Oshkosh Truck Reports Net Income Up 7.8%-Good
OSHKOSH, Wis.--April 25, 2002--Oshkosh Truck Corporation today reported that second quarter net income increased 7.8 percent to $12.2 million, or $0.70 per share, on sales of $416 million for the quarter ended March 31, 2002. This compares with net income of $11.3 million, or $0.66 per share, on sales of $343 million for last year's second quarter. Effective October 1, 2001, the company adopted the new financial accounting standard on accounting for goodwill and other intangible assets that eliminated amortization of goodwill and indefinite-lived assets of $1.7 million ($1.6 million net of tax), or $0.10 per share, in the second quarter. Results for the second quarter of fiscal 2001 included favorable income tax adjustments of $1.3 million, or $0.08 per share, due to settlement of certain tax audits in the period. Eliminating goodwill amortization and excluding the favorable tax settlement, earnings per share for the second quarter of fiscal 2001 would have been $0.68 per share.Oshkosh also increased its earnings per share estimate for the full fiscal year ended September 30, 2002 from $2.98 per share to about $3.05 per share. Reduced debt levels and lower interest rates have contributed to the improved estimates for the fiscal year.
Sales increased 21.0 percent in the second quarter. Operating income increased 12.1 percent to $23.6 million, or 5.7 percent of sales, compared to $21.0 million, or 6.1 percent of sales, in the prior year's second quarter. The company's fiscal 2002 second quarter performance included the results of the Geesink Norba Group ("Geesink Norba Group"), which was acquired in July 2001. Excluding the impact of the Geesink Norba Group acquisition and adjusting for the elimination of amortization of goodwill, sales were up 11.6 percent and operating income was down 7.8 percent. Consistent with a year long trend, the company had lower sales of higher-margin concrete placement products in its commercial segment and higher sales of lower-margin Medium Tactical Vehicle Replacement ("MTVR") trucks in its defense segment.
Commenting on results and the current outlook, Robert G. Bohn, chairman, president and chief executive officer, said, "We are beginning to make progress on our plans to significantly reduce working capital invested in the business. We have reduced debt by $77 million in the first half of fiscal 2002. That's more than our full year target of $75 million for debt reduction. Interest savings on the lower debt levels permitted us to increase our earnings estimate for the year."
Bohn continued, "This is truly Go Time for new product development at Oshkosh Truck. We unveiled our new Revolution(TM) composite drum to a packed house at the Con-Agg/Con Expo show in March. In early April, we introduced the Hawk(TM) Extreme, an extreme performance, off-road firefighting vehicle for the wildland fire service based on the MTVR chassis, and a new industrial foam, high-flow water tower at the Fire Department Instructors Conference. And, of course, we continue to invest heavily on major defense truck procurement competitions in the U.S. and U.K. These investments impacted second quarter margins, but offer significant opportunities for long-term growth.
"In May, we plan to introduce additional new refuse products at the Wastec show in Las Vegas and at IFAT, the largest European refuse show in Germany. We are introducing all these new products just in time for what we hope will be an economic recovery in 2003," concluded Bohn.
Factors affecting second quarter results for the company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 3.2 percent to $119.7 million for the second quarter. Operating income was up 7.0 percent to $11.6 million, or 9.7 percent of sales, compared to prior year income of $10.9 million, or 9.4 percent of sales. Excluding the impact of the adoption of the new accounting standard on accounting for goodwill, operating income was flat between periods.
Defense--Defense sales increased 58.3 percent to $127.1 million for the second quarter due to increased parts sales and as a result of a full quarter of full-rate production under the company's contract to supply medium trucks to the U.S. Marines under the MTVR contract.
Operating income was down 25.0 percent to $5.1 million, or 4.0 percent of sales, compared to prior year income of $6.8 million, or 8.4 percent of sales. Margins on the MTVR contract during the quarter remained unchanged from the previous quarter. Second quarter results include significantly higher spending on U.K. and U.S. defense truck competitions than prior year levels. The status of these competitions will be discussed in today's earnings conference call.
Commercial--Commercial sales increased 15.4 percent to $170.0 million for the second quarter. Operating income increased 59.2 percent to $12.2 million, or 7.2 percent of sales. Excluding the results of the Geesink Norba Group and adjusting for the adoption of the new accounting standard on accounting for goodwill, sales for the quarter would have been down 6.7 percent, but operating income would have been up 12.2 percent due to higher domestic refuse margins resulting from improved manufacturing cost performance. Concrete placement product sales declined 11.8 percent in the second quarter. Refuse sales in the U.S. were up 5.7 percent during the quarter, due to higher "body only" sales to the "Big Three" waste haulers. Geesink Norba Group sales and earnings improved sequentially from the first to the second quarters of fiscal 2002 as European economies are beginning to show signs of a recovery.
