financial
measures. These non-GAAP measures may not be comparable to similarly
titled measures being disclosed by other companies. Terex believes
that this non-GAAP information is useful to understanding its
operating results and the ongoing performance of its underlying
businesses. Certain financial measures are shown in italics the first
time referenced and are described in a Glossary at the end of this
press release.
Net Sales: Net sales reached $2,362.7 million in the first quarter
of 2008, an increase of $350.0 million, or 17.4%, from $2,012.7
million in the first quarter of 2007. Global infrastructure spending
continued to drive increased demand in many product categories,
particularly Cranes and Materials Processing & Mining equipment, as
well as the Aerial Work Platforms product category in North America.
In addition, the increase in net sales versus the prior year period
was favorably impacted by approximately $122 million due to the
translation effect of foreign currency exchange rate changes,
primarily the strength of the Euro, British Pound and Australian
Dollar relative to the U.S. Dollar, as well as the inclusion of $38
million in net sales from recent acquisitions.
Income from Operations and Operating Margin: Income from
operations was $256.3 million in the first quarter of 2008, an
increase of $55.6 million, or 27.7%, from $200.7 million in the first
quarter of 2007. The first quarter operating margin was 10.8%, up from
last year's first quarter operating margin of 10.0%. The results for
the first quarter of 2008 included the effect of inventory valuation
adjustments and intangible amortization of approximately $5 million
related to the acquisition of both Superior Highwall Miners (SHM) and
ASV. Leverage from revenue growth in our more profitable segments and
the positive impact of pricing adjustments more than offset the
unfavorable performance of certain product lines. Selling, general and
administrative costs in the first quarter of 2008 increased $46.4
million versus the prior year period, reflecting continued investment
in support of various operational improvement initiatives, including
supply chain management, global sales and service capabilities in
developing markets, marketing, implementation of the Terex Management
System (our management information system), and our strategic sourcing
initiative. Additionally, approximately $13 million of this impact was
due to the translation effect of foreign currency exchange rate
changes. Selling, general and administrative expenses as a percentage
of net sales increased in the first quarter of 2008 when compared with
2007, to 10.9% of net sales versus 10.5% of net sales in the prior
year quarter.
Interest and Other Income/Expense: Interest expense was $25.5
million for the first quarter of 2008, compared with $14.2 million in
the first quarter of 2007, reflecting increased outstanding debt
versus year ago levels resulting from the $800 million senior
subordinated note offering completed in November 2007. Interest income
also increased $5.7 million in the first quarter of 2008 versus the
prior year, as the majority of the proceeds of the issuance of this
new debt were held in cash and cash equivalents until the consummation
of the ASV acquisition in late February 2008. Other income totaled
$6.6 million for the first quarter of 2008, compared with $4.6 million
for the first quarter of 2007, primarily attributable to foreign
currency translation gains.
Taxes: The effective tax rate for continuing operations for the
first quarter of 2008 was 33.8%, compared to the effective tax rate of
37.5% for the first quarter of 2007, as the mix of international
business and the effect of recently reduced statutory rates in several
European countries had a positive impact. In the first quarter of
2007, the effect of a discrete charge for the repatriation of
international cash negatively impacted the effective tax rate.
Capital Structure: Return on Invested Capital (ROIC) was 27.3% for
the trailing twelve months ended March 31, 2008. The Company has
altered its method of how ROIC is calculated to now provide the metric
on an after-tax basis. A full reconciliation is included in the
Glossary at the end of this release. Cash flow from operations in the
first quarter was a use of $190.4 million, a slightly higher use of
cash when compared with the prior year's first quarter. Strong
earnings were more than offset by a decrease in customer advances due
to certain large crane and mining equipment deliveries in the first
quarter, as well as an increase in working capital ahead of
anticipated sales in the second and third quarters. Debt, less cash
and cash equivalents, increased $522.0 million in the first quarter to
$769.2 million, compared to the first quarter of 2007, reflecting the
impact of recent acquisitions and an increase in working capital,
offset somewhat by increased earnings. In addition, during the first
quarter of 2008, the Company repurchased approximately $52 million of
Terex common stock pursuant to its previously announced stock
repurchase program. Through March 31, 2008, the Company repurchased
approximately $218 million of its common stock under the total
authorized $700 million program, which expires June 30, 2009. The
Company's performance has led to a ratio of Debt, less cash and cash
equivalents, to Total Capitalization of 23.3% at the end of the first
quarter of 2008, with the largest influence on outstanding
indebtedness being the cash paid in late February to acquire ASV.
