Latest news with #EnvironmentalSolutions
Yahoo
16-05-2025
- Business
- Yahoo
TEX Q1 Earnings Call: Environmental Solutions Segment Drives Guidance Amid Tariff Headwinds
Lifting and material handling equipment company Terex (NYSE:TEX) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 4.9% year on year to $1.23 billion. On the other hand, the company's full-year revenue guidance of $5.4 billion at the midpoint came in 2.2% above analysts' estimates. Its GAAP profit of $0.31 per share was 28.8% below analysts' consensus estimates. Is now the time to buy TEX? Find out in our full research report (it's free). Revenue: $1.23 billion vs analyst estimates of $1.25 billion (4.9% year-on-year decline, 1.3% miss) EPS (GAAP): $0.31 vs analyst expectations of $0.44 (28.8% miss) Adjusted EBITDA: $128 million vs analyst estimates of $110.4 million (10.4% margin, 15.9% beat) The company reconfirmed its revenue guidance for the full year of $5.4 billion at the midpoint EPS (GAAP) guidance for the full year is $4.90 at the midpoint, beating analyst estimates by 15.8% EBITDA guidance for the full year is $660 million at the midpoint, above analyst estimates of $628.7 million Operating Margin: 5.6%, down from 12.2% in the same quarter last year Free Cash Flow was -$57 million compared to -$68.9 million in the same quarter last year Organic Revenue fell 18.7% year on year (4.4% in the same quarter last year) Market Capitalization: $3.08 billion Terex's first quarter results were shaped by a combination of operational adjustments and ongoing market uncertainty. Management cited the impact of production cuts in its Aerials and Materials Processing (MP) segments, which were implemented to manage inventory and rebalance supply with demand. CEO Simon Meester highlighted that these actions impacted margins during the quarter but are now largely behind the company, with expectations for improvement in subsequent periods. The Environmental Solutions (ES) segment, particularly the recently integrated ESG business, delivered notable performance, accounting for a third of global sales and achieving high operating margins. Looking ahead, the company's forward guidance is influenced by its ability to mitigate tariff-related cost pressures, leverage its U.S.-centric manufacturing footprint, and realize operational synergies from the ESG acquisition. Management reaffirmed its revenue and earnings outlook for the year, pointing to strong backlog, ongoing cost controls, and a cautious approach to external uncertainties such as tariffs and macroeconomic volatility. CFO Jennifer Kong emphasized the expectation for improved free cash flow and operating margins as the year progresses, supported by continued integration benefits and operational efficiency gains. Management's commentary focused on the operational levers and market dynamics affecting segment performance, as well as the progress of integration efforts within Environmental Solutions. Key drivers of the quarter's financial performance included shifts in production, cost mitigation strategies, and evolving demand patterns across end markets. Production Cuts and Inventory Rebalancing: The Aerials and MP segments experienced reduced production volumes to align inventory with current demand, leading to under-absorption of fixed costs and temporary margin pressure. Management expects these effects to diminish, supporting margin recovery in future quarters. Environmental Solutions Outperformance: The ES segment, bolstered by the ESG acquisition, contributed about one-third of total sales and achieved a 19.4% operating margin. The segment benefited from record throughput and early realization of integration synergies, though management expects margins to moderate slightly in coming quarters. Tariff Mitigation Efforts: The company has been proactive in managing the impact of new tariffs by securing inventory early, adjusting its supply chain, and leveraging its U.S. manufacturing footprint. Approximately 75% of U.S. machine sales are sourced domestically, helping buffer the effect of trade policy shifts. End Market Shifts: Waste and recycling, infrastructure, and utilities now represent more than half of total revenue, making Terex less exposed to cyclical swings in general construction. Publicly funded infrastructure demand remains healthy, while private sector construction is described as cautious. Synergy Realization and Cost Controls: Integration of ESG is expected to deliver over $25 million in operational run-rate synergies by the end of 2026. The company also reported ongoing SG&A reductions and operational efficiency measures, which partially offset margin headwinds from volume declines. Management's outlook for the upcoming quarters is shaped by efforts to navigate tariff-related costs, realize integration benefits, and manage demand across resilient end markets. The company's ability to sustain margins and cash flow will depend on these ongoing initiatives. Tariff and Supply Chain Management: The company is focused on mitigating tariff impacts through supply chain adjustments, leveraging USMCA trade agreements, and maintaining price/cost neutrality. Management expects these actions to limit cost inflation's effect on margins. ESG Integration and Synergy Capture: Continued integration of the ESG acquisition is expected to drive operational synergies, particularly in Environmental Solutions. Management anticipates these benefits will support margin improvement and segment growth over the next 18 months. End Market Demand and Backlog: Stable demand in waste, recycling, infrastructure, and utilities is expected to underpin revenue, while cautious private construction and European uncertainty