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Terex (TEX) Beats Q3 Earnings by Wide Margin, Ups '17 View

Terex Corporation 's TEX third-quarter 2017 adjusted earnings surged a whopping 194% year over year to 50 cents per share. Earnings also beat the Zacks Consensus Estimate of 36 cents per share by a wide margin of 39%. All the three segments increased sales, improved operating margin and grew backlog which led to the overall improved performance in the quarter.

Including one-time items, Terex posted earnings of 63 cents per share in the quarter compared to 31 cents reported in the year-ago quarter.

Operational Update

Revenues in the quarter improved 5% year over year to $1,111 million from $1,056 million recorded in the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $1,034 million.

Cost of goods sold increased 2.3% to $892 million from $873 million in the prior-year quarter. Gross profit surged 19% year over year to $219 million. Gross margin expanded 230 basis points (bps) to 19.7%.

Terex Corporation Price, Consensus and EPS Surprise

Terex Corporation Price, Consensus and EPS Surprise | Terex Corporation Quote

Selling, general and administrative expenses increased 7% year over year to $154.8 million. Terex reported an operating income of $64.2 million compared with $39.6 million in the year-ago quarter, a rise of 62%. Operating margin expanded 210 bps to 5.8%.

Segment Performance

The Aerial Work Platforms (AWP) segment posted revenues of $556.7 million in the quarter, up 15% from $484.4 million in the prior-year quarter. Operating income improved 18% to $57.5 million from $48.6 million in the prior-year quarter.

Revenues from the Crane segment were up 7% to $301.9 million from $282.8 million recorded in the year-ago quarter. The segment reported an operating loss of $1.3 million, narrower than the operating loss of $12.1 million in the prior-year quarter.

The Material Processing (MP) segment's revenues were $259.9 million, up 14% year over year. The segment reported an operating income of $28.4 million, up 46% year over year.

Financial Position

Terex had cash and cash equivalents of $592.7 million at the end of third-quarter 2017 compared with $428.5 million at the end of 2016. The company used $56.2 million of cash in operations in the nine-month period ended Sep 30, 2017 compared with cash inflow of $100.3 million in the prior-year comparable period. Long-term debt was $980 million as of Sep 30, 2017, compared with $1.56 billion as of Dec 31, 2016.

During the reported quarter, Terex repurchased 6.4 million of its shares for $254 million. This brings the total to 22.3 million shares repurchased for $770 million for the first nine months of the year. Terex sold remaining holdings of Konecranes shares for proceeds of $221 million, bringing the total consideration received by the company for the disposition of Material Handling & Port Solutions (MHPS) to approximately $1.6 billion.

2017 Guidance

Given its year-to-date results, positive market dynamics, operational expectations for the fourth quarter, Terex has raised full-year adjusted EPS guidance to $1.20-$1.30 from the previous guidance range of $1.05-$1.15.

The company continues to implement its strategy to focus and simplify the company, and build capabilities in key commercial and operational areas. Its on-going efforts to expand capabilities in sales execution and account management through Commercial Excellence initiative reflects the company's growing bookings and backlog. Consequently, Terex has, soared 108.8% in the past year, outperforming 67.1% growth recorded by the industry .

Terex currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other top-ranked stocks worth considering in the same sector are Lakeland Industries, Inc. LAKE , China National Materials Company Limited CASDY and Caterpillar Inc. CAT . All three stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Lakeland Industries has an expected long-term earnings growth rate of 10%.

China National Materials has an expected long-term earnings growth rate of 20%.

Caterpillar has an expected long-term earnings growth rate of 9.5%.

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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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