Oshkosh Truck Reports Third Quarter EPS
OSHKOSH, Wis.--July 27, 2001--Oshkosh Truck Corporation today reported that third quarter net income decreased 10.2 percent to $13.7 million, or $0.80 per share, on sales of $404 million for the quarter ended June 30, 2001. This compares with net income of $15.3 million, or $0.90 per share, on sales of $392 million for last year's third quarter. These results are in line with Oshkosh's previously announced earnings expectations of $0.78 per share. The decline in net income is largely attributed to a soft concrete placement market that substantially impacted sales and operating income for Oshkosh's commercial segment.Oshkosh reaffirmed its earnings per share estimate for the full year ending September 30, 2001 at $2.80 per share. Oshkosh also announced its earnings per share estimate for the full fiscal year ending September 30, 2002 of $2.60 per share, before the effects of the elimination of amortization of goodwill and other intangible assets. The fiscal 2002 estimate reflects Oshkosh's view of a further weakening of its markets, and the company's intention to make significant investments in product development and bid and proposal activities in fiscal 2002 to win large multi-year defense programs. Under the transition rules for a new accounting standard for business combinations, amortization of goodwill and certain other intangible assets is expected to cease effective October 1, 2001. This should add about $0.38 per share to fiscal 2002 earnings, bringing Oshkosh's estimated reported earnings per share to approximately $2.98.
Sales increased 3.2 percent in the third quarter. Operating income decreased 4.5 percent to $27.5 million, or 6.8 percent of sales, compared to $28.8 million, or 7.4 percent of sales, in the prior year's third quarter.
The company's third quarter performance reflects double-digit sales and operating income growth in its fire and emergency and defense businesses, which tempered continued weakness in concrete placement market conditions.
"Five years ago we made a strategic commitment to become a diversified industrial company with less dependence on any single business segment. This year it has proven to be the right decision as the domestic concrete placement market has cooled down after two years of tremendous growth. The ramp-up of our Medium Tactical Vehicle Replacement ("MTVR") business to full-rate production during the third and fourth quarters of this year comes at exactly the right time, as our cyclical concrete placement business continues to be negatively impacted by the difficult economic environment," commented Robert G. Bohn, chairman, president and chief executive officer.
Bohn continued, "Nonetheless, increased sales volume in our defense and fire and emergency segments did not fully offset lower commercial segment income resulting from reduced sales volume on our higher-margin concrete placement products during the quarter."
Factors affecting third quarter results for the company's business segments included:
Fire and Emergency -- Fire and emergency segment sales increased 25% to $128.9 million for the quarter, while operating income rose 50 percent, to $14.3 million, or 11.1 percent of sales, compared to prior year income of $9.5 million, or 9.2 percent of sales. Third quarter results included the operations of Medtec Ambulance Corporation ("Medtec") following its acquisition on October 30, 2000. Excluding the impact of the Medtec acquisition, segment sales and operating income increased 18 percent and 43 percent, respectively. That significant increase in operating income margin can be attributed to increased production efficiency at the company's custom fire apparatus plants and a favorable product mix.
Defense--Defense sales increased 60 percent, to $111.3 million, for the quarter. This surge is primarily attributed to the continued ramp-up of production under the company's contract with the U.S. Marines to supply trucks under the MTVR contract.
Operating income was up 20 percent in the third quarter, to $8.7 million, or 7.8 percent of sales, compared to prior year income of $7.3 million, or 10.5 percent of sales. Increased sales of lower-margin MTVRs were partially offset by strong parts sales during the quarter.
Commercial--Commercial sales declined 25 percent, to $164.8 million, for the quarter. Operating income declined 52 percent to $8.9 million, or 5.4 percent of sales. Results reflected concrete placement orders that were down 33 percent from third quarter 2000 results as market conditions remained soft throughout the North American market. Renewed order strength among large, national waste haulers and municipalities continued to increase refuse sales.
