Bucyrus International, Inc. (Nasdaq:BUCY), a leading designer,
manufacturer and marketer of high productivity mining equipment for
surface and underground mining, announced today its summary
unaudited financial results for the quarter ended March 31, 2010.
Operating Results
On February 19, 2010, Bucyrus completed its previously announced
acquisition of Terex Corporation's mining equipment business
("Terex Mining") for $1.0 billion in cash and 5,809,731 shares of
Bucyrus' common stock, subject to certain post-closing net assets,
net debt and other adjustments. Also on February 19, 2010, Bucyrus
entered into an amendment to its existing credit agreement to
provide for an additional new secured term loan of $1.0 billion and
$167.5 million of additional revolving credit facilities. The term
loan was used to fund the cash portion of the purchase price for
Terex Mining and the revolving credit facility will be used to
support Bucyrus' future working capital needs and its capital
expenditure plan.
The financial results for the quarter ended March 31, 2010
include the net assets and results of operations of Terex Mining
since the February 19, 2010 date of acquisition as well as the
preliminary purchase accounting adjustments and acquisition costs
related to the Terex Mining acquisition. As a result, the financial
results for the quarter ended March 31, 2010 are not necessarily
comparative to the results for the quarter ended March 31, 2009 or
as of December 31, 2009 and may not be indicative of future
results. Terex Mining has been integrated into the surface mining
segment. For this quarter, Bucyrus has disclosed certain financial
information for Terex Mining.
Consolidated Condensed Statements of Earnings
(Unaudited)
|
|
|
|
|
Quarter Ended March 31,
|
|
2010
|
2009
|
|
(Dollars in thousands, except
per share amounts)
|
Sales
|
$607,525
|
$605,744
|
Cost of products sold
|
432,243
|
435,559
|
Gross profit
|
175,282
|
170,185
|
Selling, general and administrative expenses
|
87,134
|
61,053
|
Research and development expenses
|
13,243
|
9,376
|
Amortization of intangible assets
|
8,990
|
5,164
|
Operating earnings
|
65,915
|
94,592
|
Interest income
|
(1,349)
|
(1,586)
|
Interest expense
|
11,059
|
6,864
|
Other expense
|
1,835
|
5,025
|
Earnings before income taxes
|
54,370
|
84,289
|
Income tax expense
|
19,356
|
27,388
|
Net earnings
|
$35,014
|
$56,901
|
|
|
|
Net Earnings Per Share Data
|
|
|
Basic:
|
|
|
Net earnings per share
|
$0.45
|
$0.76
|
Weighted average shares
|
77,299,009
|
74,451,449
|
Diluted:
|
|
|
Net earnings per share
|
$0.45
|
$0.76
|
Weighted average shares
|
78,661,173
|
74,956,271
|
|
|
|
Other Financial Data
|
|
|
EBITDA (1)
|
$94,886
|
$105,187
|
Non-cash stock compensation expense (2)
|
1,948
|
2,384
|
Loss on disposal of fixed assets (3)
|
1,865
|
3
|
Terex Mining acquisition costs (4)
|
14,068
|
—
|
Inventory fair value adjustment charged to cost of products sold
(5)
|
7,019
|
—
|
|
|
|
Adjusted EBITDA (6)
|
$119,786
|
$107,574
|
|
(1) EBITDA is defined as net earnings before net interest
expense, income tax expense (benefit), depreciation and
amortization. EBITDA is presented because (i) management uses
EBITDA to measure Bucyrus' liquidity and financial performance and
(ii) management believes EBITDA is frequently used by securities
analysts, investors and other interested parties in evaluating the
performance and enterprise value of companies in general, and in
evaluating the liquidity of companies with significant debt service
obligations and their ability to service their
indebtedness. The EBITDA calculation is not an alternative to
net earnings under accounting principles generally accepted in the
United States of America ("GAAP") as an indicator of operating
performance or of cash flows as a measure of
liquidity. Additionally, EBITDA is not intended to be a
measure of free cash flow for management's discretionary use, as it
does not consider certain cash requirements such as interest
payments, tax payments and debt service requirements. Because
not all companies use identical calculations, this presentation of
EBITDA may not be comparable to other similarly titled measures of
other companies. The following table reconciles net earnings
to EBITDA and EBITDA to net cash provided by operating
activities.
