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Terex's (TEX) Q4 Earnings Surpass Estimates, Sales Miss

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Terex Corporation (TEX - Free Report) reported adjusted earnings per share of 36 cents in fourth-quarter 2019 which beat the Zacks Consensus Estimate of 18 cents by a massive margin of 100%. However, the bottom line declined 55% from the prior-year quarter reflecting the ongoing challenging global market conditions for industrial equipment.

Including one-time items, the company reported earnings of 26 cents per share in the quarter, flat compared with the year-ago figure.

Operational Update

Revenues in the quarter declined 16% year over year to $885 million. Moreover, the company’s revenues missed the Zacks Consensus Estimate of $895 million.

Terex Corporation Price, Consensus and EPS Surprise



Cost of goods sold declined 14% to $716 million from $834 million in the prior-year quarter. Gross profit fell 21.4% year over year to around $169 million.

Selling, general and administrative expenses increased 9.5% to $146 million from $133 million in the prior-year quarter. Terex reported operating income of $22.9 million compared with $81.6 million in the year-ago quarter, reflecting a year-over-year decline of 72%. Operating margin was 2.6% in the reported quarter compared with 7.8% in in the prior-year quarter.

Segmental Performance

The Aerial Work Platforms (AWP) segment reported revenues of $500 million in the fourth quarter, down 21% from $631 million in the prior-year quarter. Operating income declined 88% to $4.4 million from the prior-year quarter.

The Material Processing (MP) segment’s revenues totaled $321 million, reflecting a year-over-year decline of around 10%. The segment reported operating income of $39 million, down 23% year over year.

Financial Position

Terex had cash and cash equivalents of $535 million at the end of 2019 compared with $340 million at 2018 end. In 2019, the company generated $173 million of cash from operating activities compared with $94 million in the prior year. Long-term debt was $1,169 million as of Dec 31, 2019, compared with $1,210.6 million as of Dec 31, 2018.

2019 Results

Terex reported adjusted earnings per share of $3.25 in 2019, down 20% from the prior year. Earnings beat the Zacks Consensus Estimate of $3.07. On a reported basis, including one-time items, earnings per share came in at $2.92 compared with $3.14 recorded in 2018.

Sales came in at $4,353 million in 2019 compared with the previous year’s $4,517 million. The top-line figure also missed the Zacks Consensus Estimate of $4,366 million.

2020 Guidance

Terex now projects earnings per share of $1.85-$2.35 for fiscal 2019 on net sales of approximately $3.9 billion. The company expects customers to remain cautious with their capital expenditure decisions in 2020.

Share Price Performance

Terex stock has declined 22% over the past year against the industry’s growth of 0.2%.

Zacks Rank and Stocks to Consider

Terex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Northwest Pipe Company NWPX, Sharps Compliance Corp SMED and Graco Inc. GGG. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Northwest Pipe has an expected earnings growth rate of 19.5% for the current year. The stock has appreciated 50% over the past year.

Sharps Compliance has an estimated earnings growth rate of 767% for the ongoing year. In a year’s time, the company’s shares have gained 43%.

Graco has a projected earnings growth rate of 4.3% for 2020. The company’s shares have rallied 20% over the past year.

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