Joy Global Inc. JOY reported adjusted earnings of 43 cents per share in the fourth quarter of fiscal 2015, down 66.7% from $1.29 per share a year ago. However, earnings outpaced the Zacks Consensus Estimate of 42 cents by 2.4%.

Fiscal 2015 adjusted earnings were $1.95 per share, compared with $3.44 in fiscal 2014. However, earnings for the full fiscal were ahead of the Zacks Consensus Estimate of $1.80 by 8.3%.

GAAP loss per share was $13.43 for the fourth quarter and $12.02 for fiscal 2015. The difference between GAAP and operating earnings emanated from the impact of unusual items, impairment charges, restructuring charges and acquisition activities.

Total Revenue

Joy Global reported net sales of $865.6 million in the fourth quarter of fiscal 2015, down 23.6% from $1,133.6 million in the year-ago quarter.

Revenues were however ahead of the Zacks Consensus Estimate of $792 million.

Joy Global reported net sales of $3,172.1 million for fiscal 2015, down 16.1% from $3,778.3 million in fiscal 2014. Revenues were 2.4% higher than the Zacks Consensus Estimate of $3,098 million.

The downside was due to lower contributions from its Underground Mining Machinery and Surface Mining Equipment segments.

Highlights of the Release

Total bookings at Joy Global during fiscal 2015 were $2.69 billion, down 25% from the prior year-end level of $3.61 billion. A 14% decline in orders from Joy Global’s legacy underground business and a 34% reduction in bookings from the surface mining businesses led to the decrease in booking in fiscal 2015.

Joy Global’s total backlog at the end of the fiscal fourth quarter was $873.4 million, down 34.3% from fiscal 2014 end.

Net interest expense in fiscal 2015 was $53.4 million, down from $55.4 million in the previous fiscal.

Financial Condition

Cash and cash equivalents, as of Oct 31, 2015, were $102.9 million compared with $270.2 million as of Oct 31, 2014.

Cash from operating activities during fiscal 2015 was $355.3 million as against $363.4 million provided in the previous year.

Capital expenditure was $71 million in fiscal 2015, compared with $91 million in the prior year.

Guidance

Joy Global expects fiscal 2016 revenues to range from $2.4 billion to $2.6 billion. The company expects fiscal 2016 earnings per share in the band of 10–50 cents.

Other Releases

Caterpillar Inc. CAT posted earnings of 75 cents per share in third-quarter 2015, in line with the Zacks Consensus Estimate.

Stanley Black & Decker, Inc.’s SWK third-quarter 2015 adjusted earnings of $1.62 per surpassed the Zacks Consensus Estimate of $1.52 by 6.58%.

Terex Corporation’s TEX third-quarter 2015 adjusted earnings of 58 cents fell short of the Zacks Consensus Estimate of 62 cents by 6.45%.

Our View

Although Joy Global’s earnings and revenues beat the respective estimates, a depleting backlog and decline in orders from some of its key markets are reasons for concern.

The company presently operates in a commodity surplus market, which puts commodity prices under pressure. As a result, 2016 mining industry capital expenditures are expected to decline from the 2015 levels and hurt orders for this mining equipment maker.

Amid constrained market conditions, the company is implementing cost-saving initiatives that will enable it to survive during troubled times.

However, the drop in the demand from the international market, especially China, stringent regulations against the use of coal in power plants, and weak natural gas prices are reducing the coal burn and adversely impacting the demand for Joy Global’s coal mining equipment. Moreover, the company depends on its thermal and metallurgical coal customers to generate a major portion of its revenues. Hence, the weak coal market is expected to further hurt Joy Global’s prospects.

Joy Global currently has a Zacks Rank #5 (Strong Sell).

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