Oshkosh Truck Reports Net Income Up 44 Percent for Fourth Quarter
26 October 2000
Oshkosh Truck Reports Net Income Up 44 Percent for Fourth Quarter; Raises EPS Expectations for Fiscal 2001
OSHKOSH, Wis.--Oct. 26, 2000--Oshkosh Truck Corporation today reported that fourth quarter net income before extraordinary items increased 44 percent to $14.6 million, or $0.86 per share, on sales of $358 million for the quarter ended September 30, 2000. This compares with net income before extraordinary items of $10.2 million, or $0.77 per share, on sales of $314 million for last year's fourth quarter.This record fourth quarter profit was generated on a net sales increase of 14 percent. Operating income increased 21 percent to $28 million, or 7.8 percent of sales, compared to $23 million, or 7.3 percent of sales, in the prior year's quarter.
The company attributes this performance to double-digit sales and income growth in its fire and emergency and defense businesses, which was tempered by a downturn in the company's concrete placement business. The decrease in concrete placement sales during the fourth quarter reflects a moderate slowing of the overall concrete placement market, consistent with the company's outlook for this business in 2001.
"In just three years, we have nearly doubled the sales of Oshkosh Truck. With almost a five-fold increase in net income during that same period, we have demonstrated consistent ability to improve net income at an even faster pace through purchasing synergies and operational efficiency," commented Robert G. Bohn, chairman, president and chief executive officer, on Oshkosh's fiscal 2000 performance.
Bohn continued, "We have generated significant forward momentum in each of our businesses, while continuing to invest in future growth."
Based on the company's current outlook, it is raising expectations for fiscal 2001 earnings-per-share from $3.35 to $3.45, a 16.7 percent increase over fiscal 2000.
Factors affecting fourth quarter results for the company's business segments included:
Fire and Emergency -- The company increased sales by 17 percent to $108.8 million for the quarter. Operating income was up $3.1 million, or 45 percent, to $10.0 million, or 9.2 percent of sales, compared to prior year operating income of $6.9 million, or 7.4 percent of sales. Fourth quarter 1999 results were adversely affected by production inefficiencies following the installation of an enterprise-wide resource planning system at the company's Pierce Manufacturing Inc. ("Pierce") subsidiary. Those production inefficiencies have been eliminated, and cost reduction and margin expansion efforts continue.
Defense -- Fourth quarter sales increased $32.2 million, or 43 percent, to $107.7 million due to strong export sales and the continued ramp-up of production under the company's contract to supply medium trucks to the U.S. Marines under the MTVR contract.
Operating income increased $5.2 million, or 66 percent, to $13.2 million, or 12.2 percent of sales, compared to prior year operating income of $7.9 million, or 10.5 percent of sales. Increased volume and improved production efficiency at the company's Oshkosh facility drove cost containment and contributed to the strong performance.
Commercial -- Fourth quarter sales decreased $3.9 million, or 3 percent, to $141.8 million for the quarter. Refuse business sales grew by 11 percent, but were more than offset by an 8 percent reduction in concrete placement product sales. Prior year fourth quarter concrete placement sales were an all-time record and reflected unusually strong customer demand during a quarter that is normally a seasonally slower period for the construction market.
Operating income decreased $4.5 million, or 32 percent, to $9.4 million, or 6.7 percent of sales, compared to prior year operating income of $14.0 million, or 9.6 percent of sales. This reflects lower sales volumes and higher employee expenses.
"Fourth quarter results of our concrete placement business were lower than the record levels set in fiscal 1999, but consistent with sales levels experienced during this seasonally slower period in other recent years," commented Bohn.
Corporate and Other -- Operating expenses and inter-segment profit elimination decreased from $5.8 million to $4.6 million. Net interest expense for the quarter decreased to $4.3 million compared to $6.6 million in the prior year quarter as a result of the company's November 1999 equity offering and related debt prepayment.
"During the quarter, we took steps to increase financial flexibility for our acquisitions strategy by amending our bank credit facility to increase our bank revolving line of credit from $100 million to $170 million, while reducing our borrowing costs at the same time," Bohn explained.
Full-Year Results
The company reported that net income before extraordinary items and discontinued operations increased 56 percent to $48.5 million, or $2.96 per share, for the year on sales of $1,324 million compared to $31.2 million, or $2.39 per share, for fiscal 1999, on sales of $1,165 million in the prior year. Operating income rose 29 percent to $98.1 million, or 7.4 percent of sales, compared to $76.2 million, or 6.5 percent of sales, in fiscal 1999.
Factors affecting fiscal 2000 results for the company's business segments included:
Fire and Emergency -- Sales increased 16 percent to $391 million compared to $336 million in the prior year. A full year of production and sales of Pierce fire trucks out of the company's Florida manufacturing facility contributed to the growth in sales. Operating income increased 23 percent to $32.9 million, or 8.4 percent of sales, compared to $26.8 million, or 8.0 percent of sales, in the prior year. Operating income benefited from the elimination of production inefficiencies, which had arisen from the installation of an enterprise-wide resource planning system at Pierce. In addition, cost reduction efforts and the acquisition of Kewaunee Fabrications contributed to operating income margin improvement.
