Terex Corporation (NYSE:TEX) today announced income from
continuing operations of $44.8 million, or $0.41 per share for the
third quarter of 2015, and excluding certain items, income from
continuing operations as adjusted was $63.4 million, or $0.58 per
share. This compared to income from continuing operations of $58.7
million, or $0.51 per share for the third quarter of 2014, income
from operations as adjusted was $67.8 million, or $0.59 per share.
The Glossary at the end of the release contains more details on
these items.
Net sales were $1,641.3 million in the third quarter of 2015, a
decrease of $168.5 million, or 9.3%, when compared with $1,809.8
million in the third quarter of 2014. Excluding the impact of
currency exchange rates, net sales decreased $17.4 million or 1.0%.
Income from operations was $111.9 million in the third quarter of
2015 and excluding certain items, income from operations as
adjusted was $126.8 million. This compared to income from
operations of $116.8 million in the third quarter of 2014 and
excluding certain items, income from operations as adjusted was
$127.5 million.
“Our marketplace remains challenging,” commented Ron DeFeo,
Terex Chairman and Chief Executive Officer. “We had another good
performance in our Aerial Work Platforms (AWP) business which
delivered year over year improvement in profitability in the third
quarter as increased productivity and lower material cost more than
offset lower sales, mainly in the North American telehandler
product category. The Materials Processing (MP) business also had a
solid quarter, expanding operating margins on relatively flat
sales. The Cranes and Construction businesses continue to
experience relatively soft market conditions overall, with
customers remaining cautious with their equipment purchasing
patterns. The Material Handling and Port Solutions (MHPS) business
saw declines driven by a decrease in port automation sales.”
Mr. DeFeo continued, “As mentioned last quarter, we are seeing
pricing pressure in the marketplace, which to date we have been
able to mostly offset by reductions in material input costs. We
continue to execute very well against the cost saving initiatives
that we have previously communicated. We also continue to make
progress towards the completion of the merger with Konecranes Plc,
which when combined with the improvements already underway creates
a compelling financial improvement story in an otherwise flat
market.”
Outlook: Mr. DeFeo added, “Given
where we are in the year and the challenging environment we are
operating in, we believe we will be at or near the low end of our
previously announced earnings guidance for the full year 2015.”
Capital Structure: “We generated
approximately $62 million of free cash flow in the quarter, which
was lower than anticipated, as our net working capital as a
percentage of annualized sales remains high at 28%, commented Kevin
Bradley, Terex Senior Vice President and Chief Financial Officer.
We have more work in front of us to improve our working capital
efficiency, but we still believe we have an opportunity to meet our
free cash flow target for 2015 of $200 - 250 million."
The Company’s liquidity at September 30, 2015 increased by $11
million compared to June 30, 2015 and totaled $829 million, which
was comprised of cash balances of $301 million and borrowing
availability under the Company’s revolving credit facilities of
$528 million.
Return on Invested Capital (ROIC) was 9.7% for the trailing
twelve months ended September 30, 2015.
Taxes: The effective tax rate for
the third quarter of 2015 was 40.1% as compared to an effective tax
rate of 32.1% for the third quarter of 2014. The higher effective
rate for the three months ended September 30, 2015 was primarily
due to an increase in the provision for uncertain tax positions
compared with a reduction in the provision for uncertain tax
positions in the three months ended September 30, 2014.
Backlog: Backlog for orders
deliverable during the next twelve months was $1,482 million at
September 30, 2015, a decrease of 19.2% from June 30, 2015 and a
decrease of 13.0% from September 30, 2014. Excluding the impact of
foreign exchange rate changes, backlog at September 30, 2015
decreased 5.9% from September 30, 2014 primarily driven by
decreases in our MHPS and Cranes backlog which were slightly offset
by increases in AWP 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, October 21, 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. For those participants that do not have Internet access,
the call-in number is 877-726-6603. International participants
should dial 706-634-5517. No pass code is required.
