Terex (TEX) - 2020 Q2 - Quarterly Report

Financial Performance - Net sales for Q2 2020 were $690.5 million, a decrease of 47% compared to $1.3 billion in Q2 2019[12] - Gross profit for Q2 2020 was $107.1 million, down from $271.8 million in Q2 2019, reflecting a gross margin of 15.5%[12] - The company reported a net loss of $9.2 million for Q2 2020, compared to a net income of $75.1 million in Q2 2019[12] - Basic earnings per share for continuing operations were $(0.05) in Q2 2020, compared to $1.14 in Q2 2019[12] - Total net sales for the six months ended June 30, 2020, were $1,524.1 million, a decrease of 37.6% compared to $2,443.5 million for the same period in 2019[50] - Net income for the six months ended June 30, 2020, was a loss of $34.1 million, compared to a profit of $8.5 million for the same period in 2019[19] - The total income from operations for the three months ended June 30, 2020, was $7.4 million, down from $126.0 million in the same period of 2019[46] - The company reported a basic loss per share of $0.13 for the three months ended June 30, 2020, compared to earnings of $1.05 per share for the same period in 2019[12] Assets and Liabilities - Total assets decreased to $2.86 billion as of June 30, 2020, down from $3.20 billion at the end of 2019[14] - Current liabilities were $675.6 million as of June 30, 2020, compared to $872.4 million at the end of 2019[14] - Long-term debt, less current portion, remained stable at approximately $1.17 billion as of June 30, 2020[14] - Cash and cash equivalents decreased to $426.0 million from $535.1 million at the end of 2019[14] - Total current assets decreased to $1,707.1 million as of June 30, 2020, from $2,019.7 million at the end of 2019[14] - As of June 30, 2020, total liabilities were $2,063.9 million, down from $2,263.3 million at the end of 2019[14] Inventory and Receivables - The company experienced a significant decline in inventories, which fell to $699.8 million from $847.7 million at the end of 2019[14] - Trade receivables increased by $33.6 million, while inventories rose by $129.0 million, indicating changes in working capital management[19] - The allowance for doubtful accounts increased to $12.6 million as of June 30, 2020, from $9.9 million as of December 31, 2019, reflecting a provision for credit losses of $2.3 million[33] - The total finance receivables balance was $148.2 million as of June 30, 2020, down from $166.2 million as of December 31, 2019[75] Cash Flow and Capital Expenditures - Operating cash flow for the six months ended June 30, 2020, was $12.3 million, a significant improvement from a cash outflow of $48.3 million in the prior year[19] - Capital expenditures for the six months ended June 30, 2020, were $42.1 million, compared to $35.1 million in the same period of 2019[19] - The company repaid $173.0 million in debt during the six months ended June 30, 2020, compared to $1,037.2 million in the same period of 2019[19] Segment Performance - Aerials segment (AWP) net sales were $413.9 million for the three months ended June 30, 2020, down from $870.4 million in the same period of 2019, representing a decline of 52.5%[46] - Materials Processing (MP) segment net sales were $263.6 million for the three months ended June 30, 2020, compared to $430.9 million in the same period of 2019, a decrease of 38.8%[46] - Net sales from Aerial Work Platforms for the six months ended June 30, 2020, were $626.3 million, a decrease from $1,157.2 million in 2019[54] - Specialty Equipment sales for the six months ended June 30, 2020, totaled $238.9 million, down from $391.1 million in the previous year[54] Strategic Actions and Changes - The company completed the disposition of its Demag mobile cranes business on July 31, 2019, which has been classified as discontinued operations[22] - The company has reorganized its operations into two segments: Aerial Work Platforms (AWP) and Materials Processing (MP) following the exit from certain product lines[22] - The Company’s strategic actions included exiting the North American mobile crane product lines, which were significant to its operations[58] Credit Losses and Provisions - The allowance for credit losses increased from $11.0 million on December 31, 2019, to $14.4 million on June 30, 2020, reflecting a rise of 30.9%[70] - The provision for credit losses for the six months ended June 30, 2020, was $3.2 million, compared to $7.7 million for the same period in 2019[72] - The company has offered principal payment relief options to customers impacted by COVID-19, in accordance with the CARES Act[69] Legal Proceedings - The Company is involved in various legal proceedings, with management estimating appropriate reserves for probable losses, which are not expected to materially affect financial statements[109] - The Company anticipates litigation regarding an ICMS tax claim from the state of Sao Paulo, amounting to approximately $19 million, which it plans to contest[112] Financial Instruments and Hedging - The company does not engage in trading or speculative use of financial instruments, focusing instead on managing foreign currency and price risk exposures[83] - Changes in the fair value of derivative financial instruments are recognized in the Condensed Consolidated Statement of Comprehensive Income (Loss), impacting COGS and other income[86] - For the three months ended June 30, 2020, the total loss recognized on derivatives designated as hedges was $(2.1) million, with $(1.5) million reclassified into income[91]