Terex (TEX) Beats On Q1 Earnings & Sales, Lifts '17 EPS View

Terex Corporation (NYSE:TEX) reported first-quarter 2017 adjusted earnings of 5 cents per share, flat with the prior-year quarter. However, earnings beat the Zacks Consensus Estimate of a loss of 3 cents per share.

Including one-time items, Terex incurred a loss of 57 cents per share in the quarter, faring much worse than the year-ago quarter’s earnings per share of 20 cents.

Operational Update

Revenues in the quarter declined 9.6% year over year to $1,007 million from $1,114 million recorded in the prior-year quarter. Nonetheless, revenues beat the Zacks Consensus Estimate of $926 million.

Cost of goods sold decreased 8.4% to $854.6 million from $932.6 million in the prior-year quarter. Gross profit declined 16% year over year to $152.3 million. Gross margin contracted 130 basis points to 15%.

Selling, general and administrative expenses fell 8% year over year to $158.6 million. Terex reported an operating loss of $6.3 million compared with operating income of $11.3 million in the year-ago quarter.

Segment Performance

The Aerial Work Platforms (AWP) segment posted revenues of $472.4 million in the quarter, down 9.3% from $520.7 million in the prior-year quarter. Operating income plunged 43% to $21.7 million from $38 million in the prior-year quarter.

Revenues from the Crane segment were down 14% to $263.9 million from $307.3 million recorded in the year-ago quarter. The segment’s operating loss of $32.8 million is wider than the prior-year quarter’s loss of $16.6 million.

The Material Processing (MP) segment’s revenues were $249 million, down 11% year over year. The segment reported an operating income of $25.5 million, up 61% year over year.

Financial Position

Terex had cash and cash equivalents of $814 million at the end of first-quarter 2017 compared with $428.5 million at the end of 2016. The company recorded cash used for operating activities of $196 million in the reported quarter compared with cash usage of $120.7 million recorded in the year-ago quarter. Long-term debt was $979.6 million as of Mar 31, 2017 compared with $1.56 billion as of Dec 31, 2016.

In the first quarter, Terex earned a dividend on Konecranes’ shares of $13.5 million, contributing 9 cents to its earnings per share. The company also repurchased approximately 6.5 million shares through its previously announced programs.

2017 Guidance

Terex raised its 2017 earnings per share outlook in the range of 80–95 cents from the previous guidance range of 60–80 cents, which includes the full-year impact of the Konecranes dividends and share repurchases. It expects interest savings of approximately $35 million on an annualized basis.

Share Price performance

In the past one year, Terex has outperformed Zacks categorized Machinery-Construction/Mining sub industry. Terex’s shares have surged 42.3% in the said time frame, coming ahead of the industry’s gain of 39.7%.

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

Key Picks

Some better-ranked stocks in the same sector are AGCO Corporation (NYSE:AGCO) , AptarGroup, Inc. (NYSE:ATR) and Caterpillar Inc. (NYSE:CAT) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation has a remarkable positive average earnings surprise of 40.39% for the last four quarters. AptarGroup generated a positive average earnings surprise of 1.78% over the trailing four quarters. Caterpillar has delivered an average positive earnings surprise of 40.25% in the past four quarters.

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