Terex sees bright times for AWP segment

News Story
- 13 Dec 2012 ( #595 ) - Westport, CT, United States
2 min read
Terex Corp is optimistic about 2013 for its aerial work platform (AWP) segment including Genie brand equipment.

"(For the corporation, the) tone remains positive overall and the company expects to benefit in 2013 from a combination of better pricing, new product introductions and integration/cost-cutting initiatives, although certain segments still face headwinds," says C Schon Williams, vice president with BB&T Capital Markets in Charlotte, North Carolina. "In light of this, valuation appears attractive ... and it remains one of our top picks in the machinery space."

Recently, BT&T hosted Tom Gelston, vice president of investor relations for Westport-based Terex, for a series of investor meetings.

"(Terex) management is targeting mid-teens AWP sales growth in 2013, ahead of our 8.2%, driven by North American rental replacement demand, which is still in early innings", Williams says. Terex "also sees early signs of fleet expansion based on customer commentary and geographic growth".

An unconfirmed note from BB&T suggests that Sunbelt Rentals of Fort Mill, South Carolina, a wholly owned subsidiary of Ashtead Group plc, may open as many as 100 US locations in the near future. Construction information supplier KHL Group LLP of Wadhurst, England ranked Sunbelt second among companies in the North American AWP rental market with 34,000 units.

Terex plans to raise AWP list prices 3.4% in 2013 "ahead of expected raw material cost pressure of less than1%", Williams says. "Our current 12.1% AWP operating margin estimate for 2013 reflects the new pricing, which we believe will stick given constrained production in the space."

Terex AWP segment sales for the third quarter ended 30 September increased USD77.4 million, or 17.2%, to USD526.1 million versus the comparable 2011 period. At 29% of total Terex sales for the quarter, AWP constitutes the company's largest segment.

BB&T Capital Markets is a division of Scott & Stringfellow LLC and part of the bank holding company BB&T Corp.
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