SOUTH MILWAUKEE, Wis., July 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 and six months ended June 30, 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 second quarter and six months ended June 30, 2008 are not necessarily comparative to the results for the second quarter and six months ended June 30, 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)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- --------- ---------- ----------
(Dollars in thousands, except per share amounts)
Sales $ 621,008 $ 374,801 $1,137,989 $ 565,162
Cost of
products sold 446,912 278,504 822,308 416,787
---------- ---------- ---------- ----------
Gross profit 174,096 96,297 315,681 148,375
Selling, general
and
administrative
expenses 59,383 41,687 118,864 62,805
Research and
development
expenses 10,359 4,614 18,510 7,162
Amortization of
intangible
assets 4,610 4,452 11,031 4,898
---------- ---------- ---------- ----------
Operating
earnings 99,744 45,544 167,276 73,510
Interest expense
- net 6,583 6,217 12,497 7,454
Other expense 769 600 1,536 865
---------- ---------- ---------- ----------
Earnings before
income taxes 92,392 38,727 153,243 65,191
Income tax
expense 30,075 10,965 49,845 19,566
---------- ---------- ---------- ----------
Net earnings $ 62,317 $ 27,762 $ 103,398 $ 45,625
========== ========== ========== ==========
Net earnings per share:
Basic:
Net earnings
per share $ 0.84 $ 0.40 $ 1.39 $ 0.69
Weighted average
shares 74,342,810 68,749,332 74,333,624 65,721,758
Diluted:
Net earnings per
share $ 0.83 $ 0.40 $ 1.37 $ 0.69
Weighted average
shares 75,272,435 69,406,916 75,238,982 66,328,538
Other Financial
Data:
EBITDA (1) $ 114,022 $ 57,684 $ 196,960 $ 89,844
========== ========== ========== ==========
Non-cash stock
compensation
expense (2) $ 2,157 $ 1,365 $ 3,979 $ 3,057
Severance
expenses (3) 910 757 1,190 1,230
Loss on sale of
fixed assets (4) 5 205 565 300
Inventory fair
value
adjustment
charged to cost
of products
sold (5) 3,229 5,631 12,088 5,631
---------- ---------- ---------- ----------
$ 6,301 $ 7,958 $ 17,822 $ 10,218
========== ========== ========== ==========
(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)
Quarter Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Dollars in thousands)
Net earnings $62,317 $27,762 $103,398 $45,625
Interest expense - net 6,583 6,217 12,497 7,454
Income tax expense 30,075 10,965 49,845 19,566
Depreciation 9,983 7,688 18,653 11,436
Amortization 5,064 5,052 12,567 5,763
-------- -------- -------- --------
EBITDA 114,022 57,684 196,960 89,844
Changes in assets and
liabilities (84,056) (38,273) 7,578 (53,330)
Non-cash stock compensation
expense 2,157 1,365 3,979 3,057
Loss on sale of fixed assets 5 205 565 300
Interest expense - net (6,583) (6,217) (12,497) (7,454)
Income tax expense (30,075) (10,965) (49,845) (19,566)
-------- -------- -------- --------
Net cash provided by (used in)
operating activities ($4,530) $3,799 $146,740 $12,851
======== ======== ======== ========
Consolidated Balance Sheets (Unaudited)
June 30, Dec. 31,
2008 2007
---------- ----------
(Dollars in thousands)
Assets
------
Cash and cash equivalents $140,483 $61,112
Receivables - net 500,544 416,584
Inventories - net 578,373 494,425
Deferred income taxes 39,054 33,630
Prepaid expenses and other 34,480 41,038
---------- ----------
Total current assets 1,292,934 1,046,789
---------- ----------
Goodwill 320,255 317,238
Intangible assets - net 234,841 245,836
Deferred income taxes 3,425 3,498
Other assets 40,809 44,448
---------- ----------
Total other assets 599,330 611,020
---------- ----------
Property, plant and equipment - net 444,643 410,403
---------- ----------
Total assets $2,336,907 $2,068,212
========== ==========
Liabilities and Common Stockholders'
------------------------------------
Investment
----------
Accounts payable and accrued expenses $356,052 $295,972
Liabilities to customers on uncompleted
contracts and warranties 282,504 158,390
Income taxes 52,433 55,086
Current maturities of long-term debt and other
short-term obligations 9,230 9,348
---------- ----------
Total current liabilities 700,219 518,796
---------- ----------
Postretirement benefits 16,883 16,007
Deferred income taxes 50,031 50,920
Pension and other 152,016 144,918
---------- ----------