Corporate and other--Operating expenses and inter-segment profit elimination increased from $4.2 million to $5.3 million as a result of higher insurance costs, acquisition integration costs and variable compensation adjustments. Net interest expense for the quarter increased to $5.3 million compared to $4.9 million in the prior year. Higher borrowings due to the Geesink Norba Group acquisition were partially offset by reductions in variable interest rates.
Six-Month Results
The company reported that net income increased 6.5 percent to $20.8 million, or $1.21 per share, for the first six months of fiscal 2002 on sales of $777.1 million compared to $19.5 million, or $1.14 per share, for the first six months of fiscal 2001 on sales of $625.9 million. Excluding the impact of the Geesink Norba Group acquisition and adjusting for the elimination of amortization of goodwill and prior year favorable income tax adjustments, sales were up 14.3 percent and net income was down 6.6 percent.
Operating income increased 6.6 percent to $41.4 million in the first six months of fiscal 2002 compared to $38.8 million in the first six months of fiscal 2001. Excluding the impact of the Geesink Norba Group acquisition and adjusting for the elimination of amortization of goodwill, operating income declined 12.7 percent. The company had lower sales of higher-margin concrete placement products in its commercial segment and higher sales under its lower-margin MTVR defense contract. The company also incurred increased bid and proposal spending on U.S. and U.K. defense truck procurement competitions, including the successful bid for provision of U.K. Heavy Equipment Transport trucks and trailers, which was awarded in December 2001.
The company will comment on second quarter earnings and expectations for fiscal 2002 during a live conference call at 11:00 a.m. Eastern Daylight Time this morning. The call will be available simultaneously via a webcast over the Internet as a service to investors. It will be listen-only format for on-line listeners. To access the webcast, investors should go to www.oshkoshtruck.com at least 15 minutes prior to the event and follow instructions for listening to the broadcast. An audio replay of such conference call and related question and answer session will be available for thirty days at this website.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.07500 per share for Class A Common Stock and $0.08625 per share for Common Stock. These dividends, unchanged from the prior quarter, will be payable May 13, 2002 to shareholders of record as of May 6, 2002.
Oshkosh Truck Corporation is a leading manufacturer of specialty trucks and truck bodies for the defense, fire and emergency, concrete placement and refuse hauling markets. Oshkosh Truck is a Fortune 1000 company with products marketed under the Oshkosh, Pierce, McNeilus, Geesink, Norba and Medtec brand names. The company is headquartered in Oshkosh, Wis., and had annual sales of $1.445 billion in fiscal 2001.
Forward-Looking Statements
This press release contains statements that the company believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding the company's future financial position, business strategy, targets, projected sales, costs, earnings, capital spending and debt levels, and plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as the company "may," "will," "expects," "intends," "estimates," "anticipates," "believes," "should," or "plans" or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the company's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the company's commercial and fire and emergency markets, risks related to reductions in government expenditures, the uncertainty of government contracts, the challenges of identifying, completing and integrating future acquisitions, disruptions in the supply of parts or components from sole source suppliers and subcontractors, competition, and risks associated with international operations and sales, including foreign currency fluctuations. In addition, the company's expectations for fiscal 2002 are based in part on certain assumptions made by the company, including those relating to fiscal 2002 concrete placement activity, the performance of the U.S. and European economies generally, when the company will receive sales orders and payments, achieving cost reductions, sales and margin levels under the MTVR contract and defense programs, capital expenditures of municipalities and commercial waste haulers, sales and operating income of the Geesink Norba Group, expected debt levels and interest rates, and assuming no acquisitions in fiscal 2002. The inaccuracy of these or other assumptions could have a material adverse effect on the company's ability to achieve the company's expectations. Additional information concerning these and other factors is contained in the company's filings with the Securities and Exchange Commission, including the Form 8-K filed today.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
--------------------- ---------------------
2002 2001 2002 2001
--------------------- ---------------------
(In thousands, except per share amounts)
Net sales $ 415,605 $ 343,367 $ 777,098 $ 625,895
Cost of sales 356,109 292,863 667,578 532,124
