Terex Corporation (NYSE:TEX) today announced income from
continuing operations of $209.0 million, or $1.79 per share, on net
sales of $7.1 billion for the full year 2013, as compared to income
from continuing operations of $77.0 million, or $0.68 per share, on
net sales of $7.0 billion for the full year 2012. Excluding certain
items, income from continuing operations as adjusted for the full
year 2013 was $261.2 million or $2.23 per share compared to $179.5
million or $1.58 per share in 2012. The Glossary at the end of this
press release contains further details regarding these items and
all per share amounts are on a fully diluted basis.
For the fourth quarter of 2013 income from continuing operations
was $84.8 million, or $0.72 per share, on net sales of $1.8
billion, compared to a loss from continuing operations of $33.2
million, or $0.30 per share, on net sales of $1.6 billion, for the
fourth quarter of 2012. Excluding certain items, income from
continuing operations as adjusted was $76.8 million, or $0.65 per
share in 2013 compared to $19.4 million, or $0.17 per share in
2012.
“Overall, 2013 was a good year and I am pleased with the
improvements and progress underway at Terex,” commented Ron DeFeo,
Terex Chairman and CEO. “This past year was a tale of two halves,
with the second half of the year significantly stronger than the
first half. Our performance in the second half was fueled by the
continued strength of our Aerial Work Platforms (AWP) segment and a
turnaround in our Materials Handling & Port Solutions (MHPS)
segment. Our focus throughout the year on strengthening margins and
driving financial efficiency helped deliver a strong close to the
year.
“Operationally, our AWP segment is continuing to benefit from
strong North American rental channel demand plus a noticeable
pickup in Latin America and European performance. Additionally, the
Materials Processing (MP) segment performance remains solid,
delivering double digit operating margin in 2013 despite a
relatively soft demand environment. These business segments
performed well in 2013 and we expect even better performance in
2014. The remaining three segments did not meet our expectations in
2013. However, we have made good progress with the integration of
our MHPS segment and we expect continued progress in 2014. The
pending sale of our off highway truck business results in a smaller
and more focused Construction portfolio. We have confidence we can
improve the financial profile of this segment going forward.
Lastly, our Cranes segment failed to realize the growth that we had
anticipated entering 2013. While new product launches did provide
some growth, markets such as Australia, Europe and Latin America
were more challenging than anticipated.”
Mr. DeFeo continued, “During 2013, we made investments and
implemented actions to set us on a course toward increased
profitability in 2014 and beyond. We enter 2014 with optimism
around our businesses and expectations to deliver improved
financial results. Much of this optimism stems from our continued
focus on internal areas of improvement, such as our capital
structure initiatives and business simplification, as well as the
year over year benefits anticipated from the restructuring efforts
undertaken in 2013.”
Outlook
The Company expects 2014 earnings per share to be between $2.50
and $2.80 (excluding restructuring and other unusual items) on net
sales of between $7.3 billion and $7.7 billion.
Mr. DeFeo commented, “Our 2014 guidance reflects the benefits of
internal cost initiatives, capital structure improvements and some
anticipated net sales growth. The guidance is for continuing
operations, and as such excludes the earnings associated with the
off-highway truck business due to its impending sale. We see some
signs of improvement in many parts of the world although this is
tempered with some continued market uncertainty, particularly in
developing markets. Overall, we believe that the global economy
will be stronger in 2014, but still modest when viewed against
historic demand levels.”
Capital Structure: The Company’s
liquidity at December 31, 2013 decreased by approximately $30
million compared to September 30, 2013 and totaled $736.2 million,
which comprised cash of $408.1 million and borrowing availability
under the Company’s revolving credit facilities of $328.1 million.
The decrease was mainly due to investments in capital expenditures
and the repurchase of Terex Common Stock during the quarter. Debt,
less cash and cash equivalents, increased approximately $148
million to $1,568.6 million compared to December 31, 2012 primarily
as a result of the purchase of minority shares of Terex Material
Handling & Port Solutions AG.
