swung to a loss Thursday and warned of a weak second quarter, as rising steel prices continue to hit the manufacturing sector.
The McConnellsburg, Pa., maker of highway-speed telescopic hydraulic excavators posted a first-quarter loss of $8.7 million, or 20 cents a share. That reverses the year-ago profit of $533,000, or a penny a share. Revenue rose to $307 million from $214 million a year earlier.
The company said unrecovered steel costs hit $27 million in the latest quarter, $7 million above its previous forecast. The company said it now expects weighted-average steel prices to more than double this year, up from the previous forecast of a 75% gain.
"Our near-term focus is on how we respond to increasing raw material costs, specifically steel, in the face of our customers' expectations of prices and how we overcome supplier constraints," said CEO Bill Lasky. "Although we achieved significant cost reductions and integration synergies last year, the price increases we implemented did not cover the higher cost of steel and associated variances. Therefore, we are compelled to pass through additional price increases to our customers to offset these rising costs."
The company expects to boost prices 6% in January, through an increased steel surcharge, base price increases and reductions in customer discounts. Still, JLG said that order patterns remain strong and customers indicate a continued need for new equipment.
The company forecast earnings of $1 to $1.15 a share for the year ending in July, which is short of the $1.22-a-share Thomson First Call estimate. JLG expects revenue to rise 10%-25% from the fiscal 2004 level of $1.2 billion. That implies fiscal 2005 revenue of $1.32 billion to $1.5 billion, while the Wall Street estimate is $1.5 billion.
"Our second quarter will continue to be challenged by these issues but will be mitigated by a reduced amount of capitalized variances entering the quarter and the price increases effective in January," the company said. "We expect the second half of our fiscal year, our seasonally strongest, to see the full benefits of the price increases, reduced supplier shortages and therefore improved manufacturing efficiencies and the favorable impact of our current cost reduction activities."
JLG shares fell $1.02 in regular action to close at $19.06. They weren't available for trading in the postclose