|
(2) Reflects non-cash stock compensation expense related to
equity incentive plans.
|
(3) Reflects losses on the disposal of fixed assets in the
ordinary course.
|
(4) Reflects costs incurred to acquire Terex Mining.
|
(5) In connection with the acquisition of Terex Mining,
inventories acquired were adjusted to estimated fair value. This
adjustment is being charged to cost of products sold as the
inventory is sold.
|
(6) Adjusted EBITDA is a material term in Bucyrus' credit
agreement, which management believes is a material agreement, and
is used in the calculation of the leverage ratio covenant
thereunder.
|
|
EBITDA Reconciliation (Unaudited)
|
|
|
|
|
Quarter Ended March 31,
|
|
2010
|
2009
|
|
(Dollars in thousands)
|
Net earnings
|
$35,014
|
$56,901
|
Interest income
|
(1,349)
|
(1,586)
|
Interest expense
|
11,059
|
6,864
|
Income tax expense
|
19,356
|
27,388
|
Depreciation
|
13,194
|
9,435
|
Amortization
|
17,612
|
6,185
|
EBITDA
|
94,886
|
105,187
|
Changes in assets and liabilities
|
120,855
|
(31,137)
|
Non-cash stock compensation expense
|
1,948
|
2,384
|
Loss on disposal of fixed assets
|
1,865
|
3
|
Interest income
|
1,349
|
1,586
|
Interest expense
|
(11,059)
|
(6,864)
|
Income tax expense
|
(19,356)
|
(27,388)
|
Net cash provided by operating activities
|
$190,488
|
$43,771
|
|
Consolidated Condensed Balance Sheets
(Unaudited)
|
|
|
|
|
March 31,
|
December 31,
|
|
2010
|
2009
|
|
(Dollars in thousands)
|
Assets
|
|
|
Cash and cash equivalents
|
$241,933
|
$101,084
|
Receivables - net
|
717,740
|
741,815
|
Inventories
|
1,142,333
|
627,289
|
Deferred income taxes
|
32,843
|
45,024
|
Prepaid expenses and other
|
58,117
|
40,861
|
Total current assets
|
2,192,966
|
1,556,073
|
|
|
|
Goodwill
|
760,048
|
351,333
|
Intangible assets - net
|
702,051
|
220,780
|
Other assets
|
109,667
|
61,505
|
Total other assets
|
1,571,766
|
633,618
|
Property, plant and equipment - net
|
584,543
|
514,421
|
Total assets
|
$4,349,275
|
$2,704,112
|
|
|
|
Liabilities and Common Stockholders' Investment
|
|
|
Accounts payable and accrued expenses
|
$487,664
|
$328,722
|
Liabilities to customers on uncompleted contracts and
warranties
|
249,779
|
183,097
|
Income taxes
|
55,845
|
45,811
|
Current maturities of long-term debt and short-term
obligations
|
17,483
|
7,566
|
Total current liabilities
|
810,771
|
565,196
|
|
|
|
Deferred income taxes
|
100,139
|
82,260
|
Pension and other
|
226,382
|
198,000
|
Total long-term liabilities
|
326,521
|
280,260
|
Long-term debt, less current maturities
|
1,484,995
|
499,666
|
Common stockholders' investment
|
1,726,988
|
1,358,990
|
Total liabilities and common stockholders' investment
|
$4,349,275
|
$2,704,112
|
Segment Information (Unaudited)
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2010
|
|
|
Operating
|
Depreciation and
|
Capital
|
Total
|
|
Sales
|
