- Full-year sales of $5.2
billion increased 17%
- Q4 and full-year income from operations of
$116 million and $637 million
- Q4 and full-year operating margins of 9.5% and
12.4%
- Q4 and full-year EPS of $1.88 and $7.56
- Q4 and full-year results include $0.47 and $0.50 net
favorable EPS impacts from non-recurring items. Excluding these
items:
- Q4 EPS of $1.41 up
5%
- Full-year income from operations of $652 million up 55%
- Full-year operating margin of 12.7% improved 320
bps
- Full-year EPS of $7.06 up
63%
- Return on Invested Capital of 28.5% up 720 bps
- 2024 Outlook: Sales of $5.1 to $5.3
billion and EPS of $6.85 to
$7.25
NORWALK,
Conn., Feb. 8, 2024 /PRNewswire/ -- Terex
Corporation (NYSE: TEX) today announced its results for the fourth
quarter and full-year 2023.
CEO Commentary
"After five years in the organization, I am honored, humbled and
excited to be Terex's next CEO. Terex is in a very good place,
and I look forward to a bright future," said Terex President and Chief Executive Officer
Simon Meester. He added, "We are
pleased by our strong 2023 performance, and believe Terex is
well-positioned to continue to deliver value to its customers and
shareholders, with strong demand for its products and favorable
megatrends for the long term. Our annual results demonstrate
significant improvement over the prior year and highlight our
ability to successfully manage cost inflation and supply chain
challenges. I would like to thank our team members for their hard
work and resilience to consistently deliver value for our customers
and shareholders."
"As we begin the new year, we again expect to deliver strong
results across our diverse product portfolio, driven by our
differentiated offerings, continued focus on efficiency and
favorable end markets. We do anticipate some headwinds from
European markets as well as lingering, yet slowly improving supply
chain disruptions. As such, Terex plans to deliver sales
between $5.1 and $5.3 billion and earnings per share between
$6.85 and $7.25 and with that, continue to stay ahead of
our December 2022 Investor Day
targets."
Fourth Quarter Operational and Financial Highlights
- Net sales of $1.2 billion in the
fourth quarter of 2023 were consistent with the strong fourth
quarter of 2022. Demand for our products remained healthy across
multiple businesses.
- Income from continuing operations was $127.9 million, or $1.88 per share, compared to $92.0 million, or $1.34 per share, in the fourth quarter of 2022.
Income from continuing operations in the fourth quarter of 2023
included a net favorable impact of $32.0
million of one-time items primarily related to a tax benefit
associated with the Company's operations in Switzerland partially offset by accelerated
stock vesting and other expenses. Excluding these items, EPS was
$1.41 compared with $1.34 per share, in the fourth quarter of
2022.
Full-Year 2023 Operational and Financial Highlights
- Net sales of $5.2 billion for the
full-year 2023 increased 16.6% compared to $4.4 billion in the prior year. The increase was
primarily driven by strong demand for our products across multiple
businesses and all major geographies and price realization
necessary to mitigate rising costs, across all segments.
- Income from operations of $636.5
million, or 12.4% of net sales in the full-year 2023,
increased from $420.0 million or 9.5%
of net sales in the prior year. The increase was primarily driven
by incremental profit achieved on higher sales volume, improved
manufacturing efficiencies and price realization, partially offset
by cost increases. Excluding net one-time expenses of $15.2 million, operating margins were 12.7%.
- Income from continuing operations for the full-year 2023 was
$516.7 million, or $7.56 per share, compared to $300.2 million, or $4.32 per share, in the prior year. Excluding net
one-time items of $0.50, 2023 EPS of
$7.06 increased $2.74 or 63% year-over-year.
- Return on invested capital of 28.5% significantly exceeded our
cost of capital as we continued to invest in the business and
return cash to shareholders through dividends and share
repurchases.
- The effective tax rate for the year was 10.9% which was
impacted by a deferred tax asset from the recognition of a tax
attribute related to a change in the Company's taxation model
associated with its operations in Switzerland. Excluding the impact, our
effective tax rate would have been 18.2%.
