A RECENT stock offering and comments by president and CEO Ron DeFeo give every indication that Terex is preparing itself for a major acquisition.
Announcing the company’s first quarter results, DeFeo said: ‘Our recent equity offering… positions the company to seize growth opportunities that may from time to time present themselves in the market place. We believe that achieving our goal of doubling the size of the company by 2005 will be financed through a balance between debt and equity, which is consistent with our commitment to maintain a balance between growth and leverage.’
Speculation continues that one of the first companies that Terex will buy with the money raised by the equity offering will be Demag Mobile Cranes.
On 18 April 2002 Terex announced that it had completed the sale of 5m shares of common stock at a price to the public of $21.75 per share. The underwriters of the offering subsequently exercised their option to purchase an additional 346,700 shares of common stock from the company. Net proceeds to Terex from this offering of approximately $113m will be used to repay outstanding indebtedness and for general corporate purposes, including acquisitions.
For the first quarter 2002 Terex saw net income leap 67% to $16.9m, compared with $10.1m for the first quarter of 2001.
Excluding special items, income for the first quarter of 2002 was $7.0m compared with $12.4m for the first quarter of 2001. Special items in the first quarter of 2002 included a $1.2m restructuring charge and $10.7m of income related to the write-off of negative goodwill, while the first quarter of 2001 includes $2.3m related to a loss on retirement of debt.
Net sales for the first quarter of 2002 were $582m, a 22% increase over the first quarter of 2001. The growth in the first quarter was driven primarily by the acquisitions because Atlas Terex and CMI Terex were included for a full quarter and the results of Schaeff and Pacific Utility Equipment were added during the first quarter of 2002.
Excluding the impact of acquisitions, net sales fell 4% quarter over quarter. Operating expenses increased to $59.8m, or 10.3% of revenues, from $40.6m, or 8.5% of revenues. Excluding acquisitions, operating expenses remained at 8.5% of revenues.
A ‘double digit decline’ in revenues from mobile hydraulic cranes in North America was one of the reasons cited for a 17% fall in operating profit to $31.5m.
