SOUTH MILWAUKEE, Wis., Feb. 14, 2008 (PRIME NEWSWIRE) -- Bucyrus International, Inc. (Nasdaq:BUCY), a leading designer, manufacturer and marketer of large-scale excavation equipment used in surface mining and of high technology system solutions for underground coal mining, announced today its summary unaudited results for the quarter and year ended December 31, 2007.
Operating Results
The net assets acquired and results of operations of DBT GmbH ("DBT") since the May 4, 2007 date of acquisition are included in Bucyrus' financial information presented below which, as a result of the shortened reporting period, among other things, may not be indicative of future results. The allocation of the DBT purchase price is preliminary and is subject to final adjustments. Bucyrus now has two reportable segments: surface mining and underground mining. Prior to the acquisition of DBT, all of Bucyrus' operations were in surface mining.
Consolidated Condensed Statements of Earnings (Unaudited)
Quarters ended Years ended
December 31, December 31,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
(Dollars in thousands, except per share amounts)
Sales $547,951 $205,613 $1,613,391 $738,050
Cost of products sold 411,629 154,539 1,205,066 551,275
---------- ---------- ---------- ----------
Gross profit 136,322 51,074 408,325 186,775
Selling, general and
administrative
expenses 67,034 20,877 185,639 72,983
Research and
development expenses 8,024 3,506 20,358 10,661
Amortization of
intangible assets 12,611 445 29,181 1,792
---------- ---------- ---------- ----------
Operating earnings 48,653 26,246 173,147 101,339
Interest income 1,018 248 3,523 663
Interest expense (9,581) (1,643) (27,718) (3,693)
Other expense (764) (258) (2,394) (1,035)
---------- ---------- ---------- ----------
Earnings before income
taxes 39,326 24,593 146,558 97,274
Income tax expense
(benefit) (22,581) 7,049 10,424 26,930
---------- ---------- ---------- ----------
Net earnings $61,907 $17,544 $136,134 $70,344
========== ========== ========== ==========
Net earnings per share:
Basic:
Net earnings per
share $1.66 $.56 $3.89 $2.25
========== ========== ========== ==========
Weighted average
shares 37,231,000 31,291,072 35,034,593 31,264,580
========== ========== ========== ==========
Diluted:
Net earnings per
share $1.64 $.56 $3.85 $2.23
========== ========== ========== ==========
Weighted average
shares 37,653,529 31,518,024 35,385,043 31,539,761
========== ========== ========== ==========
Other Financial Data:
EBITDA(1) $67,361 $30,186 $227,766 $116,023
========== ========== ========== ==========
Non-cash stock
compensation
expense(2) $1,578 $1,477 $6,171 $4,284
Severance expenses(3) 1,347 131 3,220 1,443
Loss on sale of fixed
assets(4) 174 104 532 140
Inventory fair value
adjustment charged to
cost of products
sold(5) 8,860 -- 23,350 --
---------- ---------- ---------- ----------
$11,959 $1,712 $33,273 $5,867
========== ========== ========== ==========
(1) EBITDA is defined as net earnings before
interest income, interest expense, income tax expense,
depreciation and amortization. EBITDA is presented because (i)
management uses EBITDA to measure the company's 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 operating 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 a 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 and net cash provided by
operating activities.
(2) Reflects non-cash stock compensation expense related to Bucyrus'
equity incentive plans.
(3) Reflects severance and early retirement expenses for personnel
changes in the ordinary course.
(4) Reflects losses on the sale of fixed assets in the ordinary
course.
(5) In connection with the acquisition of DBT, inventories purchased
were adjusted to estimated fair value. This adjustment is being
charged to cost of products sold as the inventory is sold.
