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Terex (TEX) Posts Wider-Than-Expected Loss in Q1, Scraps View

Zacks Equity Research

Terex Corporation TEX reported loss per share of 35 cents in first-quarter 2020, significantly wider than the Zacks Consensus Estimate of a loss per share of 3 cents. The company had reported adjusted earnings per share of 87 cents in the prior-year quarter.

In the reported quarter, production was lower in the company’s global facilities due to bleak customer demand and local government mandates on account of the coronavirus outbreak.

Operational Update

Revenues in the quarter declined 26.5% year over year to $834 million. Moreover, the revenue figure missed the Zacks Consensus Estimate of $854 million.

Cost of goods sold slid 22.4% to $697 million from the prior-year quarter’s $899 million. Gross profit plummeted 42.4% year over year to around $137 million.

Selling, general and administrative expenses flared up 4.3% to $144 million from the prior-year quarter’s $138 million. Terex reported an operating loss of $7.1 million as against the operating profit of $99.7 million witnessed in the year-ago quarter. The company incurred operating margin loss of 0.8% as against margin gain of 8.8% recorded in the prior-year quarter.

Terex Corporation Price, Consensus and EPS Surprise

Terex Corporation Price, Consensus and EPS Surprise

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

Segmental Performance

The Aerial Work Platforms (AWP) segment generated revenues of $512 million in the first quarter, down 29.6% from the year-ago quarter’s $728 million. The segment reported an operating loss of $6 million, as against the operating profit of $59.6 million in the prior-year quarter.

The Material Processing (MP) segment’s revenues totaled $316 million, reflecting a year-over-year decline of around 23%. The segment reported operating income of $25 million, significantly down 58% year over year.

Financial Position

Terex had cash and cash equivalents of $511.3 million as of Mar 31, 2020, compared with $535.1 million as of Dec 31, 2019. In the reported quarter, the company utilized $89 million cash in operating activities compared with the year-ago quarter’s $265 million. Long-term debt was $1,338 million as of Mar 31, 2020, compared with $1,169 million as of Dec 31, 2019. As of Mar 31, 2020, Terex had available liquidity of $945 million.

Additionally, the company undertook significant cost-reduction actions, including suspending dividends and share repurchases, reducing team-member compensation, and making temporary furloughs and permanent layoffs of team members. These actions will hurt the company’s cost structure.

Guidance Suspension

On Mar 25, Terex withdrew the current-year financial guidance on account of the uncertainties related to the coronavirus pandemic. Also, the company has not issued any revised guidance. Its operating results will continue to be negatively impacted by the pandemic-related crisis.

Price Performance

Terex's shares have depreciated 57.2% over the past year compared with the industry’s loss of 21.4%.



Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Ampco-Pittsburgh Corporation AP, Silgan Holdings Inc. SLGN and Intellicheck, Inc. IDN. While Ampco-Pittsburgh and Silgan Holdings sport a Zacks Rank #1 (Strong Buy), Intellicheck carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ampco-Pittsburgh has an expected earnings growth rate of 2.70% for the current year. The stock has appreciated 11.7% in a year’s time.

Silgan has a projected earnings growth rate of 11.3% for 2020. The company’s shares have rallied 11.8% over the past year.

Intellicheck has an estimated earnings growth rate of 112.5% for the ongoing year. The company’s shares have gained 60.5% in the past year.

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