Joy Global Inc.
) reported adjusted earnings of 76 cents per share in the second
quarter of fiscal 2014. The bottom line compared unfavorably with
$1.73 per share earned in the year-ago quarter.
Earnings were, however, 8.6% higher than the Zacks Consensus
Estimate of 70 cents.
Joy Global reported net sales of $929.7 million in the reported
quarter, down 31.7% from $1,360 million a year ago. The decline was
due to lower contribution from the Underground Mining Machinery
(down 24.1%) and Surface Mining Equipment (down 37.8%) segments.
Softness in demand persists in the global mining market.
Geographically, revenue contributions decreased 38.9% year over
year to $357.9 million from the U.S. and by 26.6% to $571.8 million
from Rest of the World. Original equipment bookings fell
significantly by 27.1%, while services bookings increased 7.6% year
Net sales in the reported quarter surpassed the Zacks Consensus
forecast of $924 million marginally by 0.7%.
Booking in the fiscal second quarter declined 7.2% from the
comparable quarter last year. Underground Mining Machinery booking
dropped 31.4% year over year to $488.0 million, while Surface
Mining booking improved 34.4% year over year to $600.5 million.
The decline in Underground Mining Machinery was primarily due to a
60% fall in original equipment orders. Since the company could not
match the U.S. longwall orders received in the previous year it led
to steep declines.
Backlog at the end of the quarter was $1.6 billion, higher than
$1.5 billion at the end of the previous quarter.
During the reported quarter, cost of sales declined 28.3% to $651.6
million. However, cost of sales, as a percentage of total revenues,
increased 325 basis points year over year. This had a dilutive
impact on margins.
Operating income in the reported quarter was $125.7 million,
reflecting a year-over-year decline of 54.9%.
Interest expenses during the quarter declined 8.8% to $13.8
Joy Global's cash and cash equivalents as of May 2, 2014, were
$385.8 million versus $405.7 million as of Oct 25, 2013.
Long-term debt as of May 2, 2014, was $1.23 billion, decreasing
from the year-end figure of $1.25 billion.
Net cash from operating activities was $206.6 million in the first
half of fiscal 2014, compared with $90.9 million in the comparable
prior-year period. The increase in cash from operating activities
was primarily attributable to favorable working capital changes.
Capital expenditure at Joy Global for the first half of fiscal 2014
was $44 million, down from $87 million in the comparable year-ago
period. The mining equipment manufacturers are trying to lower
their capex to cope with a sluggish demand situation.
Joy Global reiterated its fiscal 2014 total revenue guidance in the
range of $3.6 billion to $3.8 billion.
Excluding restructuring charges and unusual items, earnings per
diluted share are expected between $3.10 and $3.50.
Other Company Releases
Astec Industries Inc.
) reported earnings of 41 cents per share in the first quarter of
2014, lagging the Zacks Consensus Estimate of 57 cents by 28.1%.
) announced first quarter 2014 operating earnings of $1.61 per
share, beating the Zacks Consensus Estimate of $1.25 by 28.8%.
H&E Equipment Services Inc.
) announced first quarter 2014 operating earnings of 21 cents per
share, beating the Zacks Consensus Estimate of 19 cents by 10.5%.
The frigid winter in the U.S. resulted in higher usage of coal to
produce electricity, consequently depleting coal reserves. In
addition, higher steel usage projected for 2014 by the World Steel
Association could boost met coal demand. So, these factors could
bring in a glimmer of hope for mining equipment manufacturers.
However, the global supply glut of commodities is creating a
downward pressure on prices and neutralizing the positive impact of
the above mentioned factors.
Joy Global however continued with its share repurchase plan in the
reported quarter. It bought back shares worth $7 million. Since the
authorization of the $1 billion buyback program in the fourth
quarter of fiscal 2013, the company has repurchased shares worth
Joy Global currently has a Zacks Rank #3 (Hold).
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