Equipment manufacturer Terex Corp. maintained a backlog of $4.1 billion quarter over quarter as demand remained strong, despite continued supply chain issues and rising interest rates.
Terex’s backlog for its aerial work platforms (AWP) at the end of the first quarter was a record $3 billion, up 2.7% sequentially and 4.2% year over year, according to the company’s earnings presentations.
“The improvement was a result of higher sales volume, favorable mix, cost reduction initiatives, manufacturing efficiencies and disciplined pricing actions to offset martial supplier cost,” Julie Beck, senior vice president and chief financial officer at Terex, said today on the company’s earnings call. The AWP segment’s Q1 book-to-bill ratio was 112%, according to the earnings release.
The equipment manufacturer posted a materials processing (MP) backlog of $1.2 billion, down 1% QoQ and 10.3% YoY, according to the earnings presentation. “The backlog remains robust and is approximately three times historical norms,” Beck said. Bookings were up 6% sequentially, according to the earnings presentation.
The company’s Q1 total backlog was $4.1 billion, up 1.6% QoQ but down 0.3% YoY, according to the earnings release. The total backlog “demonstrates the strength of our end markets and supports their outlook for the remainder of the year, and gives us visibility into early 2024,” Terex’s Chairman and Chief Executive John Garrison said during the company’s earnings call.
“It’s too early to talk about 2024 from a financial standpoint, but we have $1.1 billion of backlog for 2024,” Garrison said. The backlog for 2024 is up 57.1% from the estimated backlog Garrison provided during the company’s yearend 2022 earnings call.
Terex sales up 23.3% YoY
Terex’s total sales increased in Q1 2023, landing at $1.2 billion, an increase of 1.5% QoQ and 23.3% YoY, according to the company’s release. As a result of the Q1 sales performance, Beck said that Terex is increasing its 2023 sales outlook to $5 billion from $4.8 billion.
“Our increased sales outlook of $4.8 billion to $5 billion incorporates the latest dialog with our customers and our suppliers,” she said. “We anticipate higher volume as customer demand remains strong. Our sales are expected to be relatively consistent in Q2 and Q3, and down slightly in Q4, due to lower production days.”
Terex’s AWP sales in Q1 totaled $658.9 million, up 2.1% QoQ and 24.4% YoY, according to the company’s earnings presentation. Terex’s MP sales in Q1 totaled $553.8, up 0.6% QoQ and 22.3% YoY.
“We expect our MP sales and margins to be relatively consistent for the remainder of the year,” Beck said. “We anticipate AWP sales to be relatively consistent in Q2 and Q3, and down slightly in Q4 due to normal seasonality and lower production days.”
Terex didn’t break out Terex Financial Services (TFS) during the earnings call, but the company remained “focused on expanding customer financing solutions in key markets like the U.S., Europe and China,” according to the company’s 10-Q filing with the Securities and Exchange Commission Tuesday. “We also anticipate our continued use of TFS to drive incremental sales by facilitating customer financing.”
At the end of Q1, Terex’s credit guarantees outstanding maximum exposure was determined to be $115 million, down 5.3% QoQ, according to the company’s 10-Q released Tuesday. The terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years. Terex’s allowance for credit losses on credit guarantees was $6 million at the end of Q1, down 4.8% QoQ.
The company’s net finance receivable balances include sales-type leases and commercial loans, according to the company’s 2022 10-K. Terex had $7.6 million in gross finance receivables on Dec. 31, 2022, down 37.7% YoY, according to the 10-K. The allowance for credit losses on finance receivables was $7.4 million at yearend 2022, down 6.3% YoY.
Shares of Terex Corp. [Nasdaq: TEX] were trading at $48.25 at market close today, down 4.89%, or $2.25, from market open. The company has a market capitalization of $3.38 billion.