SOUTH MILWAUKEE, Wis., Oct. 23, 2008 (GLOBE 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 nine months ended September 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 nine months ended September 30, 2008 are not necessarily comparative to the results for the nine months ended September 30, 2007 and may not be indicative of future results. Bucyrus 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 Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
(Dollars in thousands,
except per share amounts)
Sales $646,002 $500,278 $1,783,991 $1,065,440
Cost of products sold 463,671 376,650 1,285,979 793,437
---------- ---------- ---------- ----------
Gross profit 182,331 123,628 498,012 272,003
Selling, general and
administrative
expenses 66,285 55,802 185,149 118,607
Research and
development expenses 8,910 5,172 27,420 12,334
Amortization of
intangible assets 4,183 11,672 15,214 16,570
---------- ---------- ---------- ----------
Operating earnings 102,953 50,982 270,229 124,492
Interest expense - net 6,422 8,178 18,919 15,632
Other expense 768 763 2,304 1,628
---------- ---------- ---------- ----------
Earnings before income
taxes 95,763 42,041 249,006 107,232
Income tax expense 31,596 13,439 81,441 33,005
---------- ---------- ---------- ----------
Net earnings $64,167 $28,602 $167,565 $74,227
========== ========== ========== ==========
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net earnings per
share
Basic:
Net earnings per
share $0.86 $0.39 $2.25 $1.08
Weighted average
shares 74,339,888 74,229,464 74,335,712 68,588,824
Diluted:
Net earnings per
share $0.85 $0.38 $2.23 $1.07
Weighted average
shares 75,248,961 74,971,382 75,266,063 69,241,144
Other Financial
Data:
EBITDA (1) $115,778 $70,561 $312,738 $160,405
========== ========== ========== ==========
Non-cash stock
compensation
expense (2) $1,082 $1,536 $5,061 $4,593
Severance
expenses (3) 599 181 1,789 1,411
Loss on sale of
fixed assets (4) 194 58 759 358
Inventory fair value
adjustment charged
to cost of
products sold (5) -- 8,859 12,088 14,490
---------- ---------- ---------- ----------
$1,875 $10,634 $19,697 $20,852
========== ========== ========== ==========
--------
(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 was
charged to cost of products sold as the inventory was sold.
EBITDA Reconciliation (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Dollars in thousands)
Net earnings $64,167 $28,602 $167,565 $74,227
Interest expense - net 6,422 8,178 18,919 15,632
Income tax expense 31,596 13,439 81,441 33,005
Depreciation 8,642 7,906 27,295 19,342
Amortization 4,951 12,436 17,518 18,199
-------- -------- -------- --------
EBITDA 115,778 70,561 312,738 160,405
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Changes in assets and
liabilities (141,714) (37,612) (134,136) (90,942)
Non-cash stock
compensation expense 1,082 1,536 5,061 4,593
Loss on sale of fixed
assets 194 58 759 358
Interest expense - net (6,422) (8,178) (18,919) (15,632)
Income tax expense (31,596) (13,439) (81,441) (33,005)
-------- -------- -------- --------
Net cash provided by
(used in) operating
activities ($62,678) $12,926 $84,062 $25,777
======== ======== ======== ========
Consolidated Balance Sheets (Unaudited)
Sept. 30, Dec. 31,
2008 2007
---------- ----------
(Dollars in thousands)
Assets
-------
Cash and cash equivalents $62,844 $61,112
Receivables - net 554,029 416,584
Inventories - net 622,180 494,425
Deferred income taxes 54,377 33,630
Prepaid expenses and other 34,366 41,038
---------- ----------
Total current assets 1,327,796 1,046,789
---------- ----------
Goodwill 320,255 317,238
Intangible assets - net 230,619 245,836
Other assets 39,374 47,946
---------- ----------
Total other assets 590,248 611,020
---------- ----------
Property, plant and equipment - net 446,088 410,403
---------- ----------
Total assets $2,364,132 $2,068,212
========== ==========
Liabilities and Common Stockholders'
-----------------------------------
Investment
----------
Accounts payable and
accrued expenses $394,219 $295,972
Liabilities to customers
on uncompleted
contracts and
warranties 240,948 158,390
Income taxes 67,696 55,086
Current maturities of
long-term debt and other
short-term obligations 9,607 9,348
---------- ----------
