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NORWALK, Conn., Oct. 27, 2022 /PRNewswire/ -- Terex Corporation (NYSE: TEX) today announced its results for the third quarter 2022.
CEO Commentary
"We are pleased with our strong financial performance in the quarter as a result of continued progress on our strategy and the relentless focus of our team members to deliver our products and solutions to customers and dealers," said Terex Chairman and Chief Executive Officer John L. Garrison, Jr. "We grew sales 21% when adjusting for FX rates and ended the quarter with total backlog of $3.9 billion, an increase of 33% year-over-year and a clear indication of the strength of demand from our customers."
"We remain focused on executing our multi-year growth plan and continue to invest in new technologies and products across our businesses. In our Materials Processing segment we expanded the capabilities of our growing environmental business with the recent acquisition of ZenRobotics, allowing us to deploy robot technologies that pick, sort and recycle waste material. In addition, our Genie team continued to execute their product electrification plans with the introduction of a new lithium-ion battery option for the line of GS E-Drive slab scissor lifts. We are proud of our execution this quarter despite continued global supply chain disruptions, significant inflationary pressures and foreign exchange rate volatility. Following the strong performance in the third quarter, we are raising our full year EPS outlook to a range of $4.00 to $4.20. Our globally recognized brands, industry-leading and innovative new products, backlog, and strong balance sheet position us well to successfully navigate the near-term macro challenges and deliver long-term value."
Third Quarter Operational and Financial Highlights
Business Segment Review
Materials Processing
Aerial Work Platforms
Disciplined Capital Allocation
CFO Commentary
Julie Beck, Senior Vice President and Chief Financial Officer, said "We are proud that our strong balance sheet has allowed us to return approximately $120 million of cash to shareholders year-to-date. Our teams continue to execute on our multi-year growth plan, driving sales and expanding margins through disciplined pricing and expense management. As a result, we are raising our full year sales, margin and EPS guidance ranges."
2022 Outlook
(in millions, except per share data)
Terex Outlook (1) | PREVIOUS Outlook | UPDATED Outlook |
Net Sales | $4,100 - $4,300 | ~$4,300 |
SG&A % to Sales | ~10.6% | ~10.6% |
Operating Margin | 9.1% - 9.6% | ~9.5% |
Interest / Other Expense | ~$50 | ~$50 |
Tax Rate | ~20.0% | ~20.0% |
EPS | $3.80 - $4.20 | $4.00 - $4.20 |
Share Count | ~70.0 | ~69.5 |
Depreciation / Amortization | ~$50 | ~$50 |
Free Cash Flow (2) | $150 - $200 | ~$125 |
Corp & Other OP (3) | ~($80) | ~($73) |
Segment Outlook (1) | PREVIOUS Outlook | UPDATED Outlook | ||
Net Sales | Operating | Net Sales | Operating | |
Materials Processing | $1,800 - $1,900 | 14.8% - 15.3% | ~$1,900 | 15.0% - 15.3% |
Aerial Work Platforms | $2,300 - $2,400 | 8.0% - 8.5% | ~$2,400 | ~8.0% |
(1) Excludes the impact of future acquisitions, divestitures, restructuring and other unusual items |
(2) CapEx ~$120 million |
(3) 2022 Outlook for Corporate & Other Net Sales of ~$0 million |
FX Commentary
Non-GAAP Measures and Other Items
Results of operations reflect continuing operations. All per share amounts are on a fully diluted basis. A comprehensive review of the quarterly financial performance is contained in the presentation that will accompany the Company's earnings conference call.
In this press release, Terex refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Terex believes that this non-GAAP information is useful to understanding its operating results and the ongoing performance of its underlying businesses.
The Glossary at the end of this press release contains further details about this subject.
Conference call
The Company has scheduled a conference call to review the financial results on Friday, October 28, 2022 beginning at 8:30 a.m. ET. John L. Garrison, Jr., Chairman and CEO, and Julie Beck, Senior Vice President and Chief Financial Officer, will host the call. A simultaneous webcast of this call can be accessed at https://investors.terex.com. Participants are encouraged to access the call 10 minutes prior to the starting time. The call will also be archived in the Event Archive at https://investors.terex.com.
