Equipment manufacturer Terex reduced its backlog again to end 2024, as the market returns closer to pre-pandemic levels.
Overall order backlog at the end of the fourth quarter was $2.3 billion, down 34.4% year over year, according to the company’s Feb. 6 earnings presentation. While the addition of the company’s environmental solutions group (ESG) inflates the overall backlog value, the legacy businesses of aerial work platforms (AWP) and materials processing (MP) neared historical levels, Chief Executive Simon Meester said during the Feb. 6 earnings call.
“Our current backlog of $2.3 billion includes a very healthy $520 million for ESG and $1.8 billion for our legacy businesses, which is in line with historical pre-COVID norm,” he said. “As expected, we saw booking trends return to a historical pattern with the fourth quarter traditionally being a seasonally strong bookings period.”
While backlogs continue to improve, including for dealers, coverage remains weak, especially for the MP segment.
“Backlog coverage compared to the other two legs of the stool, seems a little less favorable, but don’t forget, it’s mostly a dealer model, so we have pretty strong forward visibility,” he said. “Historically, MP has been, if compared to the other two segments, more of a book-to-bill business with one-quarter forward visibility.”
Annual sales dip
Annual sales for Terex products declined in 2024, despite an uptick in the fourth quarter in certain areas, Senior Vice President and Chief Financial Officer Julie Beck said on the call.
“Consistent with our third-quarter outlook, fourth-quarter margins were impacted by aggressive production cuts, product moves and unfavorable mix in Aerials,” she said. “On the aggregate side, we saw machines on rent longer than usual, impacting dealers’ replenishment of new units.”
During the earnings presentation, Norwalk, Conn.-based Terex reported:
- Full-year sales dipped 0.5% YoY to $5.1 billion;
- AWP annual sales rose 2.5% YoY to $3 billion;
- MP annual sales fell 14.6% YoY to $1.9 billion;
- Q4 sales inched up 1.5% YoY to $1.2 billion;
- AWP Q4 sales were down 13.2% YoY to $573 million;
- MP Q4 sales dropped 20.9% YoY to $439 million;
- ESG Q4 sales, beginning on Oct. 8, totaled $228 million;
- Q4 order backlog for AWP dropped 43% YoY to $1.5 billion; and
- MP backlog plummeted 58.3% annually to $320 million.
Looking ahead
Terex expects growth in 2025 if the impact of potential tariffs or a trade war remains minimal, Beck said.
“We are operating in a complex environment with many macroeconomic variables and geopolitical uncertainties, and results could change negatively or positively,” she said. “We expect overall growth in 2025 with the full-year contribution of ESG, anticipating net sales of approximately $5.4 billion.”
Part of the growth is also dependent on collaboration with dealers, Declan North, global director of MP trade AR and financial solutions for Terex, told Equipment Finance News on a recent episode of “The Dig” podcast.
“We are going to continue to work hard with our dealers and we’re going to continue to get into the situation whereby we have the dealers’ fleets right-sized,” he said. “We’re going to then put the right facilities in place for the dealers to grow their business effectively.”
The U.S. market also represents a strong opportunity for Terex, Meester said.
“We do see that Europe is soft and the United States has more upside for us,” he said. “We do see some more positive quoting activity, we do see a pickup in orders, actually, going into the first quarter, we do see fleet utilization is still high in the MP fleet, and we do see fleets are aging.”
Shares of Terex [NYSE: TEX] were trading at $44.75 per share as of market close Friday, down roughly 3.80% or $1.77 since the market opened. The company has a market cap of $3.11 billion.
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