JLTV Program Ramping Up After Protest
Ended
Increases Fiscal 2016 EPS Estimate Range to
$2.30 to $2.70
Declares Quarterly Cash Dividend of $0.19
Per Share
Oshkosh Corporation (NYSE: OSK) today reported fiscal 2016
second quarter net income of $56.1 million, or $0.76 per
diluted share, compared to $54.6 million, or $0.69 per
diluted share, in the second quarter of fiscal 2015. Results for
the second quarter of fiscal 2015 included after-tax costs of
$9.3 million incurred in connection with the refinancing of
the Company’s senior notes due 2020. Excluding this item, fiscal
2015 second quarter adjusted1 net income was $63.9 million, or
$0.81 per diluted share.
Consolidated net sales in the second quarter of fiscal 2016 were
$1.52 billion, a decrease of 1.9 percent compared to the
prior year second quarter. Higher sales in the defense, fire &
emergency and commercial segments almost completely offset a
decline in sales in the access equipment segment.
Consolidated operating income in the second quarter of fiscal
2016 was $91.4 million, or 6.0 percent of sales, compared
to $109.7 million, or 7.1 percent of sales, in the prior
year second quarter. The decline in operating income was driven by
lower access equipment segment sales and higher corporate expenses,
offset in part by improved performance in the defense segment. The
Company also experienced improved margins and operating income in
the fire & emergency and commercial segments as both segments
continued to execute on strategies to deliver improved operational
efficiencies.
“I’m proud of the focus that our team members exhibited
executing our MOVE strategy as we delivered earnings per share of
$0.76 during the second fiscal quarter, significantly exceeding our
expectations,” stated Wilson R. Jones, Oshkosh Corporation
president and chief executive officer. “Better than expected
results in the access equipment and defense segments, along with
discrete tax benefits of $0.06 per share, drove the higher than
previously anticipated earnings.
“Our North American access equipment rental customers, as
expected, adopted a more cautious approach to rental fleet capital
expenditures during the quarter. However, we believe rental company
market conditions continue to support a reasonable level of fleet
investment. We believe a generally more positive view on the U.S.
economy, a solid construction outlook and a relatively mild winter
in the U.S. led some rental companies to make access equipment
purchase decisions earlier in the year than they may have
previously planned, leading to higher than expected sales in the
access equipment segment in the second quarter.
“The defense segment achieved sales in the quarter above our
prior expectations and delivered strong operational performance,”
added Jones. “We’re also pleased that our defense team can now move
forward on the JLTV program without the constraints of the
competitor protest that was filed after the award of the production
contract to Oshkosh. Our defense team is energized to begin
delivering these game-changing vehicles to our customer this fall.
The team also secured a contract that they have been pursuing from
an international customer for more than 1,000 M-ATVs. The team is
working with the customer to finalize the funding and vehicle
delivery schedule for this important contract and as a result, our
outlook for fiscal 2016 and the defense segment backlog exclude any
sales of vehicles under this contract.
“We are modestly raising our earnings per share expectations for
fiscal 2016 from a range of $2.20 to $2.60 to a range of $2.30 to
$2.70, largely as the result of a lower estimated tax rate, along
with increased expectations for results in the defense
segment.”
Factors affecting second quarter results for the Company’s
business segments included:
Access Equipment – Access equipment segment sales
declined 23.2 percent to $754.3 million for the second
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
second quarter of fiscal 2015, the access equipment segment
experienced a large increase in telehandler sales related to the
transition to Tier 4 engines.
Access equipment segment operating income decreased
44.7 percent to $75.7 million, or 10.0 percent of
sales, for the second quarter of fiscal 2016 compared to
$136.9 million, or 13.9 percent of sales, in the second
quarter of fiscal 2015. The decrease in operating income was
primarily the result of the lower sales volume and a challenging
pricing environment, the impact of a prior year benefit associated
with a favorable vendor recovery settlement and adverse
manufacturing absorption as the business significantly reduced
production rates, offset in part by lower spending on engine
emissions standards changes.
