Joy Global FY 1Q15 Earnings Call Notes

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We expected a tough quarter, but this was tough

“The added challenges to our market certainly impacted our first quarter of the year. We had expected a slower first quarter with many of our customers taking extended production shutdowns. However, the further deterioration seen in some of our major end markets resulted in a tough quarter for us.”

Economic landscape ahs become more challenging

“Over the last several months, the global economic landscape has become more challenging. While growth began slowing in the second half of 2014, the fourth quarter saw U.S. growth fall sequentially to 2.2% while the Eurozone remained weak with a 0.3% growth.”

Long term copper fundamentals remain positive

“While there certainly will be periods of volatility in copper markets, the fundamental long-term dynamics remain positive and provide an investment opportunity for most of our customers.”

Coal is probably the best opportunity for a comeback

“globally looking at it, Jerry, it’s probably the best opportunity for growth coming back is actually coal because we’ve had 2 years of reduction there. ”

“the U.S. — actually, the U.S. coal business, our service levels in the U.S. was actually flat to slightly up. So we do see that as some positive there after the 2 years reduction.”

Big change is in copper markets

“The big change, though, in the quarter for us was in the copper markets. So we’re seeing that drop-off in the first quarter, with the price of copper dropping $0.50, was a change for us”

Copper companies are reacting to price downturn with austerity

“I think what — part of what we’re seeing, as what we saw with coal when coal first took the downturn, is there is this immediate impact on margins for our customers, and there’s this push towards austerity type of cost reduction, which we’ve learned in coal, having been in and out for the third year, that, that ends up turning because it’s not sustainable. And so part of what we see in copper is just a sign of the price went down pretty materially, clearly impacting margins. And I think there is a short-term austerity type of response that we think will be rectified as we get to the back half of the year because fundamentally, copper is still in very nice shape from a supply/demand perspective. So we see it being kind of that early-stage initial reaction. And our customers know that that’s not going to win long term, but they do have to do that because they’re being, in a lot of cases, instructed from their management teams to execute in that kind of austere type way.”