Oshkosh Truck Reports Second Quarter Net Income up 16% - B'Gosh
OSHKOSH, Wis.--April 24, 2003--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that second quarter net income increased 16.0 percent to $14.1 million, or $0.81 per share, on sales of $453.4 million for the quarter ended March 31, 2003. This compares with net income of $12.2 million, or $0.70 per share, on sales of $415.6 million for last year's second quarter. Oshkosh maintained its earnings per share estimate for the full year ending September 30, 2003 at $3.70 per share.Sales increased 9.1 percent in the second quarter. Operating income increased 3.4 percent to $24.4 million, or 5.4 percent of sales, compared to $23.6 million, or 5.7 percent of sales, in the prior year's second quarter.
Factors affecting second quarter results for the company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 18.3 percent, to $141.6 million for the quarter. Operating income was up 23.3 percent to $14.3 million, or 10.1 percent of sales, compared to prior year operating income of $11.6 million, or 9.7 percent of sales. Second quarter results were impacted by strong orders recorded in fiscal 2002. Beginning in the fourth quarter of fiscal 2002, fire and emergency orders began to soften due to municipal budget pressures. Such order weakness is not expected to impact earnings until fiscal 2004.
Defense--Defense sales increased 2.7 percent to $130.6 million for the quarter, largely due to higher parts sales. Operating income in the second quarter was up 32.5 percent, to $6.7 million, or 5.2 percent of sales, compared to prior year operating income of $5.1 million, or 4.0 percent of sales. Higher earnings for the quarter reflect the higher parts sales and lower bid and proposal spending. Also, margins on the MTVR contract were 4.3% in the second quarter of fiscal 2003 compared to 3.3% in the second quarter of fiscal 2002. The Company had previously recorded a cumulative catch-up adjustment to increase the life-to-date margins recognized on this contract to 4.3% in the third quarter of fiscal 2002.
Commercial--Commercial sales increased 7.3 percent, to $182.4 million, for the quarter as a higher proportion of "package" chassis and body sales offset lower overall unit sales, especially in rear-discharge concrete mixers where unit volumes declined 32.1%. Operating income decreased 6.4% to $11.4 million, or 6.2 percent of sales, compared to 7.2 percent of sales in the prior year quarter. Operating income margins were lower due to a higher percentage of "package" chassis and body sales versus "body-only" sales in the current year quarter. The Company earns a lower overall operating income margin on sales that include purchased commercial chassis.
Corporate and other--Operating expenses and inter-segment profit elimination increased $2.8 million to $8.1 million, due to increased variable compensation, Sarbanes-Oxley Act and related costs, and expenses related to the previously-reported plan to increase investments in people and services. Net interest expense for the quarter decreased $2.2 million to $3.2 million, compared to the prior year quarter. Lower interest costs were largely due to debt reduction in the second half of fiscal 2002 resulting from "performance-based" payments received on the multi-year MTVR and Family of Heavy Tactical Vehicles contracts and free cash flow from operations.
Six-Month Results
The company reported that net income increased 22.3 percent to $25.4 million, or $1.46 per share, for the first six months of fiscal 2003 on sales of $879.7 million compared to $20.8 million, or $1.21 per share, for the first six months of fiscal 2002 on sales of $777.1 million.
Operating income increased 8.2 percent to $44.7 million, or 5.1 percent of sales, in the first six months of fiscal 2003 compared to $41.4 million, or 5.3 percent of sales, in the first six months of fiscal 2002.
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, 2003 to shareholders of record as of May 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(R), McNeilus(R), Pierce(R), Medtec(R), 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 the FMTV contract, second quarter earnings and their current outlook for fiscal 2003 and beyond during a live conference call at 11:00 a.m. Eastern Daylight 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.