Working capital: Working Capital as a percent of Trailing Three
Month Annualized Sales was 24.9% at March 31, 2008, as compared to
approximately 21.5% at March 31, 2007. The increase over the prior
year was driven mainly by heightened inventory levels to meet expected
growth, as well as 0.8% due to the addition of approximately $99
million of working capital associated with the acquisition of ASV in
February 2008. While most of the inventory accumulation is associated
with anticipated continued strong growth, it also reflects logistic
issues arising from increased transportation times due to the
globalization of our customer base, as well as challenges with
supplier parts availability at certain locations. The Company is
continuing to review its global manufacturing footprint to better
position production closer to its customers, and aims to moderate this
negative influence over the next twelve to eighteen months.
Backlog: Backlog for orders deliverable during the next twelve
months was $4,815.6 million at March 31, 2008, an increase of
approximately 41.1% versus the first quarter of 2007, and an increase
of 15.2% versus the December 31, 2007 level. The increase from
December 31, 2007 was reflected across all business segments. The
increase versus the prior year's first quarter was aided substantially
by the continued strength of Crane orders, which are outpacing the
Company's ability to manufacture and deliver products to its
customers. Also meaningfully contributing to the increase was the
Construction business, as that segment's backlog increased 48% over
the prior year period, in response to strong Eastern European and
Middle East demand, continued strong demand for material handlers in
response to higher steel prices, and continued ramp-up challenges on
certain product lines. Materials Processing & Mining segment backlog
increased 27% over the prior year period, reflecting global
infrastructure requirements. Backlog for the Aerial Work Platforms
segment showed a modest improvement, while the Roadbuilding, Utility
Products and Other segment declined somewhat from the prior year's
first quarter. Further details are contained in the Glossary. With
regard to the reported backlog, it should be noted that Terex has not
accepted firm orders for rough terrain crane delivery to take place
after January 1, 2009. This was designed to ensure that prices for
2009 delivery sufficiently reflect the demand environment and
potential input cost increases of the business. Production volumes for
the first quarter of 2009 that have not been included in backlog
approximate $210 million. The Company does not anticipate establishing
pricing for rough terrain cranes for 2009 delivery until the third
quarter of 2008.
First Quarter Segment Performance Review
Aerial Work Platforms: Net sales for the Aerial Work Platforms
(AWP) segment for the first quarter of 2008 increased $38.9 million,
or 7.1%, to $586.6 million versus the first quarter of 2007. Excluding
the translation effect of foreign currency exchange rate changes, net
sales increased approximately 5.8%. Strong U.S. demand coupled with
international demand, primarily in the Middle East, Russia and Eastern
Europe, continued to drive higher sales volume. Additionally, a merger
of several customers occurred in Western Europe that negatively
impacted sales in that region due to a temporary halt in capital
expenditures while those customers reviewed their total fleet
composition. The favorable performance in the U.S. market versus
expectations helped to offset slightly weaker performance versus
expectations in the Western European and Asia Pacific regions. Demand
for boom lifts drove sales higher, but was offset somewhat by slower
telehandler sales in both the U.S. and Europe. Operating margin in the
first quarter of 2008 was essentially flat when compared to the first
quarter of 2007, as increased sales volume was offset by costs
associated with the expansion of global sales and distribution
infrastructure.