Defense – Defense segment sales for the second quarter of
fiscal 2016 increased 87.1 percent to $297.0 million. The
increase in sales was primarily due to increased sales of Family of
Heavy Tactical Vehicles (“FHTVs”) and international Mine Resistant
Ambush Protected All-Terrain Vehicles (“M-ATVs”). The Company
experienced a break in production under the FHTV program in the
second quarter of fiscal 2015.
The defense segment recorded operating income of
$27.8 million, or 9.4 percent of sales, for the second
quarter of fiscal 2016 compared to an operating loss of
$12.0 million, or 7.5 percent of sales, in the second
quarter of fiscal 2015. The increase in operating results was
largely due to higher sales volume and favorable product mix.
Fire & Emergency – Fire & emergency segment sales
for the second quarter of fiscal 2016 increased 18.5 percent
to $240.4 million. Sales in the second 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 and maintain higher production rates.
Fire & emergency segment operating income increased
66.0 percent to $14.9 million, or 6.2 percent of
sales, for the second quarter of fiscal 2016 compared to
$9.0 million, or 4.4 percent of sales, in the second
quarter of fiscal 2015. Higher sales volume was the largest
contributor to the increase in operating income.
Commercial – Commercial segment sales increased
7.1 percent to $236.7 million in the second quarter of
fiscal 2016. The increase in sales was primarily attributable to
higher refuse collection vehicle volume driven by fleet
replenishment by private waste haulers and share gains.
Commercial segment operating income increased 99.0 percent
to $17.2 million, or 7.3 percent of sales, for the second
quarter of fiscal 2016 compared to $8.6 million, or
3.9 percent of sales, in the second quarter of fiscal 2015.
The increase in operating income was primarily a result of improved
product mix and higher sales volume.
Corporate – Corporate operating expenses increased
$11.4 million in the second quarter of fiscal 2016 to
$44.2 million. The increase in corporate operating expenses in
the second quarter of fiscal 2016 was primarily due to increased
start-up costs of a shared manufacturing facility and higher health
care costs compared to the second quarter of fiscal 2015.
Interest Expense Net of Interest Income – Interest
expense net of interest income decreased $13.1 million to
$15.1 million in the second quarter of fiscal 2016. Results
for the second quarter of fiscal 2015 included a $14.7 million
charge related to debt extinguishment costs in connection with the
refinancing of the Company’s senior notes. Excluding debt
extinguishment costs, adjusted1 interest expense net of interest
income increased $1.6 million in the second quarter of fiscal
2016. The benefit of lower interest rates on the Company’s
refinanced senior notes was more than offset by increased
borrowings to support increased working capital levels.
Provision for Income Taxes – The Company recorded income
tax expense of $20.3 million in the second quarter of fiscal
2016, or 27.0 percent of pre-tax income, compared to
$29.5 million, or 35.7 percent of pre-tax income, in the
second quarter of fiscal 2015. The Company recorded
$4.4 million, or $0.06 per share, of discrete tax benefits in
the second quarter of fiscal 2016.
Share Repurchases – Share repurchases completed during
the previous twelve months had the effect of increasing earnings
per share in the second quarter of fiscal 2016 by $0.05 compared to
the prior year second quarter. The Company did not repurchase any
shares in the second quarter of fiscal 2016.
Six-month Results
The Company reported net sales for the first six months of
fiscal 2016 of $2.78 billion and net income of
$70.7 million, or $0.95 per share. This compares with net
sales of $2.91 billion and net income of $89.3 million,
or $1.12 per share, in the first six months of the prior year.
