Market Overview

Oshkosh Corporation Reports Fiscal 2017 Second Quarter Results

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Oshkosh Corporation (NYSE:OSK) today reported fiscal 2017 second
quarter net income of $44.3 million, or $0.58 per diluted share,
compared to $56.1 million, or $0.76 per diluted share, in the second
quarter of fiscal 2016. Results for the second quarter of fiscal 2017
included after-tax charges of $13.7 million associated with previously
announced restructuring actions in the access equipment segment.
Excluding these charges, fiscal 2017 second quarter adjusted1
net income was $58.0 million, or $0.76 per diluted share. Comparisons in
this news release are to the corresponding period of the prior year,
unless otherwise noted.

Consolidated net sales in the second quarter of fiscal 2017 were
$1.62 billion, an increase of 6.2 percent. A significant increase in
sales in the defense segment was offset in part by lower sales in the
access equipment and commercial segments.

Consolidated operating income in the second quarter of fiscal 2017 was
$80.4 million, or 5.0 percent of sales, compared to $91.4 million, or
6.0 percent of sales, in the prior year second quarter. Excluding
$17.2 million of pre-tax restructuring-related charges in the access
equipment segment, adjusted1 operating income in the second
quarter of fiscal 2017 was $97.6 million, or 6.0 percent of sales. The
increase in adjusted1 operating income was primarily the
result of higher sales in the defense segment, improved performance in
the fire & emergency segment and lower start-up costs related to a
corporate-led manufacturing facility, offset in part by lower access
equipment and commercial segment performance.

"Our positive momentum continued in the second quarter, as we delivered
adjusted1 earnings per share of $0.76, matching our
performance of last year and ahead of our expectations," said Wilson R.
Jones, president and chief executive officer of Oshkosh Corporation.

"We are pleased with our second quarter results and have a positive
outlook. Our positive outlook is supported by favorable market dynamics
in our defense and fire & emergency segments as well as opportunities to
drive additional shareholder value through continued execution of our
MOVE strategy and the benefit of aging customer fleets that will
eventually need to be replaced. As we celebrate our 100th
anniversary, our team members are engaged and energized about the future.

"As a result of our solid performance in the first half of fiscal 2017
and positive outlook for the remainder of the year, we are raising our
full-year fiscal 2017 earnings per share estimate range to $2.70 to
$3.00 and our adjusted1 earnings per share estimate range to
$3.20 to $3.50," said Jones.

Factors affecting second quarter results for the Company's business
segments included:

Access Equipment – Access equipment segment net sales decreased
4.1 percent to $723.2 million in the second quarter of fiscal 2017. The
decline in sales was primarily due to lower telehandler sales volumes in
North America and Europe as well as a more competitive pricing
environment, offset in part by higher sales of used equipment and
service.

Access equipment segment operating income decreased 44.4 percent to
$42.1 million, or 5.8 percent of sales, in the second quarter of fiscal
2017 compared to $75.7 million, or 10.0 percent of sales, in the second
quarter of fiscal 2016. Excluding restructuring-related charges, access
equipment segment adjusted1 operating income in the second
quarter of fiscal 2017 was $59.3 million, or 8.2 percent of sales. The
decline in operating income was primarily due to a more competitive
pricing environment, along with higher selling, general and
administrative expenses, including higher trade show expenses.

Defense – Defense segment net sales for the second quarter of
fiscal 2017 increased 50.2 percent to $446.1 million. The increase in
sales was primarily due to the ramp-up of sales to the U.S. government
under the Joint Light Tactical Vehicle program and higher international
Mine Resistant Ambush Protected All Terrain Vehicle sales.

Defense segment operating income increased 75.2 percent to
$48.7 million, or 10.9 percent of sales, in the second quarter of fiscal
2017 compared to $27.8 million, or 9.4 percent of sales, in the second
quarter of fiscal 2016. The increase in operating income was largely due
to higher sales volume and improved manufacturing absorption as a result
of higher sales, offset in part by adverse product mix and higher
incentive compensation expense.

Fire & Emergency – Fire & emergency segment net sales for the
second quarter of fiscal 2017 decreased 1.2 percent to $237.5 million.
The decrease in sales was primarily due to lower international Airports
Products unit volume, which was offset in part by improved pricing.

Fire & emergency segment operating income increased 46.3 percent to
$21.8 million, or 9.2 percent of sales, in the second quarter of fiscal
2017 compared to $14.9 million, or 6.2 percent of sales, in the second
quarter of fiscal 2016. The increase in operating income was primarily a
result of improved pricing.

Commercial – Commercial segment net sales decreased 8.7 percent
to $216.0 million in the second quarter of fiscal 2017. The decrease in
sales was primarily due to lower refuse collection vehicle unit volumes,
offset in part by higher package sales, which include third-party
chassis.

