Joy Global Cuts 2015 Outlook As Q1 Results Miss Estimates

(RTTNews) - Mining equipment maker Joy Global, Inc. (JOY) reported Thursday a profit for the first quarter that halved from last year, reflecting lower operating margins and double-digit sales decline amid drop in order bookings. Both earnings per share and quarterly sales missed analysts' expectations. The company also slashed its earnings and sales guidance for the full-year 2015.

Following the announcement, the company's shares are plunging nearly eight percent in pre-market trading.

"Our first quarter results highlight the continued challenges we face in our end markets as we navigate the extended trough of this cycle. Key commodity prices took another step-down this quarter which has created additional challenges for our customers and slowed our incoming order rates," President and CEO Ted Doheny said in a statement.

The Milwaukee, Wisconsin-based mining solutions provider reported net income of $23.59 million or $0.24 per share for the first quarter, sharply lower than $48.86 million or $0.48 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $24.6 million or $0.25 per share, compared to $50.0 million or $0.49 per share in the year-ago quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 16 percent to $703.87 million from $839.31 million in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate of $753.75 million.

Adjusting for foreign currency exchange, sales declined 14 percent, with original equipment sales down 28 percent and service sales down 8 percent.

On an operational basis, surface mining equipment registered a sales drop of 13 percent, and underground mining machinery sales declined 19 percent from last year.

On a product stream basis, service revenues declined 10 percent, and original equipment revenues plunged 29 percent from last year.

Geographically, Joy Global's domestic sales decreased 13 percent, and international sales declined 18 percent fro a year ago.

Operating margins for the quarter contracted 330 basis points to 6.9 percent from last year's 10.2 percent.

Orders bookings for the quarter declined 19 percent to $700.15 million from last year, with service bookings down 14 percent. The company ended the first quarter with total backlog of $1.33 billion, compared to $1.50 billion at end of the year-ago quarter quarter.

Looking ahead to fiscal 2015, the company now expects adjusted earnings in a range of $2.50 to $3.00 per share on revenues between $3.3 billion and $3.6 billion, down from the prior forecast for adjusted earnings in the range of $3.10 to $3.50 per share on revenues between $3.6 billion and $3.8 billion.

Street is currently looking for full-year 2014 earnings of $3.20 per share on annual revenues of $3.65 billion.

"With the further slowdown in our end markets, we are accelerating our cost reduction programs while remaining steadfast in building out our new underground hard rock platform and driving new product development and service strategies that will help our customers sustainably lower their cost positions," Doheny added.

JOY closed Wednesday's regular trading session at $42.13, up $0.83 on a volume of 1.65 million shares.