Joy Global Misses on Fiscal Q3 Earnings, Tweaks Guidance - Analyst Blog

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Joy Global Inc. ( JOY ) reported adjusted earnings of 80 cents per share in the third quarter of fiscal 2014. The bottom line compared unfavorably with $1.73 per share earned in the year-ago quarter.

Joy Global, Inc - Earnings Surprise | FindTheBest

Earnings were nearly 7% lower than the Zacks Consensus Estimate of 86 cents.

Total Revenue

Joy Global reported net sales of $875.7 million in the reported quarter, down 33.7% from $1,320.6 million a year ago. The decline was due to lower contribution from the Underground Mining Machinery (down 34.9%) and Surface Mining Equipment (down 37.8%) segments.

Softness in demand persists in the global mining market. Geographically, revenue contributions decreased 31.1% year over year to $362.9 million in the U.S. and 35.4% to $512.7 million in Rest of the World.

Net sales in the reported quarter missed the Zacks Consensus forecast of $950 million by 7.8%.

Quarter Highlights

Booking in the fiscal third quarter increased 32.8% from the comparable quarter last year.

Original equipment bookings increased a significant 195.3% to $284.4 million while services bookings rose 6.7% to $639 million.

Original equipment orders improved for both underground mining and surface mining. Underground equipment orders improved in North America, Australia and Africa with declines in all other regions. Surface equipment orders improved in South America, Australia and China, partially offset by declines in all other regions.

Backlog at the end of the quarter was $1.7 billion, higher than $1.5 billion at the end of the previous quarter.

During the reported quarter, cost of sales declined 29.1% to $623.7 million. However, cost of sales, as a percentage of total revenues, increased nearly 460 basis points year over year. This had a dilutive impact on margins.

Operating income in the reported quarter was $119.3 million, reflecting a year-over-year decline of 56.5%.

Interest expenses during the quarter increased 9.6% to $14.9 million.

Financial Update

Joy Global's cash and cash equivalents as of Aug 1, 2014, were $308 million versus $405.7 million as of Oct 25, 2013.

Long-term debt as of Aug 1, 2014, was $1.27 billion, increasing from the year-end figure of $1.25 billion.

Net cash from operating activities was $91.6 million in the fiscal third quarter, compared with $349.9 million in the comparable prior-year period. The decrease in cash provided by continuing operations during the fiscal third quarter was primarily due to lower earnings and reduced cash generation from changes in trade working capital levels.

Capital expenditure at Joy Global for the quarter was $25 million, down from $31 million in the comparable year-ago period.

Guidance

Joy Global adjusted its fiscal 2014 total revenue guidance to the range of $3.65 billion to $3.75 billion from the prior range of $3.6 billion to $3.8 billion.

Excluding restructuring charges and unusual items, earnings per diluted share are now expected between $3.15 and $3.30 versus the prior expectation of $3.10 and $3.50.

Other Company Releases

Astec Industries Inc. ( ASTE ) reported earnings of 63 cents per share in the second quarter of 2014, beating the Zacks Consensus Estimate of 43 cents by 46.5%.

Caterpillar Inc. ( CAT ) announced second quarter 2014 operating earnings of $1.69 per share, beating the Zacks Consensus Estimate of $1.51 by 11.9%.

Terex Corp. ( TEX ) reported second-quarter 2014 adjusted earnings of 76 cents per share, up 18.8% from 64 cents in the year-ago quarter. Earnings however fell short of the Zacks Consensus Estimate of 80 cents.

Our View

Depressed commodity pricing and a global supply glut impacted the performance of this mining equipment maker. However, management remains optimistic over the long-term prospects of mining in Eastern Europe and Russia.

Joy Global, however, continued with its share repurchase plan in the reported quarter. It bought back shares worth $65 million. Since the authorization of the $1 billion buyback program in the fourth quarter of fiscal 2013, the company has repurchased shares worth $408 million.

Joy Global currently has a Zacks Rank #4 (Sell).


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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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: JOY , TEX , CAT , ASTE

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