News Column

Oshkosh Corporation Reports Fiscal 2014 Second Quarter Results

May 14, 2014



By a News Reporter-Staff News Editor at Defense & Aerospace Week -- Oshkosh Corporation (NYSE: OSK) reported fiscal 2014 second quarter net income of $71.5 million, or $0.83 per diluted share, compared to $85.9 million, or $0.96 per diluted share, in the second quarter of fiscal 2013. Fiscal 2014 second quarter adjusted net income was $69.0 million, or $0.80 per diluted share, excluding1 after-tax costs of a pension curtailment of $2.6 million related to announced workforce reductions in the Company's defense segment, after-tax costs of $7.0 million incurred in connection with the refinancing of the Company's senior notes due 2017 and credit agreement as well as a $12.1 million tax benefit related to the reduction of a net operating loss valuation reserve. All results are for continuing operations, unless stated otherwise. Comparisons are to the corresponding period of the prior year, unless otherwise noted.

Consolidated net sales in the second quarter of fiscal 2014 were $1.68 billion, a decrease of 15.4 percent. Significantly lower defense segment sales were offset in part by improved demand in the Company's access equipment segment.

Consolidated operating income in the second quarter of fiscal 2014 was $119.4 million, or 7.1 percent of sales, compared to $134.6 million, or 6.8 percent of sales, in the second quarter of fiscal 2013. Fiscal 2014 second quarter adjusted operating income was $123.5 million, or 7.4 percent of sales, excluding1 before-tax pension curtailment costs of $4.1 million. The 60 basis point improvement in adjusted operating income margins in the second quarter of fiscal 2014 was primarily a result of favorable performance in the Company's access equipment segment, offset in part by lower defense segment sales.

"A strong focus on execution has enabled a successful roll-out of our MOVE strategy over the past two years and that focus was certainly evident this quarter. Our employees and business partners worked hard to overcome a number of weather-related challenges in the United States during the quarter, and we are thankful for their efforts," said Charles L. Szews, Oshkosh Corporation chief executive officer. "We are optimistic about our outlook for the second half of fiscal 2014. U.S. construction spending has continued to slowly improve. We are also seeing positive trends outside the U.S. as international orders for the first six months of fiscal 2014 grew at a double digit rate in our access equipment segment. This is encouraging as we seek to broaden our sales across the globe.

"We recently participated in several successful trade shows for our non-defense businesses where we launched a large number of new products that we believe will improve performance for our customers.

"Our defense segment performance remained in line with our previously communicated expectations. We recently announced plans to reduce our defense segment workforce this summer, while still maintaining the experience and expertise necessary to support existing programs and to successfully compete for numerous tactical wheeled vehicle sales opportunities globally. We expect to be able to announce positive results on some of these opportunities over the next 12 to 24 months.

"We remain focused on executing our MOVE strategy and reiterate our fiscal 2014 adjusted1 earnings per share target range of between $3.40 and $3.65," added Szews.

Factors affecting second quarter results for the Company's business segments included: Access Equipment - Access equipment segment sales increased 5.9 percent to $866.0 million for the second quarter of fiscal 2014. The improvement was principally the result of higher unit volumes, improved aftermarket parts & service sales and favorable pricing, offset in part by the absence of U.S. military telehandler sales under a contract that was completed in the fourth quarter of fiscal 2013. Sales of access equipment, excluding U.S. military contract sales1, rose 9.3 percent in the second quarter, overcoming the impact of severe weather.

Access equipment segment operating income increased 22.7 percent to $116.6 million, or 13.5 percent of sales, for the second quarter of fiscal 2014 compared to $95.0 million, or 11.6 percent of sales. The increase in operating income was primarily the result of higher sales volume, favorable impact of cost reduction initiatives and favorable pricing, offset in part by increased new product development spending. Defense - Defense segment sales for the second quarter of fiscal 2014 decreased 41.5 percent to $484.4 million. The decrease in sales was primarily due to an expected decline in sales to the U.S. Department of Defense (DoD) and lower international sales of MRAP All-Terrain Vehicles.

Defense segment operating income decreased 48.6 percent to $34.5 million, or 7.1 percent of sales, for the second quarter of fiscal 2014 compared to $67.0 million, or 8.1 percent of sales. Excluding a pension curtailment charge1, adjusted operating income was $38.6 million, or 8.0 percent of sales. The decrease in adjusted operating income was largely due to lower sales volume. Results in the second quarter of fiscal 2014 also benefited from reaching an agreement with the U.S. government regarding the reimbursement of $4.6 million of pension costs on DoD contracts. Fire & Emergency - Fire & emergency segment sales for the second quarter of fiscal 2014 decreased 10.3 percent to $156.1 million. The decrease in sales primarily reflected lower sales volume as a result of production delays and lower international deliveries.

Fire & emergency segment operating income decreased 60.9 percent to $1.0 million, or 0.7 percent of sales, for the second quarter of fiscal 2014 compared to $2.7 million, or 1.6 percent of sales. The decrease in operating income was largely the result of lower sales volume. Commercial - Commercial segment sales decreased 1.7 percent to $182.3 million in the second quarter of fiscal 2014. The decrease in sales was primarily attributable to lower package sales, which include both a body and chassis, and lower intersegment defense sales, offset in part by higher shipments of front-discharge concrete mixer rebuilds. Severe weather contributed to delays in chassis supplier deliveries, which impacted the Company's ability to ship completed units in the quarter.

Keywords for this news article include: Defense, U.S. Military, Oshkosh Corporation.

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Source: Defense & Aerospace Week


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