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Inside Joy Global’s Fiscal 2Q16 Revenue Drop across Segments

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Nov. 20 2020, Updated 10:43 a.m. ET

Joy Global’s 2Q16 revenues

Joy Global’s (JOY) fiscal 2Q16 revenues came in at $602 million, which was below the analyst estimate of $606 million. When compared to the second quarter of 2015, fiscal 2Q16 revenues declined by 26%. Revenues were unfavorably impacted by a $24 million loss from foreign currency translation, a $35 million decrease from original equipment, and a $22 million decrease from service sales.

Underperformances for JOY can be attributed the mining industry, which has been hit hard by a reduced mining capital expenditure and an oversupplied commodities market. Commodity prices on the whole have been under pressure for the past few quarters.

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Joy Global’s segmental overview

In JOY’s Underground Mining segment, revenues declined by 19% to $343 million in 2Q16 from $424 million in 2Q15. In fiscal 2Q16, this segment contributed ~54.6% to the company’s total revenues but incurred an operating loss of $20.8 million, with an operating margin of 6%.

In the company’s Surface Mining segment, revenues declined by 33% to $285 million in fiscal 2Q16, from $423 million in fiscal 2Q15. In fiscal 2Q16, this segment contributed 45.4% to the company’s total revenues, and its operating profit stood at $35.6 million with an operating margin of 12.5%.

Peer comparisons

Caterpillar (CAT), Terex (TEX), and Illinois Tool Works (ITW) are among the other major companies in the mining equipment industry. By comparison, CAT’s 1Q16 revenue declined by 25.2% on a yearly basis. TEX’s and ITW’s 1Q16 revenues declined by 4.6% and 2.0%, respectively, on a yearly basis.

Notably, JOY is a part of the WisdomTree SmallCap Earnings ETF (EES) and accounts for 0.89% of the fund’s total holdings. Investors in this ETF could benefit if JOY surpasses its operational targets set for 2016.

Now let’s take a look at JOY’s operating cash flow.

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