Market Overview

Oshkosh Corporation Reports Fiscal 2017 Third Quarter Results

Share:

Increases Fiscal 2017 Estimated EPS Range

Declares Quarterly Cash Dividend of $0.21 Per Share

Oshkosh Corporation (NYSE:OSK) today reported fiscal 2017 third quarter
net income of $128.6 million, or $1.69 per diluted share, compared to
$84.2 million, or $1.13 per diluted share, in the third quarter of
fiscal 2016. Results for the third quarter of fiscal 2017 included
after-tax charges of $11.2 million associated with previously announced
restructuring actions in the access equipment segment. Excluding these
charges, fiscal 2017 third quarter adjusted1 net income was
$139.8 million, or $1.84 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 third quarter of fiscal 2017 were
$2.04 billion, an increase of 16.6 percent. All segments reported
increased sales, led by the defense segment.

Consolidated operating income increased 44.3 percent to $211.9 million,
or 10.4 percent of sales, in the third quarter of fiscal 2017 compared
to $146.8 million, or 8.4 percent of sales, in the third quarter of
fiscal 2016. Excluding $10.6 million of pre-tax restructuring-related
charges in the access equipment segment, adjusted1 operating
income in the third quarter of fiscal 2017 was $222.5 million, or
10.9 percent of sales. The increase in adjusted1
operating income was primarily the result of higher sales, improved
pricing in the fire & emergency segment and improved product mix.

"We are pleased to report another quarter of strong performance
highlighted by growth in revenue, operating income and earnings per
share in our fiscal third quarter," said Wilson R. Jones, president and
chief executive officer of Oshkosh Corporation. "We delivered increased
sales in all four segments, driving revenue growth of 16.6 percent and
adjusted1 operating income growth of 51.6 percent. This
resulted in adjusted1 earnings per share of $1.84, greatly
exceeding our fiscal 2016 third quarter results.

"This was a strong quarter by many measures of performance and we are
proud of the way our team members are executing in this, our 100th
year as a company. In particular, our access equipment and fire &
emergency segments reported stronger than expected results in the
quarter and all of our non-defense segments ended the period with higher
year over year backlogs. Additionally, our defense team worked hard to
deliver M-ATVs in support of a large international order that extends
into the first quarter of fiscal 2018. They are also on track delivering
JLTVs to the U.S. Department of Defense that are being driven and tested
daily to support the government's Low Rate Initial Production schedule
as the program ramps up over the next several years.

"As a result of our strong performance and positive outlook for the
remainder of fiscal 2017, we are increasing our expectations for fiscal
2017 earnings per share to be in a range from $3.33 to $3.43, or $3.80
to $3.90 on an adjusted1 earnings per share basis. We look
forward to delivering strong fiscal 2017 performance and believe we are
well positioned for fiscal 2018, as evidenced by our strong backlogs,
positive sentiment in our markets and the strength of our people," said
Jones.

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

Access Equipment – Access equipment segment net sales increased
2.9 percent to $980.2 million in the third quarter of fiscal 2017. The
increase in sales was primarily due to higher aerial work platform
sales, offset in part by lower telehandler sales.

Access equipment segment operating income increased 6.6 percent to
$130.2 million, or 13.3 percent of sales, in the third quarter of fiscal
2017 compared to $122.1 million, or 12.8 percent of sales, in the third
quarter of fiscal 2016. Excluding restructuring-related charges, access
equipment segment adjusted1 operating income in the third
quarter of fiscal 2017 increased 15.3 percent to $140.8 million, or
14.4 percent of sales. The increase in adjusted1
operating income was primarily due to the impact of higher sales volume,
a more favorable product mix and more efficient material usage.

Defense – Defense segment net sales for the third quarter of
fiscal 2017 increased 82.6 percent to $482.7 million. The increase in
sales was primarily due to international Mine Resistant Ambush
Protected-All Terrain Vehicle sales and the ramp-up of sales to the U.S.
government under the Joint Light Tactical Vehicle program, offset in
part by lower sales to the U.S. government under the Family of Medium
Tactical Vehicles program.

Defense segment operating income increased 226.7 percent to
$62.4 million, or 12.9 percent of sales, in the third quarter of fiscal
2017 compared to $19.1 million, or 7.2 percent of sales, in the third
quarter of fiscal 2016. The increase in operating income was largely due
to the impact of higher sales volume.

