EX-99 2 d72420_ex-99.htm PRESS RELEASE

EXHIBIT 99


NEWS RELEASE
For further information, contact
Kent Henschen, Director – Marketing &
Corporate Communications
Tel: 414-768-4626       Fax: 414-768-4474
khenschen@bucyrus.com    www.bucyrus.com

 

BUCYRUS INTERNATIONAL, INC. ANNOUNCES SUMMARY OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2007

______________________________________________________________________

 

South Milwaukee, Wisconsin – August 2, 2007 - Bucyrus International, Inc. (NASDAQ: BUCY), one of the world's leading manufacturers of large-scale excavation equipment used in surface mining, and a leading designer, manufacturer and marketer of high technology system solutions for underground coal mining as a result of its recent acquisition of DBT GmbH (“DBT”), announced today its summary unaudited results for the three and six months ended June 30, 2007. Bucyrus acquired DBT on May 4, 2007 for $710 million in cash, subject to certain post-closing adjustments, and 471,476 shares of Bucyrus’ common stock with a market value of $21.8 million.

 

Second Quarter Operating Results

 

The net assets acquired and results of operations of DBT since the date of acquisition are included in Bucyrus’ financial information presented below which, as a result of the shortened reporting period, may not be indicative of future results.

 

Sales for the second quarter of 2007 were $374.8 million, an increase of $193.0 million, or 106.2%, from $181.8 million for the second quarter of 2006. Original equipment sales were $189.0 million, an increase of $135.2 million, or 251.6%, from $53.8 million for the second quarter of 2006. Aftermarket parts and service sales were $185.8 million, an increase of $57.8 million, or 45.1%, from $128.0 million for the second quarter of 2006. Sales for the six months ended June 30, 2007 were $565.2 million, an increase of $217.7 million, or 62.7% from $347.5 million for the six months ended June 30, 2006. Original equipment sales were $267.4 million, an increase of $160.2 million, or 149.4%, from $107.2 million for the six months ended June 30, 2006. Aftermarket parts and service sales were $297.8 million, an increase of $57.5 million, or 23.9%, from $240.3 million for the six months ended June 30, 2006. Surface mining sales for second quarter of 2007 were $213.6 million, an increase of $31.8 million, or 17.5%, from $181.8 for the second quarter of 2006. Surface mining original equipment sales were $85.7 million, an increase of $31.9 million, or 59.5%, from $53.8 million for the second quarter of 2006, and aftermarket parts and service sales were $127.9 million, a decrease of $.1 million, or .1%, from $128.0 million for the second quarter of 2006. Surface mining sales for the six months ended June 30, 2007 were $404.0 million, an increase of $56.5 million, or 16.3%, from $347.5 million for the six months ended June 30, 2006. Surface mining original equipment sales were $164.1 million, an increase of $56.9 million, or 53.1%, from $107.2 million for the six months ended June 30, 2006, and aftermarket parts and service sales were $239.9 million, a decrease of $.4 million, or .2%, from $240.3 million for the six months ended June 30, 2006. The overall increase in surface mining sales is the result of sustained demand and increased prices of commodities that are surface mined by Bucyrus machines. Capacity constraints continue to have an impact on surface mining sales. The ongoing expansion of Bucyrus’ South Milwaukee facilities is expected to be completed by the first quarter of 2008. Underground mining sales for the second quarter and first six months of 2007 were $161.2 million and consisted of $103.3 million and $57.9 million of original equipment and aftermarket parts and service sales, respectively. Underground mining sales were at the level expected when DBT was acquired.

 



Gross profit for the second quarter of 2007 was $96.3 million, or 25.7% of sales, compared with $46.9 million, or 25.8% of sales, for the second quarter of 2006. Gross profit for the six months ended June 30, 2007 was $148.4 million, or 26.3% of sales, compared with $87.8 million, or 25.3% of sales, for the six months ended June 30, 2006. Gross profit for the second quarter and first six months of 2007 was reduced by $6.2 million of amortization of purchase accounting adjustments as a result of the acquisition of DBT. Excluding this amortization, the gross profit percentage for the second quarter and first six months of 2007 in each case would have been 27.3%. The increases in gross profit were primarily due to the acquisition of DBT and increased surface mining original equipment sales, as well as improved gross margins on both surface mining original equipment and aftermarket parts and services.

