Oshkosh Truck Reports Sales up 17.9% and Net Income up 31.2% in First Quarter
OSHKOSH, Wis.--Jan. 23, 2003--Oshkosh Truck Corporation, a leading manufacturer of specialty trucks and truck bodies, today reported that first quarter net income increased 31.2 percent to $11.3 million, or $0.65 per share, on sales of $426.3 million for the quarter ended December 31, 2002. This compares with net income of $8.6 million, or $0.50 per share, on sales of $361.5 million for last year's first quarter."Several recent developments are instrumental to Oshkosh's long-term financial performance. Our selection as preferred bidder for the U.K. Ministry of Defence Wheeled Tanker program reflects Oshkosh's ability to engineer and deliver top-performance military vehicles and provide the best value for money. In addition, we broke ground and are on schedule for a new U.S. manufacturing facility for our Revolution(TM) composite mixer drum which is expected to be operational late this fiscal year," commented Robert G. Bohn, chairman, president and chief executive officer.
Bohn continued, "Higher sales and operating income in each business segment reflect aggressive performance initiatives we implemented across the corporation. We also benefited in the quarter from lower interest expense resulting from a continuing focus on working capital management and prior year debt reduction. Our outlook for the year remains positive; however, we remain guarded as to the direction of the global economy. We re-affirm our estimate of fiscal year 2003 earnings per share of about $3.70."
Factors affecting first quarter results for the company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 17.8 percent to $113.0 million for the quarter. Operating income was up 29.3 percent to $10.0 million, or 8.9 percent of sales, compared to prior year income of $7.8 million, or 8.1 percent of sales. Increased sales volume, improved product sales mix and favorable manufacturing cost performance at the company's Pierce Manufacturing Inc. subsidiary were responsible for most of the improved earnings in this segment compared to results in the prior year quarter.
Defense--Defense sales increased 8.8 percent to $148.6 million for the quarter as a result of increased sales of heavy-payload vehicles under the company's Family of Heavy Tactical Vehicles ("FHTV") contract, which were partially offset by lower parts sales.
Operating income increased 19.2 percent to $9.6 million, or 6.5 percent of sales, compared to prior year income of $8.0 million, or 5.9 percent of sales. Increased sales of higher-margin, heavy-payload vehicles under the FHTV contract contributed to the increase in operating income in the quarter compared to the prior year. Margins on the Company's Medium Tactical Vehicle Replacement ("MTVR") contract were 3.3 percent in the first quarter of fiscal 2002. Margins on the MTVR contract were increased in the third quarter of fiscal 2002 to 4.3 percent and have remained at that level since then, including the first quarter. The difference in the margin percentage added approximately $0.7 million to the defense segment operating income in the first quarter compared to the prior year quarter. Bid and proposal spending continued at a high rate during the first quarter as the Company submitted its initial bid on the multi-year Family of Medium Tactical Vehicles ("FMTV") contract in November 2002 and pursued other defense programs in the United Kingdom.
Commercial--Commercial sales increased 28.8 percent to $166.8 million for the first quarter. Concrete placement and refuse product sales were up 66.8 percent and 4.1 percent, respectively, from first quarter 2002 results. Increased chassis and truck body "package" sales compared to "body-only" sales drove the revenue increases. Domestic refuse sales decreased 9.4 percent due to substantially lower shipments to large, commercial waste haulers in spite of a higher mix of "package" sales. While European refuse sales were up 26.7% compared to the prior year's first quarter, most of the increase also resulted from higher "package" sales.
Operating income increased 4.9 percent to $7.7 million, or 4.6 percent of sales, compared to prior year income of $7.3 million, or 5.6 percent of sales. Operating income margins declined largely due to the increase in "package" sales compared to "body-only" sales. Margins on "package" sales are lower because they include a purchased commercial chassis. First quarter results in fiscal 2003 also benefited from a $0.5 million gain on the sale of certain operating equipment.
Corporate and other--Operating expenses and inter-segment profit elimination increased from $5.3 million to $6.9 million in the first quarter of fiscal 2003, consistent with a previously reported plan to increase investments in people and services. Net interest expense for the quarter decreased $2.9 million to $3.2 million, compared to the prior year quarter. Lower interest costs were largely due to prior year debt reduction resulting from "performance-based" payments received on the multi-year MTVR and FHTV contracts and free cash flow from operations. Also, first quarter results in fiscal 2002 included a $0.9 million credit, or $0.05 per share, related to a settlement of certain tax audits.
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 February 13, 2003 to shareholders of record as of February 6, 2003.
Oshkosh Truck Corporation is a leading designer, manufacturer and marketer of a broad range of specialty commercial, fire and emergency and military trucks and truck bodies under the Oshkosh, McNeilus, Pierce, Medtec, Geesink and Norba brand names. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, and concrete placement and refuse businesses where high quality, superior performance, rugged reliability and long-term value are paramount.