Total current liabilities 712,470 518,796
---------- ----------
Sept. 30, Dec. 31,
2008 2007
---------- ----------
Postretirement benefits 17,057 16,007
Deferred income taxes 55,805 50,920
Pension and other 143,085 144,918
---------- ----------
Total long-term liabilities 215,947 211,845
---------- ----------
Long-term debt, less current maturities 507,205 526,721
---------- ----------
Common stockholders' investment 928,510 810,850
---------- ----------
Total liabilities and common
stockholders' investment $2,364,132 $2,068,212
========== ==========
Segment Information (Unaudited)
Quarter Ended September 30, 2008
----------------------------------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
-------- -------- ------------ ------------ --------
(Dollars in thousands)
Surface
mining $337,148 $72,269 $4,733 $12,346 $1,010,100
Underground
mining 308,854 39,874 8,092 5,551 1,354,032
-------- -------- ------- --------- ----------
Total
operations 646,002 112,143 12,825 17,897 2,364,132
Corporate N/A (9,190) N/A N/A N/A
-------- -------- ------- --------- ----------
Consolidated
total $646,002 102,953 12,825 $17,897 $2,364,132
======== ========= ==========
Interest
expense - net 6,422
Other expense 768 768
-------- -------
Earnings
before income
taxes $95,763 $13,593
======== =======
Quarter Ended September 30, 2007
----------------------------------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
-------- -------- ------------ ------------ --------
(Dollars in thousands)
Surface
mining $237,104 $42,872 $4,491 $18,804 $739,165
Underground
mining 263,174 12,283 15,088 7,158 1,357,584
-------- -------- ------- --------- ----------
Total
operations 500,278 55,155 19,579 25,962 2,096,749
Corporate N/A (4,173) N/A N/A N/A
-------- -------- ------- --------- ----------
Consolidated
total $500,278 50,982 $19,579 $25,962 $2,096,749
======== ========= ==========
Interest
expense - net 8,178
Other expense 763 763
-------- -------
Earnings
before
income taxes $42,041 $20,342
======== =======
Nine Months Ended September 30, 2008
----------------------------------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
-------- -------- ------------ ------------ --------
(Dollars in thousands)
Surface
mining $922,985 $190,872 $14,813 $46,589 $1,010,100
Underground
mining 861,006 103,421 27,696 15,634 1,354,032
-------- -------- ------- --------- ----------
Total
operations 1,783,991 294,293 42,509 62,223 2,364,132
Corporate N/A (24,064) N/A N/A N/A
-------- -------- ------- --------- ----------
Consolidated
total $1,783,991 270,229 42,509 $62,223 $2,364,132
Interest ========== ========= ==========
expense - net 18,919
Other expense 2,304 2,304
-------- -------
Earnings
before
income taxes $249,006 $44,813
======== =======
Nine Months Ended September 30, 2007
----------------------------------------------------
Depreciation
Operating and Capital Total
Sales Earnings Amortization Expenditures Assets
-------- -------- ------------ ------------ --------
(Dollars in thousands)
Surface
mining $641,060 $106,964 $13,206 $51,191 $739,165
Underground
mining 424,380 23,749 22,707 10,366 1,357,584
-------- -------- ------- --------- ----------
Total
operations 1,065,440 130,713 35,913 61,557 2,096,749
Corporate N/A (6,221) N/A N/A N/A
-------- -------- ------- --------- ----------
Consolidated
total $1,065,440 124,492 35,913 $61,557 $2,096,749
========== ========= ==========
Interest
expense - net 15,632
Other expense 1,628 1,628
-------- -------
Earnings
before
income taxes $107,232 $37,541
======== =======
Sales consisted of the following:
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ --------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- ------ -------- -------- ------
(Dollars in thousands)
Surface
mining:
Original
equipment $155,554 $113,119 37.5% $437,631 $277,223 57.9%
Aftermarket
parts and
service 181,594 123,985 46.5% 485,354 363,837 33.4%
-------- -------- ---------- ----------
337,148 237,104 42.2% 922,985 641,060 44.0%
-------- -------- ---------- ----------
Underground
mining:
Original
equipment 186,037 174,140 6.8% 512,653 277,422 84.8%
Aftermarket
parts and
service 122,817 89,034 37.9% 348,353 146,958 137.0%
-------- -------- ---------- ----------
308,854 263,174 17.4% 861,006 424,380 102.9%
