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Terex (TEX) Q1 Earnings & Revenues Beat Estimates, Ups '21 View

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Terex Corporation TEX reported first-quarter 2021 adjusted earnings per share of 56 cents, which beat the Zacks Consensus Estimate of 22 cents. This also marked a turnaround from a loss of 35 cents per share in the prior-year quarter. The improved performance can be attributed to rising demand, margin expansion at its segments and its cost reduction efforts.

Operational Update

Revenues in the reported quarter rose 4% year over year to $864 million and surpassed the Zacks Consensus Estimate of $821 million. The company witnessed a whopping improvement of 101% in bookings and growth of 104% in backlog, both on a year-over-year basis.

Cost of goods sold fell 1.2% year over year to $689 million. Gross profit increased 28% year over year to $175 million.

Terex Corporation Price, Consensus and EPS Surprise

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 (SG&A) was $114 million in the quarter under review, down 21% from $144 million in the prior-year quarter, reflecting the company’s aggressive management of SG&A expenses. Terex reported an operating profit of $61.5 million against an operating loss of $7.1 million in the last-year quarter.

Segmental Performance

The Aerial Work Platforms segment generated revenues of $477 million in the first quarter, down 7% from the year-ago quarter. The segment reported an operating profit of $27 million against the prior-year quarter’s loss of $6 million.

The Material Processing segment’s revenues totaled $378 million, reflecting year-over-year growth of 20%. The segment reported an operating income of $49 million, up 96% year over year.

Financial Position

Terex had cash and cash equivalents of $572.9 million as of Mar 31, 2021, compared with $665 million as of Dec 31, 2020. The company generated $138 million of cash from operating activities in the reported quarter compared with an usage of $88.7 million in the prior-year quarter. Long-term debt was $973.5 million as of Mar 31, 2021, compared with $1,166 million as of Dec 31, 2020. During the quarter, Terex refinanced a large portion of its capital structure, including its revolving credit facility and $600 million of bonds.

Guidance

Due to improved market conditions and operational execution, Terex now anticipates earnings per share for 2021 in the range of $2.35 to $2.55, higher than the previous expectation in the band of $1.95 to $2.35. The guidance suggests a substantial improvement from earnings of 13 cents reported in 2020. It includes a charge of 30 cents associated with capital structure refinancing.

The company expects sales to be around $3.7 billion in 2021, up from its previous expectation of $3.45 billion in 2021. The updated sales growth guidance indicates year-over-year growth of 20%.

Price Performance

Terex's shares have soared 244% over the past year, compared with the industry’s rally of 114.6%.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector include Dover Corporation DOV, Caterpillar Inc. CAT and Pentair plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 65%.

Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 112% in the past year.

Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 87% in a year’s time.

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