Oshkosh Truck Reports First Quarter EPS up 159.4%
OSHKOSH, Wis.--Jan. 2, 20042, 2004--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that net income increased 163.0 percent to $29.7 million, or $0.83 per share, on sales of $493.2 million for the quarter ended December 31, 2003. This compares with net income of $11.3 million, or $0.32 per share, on sales of $426.3 million for last year's first quarter. These results exceeded Oshkosh's most recent earnings expectations of $0.48 per share for the first quarter of fiscal 2004. Oshkosh also increased its sales and earnings estimates for fiscal 2004 results to $1.97 billion and $2.80 per share, respectively.Sales increased 15.7 percent in the first quarter of fiscal 2004 to $493.2 million. Operating income increased 129.5 percent to $46.7 million, or 9.5 percent of sales, compared to $20.4 million, or 4.8 percent of sales, in the prior year's first quarter. Operating income increased principally due to a near tripling of earnings in the Company's defense business, improved fire and emergency business performance and lower interest costs.
Robert G. Bohn, chairman, president and chief executive officer, said, "We are very pleased with our exceptional first quarter financial performance, which can be attributed largely to strong results in our defense business. Sales to international defense customers as well as outstanding defense parts sales arising chiefly from the conflicts in Iraq and Afghanistan were major performance drivers. Ongoing cost reduction initiatives allowed us to increase margins on MTVR sales again. In addition, the fire and emergency business delivered strong results, higher orders and increases in backlog. For our commercial business, first quarter earnings were down slightly, but we expect an improving order rate to lead to a recovery in this business during fiscal 2004."
Factors affecting first quarter results for the Company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 8.8 percent to $122.9 million for the quarter. Operating income was up 15.8 percent to $11.6 million, or 9.4 percent of sales, compared to prior year operating income of $10.0 million, or 8.9 percent of sales. Higher sales of airport products were the primary contributor to the increases.
Defense--Defense segment sales increased 28.1 percent to $190.4 million for the quarter, despite a $32.0 million planned reduction in sales of MTVR trucks. Substantially higher international heavy truck sales drove most of the sales increase, and parts sales also rose sharply. Certain shipments of Heavy Equipment Transporters to the U.K. were accelerated from the second to the first quarter to meet mission objectives of the U.K. Ministry of Defence. Operating income in the first quarter was up 287.6 percent to $37.2 million, or 19.5 percent of sales, compared to prior year operating income of $9.6 million, or 6.5 percent of sales. Earnings for the current year quarter increased primarily due to the higher level of international heavy truck sales. Earnings also reflected a $6.5 million cumulative catch-up adjustment to operating income due to an increase in margins on the Company's MTVR contract from 5.5 percent to 6.3 percent as a result of a warranty settlement and positive cost performance due to increased overall defense segment production volume. The Company recorded MTVR margins during the first quarter of fiscal 2003 at a 4.3 percent rate. Operating income for the quarter also benefited from increased sales of higher-margin parts and lower bid and proposal spending compared to the prior year quarter.
Commercial--Commercial segment sales increased 9.7 percent to $183.0 million for the quarter, largely as a result of a higher mix of package sales involving a chassis and body and higher unit volumes in domestic and European refuse products. Operating income decreased 6.1 percent to $7.2 million, or 3.9 percent of sales, compared to 4.6 percent of sales in the prior year quarter. Commercial operating income declined because package sales involve lower margins and due to an increase in new product development spending.
Corporate and other--Operating expenses and inter-segment profit elimination increased $2.3 million to $9.2 million, largely due to higher variable incentive compensation expense and investments in additional personnel and services. Net interest expense for the quarter decreased $2.3 million to $0.9 million, compared to the prior year quarter. Lower interest costs were largely due to debt reduction resulting from available cash flow and the September 2003 prepayment of the Company's 8 3/4% Senior Subordinated Notes.
Total debt increased during the quarter to $74.0 million at December 31, 2003 from $53.1 million at September 30, 2003 as a result of increased working capital requirements associated with the Company's U.K. Ministry of Defence contracts and seasonal working capital requirements.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.05 per share for Class A Common Stock and $0.0575 per share for Common Stock. These dividends, unchanged from the immediately preceding quarter, will be payable February 13, 2004, to shareholders of record as of February 6, 2004.
The Company will comment on first quarter earnings and expectations for the remainder of fiscal 2004 during a live conference call at 11:00 a.m. Eastern Standard 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.oshkoshtruckcorporation.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 twelve months at this website.
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.
