Terex Corp (TEX) 2010 Q1 法說會逐字稿

Good morning. My name is Amanda and I will be your conference operator today. At this time, I would like to welcome everyone to the Terex Corporation first quart 2010 conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. (Operator Instructions) Thank you.

Mr. DeFeo, you may begin the conference.

Thank you. Good morning, ladies and gentlemen, and thank you for your interest in Terex today. On the call with me this morning is Phil Whitman, our Senior Vice President and Chief Financial Officer, Tom Riordan, the Company's President and Chief Operating Officer, Tom Gelston, Vice President of Investor Relations and participating in the room with me today is Rick Nichols, President of our Cranes business, Tim Ford, President of our Aerial Work Platform, George Ellis is on the call from the Bama show, President of our Construction business, Karen Haggerty, President of our Materials Processing business, Steve Filipov is in the room as President of our Developing Markets business. A replay of call the will be archived on the Company's website under audio archives in the investor relations section.

I'd like to begin with some opening commentary followed by Mr. Whitman and Mr. Riordan who will discuss specific performance by, by the business overall and by segment. Then we'll open it up for questions. I'd encourage you to ask only one question and a follow- up. We will be referring to a presentation on the Company's website, as we go through this morning's presentation. Let me begin by referring to the forward- looking statement on page 2 which I encourage you to both review and read.

So now Let me start with an overview. The first quarter performance for Terex was generally in line with our expectations. The net sales performance was relatively stable with the 4th quarter performance of 2009, and while on a year- over- year basis, revenue was down 17%, this was expected and this decline removes the impact of both currency and the benefit from the Terex port equipment business acquisition.

In 2009 in the first quarter, we were still selling down our previously high backlog. Going forward, we have seen our backlogs begin to grow almost everywhere, except in our crane business, where we continue to see some near- term weakness. As a general rule, our production schedules have increased meaningfully. This is positive and in line with expectations.

We are now building product in quantities generally consistent with our retail demand. Our cost structure has continued to come down but have had additional restructuring that will be detailed in Phil and Tom's comments. And as you know, the mine sale netted us a gain of approximately $620 million or $5.72 per share in the quarter. As we've looked to the full year, 2010, we expect an EPS loss of about $1 per share, excluding the impact of unusual items and this has not changed from our previous report.

What we hear and see in our marketplace is encouraging for the future. We expect the years 2011 and 2013, at least, to be strong growth years for our industry, and in particular, for our products, which are on a slightly different cycle typically than some of our other competitors or other industry colleagues' product lines. So now let me turn to Mr. Whitman who will summarize financial performance for our continuing operations. Phil.

Thanks Ron and good morning, everyone. The key figures table on page 4, displays the quarterly year- over- year be sequential performance for the continuing operations of the Company. Given the sale of our Atlas business in April, their results have been included in discontinued operations for all periods that I will reference. Net sales were down 3% from the prior year quarter, or 9% when adjusting for the translational impact of foreign currency movements.

The addition of the port equipment business provided an 8% uplift in that sales of in net sales in the period, and on a sequential basis, first quarter net sales decreased by 7%, virtually all related to the timing of deliveries of large crawler cranes and some softness in all- terrain crane business. As other segments were flat to modestly up.

We incurred a loss from operations in the first quarter of $67 million, compared to $111 million in the prior year quarter. The negative affect of the net sales decline was more than offset by reduced spending, and favorable manufacturing absorption which I will cover in more detail in two slides. Adjusting for currency movement, working capital is flat with year- end 2009, as increased payables from heightened manufacturing activity more than offset some inventory build.

Net debt improvement to $172 million reflects the cash proceeds received on the mining business divestiture reduced by our use of cash from operating activities in the quarter. Overall liquidity of approximately $2.3 billion with cash balances of $1.8 billion, and availability unrevolving facility of $500 million provides significant flexibility to put cash to work to yield higher returns and accelerate growth as well as be opportunistic on acquisitions should they become actionable.

On page 5, you'll note overall backlog is similar th quarter 2009 levels, and down 24% from the first quarter of 2009. Crane's backlog declined from both reference periods, mainly due to softening in the all-terrain demand and the delivery of port equipment as they have begun to catch up on production. All other segments showed improving backlog trends.

Net interest expense increased over the prior year, due to the second quarter 2009 capital markets transactions. The change in other expense from the prior periods is largely due to the mark to market of derivatives instruments intended to partly mitigate risks associated with the 5.8 million shares of Bucyrus International common stock acquired in connection with the mining divestiture.

We will have this adjustment each quarter until the derivatives expire. The effective tax rate in the first quarter was approximately 32%, reflecting some mix of jurisdictional income and reduced provision for uncertain tax provisions relative to last year's first quarter. The 4th quarter of 2009 had a reduced benefit by comparison due to discrete charges related to uncertain tax provisions, excuse me, and evaluation allowance on the deferred tax assets of the European operation. We currently expect that 2010 effective tax rate to be approximately 24%.

Page 6 bridges the change in operating loss from the prior year's quarter to the operating loss for first quarter of 2009. Excluding the impact of acquisitions and in total. The margin impact of $12.6 million on a net sales decline includes both mix and pricing changes as well. Net restructuring was $14.6 million lower this quarter, excluding charges taken in the port equipment business. Total restructuring charges including port equipment for $12.9 million in the period of which $6.4 million was in cost of sales, and $6.5 million in SG&A.

Current periods of capacity variance of $2.3 million and under absorption combined for a $25.4 million favorable impact over the first quarter of 2009. As under absorption is reflected in the profit and loss statement as it flows through inventory, there is roughly a one quarter lag on the current period absorption flowing to the P&L. This is one of the reasons why AWP, which has a faster inventory turnover has more benefit this period than the other segments. We would expect improving trends in the other segments moving forward as we have picked up production volumes.

Inventory charges have decreased as volumes and market conditions have stabilized. Transactional foreign currency gain or losses were mixed by segment, but were favorable overall as we head to unwind various hedges in 2009 given volume declines. SG&A cost reductions had a net positive effect of $16.4 million, and overall, foreign currency translation impact was $4. 3 million favorable.

Separately, you can see the impact of the port equipment acquisition which negatively affected the operating performance by $4 million, which includes the benefit of the change in that obligation of $7.6 million. Restructuring activities are continuing in port equipment with charges of $8.4 million in the period. The breakdown of the causal by segment varies somewhat by issue, but is disclosed for transparency. Let me refer to page 7. Working capital statistics are on track with our expectations for the first quarter, as we have started to produce ahead of expected increase in sales in the second quarter.