 

Selling, general and administrative expenses for the second quarter of 2007 were $42.9 million, or 11.5% of sales, compared with $18.1 million, or 9.9% of sales, for the second quarter of 2006. Selling, general and administrative expenses for the six months ended June 30, 2007 were $64.1 million, or 11.3% of sales, compared with $33.5 million, or 9.7% of sales, for the six months ended June 30, 2006. The increase in selling, general and administrative expenses was primarily due to the acquisition of DBT. Excluding the impact of the acquisition of DBT, the dollar amount of selling, general and administrative expenses in the second quarter of 2007 approximated the dollar amount of selling, general and administrative expenses recognized in recent quarters.

 

Operating earnings were $44.3 million for the second quarter of 2007, an increase of 74.7% from $25.4 million for the second quarter of 2006. Operating earnings for the six months ended June 30, 2007 were $72.2 million, an increase of 49.2% from $48.4 million for the six months ended June 30, 2006. Included in second quarter and first six months operating earnings for 2007 was $11.5 million related to the operations of DBT, which is net of $10.5 million of purchase accounting adjustments. In addition to operating earnings related to DBT operations, operating earnings for the quarter and six months ended June 30, 2007 increased primarily due to increased gross profit resulting from increased sales volume.

 

Interest expense was $7.0 million for the second quarter of 2007 compared with $.6 million for the second quarter of 2006. Interest expense for the six months ended June 30, 2007 was $8.4 million compared with $1.2 million for the six months ended June 30, 2006. The increase in interest expense in 2007 was due to increased debt levels related to the financing of the acquisition of DBT.

 

Income tax expense for the second quarter of 2007 was $11.0 million compared with $3.2 million for the second quarter of 2006. Income tax expense for the six months ended June 30, 2007 was $19.6 million compared with $11.0 million for the six months ended June 30, 2006. The effective rate for the second quarter of 2007 was 28.3%, which is lower than the statutory rate as a result of the implementation of the financing structure and certain one-time adjustments related to the acquisition of DBT. Income tax expense for the second quarter of 2006 was reduced by a net income tax benefit of approximately $3.7 million related to foreign tax credits. The foreign tax credits resulted from the completion of Bucyrus’ evaluation of its potential to claim additional foreign tax credits generated in previous tax periods.

 

Net earnings for the second quarter of 2007 were $27.8 million, or $.81 per share, compared with $21.6 million, or $0.69 per share, for the second quarter of 2006. Net earnings for the six months ended June 30, 2007 were $45.6 million, or $1.39 per share, compared with $36.1 million, or $1.15 per share, for the six months ended June 30, 2006.

 

EBITDA for the second quarter of 2007 was $57.7 million, an increase of 98.4% from $29.1 million for the second quarter of 2006. As a percent of sales, EBITDA for the second quarter of 2007 was 15.4% compared to 16.0% for the second quarter of 2006. EBITDA for the six months ended June 30, 2007 was $89.8 million, an increase of 61.3% from $55.7 million for

 

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the six months ended June 30, 2006. As a percent of sales, EBITDA for the six months ended June 30, 2007 was 15.9% compared to 16.0% for the six months ended June 30, 2006. Included in second quarter and first six months EBITDA for 2007 was $20.3 million related to the operations of DBT. EBITDA is defined as net earnings before interest income, interest expense, income taxes, depreciation and amortization. EBITDA includes the impact of non-cash stock compensation expense, severance expenses, loss on sales of fixed assets and the inventory fair value purchase accounting adjustment charged to cost of products sold as set forth in the following tables. EBITDA is a measurement not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as an alternative to GAAP measures of performance. For a reconciliation of net earnings as shown in the Unaudited Consolidated Statements of Earnings to EBITDA and a reconciliation of net cash provided by operating activities as shown in the Unaudited Consolidated Statements of Cash Flows to EBITDA, see the tables below.

 

Capital expenditures for the first six months of 2007 were $35.6 million, which included $16.8 million related to Bucyrus’ previously announced ongoing expansion of its South Milwaukee facilities. The remaining capital expenditures consisted primarily of production machinery at its main manufacturing facility.

