Morningstar | Terex Announces Delay in 2018 Fourth-Quarter Earnings Release; No FVE Adjustment Expected
On Feb. 18, one day before Terex was scheduled to report its fourth-quarter 2018 earnings, the firm announced it would be delaying the release until Feb. 26. While the reason for the delay was unspecified, management noted that it was for “non-regulatory, non-accounting related reasons.†In the press release, Terex revealed that it expected revenue of $5.1 billion for 2018 with adjusted EPS of $2.71. These results are approximately in line with consensus of $5.1 billion for annual revenue and adjusted EPS of $2.66. The results were consistent with our expectations, and we don’t anticipate a change in our fair value estimate.Also included in the press release was a reconciliation of GAAP EPS of $1.45 to adjusted EPS of $2.71. A new noncash charge of $67 million or $0.55 per share for pension annuitization was included that hasn’t been previously discussed. We don’t view this charge as a concern. Consistent with previous reporting periods, Terex also included separate restructuring charges and transformation charges, which together ($14.7 million and $35.9 million) totaled 34% of anticipated GAAP earnings of $148.7 million for the year. Even though we expected these two adjustments, we find the ongoing inclusion of a transformation charge adjustment as overly generous as it has been described principally as a strategic initiative.
Upon release of Terex’s complete earnings for the quarter, we will be eager to get updates on two important issues: improvement in Terex’s supply chain problems and backlog growth. The company claimed many of the supply chain challenges were resolved during the third quarter, so we seek further confirmation during the upcoming call. More importantly, indications of 2019 demand in two of its segments--aerial work platforms and cranes--will provide information on the prospects of Terex and the health of the larger economy as these products are tied to nonresidential construction.
Terex is a global manufacturer of aerial work platforms, materials processing machinery and cranes. The company has two segments: Aerial Work Platforms, which designs, manufactures, services and markets aerial work platform equipment, utility equipment, telehandlers and light towers, including portable material lifts, self-propelled articulating and telescopic booms, scissor lifts, and trailer-mounted light towers as well as, their related components and replacement parts; and Material Processing, which designs, manufactures and markets materials processing and other equipment, including crushers, washing systems, apron feeders, conveyors, and their related components and replacement parts.
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