Forward-Looking Statements
Certain information in this press release includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including those discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, and subsequent reports we file with the U.S. Securities and Exchange Commission from time to time, in the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations – Contingencies and Uncertainties." In addition, when included in this press release the words "may," "expects," "should," "intends," "anticipates," "believes," "plans," "projects," "estimates," "will" and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, among others:
Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks, uncertainties and material factors. The forward-looking statements contained herein speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this press release to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
About Terex
Terex Corporation is a global manufacturer of materials processing machinery and aerial work platforms. We design, build and support products used in construction, maintenance, manufacturing, energy, recycling, minerals and materials management applications. Certain Terex products and solutions enable customers to reduce their environmental impact including electric and hybrid offerings that deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste. Our products are manufactured in North America, Europe, Australia and Asia and sold worldwide. We engage with customers through all stages of the product life cycle, from initial specification and financing to parts and service support.
Contact Information
Paretosh Misra
Head of Investor Relations
Phone: 203-604-3977
Email: paretosh.misra@terex.com
TEREX CORPORATION AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions, except per share data) | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net sales | $ | 1,120.5 | $ | 993.8 | $ | 3,200.1 | $ | 2,896.7 | |||
Cost of goods sold | (883.4) | (815.3) | (2,564.3) | (2,311.2) | |||||||
Gross profit | 237.1 | 178.5 | 635.8 | 585.5 | |||||||
Selling, general and administrative expenses | (116.3) | (104.3) | (336.6) | (327.3) | |||||||
Income (loss) from operations | 120.8 | 74.2 | 299.2 | 258.2 | |||||||
Other income (expense) | |||||||||||
Interest income | 1.1 | 0.6 | 2.1 | 2.9 | |||||||
Interest expense | (13.5) | (12.3) | (35.8) | (40.6) | |||||||
Loss on early extinguishment of debt | — | — | (0.1) | (27.7) | |||||||
Other income (expense) – net | (1.0) | (1.1) | (4.6) | 2.7 | |||||||
Income (loss) from continuing operations before income taxes | 107.4 | 61.4 | 260.8 | 195.5 | |||||||
(Provision for) benefit from income taxes | (25.6) | (13.9) | (52.6) | (36.0) | |||||||
Income (loss) from continuing operations | 81.8 | 47.5 | 208.2 | 159.5 | |||||||
Gain (loss) on disposition of discontinued operations- net of tax | — | 0.6 | (0.4) | 2.6 | |||||||
Net income (loss) | $ | 81.8 | $ | 48.1 | $ | 207.8 | $ | 162.1 | |||
Basic earnings (loss) per Share: | |||||||||||
Income (loss) from continuing operations | $ | 1.21 | $ | 0.68 | $ | 3.03 | $ | 2.29 | |||
Gain (loss) on disposition of discontinued operations – net of tax | — | 0.01 | (0.01) | 0.04 | |||||||
Net income (loss) | $ | 1.21 | $ | 0.69 | $ | 3.02 | $ | 2.33 | |||
Diluted earnings (loss) per Share: | |||||||||||
Income (loss) from continuing operations | $ | 1.20 | $ | 0.67 | $ | 2.99 | $ | 2.25 | |||
Gain (loss) on disposition of discontinued operations – net of tax | — | 0.01 | — | 0.04 | |||||||
Net income (loss) | $ | 1.20 | $ | 0.68 | $ | 2.99 | $ | 2.29 | |||
Weighted average number of shares outstanding in per share calculation | |||||||||||
Basic | 67.8 | 69.8 | 68.8 | 69.7 | |||||||
Diluted | 68.4 | 70.9 | 69.6 | 70.8 |
TEREX CORPORATION AND SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||
(unaudited) | |||||
(in millions, except par value) | |||||