-------- -------- ---------- ----------
Total:
Original
equipment 341,591 287,259 18.9% 950,284 554,645 71.3%
Aftermarket
parts and
service 304,411 213,019 42.9% 833,707 510,795 63.2%
-------- -------- ---------- ----------
$646,002 $500,278 29.1% $1,783,991 $1,065,440 67.4%
======== ======== ========== ==========
The increase in surface mining sales was in both original equipment and aftermarket parts and service and was the result of the continued strong 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 continued to be driven by high global commodity prices during the first nine months of 2008 and strong global markets for commodities mined by Bucyrus' machines. The increase in surface mining original equipment sales for the third quarter of 2008 was in all three product lines, electric mining shovels, draglines, and blasthole drills, and for the nine months ended September 30, 2008 was in electric mining shovels and draglines. Surface mining aftermarket parts and service sales for the quarter and nine months ended September 30, 2008 increased in nearly all global markets compared to the same periods last year. The expansion of Bucyrus' South Milwaukee, Wisconsin facilities is substantially complete, which will allow for annual shovel production capacity of least 24 machines and almost doubled manufactured parts capacity from 2006 levels.
The increase in underground mining sales for the third quarter of 2008 compared to the third quarter last year was in both original equipment and aftermarket parts and service and reflects strong global coal prices and demand. The increase in underground mining original equipment sales was primarily due to strong original equipment new orders since the fourth quarter of 2007. Market conditions continued to be strong in Eastern Europe and the United States.
Gross profit for the third quarter of 2008 was $182.3 million, or 28.2% of sales, compared to $123.6 million, or 24.7% of sales, for the third quarter of 2007. Gross profit for the nine months ended September 30, 2008 was $498.0 million, or 27.9% of sales, compared to $272.0 million, or 25.5% of sales, for the nine months ended September 30, 2007. Gross profit was affected by purchase accounting adjustments as a result of the acquisition of DBT in 2007 as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2008 2007 2008 2007
------- ------- ------- -------
(Dollars in thousands)
(Increase) decrease due
to purchase accounting
adjustments ($629) $8,978 $11,262 $15,144
Gross margin increase
(reduction) (percentage
points) 0.1 (1.8) (0.6) (1.4)
The increase in gross profit was primarily due to the acquisition of DBT and increased surface mining sales. The availability of raw materials and raw material cost increases have not had a significant effect on gross margin or operating performance.
Selling, general and administrative expenses for the third quarter of 2008 were $66.3 million, or 10.3% of sales, compared to $55.8 million, or 11.2% of sales, for the third quarter of 2007. These expenses for the nine months ended September 30, 2008 were $185.1 million, or 10.4% of sales, compared to $118.6 million, or 11.1% of sales, for the nine months ended September 30, 2007. The increase in year to date expenses in 2008 compared to 2007 was primarily due to the acquisition of DBT.
Operating earnings were as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2008 2007 % Change 2008 2007 % Change
------ ------ -------- ------ ------ --------
(Dollars in thousands)
Surface mining $72,269 $42,872 68.6% $190,872 $106,964 78.4%
Underground
mining 39,874 12,283 224.6% 103,421 23,749 335.5%
-------- ------- -------- --------
Total operations 112,143 55,155 103.3% 294,293 130,713 125.1%
Corporate (9,190) (4,173) 120.2% (24,064) (6,221) 286.8%
-------- ------- -------- --------
Consolidated
total $102,953 $50,982 101.9% $270,229 $124,492 117.1%
======== ======= ======== ========
The increase in operating earnings for the nine months ended September 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 $3.1 million and $24.8 million for the quarter and nine months ended September 30, 2008, respectively, compared to $20.2 million and $30.7 million for the quarter and nine months ended September 30, 2007.
