Westport, Conn.-based Terex Corp. last week announced net income for the third quarter of 2006 of $101.0 million, or 98 cents per share, compared to net income of $51.9 million, or 51 cents per share, for the third quarter of 2005, a 94.6 percent jump. Net income for the third quarter of 2006 included a $16.6 million pre-tax charge related to the early extinguishment of the company’s 10-3/8 percent senior subordinated notes and senior debt facilities, which negatively impacted earnings per share by 11 cents, and a loss on the disposition of the Tatra business, net of tax, of $7.7 million, which negatively impacted earnings per share by 7 cents.
Net sales for Terex reached $1.9 billion in the third quarter of 2006, an increase of 27.4 percent from $1.5 billion in the third quarter of 2005.
“We continue to be pleased with our results, and we remain optimistic about our performance going forward,” said Ronald DeFeo, Terex’s chairman and CEO. “In early 2004, we established stretch goals designed to transform Terex from an acquisition-driven holding vehicle into a true operating company that could grow dramatically without acquisitions while at the same time improving its margins and working capital ratios. By the end of 2006, we expect that we will have substantially achieved these goals, although opportunities for improvement remain.”
The company expects to continue to achieve 10 percent or greater operating margin in 2007, according to DeFeo.
Though the company’s Aerial Work Platforms segment continued to have good results, and its Materials Processing & Mining and Terex Cranes segments continued to show rapidly improving results, its Construction segment continues to lag behind targets.
“We are addressing the Construction segment’s issues in a manner that will take several years to fully implement, although we do expect meaningful short-term improvements from this group, as new products should contribute to profitability and growth,” DeFeo said.
The company revised its outlook for the full year 2006. It expects net sales to be within the range of $7.45 to $7.6 billion, even after giving effect to the Tatra transaction. Additionally, the company expects earnings per share for the year to be in the range of $3.65 to $3.75. The earnings guidance includes a $23.3 million charge related to the early extinguishment of debt, which negatively impacts Terex’ earnings per share by 15 cents during the year, as well as a loss on the disposition of the Tatra business, net of tax, of $7.7 million, which negatively impacts earnings per share by 7 cents.