Corporate and other--Operating expenses and inter-segment profit elimination decreased from $6.4 million to $4.4 million as a result of cost reduction initiatives and variable compensation adjustments. Net interest expense for the quarter increased to $5.4 million compared to $4.8 million in the prior year. Higher borrowings to support increased working capital requirements, the Medtec acquisition and the purchase of inventory and certain assets from Temco, a subsidiary of Trinity Industries Inc., offset the benefits from interest rate reductions in the quarter.
Nine-Month Results - The company reported that income from continuing operations decreased 2 percent to $33.2 million, or $1.94 per share, for the first nine months of fiscal 2001 on sales of $1,028 million compared to $33.9 million, or $2.10 per share, for the first nine months of fiscal 2000 on sales of $966 million.
Operating income declined $3.8 million, or 5 percent, to $66.3 million in the first nine months of fiscal 2001 compared to $70.1 million in the first nine months of fiscal 2000. Double-digit increases in defense and fire and emergency sales and operating income were not enough to offset revenue declines in the more profitable concrete placement business of the commercial segment.
In the first nine months of fiscal 2000, the company recorded a $2.0 million gain (net of income taxes of $1.2 million), or $0.12 per share, from the sale of technology and collection of certain previously written-off receivables from a foreign affiliate, which was part of a business that the company exited in 1995. The company also recorded a $0.6 million charge in the first nine months of fiscal 2000 (net of income taxes of $0.4 million) for the early retirement of debt from proceeds of its November 1999 common stock offering.
The company will comment on third quarter earnings and expectations for the full years of fiscal 2001 and 2002 during a live conference call at 11:00 a.m. Eastern Daylight Time this morning. The company has recently announced that it closed the acquisition of Geesink Norba on July 25, 2001, which was financed with a new $140 million Term B bank loan. The scheduled conference call will also address this acquisition. 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.
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 August 13, 2001 to shareholders of record as of August 6, 2001.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
(In thousands, except per share amounts)
Net sales $ 404,248 $ 391,667 $ 1,027,735 $ 966,058
Cost of sales 347,929 332,865 877,645 817,518
-------- -------- -------- --------
Gross income 56,319 58,802 150,090 148,540
Operating expenses:
Selling, general
and administrative 25,681 27,213 74,826 70,125
Amortization of goodwill
and other intangibles 3,137 2,780 8,947 8,324
-------- -------- -------- --------
Total operating expenses 28,818 29,993 83,773 78,449
-------- -------- -------- --------
Operating income 27,501 28,809 66,317 70,091
Other income (expense):
Interest expense (5,610) (5,116) (15,428) (16,314)
Interest income 228 286 707 640
Miscellaneous, net (81) 244 (76) 529
-------- -------- -------- --------
(5,463) (4,586) (14,797) (15,145)
-------- -------- -------- --------
Income before
items noted below 22,038 24,223 51,520 54,946
Provision for
income taxes 8,677 9,253 19,344 21,957
-------- -------- -------- --------
13,361 14,970 32,176 32,989
Equity in earnings of
unconsolidated partnership,
net of income taxes 348 304 1,040 894
-------- -------- -------- --------
Income from
continuing operations 13,709 15,274 33,216 33,883
Gain on disposal of
discontinued operations,
net of income
taxes of $1,235 - - - 2,015
Extraordinary charge for
early retirement of
debt, net of income
tax benefit of $356 - - - (581)
-------- -------- -------- --------
Net income $ 13,709 $ 15,274 $ 33,216 $ 35,317
======== ======== ======== ========
Earnings (loss) per share:
Continuing
operations $ 0.82 $ 0.92 $ 1.99 $ 2.13
Discontinued operations - - - 0.13
Extraordinary charge - - - (0.04)
-------- -------- -------- --------
Net income $ 0.82 $ 0.92 $ 1.99 $ 2.22
======== ======== ======== ========
Earnings (loss) per
share assuming dilution:
Continuing
