Terex (TEX) - 2019 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended June 30, 2019, were $1,306.9 million, an increase from $1,253.0 million in the same period of 2018, representing a growth of 4.5%[14] - Gross profit for the three months ended June 30, 2019, was $271.8 million, slightly down from $278.6 million in the same period of 2018, indicating a decrease of 2.9%[14] - Net income for the three months ended June 30, 2019, was $75.1 million, compared to $57.8 million in the same period of 2018, reflecting an increase of 29.3%[14] - Basic earnings per share for continuing operations was $1.14 for the three months ended June 30, 2019, compared to $1.11 for the same period in 2018, showing a growth of 2.7%[14] - The company reported a comprehensive income of $74.9 million for the three months ended June 30, 2019, compared to a loss of $17.1 million in the same period of 2018[14] - Net income for the six months ended June 30, 2019, was $8.5 million, a decrease from $108.1 million in the same period of 2018, reflecting a significant decline[21] - Total net sales for the six months ended June 30, 2019, were $2,443.5 million, compared to $2,369.6 million for the same period in 2018, reflecting a 3.1% increase[57] Assets and Liabilities - Total current assets as of June 30, 2019, were $2,439.6 million, slightly up from $2,423.0 million as of December 31, 2018[16] - Total liabilities as of June 30, 2019, increased to $2,742.5 million from $2,624.9 million as of December 31, 2018, indicating a rise of 4.5%[16] - Long-term debt, less current portion, was $1,341.7 million as of June 30, 2019, compared to $1,210.6 million as of December 31, 2018, reflecting an increase of 10.8%[16] - Cash and cash equivalents as of June 30, 2019, were $367.5 million, up from $339.5 million as of December 31, 2018, representing an increase of 8.6%[16] - Total assets increased to $3,603.1 million as of June 30, 2019, compared to $3,485.9 million at December 31, 2018, reflecting a growth of 3.4%[16] - Stockholders' equity slightly decreased to $860.6 million from $861.0 million, a decline of 0.5%[16] Cash Flow and Expenditures - Operating cash flow for the six months ended June 30, 2019, was $(48.3) million, compared to $35.6 million in the same period of 2018, indicating a negative cash flow trend[21] - Capital expenditures for the six months ended June 30, 2019, were $(35.1) million, down from $(50.7) million in the same period of 2018[21] - Total cash and cash equivalents at the end of the period increased to $394.6 million from $372.1 million at the beginning of the period[21] Segment Performance - The AWP segment reported net sales of $870.4 million for the three months ended June 30, 2019, an increase from $852.3 million in the same period of 2018, while the MP segment's net sales rose to $365.2 million from $335.2 million[53] - Income from operations for the AWP segment decreased to $86.3 million in Q2 2019 from $111.6 million in Q2 2018, while the MP segment's income increased to $56.3 million from $44.3 million[53] - The Company recorded a total income from operations of $126.0 million for the three months ended June 30, 2019, slightly down from $132.4 million in the same period of 2018[53] Discontinued Operations - The company is in the process of selling its Demag® mobile cranes business for an enterprise value of $215 million, expected to close in Q3 2019[65] - The company reported a loss from discontinued operations of $17.3 million for the three months ended June 30, 2019, compared to a loss of $28.3 million in the same period of 2018[70] - The company reported a loss on the disposition of discontinued operations of $(11.4) million for the six months ended June 30, 2019, compared to $(4.6) million in the same period of 2018[21] Accounting and Compliance - The Company adopted the Lease Standard on January 1, 2019, recognizing approximately $138 million of operating lease liabilities with corresponding right-of-use assets[28][29] - The Company is currently evaluating the impact of the Credit Loss Standard, which will be effective in the first quarter of fiscal year 2020[32][36] - The Company has defined benefit plans in multiple countries, with a net periodic cost of $0.6 million for U.S. pension plans and $0.9 million for non-U.S. pension plans for the six months ended June 30, 2019[110] - The Company was in compliance with the financial covenants of the 2017 Credit Agreement as of June 30, 2019[102] Risk Factors - The company continues to face risks related to global trade conflicts and economic conditions that may impact future performance[10] - Management believes the risk of incurring losses on derivative contracts related to credit risk is unlikely and any losses would be immaterial[97] Inventory and Receivables - Inventories as of June 30, 2019, totaled $863.1 million, a decrease from $918.9 million at December 31, 2018[86] - Trade receivables decreased by $66.0 million during the six months ended June 30, 2019, compared to a decrease of $161.6 million in the same period of 2018[21] - The allowance for credit losses increased from $5.5 million (December 31, 2018) to $12.1 million (June 30, 2019), representing a significant increase of approximately 120%[78] Taxation - The company recognized an income tax expense of $20.3 million on income of $101.9 million for the three months ended June 30, 2019, resulting in an effective tax rate of 19.9%[63] - The effective tax rate for the six months ended June 30, 2019, was 21.6%, down from 22.6% in the same period of 2018[64] Legal and Contingencies - The Company is involved in various legal proceedings, but believes that the likelihood of a material loss beyond amounts accrued is remote[117] - The Company has recorded provisions for estimated losses in circumstances where a loss is probable and the amount is estimable[122]