On page 8, you can see the impact on the first quarter results of the mining divestiture. Consideration includes the valuation of 5.8 million shares as of the closing day, and we picked up the cash in the divested businesses. The gain of $620 million includes tax obligations that will largely be paid out in 2011. You may recall that we also recorded some fees associated with this transaction in the fourth quarter of 2009.

As mentioned earlier, we have entered into derivative transactions with an initial premium of $21 million to partially mitigate our risk associated withholding the Bucyrus common stock until we can sell. The value of these derivatives will change continually and variations in the mark to market will be reflected in other income or expense in our quarterly results.

Changes in the value of Bucyrus stock from the time of acquisition are reflected in other comprehensive income in the equity section of the balance sheet until ultimate disposition of the shares. I'll turn it over to Tom to talk more about the operational update.

Thanks, Phil, and good morning, everyone. I will cover the currents views of each of our business and then a few carrot swipe comments. Moving on to page 9, most of our businesses are seeing signs of positive trends and orders. Mostly due to running to retail demand after the channel inventory reductions over the last 18 months and partially due to some true increase in market demand. Our AWC business has seen a rebound in orders for aerials driven by emerging markets, especially Brazil, and Asia- Pacific, including Australia. North American and Western Europe remain sluggish.

Larger national account rental companies are increasing their request for quotations and showing interest but remain wary of placing significant orders. Smaller rental companies continue to struggle financially with rental rates and utilization, and we believe we are near the bottom of the cycle for them. Our bad debt experience remains stable. Used equipment pricing has stabilized and firmed somewhat based on recent auction experience and other third party information. We also believe that industry wide defleeting has slowed substantially although most purchase transactions today also involve a trade- in of over fleet. Our utilities business has been strong and we expect that to continue.

Overall, we believe our segment profitability will continue to improve as the year progresses. Our production rates have risen significantly with most of our facilities back to a full workweek, and in some cases we're working overtime or hiring temps. We ended 2009 with a very low level of finished goods inventory. Superlative increases to insure we have reasonable product availability and manageable lead times for customers. As such, we will likely be building some inventory short term.

In addition, we are also working diligently to make sure our supply chain partners can keep up with our increasing build rates. Lastly, our new China facility remains on track for Q4 production. The team there is genuinely excited about launching a new plant with several products that are tailored to the local market.

Moving on to construction, we again see a nice uptick in orders recently tied to retail demand. Our backlog has started to grow and similar to AWP, we are working hard to maintain lead times to or customers and keep the supply partners in sync with us. Order intake has soured in most products except our truck business at the moment, and even there, we are seeing positive signs.

Developing markets are strong, including a rebound in eastern Europe and Russia. While North American remains sluggish, our western European business is also showing signs of improvement. Our material handing product line has rebounded with the recent increase in steel scrap pricing, which is one of the primary applications. Our road building business is also seeing a strong uptick in orders and in profitability.

Despite the downturn, we continue to focus on new products, and this week at the Bama show in Munich, we launched 10 new products in this segment. Most of our restructuring in this segment has been completed and significant improvement of profitability you see is a direct result of that. We expect further profitability improvements as we go through the year.

Our crane's business has been challenged with the drop in order rates along with the impact of the acquisition of the port equipment business. Our restructuring of the port equipment business is progressing as planned, and although customers that welcome us back as we have resuscitated the business, most ports are still under utilized and have cut back on capital purchases. This business is performance with noticeable drag in our cranes earnings for the quarter.

Additionally, we had two large cranes whose shipment was delayed from Q1 due to supplier quality problems which will now ship in Q2. I fully expect us to be back to moderate profitability in Q2. In general, we are seeing strong quote in order rates in Asia- Pacific, notably China and Australia, and very soft in the Europe and in the US. The Middle East is also starting to show early signs of recovery for cranes. Our cranes business also launched several significant products this week at Bama, including a new 1000 ton crane with state of the art performance and operating costs, and a new 100- ton rough terrain crane jointly engineered by Italian-US businesses which fills a big global gap in our product portfolio.

Moving on to material processing, we have effectively gotten back to break even. The order rates for crush and screening products continue to be strong, mostly due to running at retail demand. In general, markets are flat with a few exceptions including India for the aggregate markets, and Australia and South Africa for mining related markets.

Similar to the rest of our businesses, we have numerous new products being launched at Bama, many of which are targeted for mining applications and all of which should help the second half results. Our results showed a positive impact of cost reductions from this past years, and I expect a positive profitability trend as the year progresses. Similar to construction in AWP, we find ourself working hard to keep lead times short in order to be responsive to the customer as markets recover.

Moving on to page 10, our material cost continue to reduce at the moment, but we are vigilant about potential steel price increases in the second half of this year. With the movement of major mining companies to reprice oil on a quarterly basis, rather than annually, this will make steel purchasing much more volatile. At this point in time, it's difficult to predict the impact of this.

As I alluded to earlier, we're seeing some early delivery challenges for key components. We're working effectively with our suppliers to provide additional visibility into our production plans, but similar to ourselves, they are seeing early stage increases that can be dramatic as parts of material inventory has been used up and lines begin to run again. While this can be viewed as a good problem, it is still a problem.

Developing markets in general continue to be strong for Terex. Nearly 30% of our sales are in these markets, with Brazil, Russia, India and China accounting for approximately 13% of our revenue by themselves. Brazil and India are both up very dramatically year over year, and with the planned investment in India in startup mode and our recently announced investment in southern Brazil for a new multi product facility for several segments, I believe you'll see these trends continue in these markets.

Our IT investment and our new ERP system continues to help upgrade our ability to improve our back office and other areas. And I mentioned several times already our new product pipeline is pretty robust and our tier four reengineering efforts are very much on track. To summarize, we're comfortable and confident in how the year is progressing and how the markets are rebounding. And at this point in time, I'll turn it back to Ron.

Thanks, Tom. So let me summarize. As we look forward, we feel quite positive about the future. The EPS outlook for the full year remains at the dollar per share loss previously mentioned. Our net sales outlook will be slightly reduced, due to lower anticipated benefits coming from currency translation.

However, our developing markets are leading this recovery as Tom has indicated, and we're seeing more positive signs of growth in a number of our businesses than frankly we had expected a few months ago. We believe that the channel inventories that took place in 2009, the reductions that took place, are providing production and absorption opportunities in 2010, and this will be a critical area of improvement in the current quarter for both, in the current quarter and both the third and fourth quarters as well. The backlog for the company is beginning to build in three of the four segments. We've had to and will remain vigilant in terms of cost control initiatives and continue to look for ways to reduce costs. Improving our material costs will be a constant area of emphasis and this, that will positively impact profitability in the second quarter of 2010. Although we do have some concern about steel and potential other cost increases later in the year. And lastly, the liquidity positions of the company certainly creates flexibility in terms of acquisitions and or debt pay downs. We continue to pursue both areas as a way to generate increased shareholder returns in the coming months. We are on a path to continue to diversify Terex into a machinery and industrial products enterprise. Our primary focus will be to stay within the context of our basic machinery business although we will look for other platforms if the opportunity is right. With that, I now would like to open it up to you for your questions. Operator, can you do this, Amanda?