EBITDA Reconciliation (Unaudited)
Quarters ended Years ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- --------
(Dollars in thousands)
Net earnings $61,907 $17,544 $136,134 $70,344
Interest income (1,018) (248) (3,523) (663)
Interest expense 9,581 1,643 27,718 3,693
Income tax expense
(benefit) (22,581) 7,049 10,424 26,930
Depreciation 6,096 3,486 25,438 12,892
Amortization 13,376 712 31,575 2,827
--------- --------- --------- --------
EBITDA 67,361 30,186 227,766 116,023
Changes in assets and
liabilities (66,604) 8,952 (157,546) (39,557)
Non-cash stock
compensation expense 1,578 1,477 6,171 4,284
Loss on sale of fixed
assets 174 104 532 140
Interest income 1,018 248 3,523 663
Interest expense (9,581) (1,643) (27,718) (3,693)
Income tax expense
(benefit) 22,581 (7,049) (10,424) (26,930)
--------- --------- --------- --------
Net cash provided by
operating activities $16,527 $32,275 $42,304 $50,930
========= ========= ========= ========
Consolidated Balance Sheets (Unaudited)
December 31, December 31,
2007 2006
---------- ----------
(Dollars in thousands)
Assets
------
Cash and cash equivalents $61,112 $9,575
Receivables-net 416,584 162,535
Inventories 494,425 176,277
Deferred income taxes 43,280 11,725
Prepaid expenses and other 41,038 16,408
---------- ----------
Total current assets 1,056,439 376,520
---------- ----------
Goodwill 317,238 47,306
Intangible assets-net 245,112 28,097
Deferred income taxes 43,098 16,117
Other assets 38,987 7,523
---------- ----------
Total other assets 644,435 99,043
---------- ----------
Property, plant and equipment - net 411,127 125,149
---------- ----------
Total assets $2,112,001 $600,712
========== ==========
Liabilities and Common Stockholders'
Investment
------------------------------------
Accounts payable and accrued expenses $289,213 $127,724
Liabilities to customers on uncompleted
contracts and warranties 158,390 32,233
Income taxes 64,736 9,978
Current maturities of long-term debt and
other short-term obligations 9,348 331
---------- ----------
Total current liabilities 521,687 170,266
---------- ----------
Postretirement benefits 16,009 17,313
Deferred income taxes 86,178 367
Pension and other 150,556 34,504
---------- ----------
Total other liabilities 252,743 52,184
---------- ----------
Long-term debt 526,721 82,266
---------- ----------
Common stockholders' investment 810,850 295,996
---------- ----------
Total liabilities and common
stockholders' investment $2,112,001 $600,712
========== ==========
Segment Information (Unaudited)
Quarter ended December 31, 2007
-------------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
---------- --------- ------------ ------------ ------
(Dollars in thousands)
Surface mining $286,041 $58,272 $3,625 $29,978 $807,569
Underground
mining 61,910 (5,480) 15,083 5,346 1,304,432
---------- -------- ------- ------- ----------
Total
operations 547,951 52,792 18,708 35,324 2,112,001
Corporate -- (4,139) -- -- --
---------- -------- ------- ------- ----------
Consolidated
total $547,951 48,653 18,708 $35,324 $2,112,001
========== ======= ==========
Interest
income 1,018
Interest
expense (9,581)
Other expense (764) 764
-------- -------
Earnings
before
income taxes $39,326 $19,472
======== =======
Year ended December 31, 2007
----------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
---------- --------- ------------ ------------ ------
(Dollars in thousands)
Surface mining $927,101 $165,238 $16,829 $81,169 $807,569
Underground
mining 686,290 18,269 37,790 15,712 1,304,432
---------- -------- ------- ------- ----------
Total
operations 1,613,391 183,507 54,619 96,881 2,112,001
Corporate -- (10,360) -- -- --
---------- -------- ------- ------- ----------
Consolidated
total $1,613,391 173,147 54,619 $96,881 $2,112,001
========== ======= ==========
Interest
income 3,523
Interest
expense (27,718)
Other expense (2,394) 2,394
-------- -------
Earnings
before
income taxes $146,558 $57,013
======== =======
Sales consisted of the following:
For the quarters For the years
ended December 31, ended December 31,
-------------------------- ----------------------------
% %
2007 2006 Change 2007 2006 Change
---- ---- ------ ---- ---- ------
(Dollars in thousands)
Surface:
Original
equipment $121,439 $74,038 64.0% $398,662 $255,739 55.9%
Aftermarket
parts and
service 164,602 131,575 25.1% 528,439 482,311 9.6%
-------- -------- ---------- --------
286,041 205,613 39.1% 927,101 738,050 25.6%
-------- -------- ---------- --------
Underground:
Original
equipment 170,830 N/A N/A 448,252 N/A N/A
Aftermarket
parts and
service 91,080 N/A N/A 238,038 N/A N/A
-------- ----------
261,910 N/A N/A 686,290 N/A N/A
-------- ----------
Total:
Original
equipment 292,269 74,038 294.8% 846,914 255,739 231.2%
Aftermarket
parts and
service 255,682 131,575 94.3% 766,477 482,311 58.9%
-------- -------- ---------- --------
$547,951 $205,613 166.5% $1,613,391 $738,050 118.6%
======== ======== ========== ========
The overall increase in surface mining sales reflected the ongoing global demand for Bucyrus' products and services, which continues to be driven by the sustained strength in markets for commodities mined by Bucyrus machines. Capacity constraints continue to have an impact on surface mining sales, and the ongoing expansion of Bucyrus' South Milwaukee facilities is expected to be completed by the end of the first quarter of 2008. Underground mining sales were consistent with Bucyrus' expectation for 2007 at the time of the DBT acquisition.