Kevin Bradley, Terex Senior Vice President and Chief Financial
Officer, commented, “One of our main focuses is improving our
financial efficiency. During 2013 and into early 2014 we have taken
a couple of steps forward in this area. Over the past 12 months we
have reduced our debt and also lowered the interest rates on our
term loans, yielding a meaningful reduction in interest expense
from 2012. In January 2014, we completed the squeeze out of the
remaining outstanding minority shares of Terex Material Handling
& Port Solutions AG, and now have attained 100% ownership. This
simplifies our capital structure by eliminating the obligation to
make guaranteed payments to the minority shareholders and also
removes the complexity and financial cost of maintaining the entity
as a German public company.”
Mr. Bradley continued, “We are pleased that these positive steps
have enabled us to be in a position where we can begin to return a
portion of our cash flow to our shareholders on a regular basis. We
initiated a quarterly dividend and also announced a share
repurchase program of up to $200 million. During the fourth quarter
we began to take action under this program, purchasing
approximately 0.8 million shares for approximately $30 million.
Overall, we are pleased with the evolution of our capital structure
and shareholder returns, and will continue to focus on cash flow
generation throughout 2014.”
Return on Invested Capital (ROIC) was 8.1% for the period ended
December 31, 2013.
Taxes: The effective tax rate was
21.0% for the fourth quarter of 2013 and 30.0% for the full year as
compared to an effective tax rate of 22.6% for the fourth quarter
of 2012 and 40.8% for the full year.
Working Capital: Working Capital as
a percent of Trailing Three Month Annualized Net Sales was 24.8% at
December 31, 2013, as compared to 26.9% at December 31, 2012.
Backlog: Backlog for orders
deliverable during the next twelve months was approximately $1,828
million at December 31, 2013, an increase of approximately 1.8%
from September 30, 2013 and a decrease of approximately 7.5% from
December 31, 2012. The majority of the year over year decline was
related to AWP backlog, driven by the timing of orders received
from one of our larger rental customers, and lower demand for Crane
products. This was partially offset by existing large port
equipment orders for MHPS, which are now deliverable in the next
twelve months. The Glossary contains further details regarding
backlog.
Discontinued Operations: The
results of the off-highway rigid and articulated haul trucks
business are classified as Discontinued Operations in the financial
statements.
In this press release, Terex refers to various GAAP (U.S.
generally accepted accounting principles) an 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 the text or the Glossary
at the end of this press release.
Conference call
The Company has scheduled a one-hour conference call to review
the financial results on Wednesday, February 19, 2014, at 8:30 a.m.
ET. Ronald M. DeFeo, Chairman and CEO, will host the call. A
simultaneous webcast of this call will be available on the
Company’s website, www.terex.com. To listen to the call, select
“Investor Relations” in the “About Terex” section on the home page
and then click on the webcast microphone link. Participants are
encouraged to access the call 10 minutes prior to the starting
time. The call will also be archived on the Company’s website under
“Audio Archives” in the “Investor Relations” section of the
website.
Forward-Looking Statements
This press release contains forward-looking information
regarding future events or the Company’s future financial
performance based on the current expectations of Terex Corporation.
In addition, when included in this press release, the words “may,”
“expects,” “intends,” “anticipates,” “plans,” “projects,”
“estimates” and the negatives thereof and analogous or similar
expressions are intended to identify forward-looking statements.
However, the absence of these words does not mean that the
statement is not forward-looking. The Company has based these
forward-looking statements on current expectations and projections
about future events. These statements are not guarantees of future
performance.