operations $ 0.80 $ 0.90 $ 1.94 $ 2.10
Discontinued operations - - - 0.12
Extraordinary charge - - - (0.04)
-------- -------- -------- --------
Net income $ 0.80 $ 0.90 $ 1.94 $ 2.18
======== ======== ======== ========
Weighted average
shares outstanding:
Basic 16,687 16,633 16,678 15,881
Assuming dilution 17,079 16,971 17,083 16,201
Cash dividends:
Class A Common Stock $ 0.07500 $ 0.07500 $ 0.22500 $ 0.22500
Common Stock $ 0.08625 $ 0.08625 $ 0.25875 $ 0.25875
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2001 2000
----------- ------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 4,563 $ 13,569
Receivables, net 157,052 106,805
Inventories 272,770 201,210
Prepaid expenses 6,098 5,424
Deferred income taxes 16,418 14,708
----------- ------------
Total current assets 456,901 341,716
Investment in unconsolidated partnership 17,928 15,179
Other long-term assets 14,309 9,995
Property, plant and equipment 223,028 206,507
Less accumulated depreciation (98,064) (87,748)
----------- ------------
Net property, plant and equipment 124,964 118,759
Goodwill and other intangible assets, net 320,289 310,731
----------- ------------
Total assets $ 934,391 $ 796,380
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 83,536 $ 84,215
Floor plan notes payable 31,864 23,925
Customer advances 67,306 58,493
Payroll-related obligations 22,126 23,465
Accrued warranty 16,683 15,519
Other current liabilities 71,047 52,310
Revolving credit facility and current
maturities of long-term debt 87,885 8,544
----------- ------------
Total current liabilities 380,447 266,471
Long-term debt 146,322 154,238
Deferred income taxes 41,423 46,414
Other long-term liabilities 35,724 28,200
Commitments and contingencies
Shareholders' equity 330,475 301,057
----------- ------------
Total liabilities and
shareholders' equity $ 934,391 $ 796,380
=========== ============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
-------------------
2001 2000
-------- --------
(In thousands)
Operating activities:
Income from continuing operations $ 33,216 $ 33,883
Non-cash adjustments 14,059 13,998
Changes in operating assets and liabilities (79,030) (34,203)
-------- --------
Net cash provided from (used for)
operating activities (31,755) 13,678
Investing activities:
Acquisition of businesses, net of cash acquired (26,423) (7,287)
Additions to property, plant and equipment (12,748) (13,584)
Proceeds from sale of property, plant and
equipment 25 46
Increase in other long-term assets (5,426) (3,862)
-------- --------
Net cash used for investing activities (44,572) (24,687)
Net cash provided from discontinued operations - 2,015
Financing activities:
Net borrowings under revolving credit facility 77,900 12,800
Repayment of long-term debt (6,475) (93,842)
Proceeds from Common Stock offering - 93,736
Costs of Common Stock offering - (334)
Dividends paid (4,300) (3,961)
Other 196 156
-------- --------
Net cash provided from financing activities 67,321 8,555
-------- --------
Decrease in cash and cash equivalents (9,006) (439)
Cash and cash equivalents at beginning of period 13,569 5,137
-------- --------
Cash and cash equivalents at end of period $ 4,563 $ 4,698
======== ========
Supplementary disclosure:
Depreciation and amortization $ 20,756 $ 17,640
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2001 2000 2001 2000
-------- -------- -------- --------
(In thousands)
Net sales to
unaffiliated customers:
Commercial $ 164,828 $ 219,217 $ 416,800 $ 516,484
Fire and emergency 128,850 103,482 338,603 281,863
Defense 111,284 69,368 273,356 168,111
Corporate and other (714) (400) (1,024) (400)
-------- -------- -------- --------
Consolidated $ 404,248 $ 391,667 $ 1,027,735 $ 966,058
======== ======== ======== ========
Operating income (expense):
Commercial $ 8,898 $ 18,351 $ 22,710 $ 45,214
Fire and emergency 14,281 9,523 32,486 22,916
Defense 8,730 7,305 24,055 16,963
Corporate and other (4,408) (6,370) (12,934) (15,002)
-------- -------- -------- --------
Consolidated $ 27,501 $ 28,809 $ 66,317 $ 70,091
======== ======== ======== ========
Backlog:
Commercial $ 77,072 $ 82,391
Fire and emergency 228,069 209,663
Defense 521,554 352,893
-------- --------
Consolidated $ 826,695 $ 644,947
======== ========