Oshkosh Truck Reports Second Quarter EPS Up 67.7%
OSHKOSH, Wis.--May 3, 2005--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that second quarter earnings per share increased 67.7 percent to $1.04 per share, on sales of $672.4 million and net income of $38.2 million for the quarter ended March 31, 2005. This compares with earnings per share of $0.62 per share, on sales of $518.2 million and net income of $22.5 million for last year's second quarter. These results exceeded Oshkosh's most recent sales and earnings estimates of $645.0 million and $0.66 per share, respectively, for the second quarter of fiscal 2005. Oshkosh also increased its sales and earnings per share estimates for the full year ending September 30, 2005 to $2.9 billion and $4.25 per share, respectively.Sales increased 29.7 percent in the second quarter. Operating income increased 78.5 percent to $62.6 million, or 9.3 percent of sales, compared to $35.1 million, or 6.8 percent of sales, in the prior year's second quarter.
Commenting on the results, Robert G. Bohn, chairman, president and chief executive officer, said, "Our financial performance in fiscal 2005, particularly the favorable year-over-year earnings growth, continued to gain momentum. This was a record second quarter for the Corporation, driven largely by exceptional results in our defense business along with strong operational performance and a favorable product mix in our fire and emergency business.
"Our defense business performed beyond our expectations, providing favorable performance on our Medium Tactical Vehicle Replacement (MTVR) contract and stronger than expected margins on new truck and new service contracts.
"In our commercial business, the U.S. concrete placement and refuse markets continued to show strength and provided solid revenue growth. Unfortunately, operating income continued to be negatively impacted by lower-priced backlog, but that is now largely behind us, so we believe there is the prospect of margin growth in the domestic market.
Bohn continued, "As we move through the second half of fiscal 2005, we are focused specifically on capitalizing on the positive market developments in our businesses and on continuing the operational improvements of our McNeilus and European refuse operations. We are encouraged by the progress that we are making across the Corporation. On the basis of our performance in the second quarter and our positive outlook, we have increased our fiscal 2005 earnings per share estimate from $3.85 to $4.25."
Factors affecting second quarter results for the Company's business segments included:
Fire and emergency--Fire and emergency segment sales increased 57.2 percent, to $213.2 million for the quarter compared to the prior year. Operating income was up 69.5 percent to $19.0 million, or 8.9 percent of sales, compared to prior year operating income of $11.2 million, or 8.3 percent of sales. The JerrDan and BAI acquisitions contributed sales of $42.7 million and operating income of $2.1 million during the quarter. Sales and operating income from other businesses in this segment grew 25.7 percent and 50.9 percent, respectively, for the quarter. The higher sales level for these businesses reflected strong order flow for fire apparatus during fiscal 2004 and substantially higher airport product sales. Operating income margins for the businesses increased due to a substantially improved sales mix of custom pumpers, aerials and airport products.
Defense--Defense segment sales increased 24.7 percent to $209.6 million for the quarter, largely due to a more than doubling of parts and service sales compared to the prior year's second quarter as a result of the conflict in Iraq, which was offset by slightly lower truck sales. Operating income in the second quarter was up 114.4 percent, to $49.4 million, or 23.6 percent of sales, compared to prior year operating income of $23.0 million, or 13.7 percent of sales. Earnings for the current quarter increased primarily due to a $14.1 million cumulative life-to-date adjustment to operating income to increase the margins on the Company's MTVR base contract from 8.5 percent to 9.9 percent. Second quarter earnings also were favorably impacted by the more than doubling of relatively higher-margin parts and service sales.
Commercial--Commercial segment sales increased 17.2 percent, to $255.3 million, for the quarter on strong order intake in U.S. markets. Operating income decreased 31.6 percent to $6.5 million, or 2.5 percent of sales, compared to $9.4 million, or 4.3 percent of sales, in the prior year quarter. The CON-E-CO and London acquisitions contributed sales of $9.0 million and operating income of $0.5 million during the quarter. Operating income margins were lower principally due to continued operating losses in the Company's European refuse business and insufficient price increases for concrete placement and domestic refuse products to recover sharply higher domestic steel costs as well as other cost increases in the quarter.
Corporate and other--Operating expenses and inter-segment profit elimination increased $3.6 million to $12.2 million, due largely to increased personnel costs. Net interest expense for the quarter increased $0.6 million to $1.7 million, compared to the prior year quarter. Higher interest costs were largely due to higher average borrowings as a result of acquisitions.
