Terex Reports Third Quarter 2024 Results
Terex (NYSE: TEX) reported Q3 2024 results with net sales of $1.2 billion, down 6% year-over-year. Operating margin was 10.1% (10.5% adjusted), with EPS of $1.31 ($1.46 adjusted). Materials Processing segment saw declining sales, while Aerial Work Platforms showed modest growth. The company completed the acquisition of Environmental Solutions Group in October, strengthening its waste and recycling portfolio. Full-year 2024 outlook projects net sales of $5.0-$5.2 billion with adjusted EPS guidance of $5.85-$6.25.
Terex (NYSE: TEX) ha riportato i risultati del terzo trimestre 2024 con vendite nette di 1,2 miliardi di dollari, in calo del 6% rispetto all'anno precedente. Il margine operativo è stato del 10,1% (10,5% rettificato), con un utile per azione (EPS) di 1,31 dollari (1,46 dollari rettificato). Il segmento Processing dei materiali ha registrato un calo delle vendite, mentre le Piattaforme Aeree hanno mostrato una crescita modesta. L'azienda ha completato l'acquisizione del Environmental Solutions Group in ottobre, rafforzando il proprio portafoglio nel settore rifiuti e riciclaggio. Le previsioni per l'intero anno 2024 indicano vendite nette comprese tra 5,0 e 5,2 miliardi di dollari, con una guida EPS rettificata tra 5,85 e 6,25 dollari.
Terex (NYSE: TEX) reportó resultados del tercer trimestre de 2024 con ventas netas de 1.2 mil millones de dólares, una disminución del 6% en comparación con el año anterior. El margen operativo fue del 10,1% (10,5% ajustado), con una utilidad por acción (EPS) de 1,31 dólares (1,46 dólares ajustados). El segmento de Procesamiento de Materiales vio una disminución en las ventas, mientras que las Plataformas de Trabajo Aéreo mostraron un crecimiento modesto. La compañía completó la adquisición de Environmental Solutions Group en octubre, fortaleciendo su cartera de residuos y reciclaje. Las proyecciones para todo el año 2024 prevén ventas netas de entre 5,0 y 5,2 mil millones de dólares, con una guía de EPS ajustado de entre 5,85 y 6,25 dólares.
Terex (NYSE: TEX)는 2024년 3분기 실적을 발표했으며, 순매출액은 12억 달러로 전년 대비 6% 감소했습니다. 운영 마진은 10.1%(조정 시 10.5%)였으며, 주당순이익(EPS)은 1.31달러(조정 시 1.46달러)였습니다. 자재 가공 부문은 매출이 감소했으나 항공 작업 플랫폼은 다소 성장했습니다. 회사는 10월에 Environmental Solutions Group의 인수를 완료하여 폐기물 및 재활용 포트폴리오를 강화했습니다. 2024년 전체 연도 전망에서는 순매출 50억~52억 달러와 조정 EPS 가이던스 5.85~6.25달러를 예상하고 있습니다.
Terex (NYSE: TEX) a annoncé les résultats du troisième trimestre 2024 avec un chiffre d'affaires net de 1,2 milliard de dollars, en baisse de 6 % par rapport à l'année précédente. La marge opérationnelle était de 10,1 % (10,5 % ajustée), avec un bénéfice par action (EPS) de 1,31 dollar (1,46 dollar ajusté). Le segment de traitement des matériaux a vu ses ventes diminuer, tandis que les plateformes de travail aérien ont montré une croissance modeste. L'entreprise a finalisé l'acquisition du Environmental Solutions Group en octobre, renforçant ainsi son portefeuille de gestion des déchets et de recyclage. Les prévisions pour l'année entière 2024 indiquent des ventes nettes comprises entre 5,0 et 5,2 milliards de dollars, avec une prévision de bénéfice par action ajustée de 5,85 à 6,25 dollars.
