Terex Corporation (NYSE:TEX) today announced income from
continuing operations of $58.7 million, or $0.51 per share for the
third quarter of 2014, and excluding certain items, income from
continuing operations as adjusted was $67.8 million, or $0.59 per
share. This compared to income from continuing operations of $84.5
million, or $0.73 per share for the third quarter of 2013. The
Glossary at the end of the release contains more details on these
items.
Net sales were $1,809.8 million in the third quarter of 2014,
3.0% higher than net sales of $1,757.0 million in the third quarter
of 2013. Income from operations was $116.8 million in the third
quarter of 2014 and excluding certain items, income from operations
as adjusted was $127.5 million. This compared to income from
operations of $138.6 million in the third quarter of 2013.
“Our results for the third quarter were in line with the revised
guidance communicated in mid-September,” commented Ron DeFeo, Terex
Chairman and Chief Executive Officer. “Our Cranes segment met our
lowered expectations for the quarter as end markets remain
challenged. However, despite continued market environment
challenges, we are anticipating sequential improvement from Cranes
in the fourth quarter. While our AWP business is performing well,
we had planned for a stronger second half of 2014 than has
materialized which has put pressure on margins. AWP profitability
was further negatively affected by currency movements late in the
quarter, primarily the Brazilian Real, higher commodity costs and
continued manufacturing startup costs related to the production of
telehandlers at our Oklahoma City facility. As a result, we removed
approximately 500 team members from AWP in the third quarter, which
will aid in the return to more normal mid-teens margins within the
next 12 months. Our MHPS segment had a strong improvement in
profitability, excluding the reserve we booked related to the
planned closure of a manufacturing facility and production
relocation. We are taking this action to improve the efficiency of
our manufacturing footprint. Our Construction segment performed as
we expected. Our Materials Processing segment had a weak margin
quarter as it experienced unfavorable geographic and product mix
and our investments in new growth initiatives have yet to deliver
increased net sales.”
Outlook: “Predicting market
improvements has been challenging and in the near term we will be
assuming flat markets and only performance improvements that we can
control,” Mr. DeFeo added. “Consequently, we now expect our annual
outlook for earnings per share to be at or near the bottom of our
previously announced range of $2.35 to $2.50, excluding
restructuring and other unusual items, on net sales of between $7.3
billion and $7.5 billion. Looking forward, we have identified
improvement opportunities from cost reduction actions, interest
expense declines and tax rate improvements. We think we can
accomplish these in the next two years to provide meaningful
improvement in our earnings per share even in a flat market.”
Capital Structure: “During the
quarter we completed the refinancing of our senior credit facility,
allowing us to lower our borrowing cost, extend the maturity dates
substantially, and increase our liquidity,” commented Kevin
Bradley, Terex Senior Vice President and Chief Financial Officer.
“In addition, we generated $70.8 million in free cash flow in the
quarter. Although we have more work in front of us, we still
believe we will meet our free cash flow target although at or near
the lower end of the range which is $200 million. We repurchased
$11 million of our shares within the quarter for a cumulative total
of $95 million since the inception of the program in December
2013."
The Company’s liquidity at September 30, 2014 was $894.5
million, which was comprised of cash balances of $344.5 million and
borrowing availability under the Company’s revolving credit
facilities of $550.0 million.
Return on Invested Capital (ROIC) was 9.8% for the trailing
twelve months ended September 30, 2014.
Taxes: The effective tax rate for
the third quarter of 2014 was 32.1% as compared to an effective tax
rate of 21.4% for the third quarter of 2013. The higher effective
tax rate for the third quarter of 2014 was primarily due to the
reduced benefit from the release of uncertain tax positions
partially offset by a more favorable geographic mix of earnings
when compared to the prior year quarter.
Backlog: Backlog for orders
deliverable during the next twelve months was $1,704.3 million at
September 30, 2014, a decrease of 5.1% from September 30, 2013 and
a decrease of 22.5% from June 30, 2014. 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 Thursday, October 30, 2014 at 8:30 a.m.
