Westport, Conn.-based Terex Corp. last week announced net income for the 2006 fourth quarter of $100.9 million, or 97 cents per share, compared to net income of $34.8 million, or 34 cents per share, for the fourth quarter of 2005. Net sales for Terex totaled $2.0 billion in the fourth quarter of 2006, an increase of 29.4 percent from $1.6 billion in the fourth quarter of 2005. All per share amounts are on a fully diluted basis.
For the full year 2006, the company reported net income of $399.9 million, or $3.88 per share, compared to net income of $188.5 million, or $1.84 per share, for the full year 2005. Net sales for Terex totaled $7.6 billion in 2006, an increase of 24.2 percent from $6.2 billion in 2005. Debt, less cash and cash equivalents, decreased by $483.9 million from Dec. 31, 2005 levels.
“2006 was a year of significant progress on many fronts — financially, operationally and organizationally,” said Ron DeFeo, Terex chairman and CEO. “Financially, we experienced record net sales and net income, and our debt less cash and cash equivalents of $86 million is at a historic low. Return on Invested Capital,or ROIC, continues to be the unifying metric we use to measure our operating performance. In 2006, we achieved a record ROIC of 38.4 percent, compared to 21.5 percent ROIC in 2005 and our 2006 ROIC target of 27.5 percent.”
“Our outlook for 2007 is strong and we expect to grow our franchise even more than we did in 2006. Back in 2004, I articulated a three-year stretch goal intended to highlight what I felt was possible for our company. We clearly outperformed our net sales goal of $6 billion in 2006, and made great progress towards our objectives in operating margin and working capital reduction as a percentage of net sales. Today, I am stating externally what I told our leadership team in January 2007: our new medium-term stretch goal is to be $12 billion in net sales, with a 12-percent operating margin, by the end of 2010, or our ‘12 by 12 in 10’ goal. This goal primarily hinges on our execution of the internal opportunities of continuous improvement, supply chain management, and the optimum usage of our asset base, as well as our making selected acquisitions when the opportunities arise.”
Net sales for the Terex Aerial Work Platforms segment for the fourth quarter of 2006 increased $118.4 million, or 30 percent, to $514.0 million from $395.6 million in the fourth quarter of 2005. The increase in net sales was driven by continued strong order activity from the rental channel and increasing demand from international markets, despite slowing demand for telehandlers and trailer-mounted lifts.
“Solid fourth-quarter results capped a record year of growth and profitability for aerial work platforms,” said Tim Ford, president, Terex Aerial Work Platforms. “The fourth quarter is usually the slowest quarter of the year for aerial work platforms, as our rental customers typically prefer deliveries that match the construction season. But in the fourth quarter, we found that strong demand continued domestically and abroad. Weakness in telehandler sales, particularly the smaller machines that are used for residential construction, was more than offset by solid demand for aerial lifts.”
“We are forecasting 2007 demand to remain at least as strong as it was in 2006 in the U.S. market, with accelerating growth from overseas markets,” Ford continued. “We expect overseas demand to account for about 40 percent of our revenue for 2007, up from a third of net sales for 2006.”
Net sales in the Terex Construction segment for the fourth quarter of 2006 increased $82.9 million, or 24 percent, to $432.3 million from $349.4 million in the fourth quarter of 2005. The increase was driven by strong European demand for compact construction equipment combined with global demand for heavy truck products, reflecting favorable global non-residential construction trends.
“For Terex, 2006 marked the third consecutive year of sharp increases in demand for many of our products,” DeFeo said. “It is our expectation that Terex’s total revenue for 2007 will be between $8.2 and $8.5 billion, and earnings per share in the range of $5.00 to 5.40 per share, including the impact of certain one-time items, such as the approximately $10 million expense associated with the early extinguishment of debt that we incurred in January 2007. Additionally, expectations are for our first-quarter results to be approximately one-third of our first-half guidance.”
Terex Corp. is a diversified global manufacturer with 2006 sales of approximately $7.6 billion. Terex operates in five business segments: Terex Aerial Work Platforms, Terex Construction, Terex Cranes, Terex Materials Processing & Mining, and Terex Roadbuilding, Utility Products and Other.
