Terex Corporation (NYSE:TEX) today announced income from
continuing operations of $259.0 million, or $2.27 per share, on net
sales of $7.3 billion for the full year 2014, as compared to 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. Excluding the
$0.49 per share tax benefit related to the ASV disposition and
certain other items, income from continuing operations as adjusted
for the full year 2014 was $268.5 million, or $2.35 per share,
compared to $261.2 million, or $2.23 per share, in 2013. 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 2014 income from continuing operations
was $79.9 million, or $0.71 per share, on net sales of $1.8
billion, compared to income from continuing operations of $84.8
million, or $0.72 per share, on net sales of $1.8 billion for the
fourth quarter of 2013. Excluding the $0.49 per share tax benefit
related to the ASV disposition and certain other items, income from
continuing operations as adjusted was $80.3 million, or $0.72 per
share, in 2014 compared to $76.8 million, or $0.65 per share, in
2013.
“Terex continued to improve in 2014 despite a more challenging
operating environment than anticipated entering the year,”
commented Ron DeFeo, Terex Chairman and CEO. “We have streamlined
our business portfolio, reduced our cost structure, introduced
innovative new products, and simplified operations. There is more
work to do, but overall we are pleased with the progress we have
made and the momentum of our internal improvement initiatives.
Additionally in 2014, we repurchased 5.3 million shares, lowered
borrowing costs and extended our debt maturity dates, as well as
generated $329 million of free cash flow. Consequently, we have
announced a new $200 million share repurchase authorization, as
well as an increase in our dividend of 20%.”
“Operationally, performance was mixed during 2014, and the
fourth quarter was no exception. Our Cranes and Materials Handling
& Ports Solutions (MHPS) segments had meaningful adjusted
operating profit increases in the fourth quarter, while our Aerial
Work Platforms (AWP) segment was substantially below the prior
year. During the fourth quarter of 2013, AWP performance was
particularly strong as we focused on producing equipment during
that traditionally softer demand period to capture incremental
demand in the quarter, as well as level the production load on our
factories. Conversely, in the fourth quarter of 2014, we curtailed
production to align our product build schedules more closely with
actual demand and machine configuration in our order book.
Importantly, however, AWP backlog increased 137% when compared with
the prior year, giving us confidence that 2015 will be another
solid year for this segment.”
Mr. DeFeo continued, “For the full year, adjusted operating
profit for the company as a whole was flat with 2013; however, the
contribution varied by segment. Performance this year was led by
adjusted operating profit improvements of $54 million and $23
million from MHPS and Construction, respectively. Cranes and AWP
disappointed with adjusted operating profit performance of $35
million and $25 million below 2013, respectively. Cranes
performance was negatively impacted by lower net sales and AWP by
productivity, product mix and higher material costs. MP operating
profit declined by $11 million during the year, driven by
unfavorable mix and investments in growth initiatives. Lastly, we
are pleased that our overall working capital as a percentage of
sales improved to 22.5% and ROIC for the year was 11.2% or 310
basis points higher than 2013.”
Outlook: The Company expects 2015
earnings per share between $2.00 and $2.30 (excluding restructuring
and other unusual items) on net sales of between $6.2 billion and
$6.6 billion. We anticipate currency and the ASV disposition will
negatively affect net sales between $650 million and $750 million
and EPS between $0.15 and $0.20 per share.
Mr. DeFeo commented, “Our improvement program targeting $202
million of incremental operating profit over the next few years is
progressing as planned. We anticipate approximately $50 million of
profit improvements in 2015 from these initiatives. Furthermore,
tax and cash generation initiatives remain on track. Market
uncertainty from oil price and currency volatility is a key
contributor to our sales outlook. We will continue to focus on what
we can influence and believe improved operating conditions will
eventually return.”
