Bucyrus International Inc. (BUCY): First Take: 1Q beat, very strong orders, consensus EPS too low - Goldman Sachs - April 25, 2008
News
After the close, Bucyrus reported 1Q2008 EPS of $1.09, beating GS/ consensus estimates of $0.97/ $0.96, with EBIT 7% above our estimate (+$0.09) due to sharply stronger Underground Mining Equipment margins of 12% vs. GS 8%. Interest, other expense and tax rate were in-line. Orders of $1.1 bln were +126% yoy and 34% above our estimate, with strength in both Surface and Underground resulting in an gaudy book-to-bill of 2.1x. Surface EBIT was 4% above GS as incremental margins of 28% were ahead of GS 24% likely due to higher aftermarket mix (50% of sales vs. GS 45%). Sales were +49% yoy (-2% vs. GS estimates), with OE +82% yoy and Aftermarket +26%. Underground EBIT was +14% vs. GS, with 12% EBIT margins well ahead of our 8.4% estimate. Sales were 21% below our estimates (likely timing) driven by 32% weaker OE, with Aftermarket 4% higher. We believe it is likely that BUCY will raise guidance on its conference call tomorrow.
Analysis
We expect a positive reaction in BUCY shares tomorrow, though strong performance over the last month and waning near-term commodity macro sentiment may mute the upside. Our street high estimates (10% above consensus) and target are under review.
Implications
Strong margins and booking activity are a positive read-across for Joy Global (JOYG, Neutral). |
