OSHKOSH, WI — Oshkosh Truck Corp. today reported that for the quarter ending June 30, earnings per share increased 38.5 percent to 72 cents on sales of $887.9 million and net income of $53.4 million. This compares with earnings per share of 52 cents on sales of $818.9 million and net income of $38.7 million for the prior year’s third quarter.
These results exceeded Oshkosh’s most recent earnings per share estimate range for the third quarter of fiscal 2006 of 53 cents – 57 cents per share. Based upon the results of the third quarter, Oshkosh increased its earnings per share estimate range for the full year ending Sept. 30 to $2.70 – $2.75 per share.
Sales increased 8.4 percent in the third quarter of fiscal 2006 as compared to the prior year’s third quarter. Operating income increased 31.2 percent to $82.6 million, or 9.3 percent of sales, compared to $63 million, or 7.7 percent of sales, in the prior year’s third quarter. All segments contributed to the sales and earnings growth during the third quarter with the commercial segment driving approximately two-thirds of the increase in consolidated operating income. Third quarter operating income rose 252 percent in the commercial segment compared to the prior year’s third quarter.
Factors affecting third quarter results for the company’s business segments included:
Fire and emergency–Fire and emergency segment sales increased 14.7 percent to $255.3 million for the quarter compared to the third quarter of last year. Operating income was up 28.7 percent to $29.8 million, or 11.7 percent of sales, compared to prior year quarter operating income of $23.1 million, or 10.4 percent of sales. The increase in sales for the fire and emergency segment included $13.6 million in sales that were delayed from the previous quarter due to two separate supplier component issues. Operating income margins for the fire and emergency segment improved due to an improved product mix, including increased airport product sales and benefits from cost reduction initiatives, especially at Pierce.
Defense–Defense segment sales increased 3.7 percent to $291.4 million for the quarter compared to the prior year’s third quarter. An increase in sales of remanufactured trucks for the U.S. Department of Defense and of new trucks for international customers offset lower parts and service and Medium Tactical Vehicle Replacement (“MTVR”) truck sales. The MTVR base contract was concluded during the third quarter of fiscal 2005.
Operating income in the third quarter was up 6.7 percent to $49 million, or 16.8 percent of sales, compared to prior year operating income of $46 million, or 16.4 percent of sales. The increase in operating income for the third quarter was primarily due to the increase in sales and was partially offset by higher bid and proposal spending. Operating income margins in the third quarter of fiscal 2005 benefited from a $2.1 million (2 cents per share) adjustment to MTVR base contract margins, which was recorded under the percentage of completion method of accounting.
Commercial–Commercial segment sales increased 8.8 percent to $350.6 million in the third quarter compared to the prior year quarter. Operating income increased 252 percent to $25.4 million, or 7.2 percent of sales, compared to $7.2 million, or 2.2 percent of sales, in the prior year quarter. The increase in sales for the segment was largely due to strong demand at the company’s North American businesses in advance of diesel engine emissions standards changes effective Jan. 1, 2007 and higher unit sales at the company’s European refuse business, offset in part by a lower mix of package sales involving both a truck chassis and truck body. The significant increase in operating income margins in the third quarter of fiscal 2006 resulted from both higher price realization and cost reduction in North America and continued profitable operations at the company’s European refuse business compared to an operating loss of $5.1 million in Europe in the third quarter of fiscal 2005. The prior year’s third quarter results included a $4.3 million (4 cents per share) charge for workforce reductions at the company’s European refuse business. The improvement in Europe resulted from increased sales volume, cost reduction activities and restructuring activities that began in fiscal 2005.
Corporate and other–Operating expenses and inter-segment profit elimination increased $8.2 million to $21.5 million. The increase in the third quarter was largely due to a $5.9 million increase in acquisition investigation and related costs, an additional $1.1 million related to the expensing of stock options due to the adoption of Statement of Financial Accounting Standards No. 123, “Share Based Payment,” and $0.8 million related to the company’s new office in China. Interest income net of interest expense for the quarter was $0.3 million as compared to $1.4 million of net expense for the prior year quarter. Lower interest costs were largely due to the repayment of acquisition-related debt and higher interest income resulting from the investment of higher average cash balances during the quarter.
Cash and cash equivalents, net of debt, increased during the quarter to $193.1 million at June 30 from $74.6 million at March 31.
The company reported that earnings per share increased 31.3 percent to $2.10 per share for the first nine months of fiscal 2006 on sales of $2.52 billion and net income of $156.3 million compared to $1.60 per share for the first nine months of fiscal 2005 on sales of $2.14 billion and net income of $117.5 million. Results for the first nine months of fiscal 2005 included MTVR base contract life-to-date margin adjustments totaling $24.7 million.
Operating income increased 29 percent to $249.3 million, or 9.9 percent of sales, in the first nine months of fiscal 2006 compared to $193.2 million, or 9 percent of sales, in the first nine months of fiscal 2005.
Oshkosh Truck Corp.’s Board of Directors declared a quarterly dividend of 10 cents per share of common stock. The dividend, unchanged from the immediately preceding quarter, will be payable Aug. 23 to shareholders of record as of Aug. 15.
_______________________________________
Click here to view the rest of today’s headlines.