 

As of June 30, 2007, total backlog was $1.46 billion, $1.13 billion of which was expected to be recognized within the subsequent 12 months. This represents a 63.6% and 90.8% increase from the December 31, 2006 total backlog of $894.7 million and 12-month backlog of $593.8 million, respectively. Included in backlog at June 30, 2007 was $994.6 million related to surface mining operations, $667.4 million of which was expected to be recognized within the subsequent 12 months, and $469.1 million related to underground mining operations, $465.5 million of which was expected to be recognized within the subsequent 12 months. New orders related to surface mining operations for the first six months of 2007 were $298.5 million and $205.3 million for original equipment and aftermarket parts and service sales, respectively. New orders related to underground mining operations for the first six months of 2007 were $127.3 million and $62.2 million for original equipment and aftermarket parts and service sales, respectively. Included in surface mining original equipment orders for the second quarter of 2007 was the sale of a dragline and related equipment with a price in excess of $100.0 million to be delivered by 2010. Since Bucyrus recognizes revenue on a percentage of completion basis, the impact of this order will be recognized over a period of several years.

 

Conference Call

 

Bucyrus will hold a telephone conference call pertaining to this news release at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Friday, August 3, 2007. Interested parties should call (866) 770-7146 ((617) 213-8068 for international callers), participant passcode 12528842. A replay of the call will be available until August 17, 2007 at (888) 286-8010 ((617) 801-6888 internationally), passcode 11693033. The conference call will also be available as a webcast. The webcast can be accessed through the link provided on the Investor Relations page of Bucyrus’ website at www.bucyrus.com and will be available until September 3, 2007.

 

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# # #

FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS

 

This press release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of predictive, future tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "intends," "may," "will" or similar terms. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements as a result of various factors, some of which are unknown. The factors that could cause actual results to differ materially from those anticipated in such forward-looking statements and could adversely affect our actual results of operations and financial condition include, without limitation:

 

disruption of our plant operations due to equipment failures, natural disasters or other reasons;

our ability to attract and retain skilled labor;

our production capacity;

our ability to purchase component parts or raw materials from key suppliers at acceptable prices and/or on the required time schedule;

the cyclical nature of the sale of original equipment due to fluctuations in market prices for coal, copper, oil, iron ore and other minerals, changes in general economic conditions, interest rates, customers’ replacement or repair cycles, consolidation in the mining industry and competitive pressures;

the loss of key customers or key members of management;

the risks and uncertainties of doing business in foreign countries, including emerging markets, and foreign currency risks;

our ability to continue to offer products containing innovative technology that meets the needs of our customers;

costs and risks associated with regulatory compliance and changing regulations affecting the mining industry and/or electric utilities;

product liability, environmental and other potential litigation;

work stoppages at our company, our customers, suppliers or providers of transportation;

our ability to satisfy under-funded pension obligations;

our ability to effectively and efficiently integrate the operations of DBT and to realize expected levels of sales and profit from this acquisition;

potential risks, material weaknesses in financial reporting and liabilities of DBT unknown to us;

our dependence on the commodity price of coal and other conditions in the coal markets;

our reliance on significant customers;

our experience in the underground mining business, which is less than some of our competitors; and

our increased levels of debt and debt service obligations relating to our acquisition of DBT.

The foregoing factors do not constitute an exhaustive list of factors that could cause actual results to differ materially from those anticipated in forward-looking statements, and should be read in conjunction with the other cautionary statements and risk factors included in our prospectus supplement filed with the Securities and Exchange Commission on May 9, 2007 in connection with the recent public offering of our common stock and our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2007 and other cautionary statements described in our other reports filed with the Securities and Exchange Commission. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

# # #

 

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For the three months
ended June 30,

For the six months
ended June 30,

Dollars in thousands, except per share amounts
2007

2006

2007

2006

Consolidated Statements of Earnings:                    
Sales   $ 374,801   $ 181,804   $ 565,162   $ 347,457  
Cost of products sold    278,504    134,870    416,787    259,650  




Gross profit    96,297    46,934    148,375    87,807  
Selling, general and administrative expenses..    42,937    18,078    64,131    33,538  
Research and development expenses    4,614    3,051    7,162    4,973  
Amortization of intangible assets    4,452    449    4,898    901  




Operating earnings    44,294    25,356    72,184    48,395  
   
Interest expense    6,976    601    8,425    1,246  
Other (income) expense - net    (1,409 )  (3 )  (1,432 )  119  




Earnings before income taxes    38,727    24,758    65,191    47,030  
   
Income tax expense    10,965    3,200    19,566    10,950  




   
Net earnings   $ 27,762   $ 21,558   $ 45,625   $ 36,080  




   
Net earnings per share:                  
  Basic:                  
    Net earnings per share   $ .81   $ .69   $ 1.39   $ 1.15  