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; the effect of the announcement and pendency of the merger
on our customers, employees, suppliers, vendors, distributors,
dealers, retailers, operating results and business generally, and
the diversion of management’s time and attention while the proposed
merger is pending; 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, 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 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, 2015 2014 2015 2014
Net sales $ 1,641.3 $ 1,809.8 $ 4,965.4 $ 5,519.5 Cost of goods
sold (1,304.7 ) (1,452.5 ) (3,968.0 )
(4,405.0 ) Gross profit 336.6 357.3 997.4 1,114.5 Selling, general
and administrative expenses (224.7 ) (240.5 )
(693.0 ) (761.8 ) Income (loss) from operations 111.9 116.8
304.4 352.7 Other income (expense) Interest income 1.1 2.3 3.1 4.8
Interest expense (24.7 ) (28.8 ) (79.9 ) (90.9 ) Loss on early
extinguishment of debt — (2.6 ) — (2.6 ) Other income (expense) –
net (11.4 ) (1.3 ) (21.3 ) (6.2 )
Income (loss) from continuing operations before income taxes 76.9
86.4 206.3 257.8 (Provision for) benefit from income taxes
(30.8 ) (27.7 ) (75.4 ) (79.2 ) Income (loss)
from continuing operations 46.1 58.7 130.9 178.6 Income (loss) from
discontinued operations – net of tax — — — 1.4 Gain (loss) on
disposition of discontinued operations- net of tax (1.2 )
5.5 1.5 58.5 Net income
(loss) 44.9 64.2 132.4 238.5 Net loss (income) attributable to
noncontrolling interest (1.3 ) — (3.0 )
0.5 Net income (loss) attributable to Terex
Corporation $ 43.6 $ 64.2 $ 129.4 $ 239.0
Amounts attributable to Terex Corporation common
stockholders: Income (loss) from continuing operations $ 44.8 $
58.7 $ 127.9 $ 179.1 Income (loss) from discontinued operations –
net of tax — — — 1.4 Gain (loss) on disposition of discontinued
operations – net of tax (1.2 ) 5.5 1.5
58.5 Net income (loss) attributable to Terex
Corporation $ 43.6 $ 64.2 $ 129.4 $ 239.0
Basic Earnings (Loss) per Share Attributable to Terex
CorporationCommon Stockholders: Income (loss) from continuing
operations $ 0.41 $ 0.53 $ 1.19 $ 1.62 Income (loss) from
discontinued operations – net of tax — — — 0.01 Gain (loss) on
disposition of discontinued operations – net of tax (0.01 )
0.05 0.02 0.53 Net income
(loss) attributable to Terex Corporation $ 0.40 $ 0.58
$ 1.21 $ 2.16 Diluted Earnings (Loss) per
Share Attributable to Terex CorporationCommon Stockholders: Income
(loss) from continuing operations $ 0.41 $ 0.51 $ 1.17 $ 1.55
Income (loss) from discontinued operations – net of tax — — — 0.01
Gain (loss) on disposition of discontinued operations – net of tax
(0.01 ) 0.05 0.01 0.51
Net income (loss) attributable to Terex Corporation $ 0.40
$ 0.56 $ 1.18 $ 2.07 Weighted average
number of shares outstanding in per share calculation Basic
108.5 110.2 107.0 110.4
Diluted 109.2 115.4 109.7
115.7
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
(unaudited)
(in millions, except par value)
September 30, December 31, 2015 2014
Assets Current assets Cash and cash equivalents $ 301.1 $ 478.2
Trade receivables (net of allowance of
$27.9 and $30.5 at September 30, 2015 andDecember 31, 2014,