Fire & Emergency – Fire & emergency segment net sales for the
third quarter of fiscal 2017 increased 13.8 percent to $282.9 million.
Sales in the third quarter of fiscal 2017 benefited from higher domestic
fire apparatus deliveries as a result of increased production rates, the
timing of international fire apparatus deliveries and improved pricing.

Fire & emergency segment operating income increased 56.3 percent to
$30.8 million, or 10.9 percent of sales, in the third quarter of fiscal
2017 compared to $19.7 million, or 7.9 percent of sales, in the third
quarter of fiscal 2016. The increase in operating income was primarily a
result of improved pricing and the impact of higher sales volume.

Commercial – Commercial segment net sales increased 2.5 percent
to $295.2 million in the third quarter of fiscal 2017. The increase in
sales was primarily due to higher refuse collection vehicle unit volume.

Commercial segment operating income decreased 9.2 percent to
$21.6 million, or 7.3 percent of sales, in the third quarter of fiscal
2017 compared to $23.8 million, or 8.3 percent of sales, in the third
quarter of fiscal 2016. The decrease in operating income was primarily a
result of operational inefficiencies associated with changes in
production volumes.

Corporate – Corporate operating costs decreased $4.8 million in
the third quarter of fiscal 2017 to $33.1 million due primarily to
improved operating results related to a corporate-led manufacturing
facility, which incurred higher start-up costs during the third quarter
of fiscal 2016.

Interest Expense Net of Interest Income – Interest expense net of
interest income decreased $1.4 million to $13.9 million in the third
quarter of fiscal 2017.

Provision for Income Taxes – The Company recorded income tax
expense of $70.1 million in the third quarter of fiscal 2017, or
35.3 percent of pre-tax income, compared to $48.4 million, or
36.6 percent of pre-tax income, in the third quarter of fiscal 2016.
Excluding the impact of restructuring-related charges, adjusted1
income tax expense in the third quarter of fiscal 2017 was
$69.5 million, or 33.2 percent of adjusted1 pre-tax
income. The Company recorded $3.9 million of discrete tax benefits in
the third quarter of fiscal 2017. The Company recorded a year-to-date
adjustment in the third quarter of fiscal 2016 to increase tax expense
as a result of a higher estimated mix of domestic income versus
lower-tax rate foreign income.

Nine-month Results

The Company reported net sales for the first nine months of fiscal 2017
of $4.87 billion and net income of $192.1 million, or $2.54 per diluted
share. This compares with net sales of $4.52 billion and net income of
$154.9 million, or $2.08 per diluted share, in the first nine months of
the prior year. Excluding $24.9 million of after-tax
restructuring-related charges in the access equipment segment, adjusted1
net income for the first nine months of fiscal 2017 was $217.0 million,
or $2.87 per diluted share. Improved performance in the defense, fire &
emergency and access equipment segments and lower start-up costs for a
corporate-led manufacturing facility were partially offset by lower
results 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 $3.33 to $3.43 on projected net sales of approximately
$6.75 billion and estimated operating income of $439 million to
$449 million. The Company also increased its fiscal 2017 adjusted1
diluted earnings per share estimate range to $3.80 to $3.90 on adjusted1
operating income of $480 million to $490 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 September 1, 2017, to shareholders of record as of August 18,
2017.

Conference Call

The Company will comment on its fiscal 2017 third 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 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 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 Nine Months Ended
June 30, June 30,
2017 2016 2017 2016
 
Net sales $ 2,036.9 $ 1,747.5 $ 4,866.6 $ 4,523.8
Cost of sales   1,650.0     1,432.9     4,018.7     3,767.1  
Gross income 386.9 314.6 847.9 756.7
 
Operating expenses:
Selling, general and administrative 163.9 154.7 484.7 448.7
Amortization of purchased intangibles   11.1     13.1     34.7     39.5  
Total operating expenses   175.0     167.8     519.4     488.2  
Operating income 211.9 146.8 328.5 268.5
 
Other income (expense):
Interest expense (15.3 ) (15.8 ) (45.1 ) (46.0 )
Interest income 1.4 0.5 3.2 1.5
Miscellaneous, net   0.6     0.8     3.1     (0.2 )
Income before income taxes and equity
in earnings of unconsolidated affiliates 198.6 132.3 289.7 223.8
Provision for income taxes   70.1     48.4     98.9     70.4  
Income before equity in earnings of
unconsolidated affiliates 128.5 83.9 190.8 153.4

