Terex Corporation (NYSE:TEX) today announced second quarter 2016
income from continuing operations of $109.6 million, or $1.00 per
share, on net sales of $1.3 billion. In the second quarter a year
ago, the reported income from continuing operations was $75.9
million, or $0.70 per share, on net sales of $1.4 billion.
Excluding a benefit of $67.7 million related to the release of
certain tax valuation allowances, after-tax charges of $19.4
million from restructuring and related actions, and after-tax
charges of $8.9 million related to merger and divestiture
activities, income from continuing operations as adjusted for the
second quarter of 2016 was $70.2 million, or $0.64 per share. The
Glossary at the end of this press release contains further details
regarding these items.
“Our second quarter results reflect a company in transition”
said John L. Garrison, Terex President and CEO. “With the pending
sale of our Material Handling & Port Solutions (MHPS) business
and parts of our Construction portfolio, we made several structural
changes in the quarter. MHPS is now accounted for as a discontinued
operation. Going forward, we will be a more focused company,
centered around three segments: Aerial Work Platforms (AWP),
Cranes, and Materials Processing (MP).”
Mr. Garrison added, “We continued to face challenging markets in
the second quarter. The North American market for many of our AWP
and Cranes products was lower than last year, as expected, which
was reflected in both our sales and orders in the quarter. We grew
AWP sales in Europe and parts of Asia, but not enough to offset the
softness in North America. Our Materials Processing (MP) segment
executed well and improved upon last year’s performance.”
“We remain focused on what we can control. The steps we took
earlier in the year to reduce SG&A helped offset some of the
impact of soft markets and competitive pricing, but more is needed.
In the second quarter, we took additional steps to simplify our
manufacturing footprint and lower our cost base. After the sale of
MHPS, Terex will be a smaller company. We are committed to reducing
our cost structure accordingly,” continued Mr. Garrison.
Mr. Garrison concluded, “On a comparable basis, we believe our
earnings per share and net sales for the full year 2016 will be
consistent with our previous guidance. As a result of accounting
for MHPS as discontinued operations, we now expect earnings per
share from continuing operations to be between $0.85 and $1.15,
excluding restructuring and other unusual items, on net sales of
$4.3 billion to $4.5 billion. This reflects the removal of MHPS
earnings from continuing operations and the impact of unabsorbed
corporate management costs, but does not reflect any of the
benefits of the sale of MHPS which will be realized upon completion
of the sale.”
Re-segmentation and Non-GAAP Measures
The current and prior period results reflect the re-segmentation
of our scrap material handling, concrete mixer trucks and concrete
paver business from our former Construction segment into MP, and
part of the North American services business from Cranes to MHPS
and AWP. Our MHPS business is reported as a discontinued operation.
Remaining product lines of our former Construction segment, such as
mini-excavators, loader backhoes and site dumpers are included in
Corporate and Other.
Results of operations reflect 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.
The Company provides guidance on a non-GAAP basis as the Company
cannot predict with a reasonable degree of certainty some elements
that are included in reported GAAP results, such as the timing and
impact of future restructuring charges.
The Glossary at the end of this press release contains further
details about this subject.
Conference call
The Company has scheduled a one hour conference call to review
the financial results on Tuesday, August 2, 2016 at 8:30 a.m. ET.
John L. Garrison, President 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; the
carrying value of goodwill and other indefinite-lived intangible
assets could become impaired; 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, commodity price changes, 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, intellectual property 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 global manufacturer of lifting and
material processing products and services that deliver lifecycle
solutions to maximize customer return on investment. The company
reports in three business segments: Aerial Work Platforms, Cranes,
and Materials Processing. Terex delivers lifecycle solutions to a
broad range of 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 CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
(unaudited)
(in millions, except per share data)