Capital Structure: The Company’s
liquidity at December 31, 2014 increased by approximately $184
million compared to September 30, 2014, for a total of $1,078
million, which comprised cash of $478 million and borrowing
availability under the Company’s revolving credit facilities of
$600 million. The increase was mainly due to an improvement in
working capital, offset by the repurchase of Terex common stock
during the quarter and capital expenditures. Debt, less cash and
cash equivalents, decreased approximately $258 million to $1,311
million compared to December 31, 2013.
Kevin Bradley, Terex Senior Vice President and Chief Financial
Officer, commented, “Our primary focus areas in 2014 included
improving our capital structure and our financial efficiency. We
made substantial progress in these areas, notably the improvements
in our balance sheet. Aided by our focused working capital
improvement activities, we were able to generate $329 million in
free cash flow in 2014, meaningfully above our expectations. This,
combined with our continued portfolio management, particularly in
our Construction segment, enabled us to improve our liquidity by
$342 million compared to December 2013. Moreover, we completed our
stock repurchase program, purchasing $170 million of stock in 2014
and paying $0.20 per share in dividends to our shareholders.”
Taxes: The effective tax rate was
negative 105.3% for the fourth quarter of 2014 and positive 12.7%
for the full year, as compared to an effective tax rate of positive
21.0% for the fourth quarter of 2013 and positive 30.0% for the
full year. The lower effective tax rate for the fourth quarter of
2014 was primarily due to tax benefits derived from divestitures
and a more favorable geographic mix of earnings.
Working Capital: Working Capital as
a percent of Trailing Three Month Annualized Net Sales was 22.5% at
December 31, 2014, as compared to 24.8% at December 31, 2013.
Backlog: Backlog for orders
deliverable during the next twelve months was approximately $2,001
million at December 31, 2014, an increase of approximately 17.4%
from September 30, 2014 and an increase of approximately 9.5% from
December 31, 2013. The majority of the year over year increase
relates to timing differences in order patterns from large AWP
rental customers, partially offset by decreases in MHPS due to
significant shipments of port automation products in the fourth
quarter of 2014 and the negative impact of foreign exchange rates.
The Glossary contains further details regarding backlog.
All results are for continuing operations. All per share amounts
are on a fully diluted basis. A comprehensive review of the
quarterly financial performance is contained in the presentation
that will accompany the Company’s earnings conference call.
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 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 18, 2015, 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;
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
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 that arise from
operating a multinational business, 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 imposed by the United
States Securities and Exchange Commission (“SEC”); disruption or
breach in our information technology systems; 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 lifting and material handling solutions
