Reaffirms Fiscal 2020 Estimated EPS
Range
Declares Quarterly Cash Dividend of $0.30
Per Share
Oshkosh Corporation (NYSE: OSK), a leading innovator of
mission-critical vehicles and equipment, today reported fiscal 2020
first quarter net income of $75.7 million, or $1.10 per diluted
share, compared to $109.0 million, or $1.51 per diluted share, in
the first quarter of fiscal 2019. Results for the first quarter of
fiscal 2019 included a $7.0 million tax charge related to an
adjustment of the repatriation tax required under tax legislation
passed in the United States in December 2017. Excluding this item,
fiscal 2019 first quarter adjusted1 net income was $116.0 million,
or $1.61 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 first quarter of fiscal 2020
decreased 6.0 percent to $1.70 billion compared to the first
quarter of fiscal 2019 primarily as a result of lower access
equipment segment sales.
Consolidated operating income in the first quarter of fiscal
2020 decreased 32.0 percent to $109.1 million, or 6.4 percent of
sales, compared to $160.5 million, or 8.9 percent of sales, in the
first quarter of fiscal 2019. The decrease in consolidated
operating income was primarily due to lower defense segment results
and the impact of lower consolidated sales, offset in part by
improved access equipment segment performance.
“We delivered first quarter results, including sales of $1.7
billion and earnings per share of $1.10, in line with our
expectations,” stated Wilson R. Jones, president and chief
executive officer of Oshkosh Corporation. “With large favorable
contract adjustments in the defense segment last year, we expected
lower earnings in the quarter compared to the prior fiscal year
quarter. Also, during the quarter, our access equipment segment
experienced lower market activity. Despite these challenges, our
team continued to embrace our People First culture and successfully
executed the plan to deliver these results, including higher access
equipment segment operating income on lower sales.
“During the quarter, our defense segment received a Joint Light
Tactical Vehicle (JLTV) order for just over $800 million that
included requirements for the segment’s first 30 JLTVs for an
international customer. We look forward to receiving additional
orders for this innovative next generation vehicle from more
international allies.
“It’s still early in the year, but there are a number of
positive items that give us confidence in reaffirming our full year
earnings per share estimate range of $7.30 to $8.10, including
first quarter results that were in line with our expectations;
successfully concluding negotiations during the quarter with most
of the access equipment segment’s key rental company customers;
solid backlogs across all four segments and signs of stabilization
in macro-economic data,” said Jones.
Factors affecting first quarter results for the Company’s
business segments included:
Access Equipment - Access equipment segment net sales in
the first quarter of fiscal 2020 decreased 13.1 percent to $717.9
million. The decrease in sales, which was expected, was due to
lower sales volumes for both aerial work platforms and telehandlers
in North America and the Europe, Africa and Middle East region,
offset in part by continued strong sales growth in the Asia Pacific
region. The lower sales volumes in North America reflected rental
company customers in this region slowing down their capital
expenditures for fleet growth.
Access equipment segment operating income in the first quarter
of fiscal 2020 increased 3.9 percent to $69.0 million, or 9.6
percent of sales, compared to $66.4 million, or 8.0 percent of
sales, in the first quarter of fiscal 2019. The increase in
operating income was primarily due to favorable price/cost
dynamics, favorable mix and improved operational efficiencies,
largely offset by the impact of the lower sales volume.
Defense - Defense segment net sales for the first quarter
of fiscal 2020 increased 6.2 percent to $493.1 million due to the
continued ramp up of JLTV sales to the U.S. government, offset in
part by lower Family of Heavy Tactical Vehicle program sales.
Defense segment operating income in the first quarter of fiscal
2020 decreased 56.5 percent to $30.9 million, or 6.3 percent of
sales, compared to $71.1 million, or 15.3 percent of sales, in the
first quarter of fiscal 2019. The decrease in operating income was
due to a large cumulative catch-up adjustment on contract margins
in the prior year quarter, adverse product mix, a favorable
resolution of contract compliance matters in the prior year quarter
and higher new product development spending.
Fire & Emergency - Fire & emergency segment net
sales for the first quarter of fiscal 2020 decreased 11.2 percent
to $262.4 million due to favorable sales timing in the prior year
quarter.
Fire & emergency segment operating income in the first
quarter of fiscal 2020 decreased 22.3 percent to $31.0 million, or
11.8 percent of sales, compared to $39.9 million, or 13.5 percent
of sales, in the first quarter of fiscal 2019. The decrease in
operating income was largely a result of the impact of lower sales
volume, higher selling, general and administrative expenses,
adverse product mix and production inefficiencies caused by a
supplier issue, offset in part by improved pricing.
Commercial - Commercial segment net sales for the first
quarter of fiscal 2020 increased 0.9 percent to $224.2 million on a
higher mix of package sales, which include third-party chassis,
offset in part by lower concrete placement unit volumes.