Terex (NYSE: TEX) hat die Ergebnisse des dritten Quartals 2024 veröffentlicht, mit Nettoumsätzen von 1,2 Milliarden Dollar, was einem Rückgang von 6% im Jahresvergleich entspricht. Die operative Marge betrug 10,1% (10,5% angepasst), mit einem Gewinn pro Aktie (EPS) von 1,31 Dollar (1,46 Dollar angepasst). Das Segment Materialverarbeitung verzeichnete rückläufige Umsätze, während die Arbeitsbühnen ein moderates Wachstum zeigten. Das Unternehmen hat im Oktober die Übernahme der Environmental Solutions Group abgeschlossen und sein Portfolio im Bereich Abfall und Recycling gestärkt. Die Prognose für das Gesamtjahr 2024 rechnet mit Nettoumsätzen von 5,0 bis 5,2 Milliarden Dollar und einer angepassten EPS-Prognose von 5,85 bis 6,25 Dollar.
- Return on invested capital remains strong at 23.7%
- Aerial Work Platforms segment showed growth with sales up 2.4% YoY to $769 million
- Strong liquidity position of $952 million
- Strategic acquisition of ESG expected to be financially accretive
- Overall net sales declined 6% year-over-year
- Operating margin decreased to 10.1% from 12.6% in prior year
- Materials Processing segment sales dropped significantly
- EPS declined from $1.75 to $1.31 year-over-year
- Net leverage expected to increase to 2.5x by year-end due to ESG acquisition
Insights
The Q3 results reveal significant headwinds for Terex, with net sales declining
The acquisition of Environmental Solutions Group (ESG) represents a strategic pivot towards non-cyclical revenue streams. With expected net leverage increasing to
The balance sheet remains solid with
The market dynamics reveal a challenging environment, particularly in the Materials Processing segment where channel inventory adjustments and softening demand are impacting performance. The Aerial Work Platform segment shows resilience with modest
The ESG acquisition marks a strategic shift towards waste and recycling markets, potentially reducing cyclicality in revenue streams. This move could help buffer against traditional equipment market volatility, though integration execution will be crucial. The projected
- Sales of
and operating margin of$1.2 billion 10.1% and10.5% as adjusted1 - EPS of
and adjusted1 EPS of$1.31 $1.46 - Return on invested capital of
23.7% - Full-year adjusted1 EPS outlook of
to$5.85 $6.25
CEO Commentary
"The Terex team adapted quickly to in-quarter industry channel adjustments and executed at a high level throughout the third quarter," said Simon Meester, Terex President and Chief Executive Officer. "In early October, we completed the acquisition of Environmental Solutions Group ("ESG") strengthening our portfolio and leveraging our operating system to drive sustainable, accelerated long-term growth. ESG adds a non-cyclical, financially accretive, and market-leading business to Terex's portfolio with tangible synergies in the fast-growing waste and recycling end market."
Third Quarter Operational and Financial Highlights
- Net sales of
were$1.2 billion 6% lower than the third quarter of 2023, resulting from declines in Material Processing ("MP"), partially offset by modest growth in Aerial Work Platforms ("AWP"). - Income from operations was
, or$122 million 10.1% of net sales, compared to , or$163 million 12.6% of net sales, during the prior year2. Adjusted1 income from operations was , or$127 million 10.5% of net sales for the third quarter of 2024. The year-over-year change was primarily due to lower sales volume and unfavorable geographic and product mix. - Income from continuing operations was
, or$88 million per share, compared to$1.31 , or$119 million per share, in the third quarter of 2023. Adjusted1 income from continuing operations was$1.75 , or$98 million per share for the third quarter of 2024, compared to$1.46 , or$117 million per share, in the third quarter of 2023.$1.72 - Return on invested capital of
23.7% continues to significantly exceed our cost of capital.
Business Segment Review
Materials Processing
- Net sales of
were down$444 million year-over-year, resulting from channel adjustments and lower end-market demand in certain areas.$97 million - Income from operations was
, or$56 million 12.6% of net sales, compared to , or$92 million 17.0% of net sales, in the prior year2. Adjusted1 income from operations was , or$59 million 13.3% of net sales for the third quarter of 2024. The change was primarily due to lower sales volume and unfavorable product and geographic mix. The team continues to execute cost reduction actions and align production plans with market requirements.
Aerial Work Platforms
- Net sales of
were up$769 million 2.4% year-over-year or . During the third quarter, customers adjusted delivery schedules to align with fleet productivity and shorter equipment lead times.$18 million - Income from operations of
, or$83 million 10.8% of net sales, was down from , or$93 million 12.4% of net sales, in the prior year2. Adjusted1 income from operations was , or$85 million 11.1% of net sales for the third quarter of 2024. The change resulted from unfavorable product mix and higher freight costs. The team continues to execute cost reduction actions and align production plans with market requirements.
