On the Upswing

May 5, 2004- Highlights of first quarter earnings reports from several key manufacturers, contractors, and rental companies indicate that the economy continues to show positive signs of recovery. The uncertainty of high steel prices, however, was cited by several manufacturers as a concern for future earnings. Nevertheless, improved construction markets, particularly among large rental buyers, has contributed to the first quarter's positive outlook.

Terex Corp., Westport , Conn. , reported on April 21 that in the first quarter sales increased 13 percent to $1,044 million; net income was $17 million, an increase of 42 percent; and backlogs are up $335 million, or 73 percent. Percentages are in comparison with first quarter 2003 results.

"Over the past several years we have become accustomed to working with a very small backlog. The surge in backlog is encouraging, but we realize that this may not be entirely indicative of future trends. The businesses that we would expect to be improved early in an economic recovery are showing stronger trends. The aerial work platform and compact construction equipment businesses are doing particularly well," said Ronald M. DeFeo, chairman and chief executive officer.

Net sales for the Terex Aerial Work Platforms group for the first quarter of 2004 increased $20.8 million to $168.0 million from $147.2 million in the first quarter of 2003. Improved sales were driven by increased orders from rental customers.

"The rental channel is our largest customer base. Over the past few years, they have chosen to age their fleets in order to maximize profits and minimize capital expenditure requirements. With improved rental markets, we expect that rental companies will not continue to age their fleets as much as they have in the past," said Bob Wilkerson, president of Terex Aerial Work Platforms.

Net sales in the Terex Cranes group for the first quarter of 2004 decreased $28.7 million to $209.2 million from $237.9 million in the first quarter of 2003. This is due in part to reduced used crane sales. Continuing to negatively impact this segment is the relatively weak market in North America for lattice boom cranes and rough terrain telescopic cranes.

"The North American market remains depressed for mobile telescopic and lattice boom cranes, but the success of our all-terrain product line and the market strength of certain European economies helped to partially offset this," commented Steve Filipov, president of Terex Cranes. "We feel that the U.S. crane market is at the tail end of the economic trough that has existed since 2000, and we see some important steps taking place at our customers that point to the prospect of a stronger future."

United Rentals, Inc., Greenwich , Conn. , reported first quarter results on April 22. Revenues came in at $645 million, an increase of 8.9 percent over first quarter 2003. Adjusted operating income was $39.9 million and the adjusted net loss was $5.9 million. The adjusted loss per share was $0.08 compared with a net loss of $8.7 million and a loss per share of $0.11 for the first quarter of 2003.

This quarter, the company began reporting its results in two business segments-general rentals and traffic control. General rentals, the largest segment, includes rental of construction equipment such as aerial work platforms, telehandlers, and industrial equipment. First quarter revenues for the general rentals segment were $599 million, an increase of 11.2 percent. Rental rates for the first quarter increased 6.5 percent and same-store rental revenues increased 8.5.

"Following three and a half years of continued decline in our primary end market, first quarter data suggest that private nonresidential construction has almost leveled off. However, we're beginning to sense more optimism from our customers that their business has bottomed out and is beginning to turn," said Wayland Hicks, vice chairman and chief executive officer.

Gehl Company , West Bend , Wis. , reported on April 23 a 45 percent sales increase for the first quarter 2004 compared with a year ago. Net sales were $84.7 million compared with $58.5 million in 2003. Net income for first quarter 2004 was $2.9 million.

Construction equipment net sales in the first quarter of 2004 were $54.4 million, a 52 percent increase over the same quarter last year. One factor contributing to this improvement was that telescopic handler shipments increased over 50 percent in the quarter as larger rental customers reemerged as buyers.

First quarter sales were stronger than the company had originally forecasted and order backlogs are improving, indicating continued signs of strength from the markets the company serves. Offsetting this positive trend, however, is the uncertainty of the magnitude and duration of higher steel prices.

Caterpillar Inc., Peoria , Ill , reported on April 22 record first-quarter 2004 sales and revenues of $6.47 billion and record first-quarter profit per share of $1.16. Sales and revenues were up 34 percent over last year due primarily to higher machinery and engines volume, a favorable currency impact, and favorable price realization. Profit of $412 million or $1.16 per share was up $283 million compared to $129 million or $0.37 per share in the first quarter of 2003.

"We remain focused on managing our cost structure as the economy recovers, ensuring we deliver outstanding results over the business cycle," said Jim Owens, chairman and chief executive officer.

"It appears the world economy will have one of the strongest, broadest recoveries in years. Economic stimulus in the United States is producing strong growth and the Asian economies are improving on last year's outstanding performance," he continued.

Pinguely-Haulotte , L'Horme, France , announced on April 22 a 31 percent increase in revenue for the first quarter of 2004. The company generated consolidated sales of €52.8 million for the first quarter, which is line with the company's forecast.

Ingersoll-Rand Co. Ltd., Woodcliff Lake , N.J. , reported on April 20 that nearly all of its businesses posted double-digit revenue increases for a 17 percent increase in first-quarter profit. Revenues totaled $2.29 billion, up 8 percent from $2.12 billion in the first quarter last year. About 4 percentage points of the revenue increase was due to favorable exchange rates. International revenues were up 18 percent compared to the first quarter of 2003, while North American revenues increased by about 12 percent over last year.

"Given that our first quarter results were much higher than our prior forecast, as well as recent order activity suggesting that many of our end markets continue to strengthen, we believe that we are on track to deliver improved results for the second quarter and remainder of the year," said Herbert L. Henkel, chairman, president, and chief executive.

Atlas Copco Group , Stockholm , Sweden , parent company for Rental Service Corporation, reported its first quarter results on April 27. "We have achieved a robust volume increase, and profit margins have increased," said Gunnar Brock, president and chief executive officer. "Without support from the market, the volume improved slightly in the Rental Service business area. We are proud of the strengthening of our position, and of the positive price development."

In the first quarter, orders received were MSEK 11 577 (10 903), corresponding to a volume increase of 11 percent. Revenues were up 9 percent in volume, and amounted to MSEK 10 858 (10 400).

Ritchie Bros. Auctioneers Inc., Vancouver , British Columbia , announced on April 19 that its shareholders have approved a 2-for-1 stock split of its outstanding common shares. Shareholders are entitled to receive one additional common share of the company for each share they hold. Ritchie Bros. currently has approximately 17 million common shares outstanding, and following the 2-for-1 stock split, the number of common shares will double.