(Operator Instructions) We'll pause for a moment to compile the Q and A roster. Your first question is from David Raso with ISI group.

Good morning. My question is about a line of sight to profitability. The overhead absorption comments, Phil, was interesting with the quarter lag, and showed up in aerials relatively materially, but hasn't shown up at all in construction anteriorly processing. The overhead absorption comments, Phil, was interesting with the quarter lag, and it already showed up in aerials relatively materially, but hasn't really shown up yet at all in construction and material processing. And then you highlighted how a lot of the factors are starting to get back to you rehiring and work weeks pretty full. Even some overtime in some examples. You mentioned cranes back to profitability in the second quarter, and it sounds like material processing should be there as well, so focusing on aerials and construction in particular, this quarter we had all four divisions losing money. Sounds like your ready to highlight to should be back to profitability pretty soon. With that overhead absorption issue, especially in construction, we're obviously getting closer to break- even. Can you give us a line of sight for when you aerials in construction in particular? Back in the black?

Let me comment on that, David, and I'll turn it over to Phil. You know, I think we've said that we expect to deliver and are targeting to deliver EPS profitability for the Company in the fourth quarter. Okay. In order to do that, of course, we're going to have to progress our way towards profitability throughout the year. And we still believe we can achieve that sitting here today.

As we look at the second quarter, historically, the second quarter would normally be a strong quarter and is a, you know, prime part of the selling season. From what customers are telling us at the Bama show this week, although I'm not there, you know, I wish I was there, but, given the volcanic issue, we, many of us from North America never made it, the market environment is clearly improving, so net, net, I think the aerials business, if it's not going to be profitable in the second quarter, it's going to be darn close to that. You know, we're hopeful. I think the construction business has some distance to go, but many of the elements of profitability are working in that construction business. The biggest drag has been the, at this point in time, the truck business, which only recently have we been able to get some meaningful orders on. So I think that is headed back to that level. S I think, for us, this will be a year where we'll progress and be able to achieve that EPS profitability by the end of the year.

David, the other comment to follow up on your absorbs question, you recall in our guidance that we indicated about $200 million of year- over- year improvement was related to absorption change. So given we're just starting to get more towards full production, a lot of our businesses, some are still not there, that will start to accelerate as we go through the year as well.

So that's kind of the points. If we have $180 million left - -

That was in our guidance.

Yeah. I'm just trying to think if the second quarter is going to be close and the overhead absorption numbers if only $19 million so far. Or $19.3 million to be exact. You start layering in somewhere $40 million or $50 million overhead of absorptions, you've got to get to $180 million somehow over three quarters.

Right.

I'm just trying to think why aren't we even thinking the third quarter?

If you look back at the history last year of the absorption, you know, we shut down a lot of our facilities in the second and third quarter of the year, and frankly, in the fourth quarter as well, so year over year, that will start to accelerate.

The real question for us, are we going to see a stronger second quarter than a third quarter? Historically, the third quarter always backs up a little bit due to vacations and vacation shutdowns, and the fourth quarter is stronger, so you know, that is the real question for us, David, as we look at the last, the next three quarters.

Okay. Thank you very much.

Your next question is from Seth Weber with RBC Capital Markets.

Hey, good morning., everybody. Wondering if you could touch on the pricing environment that you're seeing across your segments, how rationale are your competitors being, how aggressive are your customers, you know, pushing back, and whether you plan to have any price increases baked into your, you know, into your second half assumptions, and I have a followup question for Tim.

Okay, in general, I say the pricing environment is about as we expected. It's a little challenging in some of our businesses as you might imagine. But, it's not crazy. I'm going to kind of turn it over to the segment guys to talk about that because they are closer than I am. I'll start with Tim and then go to Rick, Karen and George.

From a pricing standpoint in the AWC business, I'd say customers continue to put, ask for price discounts in the form of over allowance on trades, rather than a reduction on the actual equipment. But, countering that with industry production at a low level, or at such low levels, versus historical levels, that's the normalizing effect here is lead times, so where product is available and the need immediate, price is less important. I think our view is that we think we'll continue to see price stabilization through the year as the, as the used market solidifies and as as the, you know, the customer expectations on what they need grows.

Rick?

I think from a cranes perspective, certainly pricing is competitive, but in reality, the need for financing and the ability to provide financing for the customers is offsetting some of that pricing pressure in the market, but it is a very competitive environment today.

Karen?

I would probably echo what Rick and Tim said. I think we went through a 12 month period in material processing where there was a lot of used equipment, and the marketplace and a lot of that is washed out, and reality most manufacturers significantly cut capacity in the last 12 months, so we would see in the material processing business certainly over recent months, a fair degree of price delivery. What we expect to get modest price increases this year. Again, primarily driven from the past 12 months when there was excess capacity, but there was an element of discounting that existed. We would see a lot of discounts, so in real terms, we would see less modest price increases again based on the fact that capacity is now more in line with real retail demand on a lot of the used equipment, has effectively been washed out of the system.

Okay.

Thank you. I just had a quick followup for Tim. You know, on the aerial business, I guess are you seeing any kind of uptick in after- market activity or parts and services? I'm trying to just understand, you know, the rental companies are talking about pushing their fleets, you know, up to or even past historical ages, and I'm just trying to understand if you think that's a viable strategy and, you know, how much longer they can really push it up.

I think the short answer to your question, Seth, is not yet. We're not seeing an uptick in either parts other services this material to speak of. In many cases, customers are continuing to take, take parts from old equipment and move it, cannibalize from fleets sitting there and moving it, but I think we'll see that stabilize in frankly our view is that the parts business will actually turn a corner here and start to grow in the second half as that equipment is either already canabalized or is out on rent.

Do you think that the fleets can get past the, you know, the old- age levels just because they haven't been used a lot or is that - -

To be honest with you Seth, I think that's a question for the rental companies, you know. Our view is that, and we have a pretty good model on what we think it costs them to maintain the equipment and frankly, for them, it's a function of how much do I want to spend on expense versus how much honor capital.

And our perspective on that, and from a planning point of view has generally been that this year, they will stretch it and then next year they will absolutely need equipment.

Got it. Okay. Thanks very much, guys.

Your next question is from Charles Brady with BMO Capital Markets.

Good morning. This is actually Tom Brinkman standing in for Charlie Brady. Just a question about your uses of cash kind of, wondering what your thinking in term of quarterly run rate for interest expense between now and any such time as you try to do a debt pay- down.