Commercial segment operating income decreased 65.1 percent to
$6.0 million, or 2.8 percent of sales, in the second quarter of fiscal
2017 compared to $17.2 million, or 7.3 percent of sales, in the second
quarter of fiscal 2016. The decrease in operating income was primarily a
result of lower sales volumes and underabsorption due to lower
production driven by lower order activity in the first fiscal quarter.
Commercial segment second quarter fiscal 2017 results also included
$1.3 million of costs related to an accident at one of its manufacturing
facilities.

Corporate – Corporate operating costs decreased $6.0 million in
the second quarter of fiscal 2017 to $38.2 million due primarily to
improved operating results related to a corporate-led manufacturing
facility, which incurred higher start-up costs during the second quarter
of fiscal 2016.

Interest Expense Net of Interest Income – Interest expense net of
interest income decreased $1.0 million to $14.1 million in the second
quarter of fiscal 2017.

Provision for Income Taxes – The Company recorded income tax
expense of $23.6 million in the second quarter of fiscal 2017, or
35.0 percent of pre-tax income, compared to $20.3 million, or
27.0 percent of pre-tax income, in the second quarter of fiscal 2016.
Excluding impacts of restructuring-related charges, adjusted1
income tax expense in the second quarter of fiscal 2017 was
$27.1 million, or 32.0 percent of adjusted1 pre-tax
income. The Company recorded $1.5 million and $4.4 million of discrete
tax benefits in the second quarter of fiscal 2017 and fiscal 2016,
respectively.

Six-month Results

The Company reported net sales for the first six months of fiscal 2017
of $2.83 billion and net income of $63.5 million, or $0.84 per diluted
share. This compares with net sales of $2.78 billion and net income of
$70.7 million, or $0.95 per diluted share, in the first six months of
the prior year. Excluding $13.7 million of after-tax
restructuring-related charges in the access equipment segment, adjusted1
net income for the first six months of fiscal 2017 was $77.2 million, or
$1.02 per diluted share. Higher defense segment sales, improved
performance in the fire & emergency segment and lower start-up costs of
a corporate-led manufacturing facility were partially offset by lower
access equipment segment sales, lower performance in the commercial
segment and higher incentive compensation expense.

Fiscal 2017 Expectations

The Company increased its fiscal 2017 diluted earnings per share
estimate range to $2.70 to $3.00 on estimated operating income of
$372 million to $402 million. The Company also increased its fiscal 2017
adjusted1 diluted earnings per share estimate range to $3.20
to $3.50 on projected net sales of $6.6 billion to $6.7 billion and
adjusted1 operating income of $415 million to $445 million.
The adjusted1 diluted earnings per share and adjusted1
operating income estimates exclude the impact of expected access
equipment segment restructuring-related charges.

Dividend Announcement

The Company's Board of Directors today declared a quarterly cash
dividend of $0.21 per share of Common Stock. The dividend will be
payable on May 26, 2017, to shareholders of record as of May 12, 2017.

Conference Call

The Company will comment on its fiscal 2017 second quarter earnings and
its full-year fiscal 2017 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 news 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 news
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 acceptance of and funding or
payments for such products and services; 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,
including any delays as a result of an accident at the Company's Dodge
Center manufacturing facility; 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 news
release. The Company assumes no obligation, and disclaims any
obligation, to update information contained in this news 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

Founded in 1917, Oshkosh Corporation is 100 years strong and continues
to make a difference in people's lives. Oshkosh brings together a unique
set of integrated capabilities and diverse end markets that, when
combined with the Company's MOVE strategy and positive long-term
outlook, illustrate why Oshkosh is a different integrated global
industrial. The Company is a leader in designing, manufacturing and
servicing a broad range of access equipment, commercial, fire &
emergency, military and specialty vehicles and vehicle bodies under the
brands of Oshkosh®, JLG®, Pierce®,
McNeilus®, Jerr-Dan®, Frontline,
CON-E-CO®, London® and IMT®.

Today, Oshkosh Corporation is a Fortune 500 Company with manufacturing
operations on four continents. Its products are recognized around the
world for quality, durability and innovation and can be found in more
than 150 countries around the globe. As a different integrated global
industrial, Oshkosh is committed to making a difference for team
members, customers, shareholders, communities and the environment. For
more information, please visit www.oshkoshcorporation.com.

