Oshkosh Truck Reports Record Fourth Quarter
OSHKOSH, Wis.--Nov. 1, 2005--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that net income increased 42.0 percent to $160.2 million, or $2.18 per share, on sales of $2.96 billion for its fiscal year ended September 30, 2005. This compares with net income of $112.8 million, or $1.57 per share, on sales of $2.26 billion in fiscal 2004. Oshkosh also reaffirmed its estimated range of fiscal 2006 earnings per share of $2.40 - $2.50. All references to per share amounts have been adjusted to reflect the two-for-one stock split effected on August 26, 2005.Sales increased 26.5 percent in the fourth quarter of fiscal 2005 to $823.7 million. Operating income increased 49.6 percent to $74.0 million or 9.0 percent of sales. Net income was up 42.4 percent to $42.8 million, or $0.58 per share, in the fourth quarter compared to the prior year quarter. Strong defense segment earnings offset relatively flat earnings in the fire and emergency and commercial segments as compared to the prior year quarter. The results for the fourth quarter of fiscal 2004 included a cumulative life-to-date adjustment of $5.3 million to increase margins on the Company's Medium Tactical Vehicle Replacement ("MTVR") base contract with the U.S. Marine Corps by 0.5 percent ($0.05 per share). The MTVR base contract was completed in June 2005.
Robert G. Bohn, Oshkosh chairman, president and chief executive officer, said, "Fiscal 2005 results were at record levels for most financial performance metrics. In addition, this marked the ninth consecutive year of improved financial performance and reflects positively on our ability to deliver long-term value and growth to our shareholders.
"Fourth quarter results reflected exceptional performance from the Company's defense business. Revenue growth in new and remanufactured defense trucks, parts and service were driving forces in quarterly and full-year performance. The Geesink Norba Group returned to profitability this quarter, and 'lean' initiatives at McNeilus exerted positive influence, reflected in record deliveries and improved lead times.
"Oshkosh Truck is moving into fiscal 2006 strong and focused. We are encouraged that backlog in all businesses is up significantly from the prior year, providing a solid base for growth. Cost reduction will continue to be the critical focus for all segments to supplement our current 'lean' initiatives in driving margin improvement. Most significantly, we have made progress toward achieving our previously stated goals. Fiscal 2005 organic sales growth was above our 10 percent stated goal. Our consolidated operating income margin reached 9 percent for the first time. And, return on invested capital was 20.5 percent, well above our 15 percent target," continued Bohn.
Factors affecting fourth quarter results for the Company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 6.4 percent to $211.4 million for the quarter compared to the prior year quarter, while operating income remained flat at $19.0 million, or 9.0 percent of sales, compared to 9.5 percent of sales in the prior year quarter. The higher sales level reflected strong order flow for fire apparatus offset by lower airport product sales. Operating income margins for the segment decreased due to lower sales of higher-margin airport products and production inefficiencies associated with the consolidation of certain ambulance manufacturing facilities.
Defense--Defense segment sales increased 58.1 percent to $355.0 million for the quarter compared to the prior year's fourth quarter due to a nearly 50.0 percent increase in new and remanufactured heavy-payload truck sales and a near doubling of parts and service sales. Operating income in the fourth quarter was up 87.4 percent, to $63.2 million, or 17.8 percent of sales, compared to operating income in the prior year quarter of $33.7 million, or 15.0 percent of sales. Fourth quarter 2005 margins were favorably impacted by an improved product mix of new and remanufactured heavy-payload truck sales and parts and service sales. Results in the fourth quarter of fiscal 2004 reflected relatively high sales of lower-margin MTVR base contract trucks and included a $5.3 million cumulative life-to-date adjustment to operating income to increase margins on the Company's MTVR base contract by 0.5 percent.
Commercial--Commercial segment sales increased 13.7 percent to $266.5 million for the quarter on strong order intake. Operating income decreased 6.6 percent to $4.5 million, or 1.7 percent of sales, compared to $4.9 million, or 2.1 percent of sales, in the prior year quarter. The CON-E-CO and London acquisitions contributed sales of $21.7 million and operating income of $0.6 million during the quarter. Sales from other businesses in the segment grew 4.4 percent while their operating income declined 19.7 percent for the quarter. The decrease in operating income margins from the prior year was primarily a result of the sale of concrete placement and domestic refuse products at sales prices that were not sufficient to recover higher steel and component costs. The Company expects that its pricing initiatives over the last six months will begin to benefit its concrete placement and domestic refuse products margins beginning in the second quarter of fiscal 2006. The Company's European refuse business earned a small operating profit in the quarter compared to an operating loss in the prior year's quarter. The Company expects its European refuse business to be modestly profitable throughout fiscal 2006 due to product design changes, outsourcing and other cost reduction activities in process.
