Joy Global Q1 Earnings Recap, Guidance Boost

Feb.29.12 | About: Joy Global (JOY)

Joy Global (NYSE:JOY) said Wednesday its first quarter earnings rose nearly 40 percent, as the company boosted its 2012 earnings forecast.

The mining equipment maker now anticipates between $7.40 per share and $7.80 per share in earnings for 2012, up from its previous outlook in the range of $7.00 to $7.40 per share. Total sales are now expected between $5.6 billion and $5.8 billion for the year, up from its previous forecast in the range of $5.3 billion to $5.5 billion.

Joy said many of its clients are looking forward to improvements in the U.S. economy and strong Chinese business, though eurozone debt woes are still troubling. Some 2012 forecasts were revised downward in the second half of 2011, the company said, though other companies benefitted from higher copper prices. Global steel production declined in the last months of 2011, and mild weather drove lower natural gas prices, though thermal coal markets remain strong.

These factors were incorporated into Joy's 2012 guidance, it said. The company said it expects its exposure to U.S. underground coal to be in the range of 20 percent to 25 percent of total revenues. Its IMM operations will add $400 million to total revenues in 2012, while boosting earnings by 50-cents per share.

For the three months ended January 27, Joy profits rose 39.2 percent to $142.4 million, or $1.33 per share, from $102.2 million, or $0.96 per share, a year ago. Revenues rose 30.7 percent to $1.14 billion, from $869.5 million a year earlier. Analysts polled by Thomson Reuters I/B/E/S had anticipated $1.35 per share in earnings, on revenues of $1.16 billion, for the quarter.

Joy president and CEO Mike Sutherlin said:

We are very pleased with our first quarter, and it gives us a very strong start to our 2012.

Our core surface and underground businesses grew revenues by 18 percent, and 23 percent, respectively, and operating leverage enabled them to expand operating margins to over 20 percent. Both sales and margins are records for a first quarter.

Orders in these core businesses were strong, but lumpy. Orders for original equipment in our underground business were down, but this is largely due to the exceptionally strong bookings we had in last year’s first quarter.

Conversely, orders for surface original equipment and for aftermarket parts and services in both segments were especially strong, and in line with the outlook for our markets.

LeTourneau operating results remain accretive, despite working through legacy warranty and supply chain issues which should improve over the balance of the year.

We hit a major milestone with International Mining Machinery, by reaching an ownership level that enables us to proceed with de-listing.

As a result of all of these factors, our first quarter was a combination of strong operational performance and good progress on investments we have made in our future.

Sales of the company's underground mining machinery rose 23.1 percent to $628.8 million, while surface mining equipment rose 17.7 percent to $454.0 million. Original equipment sales rose 37 percent over the prior year period, while aftermarket sales increased ten percent.

Revenues from the company's LeTourneau business, which it acquired in May 2011 for $1.1 billion, added $78.3 million to revenues. Revenues from its International Mining and Machinery Holding (IMM) business totaled $10.5 million for the month of January.

Late last year, Joy purchased a 41.1 percent ownership in IMM, bringing its total holding in the company to a controlling 69.2 percent, and triggering the consolidation of IMM's results into its own. Subsequent to the end of the first quarter, the company purchased another 29.1 percent in the Chinese company, bringing its total interest to 98.9 percent.

Total bookings during the quarter rose 16.8 percent to $1.43 billion. Underground mining machinery bookings fell two percent to $806.5 million, more than offset by a 40.3 percent increase in surface mining equipment bookings, to $612.0 million. LeTourneau added $84.3 million to bookings, while IMM added $15.5 million to bookings.

At the quarter's end, Joy had a total backlog of $3.57 billion, up ten percent from the same period last year. Underground mining machinery backlog increased 13 percent to $1.97 billion, while surface mining equipment backlog rose ten percent to $1.72 billion.

In New York, shares of the Milwaukee, Wisconsin-based company rose 0.69 percent in premarket trading, to $91.77 per share.