Strong Balance Sheet and Liquidity
- As of September 30, 2024, the Company had liquidity (cash and availability under our revolving line of credit) of
and net leverage of 0.4x.$952 million - Terex deployed
for capital expenditures during the third quarter of 2024 to support business growth and operational improvements.$29 million - Through September 30, 2024, Terex has returned
to shareholders through share repurchases and dividends.$66 million - On October 8, 2024, the Company completed the acquisition of ESG, which was funded with a combination of
6.25% Senior Notes, term loan borrowings, and cash on hand. The Company expects net leverage to be approximately 2.5x for the year ended December 31, 2024.
CFO Commentary
"Our Q3 results reflect lower than expected volume in the quarter. We continue to take action to reduce costs and align production with demand," commented Julie Beck, Senior Vice President and Chief Financial Officer. "I am very pleased that our future financial results will enjoy the accretive addition of ESG, reducing our cyclicality going forward. I am also pleased with the results of our ESG acquisition-related funding actions. We maintain a strong and agile balance sheet that will continue to enable us to fund strategic growth initiatives, and return capital to shareholders."
Full-Year 2024 Outlook
(in millions, except per share data)
Terex Adjusted Outlook3 | |
Net Sales | |
Operating Margin | |
EBITDA | |
Interest / Other Expense | |
Tax Rate | ~ |
EPS | |
Share Count | ~68 |
Depreciation / Amortization | |
Free Cash Flow4 | |
Corp & Other OP | ~( |
Terex Outlook includes ESG post October 8, 2024 close contribution of
Segment Adjusted Outlook5 | ||
Net Sales | Operating Margin1 | |
Materials Processing | ||
AWP | ||
Non-GAAP Measures and Other Items
Results of operations reflect continuing operations. All per share amounts are on a fully diluted basis. A comprehensive review of the quarterly financial performance is contained in the presentation that will accompany the Company's earnings conference call.
In this press release, Terex refers to various GAAP (
The Glossary at the end of this press release contains further details about this subject.
Conference call
The Company has scheduled a conference call to review the financial results on Wednesday, October 30, 2024 beginning at 8:30 a.m. ET. Simon A. Meester, President and CEO, and Julie Beck, Senior Vice President and Chief Financial Officer, will host the call. A simultaneous webcast of this call can be accessed at https://investors.terex.com. Participants are encouraged to access the call 15 minutes prior to the starting time. The call will also be archived in the Event Archive at https://investors.terex.com.
1 | Refer to the Glossary for GAAP to non-GAAP reconciliation. |
2 | No adjustments applicable for prior year figures. |
3 | Includes the impact of ESG post October 8, 2024 close. Excludes the impact of future acquisitions, divestitures, restructuring and other unusual items. |
4 | Capital expenditures, net of proceeds from sale of capital assets: |
5 | Excludes the impact of future acquisitions, divestitures, restructuring and other unusual items. |
Forward-Looking Statements
Certain information in this press release includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including those discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent reports we file with the
- we may be unable to successfully integrate acquired businesses, including the Environmental Solutions Group business;
- we may not realize expected benefits for any acquired businesses within the timeframe anticipated or at all;
- our operations are subject to a number of potential risks that arise from operating a multinational business, including political and economic instability and compliance with changing regulatory environments;
- changes in the availability and price of certain materials and components, which may result in supply chain disruptions;
- consolidation within our customer base and suppliers;
- our business may suffer if our equipment fails to perform as expected;
- a material disruption to one of our significant facilities;
- our business is sensitive to general economic conditions, government spending priorities and the cyclical nature of markets we serve;
- our consolidated financial results are reported in
U.S. dollars while certain assets and other reported items are denominated in the currencies of other countries, creating currency exchange and translation risk; - we have a significant amount of debt outstanding and need to comply with restrictive covenants contained in our debt agreements;
- our ability to generate sufficient cash flow to service our debt obligations and operate our business;
- our ability to access the capital markets to raise funds and provide liquidity;
- the financial condition of customers and their continued access to capital;
- exposure from providing credit support for some of our customers;
- we may experience losses in excess of recorded reserves;
- our industry is highly competitive and subject to pricing pressure;
- our ability to successfully implement our strategy and the actual results derived from such strategy;
- increased cybersecurity threats and more sophisticated computer crime;
- increased regulatory focus on privacy and data security issues and expanding laws;
- our ability to attract, develop, engage and retain team members;
- possible work stoppages and other labor matters;
- litigation, product liability claims and other liabilities;
- changes in import/export regulatory regimes, imposition of tariffs, escalation of global trade conflicts and unfairly traded imports, particularly from
China , could continue to negatively impact our business; - compliance with environmental regulations could be costly and failure to meet sustainability expectations or standards or achieve our sustainability goals could adversely impact our business;
- our compliance with the
U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws; - our ability to comply with an injunction and related obligations imposed by the
U.S. Securities and Exchange Commission; and - other factors.
Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks, uncertainties and material factors. The forward-looking statements contained herein speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this press release to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
About Terex
Terex Corporation is a global industrial equipment manufacturer of materials processing machinery, waste and recycling solutions, mobile elevating work platforms (MEWPs), and equipment for the electric utility industry. We design, build, and support products used in maintenance, manufacturing, energy, minerals and materials management, construction, waste and recycling, and the entertainment industry. We provide best-in-class lifecycle support to our customers through our global parts and services organization, and offer complementary digital solutions, designed to help our customers maximize their return on their investment. Certain Terex products and solutions enable customers to reduce their impact on the environment including electric and hybrid offerings that deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste. Our products are manufactured in
Contact Information
Derek Everitt
VP Investor Relations
Email: InvestorRelations@Terex.com
TEREX CORPORATION AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions, except per share data) | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Net sales | $ | 1,212 | $ | 1,290 | $ | 3,886 | $ | 3,929 | |||
Cost of goods sold | (967) | (998) | (3,015) | (3,015) | |||||||
Gross profit | 245 | 292 | 871 | 914 | |||||||
Selling, general and administrative expenses | (123) | (129) | (398) | (393) | |||||||
Income (loss) from operations | 122 | 163 | 473 | 521 | |||||||
Other income (expense) | |||||||||||
Interest income | 3 | 2 | 9 | 5 | |||||||
Interest expense | (13) | (17) | (44) | (47) | |||||||
Other income (expense) – net | (13) | 1 | (28) | (5) | |||||||
Income (loss) from continuing operations before income taxes | 99 | 149 | 410 | 474 | |||||||
(Provision for) benefit from income taxes | (11) | (30) | (73) | (85) | |||||||
Income (loss) from continuing operations | 88 | 119 | 337 | 389 | |||||||
Gain (loss) on disposition of discontinued operations- net of tax | — | — | — | 2 | |||||||
Net income (loss) | $ | 88 | $ | 119 | $ | 337 | $ | 391 | |||
Basic earnings (loss) per Share: | |||||||||||
Income (loss) from continuing operations | $ | 1.32 | $ | 1.77 | $ | 5.03 | $ | 5.75 | |||
Gain (loss) on disposition of discontinued operations – net of tax | — | — | — | 0.04 | |||||||
Net income (loss) | $ | 1.32 | $ | 1.77 | $ | 5.03 | $ | 5.79 | |||
Diluted earnings (loss) per Share: | |||||||||||
Income (loss) from continuing operations | $ | 1.31 | $ | 1.75 | $ | 4.98 | $ | 5.69 | |||
Gain (loss) on disposition of discontinued operations – net of tax | — | — | — | 0.03 | |||||||
Net income (loss) | $ | 1.31 | $ | 1.75 | $ | 4.98 | $ | 5.72 | |||
Weighted average number of shares outstanding in per share calculation | |||||||||||
Basic | 66.9 | 67.4 | 67.0 | 67.6 | |||||||
Diluted | 67.4 | 68.2 | 67.7 | 68.4 |
TEREX CORPORATION AND SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||
(unaudited) | |||||
(in millions, except par value) | |||||
September 30, 2024 | December 31, 2023 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 352 | $ | 371 | |
Other current assets | 2,029 | 1,874 | |||
Total current assets | 2,381 | 2,245 | |||
Non-current assets | |||||
Property, plant and equipment – net | 602 | 570 | |||
Other non-current assets | 798 | 800 | |||
Total non-current assets | 1,400 | 1,370 | |||
