SOUTH MILWAUKEE, Wis., April 24, 2008 (PRIME NEWSWIRE) -- 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, 2008.
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. As a result, the financial results for the first quarter of 2008 are not necessarily comparative to the results for the first quarter of 2007 and may not be indicative of future results. 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
March 31,
-------------------
2008 2007
-------- --------
(Dollars in thousands,
except per share amounts)
Sales $516,981 $190,361
Cost of products sold 375,396 138,283
-------- --------
Gross profit 141,585 52,078
Selling, general and administrative expenses 59,481 21,118
Research and development expenses 8,151 2,548
Amortization of intangible assets 6,421 446
-------- --------
Operating earnings 67,532 27,966
Interest expense - net 5,914 1,237
Other expense 767 265
-------- --------
Earnings before income taxes 60,851 26,464
Income tax expense 19,770 8,601
-------- --------
Net earnings $ 41,081 $ 17,863
======== ========
Quarters ended
March 31,
-------------------
2008 2007
-------- --------
(Dollars in thousands,
except per share amounts)
Net earnings per share:
Basic:
Net earnings per share $1.11 $.57
Weighted average shares 37,170,129 31,330,272
Diluted:
Net earnings per share $1.09 $.57
Weighted average shares 37,602,579 31,607,977
Other Financial Data:
EBITDA (1) $82,938 $32,160
======= =======
Non-cash stock compensation expense (2) $1,822 $1,692
Severance expenses (3) 280 473
Loss on sale of fixed assets (4) 560 95
Inventory fair value adjustment charged to
cost of products sold (5) 8,859 --
------- ------
$11,521 $2,260
======= ======
--------------
(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 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 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 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 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
March 31,
---------------------
2008 2007
-------- --------
(Dollars in thousands)
Net earnings $ 41,081 $ 17,863
Interest expense - net 5,914 1,237
Income tax expense 19,770 8,601
Depreciation 8,985 3,748
Amortization 7,188 711
-------- --------
EBITDA 82,938 32,160
Quarters ended
March 31,
---------------------
2008 2007
-------- --------
Changes in assets and liabilities 91,634 (15,057)
Non-cash stock compensation expense 1,822 1,692
Loss on sale of fixed assets 560 95
Interest expense - net (5,914) (1,237)
Income tax expense (19,770) (8,601)
-------- --------
Net cash provided by operating activities $151,270 $9,052
======== ========
Consolidated Balance Sheets (Unaudited)
March 31, Dec. 31,
2008 2007
---------- ----------
(Dollars in thousands)
Assets
------
Cash and cash equivalents $ 176,598 $ 61,112
Receivables - net 423,341 416,584
Inventories - net 538,856 494,425
Deferred income taxes 37,117 33,630
Prepaid expenses and other 46,450 41,038
---------- ----------
Total current assets 1,222,362 1,046,789
---------- ----------
Goodwill 324,443 317,238
Intangible assets-net 239,473 245,836
Deferred income taxes 11,103 3,498
Other assets 41,620 44,448
---------- ----------
Total other assets 616,639 611,020
---------- ----------
Property, plant and equipment - net 428,864 410,403
---------- ----------
Total assets $2,267,865 $2,068,212
========== ==========
Liabilities and Common Stockholders'
------------------------------------
Investment
----------
Accounts payable and accrued expenses $ 312,706 $ 295,972
Liabilities to customers on uncompleted
contracts and warranties 290,661 158,390
Income taxes 62,473 55,086
Current maturities of long-term debt and
other short-term obligations 8,641 9,348
---------- ----------
Total current liabilities 674,481 518,796
---------- ----------
March 31, Dec. 31,
2008 2007
---------- ----------
Postretirement benefits 16,413 16,007
Deferred income taxes 53,900 50,920
Pension and other 154,165 144,918
---------- ----------
Total long-term liabilities 224,478 211,845
---------- ----------
Long-term debt, less current maturities 516,823 526,721
---------- ----------
Common stockholders' investment 852,083 810,850