Well, we haven't included in our guidance and that pay down impact on interest expense so relatively speaking, it's going to be flat barring that but we haven't announced anything on what we're going to do with debt.

Okay. And if the acquisitions pipeline does not materialize between now and the time the shares can be sold, is that going to be sort of a catalyst for the timing of any debt pay down that might occur?

No. We have requirements in our credits facilities within 300 days of the access of proceeds so from February 19th. We have to invest those proceeds in the business or we have to start down the water fall of paying off debt with our term debts being first, and then to the sub notes. Sub notes are 365 days. So there will be some activity this year. On the shares, those don't count as proceeds until put into cash, so it would be a year or so from now.

Right. Right. I got you. Okay. Only other question I had was, do you still see any possible divestitures of small product lines?

At this stage, no.

Okay, thank you.

Your next question is from Jamie Cook with Credit Suisse.

Hi. Good morning. A couple questions, you know, first, I was interested in your comments about building inventory, you know, as well as seeing some concern out there for supplier constraints, I was wondering if you could just give a little more granularity on where you're see issues in the supply chain, you know, also to what you're hearing from customers on tier four. Whether they are considering you know, buying ahead of tier four and whether any of that is embedded in guidance, and then my last question, Ron, the improvement in the construction, the losses in the construction business was much better than I anticipated year over year, and sequentially. I'm just wondering on the sequential analysis how much is helped by the fact I think there's still the load king in atlas in Q4, so I'm just trying to understand what the improvement was on an apples to apples basis.

I'm going to let Phil answer that.

Okay. No, you come back to that. Let me see if I can address the first couple and maybe hand it off. You know, in a declining market, you aggressively want to sell off inventory, cut your production, run for cash. In an increasing market, you want to build inventory in order to capitalize on a future business that you expect to be better tomorrow than today.

As we look at our business, that's clearly the path we're now on. At the end of 2009, I gave kind of a directive to our company, and said it's time to grow, and my view was it was going to take us six months to turn the ship from a company that was focused on cash generation to a company that's focused on growth. I think we're right at that point at this point in time, and frankly, we have plenty of capital in order to invest in inventory, in order to capitalize on what we expect to be strong end markets in the next 12 to 18 months.

Starting with aerial work platforms, which are clearly growing, in places like Brazil, and other parts of the world and we're seeing some improvement even in Europe and North America, albeit not with the major rental companies, but frankly, that's a good sign because the nonresidential construction is still declining, and so we expect when nonresidential construction flattens out, either the end of this year or early next year, that will really begin to be a positive for that aerials business. That same comment, frankly, is somewhat true for both our construction business and our materials processing business. So we're going to use the capital that we have to try and make sure we have plenty of inventory in the right places to capitalize on a growing market.

The one area where we're going to continue to see some softness from a revenue point of view is in our crane business, which has always been a lagging product line from a cycle point of view. It's the last one to go down, and it's the last one to start back up. And that is no different in this downturn than it has been historically. Relative to the tier four engines, I frankly don't see any previne but I'll open that up to any of you guys. Tom, do you see any previne?

No, Jamie, the first types of products are going to get impacted. Tier four, the on- road products as an example, are some mix of businesses continue to be in a very, very challenging market, and we're not seeing anything in that market that suggests any kind of prebuys nor in the other product lines as well. Phil, you want to comment in?

Jamie, to clarify your question, if you look at page 9 of our presentation, where we have the segment results in the prior periods, when we, define continuing operations, that means that load king, atlas, mining and all of those are out of the figures even in the history that we're presenting here.

Okay.

So that's been adjusted so atlas is out of here.

The improvements in construction are going to be real, and you know, we're seeing our folks material handler business which was a huge drag on the company when steel prices cratered, really solidify. We're seeing some of our compact business, solidify and growing, and we are, you know, I think at the early stages of some improvements in some other areas. And I think George is having a good show.

Great, I'll get back in cue. Thanks.

Your next question is from Ann Duignan with JPMorgan.

Hi. Good morning, guys.

Good morning, Ann.

Morning. Ron, just a point of clarification, I know your reiterating your dollar loss for the year but atlas was a loss making business so why wouldn't we interpret your guidance as you know, lower guidance and if that's true, which of the businesses do you think are weighing most heavily on your outlook?

Well you see one of the benefits of having my job, Ann, is knowing what's in the guidance that I give, and from my point of view, atlas has always been an area that we were going to act upon one way or the other over the course of the year. And so from our point of view, that was in our plan.

Okay. Good. That's good color. Thank you. Then I just wants to ask you also about, you know, Iron Planet is that they are talking about the first- ever crane only used equipment auction that they are planning for June. You know, I'm curious what you think about that in terms of demand for new equipment. Could this push back demand for new equipment, you know, if buyers get the opportunity globally to purchase used cranes for the first time at an auction? In a crane only auction?

I'll comment on that but pass it back to Rick and say, one of the, I guess, disadvantages of being an old guy now in the business is I've seen this movie a couple of times in cranes. And frankly, the way we really decided to get into the crane business big, back in 1993 coming out of the last recession when there were no orders in the business. No orders in the business, in 1993, as we produced new cranes and put them into auction and they sold and they told us what price they were going to sell at. And that really caused us to establish what the price points were going to be, and how we would approach the crane market way back in 1993. So, you know, we've seen a pretty severe recession in 1993, we saw a pretty meaningful one in 2000 and 2002, and living with a pretty severe one at this point in time. And having cranes in an auction is pretty consistent with what happened and frankly, should be seen as a positive in that the inventory will be cleared out and put people in a position to actually buy equipment more equipment in '11 and '12. Rick?

I don't know that I can add more color than that. Auctions have been around for a long period of time. It certainly good avenue for customers to move used equipment. It also gives us an opportunity to replace the used equipment with new equipment, so I think, I'm very positive about an open auction environment in this environment. You can also look at the auctions and see that, you know, for the first time in about nine to 12 months that, you know, residual pricing is really pretty good on cranes which is good indication at least in my mind that, you know, the future, we've been down but there's positives moving forward. So I'm supportive of that environment.

Great. And if I could sneak in one final one, on slide 6 on the line item price mix volume. Are there -- could you break out pricing?

Not specifically, Anne. I'd say that pricing year over year, obviously in fact impacted by the used that we had last year, so year over year probably going to be more of a positive impact as we get to the middle of the year. In the first quarter, we didn't have significant used impact either year. But I say in general, it's a small portion of the total that's there.

Good, but you did notice that there was a negative?

Right.

Not a massive negative.

Right, no.