Consolidated net sales in the first six months of fiscal 2016
declined 4.5 percent on significantly lower access equipment
segment sales. Earnings for the first six months of fiscal 2016
were $70.7 million, or $0.95 per share, as compared to
adjusted1 earnings of $96.5 million, or $1.21 per share, in
the first six months of fiscal 2015. Improved operating income
results in each of the Company’s non-access equipment segments were
not sufficient to offset the impact of lower sales in the Company’s
access equipment segment and higher corporate expenses, including
increased start-up costs of a shared manufacturing facility.
Earnings per share in the first six months of fiscal 2016 improved
$0.06 compared to the prior year period as a result of lower
average diluted shares outstanding. Earnings per share for the
first six months of fiscal 2016 were negatively impacted by $0.02
as a result of the strengthening U.S. dollar.
Fiscal 2016 Expectations
The Company increased its fiscal 2016 earnings per share
estimate range to $2.30 to $2.70 on projected net sales of
$5.7 billion to $6.0 billion. The increased estimate
range largely reflects a lower estimated tax rate as a result of
the discrete tax benefits recorded in the second fiscal quarter and
increased expectations for defense segment results, partially
offset by expected higher corporate costs.
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 May 31, 2016, to shareholders of record as of May 16,
2016.
Conference Call
The Company will comment on its fiscal 2016 second quarter
earnings and its full-year fiscal 2016 outlook during a conference
call at 9:00 a.m. EDT this morning. Slides for the call will be
available on the Company’s website beginning at 7:00 a.m. EDT 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 or payments
thereof; the Company’s ability to utilize material and components
which it has committed to purchase from suppliers; higher material
costs resulting from production variability due to uncertainty of
timing of funding or payments from international defense customers;
risks related to reductions in government expenditures in light of
U.S. defense budget pressures, sequestration and an uncertain DoD
tactical wheeled vehicle strategy; the impact of any DoD
solicitation for competition for future contracts to produce
military vehicles, including a future Family of Medium Tactical
Vehicle production contract; 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 Six Months Ended
March 31, March 31,
2016 2015
2016 2015 Net
sales $ 1,524.3 $ 1,554.2 $
2,776.3 $ 2,907.5 Cost of sales
1,265.0
1,278.4
2,334.2
2,402.0 Gross income 259.3
275.8 442.1 505.5 Operating
expenses: Selling, general and administrative
154.7 152.8 294.0 303.3 Amortization
of purchased intangibles 13.2
13.3
26.4 26.8
Total operating expenses
167.9 166.1
320.4
330.1 Operating income
91.4 109.7 121.7 175.4 Other
income (expense): Interest expense (15.6 )
(28.8 ) (30.2 ) (43.2 )
Interest income 0.5 0.6 1.0 1.4
Miscellaneous, net (1.0
) 1.3
(1.0 )
-
Income before income taxes and
equity
in earnings of unconsolidated
affiliates
75.3 82.8 91.5 133.6 Provision for
income taxes 20.3
29.5 22.0
45.7
Income before equity in earnings of unconsolidated
affiliates 55.0 53.3 69.5 87.9
Equity in earnings of unconsolidated affiliates
1.1 1.3
1.2
1.4 Net income
$ 56.1
$ 54.6
$ 70.7
$ 89.3
Amounts available to common shareholders, net of tax: Net
