WESTPORT, Conn.--(BUSINESS WIRE)--July 23, 2008--Terex Corporation
(NYSE: TEX) today announced net income for the second quarter of 2008
of $236.3 million, or $2.32 per share, compared to net income of
$174.6 million, or $1.66 per share, for the second quarter of 2007, an
increase in earnings per share of 39.8%. Net sales of $2,935.9 million
in the second quarter of 2008 were 25.3% above the comparable period
in 2007. The increase in net sales versus the prior year period was
favorably impacted by acquisitions and by the translation effect of
foreign currency exchange rate changes (3.4% and 7.9%, respectively).
Excluding these effects, net sales increased 14.1% in the second
quarter of 2008 versus the prior year period. All per share amounts
are on a fully diluted basis.
"Results this quarter demonstrate the continued strength of our
global franchise," commented Ron DeFeo, Terex Chairman and Chief
Executive Officer. "The infrastructure and commodity boom is driving
strong demand for our cranes and mining equipment. Based on our
increasing backlog for these products, we expect these positive trends
to continue. Also, as expected, this was partially offset by slower
growth trends in the Aerial Work Platforms (AWP) segment and further
softening in the Construction segment. Though both AWP and
Construction experienced growth this past quarter, slower growth in
Western Europe impacted their performance."
Mr. DeFeo continued, "Not surprisingly, input costs continue to
present challenges for us. To offset this, we are implementing various
price increases and maintaining cost discipline. While in total we
expect higher pricing will largely offset the cost increases that we
have already incurred, as well as additional cost increases that we
expect to incur during the second half of 2008, we do expect that
there will be a lag between when higher costs are incurred and price
increases to our customers take effect. Accordingly, we anticipate
some reduction in operating margin in our business during the
remainder of 2008."
"The power of our strategy of product and geographic diversity is
illustrated in our results," continued Mr. DeFeo. "We have been able
to continue to grow net sales and income through an evolving sales
mix. The Cranes and Materials Processing & Mining (MPM) segments grew
dramatically during the period. Geographically, we continue to see
significant growth in developing markets in line with global
infrastructure development. Over time, our percentage of sales to
developing markets has steadily increased, with first half 2008 net
sales in these regions representing approximately 22% of our total
sales."
Commenting on future earnings potential, Mr. DeFeo said, "We
expect our performance for 2008 to be within our previously announced
range for earnings per share of $6.85 to $7.15 and net sales of $10.5
to $10.9 billion. We expect strong infrastructure and commodity demand
trends for our Cranes and MPM segments to continue, which will drive a
higher portion of our net sales and income for the balance of 2008."
Tom Riordan, Terex President and Chief Operating Officer, added,
"We are progressing well with our key internal initiatives. We
continue to invest in appropriate capacity expansion, focusing on
up-cycle businesses such as cranes and mining equipment and developing
markets, and at the same time we are keenly focused on improving
existing capacity and our cost structure to better meet changes in
demand and customer needs. As appropriate, headcount and overhead
levels are being adjusted globally in line with changes in product
demand and the Company's evolving global manufacturing footprint.
Finally, we have successfully gone live with the implementation of the
Terex Management System at three businesses in the U.S., Germany and
U.K. We believe that this new enterprise wide system will contribute
to improved efficiency in our operations over the long term, as we
consolidate our information systems."
Mr. DeFeo concluded, "Our global and product diversification has
allowed the Company to perform well despite the difficult economic
conditions in the U.S., softening of the markets in Western Europe and
increasing input costs. Demand remains strong for many of our
products, and we are continuing to invest in our business for today
and tomorrow, particularly in developing markets such as China and
India. We expect world demand for infrastructure, energy and mining
products to continue, while at the same time we are positioning our
businesses for the eventual recovery in the U.S. market. We remain
confident in our ability to achieve our previously stated goal of '12
by 12 in 10', which is $12 billion in revenues with a 12% operating
margin by 2010. By quickly adapting to changing market conditions in
all of our segments and geographies, we are showing that we can
provide products that meet our customers' needs worldwide, and at the
same time improve our financial performance and invest in growth for
the Company."