Construction: Net sales for the Construction segment for the first
quarter of 2008 increased $40.5 million, or 9.9%, to $448.3 million
versus the first quarter of 2007. Excluding the translation effect of
foreign currency exchange rate changes of $29.8 million and ASV sales
since its acquisition of $21.3 million, net sales decreased
approximately 2.6%. The U.S. market remained relatively weak and the
European market was moderately slower. This decline was mostly offset
with positive developments in the Middle East and Eastern Europe.
Additionally, the larger construction-class off-highway truck business
in Motherwell, Scotland experienced a slow-down in production rates
due to challenges that arose during the shift to a mixed model
production line. This shortfall is expected to be temporary, and the
net result of this activity is still expected to yield significant
volume opportunity and cost reduction.
Cranes: Net sales for the Cranes segment for the first quarter of
2008 increased $131.4 million, or 26.2%, to $632.2 million versus the
first quarter of 2007. Excluding the translation effect of foreign
currency exchange rate changes, net sales increased approximately
15.4%. Very strong global demand, particularly for large crawler
cranes and mobile telescopic cranes, continued to drive robust sales
and order activity. Growth in rough terrain cranes sales in the
quarter reflected North American and Middle East market strength,
particularly from the energy sector, while sales of boom trucks and
smaller truck cranes in North America remained under pressure.
Operating margin increased to 13.6%, up substantially from the 10.6%
reported in the first quarter of 2007, reflecting the favorable mix of
sophisticated, high capacity cranes in the quarter, as well as
meaningful improvement in lean manufacturing and productivity
enhancements. Supplier constraints, particularly in Europe, and
capacity limitations in terms of welding and assembly space have
extended delivery lead times.
Materials Processing & Mining: Net sales for the Materials
Processing & Mining (MPM) segment for the first quarter of 2008
increased $169.0 million, or 42.8%, to $564.3 million versus the first
quarter of 2007. Excluding the translation effect of foreign currency
exchange rate changes, net sales increased approximately 35.3%. The
acquisition of SHM in November 2007 contributed approximately
one-tenth of the 2008 sales increase, while also reducing operating
profit by approximately $5 million in the quarter as a result of
inventory valuation adjustments and intangible amortization. The
Mining business had a very strong first quarter, with sales increasing
approximately 65% when compared with the prior year period, driven by
continued strong commodity demand. This increase was attributable in
large part to significant commissioning activity of large hydraulic
mining shovels, including the delivery of the first of two scheduled
RH400's (the world's largest hydraulic mining shovel) to the Canadian
Oil Sands project. The second shovel was commissioned in early April
2008. The Materials Processing business continues to benefit from
developing market infrastructure activity. While demand remains strong
in this business, capacity constraints, specifically in assembly
space, are a key challenge that may impede acceleration in the growth
of this business. The Company is continuing to improve historic
production bottlenecks through supply management and lean
manufacturing techniques.
Roadbuilding, Utility Products and Other: Net sales for the
Roadbuilding, Utility Products and Other (RBUO) segment for the first
quarter of 2008 decreased $9.6 million, or 5.4%, to $169.2 million
versus the first quarter of 2007. This is directly related to the
decrease in concrete mixer truck demand resulting from continued
softness in the North American housing construction market.
Additionally, the prior year's results reflected an unusual positive
effect of the Tier III engine changeover which resulted in an elevated
level of customer demand ahead of the introduction of the higher cost,
stricter emissions engine. Order quoting activity remains strong for
both the asphalt plant and utility product businesses and shipments
are expected to increase in the second quarter. The lower net sales
volume in the first quarter of 2008 had a negative impact on Gross
Margin and operating margin. The Company will continue to monitor the
estimated fair value of the roadbuilding business for purposes of
determining whether an impairment is evidenced.