Oshkosh Truck Corporation officials will comment on first quarter earnings and their current outlook for fiscal 2003, including a discussion of the factors underlying the 2003 earnings estimates, during a live conference call at 10:00 a.m. Eastern Standard Time today. 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.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
December 31,
------------------------
2002 2001
------------ -----------
(In thousands,
except per share amounts)
Net sales $ 426,336 $ 361,493
Cost of sales 368,697 311,469
------------ -----------
Gross income 57,639 50,024
Operating expenses:
Selling, general and administrative 35,675 30,805
Amortization of purchased intangibles 1,602 1,440
------------ -----------
Total operating expenses 37,277 32,245
------------ -----------
Operating income 20,362 17,779
Other income (expense):
Interest expense (3,409) (6,422)
Interest income 187 285
Miscellaneous, net (276) (250)
------------ -----------
(3,498) (6,387)
------------ -----------
Income before provision for income taxes and
equity in earnings of unconsolidated
partnership 16,864 11,392
Provision for income taxes 6,204 3,304
------------ -----------
Income before equity in earnings of
unconsolidated partnership 10,660 8,088
Equity in earnings of unconsolidated
partnership, net of income taxes 632 520
------------ -----------
Net income $ 11,292 $ 8,608
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Earnings per share $ 0.67 $ 0.51
Earnings per share assuming dilution $ 0.65 $ 0.50
Weighted average shares outstanding:
Basic 16,941 16,716
Assuming dilution 17,392 17,123
Cash dividends:
Class A Common Stock $ 0.07500 $ 0.07500
Common Stock $ 0.08625 $ 0.08625
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December September
31, 30,
2002 2002
------------ -----------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 19,367 $ 40,039
Receivables, net 138,668 142,709
Inventories 233,214 210,866
Prepaid expenses 8,255 7,414
Deferred income taxes 31,155 26,008
------------ -----------
Total current assets 430,659 427,036
Investment in unconsolidated partnership 23,088 22,274
Other long-term assets 11,013 11,625
Property, plant and equipment 265,277 261,045
Less accumulated depreciation (123,964) (120,684)
------------ -----------
Net property, plant and equipment 141,313 140,361
Purchased intangible assets, net 103,309 104,316
Goodwill 326,009 318,717
------------ -----------
Total assets $1,035,391 $1,024,329
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 101,084 $ 116,422
Floor plan notes payable 29,474 23,801
Customer advances 125,758 119,764
Payroll-related obligations 25,891 34,474
Income taxes 17,534 8,597
Accrued warranty 25,088 24,015
Other current liabilities 51,089 47,754
Revolving credit facility and current
maturities of long-term debt 9,777 18,245
------------ -----------
Total current liabilities 385,695 393,072
Long-term debt 127,997 131,713
Deferred income taxes 40,332 39,303
Other long-term liabilities 48,375 50,481
Commitments and contingencies
Shareholders' equity 432,992 409,760
------------ -----------
Total liabilities and shareholders' equity $1,035,391 $1,024,329
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OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
------------------------
2002 2001
------------ -----------
(In thousands)
Operating activities:
Net income $ 11,292 $ 8,608
Non-cash adjustments 49 3,000
Changes in operating assets and liabilities (16,962) 31,516
------------ -----------
Net cash provided from (used for)
operating activities (5,621) 43,124
Investing activities:
Additions to property, plant and equipment (5,174) (1,727)
Proceeds from sale of property, plant and
equipment 1,879 -
Decrease (increase) in other long-term assets 743 (757)
------------ -----------
Net cash used for investing activities (2,552) (2,484)
Financing activities:
Net repayments under revolving credit
facility - (37,200)
Repayment of long-term debt (12,194) (3,242)
Dividends paid (1,459) (1,437)
Other 893 5
------------ -----------
Net cash used for financing activities (12,760) (41,874)
Effect of exchange rate changes on cash 261 (131)
------------ -----------
Decrease in cash and cash equivalents (20,672) (1,365)
Cash and cash equivalents at beginning of period 40,039 11,312
------------ -----------
Cash and cash equivalents at end of period $ 19,367 $ 9,947
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Supplementary disclosure:
Depreciation and amortization $ 6,106 $ 6,072
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
December 31,
------------------------
2002 2001
------------ -----------
(In thousands)
Net sales to unaffiliated customers:
Commercial $ 166,751 $ 129,429
Fire and emergency 112,956 95,866
Defense 148,609 136,575
Intersegment eliminations (1,980) (377)
------------ -----------
Consolidated $ 426,336 $ 361,493
============ ===========
Operating income (expense):
Commercial $ 7,652 $ 7,296
Fire and emergency 10,025 7,753
Defense 9,588 8,042
Corporate and other (6,903) (5,312)
------------ -----------
Consolidated $ 20,362 $ 17,779
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Period-end backlog:
Commercial $ 152,412 $ 134,412
Fire and emergency 315,811 307,871
Defense 606,040 407,381
------------ -----------
Consolidated $1,074,263 $ 849,664
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