Highlights for the Second 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 $2,935.9 million in the second
quarter of 2008, an increase of 25.3% from $2,342.2 million in the
second quarter of 2007. Continued strong demand in the Cranes and MPM
segments primarily drove the increase. In addition, the increase in
net sales versus the prior year period was favorably impacted by
approximately $184 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 approximately $79 million in net sales from recent
acquisitions.
Gross profit and gross margin showed improvement over the prior
year period due mainly to the growing contribution of the Cranes and
MPM segments, pricing actions and volume leverage. The AWP segment
demonstrated strong performance in the quarter. Collectively, these
more than offset input cost pressures in the period.
Selling, general and administrative (SG&A) expenses in the second
quarter of 2008 increased $57.7 million versus the prior year period
and remained consistent as a percentage of net sales. Approximately
$16 million of the increase in SG&A expenses was due to the
translation effect of foreign currency exchange rate changes and $5.4
million of the increase was due to the impact of recent acquisitions.
The Company continues to invest in global support systems necessary to
meet customer expectations, as well as supply chain management,
improved sales and service capabilities in developing markets, and the
Terex Management System.
Income from Operations and Operating Margin: Income from
operations was $370.9 million in the second quarter of 2008, an
increase of 30.4% versus the second quarter of 2007. The second
quarter 2008 operating margin of 12.6% increased 50 basis points from
the comparable 2007 period operating margin of 12.1%. The mix of
operating margin has shifted versus the prior year period, with a
lower income contribution from the AWP segment and greater income
contributions from the Cranes and MPM segments.
Taxes: The effective tax rate for the second quarter of 2008 was
33.1%, compared to 35.6% for the second 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. The Company
expects the effective tax rate for the remainder of the year to be
somewhat higher than the second quarter level.
Capital Structure: Return on Invested Capital (ROIC) was 27.0% for
the trailing twelve months ended June 30, 2008. This reflects strong
operating performance, offset somewhat by the impact of recent
acquisition investments, which more than offset the benefit from
strong operating performance. The calculation of ROIC is included in
the Glossary at the end of this release.
Net cash provided by operating activities for the second quarter
of 2008 was $134.3 million, mainly as a result of income generation,
bringing the year to date results to a net use of $56.1 million,
somewhat improved from the comparable prior year period use of cash of
$89.0 million.
Debt, less cash and cash equivalents, of $765.9 million at June
30, 2008 increased $686.3 million in the first half of 2008, compared
to $79.6 million at year end 2007, primarily due to recent
acquisitions and share repurchases.
During the second quarter of 2008, the Company repurchased
approximately $144 million of common stock pursuant to its previously
announced share repurchase program. The Company has purchased $362
million of its shares through June 30, 2008 under this program. On
July 15, 2008, the Board of Directors of the Company authorized an
increase in this program of $500 million to $1.2 billion, with no
change to the program expiration date of June 30, 2009.
For the second quarter of 2008, the weighted average diluted
shares outstanding were 102.0 million. Approximately 1.1 million
shares were repurchased in June with the cash settlement occurring
subsequent to June 30, 2008. The level of share repurchases continues
to be balanced with the capital needs of reinvesting in the business
and the potential for additional acquisitions.
The Company's performance has led to a ratio of Debt, less cash
and cash equivalents, to Total Capitalization of 22.3% at the end of
the second quarter of 2008, which is down modestly from the March 31,
2008 measure of 23.3%.
Working capital: Working Capital as a percent of Trailing Three
Month Annualized Sales was 22.1% for the period ended June 30, 2008
versus 21.5% for the period ended June 30, 2007, as acquisitions were
the primary reason for the increase. Much of the working capital is
associated with anticipated continued strong growth in the Cranes and
MPM segments, although it also reflects a slowing of demand in certain
businesses. The Company is adjusting production levels as appropriate
to reflect demand.
Backlog: Backlog for orders deliverable during the next twelve
months was $4,224.8 million at June 30, 2008, an increase of
approximately 11.2% versus the second quarter of 2007, and a decrease
of 12.3% versus March 31, 2008.
With regard to the reported backlog, it should be noted that Terex
has not accepted firm orders for a variety of crane types, primarily
rough terrain cranes, which have scheduled delivery 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 2009 that have not
been included in backlog approximate $484 million, based on current
pricing levels. The Company anticipates establishing pricing for these
cranes in the third quarter of 2008.
