Joy Global Beats Estimates

Zacks

Joy Global Inc. (JOY) reported adjusted earnings of $1.31 per share in the first quarter of fiscal 2013, beating the year-ago number by 4%. The results of the company were 17 cents higher than the Zacks Consensus Estimate of $1.14 for the quarter.

GAAP earnings per share for the first quarter were $1.33, in line with the prior-year quarter. The difference between GAAP and operating earnings in the quarter emanated from the impact of a gain of 3 cents and a restructuring charge of 1 cent.

Total Revenue

Joy Global reported net sales of $1,149.9 million in the first quarter of fiscal 2013, up 1.2% from $1,136.2 million reported in the first quarter of fiscal 2012.

The actual results were ahead of the Zacks Consensus forecast of $1,080 million.

The upside was driven by higher contribution from the Surface Mining Equipment segment while lower contribution from Underground Mining Machinery and eliminations dragged down total revenue marginally.

Highlights of the Release

In the reported quarter Joy Global was able to lower its product development, selling and administrative expenses by 8.2% to $157.3 million.

The decline in costs coupled with an increase in revenues boosted the margins of the company. Operating income in the quarter increased 3.4% to $221.1 million.

Total bookings at Joy Global during the first quarter of fiscal year 2013 were $1.02 billion, down 28.5% year over year. Booking at Underground Mining Machinery declined 27.2% and at Surface Mining Equipment dropped 25.1% from the comparable prior-year period.

Total backlog at the end of the first quarter of fiscal 2013 was $2.44 billion, reflecting a decline of $0.12 billion from the fiscal 2012 end backlog.

Net interest expense in quarter was $15.1 million, down 5.6% year over year.

Financial Condition

Cash and cash equivalents of Joy Global as of Jan 25, 2013, were $269.9 million versus $263.8 million as of October 26, 2012.

Cash provided by and/or used in operating activities during the first quarter of fiscal 2013 was $90.5 million versus ($18.5) million in the prior-year quarter.

Capital expenditures were $55 million in the first quarter of fiscal 2013, compared with $49 million in the prior-year quarter. The company made capital investments to improve its manufacturing capacity in emerging markets and strengthen its aftermarket service infrastructure.

Guidance

Joy Global expects revenue to range from $4.9 billion to $5.2 billion for fiscal 2013. The company expects fiscal 2013 earnings per share to range between $5.75 and $6.35.

Other Company Release

Astec Industries Inc. (ASTE) reported earnings of 23 cents per share in the fourth quarter of fiscal 2012, falling short of the Zacks Consensus Estimate of 37 cents.

Caterpillar Inc. (CAT) announced fourth-quarter 2012 operating earnings of $1.91 per share, surpassing the Zacks Consensus Estimate of $1.68.

Our View

Joy Global continues to face the rippling effect of the sluggish market conditions of 2012, with its booking in the reported quarter declining from the comparable previous year quarter.

However, global steel and coal production is on an uptrend with a similar trend observed in the copper markets. These macro factors can influence growth at Joy Global. Particularly rising demand for coal in China and India is expected to improve the fortunes of this mining equipment manufacturer.

However, slowly declining coal stockpiles, continued Eurozone debt crisis and the decline in booking make us skeptical of any quick recovery from 2012 levels.

Joy Global currently retains a short-term Zacks #3 Rank (Hold rating). Another operator H&E Equipment Services Inc. (HEES) having a Zacks Rank #2 (Buy) is slated to release its fourth quarter 2012 earnings on Mar 5, 2013.

Based in Milwaukee, Wisconsin Joy Global Inc. was founded in 1884. The company is involved in manufacturing as well as servicing of mining equipment. The company serves a global market through its two segments, Underground Mining Machinery and Surface Mining Equipment. With a market cap of $6.36 billion, the company has 18,019 employees.

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