income $ 56.1 $ 54.6 $
70.7 $ 89.3 Allocated to participating
securities -
(0.1 )
- (0.2
) Net income available to common
shareholders $ 56.1
$ 54.5
$ 70.7
$ 89.1
Earnings per share attributable to common shareholders:
Basic $ 0.77 $ 0.70 $
0.96 $ 1.14 Diluted 0.76
0.69 0.95 1.12 Basic
weighted-average shares outstanding 73,118,295
78,007,479 73,593,439 78,433,035 Dilutive
stock options and other equity- based compensation
awards 743,045 1,102,424 766,421
1,103,796 Participating restricted stock
- (115,163
) -
(112,237 ) Diluted
weighted-average shares outstanding
73,861,340
78,994,740
74,359,860
79,424,594 OSHKOSH
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
March 31, September 30, 2016
2015 ASSETS Current assets:
Cash and cash equivalents $ 38.4 $
42.9 Receivables, net 1,046.0 964.6
Inventories, net 1,373.4 1,301.7 Deferred
income taxes, net 54.5 52.2 Other current
assets 77.9
67.9 Total current assets
2,590.2 2,429.3 Investment in unconsolidated
affiliates 16.8 16.2 Property, plant and
equipment: Property, plant and equipment 1,121.8
1,093.7 Accumulated depreciation
(643.5 )
(617.9 ) Property, plant
and equipment, net 478.3 475.8 Goodwill
1,006.0 1,001.1 Purchased intangible assets,
net 580.2 606.7 Other long-term assets
79.7
83.9 Total assets
$ 4,751.2
$ 4,613.0
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Revolving credit facilities and current
maturities of long-term debt $ 155.7
$ 83.5 Accounts payable 597.7
552.8 Customer advances 525.9 440.2
Payroll-related obligations 123.6 116.6
Other current liabilities 241.6
265.0 Total current
liabilities 1,644.5 1,458.1 Long-term debt,
less current maturities 845.0 855.0 Deferred
income taxes, net 88.6 91.7 Other long-term
liabilities 298.7 297.1 Commitments and
contingencies Shareholders' equity
1,874.4
1,911.1 Total liabilities and
shareholders' equity $
4,751.2 $
4,613.0 OSHKOSH
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited; in millions)
Six Months Ended March 31,
2016 2015 Operating
activities: Net income $ 70.7 $
89.3 Depreciation and amortization 63.7
64.0 Stock-based compensation expense 11.4
11.4 Deferred income taxes (7.0 )
(4.7 ) Foreign currency transaction losses
0.3 10.7 Gain on sale of assets (6.3
) (5.0 ) Other non-cash adjustments
(0.2 ) 12.8 Changes in operating assets and
liabilities (38.1
) (249.2
) Net cash provided (used) by operating
activities 94.5 (70.7 )
Investing activities: Additions to property, plant and
equipment (40.3 ) (69.8 )
Additions to equipment held for rental (22.7 )
(15.5 ) Proceeds from sale of equipment held for
rental 26.1 13.4 Other investing
activities (1.0
) (1.5
) Net cash used by investing activities
(37.9 ) (73.4 ) Financing
activities: Net increase (decrease) in short-term debt
(21.3 ) 13.7 Proceeds from issuance of
debt (original maturities greater than three months)
273.5 315.0 Repayments of debt (original
maturities greater than three months) (190.0 )
(325.0 ) Repurchases of common stock
(100.1 ) (88.1 ) Dividends paid
(28.0 ) (26.7 ) Debt issuance
costs - (15.4 ) Proceeds from exercise
of stock options 1.9 3.4 Excess tax benefit
from stock-based compensation 0.9
4.1 Net cash used by
financing activities (63.1 ) (119.0
) Effect of exchange rate changes on cash
2.0
2.7 Decrease in cash and cash
equivalents (4.5 ) (260.4 ) Cash
and cash equivalents at beginning of period
42.9 313.8
