A recently released financial report from Oshkosh Corp. says that 5.9% growth in access-equipment sales during the second quarter helped Oshkosh Corp. offset reductions in defense work during the period. Oshkosh owns the JLG brand of access equipment and telehandlers, as well as the SkyTrak brand of telehandlers.
Second-quarter sales of access equipment grew 5.9%, reaching $866.0 million. The improvement was principally the result of higher unit volumes, improved aftermarket parts and service sales, and favorable pricing. That growth was 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 sales, rose 9.3% in the second quarter, despite the impact of severe weather.
Access equipment segment operating income increased 22.7%, to $116.6 million, or 13.5% of sales, for the second quarter of fiscal 2014, compared to $95.0 million, or 11.6% of sales a year ago. The increase in operating income came primarily from higher sales volume, the favorable impact of cost reduction initiatives, and favorable pricing, offset in part by increased spending on new-product development.
Overall, Oshkosh Corp. 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.
The company’s Fiscal 2014 second-quarter adjusted net income was $69.0 million, or $0.80 per diluted share, excluding 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 from refinancing of the company’s senior notes due in 2017 and credit agreement; as well as a $12.1-million tax benefit related to the reduction of a net operating loss valuation reserve.
Consolidated operating income in the second quarter of fiscal 2014 was $119.4 million, or 7.1% of sales, compared to $134.6 million, or 6.8% of sales, in the second quarter of fiscal 2013.
Fiscal 2014 second quarter adjusted operating income was $123.5 million, or 7.4% of sales, excluding 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,” said Szews.
Six-month Results
The Company reported net sales for the first six months of fiscal 2014 of $3.21 billion and net income of $126.4 million, or $1.47 per share. This compares with net sales of $3.73 billion and net income of $132.2 million, or $1.46 per share, in the first six months of the prior year. Adjusted results1 for the first six months of fiscal 2014 were $123.9 million, or $1.44 per share, compared to $142.6 million, or $1.57 per share, in the first six months of fiscal 2013.
The decrease in adjusted results in the first six months of fiscal 2014 was largely attributable to lower sales and operating income in the company’s defense segment and higher information technology and new product development spending, offset in part by higher sales and improved performance in the access equipment segment. Earnings per share in the first six months of fiscal 2014 improved $0.06 compared to the prior year period as a result of lower average diluted shares outstanding.
Fiscal 2014 Expectations
The company expects consolidated sales for fiscal 2014 to be approximately $6.7 billion to $6.8 billion, reflecting an increase of $50 million on the low end of the range and a decrease of $50 million on the high end of the range, compared to the company’s previous expectations.
The company’s estimated sales range reflects higher expectations in the access equipment segment and slightly lower expectations in each of the company’s other segments. The company expects adjusted consolidated operating income to be between $490 million and $520 million.
The adjusted consolidated operating income expectations reflect improved operating income margins in the company’s access equipment and defense segments, offset by lower operating income margins in the company’s fire & emergency and commercial segments, and an approximate $10 million increase in corporate expenses compared to previous expectations.
For more information, log on to www.oshkoshcorporation.com.
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