Selectively, yeah, but not massively. I think we're still a couple of years away from having a common information enterprise system which would allow us to discreetly be able to measure that better. Now we have to do it kind of business by business and provide some over site or some perspective on it, I think generally speaking, pricing hasn't been a positive but it hasn't win a huge negative either.

Okay. Thanks, guys. I'll get back in cue.

Your next question is from Alex Blanton with Ingalls and Snyder.

Good morning.

Good morning, Alex.

My question is for Tim on the work platform business. The 5% sequential increase in the quarter, if we were to seasonally adjust that somehow, it would be pretty bad because normally, the fourth quarter is the weakest and first quarter starts the seasonal up swing pretty good fashion, so there is not any improvement there, and united rentals related to the, one of the prior questions reported yesterday that the age of the fleet was 44. The 5% sequential increase in the quarter, if we were to seasonally adjust that somehow, it would be pretty bad because normally, the fourth quarter is the weakest and first quarter starts the seasonal up swing pretty good fashion, so there clearly is not any improvement there, and United Rentals related to the, one of the prior questions reported yesterday that the age of the fleet was 44. month, up from 42.4 months, three months ago, so they're aging the fleet dramatically. And there Cap Ex was just $49 million rental Cap Ex in the quarter, about a quarter of what it was at the peak. So the question really is, do we have to wait until 2011 for a tipping points here? Things are pretty bad now, but there is an indication that there was an uptick yesterday reported in the billings index for architecture for the AII, still below 50, but better than the prior months, so if there is an improvement in non-res., could we see some uptick from a really disastrous level of purchases of AWP's by the end of this year? Or do we have to wait for the next selling -- purchase season which is a year from now?

Well, Alex, this is Tim. You took the air out of my balloon here, I was feeling good about 5% sequential growth after the last seven quarters.

But you know, compared with what it usually is quarter over quarter, that's nothing.

Well, it isn't anything, but you know, a little bit is better than nothing.

Right.

And frankly, Alex, as you look at the aerials business, it has really shrunk, it's pretty dramatic.

Oh, sure.

If you were to take the utilities business out of our business, we'd be down to levels into 2000 and 2002 period. That's the bad news scenario. The good news is it is going to come back and it is going to come back strongly. I'll let Tim comment on , you know, how he sees the year playing

When I step back and look at the big picture, backlog has grown each quarter since basically bottoming out at the end of the second quarter '09. Obviously, some of that was the fact we weren't producing a lot to offset the orders that were coming in, but our backlog grew in the third quarter, it grew in the fourth quarter, it grew in the first quarter. If you look around the world to the comments made earlier - -

What was the backlog increase in the first quarter sequentially?

From - -

200 over 158. Whatever that is.

28%.

Slide 9, Alex.

Got you.

You know, North America is still sluggish. I think Ron commented on that earlier. Rental rates, we think bottomed in the first quarter. Utilizations are improving seasonally. You know, the mass defleeting that we were seeing in the first half of last year is mostly complete, however, most of our new orders come with a trade. We're hearing, I'm hearing more buying interest from our customers than I've heard any time since basically mid- 2008. Has that translated into orders yet? No. But there's a sense that we've got to take some action. In Europe, it's the same story as the US though. If you look at the first quarter bookings, they were very strong. Ron commented earlier about Brazil. Latin America has been strong led by Brazil, and in Asia- Pacific, we had a pretty strong first quarter orders run rate. Mostly driven by an Australian recovery. So, you know, I kind of look around the world. I feel like I don't think we have to wait until 2011, but I think the second half of 2010 will be better than the first half but I don't see massive recovery, but I see it improving.

Great, thank you.

Your next connection is from Meredith Taylor with Barclays Capital.

Hi. Good morning. Given your comments around the outlook for debt paydown. I'm hoping you can talk a little bit about the acquisition environment. You know, specifically is there any way for you to give us a sense of the size of the pipeline and how it's developing? And then broadly speaking, where are you see opportunities right now? Is it more along the lines of full- time acquisitions to your core businesses or some of these industrial products types of acquisitions that you've talked about?

I've seen the opportunities more along the bolt-on smaller size acquisitions and even some of them are a little bit difficult to predict. We have a very active process as I'm sure you know, Meredith, and a pretty high level of expectation relative to trying to meet financial hurdles coupled with the strategic hurdles. You know, strategic acquisition that doesn't meet our financial guidelines isn't going to be done. And the financially attractive acquisition that is way off strategically isn't going to be done. So we're trying to overlay those circles to be on top of each other and in this moment in time, there are not many opportunities that present themselves with, with that level of fit that I'd be confident in predicting something.

Having said that, there are a number of smaller bolt- ons, nice tuck- ins that our team is working on, and I think we will continue to do. What that means, of course, is that we will invest in our business in other ways. Some of which we've already talked about, and it also means that we will pay down some debt that we have always known that we will do, and just remain diligent in looking for acquisitions as they don't present themselves in the next, you you know, it 270 days, than we're not going to just spend money to spend money. Because we can always get financing, particularly as our basic business improves.

Okay. That's helpful. You know, could you give anymore clarity around what the mix might b between acquisitions and debt pay down and then just as a quick other follow- up, you know, if you can give us a sense of just directionally how you're seeing valuations evolve at this point?

Well valuations are attractive for the assets you don't want, and for the assets you do want, the valuations are higher than I would expect at this point. And part of it has to do with the recovery of the financial institutions that really, you know, came back very strongly and there's a general pre-buying that's taking place of equities, and so it has pushed equity values up for some industrial industrial companies, so expectations haven't eroded as much as I might have thought. But nevertheless, if you start working the acquisition process across the world, and don't limit yourself just to US kind of companies, I think you can still find some opportunities.

Let me size a little bit to help you, Meredith. If you think of the proceeds we got from the mining divestiture. Around $1 billion for round number purposes. You take off the taxes of about $250 million, then you think of other investments that we're going to make in our business. We have $85 million to $100 million in Cap Ex, in this time frame kind of going through the rest of the year. Let's say you're at about $650 million, the size what we're required by our bank agreement to, again, invest in the business or pay down debt, and out of that acquisitions, would obviously be a piece of that so - -

And maybe working capital.

And working capital, that's right. And so there for, you know, you're left at a place where it's, you know, you're going to go through your debt and if you look at the debt we have, you starts with the term debt, and the term debt is about --

$272 million.

Right. And then you work your way down the other debt.

Okay. Thanks very much.

Your next question is from David Wells with Thompson Research Group.

Good morning, everyone. I guess first off, maybe tieing into some of the commentary about cash and the use of cash, I certainly understand in terms of the amount of proceeds that are left, but given the capital rates out of the business, you still have, say, you know, $1.6 billion, $1.7 billion worth of cash that's with treasuries where they are obviously not earning a significant amount of return. From a timing perspective, how do you weigh out of choice of saying you know, look the deals just aren't presenting themselves. It's a lot more accretive to shareholders to make a significant kind of debt pay down, you know, pay down the large slug, and boost EPS from that. You know, how does that process get managed internally in that choice?