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 cyclical and weak general
economic conditions affect the sales of our products and financial
results; our ability to successfully integrate acquired businesses,
including Terex Material Handling & Port Solutions AG; the need
to comply with restrictive covenants contained in our debt
agreements; our ability to generate sufficient cash flow to service
our debt obligations and operate our business; our ability to
access the capital markets to raise funds and provide liquidity;
our business is sensitive to government spending; our business is
very competitive and is affected by our cost structure, pricing,
product initiatives and other actions taken by competitors; our
ability to timely manufacture and deliver products to customers;
our retention of key management personnel; the financial condition
of suppliers and customers, and their continued access to capital;
our providing financing and credit support for some of our
customers; we may experience losses in excess of recorded reserves;
impairment in the carrying value of goodwill and other
indefinite-lived intangible assets; our ability to obtain parts and
components from suppliers on a timely basis at competitive prices;
our business is global and subject to changes in exchange rates
between currencies, regional economic conditions and trade
restrictions; our operations are subject to a number of potential
risks, including compliance with changing regulatory environments,
the Foreign Corrupt Practices Act and other similar laws and
political instability; a material disruption to one of our
significant facilities; possible work stoppages and other labor
matters; compliance with changing laws and regulations,
particularly environmental and tax laws and regulations;
litigation, product liability claims, patent claims, class action
lawsuits and other liabilities; our ability to comply with an
injunction and related obligations resulting from the settlement of
an investigation by the United States Securities and Exchange
Commission (“SEC”); our implementation of a global enterprise
system and its performance; 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
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
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 reporting
in five business segments: Aerial Work Platforms, Construction,
Cranes, Material Handling & Port Solutions and Materials
Processing. Terex manufactures a broad range of equipment for use
in various industries, including the construction, infrastructure,
quarrying, manufacturing, mining, shipping, transportation,
refining, energy and utility industries. Terex offers financial
products and services to assist in the acquisition of Terex
equipment through Terex Financial Services. Terex uses its website
(www.terex.com) and its Facebook page
(www.facebook.com/TerexCorporation) to make information available
to its investors and the market.
TEREX CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF
INCOME
(unaudited)
(in millions, except per share data)
Three Months Twelve Months Ended
December 31, Ended December 31, 2013 2012 2013 2012
Net sales $ 1,811.8 $ 1,619.8 $ 7,084.0 $ 6,982.2 Cost of goods
sold (1,426.1 ) (1,319.8 ) (5,644.5 )
(5,582.1 ) Gross profit 385.7 300.0 1,439.5 1,400.1 Selling,
general and administrative expenses (254.3 ) (277.0 )
(1,020.4 ) (1,033.3 ) Income (loss) from operations
131.4 23.0 419.1 366.8 Other income (expense) Interest income 1.7
2.4 6.7 8.8 Interest expense (29.5 ) (34.6 ) (126.1 ) (164.6 ) Loss
on early extinguishment of debt --- (30.7 ) (5.2 ) (83.0 )
Amortization of debt issuance costs (2.2 ) (2.3 ) (8.5 ) (9.6 )
