Restarts Work on JLTV Program
Lowers Fiscal 2016 EPS Estimate
Range
Declares Quarterly Cash Dividend of $0.19
Per Share
Oshkosh Corporation (NYSE: OSK) today reported fiscal 2016 first
quarter net income of $14.6 million, or $0.19 per diluted
share, compared to $34.7 million, or $0.43 per diluted
share, in the first quarter of fiscal 2015. Results for the first
quarter of fiscal 2015 included a $2.1 million after-tax other
postretirement benefit curtailment gain in the defense segment.
Excluding this item, fiscal 2015 first quarter adjusted1 net income
was $32.6 million, or $0.41 per diluted share.
Comparisons are to the corresponding period of the prior year,
unless otherwise noted.
Consolidated net sales in the first quarter of fiscal 2016 were
$1.25 billion, a decrease of 7.5 percent compared to the
prior year first quarter. Higher sales in the defense and fire
& emergency segments were not sufficient to offset a decline in
sales in the access equipment segment, and to a lesser extent, the
commercial segment. On a constant currency basis, sales decreased
6.4 percent compared to the first quarter of fiscal 2015.
Consolidated operating income in the first quarter of fiscal
2016 was $30.3 million, or 2.4 percent of sales, compared
to $65.7 million, or 4.9 percent of sales, in the prior
year first quarter. Excluding the curtailment benefit described
above, adjusted1 consolidated operating income in the first quarter
of fiscal 2015 was $62.3 million, or 4.6 percent of
sales. The decline in adjusted operating income was driven by lower
access equipment segment sales, offset in part by improved
performance in the defense and fire & emergency segments.
“Our first quarter results were largely in line with our
expectations,” stated Wilson R. Jones, Oshkosh Corporation
president and chief executive officer. “Despite lower earnings in
the first quarter compared to the prior year driven by lower access
equipment segment results, we made progress on a number of
fronts.
“The fire & emergency segment reported another quarter of
improved results compared to the prior year quarter. Additionally,
the fire & emergency segment reported another quarter of strong
orders. Defense segment results were also up compared to the prior
year quarter as this segment rebounds from the trough experienced
in fiscal 2015.
“In mid-December, our defense segment was directed to begin work
again on the Joint Light Tactical Vehicle (“JLTV”) program,” added
Jones. “The JLTV is a next-generation, light vehicle for our
nation’s armed forces. We were awarded the JLTV production contract
for this program last August, but the award was protested by one of
the competitors. Despite the ongoing challenge of our award by the
competitor, we are confident that the U.S. Army made the right
choice and expect to retain the eight-year JLTV production
contract.
“The timing of the award of an international contract for more
than 1,000 M-ATVs that we expect to receive has been slowed. We now
assume that we will not receive the contract in time to recognize
any sales in fiscal 2016. In addition, we are lowering our access
equipment segment outlook for fiscal 2016 to reflect what we
believe will be a more cautious approach to capital expenditures by
rental companies than previously anticipated and a more competitive
market environment, due in part to the continued strong U.S.
dollar. As a result of these items, we are reducing our full-year
fiscal 2016 earnings per share expectations to a range of $2.20 to
$2.60.”
Factors affecting first quarter results for the Company’s
business segments included:
Access Equipment – Access equipment segment sales
declined 26.1 percent to $529.8 million for the first
quarter of fiscal 2016. The decline in sales was primarily due to
the slowdown in North American replacement demand that began last
summer and lower shipments of telehandlers in North America. In the
first quarter of fiscal 2015, the access equipment segment
experienced a large increase in telehandler sales ahead of price
increases related to Tier 4 engine emissions standards changes. A
stronger U.S. dollar also negatively impacted access equipment
segment sales in the current quarter by $12.6 million. On a
constant currency basis, access equipment segment sales decreased
24.3 percent.
Access equipment segment operating income decreased
73.5 percent to $20.4 million, or 3.9 percent of
sales, for the first quarter of fiscal 2016 compared to
$77.2 million, or 10.8 percent of sales, in the first
quarter of fiscal 2015. The decrease in operating income was
primarily the result of the lower sales volume and adverse
manufacturing absorption as the business significantly reduced
production rates compared to the prior year quarter. Access
equipment segment first quarter fiscal 2016 results also included
$1.2 million of restructuring costs related to workforce
reductions.