Gross profit for the fourth quarter of 2007 was $136.3 million, or 24.9% of sales, compared with $51.1 million, or 24.8% of sales, for the fourth quarter of 2006. Gross profit for the year ended December 31, 2007 was $408.3 million, or 25.3% of sales, compared with $186.8 million, or 25.3% of sales, for the year ended December 31, 2006. Gross profit for the fourth quarter and year ended December 31, 2007 was reduced by $7.1 million and $22.2 million, respectively, of amortization of purchase accounting adjustments as a result of the acquisition of DBT, which had the effect of reducing the gross profit percentage for the fourth quarter and year ended December 31, 2007 by 1.3% and 1.4%, respectively. The increases in gross profit were primarily due to the acquisition of DBT and increased surface mining sales, as well as improved gross margins on both surface mining original equipment and aftermarket parts and services. Gross profit on underground mining equipment was down slightly for the fourth quarter of 2007 partially as a result of increased manufacturing absorption losses.
Selling, general and administrative expenses for the fourth quarter of 2007 were $67.0 million, or 12.2% of sales, compared with $20.9 million, or 10.2% of sales, for the fourth quarter of 2006. Selling, general and administrative expenses for the year ended December 31, 2007 were $185.6 million, or 11.5% of sales, compared with $73.0 million, or 9.9% of sales, for the year ended December 31, 2006. The increase in selling, general and administrative expenses was primarily due to the acquisition of DBT. Included in the fourth quarter of 2007 were increased costs related to the SAP computer software upgrade in our underground mining operations and one-time expenses related to the continued integration of DBT.
Operating earnings were as follows:
Quarters ended Years ended
December 31, December 31,
------------------------ -------------------------
% %
2007 2006 Change 2007 2006 Change
---- ---- ------ ---- ---- ------
(Dollars in thousands)
Surface mining $58,272 $26,251 122.0% $165,238 $101,184 63.3%
Underground mining (5,480) N/A N/A 18,269 N/A N/A
------- ------- -------- --------
Total operations 52,792 26,251 101.1% 183,507 101,184 81.4%
Corporate (4,139) N/A N/A (10,360) N/A N/A
------- ------- -------- --------
Consolidated
total $48,653 $26,246 85.4% $173,147 $101,339 70.9%
======= ======= ======== ========
Operating earnings for underground mining operations were reduced by purchase accounting adjustments related to the acquisition of DBT of $18.3 million and $49.1 million for the fourth quarter and year ended December 31, 2007, respectively. The increase in consolidated operating earnings for the quarter and year ended December 31, 2007 was primarily due to the acquisition of DBT and increased gross profit resulting from increased sales volume related to surface mining operations.
Interest expense for the fourth quarter of 2007 was $9.6 million compared with $1.6 million for the fourth quarter of 2006. Interest expense for the year ended December 31, 2007 was $27.7 million compared with $3.7 million for the year ended December 31, 2006. The increase in interest expense in 2007 was due to increased debt levels related to the financing of the acquisition of DBT.
Income tax benefit for the fourth quarter of 2007 was $22.6 million compared with expense of $7.0 million for the fourth quarter of 2006. Income tax expense for the year ended December 31, 2007 was $10.4 million, or 7.1% of pre-tax earnings, compared with $26.9 million, or 27.7% of pre-tax earnings, for the year ended December 31, 2006. The effective tax rate for the fourth quarter was impacted by significant one-time benefits related to the underground mining operations. These include a $12.2 million deferred tax benefit resulting from a reduction in the German statutory tax rate and a $14.0 million foreign tax credit benefit resulting from repatriation of German earnings. Earnings in lower taxed jurisdictions resulted in $4.7 million of benefits and various other items resulted in an additional $4.7 million of benefits.
Net earnings for the fourth quarter of 2007 were $61.9 million, or $1.66 per share, compared with $17.5 million, or $0.56 per share, for the fourth quarter of 2006. Net earnings for the year ended December 31, 2007 were $136.1 million, or $3.89 per share, compared with $70.3 million, or $2.25 per share, for the year ended December 31, 2006. Net earnings were reduced (increased) by amortization of purchase accounting adjustments related to the acquisition of DBT as follows:
Quarter Year
ended ended
December 31, December 31,
-------- --------
2007 2007
---- ----
(Dollars in thousands)
Inventory fair value adjustment charged to
cost of product sold $8,860 $23,350
Amortization of intangible assets 12,218 27,456
Depreciation of fixed assets (2,784) (1,746)
-------- --------
Operating earnings 18,294 49,060
Income tax expense (a) (18,149) (28,432)
-------- --------
Total $145 $20,628
======== ========
----------------
(a) Includes a $12.2 million tax benefit resulting from a reduction
in the German statutory tax rate.
