Aerial works platforms and materials processing machinery manufacturer
Terex Corp. (NYSE: TEX) stock has been grinding to multi-year highs on the momentum in
housing and infrastructure. The Company produces
machinery that performs the processing of
building materials including crushing, screening, washing, grinding, shredding, and conveying to
construction including cranes, diggers, mixer trucks and roller pavers. It’s a pure infrastructure play that also includes the processing of materials. The Biden administration’s infrastructure initiative provides additional tailwinds for the growing demand for its products. The push to upgrade the nation’s crumbling road, highway and bridge
infrastructure is a boon to Terex. Prudent investors seeking a pure play physical infrastructure beneficiary can monitor shares of Terex for opportunistic pullback levels to consider building a position.
Q4 FY 2020 Earnings Release
On Feb. 11, 2021, Terex released its fiscal fourth-quarter 2020 results for the quarter ending December 2020. The Company reported an earnings-per-share (EPS) profit of $0.21 excluding non-recurring items versus consensus analyst estimates for a profit of just $0.02, a $0.17 blowout beat. Revenues fell (-11.1%) year-over-year (YoY) to $786.7 million beating analyst estimates for $757 million. Bookings grew 25% YoY. The Company achieved aerial works platform (AWP) decremental margins of 7% and material processing (MP) incremental margins of 82% with a 28% reduction in inventories YoY.
Mixed full-year 2021 Guidance
The Company raised its full-year 2021 guidance with EPS expected in the range of $1.95 to $2.35 versus $1.80 analyst estimates. Revenue guidance was slightly lowered as the Company expects between $3.45 billion to $3.5 billion versus $3.5 billion analyst expectations.
Conference Call Takeaways
Terex CEO, John Garrison, set the tone, “The sequential improvement in revenues was driven by MP whose revenues improved approximately 18%. Customer bookings in Q4 represented a continued strong improvement from Q3. Sequential AWP and MP bookings were up dramatically.” While AWP bookings were flat YoY pre-COVID levels, but MP bookings were up 53% YoY with yearend backlog up 25% YoY with pre-COVID levels. AWP is a beneficiary of the re-openings, while MP continues to strengthen as both a pandemic and post-pandemic benefactor. CEO Garrison notes, “We continue to drive global adoption of our products Genie scissors and Boom for working safely at height and mobile crushing and screening products for aggregate production.” He concluded, “We will continue to invest in innovative products and services to serve our specialized markets. Terex is well positions for growth in 2021 because we have strong businesses, strong brands and strong market positions upon which we can grow.”
$600 Million Note Offering
On March 18, 2020, Terex prices $600 million in 5% senior notes due 2029 at par closing on April 1, 2021. The net proceeds will be used to redeem in full the 5.625% senior notes due 2025 and refinance all outstanding indebtedness under existing senior secured credit facilities and related fees, premiums, discounts, and expenses.
Pure Infrastructure Play and Re-Opening Benefactor
Terex is unquestionably a re-opening play in addition to being an infrastructure construction play. It’s worth noting that the Company has undergone significant restricting in the past three-years as it simplified its business lines while focusing on shareholder returns. Dividing its products into two simple segments AWPs, which include the design and manufacturing of aerial platform equipment like cranes, telehandlers, light towers basically enabling workers to work jobs that are high up in the air. The materials processing segment makes concrete mixer trucks, concrete pavers, crushers and screeners need to create building materials.
TEX Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a broader view of the price action playing field for TEX stock. The weekly rifle chart has been uptrending since Sept. 20, 2020 finally peaking out at the $49.81 Fibonacci (fib) level. The weekly 5-period moving average (MA) has flattened out at $46.28 with upper daily Bollinger Bands (BBs) at the $52.88 fib. The weekly market structure high (MSH) sell triggers on a breakdown through $42.08. The weekly stochastic formed a stair step mini inverse pup that has stalled just under the 80-band, which sets up the weekly make or break pattern that will resolve in either a pup breakout or a mini inverse pup breakdown. The daily rifle chart has a grinding uptrend with the rising 5-period MA support at $46.29 after triggering the market structure low (MSL) on a breakout through $45.66. The daily upper BBs are at $47.98, but they have been in a compression period, which precedes a breakout or breakdown. Prudent investors can monitor opportunistic pullback levels at the $45.66 daily MSL trigger, $44.19 fib, $42.06 weekly MSH trigger, $40.52 fib, and the $39.48 sticky 5s level. The upside trajectories range from the $57.47 fib to the $72.18 fib.
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