Total assets | $ | 3,781 | $ | 3,615 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities | |||||
Current portion of long-term debt | $ | 4 | $ | 3 | |
Other current liabilities | 992 | 1,116 | |||
Total current liabilities | 996 | 1,119 | |||
Non-current liabilities | |||||
Long-term debt, less current portion | 624 | 620 | |||
Other non-current liabilities | 204 | 204 | |||
Total non-current liabilities | 828 | 824 | |||
Total liabilities | 1,824 | 1,943 | |||
Total stockholders' equity | 1,957 | 1,672 | |||
Total liabilities and stockholders' equity | $ | 3,781 | $ | 3,615 | |
TEREX CORPORATION AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
(unaudited) | ||||||
(in millions) | ||||||
Nine Months Ended September 30, | ||||||
2024 | 2023 | |||||
Operating Activities | ||||||
Net income (loss) | $ | 337 | $ | 391 | ||
Depreciation and amortization | 45 | 37 | ||||
Changes in operating assets and liabilities and non-cash charges | (233) | (159) | ||||
Net cash provided by (used in) operating activities | 149 | 269 | ||||
Investing Activities | ||||||
Capital expenditures | (88) | (72) | ||||
Other investing activities, net | 8 | 18 | ||||
Net cash provided by (used in) investing activities | (80) | (54) | ||||
Financing Activities | ||||||
Net cash provided by (used in) financing activities | (88) | (161) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0 | (6) | ||||
Net increase (decrease) in cash and cash equivalents | (19) | 48 | ||||
Cash and cash equivalents at beginning of period | 371 | 304 | ||||
Cash and cash equivalents at end of period | $ | 352 | $ | 352 | ||
TEREX CORPORATION AND SUBSIDIARIES | |||||||||||||
SEGMENT RESULTS DISCLOSURE | |||||||||||||
(unaudited) | |||||||||||||
(in millions) | |||||||||||||
Q3 | Year to Date | ||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||
% of | % of | % of | % of | ||||||||||
Net Sales | Net Sales | Net Sales | Net Sales | ||||||||||
Consolidated | |||||||||||||
Net sales | $ | 1,212 | $ | 1,290 | $ | 3,886 | $ | 3,929 | |||||
Income from operations | $ | 122 | 10.1 % | $ | 163 | 12.6 % | $ | 473 | 12.2 % | $ | 521 | 13.3 % | |
MP | |||||||||||||
Net sales | $ | 444 | $ | 541 | $ | 1,463 | $ | 1,672 | |||||
Income from operations | $ | 56 | 12.6 % | $ | 92 | 17.0 % | $ | 205 | 14.0 % | $ | 275 | 16.4 % | |
AWP | |||||||||||||
Net sales | $ | 769 | $ | 751 | $ | 2,423 | $ | 2,262 | |||||
Income from operations | $ | 83 | 10.8 % | $ | 93 | 12.4 % | $ | 324 | 13.4 % | $ | 310 | 13.7 % | |
Corp and Other / Eliminations | |||||||||||||
Net sales | $ | (1) | $ | (2) | $ | — | $ | (5) | |||||
Loss from operations | $ | (17) | * | $ | (22) | * | $ | (56) | * | $ | (64) | * | |
* Not a meaningful percentage | |||||||||||||
GLOSSARY
Non-GAAP Measures Definitions
In an effort to provide investors with additional information regarding the Company's results, Terex refers to various GAAP (
The amounts described below are unaudited, are reported in millions of
2024 Outlook
The Company's 2024 outlook for earnings per share is a non-GAAP financial measure because it excludes potential future acquisitions, divestitures, restructuring, and other unusual items. The Company is not able to reconcile this forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the exact timing and impact of such items. The unavailable information could have a significant impact on the Company's full-year 2024 GAAP financial results. This forward looking information provides guidance to investors about the Company's EPS expectations excluding unusual items that the Company does not believe is reflective of its ongoing operations.
