On Sept. 25, construction machinery manufacturer JLG Industries (NYSE:JLG) released full-year earnings for the 2006 fiscal year, ended July 31, 2006.

  • Cash flow is decreasing year over year, even as net profit skyrockets. That could be a warning sign, although there is still a way to go before free cash flow goes negative.
  • Of that net income, $14.5 million came from the sale of the Gradall excavation machines product line. The rest of the bottom-line improvement trickled down all the way from an improved gross-margin performance.
  • Cash on hand is growing nicely while the company pays down long-term debts, accounts-payable growth is outpacing receivables in a show of tighter control over cash-cycle management, and sales are growing faster than inventories. In short, that's a darn healthy balance sheet, son.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

FY 2006

FY 2005

Change

Sales

$2,250

$2,289.4

$1,735.0

32.0%

Net Profit

--

$149.3

$57.2

161.2%

EPS

$1.29

$1.40

$0.60

133.3%

Diluted Shares

106.5

95.6

11.4%

Get back to basics with a look at the income statement.

Margin Checkup

FY 2006

FY 2005

Change*

Gross Margin

19.35%

16.56%

2.79

Operating Margin

11.49%

6.93%

4.56

Net Margin

6.52%

3.30%

3.22
*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

FY 2006

FY 2005

Change

Cash + ST Invest.

$328.1

$223.6

46.7%

Accounts Rec.

$445.6

$419.9

6.1%

Inventory

$212.9

$169.1

25.9%

Liabilities

FY 2006

FY 2005

Change

Accounts Payable

$233.7

$200.3

16.7%

Long-Term Debt

$207.4

$224.2

(7.5%)



Learn the ways of the balance sheet.

Cash Flow Highlights

FY 2006

FY 2005

Change

Cash From Ops.

$118.8

$142.4

(16.6%)

Capital Expenditures

$24.8

$10.6

135.0%

Free Cash Flow

$93.9

$131.8

(28.8%)

Find out why Fools always follow the money.

Related Companies:

  • Caterpillar (NYSE:CAT)
  • MSC Industrial Direct (NYSE:MSM)
  • Alamo Group (NYSE:ALG)
  • Gehl (NASDAQ:GEHL)
  • Terex (NYSE:TEX)
  • Deere (NYSE:DE)

Related Foolishness:

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At the time of publication,Fool contributorAnders Bylundhad positions in none of these fine industrial equipment companies, and he doesn't know how to operate an excavator. Fool rules arehere.