Poor 1Q Earnings Results for Terex - Analyst Blog
26 4월 2013 - 10:30PM
Zacks
Terex Corp.’s (TEX) first-quarter 2013 adjusted
earnings of 23 cents per share declined 21% from 29 cents earned in
the year-ago quarter. The company’s earnings fell short of the
Zacks Consensus Estimate of 28 cents as well. Including special
items, Terex reported income from continuing operations of 18 cents
per share in the first-quarter, flat compared with the prior-year
quarter.
Operational Update
Total revenue in the quarter declined 5% year over year to $1.723
billion, missing the Zacks Consensus Estimate of $1.820
billion.
Cost of goods sold declined 6% to $1.39 billion versus $1.48
billion in the year-earlier quarter. Gross profit decreased 1% to
$327.5 million. Gross margin expanded 100 basis points to 19% in
the quarter.
Selling, general and administrative expenses dropped 3% to $259
million in the quarter. The company reported an operating income of
$68.4 million, a 7% increase from $63.8 million in the year-ago
quarter.
Segment Performance
Total revenue at Aerial Work Platforms improved 21% year over year
to $509 million in the reported quarter, due to improvement in
replacement demand, particularly in North America. Operating income
saw an 85% increase to $72.4 million from $39.2 million in the
prior-year quarter.
Total revenue at the Construction segment declined 23% to $279
million. Results deteriorated due to soft demand in the end
markets, especially in Europe, as well as the decline in truck
sales in global market. The segment reported an operating loss of
$13.1 million in the quarter compared with break even results last
quarter.
Cranes segment’s total revenue dropped 3.5% to $470.9 million.
Operating income went up to $32.5 million from $13 million in the
year-earlier quarter.
Total revenue at Material Handling & Port Solutions declined 9%
to $154 million, driven by weak demand for port equipment across
most product categories and decline in industrial material handing
cranes. The segment reported an operating loss of $29.1 million
compared to an operating income of $0.6 million in the year-ago
quarter;
Total revenue at the Material Processing segment was $154.3
million, down 9% year over year due to weak mineral markets in
Australia and South America, soft general construction in Europe,
partly offset by stronger North American market and flat selling,
general and administrative expenses. The segment reported an
operating income of $11.7 million compared to $15.3 million in the
year-ago quarter.
Financial Position
As of Mar 31, 2013, cash and cash equivalents amounted to $730
million versus $678 million as of Dec 31, 2012. Cash flow from
operating activities was $58.8 million in the reported quarter
compared with cash utilization of $78.5 million in the prior year
quarter.. Debt to capitalization ratio was 51% as of Mar 31, 2013,
flat compared with Dec 31, 2012. The company generated free cash
flow in the first quarter of 2013 of about $135 million. Return on
invested capital was 7.7% for the trailing twelve months ended Mar
31, 2013.
Backlog
Backlog for orders to be fulfilled during the next twelve months
was around $2.166 billion as of Mar 31, 2013, an increase of 7.8%
from Dec 31, 2012. Strong demand for AWP products contributed
positively to the backlog, offset by soft demand for construction,
mainly as a result of continued European softness.
Outlook for 2013
Terex maintains its 2013 earnings per share forecast range of $2.40
and $2.70 and net sales between $7.9 billion and $8.3 billion. The
company expects to generate more than $500 million in free cash
flow during the year and remains committed to reducing its
debt.
Our View
Terex aims at improving margins and its earnings and generating
cash flow to help reduce the debt level. Entering 2013, the Aerial
Work Platforms (AWP) segment continues to benefit from the North
American rental channel demand. Crane segment’s performance is also
expected to remain strong in North America and in certain
developing markets.
Westport, CT-based Terex is a global equipment manufacturer
catering to the construction, infrastructure, and surface mining
industries. The company’s manufacturing facilities are located in
the U.S., Canada, Europe, Australia, Asia, and South America. It
also offers a complete line of financial products and services to
assist in the acquisition of equipment through Terex Financial
Services.
Terex retains a short-term Zacks Rank #2 (Buy). Other companies in
the construction and machinery industry are Astec
Industries, Inc. (ASTE), Joy Global, Inc.
(JOY) and The Manitowoc Company, Inc. (MTW).
ASTEC INDS INC (ASTE): Free Stock Analysis Report
JOY GLOBAL INC (JOY): Free Stock Analysis Report
MANITOWOC INC (MTW): Free Stock Analysis Report
TEREX CORP (TEX): Free Stock Analysis Report
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