No Smiles for Joy Global Q4 Earnings or Outlook

Andrew Klips |

A slump in the mining sector hit equipment maker Joy Global (JOY) , tanking its fiscal fourth-quarter profits by 87 percent as the company took a large impairment charge and looks for ways to cut expenses.

For the quarter ended October 25, the Milwaukee-based company reported revenue of $1.18 billion, down 26 percent from $1.59 billion in the year prior quarter.  Net earnings were $26.8 million, or 25 cents per share, versus $212.6 million, or $1.99 per share, in the same quarter last year.  The latest quarter included a $155-million asset impairment charge.  Excluding that and other one-time items, adjusted earnings were $1.11 per share.

Wall Street was expecting adjusted earnings per share of $1.12 on revenue of $1.12 billion.

Joy Global sells and services surface and underground equipment and generates about 66 percent of its revenue from the coal industry.  Bookings for the quarter fell by 19 percent compared to Q4 last year to $1.1 billion as coal miners grapple with a supply glut and depressed prices.  On the bright side, there are signs of economic recovery in Europe, thermal coal imports in China and India have increased and the overhang in coal inventories in U.S. from 2012 was reduced across 2013, which has the company optimistic about the markets in 2014.

Original equipment orders fell 38 percent and aftermarket orders slid 3 percent.  Bookings for underground mining machines were lower by 6 percent compared to last year, while orders for surface mining equipment declined 32 percent.

“The third and fourth quarter bookings bound a range that we expect to continue in 2014. Although we booked a major longwall project this quarter as expected, there are fewer other projects moving forward which meet today’s stringent criteria of operating on the lower half of the global cost curve,” said Mike Sutherlin, president and chief executive at Joy, in a statement today.  Sutherlin is scheduled to retire at the first of February, with executive vice president Ted Doheny, who heads the company’s underground mining equipment division, designated to take his place.

Sutherlin added that the company sees “the need and opportunity” to lower its cost base.  The company said it will invest $15 million in restructuring, but didn’t provide details.

Joy repurchased 4.1 million shares of its common stock for an aggregate of $214 million during the quarter.  It still has $786 million available under a current authorized buy-back plan.

Looking ahead, Joy Global sees fiscal 2014 earnings between $3.00 and $3.50 per share and revenue in the range of $3.6 billion to $3.8 billion.  The figures were weak compared to analyst expectations of profits of $3.68 per share on sales of $3.8 billion.

Shares of JOY have sunk 4.6 percent on the report and outlook, trading Wednesday morning at $53.66.  With the slide, shares are down about 14 percent in 2013.

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Symbol Name Price Change % Volume
HIPCF Hip Energy Corp n/a n/a n/a 0
JOY Joy Global Inc. 27.90 0.05 0.18 876,240


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