Business Segment Review
Materials Processing
- Net sales were $554.7 million for
the fourth quarter of 2023, up 0.8% or $4.4
million year-over-year, primarily driven by healthy demand
for our products across multiple businesses. Income from operations
decreased 3.7% to $83.8 million for
the fourth quarter of 2023, or 15.1% of net sales, compared to
$87.0 million, or 15.8% of net sales,
in the prior year as improved manufacturing efficiencies and
disciplined cost management were offset by non-recurring charges
related to an unfavorable product liability verdict.
- Net sales were $2.2 billion for
the full-year 2023, up 14.7% or 285.4 million year-over-year.
Income from operations increased 20.4% to $358.6 million for the full-year 2023, or 16.1%
of net sales, compared to $297.8
million, or 15.3% of net sales, in the prior year.
Aerial Work Platforms
- Net sales were $659.9 million for
the fourth quarter of 2023, down slightly from the fourth quarter
of 2022 as deliveries returned to a more normal seasonal pattern.
Income from operations increased 13.0% to $61.0 million for the fourth quarter of 2023, or
9.2% of net sales, compared to $54.0
million, or 8.0% of net sales in the prior year. The
increase was driven by price realization and cost reduction
initiatives, partially offset by costs associated with the ramp-up
of our Monterrey facility and severance charges.
- Net sales were $2.9 billion for
the full-year 2023, up 17.6% or $438.1
million year-over-year. Income from operations increased
89.2% to $371.3 million for the
full-year 2023, or 12.7% of net sales, compared to $196.2 million, or 7.9% of net sales, in the
prior year as Genie reached its goal of price/cost neutrality for
the year.
Capital Allocation
- As of December 31, 2023, the
Company had liquidity (cash and availability under our revolving
line of credit) of $971 million and
net leverage of 0.4x.
- During 2023, Terex deployed $151
million in capital expenditures and investments.
- Terex returned over $100 million
to shareholders for the second year in a row. In 2023, Terex
returned $104 million to
shareholders, including $61 million
in share repurchases and $43 million
in dividend payments.
- We raised the dividend twice by a total of 31% in 2023.
- Full-year free cash flow was $366
million, up $214 million over
the prior year.
CFO Commentary
Julie Beck, Senior Vice President
and Chief Financial Officer, said, "We delivered another year of
profitable growth, margin expansion and strong ROIC, while
remaining committed to our capital allocation strategy. With our
low leverage, ample liquidity, and free cash flow generation, we
are in a strong position to pursue our growth initiatives and to
continue to enhance shareholder value."
Dividend Announcement
The Company's Board of Directors declared a quarterly dividend
of $0.17 per share. The dividend is
to be paid on March 19, 2024 to all
stockholders of record as of the close of business on March 8, 2024.
Full-Year 2024: Outlook
(in millions, except per share data)
Terex Outlook
(1)
|
FY
2023
GAAP /
Non-GAAP
|
FY 2024
Outlook
|
Net Sales
|
$5,152
|
$5,100 -
$5,300
|
Operating
Margin*
|
12.4% /
12.7%
|
12.8% -
13.1%
|
Interest / Other
Expense
|
$57
|
~$60
|
Tax Rate*
|
10.9% /
18.2%
|
~22%
|
EPS*
|
$7.56 /
$7.06
|
$6.85 -
$7.25
|
Share Count
|
68.3
|
~68
|
Depreciation /
Amortization
|
$56
|
~$65
|
Free Cash
Flow
|
$366
|
$325 - $375
(2)
|
Corp & Other
OP*
|
($93) /
($84)
|
~($80)
|
|
Segment Outlook
(1)
|
FY
2023
|
FY 2024
Outlook
|
Net
Sales
|
Operating
Margin
|
Net
Sales
|
Operating
Margin
|
Materials
Processing
|
$2,227
|
16.1 %
|
$2,200 -
$2,300
|
15.6% -
15.9%
|
Aerial Work
Platforms
|
$2,922
|
12.7 %
|
$2,900 -
$3,000
|
13.4% -
13.7%
|
|
|
(1)
|
Excludes the impact of
future acquisitions, divestitures, restructuring and other unusual
items
|
(2)
|
Capital expenditures of
~$145 million
|
|
|
*
|
See the glossary for
reconciliation of financial call-outs to U.S. GAAP.
|
Non-GAAP Measures and Other Items
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 Glossary at the end of this press release contains further
details about this subject.
