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NORWALK, Conn., Feb. 9, 2023 /PRNewswire/ -- Terex Corporation (NYSE: TEX) today announced its results for the fourth quarter and full-year 2022.
CEO Commentary
"The fourth quarter marked an excellent finish to a strong year for Terex. We successfully navigated complex global macro dynamics to deliver significant revenue and earnings growth. I would like to thank the Terex team members for their hard work, dedication, and resilience in managing through this environment. Our 2022 results showcase the strength of our portfolio of diverse market-leading businesses and our continued leadership in attractive growth markets," said Terex Chairman and Chief Executive Officer John L. Garrison, Jr.
"We were able to achieve price cost neutrality for the full-year, despite global supply chain disruptions and considerable inflationary pressures. Our team remains focused on executing our multi-year growth plan as highlighted at our December Investor Day. We entered 2023 with backlog of $4.1 billion, an increase of 22% year-over-year, clearly showing strong demand from our customers. Our globally recognized brands, industry-leading and innovative new products, robust backlog, and balance sheet position us well to manage our business amidst continued macroeconomic volatility. We expect 2023 sales to be between $4.6 and $4.8 billion and earnings per share to be between $4.60 and $5.00 as we capitalize on favorable megatrends and continue to deliver profitable growth."
Fourth Quarter Operational and Financial Highlights
Full-Year 2022 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 followed our disciplined capital allocation strategy in 2022, returning $132 million of cash to shareholders over the course of the year, while also investing to improve and grow our businesses. The expansion of our share repurchase program announced in December and the 15% increase in our dividend which we announced today reflect continued confidence of both management and the Board in our strong financial position and ability to drive sustainable, profitable growth going forward. Our net financial leverage of 1.0x, ample liquidity and sustainable free cash flow generation put us in a very strong position to achieve our 2023 financial targets and continue executing on our multi-year growth plan."
Full-Year 2023: Outlook
(in millions, except per share data)
Terex Outlook (1) | FY 2022 | FY 2023 Outlook | |
Net Sales | $4,418 | $4,600 - $4,800 | |
SG&A % to Sales | 10.2 % | ~10.5% | |
Operating Margin | 9.5 % | 10.0% - 10.4% | |
Interest / Other Expense | $53 | ~$60 | |
Tax Rate | 18.1 % | ~21.0% | |
EPS | $4.32 | $4.60 - $5.00 | |
Share Count | 69.4 | ~69.0 | |
Depreciation / Amortization | $47 | ~$50 | |
Free Cash Flow | $152 | $225 - $275 (2) | |
Corp & Other OP (3) | ($74) | ~($75) |
Segment Outlook (1) | FY 2022 | FY 2023 Outlook | ||
Net Sales | Operating | Net Sales | Operating | |
Materials Processing | $1,942 | 15.3 % | $2,000 - $2,100 | ~15.5% |
Aerial Work Platforms | $2,484 | 7.9 % | $2,600 - $2,700 | ~9.0% |
(1) Excludes the impact of future acquisitions, divestitures, restructuring and other unusual items |
(2) Capital expenditures of ~$135 million |
(3) 2023 Outlook for Corporate & Other net sales of ~($10) million |
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, February 10, 2023 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 (the "Exchange Act") 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, 2022, 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 or in documents referenced herein, 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 and the forward-looking statements contained in documents referenced herein speak only as of the date of the respective documents. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained in, or referenced 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 impact on the environment 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 | |||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net sales | $ | 1,217.6 | 990.1 | 4,417.7 | 3,886.8 | ||||||
Cost of goods sold | (982.2) | (818.2) | (3,546.5) | (3,129.4) | |||||||
Gross profit | 235.4 | 171.9 | 871.2 | 757.4 | |||||||
Selling, general and administrative expenses | (114.6) | (102.1) | (451.2) | (429.4) | |||||||
Income (loss) from operations | 120.8 | 69.8 | 420.0 | 328.0 | |||||||
Other income (expense) | |||||||||||
Interest income | 0.7 | 0.8 | 2.8 | 3.7 | |||||||
