Slower Start in the AWP Segment Affects Terex Quarterly Financials | Construction News

Terex Corp. reported last week that while the first quarter of 2015 was operationally in line with its expectations, the company had a loss from continuing operations of $2.1 million for the first quarter of 2015, as compared to income from continuing operations of $32.6 million for the first quarter of 2014.

Taxes for the quarter were 114.9%, more than four times the effective tax rate of 26.7% for the first quarter of 2014. Net sales were $1.5 billion in the first quarter of 2015, a decrease of $159 million when compared with the $1.65 billion in the first quarter of 2014. Net sales were essentially flat, and income from operations was $44.2 million in the first quarter of 2015, a decrease of $30.8 million when compared to income from operations of $75.0 million in the first quarter of 2014.

“We are encouraged by our order and backlog trends. However, our overall results were weighed down by lower margins in our AWP segment and an unusually high tax rate,” said Ron DeFeo, Terex chairman and CEO. “Labor issues at the West Coast ports, severe weather conditions in some regions in the U.S., and uncertainty surrounding oil and gas caused our AWP segment to have a slow start to the year. Currency exchange rates, an unfavorable product mix of fewer booms and more telehandlers, and higher factory production rates in the prior year first quarter, also negatively impacted the year over year margin comparison. Importantly, our AWP segment exited the first quarter with a meaningfully higher operating margin run rate than its overall margins for the quarter. This, coupled with a strong backlog, gives us confidence that AWP will return to more normalized operating margins in the second quarter.”

Performance across the remaining business segments was consistent with Terex’s expectations. “Our Materials Processing business had a reasonable start to the year in what is traditionally a seasonally softer quarter for sales in this segment,” said DeFeo. “While both the MHPS and Construction segments had an operating loss in the quarter, we continue to anticipate improving operating results from these businesses for the balance of 2015. Our Cranes segment performed generally as planned for the first quarter. The order trends and product mix in backlog for this segment continue to suggest improvements as the year progresses. Although our tax rate was unusually high in the quarter due to the mix of earnings and losses by country, we expect our full year tax rate to be consistent with the guidance we provided in February.”

The company’s overall outlook for 2015 has not changed, and DeFeo expects a strong performance from the AWP segment and improvement from our other segments throughout the remainder of 2015. The company reiterates its annual outlook for earnings per share of between $2.00 and $2.30, excluding restructuring and other unusual items, on net sales of between $6.2 billion and $6.6 billion.

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