) reported fourth quarter adjusted EPS of 26 cents, versus 20 cents
in the year-ago quarter. The EPS was a penny ahead of the Zacks
Excluding the special items in both periods; Terex reported a
loss per share of 3 cents in the quarter compared with a loss per
share of 30 cents in the year-ago quarter.
Net sales at Terex increased 47% to $1.957 billion from $1.327
billion in the year-earlier quarter, ahead of the Zacks Consensus
Estimate of $1.896 billion. Excluding the impact of the Demag
Cranes AG acquisition, net sales increased 20%.
Costs and Margins
Cost of goods sold amounted to $1.6 billion versus $1.1 billion
in the year-earlier quarter. Gross profit increased to $330.5
million from $185.6 million in the year-ago quarter. Gross margins
expanded 200 basis points to 16% in the quarter.
Selling, general and administrative expenses increased 46% to
$271 million in the quarter. The company reported an operating
income of $32 million compared with $0.5 million in the year-ago
Total revenue at Aerial Work Platforms increased to $437.4
million from $342.8 million in the year-ago quarter. The segment
reported an operating income of $26 million versus $11 million in
the prior-year quarter.
Net sales at the Construction segment were $409 million versus
$316 million in the year-ago quarter driven by strong demand in
North America and Europe. Operating loss at the Construction
business narrowed to $2.8 million from a loss of $4.3 million in
the year-earlier quarter due to lower demand for roadbuilding
products, charges to reduce staffing to better align production
with lower demand, higher material and component costs.
Cranes reported total revenue of $593.7 million versus $549.1
million in the year-earlier quarter with improvement in demand for
rough terrain cranes in North America, robust performance in the
port equipment businesses and strong demand for pick and carry
crane products in Australia. The segment reported an operating
profit of $10.8 million versus $15.7 million in the year-earlier
Net sales at Material Handling & Port solutions were $361
million driven by machine sales for industrial cranes and mobile
harbor cranes due to strong orders during earlier parts of 2011.
Region wise, Germany and the United States showed strong
performance followed by Brazil, India and China. The segment
reported a loss of $16.6 million. This included a charge of
$22.1 million related to the step-up in the valuation of inventory
at the acquisition date of Demag Cranes AG partially offset by
higher spare parts, service and maintenance revenue.
Net sales at the Material Processing segment were $170.8
million, up 17% year over year due to strong mobile equipment sales
in Australia, South Africa and parts of southern Asia and Latin
America. However, lower demand for crushing equipment in Europe was
a minor offset. The segment reported an operating profit of $14.6
million, up from $5.3 million in the prior year quarter.
Fiscal 2011 Performance
Terex reported fiscal adjusted EPS of 46 cents compared with a
loss of $1.29 in the prior year,. This was ahead of the Zacks
Consensus Estimate of 44 cents.. Including special items, EPS in
fiscal 2011 stood at 35 cents compared with a loss in the previous
year. Revenues improved 47% year over year to $6.5 billion,
surpassing the Zacks Consensus Estimate of $6.4 billion.
As of December 31, 2011 cash and cash equivalents amounted to
$774 million versus $894 million as of December 31, 2010. Cash from
operating activities was an inflow of $19.1 million during the year
compared with usage of $610 million in fiscal 2010. The
debt-to-capitalization ratio worsened to 55% as of December 31,
2011 from 45% as of December 31, 2010.
Management now expects full year net sales in the range of $7.5
billion to $8.0 billion. Full year EPS is projected in the range of
$1.65 to $1.85. For the fourth quarter, EPS is forecast in the band
of 20 cents to 25 cents. Capital expenditures is expected to be
approximately $140 million. Ratio of working capital to trailing
three months annualized sales is projected at 25% at the end
In the Aerial Work Platform segment, operating margin is
projected to be in the 10% - 11% range for 2012, driven by price
realization and productivity enhancements. The Cranes segment's
operating margin is expected to be within 5% to 6%. Weak demand in
Europe is expected to be offset by growth in North American and
Australian markets. Latin America and the Middle East markets will
also remain strong. Price increases and restructuring activities
are expected to aid margins.
The Material Processing segment sales is expected to remain
strong in Australia and South Africa, combined with improved
pricing overall. Operating margins is expected to lie within 10% to
11%. Sales are also expected to improve in the Material Handling
& Port segment led by the services and the port solutions
businesses, Particularly in North America, India and the Middle
East. Operating margin is expected in the 4.5% - 5.5% range. In the
Construction business, roadbuilding operations are expected to
remain weak in 2012. Overall segment operating margin is expected
to be in the range of 2% - 3%.
Terex had been continuously suffering losses since the first
quarter of fiscal 2009, affected by the global economic slowdown.
Particularly hurt were the Aerial Work Platforms and Construction
However, the company reversed its string of losses beginning
fiscal 2011 first quarter. Even though the other segments have
turned around, the Construction segment still remains in the red.
However, an increase in backlog and order quotation activity in the
quarter hold promise.
With the recent Demag acquisition, Terex will add a new product
category of industrial cranes and hoists, and become the leading
worldwide player in port equipment. The combined entity will have a
strong footprint in Europe and the emerging markets, especially in
China, as Demag is counting on capturing the growing demand for
cranes in that country, the world's largest market for industrial
cranes. We currently have a Zacks #3 Rank (short-term Hold
recommendation) on the stock.
Westport, Connecticut-based Terex Corporation is a global
manufacturer of a broad range of equipment for the construction,
infrastructure, quarrying, mining, shipping, transportation,
refining, energy and utility industries.
The company's manufacturing facilities are located in the U.S.,
Canada, Europe, Australia, Asia and South America. It operates
through four business segments: Aerial Work Platforms,
Construction, Cranes and Materials Processing. Terex competes with
the likes of
Deere & Company
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