AWP backlog decreased 46.8% as compared to June 30, 2007, and
decreased 40.2% as compared to March 31, 2008, due to softening
demand, particularly in Western Europe.
Construction segment backlog decreased 2.6% versus the comparable
prior year period and decreased 26.5% as compared to March 31, 2008.
Slowing compact construction demand in Western Europe, combined with
the easing of some supplier constraints (which allowed for increased
production levels), contributed to the decreased backlog.
As compared to June 30, 2007 levels, Cranes segment backlog
increased 45.5%, due primarily to strong global demand. Compared to
March 31, 2008 levels, Cranes backlog decreased 6.0%, due to crane
orders received for 2009 delivery which are not included in the
backlog because they have yet to be priced (as noted above).
MPM backlog increased 24.4% versus June 30, 2007 and increased
7.4% as compared to March 31, 2008, as global commodity market
strength is driving higher demand for mining equipment.
Roadbuilding, Utility Products and Other (RBUO) segment backlog
declined 12.6% versus June 30, 2007 and declined 6.2% as compared to
March 31, 2008, as concrete mixer truck orders slowed.
The Glossary contains further details regarding backlog.
Second Quarter Segment Performance Review
Aerial Work Platforms: Net sales for the AWP segment for the
second quarter of 2008 increased 5.1%, to $672.7 million, versus the
second quarter of 2007. Excluding the translation effect of foreign
currency exchange rate changes, net sales increased approximately 1%.
Net sales in Western Europe did not achieve the Company's growth
expectations this quarter, while U.S. performance was as expected. AWP
performance in developing markets, including the Middle East, Russia,
Eastern Europe and Brazil, continued to expand due to ongoing
construction and infrastructure spending, along with tightening safety
standards for work at height. AWP production is being adjusted to
reflect anticipated demand in the second half of 2008 in the U.S. and
Western Europe.
AWP operating margin in the second quarter of 2008 declined to
18.6% from 23.0% in the second quarter of 2007, primarily due to sales
mix, rising input costs and increased costs associated with the
expansion of the global sales and distribution infrastructure.
Construction: Net sales for the Construction segment for the
second quarter of 2008 increased 23.6% to $620.9 million versus the
second quarter of 2007. Excluding the translation effect of foreign
currency exchange rate changes of approximately $44 million and
acquisition related sales during the second quarter of 2008 of $58.5
million, net sales increased approximately 3% versus the prior year
period.
Weakness in the U.S. construction market continued during the
second quarter of 2008, while compact construction equipment sales
slowed in Western Europe. Demand remains solid for rigid frame dump
trucks as well as material handlers (a product used by scrap steel
yards). Additionally, demand trends in developing markets remain
favorable for Construction, particularly in the Middle East, Africa,
and Eastern Europe.
Construction operating margin decreased to 2.8% for the second
quarter of 2008 from 4.7% for the comparable period in 2007. Rising
input costs pressured operating margin during the second quarter of
2008. Additionally, investments in global sales and support structure,
as well as initiatives in aftermarket services and engineering,
continue to progress, and are expected to contribute to operating
margin expansion over the next two to three years.
Cranes: Net sales for the Cranes segment for the second quarter of
2008 increased 48.7% versus the second quarter of 2007, to $809.8
million. Excluding the translation effect of foreign currency exchange
rate changes, net sales increased approximately 34%. Global
infrastructure and energy demand continues to drive strong sales of
cranes, particularly larger capacity lattice boom crawler cranes,
tower cranes and rough terrain cranes. The North American market
remains strong for large capacity cranes, but sales of smaller
capacity cranes, including boom trucks and lower capacity truck
cranes, remain soft.
Cranes operating margin increased to 15.6% during the second
quarter of 2008, up from 10.4% in the comparable prior year period.
The increase was primarily driven by higher volume and favorable sales
mix, combined with historical pricing actions working through the
backlog. Cranes mix in the quarter was oriented towards higher margin
larger capacity cranes. Supplier constraints in Europe for select
components, such as hydraulics and gear boxes, have improved, as have
welding and assembly capacity constraints.
Capacity changes are being implemented in the Company's Cranes
facilities, which are expected to increase throughput while minimizing
the addition of fixed costs. For example, production of rough terrain
cranes in the Company's Waverly, Iowa facility has already doubled in
the past year as a result of efficiency gains with no increase in
square footage. Future throughput improvements are expected in the
Company's German and Chinese crane manufacturing locations.