Defense – Defense segment sales for the first quarter of
fiscal 2016 increased 18.1 percent to $318.0 million. The
increase in sales was primarily due to the sale of international
M-ATVs along with higher M-ATV reset sales to the U.S. Government,
offset in part by lower sales of legacy heavy and medium tactical
wheeled vehicles to the U.S. Government. Production of heavy
tactical wheeled vehicles continued to ramp back up after the break
in production experienced in fiscal 2015.
The defense segment recorded operating income of
$23.2 million, or 7.3 percent of sales, for the first
quarter of fiscal 2016 compared to $9.8 million, or
3.6 percent of sales, in the first quarter of fiscal 2015.
Defense segment results for the first quarter of fiscal 2015
included a $3.4 million other postretirement curtailment
benefit. Excluding this item, adjusted1 operating income was
$6.4 million, or 2.4 percent of sales, in the first
quarter of fiscal 2015. The increase in operating income in the
current quarter compared to adjusted operating income in the prior
year quarter was largely due to favorable product mix and higher
sales volume.
Fire & Emergency – Fire & emergency segment sales
for the first quarter of fiscal 2016 increased 24.2 percent to
$207.5 million. Sales in the first quarter of fiscal 2016
benefited from higher domestic fire apparatus deliveries as a
result of increased production rates to meet higher demand and the
delivery of a multi-unit international order. Improved operational
efficiencies have allowed the fire & emergency segment to
increase production rates.
Fire & emergency segment operating income increased
556.8 percent to $10.1 million, or 4.9 percent of
sales, for the first quarter of fiscal 2016 compared to
$1.5 million, or 0.9 percent of sales, in the first
quarter of fiscal 2015. Higher sales volume was the largest
contributor to the increase in operating income.
Commercial – Commercial segment sales decreased
4.7 percent to $200.3 million in the first quarter of
fiscal 2016. The decrease in sales was primarily attributable to
lower concrete mixer sales, offset in part by higher refuse
collection vehicle unit volume.
Commercial segment operating income decreased 28.3 percent
to $8.9 million, or 4.4 percent of sales, for the first
quarter of fiscal 2016 compared to $12.4 million, or
5.9 percent of sales, in the first quarter of fiscal 2015. The
decrease in operating income was primarily a result of the lower
sales volume and unfavorable warranty experience.
Corporate – Corporate operating expenses decreased
$3.0 million in the first quarter of fiscal 2016 to
$32.3 million. The decrease in corporate operating expenses in
the first quarter of fiscal 2016 was primarily due to lower
incentive compensation than in the first quarter of fiscal
2015.
Interest Expense Net of Interest Income – Interest
expense net of interest income increased $0.5 million to
$14.1 million in the first quarter of fiscal 2016. The benefit
of lower interest rates on the Company’s senior notes refinanced in
the second quarter of fiscal 2015 was offset by increased
borrowings to support increased working capital.
Provision for Income Taxes – The Company recorded income
tax expense of $1.7 million in the first quarter of fiscal
2016, or 10.6 percent of pre-tax income, compared to
$16.2 million, or 31.9 percent of pre-tax income, in the
first quarter of fiscal 2015. The Company recorded
$3.7 million of discrete tax benefits in the first quarter of
fiscal 2016 largely related to the retroactive reinstatement of the
research and development tax credit in the United States.
Share Repurchases – Earnings per share in the first
quarter of fiscal 2016 improved $0.01 compared to the prior year
first quarter as a result of share repurchases completed during the
previous twelve months. The Company deployed cash of
$100.1 million to repurchase 2.5 million shares in the
first quarter of fiscal 2016 and $200.4 million to repurchase
4.9 million shares during fiscal 2015.
Fiscal 2016 Expectations
As a result of a delay in the timing of receipt of an
international contract in the defense segment that the Company
expects to receive for more than 1,000 M-ATVs as well as an
expected more cautious approach to capital expenditures in 2016 by
rental companies and a more competitive market environment in the
access equipment segment, the Company reduced its fiscal 2016
earnings per share estimate range from $3.00 to $3.40 to a range of
$2.20 to $2.60. Likewise, the Company’s estimate of fiscal 2016 net
sales has been reduced from a range of $6.2 billion to
$6.5 billion to a range of $5.7 billion to
$6.0 billion. The Company expects second quarter earnings per
share to be meaningfully lower than the comparable prior year
quarter as a result of expected lower access equipment segment
sales, driven in part by strong telehandler sales in the prior year
quarter related to Tier 4 engine emissions standards changes and
expected continued lower year-over-year production levels in the
access equipment segment.