respectively)
1,183.4 1,086.4 Inventories 1,545.6 1,460.9 Prepaid assets 239.9
248.0 Other current assets 79.2 82.7
Total current assets 3,349.2 3,356.2 Non-current assets Property,
plant and equipment – net 672.8 690.3 Goodwill 1,054.4 1,131.0
Intangible assets – net 285.9 325.4 Other assets 516.6
425.1 Total assets $ 5,878.9 $ 5,928.0
Liabilities and Stockholders’ Equity Current
liabilities Notes payable and current portion of long-term debt $
83.4 $ 152.5 Trade accounts payable 740.4 736.1 Accrued
compensation and benefits 207.4 204.0 Accrued warranties and
product liability 66.9 74.2 Customer advances 158.8 197.4 Other
current liabilities 335.5 278.9 Total
current liabilities 1,592.4 1,643.1
Non-current liabilities Long-term debt, less current portion
1,814.2 1,636.3 Retirement plans 398.8 432.5 Other non-current
liabilities 147.8 177.0 Total
liabilities 3,953.2 3,888.9 Commitments
and contingencies Stockholders’ equity
Common stock, $.01 par value – authorized
300.0 shares; issued 128.8 and 124.6 shares atSeptember 30, 2015
and December 31, 2014, respectively
1.3 1.2 Additional paid-in capital 1,266.1 1,251.5 Retained
earnings 2,094.6 1,984.9 Accumulated other comprehensive income
(loss) (620.2 ) (429.8 )
Less cost of shares of common stock in
treasury – 21.1 and 19.2 shares at September 30,2015 and December
31, 2014, respectively
(851.9 ) (801.9 ) Total Terex Corporation
stockholders’ equity 1,889.9 2,005.9 Noncontrolling interest
35.8 33.2 Total stockholders’ equity
1,925.7 2,039.1 Total liabilities and
stockholders’ equity $ 5,878.9 $ 5,928.0
TEREX CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
(unaudited)
(in millions)
Nine Months Ended September 30,
2015
2014
Operating Activities Net income $ 132.4 $ 238.5 Adjustments to
reconcile net income to net cash provided by (used in)
operatingactivities: Depreciation and amortization 95.7 118.2
Changes in operating assets and liabilities (net of effects of
acquisitions anddivestitures): Trade receivables (145.1 ) (65.9 )
Inventories (139.8 ) (164.7 ) Trade accounts payable 37.2 51.4
Customer advances (35.3 ) (2.7 ) Other, net (1.7 )
(58.2 ) Net cash (used in) provided by operating activities
(56.6 ) 116.6 Investing Activities Capital
expenditures (73.4 ) (58.6 ) Proceeds (payments) from disposition
of discontinued operations (0.2 ) 162.2 Other investing activities,
net (70.5 ) (4.4 ) Net cash (used in) provided by
investing activities (144.1 ) 99.2 Financing
Activities Net cash provided by (used in) financing activities
53.2 (261.6 ) Effect of Exchange Rate Changes
on Cash and Cash Equivalents (29.6 ) (17.8 ) Net
Decrease in Cash and Cash Equivalents (177.1 ) (63.6 ) Cash and
Cash Equivalents at Beginning of Period 478.2
408.1 Cash and Cash Equivalents at End of Period $ 301.1
$ 344.5
TEREX CORPORATION AND
SUBSIDIARIES
SEGMENT RESULTS DISCLOSURE
(unaudited)
(in millions)
Third Quarter
Year-to-Date 2015 2014 2015
2014 % of % of % of
% of Net Sales Net Sales Net Sales Net Sales
Consolidated Net sales $ 1,641.3 $ 1,809.8 $
4,965.4 $ 5,519.5 Gross profit 336.6 20.5% 357.3
19.7% 997.4 20.1% 1,114.5 20.2% SG&A 224.7 13.7%
240.5 13.3% 693.0 14.0% 761.8