company 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, manufacturing, shipping, transportation, refining,
energy, utility, quarrying and mining 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, 2014 2013 2014 2013 Net sales $ 1,789.4 $ 1,811.8
$ 7,308.9 $ 7,084.0 Cost of goods sold (1,450.4 )
(1,426.1 ) (5,855.4 ) (5,644.5 ) Gross profit 339.0
385.7 1,453.5 1,439.5 Selling, general and administrative expenses
(268.6 ) (254.3 ) (1,030.4 ) (1,020.4 )
Income (loss) from operations 70.4 131.4 423.1 419.1 Other income
(expense) Interest income 1.8 1.7 6.6 6.7 Interest expense (28.2 )
(29.5 ) (119.1 ) (126.1 ) Loss on early extinguishment of debt — —
(2.6 ) (5.2 ) Amortization of debt issuance costs (1.4 ) (2.2 )
(7.4 ) (8.5 ) Other income (expense) – net (3.2 ) 4.6
(3.4 ) 5.3 Income (loss) from
continuing operations before income taxes 39.4 106.0 297.2 291.3
(Provision for) benefit from income taxes 41.5
(22.3 ) (37.7 ) (87.4 ) Income (loss) from continuing
operations 80.9 83.7 259.5 203.9 Income (loss) from discontinued
operations – net of tax — 1.6 1.4 14.4 Gain (loss) on disposition
of discontinued operations- net of tax 0.1 —
58.6 2.6 Net income (loss) 81.0
85.3 319.5 220.9 Net loss (income) attributable to noncontrolling
interest (1.0 ) 1.1 (0.5 ) 5.1
Net income (loss) attributable to Terex Corporation $ 80.0
$ 86.4 $ 319.0 $ 226.0 Amounts
attributable to Terex Corporation common stockholders: Income
(loss) from continuing operations $ 79.9 $ 84.8 $ 259.0 $ 209.0
Income (loss) from discontinued operations – net of tax — 1.6 1.4
14.4 Gain (loss) on disposition of discontinued operations – net of
tax 0.1 — 58.6 2.6
Net income (loss) attributable to Terex Corporation $ 80.0
$ 86.4 $ 319.0 $ 226.0
Basic Earnings (Loss) per Share
Attributable to Terex Corporation Common Stockholders:
Income (loss) from continuing operations $ 0.74 $ 0.76 $ 2.36 $
1.88 Income (loss) from discontinued operations – net of tax — 0.02
0.01 0.13 Gain (loss) on disposition of discontinued operations –
net of tax — — 0.54
0.02 Net income (loss) attributable to Terex
Corporation $ 0.74 $ 0.78 $ 2.91 $ 2.03
Diluted Earnings (Loss) per Share
Attributable to Terex Corporation Common Stockholders:
Income (loss) from continuing operations $ 0.71 $ 0.72 $ 2.27 $
1.79 Income (loss) from discontinued operations – net of tax — 0.02
0.01 0.12 Gain (loss) on disposition of discontinued operations –
net of tax — — 0.51
0.02 Net income (loss) attributable to Terex
Corporation $ 0.71 $ 0.74 $ 2.79 $ 1.93
Weighted average number of shares outstanding in per share
calculation Basic 107.8 111.3
109.7 111.1 Diluted 112.2
117.4 114.2 117.0
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
(unaudited)
(in millions, except par value)
December 31, December 31, 2014 2013 Assets Current assets
Cash and cash equivalents $ 478.2 $ 408.1
Trade receivables (net of allowance of
$30.5 and $47.6 at December 31, 2014 and 2013, respectively)
1,086.4 1,176.8 Inventories 1,460.9 1,613.2 Prepaid assets 248.0
220.9 Other current assets 82.7 91.1 Current assets – discontinued
operations — 129.3 Total current assets
3,356.2 3,639.4 Non-current assets Property, plant and equipment –
net 690.3 789.4 Goodwill 1,131.0 1,245.6 Intangible assets – net
325.4 444.8 Other assets 425.1 401.9 Non-current assets –
discontinued operations — 15.6 Total assets $