Three Months Six Months Ended June 30, Ended June 30, 2016
2015 2016 2015 Net sales $ 1,297.7 $ 1,442.9 $
2,412.0 $ 2,598.7 Cost of goods sold (1,055.6 )
(1,140.7 ) (1,988.2 ) (2,095.2 ) Gross profit
242.1 302.2 423.8 503.5 Selling, general and administrative
expenses (168.7 ) (166.1 ) (339.1 )
(329.1 ) Income (loss) from operations 73.4 136.1 84.7 174.4 Other
income (expense) Interest income 1.1 0.9 2.3 1.8 Interest expense
(25.5 ) (27.9 ) (50.2 ) (56.8 ) Loss on early extinguishment of
debt (0.4 ) — (0.4 ) — Other income (expense) – net (6.1 )
(3.4 ) (12.0 ) (6.3 ) Income (loss) from
continuing operations before income taxes 42.5 105.7 24.4 113.1
(Provision for) benefit from income taxes 67.1
(29.8 ) 63.2 (38.9 ) Income (loss) from
continuing operations 109.6 75.9 87.6 74.2 Income (loss) from
discontinued operations – net of tax (45.1 ) 10.4 (97.5 ) 10.6 Gain
(loss) on disposition of discontinued operations- net of tax
0.1 (0.4 ) 3.5 2.7 Net
income (loss) 64.6 85.9 (6.4 ) 87.5
Net loss (income) from continuing
operations attributable to noncontrolling interest
— — —
0.1
Net loss (income) from discontinued
operations attributable to noncontrolling interest
0.5 (1.1 ) 0.7 (1.8 ) Net
income (loss) attributable to Terex Corporation $ 65.1 $
84.8 $ (5.7 ) $ 85.8 Amounts attributable to Terex
Corporation common stockholders: Income (loss) from continuing
operations $ 109.6 $ 75.9 $ 87.6 $ 74.3 Income (loss) from
discontinued operations – net of tax (44.6 ) 9.3 (96.8 ) 8.8 Gain
(loss) on disposition of discontinued operations – net of tax
0.1 (0.4 ) 3.5 2.7
Net income (loss) attributable to Terex Corporation $ 65.1 $
84.8 $ (5.7 ) $ 85.8 Basic Earnings (Loss) per Share
Attributable to Terex CorporationCommon Stockholders: Income (loss)
from continuing operations $ 1.01 $ 0.71 $ 0.81 $ 0.70 Income
(loss) from discontinued operations – net of tax (0.41 ) 0.09 (0.89
) 0.08 Gain (loss) on disposition of discontinued operations – net
of tax — — 0.03
0.03 Net income (loss) attributable to Terex Corporation $
0.60 $ 0.80 $ (0.05 ) $ 0.81 Diluted Earnings
(Loss) per Share Attributable to Terex CorporationCommon
Stockholders: Income (loss) from continuing operations $ 1.00 $
0.70 $ 0.80 $ 0.68 Income (loss) from discontinued operations – net
of tax (0.41 ) 0.08 (0.88 ) 0.08 Gain (loss) on disposition of
discontinued operations – net of tax — —
0.03 0.02 Net income (loss)
attributable to Terex Corporation $ 0.59 $ 0.78 $
(0.05 ) $ 0.78 Weighted average number of shares outstanding
in per share calculation Basic 109.2 106.2
109.0 106.2 Diluted 109.6
109.0 109.6 109.9
TEREX CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except par value)
June 30, December 31, 2016 2015 Assets Current assets Cash
and cash equivalents $ 200.8 $ 371.2
Trade receivables (net of allowance of
$17.4 and $20.4 at June 30, 2016 and December 31, 2015,
respectively)
795.7 703.3 Inventories 1,035.3 1,063.6 Prepaid and other current
assets 207.2 252.5 Current assets held for sale 827.7
749.6 Total current assets 3,066.7 3,140.2
Non-current assets Property, plant and equipment – net 355.6 371.9
Goodwill 450.3 459.1 Intangible assets – net 22.0 22.6 Other assets
563.1 461.7 Non-current assets held for sale 1,164.6
1,160.5 Total assets $ 5,622.3 $ 5,616.0
Liabilities and Stockholders’ Equity Current
liabilities Notes payable and current portion of long-term debt $
6.8 $ 66.4 Trade accounts payable 552.3 560.7 Accrued compensation
and benefits 122.6 128.5 Accrued warranties and product liability
56.1 51.5 Customer advances 33.8 29.6 Other current liabilities
221.6 175.9 Current liabilities held for sale 531.6
446.0 Total current liabilities 1,524.8
1,458.6 Non-current liabilities Long-term debt, less
current portion 1,679.5 1,729.8 Retirement plans 151.6 157.0 Other
non-current liabilities 68.7 60.1 Non-current liabilities held for
sale 308.2 298.5 Total liabilities
3,732.8 3,704.0 Commitments and
contingencies Stockholders’ equity
Common stock, $.01 par value – authorized
300.0 shares; issued 129.5 and 128.8 shares at June 30,
2016 and December 31, 2015, respectively
1.3 1.3 Additional paid-in capital 1,281.1 1,273.3 Retained
earnings 2,083.4 2,104.6 Accumulated other comprehensive income
(loss) (656.3 ) (649.6 )
Less cost of shares of common stock in
treasury - 21.1 shares at June 30, 2016 and December 31,
2015
(853.4 ) (852.2 ) Total Terex Corporation
stockholders’ equity 1,856.1 1,877.4 Noncontrolling interest
33.4 34.6 Total stockholders’ equity
1,889.5 1,912.0 Total liabilities, and
stockholders’ equity $ 5,622.3 $ 5,616.0
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in millions)
Six Months Ended June 30, 2016 2015 Operating
Activities Net income (loss) $ (6.4 ) $ 87.5
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 57.7 72.9
