Bucyrus International Inc. (BUCY)
Q3 2010 Earnings Call
October 22, 2010 9:00 AM ET
Shelley Hickman – Director, Global Communications
Tim Sullivan – President and CEO
Craig Mackus – Chief Financial Officer
Andy Kaplowitz – Barclays Capital
Steve Volkmann – Jefferies & Company
Seth Weber – RBC Capital Markets
Robert Wertheimer – Morgan Stanley
Jerry Revich – Goldman Sachs
Charlie Brady – BMO Capital Markets
Ann Duignan – J.P. Morgan
C Schon Williams – BB&T Capital
Robert McCarthy – Robert W. Baird
Ben Elias – Sterne, Agee
Joel Tiss – Buckingham Research
Previous Statements by BUCY
» Bucyrus International, Inc. Q2 2010 Earnings Call Transcript
» Bucyrus International, Inc. Q1 2010 Earnings Call Transcript
» Bucyrus International, Inc. Q4 2009 Earnings Call Transcript
» Bucyrus International Inc. Q3 2009 Earnings Call Transcript
Good day, ladies and gentlemen. And welcome to the Third Quarter 2010 Bucyrus International Incorporated Earnings Conference Call. My name is Alicia, and I’ll be your coordinator for today. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of the call. (Operator Instructions)
As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Ms. Shelley Hickman, Director, Global Communications. Please proceed.
Thank you, Alicia. Good morning. And thank you for joining us for Bucyrus International Incorporated third quarter 2010 earnings release teleconference. In a few moments, I’ll turn the teleconference over to Mr. Tim Sullivan, President and CEO of Bucyrus; and Mr. Craig Mackus, Bucyrus’ CFO.
As we begin, I would want to remind you that Bucyrus desires to apply the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain statements in this conference call are subject to factors that could cause actual results to differ from those expressed or implied by those statements. For a further description, I refer you to our filings with the SEC. Any forward-looking statements speak only as of today and there is no obligation to update these statements to reflect future events or circumstances.
Tim, now I’ll turn the conference over to you.
Good morning, everyone, and as usual, thanks for joining us on our quarterly call. I want to have Craig go ahead and give you a summary of where our financials were for the quarter.
Okay. Thanks, Tim. Now, as I have stated in the last two quarters, I’d like to advise everyone that our financial results for 2010 include the net assets and results of operations of Terex since February 19th date of acquisition, as well as preliminary acquisition accounting adjustments and acquisition costs related to Terex acquisition.
As a result, our financial results for the quarter and nine months ended September 30, 2010 are not necessarily comparative to the results for same periods last year or as of December 31, 2009, and may not be indicative of future results.
Sales for the third quarter of 2010, which include a $247 million for Terex, a $937 million, an increase of $261 million or 39% compared to the third quarter of 2009. Original equipment sales which include $115 million for Terex increased $137 million or 41% compared to the third quarter of 2009 and after market sales, which included $132 million for Terex increased $124 million or 36% compared to the third quarter of 2009.
Sales for the first nine months of 2010, which included $616 million for Terex were $2.4 billion, an increase of $407 million or 20% compared to the first nine months of 2009. Original equipment sales which included $284 million for Terex increased $146 million or 14% compared to the first nine months of 2009 and after market sales, which include $332 million for Terex increased $261 million or 27% compared to the first nine months of 2009.
Non-Terex surface mining original equipment sales for the third quarter in the first nine months of 2010 increased 24% and 4%, respectively, compared to the same periods last year. The increases were primarily in the electric mining shovel product line.
Underground mining original equipment sales decreased 3% compared to the third quarter last year and 25% compared to the first nine months of 2009. The quarterly decrease was in the room and pillar product line, partially offset by an increase in longwall product line. The year-to-date decrease was across all product lines with the largest change being longwall systems in the Czech Republic.
Non-Terex after market sales for the third quarter of 2010 compared to the third quarter last year decreased 19% in the surface segment with the largest decreases being in the Canadian, United States and African markets, but increased 20% in the underground segment, primarily in the Eastern European and Chinese markets.
Non-Terex after market sales for the first nine months of 2010 compared to the first nine months last year decreased 10% in the surface mining segment, with the largest decreases being in the United States, Chilean, Canadian and African markets, partially offset by an increase in the Brazilian market and decreased 3% in the underground segment, primarily in the United States market offset by an increase in the Chinese market.
The decrease in United States markets were primarily due to a major dragline repair and rebuild project, and a dragline move in 2009 for a total of $40 million that has not been repeated in 2010, and lower longwall face extension orders in 2010.
Gross margin after adjusting for amortization of Terex acquisition accounting adjustments was 29% for the third quarter and 30% for the first nine months of 2010 compared to 33% and 30% for the same periods last year.
The reduced gross margins for the third quarter of 2010 compared to the third quarter last year was primarily due to lower gross margins on the Terex business compared with historical Bucyrus and the mix of products sold.