Conference call
The Company has scheduled a conference call to review the
financial results on Friday, February 9, 2024 beginning at
8:30 a.m. ET. Simon A. Meester, President and Chief Executive
Officer, and Julie Beck, Senior Vice
President and Chief Financial Officer, will host the call. A
simultaneous webcast of this call can be accessed at
https://investors.terex.com. Participants are encouraged to access
the call 15 minutes prior to the starting time. The call will also
be archived in the Event Archive
at https://investors.terex.com.
Forward-Looking Statements
Certain information in this press release includes
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act") and the Private Securities
Litigation Reform Act of 1995) regarding future events or our
future financial performance that involve certain contingencies and
uncertainties, including those discussed in our Annual Report on
Form 10-K for the year ended December 31, 2023, and subsequent
reports we file with the U.S. Securities and Exchange Commission
from time to time, in the sections entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations – Contingencies and Uncertainties." In addition,
when included in this press release, the words "may," "expects,"
"should," "intends," "anticipates," "believes," "plans,"
"projects," "estimates," "will" 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. We have based these forward-looking
statements on current expectations and projections about future
events. These statements are not guarantees of future
performance. Such statements are inherently subject to a
variety of risks and uncertainties that could cause actual results
to differ materially from those reflected in such forward-looking
statements. Such risks and uncertainties, many of which are
beyond our control, include, among others:
- our operations are subject to a number of potential risks
that arise from operating a multinational business, including
political and economic instability and compliance with changing
regulatory environments;
- changes in the availability and price of certain materials
and components, which may result in supply chain
disruptions;
- consolidation within our customer base and
suppliers;
- our business may suffer if our equipment fails to perform as
expected;
- a material disruption to one of our significant
facilities;
- our business is sensitive to general economic conditions,
government spending priorities and the cyclical nature of markets
we serve;
- our consolidated financial results are reported in U.S.
dollars while certain assets and other reported items are
denominated in the currencies of other countries, creating currency
exchange and translation risk;
- our 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;
- the financial condition of customers and their continued
access to capital;
- exposure from providing credit support for some of our
customers;
- we may experience losses in excess of recorded
reserves;
- our industry is highly competitive and subject to pricing
pressure;
- our ability to integrate acquired businesses;
- our ability to successfully implement our strategy and the
actual results derived from such strategy;
- increased cybersecurity threats and more sophisticated
computer crime;
- increased regulatory focus on privacy and data security
issues and expanding laws;
- our ability to attract, develop, engage and retain team
members;
- possible work stoppages and other labor matters;
- litigation, product liability claims and other
liabilities;
- changes in import/export regulatory regimes, imposition of
tariffs, escalation of global trade conflicts and unfairly traded
imports, particularly from China,
could continue to negatively impact our business;
- compliance with environmental regulations could be costly
and failure to meet sustainability expectations or standards or
achieve our sustainability goals could adversely impact our
business;
- our compliance with the United
States ("U.S.") Foreign Corrupt Practices Act and similar
worldwide anti-corruption laws;
- our ability to comply with an injunction and related
obligations imposed by the U.S. Securities and Exchange Commission
("SEC"); and
- other factors.
