This summary is based on the third quarter earnings call conducted by Joy Global Inc. (JOYG) on September 3, 2008.
Management:
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Chief Accounting Officer: Michael S. Olsen
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CEO and President: Michael W. Sutherlin
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VP, IR and Corporate Communications: Sara Leuchter Wilkins
Key Investors Issues
- Net sales were $904 million, compared to $622 million in 2007, increasing by 32% over last year.
- Income was $113 million or $1.03 per share, up 53.8% compared to $73 million or 66 cents a share last year.
- Cash flow from operations was $142 million compared to $150 million in 2007.
Year to Date Highlights:
- Sales rose 33% from $1.8 billion in 2007 to $2.39 billion.
- Net income was $256 million or $2.37 a share, up 21.9% from $210 million or $1.89 in the prior year.
Third Quarter Highlights
Bookings totaled $1.5 billion, an $872 million increase over bookings in the third quarter last year.
- This increase was a result of a $410 million and a $350 million increase in new orders, for the surface mining equipment business and the underground mining equipments business respectively.
- It also combined with a $112 million of bookings for the crushing and conveyor business.
- This growth represents a 147% increase for the surface mining equipment business, and an 89% increase for the underground mining machinery business.
- Orders for new equipment were up over $700 million, while the aftermarket bookings were up $170 million or 40%.
- The increase in orders for underground mining equipment was led by the continuing recovery in the North American market while the improvement for the surface mining equipment was achieved across most of our global markets.
Backlog was almost $3 billion and was more than $1.3 billion greater than backlog at the beginning of the 2008 fiscal year.
- Net sales were $904 million, compared to $622 million in 2007, increasing by 32% over last year.
- Sales increased by 33% and 30% for the surface equipment and underground equipment businesses, respectively.
- At the same time, original equipment shipments were 61% greater than a year ago, as new machine sales have begun to reflect the strength of original equipment orders for the last several quarters.
- Aftermarket sales for were 35%, 24% excluding crushing and conveyor sales, greater than they were in 2007.
- Sales were higher than a year ago in most of the company''s markets, led by strength in the U.S. underground market and for surface mining equipment in North and South America.
Operating profit was $134 million or 14.8% of net sales, compared to $110 million or 17.7% of net sales a year ago.
- The decrease in the return on net sales percentage from a year ago was due to $5.8 million charges for purchase accounting, related to the Continental acquisition.
- It was also attributed to a $5.3 million charge associated with the settlement and extension of a labor agreement at the surface mining equipments main U.S. manufacturing facility.
- As well as a $5.2 million foreign exchange costs, primarily associated with the valuation of the Chilean peso, and a $12.4 million increase in the company''s variable performance-related compensation expense.
Income was $113 million or $1.03 per share, up 53.8% compared to $73 million or 66 cents a share last year, benefitting from a discrete tax credit of $23.4 million or 22 cents per share.
- Working capital, excluding cash, was $588 million compared to $611 million at the end of the 2007 fiscal year.
- The increase in inventories to support the anticipated increased sales over the next several quarters was offset by additional advance payments from customers.
- Increase in accounts payable was primarily responsible for the decrease in working capital from the beginning of the year.
- Cash flow from operations was $142 million compared to $150 million in the same quarter last year, reflecting the company''s continuing ability to generate positive cash flows during all stages of the business cycle.
Operational Metrics:
- Order bookings were up well over four-fold on original equipment with record bookings of the continuous miners and shuttle cars.
- U.S. aftermarket orders were also strong, up 70% from last year, partially due to the fact that the U.S. underground business was just starting to recover in last year''s third quarter.
- Original equipment shipments were up more than 40% across both Joy and P&H businesses, and aftermarket revenues were up more than 20% before adding in Continental.
The firm signed a definitive agreement to purchase Wuxi Shengda, a Chinese manufacturer of longwall shearing machines.
- This is a small company, but one with a strong brand and a significant growth potential giving access to provincial mining companies and significantly expands market reach in China.
- The firm made decisions to increase the investment in R&D programs that will lead to significant new revenues streams and decisions to carry a higher cost needed to support the start-up of manufacturing in China.
- The majority of the foreign exchange charges came from Chile and results from the expanding business level in that country impacted by the recent weakening of the peso.
