|
Premium Sponsor:
| ||||||
|
AEDNews - Construction Equipment Industry News Oshkosh Corporation Reports Record Results for Fiscal 2010 First Quarter Oshkosh Corporation , a manufacturer of specialty vehicles and vehicle bodies, last week reported fiscal 2010 first quarter net sales of $2.43 billion and income from continuing operations of $191.2 million, or $2.10 per share, excluding non-cash intangible asset impairment charges1. This compares with net sales of $1.33 billion and a loss from continuing operations of $11.7 million, or $0.16 per share, in the prior year's first quarter. Including pre-tax, non-cash impairment charges of $23.3 million ($0.20 per share, net of taxes) related to goodwill and other long-lived assets, the company reported income from continuing operations of $172.5 million, or $1.90 per share, for the first quarter of fiscal 2010. These results exclude the operations of the company's former European fire apparatus business, BAI Brescia Antincendi International S.r.l. (BAI), which have been reclassified to discontinued operations due to the company's sale of this business in October 2009. "We kicked off fiscal 2010 with strong revenue and earnings growth, led by our industry-leading defense business," said Robert G. Bohn, Oshkosh Corporation chairman and chief executive officer. "During the quarter, we supplied more than 2,300 life-saving MRAP All Terrain Vehicles (M-ATVs) to the U.S. armed forces for use by our warfighters in Afghanistan as we ramped up production to 1,000 units per month in December 2009. Additionally, our defense team executed extraordinarily well under all of our tactical wheeled vehicle and aftermarket parts & service contracts for the U.S. Army and Marines. Our long and proud history of delivering high quality products on time is something our customers have come to expect. We plan to operate just as effectively on the Family of Medium Tactical Vehicles (FMTVs) contract should the U.S. Army affirm our earlier contract award. "Fiscal 2009 was a year of impressive debt reduction for Oshkosh, and we continued the trend in the first quarter of fiscal 2010 as we reduced our debt by an additional $182.5 million, further strengthening our balance sheet. We will continue to focus on reducing our debt throughout fiscal 2010. "We believe that we are in position to generate strong earnings for our shareholders in fiscal 2010, despite a continuation of some industry-wide challenges facing a number of our businesses," added Bohn. The company reported that consolidated net sales in the first quarter of fiscal 2010 increased 83.2 percent compared with the prior year's first quarter largely due to $1.1 billion of M-ATV contract sales, including related aftermarket parts & service sales. Operating income, excluding impairment charges1, increased to $349.0 million, or 14.3 percent of sales, for the first quarter of fiscal 2010 compared with operating income of $25.6 million, or 1.9 percent of sales, in the prior year first quarter. Significantly improved defense segment performance, combined with improved access equipment segment performance, in each case, due in large part to high volume M-ATV production, led to the increase in operating income. Including impairment charges, the company reported operating income of $325.7 million. Factors affecting first quarter results for the company's business segments included: Defense- Defense segment sales increased 242.0 percent to $1.86 billion for the first quarter of fiscal 2010 compared with the prior year first quarter. The increase was due to the continued ramp-up of M-ATV production that began in the fourth quarter of fiscal 2009, an increase in sales of new Family of Heavy Tactical Vehicles (FHTVs) and a more than doubling of parts & service sales compared to the prior year quarter. Defense parts & service sales during the first quarter of fiscal 2010 benefited from the sale of TAK-4(R) independent suspension systems for Mine Resistant Ambush Protected vehicles and the sale of parts kits for the M-ATV. Combined vehicle and parts & service sales related to the M-ATV program totaled approximately $1.1 billion in the first quarter of fiscal 2010. Operating income in the first quarter more than quadrupled to $339.7 million, or 18.3 percent of sales, compared with prior year first quarter operating income of $73.7 million, or 13.6 percent of sales. The increase in operating income as a percent of sales reflected a combination of higher volume on a relatively fixed cost base, lower material costs, improved manufacturing efficiencies and an improved parts and services mix. Access Equipment- Access equipment segment sales increased 97.6 percent to $728.0 million for the first quarter of fiscal 2010 compared with the prior year quarter. First quarter fiscal 2010 sales included $527.6 million of intercompany M-ATV related sales to the defense segment as the company was able to leverage significantly underutilized facilities in the access equipment segment and call back idled employees to meet defense production requirements. Sales to external customers decreased 45.6 percent to $200.4 million for the first quarter of fiscal 2010 compared with the prior year quarter. External customer sales reflected substantially lower global demand for access equipment as a result of recessionary economies and tight credit markets. Sales of new access equipment declined about 60 percent compared with the prior year quarter as the first quarter of fiscal 2009 benefited from shipments from a strong backlog entering that quarter. The access equipment segment reported operating income of $13.5 million, or 1.9 percent of sales, for the first quarter of fiscal 2010 compared with an operating loss of $47.0 million, or 12.8 percent of sales, in the prior year quarter. Operating results benefited from the recognition of intercompany M-ATV sales at mid single-digit margins. Operating results for the access equipment segment also benefited from a decrease in material costs, lower provisions for credit losses and restructuring charges and the benefit of cost reductions from prior year initiatives. Fire & Emergency- Fire & emergency segment sales for the first quarter of fiscal 2010 decreased 5.5 percent to $250.9 million compared with the prior year quarter. The sales decrease reflected lower shipments of fire apparatus, due to softer demand attributable to declining municipal budgets in the U.S., and continued weak demand for mobile medical equipment, offset in part by strong airport product sales. The mobile medical equipment market has been adversely impacted by a reduction in Medicare reimbursement rates and the uncertain health care environment due to potential U.S. legislation impacting the health care industry. Despite lower sales, operating income, excluding impairment charges1, increased 9.1 percent in the first quarter of fiscal 2010 to $21.1 million, or 8.4 percent of sales, compared with the prior year quarter operating income of $19.3 million, or 7.3 percent of sales. The increase in operating income during the first quarter was primarily the result of improved product mix within the segment and lower material costs at the company's fire apparatus business. Including impairment charges, the fire & emergency segment reported an operating loss of $2.2 million. In December 2009, the company determined that events had occurred at Oshkosh Specialty Vehicles, which includes the company's mobile medical equipment business, which constituted interim impairment indicators requiring an assessment of goodwill and long-lived intangible assets at this reporting unit for potential impairment. Specifically, order rates for mobile medical equipment had not materialized as expected due to uncertainty surrounding potential U.S. health care legislation and this legislation may have further detrimental effects on the sales of mobile medical units. Testing revealed that an impairment was present and, as a result, the company recorded goodwill and intangible asset impairment charges of $23.3 million ($18.7 million, net of tax) in the first quarter of fiscal 2010. Commercial - Commercial segment sales decreased 14.1 percent to $155.1 million in the first quarter of fiscal 2010 compared with the prior year quarter. The sales decrease was largely due to a 21 percent decline in sales of concrete placement products as a result of lower construction activity in North America and a 15 percent decrease in domestic refuse collection vehicle (RCV) sales. The prior year's first quarter RCV sales benefited from the timing of deliveries to large waste haulers. Operating income increased to $3.1 million in the first quarter of fiscal 2010, or 2.0 percent of sales, compared with operating income of $0.6 million, or 0.4 percent of sales, in the prior year quarter. The increase in operating income primarily resulted from the recognition of profit on intercompany manufacturing activities and the benefit of cost reductions implemented in fiscal 2009, offset in part by the effect of further declines in sales in the first quarter of fiscal 2010. Corporate - Corporate operating expenses increased $3.1 million to $24.4 million for the first quarter of fiscal 2010 compared with the prior year quarter. The increase was the result of higher incentive compensation, including higher share-based compensation expense. Intersegment Eliminations- Intersegment eliminations of $4.0 million in the quarter resulted from profit on intercompany sales between segments (largely M-ATV related sales between access equipment and defense) where the related inventory sold from one segment to another has not yet been sold to a third party customer. Interest Expense net of Interest Income- Interest expense net of interest income increased $7.0 million to $49.9 million in the first quarter of fiscal 2010 compared with the prior year quarter largely as a result of higher interest rates associated with the March 2009 amendment of the company's credit agreement. Average debt outstanding decreased from $2.74 billion during the first quarter of fiscal 2009 to $1.91 billion during the first quarter of fiscal 2010. In addition to strong cash flow generation during the past 12 months, the company completed a common stock offering early in the fourth quarter of fiscal 2009 which provided $358 million of net proceeds which were applied to reduce outstanding debt. Provision for Income Taxes- The company recorded income tax expense, excluding tax benefits associated with impairment charges, of $107.8 million in the first quarter of fiscal 2010, or 36.0 percent of pre-tax income from continuing operations before impairment charges. Discontinued Operations In July 2009, the company sold its ownership in Geesink Group B.V., Geesink Norba Limited and Norba A. B. (collectively, the Geesink Norba Group). The Geesink Norba Group, the company's former European RCV manufacturer, was included in the company's commercial operating segment. In October 2009, the company sold its 75 percent ownership in BAI. BAI, the cmpany's former European fire apparatus manufacturer, was included in the company's fire & emergency segment. The historical results of operations of these businesses have been presented as discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations for all periods. 1Further information regarding operating results including impairment charges and related reconciliations 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, which should be thoroughly reviewed. About Oshkosh Corporation Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies. Oshkosh Corporation manufactures, distributes and services products under the brands of Oshkosh, JLG, Pierce,McNeilus, Medtec, Jerr-Dan Oshkosh Specialty Vehicles, Frontline, SMIT, CON-E-CO, London and IMT. Oshkosh products are valued worldwide in businesses where high quality, superior performance, rugged reliability and long-term value are paramount. For complete financial results visit www.oshkoshcorporation.com. All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies. Article Date: 02-01-2010 Source: Oshkosh Corp. Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved. | ||||||
AEDNews is the weekly electronic newsletter published by Associated Equipment Distributors, providing the construction equipment distribution industry with timely news and information related to the equipment business.