Actual events or our actual future results may differ
materially from any forward-looking statement due to these and
other risks, uncertainties and material factors. The
forward-looking statements contained herein speak only as of the
date of this press release and the forward-looking statements
contained in documents incorporated herein by reference speak only
as of the date of the respective documents. We expressly
disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained or
incorporated by reference in this press release to reflect any
change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
About Terex
Terex is a global manufacturer of materials processing
machinery and aerial work platforms. We design, build and
support products used in maintenance, manufacturing, energy,
recycling, minerals and materials management, and construction
applications. Certain Terex products and solutions enable
customers to reduce their impact on the environment including
electric and hybrid offerings that deliver quiet and emission-free
performance, products that support renewable energy, and products
that aid in the recovery of useful materials from various types of
waste. Our products are manufactured in North America, Europe, Australia and Asia and sold worldwide. We engage with
customers through all stages of the product life cycle, from
initial specification to parts and service support. We report
our business in the following segments: (i) MP and (ii)
AWP.
Contact Information
Paretosh Misra
Head of Investor
Relations
Phone: 203-604-3977
Email:
paretosh.misra@terex.com
TEREX CORPORATION
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in millions, except
per share data)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
|
1,222.6
|
|
$
|
1,217.6
|
|
$
|
5,151.5
|
|
$
|
4,417.7
|
Cost of goods
sold
|
|
(960.1)
|
|
|
(982.2)
|
|
|
(3,974.9)
|
|
|
(3,546.5)
|
Gross profit
|
|
262.5
|
|
|
235.4
|
|
|
1,176.6
|
|
|
871.2
|
Selling, general and
administrative expenses
|
|
(146.8)
|
|
|
(114.6)
|
|
|
(540.1)
|
|
|
(451.2)
|
Income (loss) from
operations
|
|
115.7
|
|
|
120.8
|
|
|
636.5
|
|
|
420.0
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
2.4
|
|
|
0.7
|
|
|
7.6
|
|
|
2.8
|
Interest
expense
|
|
(16.0)
|
|
|
(13.3)
|
|
|
(63.3)
|
|
|
(49.1)
|
Loss on early
extinguishment of debt
|
|
—
|
|
|
(0.2)
|
|
|
—
|
|
|
(0.3)
|
Other income (expense)
– net
|
|
3.6
|
|
|
(2.2)
|
|
|
(1.1)
|
|
|
(6.8)
|
Income (loss) from
continuing operations before income taxes
|
|
105.7
|
|
|
105.8
|
|
|
579.7
|
|
|
366.6
|
(Provision for)
benefit from income taxes
|
|
22.2
|
|
|
(13.8)
|
|
|
(63.0)
|
|
|
(66.4)
|
Income (loss) from
continuing operations
|
|
127.9
|
|
|
92.0
|
|
|
516.7
|
|
|
300.2
|
Gain (loss) on
disposition of discontinued operations- net of tax
|
|
(1.0)
|
|
|
0.2
|
|
|
1.3
|
|
|
(0.2)
|
Net income
(loss)
|
$
|
126.9
|
|
$
|
92.2
|
|
$
|
518.0
|
|
$
|
300.0
|
Basic earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
|
1.90
|
|
$
|
1.37
|
|
$
|
7.65
|
|
$
|
4.38
|
Gain (loss) on
disposition of discontinued operations – net of tax
|
|
(0.01)
|
|
|
—
|
|
|
0.02
|
|
|
—
|
Net income
(loss)
|
$
|
1.89
|
|
$
|
1.37
|
|
$
|
7.67
|
|
$
|
4.38
|
Diluted earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
|
1.88
|
|
$
|
1.34
|
|
$
|
7.56
|
|
$
|
4.32
|
Gain (loss) on
disposition of discontinued operations – net of tax
|
|
(0.02)
|
|
|
—
|
|
|
0.02
|
|
|
—
|
Net income
(loss)
|
$
|
1.86
|
|
$
|
1.34
|
|
$
|
7.58
|
|
$
|
4.32
|
Weighted average number
of shares outstanding in per share calculation
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
67.2
|
|
|
67.5
|
|
|
