Joy Global Inc.
) reported adjusted earnings of $1.73 per share in the second
quarter of fiscal 2013, compared with $2.23 per share in the
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Earnings were however 11.6% higher than the Zacks Consensus
Estimate of $1.55.
Joy Global reported net sales of $1.36 billion in the relevant
quarter, down 11.7% from $1.54 billion in the year-earlier
period. The decline was primarily due to lower contribution from
Underground Mining Machinery (down 23.1%), offset marginally by
Surface Mining Equipment (up 3.0%).
The performance at Underground Mining Machinery was down due to a
33% decline in original equipment sales and a 13% aftermarket
sales decline. The softness in demand from U.S. markets and lower
shipments in China and Eurasia led to lower original equipment
Backlog at the end of the quarter was $2.2 billion, dipping
sequentially from $2.4 billion at the end the first quarter of
Net sales in the reported quarter came in higher than the Zacks
Consensus forecast of $1.27 billion.
Booking in the second quarter dropped 8.3% over the previous
quarter. Lackluster booking of surface mining equipment impacted
results. The sluggishness in booking in North America and
Australia resulted in the decline. These negatives were
marginally offset by strong order from China and Africa.
During the second quarter, cost of sales declined 11.8% to $0.9
billion from $1.03 billion a year ago. Selling and administrative
expenses declined 5.1% year over year.
Interest expenses during the quarter declined by $2 million to
Cash and cash equivalents as of Apr 26, 2013, were $234.9 million
versus $263.8 million as of Oct 26, 2012.
Long-term debt as of Apr 26, 2013, was $1.3 billion, increasing
marginally from the year-end figure.
Cash from continuing operations was $1 million in the second
quarter of fiscal 2013, compared with $111 million in the
prior-year quarter. The decrease in cash was primarily due to
income tax payments, an increase in accounts receivable and a
reduction in advance payments resulting from a decline in
original equipment order activity.
Capital expenditure at Joy Global for the second quarter was $32
million, down from $65 million in the year-ago quarter. Despite
the reduction in capex, the company's objective remains
unaltered. The company continues to focus on improving
manufacturing capacity in the emerging markets and global
aftermarket service infrastructure.
The lingering economic problems in the Euro-zone and the sluggish
pace of economic recovery in China continue to impede the growth
of global commodity demand. Joy Global notes that the improvement
in the global economy is yet to benefit the industrial sector,
which drives demand for mining equipment. The softness in demand
has resulted in lower bookings.
Taking into consideration the above factors, the company
presently forecasts fiscal 2013 revenues in the range of $4.9
billion to $5.0 billion, down from the previous range of $4.9
billion to $5.2 billion.
The reported earnings of the company is are expected to be to be
between $5.60 and $5.80, down from the previous guidance of $5.75
to $6.35. Excluding restructuring charges, earnings per diluted
share are expected to be between $5.75 and $5.95.
Other Company Releases
Astec Industries Inc.
) reported earnings of 57 cents per share in the first quarter of
2013, beating the Zacks Consensus Estimate of 53 cents by 7.55%.
) announced first-quarter 2013 operating earnings of $1.31 per
share, lagging the Zacks Consensus Estimate of $1.34 by 2.24%.
Despite Joy Global's forecast beating results this quarter, we
are cautious about the decline in backlog as well as order
booking. The lower-than-expected recovery in the Chinese market
diluted demand. Coal imports in India are expected to reach 165
million tones, exceeding prior-year imports by 30 million tones,
a definite positive for mining companies.
On the whole, commodities mined are presently in supply surplus.
Hence, the miners are taking a cautious approach towards
developing and expanding their mining projects. Unless demand
recovers to cover up the excess capacity the mining equipment
makers will find it difficult to accelerate demand for mining
Joy Global currently has a Zacks Rank #5 (Strong Sell). We,
however, prefer another operator
H&E Equipment Services Inc.
) having a Zacks Rank #2 (Buy).