Total debt decreased during the quarter to $69.4 million at March 31, 2005 from $104.4 million at December 31, 2004 in spite of the acquisition of London late in the quarter due to strong cash flow from operations, including a substantial increase in customer advances.
Six-Month Results
The Company reported that earnings per share increased 47.3 percent to $2.15 per share for the first six months of fiscal 2005 on sales of $1,317.3 million and net income of $78.8 million compared to $1.46 per share for the first six months of fiscal 2004 on sales of $1,011.4 million and net income of $52.2 million.
Operating income increased 59.2 percent to $130.3 million, or 9.9 percent of sales, in the first six months of fiscal 2005 compared to $81.8 million, or 8.1 percent of sales, in the first six months of fiscal 2004.
Change to Single Class of Stock and Dividend Announcements
The Company also announced that it has transitioned from having two classes of stock to a single class of stock, with the change effective immediately. Before the change, the Company had outstanding both New York Stock Exchange-listed Common Stock with limited voting rights and unlisted Class A stock with greater voting rights. Because holders of a sufficient number of shares of Class A stock have converted their shares into Common Stock, on a share-for-share basis, the remaining Class A shares converted automatically into Common Stock on the same basis, again, effective immediately. With the change to a single class of stock, the Common Stock now carries full voting rights.
Speaking on behalf of the Company's Board of Directors and management, Mr. Bohn said: "The stability that our Class A stock provided over the years benefited all shareholders by helping us build the Company that exists today. Now, because of our current strength and confidence in our future, we welcome the change to a single class of stock and believe that having voting rights commensurate with shareholdings will make our stock more attractive to the investing public. At the same time, we intend to continue to implement our strategic plan to generate long-term growth."
In addition, the Board of Directors declared a quarterly dividend of $0.1325 per share for the Common Stock. This dividend, up approximately 50.0 percent from the Common Stock rate for the immediately preceding quarter, will be payable May 24, 2005, to shareholders of record as of May 1, 20057, 2005. Previous holders of Class A stock will receive this dividend as holders of Common Stock.
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(R), McNeilus(R), Pierce(R), Medtec(TM), CON-E-CO(R), London(R), 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 Six Months Ended
March 31, March 31,
-------------------- -----------------------
2005 2004 2005 2004
---------- --------- ----------- -----------
(In thousands, except per share amounts)
Net sales $672,355 $518,213 $1,317,272 $1,011,407
Cost of sales 552,462 440,450 1,081,788 845,222
---------- --------- ----------- -----------
Gross income 119,893 77,763 235,484 166,185
Operating expenses:
Selling, general and
administrative 55,240 41,009 101,505 81,040
Amortization of
purchased intangibles 2,028 1,669 3,722 3,332
---------- --------- ----------- -----------
Total operating expenses 57,268 42,678 105,227 84,372
---------- --------- ----------- -----------
Operating income 62,625 35,085 130,257 81,813
Other income (expense):
Interest expense (2,239) (1,401) (4,490) (2,549)
Interest income 552 331 1,018 581
Miscellaneous, net 100 600 (613) 560
---------- --------- ----------- -----------
(1,587) (470) (4,085) (1,408)
---------- --------- ----------- -----------
Income before provision
for income taxes, equity in
earnings of unconsolidated
affiliates and
minority interest 61,038 34,615 126,172 80,405
Provision for income
taxes 23,570 12,636 48,702 29,348
---------- --------- ----------- -----------
Income before equity in
earnings of unconsolidated
affiliates and
minority interest 37,468 21,979 77,470 51,057
Equity in earnings of
unconsolidated affiliates,
net of income taxes 867 494 1,340 1,114
Minority interest, net of
income taxes (145) - (46) -
---------- --------- ----------- -----------
Net income $ 38,190 $ 22,473 $ 78,764 $ 52,171
========== ========= =========== ===========
Earnings per share
Class A Common Stock $ 0.92 $ 0.56 $ 1.91 $ 1.30
Common Stock $ 1.06 $ 0.64 $ 2.20 $ 1.50
Earnings per share
assuming dilution $ 1.04 $ 0.62 $ 2.15 $ 1.46
Weighted average shares
outstanding:
Basic earnings per share:
Class A Common Stock 805 814 806 814
Common Stock 35,308 34,182 35,056 34,083
Effect of dilutive
options and incentive
compensation awards 705 1,035 774 954