Defense -- Sales increased $53 million, or 24 percent, to $276 million, compared to $223 million in the prior year. The company started low rate initial production under its MTVR contract with the U.S. Marines in the second quarter of fiscal 2000. This contributed about one half of the increase, with the remaining increase resulting from higher export shipments. Operating income increased 32 percent to $30.1 million, or 10.9 percent of sales, compared to $22.9 million, or 10.3 percent of sales, in the prior year. Increased shipments of higher margin parts and export products more than offset increased sales of the lower-margin Medium Tactical Vehicle Replacement (MTVR).
"In our defense business, we noticed the most significant impact of our improved international sales and profit performance. In fiscal 2001, we look forward to the start of full-rate production for our medium tactical truck contract -- a major factor in our defense business performance, beginning in the second quarter," commented Bohn.
Commercial -- Sales increased $50 million, or 8.3 percent, to $658 million, compared to $608 million in the prior year. The company reported sales increases across the entire segment, which includes front-and rear-discharge concrete mixers, batch plants, concrete placement parts and service, refuse packers, and refuse parts and service. Operating income increased 12 percent to $54.7 million, or 8.3 percent of sales, compared to $49.0 million, or 8.1 percent of sales, in the prior year.
"We continue to believe that the economic environment, characterized by slower housing starts and higher interest rates, will generate approximately a 10 percent decline in concrete placement shipments in 2001, over the record levels of fiscal 2000. However, we have planned for that eventuality. Our focus will be on expanding sales and margins in the refuse market, as well as generating superior growth in our fire and emergency and defense segments in 2001. The McNeilus refuse expansion was completed in September and is an important factor in achieving higher refuse margins in 2001," commented Bohn.
Corporate and other -- Corporate expenses and inter-segment profit elimination decreased $2.8 million to $19.6 million. Prior year expenses were higher due to settlement of litigation. Net interest expense decreased $5.9 million to $20.1 million. Lower interest costs as a result of the company's November 1999 equity offering were partially offset by working capital borrowings to support the company's sales growth and to fund the acquisitions of Kewaunee and Viking Truck.
Gain on disposal of discontinued operations and extraordinary charge -- the company recorded an after-tax, extraordinary charge of $0.8 million related to the write-off of debt issuance costs as a result of the prepayment of debt. Fiscal 2000 results also include a $2.0 million after-tax gain related to a technology transfer agreement and collection of previously written-off receivables from a foreign affiliate. The company exited this business in 1995. The gain has been recorded as a gain on sale of discontinued operations.
The company will comment on fourth quarter and full year earnings and expectations for fiscal 2001 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.oshkoshtruck.com at least 15 minutes prior to the event and follow instructions for listening to the broadcast.
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 prior quarter, will be payable November 13, 2000 to shareholders of record as of November 1, 2000.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
September 30, September 30,
------------------- -----------------------
2000 1999 2000 1999
---------- -------- ---------- -----------
(Unaudited) (Unaudited)
(In thousands, except per share amounts)
Net sales $357,968 $313,906 $1,324,026 $ 1,164,954
Cost of sales 303,574 265,445 1,121,092 991,573
--------- ---------- ----------- ------------
Gross income 54,394 48,461 202,934 173,381
Operating expenses:
Selling, general and
administrative 23,599 22,674 93,724 85,996
Amortization of
goodwill and other
intangibles 2,835 2,772 11,159 11,172
--------- ---------- ----------- ------------
Total operating expenses 26,434 25,446 104,883 97,168
--------- ---------- ----------- ------------
Operating income 27,960 23,015 98,051 76,213
Other income (expense):
Interest expense (4,642) (6,905) (20,956) (26,744)
Interest income 253 146 893 760
Miscellaneous, net 132 166 661 730
--------- ---------- ----------- ------------
(4,257) (6,593) (19,402) (25,254)
--------- ---------- ----------- ------------
Income before items noted
below 23,703 16,422 78,649 50,959
Provision for income
taxes 9,389 6,613 31,346 21,313
--------- ---------- ----------- ------------
14,314 9,809 47,303 29,646
Equity in earnings of
unconsolidated
partnership, net of
income taxes 311 376 1,205 1,545
--------- ---------- ----------- ------------
Income from continuing
operations 14,625 10,185 48,508 31,191
Gain on disposal of
discontinued operations,
net of income taxes - - 2,015 -
Extraordinary charge for
early retirement of
debt, net of income tax