Total long-term liabilities 218,930 211,845
---------- ----------
Long-term debt, less current maturities 513,533 526,721
---------- ----------
Common stockholders' investment 904,225 810,850
---------- ----------
Total liabilities and common stockholders'
investment $2,336,907 $2,068,212
========== ==========
Segment Information (Unaudited)
Quarter Ended June 30, 2008
---------------------------
Deprecia
-tion
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
-------- -------- ------- ---------- --------
(Dollars in thousands)
Surface mining $301,779 $64,259 $5,488 $18,654 $978,881
Underground mining 319,229 44,298 8,790 4,488 1,358,026
-------- -------- ------- -------- ----------
Total operations 621,008 108,557 14,278 23,142 2,336,907
Corporate N/A (8,813) N/A N/A N/A
-------- -------- ------- -------- ----------
Consolidated
total $621,008 99,744 14,278 $23,142 $2,336,907
======== ======== ======= ======== ==========
Interest expense -
net 6,583
Other expense 769 769
-------- -------
Earnings before
income taxes $92,392 $15,047
======== =======
Quarter Ended June 30, 2007
---------------------------
Deprecia
-tion
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
-------- -------- ------- ---------- --------
(Dollars in thousands)
Surface mining $213,595 $36,126 $4,521 $17,564 $726,697
Underground mining 161,206 11,466 7,619 3,208 1,418,526
-------- -------- ------- -------- ----------
Total operations 374,801 47,592 12,140 20,772 2,145,223
Corporate N/A (2,048) N/A N/A N/A
-------- -------- ------- -------- ----------
Consolidated
total $374,801 45,544 12,140 $20,772 $2,145,223
======== ======== ==========
Interest expense -
net 6,217
Other expense 600 600
-------- -------
Earnings before
income taxes $38,727 $12,740
======== =======
Six Months Ended June 30, 2008
------------------------------
Deprecia
-tion
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
-------- -------- ------- ---------- --------
(Dollars in thousands)
Surface mining $585,837 $118,603 $10,080 $34,243 $978,881
Underground mining 552,152 63,547 19,604 10,084 1,358,026
-------- -------- ------- -------- ----------
Total operations 1,137,989 182,150 29,684 44,327 2,336,907
Corporate N/A (14,874) N/A N/A N/A
-------- -------- ------- -------- ----------
Consolidated
total $1,137,989 167,276 29,684 $44,327 $2,336,907
========== ======== ==========
Interest expense -
net 12,497
Other expense 1,536 1,536
-------- -------
Earnings before
income taxes $153,243 $31,220
======== =======
Six Months Ended June 30, 2007
------------------------------
Deprecia
-tion
and Capital
Operating Amorti- Expendi- Total
Sales Earnings zation tures Assets
-------- -------- ------- ---------- --------
(Dollars in thousands)
Surface mining $403,956 $64,092 $8,715 $32,387 $726,697
Underground mining 161,206 11,466 7,619 3,208 1,418,526
-------- -------- ------- -------- ----------
Total operations 565,162 75,558 16,334 35,595 2,145,223
Corporate N/A (2,048) N/A N/A N/A
-------- -------- ------- -------- ----------
Consolidated
total $565,162 73,510 16,334 $35,595 $2,145,223
======== ======= ==========
Interest expense -
net 7,454
Other expense 865 865
-------- -------
Earnings before
income taxes $65,191 $17,199
======== =======
Sales consisted of the following:
Six Months Ended
Quarter Ended June 30, June 30,
------------------------ -------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- ------ -------- -------- ------
(Dollars in thousands)
Surface
mining:
Original
equipment $139,069 $85,734 62.2% $282,077 $164,104 71.9%
Aftermarket
parts and
service 162,710 127,861 27.3% 303,760 239,852 26.6%
-------- -------- -------- --------
301,779 213,595 41.3% 585,837 403,956 45.0%
-------- -------- -------- --------
Underground
mining:
Original
equipment 185,500 103,282 79.6% 326,616 103,282 216.2%
Aftermarket
parts and
service 133,729 57,924 130.9% 225,536 57,924 289.4%
-------- -------- -------- --------
319,229 161,206 98.0% 552,152 161,206 242.5%
-------- -------- -------- --------
Total:
Original
equipment 324,569 189,016 71.7% 608,693 267,386 127.6%
Aftermarket
parts and
service 296,439 185,785 59.6% 529,296 297,776 77.7%
-------- -------- ---------- --------
$621,008 $374,801 65.7% $1,137,989 $565,162 101.4%
======== ======== ========== ========