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 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 "expects," "intends," "estimates," "anticipates," or "believes" and similar expressions 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, without limitation, the outcome of defense truck procurement competitions, 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 acquisition candidates and integrating acquired businesses and risks associated with international operations and sales, including foreign currency fluctuations. In addition, the Company's expectations for fiscal 2003 are based in part on certain assumptions made by the Company, including, without limitation, those relating to 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, production and margin levels under the MTVR contract, the FHTV contract and for international defense trucks; capital expenditures of municipalities and large waste haulers, targets for Geesink Norba sales and operating income; spending on bid and proposal activities and pre-contract costs; interest costs; and that the Company does not complete any acquisitions. 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,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(In thousands, except per share amounts)
Net sales $453,377 $415,605 $879,713 $777,098
Cost of sales 387,585 356,109 756,282 667,578
--------- --------- --------- ---------
Gross income 65,792 59,496 123,431 109,520
Operating expenses:
Selling, general and
administrative 39,798 34,439 75,473 65,244
Amortization of purchased
intangibles 1,607 1,475 3,209 2,915
--------- --------- --------- ---------
Total operating expenses 41,405 35,914 78,682 68,159
--------- --------- --------- ---------
Operating income 24,387 23,582 44,749 41,361
Other income (expense):
Interest expense (3,497) (5,617) (6,906) (12,039)
Interest income 307 271 494 556
Miscellaneous, net 601 51 325 (199)
--------- --------- --------- ---------
(2,589) (5,295) (6,087) (11,682)
--------- --------- --------- ---------
Income before provision for
income taxes and equity in
earnings of unconsolidated
partnership 21,798 18,287 38,662 29,679
Provision for income taxes 8,178 6,706 14,382 10,010
--------- --------- --------- ---------
Income before equity in
earnings of unconsolidated
partnership 13,620 11,581 24,280 19,669
Equity in earnings of
unconsolidated partnership,
net of income taxes 494 586 1,126 1,106
--------- --------- --------- ---------
Net income $14,114 $12,167 $25,406 $20,775
========= ========= ========= =========
Earnings per share $0.83 $0.72 $1.50 $1.24
Earnings per share assuming
dilution $0.81 $0.70 $1.46 $1.21
Weighted average shares
outstanding:
Basic 16,988 16,789 16,965 16,752
Assuming dilution 17,442 17,281 17,417 17,210
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,
2003 2002
----------- -----------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 19,794 $ 40,039
Receivables, net 161,517 142,709
Inventories 266,993 210,866
Prepaid expenses 7,640 7,414
Deferred income taxes 32,281 26,008
----------- -----------
Total current assets 488,225 427,036
Investment in unconsolidated partnership 21,870 22,274
Other long-term assets 22,330 11,625
Property, plant and equipment 270,922 261,045
Less accumulated depreciation (127,688) (120,684)
----------- -----------
Net property, plant and equipment 143,234 140,361
Purchased intangible assets, net 101,994 104,316
Goodwill 329,453 318,717
----------- -----------
Total assets $1,107,106 $1,024,329
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 115,749 $ 116,422
Floor plan notes payable 31,870 23,801
Customer advances 164,114 119,764
Payroll-related obligations 30,638 34,474
Income taxes 3,572 8,597
Accrued warranty 26,297 24,015
Other current liabilities 50,635 47,754
Revolving credit facility and current
maturities of long-term debt 13,227 18,245
----------- -----------
Total current liabilities 436,102 393,072
Long-term debt 124,526 131,713
Deferred income taxes 46,921 39,303
Other long-term liabilities 48,588 50,481
Commitments and contingencies
Shareholders' equity 450,969 409,760
----------- -----------
Total liabilities and shareholders' equity $1,107,106 $1,024,329
=========== ===========
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
-----------------
2003 2002
-------- --------
(In thousands)
Operating activities:
Net income $25,406 $20,775
Non-cash adjustments 9,979 4,597
Changes in operating assets and liabilities (25,469) 60,494
-------- --------
Net cash provided from operating activities 9,916 85,866
Investing activities:
Additions to property, plant and equipment (11,767) (4,873)
Proceeds from sale of assets 3,760 1
Increase in other long-term assets (8,409) (1,305)
-------- --------
Net cash used for investing activities (16,416) (6,177)
Financing activities:
Net repayments under revolving credit facility - (55,200)
Repayment of long-term debt (12,219) (21,830)
Dividends paid (2,927) (2,875)
Other 964 1,941
-------- --------
Net cash used for financing activities (14,182) (77,964)
Effect of exchange rate changes on cash 437 (13)
-------- --------
Increase (decrease) in cash and cash equivalents (20,245) 1,712
Cash and cash equivalents at beginning of period 40,039 11,312
-------- --------
Cash and cash equivalents at end of period $19,794 $13,024
======== ========
Supplementary disclosure:
Depreciation and amortization $12,328 $12,249
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------- ---------------------
2003 2002 2003 2002
--------- --------- ----------- ---------
(In thousands)
Net sales to unaffiliated
customers:
Commercial $182,398 $169,978 $349,149 $299,407
Fire and emergency 141,586 119,682 254,542 215,548
Defense 130,551 127,126 279,160 263,701
Intersegment eliminations (1,158) (1,181) (3,138) (1,558)
--------- --------- ----------- ---------
Consolidated $453,377 $415,605 $879,713 $777,098
========= ========= =========== =========
Operating income (expense):
Commercial $11,384 $12,161 $19,036 $19,457
Fire and emergency 14,315 11,610 24,340 19,363
Defense 6,738 5,087 16,326 13,129
Corporate and other (8,050) (5,276) (14,953) (10,588)
--------- --------- ----------- ---------
Consolidated $24,387 $23,582 $44,749 $41,361
========= ========= =========== =========
Period-end backlog:
Commercial $ 145,617 $154,822
Fire and emergency 306,707 301,818
Defense 907,782 422,802
----------- ---------
Consolidated $1,360,106 $879,442
=========== =========