---------- ----------
Total liabilities and common
stockholders' investment $2,267,865 $2,068,212
========== ==========
Segment Information (Unaudited)
Quarter ended March 31, 2008
----------------------------
Depreciation
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
Surface mining $ 284,058 $ 54,344 $ 4,592 $ 15,589 $ 885,597
Underground
mining 232,923 19,249 10,814 5,596 1,382,268
---------- ---------- ---------- ---------- ----------
Total
operations 516,981 73,593 15,406 21,185 2,267,865
Corporate -- (6,061) -- -- --
---------- ---------- ---------- ---------- ----------
Consolidated
total $ 516,981 67,532 15,406 $ 21,185 $2,267,865
========== ========== ==========
Interest
expense
- net 5,914
Other expense 767 767
---------- ----------
Earnings before
income taxes $ 60,851 $ 16,173
========== ==========
Quarter ended March 31, 2007
----------------------------
Depreciation
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
Surface mining $ 190,361 $ 27,966 $ 4,194 $ 14,823 $ 627,751
Underground
mining N/A N/A N/A N/A N/A
---------- ---------- ---------- ---------- ----------
Total
operations 190,361 27,966 4,194 14,823 627,751
Corporate N/A N/A N/A N/A N/A
---------- ---------- ---------- ---------- ----------
Consolidated
total $ 190,361 27,966 4,194 $ 14,823 $ 627,751
========== ========== ==========
Interest
expense
- net 1,237
Other expense 265 265
---------- ----------
Earnings before
income taxes $ 26,464 $ 4,459
========== ==========
Sales consisted of the following:
Quarters ended March 31,
------------------------------
%
2008 2007 Change
---- ---- ------
(Dollars in thousands)
Surface mining:
Original equipment $143,008 $ 78,370 82.5%
Aftermarket parts and service 141,050 111,991 25.9%
-------- --------
284,058 190,361 49.2%
-------- --------
Underground mining:
Original equipment 141,116 N/A
Aftermarket parts and service 91,807 N/A
--------
232,923 N/A
--------
Total:
Original equipment 284,124 78,370 262.5%
Aftermarket parts and service 232,857 111,991 107.9%
-------- --------
$516,981 $190,361 171.6%
======== ========
The overall increase in surface mining sales was attributable to the strong global demand for Bucyrus' products and services, which continues to be driven by high international commodity prices and strong markets for commodities mined by Bucyrus machines. Surface mining original equipment sales for the first quarter of 2008 increased in all three product lines compared to the first quarter of 2007. Surface mining aftermarket parts and service sales for the first quarter of 2008 increased in nearly all worldwide markets compared to the first quarter of 2007. The expansion of Bucyrus' South Milwaukee, Wisconsin surface mining facilities was substantially complete as of March 31, 2008, which will allow for annual shovel production capacity of 24 machines and almost doubled manufactured parts capacity from 2006 levels. Underground mining sales for the first quarter of 2008 decreased from the third and fourth quarters of 2007 primarily due to the timing of new orders in 2007.
Gross profit for the first quarter of 2008 was $141.6 million, or 27.4% of sales, compared to $52.1 million, or 27.4% of sales, for the first quarter of 2007. Gross profit for the first quarter of 2008 was reduced by $8.7 million of amortization of purchase accounting adjustments as a result of the acquisition of DBT in 2007, which had the effect of reducing gross margin for the first quarter of 2008 by 1.7 percentage points. The increase in gross profit was primarily due to the acquisition of DBT and increased surface mining sales. For the first quarter of 2008, gross margins on surface mining original equipment and aftermarket parts and services were improved from the first quarter of 2007; however, overall gross margin was negatively impacted by the sales mix of lower margin original equipment and higher margin aftermarket parts and services. Gross margin on underground mining equipment for the first quarter of 2008 was improved from the last two quarters of 2007 primarily due to 2008 sales consisting of a larger percentage of higher margin aftermarket parts and services.
