Terex Announces Third-Quarter 2011 Results
Terex Corp., Westport, Conn., has announced its financial results for the third quarter of 2011, including evaluations of its operations and market conditions.
Terex says that net sales and operating profit improved in all of its business segments, and that end-market recovery is evident, but not consistent. The company also noted that its crane-manufacturing operations have improved production throughput, and that the restructuring of those operations is progressing.
Although supply shortages are decreasing, they are still a concern for the construction-equipment segment of the business. Aerial work platforms are continuing to see order backlog grow, but costs are still a challenge, so Terex is increasing prices on its AWP products an average of 4.5 percent, starting in January.
Terex said that its third-quarter 2011 income from continuing operations was $36.9 million, or $0.33 per share, compared to a loss of $90.9 million, or $0.84 per share, in the third quarter of 2010. Excluding the sale of shares of Bucyrus Intl., Inc. common stock, acquisition-related items, and certain other items in both periods, income from continuing operations would have been about $33 million, or $0.30 per share, in the third quarter of 2011, compared to a loss of about $35 million, or $0.32 per share, in the third quarter of 2010.
Net sales from continuing operations in the third-quarter of 2011 were $1,803.6 million, a 67.7-percent increase from $1,075.8 million in the third quarter of 2010. Excluding the impact of acquiring Demag Cranes AG, net sales increased about 44 percent from the same period in 2010. Adjusting for changes in foreign-currency exchange rates and the impact of acquiring Demag Cranes AG, net sales increased about 35 percent from the third quarter of 2010.
Income from operations was $52.6 million in the third quarter of 2011, compared to $3.6 million in the third quarter of 2010, an improvement of $49.0 million. Excluding the impact of certain items in the current-year period, adjusted income from operations would be about $78 million. Excluding the impact of certain items in the same period of 2010, adjusted income from operations would have been about $5 million.
The Terex report and conference-call presentation covered key factors affecting the company’s markets, and the financial results for each segment. Here are highlights of Terex market segments covered by Lift and Access, Crane Hot Line, and Industrial Lift and Hoist.
Aerial work platforms
Orders for Terex aerial work platforms, about 65 percent of which are sold in North America, are coming predominantly from large rental companies replacing their fleets. Independent rental firms are also buying, but more slowly than expected. Rental customers’ equipment utilization rates are healthy, Terex noted. In addition, international sales of aerial work platforms continue to expand. Net sales for the AWP segment for the third quarter of 2011 reached $448.7 million. That’s an increase of $166.4 million, or 58.9 percent, over the third quarter of 2010. Adjusting for changes in foreign-currency exchange rates, net sales increased approximately 55 percent from the same period of last year.
Income from AWP operations in the third quarter of 2011 was $27.0 million, or 6.0 percent of net sales, compared to income from operations of $14.0 million, or 5.0 percent of net sales, during the third quarter of 2010. Operating profit benefitted mainly from increased sales volumes, partially offset by increasing costs.
Terex said that markets for cranes saw stable demand throughout the segment, and that sales in the United States more than doubled from the same quarter in 2010, due largely to sales of all-terrain cranes, rough-terrain cranes, and boom trucks. It also noted that crawler cranes, port equipment, and tower cranes are starting to see increased demand. Net sales for the cranes segment for the third quarter of 2011 stood at $543.6 million— an increase of $174.9 million, or 47.4 percent, from the third quarter of 2010. Adjusting for changes in foreign-currency exchange rates, net sales grew about 32 percent from the same period last year. Income from operations in the third quarter of 2011 was $25.9 million, or 4.8 percent of net sales, compared with $3.9 million, or 1.1 percent of net sales, during the third quarter of 2010.
Material handling and port solutions
The segment’s third-quarter 2011 net sales of $256.0 million represent the results of newly purchased Demag Cranes AG, starting from August 16, 2011. Net sales were driven by strength in Europe, particularly Germany. Increasing demand for industrial cranes and mobile harbor cranes positively affected net sales. Parts sales also contributed, as higher capacity utilization at customer plants increased need for services and spare parts.
Although the business unit lost $2.6 million during the quarter, the results included charges of $19.3 million related to the revaluation of inventory at the acquisition date of Demag Cranes AG and $5.0 million related primarily to the incremental amortization of revalued tangible and intangible assets. While the effects of purchase accounting adversely affected third-quarter performance of the new MHPS segment, the company says it is optimistic about the business segment’s longer-term opportunities.
Chairman DeFeo comments
Discussing overall corporate results, Terex Chairman and CEO Ronald M. DeFeo said, “Overall, our performance continues to improve in terms of net sales and operating profitability, even during this economically uncertain time.” He also noted that Terex is optimistic about the rest of the year and 2012 for AWPs. “We are having earlier than normal conversations with customers who have indicated a willingness and need to purchase more equipment,” he said.
DeFeo noted that in Terex’s crane business segment, improved production execution allowed the company to deliver orders from its backlog of larger mobile cranes and port equipment, and that margins improved both as a result of higher sales volumes and reduced costs from restructuring. He also said that the materials-processing business had another solid quarter, led by strong demand for larger capacity machines worldwide.
“Additionally,” said DeFeo, “We strengthened our company this quarter with the addition of Demag Cranes AG. We own approximately 82 percent of the outstanding shares of Demag Cranes AG, and we have begun negotiations of a domination and profit and loss transfer agreement.” He said that although the agreement is not expected to be completed until 2012, the company has started the integration planning process involving management teams from both businesses. “We have identified specific work streams, each intended to strengthen the business, balancing speed of integration with the legal requirements of a German public company and effectiveness of domination.”
“Our longer term outlook is for continued growth in many of our key product categories and end markets. While we are mindful of the continuing economic uncertainty, we continue to believe that the overall market conditions support growth led by our AWP business, mainly in North America, and our Port Equipment business globally,” said DeFeo.
The full news release, including more information about the company’s construction-equipment and materials-processing segments, corporate financial operations, taxes, interest, other income, and capital structure, is available in the news section of www.terex.com.