Materials Processing & Mining: Net sales for the MPM segment for
the second quarter of 2008 increased 32.2% versus the second quarter
of 2007, to $681.5 million. Excluding the translation effect of
foreign currency exchange rate changes and recent acquisitions, net
sales increased approximately 23%.
The overall MPM operating margin of 16.2% for the second quarter
of 2008 was substantially higher than the comparable 2007 operating
margin of 12.2%, mainly driven by the Mining business performance.
The Materials Processing business continues to generate strong net
sales growth and consistent profitability. Materials Processing sales
continue to benefit from global infrastructure development,
particularly in developing markets, tempered modestly by softness that
has begun to develop in the U.S. and parts of Western Europe.
The Mining business had a very strong second quarter, as net sales
growth continues to be driven by commodity demand, including the
surface mining of iron ore and coal. This includes the sale of the
second of two RH400 hydraulic excavators, the world's largest mobile
hydraulic excavator, during the second quarter of 2008 to a customer
operating in the Canadian oil sands.
Higher operating margin replacement part sales have increased
substantially compared to the prior year period, due to the growing
installed base of hydraulic mining excavators that have strong
utilization rates at mine sites. Additionally, extensive flooding in
parts of Australia during the first quarter of 2008 pushed some mining
business sales into the second quarter of 2008, which together with
equipment repairs from the flooding, favorably impacted parts sales.
Capacity continues to be a limiting factor to meeting Mining
product demand, particularly for hydraulic mining excavators, along
with some supplier constraints for hydraulics and gear boxes. The
Company is continuing to adjust its global manufacturing footprint to
better meet demand.
Roadbuilding, Utility Products and Other: Net sales for the RBUO
segment for the second quarter of 2008 increased 13.3%, to $191.3
million, versus the second quarter of 2007. Excluding the translation
effect of foreign currency exchange rate changes, net sales increased
approximately 11%. The Utility Products, Roadbuilding and Government
Programs businesses all witnessed sales growth, although concrete
mixer truck sales were essentially flat when compared to the second
quarter of 2007.
Trends in the Company's Utility Products business are positive.
Roadbuilding net sales remained soft, as U.S. infrastructure spending
remains weak, resulting in the continued implementation of cost
containment strategies within this business. The Company will continue
to monitor the estimated fair value of the Roadbuilding business for
purposes of determining whether a goodwill impairment is evidenced.
RBUO operating margin was 5.1% in the second quarter of 2008
versus 2.4% for the comparable period in 2007. Increased volume
combined with cost containment, particularly manufacturing
efficiencies recognized within the Utility Products business, resulted
in improved operating margin for the entire segment.
Corporate / Eliminations: The increase in loss from operations to
$19.0 million for the second quarter of 2008 versus the prior year
period's $10.2 million loss from operations reflects continued
investment in initiatives to support the growth of the Company. This
includes marketing programs, the people, systems and support to create
leading supply chain management and manufacturing capabilities, and
the necessary training to maximize the impact of the Terex Business
System. Legal costs also increased in the second quarter 2008 compared
to the prior year period. The loss was partially 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 Six Months
Ended June 30, Ended June 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 2,935.9 $ 2,342.2 $ 5,298.6 $ 4,354.9
