Oshkosh Truck Reports Net Income Increases 56% in First Quarter
21 January 2000
Oshkosh Truck Reports Net Income Increases 56% in First Quarter
OSHKOSH, Wis.--Jan. 21, 2000--Oshkosh Truck Corporation (NASDAQ - OTRKB) today reported that net income increased 56 percent to $6.1 million, or $0.42 per share, for the first quarter of fiscal 2000 on sales of $244 million. This compares to net income of $3.9 million, or $0.30 per share, for the first quarter of fiscal 1999 on sales of $223 million.Net sales for the quarter increased 10 percent. Operating income increased 30 percent to $16.6 million, or 6.8 percent of sales, compared to $12.8 million, or 5.8 percent of sales, in the prior year. Sales and income growth continued to be led by the commercial segment, the largest of the company's three business segments.
First quarter earnings per share includes a noncash extraordinary charge of $0.6 million, or $0.04 per share, related to the prepayment of $93.5 million of term debt from proceeds of the issuance of 3.795 million shares of Common Stock in a secondary offering which was completed in November 1999.
"Oshkosh delivered strong top and bottom line results during the quarter and focused on building bench strength for future growth," said Robert G. Bohn, president and chief executive officer. "We completed a secondary offering of Common Stock, using the the proceeds to delever our balance sheet, strengthen our financial position for acquisitions and increase trading liquidity. In our commercial business, we began constructing our production lines in the 100,000 square foot facility expansion at McNeilus, all the while keeping our eye on maintaining solid sales improvements in this traditionally slower sales period for concrete mixers. The defense business focused significant effort on delivering the first Medium Tactical Vehicle Replacement ("MTVR") trucks to the Marine Corps on time. On January 19, we held the official rollout ceremony for the first of at least 5,666 vehicles. Finally, our fire and emergency segment made substantial progress in eliminating inefficiencies remaining from the installation of a new enterprise-wide resource planning system at Pierce Manufacturing ("Pierce"). Additionally during the first quarter, Oshkosh completed the acquisition of Kewaunee Engineering as part of a plan to strengthen operating results in the fire and emergency segment. Kewaunee fabricates major portions of Pierce aerial devices."
Factors affecting results for the company's business segments included:
Commercial segment--Sales increased 19 percent to $115 million due to strong performance in both the concrete placement and refuse markets. Concrete placement sales were up 18 percent and refuse sales were up 21 percent for the quarter.
Operating income increased 89 percent to $9.1 million, or 7.8 percent of sales, compared to prior year operating income of $4.8 million, or 5.0 percent of sales. Strong customer demand during the quarter in what is normally a seasonally slower period for the concrete placement market, contributed to the commercial segment's strong performance.
Fire and Emergency--Sales increased 2 percent to $76 million for the quarter. Operating income declined 19 percent to $3.9 million for the quarter. The decline in operating income is primarily attributable to late commercial chassis deliveries and to short-term production inefficiencies following the installation of the final modules of a new enterprise-wide resource planning system during the third quarter of fiscal 1999 at Pierce. Pierce had significantly reduced the production inefficiencies by the end of September 1999. Management believes that Pierce had substantially resolved any lingering effects from the system conversion by the end of December 1999. Pierce's sales mix in the second quarter is expected to include a high proportion of more profitable custom pumpers and aerial devices.
Defense--Sales increased by 2 percent to $53 million for the quarter. Operating income for the defense segment increased 22 percent to $7.5 million, or 14.2 percent of sales, compared to $6.2 million, or 11.8 percent of sales, for the same quarter in fiscal 1999. First quarter 2000 results were positively impacted by lower than expected costs on the U.S. Army Family of Medium Tactical Vehicles ("FMTV") Phase I contract and strong parts sales.
Corporate and other--Operating expenses were $3.8 million for the quarter compared to $2.9 million in the prior year. Net interest expense for the quarter decreased $0.8 million to $5.6 million compared to $6.4 million in the prior year quarter generally as a result of prepayment of $93.5 million of term debt from proceeds of the company's November 24, 1999 offering of Common Stock.
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 previous quarter dividend rate, will be payable February 14, 2000 to shareholders of record as of February 7, 2000.
