Joy Global Beats Q2 Earnings Estimates, Bookings Drop

Zacks

Joy Global Inc.’s JOY adjusted earnings of 59 cents per share in the second quarter of fiscal 2015 were down 22.4% from 76 cents per share a year ago. Earnings were ahead of the Zacks Consensus Estimate of 55 cents by 7.3%.

GAAP earnings per share for the fiscal second quarter were 40 cents compared with 73 cents in the year-ago quarter. The difference between GAAP and operating earnings was due to an 8 cent restricting charge, a 10 cent non-cash pension settlement and a 1 cent tax charge.

Total Revenue

Joy Global reported net sales of $810 million in the second quarter of fiscal 2015, down 12.9% from $929.7 million in the year-ago quarter.

Revenues were also lower than the Zacks Consensus Estimate of $841 million by 3.7%.

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

Highlights of the Release

Joy Global’s adjusted operating profit in the second quarter of fiscal 2015 declined 28.2% to $94.3 million from $131.0 million in the prior-year quarter.

Total bookings at Joy Global during the fiscal second quarter were $745 million, down 29% year over year. Joy Global’s legacy underground business saw a 10% drop in orders while bookings at its surface businesses plummeted 43%.

Total backlog at the end of the second quarter was $1.26 billion, reflecting a sequential decline of 5.3%.

Net interest expense in the fiscal second quarter declined 3.6% to $13.3 million.

During the quarter, the company did not repurchase any shares. 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 May 1, 2015, were $192.1 million compared with $270.2 million as of Oct 31, 2014.

Cash from operating activities during the reported quarter was $71.1 million, down from $141.7 million in the prior year.

Capital expenditures were $18 million in the fiscal second quarter 2015, flat with the prior-year quarter.

Guidance

Joy Global reaffirmed its fiscal 2015 revenues in the range of $3.3 billion to $3.6 billion and earnings per share in a band of $2.50 to $3.00.

Other Releases

Caterpillar Inc. CAT posted earnings of $1.86 per share in the first quarter of 2015, lagging the Zacks Consensus Estimate of $1.35 by 37.8%.

Astec Industries Inc.’s ASTE first-quarter 2015 earnings of 65 cents per share surpassed the Zacks Consensus Estimate of 57 cents by 14%.

The Manitowoc Company, Inc.’s MTW first-quarter 2015 adjusted loss of 5 cents was in line with the Zacks Consensus Estimate.

Our View

Joy Global continues to face choppy demand in the international markets on lackluster economic growth. Stringent regulations and lower natural gas prices are affecting the demand for thermal coal in the power sector. This is particularly going against Joy Global as coal miners contribute the largest share of its revenues.

The company’s initiatives to reduce expenses are appreciable. But unless commodity prices improve, mining activity will not pick up and Joy Global will continue to be affected by soft demand. Lower customer spending on new projects has resulted in a 29% decline in total bookings.

However, the completion of acquisition of Montabert S.A.S. from Doosan Holding France S.A.S on Jun 1 will strengthen JOY Global’s position in the underground hard rock mining market.

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

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