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Terex (TEX) Beats on Q2 Earnings & Revenues, Raises '18 View

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Terex Corporation’s (TEX - Free Report) second-quarter 2018 adjusted earnings surged 92% year over year to 98 cents per share. Earnings also beat the Zacks Consensus Estimate of 90 cents per share by a margin of 9%. Broad-based improvements in Terex’s global markets, operational improvements as well as benefits from its disciplined capital allocation strategy led to the overall improved performance in the reported quarter.
 
Including one-time items, Terex posted earnings of 73 cents per share in the quarter compared with 98 cents reported in the year-ago quarter.
 
Operational Update
 
Revenues in the quarter improved 19% year over year to $1,403 million from $1,182 million recorded in the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $1,397 million. Backlog rose by 31% in the quarter, aided by growth in all segments.
 
Cost of goods sold increased 19% to $1,123 million from $941 million in the prior-year quarter. Gross profit surged 16% year over year to $279 million. However, gross margin contracted 50 basis points (bps) to 19.9%.
 
Terex Corporation Price, Consensus and EPS Surprise
 
Terex Corporation Price, Consensus and EPS Surprise

Terex Corporation price-consensus-eps-surprise-chart | Terex Corporation Quote

Selling, general and administrative expenses increased 8% year over year to $176 million. Terex reported an operating income of $103 million compared with $78 million in the year-ago quarter, a rise of 33%. Operating margin expanded 80 bps to 7.4%.

Segment Performance
 
The Aerial Work Platforms (“AWP”) segment reported revenues of $751 million in the quarter, up 27% from $593 million in the prior-year quarter. Operating income improved 67% to $102 million from $61 million in the prior-year quarter.
 
Revenues from the Crane segment were up 10% to $3359 million from $304 million recorded in the year-ago quarter. The segment reported an operating loss of $12 million, in contrast with the operating income of $15 million in the prior-year quarter.
 
The Material Processing (“MP”) segment’s revenues were $319 million, up 14% year over year. The segment reported an operating income of $42 million, up 19% year over year.
 
Financial Position
 
Terex had cash and cash equivalents of $374 million at the end of second-quarter 2018 compared with $627 million at the end of 2017. The company generated $35.6 million of cash in operations in the six-month period ended Jun 30, 2018 compared with cash outflow of $123 million in the prior-year comparable period. Long-term debt was $1,089 million as of Jun 30, 2018, compared with $980 million as of Dec 31, 2017.
 
During the reported quarter, Terex repurchased 2.9 million shares for $116 million. The company recently announced a new $300 million share repurchase authorization.
 
2018 Guidance Raised
 
Backed by its year-to-date results, capital market actions and upbeat guidance for the back half of the year, Terex raised full-year adjusted EPS guidance to $2.80-$3.00 from the previous guidance of $2.70-$3.00.
 
 

 
Terex has edged up 2% in the past year, underperforming the industry’s growth of 23%.
 
The company currently carries a Zacks Rank #3 (Hold).
 
Stocks to Consider
 
Better-ranked stocks in the same sector include Caterpillar Inc. (CAT - Free Report) , Chart Industries, Inc. (GTLS - Free Report) and W.W. Grainger, Inc. (GWW - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Caterpillar has a long-term earnings growth rate of 13.3%. The stock has gained around 25% in a year’s time.
 
Chart Industries has a long-term earnings growth rate of 26.9%. The company’s shares have appreciated 125% over the past year.
 
Grainger has a long-term earnings growth rate of 12.5%. Its shares have rallied nearly 112% in the past year.
 
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Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. 
 


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