Oshkosh Corporation reported its fiscal 2015 first quarter net income of $34.7 million compared to $54.9 million in the first quarter of fiscal 2014. Results for the first quarter of fiscal 2015 included a $2.1 million after-tax other post-retirement benefit curtailment gain in the defense segment. First quarter adjusted net income was $32.6 million.
Consolidated net sales in the first quarter of fiscal 2015 were $1.35 billion, a decrease of 11.6%. Expected lower defense segment sales and lower fire & emergency shipments resulted a planned lower rate of production. This decline was offset by improved demand in the access equipment and commercial segments.
Access equipment segment sales increased 7.2% to $716.7 million for the first quarter of fiscal 2015. The improvement was principally the result of an increase in telehandler unit volume in North America, offset in part by lower aerial work platform unit volume. The increase in North American telehandler sales was due in part to shipments ahead of price increases related to Tier 4 engine emissions changes. Similarly, price increases related to Tier 4 engine emissions changes for aerial work platforms drove higher demand for those products in the first quarter of fiscal 2014. While North America provided for the majority of the increase in sales in the first quarter of fiscal 2015, the segment experienced higher volumes in all regions of the world except Latin America.
Access equipment segment operating income decreased 14.5%to $77.2 million, or 10.8 percent of sales, for the first quarter of fiscal 2015 compared to $90.3 million, or 13.5 percent of sales, in the first quarter of fiscal 2014. The decrease in operating income was primarily the result of adverse product mix, increased new product development spending, and higher operating costs in support of ongoing MOVE initiatives, offset in part by higher sales volume. Results in the prior year quarter also benefited by $7.5 million as a result of reaching an agreement on the final pricing of a multi-year U.S. military contract.
Consolidated operating income for Oshkosh in the first quarter of fiscal 2015 was $65.7 million, or 4.9% of sales, compared to $96.5 million, or 6.3% of sales, in the prior year first quarter. Adjusted consolidated operating income in the quarter was $62.3 million, or 4.6% of sales. The decrease in adjusted operating income in the first quarter of fiscal 2015 as compared to the first quarter of the prior year was the result of lower sales in the defense segment and an adverse product mix in the access equipment segment.
Charles Szews, Oshkosh Corporation's CEO, said that despite lower sales in the defense segment due to lower U.S. Department of Defense spending for tactical wheeled vehicles, "we finished the quarter with strong orders and higher backlogs in all of our non-defense segments compared with the first quarter of fiscal 2014, which we believe is a positive reflection of our non-defense customers’ expectations for 2015."
Fiscal 2015 Expectations
The company reaffirmed its fiscal 2015 adjusted1 earnings per share estimate range of $4.00 to $4.25 on projected net sales of $6.5 billion to $6.6 billion. Oshkosh believes its stronger than expected first quarter performance will be offset by foreign currency headwinds later in the fiscal year due to the recent significant strengthening of the U.S. dollar. The company anticipates that second quarter adjusted earnings per share will be in the range of the second quarter of fiscal 2014 adjusted earnings per share. This estimate is based on expected improved results in all of the non-defense segments and a lower share count being offset by significantly lower defense earnings due to lower sales, including the impact of an estimated six-month break in production on the Family of Heavy Tactical Vehicles program.
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