Market Overview

Joy Global Q2 Conference Call Highlights; Shares Jump

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Shares of Joy Global (NYSE: JOY) closed up 6.6 percent following its second quarter earnings release on Thursday.

Below are some highlights and key takeaways from its conference call:

Financial Results:

• Bookings of over $1 billion were down seven percent versus the year-ago period.

• Orders for original equipment totaled $351 million, down 27 percent.

• Service orders of $697 million were up eight percent.

• Second consecutive quarter of year-over-year growth and service bookings.

• The decrease in operating profit versus the year-ago period was due to lower sales volume, unfavorable product mix, and lower manufacturing cost absorption.

• The company realized year-over-year cost savings of approximately $20 million.

• These savings puts it on track to deliver full-year cost savings target of $75 million.

• The effective income tax rate excluding discrete items was 34.4 percent in the current quarter and that compared
to 31 percent in the second quarter of 2013.

• As noted in today's press release, we are maintaining our EPS guidance of $3.10 to $3.50 per fully diluted share, excluding restructuring and unusual items.

Shares Repurchase:

• Repurchased 138,000 shares of the company stock for $7 million.

• Year-to-date, we have repurchased 2.4 million shares for $130 million.

• This represents over 80 percent of the company's year-to-date free cash flow.

• Strong cash flow through the cycle has allowed it to execute nearly 35 percent of the $1 billion repurchase program in the first three quarters.

• National and International Conditions

• We saw mixed economic signals in the second quarter, as Eurozone growth hit three-year highs.

• U.S. growth faltered due to weather-related disruptions.

• We expect U.S. growth to rebound from the first quarter and see annual growth rate at 2.8 percent.
• Chinese growth at 7.3 percent during the first quarter was the lowest level since 2009.

• Beijing recently announced small targeted fiscal measures aimed at rail infrastructure and housing programs that should aid economic growth in the second half of the year.

• Further, targeted monetary policies aimed at provincial loan creation should help to stabilize growth.

• Despite the slowdown in Chinese growth and temporary headwinds in the U.S.

• As we look at our end markets around the world, we see a number of different conditions playing out.

• When we look at U.S. thermal coal, we see several encouraging improvements in the fundamentals of the market.

• Of our major end markets, global coal markets have seen the toughest headwinds during the first five months of 2014.

• Metal markets have drifted lower during 2014, with the recent $120-per-ton contract for met coal, representing the toughest pricing environment since 2009.

• We expect global copper prices to average $3.10 to $3.20 through 2015, which leaves 95 percent of global production in the money.

Posted-In: Earnings News Guidance


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