Dividend Announcement
The Company’s Board of Directors today declared a quarterly cash
dividend of $0.19 per share of Common Stock. The dividend will
be payable on March 1, 2016, to shareholders of record as of
February 16, 2016.
Conference Call
The Company will comment on its fiscal 2016 first quarter
earnings and its full-year fiscal 2016 outlook during a conference
call at 9:00 a.m. EST this morning. Slides for the call will be
available on the Company’s website beginning at 7:00 a.m. EST this
morning. The call will be webcast simultaneously over the Internet.
To access the webcast, listeners can go to
www.oshkoshcorporation.com at least 15 minutes prior to the event
and follow instructions for listening to the webcast. An audio
replay of the call and related question and answer session will be
available for 12 months at this website.
Forward-Looking
Statements
This press release contains statements that the Company believes
to be “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact, including, without
limitation, statements regarding the Company’s future financial
position, business strategy, targets, projected sales, costs,
earnings, capital expenditures, debt levels and cash flows, and
plans and objectives of management for future operations, are
forward-looking statements. When used in this press release, words
such as “may,” “will,” “expect,” “intend,” “estimate,”
“anticipate,” “believe,” “should,” “project” or “plan” or the
negative thereof or variations thereon or similar terminology are
generally intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties, assumptions and other
factors, some of which are beyond the Company’s control, which
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. These
factors include the cyclical nature of the Company’s access
equipment, commercial and fire & emergency markets, which are
particularly impacted by the strength of U.S. and European
economies and construction seasons; the Company’s estimates of
access equipment demand which, among other factors, is influenced
by customer historical buying patterns and rental company fleet
replacement strategies; the strength of the U.S. dollar and its
impact on Company exports, translation of foreign sales and
purchased materials; the expected level and timing of U.S.
Department of Defense (“DoD”) and international defense customer
procurement of products and services and funding thereof; the
Company’s ability to utilize material and components which it has
committed to purchase from suppliers; risks related to reductions
in government expenditures in light of U.S. defense budget
pressures, sequestration and an uncertain DoD tactical wheeled
vehicle strategy; risks related to the Company’s future defense
segment results depending upon the outcome of a competitor’s
lawsuit regarding the JLTV production contract award to the
Company; the Company’s ability to increase prices to raise margins
or offset higher input costs; increasing commodity and other raw
material costs, particularly in a sustained economic recovery;
risks related to facilities expansion, consolidation and alignment,
including the amounts of related costs and charges and that
anticipated cost savings may not be achieved; global economic
uncertainty, which could lead to additional impairment charges
related to many of the Company’s intangible assets and/or a slower
recovery in the Company’s cyclical businesses than Company or
equity market expectations; projected adoption rates of work at
height machinery in emerging markets; the impact of severe weather
or natural disasters that may affect the Company, its suppliers or
its customers; risks related to the collectability of receivables,
particularly for those businesses with exposure to construction
markets; the cost of any warranty campaigns related to the
Company’s products; risks related to production or shipment delays
arising from quality or production issues; risks associated with
international operations and sales, including compliance with the
Foreign Corrupt Practices Act; the Company’s ability to comply with
complex laws and regulations applicable to U.S. government
contractors; cybersecurity risks and costs of defending against,
mitigating and responding to a data security breach; and risks
related to the Company’s ability to successfully execute on its
strategic road map and meet its long-term financial goals.
Additional information concerning these and other factors is
contained in the Company’s filings with the Securities and Exchange
Commission, including the Form 8-K filed today. All forward-looking
statements speak only as of the date of this press release. The
Company assumes no obligation, and disclaims any obligation, to
update information contained in this press release. Investors
should be aware that the Company may not update such information
until the Company’s next quarterly earnings conference call, if at
all.
About Oshkosh
Corporation
Oshkosh Corporation is a leading designer, manufacturer and
marketer of a broad range of access equipment, commercial, fire
& emergency, military and specialty vehicles and vehicle
bodies. Oshkosh Corporation manufactures, distributes and services
products under the brands of Oshkosh®, JLG®, Pierce®, McNeilus®,
Jerr-Dan®, Frontline™, CON-E-CO®, London® and IMT®. Oshkosh
products are valued worldwide by rental companies, concrete
placement and refuse collection businesses, fire & emergency
departments, municipal and airport services and defense forces,
where high quality, superior performance, rugged reliability and
long-term value are paramount. For more information, log on to
www.oshkoshcorporation.com.