67.5
|
|
|
68.5
|
Diluted
|
|
68.1
|
|
|
68.6
|
|
|
68.3
|
|
|
69.4
|
TEREX CORPORATION
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions,
except par value)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
370.7
|
|
$
|
304.1
|
Other current
assets
|
|
1,874.5
|
|
|
1,657.9
|
Total current
assets
|
|
2,245.2
|
|
|
1,962.0
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment – net
|
|
569.8
|
|
|
465.6
|
Other non-current
assets
|
|
800.5
|
|
|
690.5
|
Total non-current
assets
|
|
1,370.3
|
|
|
1,156.1
|
Total assets
|
$
|
3,615.5
|
|
$
|
3,118.1
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Current portion of
long-term debt
|
$
|
2.8
|
|
$
|
1.9
|
Other current
liabilities
|
|
1,116.4
|
|
|
996.7
|
Total current
liabilities
|
|
1,119.2
|
|
|
998.6
|
Non-current
liabilities
|
|
|
|
|
|
Long-term debt, less
current portion
|
|
620.4
|
|
|
773.6
|
Other non-current
liabilities
|
|
203.6
|
|
|
164.7
|
Total non-current
liabilities
|
|
824.0
|
|
|
938.3
|
Total
liabilities
|
|
1,943.2
|
|
|
1,936.9
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
1,672.3
|
|
|
1,181.2
|
Total liabilities and
stockholders' equity
|
$
|
3,615.5
|
|
$
|
3,118.1
|
|
|
|
|
|
|
TEREX CORPORATION
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in
millions)
|
|
|
|
|
Year Ended December
31,
|
|
|
|
2023
|
|
2022
|
|
Operating
Activities
|
|
|
|
|
Net income
(loss)
|
$
|
518.0
|
|
$
|
300.0
|
|
Depreciation and
amortization
|
|
56.4
|
|
|
47.2
|
|
Changes in operating
assets and liabilities and non-cash charges
|
|
(115.1)
|
|
|
(86.0)
|
|
Net cash provided by
(used in) operating activities
|
|
459.3
|
|
|
261.2
|
|
Investing
Activities
|
|
|
|
|
|
|
Capital
expenditures
|
|
(127.2)
|
|
|
(109.6)
|
|
Other investing
activities, net
|
|
12.8
|
|
|
(44.5)
|
|
Net cash provided by
(used in) investing activities
|
|
(114.4)
|
|
|
(154.1)
|
|
Financing
Activities
|
|
|
|
|
|
|
Net cash provided by
(used in) financing activities
|
|
(287.8)
|
|
|
(54.9)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
9.5
|
|
|
(15.0)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
66.6
|
|
|
37.2
|
|
Cash and cash
equivalents at beginning of year
|
|
304.1
|
|
|
266.9
|
|
Cash and cash
equivalents at year end
|
$
|
370.7
|
|
$
|
304.1
|
|
|
|
|
|
|
|
|
TEREX CORPORATION
AND SUBSIDIARIES
SEGMENT RESULTS
DISCLOSURE
(unaudited)
(in
millions)
|
|
|
Q4
|
|
Year to
Date
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
% of
|
|
|
% of
|
|
|
|
% of
|
|
|
% of
|
Net
Sales
|
Net
Sales
|
|
Net
Sales
|
Net
Sales
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,222.6
|
|
$
|
1,217.6
|
|
|
$
|
5,151.5
|
|
$
|
4,417.7
|
|
Income from
operations
|
$
|
115.7
|
9.5 %
|
$
|
120.8
|
9.9 %
|
|
$
|
636.5
|
12.4 %
|
$
|
420.0
|
9.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
554.7
|
|
$
|
550.3
|
|
|
$
|
2,227.0
|
|
$
|
1,941.6
|
|
Income from
operations
|
$
|
83.8
|
15.1 %
|
$
|
87.0
|
15.8 %
|
|
$
|
358.6
|
16.1 %
|
$
|
297.8
|
15.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
659.9
|
|
$
|
671.8
|
|
|
$
|
2,921.7
|
|
$
|
2,483.6
|
|
Income from
operations
|
$
|
61.0
|
9.2 %
|
$
|
54.0
|
8.0 %
|
|
$
|
371.3
|
12.7 %
|
$
|
196.2
|
7.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corp and Other /
Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
8.0
|
|
$
|
(4.5)
|
|
|
$
|
2.8
|
|
$
|
(7.5)
|
|
Loss from
operations
|
$
|
(29.1)
|
*
|
$
|
(20.2)
|
*
|
|
$
|
(93.4)
|
*
|
$
|
(74.0)
|
*
|
* - Not a meaningful
percentage
|
|
|
|
|
|
|
|
GLOSSARY
Non-GAAP Measures Definitions
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 December 31, 2023, unless
otherwise indicated.