EDT. 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
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 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 resulting from the settlement of an investigation by
the United States Securities and Exchange Commission (“SEC”); our
implementation of a global enterprise resource planning 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 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
CONDENSED CONSOLIDATED STATEMENT OF
INCOME
(unaudited)
(in millions, except per share data)
Three Months Nine Months Ended
September 30, Ended September 30, 2014 2013 2014 2013
Net sales $ 1,809.8 $ 1,757.0 $ 5,519.5 $ 5,272.2 Cost of goods
sold (1,452.5 ) (1,375.6 ) (4,405.0 )
(4,218.4 ) Gross profit 357.3 381.4 1,114.5 1,053.8 Selling,
general and administrative expenses (240.5 ) (242.8 )
(761.8 ) (766.1 ) Income (loss) from operations 116.8
138.6 352.7 287.7 Other income (expense) Interest income 2.3 1.5
4.8 5.0 Interest expense (28.8 ) (31.8 ) (90.9 ) (96.6 ) Loss on
early extinguishment of debt (2.6 ) — (2.6 ) (5.2 ) Other income
(expense) – net (1.3 ) (1.7 ) (6.2 )
(5.6 ) Income (loss) from continuing operations before income taxes
86.4 106.6 257.8 185.3 (Provision for) benefit from income taxes
(27.7 ) (22.8 ) (79.2 ) (65.1 ) Income
(loss) from continuing operations 58.7 83.8 178.6 120.2 Income
(loss) from discontinued operations – net of tax — 10.3 1.4 12.8
Gain (loss) on disposition of discontinued operations- net of tax
5.5 (0.4 ) 58.5 2.6
Net income (loss) 64.2 93.7 238.5 135.6 Net loss (income)
attributable to noncontrolling interest — 0.7
0.5 4.0 Net income (loss)
attributable to Terex Corporation $ 64.2 $ 94.4 $
239.0 $ 139.6 Amounts attributable to Terex
Corporation common stockholders: Income (loss) from continuing
operations $ 58.7 $ 84.5 $ 179.1 $ 124.2 Income (loss) from
discontinued operations – net of tax — 10.3 1.4 12.8 Gain (loss) on
disposition of discontinued operations – net of tax 5.5
(0.4 ) 58.5 2.6 Net
income (loss) attributable to Terex Corporation $ 64.2 $
94.4 $ 239.0 $ 139.6
Basic Earnings (Loss) per Share
Attributable to Terex Corporation Common Stockholders:
Income (loss) from continuing operations $ 0.53 $ 0.76 $ 1.62 $
1.12 Income (loss) from discontinued operations – net of tax — 0.09
0.01 0.12 Gain (loss) on disposition of discontinued operations –
net of tax 0.05 — 0.53
0.02 Net income (loss) attributable to Terex
Corporation $ 0.58 $ 0.85 $ 2.16 $ 1.26
Diluted Earnings (Loss) per Share
Attributable to Terex Corporation Common Stockholders:
Income (loss) from continuing operations $ 0.51 $ 0.73 $ 1.55 $
1.07 Income (loss) from discontinued operations – net of tax — 0.08
0.01 0.11 Gain (loss) on disposition of discontinued operations –
net of tax 0.05 — 0.51
0.02 Net income (loss) attributable to Terex
Corporation $ 0.56 $ 0.81 $ 2.07 $ 1.20
Weighted average number of shares outstanding in per share
calculation Basic 110.2 111.3
110.4 111.1 Diluted 115.4
116.2 115.7 116.0
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
(unaudited)
(in millions, except par value)
September 30, December 31, 2014
2013 Assets Current assets Cash and cash equivalents $ 344.5 $
408.1
Trade receivables (net of allowance of
$33.0 and $47.6 at September 30, 2014 and December 31,
2013, respectively)
1,196.2 1,176.8 Inventories 1,676.8 1,613.2 Other current assets
320.2 312.0 Current assets – discontinued operations —
129.3 Total current assets 3,537.7 3,639.4
Non-current assets Property, plant and equipment – net 739.5 789.4