Interest expense | (13.3) | (10.9) | (49.1) | (51.5) | |||||||
Loss on early extinguishment of debt | (0.2) | (1.7) | (0.3) | (29.4) | |||||||
Other income (expense) – net | (2.2) | 10.3 | (6.8) | 13.0 | |||||||
Income (loss) from continuing operations before income taxes | 105.8 | 68.3 | 366.6 | 263.8 | |||||||
(Provision for) benefit from income taxes | (13.8) | (10.3) | (66.4) | (46.3) | |||||||
Income (loss) from continuing operations | 92.0 | 58.0 | 300.2 | 217.5 | |||||||
Gain (loss) on disposition of discontinued operations- net of tax | 0.2 | 0.8 | (0.2) | 3.4 | |||||||
Net income (loss) | $ | 92.2 | 58.8 | 300.0 | 220.9 | ||||||
Basic earnings (loss) per share: | |||||||||||
Income (loss) from continuing operations | $ | 1.37 | 0.83 | 4.38 | 3.12 | ||||||
Gain (loss) on disposition of discontinued operations – net of tax | — | 0.01 | — | 0.05 | |||||||
Net income (loss) | $ | 1.37 | 0.84 | 4.38 | 3.17 | ||||||
Diluted earnings (loss) per share: | |||||||||||
Income (loss) from continuing operations | $ | 1.34 | 0.82 | 4.32 | 3.07 | ||||||
Gain (loss) on disposition of discontinued operations – net of tax | — | 0.01 | — | 0.05 | |||||||
Net income (loss) | $ | 1.34 | 0.83 | 4.32 | 3.12 | ||||||
Weighted average number of shares outstanding in per share calculation | |||||||||||
Basic | 67.5 | 69.8 | 68.5 | 69.7 | |||||||
Diluted | 68.6 | 70.9 | 69.4 | 70.9 |
TEREX CORPORATION AND SUBSIDIARIES | |||||
December 31, | December 31, | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 304.1 | $ | 266.9 | |
Other current assets | 1,657.9 | 1,500.9 | |||
Total current assets | 1,962.0 | 1,767.8 | |||
Non-current assets | |||||
Property, plant and equipment – net | 465.6 | 429.6 | |||
Other non-current assets | 690.5 | 666.1 | |||
Total non-current assets | 1,156.1 | 1,095.7 | |||
Total assets | $ | 3,118.1 | $ | 2,863.5 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities | |||||
Current portion of long-term debt | $ | 1.9 | $ | 5.6 | |
Other current liabilities | 996.7 | 904.3 | |||
Total current liabilities | 998.6 | 909.9 | |||
Non-current liabilities | |||||
Long-term debt, less current portion | 773.6 | 668.5 | |||
Other non-current liabilities | 164.7 | 175.5 | |||
Total non-current liabilities | 938.3 | 844.0 | |||
Total liabilities | 1,936.9 | 1,753.9 | |||
Total stockholders' equity | 1,181.2 | 1,109.6 | |||
Total liabilities and stockholders' equity | $ | 3,118.1 | $ | 2,863.5 |
TEREX CORPORATION AND SUBSIDIARIES | |||||
Year Ended December 31, | |||||
2022 | 2021 | ||||
Operating Activities | |||||
Net income (loss) | $ | 300.0 | $ | 220.9 | |
Depreciation and amortization | 47.2 | 50.2 | |||
Changes in operating assets and liabilities and non-cash charges | (86.0) | 22.3 | |||
Net cash provided by (used in) operating activities | 261.2 | 293.4 | |||
Investing Activities | |||||
Capital expenditures | (109.6) | (59.7) | |||
Other investing activities, net | (44.5) | (42.5) | |||
Net cash provided by (used in) investing activities | (154.1) | (102.2) | |||
Financing Activities | |||||
Net cash provided by (used in) financing activities | (54.9) | (580.1) | |||
Effect of exchange rate changes on cash and cash equivalents | (15.0) | (14.3) | |||
Net increase (decrease) in cash and cash equivalents | 37.2 | (403.2) | |||
Cash and cash equivalents at beginning of year | 266.9 | 670.1 | |||
Cash and cash equivalents at year end | $ | 304.1 | $ | 266.9 |
TEREX CORPORATION AND SUBSIDIARIES | |||||||||||||
Q4 | Year to Date | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
% of | % of | % of | % of | ||||||||||
Net Sales | Net Sales | Net Sales | Net Sales | ||||||||||
Consolidated | |||||||||||||
Net sales | $ | 1,217.6 | $ | 990.1 | $ | 4,417.7 | $ | 3,886.8 | |||||
Income from operations | $ | 120.8 | 9.9 % | $ | 69.8 | 7.0 % | $ | 420.0 | 9.5 % | $ | 328.0 | 8.4 % | |
MP | |||||||||||||
Net sales | $ | 550.3 | $ | 454.1 | $ | 1,941.6 | $ | 1,691.8 | |||||
Income from operations | $ | 87.0 | 15.8 % | $ | 62.6 | 13.8 % | $ | 297.8 | 15.3 % | $ | 240.9 | 14.2 % | |
AWP | |||||||||||||
Net sales | $ | 671.8 | $ | 534.4 | $ | 2,483.6 | $ | 2,178.8 | |||||
Income from operations | $ | 54.0 | 8.0 % | $ | 25.4 | 4.8 % | $ | 196.2 | 7.9 % | $ | 152.1 | 7.0 % | |
Corp and Other / Eliminations | |||||||||||||
Net sales | $ | (4.5) | $ | 1.6 | $ | (7.5) | $ | 16.2 | |||||
Loss from operations | $ | (20.2) | * | $ | (18.2) | * | $ | (74.0) | * | $ | (65.0) | * | |
* - 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 December 31, 2022, unless otherwise indicated.
As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating current period results using rates that the comparable prior periods were translated at to isolate the foreign exchange component of the fluctuation from the operational component. Similarly, the impact of changes in our results from acquisitions and divestitures that were not included in comparable prior periods may be subtracted from the absolute change in results to allow for better comparability of results between periods.
2023 Outlook
The Company's 2023 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 2023 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, plus (minus) increases (decreases) in Terex Financial Services finance receivables consisting of sales-type leases and commercial loans ("TFS Assets"), 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):
Year Ended | Year Ended | |||
Net cash provided by (used in) operating activities | $ 261.2 | $ 293.4 | ||
Increase (decrease) in TFS assets | — | (110.6) | ||
Capital expenditures, net of proceeds from sale of capital assets | (109.4) | (57.8) | ||
Free cash flow | $ 151.8 | $ 125.0 |
ROIC
ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Stockholders' equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying Income (loss) from operations by one minus the full year 2022 effective tax rate ("Effective Tax Rate").
Furthermore, debt is calculated using amounts for Current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters' NOPAT as this represents the most recent 12-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters' ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.
Our management and Board of Directors use ROIC as one measure to assess operational performance, including in connection with certain compensation programs. We use ROIC as a metric because we believe it measures how effectively we invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive operational improvement. We believe ROIC measures return on the amount of capital invested in our businesses and is an accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents to Stockholders' equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at December 31, 2022 was 21.3%.
Amounts described below are reported in millions of U.S. dollars, except for the Effective Tax Rate. Amounts are as of and for the three months ended for the periods referenced in the tables below:
Dec '22 | Sep '22 | Jun '22 | Mar '22 | Dec '21 | |
Effective tax rate | 18.1 % | 18.1 % | 18.1 % | 18.1 % | |
Income (loss) from operations | $ 120.8 | $ 120.8 | $ 103.9 | $ 74.5 | |
Multiplied by: 1 minus effective tax rate | 81.9 % | 81.9 % | 81.9 % | 81.9 % | |
Net operating income (loss) after tax | $ 98.9 | $ 98.9 | $ 85.1 | $ 61.0 | |
Debt | $ 775.5 | $ 826.5 | $ 828.2 | $ 740.3 | $ 674.1 |
Less: Cash and cash equivalents | (304.1) | (231.7) | (253.3) | (218.4) | (266.9) |
Debt less Cash and cash equivalents | 471.4 | 594.8 | 574.9 | 521.9 | 407.2 |
Stockholders' equity | 1,181.2 | 1,034.7 | 1,048.9 | 1,114.1 | 1,109.6 |
Debt less Cash and cash equivalents plus Stockholders' equity | $ 1,652.6 | $ 1,629.5 | $ 1,623.8 | $ 1,636.0 | $ 1,516.8 |
December 31, 2022 ROIC | 21.3 % |
NOPAT as adjusted (last 4 quarters) | $ 343.9 |
Average Debt less Cash and cash equivalents plus Stockholders' equity (5 quarters) | $ 1,611.7 |
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:
December 31, 2022 | |
Inventories | $988.4 |
Trade Receivables | 547.5 |
Less: Trade Accounts Payables | (624.6) |
Less: Customer Advances | (36.2) |
Total Working Capital | $875.1 |
Trailing Three Months Annualized Net Sales is calculated using the net sales for the quarter multiplied by four.
3 months Sales | $1,217.6 | |
Number of quarters | x | 4.0 |
Annualized Quarterly Sales | $4,870.4 | |
WC % of Annualized Quarterly Sales | 18.0 % |
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
We define 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 orders will be filled. Our backlog orders represent primarily new equipment orders. Parts orders are generally filled on an as ordered basis.
Our management views backlog as one of many indicators of the performance of our business. Because many variables can cause changes in backlog and these changes may or may not be of any significance, we consequently view backlog as an important, but not necessarily determinative, indicator of future results.
Q4 2021 | Q4 2022 | % Change | |||||||||
< 12 | > 12 | Backlog | < 12 | > 12 | Backlog | < 12 | > 12 | Backlog | |||
MP | $1,034 | $13 | $1,047 | $911 | $263 | $1,174 | (12 %) | 1923 % | 12 % | ||
AWP | $1,956 | $328 | $2,284 | $2,493 | $404 | $2,897 | 27 % | 23 % | 27 % | ||
Total | $2,990 | $341 | $3,331 | $3,404 | $667 | $4,071 | 14 % | 96 % | 22 % |
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SOURCE Terex Corporation