EBITDA
EBITDA is defined as earnings, before interest, other non-operating income (loss), income (loss) attributable to non-controlling interest, taxes, depreciation and amortization. The Company calculates this by subtracting the following items from Net income (loss): (Gain) loss on disposition of discontinued operations- net of tax; and (Income) loss from discontinued operations – net of tax. Then adds the Provision for (benefit from) income taxes; Interest & Other (Income) Expense; the Depreciation and Amortization amounts reported in the Consolidated Statement of Cash Flows less amortization of debt issuance costs that are recorded in Interest expense. Adjusted EBITDA is defined as EBITDA plus certain SG&A and other income/expenses.
The Company believes that disclosure of EBITDA and Adjusted EBITDA will be helpful to those reviewing its performance, as EBITDA provides information on its ability to meet debt service, capital expenditure and working capital requirements, and is also an indicator of profitability.
Three Months Ended | LTM Ended September 30, 2024 | ||
Net income (loss) | $ 88 | $ 464 | |
(Gain) loss on disposition of discontinued operations - net of tax | — | 1 | |
Income (loss) from continuing operations | 88 | 465 | |
Interest & Other (Income) Expense | 23 | 74 | |
Income Taxes | 11 | 50 | |
Income (loss) from operations | 122 | 589 | |
Depreciation | 14 | 59 | |
Amortization | 1 | 4 | |
Non-Cash Interest Costs | (1) | (2) | |
EBITDA | $ 136 | $ 650 | |
Accelerated Vesting / Severance | 5 | 25 | |
Other | — | 4 | |
Adjusted EBITDA | $ 141 | $ 679 | |
Net sales | $ 1,212 | 5,109 | |
EBITDA Margin % | 11.2 % | 12.7 % | |
Adjusted EBITDA Margin % | 11.6 % | 13.3 % | |
Three Months Ended | LTM Ended | |||||
EBITDA | $ 136 | 11.2 % | $ 650 | 12.7 % | ||
MP Adjustments | 3 | 0.2 % | 10 | 0.2 % | ||
AWP Adjustments | 2 | 0.2 % | 5 | 0.1 % | ||
Corporate & Other Adjustments | — | — % | 14 | 0.3 % | ||
Adjusted consolidated EBITDA | $ 141 | 11.6 % | $ 679 | 13.3 % | ||
Free Cash Flow
The Company calculates a non-GAAP measure of free cash flow. The Company defines free cash flow as Net cash provided by (used in) operating activities less Capital expenditures, net of proceeds from sale of capital assets. The Company believes that this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations. The following table reconciles Net cash provided by (used in) operating activities to free cash flow (in millions):
Year Ending December 31, 2024 | ||||
Net cash provided by (used in) operating activities | $ 325 | |||
Capital expenditures, net of proceeds from sale of capital assets | (125) | |||
Free cash flow (use) | $ 200 |
Note: 2024 Outlook free cash flow represents the mid-point of the range |
Net Leverage
The Company calculates a non-GAAP measure of net leverage. The Company defines net leverage as Net Debt divided by adjusted last twelve months (LTM) EBITDA. The Company believes that this measure reflects its ability to cover its net debt obligations with results from core operations. Amounts described below are reported in millions, except net leverage.
September 30, 2024 | |
Net Debt | $ 276 |
Divided by: Adjusted LTM EBITDA | 679 |
Net Leverage | 0.4x |
Debt & Net Debt
Debt is calculated using the Condensed Consolidated Balance Sheet amounts for Current portion of long-term debt plus Long-term debt, less current portion plus debt from liabilities held for sale. Net Debt is calculated as Debt less Cash and cash equivalents, including amounts in assets held for sale. These measures aid in the evaluation of the Company's financial condition.
September 30, 2024 | |||
Long-term debt, less current portion | $ 624 | ||
Current portion of long-term debt | $ 4 | ||
Debt | $ 628 | ||
Less: Cash and cash equivalents | $ (352) | ||
Net Debt | $ 276 |
ROIC
ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Stockholders' equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying Income (loss) from operations by one minus the annualized effective tax rate as adjusted. Debt is calculated using amounts for Current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters' NOPAT as this represents the most recent 12-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters' ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.
