Oshkosh Truck Corporation, the manufacturer of specialty trucks and truck bodies, on Thursday reported that net income increased 163.0% to $29.7 million, or $0.83 per share, on sales of $493.2 million for the quarter ended December 31, 2003.
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This compares with net income of $11.3 million, or $0.32 per share, on sales of $426.3 million for last year’s first quarter and exceeded Oshkosh’s most recent earnings expectations of $0.48 per share for the first quarter of fiscal 2004.
Oshkosh also increased its sales and earnings estimates for fiscal 2004 results to $1.97 billion and $2.80 per share, respectively.
Sales increased 15.7% in the first quarter of fiscal 2004 to $493.2 million. Operating income increased 129.5% to $46.7 million, or 9.5% of sales, compared to $20.4 million, or 4.8% of sales, in the prior year’s first quarter. Operating income increased principally due to a near tripling of earnings in the company’s defence business, improved fire and emergency business performance and lower interest costs.
Fire and emergency segment sales increased 8.8% to $122.9 million for the quarter. Operating income was up 15.8% to $11.6 million, or 9.4% of sales, compared to prior year operating income of $10.0 million, or 8.9% of sales. Higher sales of airport products were the primary contributor to the increases.
Defence segment sales increased 28.1% to $190.4 million for the quarter, despite a $32.0 million planned reduction in sales of MTVR trucks. Substantially higher international heavy truck sales drove most of the sales increase, and parts sales also rose sharply.
Some shipments of heavy equipment transporters to the UK were accelerated from the second to the first quarter to meet mission objectives of the UK Ministry of Defence. Operating income in the first quarter was up 287.6% to $37.2 million, or 19.5% of sales, compared to prior year operating income of $9.6 million, or 6.5% of sales. Earnings for the current year quarter increased primarily due to the higher level of international heavy truck sales.
Earnings also reflected a $6.5 million cumulative catch-up adjustment to operating income due to an increase in margins on the company’s MTVR contract from 5.5% to 6.3% as a result of a warranty settlement and positive cost performance due to increased overall defence segment production volume. The company recorded MTVR margins during the first quarter of fiscal 2003 at a 4.3% rate.
Operating income for the quarter also benefited from increased sales of higher-margin parts and lower bid and proposal spending compared to the prior year quarter.
Commercial segment sales increased 9.7% to $183.0 million for the quarter, largely as a result of a higher mix of package sales involving a chassis and body and higher unit volumes in domestic and European refuse products. Operating income decreased 6.1% to $7.2 million, or 3.9% of sales, compared to 4.6% of sales in the prior year quarter. Commercial operating income declined because package sales involve lower margins and due to an increase in new product development spending.
Operating expenses and inter-segment profit elimination increased $2.3 million to $9.2 million, largely due to higher variable incentive compensation expense and investments in additional personnel and services. Net interest expense for the quarter decreased $2.3 million to $0.9 million, compared to the prior year quarter.
