Terex Holds Steady Amid Shaky Construction Market to Post Strong Gains for Third-Quarter 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--Terex Corporation (NYSE:TEX) (Westport, Connecticut), a North American provider of industrial and machinery solutions, reported solid overall improvement in the third quarter of 2013. The company saw significantly stronger demand and execution in its Aerial Work Platform (AWP) and Material Handling & Port Solutions (MHPS) segments, despite continuing weaknesses in the Cranes and Construction businesses. Net income was reported to be $94.4 million, compared with $30.2 million in third-quarter 2012.

Total sales stood at $1.81 billion, a decrease of less than 1% from the same period last year. Terex saw its strongest gains in its AWP and Port Solutions businesses; AWP benefited from continuing U.S. growth and increasing international replacement demand, while Port Solutions benefited from solid demand and performance for services and parts. However, businesses that depend on non-residential construction continue to lag--including the Cranes business, where the Middle East is currently the only pure growth market. (AWP and Port Solutions are less dependent on non-residential construction.)

Third-quarter 2012 results included $49.9 million in losses on early extinguishment of debt, while third-quarter 2013 saw none. Regionally, strong stability in the North American markets in the past quarter were offset partly by slowness in Europe and Australia.

Capital expenditures for the first nine months of 2013 were reported to be $60.9 million, compared with $56.1 million in the same period last year.

As part of its North American Industrial Manufacturing Database, Industrial Info is tracking progress at several Terex facilities, including two lifting equipment plants in Redmond, Washington, and Moses Lake, Wisconsin, that are owned by Terex subsidiary Genie Industries (Redmond). Industrial Info also is tracking a crane-manufacturing plant in Waverly, Iowa.

"Our Aerial Work Platform business continues to benefit from the recovery in the North American rental channel, a strong Latin American market, and early signs of a European replacement cycle," said Ron DeFeo, the chairman and chief executive officer of Terex, in a conference call. "We continue to be optimistic about the prospects for this business, as demand seems healthy, our expanded product range is well-received, and our margins appear sustainable."

Terex executives expect full-year net sales to be between $7.3 billion and $7.5 billion. They also expect the company to benefit from a lower full-year adjusted tax rate, as well as restructuring activities in MHPS. Terex's backlog for orders deliverable during the next 12 months stood at $1.83 billion at the end of the third quarter, compared with $1.72 billion at the same time last year. The increase was attributed to the growing demand for AWP and port equipment products, with AWP's backlog alone up 35% from third-quarter 2012.

"We have choppy markets, but our execution of these markets, we feel, is improving," DeFeo said. "The whole company is focused on execution and doing the things we can control.... We believe we've turned the corner in our Material Handling & Port Solutions business, but overall, Aerial Work Platforms is the only business where global demand drivers remain quite predictable. Importantly, the Architectural Billing Index supports a future recovery in non-residential construction."

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.