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 success of the launch of the Revolution(TM) composite concrete mixer drum, 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 2004 are based in part on certain assumptions made by the Company, including, without limitation, those relating to concrete placement activity; anticipated sales of the Revolution composite concrete mixer drum; 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; level of U.S. Department of Defense procurement of replacement parts and remanufacturing of trucks; capital expenditures of municipalities and large waste haulers; targets for Geesink Norba sales and operating income; spending on bid and proposal activities and new product development; 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
December 31,
-------------------
2003 2002
--------- ---------
(In thousands,
except per
share amounts)
Net sales $493,194 $426,336
Cost of sales 404,772 368,697
--------- ---------
Gross income 88,422 57,639
Operating expenses:
Selling, general and administrative 40,031 35,675
Amortization of purchased intangibles 1,663 1,602
--------- ---------
Total operating expenses 41,694 37,277
--------- ---------
Operating income 46,728 20,362
Other income (expense):
Interest expense (1,148) (3,409)
Interest income 250 187
Miscellaneous, net (40) (276)
--------- ---------
(938) (3,498)
--------- ---------
Income before provision for income taxes
and equity in earnings of unconsolidated
affiliates 45,790 16,864
Provision for income taxes 16,712 6,204
--------- ---------
Income before equity in earnings of
unconsolidated affiliates 29,078 10,660
Equity in earnings of unconsolidated
affiliates, net of income taxes 620 632
--------- ---------
Net income $29,698 $11,292
========= =========
Earnings per share $0.85 $0.33
Earnings per share assuming dilution $0.83 $0.32
Weighted average shares outstanding:
Basic 34,800 33,883
Assuming dilution 35,779 34,784
Cash dividends:
Class A Common Stock $0.05000 $0.03750
Common Stock $0.05750 $0.04313
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
2003 2003
----------- -----------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $23,588 $19,245
Receivables, net 170,115 159,752
Inventories 277,419 242,076
Prepaid expenses 9,416 10,393
Deferred income taxes 32,419 35,092
----------- -----------
Total current assets 512,957 466,558
Investment in unconsolidated affiliates 23,395 21,977
Other long-term assets 12,210 7,852
Property, plant and equipment 292,997 285,270
Less accumulated depreciation (143,934) (138,801)
----------- -----------
Net property, plant and equipment 149,063 146,469
Purchased intangible assets, net 101,566 102,460
Goodwill 348,223 337,816
----------- -----------
Total assets $1,147,414 $1,083,132
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $102,416 $115,739
Floor plan notes payable 26,407 18,730
Customer advances 154,284 164,460
Payroll-related obligations 27,079 33,712
Income taxes 8,951 263
Accrued warranty 28,139 29,172
Other current liabilities 59,245 54,293
Revolving credit facility and current
maturities of long-term debt 73,109 51,625
----------- -----------
Total current liabilities 479,630 467,994
Long-term debt 863 1,510
Deferred income taxes 43,257 47,619
Other long-term liabilities 63,357 47,146
Commitments and contingencies
Shareholders' equity 560,307 518,863
----------- -----------
Total liabilities and shareholders' equity $1,147,414 $1,083,132
=========== ===========
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
-----------------
2003 2002
-------- --------
(In thousands)
Operating activities:
Net income $29,698 $11,292
Non-cash and other adjustments 6,986 49
Changes in operating assets and liabilities (48,745) (16,962)
-------- --------
Net cash used for operating activities (12,061) (5,621)
Investing activities:
Additions to property, plant and equipment (4,716) (5,174)
Proceeds from sale of assets 46 1,879
Decrease (increase) in other long-term assets (434) 743
-------- --------
Net cash used for investing activities (5,104) (2,552)
Financing activities:
Net borrowings under revolving credit facility 20,100 -
Proceeds from issuance of long-term debt 965 -
Repayment of long-term debt (240) (12,194)
Dividends paid (2,001) (1,459)
Other 1,772 893
-------- --------
Net cash provided from (used for)
financing activities 20,596 (12,760)
Effect of exchange rate changes on cash 912 261
-------- --------
Increase (decrease) in cash and cash equivalents 4,343 (20,672)
Cash and cash equivalents at beginning of period 19,245 40,039
-------- --------
Cash and cash equivalents at end of period $23,588 $19,367
======== ========
Supplementary disclosure:
Depreciation and amortization $6,585 $6,106
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
December 31,
-----------------------
2003 2002
----------- -----------
(In thousands)
Net sales to unaffiliated customers:
Commercial $182,996 $166,751
Fire and emergency 122,861 112,956
Defense 190,387 148,609
Intersegment eliminations (3,050) (1,980)
----------- -----------
Consolidated $493,194 $426,336
=========== ===========
Operating income (expense):
Commercial $7,187 $7,652
Fire and emergency 11,606 10,025
Defense 37,164 9,588
Corporate and other (9,229) (6,903)
----------- -----------
Consolidated $46,728 $20,362
=========== ===========
Period-end backlog:
Commercial $215,385 $152,412
Fire and emergency 347,577 315,811
Defense 874,761 606,040
----------- -----------
Consolidated $1,437,723 $1,074,263
=========== ===========