In the calculation of ROIC, we adjust the annualized effective tax rate to reflect management's expectation of the full-year effective tax rate and amortize the one-time tax benefit derived from recording of a deferred tax asset in relation to our Swiss operations in 2023 to create a measure that is more useful to understanding our operating results and the ongoing performance of our underlying business as shown in the tables below. Our management and Board of Directors use ROIC as one measure to assess operational performance, including in connection with certain compensation programs. We use ROIC as a metric because we believe it measures how effectively we invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive operational improvement. We believe ROIC measures return on the amount of capital invested in our businesses and is an accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents to Stockholders' equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at September 30, 2024 was
Q3 2024
Amounts described below are reported in millions, except for the annualized effective tax rate as adjusted. Amounts are as of and for the three months ended for the periods referenced in the tables below.
Sep '24 | Jun '24 | Mar '24 | Dec '23 | Sep '23 | |
Annualized effective tax rate as adjusted(1) | 17.3 % | 17.3 % | 17.3 % | 18.2 % | |
Income (loss) from operations | $ 122 | $ 193 | $ 158 | $ 116 | |
Multiplied by: 1 minus annualized effective tax rate | 82.7 % | 82.7 % | 82.7 % | 81.8 % | |
Net operating income (loss) after tax | $ 101 | $ 160 | $ 131 | $ 95 | |
Debt | $ 628 | $ 666 | $ 724 | $ 623 | $ 709 |
Less: Cash and cash equivalents | $ (352) | $ (319) | $ (365) | $ (371) | $ (352) |
Debt less Cash and cash equivalents | $ 276 | $ 347 | $ 359 | $ 252 | $ 357 |
Stockholders' equity | $ 1,957 | $ 1,824 | $ 1,732 | $ 1,672 | $ 1,496 |
Debt less Cash and cash equivalents plus Stockholders' equity | $ 2,233 | $ 2,171 | $ 2,091 | $ 1,924 | $ 1,853 |
(1) The annualized effective tax rate for Dec '23 period represents the adjusted full-year 2023 effective tax rate. |
September 30, 2024 ROIC | 23.7 % |
NOPAT as adjusted (last 4 quarters) | $ 487 |
Average Debt less Cash and cash equivalents plus Stockholders' | $ 2,054 |
Nine Months Ended September 30, 2024 | Income (loss) from | (Provision for) | Income tax |
Reconciliation of annualized effective tax rate: | |||
As reported | $ 410 | $ (73) | 17.8 % |
Effect of adjustments: | |||
Tax related to full-year effective tax rate expectation | — | (5) | |
Tax related to Swiss deferred tax asset | — | 7 | |
As adjusted | $ 410 | $ (71) | 17.3 % |
GAAP to Non-GAAP Reconciliation: Q3 2024
Q3 2024 GAAP | Accelerated | Deal | Mark-to- | Q3 2024 Adjusted | |||
Net Sales | $ | 1,212 | — | — | — | $ | 1,212 |
Gross Profit | 245 | 4 | — | — | 249 | ||
% of Sales | 20.2 % | 20.5 % | |||||
SG&A | (123) | 1 | — | — | (122) | ||
% of Sales | (10.1 %) | (10.1 %) | |||||
Income (Loss) from Operations | 122 | 5 | — | — | 127 | ||
Operating Margin | 10.1 % | 10.5 % | |||||
Net Interest (Expense) | (10) | — | — | — | (10) | ||
Other (Expense) | (13) | — | 8 | — | (5) | ||
Income (Loss) from Cont. Ops. Before Taxes | 99 | 5 | 8 | — | 112 | ||
Benefit from (Provision for) Income Taxes | (11) | (1) | (2) | — | (14) | ||
Effective Tax Rate | 11.1 % | 12.5 % | |||||
