QUOTE AND NEWS
Benzinga  Apr 11  Comment 
Joy Global Inc. (NYSE: JOY), a worldwide leader in high-productivity mining solutions, today announced that it entered into a definitive agreement to purchase certain assets of Mining Technologies International, Inc. ("MTI") for $51.0 million...
SeekingAlpha  Mar 21  Comment 
By Ayush Singh: The present scenario for the mining sector doesn't look good as mining equipment makers are suffering from poor demand for mining equipments. This explains why Joy Global (JOY) shares have underperformed this year, losing close to...
Benzinga  Mar 11  Comment 
In a report published Tuesday, Morgan Stanley analyst Nicole DeBlase reiterated an Equal-Weight rating on Joy Global (NYSE: JOY), and raised the price target from $54.00 to $58.00. In the report, Morgan Stanley noted, “The highlight of JOY's...
SeekingAlpha  Mar 8  Comment 
By Stephen Simpson, CFA: Cyclical stocks have a way of outdoing expectations both for good and bad. That makes it tricky to feel all that confident that Joy Global (JOY) is bottoming out, particularly when there are still long-term issues with the...
SeekingAlpha  Mar 6  Comment 
Joy Global (JOY) Q1 2014 Earnings Call March 06, 2014 11:00 am ET Executives James M. Sullivan - Chief Financial Officer and Executive Vice President Edward L. Doheny - Chief Executive Officer, President, Director and Member of...
TheStreet.com  Mar 6  Comment 
NEW YORK (TheStreet) -- Morgan Stanley issued a research note Thursday suggesting that NAND flash pricing power could dramatically hurt margins for Micron and SanDisk .  TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio,...
Benzinga  Mar 6  Comment 
Joy Global (NYSE: JOY) reported a decline in its first-quarter profit. Joy Global's quarterly net income slipped to $48.9 million, or $0.48 per share, versus a year-ago profit of $142.1 million, or $1.33 per share. Excluding items, it earned...
Wall Street Journal  Mar 6  Comment 
Joy Global said its fiscal first-quarter earnings fell 65% as the mining-equipment maker continued to post weaker sales.
StreetInsider.com  Mar 6  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Joy+Global%2C+Inc.+%28JOY%29+Misses+Q1+EPS+by+15c/9252795.html for the full story.
Forbes  Mar 4  Comment 
Wall Street is expecting lower profit for Joy Global when the company reports its first quarter results on Thursday, March 6, 2014. Analysts are expecting earnings per share of 64 cents after the company booked a profit of $1.31 a share a year...




 

Joy Global, Inc. (NASDAQ: JOY) manufactures mining equipment used to extract coal, copper, and iron ore. Commodity prices directly impact the demand for Joy Global's products and services. When prices are high, mining companies turn to Joy Global for equipment and expand their operations. The company primarily sells two types of mining equipment - underground and surface - of which the former makes up half of the company's net revenue. Joy is a multinational firm - half of the firm's sales are international - but its portfolio is dominated by the coal industry, which accounts for three-quarters of revenues.[1] Nonetheless the rise in natural gas and crude oil have helped JOY, as it has led to increased demand for coal as a substitute source of energy. The company earned $3.6 billion in revenue and $454 million in net income in 2009.[2]

Company Overview

Business Segments[3]

Joy Global's business is divided into two segments - Underground Mining Machinery and Surface Mining Equipment:

Underground Mining Machinery (53% of net sales)

Joy is the world’s largest producer of high productivity underground mining machinery for the extraction of coal and other bedded materials. It has facilities in Australia, South Africa, the United Kingdom, China, and the United States. The company's products include:

  • Continuous miners – Electric, self-propelled continuous miners cut material using carbide-tipped bits on a horizontal rotating drum. Once cut, the material is gathered onto an internal conveyor and loaded into a haulage vehicle or continuous haulage system for transportation to the main mine belt.
  • Longwall shearers – A longwall shearer moves back and forth on an armored face conveyor parallel to the material face. Using carbide-tipped bits on cutting drums at each end, the shearer cuts a 1.2 meter to 6.5 meters of material on each pass and simultaneously loads the material onto the armored face conveyor for transport to the main mine belt.
  • Powered roof supports – Roof supports perform a jacking-like function that supports the mine roof during longwall mining. The supports advance with the longwall shearer and Armored Face Conveyors, resulting in controlled roof falls behind the supports. A longwall face may range up to 400 meters in length.
  • Armored face conveyors – Armored face conveyors (AFC) are used in longwall mining to transport material cut by the shearer away from the longwall face.
  • Shuttle cars – Shuttle cars, a type of haulage vehicle, are electric-powered with umbilical cable, rubber-tired vehicles used to transport material from continuous miners to the main mine belt where self-contained chain conveyors in the shuttle cars unload the material onto the belt. Some models of Joy shuttle cars can carry up to 22 metric tons of coal.
  • Flexible conveyor trains (FCT) – FCT’s are electric-powered, self-propelled conveyor systems that provide continuous haulage of material from a continuous miner to the main mine belt. The FCT uses a rubber belt similar to a standard fixed conveyor. The FCT’s conveyor belt operates independently from the track chain propulsion system, allowing the FCT to move and convey material simultaneously. Available in lengths of up to 570 feet, the FCT is able to negotiate multiple 90-degree turns in an underground mine infrastructure.
  • Roof bolters – Roof bolters are roof drills used to bore holes in the mine roof and to insert long metal bolts into the holes to reinforce the mine roof.
  • Battery haulers – Battery haulers perform a similar function to shuttle cars. Shuttle cars are powered through cables and battery haulers are powered by portable rechargeable batteries.
  • Continuous haulage systems – The continuous haulage system provides a similar function as the FCT in that it transports material from the continuous miner to the main mine belts on a continuous basis versus the batch process used by shuttle cars and battery haulers, but it does so with different technology. It is made up of a series of connected bridge structures that utilize chain conveyors that transport the coal from one bridge structure to the next bridge structure and ultimately to the main mine belts.

