Joy Global. Creating Long Term Value for Shareholders. Global Industrials & EU Autos Conference

Transcription

1 Joy Global Creating Long Term Value for Shareholders Global Industrials & EU Autos Conference March 17, 2015

2 Forward Looking Statements All statements in this presentation other than historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that may cause actual results to differ materially from those indicated by such forward looking statements. These statements are identified by forward looking terms such as anticipate, believe, estimate, expect, indicate, may be, objective, plan, predict, will be, and similar expressions. Such statements are based on our current expectations and we undertake no obligation to update such statements to reflect new information, events, or otherwise. In addition to the assumptions and other factors referred to in this presentation, cautionary factors and other information are set forth in our public filings with the Securities and Exchange Commission, including those set forth under Risk Factors in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Non-GAAP Measures: The company from time to time refers to various non-gaap financial measures. We believe that this information is useful to understanding the operating results and ongoing performance of our underlying businesses. See our public filings in the investor relations section of our website for reconciliations of material non-gaap financial measures to their related GAAP measures. 2

3 Creating Long Term Value Supply surplus/low commodity prices reduces mine capex/maintenance Selective projects are progressing, but without urgency Service bookings impacted by short-term driven austerity measures Longer-term industrialization and urbanization of emerging markets remains intact Driving our key strategies Direct Service LCM, Consumables & JoySmart SM Services Joy Business Systems (JBS) Operational Excellence China & High Growth Markets Innovations, NPD & Transformational Technology Solid cash flow through the cycle with disciplined capital allocation Bolt-on strategic acquisitions and share repurchases are current priorities 3

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5 Market-Leading Full-System Solutions Joy Global s Mine Map of the Future Crushing & Conveying Drills Draglines Shovels Loaders Joy Truckless Mining Systems Hybrid Shovels/Excavators Surface CM Systems Conveyor Systems Hard Rock Mining Systems Continuous Miners 5 Longwall Systems Entry Development Flexible Conveyor Trains LHDs

6 Global Leader in Total Joy Global Sales (last 12 months) Commodities We Serve Geographies We Service Potash / Salt: 1% Oil Sands: 3% Iron Ore: 8% Gold: 1% Other: 7% Australasia: 15% Eurasia: 7% Americas North: 38% Copper: 20% China: 10% Tunneling: 1% Coal: 59% Africa: 9% Latin America: 21% Life Cycle Management Consumables: 8% Original Equipment: 30% Service: 62% 6

7 The World Needs More Energy & Minerals Half the world s population does not have adequate access to electricity Increasing urbanization rates will drive demand for electricity and electrical infrastructure Millions of People 1 Lacking adequate electricity (GW) Have no electricity Coal capacity under construction Urbanization Populations Lead to Higher Commodity Demand China & India Driving Commodity Demand (2010 = 100) Coal Remains a Prominent Source For Electricity Generation 200 Thermal Coal 200 Copper Liquids Nuclear Renewables Nat Gas Coal '00 '10 '25 0 '00 '10 '25 '12 '20 '25 '30 '35 '40 Source: IEA, EIA, Energy Annual, ICSG, LME, World Bank Development Indicators, World Energy Outlook 2014 China India Rest of World 7

8 2015 Global Economic Outlook Reduced Further 3.2% 3.0% 2.9% World 3.9% 3.5% 3.3% Changes In 2015 Growth Expectations 2015 June Dec Jan Dec World 3.9% 3.5% 3.3% -0.2% Europe 1.7% 1.0% 0.8% -0.2% China 7.5% 7.3% 7.0% -0.3% e 2015 Jun ' Dec ' Jan '15 U.S. 3.1% 3.2% 3.2% 0.0% Source: IMF, World Bank, Bloomberg, Factset, Consensus Estimates, Joy Global Research 2015 growth forecasts revised downwards by -0.2% since December 2014 Weak commodity prices, diverging monetary policies, weak world trade Europe flirting with stagnation/renewed recession and intensifying geopolitical tensions Chinese economy slowing & housing market concerns drives 40% of commodity demand U.S. economy steady with consumer driven upside in

9 Global Copper Markets: Near-Term Price Pressure $3.00 $2.90 $2.80 $2.70 $2.60 Copper Prices ($/lb.) Near-Term Price Pressure Reduced economic outlook pressuring prices; hovering around $2.65/lb (-8% since Dec. 1) Demand exposure to Chinese construction & semiconductors sectors remains largest threat Near-term macro fear outweighing fundamentals: Market in deficit of ~640,000 tonnes through Nov. Global inventories at 1.02mt 38% from peak (Apr. 13) $2.50 $ /1/14 1/1/15 2/1/15 3/4/15 19 Global Copper Production - LTM Million tonnes Jan-07 Aug-08 Mar-10 Oct-11 May-13 Dec-14 Mined Copper Production Run-Rate 1.1% Global copper production LTM 18.43mt, down 1.1% from 18.64mt Mined copper production (LTM-basis) 1.8% and 4.0% in Chile and Peru respectively since June Long-Term Fundamentals Remain Strong New supply growth forecast to drive market to average surplus of ~355,000 tonnes in 15 & 16 Market returns to longer-term deficit driven by global growth & slowing investment in new capacity Structural headwinds; declining ore grades, labor disputes, ore deposits going underground 9