Corporate and other--Operating expenses and inter-segment profit elimination increased $4.7 million to $12.8 million, due largely to increased personnel costs. Interest expense net of interest income in the fourth quarter decreased $1.0 million to $0.3 million, compared to the prior year quarter due to investment income on higher cash balances during the quarter.
The provision for income taxes in the fourth quarter increased to 41.4 percent of income, compared to 38.3 percent of income in the prior year quarter. The higher rate reflected an increase of $2.2 million ($0.03 per share) in the valuation allowance for deferred tax assets related to net operating loss carryforwards in The Netherlands.
Total debt at September 30, 2005 increased slightly to $24.1 million from $23.6 million at June 30, 2005, while cash increased $84.4 million to $127.5 million at September 30, 2005 from $43.1 million at June 30, 2005 due to strong cash flow from operations.
Full Year Results
The Company reported that earnings per share increased 38.9 percent to $2.18 per share for fiscal 2005 on sales of $2.96 billion and net income of $160.2 million compared to $1.57 per share for fiscal 2004 on sales of $2.26 billion and net income of $112.8 million. Results for fiscal 2005 included cumulative life-to-date adjustments to increase the margin on the MTVR base contract totaling $24.7 million, the favorable settlements of product liability matters for $4.2 million and a net charge for workforce reductions of $3.7 million. Results for fiscal 2004 included MTVR base contract cumulative life-to-date margin adjustments totaling $19.5 million that increased operating income for the year and a $1.8 million charge for workforce reductions.
Operating income increased 48.1 percent to $267.2 million, or 9.0 percent of sales, in fiscal 2005 compared to $180.4 million, or 8.0 percent of sales, in fiscal 2004.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.0675 per share of Common Stock. The dividend will be payable November 23, 2005, to shareholders of record as of
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(In thousands, except per share amounts)
Net sales $ 823,716 $ 651,074 $ 2,959,900 $ 2,262,305
Cost of sales 688,274 552,838 2,465,130 1,898,636
------------ ------------ ------------ ------------
Gross income 135,442 98,236 494,770 363,669
Operating expenses:
Selling, general
and administrative 59,543 46,494 219,875 175,951
Amortization of
purchased
intangibles 1,925 2,310 7,693 7,308
------------ ------------ ------------ ------------
Total operating
expenses 61,468 48,804 227,568 183,259
------------ ------------ ------------ ------------
Operating income 73,974 49,432 267,202 180,410
Other income
(expense):
Interest expense (1,865) (1,541) (8,235) (5,549)
Interest income 1,553 243 3,052 1,235
Miscellaneous,
net (1,061) (227) (1,898) 452
------------ ------------ ------------ ------------
(1,373) (1,525) (7,081) (3,862)
------------ ------------ ------------ ------------
Income before
provision for
income taxes,
equity in earnings
of unconsolidated
affiliates and
minority interest 72,601 47,907 260,121 176,548
Provision for
income taxes 30,072 18,329 102,267 65,892
------------ ------------ ------------ ------------
Income before
equity in earnings
of unconsolidated
affiliates and
minority interest 42,529 29,578 157,854 110,656
Equity in earnings
of unconsolidated
affiliates, net
of income taxes 603 503 2,920 2,219
Minority interest,
net of income
taxes (380) (69) (569) (69)
------------ ------------ ------------ ------------
Net income $ 42,752 $ 30,012 $ 160,205 $ 112,806
============ ============ ============ ============
Earnings per share
Basic $ 0.59 $ 0.43 $ 2.22 $ 1.62
Diluted $ 0.58 $ 0.42 $ 2.18 $ 1.57
Basic weighted
average shares
outstanding 72,915 68,624 71,294 68,388
Effect of dilutive
securities:
Class A Common
Stock - 1,620 944 1,624
Stock options and
incentive
compensation
awards 1,195 1,896 1,384 1,966
------------ ------------ ------------ ------------
Diluted weighted
average shares
outstanding 74,110 72,140 73,622 71,978
============ ============ ============ ============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, September 30,
2005 2004
------------- -------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 127,507 $ 30,081
Receivables, net 280,247 252,253
