Construction Company Earnings Summary 2Q 2021

Key Takeaways

• Most companies are seeing strong demand and a positive outlook for the rest of 2021. The US infrastructure bill is expected to support growth over the next few years.
• Rising input costs, such as steel and copper, are increasing manufacturing expenses.
• Supply chain issues persist, but large manufacturers like Caterpillar say they are manageable.
• Several manufacturers report that demand from equipment rental companies is beginning to recover.

Global construction demand remains robust, fueled by post-pandemic recovery. Most manufacturers believe the industry has long-term tailwinds driven by fiscal stimulus and infrastructure investments.

Higher input costs and supply chain challenges are concerns for many. However, companies like Caterpillar emphasize that these issues are not threatening their inventory levels or operations.

Caterpillar dealers are holding lower-than-average inventory, which could signal tightness in the market.

Company Outlooks

Titan Machinery

Titan Machinery reported a 35% increase in equipment revenue during its second fiscal quarter, driven by strong demand and improved inventory management. The company is confident in its ability to meet revenue targets despite ongoing supply chain challenges.

"We're seeing increased construction activity across our markets, supported by economic reopening, low interest rates, and strong housing starts," said David Meyer, Chairman and CEO. "Our operating improvements are translating into better profitability."

"With the right strategies in place, we're well-positioned to continue driving growth through the rest of the year," added Bryan Knutson, COO.

John Deere

John Deere's leadership emphasized the strength of its product lines, despite ongoing supply chain pressures. “Our results reflect the hard work of our teams and dealers in keeping factories running and customers served,” said John C. May, Chairman and CEO.

The company forecasts a 15–20% increase in North American construction equipment sales, with compact equipment up 20–25%. Forestry equipment is also expected to see strong growth due to rising lumber demand.

"Demand for earthmoving and compact equipment is outpacing production, leading to low inventory levels," said John Stone, President of Construction & Forestry. "We expect continued strong performance heading into the fourth quarter."

Linamar (Skyjack)

Linamar’s CEO, Linda Hasenfratz, noted that while supply chain issues are creating challenges, the company is managing them effectively. “We’re seeing strong market demand and growing market share,” she said.

Skyjack had a strong quarter, with commercial and industrial sales up 48%. "Equipment utilization is at 93–98% of 2019 levels, and we expect double-digit growth in 2021 and 2022," said Hasenfratz.

"A strong backlog supports this growth, and we're confident in our ability to deliver on our commitments," she added.

Manitowoc

Manitowoc’s CEO, Aaron Ravenscroft, stated that demand for its products exceeded expectations. “We're proactively managing challenges like inflation, supply chain shortages, and labor constraints,” he said.

He highlighted strong performance in tower cranes and noted that the European mobile crane market is still recovering. “The U.S. infrastructure bill could provide significant tailwinds in the coming years,” he added.

Manitex

Manitex reported higher revenues and improved EBITDA. CEO Steve Filipov said, “We're seeing more confidence from distributors and partners in their order patterns.”

“Legislative progress on infrastructure spending in the U.S. suggests increased construction activity,” he said. “Our products are well-suited for new funding initiatives, and we're excited about the opportunities ahead.”

“While supply chain challenges remain, we expect a strong finish to the year,” he concluded.

Caterpillar

Caterpillar’s CEO, Jim Umpleby, noted that sales and revenues grew across all regions and segments. “There's continued improvement in end markets,” he said.

He highlighted strong performance in mining, construction, and energy sectors. “Dealer inventory remains near the low end of normal ranges,” he added.

Despite supply chain challenges, Caterpillar reported that product availability remains within normal limits. “Our team is preparing contingency plans to ensure minimal disruption,” he said.

CNH Industrial (Case)

Scott Wine, CEO of CNH Industrial, said, “Despite supply chain challenges, our strong end markets and operational efficiency led to record earnings.”

He noted that construction equipment demand is growing in both light and heavy segments. “Residential construction is a key driver, and preparations for the U.S. infrastructure bill are also boosting demand,” he said.

Hitachi

Hitachi reported solid order intakes, particularly in markets recovering from the pandemic. “We're seeing positive momentum in key regions,” said the company.

Komatsu

Komatsu expects steady demand in residential and non-residential construction, as well as road and traffic infrastructure. Rental equipment demand is also starting to recover.

European construction demand is rebounding, especially in major markets like the UK, Germany, and France. Global mining demand is up 46% year-over-year, driven by Oceania, Latin America, CIS, and Asia.

Terex

Terex reported strong performance in AWP and MP segments. “The global access equipment market is entering a multi-year replacement cycle,” said the company.

Strong demand is being driven by elevated fleet ages and increased utilization. “We're also seeing growth in utility parts and service businesses,” said the company.

Global monetary and fiscal stimulus programs are supporting demand. “We're seeing robust conditions worldwide,” said Terex.

Oshkosh (JLG)

Oshkosh CEO John C. Pfeifer said, “Global supply chain disruptions and labor shortages are challenging, but our teams are delivering strong results.”

He noted that access equipment demand is rising, with JLG seeing nearly 90% revenue growth compared to the previous year. “Rental companies are looking to modernize their fleets, which presents a multi-year opportunity,” he said.

Orders were strong, with a backlog of $1.75 billion. “Electric equipment is gaining traction, with customers valuing performance, cost savings, and environmental benefits,” said Pfeifer.

Volvo Construction Equipment

Volvo's CEO, Martin Lundstedt, said, “Despite material shortages and production stoppages, we achieved an adjusted operating margin of 10.7%.”

He noted that price increases are being implemented to offset rising raw material costs.

Atlas Copco

Atlas Copco expects customer business activity to remain high. “Order intake increased 45%, representing organic growth of 54%,” said the company.

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