Terex Corp. posted first quarter 2020 net sales of $833.6 million, compared to net sales of $1.1 billion in the first quarter of 2019, a 24.2-percent year-over-year slide. First quarter loss from continuing operations was $24.7 million, compared to reported income from continuing operations of $57.2 million in the first quarter of 2019. Production was quickly reduced in Terex’s global facilities because of slowed customer demand and local government mandates. The company is beginning to gradually and safely resume operations in response to customer demand and as permitted by government mandate.
“First and foremost, we have taken measures to prioritize the health and safety of our team members, families and customers during the COVID-19 pandemic,” said Terex chairman and CEO John Garrison. “While the first two months of the year met our expectations, during March, global economic activity, including customer capital equipment purchases, sharply contracted. In response to this unprecedented situation, we swiftly implemented safety, financial, and production actions.”
On March 31, 2020, the company had $945 million of available liquidity. In order to maintain Terex’s strong liquidity position, on April 23, 2020, Terex completed an amendment and waiver of its revolving credit facility with its bank group. This action provides continued access to ample liquidity and the financial flexibility to successfully operate the business during this period of economic uncertainty.
In addition, the Company undertook significant cost reduction actions, including suspending its dividend and share repurchases, reducing team member compensation, temporary furloughs, and permanent layoffs of team members. These actions seek to match our cost structure to the current economic environment.
The Terex AWP business segment (Genie) reported net sales of $511.7 million, down 29.7 percent versus Q1 2019 driven by challenging global markets. Global Terex AWP backlog totaled $717 million and bookings in the quarter were $498 million.
“Production was quickly reduced in our global facilities due to customer demand and local government mandates,” said Matt Fearon, president of the AWP division. “We are beginning to gradually and safely resume operations in response to customer demand and as permitted by government mandate. The current status of our operations can be found on the Terex website under the COVID-19 resources section.
“In response to the COVID-19 pandemic, the Genie team brainstormed on how to help our local communities in Washington state, which endured the first major COVID-19 outbreak in the United States. The team produced and donated 4,500 protective face shields for local medical professionals in Seattle. In Watertown, South Dakota, Terex Utilities received a request from a local vocational college to use our 3D printer to help make parts needed for face shields. Thanks to the efforts of our Terex Utilities team, approximately 1,000 shields were distributed to healthcare providers in South Dakota and Minnesota.”
“As of March 31, we had $945 million in available liquidity,” Garrison told an investor’s conference call. “We are participating in tax and other government relief programs. We’re also utilizing worker assistance programs in the United States, UK, Germany, Australia and other countries to help keep our talented workforce in place, while easing the financial burning to Terex. We’ve begun a global effort to reduce indirect expenses. In short, we’re asking all team members to look for opportunities to reduce the company’s costs. We have taken 35 percent out of our CapEx budget for 2020. However, we are investing in the future on a more targeted basis. We are still funding the completion of our Watertown, South Dakota manufacturing facility and the expansion of our Changzhou China facility.
“Changzhou is an important manufacturing facility for us. The China market is growing, and it is essential they have the capacity for future demand. Working with our banks, we successfully extended and amended our revolving credit facility. Additionally, we suspended our dividend and share repurchases for the remainder of 2020. As a result of these actions, I am confident that we will have more than sufficient liquidity through the downturn and that we will be able to grow when we get to the other side of this pandemic.”
Terex has withdrawn its 2020 financial guidance on March 25, and will not issue revised guidance because of the economic uncertainties resulting from the COVID-19 pandemic. The full severity and duration of the related global economic crisis is not known, but the company expects it to continue to negatively impact its operating results.
“I am proud of the determination and dedication of our Terex team members, who continue to follow our Zero Harm Safety Program and safely serve our customers despite difficult market conditions,” concluded Garrison. “Terex will emerge well-positioned to continue to serve our customers and participate in the future economic recovery.”