Cash and cash equivalents at end of period
$ 38.4
$ 53.4
OSHKOSH CORPORATION SEGMENT INFORMATION
(Unaudited; in millions)
Three Months Ended March
31, 2016 2015
External Inter- Net External
Inter- Net Customers
segment Sales
Customers segment
Sales Access equipment Aerial work
platforms $ 375.1 $ - $
375.1 $ 432.5 $ - $
432.5 Telehandlers 214.7 - 214.7
379.7 - 379.7 Other
164.5 -
164.5
169.6 -
169.6 Total access
equipment 754.3 - 754.3 981.8
- 981.8 Defense 296.8 0.2
297.0 157.6 1.1 158.7 Fire
& emergency 237.2 3.2 240.4
194.6 8.3 202.9 Commercial
Concrete placement 111.3 - 111.3
111.0 - 111.0 Refuse collection
99.5 - 99.5 76.7 - 76.7
Other 25.2
0.7 25.9
32.5
0.7 33.2
Total commercial 236.0 0.7 236.7
220.2 0.7 220.9 Intersegment
eliminations -
(4.1 )
(4.1 )
- (10.1
) (10.1
) Consolidated net sales
$ 1,524.3
$ -
$ 1,524.3
$ 1,554.2
$ -
$ 1,554.2
Six Months Ended March 31,
2016 2015 External
Inter- Net External Inter- Net
Customers segment
Sales Customers
segment Sales Access
equipment Aerial work platforms $ 617.1
$ - $ 617.1 $ 709.8
$ - $ 709.8 Telehandlers
326.5 - 326.5 670.1 -
670.1 Other 340.5
- 340.5
318.6
- 318.6
Total access equipment 1,284.1 -
1,284.1 1,698.5 - 1,698.5
Defense 613.7 1.3 615.0 426.8
1.2 428.0 Fire & emergency
442.6 5.3 447.9 354.1 15.8
369.9 Commercial Concrete placement
183.6 - 183.6 197.1 -
197.1 Refuse collection 198.5 -
198.5 166.3 - 166.3 Other
53.8 1.1
54.9
64.7 3.0
67.7 Total commercial
435.9 1.1 437.0 428.1 3.0
431.1 Intersegment eliminations
- (7.7
) (7.7
) -
(20.0 )
(20.0 ) Consolidated net
sales $ 2,776.3
$ -
$ 2,776.3
$ 2,907.5
$ -
$ 2,907.5
Three Months Ended Six Months
Ended March 31, March
31, 2016
2015 2016
2015 Operating income (loss): Access
equipment $ 75.7 $ 136.9 $
96.1 $ 214.1 Defense 27.8
(12.0 ) 51.0 (2.2 ) Fire
& emergency 14.9 9.0 25.0 10.5
Commercial 17.2 8.6 26.1 21.0
Corporate (44.2 ) (32.8 )
(76.5 ) (68.1 ) Intersegment
eliminations -
- -
0.1 Consolidated
$ 91.4
$ 109.7
$ 121.7
$ 175.4
March 31, 2016
2015 Period-end backlog: Access
equipment $ 664.8 $ 654.1
Defense 1,680.5 573.9 Fire &
emergency 903.4 716.1 Commercial
289.4 291.8
Consolidated $
3,538.1 $
2,235.9
Defense and consolidated backlog at March 31, 2016 excludes a
contract award from an international customer for over 1,000 M-ATVs
as the Company works with the customer to finalize funding and
vehicle delivery schedules.
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 (in
millions, except per share amounts):
Three Months Ended
Six Months Ended March 31, 2015
March 31, 2015 Adjusted interest
expense net of interest income (non-GAAP) $
(13.5 ) $ (27.1 ) Debt
extinguishment costs (14.7
) (14.7
) Interest expense net of interest income
(GAAP) $ (28.2
) $
(41.8 ) Adjusted
net income (non-GAAP) $ 63.9 $ 96.5
OPEB curtailment / settlement, net of tax -
2.1 Debt extinguishment costs, net of tax
(9.3 )
(9.3 ) Net income
(GAAP) $ 54.6
$ 89.3
Adjusted earnings per share-diluted (non-GAAP) $
0.81 $ 1.21 OPEB curtailment / settlement,
net of tax - 0.03 Debt extinguishment costs,
net of tax (0.12
) (0.12
) Earnings per share-diluted (GAAP)
$ 0.69
$ 1.12
____________________________
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/20160428005410/en/
Oshkosh CorporationFinancial:Patrick DavidsonVice President,
Investor Relations920.966.5939orMedia:John DaggettVice President,
Communications920.233.9247
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