) second-quarter 2013 adjusted earnings of 65 cents per share
declined 13% from 75 cents earned in the year-ago quarter, but
were ahead of the Zacks Consensus Estimate of 54 cents. Weak
market conditions, decline in the Cranes, Construction and
Material Handling & Port Solutions segment revenues impacted
the earnings. Including special items, Terex reported income from
continuing operations of 18 cents per share in the second
quarter, a 76% plunge from 75 cents earned in the prior-year
Revenues in the quarter declined 5% year over year to $1.91
billion, missing the Zacks Consensus Estimate of $1.99 billion.
Cost of goods sold declined 2% to $1.55 billion versus $1.58
billion in the year-earlier quarter. Gross profit decreased 17%
to $3567.5 million. Gross margin contracted 260 basis points to
18.7% in the quarter.
Selling, general and administrative expenses increased 7% to $271
million in the quarter. The company reported an operating income
of $85.3 million, a 51% drop from $175 million in the year-ago
Aerial Work Platforms revenues improved 17% year over year to
$607 million in the reported quarter on the back of improvement
in replacement demand, particularly in North America. Operating
income saw a 30% increase to $101 million from $78 million in the
Construction segment revenues declined 29% to $275 million.
Results deteriorated due to soft demand in the end markets,
especially in Europe, as well as the decline in truck sales in
global market. The segment reported an operating loss of $5
million in the quarter compared with operating profit of $9.6
million in the year-ago quarter.
Cranes segment revenues increased 3% to $521 million. Operating
income declined to $23.4 million from $49.6 million in the
Material Handling & Port Solutions revenues declined 16% to
$370 million, driven by weak demand for port equipment across
most product categories and a decline in industrial material
handing cranes. The segment reported an operating loss of $57
million compared to an operating income of $10.8 million in the
Material Processing segment revenues were $176 million, down 7%
year over year due to weak mineral markets in Australia and South
America, and soft general construction in Europe, partly offset
by stronger North American market and flat selling, general and
administrative expenses. The segment reported an operating income
of $24.5 million, down 14% from $28.6 million in the year-ago
As of Jun 30, 2013, cash and cash equivalents amounted to $5480
million versus $678 million as of Dec 31, 2012. Long-term debt
was at $1.8 billion as of Jun 30, 2013 compared with $2 billion
as of Dec 31, 2012. Cash flow from operating activities was $1308
million in the first half of 2013 compared with $18 million in
the prior-year comparable period. The company generated free cash
flow of $40 million in the quarter compared with $175 million in
the second quarter of 2012.
Backlog for orders to be filled during the next twelve months was
around $2.18 billion as of Jun 30, 2013, in line with Mar 31,
2012 and a 5% rise from Jun 30, 2013. Strong demand for AWP
products as well as existing large port equipment orders for MHPS
led to the increase. However, weak demand witnessed in the cranes
segment due to softness in Europe, Latin America and Australia
offset the increase.
Outlook for 2013
Terex maintained its 2013 earnings per share forecast range of
$1.90 and $2.10 and net sales between $7.5 billion and $7.7
billion. The company expects to generate more than $400 million
in free cash flow during the year and remains committed to
reducing its debt.
Terex will realize benefits starting in 2014 from its substantive
actions undertaken in the second quarter to further adjust the
cost structure of the MHPS, and Cranes and Construction segments.
In the near term, strong backlog in the MHPS segment will aid
results. The company will also benefit from the recovery in the
construction sector. The company also remains focused on
improving profit through continued attention on pricing and
Westport, Conn-based Terex is a global equipment manufacturer,
catering to the construction, infrastructure, and surface mining
industries. The company's manufacturing facilities are located in
the U.S., Canada, Europe, Australia, Asia, and South America. It
also offers a complete line of financial products and services to
assist in the acquisition of equipment through Terex Financial
Terex retains a short-term Zacks Rank #5 (Strong Sell).
), with a Zacks Rank #2 (Buy), is a better option for investors
who are keen on investing in the construction and machinery
Reflecting on the performance of Terex's peers in the second
Astec Industries Inc.
) fared better with a 17% year over year increase in earnings to
48 cents per share, but short of the Zacks Consensus Estimate of
On the other hand, earnings of construction and mining equipment
) slumped 43% to $1.45 per share and fell well short of the Zacks
Consensus Estimate of $1.70.
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