5,928.0 $ 6,536.7 Liabilities and
Stockholders’ Equity Current liabilities Notes payable and current
portion of long-term debt $ 152.5 $ 86.8 Trade accounts payable
736.1 689.1 Accrued compensation and benefits 204.0 234.3 Accrued
warranties and product liability 74.2 96.2 Customer advances 197.4
302.1 Other current liabilities 278.9 270.1 Current liabilities –
discontinued operations — 46.1 Total
current liabilities 1,643.1 1,724.7
Non-current liabilities Long-term debt, less current portion
1,636.3 1,889.9 Retirement plans 432.5 388.2 Other non-current
liabilities 177.0 259.5 Non-current liabilities – discontinued
operations — 5.7 Total liabilities
3,888.9 4,268.0 Commitments and
contingencies Redeemable noncontrolling interest — 53.9
Stockholders’ equity
Common stock, $.01 par value – authorized
300.0 shares; issued 124.6 and 123.7 shares at December 31, 2014
and 2013, respectively
1.2 1.2 Additional paid-in capital 1,251.5 1,247.5 Retained
earnings 1,984.9 1,688.1 Accumulated other comprehensive (loss)
income (429.8 ) (116.5 ) Less cost of shares of common stock in
treasury – 19.2 and 13.8 shares at December 31, 2014 and 2013,
respectively (801.9 ) (630.2 ) Total Terex
Corporation stockholders’ equity 2,005.9 2,190.1 Noncontrolling
interest 33.2 24.7 Total stockholders’
equity 2,039.1 2,214.8 Total
liabilities, redeemable noncontrolling interest and stockholders’
equity $ 5,928.0 $ 6,536.7
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
(unaudited)
(in millions)
Twelve Months Ended December 31, 2014 2013 Operating
Activities Net income $ 319.5 $ 220.9 Adjustments to reconcile net
income to net cash provided by (used in) operating activities:
Depreciation and amortization 155.7 152.3 Changes in operating
assets and liabilities (net of effects of acquisitions and
divestitures): Trade receivables (4.2 ) (153.1 ) Inventories (27.1
) (70.4 ) Trade accounts payable 85.8 86.9 Customer advances (75.2
) (16.5 ) Other, net (43.8 ) (31.6 ) Net cash
provided by (used in) operating activities $ 410.7 $ 188.5
Investing Activities Capital expenditures (81.5 ) (82.8 )
Proceeds from disposition of discontinued operations 162.2 0.7
Other investing activities, net 14.3 44.7
Net cash provided by (used in) investing
activities
95.0 (37.4 ) Financing Activities Net cash
provided by (used in) financing activities (396.7 )
(420.1 ) Effect of Exchange Rate Changes on Cash and Cash
Equivalents (38.9 ) (0.9 ) Net Increase (Decrease) in
Cash and Cash Equivalents 70.1 (269.9 ) Cash and Cash Equivalents
at Beginning of Period 408.1 678.0 Cash
and Cash Equivalents at End of Period $ 478.2 $ 408.1
TEREX CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(unaudited)
(in millions)
Fourth Quarter Year-to-Date 2014 2013 2014
2013 % of %
of % of % of Net Sales
Net Sales Net Sales Net Sales
Consolidated Net sales $
1,789.4 $ 1,811.8 $ 7,308.9 $ 7,084.0
Gross profit 339.0 18.9 % 385.7 21.3 % 1,453.5 19.9 % 1,439.5 20.3
% SG&A 268.6 15.0 % 254.3 14.0 %
1,030.4 14.1 % 1,020.4 14.4 % Income
from operations $ 70.4 3.9 % $ 131.4 7.3 % $ 423.1 5.8 % $ 419.1
5.9 %
AWP Net sales $ 468.2 $ 482.0 $
2,369.7 $ 2,131.0 Gross profit 87.7 18.7 % 121.8 25.3
% 504.3 21.3 % 514.9 24.2 % SG&A 49.0 10.5 %
50.3 10.4 % 201.5 8.5 % 189.1
8.9 % Income from operations $ 38.7 8.3 % $ 71.5 14.8 % $
302.8 12.8 % $ 325.8 15.3 %
Construction Net sales $
206.4 $ 193.5 $ 836.6 $ 820.0 Gross
