Joy Global Inc. (JOY - Analyst Report) reported adjusted earnings of $1.25 per share in the fourth quarter of fiscal 2014, up 12.6% from $1.11 per share a year ago. Earnings also outpaced the Zacks Consensus Estimate of $1.14 by 9.6%.

Joy Global, Inc - Earnings Surprise | FindTheBest

Fiscal 2014 adjusted earnings were $3.29 per share, compared with $5.83 per share in fiscal 2013. However, earnings for the fiscal year were ahead of the Zacks Consensus Estimate of $3.17.

GAAP earnings per share for the fourth quarter were $1.38 and for the fiscal were $3.28. The difference between GAAP and operating earnings in the fiscal year emanated from the impact of unusual items and acquisition activities.

Total Revenue

Joy Global reported net sales of $1,133.6 million in the fourth quarter of fiscal 2014, down 4.1% from $1,181.8 million in the year-ago quarter.

Revenues were however ahead of the Zacks Consensus Estimate of $1,050 million.

Joy Global reported net sales of $3,778.3 million for fiscal 2014, down 24.6% from $5,012.7 million in fiscal 2013. Revenues were marginally higher than the Zacks Consensus Estimate of $3,707 million.

The downside was due to lower contributions from its Underground Mining Machinery and Surface Mining Equipment segments, while eliminations dragged down total revenue marginally.

Fiscal 2014 Highlights

Joy Global’s operating profit in fiscal 2014 declined 37.1% to $517.1 million from $821.7 million in the prior fiscal.

Total bookings at Joy Global during the fiscal year were $3.61 billion, down 8% from the prior year-end level of $3.92 billion. A 20% decline in orders from Joy Global’s legacy underground business was marginally offset by an 8% increase in bookings from surface businesses.

The total backlog at the end of fiscal 2014 was $1.34 billion reflecting a decline of 20.8% year over year.

Net interest expense in fiscal 2014 was $55.4 million, down from $57.5 million in the previous fiscal.

Financial Condition

Cash and cash equivalents of Joy Global as of Oct 31, 2014, were $270.2 million compared with $405.7million as of Oct 25, 2013.

Cash from operating activities during fiscal 2014 was $363.4 million as against $638.6 million provided in the previous year.

Capital expenditures were $91 million in fiscal 2014, compared with $153 million in the prior year.

Guidance

Joy Global expects fiscal 2015 revenues to range from $3.6 billion to $3.8 billion. The company expects fiscal 2015 earnings per share in a band of $3.10 and $3.50.

Other Releases

Caterpillar Inc. (CAT - Analyst Report) posted earnings of $1.72 per share in third quarter 2014, beating the Zacks Consensus Estimate of $1.33 by 29.3%.

Stanley Black & Decker, Inc.’s (SWK - Analyst Report) third-quarter 2014 adjusted earnings of $1.55 per surpassed the Zacks Consensus Estimate of $1.44 by 7.64%.

Terex Corporation’s (TEX - Analyst Report) third-quarter 2014 adjusted earnings of 59 cents fell short of the Zacks Consensus Estimate of 61 cents by 2.28%.

Our View

Even though Joy Global’s earnings and revenues were ahead of estimates, depleting backlog and a decline in orders from some of the key markets are reasons for concern.

Joy Global is presently operating in a commodity surplus market, which puts commodity prices under pressure. Miners are very cautious about developing new projects. As a result, mining industry capital expenditures declined in 2014 for the second consecutive year, with further declines expected in 2015. This does not bode well for Joy Global going forward.

Demand from Europe and China is yet to pick up, while a cooler-than-normal U.S. summer temperature this year and higher shale gas production led to lower demand for coal. Joy Global 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 #4 (Sell).