Equity in earnings of unconsolidated affiliates

  0.1     0.3     1.3     1.5  
Net income $ 128.6   $ 84.2   $ 192.1   $ 154.9  
 

Earnings per share attributable to common shareholders:

Basic $ 1.72 $ 1.15 $ 2.57 $ 2.11
Diluted 1.69 1.13 2.54 2.08
 
Basic weighted-average shares outstanding 74,806,775 73,390,624 74,593,065 73,526,081
Dilutive stock options and other equity-
based compensation awards   1,086,050     876,338     1,092,479     803,060  
Diluted weighted-average shares outstanding   75,892,825     74,266,962     75,685,544     74,329,141  
   
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
 
June 30, September 30,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 373.2 $ 321.9
Receivables, net 1,182.3 1,021.9
Inventories, net 1,410.7 979.8
Other current assets   84.0     93.9  
Total current assets 3,050.2 2,417.5
Property, plant and equipment:
Property, plant and equipment 1,152.3 1,110.6
Accumulated depreciation   (708.9 )   (658.5 )
Property, plant and equipment, net 443.4 452.1
Goodwill 1,006.5 1,003.5
Purchased intangible assets, net 518.8 553.5
Other long-term assets   73.7     87.2  
Total assets $ 5,092.6   $ 4,513.8  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit facilities and current maturities
of long-term debt $ 18.0 $ 20.0
Accounts payable 686.9 466.1
Customer advances 559.4 471.8
Payroll-related obligations 167.0 147.9
Other current liabilities   341.8     261.8  
Total current liabilities 1,773.1 1,367.6
Long-term debt, less current maturities 812.5 826.2
Other long-term liabilities 327.9 343.5
Commitments and contingencies
Shareholders' equity   2,179.1     1,976.5  
Total liabilities and shareholders' equity $ 5,092.6   $ 4,513.8  
   
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
 
Nine Months Ended
June 30,
2017 2016
Operating activities:
Net income $ 192.1 $ 154.9
Depreciation and amortization 97.3 95.9
Stock-based compensation expense 16.8 16.0
Deferred income taxes 3.8 (4.5 )
Gain on sale of assets (5.2 ) (7.6 )
Foreign currency transaction losses 2.1 0.1
Other non-cash adjustments 0.4 0.7
Changes in operating assets and liabilities   (183.4 )   (92.0 )
Net cash provided by operating activities 123.9 163.5
 
Investing activities:
Additions to property, plant and equipment (45.2 ) (62.3 )
Additions to equipment held for rental (26.3 ) (30.9 )
Proceeds from sale of equipment held for rental 42.3 33.7
Other investing activities   (1.4 )   (1.5 )
Net cash used by investing activities (30.6 ) (61.0 )
 
Financing activities:
Net increase (decrease) in short-term debt 3.0 (16.5 )
Proceeds from issuance of debt - 323.5
Repayments of debt (20.0 ) (278.5 )
Repurchases of common stock (3.0 ) (101.7 )
Dividends paid (47.1 ) (41.9 )
Proceeds from exercise of stock options 34.2 8.8
Excess tax benefit from stock-based compensation   -     1.3  
Net cash used by financing activities (32.9 ) (105.0 )
 
Effect of exchange rate changes on cash   (9.1 )   5.1  
Increase in cash and cash equivalents 51.3 2.6
Cash and cash equivalents at beginning of period   321.9     42.9  
Cash and cash equivalents at end of period $ 373.2   $ 45.5  
           
OSHKOSH CORPORATION
SEGMENT INFORMATION
(Unaudited; in millions)
 
Three Months Ended June 30,
2017 2016
External Inter- Net External Inter- Net
Customers segment Sales Customers segment Sales
Access equipment
Aerial work platforms $ 583.1 $ - $ 583.1 $ 511.4 $ - $ 511.4
Telehandlers 202.9 - 202.9 266.6 - 266.6
Other   194.2   -     194.2     174.5   -     174.5  
Total access equipment 980.2 - 980.2 952.5 - 952.5
 
