25.02.2005

JLG First half sales soar by 47 percent

JLG revenues in the fourth quarter and year to date soared by 49 and 47 percent respectively with strong demand increasing its order book by 44 percent compared to the same time last year.

While the fourth quarter saw net income rise substantially on 2004, to $7.5 million, it was not enough to offset the first quarter loss of $8.3 million, leaving the company in negative territory year to date.

Based on the higher sales levels, JLG is increasing its full year revenue forecasts to a 30 to 35 percent increase compared to its original projections of 10 to 25 percent.

With commodity prices now stabilising and sales prices firming as increases flow through, the company expects to see an ongoing improvement in profitability over the rest of the year.

"The record revenues in the second quarter, coming on the heels of record sales in the first quarter, further confirm the strong demand for our products," commented Bill Lasky, Chairman of the Board, President and Chief Executive Officer. "Sales in the U.S. increased by 44 percent, while international sales grew 65 percent year over year, and the order book increased 44 percent sequentially to $290 million.

"Although the price of steel and other commodities remains high, the rate of change has slowed dramatically. The increase in the base prices of our machines and the steel surcharge, which we previously announced, did not recover the increased costs in the first five months of our fiscal year but come closer to neutralizing those increased costs for the remainder of this year. I'm very pleased with the performance of the JLG team in responding to these challenges while meeting the increased demand from our customers."

"With half of our fiscal year already behind us, we are reasonably confident that the level of end-user demand that we have seen both in North America and in international regions will continue as customers refresh their fleets and add a measure of expansion," stated Jim Woodward, Executive Vice President and Chief Financial Officer.

"Our supply chain continues to improve and has supported a significant increase in production from last year. Component deliveries continue to improve and we are seeing the benefits of additional capacity investments by many suppliers. Additionally, we continue to successfully focus on cost reduction initiatives, a key element of which is our deployment of the Six Sigma process.

Vertikal Comment

These numbers are no surprise, demand for both aerial lifts and Telescopic handlers is growing rapidly and long lead times are allowing price increases to "stick", but two quarters of 40 percent plus sales growth is still extremely impressive.

However understanding why the first quarter of fiscal 2005 was so bad in terms of profitability, when the fourth quarter of fiscal 2004 and this latest quarter are so much better is still difficult.

JLG still have a great deal more to wring out of even current market levels, given its range, market coverage and weakness of many competitors. With the world market on the rise though it shoud easily achieve and exceed its forecasts.

JLG are likely to come in with annual revenues in the region of $1.4 billion possibly coming close to $1.5 billion, if it can manage to increase production output and make inroads into the European telehandler market.

The next two quarters are likely to be increasingly profitable.