Corporate / Eliminations: The increase in loss from operations to
$7.2 million versus the prior year's $6.5 million loss from operations
reflects continued investment in Company-wide initiatives, namely
supply chain management, manufacturing strategy, information
technology, marketing, and the Terex Business System, offset by
approximately $8.9 million in the allocation of incremental corporate
costs to the business segments in 2008 versus the prior year.
Safe Harbor Statement
This press release contains forward-looking information based on
the current expectations of Terex Corporation. Because forward-looking
statements involve risks and uncertainties, actual results could
differ materially. Such risks and uncertainties, many of which are
beyond the control of Terex, include among others: Our business is
highly cyclical and weak general economic conditions may affect the
sales of our products and financial results; our business is sensitive
to fluctuations in interest rates and government spending; our
business is very competitive and may be affected by pricing, product
initiatives and other actions taken by competitors; a material
disruption to one of our significant facilities; our retention of key
management personnel; the financial condition of suppliers and
customers, and their continued access to capital; our continued access
to capital and ability to obtain parts and components from suppliers
on a timely basis at competitive prices; our ability to timely
manufacture and deliver products to customers; the need to comply with
restrictive covenants contained in our debt agreements; our business
is global and subject to changes in exchange rates between currencies,
as well as international politics, particularly in developing markets;
the effects of changes in laws and regulations; possible work
stoppages and other labor matters; compliance with applicable
environmental laws and regulations; product liability claims and other
liabilities arising out of our business; investigations by the
Securities and Exchange Commission and the Department of Justice; our
implementation of a global enterprise system and its performance; our
ability to successfully integrate acquired businesses; and other
factors, risks and uncertainties that are more specifically set forth
in our public filings with the SEC. Actual events or the actual future
results of Terex may differ materially from any forward-looking
statement due to these and other risks, uncertainties and significant
factors. The forward-looking statements speak only as of the date of
this presentation. Terex expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statement included in this presentation to reflect any
changes in 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 2007
net sales of over $9.1 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
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in millions, except per share data)
Three Months
Ended March 31,
-------------------
2008 2007
--------- ---------
Net sales $2,362.7 $2,012.7
Cost of goods sold 1,848.7 1,600.7
--------- ---------
Gross profit 514.0 412.0
Selling, general and administrative expenses 257.7 211.3
--------- ---------
Income from operations 256.3 200.7
Other income (expense)
Interest income 9.1 3.4
Interest expense (25.5) (14.2)
Loss on early extinguishment of debt - (12.5)
Other income (expense) - net 6.6 4.6
--------- ---------
Income before income taxes 246.5 182.0
Provision for income taxes (83.2) (68.2)
--------- ---------
Net income $ 163.3 $ 113.8
========= =========
Earnings Per Common Share
Basic $ 1.62 $ 1.11
Diluted $ 1.59 $ 1.09
Weighted average number of shares outstanding in
per share calculation
Basic 101.1 102.2
Diluted 103.0 104.7
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except par value)
March 31, December 31,
2008 2007
