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Terex (TEX) Q3 Earnings and Revenues Fall Short Of Estimates

Terex Corporation TEX reported adjusted earnings per share of 82 cents in third-quarter 2019, missing the Zacks Consensus Estimate of 83 cents by 1%.The bottom line declined 24% from the prior-year quarter.

Including one-time items, the company reported earnings of 73 cents per share in the quarter compared with the year-ago figure of 92 cents per share.
Operational Update

Revenues in the quarter declined 6.8% year over year to $1.025 billion. Moreover, the company’s revenues missed the Zacks Consensus Estimate of $1.105 billion. Cost of goods sold declined 5% to $815 million from $858.7 million in the prior-year quarter. Gross profit fell 12.7% year over year to $209.6 million.

Selling, general and administrative expenses declined 9.3% to $123.2 million from $135.9 million in the prior-year quarter. Terex reported operating income of $86.4 million compared with $104.2 million in the year-ago quarter, reflecting a year-over-year decline of 17%.

Terex Corporation Price, Consensus and EPS Surprise


Segmental Performance

The Aerial Work Platforms (AWP) segment reported revenues of $628.2 million in the third quarter, down 13.9% from $729.4 million in the prior-year quarter due to a decline in demand in its major market. Operating income declined 43.8% to $45.9 million from the prior-year quarter.

The Material Processing (MP) segment’s revenues totaled $338.6 million, reflecting a year-over-year improvement of around 8%. The segment reported operating income of $52.4 million, up 26.6% year over year.

Financial Position

Terex had cash and cash equivalents of $470.6 million at the end of the third quarter of 2019 compared with $339.5 million at 2018 end. In the nine months ended Sep 30, 2019, the company generated $78.4 million of cash from operating activities against cash outflow of $19.6 million in the prior-year comparable period. Long-term debt was $1,166.6 million as of Sep 30, 2019, compared with $1,210.6 million as of Dec 31, 2018.

2019 Guidance

Terex now projects earnings per share of $3.00-$3.20 for fiscal 2019 on net sales of approximately $4.4 billion. It had earlier expected earnings per share of $3.40-$3.80 and net sales of $4.6 billion. Further, the company adjusted its yearly free cash flow guidance to roughly $110 million.

Considering the overall slowdown in the industrial equipment demand, the company anticipates sales to be down 10% year over year in 2020.

Share Price Performance

Terex stock has declined 8.2% over the past year against the industry’s growth of 12.5%.



Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp SMED, Plug Power Inc. PLUG and Cintas Corporation CTAS. While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Plug Power and Cintas carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sharps Compliance has an expected earnings growth rate of a whopping 500% for the ongoing year. The company has appreciated 39.1% so far this year.

Plug Power has a projected earnings growth rate of 2.8% for the current year. The stock has gained 124.2% so far this year.

Cintas has an estimated earnings growth rate of 12.74% for 2019. Shares of the company have rallied 60% year to date.

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