As changes in foreign currency exchange rates have a
non-operating impact on our financial results, we believe excluding
effects of these changes assists in assessment of our business
results between periods. We calculate the translation effect
of foreign currency exchange rate changes by translating current
period results using rates that the comparable prior periods were
translated at to isolate the foreign exchange component of the
fluctuation from the operational component. Similarly, the
impact of changes in our results from acquisitions and divestitures
that were not included in comparable prior periods may be
subtracted from the absolute change in results to allow for better
comparability of results between periods.
2024 Outlook
The Company's 2024 outlook for earnings per share is a non-GAAP
financial measure because it excludes the impact of potential
future acquisitions, divestitures, restructuring, and other unusual
items. The Company is not able to reconcile this forward-looking
non-GAAP financial measure to its 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 2024 GAAP financial results. This forward
looking information provides guidance to investors about the
Company's EPS expectations excluding unusual items that the Company
does not believe is reflective of its ongoing operations.
Free Cash Flow
The Company calculates a non-GAAP measure of free cash flow.
The Company defines free cash flow as Net cash provided by (used
in) operating activities less Capital expenditures, net of proceeds
from sale of capital assets. The Company believes that this
measure of free cash flow provides management and investors further
useful information on cash generation or use in our primary
operations. The following table reconciles Net cash provided by
(used in) operating activities to free cash flow (in millions):
|
|
Year Ended
December 31, 2023
|
|
Year Ended
December 31, 2022
|
Net cash provided by
(used in) operating activities
|
|
$
459.3
|
|
$
261.2
|
Capital expenditures,
net of proceeds from sale of capital assets
|
|
(93.6)
|
(1)
|
(109.4)
|
Free cash flow
(use)
|
|
$
365.7
|
|
$
151.8
|
|
|
(1)
|
Amount includes $127.2
million of capital expenditures, net of $33.6 million of proceeds
from sale of capital assets.
|
ROIC
ROIC and other Non-GAAP Measures (as calculated below) assist in
showing how effectively we utilize capital invested in our
operations. ROIC is determined by dividing the sum of NOPAT
for each of the previous four quarters by the average of Debt less
Cash and cash equivalents plus Stockholders' equity for the
previous five quarters. NOPAT for each quarter is calculated
by multiplying Income (loss) from operations by one minus the full
year 2023 effective tax rate as adjusted. Debt is calculated
using amounts for Current portion of long-term debt plus Long-term
debt, less current portion. We calculate 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, we include 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.
In the calculation of ROIC, we adjusted the effective tax rate
for a one-time tax benefit derived from recording of a deferred tax
asset in relation to our Swiss operations to create a measure that
is more useful to understanding our operating results and the
ongoing performance of our underlying business as shown in the
tables below. Our management and Board of Directors use ROIC
as one measure to assess operational performance, including in
connection with certain compensation programs. We use ROIC as
a metric because we believe it measures how effectively we invest
our capital and provides a better measure to compare ourselves to
peer companies to assist in assessing how we drive operational
improvement. We believe ROIC measures return on the amount of
capital invested in our businesses and is an accurate and
descriptive measure of our performance. We also believe
adding Debt less Cash and cash equivalents to 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. As the tables
below show, our ROIC at December 31, 2023 was 28.5%.