Other income (expense) – net 4.6 1.5
5.3 7.9 Income (loss) from continuing
operations before income taxes 106.0 (40.7 ) 291.3 126.3 (Provision
for) benefit from income taxes (22.3 ) 9.2
(87.4 ) (51.5 ) Income (loss) from continuing
operations 83.7 (31.5 ) 203.9 74.8 Income (loss) from discontinued
operations – net of tax 1.6 1.8 14.4 28.4 Gain (loss) on
disposition of discontinued operations- net of tax ---
(1.9 ) 2.6 0.4 Net income
(loss) 85.3 (31.6 ) 220.9 103.6 Net (income) loss attributable to
noncontrolling interest 1.1 (1.7 ) 5.1
2.2 Net income (loss) attributable to Terex
Corporation $ 86.4 $ (33.3 ) $ 226.0 $ 105.8
Amounts attributable to Terex Corporation common stockholders:
Income (loss) from continuing operations $ 84.8 $ (33.2 ) $ 209.0 $
77.0 Income (loss) from discontinued operations – net of tax 1.6
1.8 14.4 28.4 Gain (loss) on disposition of discontinued operations
– net of tax --- (1.9 ) 2.6
0.4 Net income (loss) attributable to Terex
Corporation $ 86.4 $ (33.3 ) $ 226.0 $ 105.8
Basic Earnings (Loss) Per Share Attributable to Terex Corporation
Common Stockholders: Income (loss) from continuing operations $
0.76 $ (0.30 ) $ 1.88 $ 0.70 Income (loss) from discontinued
operations – net of tax 0.02 0.02 0.13 0.26 Gain (loss) on
disposition of discontinued operations – net of tax ---
(0.02 ) 0.02 --- Net
income (loss) attributable to Terex Corporation $ 0.78 $
(0.30 ) $ 2.03 $ 0.96
Diluted Earnings (Loss) Per Share
Attributable to Terex Corporation Common Stockholders:
Income (loss) from continuing operations $ 0.72 $ (0.30 ) $ 1.79 $
0.68 Income (loss) from discontinued operations – net of tax 0.02
0.02 0.12 0.25 Gain (loss) on disposition of discontinued
operations – net of tax --- (0.02 )
0.02 --- Net income (loss) attributable to
Terex Corporation $ 0.74 $ (0.30 ) $ 1.93 $ 0.93
Weighted average number of shares
outstanding in per share calculation
Basic 111.3 110.5 111.1
110.3 Diluted 117.4 110.5
117.0 113.9
TEREX CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except par value)
December 31,
2013
December 31,
2012
Assets Current assets Cash and cash equivalents $ 408.1 $ 678.0
Trade receivables (net of allowance of
$47.6 and $38.5 at December 31, 2013 and 2012, respectively)
1,176.8 1,026.6 Inventories 1,613.2 1,632.2 Other current assets
312.0 319.6 Current assets – discontinued operations 129.3
141.0 Total current assets 3,639.4 3,797.4
Non-current assets Property, plant and equipment – net 789.4 806.8
Goodwill 1,245.6 1,245.3 Intangible assets – net 444.8 474.4 Other
assets 401.9 410.8 Non-current assets – discontinued operations
15.6 11.5 Total assets $ 6,536.7
$ 6,746.2 Liabilities and Stockholders’ Equity
Current liabilities Notes payable and current portion of long-term
debt $ 86.8 $ 83.8 Trade accounts payable 689.1 600.2 Accrued
compensation and benefits 234.3 224.0 Accrued warranties and
product liability 96.2 92.1 Customer advances 302.1 312.9 Other
current liabilities 270.1 348.5 Current liabilities – discontinued
operations 46.1 47.3 Total current
liabilities 1,724.7 1,708.8 Non-current liabilities Long-term debt,
less current portion 1,889.9 2,014.9 Retirement plans 388.2 430.7
Other non-current liabilities 259.5 308.0 Non-current liabilities –
discontinued operations 5.7 5.6 Total
liabilities 4,268.0 4,468.0 Commitments
and contingencies Redeemable noncontrolling interest 53.9 246.9
Stockholders’ equity
Common stock, $.01 par value – authorized
300.0 shares; issued 123.7 and 122.9 shares at December 31, 2013
and 2012, respectively
1.2 1.2 Additional paid-in capital 1,247.5 1,260.7 Retained
earnings 1,688.1 1,467.7 Accumulated other comprehensive (loss)