10 US Coal: Headwinds Persist 1150 US Coal Consumption Electric Power Sector (mt) e 2016e US Coal Consumption Facing Headwinds in 2015 Power plant closures and MATS implementation Heating-degree days ~4% above 10-year ave Coal burn 0.5% in 2014 (~4mt); declines 5% (45mt) in 15 Exports 16% in 98mt; decline 8% to ~90mt in US Coal Production (mt) Yr Ave Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nat. Gas Forward Curves ($/mmbtu) Current 1-Month Ago 3-Months Ago 2.00 Feb-15 Oct-15 Jun-16 Feb-17 Oct-17 Q1 Production Down; Full-Year Expected Down ~25mt Coal production 996mt in 2014; 1.2% year-over-year US production down ~1% through Feb Falling natural gas prices, decreased exports, mild winter Full-year 2015 coal production expected down ~25mt Natural Gas Forward Curve Shifting Downward Natural gas spot at $2.79/mmBtu March 2 nd Record gas production swells inventories, 5% to 10-yr ave Forward curve for 2015 points to $3.01/mmBtu PRB competitive; ILB coal under additional pressures 10

11 Seaborne Coal & Iron Ore Markets Remain Oversupplied Seaborne Thermal Coal ($/t) NWE marker CIF Richards Bay FOB Newcastle FOB Thermal Coal Remains Near 5-Lows Current prices at ~$64/t; ~30% of thermal loss Oversupply to exist through 2015 (Aus. & Indonesia) 60% of Indian power plant s; < than 7 days of coal Mine closures, pricing pressure, reduce costs 50 Mar-12 Dec-12 Sep-13 Jun-14 Mar $/tonne Seaborne Met Coal ($/t) 100 Jan-13 Feb-14 Mar-15 $160 $120 $80 Iron Ore ($/t) Spot HCC Forecast HCC Quarterly Contract $40 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Met Coal Q1 15 Contract Down QoQ At $117/t Spot prices range bound between $110 and $120 >50% of global producers underwater Supply response slower than expected Globally ~26mt of met coal curtailments ~15mt more needed to balance market Cuts expected to improve pricing in 2H 2015 Iron Ore Prices Touch 5-Year Lows Current prices at ~$65/t; lowest since June 2009 ~65mt of Chinese iron ore being idled/closed Iron ore prices ~48% in 2014 Structural support level between $65 and $80 Sticky Chinese production getting stickier as Beijing contemplates tax cuts on domestic production 11

12 Chinese Electricity Consumption LTM China Coal Market Consolidating Billion kwh Jan-12 Dec-12 Nov-13 Oct-14 Chinese Domestic Coal Production (mt) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chinese Coal Prices Chinese Electricity Production Slowing Electricity production 4.9% in 14 vs. 8.2% in 13 Thermal power ~77% of Chinese electricity production down from 82% in 2011 Hydro generation and alternative sources gaining share Coal consumption 2.1% through Nov 3.65bt) Chinese Coal Market Facing Supply Controls Government policies curb output ~85mt (Aug Dec) Production ~2.5% in 2014 at ~3.6bt Further cuts expected in 2015 as oversupply remains Stricter import restrictions began January 1 st ; delays at ports as imported materials are facing higher quality requirements and testing before transport Chinese coal imports at 291mt in 2014 ( 11% YoY); headwinds into 2015 as regulations take hold Prices likely have bottomed but marginal upside exists; prices ~16% YTD, but ~6% since early-october Source: IHS Energy, CCM 12

13 Growth Beyond Coal: Other Metals & Commodities Salt & Potash Prices ($/t) Oil Prices ($/barrel) Potash Salt (RHS) Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Oil Down 51% From Recent Peak - Largest Decline Since Global Financial Crisis 0 Jan-05 May-08 Sep-11 Jan-15 Hard Rock Prices (Indexed June 2012 = 1.0) 0.6 Jun-12 Feb-13 Oct-13 Jun-14 Feb-15 Nickel Zinc Platinum Palladium U.S. Salt Prices Increase to Nearly ~$60/t 2 nd consecutive cold winter season to drive demand Snowfall Events 26% in Q4 2014; Q likely to increase on East-coast events Quarterly contract & bidding process Potash Prices +19% From 2013 Demand seen rising 2-3% through 2030 Market currently oversupplied; longer-term fewer brownfield opportunities will drive greenfield expansion Limited arable land and weather pattern trends forcing higher yield requirements are positive longer-term Crude Oil Prices Trading ~$50/barrel U.S. shale oil production up 285% (2014 vs. 2007) 37% reduction in oil drilling rig count since Oct. OECD inventories at multi-year highs Oil sands production costs ~$40/barrel Metals Group Prices Fall on Economic Fears Nickel, Plat., Palladium 28%, 22% and 10% since June Lack of zinc mine projects to move market to deficit Indonesian ore ban to impact nickel market in 2015 Platinum strike impacted >1 million oz. in 2014 market still recovering from supply shock 13