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 604.2 $ 1,272.4
Trade receivables (net of allowance of
$67.0 and $62.5 at March 31, 2008 and
December 31, 2007, respectively) 1,407.5 1,195.8
Inventories 2,362.0 1,934.3
Deferred taxes 162.8 166.3
Other current assets 252.4 208.1
----------- ------------
Total current assets 4,788.9 4,776.9
Long-term assets
Property, plant and equipment - net 475.6 419.4
Goodwill 1,022.3 699.0
Deferred taxes 122.9 143.1
Other assets 321.6 277.9
----------- ------------
Total assets $ 6,731.3 $ 6,316.3
=========== ============
Liabilities and Stockholders' Equity
Current liabilities
Notes payable and current portion of
long-term debt $ 26.9 $ 32.5
Trade accounts payable 1,411.8 1,212.9
Accrued compensation and benefits 194.0 194.8
Accrued warranties and product liability 141.9 132.0
Customer advances 140.3 181.8
Other current liabilities 448.6 421.3
----------- ------------
Total current liabilities 2,363.5 2,175.3
Non-current liabilities
Long-term debt, less current portion 1,346.5 1,319.5
Retirement plans and other 483.2 478.3
----------- ------------
Total liabilities 4,193.2 3,973.1
----------- ------------
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value - authorized
300.0 shares; issued 106.8 and 106.2
shares at March 31, 2008 and December
31, 2007, respectively 1.1 1.1
Additional paid-in capital 1,007.6 1,004.1
Retained earnings 1,448.0 1,284.7
Accumulated other comprehensive income 337.3 256.6
Less cost of shares of common stock in
treasury - 6.5 and 5.9 shares at March
31, 2008 and December 31, 2007,
respectively (255.9) (203.3)
----------- ------------
Total stockholders' equity 2,538.1 2,343.2
----------- ------------
Total liabilities and stockholders' equity $ 6,731.3 $ 6,316.3
=========== ============
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in millions)
Three Months
Ended March 31,
------------------
2008 2007
--------- --------
Operating Activities
Net income $ 163.3 $ 113.8
Adjustments to reconcile net income to cash used
in operating activities:
Depreciation 17.2 15.9
Amortization 5.2 2.4
Deferred taxes 23.2 (2.6)
Loss on early extinguishment of debt - 3.2
Gain on sale of assets (0.8) (4.9)
Stock-based compensation 17.0 15.7
Excess tax benefit from stock-based
compensation (6.0) (10.8)
Changes in operating assets and liabilities
(net of effects of acquisitions and
divestitures):
Trade receivables (133.8) (182.3)
Inventories (289.4) (248.1)
Trade accounts payable 112.3 128.8
Accrued compensation and benefits (28.4) (30.4)
Income taxes payable 46.5 47.4
Accrued warranties and product liability (0.7) 3.9
Customer advances (48.1) 18.2
Other, net (67.9) (35.0)
--------- --------
Net cash used in operating activities (190.4) (164.8)
--------- --------
Investing Activities
Acquisition of businesses, net of cash acquired (439.1) -
Capital expenditures (24.8) (22.2)
Proceeds from sale of assets 2.0 8.9
--------- --------
Net cash used in investing activities (461.9) (13.3)
--------- --------
Financing Activities
Principal repayments of long-term debt - (200.0)
Excess tax benefit from stock-based compensation 6.0 10.8
Proceeds from stock options exercised 0.7 4.2
Net borrowings (repayments) under credit facility (6.6) 115.1
Share repurchase (44.4) (5.4)
Other, net (0.6) 2.3
--------- --------
Net cash used in financing activities (44.9) (73.0)
--------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 29.0 5.6
--------- --------
Net Decrease in Cash and Cash Equivalents (668.2) (245.5)
Cash and Cash Equivalents at Beginning of Period 1,272.4 676.7
--------- --------
Cash and Cash Equivalents at End of Period $ 604.2 $ 431.2
========= ========
Note: The Company revised upward Cash and Cash Equivalents at End
of Period and Trade Accounts Payable for March 31, 2007 by $26 million
related to book overdrafts to conform with current period
presentation.