income (116.5 ) (124.1 )
Less cost of shares of common stock in
treasury – 13.8 and 13.0 shares at December 31, 2013 and 2012,
respectively
(630.2 ) (597.8 ) Total Terex Corporation
stockholders’ equity 2,190.1 2,007.7 Noncontrolling interest
24.7 23.6 Total stockholders’ equity
2,214.8 2,031.3 Total liabilities, redeemable
noncontrolling interest and stockholders’ equity $ 6,536.7 $
6,746.2
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
(unaudited) (in millions)
Twelve Months
Ended December 31,
2013 2012 Operating Activities Net income $ 220.9 $
103.6
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 152.3 153.0 Changes in operating
assets and liabilities (net of effects of acquisitions and
divestitures): Trade receivables (153.1 ) 122.5 Inventories (70.4 )
(55.0 ) Trade accounts payable 86.9 (126.3 ) Customer advances
(16.5 ) 97.1 Other, net (31.6 ) (2.6 ) Net cash
provided by (used in) operating activities 188.5
292.3 Investing Activities Capital expenditures (82.8
) (82.5 ) Other investing activities, net 45.4
6.2 Net cash (used in) provided by investing activities
(37.4 ) (76.3 ) Financing Activities (420.1 )
(323.3 ) Net cash provided by (used in) financing activities
(420.1 ) (323.3 ) Effect of Exchange Rate Changes on
Cash and Cash Equivalents (0.9 ) 11.2 Net
Increase (Decrease) in Cash and Cash Equivalents (269.9 ) (96.1 )
Cash and Cash Equivalents at Beginning of Period 678.0
774.1 Cash and Cash Equivalents at End of
Period $ 408.1 $ 678.0
TEREX CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(unaudited)
(in millions)
Fourth Quarter Year-to-Date 2013
2012 2013 2012 % of
Net Sales
% of
Net Sales
% of
Net Sales
% of
Net Sales
Consolidated Net sales $ 1,811.8 $ 1,619.8 $
7,084.0 $ 6,982.2 Gross profit 385.7 21.3 % 300.0
18.5 % 1,439.5 20.3 % 1,400.1 20.1 % SG&A 254.3
14.0 % 277.0 17.1 % 1,020.4 14.4 %
1,033.3 14.8 % Income from operations $ 131.4 7.3 % $
23.0 1.4 % $ 419.1 5.9 % $ 366.8 5.3 %
AWP Net sales
$ 482.0 $ 368.3 $ 2,131.0 $ 1,742.4
Gross profit 121.8 25.3 % 80.5 21.9 % 514.9 24.2 % 381.2 21.9 %
SG&A 50.3 10.4 % 44.8 12.2 %
189.1 8.9 % 170.3 9.8 % Income from operations
$ 71.5 14.8 % $ 35.7 9.7 % $ 325.8 15.3 % $ 210.9 12.1 %
Construction Net sales $ 193.5 $ 190.7 $ 820.0
$ 952.1 Gross profit 24.0 12.4 % (5.6 ) (2.9 %) 83.2
10.1 % 68.2 7.2 % SG&A 24.0 12.4 % 42.8
22.4 % 108.0 13.2 % 137.5 14.4 %
Loss from operations $ 0.0 0.0 % $ (48.4 ) (25.4 %) $ (24.8 ) (3.0
%) $ (69.3 ) (7.3 %)
Cranes Net sales $ 480.4
$ 511.2 $ 1,925.5 $ 1,987.6 Gross profit 84.3
17.5 % 113.6 22.2 % 337.1 17.5 % 393.6 19.8 % SG&A 58.6
12.2 % 59.7 11.7 % 226.6 11.8 %
225.6 11.4 % Income from operations $ 25.7 5.3 % $
53.9 10.5 % $ 110.5 5.7 % $ 168.0 8.5 %
MHPS Net
sales $ 528.9 $ 416.3 $ 1,698.5 $ 1,742.1
Gross profit 117.0 22.1 % 73.3 17.6 % 345.4 20.3 % 386.7
22.2 % SG&A 91.0 17.2 % 96.5 23.2 %
387.2 22.8 % 381.1 21.9 % Income (loss)
from operations $ 26.0 4.9 % $ (23.2 ) (5.6 %) $ (41.8 ) (2.5 %) $
5.6 0.3 %
MP Net sales $ 149.9 $ 152.1
$ 628.2 $ 661.5 Gross profit 34.7 23.1 % 34.5 22.7 %
145.4 23.1 % 149.6 22.6 % SG&A 18.0 12.0 %
18.3 12.0 % 73.6 11.7 % 74.3
11.2 % Income from operations $ 16.7 11.1 % $ 16.2 10.7 % $ 71.8
11.4 % $ 75.3 11.4 %
Corporate/Eliminations Net sales
$ (22.9 ) $ (18.8 ) $ (119.2 ) $ (103.5 ) Gross profit 3.9 (17.0 %)
3.7 (19.7 %) 13.5 (11.3 %) 20.8 (20.1 %) SG&A 12.4
(54.1 %) 14.9 (79.3 %) 35.9
(30.1 %) 44.5 (43.0 %) Loss from operations $ (8.5 )
37.1 % $ (11.2 ) 59.6 % $ (22.4 ) 18.8 % $ (23.7 ) 22.9 %
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 (except per share data and percentages),
and are as of or for the period ended December 31, 2013, unless
otherwise indicated.