Changes in operating assets and
liabilities (net of effects of acquisitions
and divestitures):
Trade receivables (123.0 ) (196.9 ) Inventories (91.0 ) (125.2 )
Trade accounts payable (7.3 ) 98.2 Customer advances 49.6 (0.9 )
Other, net 104.8 (20.4 ) Net cash provided by
(used in) operating activities (15.6 ) (84.8 )
Investing Activities Capital expenditures (44.1 ) (48.7 ) Other
investing activities, net 0.2 (58.5 ) Net cash
(used in) provided by investing activities (43.9 )
(107.2 ) Financing Activities Net cash provided by (used in)
financing activities (113.4 ) 68.6 Effect of
Exchange Rate Changes on Cash and Cash Equivalents 4.5
(22.1 ) Net Increase (Decrease) in Cash and Cash
Equivalents (168.4 ) (145.5 ) Cash and Cash Equivalents at
Beginning of Period 466.5 478.2 Cash
and Cash Equivalents at End of Period $ 298.1 $ 332.7
TEREX CORPORATION AND
SUBSIDIARIES SEGMENT RESULTS DISCLOSURE
(unaudited)
(in millions)
Q2 Year-to-Date 2016 2015 2016
2015 % of % of % of % of
Net Sales
Net Sales
Net Sales
Net Sales
Consolidated Net sales $ 1,297.7 $ 1,442.9 $ 2,412.0 $
2,598.7 Income from operations $ 73.4 5.7 % $ 136.1 9.4 % $ 84.7
3.5 % $ 174.4 6.7 %
AWP Net sales $ 593.7 $ 688.3 $
1,114.4 $ 1,205.8 Income from operations $ 72.5 12.2 % $ 105.1 15.3
% $ 110.6 9.9 % $ 149.7 12.4 %
Cranes Net sales $
357.4 $ 427.7 $ 664.7 $ 781.0 Income (loss) from operations $ (12.8
) (3.6 %) $ 21.3 5.0 % $ (29.4 ) (4.4 %) $ 23.7 3.0 %
MP Net sales $ 256.2 $ 249.6 $ 480.0 $ 459.9 Income from
operations $ 28.6 11.2 % $ 25.6 10.3 % $ 44.4 9.3 % $ 37.2 8.1 %
Corp and Other / Eliminations Net sales $ 90.4 $ 77.3
$ 152.9 $ 152.0 Loss from operations $ (14.9 ) (16.5 %) $ (15.9 )
(20.6 %) $ (40.9 ) (26.7 %) $ (36.2 ) (23.8 %)
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 share data and percentages), and
are as of or for the period ended June 30, 2016, unless otherwise
indicated.
2016 Outlook The Company’s 2016 outlook for earnings per
share is a non-GAAP financial measure as it excludes or has
otherwise been adjusted for items such as restructuring and other
related charges, deal related costs and the impact of the release
of tax valuation allowances. The Company is not able to reconcile
these forward-looking non-GAAP financial measures to their most
directly comparable forward-looking GAAP financial measures without
unreasonable efforts because the Company is unable to predict with
a reasonable degree of certainty the exact timing and impact of
such items. The unavailable information could have a significant
impact on the Company’s full-year 2016 GAAP financial results.
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 diluted
weighted average shares outstanding to provide the impact on
earnings per share. The Company highlights the impact of these
items because when discussing earnings per share, the Company
adjusts for items it believes are not reflective of ongoing
operating activities in the periods. Restructuring and related
charges are a recurring item as Terex’s restructuring programs
usually require more than one year to fully implement and the
Company is continually seeking to take actions that could enhance
its efficiency. Although recurring, these charges are subject to
significant fluctuations from period to period due to varying
levels of restructuring activity and the inherent imprecision in
the estimates used to recognize the costs and taxes associated with
severance and termination benefits in the countries in which the
restructuring actions occur.
Q2 2016
Income fromContinuingOperations
beforeTaxes
(Provision for)benefit fromIncome
Taxes*
Income fromContinuingOperations
Earnings(loss)per share**
As Reported $ 42.5 67.1 109.6 $ 1.00 Deal Related 12.8 (3.9 ) 8.9
0.08 Restructuring & Related 27.7 (8.3 ) 19.4 0.18 Valuation
Allowance -- (67.7 )
(67.7 ) (0.62 ) As Adjusted $ 83.0 (12.8 ) 70.2 $
0.64 * Tax effect on adjustments is calculated using a
jurisdictional blended tax rate ** Based on diluted weighted
average shares outstanding of 109.6 million
YTD 2016
Income fromContinuingOperations
beforeTaxes
(Provision for)benefit fromIncome
Taxes*
Income fromContinuingOperations
Earnings(loss)per share**
As Reported $ 24.4 63.2 87.6
$ 0.80 Deal Related 23.3 (5.5 ) 17.8 0.16 Restructuring
& Related 42.2 (12.3 ) 29.9 0.28 Valuation Allowance
-- (67.7 ) (67.7 )
(0.62 ) As Adjusted $ 89.9 (22.3 ) 67.6 $ 0.62 * Tax effect
on adjustments is calculated using a jurisdictional blended tax
rate ** Based on diluted weighted average shares outstanding of
109.6 million
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160801006334/en/
Terex CorporationTom Gelston, 203-222-5943Vice President,
Investor Relationsthomas.gelston@terex.com
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