read more than headline

Why I'm Not so Bullish on Joy Global

The GM decline was partially caused by the mutually agreed upon maintenance contract termination of a dragline put in service in 1996. The $20 Million charge was taken straight out of Gross Margins. Adjusting for this the GM still declined but was more like a 29% GM not the 26% referenced. Purchase accounting rules also impacted operating margins. Overall JOYG buys steel about 9-12 months ahead of time and builds escalators into the contracts. I think this article makes the margins a bigger deal than it really is once you get past the headline numbers.