After-tax gains or expense and per share amounts (Income
from continuing operations as adjusted) are calculated using
pre-tax amounts, applying a tax rate based on jurisdictional rates
to arrive at an after-tax amount. This number is divided by the
weighted average diluted shares to provide the impact on earnings
per share. The Company assesses the impact of these items because
when discussing earnings per share, the Company adjusts for items
it believes are not reflective of operating activities in the
periods.
Fourth Quarter 2013 Pre-Tax
Tax Rate After-Tax EPS*
Restructuring and related items $ 10.0
** $ 8.0 $ 0.07 Total EPS Effect
$ 10.0 $ 8.0 $ 0.07 * Based on weighted
average diluted shares of 117.4M ** Based on a jurisdictional blend
Fourth Quarter 2012
Pre-Tax Tax Rate
After-Tax EPS* Debt – Early
Extinguishment $ (30.7) 35.7% $ (19.7)
$ (0.18) Restructuring and related items (22.5) ** (15.7)
(0.14) Roadbuilding Related (15.3) ** (10.0) (0.09) Post-Employment
Benefits and Other (10.8) **
(7.2) (0.06) Total EPS Effect $ (79.3) $
(52.6) $ (0.47) * Based on weighted average diluted shares of
114.2M ** Based on a jurisdictional blend
Full
Year 2013 Pre-Tax Tax Rate
After-Tax EPS* Roadbuilding
related $ (6.1 ) 36.0% $ (3.9 )
$ (0.03 ) Debt – Early Extinguishment (5.2 ) ** (3.5 ) (0.03
) Restructuring and related items (62.1 ) ** (47.9 ) (0.41 ) MHPS
Redeemable NCI 3.1 -
3.1 0.03 Total EPS Effect
$ (70.3 ) $ (52.2 ) $
(0.44 ) * Based on weighted average diluted shares of 117.0M
** Based on a jurisdictional blend
Full Year
2012 Pre-Tax Tax Rate
After-Tax EPS* Debt – Early
Extinguishment $ (80.6 ) ** $ (52.0 )
$ (0.46 ) Restructuring and related items (29.5 ) **
(19.5 ) (0.17 ) Change in UK rate - - (1.6 ) (0.01 ) Write down of
acquisition related note (12.3 ) - (12.3 ) (0.11 ) Roadbuilding
related (15.3 ) ** (10.0 ) (0.09 ) Post-Employment benefits and
other (10.8 ) ** (7.1 )
(0.06 ) Total EPS Effect $ (148.5 ) $ (102.5 )
$ (0.90 ) * Based on weighted average diluted shares of 113.9M **
Based on a jurisdictional blend
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 the
various Terex businesses is not necessarily indicative of sales to
be recognized in a specified future period.
Dec 31,
2013
Dec 31,
2012
%
change
Sept 30,
2013
%
change
Consolidated Backlog $ 1,827.7 $ 1,976.1 (7.5%) $ 1,796.1 1.8% AWP
$ 294.4 $ 509.9 (42.3%) $ 311.9 (5.6%) Construction $ 165.6 $ 176.0
(5.9%) $ 119.9 38.1% Cranes $ 501.2 $ 642.7 (22.0%) $ 485.4 3.3%
MHPS $ 805.3 $ 577.1 39.5% $ 826.8 (2.6%) MP $ 61.2 $ 70.4 (13.1%)
$ 52.1 17.5%
Debt is calculated using the Condensed 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.