13.8% Income from operations $ 111.9 6.8% $ 116.8 6.5% $
304.4 6.1% $ 352.7 6.4%
AWP Net sales $ 573.8
$ 598.7 $ 1,758.1 $ 1,901.5 Gross profit 128.2
22.3% 119.3 19.9% 380.2 21.6% 416.6 21.9% SG&A 48.8
8.5% 50.9 8.5% 153.6 8.7%
152.5 8.0% Income from operations $ 79.4 13.8% $ 68.4 11.4%
$ 226.6 12.9% $ 264.1 13.9%
Construction Net sales $
180.1 $ 207.3 $ 517.7 $ 630.2 Gross
profit 23.0 12.8% 24.6 11.9% 61.7 11.9% 70.2 11.1% SG&A
20.3 11.3% 23.0 11.1% 62.8 12.1%
69.6 11.0% Income (Loss) from operations $ 2.7 1.5% $
1.6 0.8% $ (1.1 ) (0.2%) $ 0.6 0.1%
Cranes Net sales
$ 411.7 $ 419.7 $ 1,262.4 $ 1,316.8
Gross profit 65.5 15.9% 75.5 18.0% 205.6 16.3% 225.4 17.1% SG&A
53.1 12.9% 53.7 12.8% 167.0
13.2% 174.1 13.2% Income from operations $
12.4 3.0% $ 21.8 5.2% $ 38.6 3.1% $ 51.3 3.9%
MHPS
Net sales $ 366.7 $ 468.2 $ 1,055.8 $ 1,267.8
Gross profit 80.3 21.9% 101.9 21.8% 231.2 21.9% 283.7 22.4%
SG&A 70.0 19.1% 84.3 18.0%
223.9 21.2% 269.7 21.3% Income from operations
$ 10.3 2.8% $ 17.6 3.8% $ 7.3 0.7% $ 14.0 1.1%
MP Net
sales $ 158.9 $ 155.6 $ 472.4 $ 488.7
Gross profit 36.6 23.0% 29.8 19.2% 112.9 23.9% 105.7 21.6% SG&A
22.7 14.3% 21.1 13.6% 66.3
14.0% 63.3 13.0% Income from operations $ 13.9
8.7% $ 8.7 5.6% $ 46.6 9.9% $ 42.4 8.7%
Corp &
Eliminations Net sales $ (49.9 ) $ (39.7 ) $ (101.0 ) $ (85.5 )
Gross profit 3.0 (6.0%) 6.2 (15.6%) 5.8 (5.7%) 12.9 (15.1%)
SG&A 9.8 (19.6%) 7.5 (18.9%)
19.4 (19.2%) 32.6 (38.1%) (Loss) from
operations $ (6.8 ) 13.6% $ (1.3 ) 3.3% $ (13.6 ) 13.5% $ (19.7 )
23.0%
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, 2015, 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.
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, % 2015
2015 change 2014 change Consolidated Backlog $ 1,482.2 $ 1,835.0
(19.2)% $ 1,704.3 (13.0)% AWP $ 298.4 $ 436.3 (31.6)% $ 214.2 39.3%
Construction $ 119.2 $ 164.0 (27.3)% $ 132.1 (9.8)% Cranes $ 427.1
$ 540.2 (20.9)% $ 551.8 (22.6)% MHPS $ 575.6 $ 630.8 (8.8)% $ 750.9
(23.3)% MP $ 61.9 $ 63.7 (2.8)% $ 55.3 11.9%
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.
September 30, 2015
December 31, 2014
Long term debt, less current portion $ 1,814.2 $ 1,636.3 Notes
payable and current portion of long-term debt 83.4
152.5 Debt 1,897.6 1,788.8
Less: Cash and cash equivalents (301.1 )
(478.2 ) Net Debt $ 1,596.5 $ 1,310.6
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 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 Nine months ended
September 30, ended September 30, 2015 2014 2015 2014
Income (loss) from operations $ 111.9 $ 116.8 $ 304.4 $ 352.7
Depreciation 19.3 27.2 73.2 83.0 Amortization 7.5 11.0 22.5 34.8
Bank fee amortization not included in Income (loss) from operations
(1.3 ) (1.8 ) (3.9 ) (6.0 ) EBITDA
137.4 153.2 396.2
464.5 Operating profit adjustments 14.9
10.7 14.9 10.7 Adjusted EBITDA $
152.3 $ 163.9 $ 411.1 $ 475.2
Free cash flow is defined as Net cash provided by (used
in) operating activities, plus (minus) increases (decreases) in
Terex Financial Services (“TFS”) finance receivable assets, plus
(minus) decreases (increases) in cash balances held for settlement
on securitized assets, less Capital expenditures.
