Terex announces Second Quarter 2015 Financial Results

Terex Corporation today announced income from continuing operations of $85.2 million, or $0.78 per share for the second quarter of 2015, as compared to income from continuing operations of $87.8 million, or $0.76 per share for the second quarter of 2014. Net sales were $1,828.5 million in the second quarter of 2015, a decrease of $226.6 million, or 11.0%, when compared with $2,055.1 million in the second quarter of 2014. Excluding the impact of currency, net sales declined approximately 2.0%. Income from operations was $148.3 million in the second quarter of 2015, a decrease of $12.6 million when compared to income from operations of $160.9 million in the second quarter of 2014.

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“The second quarter was a solid quarter in terms of financial performance,” commented Ron DeFeo, Terex Chairman and Chief Executive Officer. “Our AWP segment operating margin returned to the mid-teens as anticipated, benefiting from increased productivity and seasonally strong sales. We are encouraged by our AWP backlog which is higher than the prior year level and expect improved performance for this segment in the second half of 2015 as compared to the second half of 2014. We are seeing pricing pressure in the marketplace, but to date that has been mostly offset by reductions in material input cost.”

Mr. DeFeo continued, “Our Materials Processing business had a good quarter, expanding operating margins despite lower sales. MHPS results were slightly below our expectations for the quarter, but a strong second half performance is still anticipated. Our Cranes segment performed generally in line with our expectations, but with a weaker product mix. The overall market for cranes remains challenging and we are not anticipating any near term improvements. The Construction segment was slightly profitable, with pressure on operating results continuing to come from the European and Indian compact construction and material scrap handling businesses.”

Outlook: Mr. DeFeo added “Although we had a solid second quarter performance, given where we are in the year and the challenging environment we are operating in, we now believe we will be in the low end of our previously announced earnings and revenue guidance for the full year 2015. As a result, our guidance is now for earnings per share for 2015 of between $1.90 and $2.10, excluding restructuring and other unusual items, on net sales of between $6.1 billion and $6.4 billion.”

Capital Structure: “Capital allocation activities within the quarter proceeded as planned,” commented Kevin Bradley, Terex Senior Vice President and Chief Financial Officer. “We improved our balance sheet and borrowing efficiency with the retirement of our convertible senior subordinated notes and the re-pricing of our European term loan. We also generated $76.3 million in free cash flow in the quarter."

The Company’s liquidity at June 30, 2015 decreased by $22 million compared to March 31, 2015 and totaled approximately $818 million, which was comprised of cash balances of $333 million and borrowing availability under the Company’s revolving credit facilities of $485 million. The decrease in liquidity was primarily the result of the repayment of the convertible notes and a small, “bolt on” acquisition for our Material Processing business, offset by free cash flow generated from operations and positive cash contribution from Terex Financial Services.

Return on Invested Capital (ROIC) was 9.9% at June 30, 2015 compared to 10.6% at June 30, 2014.

Taxes: The effective tax rate for the second quarter of 2015 was 27.7% as compared to an effective tax rate of 31.2% for the second quarter of 2014. The lower effective rate for the three months ended June 30, 2015 was primarily due to the geographic mix of earnings.

Backlog: Backlog for orders deliverable during the next twelve months was $1,835 million at June 30, 2015, a decrease of 14.3% from March 31, 2015 and a decrease of 16.6% from June 30, 2014. Excluding the impact of foreign exchange rate changes, backlog at June 30, 2015 decreased 7.0% from June 30, 2014 primarily driven by our decreases in our MHPS and Cranes backlog.

Conference call

The Company has scheduled a one hour conference call to review the financial results on Thursday, July 30, 2015 at 8:00 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.