Joy Global Inc. Updates Fiscal 2007
Wednesday, July 25th, 2007
Joy Global Inc. announce that it is providing updated information on its fiscal year 2007.
The sustained weakness in the U.S. coal market is adversely affecting the company’s fiscal third quarter and is expected to continue into the company’s fourth quarter. The demand for parts and aftermarket services in the U.S. coal market has continued to decline, particularly in the Central Appalachian region that has historically been the company’s largest U.S. underground market segment. As a result, it now appears unlikely that a recovery will start soon enough to materially impact fiscal 2007 revenues. Although the company anticipates that its financial performance in the second half of the year will improve over that reported in the first half, it does not expect the improvement to be sufficient to achieve its original guidance for the fiscal year.
The company has also experienced some operational issues that will affect the second half. These include a delay in bringing online a major fabrication subcontractor and delivery issues with the supplier of a critical component. Both are impacting the flow through downstream operations. Although solutions are in process, some of the catch up could roll into fiscal 2008.
The company now expects net sales for the year to be approximately $150 million to $200 million below, and fully diluted earnings per share approximately $0.15 to $0.20 below, the December 2006 guidance.
The company’s results for the fiscal year could also be affected by a contingent liability relating to a roof support system sold in China. As previously disclosed in the company’s Form 10-Q for the second quarter, the delivery of the system and corresponding payments have been delayed by permitting issues. The company expects a resolution before the release of its third quarter earnings based on current customer commitments. If these are not met, it could reduce the company’s operating income in the second half of this year by an additional $19 million.
Mike Sutherlin, President and CEO commented, “Despite the adverse factors expected to affect the company’s second half, I see the overall outlook for our markets to be very positive. There continues to be strong expansion programs in copper, iron ore, oil sands and international coal, and we are adding capacity to meet the needs of these markets. Although there is uncertainty in the U.S. coal market, it is impossible to meet the nation’s future energy needs without the strong participation of coal. That will drive the recovery of U.S. coal, and will add to the strong performance from our other markets”.
The company plans to release its third quarter earnings results prior to the opening of business on August 29, 2007. In keeping with its usual practice, the company will also hold a conference call to discuss the quarterly results, and further information regarding the time of the call and other details will be provided in a separate press release.