Joy Global Misses on Earnings & Revenues, Lowers Guidance

Zacks

Joy Global Inc. JOY reported adjusted earnings of 25 cents per share in the first quarter of fiscal 2015, down 48.9% from 49 cents per share a year ago. Earnings were also short of the Zacks Consensus Estimate of 38 cents by 34.2%.

GAAP earnings per share for the fiscal first quarter were 24 cents compared with 48 cents in the year-ago quarter. The difference between GAAP and operating earnings was due to a 1 cent restricting charge.

Total Revenue

Joy Global reported net sales of $703.8 million in the first quarter of fiscal 2015, down 16.1% from $893.3 million in the year-ago quarter.

Revenues were also lower than the Zacks Consensus Estimate of $749 million by 6%.

The downside was due to lower contributions from its Underground Mining Machinery and Surface Mining Equipment segments.

Highlights of the Release

Joy Global’s operating profit in first quarter fiscal 2015 declined 42.8% to $48.7 million from $85.2 million in the prior-year quarter.

Total bookings at Joy Global during the fiscal first quarter were $700 million, down 19% year over year. Joy Global’s legacy underground business saw a 10% drop in orders while bookings at its surface businesses plummeted 28%.

Total backlog at the end of the first quarter was $1.32 billion, reflecting a sequential decrease of 0.3%.

Net interest expense in the fiscal first quarter declined 6.5% to $12.9 million.

During the quarter, the company repurchased nearly 955 thousand shares of its common stock for $50 million. Joy Global still has $467 million available under its share repurchase program, which was authorized in the fourth quarter of fiscal 2013.

Financial Condition

Cash and cash equivalents of Joy Global as of Jan 30, 2015, were $152.3 million compared with $270.2 million as of Oct 31, 2014.

Cash (used in)/ provided from operating activities during the reported quarter was ($18.4) million as against $64.8 million in the previous year.

Capital expenditures were $22 million in the fiscal first quarter 2015, compared with $27 million in the prior year.

Guidance

Joy Global now expects fiscal 2015 revenues in the range of $3.3 billion to $3.6 billion, down from prior estimate of $3.6 billion to $3.8 billion. The earnings per share guidance for fiscal 2015 has also been lowered to a band of $2.50 to $3.00 from $3.10 and $3.50 earlier.

Other Releases

Caterpillar Inc. CAT posted earnings of $1.35 per share in fourth quarter 2014, lagging the Zacks Consensus Estimate of $1.55 by 21.0%.

Astec Industries Inc.’s ASTE fourth-quarter 2014 earnings of 37 cents per share increased 2.8% from 36 cents in the prior-year quarter. Earnings also topped the Zacks Consensus Estimate of 34 cents.

The Manitowoc Company, Inc.’s MTW fourth-quarter 2014 adjusted earnings of 27 cents fell short of the Zacks Consensus Estimate of 33 cents by 18.2%.

Our View

Joy Global faces choppy demand in the international markets as miners are lowering their capital spending in response to soft commodity prices.Consequently, the company cut its fiscal 2015 guidance anticipating lower sales.

The company’s initiatives to reduce expenses are appreciable. But unless the commodity prices improve, mining activity will not pick up and Joy Global will continue to be affected by lackluster demand.

Joy Global currently has a Zacks Rank #3 (Hold).

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