14 Joy Global Service Strategy Understand the Market Define the market and our ability to provide a competitive advantage Solve our Customer s Toughest Challenges Focus on most costly and critical issues Keep people out of harm s way Offer Compelling Solutions Superior Products Smart Products Smartly Connected Diverse Experts World-class Performance Lowest Cost per Ton Significant payback < 3 years, preferably < 1 year Deliver the Best Solution, Product and System Joy Global Brand Promise Every Customer is a Reference SM Provide exceptional service Delight the customer 14

15 Solving Mining s Toughest Challenges Take Operational Excellence (JBS) to Our Customer s Mines Productivity Decreasing Increasing social & regulatory issues Riskier regions, greater depth Declining grades, high disruptions Solutions Bring lean methods into mining Close collaboration - process improvement Smart connected systems Prognostics fix before it breaks Tons/Employee HR productivity down 40% in last 10 years Identify Constraints Performance Smart Products/Processes Optimizing the System Optimization Optimizing the Fleet/Network Eliminate waste... Simplify the process... Automate... Remove people from harms way SM 15

16 Strategies: Creating Competitive Advantage Direct Service JBS Operational Excellence Consistent global world-class components, processes, methods, and metrics throughout the global network with the ability to rapidly customize locally LCM Consumables JoySmart TM Services Innovations Creating Growth Safety Zero Harm Time Velocity Cost Productivity Quality Customer Quality Satisfaction References China & High Growth Markets World-Class COE s Hard Rock Mining Systems Lead with Service MTI New LHD s Transformational Technology $2B Market $8B Market Accelerating our Competitive Advantage in China 16

17 Technologies: Creating New Revenue Streams Hybrid Shovel / Excavator Electric Rope Shovel competitive advantage Long-life, reliable, lowest TCO Diesel/Electric Hybrid Smaller, fuel efficient, flexible ~3% increase in availability ~15% lower total cost of ownership Hardrock Mining Systems Hard Rock MTI Acquisition New LHD s and transformational technology High Performance Low Seam Longwall Unique solutions for low seams Highest productivity/lowest TCO 40% increase production 70% reduction in manpower Innovations creating growth 17

18 One Joy Global: Focused on the Customer $ Millions $75 $81 Announced Cost Announced Savings Actual Savings Direct to customers & markets $40 $52 $50 World class Products, Service, Processes, People and Financials $10 - $20 -$22 -$29 FY13 FY14 FY15 Accelerating cost reduction programs Savings exceeding targets 18

19 Joy Global Direct Service Network Every Customer is a Reference SM Consistent global world-class components, processes, methods and metrics throughout the global network with the ability to rapidly customize locally Performance Life Cycle Management Surface Underground Hard Rock JBS Operational Excellence Products/Process/People Flawless from the Start Life Cycle Management Prognostics & Health Management 19

20 Strategies: Generating Returns $8 $/Share Adjusted EPS* 40% Trade Working Capital Velocity (TWC % Sales) $6 30% $4 20% $2 10% $0 FY05 FY08 FY11 FY14 0% FY05 FY08 FY11 FY14 FY15 Revenue guidance of $3.3B $3.6B* FY15 EPS guidance $ $3.00* Adding service inventory to improve line item fill rates and overall service levels Customers holding on to cash longer/paying slower *As of March 5, 2015 Leverage in Operational Excellence programs drives improvements in margins and working capital velocity over the cycle *See website for a reconciliation of Non-GAAP financial measures to their related GAAP measures 20

21 Cash Flow: Solid Throughout the Cycle $1,000 $800 $ Millions Adjusted Cash from Ops Before Pension Contribution $600 $400 $ Millions Unfunded Pension Liability $600 $200 $400 $200 $ ~$50M per year cash contribution $ Strategies coupled with profitability & asset efficiency deliver solid cash flow $300 $200 $ Millions CAPEX Cash from operations before pension contributions FY15: 10-15% of revenues $100 Dividend raised to $0.20 in June 2014; 14% increase $ e OpEx, NPD, Service Footprint 21

22 Financial Stability: Investment Grade Balance Sheet 5.0 $ Billions Debt to Total Cap 60% % % 30% % % Q1 Gross Debt Shareholders Equity Debt / Total Capitalizaton Net Debt to EBITDA na % Priority is to maintain investment grade credit ratings Through Q1 2015, $533 million of $1 billion share repurchase authorization executed 22

23 Creating Long Term Value Industry-leading product positions R&D and acquisitions enhance product range and leveraging systems Investments expand position in underground hard rock & high growth markets Industry-leading service infrastructure Based on Life Cycle Management Direct service network extended by JoySmart TM Services Financial strength Strong balance sheet and solid margins/cash flow Managing long-term performance Operational efficiency High growth market strategies Investing in technologies that unlock value for customers and create growth 23 23

24 JOY:NYSE 100 E. Wisconsin Ave. Suite 2780 Milwaukee, WI USA