Goodwill 1,184.7 1,245.6 Intangible assets – net 397.5 444.8 Other
assets 430.3 401.9 Non-current assets – discontinued operations
— 15.6 Total assets $ 6,289.7 $ 6,536.7
Liabilities and Stockholders’ Equity Current
liabilities Notes payable and current portion of long-term debt $
160.4 $ 86.8 Trade accounts payable 715.3 689.1 Accrued
compensation and benefits 236.9 234.3 Accrued warranties and
product liability 82.7 96.2 Customer advances 281.6 302.1 Other
current liabilities 291.3 270.1 Current liabilities – discontinued
operations — 46.1 Total current
liabilities 1,768.2 1,724.7 Non-current
liabilities Long-term debt, less current portion 1,691.5 1,889.9
Retirement plans 348.9 388.2 Other non-current liabilities 232.5
259.5 Non-current liabilities – discontinued operations —
5.7 Total liabilities 4,041.1
4,268.0 Commitments and contingencies Redeemable
noncontrolling interest — 53.9 Stockholders’ equity
Common stock, $.01 par value – authorized
300.0 shares; issued 124.5 and 123.7 shares at September
30, 2014 and December 31, 2013, respectively
1.2 1.2 Additional paid-in capital 1,249.4 1,247.5 Retained
earnings 1,910.3 1,688.1 Accumulated other comprehensive income
(loss) (246.2 ) (116.5 )
Less cost of shares of common stock in
treasury – 15.5 and 13.8 shares at September30, 2014 and December
31, 2013, respectively
(697.0 ) (630.2 ) Total Terex Corporation
stockholders’ equity 2,217.7 2,190.1 Noncontrolling interest
30.9 24.7 Total stockholders’ equity
2,248.6 2,214.8 Total liabilities, redeemable
noncontrolling interest and stockholders’ equity $ 6,289.7 $
6,536.7
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
(unaudited)
(in millions)
Nine Months Ended September 30, 2014
2013 Operating Activities Net income $ 238.5 $ 135.6
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 118.2 117.6
Changes in operating assets and
liabilities (net of effects of acquisitions and divestitures):
Trade receivables (65.9 ) (95.9 ) Inventories (164.7 ) (114.3 )
Trade accounts payable 51.4 79.0 Customer advances (2.7 ) (3.3 )
Other, net (58.2 ) 44.4 Net cash provided by
(used in) operating activities $ 116.6 $ 163.1
Investing Activities Capital expenditures (58.6 ) (60.9 ) Proceeds
from disposition of discontinued operations 162.2 0.7 Other
investing activities, net (4.4 ) 43.8 Net cash
(used in) provided by investing activities 99.2
(16.4 ) Financing Activities Net cash provided by (used in)
financing activities (261.6 ) (447.9 ) Effect of
Exchange Rate Changes on Cash and Cash Equivalents (17.8 )
(6.2 ) Net Increase (Decrease) in Cash and Cash Equivalents
(63.6 ) (307.4 ) Cash and Cash Equivalents at Beginning of Period
408.1 678.0 Cash and Cash Equivalents
at End of Period $ 344.5 $ 370.6
TEREX CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(unaudited)
(in millions)
Third Quarter
Year-to-Date 2014 2013 2014 2013
% of % of % of % of
Net
Sales
Net
Sales
Net
Sales
Net
Sales
Consolidated Net sales $ 1,809.8 $ 1,757.0 $
5,519.5 $ 5,272.2 Gross profit 357.3 19.7 % 381.4
21.7 % 1,114.5 20.2 % 1,053.8 20.0 % SG&A 240.5
13.3 % 242.8 13.8 % 761.8 13.8 %
766.1 14.5 % Income from operations $ 116.8 6.5 % $ 138.6
7.9 % $ 352.7 6.4 % $ 287.7 5.5 %
AWP Net sales $
598.7 $ 533.3 $ 1,901.5 $ 1,649.0 Gross
profit 119.3 19.9 % 127.6 23.9 % 416.6 21.9 % 393.1 23.8 % SG&A
50.9 8.5 % 46.9 8.8 % 152.5
8.0 % 138.8 8.4 % Income from operations $
68.4 11.4 % $ 80.7 15.1 % $ 264.1 13.9 % $ 254.3 15.4 %
Construction Net sales $ 207.3 $ 188.0 $ 630.2
$ 626.5 Gross profit 24.6 11.9 % 18.8 10.0 % 70.2
