) reported second-quarter 2012 adjusted earnings of 75 cents per
share, versus 10 cents in the year-ago quarter. The company's
earnings also comfortably surpassed the Zacks Consensus Estimate of
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Including special items, Terex reported earnings of 75 cents per
share in the quarter compared with 1 cent in the year-ago quarter.
Total revenues increased 35.2% year over year to $2.012 billion,
ahead of the Zacks Consensus Estimate of $2.008 billion. Excluding
the impact of the Demag Cranes AG acquisition, net sales increased
11% year over year.
Costs and Margins
Cost of goods sold increased 23% to $1.6 billion versus $1.3
billion in the year-earlier quarter. Gross profit soared 99.4% to
$428.6 million. Gross margins expanded 690 basis points to 21.3% in
Selling, general and administrative expenses increased 22% to
$253.6 million in the quarter. The company reported an operating
income of $175 million compared with $6.8 million in the year-ago
Total revenues at
Aerial Work Platforms
increased 25% to $605.7 million from $485.7 million in the year-ago
quarter. The improvement was due to a replacement-based demand
increase in the North American rental channel along with natural
resource based construction spending in Australia.
Operating income increased to $83.2 million from $27.4 million in
the prior-year quarter, driven by higher manufacturing productivity
and price realization, partially offset by increasing raw material
Total revenues at the
segment increased 8.1% to $388.8 million in the quarter, driven by
a strong demand of compact construction equipment, truck, along
with component sales in Russia, China and Latin America.
Operating income increased to $9.6 million from a loss of $6.0
million in the year-earlier quarter due to cost cutting efforts and
higher price realizations.
segment's total revenues surged 4.3% to $484.2 million with
improvement in demand for rough terrain cranes and improved demands
for all terrain cranes in North America, the Middle East, Latin
America and Australia, partially offset by foreign currency
The segment reported an operating profit of $43.5 million versus a
loss of $34 million in the year-earlier quarter. Improvement was
attributable to cost cutting efforts and price realization.
Total revenues at
Material Handling & Port solutions
were $361 million. The segment reported operating profit of $11.8
million. Operating profit benefited from reduction in spending
levels and product mix.
Total revenues at the
segment soared $190.3 million, up 4% year over year due to
increased demand in markets of North America and Australia.
However, lower demand for crushing and screening equipment in
Western Europe was a minor offset.
The segment reported an operating profit of $28.6 million, up from
$21.1 million in the prior year quarter. Operating profit improved,
driven by a restart of manufacturing activities at Coalville
location along with cost saving efforts and pricing.
As of June 30, 2012, cash and cash equivalents amounted to $841.5
million versus $774.1 million as of December 31, 2011. Cash from
operating activities was an inflow of $17.8 million in the first
six months of 2012 compared with usage of $218.9 million for the
first six months of 2011.
Outlook for 2012
Management narrowed net sales in the range of $7.5 billion to $7.8
million from the previous guidance of $7.5-$8.0 billion. Earnings
are projected in the range of $1.95-$2.05 per share, up from the
previous guidance of $1.65 to $1.85.
The Construction segment has returned into profit, driven by strong
demand in the emerging markets of Russia, China and Latin America.
We expect the segment to be further benefited by the new 27-month
highway Bill moving ahead.
However, soft demand conditions in Europe and foreign currency
translation may impact margins negatively. Terex also faces tough
competition from companies like
Deere & Company
Terex retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.