Income (Loss) from Continuing Operations | $ | 88 | 4 | 6 | – | $ | 98 |
Earnings (Loss) per Share | $ | 1.31 | 0.06 | 0.09 | – | $ | 1.46 |
GAAP to Non-GAAP Reconciliation: YTD Q3 2024
YTD Q3 2024 GAAP | Accelerated | Deal | Mark-to- | YTD Q3 2024 Adjusted | |||
Net Sales | $ | 3,886 | — | — | — | $ | 3,886 |
Gross Profit | 871 | 5 | — | — | 876 | ||
% of Sales | 22.4 % | 22.5 % | |||||
SG&A | (398) | 6 | — | — | (392) | ||
% of Sales | (10.2 %) | (10.1 %) | |||||
Income (Loss) from Operations | 473 | 11 | — | — | 484 | ||
Operating Margin | 12.2 % | 12.5 % | |||||
Net Interest (Expense) | (35) | — | — | — | (35) | ||
Other (Expense) | (28) | — | 10 | 9 | (9) | ||
Income (Loss) from Cont. Ops. Before Taxes | 410 | 11 | 10 | 9 | 440 | ||
Benefit from (Provision for) Income Taxes | (73) | (2) | (2) | (3) | (80) | ||
Effective Tax Rate | 17.8 % | 18.2 % | |||||
Income (Loss) from Continuing Operations | $ | 337 | 9 | 8 | 6 | $ | 360 |
Earnings (Loss) per Share | $ | 4.98 | 0.13 | 0.12 | 0.09 | $ | 5.32 |
GAAP to Non-GAAP Reconciliation: Q3 2023
Q3 2023 GAAP | Accelerated | Deal | Mark-to- | Q3 2023 Adjusted | |||
Net Sales | $ | 1,290 | — | — | — | $ | 1,290 |
Gross Profit | 292 | — | — | — | 292 | ||
% of Sales | 22.6 % | 22.6 % | |||||
SG&A | (129) | — | — | — | (129) | ||
% of Sales | (10.0 %) | (10.0 %) | |||||
Income (Loss) from Operations | 163 | — | — | — | 163 | ||
Operating Margin | 12.6 % | 12.6 % | |||||
Net Interest (Expense) | (15) | — | — | — | (15) | ||
Other (Expense) | 1 | — | — | (2) | (1) | ||
Income (Loss) from Cont. Ops. Before Taxes | 149 | — | — | (2) | 147 | ||
Benefit from (Provision for) Income Taxes | (30) | — | — | — | (30) | ||
Effective Tax Rate | 20.0 % | 20.4 % | |||||
Income (Loss) from Continuing Operations | $ | 119 | – | – | (2) | $ | 117 |
Earnings (Loss) per Share | $ | 1.75 | – | – | (0.03) | $ | 1.72 |
GAAP to Non-GAAP Reconciliation: YTD Q3 2023
YTD Q3 2023 GAAP | Mark-to- | OKC Sale | YTD Q3 2023 Adjusted | |||
Net Sales | $ | 3,929 | — | — | $ | 3,929 |
Gross Profit | 914 | — | — | 914 | ||
% of Sales | 23.3 % | 23.3 % | ||||
SG&A | (393) | — | (2) | (395) | ||
% of Sales | (10.0 %) | (10.1 %) | ||||
Income (Loss) from Operations | 521 | — | (2) | 519 | ||
Operating Margin | 13.3 % | 13.2 % | ||||
Net Interest (Expense) | (42) | — | — | (42) | ||
Other (Expense) | (5) | (1) | — | (6) | ||
Income (Loss) from Cont. Ops. Before Taxes | 474 | (1) | (2) | 471 | ||
Benefit from (Provision for) Income Taxes | (85) | — | 1 | (84) | ||
Effective Tax Rate | 18.0 % | 17.8 % | ||||
Income (Loss) from Continuing Operations | $ | 389 | (1) | (1) | $ | 387 |
Earnings (Loss) per Share | $ | 5.69 | (0.01) | (0.01) | $ | 5.67 |
Three Months Ended | Nine Months Ended | |||||
Consolidated operating income (GAAP) | $ | 122 | 10.1 % | $ | 473 | 12.2 % |
MP Adjustments | 3 | 0.3 % | 4 | 0.1 % | ||
AWP Adjustments | 2 | 0.1 % | 3 | 0.1 % | ||
Corporate & Other Adjustments | — | — % | 4 | 0.1 % | ||
Adjusted consolidated operating income (non-GAAP) | 127 | 10.5 % | 484 | 12.5 % | ||
Consolidated operating income (GAAP) | $ | 122 | 10.1 % | $ | 473 | 12.2 % |
Accelerated Vesting / Severance | 5 | 0.4 % | 11 | 0.3 % | ||
Adjusted consolidated operating income (non-GAAP) | 127 | 10.5 % | 484 | 12.5 % | ||
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SOURCE Terex Corporation
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