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Terex (TEX) Shares Decline 19% Despite Q2 Earnings Beat

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Shares of Terex Corporation (TEX - Free Report) have moved down 19% since it reported second-quarter 2024 results on Jul 30, 2024, despite an earnings beat. Investors seem to be worried about the year-over-year declines in its top and bottom lines, reflecting lower end-market demand in Europe.

TEX reported second-quarter 2024 adjusted earnings per share of $2.16, which beat the Zacks Consensus Estimate of $2.03. The bottom line fell 8.1% from the prior-year quarter.

Terex Corporation Price, Consensus and EPS Surprise

 

Terex Corporation Price, Consensus and EPS Surprise

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

Operational Update

Revenues in the reported quarter fell 1.5% year over year to $1.38 billion, missing the Zacks Consensus Estimate of $1.42 billion.

The cost of goods sold decreased 0.7% year over year to $1.05 billion. Gross profit fell 4.2% to $328 million. Selling, general and administrative expenses were $135 million in the quarter under review, up 1.7% from the prior-year quarter.

Terex reported an operating profit of $193 million, which marked an 8% decrease from the prior-year quarter. The decline was mainly due to an unfavorable mix. The operating margin in the quarter under review was 14% compared with the 15% reported in the last-year quarter.

Segment Performances

The Aerial Work Platforms segment generated revenues of $882 million in the reported quarter, up 6.9% from the year-ago quarter. Solid demand for aerial work platforms and telehandlers in North America led to the improvement in revenues. We expected the segment’s sales to be $827 million in the quarter.

The segment reported an operating profit of $134 million, fairly flat year over year. Our estimate for the segment’s operating profit was $122 million. 

The Material Processing segment’s revenues totaled $499 million, reflecting a year-over-year fall of 13.6%. The segment’s revenues lagged our estimate of $557 million.

The segment reported an operating income of $77 million, down 21.6% year over year. The figure missed our estimate of $94 million. The downside was led by lower sales volume and an unfavorable product mix.

Cash Flow & Balance Sheet Updates

Terex had cash and cash equivalents of $319 million as of Jun 30, 2024, compared with $371 million as of Dec 31, 2023. The company generated $33 million in cash from operating activities in the first six months of 2024 compared with $130 million in the prior-year comparable period. The company returned $50 million to shareholders through share repurchases and dividends in the first half of 2024.

2024 Outlook

TEX expects earnings per share between $7.15 and $7.45, up from the previously disclosed $6.95-$7.35. The company expects sales between $5.1 billion and $5.3 billion compared with the earlier stated $5.2-$5.4 billion.

Price Performance

Terex's shares have lost 13.5% over the past year against the industry’s 14.7% growth.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank

TEX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Manufacturing Stocks

Caterpillar Inc. (CAT - Free Report) reported second-quarter 2024 adjusted earnings per share of a record $5.99, which beat the Zacks Consensus Estimate of $5.53 by a margin of 8.3%. The bottom-line figure marked an 8% year-over-year improvement.

The company reported second-quarter revenues of around $16.69 billion, which missed the Zacks Consensus Estimate of $16.76 billion by a slight margin of 0.4%. The top line was 3.6% lower than the year-ago quarter as favorable price realization was offset by lower volumes reflecting changes in dealer inventories.

H&E Equipment (HEES - Free Report) reported earnings per share of 91 cents, which missed the Zacks Consensus Estimate of $1.00. The bottom line marked a 20% decline from the year-ago quarter. 

Revenues improved 4% year over year to $376.28 million, missing the Zacks Consensus Estimate of $389 million. Rental revenues rose 6.5% from the year-ago quarter primarily due to the ongoing expansion of HEES’ branch network.

The Manitowoc Company, Inc. (MTW - Free Report) reported adjusted earnings per share of 25 cents in second-quarter 2024, missing the Zacks Consensus Estimate of 58 cents. The company reported earnings per share of 75 cents in the year-ago quarter.

Manitowoc’s revenues were down 6.8% year over year to $562 million in the quarter under review. The top line missed the Zacks Consensus Estimate of $603 million. Favorable changes in foreign currency translation rates had an impact of $2.7 million on revenues.

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