---------- --------- ----------- -----------
Diluted earnings per share 36,818 36,031 36,636 35,851
========== ========= =========== ===========
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2005 2004
------------- ------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 23,178 $ 30,081
Receivables, net 287,151 253,914
Inventories 556,031 368,067
Prepaid expenses 21,515 17,612
Deferred income taxes 36,025 41,033
------------- ------------
Total current assets 923,900 710,707
Investment in unconsolidated affiliates 19,893 21,187
Other long-term assets 34,549 26,375
Property, plant and equipment 332,769 316,538
Less accumulated depreciation (158,010) (147,962)
------------- ------------
Net property, plant and equipment 174,759 168,576
Purchased intangible assets, net 133,174 140,506
Goodwill 407,404 385,063
------------- ------------
Total assets $ 1,693,679 $ 1,452,414
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 212,370 $ 200,290
Customer advances 292,851 209,656
Floor plan notes payable 46,946 25,841
Payroll-related obligations 43,180 43,978
Income taxes 9,767 17,575
Accrued warranty 37,046 35,760
Other current liabilities 95,683 73,842
Revolving credit facility and current
maturities of long-term debt 66,310 72,739
------------- ------------
Total current liabilities 804,153 679,681
Long-term debt 3,048 3,209
Deferred income taxes 63,919 66,543
Other long-term liabilities 69,147 64,259
Minority interest 2,817 2,629
Commitments and contingencies
Shareholders' equity 750,595 636,093
------------- ------------
Total liabilities and shareholders'
equity $ 1,693,679 $ 1,452,414
============= ============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
-------------------------
2005 2004
------------- -----------
(In thousands)
Operating activities:
Net income $ 78,764 $ 52,171
Non-cash and other adjustments 21,338 13,630
Changes in operating assets and liabilities (76,319) (61,440)
------------- -----------
Net cash provided from operating
activities 23,783 4,361
Investing activities:
Acquisition of businesses, net of cash
acquired (29,896) -
Additions to property, plant and equipment (7,549) (13,446)
Proceeds from sale of assets 13 104
Decrease (increase) in other long-term assets 3,587 (4,195)
------------- -----------
Net cash used for investing activities (33,845) (17,537)
Financing activities:
Net borrowings (repayments) under revolving
credit facility (8,230) 17,500
Proceeds from exercise of stock options 18,116 4,471
Proceeds from issuance of long-term debt - 965
Repayment of long-term debt (378) (1,824)
Dividends paid (6,255) (4,012)
------------- -----------
Net cash provided from financing
activities 3,253 17,100
Effect of exchange rate changes on cash (94) 1,289
------------- -----------
Increase (decrease) in cash and cash equivalents (6,903) 5,213
Cash and cash equivalents at beginning of period 30,081 19,245
------------- -----------
Cash and cash equivalents at end of period $ 23,178 $ 24,458
============= ===========
Supplementary disclosure:
Depreciation and amortization $ 16,559 $ 13,213
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
---------------------- -----------------------
2005 2004 2005 2004
----------- ---------- ----------- -----------
(In thousands)
Net sales to unaffiliated
customers:
Fire and emergency $ 213,225 $ 135,639 $ 407,381 $ 258,500
Defense 209,636 168,137 425,110 358,524
Commercial 255,259 217,802 496,840 400,798
Intersegment
eliminations (5,765) (3,365) (12,059) (6,415)
----------- ---------- ----------- -----------
Consolidated $ 672,355 $ 518,213 $1,317,272 $1,011,407
=========== ========== =========== ===========
Operating income (expense):
Fire and emergency $ 19,003 $ 11,211 $ 37,448 $ 22,817
Defense (1) 49,381 23,035 101,082 60,199
Commercial 6,458 9,439 12,083 16,626
Corporate and other (12,217) (8,600) (20,356) (17,829)
----------- ---------- ----------- -----------
Consolidated $ 62,625 $ 35,085 $ 130,257 $ 81,813
=========== ========== =========== ===========
Period-end backlog:
Fire and emergency $ 536,363 $ 358,245
Defense 1,010,511 1,012,552
Commercial 317,172 238,870
----------- -----------
Consolidated $1,864,046 $1,609,667
=========== ===========
(1) Includes the following cumulative life-to-date adjustments to
operating income due to an increase in margins on the Company's
MTVR contract.
Three Months Ended Six Months Ended
March 31, March 31,
------------------- ------------------
2005 2004 2005 2004
---------- ------- --------- --------
(In thousands, except percentages)
Increase in operating income $ 14,100 $ - $ 22,600 $ 6,500
Increase in margin percentage 1.4% 0.0% 2.3% 0.8%
Margin percentage at period-end 9.9% 6.3%