Yahoo Finance Terex Corp (TEX) Q1 2024 Earnings Call Transcript Highlights: Strong Financial Performance and ...
Revenue: $1.3 billion, up 5% year-over-year.
Gross Margin: Increased by 40 basis points to 23%.
Net Income: Operating income of $158 million, operating margin improved by 20 basis points to 12.2%.
Earnings Per Share (EPS): $1.60, with an updated full-year outlook of $6.95 to $7.35.
Free Cash Flow: Negative in Q1; full-year outlook of $325 million to $375 million.
Return on Invested Capital: 27.6%, up 370 basis points year-over-year.
Backlog: $3.1 billion, indicating strong future sales potential.
Bookings: Consolidated Q1 bookings over $1 billion, though down year-over-year due to normalization.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide an update on the Materials Processing (MP) segment, particularly regarding the margin guidance and sales outlook given the weaker market conditions in Europe? A: Julie Beck, CFO of Terex Corp, noted that the MP segment performed better than anticipated in the quarter, with a favorable geographic mix and a 50 basis point impact from product liability charges. Despite challenges in the European market, particularly in Germany, the company sees potential upside in its environmental and concrete businesses. Margins are expected to improve sequentially throughout the year, with sales also anticipated to rise from Q1 levels.
Q: What are your views on potential M&A activities and the size of deals Terex is considering for 2024? A: Simon Meester, CEO of Terex Corp, expressed that while the company is exploring both organic and inorganic growth opportunities, there is no rush for acquisitions given the strong demand for existing businesses. Terex is evaluating opportunities that would strengthen its portfolio and enhance its earnings profile, comparing these against other capital allocation options like share buybacks and dividends.
Q: How is the company managing its leverage, and what are the plans for share buybacks? A: Julie Beck mentioned that Terex is evaluating all potential opportunities, including smaller and potentially larger acquisitions. The company has repurchased $1.6 billion of shares over the past three years and still has $130 million remaining in its current share repurchase authorization. Decisions will be made to provide the greatest return to shareholders.
Q: Can you discuss the impact of price versus cost management in the first quarter and expectations for the rest of the year? A: Julie Beck highlighted that the company performed well in price versus cost management, particularly in the AWP segment, due to improved supply chain and labor availability. For the rest of the year, Terex anticipates pricing in the mid to low single-digit range, aiming to remain price-cost neutral.
Q: What is the status of utilities orders for 2025, and how are discussions evolving in this segment? A: Simon Meester explained that while MP is returning to more traditional booking dynamics, the utilities segment is already actively taking orders for 2025. This is driven by strong demand and ongoing grid upgrades, which are expected to continue boosting the segment's performance in the coming years.
Q: How are current market conditions in Europe affecting Terex, and what is the outlook for this region? A: Simon Meester noted that the most significant impacts are being felt in Germany, the UK, and France, with both the UK and Germany nearing technical recession. The company's outlook assumes that conditions in these markets will not worsen, with a potential earlier recovery in the UK due to its lesser dependence on exports compared to Germany.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