Earnings
|
Amortization
|
Expenditures
|
Assets
|
|
(Dollars in thousands)
|
Surface mining
|
$397,571
|
$66,588
|
$20,412
|
$4,175
|
$2,878,288
|
Underground mining
|
209,954
|
21,268
|
8,558
|
2,549
|
1,470,987
|
Total operations
|
607,525
|
87,856
|
28,970
|
6,724
|
4,349,275
|
Corporate
|
—
|
(21,941)
|
—
|
—
|
—
|
Consolidated total
|
$607,525
|
65,915
|
28,970
|
$6,724
|
$4,349,275
|
Interest income
|
|
(1,349)
|
—
|
|
|
Interest expense
|
|
11,059
|
—
|
|
|
Other expense
|
|
1,835
|
1,836
|
|
|
Earnings before income taxes
|
|
$54,370
|
$30,806
|
|
|
Terex Mining results included in the table above were as
follows:
|
Quarter Ended March 31, 2010
|
|
|
Operating
|
Depreciation and
|
Capital
|
Total
|
|
Sales
|
Earnings
|
Amortization
|
Expenditures
|
Assets
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
Surface mining (1)
|
$92,197
|
($2,865)
|
$5,757
|
$233
|
$1,685,218
|
Interest income
|
|
(56)
|
—
|
|
|
Interest expense
|
|
5
|
—
|
|
|
Loss before income taxes
|
|
($2,814)
|
$5,757
|
|
|
__________________
|
|
|
|
|
|
(1) Operating earnings includes inventory fair value adjustments
included in cost of products sold of $7.0 million.
|
|
Quarter Ended March 31, 2009
|
|
|
|
|
|
|
|
|
Operating
|
Depreciation and
|
Capital
|
Total
|
|
Sales
|
Earnings
|
Amortization
|
Expenditures
|
Assets
|
|
(Dollars in thousands)
|
Surface mining
|
$311,003
|
$65,032
|
$5,669
|
$8,591
|
$1,082,901
|
Underground mining
|
294,741
|
37,347
|
8,930
|
2,610
|
1,404,967
|
Total operations
|
605,744
|
102,379
|
14,599
|
11,201
|
2,487,868
|
Corporate
|
—
|
(7,787)
|
—
|
—
|
—
|
Consolidated total
|
$605,744
|
94,592
|
14,599
|
$11,201
|
$2,487,868
|
Interest income
|
|
(1,586)
|
—
|
|
|
Interest expense
|
|
6,864
|
—
|
|
|
Other expense
|
|
5,025
|
1,021
|
|
|
Earnings before income taxes
|
|
$84,289
|
$15,620
|
|
|
Sales consisted of the following:
|
Quarter Ended March 31,
|
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
Surface Mining:
|
|
|
|
Original equipment
|
$170,169
|
$146,976
|
15.8%
|
Aftermarket parts and service
|
227,402
|
164,027
|
38.6%
|
|
397,571
|
311,003
|
27.8%
|
|
|
|
|
Underground Mining:
|
|
|
|
Original equipment
|
97,826
|
181,068
|
(46.0%)
|
Aftermarket parts and service
|
112,128
|
113,673
|
(1.4%)
|
|
209,954
|
294,741
|
(28.8%)
|
|
|
|
|
Total:
|
|
|
|
Original equipment
|
267,995
|
328,044
|
(18.3%)
|
Aftermarket parts and service
|
339,530
|
277,700
|
22.3%
|
|
$607,525
|
$605,744
|
0.3%
|
The increase in surface mining original equipment sales for the
first quarter of 2010 compared to the first quarter of 2009 was
primarily due to the inclusion of $35.4 million of Terex Mining
sales in 2010.This increase was offset by a decrease in electric
mining shovel sales. Blasthole drill and walking dragline sales for
the first quarter of 2010 approximated first quarter 2009
levels.