profit 20.2 9.8 % 24.0 12.4 % 90.4 10.8 % 83.2 10.1 % SG&A
19.6 9.5 % 24.0 12.4 % 89.2
10.7 % 108.0 13.2 % Income (loss) from
operations $ 0.6 0.3 % $ - 0.0 % $ 1.2 0.1 % $ (24.8 ) (3.0 )%
Cranes Net sales $ 474.3 $ 480.4 $
1,791.1 $ 1,925.5 Gross profit 88.0 18.6 % 84.3 17.5
% 313.4 17.5 % 337.1 17.5 % SG&A 53.4 11.3 %
58.6 12.2 % 227.5 12.7 % 226.6
11.8 % Income from operations $ 34.6 7.3 % $ 25.7 5.3 % $
85.9 4.8 % $ 110.5 5.7 %
MHPS Net sales $ 515.6
$ 528.9 $ 1,783.4 $ 1,698.5 Gross
profit 108.5 21.0 % 117.0 22.1 % 392.2 22.0 % 345.4 20.3 % SG&A
139.7 27.1 % 91.0 17.2 % 409.4
23.0 % 387.2 22.8 % Income (loss) from
operations $ (31.2 ) (6.1 )% $ 26.0 4.9 % $ (17.2 ) (1.0 )% $ (41.8
) (2.5 )%
MP Net sales $ 164.4 $ 149.9
$ 653.1 $ 628.2 Gross profit 35.1 21.4 % 34.7 23.1 %
140.8 21.6 % 145.4 23.1 % SG&A 16.9 10.3 %
18.0 12.0 % 80.2 12.3 % 73.6
11.7 % Income from operations $ 18.2 11.1 % $ 16.7 11.1 % $ 60.6
9.3 % $ 71.8 11.4 %
Corp & Eliminations Net sales
$ (39.5 ) $ (22.9 ) $ (125.0 ) $ (119.2 ) Gross profit (0.5 ) 1.3 %
3.9 (17.0 )% 12.4 (9.9 )% 13.5 (11.3 )% SG&A (10.0 )
25.3 % 12.4 (54.1 )% 22.6 (18.1 )%
35.9 (30.1 )% Income (loss) from operations $ 9.5
(24.1 )% $ (8.5 ) 37.1 % $ (10.2 ) 8.2 % $ (22.4 ) 18.8 %
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, 2014, unless
otherwise indicated.
As changes in foreign currency exchange rates have a
non-operating impact on the translation of our financial results,
we believe excluding the effect of these changes assists in the
assessment of our business results between periods. We calculate
the translation effect of foreign currency exchange rate changes by
translating the current period results at the rates that the
comparable prior periods were translated to isolate the foreign
exchange component of the fluctuation from the operational
component.
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 2014 Pre-Tax
Tax Rate After-Tax
EPS* Restructuring and Related $
(31.5 ) ** $ (21.8 )
$ (0.19 ) Portfolio Management (19.1 ) ** (19.7 ) (0.18 )
ASV Tax Benefit — N/A 55.8 0.49 Valuation Allowance & Related
Tax Items — N/A
(14.7 ) (0.13 ) Total EPS Effect
$ (50.6 ) $ (0.4 )
$ (0.01 )
* Based on weighted average diluted shares of 112.2M** Based on
a jurisdictional blend
Fourth
Quarter 2013 Pre-Tax
Tax Rate After-Tax
EPS* Restructuring and Related $ 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
Full
Year 2014 Pre-Tax
Tax Rate After-Tax
EPS* Debt – Early Extinguishment $ (2.6 ) ** $ (1.7 )
$ (0.01 ) Restructuring and Related (42.2 ) ** (29.2 ) (0.26 )
Portfolio Management (19.1 ) ** (19.7 ) (0.17 ) ASV Tax Benefit —
N/A 55.8 0.49 Valuation Allowance & Related Tax Items
— N/A (14.7
) (0.13 ) Total EPS Effect $
(63.9 ) $ (9.5 ) $
(0.08 )
* 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
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,
2014
Dec 31,
2013
%
change
Sept 30,
2014
%
change
Consolidated Backlog $ 2,001.0 $ 1,827.7 9.5 % $ 1,704.3
17.4 % AWP $ 698.4 $ 294.4 137.2 % $ 214.2 226.1 % Construction $
137.9 $ 165.6 (16.7 )% $ 132.1 4.4 % Cranes $ 538.5 $ 501.2 7.4 % $
551.8 (2.4 )% MHPS $ 574.8 $ 805.3 (28.6 )% $ 750.9 (23.5 )% MP $
51.4 $ 61.2 (16.0 )% $ 55.3 (7.1 )%
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. Net
Debt is calculated as Debt less Cash and cash equivalents.
These measures aid in the evaluation of the Company’s financial
condition.