    Weighted average shares    34,374,666    31,284,624    32,860,879    31,238,416  




  Diluted:                  
    Net earnings per share   $ .80   $ .68   $ 1.38   $ 1.14  




    Weighted average shares    34,703,458    31,615,978    33,164,269    31,571,657  




   
Other Financial Data:                   
EBITDA (1)   $ 57,684   $ 29,070   $ 89,844   $ 55,686  




Non-cash stock compensation expense (2)    1,365    1,166    3,057    1,744  
Severance expenses (3)    757    469    1,230    741  
Loss on sale of fixed assets (4)    205    13    300    55  
Inventory fair value adjustment charged to cost of  
   products sold (5)    5,631        5,631      




   $ 7,958   $ 1,648   $ 10,218   $ 2,540  





__________________

(1)

EBITDA is defined as net earnings before interest income, interest expense, income tax expense, depreciation and amortization. EBITDA is presented because (i) management uses EBITDA to measure the company’s liquidity and financial performance and (ii) management believes EBITDA is frequently used by securities analysts, investors and other interested parties in evaluating the performance and enterprise value of companies in general, and in evaluating the liquidity of companies with significant debt service obligations and their ability to service their indebtedness. The EBITDA calculation is not an alternative to operating earnings under accounting principles generally accepted in the United States of America, or GAAP, as an indicator of operating performance or of cash flows as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such a interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. The following table reconciles net earnings and net cash provided by operating activities..

(2)

Reflects non-cash stock compensation expense related to Bucyrus’ equity incentive plans.

(3)

Reflects severance expenses for personnel changes in the ordinary course.

(4)

Reflects losses on the sale of fixed assets in the ordinary course.

(5)

In connection with the acquisition of DBT, inventories purchased were adjusted to estimated fair value. This adjustment is being charged to cost of products sold as the inventory is sold.

 

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For the three months
ended June 30,

  For the six months
ended June 30,

 
Dollars in thousands
2007
 
2006
 
2007
 
2006
 
EBITDA Reconciliation                    
Net earnings   $ 27,762   $ 21,558   $ 45,625   $ 36,080  
Interest income    (759 )  (127 )  (971 )  (241 )
Interest expense    6,976    601    8,425    1,246  
Income tax expense    10,965    3,200    19,566    10,950  
Depreciation    7,688    3,133    11,436    6,240  
Amortization    5,052    705    5,763    1,411  




EBITDA    57,684    29,070    89,844    55,686  
   
Changes in assets and liabilities    (38,273 )  (38,056 )  (53,330 )  (14,234 )
Non-cash stock compensation expense    1,365    1,166    3,057    1,744  
Loss on sale of fixed assets    205    13    300    55  
Interest income    759    127    971    241  
Interest expense    (6,976 )  (601 )  (8,425 )  (1,246 )
Income tax expense    (10,965 )  (3,200 )  (19,566 )  (10,950 )




Net cash provided by operating activities   $ 3,799   $ (11,481 ) $ 12,851   $ 31,296  






Dollars in thousands
June 30,
2007


December 31,
2006


Consolidated Balance Sheets
Assets   
Cash and cash equivalents   $ 31,234   $ 9,575  
Receivables-net    492,904    162,535  
Inventories    494,124    176,277  
Deferred income taxes    12,642    11,725  
Prepaid expenses and other    45,471    16,408  


     Total current assets    1,076,375    376,520  


   
Goodwill    223,216    47,306  
Intangible assets-net    419,236    28,097  
Deferred income taxes    32,630    16,117  
Other assets    37,464    7,523  


     Total other assets    712,546    99,043  


   
Property, plant and equipment - net    356,302    125,149  


     Total assets   $ 2,145,223   $ 600,712  


   
Liabilities and Common Stockholders’ Investment   
Accounts payable and accrued expenses   $ 280,764   $ 127,724  
Liabilities to customers on uncompleted contracts and  
      warranties    173,367    32,233  
Income taxes    36,464    9,978  
Current maturities of long-term debt and other short-term  
      obligations    11,335    331  


     Total current liabilities    501,930    170,266  


   
Postretirement benefits    17,972    17,313  
Pension and other    370,663    34,871  


     Total other liabilities    388,635    52,184  


   
Long-term debt    552,892    82,266  


   
Common stockholders’ investment    701,766    295,996  


     Total liabilities and common stockholders’ investment   $ 2,145,223   $ 600,712  


 

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