Cost of goods sold (2,284.7) (1,835.1) (4,133.4) (3,435.8)
---------- ---------- ---------- ----------
Gross profit 651.2 507.1 1,165.2 919.1
Selling, general and
administrative expenses (280.3) (222.6) (538.0) (433.9)
---------- ---------- ---------- ----------
Income from
operations 370.9 284.5 627.2 485.2
Other income (expense)
Interest income 5.0 3.5 14.1 6.9
Interest expense (24.3) (14.7) (49.8) (28.9)
Loss on early
extinguishment of
debt - - - (12.5)
Other income
(expense) - net 1.5 (2.0) 8.1 2.6
---------- ---------- ---------- ----------
Income before income
taxes 353.1 271.3 599.6 453.3
Provision for income taxes (116.8) (96.7) (200.0) (164.9)
---------- ---------- ---------- ----------
Net income $ 236.3 $ 174.6 $ 399.6 $ 288.4
========== ========== ========== ==========
PER COMMON SHARE:
Basic $ 2.35 $ 1.70 $ 3.96 $ 2.81
========== ========== ========== ==========
Diluted $ 2.32 $ 1.66 $ 3.89 $ 2.75
========== ========== ========== ==========
Weighted average number of
shares outstanding in per
share calculation
Basic 100.5 102.8 100.8 102.5
========== ========== ========== ==========
Diluted 102.0 104.9 102.6 104.7
========== ========== ========== ==========
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except par value)
June 30, Dec 31,
2008 2007
--------- --------
Assets
Current assets
Cash and cash equivalents $ 590.0 $1,272.4
Trade receivables (net of allowance of $69.1
and $62.5 at June 30, 2008
and December 31, 2007, respectively) 1,512.8 1,195.8
Inventories 2,530.2 1,934.3
Deferred taxes 163.7 166.3
Other current assets 247.5 208.1
-------- --------
Total current assets 5,044.2 4,776.9
Long-term assets
Property, plant and equipment - net 502.6 419.4
Goodwill 1,010.6 699.0
Deferred taxes 98.2 143.1
Other assets 338.2 277.9
-------- --------
Total assets $6,993.8 $6,316.3
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable and current portion of long-term
debt $ 36.1 $ 32.5
Trade accounts payable 1,451.1 1,212.9
Accrued compensation and benefits 200.6 194.8
Accrued warranties and product liability 150.9 132.0
Customer advances 112.6 181.8
Other current liabilities 569.6 421.3
-------- --------
Total current liabilities 2,520.9 2,175.3
Non-current liabilities
Long-term debt, less current portion 1,319.8 1,319.5
Retirement plans and other 488.5 478.3
-------- --------
Total liabilities 4,329.2 3,973.1
-------- --------
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value - authorized 300.0
shares; issued 106.9 and
106.2 shares at June 30, 2008 and December 31, 2007,
respectively 1.1 1.1
Additional paid-in capital 1,024.2 1,004.1
Retained earnings 1,679.4 1,284.7
Accumulated other comprehensive income 359.8 256.6
Less cost of shares of common stock in
treasury - 8.3 and 5.9 shares at
June 30, 2008 and December 31, 2007,
respectively (399.9) (203.3)
-------- --------
Total stockholders' equity 2,664.6 2,343.2
-------- --------
Total liabilities and stockholders' equity $6,993.8 $6,316.3
======== ========
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in millions)
Six Months
-----------------
Ended June 30,
-----------------
2008 2007
-------- --------
Operating Activities
Net income $ 399.6 $ 288.4
Adjustments to reconcile net income to cash used
in operating activities:
Depreciation 36.4 30.5
Amortization 10.5 6.1
Deferred taxes 19.3 (4.4)
Loss on early extinguishment of debt - 3.2
Gain on sale of assets (1.2) (5.0)
Stock-based compensation 31.9 33.4
Excess tax benefit from stock-based
compensation (6.5) (17.2)
Changes in operating assets and liabilities
(net of effects of acquisitions and
divestitures):
Trade receivables (232.7) (244.8)
Inventories (446.4) (373.7)
Trade accounts payable 176.6 192.9
Accrued compensation and benefits (22.7) (13.8)
Income taxes payable 74.0 54.5
Accrued warranties and product liability 8.3 8.4
Customer advances (78.1) 11.6
Other, net (25.1) (59.1)
-------- --------
Net cash used in operating activities (56.1) (89.0)
