Oshkosh Truck Is Different Now
Oshkosh (OSK) reported some excellent results for its fiscal year ended September 30, 2007. EPS increased 29.7 percent to $3.58 on sales of $6.3 billion and net income of $268.1 million. These results compare with EPS of $2.76 on sales of $3.4 billion and net income of $205.5 million in fiscal 2006. Oshkosh’s EPS exceeded the Company’s most recent earnings estimate range for fiscal 2007 of $3.35 - $3.40. Oshkosh also reaffirmed its estimate range for fiscal 2008 EPS of $4.15 - $4.35.
The results are primarily attributable to the new access equipment division. This truly outstanding performance by JLG during the quarter propelled Oshkosh to another all-time record according to Robert G. Bohn, chairman and chief executive officer.
Here is what is different. They have added $3.1 Billion of long term debt. Debt to equity used to be minuscule in this company. Long term debt to equity is now in excess of 200%. The gearing ratio is very high. Management needs to crank out a lot of profit margin just to feed the bank.
Usually when profits are up management starts to reward shareholders with a dividend increase. The dividend of ten cents has been declared and is unchanged for the quarter. The yield is a paltry 0.74%. Management is holding their breath waiting to see how the acquisition digests.
Also goodwill valuations are now valued at $2.5 billion which is almost 200% of the company's equity. Goodwill in the past was much less prominent on the balance sheet. Finally purchased intangibles went up by 500%. Purchased intangibles are now almost equal to the equity position yet in the past it was down around 20% of equity.
It's early days of course for the acquisition. But Oshkosh is a very different company. When you gear up this high what used to be ranked as minor problem may now have major impact.
The results are primarily attributable to the new access equipment division. This truly outstanding performance by JLG during the quarter propelled Oshkosh to another all-time record according to Robert G. Bohn, chairman and chief executive officer.
Here is what is different. They have added $3.1 Billion of long term debt. Debt to equity used to be minuscule in this company. Long term debt to equity is now in excess of 200%. The gearing ratio is very high. Management needs to crank out a lot of profit margin just to feed the bank.
Usually when profits are up management starts to reward shareholders with a dividend increase. The dividend of ten cents has been declared and is unchanged for the quarter. The yield is a paltry 0.74%. Management is holding their breath waiting to see how the acquisition digests.
Also goodwill valuations are now valued at $2.5 billion which is almost 200% of the company's equity. Goodwill in the past was much less prominent on the balance sheet. Finally purchased intangibles went up by 500%. Purchased intangibles are now almost equal to the equity position yet in the past it was down around 20% of equity.
It's early days of course for the acquisition. But Oshkosh is a very different company. When you gear up this high what used to be ranked as minor problem may now have major impact.
posted by Financial Skeptic at
7:36 AM
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