Amounts described below are reported in millions of U.S.
dollars, except for the Effective Tax Rate. Amounts are as of
and for the three months ended for the periods referenced in the
tables below:
|
Dec '23
|
Sep '23
|
Jun '23
|
Mar '23
|
Dec '22
|
Effective tax rate as
adjusted
|
18.2 %
|
18.2 %
|
18.2 %
|
18.2 %
|
|
Income (loss) from
operations
|
$
115.7
|
$
163.2
|
$
209.9
|
$
147.7
|
|
Multiplied by: 1 minus
effective tax rate as adjusted
|
81.8 %
|
81.8 %
|
81.8 %
|
81.8 %
|
|
Net operating income
(loss) after tax
|
$ 94.6
|
$
133.5
|
$
171.7
|
$
120.8
|
|
Debt
|
$
623.2
|
$
708.7
|
$
736.7
|
$
777.0
|
$
775.5
|
Less: Cash and cash
equivalents
|
(370.7)
|
(352.3)
|
(297.7)
|
(254.2)
|
(304.1)
|
Debt less Cash and cash
equivalents
|
252.5
|
356.4
|
439.0
|
522.8
|
471.4
|
Stockholders'
equity
|
1,672.3
|
1,496.2
|
1,432.2
|
1,294.6
|
1,181.2
|
Debt less Cash and cash
equivalents plus Stockholders' equity
|
$ 1,924.8
|
$ 1,852.6
|
$ 1,871.2
|
$ 1,817.4
|
$
1,652.6
|
December 31, 2023
ROIC
|
28.5 %
|
NOPAT as adjusted (last
4 quarters)
|
$
520.6
|
Average Debt less Cash
and cash equivalents plus Stockholders' equity (5
quarters)
|
$
1,823.7
|
Twelve Months
Ended
December 31,
2023
|
Income (loss) from
continuing
operations before
income taxes
|
(Provision for)
benefit from
income taxes
|
Income tax
rate
|
Reconciliation of the
full year 2023 effective tax rate:
|
|
|
|
As reported
|
579.7
|
(63.0)
|
10.9 %
|
Effects of
adjustments:
|
|
|
|
Tax related to Swiss
deferred tax assets
|
—
|
(42.3)
|
|
As adjusted
|
$
579.7
|
$
(105.3)
|
18.2 %
|
Working Capital
Working Capital is calculated using the Condensed Consolidated
Balance Sheet amounts for 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:
|
December 31,
2023
|
Inventories
|
$1,186.0
|
Receivables
|
547.8
|
Less: Trade Accounts
Payables
|
(702.6)
|
Less: Customer
Advances
|
(32.2)
|
Total Working
Capital
|
$999.0
|
Trailing Three Months Annualized Net Sales is calculated using
the net sales for the quarter multiplied by four.
3 months
Sales
|
|
$1,222.6
|
Number of
quarters
|
x
|
4.0
|
Annualized Quarterly
Sales
|
|
$4,890.4
|
|
|
|
WC % of Annualized
Quarterly Sales
|
|
20.4 %
|
The ratio is calculated by dividing working capital by trailing
three months annualized net sales. The Company believes this
measures its resource use efficiency.
