Terex will provide detailed full-year 2005 financial results when these results are completed and audited.
Terex Cranes’ 2005 revenue increased approximately 18% compared with 2004, “reflecting a continued strong global tower crane market and modest improvement in the North American and international cranes business”, the company said.
Fourth quarter revenue grew approximately 8% as compared with the fourth quarter of 2004. Terex Cranes’ backlog as of December 31, 2005 was approximately $452 million, up 80% compare with the same period a year earlier, highlighted by the strengthening of the North American market.
“In general, 2005 was a very good year for Terex, reflecting continued strengthening end markets in many of our product categories and the early stages of a recovery in others,” commented Ronald DeFeo, Terex’s chairman and chief executive officer. “In 2003, we set out to achieve $6 billion in revenue by 2006. We have already surpassed that objective in 2005. We continue to benefit from an operating environment that is poised to produce another year of significant growth, as evidenced by our backlog of approximately $1.6 billion at the end of 2005, up 62% from our backlog at the end of 2004.
“We have maintained our focus on improving the balance sheet, and thus have reduced our net debt by $209 million in 2005 and anticipate a net debt to total capitalization ratio of approximately 33% at December 31, 2005, a significant accomplishment for Terex.”
However, DeFeo added that the strong business performance in the fourth quarter of 2005 was more than offset by charges the company incurred during the quarter.
The Terex Construction segment incurred charges related to physical inventory results at four locations of approximately $4 million, additional inventory valuation charges of approximately $6 million, and an increased bad debt provision largely related to customers of the compact construction business of approximately $4 million.
DeFeo added: “The Terex Cranes segment had a field retrofit program, which caused the company to accrue approximately $4 million in the quarter. The Terex Roadbuilding, Utility Products and Other segment was impacted by expenses at the American Truck Company and Tatra, and the write-down of certain assets at Tatra related to the inability of ATC to complete the tender for a US Marine Corps truck procurement, and the fact that the Israeli Ministry of Defense did not exercise its option to purchase additional trucks from ATC.
“Lastly, the company incurred charges of approximately $9 million resulting from increased accruals for equity based compensation and other plans, as well as audit and other professional fees largely related to the Company’s ongoing effort to improve its financial reporting process.”
Phil Widman, Terex’s senior vice president and chief financial officer said that net debt at the end of the fourth quarter of 2005 decreased to approximately $571m, down $209m from $780m at the end of 2004. He added: “Our reduction of net debt in the fourth quarter of 2005 was approximately $192m, leading the company to anticipate a ratio of net debt to total capitalisation of approximately 33% at year end, meaningful progress when compared to the 41% result achieved at the end of 2004.”
“We are pleased with our fourth quarter cash flow performance and our ongoing efforts in managing our balance sheet, especially in light of the continued economic expansion.”
DeFeo. Added: “It is our expectation that Terex’s total revenue for 2006 will be between $6.7 and $7.1 billion, as we continue to focus on margin improvement over increases in volume alone, with earnings per share in the range of $5.50 to $6.00 per share, excluding special items such as the costs associated with the early retirement of debt that we plan for 2006.
“Expectations are for earnings in the first half of 2006 to be slightly less than our earnings in the second half of 2006. Additionally, expectations are for our first quarter results to be approximately one-third of our first half guidance.”