You know, it will get managed as, Phil and I and our board of directors reflect on what's in the offer, and where that's top of mind around the organization today.

And, David, we have to keep in mind some of the restrictions we have right now, the lack of really significant EBITDA, we can't incur new debt and so we just see our line of sight to some of these restrictions going away, gives us a better comfort level and flexibility, and that's going to be another factor in this as well. Although you're right, we have a lot of cash, a lot of liquidity, and we will likely take action on several fronts this year related to that. But we look at all the pieces.

And then, I guess, looking at the top line guidance previously in the $5 billion range. You know, certainly stepping back from that somewhat, you know, given the divestiture, given what we're seeing in the 4X market, you know, I guess I wanted to, you know, in relationship to that, look at the crane business. You know, previously, you know, kind of a $2.2 billion number, how does that move given what we've seen, you know, with the atlas piece, you know, given what we saw out of the port equipment business, you know, are you seeing softening that, you know, would further push on that? Because, I guess, you know, given the book to bill on the quarter and things like that I'm maybe not seeing, you know, that number being quite as high as it was in late February.

Yes. David, in the call in February, I indicated that FX in our expectations was about $250 million year over year. Which at the time, indicated that that's somewhat in jeopardy in the great state we're at. Obviously, we wouldn't get a lot of that. Atlas has some impact in the revenue as well in terms of the downturn. Again, I'm not going to give a specific number on the segment there. But there's still pressure on FX, so we agree and we tried to indicate that that would be some downward pressure. And Rick if you want to comment on cranes.

I think on the previous call, from a cranes perspective we said it would be flat to slightly down. And I think we're still holding that line. We did have a challenging first quarter and as Tom mentioned, we missed a few shipments that were meaningful from a revenue standpoint because of supplier quality issues and I think, you know, we are seeing some positives in the environment. You know, the market in North America can't be much farther down than 85% over prior year and I think we see some opportunities there so it is certainly going to be a challenging year from a revenue -- to maintain the revenue profile. But, you know, I think we have line of sight to try to be, you know, flat to slightly down like we communicated prior.

That's helpful. Thank you.

Your next question is from Robert Wertheimer with Morgan Stanley.

Good morning. This is Joe Day in for Rob. My question is on crane backlog, and you mentioned in the earnings release that the majority is high capacity cranes and port equipment, but can you give anymore detail around the break- down of high capacity port equipment and smaller capacity and then what was the book to bill on high capacity cranes in the quarter?

This is Rick. Let me try to answer that. Out of $801 million, the port equipment business is about $150 million, $158 million of that number. Which leaves about $643 million in backlog for the, I'll call it base cranes business, and our zwyborken (phonetic) is about $400 million to $450 million of that total so that would give you a feel of the larger crane backlog.

But we should point out, we do not show backlog for anything that we don't believe will ship in the next 12 months period, and not all of our competitors do it that way. We know we have orders in hand for cranes that will be delivered beyond the 12 month period that are meaningful and they are almost always the larger cranes that are the most expensive cranes that are project related.

And longest lead time.

That's correct.

Okay. Great, thanks very much.

Your next question is from Matt Vittorioso with Barclays Capital

Yeah. Good morning. I think all I have left are a couple of cleanup cash flow items and I apologize if I missed them. But could you just comment on cash taxes for 2010 and maybe 2011 given the mining asset sale? And then I think previously, you guided essentially to flat working capital in 2010? Is that the case if not, could you comment on what you think it will be for the full year? Thanks.

Let me answer the working capital question. We did indicate that as a percent of revenue, we would improve to below 30% when you think of working capital for sales, fourth quarter annualized. In general, I think we will be overall flat on working capital with payables increasing, and offsetting inventory increases as well as we continue to build production levels. So I think still planning on a dollar basis to be relatively flat year over year. Cash taxes, I made the comment about the mining taxes of $250 million, and I would say of that, probably a couple hundred million is paid in 2011, some will be paid in 2010. I don't think I'd given guidance on cash taxes overall, but I'll go back and look at that.

Thank you.

It would be mainly international operations from '08 we would pay in 2010. And that was largely mining so discontinued apps.

Okay. Thanks.

Your next question is from Brian Rayle with NorthCoast Research

Good morning. Most of my questions have been answered, but I wanted to talk about as we look at the acquisition opportunities going forward, you know, you have the construction business that's made, you know, some significant process, or progress on the operating margin due to cost cuts. You know, it's been a business that's been sorts of debated back and forth, as a part of the portfolio. How do we view that in terms of your acquisition strategy? Are you looking for something that can leverage the distribution you have in those markets, mainly in North America, but Europe as well? Or does that, your know, not really a factor in terms of overall acquisition strategy? Thanks.

Yeah. I think you're asking the question about our construction business, correct?

Absolutely.

Yeah. Yeah. I think we have a path forward in the construction business that doesn't include many acquisitions. We really want that business to develop on its own. That's our main area of emphasis. We'll be introducing some additional new products later this week, building off some historical acquisitions that we think have the potential to broaden and improve that business quite meaningfully, so we're using the platforms of being a focused compact equipment company on one hand, and a specialty manufacturer of material handlers and high performance dump trucks and off- highway trucks on the other hand. George, you want to comment on that at all?

I think you're spot on with your comments there and there are niche products within our portfolio that end that we can really leverage our product and it's technical ability, and get good growth and profitability out of this business in time.

I appreciate that. I guess what I was trying to drive at was, as you look at acquisitions, obviously, you know, your AWP's go directly to rental. A lot of your cranes go directly to rental or you know, end customers. There's not a lot of distribution involved. Construction is one of the places you have a pretty good distribution footprint, you know, in North America and the US. How do you look at, when you look at acquisitions does the fact that you have that, were why it be something indirectly in compact construction equipment but something that you can utilize distribution for or are you sort of, for lack of a better term, agnostic towards how you go to market with a customer?

I would actually say it a different way. I would say we have more opportunities to build off of our aerial work platform rental relationships with our compact equipment business than to find acquisitions that will, that would use the distribution network for the construction business. I think the distribution network of the construction business can be built by adding new products that we already have on the drawing board and will be introduced later this year next year, and that the leverage, internal leverage we have is just beginning between our aerials team and our construction team and it's our intent, longer term, to demonstrate to the major rental companies that we can deliver the same high level of service, the same high level of value that Aerials and the Jeannie brand have had a reputation for in our mid- and small- range construction products. In fact, the Company's mission over the next several years is going to be the drive customer performance, and so I think there's a huge opportunity there for us.