TEREX CORPORATION AND SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(in millions)
(unaudited)
First Quarter
-------------------------------------
2008 2007
------------------ ------------------
% of % of
Net sales Net sales
--------- ---------
Consolidated
Net sales $2,362.7 $2,012.7
-------- --------
Gross profit $ 514.0 21.8% $ 412.0 20.5%
SG&A 257.7 10.9% 211.3 10.5%
-------- --------
Income from operations $ 256.3 10.8% $ 200.7 10.0%
AWP
Net sales $ 586.6 $ 547.7
-------- --------
Gross profit $ 166.6 28.4% $ 146.4 26.7%
SG&A 60.0 10.2% 47.1 8.6%
-------- --------
Income from operations $ 106.6 18.2% $ 99.3 18.1%
Construction
Net sales $ 448.3 $ 407.8
-------- --------
Gross profit $ 57.7 12.9% $ 50.4 12.4%
SG&A 54.6 12.2% 44.3 10.9%
-------- --------
Income from operations $ 3.1 0.7% $ 6.1 1.5%
Cranes
Net sales $ 632.2 $ 500.8
-------- --------
Gross profit $ 140.3 22.2% $ 99.6 19.9%
SG&A 54.5 8.6% 46.6 9.3%
-------- --------
Income from operations $ 85.8 13.6% $ 53.0 10.6%
MPM
Net sales $ 564.3 $ 395.3
-------- --------
Gross profit $ 127.6 22.6% $ 90.3 22.8%
SG&A 58.9 10.4% 43.9 11.1%
-------- --------
Income from operations $ 68.7 12.2% $ 46.4 11.7%
RBUO
Net sales $ 169.2 $ 178.8
-------- --------
Gross profit $ 21.7 12.8% $ 24.1 13.5%
SG&A 22.4 13.2% 21.7 12.1%
-------- --------
Income from operations $ (0.7) (0.4)% $ 2.4 1.3%
Corporate/Eliminations
Net sales $ (37.9) $ (17.7)
Income from operations $ (7.2) 19.0% $ (6.5) 36.7%
GLOSSARY
In an effort to provide investors with additional information
regarding the Company's results, Terex refers to various GAAP (U.S.
generally accepted accounting principles) and non-GAAP financial
measures which management believes provides useful information to
investors. These non-GAAP 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 non-GAAP information is useful to
understanding its operating results and the ongoing performance of its
underlying businesses. Management of Terex uses both GAAP and 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, 2008, 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.
Mar 31, Mar 31, % Dec 31, %
2008 2007 change 2007 change
-------- -------- -------- -------- --------
Consolidated Backlog $ 4,815.6 $ 3,413.0 41.1% $ 4,180.9 15.2%
AWP $ 701.0 $ 675.5 3.8% $ 652.4 7.4%
Construction $ 886.1 $ 598.8 48.0% $ 682.2 29.9%
Cranes (1) $ 2,189.1 $ 1,285.9 70.2% $ 2,005.5 9.2%
MPM $ 889.8 $ 700.1 27.1% $ 692.9 28.4%
RBUO (2) $ 149.6 $ 152.7 (2.0)%$ 147.9 1.1%
(1) Terex has not accepted firm orders for rough terrain crane
delivery to take place after January 1, 2009. This was designed
to ensure that prices for 2009 delivery sufficiently reflect the
demand environment and potential input cost increases of the
business. Production volumes for which firm orders have not yet
been accepted for the first quarter of 2009 have not been
included in backlog and approximate $210 million.
(2) Backlog for Terex Government Programs of $31.4 million at March
31, 2008 and $52.8 million at December 31, 2007 was moved to the
respective segments that produce the product being sold.
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 $1,346.5
Notes payable and current portion of long-term debt 26.9
--------------------------------------------------- -----------
Debt $1,373.4
===========
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,
------------------
2008 2007
-------- --------
Income from operations $ 256.3 $ 200.7
Depreciation 17.2 15.9
Amortization 5.2 2.4
Bank fee amortization not included in Income from
operations (0.8) (0.5)
-------- --------
EBITDA $ 277.9 $ 218.5
======== ========
Gross Margin is defined as the ratio of Gross Profit to Net Sales.
Net Operating Profit After Tax (NOPAT) is calculated by
multiplying Income from operations by a figure equal to one minus the
effective tax rate of the Company. The effective tax rate is equal to
the (Provision for)/benefit from Income taxes divided by Income before
income taxes for the respective quarter.
Operating Margin is defined as the ratio of Income from Operations
to Net Sales.
