Oshkosh Truck Reports Third Quarter Earnings Up 132 Percent
26 July 1999
Oshkosh Truck Reports Third Quarter Earnings Up 132 Percent, Declares 3-For-2 Stock Split and Cash Dividend
OSHKOSH, Wis.--July 26, 1999--Oshkosh Truck Corporation (NASDAQ-OTRKB) today reported that net income increased 132 percent to $10.5 million, or $1.21 per share, for the third quarter of fiscal 1999 on sales of $330 million. This compares to net income of $4.6 million, or $0.53 per share, for the third quarter of fiscal 1998 on sales of $290 million. Net income for the third quarter of fiscal 1998 was impacted by after-tax charges of $0.5 million, or $0.05 per share, related to an extraordinary charge for the early retirement of debt.Net sales for the quarter increased 14 percent. Operating income increased 53 percent to $23.5 million compared to $15.3 million in the prior year.
Sales and income growth was led by the commercial business, the largest of Oshkosh's three primary businesses. Commercial sales jumped 27 percent.
Commenting on the company's outlook, Robert G. Bohn, president and chief executive officer, noted, "Oshkosh Truck builds extreme performance products. Our earnings for the first three quarters of 1999 has delivered excellent performance for investors as well. Our commercial business has been particularly strong and our overall performance has positioned us well for the year."
The factors affecting third quarter results for the company's three primary business segments included:
Fire and Emergency Business -- Sales increased $4.5 million, or 6 percent, to $83.5 million for the third quarter. Operating income increased 16 percent to $8.1 million. Pierce Manufacturing Inc. ("Pierce") delivered an 8 percent increase in sales for the quarter, while Oshkosh's snow removal sales were lower than the prior year due to timing of shipments.
Pierce went on-line with the remaining modules of a new enterprise-wide resource planning system on April 12, 1999.
Operating income margins improved from 8.0 percent in the second quarter to 9.8 percent in the third quarter due to an improved product mix at Pierce.
Defense Business - Sales declined by $5.0 million to $50.6 million for the quarter. This is a 9 percent reduction over 1998 results, which included $8.8 million in sales of the ISO-compatible palletized flatracks contract for the U.S. Army. That contract was completed in the fourth quarter of fiscal 1998. Defense sales have declined $40 million in the first nine months of fiscal 1999. As previously reported, Oshkosh expects defense sales to increase in the fourth quarter, reducing the net decline to approximately $30 million for the full fiscal year.
Operating income for the defense segment increased $0.7 million to $4.2 million, or 8 percent of sales, for the third quarter compared to $3.5 million, or 6 percent of sales, for the same quarter in fiscal 1998 due to an improved product mix.
Earlier this year the Company initiated the start of work for the Medium Tactical Truck Replacement contract. This five-year contract was awarded to Oshkosh in December 1998 and has a potential value of more than $1.2 billion, if all options are exercised. Testing of the first ten units is scheduled to begin in December 1999.
Commercial Business - Third quarter sales increased $41.9 million, or 27 percent, to $197.4 million for the quarter due to strong performance by McNeilus Companies, Inc. ("McNeilus") and by Oshkosh's front-discharge mixer business. McNeilus sales were $140 million for the quarter, an increase of 17 percent compared to the same period last year, reflecting an 8 percent increase in rear-discharge mixer sales and a 48 percent increase in refuse packer sales. Positive customer reaction to a new cab and mixer package design and the benefits of McNeilus distribution increased Oshkosh's front-discharge mixer sales by 85 percent.
Operating income increased $5.8 million to $16.6 million, or 8 percent of sales, compared to operating income of $10.9 million, or 7 percent of sales, for the comparable period of the preceding year. Significant cost reduction in all product lines improved operating income margins during the quarter.
For the Company, net interest expense in the third quarter of 1999 decreased $0.7 million to $6.4 million compared to $7.1 million in the prior year as a result of fiscal 1998 debt reductions. Total debt reached $295 million at June 30, 1999 because of investments in working capital to support strong seasonal market demand for the Company's construction products and Pierce's international orders.
Nine-Month Results
The company reported that net income increased 108 percent to $21 million, or $2.42 per share, for the first nine months of fiscal 1999 on sales of $851 million compared to $10.1 million, or $1.19 per share, for the first nine months of fiscal 1998 on sales of $660 million.
