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Terex Announces Third Quarter 2012 Results

Stocks in this article: TEX

Interest and Other income (expense): Net interest expense increased by approximately $7 million from the third quarter of 2011 due to the increase in debt mainly related to the acquisition of Demag Cranes AG. Other expense in the third quarter of 2012 was $3.6 million compared to other income in the prior year quarter of $50.0 million. The change was primarily driven by income in the prior year period of approximately $76 million from the sale of shares of Bucyrus International. Additionally, the Company recorded an expense of $49.9 million primarily associated with redemption of the Company’s 10-7/8% Senior Notes and purchase of 25% of the Company’s 4% Convertible Notes.

Taxes: The effective tax rate for the third quarter of 2012 was 23.7% as compared to an effective tax rate of 50.8% for the third quarter of 2011. The lower effective tax rate for the third quarter of 2012 was primarily attributable to jurisdictional mix of income and reductions in the provision for uncertain tax benefits.

Capital Structure: The Company’s liquidity at September 30, 2012 decreased by approximately $300 million compared to June 30, 2012 and totaled $983.0 million, which comprised cash balances of $542.6 million and borrowing availability under the Company’s revolving credit facilities of $440.4 million. The decrease was mainly due to cash utilized of approximately $411 million in the repayment of the Company’s debt, partially offset by operational cash generation. Cash provided by operations in the third quarter of 2012 was approximately $121 million as compared to approximately $108 million for the third quarter of 2011. Debt, less cash and cash equivalents, decreased approximately $40 million in the third quarter of 2012, to $1,521.2 million, compared to the second quarter of 2012, due to the positive cash flow generation.

Phil Widman, Senior Vice President and Chief Financial Officer commented, “We have taken several important steps during the past few months to improve our debt structure and reduce the associated interest expense by purchasing approximately 25% of the 4% Convertible Notes, redeeming the entire principal amount of our 10-7/8% Senior Notes and re-pricing our term loans. We expect these actions to improve our capital structure and are actively looking for additional opportunities over the coming quarters.”

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