®, TM All brand names referred to in this news release are
trademarks of Oshkosh Corporation or its subsidiary companies.
OSHKOSH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited; in millions, except share and per share
amounts) Three Months Ended
December 31, 2015
2014 Net sales $
1,252.0 $ 1,353.3 Cost of sales
1,069.2
1,123.6 Gross income 182.8
229.7 Operating expenses: Selling, general
and administrative 139.3 150.5 Amortization of
purchased intangibles 13.2
13.5 Total operating
expenses 152.5
164.0 Operating income
30.3 65.7 Other income (expense):
Interest expense (14.6 ) (14.4 )
Interest income 0.5 0.8 Miscellaneous,
net -
(1.3 ) Income before
income taxes and equity in earnings of unconsolidated
affiliates 16.2 50.8 Provision for income
taxes 1.7
16.2 Income before equity in earnings
of unconsolidated affiliates 14.5 34.6
Equity in earnings of unconsolidated affiliates
0.1 0.1
Net income $
14.6 $
34.7 Amounts available to
common shareholders, net of tax: Net income $
14.6 $ 34.7 Allocated to participating
securities -
(0.1 ) Net income
available to common shareholders $
14.6 $
34.6 Earnings per share
attributable to common shareholders: Basic $
0.20 $ 0.44 Diluted 0.19
0.43 Basic weighted-average shares outstanding
74,063,418 78,849,340 Dilutive stock options and
other equity-based compensation awards 789,798
1,105,166 Participating restricted stock
- (109,310
) Diluted weighted-average shares
outstanding 74,853,216
79,845,196 OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited; in
millions) December 31, September
30, 2015 2015
ASSETS Current assets: Cash and cash
equivalents $ 33.7 $ 42.9
Receivables, net 788.7 964.6 Inventories,
net 1,295.4 1,301.7 Deferred income taxes,
net 53.3 52.2 Other current assets
77.5 67.9
Total current assets 2,248.6 2,429.3
Investment in unconsolidated affiliates 15.4
16.2 Property, plant and equipment: Property,
plant and equipment 1,105.6 1,093.7
Accumulated depreciation (629.5
) (617.9
) Property, plant and equipment, net
476.1 475.8 Goodwill 996.9
1,001.1 Purchased intangible assets, net 593.1
606.7 Other long-term assets
79.8 83.9
Total assets $
4,409.9 $
4,613.0 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Revolving
credit facilities and current maturities of long-term debt
$ 135.2 $ 83.5 Accounts payable
433.3 552.8 Customer advances 485.1
440.2 Payroll-related obligations 89.8
116.6 Other current liabilities
221.5 265.0
Total current liabilities 1,364.9
1,458.1 Long-term debt, less current maturities
850.0 855.0 Deferred income taxes, net
92.3 91.7 Other long-term liabilities
296.3 297.1 Commitments and contingencies
Shareholders' equity 1,806.4
1,911.1 Total
liabilities and shareholders' equity $
4,409.9 $
4,613.0 OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions) Three Months
Ended December 31, 2015
2014 Operating activities: Net
income $ 14.6 $ 34.7
Depreciation and amortization 31.0 30.5
Stock-based compensation expense 5.3 5.0
Deferred income taxes (1.6 ) (0.2
) Foreign currency transaction (gains) losses
(4.1 ) 2.4 Gain on sale of assets
(5.7 ) (0.8 ) Other non-cash
adjustments 0.9 2.7 Changes in operating
assets and liabilities 31.4
(126.6 ) Net cash
provided (used) by operating activities 71.8
(52.3 ) Investing activities:
Additions to property, plant and equipment (21.3
) (39.0 ) Additions to equipment held for
rental (15.0 ) (13.2 ) Proceeds
from sale of equipment held for rental 18.7 2.6
Other investing activities (0.6
) (0.6
) Net cash used by investing activities
(18.2 ) (50.2 ) Financing
activities: Net increase in short-term debt 28.2
- Proceeds from issuance of debt (original
maturities greater than three months) 153.6 -
Payments on debt (original maturities greater than three
months) (135.0 ) (5.0 )
Repurchases of common stock (100.1 )
(88.1 ) Dividends paid (14.1 )
(13.4 ) Proceeds from exercise of stock