Surface Mining Machinery (37% of net sales)

Joy Global is the world's largest producer of electric mining shovels and also makes rotary blasthole drills and walking draglines. The company has facilities in Australia, Brazil, Canada, Chile, China, and South Africa. The products in this segment include:

  • Electric mining shovels – Mining shovels are primarily used to load copper ore, coal, iron ore, other mineral-bearing materials and overburden into trucks or other conveyances. There are two basic types of mining loaders: electric shovels and hydraulic excavators. Electric mining shovels feature larger buckets, allowing them to load greater volumes of material, while hydraulic excavators are smaller and more maneuverable. The electric mining shovel offers the lowest cost per ton of mineral mined. Its use is determined by the size of the mining operation and the availability of electricity. P&H manufactures only electric mining shovels rather than hydraulic excavators. Dippers (buckets) can range in size from 12 to 82 cubic yards.
  • Walking draglines – Draglines are primarily used to remove overburden to uncover coal or mineral deposits and then to replace the overburden as part of reclamation activities. P&H’s draglines are equipped with bucket sizes ranging from 30 to 160 cubic yards.
  • Blasthole drills – Most surface mines require breakage or blasting of rock, overburden, or ore using explosives. A pattern of holes to contain the explosives is created by a blasthole drill. Drills are usually described in terms of the diameter of the hole they bore. Blasthole drills manufactured by P&H bore holes ranging in size from 9 7/8 to 17.5 inches in diameter.

Business Growth

FY 2009 (ended October 30, 2009)[2]

  • Net sales increased 5.2% to $3.6 billion. The increase in net sales as attributable to a 13% improvement in original equipment shipments. Revenue from the company's underground mining machinery increased by 10.6%, which was offset by a 5.9% decline in surface mining equipment.
  • Net income increased 21% to $454 million, despite the negative impact of foreign exchange of $160.5 million.

Trends and Forces

  • Commodities Prices impact the demand for mining equipment. When commodities prices increase (usually during periods of strong economic growth when economic and domestic infrastructures are expanding and demanding more raw materials), mining companies expand operations due to the higher profit margins. Over the past six years, commodities performed well; Copper prices more than quadrupled[4]and oil has increased in price. The strong performance extends beyond these two into other commodities. Joy Global faces specific commodity price risk (and reward) in coal, copper, and iron ore, because the equipment manufacturer sells mainly to mining companies extracting these three commodities.[5]
  • Coal is key to JOY's revenues: Joy Global generates roughly 70% of its annual revenue from coal mining customers.[1] Production of coal shifts with economic and political factors. As oil prices rise, alternative energy forms become more attractive. Coal power substitutes natural gas and oil consumption in some instances, and therefore, the coal price tends to move higher also. Political actions can adversely effect the demand for coal. Politicians can impose taxes to curb its use or provide subsidies to other alternative energy that is cleaner.
  • Copper also affect JOY's balance sheet:Miners of copper form the second largest customer of Joy Global[6]. Prices of copper increased more than four-fold in the past few years. People use copper in electronics, cookware, fixtures, plumbing, and a variety of other items. The strong rise in copper prices boosted extraction of the material by miners.
  • International markets are the key to Joy Global's revenue growth. Joy Global's international operations already account for more than 50% of the company's revenues[7]. High infrastructure growth contributes to commodity demand in Russia, China, and other Emerging Markets. With the increasing demand, supply comes on board. Joy Global plans to capture growth in these expanding economies by using a strategic network of service centers and manufacturing sites to complete sales to mining companies in these areas.

Competition

Joy Global competes with its peers on the basis of price, quality, delivery, and service. Most of Joy Global's customers are large mining companies that can exert significant purchasing power. As such, these customers can demand productivity and service clauses more easily than a smaller miner could when purchasing equipment. A local equipment service center mutually appeals to Joy Global and their customers - repairs can be made quickly and expenses are lower due to the close proximity. As a result, customers prefer to buy from equipment manufacturers with service centers not too distance from their mining operations.

Joy Global offers a wide range of mining products. Some of its equipment has few competitors offering direct substitutes. For instance, Bucyrus International (BUCY) offers the only electric mining shovels and draglines that compete with Joy Global's; however, such products compete with alternatives like hydraulic excavators.

In addition to competing with large global manufacturers such as Caterpillar (CAT), Bucyrus International (BUCY), and Terex (TEX), Joy Global faces pressure from emerging local companies. The competitive pressure from small companies tends to be more for repair service than new equipment.

References

  1. 1.0 1.1 JOY 2009 10-K "We are largely dependent on the continued demand for coal, which is subject to economic and climate related risks" pg. 14
  2. 2.0 2.1 JOY 2009 10-K "Selected Financial Data" pg. 26
  3. JOY 2009 10-K pg. 6-8
  4. Kitco Metals
  5. National Mining Association
  6. Joy Global's Website
  7. Joy Global (JOYG) Form 10-K, Fiscal Year 2007, "Geographical Distribution" Page F-41
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki