Terex Corp. posted income from continuing operations of $259 million for the full year of 2014, or $2.27 per share on net sales of $7.3 billion, compared to $209 million or $1.79 per share on net sales of $7.1 billion in 2013. Thus net income jumped 23.9 percent, while income per share climbed 26.8 percent, while total revenue increased less than 1 percent.
Excluding the $0.49 per share tax benefit related to the ASV disposition and certain other items, income from continuing operations adjusted for the full year was $268.5 million compared to $261.2 million in 2013.
For the fourth quarter of 2014, income from continuing operations was $79.9 million compared to $84.8 million in the fourth quarter of 2013, a decrease of 5.7 percent, while net sales were flat year over year at $1.8 billion.
“Terex continued to improve in 2014 despite a more challenging operating environment than anticipated entering the year,” said Ron DeFeo, Terex chairman and CEO. “We have streamlined our business portfolio, reduced our cost structure, introduced innovative new products, and simplified operations. There is more work to do, but overall we are pleased with the progress we have made and the momentum of our internal improvement initiatives. Additionally, in 2014, we have repurchased 5.3 million shares, lowered borrowing costs and extended our debt maturity dates, as well as generated $329 million of free cash flow.”
DeFeo said performance was mixed during 2014 and in the fourth quarter. Cranes and Materials Handling & Ports Solutions posted operating profit increases in the fourth quarter, while the Aerial Work Platforms segment was below the previous year. “During the fourth quarter of 2013, AWP performance was particularly strong as we focused on producing equipment during that traditionally softer demand period to capture incremental demand in the quarter, as well as level the production load on our factories,” DeFeo said. “Conversely, in the fourth quarter of 2014, we curtailed production to align our product build schedules more closely with actual demand and machine configuration in our order book. Importantly, however, AWP backlog increased 137 percent when compared with the prior year, giving us confidence that 2015 will be another solid year for this segment.”
DeFeo later told an investor conference call that end markets for Terex’s equipment in general were unpredictable, if not, declining. “This was especially true with our Cranes and Materials Processing segments. Our Aerial Work Platform business conversely had improved sales, but the combination of manufacturing inefficiencies, rising material costs and the startup cost of Oklahoma City muted the margin performance. Companywide, the recent sharp move in oil prices has caused uncertainty for some of our customers especially in the fourth quarter.
“Our largest market remains North America, which showed a slight 3-percent growth for the year. Our most improved market was Western Europe, which was up 28 percent for the year and now accounts for 31 percent of our net sales. The balance of our markets were negative, resulting in a decline in sales from the rest of the world to 28 percent of total sales, down from 34 the prior year. In the fourth quarter, however, we saw a slight improvement in Latin America and the Middle East, which seems to point to a more stable environment for these areas in 2015.”
DeFeo was bullish in discussing the aerial segment. “We are adding a number of new products to our lineup this year such as the 150-foot boomlift and a more complete telehandler range with the introduction of our new six-ton and eight-ton machines. We continue to ramp production in Oklahoma City for telehandlers, and in China, we are ramping production on a broader range of aerial work platform models.”
For 2015, DeFeo said: “We're calling for net sales to be in the range of $6.2 billion to $6.6 billion. The impact from currency and the deconsolidation of ASV results represent about $650 million to $750 million of this decline. The balance is a combination of lower MHPS sales given the impact of not having the large port automation projects that occurred in 2014, and that won't repeat in that size in 2015 as well as some headwind assumptions associated with the oil and gas markets. We're expecting operating margins to be in the 7 percent to 7.5 percent range mainly as a result of improved AWP performance and the impact from the savings initiatives for our programs overall.”