The timing of mine expansion projects has a major impact on our company outlook, and we expect these projects to continue to move slowly and to be lumpy. Many of our customers have new management, and their focus has moved from volume to returns. They are systematically re-evaluating all of their capital expenditures, and this continues to delay decisions. We maintain a project list of mine expansion prospects that we expect to reach equipment selection in the next twelve months. Our customers’ reassessment of their capital expenditures has created increased activity with the projects on this list. A number of projects have been delayed outside the horizon tracked by this report, but there have also been a significant number of projects moved onto the list. As a result, this list has stabilized during the current quarter, after several quarters of sequential declines. The quality of the list has also substantially improved. In combination, this raises our outlook. This is consistent with other leading indicators, such as electricity demand and steel production in China and construction activity in the U.S.
However, we think it will take time before those leading indicators translate into increased capital expenditures by our customers. Our customers will let demand improvement reduce the supply surplus and provide pricing support before they add capacity. This means that unless projects are already deep in process, decisions are not likely to be made before the second half of this year, and therefore will not impact our revenues before next year.
When all of these factors are considered, we expect our base order rates, before major projects, to remain effectively flat at recent run rates throughout this fiscal year. In addition, we feel confident that at least one or two major projects will add to 2013 bookings. We expect our aftermarket orders to recover from the first quarter levels, but they may not reach last year’s level for the full year. Our restructuring cost reduction initiatives remain on track, and will enable us to maintain our target for decremental operating margins. As a result, we continue to be comfortable with our previous guidance of earnings per fully diluted share between $5.75 and $6.35 on revenues of $4.9 billion to $5.2 billion, including $25 million of planned restructuring charges in 2013 with resulting savings not realized until 2014.”
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