Return on Invested Capital, or ROIC, is calculated by Terex by
dividing the sum of the last four quarters' Net Operating Profit After
Tax (as defined above) by the average of the sum of Total
stockholders' equity plus Debt (as defined above) less Cash and cash
equivalents for the last five quarters ended Consolidated Balance
Sheets. ROIC is calculated by using the last four quarters' Net
operating profit after tax, as this represents the most recent twelve
month period at any given point of determination. In order for the
denominator of the ROIC ratio to properly match the operational period
reflected in the numerator, Terex includes the average of five
quarter's ending balance sheet amounts so that the denominator
includes the average of the opening through ending balances (on a
quarterly basis) over the same time period as the numerator (four
quarters of average invested 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. Terex
utilizes ROIC as a unifying metric because our management believes
that it measures how effectively we invest our capital and provides a
better measure to compare ourselves to peer companies to assist in
assessing how we drive operational improvement. ROIC measures return
on the full enterprise-wide amount of capital invested in our
business, as opposed to another metric such as return on shareholder's
equity that only incorporates book equity, and is thus a more accurate
and descriptive measure of our performance. Terex also believes that
adding Debt less Cash and cash equivalents to Total stockholders'
equity provides a better comparison across similar businesses
regarding total capitalization, and that ROIC highlights the level of
value creation as a percentage of capital invested.
Mar 08 Dec 07 Sep 07 Jun 07 Mar 07
--------- ---------- --------- --------- ---------
Income before
income taxes $ 246.5 $ 236.0 $ 230.0 $ 271.3
Divided by:
Provision for
income taxes 83.2 62.0 78.5 96.7
========= ========== ========= =========
Effective tax rate 33.8% 26.3% 34.1% 35.6%
Income from
operations 256.3 239.9 236.3 284.5
Multiplied by: 1
minus Effective
tax rate 66.2% 73.7% 65.9% 64.4%
-------- --------- -------- --------
Net operating
profit after tax 169.7 176.8 155.7 183.2
Debt (as defined
above) $1,373.4 $ 1,352.0 $ 705.6 $ 651.7 $ 678.4
Less: Cash and cash
equivalents (604.2) (1,272.4) (516.6) (453.4) (431.2)
--------- ---------- --------- --------- ---------
Debt less Cash and
cash equivalents $ 769.2 $ 79.6 $ 189.0 $ 198.3 $ 247.2
========= ========== ========= ========= =========
Total stockholders'
equity $2,538.1 $ 2,343.2 $2,254.4 $2,073.4 $1,851.9
========= ========== ========= ========= =========
Debt less Cash and
cash equivalents
plus Total
stockholders'
equity $3,307.3 $ 2,422.8 $2,443.4 $2,271.7 $2,099.1
========= ========== ========= ========= =========
NOPAT (4 qtrs) 685.4
Avg Net Debt plus
Equity (5 qtr
ends) 2,508.9
After tax ROIC 27.3%
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 as of
March 31, 2008 is defined as the sum of:
-- Total stockholders' equity; and
-- Debt (as defined above);
-- Less: Cash and cash equivalents.
Total stockholders' equity $ 2,538.1
Debt (as defined above) 1,373.4
less: Cash and cash equivalents 604.2
------------------------------------ ------------
Total Capitalization $ 3,307.3
============
Trailing Three Month Annualized Sales is calculated using the net
sales for the quarter multiplied by four.
1st Quarter Net Sales $ 2,362.7
x 4
------------------------------------- ------------
Trailing Three Month Annualized Sales $ 9,450.8
============
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. As of March 31, 2008, working capital was:
Inventories $ 2,362.0
Trade Receivables, net 1,407.5
Less: Trade Accounts Payable 1,411.8
-------------------------------- -------------
Total Working Capital $ 2,357.7
=============
SOURCE: Terex Corporation
Terex Corporation
Tom Gelston, 203-222-5943
Director, Investor Relations and
Financial Planning & Analysis
Fax: 203-222-0130
thomas.gelston@terex.com