remain risks. A strong backlog in key segments supports management's confidence in the sales outlook. Jerry Revich (Goldman Sachs): Asked about the sustainability of ES segment margins; management attributed Q1's strong performance to record throughput and early synergies, but expects margins to moderate as one-off benefits fade and investments ramp up. Jamie Cook (Truist Securities): Inquired about the effect of tariffs and whether Terex's U.S. manufacturing provided a competitive advantage; management confirmed domestic production helps buffer tariff exposure, especially in Environmental Solutions and Aerials. David Raso (Evercore ISI): Sought clarity on sequential margin recovery in Aerials; management pointed to normalization of production volumes and reduced under-absorption as key drivers for expected return to double-digit margins in Q2. Mig Dobre (Baird): Questioned the impact of reciprocal tariffs on UK-sourced products in MP; management explained that mitigation strategies are in place, and pricing actions are considered based on segment exposure and competitive context. Angel Castillo (Morgan Stanley): Asked about drivers behind the improvement in MP backlog and whether it signals a bottom; management cited normalized dealer inventories and healthy North American fleet utilization, though uncertainty from tariffs remains a cautionary factor. In the coming quarters, the StockStory team will be monitoring (1) the pace of margin recovery in the Aerials and MP segments as production normalizes, (2) the realization of operational synergies and sustained performance in Environmental Solutions following the ESG integration, and (3) the company's effectiveness in mitigating tariff-related costs through supply chain and pricing actions. Additionally, the trajectory of backlog conversion and demand in key U.S. and international markets will serve as important indicators of execution. Terex currently trades at a forward P/E ratio of 9.6×. At this valuation, is it a buy or sell post earnings? Find out in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
14-05-2025
- Business
- Yahoo
FSS Q1 Earnings Call: Aftermarket and Market Share Initiatives Drive Above-Expectation Results
Safety and security company Federal Signal (NYSE:FSS) reported Q1 CY2025 results exceeding the market's revenue expectations , with sales up 9.2% year on year to $463.8 million. The company's full-year revenue guidance of $2.06 billion at the midpoint came in 0.5% above analysts' estimates. Its non-GAAP profit of $0.76 per share was 4% above analysts' consensus estimates. Is now the time to buy FSS? Find out in our full research report (it's free). Revenue: $463.8 million vs analyst estimates of $459.1 million (9.2% year-on-year growth, 1% beat) Adjusted EPS: $0.76 vs analyst estimates of $0.73 (4% beat) Adjusted EBITDA: $85.1 million vs analyst estimates of $82.38 million (18.3% margin, 3.3% beat) The company reconfirmed its revenue guidance for the full year of $2.06 billion at the midpoint Management slightly raised its full-year Adjusted EPS guidance to $3.76 at the midpoint Operating Margin: 14.2%, up from 12.8% in the same quarter last year Free Cash Flow Margin: 6.7%, up from 5.4% in the same quarter last year Backlog: $1.1 billion at quarter end, in line with the same quarter last year Market Capitalization: $5.73 billion Federal Signal's first quarter results were driven by broad-based demand across both its Environmental Solutions and Safety and Security Systems groups. CEO Jennifer Sherman attributed the company's performance to higher production levels, growth in aftermarket offerings, proactive management of supply chain and pricing dynamics, and contributions from recent acquisitions. Sherman highlighted that double-digit growth in road-marking equipment and dump bodies was the result of ongoing market share expansion efforts, particularly in key Southeastern markets such as Texas and Florida. She also noted that lead times have improved, with capacity utilization around 70-72%, allowing for further volume absorption without significant new investment. Looking ahead, management reaffirmed full-year revenue guidance and slightly raised adjusted EPS expectations, citing strong order intake and record backlog as providing visibility for the rest of the year. Sherman indicated that Federal Signal's predominantly North American supply chain limits direct exposure to global tariffs, and the company remains focused on insourcing and operational optimization. CFO Ian Hudson emphasized the company's low net debt leverage and flexibility to invest in organic growth, pursue acquisitions like HOG Technologies, and return capital to shareholders via dividends and opportunistic share repurchases. Federal Signal's management identified several operational and end-market factors that shaped quarterly performance, including strategic product initiatives, supply chain adjustments, and targeted M&A. Aftermarket expansion: Management noted that aftermarket revenue, including rentals and used equipment sales, grew 11% year-over-year due to strong rental utilization and customer demand for post-sale services. These offerings now account for approximately 26% of Environmental Solutions Group revenue, supporting recurring income streams. Market share gains in core products: Double-digit organic growth in road-marking equipment and dump bodies was attributed to targeted initiatives to expand geographic reach and win conquest customers, especially in the Southeast U.S. Over 75% of dump truck revenue growth came from new customers. Operational leverage and production ramp: Higher production at the company's two largest Environmental Solutions