---------- ---------- ---------- ----------
Gross income 59,496 50,504 109,520 93,771
Operating expenses:
Selling, general and
administrative 34,439 26,526 65,244 49,145
Amortization of goodwill
and other intangibles 1,475 2,946 2,915 5,810
---------- ---------- ---------- ----------
Total operating expenses 35,914 29,472 68,159 54,955
---------- ---------- ---------- ----------
Operating income 23,582 21,032 41,361 38,816
Other income (expense):
Interest expense (5,617) (5,160) (12,039) (9,818)
Interest income 271 310 556 479
Miscellaneous, net 51 5 (199) 5
---------- ---------- ---------- ----------
(5,295) (4,845) (11,682) (9,334)
---------- ---------- ---------- ----------
Income before income taxes
and equity in earnings of
unconsolidated partnership 18,287 16,187 29,679 29,482
Provision for income taxes 6,706 5,292 10,010 10,667
---------- ---------- ---------- ----------
11,581 10,895 19,669 18,815
Equity in earnings of
unconsolidated partnership,
net of income taxes 586 389 1,106 692
---------- ---------- ---------- ----------
Net income $ 12,167 $ 11,284 $ 20,775 $ 19,507
========== ========== ========== ==========
Earnings per share $ 0.72 $ 0.68 $ 1.24 $ 1.17
Earnings per share
assuming dilution $ 0.70 $ 0.66 $ 1.21 $ 1.14
Weighted average shares
outstanding:
Basic 16,789 16,678 16,752 16,673
Assuming dilution 17,281 17,120 17,210 17,097
Cash dividends:
Class A Common Stock $ 0.07500 $ 0.07500 $ 0.15000 $ 0.15000
Common Stock $ 0.08625 $ 0.08625 $ 0.17250 $ 0.17250
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2002 2001
-------------- ---------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 13,024 $ 11,312
Receivables, net 164,297 211,405
Inventories 252,712 258,038
Prepaid expenses 6,893 6,673
Deferred income taxes 21,213 15,722
-------------- ---------------
Total current assets 458,139 503,150
Investment in unconsolidated partnership 21,635 18,637
Other long-term assets 11,509 11,770
Property, plant and equipment 246,825 244,166
Less accumulated depreciation (110,380) (102,238)
-------------- ---------------
Net property, plant and equipment 136,445 141,928
Purchased intangible assets, net 102,952 121,643
Goodwill 298,206 292,140
-------------- ---------------
Total assets $ 1,028,886 $ 1,089,268
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 95,272 $ 107,864
Floor plan notes payable 18,646 19,271
Customer advances 91,746 58,070
Payroll-related obligations 27,996 27,084
Income taxes 11,115 25,221
Accrued warranty 18,915 18,338
Other current liabilities 46,148 46,322
Revolving credit facility and
current maturities of
long-term debt 16,292 77,031
-------------- ---------------
Total current liabilities 326,130 379,201
Long-term debt 265,951 282,249
Deferred income taxes 33,888 40,334
Other long-term liabilities 39,582 40,458
Commitments and contingencies
Shareholders' equity 363,335 347,026
-------------- ---------------
Total liabilities and shareholders'
equity $ 1,028,886 $ 1,089,268
============== ===============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
---------------------
2002 2001
---------- ----------
(In thousands)
Operating activities:
Net income $ 20,775 $ 19,507
Non-cash adjustments 4,597 11,714
Changes in operating assets and liabilities 60,494 (47,324)
---------- ----------
Net cash provided from (used for)
operating activities 85,866 (16,103)
Investing activities:
Acquisition of businesses, net of cash
acquired - (26,423)
Additions to property, plant and equipment (4,873) (9,311)
Proceeds from sale of property, plant and
equipment 1 25
Increase in other long-term assets (1,305) (4,598)
---------- ----------
Net cash used for investing activities (6,177) (40,307)
Financing activities:
Net borrowings (repayments) under revolving
credit facility (55,200) 54,800
Repayment of long-term debt (21,830) (4,310)
Dividends paid (2,875) (2,866)
Other 1,941 196
---------- ----------
Net cash provided from (used for)
financing activities (77,964) 47,820
Effect of exchange rate changes on cash (13) -
---------- ----------
Increase (decrease) in cash and cash equivalents 1,712 (8,590)
Cash and cash equivalents at beginning of period 11,312 13,569
---------- ----------
Cash and cash equivalents at end of period $ 13,024 $ 4,979
========== ==========
Supplementary disclosure:
Depreciation and amortization $ 12,249 $ 13,441
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(In thousands)
Net sales to unaffiliated
customers:
Commercial $ 169,978 $ 147,343 $ 299,407 $ 254,380
Fire and emergency 119,682 116,007 215,548 209,753
Defense 127,126 80,327 263,701 162,072
Intersegment
eliminations (1,181) (310) (1,558) (310)
---------- ---------- ---------- ----------
Consolidated $ 415,605 $ 343,367 $ 777,098 $ 625,895
========== ========== ========== ==========
Operating income (expense):
Commercial $ 12,161 $ 7,640 $ 19,457 $ 13,812
Fire and emergency 11,610 10,850 19,363 18,205
Defense 5,087 6,779 13,129 15,325
Corporate and other (5,276) (4,237) (10,588) (8,526)
---------- ---------- ---------- ----------
Consolidated $ 23,582 $ 21,032 $ 41,361 $ 38,816
========== ========== ========== ==========
Backlog:
Commercial $ 154,822 $ 124,933
Fire and emergency 301,818 258,690
Defense 422,802 358,008
---------- ----------
Consolidated $ 879,442 $ 741,631
========== ==========