®, ™ 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,
2017   2016 2017   2016
 
Net sales $ 1,618.3 $ 1,524.3 $ 2,829.7 $ 2,776.3
Cost of sales   1,357.0     1,265.0     2,368.7     2,334.2  
Gross income 261.3 259.3 461.0 442.1
 
Operating expenses:
Selling, general and administrative 169.8 154.7 320.8 294.0
Amortization of purchased intangibles   11.1     13.2     23.6     26.4  
Total operating expenses   180.9     167.9     344.4     320.4  
Operating income 80.4 91.4 116.6 121.7
 
Other income (expense):
Interest expense (15.1 ) (15.6 ) (29.8 ) (30.2 )
Interest income 1.0 0.5 1.8 1.0
Miscellaneous, net   1.2     (1.0 )   2.5     (1.0 )
Income before income taxes and equity
in earnings of unconsolidated affiliates 67.5 75.3 91.1 91.5
Provision for income taxes   23.6     20.3     28.8     22.0  
Income before equity in earnings of
unconsolidated affiliates 43.9 55.0 62.3 69.5
Equity in earnings of unconsolidated
affiliates   0.4     1.1     1.2     1.2  
Net income $ 44.3   $ 56.1   $ 63.5   $ 70.7  
 
Earnings per share attributable to common shareholders:
Basic $ 0.59 $ 0.77 $ 0.85 $ 0.96
Diluted 0.58 0.76 0.84 0.95
 
Basic weighted-average shares outstanding 74,696,616 73,118,295 74,486,209 73,593,439
Dilutive stock options and other equity-
based compensation awards   1,086,846     743,045     1,095,693     766,421  
Diluted weighted-average shares outstanding   75,783,462     73,861,340     75,581,902     74,359,860  
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
 
  March 31,   September 30,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 413.4 $ 321.9
Receivables, net 945.1 1,021.9
Inventories, net 1,455.1 979.8
Other current assets   90.1     93.9  
Total current assets 2,903.7 2,417.5
Property, plant and equipment:
Property, plant and equipment 1,135.0 1,110.6
Accumulated depreciation   (689.3 )   (658.5 )
Property, plant and equipment, net 445.7 452.1
Goodwill 994.4 1,003.5
Purchased intangible assets, net 529.7 553.5
Other long-term assets   115.3     87.2  
Total assets $ 4,988.8   $ 4,513.8  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit facilities and current maturities
of long-term debt $ 10.0 $ 20.0
Accounts payable 694.6 466.1
Customer advances 672.0 471.8
Payroll-related obligations 143.3 147.9
Other current liabilities   273.4     261.8  
Total current liabilities 1,793.3 1,367.6
Long-term debt, less current maturities 817.1 826.2
Other long-term liabilities 345.1 343.5
Commitments and contingencies
Shareholders' equity   2,033.3     1,976.5  
Total liabilities and shareholders' equity $ 4,988.8   $ 4,513.8  
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
   
Six Months Ended
March 31,
2017 2016
Operating activities:
Net income $ 63.5 $ 70.7
Depreciation and amortization 64.4 63.7
Stock-based compensation expense 12.2 11.4
Deferred income taxes 1.0 (7.0 )
Gain on sale of assets (4.2 ) (6.3 )
Foreign currency transaction losses 0.2 0.3
Other non-cash adjustments 0.5 (0.2 )
Changes in operating assets and liabilities   10.5     (36.6 )
Net cash provided by operating activities 148.1 96.0
 
Investing activities:
Additions to property, plant and equipment (28.0 ) (40.3 )
Additions to equipment held for rental (24.6 ) (22.7 )
Proceeds from sale of equipment held for rental 19.8 26.1
Other investing activities   (0.9 )   (1.0 )
Net cash used by investing activities (33.7 ) (37.9 )
 
Financing activities:
Proceeds from issuance of debt - 273.5
Repayments of debt (20.0 ) (190.0 )
Net decrease in short-term debt - (21.3 )
Repurchases of common stock (3.0 ) (101.6 )
Dividends paid (31.3 ) (28.0 )
Proceeds from exercise of stock options 33.2 1.9
Excess tax benefit from stock-based compensation   -     0.9  
Net cash used by financing activities (21.1 ) (64.6 )
 
Effect of exchange rate changes on cash   (1.8 )   2.0  
Increase (decrease) in cash and cash equivalents 91.5 (4.5 )
Cash and cash equivalents at beginning of period   321.9     42.9  
Cash and cash equivalents at end of period $ 413.4   $ 38.4  
OSHKOSH CORPORATION
SEGMENT INFORMATION
(Unaudited; in millions)
 
  Three Months Ended March 31,
2017   2016
External   Inter-   Net External   Inter-   Net
Customers segment Sales Customers segment Sales
Access equipment
Aerial work platforms $ 369.4 $ - $ 369.4 $ 375.1 $ - $ 375.1
Telehandlers 161.6 - 161.6 214.7 - 214.7
Other   192.2   -     192.2     164.5   -     164.5  
Total access equipment 723.2 - 723.2 754.3 - 754.3
 