Selling, general and administrative expenses for the first quarter of 2008 were $59.5 million, or 11.5% of sales, compared to $21.1 million, or 11.1% of sales, for the first quarter of 2007. This increase was primarily due to the acquisition of DBT.
Operating earnings were as follows:
Quarters ended March 31,
------------------------------
2008 2007 % Change
---- ---- --------
(Dollars in thousands)
Surface mining $54,344 $27,966 94.3%
Underground mining 19,249 N/A N/A
------- -------
Total operations 73,593 27,966 163.2%
Corporate (6,061) N/A N/A
------- -------
Consolidated total $67,532 $27,966 141.5%
======= =======
The increase in operating earnings for the first quarter of 2008 was primarily due to the acquisition of DBT and increased gross profit resulting from increased surface mining sales volume. Operating earnings for underground mining operations were reduced by purchase accounting adjustments related to the acquisition of DBT of $14.3 million for the first quarter of 2008.
Net interest expense for the first quarter of 2008 was $5.9 million compared to $1.2 million for the first quarter of 2007. The increase in net interest expense in 2008 was due to increased debt levels related to the financing of the acquisition of DBT.
Net earnings for the first quarter of 2008 were $41.1 million, or $1.11 per share, compared to $17.9 million, or $0.57 per share, for the first quarter of 2007. Net earnings were reduced (increased) by amortization of purchase accounting adjustments related to the acquisition of DBT as follows:
Quarter ended
March 31, 2008
---------------------
(Dollars in thousands)
Inventory fair value adjustment
charged to cost of product sold $ 8,859
Amortization of intangible assets 5,796
Depreciation of fixed assets (355)
-------
Operating earnings 14,300
Income tax expense 4,782
-------
Total $ 9,518
=======
EBITDA was as follows:
Quarters ended March 31,
-----------------------------
2008 2007 % Change
---- ---- --------
(Dollars in thousands)
EBITDA $82,938 $32,160 157.9%
EBITDA as a percent of sales 16.0% 16.9% (5.3%)
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 the first quarter of 2008 were $21.2 million, which included $7.5 million related to Bucyrus' expansion of its South Milwaukee facilities. At Bucyrus' Annual Meeting of Stockholders today, Chief Executive Officer Tim Sullivan reaffirmed that the Board of Directors had previously approved an additional $45 million for the completion of renovations at Bucyrus' South Milwaukee, Wisconsin facility. Bucyrus' capital expenditures for 2008 are expected to be between $90 million and $100 million, including this expenditure.
Backlog as of March 31, 2008 and December 31, 2007, as well as the portion of backlog which is expected to be recognized within 12 months of these dates, was as follows:
March 31, December 31,
2008 2007 % Change
---------- ---------- ----------
(Dollars in thousands)
Surface mining:
Total $1,136,222 $ 804,781 41.2%
Next 12 months $ 741,557 $ 579,448 28.0%
Underground mining:
Total $ 881,042 $ 636,473 38.4%
Next 12 months $ 744,013 $ 551,923 34.8%
Total:
Total $2,017,264 $1,441,254 40.0%
Next 12 months $1,485,570 $1,131,371 31.3%
A portion of the surface mining backlog as of March 31, 2008 and December 31, 2007 was related to multi-year contracts that will generate revenue in future years.
New orders related to surface mining operations for the first quarter of 2008 were $260.8 million and $354.7 million for original equipment and aftermarket parts and service sales, respectively. Included in surface mining aftermarket parts and service new orders was $209.8 million related to multi-year contracts that will generate revenue in future years. New orders related to underground mining operations for the first quarter of 2008 were $353.1 million and $124.4 million for original equipment and aftermarket parts and service sales, respectively.
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 25, 2008. Interested parties should call (888) 680-0869 ((617) 213-4854 for international callers), participant passcode 62401991. A replay of the call will be available until May 9, 2008 at (888) 286-8010 ((617) 801-6888 internationally), passcode 81117705. 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 25, 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 highly competitive nature of the mining industry; * 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 Bucyrus, 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' 2007 Form 10-K filed with the Securities and Exchange Commission on February 29, 2008. 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.