options 1.4 2.2 Excess tax benefit from
stock-based compensation 0.8
4.0 Net cash used by financing
activities (65.2 ) (100.3 )
Effect of exchange rate changes on cash
2.4 -
Decrease in cash and cash equivalents (9.2 )
(202.8 ) Cash and cash equivalents at beginning of
period 42.9
313.8 Cash and cash equivalents at
end of period $ 33.7
$ 111.0
OSHKOSH CORPORATION SEGMENT INFORMATION
(Unaudited; in millions) Three Months
Ended December 31, 2015
December 31, 2014 External
Inter- Net External
Inter- Net Customers
segment Sales
Customers segment
Sales Access equipment Aerial work
platforms $ 242.0 $ - $
242.0 $ 277.3 $ - $
277.3 Telehandlers 111.8 - 111.8
290.4 - 290.4 Other
176.0 -
176.0
149.0 -
149.0 Total access
equipment 529.8 - 529.8 716.7
- 716.7 Defense 316.9 1.1
318.0 269.2 0.1 269.3 Fire
& emergency 205.4 2.1 207.5
159.5 7.5 167.0 Commercial
Concrete placement 72.3 - 72.3
86.1 - 86.1 Refuse collection
99.0 - 99.0 89.6 - 89.6
Other 28.6
0.4 29.0
32.2
2.3 34.5
Total commercial 199.9 0.4 200.3
207.9 2.3 210.2 Intersegment
eliminations -
(3.6 )
(3.6 )
- (9.9
) (9.9
) Consolidated net sales
$ 1,252.0
$ -
$ 1,252.0
$ 1,353.3
$ -
$ 1,353.3
Three Months Ended December 31,
2015 2014
Operating income (loss): Access equipment $
20.4 $ 77.2 Defense 23.2
9.8 Fire & emergency 10.1 1.5
Commercial 8.9 12.4 Corporate
(32.3 ) (35.3 ) Intersegment
eliminations -
0.1 Consolidated
$ 30.3
$ 65.7
December 31, 2015
2014 Period-end backlog: Access
equipment $ 724.5 $ 793.3
Defense 1,239.2 669.8 Fire &
emergency 898.4 699.9 Commercial
269.8 237.7
Consolidated $
3,131.9 $
2,400.7
Non-GAAP Financial
Measures
The Company reports its financial results in accordance with
generally accepted accounting principles in the United States of
America (GAAP). The Company is presenting various operating results
both on a reported basis and on a basis excluding items that affect
comparability of results. When the Company uses operating results
excluding certain items as described below, they are considered
non-GAAP financial measures. The Company believes excluding the
impact of these items is useful to investors in comparing the
Company’s performance to prior period results. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the Company’s results prepared in accordance with GAAP. The
table below presents a reconciliation of the Company’s presented
non-GAAP measures to the most directly comparable GAAP measures for
the three months ended December 31, 2014 (in millions, except per
share amounts):
Adjusted defense segment operating income (non-GAAP)
$ 6.4 OPEB curtailment/settlement
3.4 Defense segment operating income
(GAAP) $ 9.8
Adjusted operating income (non-GAAP) $ 62.3
OPEB curtailment/settlement 3.4
Operating income (GAAP) $
65.7 Adjusted net income
(non-GAAP) $ 32.6 OPEB curtailment/settlement,
net of tax 2.1 Net income
(GAAP) $ 34.7
Adjusted earnings per share-diluted (non-GAAP) $
0.41 OPEB curtailment/settlement, net of tax
0.02 Earnings per share-diluted (GAAP)
$ 0.43
________________________
1 This press release refers to GAAP (U.S. generally accepted
accounting principles) and non-GAAP financial measures. Oshkosh
Corporation believes that the non-GAAP measures provide investors a
useful comparison of the Company’s performance to prior period
results. These non-GAAP measures may not be comparable to similarly
titled measures disclosed by other companies. A reconciliation of
these non-GAAP financial measures to the most comparable GAAP
measures can be found under the caption “Non-GAAP Financial
Measures” in this press release.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160128005299/en/
Oshkosh CorporationFinancial:Patrick Davidson, 920-966-5939Vice
President, Investor RelationsorMedia:John Daggett, 920-233-9247Vice
President, Communications
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