Defense 445.7 0.4 446.1 296.8 0.2 297.0
 
Fire & emergency 233.5 4.0 237.5 237.2 3.2 240.4
 
Commercial
Concrete placement 112.7 - 112.7 111.3 - 111.3
Refuse collection 79.1 - 79.1 99.5 - 99.5
Other   22.3   1.9     24.2     25.2   0.7     25.9  
Total commercial 214.1 1.9 216.0 236.0 0.7 236.7
Corporate & eliminations   1.8   (6.3 )   (4.5 )   -   (4.1 )   (4.1 )
$ 1,618.3 $ -   $ 1,618.3   $ 1,524.3 $ -   $ 1,524.3  
 
Six Months Ended March 31,
2017 2016
External Inter- Net External Inter- Net
Customers segment Sales Customers segment Sales
Access equipment
Aerial work platforms $ 603.1 $ - $ 603.1 $ 617.1 $ - $ 617.1
Telehandlers 254.9 - 254.9 326.5 - 326.5
Other   354.4   -     354.4     340.5   -     340.5  
Total access equipment 1,212.4 - 1,212.4 1,284.1 - 1,284.1
 
Defense 739.9 0.7 740.6 613.7 1.3 615.0
 
Fire & emergency 462.6 7.4 470.0 442.6 5.3 447.9
 
Commercial
Concrete placement 197.1 - 197.1 183.6 - 183.6
Refuse collection 171.3 - 171.3 198.5 - 198.5
Other   43.8   3.0     46.8     53.8   1.1     54.9  
Total commercial 412.2 3.0 415.2 435.9 1.1 437.0
Corporate & eliminations   2.6   (11.1 )   (8.5 )   -   (7.7 )   (7.7 )
$ 2,829.7 $ -   $ 2,829.7   $ 2,776.3 $ -   $ 2,776.3  
  Three Months Ended   Six Months Ended
March 31, March 31,
2017   2016 2017   2016
Operating income (loss):
Access equipment $ 42.1 $ 75.7 $ 66.5 $ 96.1
Defense 48.7 27.8 72.5 51.0
Fire & emergency 21.8 14.9 38.8 25.0
Commercial 6.0 17.2 10.6 26.1
Corporate (38.2 ) (44.2 ) (71.8 ) (76.5 )
Eliminations   -     -     -     -  
$ 80.4   $ 91.4   $ 116.6   $ 121.7  
 
March 31,
2017 2016
Period-end backlog:
Access equipment $ 737.9 $ 664.8
Defense 1,827.7 1,680.5
Fire & emergency 1,005.9 903.4
Commercial   353.8     289.4  
$ 3,925.3   $ 3,538.1  

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 GAAP basis
and on a basis excluding items that affect comparability of results.
When the Company excludes 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   Six Months
Ended Ended
March 31, 2017
 
Access equipment segment adjusted operating income (Non-GAAP) $ 59.3 $ 83.7
Restructuring-related costs   (17.2 )   (17.2 )
Access equipment segment operating income (GAAP) $ 42.1   $ 66.5  
 
Consolidated adjusted operating income (Non-GAAP) $ 97.6 $ 133.8
Restructuring-related costs   (17.2 )   (17.2 )
Consolidated operating income (GAAP) $ 80.4   $ 116.6  
 
Adjusted provision for income taxes (Non-GAAP) $ 27.1 $ 32.3
Income tax benefit for restructuring-related costs   (3.5 )   (3.5 )
Provision for income taxes (GAAP) $ 23.6   $ 28.8  
 
Adjusted net income (Non-GAAP) $ 58.0 $ 77.2
Restructuring-related costs, net of tax   (13.7 )   (13.7 )
Net income (GAAP) $ 44.3   $ 63.5  
 
Adjusted diluted earnings per share (Non-GAAP) $ 0.76 $ 1.02
Restructuring-related costs, net of tax   (0.18 )   (0.18 )
Diluted earnings per share (GAAP) $ 0.58   $ 0.84  
 
Fiscal Year Ended
September 30, 2017 Expectations
Low High
 
Adjusted operating income (Non-GAAP) $ 415.0 $ 445.0
Restructuring-related costs   (43.0 )   (43.0 )
Operating income (GAAP) $ 372.0   $ 402.0  
 
Adjusted diluted earnings per share (Non-GAAP) $ 3.20 $ 3.50
Restructuring-related costs   (0.50 )   (0.50 )
Diluted earnings per share (GAAP) $ 2.70   $ 3.00  

1 This news 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 news
release.

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