The increase in surface mining aftermarket parts and service
sales for the first quarter of 2010 compared to the first quarter
of 2009 was primarily due to the inclusion of $56.8 million of
Terex Mining sales in 2010. Non-Terex Mining aftermarket sales
increased by 4% from the first quarter of 2009. Increases in the
Canadian and Brazilian markets offset a decline in the United
States market.
The decrease in underground mining original equipment sales for
the first quarter of 2010 compared to the first quarter of 2009 was
primarily due to higher longwall system sales in the Czech Republic
in 2009.
The decrease in underground mining aftermarket parts and service
sales was primarily in the United States market due to larger
longwall aftermarket orders in the first quarter of 2009.
Gross profit and gross margin were as follows:
|
Quarter Ended March 31,
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
|
|
|
|
Gross profit
|
$175,282
|
$170,185
|
3.0%
|
Gross margin
|
28.9%
|
28.1%
|
N/A
|
Gross profit and gross margin were affected by preliminary
purchase accounting adjustments related to the acquisition of Terex
Mining as follows:
|
Quarter Ended March 31, 2010
|
|
(Dollars in thousands)
|
|
|
Gross profit reduction
|
$6,832
|
Gross margin reduction
|
1.1%
|
Operating earnings were as follows:
|
Quarter Ended March 31,
|
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
Surface mining
|
$66,588
|
$65,032
|
2.4%
|
Underground mining
|
21,268
|
37,347
|
(43.1%)
|
Total operations
|
87,856
|
102,379
|
(14.2%)
|
Corporate
|
(21,941)
|
(7,787)
|
(181.8%)
|
Consolidated total
|
$65,915
|
$94,592
|
(30.3%)
|
First quarter 2010 operating earnings for the surface mining
segment included Terex Mining earnings of $8.3 million before
amortization of preliminary purchase accounting adjustments. As a
result of the acquisition of Terex Mining, operating earnings for
the first quarter of 2010 were reduced by $11.2 million of
amortization of preliminary purchase accounting adjustments and
$14.1 million of acquisition costs.
The effective tax rate for the first quarter of 2010 was 35.6%
compared to 32.5% for the first quarter of 2009. The higher rate in
2010 was primarily due to non-deductible acquisition costs related
to the Terex acquisition.
Net earnings were as follows:
|
Quarter Ended March 31,
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
|
|
|
Net earnings
|
$35,014
|
$56,901
|
(38.5%)
|
Fully diluted net earnings per share
|
$0.45
|
$0.76
|
(40.8%)
|
Net earnings were reduced (increased) by amortizations of
preliminary purchase accounting adjustments related to the
acquisition of Terex Mining in 2010 as follows:
|
Quarter Ended March 31, 2010
|
|
(Dollars in thousands)
|
|
|
Inventory fair value adjustment charged to cost of product
sold
|
$7,019
|
Amortization of intangible assets
|
4,462
|
Depreciation of fixed assets
|
(234)
|
Operating earnings
|
11,247
|
Income tax benefit
|
(3,618)
|
Total
|
$7,629
|
Net earnings excluding Terex Mining and the associated
preliminary purchase accounting adjustments, as well as the effect
of the amended credit agreement, were as follows:
|
Quarter Ended March 31, 2010
|
|
(Dollars in thousands, except per share amounts)
|
|
|
Reported net earnings
|
$35,014
|
Terex Mining net earnings before amortization of purchase
accounting adjustments
|
(5,355)
|
Amortization of purchase accounting adjustments, net of income
tax benefit
|
7,629
|
Interest expense and amortization of capitalized financing fees,
net of income tax benefit
|
4,351
|
Acquisition costs, net of income tax benefit
|
11,089
|
Adjusted net earnings
|
$52,728
|
Adjusted Net Earnings Per Share Data
|
|
Diluted:
|
|
Adjusted weighted average shares
|
76,014,518
|
Adjusted net earnings per share
|
$0.69
|
EBITDA and Adjusted EBITDA were as follows:
|
Quarter Ended March 31,
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
|
|
|
EBITDA
|
$94,886
|
$105,187
|
(9.8%)
|
|
|
|
|
EBITDA as a percent of sales
|
15.6%
|
17.4%
|
N/A
|
|
|
|
|
Adjusted EBITDA
|
$119,786
|
$107,574
|
11.4%
|
|
|
|
|
Adjusted EBITDA as a percent of sales
|
19.7%
|
17.8%
|
N/A
|
Capital expenditures for the first quarter of 2010 were $6.7
million. Capital expenditures for 2010 are expected to be between
$60 million and $70 million.