Dec 31, 2013 Dec 31, 2012 Long term
debt, less current portion $ 1,889.9 $ 2,014.9 Notes payable and
current portion of long-term debt 86.8 83.8 Debt $
1,976.7 $ 2,098.7
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 Condensed 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
December 31,
Twelve months ended
December 31,
2013 2012 2013 2012 Income (loss) from operations $
131.4 $ 23.0 $ 419.1 $ 366.8 Depreciation 25.8 27.3 104.4 99.7
Amortization 8.6 13.3 47.1 52.6 Bank fee amortization not included
in Income (loss) from operations (2.2 ) (2.3 )
(8.5 ) (9.6 ) EBITDA $ 163.6 $ 61.3 562.1
509.5 Operating profit adjustments 61.0 67.9
Adjusted EBITDA $ 623.1 $ 577.4
MHPS
- EBITDA
Twelve months ended
December 31,2013
Twelve months ended
December 31,2012
Income (loss) from operations - MHPS $ (41.8 ) $ 5.6 Depreciation
35.8 35.1 Amortization 25.4 29.2 Bank fee amortization not included
in Income (loss) from operations --- (0.5 )
EBITDA - MHPS 19.4 69.4 Operating profit adjustments 46.2
22.3 Adjusted EBITDA - MHPS $ 65.6 $
91.7
Free cash flow is defined as income from operations plus
depreciation and amortization, proceeds from the sale of assets,
certain impairments and write-downs, plus or minus changes in
working capital, customer advances and rental/demo equipment and
less capital expenditures.
Three months ended
December 31, 2013
Twelve months ended
December 31,2013
Income (loss) from operations $ 131.4 $ 419.1 Depreciation and
amortization 34.4 151.5 Proceeds from sale of assets 0.9 46.1
Changes in working capital (13.6 ) (161.2 ) Capital expenditures
(21.6 ) (79.5 ) Free cash flow $ 131.5 $ 376.0
Income (loss) from operations as adjusted: The Company
adjusts income (loss) from operations for items it believes are not
reflective of operating activities in the periods.
Three months ended Dec 31,
Twelve Months ended Dec 31,
2013 2012 2013 2012
Income (loss) from operations
as reported $ 131.4 $ 23.0 $ 419.1 $ 366.8 Write Down of
Acquisition Related Note - - - 12.3 Roadbuilding Related - 15.3 3.4
15.3 Restructuring and Related Items (10.0 ) 22.5 57.6 29.5 Other
Items - 10.8 - 10.8
Income
(loss) from operations as adjusted $ 121.4 $ 71.6 $
480.1 $ 434.7
Operating Margin is defined as the ratio of Income (Loss)
from Operations to Net Sales.
Return on Invested Capital (“ROIC”) is determined by
dividing the sum of Net Operating Profit After Tax (“NOPAT”) (as
defined below) for each of the previous four quarters by the
average of the sum of Total Terex Corporation Stockholders’ equity
plus Debt (as defined above) less Cash and cash equivalents for the
previous five quarters. NOPAT, which is a non-GAAP measure, for
each quarter is calculated by multiplying Income (loss) from
continuing operations by a figure equal to one minus the effective
tax rate of the Company. The Company believes that returns on
capital deployed in Terex Financial Services (“TFS”) do not
represent management of the Company’s primary operations and,
therefore, TFS finance receivable assets and results of operations
have been excluded from the calculation below. Additionally, the
Company does not believe that the deferred gain on marketable
securities is reflective of its ongoing operations and has been
excluded from the calculation below. The effective tax rate is
equal to the (Provision for) benefit from income taxes divided by
Income (loss) before income taxes for the respective quarter. Total
Terex Corporation Stockholders’ equity is adjusted to include
redeemable noncontrolling interest as this item is deemed to be
temporary equity and therefore the Company believes it should be
included in the denominator of the ROIC ratio. The Company
calculates ROIC 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,
the Company includes the average of five quarters’ ending balance
sheet amounts so that the denominator includes the average of the
opening through ending balances (on a quarterly basis) thereby
providing, over the same time period as the numerator, four
quarters of average invested capital.
Terex management and the Board of Directors use ROIC as one of
the primary measures to assess operational performance and in
connection with certain compensation programs. Terex utilizes ROIC
as a unifying metric because management believes that it measures
how effectively the Company invests its capital and provides a
better measure to compare the Company to peer companies to assist
in assessing how it drives operational improvement. ROIC measures
return on the amount of capital invested in the Company’s primary
businesses, excluding TFS, as opposed to another metric such as
return on Terex Corporation stockholders’ equity that only
incorporates book equity, and is thus a more accurate and
descriptive measure of the Company’s performance. Terex also
believes that adding Debt less Cash and cash equivalents to Total
Terex Corporation 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.