Commercial segment operating income in the first quarter of
fiscal 2020 decreased 4.8 percent to $17.8 million, or 7.9 percent
of sales, compared to $18.7 million, or 8.4 percent of sales, in
the first quarter of fiscal 2019. The decrease in operating income
was primarily due to adverse product mix, higher new product
development spending and the absence of a favorable warranty
reserve adjustment experienced in the first quarter of fiscal 2019,
offset in part by improved price/cost dynamics.
Corporate - Corporate operating costs in the first
quarter of fiscal 2020 increased $4.0 million to $39.6 million
primarily as a result of higher share-based compensation expense
and an increase in post-retirement liabilities.
Interest Expense Net of Interest Income - Interest
expense net of interest income in the first quarter of fiscal 2020
increased $0.3 million to $11.8 million.
Provision for Income Taxes - The Company recorded income
tax expense in the first quarter of fiscal 2020 of $20.7 million,
or 21.4 percent of pre-tax income, compared to $39.7 million, or
26.9 percent of pre-tax income, in the first quarter of fiscal
2019. Excluding $7.0 million related to an adjustment of the
repatriation tax required under tax legislation passed in the
United States in December 2017, adjusted1 income tax expense in the
first quarter of fiscal 2019 was $32.7 million, or 22.1 percent of
pre-tax income. Adjusted1 tax expense included $1.1 million of
discrete tax benefits and $0.3 million of discrete tax charges in
the first quarter of fiscal 2020 and 2019, respectively.
Share Repurchases –The Company repurchased 128,869 shares
of Common Stock for $9.4 million in the first quarter of fiscal
2020. Share repurchases benefited earnings per share in the first
quarter of fiscal 2020 by $0.06 compared to the first quarter of
fiscal 2019.
Fiscal 2020 Expectations
The Company reaffirmed its fiscal 2020 diluted earnings per
share estimate range of $7.30 to $8.10, operating income estimate
range of $690 million and $765 million and sales estimate range of
$7.9 billion and $8.2 billion.
Dividend Announcement
The Company’s Board of Directors today declared a quarterly cash
dividend of $0.30 per share of Common Stock. The dividend will be
payable on February 28, 2020, to shareholders of record as of
February 14, 2020.
Conference Call
The Company will host a conference call at 9:00 a.m. EST this
morning to discuss its fiscal 2020 first quarter results and its
full-year fiscal 2020 outlook. Slides for the call will be
available on the Company’s website beginning at 7:00 a.m. EST this
morning. The call will be simultaneously webcast. To access the
webcast, go to oshkoshcorp.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 the
cost of 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; the Company’s ability
to predict the level and timing of orders for indefinite
delivery/indefinite quantity contracts with the U.S. federal
government; risks related to reductions in government expenditures
in light of U.S. defense budget pressures and an uncertain DoD
tactical wheeled vehicle strategy; the impact of any DoD
solicitation for competition for future contracts to produce
military vehicles; 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;
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; performance
issues with suppliers or subcontractors; 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; risks that a trade war and related
tariffs could reduce the competitiveness of the Company’s products;
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 data
security threats and breaches; the Company’s ability to
successfully identify, complete and integrate acquisitions and to
realize the anticipated benefits associated with the same; 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
At Oshkosh (NYSE: OSK), we make innovative, mission-critical
equipment to help everyday heroes advance communities around the
world. Headquartered in Wisconsin, Oshkosh Corporation employs more
than 15,000 team members worldwide, all united behind a common
cause: to make a difference in people’s lives. Oshkosh products can
be found in more than 150 countries under the brands of JLG®,
Pierce®, Oshkosh® Defense, McNeilus®, IMT®, Jerr-Dan®, Frontline™,
Oshkosh® Airport Products, CON-E-CO® and London™. For more
information, visit oshkoshcorp.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
(In millions, except share and
per share amounts; unaudited)
Three Months Ended
December 31,
2019
2018
Net sales
$
1,695.1
$
1,803.4
Cost of sales
1,405.6
1,475.1
Gross income
289.5
328.3
Operating expenses:
Selling, general and administrative
173.4
158.6
Amortization of purchased intangibles