Operating income rose 57 percent to $53 million, or 6 percent of sales, in the first nine months of fiscal 1999 compared to $34 million, or 5 percent of sales, in the first nine months of fiscal 1998. The increase in earnings reflects a full nine months of operations of McNeilus in fiscal 1999 compared to only four months in fiscal 1998.
Three-for-Two Stock Split
Oshkosh Truck Corporation's Board of Directors declared a three-for-two split of both classes of common stock of the Company to be effected in the form of a 50 percent stock dividend payable August 19, 1999 to shareholders of record as of August 5, 1999.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors also declared a pre-split quarterly dividend of $.10875 per share for Class A Common Stock and $.125 per share for Common Stock. These dividends, unchanged from the previous rate, will be payable August 19, 1999, to shareholders of record as of August 5, 1999.
Oshkosh Truck Corporation is a leading manufacturer of specialty trucks and truck bodies for the fire and emergency, defense, and commercial markets. Products are marketed under the Oshkosh, Pierce and McNeilus brand names.
Forward-Looking Statements
Forward-looking statements within this news release are made pursuant to Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than those of historical fact included in this release, are forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and company plans and objectives to differ materially. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive pricing pressures for the company's products; changes in material costs; the uncertainty inherent in government contracts; opportunities that may be presented to and pursued by the company; and the ability to achieve synergistic and other cost reductions and efficiencies.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
June 30,
-------------------------------
1999 1998
-------------- --------------
(In thousands, except per share amounts)
Net sales $ 329,821 $ 290,104
Cost of sales 281,529 250,525
-------------- --------------
Gross income 48,292 39,579
Operating expenses:
Selling, general and administrative 22,023 21,506
Amortization of goodwill and other
intangibles 2,775 2,764
-------------- --------------
Total operating expenses 24,798 24,270
-------------- --------------
Operating income 23,494 15,309
Other income (expense):
Interest expense (6,613) (7,082)
Interest income 187 10
Miscellaneous, net 224 (181)
-------------- --------------
(6,202) (7,253)
-------------- --------------
Income from operations before income taxes,
equity in earnings of unconsolidated
partnership and extraordinary item 17,292 8,056
Provision for income taxes 7,199 3,639
-------------- --------------
10,093 4,417
Equity in earnings of unconsolidated
partnership, net of income taxes 452 583
-------------- --------------
Income from operations 10,545 5,000
Extraordinary charge for early retirement of
debt, net of income tax benefit - (450)
-------------- --------------
Net income $ 10,545 $ 4,550
============== ==============
Earnings per share $ 1.24 $ 0.54
============== ==============
Earnings per share assuming dilution $ 1.21 $ 0.53
============== ==============
Cash dividends:
Class A Common Stock $ 0.10875 $ 0.10875
Common Stock $ 0.12500 $ 0.12500
Nine Months Ended
June 30,
-------------------------------
1999 1998
-------------- --------------
(In thousands, except per share amounts)
Net sales $ 851,048 $ 659,741
Cost of sales 726,128 572,630
-------------- --------------
Gross income 124,920 87,111
Operating expenses:
Selling, general and administrative 63,322 47,665
Amortization of goodwill and other
intangibles 8,400 5,559
-------------- --------------
Total operating expenses 71,722 53,224
-------------- --------------
Operating income 53,198 33,887
Other income (expense):
Interest expense (19,839) (14,273)
Interest income 614 544
Miscellaneous, net 564 (344)
-------------- --------------
(18,661) (14,073)
-------------- --------------
Income from operations before income taxes,
equity in earnings of unconsolidated
partnership and extraordinary item 34,537 19,814
Provision for income taxes 14,700 8,378
-------------- --------------
19,837 11,436
Equity in earnings of unconsolidated
partnership, net of income taxes 1,169 (135)
-------------- --------------
Income from operations 21,006 11,301
Extraordinary charge for early retirement of
debt, net of income tax benefit - (1,185)
-------------- --------------
Net income $ 21,006 $ 10,116
============== ==============