Backlog at March 31, 2010 and December 31, 2009, as well as the
portion of backlog which was then expected to be recognized within
12 months of these dates, was as follows:
|
March 31,
|
December 31,
|
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
Surface Mining:
|
|
|
|
Total
|
$1,310,181
|
$1,062,977
|
23.3%
|
Next 12 months
|
$827,844
|
$641,599
|
29.0%
|
|
|
|
|
Underground Mining:
|
|
|
|
Total
|
$907,064
|
$816,543
|
11.1%
|
Next 12 months
|
$671,631
|
$616,784
|
8.9%
|
|
|
|
|
Total:
|
|
|
|
Total
|
$2,217,245
|
$1,879,520
|
18.0%
|
Next 12 months
|
$1,499,475
|
$1,258,383
|
19.2%
|
A portion of the surface mining backlog at March 31, 2010 and
December 31, 2009 was related to multi-year contracts that will
generate revenue in future years. Included in surface mining
backlog and next 12 months backlog at March 31, 2010 was $302.2
million and $218.9 million, respectively, for Terex Mining.
New orders were as follows:
|
Quarter Ended March 31,
|
|
|
2010
|
2009
|
% Change
|
|
(Dollars in thousands)
|
|
Surface mining:
|
|
|
|
Original equipment
|
$168,213
|
$95,557
|
76.0%
|
Aftermarket parts and service
|
171,197
|
146,591
|
16.8%
|
|
339,410
|
242,148
|
40.2%
|
Underground mining:
|
|
|
|
Original equipment
|
153,214
|
98,017
|
56.3%
|
Aftermarket parts and service
|
147,014
|
104,817
|
40.3%
|
|
300,228
|
202,834
|
48.0%
|
Total:
|
|
|
|
Original equipment
|
321,427
|
193,574
|
66.0%
|
Aftermarket parts and service
|
318,211
|
251,408
|
26.6%
|
|
$639,638
|
$444,982
|
43.7%
|
The increase in surface mining original equipment new orders for
the first quarter of 2010 compared to the first quarter of 2009 was
due in part to the inclusion of $28.5 million of Terex Mining new
orders. The increase was also due to two additional electric mining
shovel new orders in the first quarter of 2010 compared to the same
period for 2009 and the receipt of a small walking dragline order
from a customer in India in the first quarter of 2010.
The increase in surface mining aftermarket parts and service new
orders for the first quarter of 2010 compared to the first quarter
of 2009 was primarily due to the inclusion of $61.8 million of
Terex Mining new orders. This increase was offset by the
cancellation of a multi-year maintenance and repair contract
resulting in a reduction of new orders of approximately $29
million.
The increase in underground mining original equipment new orders
for the first quarter of 2010 compared to the first quarter of 2009
was in the room and pillar product line.
The increase in underground mining aftermarket parts and service
new orders for the first quarter of 2010 compared to the first
quarter of 2009 was primarily due to orders from customers in the
Australian and Chinese markets. New orders in the United States
market for the first quarter of 2010 were consistent with the first
quarter of 2009.