See reconciliation of adjusted amounts below on table following
ROIC table. Amounts are as of and for the three months ended for
the periods referenced in the table below.
Dec ‘13 Sept ‘13 Jun ‘13 Mar ‘13
Dec ‘12 Provision for (benefit from) income taxes $ 22.3 $
22.8 $ 27.7 $ 14.6 Divided by: Income (loss) before income taxes
106.0 106.6 46.4
32.3 Effective tax rate 21.0 % 21.4 % 59.7 % 45.2 %
Income from operations as adjusted $ 131.5 $ 139.4 $ 83.8 $ 66.1
Multiplied by: 1 minus Effective tax rate 79.0 % 78.6
% 40.3 % 54.8 % Adjusted net operating income after
tax $ 103.9 $ 109.6 $ 33.8 $ 36.2
Debt (as defined above) $ 1,976.7 $ 1,905.9 $ 1,870.4 $
2,082.5 $ 2,098.7 Less: Cash and cash equivalents (408.1 )
(370.6 ) (548.2 ) (729.7 ) (678.0 )
Debt less Cash and cash equivalents $ 1,568.6 $ 1,535.3 $ 1,322.2 $
1,352.8 $ 1,420.7 Total Terex Corporation stockholders’
equity as adjusted $ 2,092.4 $ 2,002.2 $ 2,042.7
$ 2,053.8 $ 2,103.7 Debt less Cash and
cash equivalents plus Total Terex Corporation stockholders’ equity
as adjusted $ 3,661.0
$
3,537.5
$
3,364.9
$
3,406.6
$ 3,524.4 December 31, 2013 ROIC
8.1 % Adjusted net operating income (loss) after tax (last 4
quarters) $ 283.5 Average Debt less Cash and cash
equivalents plus Total Terex Corporation stockholders’ equity as
adjusted (5 quarters) $ 3,498.9
Threemonths
ended
12/31/13
Threemonths
ended
9/30/13
Threemonths
ended
6/30/13
Threemonths
ended
3/31/13
Reconciliation of income (loss) from operations: Income from
operations as reported $ 131.4 $ 138.6 $ 83.5 $ 65.6 (Income) loss
from operations for TFS 0.1 0.8 0.3 0.5
Income from operations as adjusted $ 131.5 $ 139.4 $ 83.8 $ 66.1
Reconciliation of Terex
Corporation stockholders’ equity: As of
12/31/13
As of
9/30/13
As of
6/30/13
As of
3/31/13
As of
12/31/12
Terex Corporation stockholders’ equity as reported $ 2,190.1 $
2,094.2 $ 1,955.8 $ 1,957.5 $ 2,007.7 Less: TFS assets (151.6 )
(149.8 ) (139.7 ) (147.5 ) (150.9 ) Redeemable noncontrolling
interest 53.9 57.8 226.6
243.8 246.9 Terex Corporation
stockholders’ equity as adjusted $ 2,092.4 $ 2,002.2
$ 2,042.7 $
2,053.8
$ 2,103.7
Trailing Three Month Annualized Net Sales is calculated
using the net sales for the quarter multiplied by four.
Three Months Ended
December 31,
2013 2012 Fourth Quarter Net Sales $ 1,811.8 1,619.8
x 4
x 4
Trailing Three Month Annualized Net Sales $ 7,247.2 6,479.2
Working Capital is calculated using the Consolidated
Balance Sheet amounts for Trade receivables (net of allowance) plus
Inventories less Trade accounts payable and Customer Advances. 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. For the
periods stated below, working capital was:
Dec 31, 2013 Sept 30, 2013
Dec 31, 2012 Inventories $ 1,613.2 $ 1,669.0 $ 1,632.2 Trade
Receivables 1,176.8 1,122.5 1,026.6 Less: Trade Accounts Payable
(689.1 ) (676.3 ) (600.2 ) Less: Customer Advances (302.1 )
(312.1 ) (312.9 ) Total Working Capital $ 1,798.8
$ 1,803.1 $ 1,745.7
Terex CorporationTom Gelston, 203-222-5943Vice President,
Investor Relationsthomas.gelston@terex.com
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