Heavy construction equipment maker Terex (NYSE:TEX) picked up steam in 2011's first quarter, proving that it has built itself into a leaner company than its peers. Terex reported income from continuing operations for the first quarter of 2011 of $5.0 million, or 4 cents per share, compared to a loss from continuing operations of $79.0 million or 73 cents per share in the year ago comparable quarter. In addition, earnings were favorably impacted by an after-tax gain of $33.2 million, or 28 cents per share on the sale of approximately 1.8 million shares of Bucyrus International, Inc. common stock; this was offset by after tax charges of nearly $8 million, or 7 cents per share, for costs associated with the early retirement of the Company's 7.375% senior subordinated notes and a customer insolvency of an additional $3.8 million, or 3 cents per share.
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The company's bottom line improvement is underscored by the strong improvement in the top line. Net sales from continuing operations were $1.3 billion in the first quarter of 2011, an increase of 34.2% from $935.9 million in the first quarter of 2010. Of the company's four operating segments - aerial work platforms, construction, cranes and materials processing - all showed significant increases in sales and backlog except the crane segment which experienced a slight decline in sales. (For more, see Terex Works Towards A Recovery.)
Terex commented that its markets are improving and the economic recovery is taking hold in the markets in which the company operates. Demand for the company's products are picking up steam. Terex sees full year 2011 net sales to be between $5 billion and $5.4 billion and EPS, excluding restructuring and unusual items, of between 60 cents and 75 cents.
A New Terex
Despite the solid growth projections, Terex has transformed itself into a different more focused company post-recession. Terex was generating nearly $10 billion in sales during the last economic peak. That's not likely to happen anytime soon for Terex, but the new Terex today has a much stronger balance sheet and more focused operations. Like giants Caterpillar (NYSE:CAT) and Deere (NYSE:DE) Terex now gets a bulk of its businesses outside of North America. With economic growth projecting to be highest in Asia and Latin America, Terex should benefit in the long term. Rival Manitowoc (NYSE:MTW) sports a market cap of $2.7 billion with net debt over $2 billion; by comparison Terex has a market cap of $3.6 billion and net debt of under $300 million.
Brighter Days Ahead
Terex has rebuilt itself post recession into a leaner, less levered operation relative to its peers. Operations are clearly showing signs of improvement and if management is right about an economic recovery taking hold for its customers, Terex has better days ahead. (For more, see 5 Big Names That Profited From The Recession.)
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