Conference Call
Bucyrus will hold a telephone conference call pertaining to this
news release at 9:00 a.m. Eastern Time (8:00 a.m. Central
Time) on Friday, April 23, 2010. Interested parties should
call (888) 680-0865 ((617) 213-4853 for international callers),
participant passcode 41522400. A replay of the call will be
available until May 23, 2010 at (888) 286‑8010 ((617) 801-6888
for international callers), passcode 97805354. The conference
call will also be available as a web cast, which can be accessed
through the link provided on the Investor Relations page of
Bucyrus' website at www.bucyrus.com and will be available until May
23, 2010.
Special Note Regarding Online Availability of Bucyrus
Releases and Filings
All Bucyrus financial news releases and SEC filings are posted
to Bucyrus' website, www.bucyrus.com. Automatic email alerts
for these postings, corporate and general releases as well as
product information also are available at www.bucyrus.com.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements may be identified by the use of predictive, future tense
or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "intends," "may," "will" or similar
terms. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
significant risks and uncertainties, and that actual results may
differ materially from those contained in the forward-looking
statements as a result of various factors, some of which are
unknown. The factors that could cause actual results to differ
materially from those anticipated in such forward-looking
statements and could adversely affect Bucyrus' actual results of
operations and financial condition include, without limitation:
-
the ability to integrate the acquired operations of Terex Mining
and to realize expected synergies and expected levels of sales and
profit from this acquisition;
-
the availability of operating cash to service indebtedness,
including the substantial indebtedness incurred to acquire Terex
Mining;
-
liabilities relating to Terex Mining which are unknown;
-
dependence on Terex Mining internal control systems for
compliance with Section 404 of the Sarbanes-Oxley Act of 2002;
-
the ability to fulfill certain employment obligations in
connection with the acquisition of Terex Mining;
-
entering into a new line of business in which certain
competitors have substantially more experience than Bucyrus does as
a result of the acquisition of Terex Mining;
-
the cyclical nature of the sale of original equipment due to
fluctuations in market prices for coal, copper, oil, iron ore and
other minerals, changes in general economic conditions, changes in
interest rates, changes in customers' replacement or repair cycles,
consolidation in the mining industry and competitive pressures;
-
changes in global financial markets and global economic
conditions;
-
disruption of plant operations due to equipment failures,
natural disasters or other reasons;
-
dependence on the commodity price of coal and other conditions
in the coal market;
-
the highly competitive nature of the mining industry;
-
reliance on significant customers;
-
the loss of key customers or key members of management;
-
the risks and uncertainties of doing business in foreign
countries, including emerging markets, and foreign currency
risks;
-
costs and risks associated with regulatory compliance and
changing regulations affecting the mining industry and/or electric
utilities;
-
customers deferring, delaying or canceling capital investments
due to volatility and tightening of credit markets, unprecedented
financial market conditions and a global recession;
-
the ability to attract and retain skilled labor;
-
reliance on local partners in foreign countries;
-
the ability to continue to offer products containing innovative
technology that meets the needs of customers;
-
work stoppages at the company, its customers, its suppliers or
providers of transportation;
-
the ability to protect intellectual property;
-
the ability to successfully implement a new Enterprise Resource
Planning system in the surface mining segment;
-
the ability to satisfy underfunded pension and postretirement
obligations;
-
production capacity;
-
product liability, environmental and other potential litigation;
and
-
the ability to purchase component parts or raw materials from
key suppliers at acceptable prices and/or on the required time
schedule.
The foregoing factors do not constitute an exhaustive list of
factors that could cause actual results to differ materially from
those anticipated in forward-looking statements, and should be read
in conjunction with the other cautionary statements and risk
factors included in Bucyrus' 2009 Form 10-K filed with the
Securities and Exchange Commission on February 26, 2010. All
forward-looking statements attributable to Bucyrus are expressly
qualified in their entirety by the foregoing cautionary
statements. Bucyrus undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
CONTACT: Bucyrus International, Inc.
Shelley Hickman, Director - Global Communications
414-768-4599
Fax: 414-768-5211
shickman@bucyrus.com
www.bucyrus.com
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