11.1 % 59.2 9.4 % SG&A 23.0 11.1 % 23.9
12.7 % 69.6 11.0 % 84.0 13.4 %
Income (loss) from operations $ 1.6 0.8 % $ (5.1 ) (2.7 )% $ 0.6
0.1 % $ (24.8 ) (4.0 )%
Cranes Net sales $ 419.7
$ 453.0 $ 1,316.8 $ 1,445.1 Gross
profit 75.5 18.0 % 82.1 18.1 % 225.4 17.1 % 252.8 17.5 % SG&A
53.7 12.8 % 53.2 11.7 % 174.1
13.2 % 168.0 11.6 % Income from operations $
21.8 5.2 % $ 28.9 6.4 % $ 51.3 3.9 % $ 84.8 5.9 %
MHPS Net sales $ 468.2 $ 460.6 $ 1,267.8
$ 1,169.6 Gross profit 101.9 21.8 % 111.1 24.1 %
283.7 22.4 % 228.4 19.5 % SG&A 84.3 18.0 %
92.6 20.1 % 269.7 21.3 % 296.2
25.3 % Income (loss) from operations $ 17.6 3.8 % $ 18.5 4.0 % $
14.0 1.1 % $ (67.8 ) (5.8 )%
MP Net sales $ 155.6
$ 147.7 $ 488.7 $ 478.3 Gross profit
29.8 19.2 % 37.0 25.1 % 105.7 21.6 % 110.7 23.1 % SG&A
21.1 13.6 % 18.1 12.3 % 63.3
13.0 % 55.6 11.6 % Income from operations $ 8.7 5.6 %
$ 18.9 12.8 % $ 42.4 8.7 % $ 55.1 11.5 %
Corp &
Eliminations Net sales $ (39.7 ) $ (25.6 ) $ (85.5 ) $ (96.3 )
Gross profit 6.2 (15.6 )% 4.8 (18.8 )% 12.9 (15.1 )% 9.6 (10.0 )%
SG&A 7.5 (18.9 )% 8.1 (31.6 )%
32.6 (38.1 )% 23.5 (24.4 )% Loss from
operations $ (1.3 ) 3.3 % $ (3.3 ) 12.9 % $ (19.7 ) 23.0 % $ (13.9
) 14.4 %
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 (except per share data and percentages),
and are as of or for the period ended September 30, 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. Similarly, the impact of changes in our results from
acquisitions that were not included in comparable prior periods is
subtracted from the absolute change in results to allow for better
comparability of results between periods.
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.
Sep 30, Jun 30, %
Sep 30, % 2014 2014 change 2013 change
Consolidated Backlog $ 1,704.3 $ 2,199.2 (22.5)% $ 1,796.1 (5.1)%
AWP $ 214.2 $ 418.4 (48.8)% $ 311.9 (31.3)% Construction $ 132.1 $
187.8 (29.7)% $ 119.9 10.2 % Cranes $ 551.8 $ 661.4 (16.6)% $ 485.4
13.7 % MHPS $ 750.9 $ 864.8 (13.2)% $ 826.8 (9.2)% MP $ 55.3 $ 66.8
(17.2)% $ 52.1 6.1 %
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 Nine months
ended September 30, September 30, 2014 2013 2014 2013
Income (loss) from operations $ 116.8 $ 138.6 $ 352.7 $ 287.7
Depreciation 27.2 26.9 83.0 78.6 Amortization 11.0 12.3 34.8 38.5
Bank fee amortization not included in Income (loss) from operations
(1.8 ) (1.9 ) (6.0 ) (6.2 ) EBITDA
153.2 175.9 464.5 398.6 Operating profit adjustments 10.7
- 10.7 71.0
Adjusted EBITDA $ 163.9 $ 175.9 $ 475.2 $
469.6
MHPS - EBITDA Three months ended Nine
months ended September 30, September 30, 2014 2013 2014 2013 Income
(loss) from operations $ 17.6 $ 18.5 $ 14.0 $ (67.8 ) Depreciation
10.1 8.7 30.6 27.4 Amortization 6.2 7.1
19.5 22.3 EBITDA 33.9 34.3 64.1 (18.1 )
Operating profit adjustments 10.7 -
10.7 49.2 Adjusted EBITDA $ 44.6
$ 34.3 $ 74.8 $ 31.1
Free cash flow is defined as net cash provided by (used
in) operating activities less capital expenditures.
Three months ended Nine months ended
September 30, September 30, 2014 2013 2014 2013 Cash
from operating activities $ 92.1 $ 33.2 $ 116.6 $ 163.1 Capital
expenditures (21.3 ) (19.5 ) (58.6 )
(60.9 ) Free Cash Flow $ 70.8 $ 13.7 $ 58.0 $
102.2
Income (loss) from operations as adjusted / Income (loss)
from continuing operations as adjusted - The Company assesses
the impact of certain items when discussing Income (loss) from
operations and Income (loss) from continuing operations and adjusts
for items it believes are not reflective of operating activities in
the periods. The impact of these adjustments are provided
below.
