Joy Global Lags, Bookings Improve - Analyst Blog


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Joy Global Inc. ( JOY ) reported adjusted earnings of $1.83 per share in the fourth quarter of fiscal 2011, compared with $1.39 per share in the fourth quarter of fiscal 2010. The results of the company were 2 cents lower than the Zacks Consensus expectation of $1.85 for the quarter.

Fiscal 2011 adjusted earnings of Joy Global were $5.92 per share, compared with $4.40 per share in fiscal 2010. The results of the company were 4 cents higher than the Zacks Consensus expectation of $5.88 for the fiscal year.

GAAP earnings per share during the fourth quarter were $1.61 and its fiscal earnings were $5.72. The difference between GAAP and operating earnings in the quarter and the fiscal year emanated from the impact of discontinued operation.

Total Revenue

Joy Global reported net sales of $1,335.3 million in the fourth quarter of 2011 versus $1,048.9 million reported in the fourth quarter of 2010, reflecting a year-over-year growth of 27.3%. The upside was driven by higher contribution from the Underground Mining Machinery and Surface Mining Equipment segments, while eliminations dragged down total revenue marginally.

The actual results were a touch short of the Zacks Consensus forecast of $1,339 million for the fourth quarter.

Joy Global reported net sales of $4,403.9 million for 2011 versus $3,524.3 million reported in 2010, which reflected a growth of 25% year over year. The year-over-year increase was due to strong performance of the Underground Mining Machinery and the Surface Mining Equipment segments.

The actual results for fiscal 2011 were marginally lower than the Zacks Consensus expectation of $4,431 million.

Fourth Quarter Highlights

During the quarter under review Underground Mining Machinery as well as Surface Mining Equipment experienced year-over-year gains due to higher shipments, while  sales were up in all markets.

Joy Global's operating profit in the fourth quarter was $296.3 million versus $226.6 million in the year-ago period, reflecting a year-over-year growth of 22.2%. The positive impact from aftermarket sales, higher sales volume, and favorable manufacturing overhead absorption drove the upside.

Fiscal 2011 Highlights

Total bookings at Joy Global during the fiscal year touched the $5.59 billion mark, up a significant 44.3% from the previous year-end level of $3.87 billion. The results were driven by strong bookings in Australia, South America and U.S.

At fiscal year end, total backlog was $3.3 billion, up $1.5 billion from the prior year. The growth reflects a positive book-to-bill ratio along with contributions from the LeTourneau acquisition.

Net interest expense in 2011 was $24 million, up $7 million from 2010 levels. The increase stemmed from acquisition financing.

Financial Condition

Cash and cash equivalents of Joy Global as of October 28, 2011, were $288.3 million versus $815.6 million as of October 29, 2010.

Cash provided by operating activities during 2011 was $499.7 million versus $583.5 million provided during the previous year. The year-over-year decline in cash from continuing operations was mainly due to growth in inventory and accounts receivable, partially offset by higher net income and increased customer advance payments.

Capital expenditure in 2011 was $111 million, higher $38 million from 2010 levels. The increase was attributable to continued investments in global capacity and aftermarket service infrastructure at the company.


Joy Global's projection for fiscal 2012 takes into account the possible contribution from the acquired LeTourneau mining business, while the forecast excludes the pending acquisition of IMM. LeTourneau is expected to contribute $400 million to 2012 revenues and $0.41 to earnings per share.

Joy Global expects revenue to range from $5.3 billion to $5.5 billion for 2012. The company expects full-year 2012 earnings per share to range between $7.00 and $7.40.

The company continues to invest in global capacity and efficiency and has thus allocated $ 200 million in 2012 for this purpose.

Peer Comparison

Joy Global competes head-to-head with the industry behemoth Caterpillar Inc. ( CAT ). Caterpillar's third-quarter adjusted EPS was $1.71, surpassing $1.22 per share reported in the comparable quarter of 2010. The company also beat the Zacks Consensus Estimate of $1.59 per share.

In the reported quarter, Caterpillar's revenues surged 41% year over year to $15.716 billion from $11.134 billion a year ago. The result surpassed the Zacks Consensus Estimate of $14.581 billion. During the quarter, the company experienced a growth in sales for new equipment and after-market parts.

Our View

Despite slightly disappointing results this fiscal, we are encouraged by the company's strong year-end booking and backlog. We believe the acquired assets will boost   performance going ahead.  Besides, increasing demand for mining equipment in U.S., China and India would act as catalysts.

Joy Global currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Mining equipment manufacturer and service provider Joy Global Inc. is based in Milwaukee, Wisconsin. The company caters to its global consumers and provides manufacturing, distributing and servicing equipment for surface mining, through its P&H Mining Equipment division, underground mining, through its Joy Mining Machinery division and bulk material conveyor systems, through its Continental Crushing & Conveying division.

CATERPILLAR INC ( CAT ): Free Stock Analysis Report
JOY GLOBAL INC ( JOY ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
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