Terex Corporation announced a loss from continuing operations of $2.1 million, or $0.02 per share for the first quarter of 2015, as compared to income from continuing operations of $32.6 million, or $0.28 per share for the first quarter of 2014. The effective tax rate for the first quarter of 2015 was 114.9% as compared to an effective tax rate of 26.7% for the first quarter of 2014. Net sales were $1,495.6 million in the first quarter of 2015, a decrease of $159.0 million when compared with the $1,654.6 million in the first quarter of 2014. Net sales were essentially flat on a currency neutral basis. 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.
“Operationally the first quarter was generally in-line with our expectations in most of our businesses, and 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,” commented Ron DeFeo, Terex Chairman and Chief Executive Officer. “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.”
Mr. DeFeo continued, “Performance across our remaining business segments was consistent with our 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. 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.”
Outlook: “The Company’s overall outlook for 2015 has not changed,” Mr. DeFeo added. “We expect strong performance from our AWP segment and improvement from our other segments throughout the remainder of 2015. We reiterate our 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.”
Capital Structure: “Capital allocation activities within the quarter proceeded as planned,” commented Kevin Bradley, Terex Senior Vice President and Chief Financial Officer. “During the first quarter we purchased approximately $48 million of stock under a new $200 million share repurchase authorization. We also increased our quarterly dividend as part of our ongoing commitment to enhance shareholder value."
The Company’s liquidity at March 31, 2015 decreased by $238 million compared to December 31, 2014 and totaled approximately $840 million, which was comprised of cash balances of $351 million and borrowing availability under the Company’s revolving credit facilities of $489 million. The decrease in liquidity was primarily the result of investments in TFS assets, the share repurchase program and the seasonal ramp up in production in anticipation of stronger demand in the second quarter.
Return on Invested Capital (ROIC) was 9.8% at March 31, 2015 compared to 8.6% at March 31, 2014.
Taxes: The higher effective tax rate in the first quarter of 2015 was primarily due to the increased impact of losses not benefitted combined with lower profit before tax in the current year period when compared to the three months ended March 31, 2014. The Company still expects the effective tax rate to be between 30% and 32% for 2015.
Backlog: Backlog for orders deliverable during the next twelve months was $2,141 million at March 31, 2015, an increase of 7.0% from December 31, 2014 and a decrease of 9.4% from March 31, 2014. Excluding the impact of foreign exchange rate changes, backlog at March 31, 2015 increased 1.5% from March 31, 2014 primarily driven by our AWP segment.