Inventories 489,997 368,067
Deferred income taxes 36,618 41,033
Other current assets 20,015 19,273
------------- -------------
Total current assets 954,384 710,707
Investment in unconsolidated affiliates 20,280 21,187
Property, plant and equipment 355,341 316,538
Less accumulated depreciation (162,315) (147,962)
------------- -------------
Net property, plant and equipment 193,026 168,576
Goodwill, net 399,875 385,063
Purchased intangible assets, net 128,525 140,506
Other long-term assets 22,213 26,375
------------- -------------
Total assets $ 1,718,303 $ 1,452,414
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 226,768 $ 200,290
Revolving credit facility and current
maturities of long-term debt 21,521 72,739
Customer advances 303,090 209,656
Floor plan notes payable 21,332 25,841
Payroll-related obligations 47,460 43,978
Income taxes 11,571 17,575
Accrued warranty 39,546 35,760
Other current liabilities 104,251 73,842
------------- -------------
Total current liabilities 775,539 679,681
Long-term debt 2,589 3,209
Deferred income taxes 55,443 66,543
Other long-term liabilities 62,917 64,259
Minority interest 3,145 2,629
Commitments and contingencies
Shareholders' equity 818,670 636,093
------------- -------------
Total liabilities and shareholders'
equity $ 1,718,303 $ 1,452,414
============= =============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
September 30,
----------------------------
2005 2004
------------- -------------
(In thousands)
Operating activities:
Net income $ 160,205 $ 112,806
Non-cash and other adjustments 36,564 24,988
Changes in operating assets and
liabilities 15,542 (2,878)
------------- -------------
Net cash provided by operating
activities 212,311 134,916
Investing activities:
Acquisition of businesses, net of cash
acquired (31,286) (87,489)
Additions to property, plant and
equipment (43,174) (29,950)
Proceeds from sale of assets 204 172
Decrease (increase) in other long-term
assets 5,747 (11,149)
------------- -------------
Net cash used by investing
activities (68,509) (128,416)
Financing activities:
Net (repayments) borrowings under
revolving credit facility (51,613) 10,063
Proceeds from exercise of stock options 24,257 4,592
Purchase of Common Stock (612) (18)
Proceeds from issuance of long-term
debt - 965
Repayment of long-term debt (656) (1,927)
Debt issuance costs - (1,342)
Dividends paid (16,022) (9,106)
------------- -------------
Net cash (used) provided by
financing activities (44,646) 3,227
Effect of exchange rate changes on cash (1,730) 1,109
------------- -------------
Increase in cash and cash equivalents 97,426 10,836
Cash and cash equivalents at beginning of
period 30,081 19,245
------------- -------------
Cash and cash equivalents at end of
period $ 127,507 $ 30,081
============= =============
Supplementary disclosure:
Depreciation and amortization $ 34,699 $ 27,961
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(In thousands)
Net sales to
unaffiliated
customers:
Fire and
emergency $ 211,414 $ 198,662 $ 841,465 $ 599,734
Defense 354,969 224,484 1,061,064 774,059
Commercial 266,514 234,492 1,085,700 907,309
Intersegment
eliminations (9,181) (6,564) (28,329) (18,797)
------------ ------------ ------------ ------------
Consolidated $ 823,716 $ 651,074 $ 2,959,900 $ 2,262,305
============ ============ ============ ============
Operating income
(expense):
Fire and
emergency $ 19,039 $ 18,954 $ 79,619 $ 54,957
Defense (1) 63,195 33,714 210,232 127,859
Commercial 4,534 4,853 23,829 34,838
Corporate and
other (12,794) (8,089) (46,478) (37,244)
------------ ------------ ------------ ------------
Consolidated $ 73,974 $ 49,432 $ 267,202 $ 180,410
============ ============ ============ ============
Period-end backlog:
Fire and
emergency $ 526,200 $ 470,720
Defense 1,199,924 888,714
Commercial 217,935 191,548
------------ ------------
Consolidated $ 1,944,059 $ 1,550,982
============ ============
(1) Includes the following cumulative life- to-date adjustments to
operating income due to an increase in margins on the Company's
MTVR base contract.
Three Months Ended Year Ended
September 30, September 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(In thousands, except percentages)
Increase in
operating income $ - $ 5,300 $ 24,700 $ 19,500
Increase in margin
percentage 0.0% 0.5% 2.5% 2.1%
Margin percentage
at period-end 10.1% 7.6%