-------- --------
Investing Activities
Acquisition of businesses, net of cash acquired (478.1) -
Capital expenditures (63.8) (44.0)
Proceeds from sale of assets 2.8 9.7
-------- --------
Net cash used in investing activities (539.1) (34.3)
-------- --------
Financing Activities
Principal repayments of long-term debt - (200.0)
Excess tax benefit from stock-based compensation 6.5 17.2
Proceeds from stock options exercised 2.0 8.1
Net borrowings under revolving line of credit
agreements 1.0 84.4
Share repurchases (135.6) (24.7)
Other, net (1.2) 1.4
-------- --------
Net cash used in financing activities (127.3) (113.6)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 40.1 13.6
-------- --------
Net Decrease in Cash and Cash Equivalents (682.4) (223.3)
Cash and Cash Equivalents at Beginning of Period 1,272.4 676.7
-------- --------
Cash and Cash Equivalents at End of Period $ 590.0 $ 453.4
======== ========
TEREX CORPORATION AND SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(in millions)
(unaudited)
Second Quarter
-------------------------------
2008 2007
--------------- ---------------
% of % of
Net Net
sales sales
----- -----
Consolidated
Net sales $2,935.9 $2,342.2
--------- ---------
Gross profit $ 651.2 22.2% $ 507.1 21.7%
SG&A 280.3 9.5% 222.6 9.5%
--------- ---------
Income from operations $ 370.9 12.6% $ 284.5 12.1%
AWP
Net sales $ 672.7 $ 640.3
--------- ---------
Gross profit $ 182.7 27.2% $ 194.9 30.4%
SG&A 57.4 8.5% 47.9 7.5%
--------- ---------
Income from operations $ 125.3 18.6% $ 147.0 23.0%
Construction
Net sales $ 620.9 $ 502.5
--------- ---------
Gross profit $ 82.3 13.3% $ 71.5 14.2%
SG&A 64.7 10.4% 47.8 9.5%
--------- ---------
Income from operations $ 17.6 2.8% $ 23.7 4.7%
Cranes
Net sales $ 809.8 $ 544.5
--------- ---------
Gross profit $ 184.8 22.8% $ 103.0 18.9%
SG&A 58.2 7.2% 46.2 8.5%
--------- ---------
Income from operations $ 126.6 15.6% $ 56.8 10.4%
MPM
Net sales $ 681.5 $ 515.6
--------- ---------
Gross profit $ 170.0 24.9% $ 112.2 21.8%
SG&A 59.4 8.7% 49.1 9.5%
--------- ---------
Income from operations $ 110.6 16.2% $ 63.1 12.2%
RBUO
Net sales $ 191.3 $ 168.8
--------- ---------
Gross profit $ 33.3 17.4% $ 26.1 15.5%
SG&A 23.5 12.3% 22.0 13.0%
--------- ---------
Income from operations $ 9.8 5.1% $ 4.1 2.4%
Corporate/ Eliminations
Net sales $ (40.3) $ (29.5)
Income from operations $ (19.0) 47.1% $ (10.2) 34.6%
Year-to-Date
--------------------------------
2008 2007
---------------- ---------------
% of % of
Net Net
sales sales
----- -----
Consolidated
Net sales $5,298.6 $4,354.9
---------- ---------
Gross profit $1,165.2 22.0% $ 919.1 21.1%
SG&A 538.0 10.2% 433.9 10.0%
---------- ---------
Income from operations $ 627.2 11.8% $ 485.2 11.1%
AWP
Net sales $1,259.3 $1,188.0
---------- ---------
Gross profit $ 349.3 27.7% $ 341.3 28.7%
SG&A 117.4 9.3% 95.0 8.0%
---------- ---------
Income from operations $ 231.9 18.4% $ 246.3 20.7%
Construction
Net sales $1,069.2 $ 910.3
---------- ---------
Gross profit $ 140.0 13.1% $ 121.9 13.4%
SG&A 119.3 11.2% 92.1 10.1%
---------- ---------
Income from operations $ 20.7 1.9% $ 29.8 3.3%
Cranes
Net sales $1,442.0 $1,045.3
---------- ---------
Gross profit $ 325.1 22.5% $ 202.6 19.4%
SG&A 112.7 7.8% 92.8 8.9%
---------- ---------
Income from operations $ 212.4 14.7% $ 109.8 10.5%
MPM
Net sales $1,245.8 $ 910.9
---------- ---------
Gross profit $ 297.6 23.9% $ 202.5 22.2%
SG&A 118.3 9.5% 93.0 10.2%
---------- ---------
Income from operations $ 179.3 14.4% $ 109.5 12.0%
RBUO
Net sales $ 360.5 $ 347.6
---------- ---------
Gross profit $ 55.0 15.3% $ 50.2 14.4%
SG&A 45.9 12.7% 43.7 12.6%
---------- ---------
Income from operations $ 9.1 2.5% $ 6.5 1.9%
Corporate/ Eliminations
Net sales $ (78.2) $ (47.2)
Income from operations $ (26.2) 33.5% $ (16.7) 35.4%
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 June
30, 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.