Group facilities drove margin expansion. Lead times for key products, like three-wheel street sweepers, have improved, enabling more timely order fulfillment and efficient use of existing capacity. Supply chain localization and tariff mitigation: With more than 95% of direct supplies sourced from North America, Federal Signal's exposure to tariff-related cost increases remains minimal. Recent investments in domestic printed circuit board manufacturing further reduce reliance on Asian suppliers. Recent acquisitions contributing to results: The HOG Technologies acquisition added approximately $5 million in net sales during the quarter and is expected to generate $50–$55 million in sales for the full year. Integration is progressing, with initial customer response described as positive by management. Management expects continued order strength and operational improvements to underpin future results. The company's outlook emphasizes diversification of end markets, ongoing supply chain optimization, and execution of strategic growth initiatives. Geographic and market expansion: Efforts to grow in underpenetrated regions and segments, particularly through cross-selling and dealer network optimization, are expected to drive organic growth ahead of end-market demand. New product development and adoption: Federal Signal is accelerating launches of control systems and safety technologies, such as the RegenX air sweeper and Pathfinder Perimeter Breach Warning System, to address customer labor and safety needs and expand content per vehicle. Tariff and supply chain risk management: The company's limited direct exposure to Chinese components and the ability to pass through chassis price changes to customers help mitigate risks from global tariff policies. Management is accelerating insourcing where possible to further reduce supply chain risk. Jacob Moore (KeyBanc Capital Markets): Asked about available capacity and lead time improvements; management said capacity utilization is around 70-72% and lead times are now at targeted levels for core products, reducing the need for major new investments. Sam Karlov (William Blair): Queried whether strong Q1 orders reflected demand pull-forward ahead of tariffs; management emphasized broad-based order strength and minimal evidence of pre-buy activity due to long lead times and ability to surcharge backlog. Tim Thein (Raymond James): Inquired about drivers of margin improvement in Environmental Solutions; CFO Ian Hudson cited higher production, operating leverage, and ongoing progress in reducing lead times, without any unusual or nonrecurring items. Christopher Moore (CJS Securities): Asked about pricing power and ability to pass through supply cost increases; CEO Jennifer Sherman said most chassis costs are passed through to customers and the company's supply chain localization provides flexibility to manage tariffs. Linda Wiley (D.A. Davidson): Sought an update on the rental business and near-term outlook; management responded that rental and used equipment revenues were both up double digits, and the rental fleet helps accelerate new product adoption and provides customer flexibility. In the coming quarters, the StockStory team will be monitoring (1) the pace and impact of new product rollouts, especially in sweepers and police safety equipment, (2) continued execution of geographic expansion and market share initiatives in specialty vehicles, and (3) order and backlog trends in both public and industrial segments. Integration progress of recent acquisitions and adaptation to evolving tariff and supply chain policies will also be closely watched. Federal Signal currently trades at a forward P/E ratio of 24.6×. In the wake of earnings, is it a buy or sell? The answer lies in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. 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Yahoo
02-05-2025
- Business
- Yahoo
Why Terex (TEX) Stock Is Trading Up Today
Shares of lifting and material handling equipment company Terex (NYSE:TEX) jumped 10.9% in the afternoon session after the company reported impressive first quarter 2025 results with EBITDA exceeding analysts' expectations and full-year EBITDA and EPS guidance topping Wall Street's estimates. The Environmental Solutions segment stood out, delivering roughly 20% adjusted margin and making up one-third of total revenue, which provided much-needed stability amid weakness in other segments. On the other hand, its revenue fell slightly short of Wall Street's estimates. Overall, this print was mixed but still had some key positives. The shares closed the day at $39.83, up 9.6% from previous close. Is now the time to buy Terex? Access our full analysis report here, it's free. Terex's shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Terex and indicate this news significantly impacted the market's perception of the business. The biggest move we wrote about over the last year was 9 months ago when the stock dropped 7.7% on the news that the company reported second-quarter earnings results. Its revenue unfortunately missed, and its full-year revenue guidance fell slightly short of Wall Street's estimates. On the other hand, Terex beat analysts' full-year EPS guidance expectations. Its EPS also outperformed Wall Street's estimates. Overall, this was a mixed but weaker quarter for Terex. Terex is down 10.5% since the beginning of the year, and at $39.83 per share, it is trading 40.3% below its 52-week high of $66.76 from July 2024. Investors who bought $1,000 worth of Terex's shares 5 years ago would now be looking at an investment worth $2,916. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Sign in to access your portfolio