Three months Nine months ended
September 30, ended September 30, 2015 2014 2015 2014
Net cash provided by (used in) operating activities $ 28.2 $ 92.1 $
(56.6 ) $ 116.6 Plus: Increase in TFS Assets 56.0 14.1 177.5 55.6
Plus: (Increase) decrease in cash for securitization settlement 2.0
— (4.8 ) — Less: Capital expenditures (24.7 ) (21.3 )
(73.4 ) (58.6 ) Free Cash Flow $ 61.5 $ 84.9
$ 42.7 $ 113.6
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 2015 Pre-Tax
Tax Rate**
After-Tax EPS* Restructuring
& Related $ 12.4 26.6%
$ 9.1 $ 0.08 Product Campaign
2.5 36.0% 1.6
0.02
Total Impact on Income From Operations
14.9
10.7 0.10 Merger Related
8.6 8.0%
7.9 0.07
Total Impact on Income From
Continuing Operations $ 23.5 $ 18.6
$ 0.17
* Based on weighted average diluted shares
of 109.2M
** Based on a jurisdictional blend
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 34.6% 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 above) less Cash and cash equivalents for the
previous five quarters. 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. 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 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 '15 Jun '15 Mar '15 Dec '14 Sep '14 Provision for
(benefit from) income taxes $ 30.8 $ 33.0 $ 11.6 $ (41.5 ) Divided
by: Income (loss) before income taxes 76.9
119.3 10.1 39.4 Effective tax
rate 40.1 % 27.7 % 114.9 % (105.3 %) Income (loss) from
operations as adjusted $ 109.4 $ 147.2 $ 46.5 $ 72.3 Multiplied by:
1 minus Effective tax rate 59.9 % 72.3 % (14.9
%) 205.3 % Adjusted net operating income (loss) after tax $
65.5 $ 106.4 $ (6.9 ) $ 148.4 Debt (as
defined above) $ 1,897.6 $ 1,906.6 $ 1,872.9 $ 1,788.8 $ 1,851.9
Less: Cash and cash equivalents (301.1 ) (332.7 )
(351.3 ) (478.2 ) (344.5 ) Debt less Cash and
cash equivalents 1,596.5 1,573.9 1,521.6 1,310.6 1,507.4
Total Terex Corporation stockholders’
equity as adjusted
1,549.7 1,630.8 1,543.3
1,843.2 2,010.5
Debt less Cash and cash equivalents plus
TotalTerex Corporation stockholders’ equityas adjusted
$ 3,146.2 $ 3,204.7 $ 3,064.9 $ 3,153.8
$ 3,517.9 September 30, 2015 ROIC 9.7 %
Adjusted net operating income (loss) after tax (last 4 quarters) $
313.4
Average Debt less Cash and cash
equivalentsplus Total Terex Corporation stockholders’ equityas
adjusted (5 quarters)
$ 3,217.5 Reconciliation of income (loss) from operations:
Sep '15 Jun '15 Mar '15 Dec '14 Income (loss) from operations as
reported $ 111.9 $ 148.3 $ 44.2 $ 70.4 (Income) loss from
operations for TFS (2.5 ) (1.1 ) 2.3
1.9 Income (loss) from operations as adjusted $ 109.4
$ 147.2 $ 46.5 $ 72.3
Reconciliation of Terex Corporation stockholders’ equity: Terex
Corporation stockholders’ equity as reported $ 1,889.9 $ 1,915.0 $
1,747.8 $ 2,005.9 $ 2,217.7 TFS assets (340.2 )
(284.2 ) (204.5 ) (162.7 ) (207.2 ) Terex
Corporation stockholders’ equity as adjusted $ 1,549.7 $
1,630.8 $ 1,543.3 $ 1,843.2 $ 2,010.5
Trailing Three Month Annualized Net Sales is calculated
using the net sales for the quarter multiplied by four.
Three months ended
September 30,
2015
2014
Third Quarter Net Sales $ 1,641.3 $ 1,809.8 x 4 x 4 Trailing Three
Month Annualized Net Sales $ 6,565.2 $ 7,239.2
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 below, working capital was:
September 30, 2015
December 31, 2014 September 30, 2014
Inventories $ 1,545.6 $ 1,460.9 $ 1,676.8 Trade Receivables 1,183.4
1,086.4 1,196.2 Less: Trade Accounts Payable (740.4 ) (736.1 )
(715.3 ) Less: Customer Advances (158.8 ) (197.4 )
(281.6 ) Total Working Capital $ 1,829.8 $ 1,613.8
$ 1,876.1
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151020006863/en/
Terex CorporationTom Gelston, 203-222-5943Vice President,
Investor Relationsthomas.gelston@terex.com
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