Q4 2023 Adjustments
|
|
Q4 2023
GAAP
|
Accelerated
Vesting /
Other
|
Product
Liability
Verdict
|
Mark-to-
Market
|
Tax
|
Q4 2023
Non-GAAP
|
Net Sales
|
$
|
1,222.6
|
–
|
–
|
–
|
–
|
$
|
1,222.6
|
Gross Profit
|
|
262.5
|
0.2
|
4.0
|
–
|
–
|
|
266.7
|
% of
Sales
|
|
21.5 %
|
|
|
|
|
|
21.8 %
|
SG&A
|
|
(146.8)
|
12.8
|
–
|
–
|
–
|
|
(134.0)
|
% of
Sales
|
|
(12.0 %)
|
|
|
|
|
|
(11.0 %)
|
Income (Loss) from
Operations
|
|
115.7
|
13.0
|
4.0
|
–
|
–
|
|
132.7
|
Operating
Margin
|
|
9.5 %
|
|
|
|
|
|
10.9 %
|
Net Interest
(Expense)
|
|
(13.6)
|
–
|
–
|
–
|
–
|
|
(13.6)
|
Other
(Expense)
|
|
3.6
|
–
|
–
|
(4.7)
|
–
|
|
(1.1)
|
Income (Loss) from
Cont. Ops. Before Taxes
|
|
105.7
|
13.0
|
4.0
|
(4.7)
|
–
|
|
118.0
|
Benefit from (Provision
for) Income Taxes
|
|
22.2
|
(1.1)
|
(0.9)
|
–
|
(42.3)
|
|
(22.1)
|
Effective Tax
Rate
|
|
(21.0 %)
|
|
|
|
|
|
18.7 %
|
Income (Loss) from
Continuing Operations
|
$
|
127.9
|
11.9
|
3.1
|
(4.7)
|
(42.3)
|
$
|
95.9
|
Earnings (Loss) per
Share
|
$
|
1.88
|
0.17
|
0.05
|
(0.07)
|
(0.62)
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting /
Other
|
|
|
Corp & Other
OP
|
$
|
(29.1)
|
9.5
|
$
|
(19.6)
|
FY 2023 Adjustments
|
|
FY 2023
GAAP
|
Accelerated
Vesting /
Other
|
Product
Liability
Verdict
|
OKC Sale
Gain
|
Mark-to-
Market
|
Tax
|
FY 2023
Non-GAAP
|
Net Sales
|
$
|
5,151.5
|
–
|
–
|
–
|
–
|
–
|
$
|
5,151.5
|
Gross Profit
|
|
1,176.6
|
0.2
|
4.0
|
–
|
–
|
–
|
|
1,180.8
|
% of
Sales
|
|
22.8 %
|
|
|
|
|
|
|
22.9 %
|
SG&A
|
|
(540.1)
|
12.8
|
–
|
(1.8)
|
–
|
–
|
|
(529.1)
|
% of
Sales
|
|
(10.5 %)
|
|
|
|
|
|
|
(10.3 %)
|
Income (Loss) from
Operations
|
|
636.5
|
13.0
|
4.0
|
(1.8)
|
–
|
–
|
|
651.7
|
Operating
Margin
|
|
12.4 %
|
|
|
|
|
|
|
12.7 %
|
Net Interest
(Expense)
|
|
(55.7)
|
–
|
–
|
–
|
–
|
–
|
|
(55.7)
|
Other
(Expense)
|
|
(1.1)
|
–
|
–
|
–
|
(5.7)
|
–
|
|
(6.8)
|
Income (Loss) from
Cont. Ops. Before Taxes
|
|
579.7
|
13.0
|
4.0
|
(1.8)
|
(5.7)
|
–
|
|
589.2
|
Benefit from (Provision
for) Income Taxes
|
|
(63.0)
|
(1.1)
|
(0.9)
|
0.4
|
(0.1)
|
(42.3)
|
|
(107.0)
|
Effective Tax
Rate
|
|
10.9 %
|
|
|
|
|
|
|
18.2 %
|
Income (Loss) from
Continuing Operations
|
$
|
516.7
|
11.9
|
3.1
|
(1.4)
|
(5.8)
|
(42.3)
|
$
|
482.2
|
Earnings (Loss) per
Share
|
$
|
7.56
|
0.17
|
0.05
|
(0.02)
|
(0.08)
|
(0.62)
|
$
|
7.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting /
Other
|
|
|
Corp & Other
OP
|
$
|
(93.4)
|
9.5
|
$
|
(83.9)
|
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SOURCE Terex Corporation