Dec 31, 2014 Dec 31, 2013 Long term
debt, less current portion $ 1,636.3 $ 1,889.9 Notes payable and
current portion of long-term debt 152.5 86.8
Debt $ 1,788.8 $ 1,976.7 Less: Cash and
cash equivalents
(478.2
)
(408.1
)
Net Debt $ 1,310.6 $ 1,568.6
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 Twelve months ended
December 31, December 31, 2014 2013 2014
2013 Income (loss) from operations $ 70.4 $ 131.4 $ 423.1 $
419.1 Depreciation 27.5 25.8 110.5 104.4 Amortization 10.1 8.6 44.9
47.1 Bank fee amortization not included in Income (loss) from
operations (1.4 ) (2.2 ) (7.4 ) (8.5 )
EBITDA 106.6 163.6 571.1 562.1 Operating profit adjustments
47.7 (10.0 ) 58.4 61.0
Adjusted EBITDA $ 154.3 $ 153.6 $ 629.5 $
623.1
MHPS - EBITDA Three months ended
Twelve months ended December 31, December 31, 2014 2013 2014 2013
Income (loss) from operations $ (31.2 ) $ 26.0 $ (17.2 ) $ (41.8 )
Depreciation 9.7 8.4 40.3 35.8 Amortization 6.0
3.1 25.5 25.4 EBITDA
(15.5 ) 37.5 48.6 19.4 Operating profit adjustments 64.4
(3.1 ) 75.1 46.2 Adjusted
EBITDA $ 48.9 $ 34.4 $ 123.7 $ 65.6
Free cash flow is defined as net cash provided by (used
in) operating activities less capital expenditure.
Three months ended Twelve months ended
December 31, December 31, 2014 2013 2014
2013 Net cash provided by (used in) operating activities $
294.1 $ 25.4 $ 410.7 $ 188.5 Capital expenditures (22.9 )
(21.9 ) (81.5 ) (82.8 ) Free Cash Flow $ 271.2
$ 3.5 $ 329.2 $ 105.7
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 Twelve months ended
December 31, December 31, 2014 2013 2014
2013
Income (Loss) from operations as reported
$ 70.4 $ 131.4 $ 423.1 $ 419.1 Roadbuilding related — — — 3.4
Restructuring and related items 31.5 (10.0 ) 42.2 57.6 Portfolio
Management 16.2 — 16.2 —
Income (Loss) from
operations as adjusted $ 118.1 $ 121.4 $ 481.5 $ 480.1
Full year ended
December 31, 2014
Full year ended
December 31, 2013
Income (Loss) Income (Loss) Income
(Loss) Income (Loss) from from from
from operations, Adjust- operations, as operations, Adjust-
operations, as as reported ments adjusted as reported ments
adjusted
AWP
$ 302.8 $ — $ 302.8 $ 325.8 $ 1.8 $ 327.6 Construction 1.2 — 1.2
(24.8 ) 2.6 (22.2 ) Cranes 85.9 — 85.9 110.5 10.4 120.9 MHPS (17.2
) 75.1 57.9 (41.8 ) 46.2 4.4 MP 60.6 — 60.6 71.8 — 71.8 Corporate
(10.2 ) (16.7 ) (26.9 ) (22.4 )
— (22.4 ) Total $ 423.1 $ 58.4 $ 481.5
$ 419.1 $ 61.0 $ 480.1 Three
months ended
December 31, 2014
Three months ended
December 31, 2013
Income (Loss) Income (Loss) Income
(Loss) Income (Loss) from from from
from operations, Adjust- operations, operations, Adjust-
operations, as as reported ments as adjusted as reported ments
adjusted AWP $ 38.7 $ — $ 38.7 $ 71.5 $ 1.8 $ 73.3 Construction 0.6
— 0.6 — (4.2 ) (4.2 ) Cranes 34.6 — 34.6 25.7 (4.5 ) 21.2 MHPS
