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Terex (TEX) Beats on Q2 Earnings & Revenues, Raises '18 View

Terex Corporation 's TEX second-quarter 2018 adjusted earnings surged 92% year over year to 98 cents per share. Earnings also beat the Zacks Consensus Estimate of 90 cents per share by a margin of 9%. Broad-based improvements in Terex's global markets, operational improvements as well as benefits from its disciplined capital allocation strategy led to the overall improved performance in the reported quarter.

Including one-time items, Terex posted earnings of 73 cents per share in the quarter compared with 98 cents reported in the year-ago quarter.

Operational Update

Revenues in the quarter improved 19% year over year to $1,403 million from $1,182 million recorded in the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $1,397 million. Backlog rose by 31% in the quarter, aided by growth in all segments.

Cost of goods sold increased 19% to $1,123 million from $941 million in the prior-year quarter. Gross profit surged 16% year over year to $279 million. However, gross margin contracted 50 basis points (bps) to 19.9%.

Terex Corporation Price, Consensus and EPS Surprise

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

Selling, general and administrative expenses increased 8% year over year to $176 million. Terex reported an operating income of $103 million compared with $78 million in the year-ago quarter, a rise of 33%. Operating margin expanded 80 bps to 7.4%.

Segment Performance

The Aerial Work Platforms ("AWP") segment reported revenues of $751 million in the quarter, up 27% from $593 million in the prior-year quarter. Operating income improved 67% to $102 million from $61 million in the prior-year quarter.

Revenues from the Crane segment were up 10% to $3359 million from $304 million recorded in the year-ago quarter. The segment reported an operating loss of $12 million, in contrast with the operating income of $15 million in the prior-year quarter.

The Material Processing ("MP") segment's revenues were $319 million, up 14% year over year. The segment reported an operating income of $42 million, up 19% year over year.

Financial Position

Terex had cash and cash equivalents of $374 million at the end of second-quarter 2018 compared with $627 million at the end of 2017. The company generated $35.6 million of cash in operations in the six-month period ended Jun 30, 2018 compared with cash outflow of $123 million in the prior-year comparable period. Long-term debt was $1,089 million as of Jun 30, 2018, compared with $980 million as of Dec 31, 2017.

During the reported quarter, Terex repurchased 2.9 million shares for $116 million. The company recently announced a new $300 million share repurchase authorization.

2018 Guidance Raised

Backed by its year-to-date results, capital market actions and upbeat guidance for the back half of the year, Terex raised full-year adjusted EPS guidance to $2.80-$3.00 from the previous guidance of $2.70-$3.00.

Terex has edged up 2% in the past year, underperforming the industry' s growth of 23%.

The company currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the same sector include Caterpillar Inc. CAT , Chart Industries, Inc. GTLS and W.W. Grainger, Inc. GWW . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Caterpillar has a long-term earnings growth rate of 13.3%. The stock has gained around 25% in a year's time.

Chart Industries has a long-term earnings growth rate of 26.9%. The company's shares have appreciated 125% over the past year.

Grainger has a long-term earnings growth rate of 12.5%. Its shares have rallied nearly 112% in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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