Capital Goods Sector Review: Dresser-Rand Bookings, Progress Rail Regresses

Dresser-Rand Group Inc. (NYSE:DRC) achieved record bookings in 2011 totaling approximately $2.9B. However, new unit bookings of approximately $1.5B were at the low end of the company’s previously disclosed guidance range of $1.5B-$1.7B, as several major awards did not close in Q4 as previously expected. The new unit bookings that moved out of the year are expected to close in 2012; however, the delay in new unit bookings is expected to shift related revenues from 2012 to 2013. The shipment shortfall was principally due to supply chain delays on major buyouts and client requests to defer deliveries to 2012. The issues with major buyouts were principally related to timely receipt of motors and other drivers.

The shares closed at $49.21, down $3.66, or 6.92%, on the day. Its market capitalization is $3.70 billion.

Joy Global Inc. (NYSE:JOY) announced the extension of the tender offer that its wholly owned Hong Kong subsidiary, Joy Global Asia Limited, is conducting for the shares of common stock it does not currently own of International Mining Machinery Holdings. To date, Joy Global Asia Limited has received acceptances in respect of 370,059,847 shares of IMM common stock and elections to cancel 100% of all outstanding options to purchase IMM common stock. Joy Global will pay aggregate consideration of approximately $420M for such shares and options. Combined with shares it previously owned, the acceptances of the tender offer to date have resulted in Joy Global Asia Limited holding approximately 97.7% of all of the shares of IMM common stock. The tender offer to purchase the remaining shares of IMM common stock, which was to have expired on February 3, will now expire on February 10, 2012 at 4:00 p.m., Hong Kong time. With 97.7% of the shares of IMM common stock, Joy Global Asia Limited intends to exercise its right to compulsorily acquire those shares of IMM common stock which have not been acquired by Joy Global Asia Limited under the share offer.

The shares closed at $89.65, down $0.51, or 0.57%, on the day. Its market capitalization is $9.42 billion.

Caterpillar Inc. (NYSE:CAT) subsidiary Progress Rail Services Corporation announced this morning its decision to shut down locomotive production operations at its London, Ontario plant. The company stated it is regrettable that it has become necessary to close production operations at the London facility. The cost structure of the operation was not sustainable and efforts to negotiate a new, competitive collective agreement were not successful, the company said. Progress Rail’s global manufacturing network assures its customers that delivery schedules will not be impacted by this decision, it added.

The shares closed at $113.94, up $3.61, or 3.27%, on the day. Its market capitalization is $73.68 billion.

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