EBITDA was as follows:
Quarters ended Years ended
December 31, December 31,
--------------- -------------
% %
- -
2007 2006 Change 2007 2006 Change
---- ---- ------ ---- ---- ------
(Dollars in thousands)
EBITDA $67,361 $30,186 123.2% $227,766 $116,023 96.3%
EBITDA as a
percent of sales 12.3% 14.7% (16.3%) 14.1% 15.7% (10.2%)
EBITDA is defined as net earnings before interest income, interest expense, income taxes, depreciation and amortization. EBITDA includes the impact of non-cash stock compensation expense, severance expenses, loss on sales of fixed assets and the inventory fair value purchase accounting adjustment charged to cost of products sold as set forth in the Other Financial Data table beneath the Consolidated Condensed Statements of Earnings. EBITDA is a measurement not recognized in accordance with accounting principles generally accepted in the United States of America ("GAAP") and should not be viewed as an alternative to GAAP measures of performance. For a reconciliation of net earnings as reported in the Unaudited Consolidated Statements of Earnings to EBITDA and a reconciliation of net cash provided by operating activities as reported in the Unaudited Consolidated Statements of Cash Flows to EBITDA, see the EBITDA Reconciliation table above.
Capital expenditures for 2007 were $96.9 million, which included $42.4 million related to Bucyrus' previously announced ongoing expansion of its South Milwaukee facilities.
Backlog as of December 31, 2007 and December 31, 2006, as well as the portion of backlog which was expected to be recognized within 12 months of these dates was as follows:
December 31, December 31,
2007 2006 % Change
---------- ---------- ----------
(Dollars in thousands)
Surface:
Total $804,781 $894,749 (10.1%)
Next 12 months $579,448 $593,828 (2.4%)
Underground:
Total $636,473 N/A N/A
Next 12 months $551,923 N/A N/A
Combined:
Total $1,441,254 $894,749 61.1%
Next 12 months $1,131,371 $593,828 90.5%
New orders related to surface mining operations for the fourth quarter of 2007 were $7.8 million and $183.3 million for original equipment and aftermarket parts and service sales, respectively. New orders related to surface mining operations for the year ended December 31, 2007 were $353.4 million and $483.7 million for original equipment and aftermarket parts and service sales, respectively. The low surface mining original equipment new orders for the fourth quarter was due to the timing of orders as many customer commitments for new equipment were at various stages of contract negotiations as of the end of the year. Quoting activity remains at a high level. New orders related to underground mining operations for the fourth quarter of 2007 were $406.6 million and $96.0 million for original equipment and aftermarket parts and service sales, respectively. New orders related to underground mining operations for the period May 4, 2007 through December 31, 2007 were $634.2 million and $247.8 million for original equipment and aftermarket parts and service sales, respectively. The high level of underground mining original equipment orders for the fourth quarter was due to an exceptionally large order for five longwall systems from a recently privatized mining company that is upgrading their equipment to enable higher production capacity.
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, February 15, 2008. Interested parties should call (888) 713-4213 ((617) 213-4865 for international callers), participant passcode 93028958. A replay of the call will be available until February 29, 2008 at (888) 286-8010 ((617) 801-6888 internationally), passcode 90279471. The conference call will also be available as a webcast, 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 March 15, 2008.
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:
* disruption of plant operations due to equipment failures, natural disasters or other reasons; * the ability to attract and retain skilled labor; * production capacity; * the ability to purchase component parts or raw materials from key suppliers at acceptable prices and/or on the required time schedule; * 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, interest rates, customers' replacement or repair cycles, consolidation in the mining industry and competitive pressures; * 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; * the ability to continue to offer products containing innovative technology that meets the needs of customers; * costs and risks associated with regulatory compliance and changing regulations affecting the mining industry and/or electric utilities; * product liability, environmental and other potential litigation; * work stoppages at the company, its customers, suppliers or providers of transportation; * the ability to satisfy under-funded pension obligations; * the ability to effectively and efficiently integrate the operations of DBT and to realize expected levels of sales and profit from this acquisition; * potential risks, material weaknesses in financial reporting and liabilities of DBT unknown to Bucyrus; * dependence on the commodity price of coal and other conditions in the coal markets; * reliance on significant customers; * experience in the underground mining business, which is less than some of Bucyrus' competitors; and * increased levels of debt and debt service obligations relating to the acquisition of DBT.
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' prospectus supplement filed with the Securities and Exchange Commission on May 9, 2007 in connection with the recent public offering of its common stock and Bucyrus' Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2007 and other cautionary statements described in other reports filed by Bucyrus with the Securities and Exchange Commission. 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.