Great. Thank you for the clarification.

Your next question is from Andy Casey with Wells Fargo Security.

Good morning, everyone. A few questions on cost management. First, as you enter a cyclic up turn, do you think the commodity inflation cycle right now is any different than what occurred in the early to mid- 2000's, in front of that up turn outside of the price volatility and material contract changes that you just discussed?

Let me answer that, Andy. I think this period that we're in is more difficult to predict than the 2000 to 2002 period. In that period, you know, 2000 and 2002, we did see for the first time real material cost increases in the 2003 to 2004 that frankly for a decade we hadn't seen. And we had a whole management team that didn't know how to take price increases, okay? Now we have a management team that knows how to take price increases and will take price increases accordingly, you know, as we see material increases. But I think the material increases we're going to get now are going to be harder to predict, and perhaps more severe at times because of volatility in steel principally.

Okay. Thanks, Ron. As a follow up to that, can you remind us what you have built in to the 2010 annual outlook for price versus cost? Is it neutral or was it a modest positive?

It's principally neutral.

And probably maybe even a little bit negative.

Okay. And then - - one other, well, a couple others. The supply chain components stress, I think you talked about. What component areas are you seeing any signs of stress or is that more of an expectation going forward?

Andy, this is Tom Riordan. I'm not going to kind of call out specific sectors, but frankly, it is a very reminiscent of some of the capacity challenges in the past. I think the more highly engineers products, particularly custom products tend to be the ones that are most challenging and those in many cases fall in the hydraulics or electronic controls areas.

I think, Andy, you have to reflect upon what has happened. If you're a component supplier, you're the tail at the end of the dog so to speak.

They see an even worse whip sign then frankly what we have with our schedule here.

So, you know, in 2009, people said don't ship me what you built for me, I don't want it, I won't take for me and then in 2010, people say give me everything you can ship me because my production is going up again. And this is what, frankly caterpillar did a good job in communicating to the supply base, how to expect this change to happen. And I think it's helped the rest of the industry, but nevertheless, it's still is going to be a bit of a challenge in some places.

Okay. Thanks. And lastly, a little bit of, you know, tieing what we just talked about together with the longer term outlook. Can you help us frame really how we should look at any risk to your shorter- term Q4 profitability goal in the context of right now, generally stable pricing environment, expected modest demand improvement through 2010? And then maybe, you know, it's going to be volatile as you said but commodity costs inflation through the year, and then any impact of that on expected longer term earnings ram do the 2013 potential especially as you layer in some of the emission cost increases on top of whatever happens in commodity costs?

I think most of our issues will be volume driven. And we will offset cost increases through pricing and as the markets improve, generally, whether we're a quarter to two lagged on that I think -- I think we'll get that. The fourth quarter for us is hard to predict. We're driving to achieve EPS profitability as I indicated. The real question is going to be, will we have customers that want to take some aerial equipment in advance of the selling season? Or not. And that will depend upon whether they're in the southern part of the US and in the western part of the US and some parts of Europe. So that will have a swing, somewhat of a swing impact on us but frankly, we know that delivery EPS profitability in the fourth quarter is going to be a bit of a challenge. Because most of the real improved demand that's going to be led by AWP, construction, and material processing, in 2011, is going to be there for us. I mean, we're going to be looking at 15%, 20%, maybe 30% kind of increases in these businesses in the 2011/ 2012 periods. And just exactly when that falls is hard to predict. Cranes will probably begin to pick up in '11 but really hit its stride in 2012.

Okay. Thank you very much.

Your next question is from Joel Tiss with Buckingham Research.

Okay. Thanks for staying on past an hour, guys. I have kind of a weird question. Is there anyway you guys can help us to separate out sort of the seasonal and the inventory rebuilding by division versus, you know, versus any real structural factors that are happening? I know you kind of hinted around and then I don't know if it's something that you can help us with.

Yeah, this is a difficult question for us because we don't see the seasonal patterns being the same as they might have been in a more historical context. But I'm going to see if Phil can provide some perspective for any of our guides here on that.

Yeah. I think - - we had very little inventory billed, when you take out the FX it was $22 million in the quarter so I don't think there's anything spiked out . AWP, fourth quarter to first quarter was flat, just to give you some feel. Construction was actually down a little bit. Cranes down. Again, this is without the FX taken out. Material processing as well was up slightly like less than $10 million. So again, there's not big shifts in term of fourth quarter to first quarter, it's just a level of

Okay. And then just a kind of cleanup also, Phil, can you talk about the status of the disputes on the prior tax returns and also that $100 million swing in other current liabilities on the balance sheet?

Well, when you say disputes on prior tax returns, we put some provisions up in the fourth quarter, we have audits going on in the US as well as in European jurisdictions. I'd rather not comment on ongoing discussions that we've had there. We are close to bringing the US to resolution for the periods 2004 to 2007. But we did not adjust any provisions at this stage.

And then the $100 million increase in other liabilities, what's in there?

Just a second.

Thank you.

I may have to get back to you on that.

Okay. All right. Thank you very much, guys.

All right.

Your next question is from Robert McCarthy with Robert W. Baird.

I'll second Joel's thank you for sticking with us.

That's okay.

Hello everybody. But you have a cast of thousands there with you, Ron, I wouldn't remember everybody's name. I want to follow up the questions that were asked earlier. In a couple cases, I don't think we ever got the complete answer, there was a discussion of pricing going on by segment for Seth at the beginning of the call, and I don't think we got to hear from George on construction.

That's right. I didn't think we wanted to leave him off but we just kind of jumped over to the end. George, why don't you comment on that.

Sure thing, Robert. Thanks for the question. What we're seeing in pricing really is regionally based as the markets are starting to pick up in certain regions of the world, the prices have stabilized, generally, reflecting the same comments that my colleagues mentioned, so one thing that is somewhat different is in the compact equipment sector where I see still some of our competition with one, two year old worth of new inventory still sitting, that is disrupting the pricing. But on for the basic inventory of the larger equipment within construction, it has flowed through and we're seeing it stabilize, but on a smaller stuff, we are still dealing with excess inventory in certain regions of the world.

Does that excess inventory affect more, you know, traditional sales through third party dealers and distributors, because I'm thinking that maybe a lot of that excess inventory is not appropriate for rental?

I would say it's sitting in dealers' yards.

Okay. Thanks. That's helpful, George. I wanted to - - can we get an updated Cap Ex and D&A estimate for the year with, you know, the various divestitures, et cetera, that occurred?

Well, as we talked about Cap Ex about $85 million, that had taken into account our divestiture expectation and D&A.

Yeah, D&A is basically $27 million, approximately, per quarter. Somewhere in that range.