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 and Pierce brand names. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, 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 in this press release, including statements regarding the company's future financial position, business strategy, budgets, targets, projected costs and plans and objectives of management for future operations, are considered 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. Important factors that could cause actual results to differ materially from the company's expectations include the cyclical nature of the concrete placement industry, the risks related to reductions in government expenditures, the uncertainty of government contracts and the challenges of identifying, completing and integrating future acquisitions. Additional information concerning these and other factors is contained in the company's filings with the Securities and Exchange Commission.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
December 31,
------------------------
1999 1998
------------ ---------
(In thousands, except
per share amounts)
Net sales $243,867 $222,693
Cost of sales 203,890 190,585
------------ ---------
Gross income 39,977 32,108
Operating expenses:
Selling, general and administrative 20,578 16,545
Amortization of goodwill and other
intangibles 2,772 2,735
------------ ---------
Total operating expenses 23,350 19,280
------------ ---------
Operating income 16,627 12,828
Other income (expense):
Interest expense (5,786) (6,581)
Interest income 166 186
Miscellaneous, net 114 142
------------ ---------
(5,506) (6,253)
------------ ---------
Income before income taxes, equity in
earnings of unconsolidated
partnership and extraordinary item 11,121 6,575
Provision for income taxes 4,740 3,000
------------ ---------
6,381 3,575
Equity in earnings of unconsolidated
partnership, net of income taxes 315 337
------------ ---------
Income before extraordinary item 6,696 3,912
Extraordinary charge for early
retirement of debt, net of
income tax benefit (581) -
----------- ---------
Net income $ 6,115 $ 3,912
=========== ==========
Earnings per share $ 0.42 $ 0.31
=========== =========
Earnings per share assuming dilution $ 0.42 $ 0.30
=========== =========
Weighted average shares outstanding:
Basic 14,399 12,636
Assuming dilution 14,709 12,903
Cash dividends:
Class A Common Stock $0.07500 $0.07250
Common Stock $0.08625 $0.08333
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1999 1999
----------------- ---------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 3,639 $ 5,137
Receivables, net 62,804 93,186
Inventories 231,946 198,446
Prepaid expenses 4,753 4,963
Deferred income taxes 15,050 14,558
------------ ------------
Total current assets 318,192 316,290
Investment in unconsolidated
partnership 13,754 12,335
Other long-term assets 20,717 20,853
Property, plant and equipment 162,278 154,597
Less accumulated depreciation (73,024) (70,606)
------------ ------------
Net property, plant and
equipment 89,254 83,991
Goodwill and other intangible
assets, net 317,049 319,821
------------ ------------
Total assets $ 758,966 $ 753,290
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 74,914 $ 84,727
Floor plan notes payable 38,285 26,616
Customer advances 68,690 68,364
Payroll-related obligations 16,280 24,734
Accrued warranty 13,886 14,623
Other current liabilities 50,931 48,462
Revolving credit facility and
current maturities of
long-term debt 13,057 5,259
------------ ------------
Total current liabilities 276,043 272,785
Long-term debt 159,782 255,289
Deferred income taxes 43,695 44,265
Other long-term liabilities 18,435 18,071
Commitments and contingencies - -
Shareholders' equity 261,011 162,880
------------ ------------
Total liabilities and shareholders'
equity $ 758,966 $ 753,290
============ ============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
--------------------------
1999 1998
---------- ----------
(In thousands)
Operating activities:
Income before extraordinary item $ 6,696 $ 3,912
Non-cash adjustments 4,202 2,798
Changes in operating assets and
liabilities (5,624) (1,784)
------- -------
Net cash provided from operating
activities 5,274 4,926
Investing activities:
Acquisition of business (5,893) -
Additions to property, plant and equipment (3,888) (1,853)
Proceeds from sale of property, plant
and equipment - 27
Increase in other long-term assets (1,603) (1,788)
------- -------
Net cash used for investing activities (11,384) (3,614)
Financing activities:
Net borrowings (repayments) under
revolving credit facility 6,000 (700)
Repayments of long-term debt (93,709) (148)
Proceeds from Common Stock offering, net
of expenses 93,395 -
Dividends paid (1,102) (1,048)
Other 28 135
------- -------
Net cash provided from (used for)
financing activities 4,612 (1,761)
------- -------
Decrease in cash and cash equivalents (1,498) (449)
Cash and cash equivalents at beginning
of period 5,137 3,622
------- -------
Cash and cash equivalents at end of period $ 3,639 $ 3,173
======= =======
Supplementary disclosure:
Depreciation and amortization $ 5,780 $ 5,373
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
December 31,
---------------------------
1999 1998
------------- -------------
(In thousands)
Net sales to unaffiliated customers:
Commercial $ 115,394 $ 96,819
Fire and emergency 75,577 73,849
Defense 52,896 52,025
------------- -------------
Consolidated $ 243,867 $ 222,693
============= =============
Operating income (loss):
Commercial $ 9,054 $ 4,794
Fire and emergency 3,915 4,819
Defense 7,495 6,164
Corporate and other (3,837) (2,949)
------------- -------------
Consolidated $ 16,627 $ 12,828
============= =============
Backlog:
Commercial $ 195,431 $ 176,404
Fire and emergency 213,254 181,932
Defense 150,048 116,057
------------- -------------
Consolidated $ 558,733 $ 474,393
============= =============