June June
30, 30, % Mar 31, %
2008 2007 change 2008 change
------- ------- -------- ------- --------
Consolidated Backlog $4,224.8 $3,800.3 11.2% $4,815.6 (12.3)%
AWP $ 419.4 $ 788.8 (46.8)%$ 701.0 (40.2)%
Construction $ 651.5 $ 668.9 (2.6)%$ 886.1 (26.5)%
Cranes (1) $2,058.0 $1,414.1 45.5% $2,189.1 (6.0)%
MPM $ 955.6 $ 767.9 24.4% $ 889.8 7.4%
RBUO $ 140.3 $ 160.6 (12.6)%$ 149.6 (6.2)%
(1) Terex has not accepted firm orders for a variety of crane
types (primarily rough terrain cranes) that have scheduled delivery
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 $484 million.
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 $1,319.8
Notes payable and current portion of long-term debt 36.1
------------------------------------------------------------- --------
Debt $1,355.9
========
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 Six months ended
June 30, June 30,
------------------ ----------------
2008 2007 2008 2007
----------- ----- --------- -----
Income from operations $ 370.9 $284.5 $ 627.2 $485.2
Depreciation 19.2 14.6 36.4 30.5
Amortization 5.3 3.7 10.5 6.1
Bank fee amortization not
included
in Income from operations (0.8) (0.5) (1.6) (1.0)
----------- ----- --------- -----
EBITDA $ 394.6 $302.3 $ 672.5 $520.8
=========== ===== ========= =====
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' NOPAT, 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.
Jun 08 Mar 08 Dec 07 Sep 07 Jun 07
--------- --------- ---------- --------- ---------
Income before
income taxes $ 353.1 $ 246.5 $ 236.0 $ 230.0
Divided by:
Provision for
income taxes 116.8 83.2 62.0 78.5
========= ========= ========== =========
Effective tax rate 33.1% 33.8% 26.3% 34.1%
Income from
operations 370.9 256.3 239.9 236.3
Multiplied by: 1
minus Effective
tax rate 66.9% 66.2% 73.7% 65.9%
Net operating
profit after tax $ 248.1 $ 169.7 $ 176.8 $ 155.7
========= ========= ========== =========
Debt (as defined
above) $1,355.9 $1,373.4 $ 1,352.0 $ 705.6 $ 651.7
Less: Cash and cash
equivalents (590.0) (604.2) (1,272.4) (516.6) (453.4)
--------- --------- ---------- --------- ---------
Debt less Cash and
cash equivalents $ 765.9 $ 769.2 $ 79.6 $ 189.0 $ 198.3
========= ========= ========== ========= =========
Total stockholders'
equity $2,664.6 $2,538.1 $ 2,343.2 $2,254.4 $2,073.4
========= ========= ========== ========= =========
Debt less Cash and
cash
equivalents plus
Total
stockholders'
equity $3,430.5 $3,307.3 $ 2,422.8 $2,443.4 $2,271.7
========= ========= ========== ========= =========
NOPAT (4 qtrs) $ 750.3
Avg Net Debt plus
Equity (5 qtr
ends) $2,775.1
ROIC 27.0%
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
June 30, 2008 is defined as the sum of:
-- Total stockholders' equity; and
-- Debt (as defined above);
-- Less: Cash and cash equivalents.
Total stockholders' equity $2,664.6
Debt (as defined above) 1,355.9
less: Cash and cash equivalents (590.0)
------------------------------------------------------------ --------
Total Capitalization $3,430.5
========
Trailing Three Month Annualized Sales is calculated using the net
sales for the quarter multiplied by four.
Second Quarter Net Sales $ 2,935.9
x 4
------------------------------------------------------------ --------
Trailing Three Month Annualized Sales $11,743.6
========
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 June 30, 2008, working capital was:
Inventories $ 2,530.2
Trade Receivables, net 1,512.8
Less: Trade Accounts Payable (1,451.1)
----------------------------------------------------------- ---------
Total Working Capital $ 2,591.9
=========
CONTACT: Terex Corporation
Laura Kiernan, 203-222-5943
Director, Investor Relations
laura.kiernan@terex.com
or
Kurt Goddard, 203-222-6160
Manager, Investor Relations
kurt.goddard@terex.com
SOURCE: Terex Corporation