The overall increase in surface mining sales was attributable to the high demand for Bucyrus' products and services throughout the world and the positive impact of recently completed capacity improvements at Bucyrus' principal surface mining manufacturing facility in South Milwaukee, Wisconsin. The high demand for Bucyrus' products and services continues to be driven by high international commodity prices and strong markets for commodities mined by Bucyrus machines. The increase in surface mining original equipment sales for the quarter and six months ended June 30, 2008 was in electric mining shovels and draglines. Surface mining aftermarket parts and service sales for the second quarter and six months ended June 30, 2008 increased in nearly all worldwide markets compared to the same periods last year. The expansion of Bucyrus' South Milwaukee, Wisconsin surface mining manufacturing facilities is substantially complete, 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 second quarter of 2008 increased from recent quarters primarily due to strong original equipment new orders in the fourth quarter of 2007 and first quarter of 2008. The lack of steel availability in the first quarter on these new orders has been resolved through changes in ordering policies. Market conditions are strong in Eastern Europe and India, which more than offsets the reductions occurring in China due to local sourcing.
Gross profit for the second quarter of 2008 was $174.1 million, or 28.0% of sales, compared to $96.3 million, or 25.7% of sales, for the second quarter of 2007. Gross profit for the six months ended June 30, 2008 was $315.7 million, or 27.7% of sales, compared to $148.4 million, or 26.3% of sales, for the six months ended June 30, 2007. Gross profit was reduced by purchase accounting adjustments as a result of the acquisition of DBT in 2007 as follows:
Quarter Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
------- ------- ------- -------
(Dollars in thousands)
Purchase accounting
adjustments $3,144 $6,166 $11,891 $6,166
Gross margin reduction
(percentage points) 0.5 1.6 1.1 1.0
The increase in gross profit was primarily due to the acquisition of DBT and increased surface mining sales. For the second quarter and six months ended June 30, 2008, gross margins on surface mining original equipment and aftermarket parts and services were improved from the comparable periods in 2007. Gross margin on underground mining equipment for the second quarter of 2008 declined from the first quarter of 2008 due to the mix of original equipment sales, although underground mining equipment gross margin for the six months ended June 30, 2008 continued to exceed 2007 gross margins.
Selling, general and administrative expenses for the second quarter of 2008 were $59.4 million, or 9.6% of sales, compared to $41.7 million, or 11.1% of sales, for the second quarter of 2007 and $59.5 million, or 11.5% of sales, for the first quarter of 2008. These expenses for the six months ended June 30, 2008 were $118.9 million, or 10.4% of sales, compared to $62.8 million, or 11.1% of sales, for the six months ended June 30, 2007. The increase in expenses in 2008 was primarily due to the acquisition of DBT.
Operating earnings were as follows:
Quarter Ended June 30, Six Months Ended June 30,
------------------------- --------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- ------ -------- -------- ------
(Dollars in thousands)
Surface
mining $64,259 $36,126 77.9% $118,603 $64,092 85.1%
Underground
mining 44,298 11,466 286.3% 63,547 11,466 454.2%
-------- -------- -------- --------
Total
operations 108,557 47,592 128.1% 182,150 75,558 141.1%
Corporate (8,813) (2,048) 330.3% (14,874) (2,048) 626.3%
-------- -------- -------- --------
Consolidated
total $99,744 $45,544 119.0% $167,276 $73,510 127.6%
======== ======== ======== ========
The increase in operating earnings for the second quarter and six months ended June 30, 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 amortization of purchase accounting adjustments related to the acquisition of DBT of $7.4 million and $21.7 million for the second quarter and six months ended June 30, 2008, respectively, compared to $10.5 million for the quarter and six months ended June 30, 2007.