benefit (239) (60) (820) (60)
--------- ---------- ----------- ------------
Net income $ 14,386 $ 10,125 $ 49,703 $ 31,131
========= ========== =========== ============
Earnings per share:
Continuing operations $ 0.87 $ 0.79 $ 3.01 $ 2.45
Discontinued
operations - - 0.13 -
Extraordinary item (0.01) - (0.05) -
---------- ---------- ------------ ----------
$ 0.86 $ 0.79 $ 3.09 $ 2.45
=========== ========== ============ =========
Earnings per share
assuming dilution:
Continuing operations $ 0.86 $ 0.77 $ 2.96 $ 2.39
Discontinued
operations - - 0.12 -
Extraordinary item (0.01) - (0.05) -
------------ --------- ----------- ----------
$ 0.85 $ 0.77 $ 3.03 $ 2.39
=========== ========== =========== ==========
Weighted average shares
outstanding:
Basic 16,647 12,810 16,074 12,727
Assuming dilution 17,009 13,170 16,404 13,052
Cash dividends:
Class A Common Stock $0.07500 $0.07500 $ 0.30000 $ 0.29250
Common Stock $0.08625 $0.08625 $ 0.34500 $ 0.33625
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2000 1999
-------------- -----------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 13,569 $ 5,137
Receivables, net 106,805 93,186
Inventories 194,931 198,446
Prepaid expenses 5,424 4,963
Deferred income taxes 14,708 14,558
-------------- -----------------
Total current assets 335,437 316,290
Investment in unconsolidated
partnership 15,179 12,335
Other long-term assets 16,274 11,824
Property, plant and equipment 206,507 168,618
Less accumulated depreciation (87,748) (75,598)
-------------- -----------------
Net property, plant and
equipment 118,759 93,020
Goodwill and other intangible
assets, net 310,731 319,821
-------------- -----------------
Total assets $796,380 $753,290
============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 84,215 $ 84,727
Floor plan notes payable 23,925 26,616
Customer advances 59,996 68,364
Payroll-related
obligations 23,465 20,990
Accrued warranty 16,320 14,623
Other current liabilities 48,511 52,206
Revolving credit facility
and current maturities
of long-term debt 8,544 5,259
-------------- -----------------
Total current liabilities 264,976 272,785
Long-term debt 154,238 255,289
Deferred income taxes 46,414 44,265
Other long-term liabilities 29,695 18,071
Commitments and contingencies - -
Shareholders' equity 301,057 162,880
-------------- -----------------
Total liabilities and
shareholders' equity $796,380 $753,290
============== =================
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
September 30,
-------------------
2000 1999
-------- --------
(Unaudited)
(In thousands)
Operating activities:
Income from continuing operations before
extraordinary item $ 48,508 $ 31,191
Non-cash adjustments 24,540 17,353
Changes in operating assets and liabilities (23,365) (9,496)
-------------------
Net cash provided from operating activities 49,683 39,048
Investing activities:
Acquisition of businesses, net of cash
acquired (7,147) -
Additions to property, plant and equipment (22,647) (17,999)
Proceeds from sale of property, plant and
equipment 52 158
(Increase) decrease in other long-term assets (2,417) 3,357
-------------------
Net cash used for investing activities (32,159) (14,484)
Net cash provided from discontinued operations 2,015 -
Financing activities:
Net repayments under revolving credit facility (5,000) (1,000)
Proceeds from issuance of long-term debt 30,913 -
Repayments of long-term debt (124,595) (19,256)
Debt issuance costs (795) -
Proceeds from Common Stock offering 93,736 -
Costs of Common Stock offering (334) -
Dividends paid (5,392) (4,226)
Other 360 1,433
-------------------
Net cash used for financing activities (11,107) (23,049)
-------------------
Increase in cash and cash equivalents 8,432 1,515
Cash and cash equivalents at beginning of period 5,137 3,622
-------------------
Cash and cash equivalents at end of period $ 13,569 $ 5,137
===================
Supplementary disclosure:
Depreciation and amortization $ 24,218 $ 23,157
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
Three Months Ended Year Ended
September 30, September 30,
---------------------- -----------------------
2000 1999 2000 1999
---------- ----------- ----------- -----------
(Unaudited) (Unaudited)
(In thousands)
Net sales to
unaffiliated customers:
Commercial $ 141,845 $ 145,717 $ 658,329 $ 607,678
Fire and emergency 108,796 93,146 390,659 336,241
Defense 107,730 75,543 275,841 222,535
Corporate and other (403) (500) (803) (1,500)
---------- ----------- ----------- ----------
Consolidated $ 357,968 $ 313,906 $ 1,324,026 $ 1,164,954
========== =========== =========== ===========
Operating income
(expense):
Commercial $ 9,440 $ 13,968 $ 54,654 $ 48,995
Fire and emergency 10,006 6,914 32,922 26,758
Defense 13,156 7,921 30,119 22,878
Corporate and other (4,642) (5,788) (19,644) (22,418)
---------- ----------- ----------- -----------
Consolidated $ 27,960 $ 23,015 $ 98,051 $ 76,213
========== =========== =========== ===========
Backlog:
Commercial $ 99,131 $ 122,358
Fire and emergency 216,861 200,306
Defense 291,541 163,852
----------- -----------
Consolidated $ 607,533 $ 486,516
=========== ===========