05.08.2005

Terex Aerials up by 51%

Terex Aerials, the Genie aerial work platform business and Terex light construction, saw revenues for the first half of 2005 rise to $671 million, an increase of 51% on the same period in 2004.

Gross margins lagged behind increasing by 32 percent, resulting in a loss of three percentage points in terms of percentage of sales, to 18 percent. This margin erosion is behind a significant price increase for all new orders scheduled for delivery in 2006.

Sales and admin costs rose by 25 percent, climbing to $45 million but falling as a percentage of sales from 8.2 percent to 6.7 percent. As a result operating income rose by 36 percent to $76.5 million.

The backlog for the aerial group was $420 million compared to $120 million at the same time in 2004. The current backlog reflects the fact that Genie deliveries are out well into 2006 for most models.

"We continue to operate in an extremely positive environment for AWP and related products," said Bob Wilkerson, President of Terex Aerial Work Platforms. "Our second quarter sales were up just under 50 percent, and our backlog is up 250 percent when compared to the second quarter of 2004. Our telehandler business posted year over year revenue increases in excess of 75 percent, as we have continued to penetrate key accounts with this product, as well as adjusted our production to take advantage of this growing product category."

"This quarter reflects a continuation of the trends we have seen over the past year. Cost pressures, namely steel, are easing somewhat, but they still weigh on our business when compared to the prior year..” continued Wilkerson, For product ordered now and shipped after January 1, 2006, we have begun to introduce a new, greatly simplified pricing structure designed to ensure more consistent pricing across our product lines. In addition, this new structure better reflects the value this segment's products deliver and makes it easier for customers to do business with Terex."

Terex Group

Terex Corporation group sales rose by 35 percent to $3.2 billion compared to $2.4 billion in 2004. Net income after special items rose by 43 percent to $109 million. Special items for the second quarter of included charges for investigation costs associated with the Company's internal review and restatement of its financial statements for the fiscal years 2000, 2001, 2002, and 2003, and charges relating to general corporate restructuring.

"Terex continues to gain momentum, both in the marketplace and from our internal initiatives," said Ronald M. DeFeo, Terex's Chairman and Chief Executive Officer. "Our incremental margin was 13%, well above the 6% we achieved in the first quarter of 2005. We have a commitment to fulfilling customer demand and growing our products' presence in the marketplace while improving operating margin through price realization and enhanced manufacturing efficiencies. We are pleased with the over 50% increase in net income and EPS for the second quarter versus last year, excluding special items."

DeFeo added, "I remain optimistic about our prospects for this year and beyond, and feel that our progress on all fronts, particularly in profitability, capital structure, and the Terex Business System implementation, are delivering disproportionately higher returns on invested capital versus our peer group. This will provide meaningful returns to our stakeholders. Many of our businesses contributed to this strong second quarter earnings performance, but we still have operational opportunities to improve. A number of our end-markets have yet to meaningfully contribute to our overall profitability. As such, we view this quarter as a good step along the path to our previously stated longer term objectives."

"Additionally, during the second quarter of 2005, we reduced our net debt by $139 million. This results from continuing efforts to improve our effective use of working capital as well as improving profitability and our corporate focus on generating strong incremental ROIC. We expect to pay down debt in the short term, continue to strengthen our capital structure and position the Company to retire our expensive bonds in 2006 with cash, which has been another of our previously stated goals." DeFeo continued,

"We continue to make progress on our financial restatement process," said DeFeo. "While I am not able to provide closure to the process at this point, I believe I can state that resolution of this matter is a short time away. We again would like to stress that, although this has been a prolonged process, the expected impact on our stockholders' equity at December 2003 will not be material."