Westport, Conn.-based Terex Corp. last week announced net income for the fourth quarter of 2007 of $174.0 million, or $1.67 per share, compared to net income of $100.9 million, or $0.97 per share, for the fourth quarter of 2006, a 72-percent jump. All per-share amounts are on a fully diluted basis.
For the full year 2007, the company reported income from continuing operations of $613.9 million, or $5.85 per share, compared to income from continuing operations of $396.5 million, or $3.85 per share, for the full year 2006, a 55-percent year-over-year boost. Net sales for Terex totaled $9.1 billion in 2007, an increase of 19.5 percent from $7.6 billion in 2006.
“For Terex, 2007 was a very strong year in terms of financial performance, with our best sales quarter of the year coming in the fourth quarter. This was a transformational year for our company, as it demonstrated that the changes made as part of the journey we embarked on a few years back are taking hold and working,” said Ron DeFeo, Terex chairman and CEO. “We achieved a full-year operating margin of 10.5 percent, net sales grew 19.5 percent and income from continuing operations was up 55 percent when compared with 2006. These achievements place us well ahead of the pace we communicated a year earlier in conjunction with our medium-term financial goals, and yet the operating margin improvement is still below the potential that we think exists in the company. We achieved these goals while continuing to have certain product lines of the company face challenging market conditions in their particular niche. We have benefited from strong global markets, as well as a relatively small exposure to the U.S. housing market; in fact non-U.S. net sales represented 70 percent of our total net sales for the full year 2007.
“We continue to build a better and stronger operating company while keeping honed the skills of a targeted acquirer of assets. The supply chain and component shortages we are facing continue, but we are making steady progress. We continue to invest in improvement projects at an aggressive rate, such as marketing knowledge, sales and service changes, information technology, new product planning processes and the Terex Business System. While these initiatives may not produce immediate benefits, they collectively comprise the cornerstone of our future successes as we build a great company. In 2008, we will build start-up factories in India and China, and potentially other developing markets. In 2007 we successfully acquired Superior Highwall Miners, and expect to close the acquisition of A.S.V. Inc. in the near future. Combined, these facilities and recent acquisitions will provide targeted growth platforms.”
Net sales reached $2.6 billion in the fourth quarter of 2007, an increase of $556.8 million, or 27.4 percent, from $2.0 billion in the fourth quarter of 2006. Global infrastructure spending continues to drive increased demand in most of the company’s product categories, particularly cranes, mining, and materials processing equipment, as well as the continued strength of the aerial work platforms product category in North America. Sharp increases in demand are also being experienced in Europe for construction equipment and aerial work platforms. In addition, the increase in net sales versus the prior-year period was favorably impacted by approximately $170 million due to the translation effect of foreign currency exchange rate changes, primarily the strength of the Euro, British Pound and Australian Dollar relative to the U.S. Dollar.
“Reflecting on where we are today with respect to our objective of $12 billion in sales and a 12-percent operating margin by 2010, we feel we are ahead of our original timeline,” DeFeo said. “And while news headlines continue to broadcast slowing economic conditions in North America and Western Europe, we remain optimistic about prospects for our businesses in both of these markets and continue to see very healthy indicators for continued economic expansion from the developing markets, notably in Asia, Eastern Europe and the Middle East.”
The company said it is poised to have another record financial performance in 2008, and it expects generally strong global markets to continue to drive demand for its equipment.
“It is our expectation that Terex's total revenue for 2008 will be between $10.0 and $10.5 billion, and earnings per share in the range of $6.65 to $7.15 per share,” DeFeo said. "Expectations are for earnings in the first and second half of 2008 to be approximately equal. Additionally, we expect our first-quarter results to be approximately 35 to 40 percent of our first-half guidance.”
Net sales for the Terex Aerial Work Platforms segment for the fourth quarter of 2007 increased $71.9 million, or 14 percent, to $585.9 million versus the fourth quarter of 2006. Strong international demand continues to drive higher sales volume. Demand for scissor and boomlifts has increased in North America over the past few months and parts sales are higher because of the greater installed base of machines.
Net sales for the Terex Construction segment for the fourth quarter of 2007 increased $113.8 million, or 26.3 percent, to $546.1 million versus the fourth quarter of 2006. Continued strong demand for compact equipment and construction-class excavators in Western and Eastern Europe continues to compensate for slower demand for equipment in North America.
Net sales for the Terex Cranes segment for the fourth quarter of 2007 increased $161.2 million, or 32.1 percent, to $663.0 million versus the fourth quarter of 2006. Strong global demand for large crawler cranes and mobile telescopic cranes continues at unprecedented levels. In the North American market, rough-terrain cranes continue to be in high demand, while sales of boom trucks and smaller truck cranes were down as compared to the fourth quarter of 2006.
Net sales for the Terex Roadbuilding, Utility Products and Other segment for the fourth quarter of 2007 decreased $14.4 million, or 7.4 percent, to $179.3 million versus the fourth quarter of 2006. This is directly related to the decrease in concrete mixer truck demand resulting from continued North American housing softness. Concrete mixer truck sales and also sales for utility products were unusually high at the end of 2006, as customers increased purchasing activities ahead of the 2007 adoption of Tier 3 Engine compliance requirements mandated by the U.S. Environmental Protection Agency. The lower volume in the fourth quarter of 2007 had a negative impact on gross and operating margins.
Terex Corp. is a diversified global manufacturer with 2007 net sales of $9.1 billion.
