Joy Global Incorporation (JOYG) reported adjusted earnings of $1.39 per share in the fourth quarter of fiscal 2010, compared with $1.20 per share in the fourth quarter of fiscal 2009. The results were 23 cents higher than the Zacks Consensus expectation of $1.16 for the quarter.
The fiscal 2010 adjusted earnings of Joy Global were $4.40 per share, compared with $4.41 in fiscal 2009. The results of the company were 24 cents higher than the Zacks Consensus expectation of $4.16 for the fiscal year.
Total Revenue
Joy Global reported net sales of $1,048.9 million in the fourth quarter of 2010 versus $963.5 million in the fourth quarter of 2009, reflecting a year-over-year growth of 8.9%. The growth was driven by higher contribution from the Underground Mining Machinery and Surface Mining Equipment segments, while eliminations dragged down the total revenue marginally.
The actual results surpassed the Zacks Consensus forecast of $925 million for the fourth quarter.
Joy Global reported net sales of $3,524.3 million for 2010 versus $3,598.3 million reported in 2009, which reflected a decline of 2.1% year over year. The year-over-year decrease was due to lower contribution from Underground Mining Machinery, which was offset marginally by higher contribution from the Surface Mining Equipment segment.
The actual results for fiscal 2010 exceeded the Zacks Consensus expectation of $3,398 million by $126.3 million.
Fourth Quarter Highlights
During the fourth quarter bookings at Joy Global touched $1 billion, which reflected a growth of 48% from the comparable period last year. During the quarter, original equipment orders doubled while aftermarket orders improved 21% from the previous year’s comparable quarter.
Underground original equipment orders improved due to increased orders for longwall and room and pillar equipment in the United States and Australia while orders for Surface business original equipment were driven by demand for electric mining shovels received from North America and Russia.
Underground aftermarket equipment business improved, led by demand for machine rebuilds and parts in the United States and South Africa, while surface aftermarket business improved mainly due to orders from Canada.
Joy Global’s operating profit in the quarter under review was $227 million versus $184 million in the year-ago period reflecting a year-over-year growth of 23.4%. The bullish growth was due to the positive impact from aftermarket sales, lower material input costs and pricing realization.
Interest expenses during the quarter were $3.9 million, down from $5.3 million reported in the comparable quarter last year. The improvement resulted from lower long-term debt of the company.
Fiscal 2010 Highlights
The marginal decline in total sales in 2010 did not have any impact on the company’s bookings. Joy Global registered a 39% increase in bookings for its products from fiscal 2009 levels. The improvement in bookings was driven by complete longwall system order from China, strong growth in the North and South American copper and coal markets, and aftermarket growth in most regions.
Joy Global’s operating profit in fiscal 2010 was $697.1 million versus $702.3 million in the year-ago period reflecting a year-over-year decline of 3.3%. Lower sales volumes plus the increased retiree benefit plan expenses of $36 million offset somewhat by higher price realization and lower material input costs resulted in the overall decline.
Net interest expense in 2010 was $17 million versus $25 million in 2009. The 32% decline in interest expenses was attributable to interest earned by Joy Global on higher cash balances.
Financial Condition
Cash and cash equivalents of Joy Global as of October 29, 2010, were $815.6 million versus $471.7 million as of October 30, 2009.
Cash provided by operating activities during 2010 was $583 million and compared favorably with $451.9 million provided during the previous year. The year-over-year growth was driven by the increases in customer advance payments and accounts payable, partially offset by increases in accounts receivable.
Capital expenditure at Joy Global for 2010 was $73 million, lower by $21 million from the previous year. The decrease was the fallout of a delay in restarting capital projects earlier put on hold.
Guidance
Joy Global expects to sustain its strong performance in 2011. Revenue is expected to range from $3.9 billion to $4.1 billion for 2011. The company expects full-year 2011 earnings per share to range between $5.00 and $5.30.
Our View
We are encouraged by the positive long-term fundamentals of the mining industry and improving conditions in the U.S., China and India, which will likely trigger greater demand for mining equipment going forward. We appreciate Joy Global’s move to incrementally increase its capital investment in 2011 and generate additional capacity to tap the increasing demand for mining products.
One of Joy Global’s closest peers, Caterpillar Inc. (CAT), ended the third quarter on a high note with earnings per share of $1.22 per share, which surpassed both the year-ago quarter results of 64 cents and the Zacks Consensus Estimate of $1.09 per share.
Joy Global currently retains a Zacks #2 Rank (short-term Buy rating).
Mining equipment manufacturer and service provider Joy Global Inc. is based in Milwaukee, Wisconsin. The company caters to its global consumers and provides manufacturing, distributing and servicing equipment for surface mining, through its P&H Mining Equipment division, underground mining, through its Joy Mining Machinery division and bulk material conveyor systems, through its Continental Crushing & Conveying division.
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