Earnings per share $ 2.48 $ 1.21
============== ==============
Earnings per share assuming dilution $ 2.42 $ 1.19
============== ==============
Cash dividends:
Class A Common Stock $ 0.32625 $ 0.32625
Common Stock $ 0.37500 $ 0.37500
======================================================================
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Jun. 30, Sept. 30,
1999 1998
------------ -------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 5,441 $ 3,622
Receivables, net 107,220 80,982
Inventories 218,319 149,191
Prepaid expenses 3,836 3,768
Deferred income taxes 20,659 12,281
------------- --------------
Total current assets 355,475 249,844
Investment in unconsolidated partnership 16,643 13,496
Other long-term assets 16,850 14,198
Property, plant and equipment 162,547 156,783
Less accumulated depreciation (81,923) (75,947)
------------- --------------
Net property, plant and equipment 80,624 80,836
Goodwill and other intangible assets, net 324,471 326,665
------------- --------------
Total assets $ 794,063 $ 685,039
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 80,814 $ 65,171
Floor plan notes payable 35,971 11,645
Customer advances 64,084 44,915
Payroll-related obligations 24,688 24,124
Accrued warranty 16,091 15,887
Other current liabilities 61,493 43,498
Current maturities of long-term debt
and revolving credit facility 28,163 3,467
------------- --------------
Total current liabilities 311,304 208,707
Long-term debt 266,693 277,337
Deferred income taxes 43,677 47,832
Other long-term liabilities 21,246 19,867
Shareholders' equity 151,143 131,296
------------- --------------
Total liabilities and shareholders' equity $ 794,063 $ 685,039
============= ==============
======================================================================
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
--------------------------
1999 1998
---------- ------------
(In thousands)
Operating activities:
Income from operations $ 21,006 $ 11,301
Non-cash adjustments 6,165 15,854
Changes in operating assets
and liabilities (26,102) 51,827
---------- ------------
Net cash provided from
operating activities 1,069 78,982
Investing activities:
Acquisition of businesses,
net of cash acquired - (217,954)
Additions to property, plant
and equipment (6,900) (6,270)
Proceeds from sale of property,
plant and equipment 58 320
Increase in other long-term
assets (4,356) (2,232)
---------- ------------
Net cash used for investing
activities (11,198) (226,136)
Net cash used for discontinued
operations - (872)
Financing activities:
Net borrowings under revolving
credit facility 14,300 -
Proceeds from issuance of
long-term debt - 325,000
Repayments of long-term debt (248) (163,931)
Debt issuance costs - (8,507)
Dividends paid (3,163) (3,129)
Other 1,059 31
---------- ------------
Net cash provided from
financing activities 11,948 149,464
---------- ------------
Increase in cash and cash equivalents 1,819 1,438
Cash and cash equivalents at beginning
of period 3,622 23,219
---------- ------------
Cash and cash equivalents at
end of period $ 5,441 $ 24,657
========== ============
Supplementary disclosure:
Depreciation and amortization $ 17,018 $ 12,995
======================================================================
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
June 30,
--------------------------
1999 1998
----------- -------------
(In thousands)
Net sales:
Fire and Emergency $ 83,465 $ 78,995
Defense 50,562 55,622
Commercial 197,440 155,562
Intersegment eliminations (1,646) (75)
------------ ------------
Total net sales $329,821 $290,104
============ ============
Operating income:
Fire and Emergency $ 8,147 $ 7,030
Defense 4,188 3,460
Commercial 16,609 10,859
Corporate and other (a) (5,450) (6,040)
------------ ------------
Total operating income $ 23,494 $ 15,309
============ ============
Nine Months Ended
June 30,
--------------------------
1999 1998
----------- -------------
(In thousands)
Net sales:
Fire and Emergency $243,095 $215,166
Defense 146,992 187,723
Commercial 465,548 257,226
Intersegment eliminations (4,587) (374)
------------ -------------
Total net sales $851,048 $659,741
============ =============
Operating income:
Fire and Emergency $ 19,844 $ 17,129
Defense 14,957 15,742
Commercial 35,027 13,637
Corporate and other (a) (16,630) (12,621)
------------ -------------
Total operating income $ 53,198 $ 33,887
============ =============
(a) Results for the nine months ended June 30, 1999 include a $3,800
nonrecurring charge for litigation.