September 30, 2022 | December 31, 2021 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 231.7 | $ | 266.9 | |
Other current assets | 1,635.3 | 1,500.9 | |||
Total current assets | 1,867.0 | 1,767.8 | |||
Non-current assets | |||||
Property, plant and equipment – net | 450.4 | 429.6 | |||
Other non-current assets | 659.1 | 666.1 | |||
Total non-current assets | 1,109.5 | 1,095.7 | |||
Total assets | $ | 2,976.5 | $ | 2,863.5 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities | |||||
Current portion of long-term debt | $ | 1.9 | $ | 5.6 | |
Other current liabilities | 950.8 | 904.3 | |||
Total current liabilities | 952.7 | 909.9 | |||
Non-current liabilities | |||||
Long-term debt, less current portion | 824.6 | 668.5 | |||
Other non-current liabilities | 164.5 | 175.5 | |||
Total non-current liabilities | 989.1 | 844.0 | |||
Total liabilities | 1,941.8 | 1,753.9 | |||
Total stockholders' equity | 1,034.7 | 1,109.6 | |||
Total liabilities and stockholders' equity | $ | 2,976.5 | $ | 2,863.5 | |
TEREX CORPORATION AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
(unaudited) | ||||||
(in millions) | ||||||
Nine Months Ended September 30, | ||||||
2022 | 2021 | |||||
Operating Activities | ||||||
Net income (loss) | $ | 207.8 | $ | 162.1 | ||
Depreciation and amortization | 35.1 | 37.9 | ||||
Changes in operating assets and liabilities and non-cash charges | (138.7) | 124.1 | ||||
Net cash provided by (used in) operating activities | 104.2 | 324.1 | ||||
Investing Activities | ||||||
Capital expenditures | (78.8) | (31.7) | ||||
Other investing activities, net | (45.6) | (41.7) | ||||
Net cash provided by (used in) investing activities | (124.4) | (73.4) | ||||
Financing Activities | ||||||
Net cash provided by (used in) financing activities | 13.3 | (348.7) | ||||
Effect of exchange rate changes on cash and cash equivalents | (28.3) | (13.9) | ||||
Net increase (decrease) in cash and cash equivalents | (35.2) | (111.9) | ||||
Cash and cash equivalents at beginning of period | 266.9 | 670.1 | ||||
Cash and cash equivalents at end of period | $ | 231.7 | $ | 558.2 | ||
TEREX CORPORATION AND SUBSIDIARIES | |||||||||||||
SEGMENT RESULTS DISCLOSURE | |||||||||||||
(unaudited) | |||||||||||||
(in millions) | |||||||||||||
Q3 | Year to Date | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
% of | % of | % of | % of | ||||||||||
Net Sales | Net Sales | Net Sales | Net Sales | ||||||||||
Consolidated | |||||||||||||
Net sales | $ | 1,120.5 | $ | 993.8 | $ | 3,200.1 | $ | 2,896.7 | |||||
Income from operations | $ | 120.8 | 10.8 % | $ | 74.2 | 7.5 % | $ | 299.2 | 9.3 % | $ | 258.2 | 8.9 % | |
MP | |||||||||||||
Net sales | $ | 457.9 | $ | 418.7 | $ | 1,391.3 | $ | 1,237.7 | |||||
Income from operations | $ | 66.8 | 14.6 % | $ | 57.1 | 13.6 % | $ | 210.8 | 15.2 % | $ | 178.3 | 14.4 % | |
AWP | |||||||||||||
Net sales | $ | 662.6 | $ | 572.5 | $ | 1,811.8 | $ | 1,644.4 | |||||
Income from operations | $ | 63.5 | 9.6 % | $ | 34.9 | 6.1 % | $ | 142.2 | 7.8 % | $ | 126.7 | 7.7 % | |
Corp and Other / Eliminations | |||||||||||||
Net sales | $ | 0.0 | $ | 2.6 | $ | (3.0) | $ | 14.6 | |||||
Loss from operations | $ | (9.5) | * | $ | (17.8) | * | $ | (53.8) | * | $ | (46.8) | * | |
* Not a meaningful percentage |
GLOSSARY
Non-GAAP Measures Definitions
In an effort to provide investors with additional information regarding the Company's results, Terex refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures which management believes provides useful information to investors. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Terex believes that this non-GAAP information is useful to understanding its operating results and the ongoing performance of its underlying businesses. Management of Terex uses both GAAP and non-GAAP financial measures to establish internal budgets and targets and to evaluate the Company's financial performance against such budgets and targets.
