21.11.2006

JLG up 13 %

JLG has announced first quarter revenues of $539 million up from $478 million last year, an increase of 12.9 percent. Net income for the period was $40 million up by 43 percent from $28 million in 2005.

Operating income was $62 million, or 11.5 percent of sales, compared to $50 million, or 10.5 percent in 2005. The company’s cash position also improved significantly to $308 million at compared to $231 million a year ago.

JLG says that its net income includes $4.1 million of charges related to the Oshkosh acquisition, without this the company is claiming a 26 percent operating income, indicating falling costs of materials combined with the higher prices..

“For the fourth consecutive year, we have produced record first-quarter revenues despite recent
consolidation in the equipment rental industry which has altered ordering patterns for some of our larger customers. Demand for our products continues to mirror the strength in non-residential construction activity as our order board grew sequentially to $845 million from $749 million at the end of July,” said chairman Bill Lasky.

“In addition, we are now shipping Caterpillar branded telehandlers to Cat dealers around the world and expect this business to grow during the year as we ramp up to full production under the exclusive 20-year private label Alliance agreement.”

The company is predicting that revenues for the full year 2007 will be up by 25 percent to around $2.8 billion.

Vertikal Comment

While an increase of $61 million over three months can not be dismissed, the rate of increase is significantly lower than the past year or two, particularly when you consider that this quarter includes shipments of Cat telehandlers.

However the first quarter at JLG is always its worse, and has often resulted in net losses, even in good years. The order book is strong and the company is confident enough to raise its full year projections towards the top end of its original plan.

If JLG had remained independent we would be confident that it would exceed $3 billion this year,

Underlying margins suggest that the JLG has recouped or compensated for the raw material cost increases that have dogged the past two years.

This combined with the higher prices that the company has gained through cost driven price increases, not to mention the exchange benefits of its increased sales in Europe, is providing the company with its highest margins for a long time.

Oshkosh will be keen to maintain these levels given the level of debt that it has taken on to finance its acquisition and the premium it has paid.