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Joy Global Inc. JOY reported an adjusted loss of 23 cents per share in the first quarter of fiscal 2016, wider than the Zacks Consensus Estimate of a loss of 10 cents.  In the year-ago quarter, the company reported earnings of 29 cents per share.

GAAP loss per share was 41 cents for the quarter as against earnings of 31 cents in the year-ago quarter. The difference between GAAP and operating loss was due to the impact of restructuring charges of 19 cents and a benefit of 1 cent from discrete tax adjustments.

Total Revenue

Joy Global reported net sales of $526.3 million in the first quarter of fiscal 2016, lagging the year-ago revenue of $703.9 million by 26% but surpassing the Zacks Consensus Estimate by 4%.

The year-over-year decline in revenue was due to lower contributions from its Underground Mining Machinery and Surface Mining Equipment segments.

Highlights of the Release

Total bookings at Joy Global during the first quarter of fiscal 2016 were $549.9 million, down 21% from $700.1 million a year ago. A 31% decline in orders from Joy Global’s legacy underground business and an 8% reduction in bookings from the surface mining businesses led to the decline.

Joy Global’s total backlog at the end of the fiscal first quarter was $896.99 million, up 2.7% sequentially.

Net interest expense in first quarter fiscal 2016 was $12.1 million, down from $12.9 million in the first quarter fiscal 2015.

Financial Condition

Cash and cash equivalents, as of Jan 29, 2016, were $139.9 million compared with $102.9 million as of Oct 31, 2015.

Cash from operating activities during first quarter fiscal 2016 was $108.6 million as against usage of $18.4 million in the prior-year quarter.

Capital expenditure was $8 million in first quarter of fiscal 2016, compared with $22 million in the prior year.

Guidance

Joy Global reiterated its fiscal 2016 revenue guidance in the range of $2.4 billion to $2.6 billion. The company expects fiscal 2016 earnings per share of 10–50 cents.

Other Releases

Caterpillar Inc. CAT posted earnings of 74 cents per share in fourth-quarter 2015, 7.25% above than the Zacks Consensus Estimate.

Stanley Black & Decker, Inc.’s SWK fourth-quarter 2015 adjusted earnings of $1.80 per share were on par with the Zacks Consensus Estimate.

Terex Corporation’s TEX fourth-quarter 2015 adjusted earnings of 50 cents fell short of the Zacks Consensus Estimate of 52 cents by 3.85%.

Our View

Joy Global’s loss was wider than our expectation while revenues beat estimates. Decline in orders from some of its key markets is a matter of concern.

The company presently operates in a commodity surplus market, which puts prices under pressure. Mild weather and cheap natural gas are expected to lower 2016 U.S. coal production by nearly 100 million tons from 2015 levels. This is going to be a big blow for Joy Global as it was depending to a large extent on the coal miners.

Amid constrained market conditions, the company is implementing cost-saving initiatives and is planning to invest in other commodities to lower its dependence on coal miners.

The weakness in demand in the Chinese market and lower-than-expected growth in emerging markets will significantly dampen the possibility of any improvement in commodity prices. In turn, mining companies are being forced to take defensive measures to defer spending on equipment maintenance and procurement. This is going to last for the better part of 2016 and impact the fortunes of the mining equipment makers.

Joy Global currently has a Zacks Rank #4 (Sell).