A little over $100 million dollars.

I wonder if we could talk just about what you're seeing in the crane business by line of business, so we have a better understanding of where the issues remain. Last quarter, you all talked about significant excess field inventories in rough terrain cranes. Less an issue for you, more an issue for competitors, how do you see that market now and how far do you think we are from an uptick in actual retail ordering?

Okay. Robert, this is Rick Nichols. I think if I look at the crane business by- product, the RT business took a significant shock in 2009, about 85% drop. In the global business. It ran at a fairly constant level throughout -- at a constantly low level throughout 2009, and I see first half of '10 being approximately the same as 2009, but I think we've will see meaningful, or some change, you know, not over the top, but some change in RT demand in a positive manner in the back half of this year.

That's something that could affect your production, right, Rick? Because you guys are so lean on inventory?

Absolutely. I see the power crane business being flat to really '09 levels in 2010. At a very low level. But there is some potential markets that I think will have some influence on that, which would be principally the Pacific rim and some parts of the Middle East and North Africa. So those are markets that are beginning to provide some positive demand influences on that business, so I think there is a potential for some back half in fourth quarter uptick in that business, and 2011 will be better than 2010.

So we bottomed out in Europe and you don't see an inventory issue?

I do not see an inventory issue.

Okay. Good.

And AC product line, we see continuing as Tom mentioned, decline in what I would call the under 300- ton class of AC units. Really across the board in all markets. That will be a tough marketplace in 20 -- 2010. Excuse me. And you know, potentially into the first part of 2011. And our larger crawler market continues to be strong. We were a bit pessimistic, I think as I said on the last conference call this year, it took production down. We are actually take production back up from what we put in our schedule this year. Demand is very global, and it's moving from the 300, 400- ton up into the larger tonnage crawler class.

Go ahead, Rick.

And in that same vein, I would say the larger AC products are still very stable and if not growing from a demand perspective from us.

And when you say the larger crawlers, you're talking what, like 600- ton and up?

Yep.

And what have you seen or heard from, I know you're not at the show, Rick, but the Bama show has been an interesting indication of the market for us because we frankly didn't know what to expect.

I think we've seen very positive, from the customers that attended, and again, we have some mix of customers that aren't there because of the volcano and inability to get to the show, but I think we have a very positive indications from Europe and the larger AC products. We've secured orders that we didn't think we would secure during the show environment, so it's been a very positive show and really, the industry after about a year to 18 months of challenge, depending on which product segment you're in is fairly optimistic at a low level, but optimistic about the gallon balance of the year and what 2011 will bring.

Yeah, I think we're bouncing along the bottom at this point in time and -- with some positives in a few places and, you know '11 will be a little bit better and '12 will be the year where we really see some meaningful growth.

And if you don't mind, just related to that. I swear this will be the last one.

Thank you.

You know, it's popular on our side of the table to infer a net order number from revenue and backlog activity in the quarter. That a calculation affected by changes in currency rates, particularly on the backlog figure. That is of course a calculation affected by changes in currency rates, particularly on the backlog figure. So X fantwosie we calculated net new orders in the crane business down roughly by half compared with prior year. But, I'm guessing that we're under counting, potentially, anyway crane order activity by as much as like $50 million. Which would put the number closer to $300 million for a net order number. Am I in the ballpark, Phil?

I think your calculations -- I think you're very close. I think it may be a little higher than that number, but that's, I think you're pretty close.

Yeah, you're close, Rob.

All right. Thanks, guys. Appreciate the patience.

One followup that Joel Tiss had asked about other current liabilities if he's on the phone and for other's clarification. The change from the fourth to the first quarter of about $100 million of largely taxes payable, which would be impacted by the mining sale, so that's within 12 months the amount that would be payable. But not all of it is necessarily money, but that's the biggest piece.

Your next question is from Steve Barger from KeyBanc Capital Markets

Two quick ones. First, on the seasonality versus historical revenue trends, for several years going into the downturn us, you averaged 20% sequential revenue increase going into 2 Q. You going to need a lot more than that this year unless your revenue story for the $5 billion is really back half loaded. So can you help us think about the sequential revenue increase to expect for 2Q for the quarter?

I'll give you a little indication. What I think, what I say is while the $5 billion number, you got to remember again, assume the big currency lift of $250 million if that doesn't happen, you have to back that down, okay. And it hasn't happened at this point in time. But put that aside, we will expect a pretty meaningful Q2 revenue list. There will be a very meaningful Q2 revenue list sequentially, over where we are right now. We're not providing revenue guidance by quarter, and we see that happening.

So do you, just a quick follow up. do you expect that, I know that 3Q typically has shut downs and vacation, but do you expect an atypical revenue ramp through the year with each quarter being more or would you expect 3Q to be lower?

At this stage, and this is a guess, you know, we have forecasts, but I think at this stage, it's a guess, I would expect our Q2 to be slightly higher than our Q3, and our Q4 to be, you know, somewhere between Q2 and Q3.

That's great. And once, since it's late in the call, just a conceptual question, can you talk about, you know, what seems to be ever- changing news out of Greece is factoring into your thinking about the prospects for Europe at large, is that going to become a bigger issue, and are you concerned at all about that?

Well, you know, I think we're all riding in the same boat so to speak on that issue. I think it will get resolved in some form. The European economy, we're not expecting huge amounts of change from. You know, there will be some positives, but I don't see it having a material impact on us at this point in time.

Great. Thanks.

Your next question is from Dick Kindig with Keeley Asset Management.

Gentlemen. If larger meaningful acquisitions are difficult, and with some debt restrictions, are you still competent in reaching the $6 per share level by 2013 that you previously talked about? And do you have any restrictions on mining acquisitions?

I'm not sure I picked up the last. Do we have any restrictions on mining?

Acquisitions, yeah, because your silence of - -

We do have a restriction non- compete restriction to go back into the same products that we just divested, but other mining- related products, I don't think there's any restrictions on, but let me comment on the $6 a share number. $6 per share number assumes that we get back to revenue levels consistent with where we were in 2007 and 2008, maybe slightly less. That won't be the case exactly coming from the same places, because we see us having more business in 2008 from places like Brazil, Russia, India and China than we did in 2008, so that revenue assumption may seem to be about the same amount but the revenue will come from different places and secondly, $6 a share of earnings that's projected in that number assumes we paid debt down, and no acquisitions.

Thank you.

Okay. I think operator, that's it?

There are no further questions. Do you have any further remarks?

I'd like to thank everybody for their patients in staying with us for an hour and a half. We appreciate your interest in Terex, and if you have followup questions, contact us. Thank you.

Thank you for participating in today's conference call. This concludes the call. You have may now disconnect.