(31.2 ) 64.4 33.2 26.0 (3.1 ) 22.9 MP 18.2 — 18.2 16.7 — 16.7
Corporate 9.5 (16.7 ) (7.2 )
(8.5 ) — (8.5 )
Total $ 70.4 $
47.7 $ 118.1 $ 131.4 $ (10.0 ) $ 121.4
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. 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 '14 Sep '14 Jun '14
Mar '14 Dec '13 Provision for (benefit
from) income taxes $ (41.5 ) $ 27.7 $ 40.0 $ 11.5 Divided by:
Income (loss) before income taxes 39.4 86.4
128.4 43.0 Effective tax rate
(105.3 )% 32.1 % 31.2 % 26.7 % Income (loss) from operations
as adjusted $ 72.3 $ 119.7 $ 162.6 $ 76.3 Multiplied by: 1 minus
Effective tax rate 205.3 % 67.9 % 68.8 %
73.3 % Adjusted net operating income (loss) after tax $
148.4 $ 81.3 $ 111.9 $ 55.9 Debt
(as defined above) $ 1,788.8 $ 1,851.9 $ 1,922.5 $ 2,055.9 $
1,976.7 Less: Cash and cash equivalents (478.2 )
(344.5 ) (364.3 ) (390.5 ) (408.1 ) Debt less
Cash and cash equivalents $ 1,310.6 $ 1,507.4 $ 1,558.2 $ 1,665.4 $
1,568.6 Total Terex Corporation stockholders’ equity as
adjusted $ 1,843.2 $ 2,010.5 $ 2,138.5 $
2,012.0 $ 2,092.4 Debt less Cash and cash
equivalents plus Total Terex Corporation stockholders’ equity as
adjusted $ 3,153.8 $ 3,517.9 $ 3,696.7 $
3,677.4 $ 3,661.0 December 31, 2014
ROIC 11.2 % Adjusted net operating income (loss) after tax
(last 4 quarters) $ 397.5 Average Debt less Cash and cash
equivalents plus Total Terex Corporation stockholders’ equity as
adjusted (5 quarters) $ 3,541.4 Reconciliation of
income (loss) from operations: Dec '14 Sep '14 Jun '14 Mar '14
Income (loss) from operations as reported $ 70.4 $ 116.8 $ 160.9 $
75.0 (Income) loss from operations for TFS 1.9
2.9 1.7 1.3 Income (loss) from
operations as adjusted $ 72.3 $ 119.7 $ 162.6
$ 76.3 Reconciliation of Terex Corporation
stockholders’ equity: Terex Corporation stockholders’ equity as
reported $ 2,005.9 $ 2,217.7 $ 2,331.6 $ 2,183.2 $ 2,190.1 TFS
assets (162.7 ) (207.2 ) (193.1 ) (171.2 ) (151.6 ) Redeemable
noncontrolling interest — — —
— 53.9 Terex Corporation
stockholders’ equity as adjusted $ 1,843.2 $ 2,010.5
$ 2,138.5 $ 2,012.0 $ 2,092.4
Trailing Three Month Annualized Net Sales is calculated
using the net sales for the quarter multiplied by four.
Three Months Ended December 31, 2014
2013 Fourth Quarter Net Sales $1,789.4
$1,811.8 x 4 x 4 Trailing Three Month Annualized Net Sales
$7,157.6
$7,247.2
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, 2014 Sept 30, 2014
Dec 31, 2013 Inventories $ 1,460.9 $ 1,676.8 $ 1,613.2 Trade
Receivables 1,086.4 1,196.2 1,176.8 Less: Trade Accounts Payable
(736.1 ) (715.3 ) (689.1 ) Less: Customer Advances (197.4 )
(281.6 ) (302.1 ) Total Working Capital $ 1,613.8
$ 1,876.1 $ 1,798.8
Terex CorporationTom Gelston, 203-222-5943Vice President,
Investor Relationsthomas.gelston@terex.com
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