Terex (TEX) Q3 Earnings & Sales Top Estimates, Shares Rise
Shares of Terex Corporation TEX have gained 5% since it reported third-quarter 2023 adjusted earnings per share of $1.75 on Oct 26, which marks a year-over-year improvement of 45.8%. The bottom line beat the Zacks Consensus Estimate of $1.67.
Operational Update
Revenues in the reported quarter increased 15.1% year over year to $1,290 million, surpassing the Zacks Consensus Estimate of $1,250 million. The upside was driven by healthy demand across multiple businesses and improved price realization that helped offset higher costs.
The company reported a backlog of $3.3 billion in the third quarter of 2023. The backlog, however, lagged our projection of $3.4 billion.
The cost of goods sold increased 12.9 % year over year to $998 million. Gross profit rose 23.4% to $293 million. Selling, general and administrative expenses were $129 million in the quarter under review, up 11.2% from the prior-year quarter.
Terex reported an operating profit of $163 million, which marked a 35.1% increase from the prior-year quarter. The operating margin in the quarter under review was 12.7%, up from 10.8% reported in the year ago quarter due to higher sales volume and price realization. However, higher costs had a dampening effect.
Terex Corporation Price, Consensus and EPS Surprise
Terex Corporation price-consensus-eps-surprise-chart | Terex Corporation Quote
Segmental Performances
The Aerial Work Platforms segment generated revenues of $751 million in the reported quarter, up 13.3% from the year-ago quarter. Solid demand, improvements in the Genie supply chain and price realization led to the rise in revenues.
The segment reported an operating profit of $93.6 million, a 47.4% jump from the prior-year quarter’s $63.5 million. Higher sales volume, price realization, favorable mix and gains from cost reduction initiatives led to the solid improvement in profit, partially offset by cost increases. We had expected revenues of $717 million and an operating income of $98 million.
The Material Processing segment’s revenues totaled $541 million, reflecting year-over-year growth of 18.2%. Strong demand for the company’s products across multiple businesses drove the improvement. The segment’s revenues were higher than our estimate of $518 million.
The segment reported an operating income of $91.3 million, up 36.7% year over year. The figure surpassed our estimate of $83 million. Gains from increased sales volume, favorable mix and improved manufacturing efficiencies were partially negated by cost increases.
Financial Position
Terex had cash and cash equivalents of $352 million as of Sep 30, 2023, compared with $304 million as of Dec 31, 2022. The company generated $269 million in cash from operating activities in the first nine months of 2023, marking a substantial improvement from the $104 million reported in the prior-year period. The company has returned $66 million to shareholders through share repurchases and dividends so far in fiscal 2023.
2023 Outlook
Backed by strong performance so far this fiscal year, Terex raised its outlook for 2023. The company expects earnings per share of $7.05, higher than the earlier stated $7.00. The company anticipates sales of $5.15 billion, updated from $5.10 billion mentioned earlier.
Price Performance
Terex's shares have gained 25.2% over the past year compared with the industry’s 7.6% growth.
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Zacks Rank and Stocks to Consider
Terex currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Brady BRC, Applied Industrial Technologies AIT and Emerson Electric Co. EMR. BRC currently sports a Zacks Rank #1 (Strong Buy), and AIT and EMR have a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023
earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC rallied 17.7% in the last year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares gained 27% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR shares gained 5.9% in the last year.
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