Oshkosh Truck Reports Third Quarter EPS up 23.2%
Robert G. Bohn, chairman, president and chief executive officer, said, "We saw a marked improvement in third quarter performance. We were pleased with the profitability achieved by our defense business and with the surge in new business volume across our company, which substantially increased our consolidated backlog by 28.3 percent at June 30, 2004, compared to the prior year. Market dynamics for all segments are robust and improving, except for the European refuse market, which remains weak.
Bohn continued, "We are not counting on improvement in European market conditions in the short-term and have initiated significant measures to improve Geesink Norba Group's performance, including a work force reduction and introduction of a new line of value-priced refuse bodies. In addition, although our North American commercial business has improved overall, we are implementing operational improvements within our McNeilus operations, with an eye on improving margins further.
"I'm pleased that we've completed the acquisition of Jerr-Dan in the tow truck market. This company is an excellent fit with our overall growth strategy, and we're confident the acquisition will be solidly accretive within the first year. All of these factors contribute to our expectations for continued solid earnings growth in fiscal 2005.
"Indeed, today we are announcing our estimate of fiscal 2005 earnings per share at $3.30, up 10.0 percent over our improved estimate of fiscal 2004 earnings. The Company also increased its quarterly cash dividend payable in August 2004 by approximately 50.0 percent as a result of its positive outlook for fiscal 2005 and improved cash flow," concluded Bohn.
Factors affecting third quarter results for the Company's business segments included:
Fire and emergency--Fire and emergency segment sales decreased 3.9 percent, to $142.6 million for the quarter due to lower airport product and international fire apparatus sales. Operating income was down 18.2 percent to $13.2 million, or 9.2 percent of sales, compared to prior year operating income of $16.1 million, or 10.9 percent of sales. Due to six to nine month lead times for custom fire apparatus, a significant percentage of third quarter shipments related to orders received in fiscal 2003. During fiscal 2003, industry order rates declined over 10.0 percent, causing pricing to be competitive for the lower volume of available business and orders reflected a particularly weak mix of higher-margin custom pumpers and aerials. Third quarter results also reflect increased product liability and group health costs and under absorption of overhead in the Company's Florida facility as the Company moved the production of the Palletized Load System trailers from that facility to Oshkosh. Beginning in the fourth quarter of fiscal 2003, the Company's orders in this segment began to improve, leading the Company to estimate improving segment results beginning in the fourth quarter of fiscal 2004.
Defense--Defense sales increased 6.9 percent to $191.1 million for the quarter, largely due to increased parts and heavy-payload truck sales, offset in part by the scheduled ramp-down of MTVR sales per contract. Operating income in the third quarter was up 100.7 percent to $33.9 million, or 17.8 percent of sales, compared to prior year operating income of $16.9 million, or 9.5 percent of sales. Operating income margins improved during the current quarter due to the MTVR margin adjustment, an improved mix of higher-margin parts and heavy-payload truck sales and strong manufacturing performance.
Commercial--Commercial sales increased 27.4 percent to $272.0 million for the quarter. Operating income decreased 11.0 percent to $13.4 million, or 4.9 percent of sales, compared to prior year operating income of $15.0 million, or 7.0 percent of sales. A nearly 50.0 percent improvement in concrete placement operating income and a more than 15.0 percent improvement in domestic refuse operating income were offset by losses in European refuse. The losses in European refuse result from a further weakening in European refuse markets and costs related to headcount reductions and the introduction of new smooth-sided and value-priced products during the third quarter.
Corporate and other--Corporate and other operating expenses and inter-segment profit elimination increased $4.2 million to $11.3 million, largely due to increased expenses related to acquisition investigations, increased personnel-related expenses and higher professional services costs. Net interest expense for the quarter decreased $1.9 million to $1.0 million compared to the prior year quarter. Lower interest costs were largely due to debt reduction in the second half of fiscal 2003 and in fiscal 2004 resulting from cash flow from operations.
Nine-Month Results
The company reported that net income increased 66.9 percent to $82.8 million, or $2.30 per share, for the first nine months of fiscal 2004 on sales of $1,611.2 million compared to $49.6 million, or $1.42 per share, for the first nine months of fiscal 2003 on sales of $1,417.9 million.
Operating income increased 52.9 percent to $131.0 million, or 8.1 percent of sales, in the first nine months of fiscal 2004 compared to $85.6 million, or 6.0 percent of sales, in the first nine months of fiscal 2003.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.075 per share for Class A Common Stock and $0.0875 per share for Common Stock. These dividends, up approximately 50.0 percent from the immediately preceding quarter, will be payable August 13, 2004, to shareholders of record as of August 6, 2004.
