I think Dickens could appreciate the story of Terex
Total revenue was up 39% for the quarter, and every operating unit posted 20% growth or greater. Gross margin, though, softened from the year-ago period, while the operating margin showed a slight improvement. On an as-reported basis, operating income rose 47% for the quarter, and net income grew 78%.
What interests me is that the company achieved this sort of profit growth even though the two largest revenue contributors, construction equipment and cranes, posted basically flat year-over-year operating income, mostly because of cost pressures.
As you might then imagine, operating-income growth in the other three segments was quite robust. The aerial-work-platform business posted 27% growth in operating income, while the materials and mining business logged in with more than 300% growth, and the road and utility business posted nearly 250% growth.
Befitting the cyclical upturn that heavy-equipment makers are seeing, Terex's backlog also noticeably increased -- nearly doubling to $1.6 billion at quarter's end. Sure, that's just one good quarter's worth of revenue, but a doubling is still a doubling.
The bad news, from my perspective, is that the company's press release did not include a balance sheet or a cash-flow statement. I believe I understand why -- the company is still in the midst of restating and completing past financial results -- but a little more information about cash, inventory levels, accounts receivable, and the like would have been nice.
These are good days indeed for makers of heavy machinery -- the construction, transportation, and mining sectors are all launching equipment-replacement cycles. Look at other players like Caterpillar
I wouldn't say that Terex is the best of the bunch by any means, but a cyclical business recovery could allow the company to make great progress with margin and balance-sheet improvements. I must repeat my admonition that cyclical stocks can be riskier and trickier than average, but I don't think we've seen the end of the heavy-machinery upgrade cycle just yet.
For more light reading on heavy machinery:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).