Third Quarter 2014 Pre-Tax
Tax Rate After-Tax
EPS* Restructuring & Related - MHPS
$ 10.7 30.9% $ 7.4 $ 0.06
Total
Impact on Income From Operations
10.7 7.4
0.06 Loss on early extinguishment of debt
2.6 ** 1.7
0.02
Total Impact on Income From Continuing Operations
$ 13.3
$ 9.1 $ 0.08
* Based on weighted average
diluted shares of 115.4M
** Based on a jurisdictional blend
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 below) less Cash and cash equivalents for the
previous five quarters. 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. NOPAT for
each quarter is calculated by multiplying Income (loss) from
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”) does not represent its primary
operations and, therefore, TFS finance receivable assets and
results from 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) from continuing
operations before income taxes for the respective quarter. Total
Terex Corporation stockholders’ equity is adjusted to include
redeemable non-controlling interest as this item is deemed to be
temporary equity and therefore 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
12-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 those
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.
Sep '14 Jun '14 Mar '14 Dec '13
Sep '13 Provision for (benefit from) income taxes $ 27.7 $ 40.0 $
11.5 $ 22.3 Divided by: Income (loss) before income taxes
86.4 128.4 43.0 106.0 Effective tax rate 32.1%
31.2% 26.7% 21.0% Income (loss) from operations as adjusted
$ 119.7 $ 162.6 $ 76.3 $ 131.5 Multiplied by: 1 minus Effective tax
rate 67.9% 68.8% 73.3% 79.0% Adjusted
net operating income (loss) after tax $ 81.3 $ 111.9 $ 55.9 $ 103.9
Debt (as defined above) $ 1,851.9 $ 1,922.5 $ 2,055.9 $
1,976.7 $ 1,905.9 Less: Cash and cash equivalents (344.5)
(364.3) (390.5) (408.1) (370.6) Debt
less Cash and cash equivalents $ 1,507.4 $ 1,558.2 $ 1,665.4 $
1,568.6 $ 1,535.3 Total Terex Corporation stockholders’
equity as adjusted $ 2,010.5 $ 2,138.5 $ 2,012.0 $ 2,092.4 $
2,002.2
Debt less Cash and cash equivalents plus
Total TerexCorporation stockholders’ equity as adjusted
$ 3,517.9 $ 3,696.7 $ 3,677.4 $ 3,661.0 $ 3,537.5
September 30, 2014 ROIC 9.8% Adjusted net operating income
(loss) after tax (last 4 quarters) $ 353.0
Average Debt less Cash and cash
equivalents plusTotal Terex Corporation stockholders’ equity
asadjusted (5 quarters)
$ 3,618.1 Reconciliation of income (loss) from operations:
Sep '14 Jun '14 Mar '14 Dec '13 Sep '13 Income (loss) from
operations as reported $ 116.8 $ 160.9 $ 75.0 $ 131.4 (Income) loss
from operations for TFS 2.9 1.7 1.3 0.1
Income (loss) from operations as adjusted $ 119.7 $ 162.6 $ 76.3 $
131.5 Reconciliation of Terex Corporation stockholders’
equity: Terex Corporation stockholders’ equity as reported $
2,217.7 $ 2,331.6 $ 2,183.2 $ 2,190.1 $ 2,094.2 TFS assets (207.2)
(193.1) (171.2) (151.6) (149.8) Redeemable noncontrolling interest
— — — 53.9 57.8 Terex
Corporation stockholders’ equity as adjusted $ 2,010.5 $ 2,138.5 $
2,012.0 $ 2,092.4 $ 2,002.2
Trailing Three Month Annualized Net Sales is calculated
using the net sales for the quarter multiplied by four.
Nine months ended
September 30, 2014 2013 Third Quarter 2014 Net Sales
$ 1,809.8 $ 1,757.0 x 4 x 4 Trailing
Three Month Annualized Net Sales $ 7,239.2 $ 7,028.0
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 below, working capital was:
Sep '14 Jun '14
Sep '13 Inventories $ 1,676.8 $ 1,779.0 $ 1,669.0 Trade
Receivables 1,196.2 1,368.4 1,122.5 Less: Trade Accounts Payable
(715.3 ) (800.8 ) (676.3 ) Less: Customer Advances (281.6 )
(334.5 ) (312.1 ) Total Working Capital $ 1,876.1
$ 2,012.1 $ 1,803.1
Terex CorporationTom Gelston, 203-222-5943Vice President,
Investor Relationsthomas.gelston@terex.com
Terex (NYSE:TEX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Terex (NYSE:TEX)
Historical Stock Chart
From Apr 2023 to Apr 2024