Net interest expense for the quarter and nine months ended September 30, 2008 was $6.4 million and $18.9 million, respectively, compared to $8.2 million and $15.6 million for the quarter and nine months ended September 30, 2007. The increase in net interest expense for the first nine months of 2008 compared to the first nine months of 2007 due to increased debt levels related to the financing of the acquisition of DBT.
Net earnings for the third quarter of 2008 were $64.2 million, or $0.86 per share, compared to $28.6 million, or $0.39 per share, for the third quarter of 2007. Net earnings for the nine months ended September 30, 2008 were $167.6 million, or $2.25 per share, compared to $74.2 million, or $1.08 per share, for the nine months ended September 30, 2007. Net earnings were reduced (increased) by amortizations of purchase accounting adjustments related to the acquisition of DBT as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------ ------ ------ ------
(Dollars in thousands)
Inventory fair value
adjustment charged to cost
of product sold $ -- $8,859 $12,088 $14,490
Amortization of intangible
assets 3,796 11,195 14,054 15,183
Depreciation of fixed assets (655) 188 (1,337) 1,038
------ ------- ------- -------
Operating earnings 3,141 20,242 24,805 30,711
Income tax expense 1,042 6,216 8,117 10,282
------ ------- ------- -------
Total $2,099 $14,026 $16,688 $20,429
====== ======= ======= =======
EBITDA was as follows:
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
% %
2008 2007 Change 2008 2007 Change
------- ------- ------ ------- ------- ------
(Dollars in thousands)
EBITDA $115,778 $70,561 64.1% $312,738 $160,405 95.0%
EBITDA as a
percent of
sales
17.9% 14.1% 17.5% 15.1%
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 nine months of 2008 were $62.2 million, which included $33.1 million related to the expansion and additional renovation of Bucyrus' South Milwaukee facilities. Bucyrus' capital expenditures for 2008 are expected to be between $100 million and $110 million.
Backlog as of September 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:
September 30, December 31,
2008 2007 % Change
---------- ---------- --------
(Dollars in thousands)
Surface mining:
Total $1,318,297 $804,781 63.8%
Next 12 months $536,902 $579,448 7.3%
Underground mining:
Total $1,188,215 $636,473 86.7%
Next 12 months $908,957 $551,923 64.7%
Total:
Total $2,506,512 $1,441,254 73.9%
Next 12 months $1,445,859 $1,131,371 27.8%
A portion of the surface mining backlog as of September 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 Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
% %
2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- -------
(Dollars in thousands)
Surface
mining:
Original
equipment $202,341 $47,117 329.4% $657,521 $345,629 90.2%
Aftermarket
parts and
service 159,191 95,116 67.4% 778,980 300,439 159.3%
-------- -------- ---------- ----------
361,532 142,223 154.2% 1,436,501 646,068 122.3%
-------- -------- ---------- ----------
Underground
mining:
Original
equipment 467,092 100,392 365.3% 964,207 227,65 323.5%
Aftermarket
parts and
service 151,086 89,518 68.8% 448,541 151,781 195.5%
-------- -------- ---------- ----------
618,178 189,910 225.5% 1,412,748 379,437 272.3%
-------- -------- ---------- ----------
Total:
Original
equipment 669,433 147,509 353.8% 1,621,728 573,285 182.9%
Aftermarket
parts and
service 310,277 184,634 68.0% 1,227,521 452,220 171.4%
-------- -------- ---------- ----------
$979,710 $332,143 195.0% $2,849,249 $1,025,505 177.8%
======== ======== ========== ==========
Included in surface mining aftermarket parts and service new orders for the nine months ended September 30, 2008 was $278.3 million 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, October 24, 2008. Interested parties should call (888) 680-0865 ((617) 213-4853 for international callers), participant passcode 35013056. A replay of the call will be available until November 24, 2008 at (888) 286-8010 ((617) 801-6888 internationally), passcode 97153617. 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 November 24, 2008.
Special Note Regarding Online Availability of Bucyrus Releases and Filings
All Bucyrus financial news releases and SEC filings are posed to Bucyrus' websites. Material and financial releases as well as SEC filings are available at www.investors.bucyrus.com. Automatic email alerts for these postings are available from this site. Corporate and general releases as well as product information is 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:
* 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.