Terex Corp. posted income from continuing operations of $20.9 million for the first quarter of 2013, as compared to $20.5 million for the first quarter of 2012, essentially flat. Net sales were $1.723 billion for the quarter, a decline of 5.3 percent from $1.819 billion in the year-ago quarter. Income from operations was $68.4 million in the first quarter of 2013, an improvement of $4.6 million compared to income from operations of $63.8 million a year ago. The Genie aerial work platform division, however, was strong, particularly in North America.
“Our business performance was mixed in the first quarter,” said Ron DeFeo, Terex chairman and CEO. “We are encouraged by the performance of our Aerial Work Platform business, which continues to reflect the strong end-market dynamics of the rental channel, particularly in North America. Our Cranes and Materials Processing businesses also positively contributed to our results and performed generally as expected. However, we have seen significant global revenue shortfalls in our MHPS business, with particular weakness in Europe and India. Our Construction business is also reflecting the challenges of a less certain customer base in Europe. As a result, we are initiating additional actions in the second quarter to further adjust the cost structure of the MHPS and Construction organizations to better reflect the reduced demand for certain of their products. We anticipate that we will be incurring restructuring and related charges of approximately $30-$50 million in the MHPS segment in the second quarter, and expect to realize a similar amount in savings over the next 12 to 24 months.”
DeFeo said Terex remains focused on improving profit through organic means, echoing comments he made a week ago at the Bauma Trade Fair in Munich. DeFeo said Terex will concentrate on integrating the businesses more thoroughly and generating consistent free cash flow. “We reiterate our annual outlook of earnings per share to be between $2.40 and $2.70 per share, excluding restructuring and other unusual items, on net sales of between $7.9 billion and $8.3 billion,” he noted.
“We generated free cash flow in the first quarter of 2013 of approximately $135 million,” said Kevin Bradley, Terex senior vice president and chief financial officer. “We are pleased with this result as we normally consume cash early in the year. We continue to anticipate improved cash generation through the remainder of the year.”
“Aerial work platforms had a strong quarter, delivering both excellent growth, up 21 percent versus the prior year, as well as solid margins at 14 percent,” said DeFeo. “The Cranes and Materials Processing business both executed their operating plan about as expected. Challenges in the quarter came from Construction, which is off to a slow start, sales volume-wise, and we’ve taken some additional actions to streamline this business.”
Bradley said AWP increased net sales by 21.3 percent as the company benefits from improving replacement demand, particularly in North America. “We were also seeing early signs of a fleet-replacement cycle taking hold in Europe,” he said. “The increased order activities for AWP that began in late 2012 continued into 2013 and are reflected in our backlog at the end of the quarter. Our AWP and Crane segments both posted strong incremental margins: AWP at 37 percent and Cranes at 46 percent. This favorable mix was largely offset by the revenue declines of roughly 23 percent in both our Construction and MHPS segments.”
DeFeo said there is strong demand for AWPs in North and South America. “Our European business was up strong double-digits in the first quarter versus the prior-year quarter,” he said. DeFeo said Terex is in the process of reconstructing its Compact business in Europe and that Terex will be selling its components businesses in Germany to reduce headcount and focus on value-added activities.
DeFeo was bullish about Genie’s new SX-180, the tallest boom in the industry that’s not truck-mounted. Steve Filipov, president of Terex’s Material Handling and Port Solutions business said that some large projects were pushed out to the third and fourth quarters, so the company is optimistic that this division’s performance would be stronger.
Terex is based in Westport, Conn.