Defense 482.2 0.5 482.7 264.0 0.3 264.3
 
Fire & emergency 278.9 4.0 282.9 244.2 4.3 248.5
 
Commercial
Concrete placement 158.5 - 158.5 164.6 - 164.6
Refuse collection 107.8 - 107.8 96.5 - 96.5
Other   27.3   1.6     28.9     25.7   1.1     26.8  
Total commercial 293.6 1.6 295.2 286.8 1.1 287.9
Corporate & eliminations   2.0   (6.1 )   (4.1 )   -   (5.7 )   (5.7 )
$ 2,036.9 $ -   $ 2,036.9   $ 1,747.5 $ -   $ 1,747.5  
 
Nine Months Ended June 30,
2017 2016
External Inter- Net External Inter- Net
Customers segment Sales Customers segment Sales
Access equipment
Aerial work platforms $ 1,186.2 $ - $ 1,186.2 $ 1,128.5 $ - $ 1,128.5
Telehandlers 457.8 - 457.8 593.1 - 593.1
Other   548.6   -     548.6     515.0   -     515.0  
Total access equipment 2,192.6 - 2,192.6 2,236.6 - 2,236.6
 
Defense 1,222.1 1.2 1,223.3 877.7 1.6 879.3
 
Fire & emergency 741.5 11.4 752.9 686.8 9.6 696.4
 
Commercial
Concrete placement 355.6 - 355.6 348.2 - 348.2
Refuse collection 279.1 - 279.1 295.0 - 295.0
Other   71.1   4.6     75.7     79.5   2.2     81.7  
Total commercial 705.8 4.6 710.4 722.7 2.2 724.9
Corporate & eliminations   4.6   (17.2 )   (12.6 )   -   (13.4 )   (13.4 )
$ 4,866.6 $ -   $ 4,866.6   $ 4,523.8 $ -   $ 4,523.8  
       
OSHKOSH CORPORATION
SEGMENT INFORMATION (continued)
(Unaudited; in millions)
 
 
Three Months Ended Nine Months Ended
June 30, June 30,
2017 2016 2017 2016
Operating income (loss):
Access equipment $ 130.2 $ 122.1 $ 196.7 $ 218.2
Defense 62.4 19.1 134.9 70.1
Fire & emergency 30.8 19.7 69.6 44.7
Commercial 21.6 23.8 32.2 49.9
Corporate   (33.1 )   (37.9 )   (104.9 )   (114.4 )
$ 211.9   $ 146.8   $ 328.5   $ 268.5  
 
June 30,
2017 2016
Period-end backlog:
Access equipment $ 523.0 $ 374.6
Defense 1,904.9 2,288.3
Fire & emergency 894.1 852.8
Commercial   333.5     206.3  
$ 3,655.5   $ 3,722.0  
 

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   Nine Months
Ended Ended
June 30, 2017
 
Adjusted access equipment segment operating income (Non-GAAP) $ 140.8 $ 224.5
Restructuring-related costs   (10.6 )   (27.8 )
Access equipment segment operating income (GAAP) $ 130.2   $ 196.7  
 
Adjusted consolidated operating income (Non-GAAP) $ 222.5 $ 356.3
Restructuring-related costs   (10.6 )   (27.8 )
Consolidated operating income (GAAP) $ 211.9   $ 328.5  
 
Adjusted provision for income taxes (Non-GAAP) $ 69.5 $ 101.8
Income tax expense (benefit) for restructuring-related costs   0.6     (2.9 )
Provision for income taxes (GAAP) $ 70.1   $ 98.9  
 
Adjusted net income (Non-GAAP) $ 139.8 $ 217.0
Restructuring-related costs, net of tax   (11.2 )   (24.9 )
Net income (GAAP) $ 128.6   $ 192.1  
 
Adjusted diluted earnings per share (Non-GAAP) $ 1.84 $ 2.87
Restructuring-related costs, net of tax   (0.15 )   (0.33 )
Diluted earnings per share (GAAP) $ 1.69   $ 2.54  
 
Fiscal 2017 Expectations
Low High
 
Adjusted operating income (Non-GAAP) $ 480.0 $ 490.0
Restructuring-related costs   (41.0 )   (41.0 )
Operating income (GAAP) $ 439.0   $ 449.0  
 
Adjusted diluted earnings per share (Non-GAAP) $ 3.80 $ 3.90
Restructuring-related costs   (0.47 )   (0.47 )
Diluted earnings per share (GAAP) $ 3.33   $ 3.43  

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.

View Comments and Join the Discussion!
 

Partner Center