Joy Global Q2 Profit Declines, But Adj Results Top Estimates

(RTTNews) - Mining equipment maker Joy Global, Inc. (JOY) reported Thursday a profit for the second quarter that halved from last year, hurt by higher charges and lower operating margins as well as a double-digit sales decline amid drop in order bookings.

However, both adjusted earnings per share and quarterly sales topped analysts' expectations. The company now expects earnings and sales at the low end of the prior guidance range for the full-year 2015.

"The company's fiscal second quarter results reflect increasing pressure on our end-markets from continued oversupplied conditions and sequentially declining commodity pricing," President and CEO Ted Doheny said in a statement.

The Milwaukee, Wisconsin-based mining solutions provider reported net income of $38.71 million or $0.40 per share for the second quarter, lower than $73.95 million or $0.73 per share in the prior-year quarter.

Excluding pension settlement and restructuring charges, adjusted net income for the quarter was $57.8 million or $0.59 per share, compared to $77.3 million or $0.76 per share in the year-ago quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 13 percent to $810.52 million from $929.73 million in the same quarter last year, but topped fifteen Wall Street analysts' consensus estimate of $809.94 million by a whisker.

Adjusting for foreign currency exchange, sales declined 10 percent, with original equipment sales down 20 percent and service sales down 5 percent.

On an operational basis, surface mining equipment registered a sales drop of 5 percent, and underground mining machinery sales declined 18 percent from last year.

On a product stream basis, service revenues declined 9 percent, and original equipment revenues plunged 21 percent from last year.

Geographically, Joy Global's domestic sales increased 7 percent, while international sales declined 21 percent fro a year ago.

Operating margins for the quarter contracted 480 basis points to 8.7 percent from last year's 13.5 percent.

Orders bookings for the quarter declined 29 percent to $744.76 million from last year, with service bookings down 15 percent. The company ended the second quarter with total backlog of $1.26 billion, compared to $1.33 billion at end of fiscal 2014.

The company also said it completed the 110 million euro acquisition of Montabert in June, an underground hard rock mining equipment and service provider.

Looking ahead to fiscal 2015, the company continues to expect adjusted earnings in a range of $2.50 to $3.00 per share on revenues between $3.3 billion and $3.6 billion. However, it is now expected to be at the low end of both the guidance ranges.

Street is currently looking for full-year 2015 earnings of $2.57 per share on annual revenues of $3.38 billion.

"We continue to invest in our service business to respond quickly and more efficiently to our customer's needs and are taking steps to accelerate the optimization of our global manufacturing and service footprint," Doheny added.

JOY closed Wednesday's regular trading session at $38.93, down $0.32 on a volume of 2.41 million shares.