The amounts described below are unaudited, are reported in millions of U.S. dollars (except share data and percentages), and are as of or for the period ended September 30, 2022, unless otherwise indicated.
2022 Outlook
The Company's 2022 outlook for earnings per share is a non-GAAP financial measure because it excludes the impact of potential future acquisitions, divestitures, restructuring, and other unusual items. The Company is not able to reconcile this forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the exact timing and impact of such items. The unavailable information could have a significant impact on the Company's full-year 2022 GAAP financial results. This forward looking information provides guidance to investors about the Company's EPS expectations excluding unusual items that the Company does not believe is reflective of its ongoing operations.
Free Cash Flow
The Company calculates a non-GAAP measure of free cash flow. The Company defines free cash flow as Net cash provided by (used in) operating activities less Capital expenditures, net of proceeds from sale of capital assets. The Company believes that this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations. The following table reconciles Net cash provided by (used in) operating activities to free cash flow (in millions):
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||
Net cash provided by (used in) operating activities | $ 84.9 | $ 104.2 | |||
Capital expenditures, net of proceeds from sale of capital assets | (31.7) | (78.6) | |||
Free cash flow (use) | $ 53.2 | $ 25.6 |
Working Capital
Working Capital is calculated using the Condensed Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus Inventories, less Trade accounts payable and Customer advances. The Company views excessive working capital as an inefficient use of resources, and seeks to minimize the level of investment without adversely impacting the ongoing operations of the business. For the periods below, working capital was:
September 30, 2022 | |
Inventories | $981.2 |
Trade Receivables | 531.1 |
Less: Trade Accounts Payables | (589.4) |
Less: Customer Advances | (27.2) |
Total Working Capital | $895.7 |
Trailing Three Months Annualized Net Sales is calculated using the net sales for the quarter multiplied by four.
3 months Sales | $1,120.5 | |
Number of quarters | x | 4.0 |
Annualized Quarterly Sales | $4,482.0 | |
WC % of Annualized Quarterly Sales | 20.0 % |
The ratio is calculated by dividing working capital by trailing three months annualized net sales. The Company believes this measures its resource use efficiency.
Performance Measures Definitions
We use the following operational metrics in monitoring the performance of our business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments.
Backlog and Total Backlog
We define backlog as firm orders that are expected to be filled within one year and total backlog as firm orders that are expected to be filled, including orders that are expected to be filled beyond one year. Although there can be no assurance that all such backlog and total backlog orders will be filled within that time. Our backlog orders and total backlog orders represent primarily new equipment orders. Parts orders are generally filled on an as ordered basis.
Our management views backlog and total backlog as one of many indicators of the performance of our business. Because many variables can cause changes in backlog and total backlog and these changes may or may not be of any significance, we consequently view backlog and total backlog as an important, but not necessarily determinative, indicator of future results.
Q3 2021 | Q3 2022 | % Change | |||||||||
< 12 Months | > 12 Months | Total | < 12 Months | > 12 Months | Total | < 12 Months | > 12 Months | Total | |||
MP | $1,020 | $42 | $1,062 | $980 | $233 | $1,213 | (4 %) | 455 % | 14 % | ||
AWP | $1,705 | $190 | $1,895 | $2,276 | $444 | $2,720 | 33 % | 134 % | 44 % | ||
Total | $2,725 | $232 | $2,957 | $3,256 | $677 | $3,933 | 19 % | 192 % | 33 % |
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SOURCE Terex Corporation