Net interest expense for the second quarter and six months ended June 30, 2008 was $6.6 million and $12.5 million, respectively, compared to $6.2 million and $7.5 million for the second quarter and six months ended June 30, 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 second quarter of 2008 were $62.3 million, or $0.84 per share, compared to $27.8 million, or $0.40 per share, for the second quarter of 2007. Net earnings for the six months ended June 30, 2008 were $103.4 million, or $1.39 per share, compared to $45.6 million, or $0.69 per share, for the six months ended June 30, 2007. Net earnings were reduced (increased) by amortizations of purchase accounting adjustments related to the acquisition of DBT as follows:
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
(Dollars in thousands)
Inventory fair value adjustment
charged to cost of product $3,229 $5,631 $12,088 $5,631
sold
Amortization of intangible
assets 4,462 3,988 10,258 3,988
Depreciation of fixed assets (327) 850 (682) 850
------- ------- ------- -------
Operating earnings 7,364 10,469 21,664 10,469
Income tax expense 2,293 4,066 7,075 4,066
------- ------- ------- -------
Total $5,071 $6,403 $14,589 $6,403
======= ======= ======= =======
EBITDA was as follows:
Quarter Ended June 30, Six Months Ended June 30,
------------------------ ------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- ------ -------- -------- ------
(Dollars in thousands)
EBITDA $114,022 $57,684 97.7% $196,960 $89,844 119.2%
EBITDA as a
percent of
sales 18.4% 15.4% 19.5% 17.3% 15.9% 8.8%
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 the first six months of 2008 were $44.3 million, which included $16.0 million related to the expansion and additional renovation of Bucyrus' South Milwaukee facilities. Bucyrus' capital expenditures for 2008 are expected to be between $90 million and $100 million.
Backlog as of June 30, 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:
June 30, December 31, %
2008 2007 Change
---------- ---------- -----
(Dollars in thousands)
Surface mining:
Total $1,293,913 $804,781 60.8%
Next 12 months $842,397 $579,448 45.4%
Underground mining:
Total $878,891 $636,473 38.1%
Next 12 months $785,120 $551,923 42.3%
Total:
Total $2,172,804 $1,441,254 50.8%
Next 12 months $1,627,517 $1,131,371 43.9%
A portion of the surface mining backlog as of June 30, 2008 and December 31, 2007 was related to multi-year contracts that will generate revenue in future years.
New orders were as follows:
Quarter Ended June 30, Six Months Ended June 30,
------------------------ -----------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- ------ ---------- -------- ------
(Dollars in thousands)
Surface
mining:
Original
equipment $194,390 $158,222 22.9% $455,180 $298,512 52.5%
After-
market
parts and
service 265,080 112,389 135.9% 619,789 205,323 201.9%
-------- -------- ---------- --------
459,470 270,611 69.8% 1,074,969 503,835 113.4%
-------- -------- ---------- --------
Underground
mining:
Original
equipment 144,007 127,264 13.2% 497,115 127,264 290.6%
After-
market
parts
and
service
173,071 62,263 178.0% 297,455 62,263 377.7%
-------- -------- ---------- --------
317,078 189,527 67.3% 794,570 189,527 319.2%
-------- -------- ---------- --------
Total:
Original
equipment 338,397 285,486 18.5% 952,295 425,776 123.7%
After-
market
parts
and
service 438,151 174,652 150.9% 917,244 267,586 242.8%
-------- -------- ---------- --------
$776,548 $460,138 68.8% $1,869,539 $693,362 169.6%
======== ======== ========== ========
Included in surface mining aftermarket parts and service new orders for the quarter and six months ended June 30, 2008 were $70.0 and $278.7 million, respectively, related to multi-year contracts that will generate revenue in future years.
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, July 25, 2008. Interested parties should call (888) 680-0890 ((617) 213-4857 for international callers), participant passcode 38099036. A replay of the call will be available until August 8, 2008 at (888) 286-8010 ((617) 801-6888 internationally), passcode 75694281. 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 August 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.