Mining equipment manufacturer and service provider
Joy Global Inc.
) reported adjusted earnings of $1.79 per share in the third
quarter of fiscal 2012, compared with $1.54 per share in the
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JOY GLOBAL INC (JOY): Free Stock Analysis
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The results of the company were 5.8% lower than the Zacks Consensus
Estimate of $1.90.
On a GAAP basis, the company reported earnings of $1.82 per share
compared with earnings of $1.61 per share in the year-ago
quarter. The difference of three cents between operating and
GAAP earnings was due to the impact of one-time items.
Joy Global reported net sales of $1.39 billion in the relevant
quarter, up 22.2% from $1.13 billion in the year-earlier period.
The growth was driven by higher contribution from Underground
Mining Machinery (up 12.7%) and Surface Mining Equipment (up
33.1%), while eliminations were a marginal drag on total revenue.
Backlog at the end of the quarter was $2.8 billion, dipping
sequentially from $3.1 billion at the end of the second quarter of
Net sales in the reported quarter came in lower than the Zacks
Consensus forecast of $1.43 billion.
Booking in the second quarter dropped 25% year over year.
Lackluster booking was attributable to a decline in the domestic
order book and sluggishness in some international pockets. Lower
orders from the legacy business was marginally offset by the $68
million of incremental bookings from LeTourneau and $65 million of
bookings from IMM.
During the quarter, cost of sales climbed 23.4% to $0.91 billion
from $0.74 billion a year ago.
Selling and administrative expenses rose 8.5% from the previous
year, but declined as a percentage of total revenue by 163 basis
points year over year.
Operating income shot up 26.9% year over year mainly due to higher
sales volume and a reduction in employee costs. Besides,
contribution from the acquired assets also benefited results.
Interest expenses during the quarter rose to $16.8 million from $6
million in the year-ago quarter. Interest expense climbed because
of the funds that were raised to finance the LeTourneau and IMM
Cash and cash equivalents of Joy Global as of July 27, 2012, were
$454.2 million versus $288.3 million as of October 28, 2011.
Cash from operating activities was $150.9 million in the third
quarter of fiscal 2012 versus $93.8 million in the third quarter of
Capital expenditure at Joy Global for the quarter was $55 million,
up $33 million from the year-ago quarter. The noticeable rise in
capital spending is part of the company's plans for the year to
increase its global capacity and aftermarket service
infrastructure. Capital expenditure for the fiscal is expected to
be $220 million.
Joy Global expects waning international demand to completely
outweigh any recovery in the US market.
The company thus expects total revenue for fiscal 2012 to be hit by
roughly $100 million. Hence, it pegs the 2012 revenue guidance in a
band of $5.450 billion and $5.550 billion. Earnings per share for
the fiscal are expected to be to be between $7.05 and $7.20, down
from the earlier range of $7.15 to $7.45.
Including restructuring changes, GAAP earnings for the fiscal are
expected to be between $6.92 and $7.07.
Joy Global competes head to head with the industry behemoth
). Caterpillar's second-quarter adjusted earnings per share
increased 67% year over year to $2.54, ahead of the Zacks Consensus
Estimate of $2.26.
Revenues increased 22% year over year to $17.37 billion, surpassing
the Zacks Consensus Estimate of $16.97 billion. Volumes grew for
both new equipment and aftermarket parts as well as across all
geographic regions except China and Europe.
Joy Global fell short of our expectation as orders from the
international markets disappointed. The company expects recovery in
demand to remain muted, leading to a downward revision in
The decline in electricity demand and switching to natural gas for
electricity production impacted U.S. thermal coal demand while
uncertainties surrounding the Eurozone debt crisis affected the
demand for Joy Global's products.
However, as power production is estimated to increase in Europe and
Asia in the next three to four years, demand for mining equipment
would also concomitantly rise. India plans to add 97 gigawatts of
coal-fired power generation over that period leading to an
additional 300 million tons of coal. Europe will add 36 gigawatts
of new generating capacity out of which 2/3rd will be coal-fired.
Besides, the global steel market is improving although very
negligibly. So, there is still hope for this mining equipment maker
in the long run.
Based in Milwaukee, Wisconsin, Joy Global Inc. was founded in 1884.
The company caters to its global consumers and provides
manufacturing, distributing and servicing equipment for surface and
underground mining. The company has a market capital of $5.76
billion and 14,500 employees. Joy Global currently retains a Zacks
#3 Rank (short-term Hold rating).