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®, Jerr-Dan®, 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
2004 2003 2004 2003
--------- --------- ----------- -----------
(In thousands, except per share amounts)
Net sales $599,824 $538,183 $1,611,231 $1,417,896
Cost of sales 500,576 456,571 1,345,798 1,212,853
--------- --------- ----------- -----------
Gross income 99,248 81,612 265,433 205,043
Operating expenses:
Selling, general and
administrative 48,417 39,100 129,457 114,573
Amortization of
purchased intangibles 1,666 1,621 4,998 4,830
--------- --------- ----------- -----------
Total operating expenses 50,083 40,721 134,455 119,403
--------- --------- ----------- -----------
Operating income 49,165 40,891 130,978 85,640
Other income (expense):
Interest expense (1,459) (3,273) (4,008) (10,179)
Interest income 411 306 992 800
Miscellaneous, net 119 (465) 679 (140)
--------- --------- ----------- -----------
(929) (3,432) (2,337) (9,519)
--------- --------- ----------- -----------
Income before provision for
income taxes and equity in
earnings of
unconsolidated affiliates 48,236 37,459 128,641 76,121
Provision for income taxes 18,215 13,796 47,563 28,178
--------- --------- ----------- -----------
Income before equity in
earnings of
unconsolidated affiliates 30,021 23,663 81,078 47,943
Equity in earnings of
unconsolidated affiliates,
net of income taxes 602 546 1,716 1,672
--------- --------- ----------- -----------
Net income $30,623 $24,209 $82,794 $49,615
========= ========= =========== ===========
Earnings per share:
Class A Common Stock $0.76 $0.62 $2.06 $1.27
Common Stock $0.87 $0.71 $2.37 $1.47
Earnings per common share
assuming dilution $0.85 $0.69 $2.30 $1.42
Weighted average shares
outstanding:
Basic:
Class A Common Stock 811 825 813 828
Common Stock 34,299 33,204 34,155 33,134
Assuming dilution 36,055 34,878 35,961 34,848
Cash dividends:
Class A Common Stock $0.07500 $0.05000 $0.17500 $0.12500
Common Stock $0.08750 $0.05750 $0.20250 $0.14375
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2004 2003
----------- -----------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $25,276 $19,245
Receivables, net 230,878 159,752
Inventories 350,325 242,076
Prepaid expenses 11,670 10,393
Deferred income taxes 34,086 35,092
----------- -----------
Total current assets 652,235 466,558
Investment in unconsolidated affiliates 21,905 21,977
Other long-term assets 26,649 7,852
Property, plant and equipment 294,849 285,270
Less accumulated depreciation (146,919) (138,801)
----------- -----------
Net property, plant and equipment 147,930 146,469
Purchased intangible assets, net 100,856 102,460
Goodwill 343,106 337,816
----------- -----------
Total assets $1,292,681 $1,083,132
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $169,712 $115,739
Floor plan notes payable 46,416 18,730
Customer advances 204,650 164,460
Payroll-related obligations 37,854 33,712
Income taxes 7,275 263
Accrued warranty 28,961 29,172
Other current liabilities 66,689 54,293
Revolving credit facility and current
maturities of long-term debt 14,593 51,625
----------- -----------
Total current liabilities 576,150 467,994
Long-term debt 643 1,510
Deferred income taxes 46,593 47,619
Other long-term liabilities 66,363 47,146
Commitments and contingencies
Shareholders' equity 602,932 518,863
----------- -----------
Total liabilities and shareholders' equity $1,292,681 $1,083,132
=========== ===========
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
2004 2003
--------- --------
(In thousands)
Operating activities:
Net income $82,794 $49,615
Non-cash and other adjustments 24,304 10,043
Changes in operating assets and liabilities (27,382) 10,540
--------- --------
Net cash provided from operating activities 79,716 70,198
Investing activities:
Additions to property, plant and equipment (19,203) (16,753)
Proceeds from sale of assets 108 3,770
Increase in other long-term assets (16,339) (7,910)
--------- --------
Net cash used for investing activities (35,434) (20,893)
Financing activities:
Net repayments under revolving credit facility (37,000) -
Proceeds from issuance of long-term debt 965 -
Repayment of long-term debt (1,872) (48,241)
Dividends paid (6,032) (4,395)
Other 4,471 2,065
--------- --------
Net cash used for financing activities (39,468) (50,571)
Effect of exchange rate changes on cash 1,217 945
--------- --------
Increase (decrease) in cash and cash equivalents 6,031 (321)
Cash and cash equivalents at beginning of period 19,245 40,039
--------- --------
Cash and cash equivalents at end of period $25,276 $39,718
========= ========
Supplementary disclosure:
Depreciation and amortization $20,073 $18,943
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- -----------------------
2004 2003 2004 2003
----------- --------- ----------- -----------
(In thousands)
Net sales to unaffiliated
customers:
Commercial $272,019 $213,585 $672,817 $562,734
Fire and emergency 142,572 148,345 401,072 402,887
Defense 191,051 178,779 549,575 457,939
Intersegment
eliminations (5,818) (2,526) (12,233) (5,664)
----------- --------- ----------- -----------
Consolidated $599,824 $538,183 $1,611,231 $1,417,896
=========== ========= =========== ===========
Operating income
(expense):
Commercial $13,359 $15,011 $29,985 $34,047
Fire and emergency 13,186 16,113 36,003 40,453
Defense 33,946 16,913 94,145 33,239
Corporate and other (11,326) (7,146) (29,155) (22,099)
----------- --------- ----------- -----------
Consolidated $49,165 $40,891 $130,978 $85,640
=========== ========= =========== ===========
Period-end backlog:
Commercial $219,302 $131,105
Fire and emergency 457,139 266,291
Defense 876,253 812,377
----------- -----------
Consolidated $1,552,694 $1,209,773
=========== ===========
Contact:
Oshkosh Truck Corporation
Financial:
Charles L. Szews, 920-235-9151, Ext. 2332
or
Media:
Kirsten Skyba, 920-233-9621