7.0
9.2
Total operating expenses
180.4
167.8
Operating income
109.1
160.5
Other income (expense):
Interest expense
(13.1
)
(13.7
)
Interest income
1.3
2.2
Miscellaneous, net
(0.4
)
(1.2
)
Income before income taxes and earnings
(losses) of unconsolidated affiliates
96.9
147.8
Provision for income taxes
20.7
39.7
Income before earnings (losses) of
unconsolidated affiliates
76.2
108.1
Equity in earnings (losses) of
unconsolidated affiliates
(0.5
)
0.9
Net income
$
75.7
$
109.0
Earnings per share:
Basic
$
1.11
$
1.53
Diluted
1.10
1.51
Basic weighted-average shares
outstanding
68,098,220
71,464,489
Dilutive equity-based compensation
awards
843,307
637,337
Diluted weighted-average shares
outstanding
68,941,527
72,101,826
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions; unaudited)
December 31, 2019
September 30,
2019
Assets
Current assets:
Cash and cash equivalents
$
264.0
$
448.4
Receivables, net
911.6
1,082.3
Unbilled receivables, net
544.0
549.5
Inventories, net
1,430.7
1,249.2
Other current assets
80.3
78.9
Total current assets
3,230.6
3,408.3
Property, plant and equipment:
Property, plant and equipment
1,356.5
1,360.9
Accumulated depreciation
(797.7
)
(787.3
)
Property, plant and equipment, net
558.8
573.6
Goodwill
1,001.4
995.7
Purchased intangible assets, net
425.5
432.3
Other long-term assets
339.9
156.4
Total assets
$
5,556.2
$
5,566.3
Liabilities and Shareholders’
Equity
Current liabilities:
Revolving credit facilities and current
maturities of long-term debt
$
—
$
—
Accounts payable
612.7
795.5
Customer advances
407.2
382.0
Payroll-related obligations
125.7
183.6
Income taxes payable
32.8
73.5
Other current liabilities
330.8
307.3
Total current liabilities
1,509.2
1,741.9
Long-term debt, less current
maturities
819.2
819.0
Other long-term liabilities
546.7
405.6
Commitments and contingencies
Shareholders’ equity
2,681.1
2,599.8
Total liabilities and shareholders’
equity
$
5,556.2
$
5,566.3
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions; unaudited)
Three Months Ended December
31,
2019
2018
Operating activities:
Net income
$
75.7
$
109.0
Depreciation and amortization
28.0
28.7
Stock-based compensation expense
9.4
7.9
Deferred income taxes
0.8
(1.0
)
Gain on sale of assets
(8.6
)
(0.8
)
Foreign currency transaction (gains)
losses
(1.3
)
(0.2
)
Other non-cash adjustments
0.4
(0.9
)
Changes in operating assets and
liabilities
(254.3
)
(228.6
)
Net cash used by operating activities
(149.9
)
(85.9
)
Investing activities:
Additions to property, plant and
equipment
(33.7
)
(13.2
)
Additions to equipment held for rental
(7.5
)
(5.9
)
Proceeds from sale of equipment held for
rental
29.0
2.3
Other investing activities
(1.0
)
1.7
Net cash used by investing activities
(13.2
)
(15.1
)
Financing activities:
Repurchases of Common Stock
(17.9
)
(176.9
)
Dividends paid
(20.4
)
(19.3
)
Proceeds from exercise of stock
options
14.8
1.7
Other financing activities
(0.3
)
-
Net cash used by financing activities
(23.8
)
(194.5
)
Effect of exchange rate changes on
cash
2.5
0.8
Decrease in cash and cash equivalents
(184.4
)
(294.7
)
Cash and cash equivalents at beginning of
period
448.4
454.6
Cash and cash equivalents at end of
period
$
264.0
$
159.9
OSHKOSH CORPORATION
SEGMENT INFORMATION
(In millions; unaudited)
Three Months Ended December
31,
2019
2018
External
Customers
Inter-
segment
Net
Sales
External
Customers
Inter-
segment
Net
Sales
Access Equipment
Aerial work platforms
$
306.0
$
—
$
306.0
$
337.7
$
—
$
337.7
Telehandlers
201.4
—
201.4
269.5
—
269.5
Other
210.5
—
210.5
219.3
—
219.3
Total access equipment
717.9
—
717.9
826.5
—
826.5
Defense
492.6
0.5
493.1
463.8
0.3
464.1
Fire & Emergency
260.0
2.4
262.4
291.2
4.3
295.5
Commercial
Concrete placement
75.7
—
75.7
81.7
—
81.7
Refuse collection
115.9
—
115.9
109.2
—
109.2
Other
32.3
0.3
32.6
30.7
0.6
31.3
Total commercial
223.9
0.3
224.2
221.6
0.6
222.2
Corporate and intersegment
eliminations
0.7
(3.2
)
(2.5
)
0.3
(5.2
)
(4.9
)
$
1,695.1
$
—
$
1,695.1
$
1,803.4
$
—
$
1,803.4
Three Months Ended
December 31,
2019
2018
Operating income (loss):
Access Equipment
$
69.0
$
66.4
Defense
30.9
71.1
Fire & Emergency
31.0
39.9
Commercial
17.8
18.7
Corporate and intersegment
eliminations
(39.6
)
(35.6
)
$
109.1
$
160.5
December 31,
2019
2018
Period-end backlog:
Access Equipment
$
1,011.1
$
1,697.2
Defense
2,941.5
3,195.7
Fire & Emergency
1,107.9
949.5
Commercial
366.8
415.4
$
5,427.3
$
6,257.8
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 Ended
December 31,
2019
2018
Provision for income taxes (GAAP)
$
20.7
$
39.7
Repatriation tax
—
(7.0
)
Adjusted provision for income taxes
(non-GAAP)
$
20.7
$
32.7
Net income (GAAP)
$
75.7
$
109.0
Repatriation tax
—
7.0
Adjusted net income (non-GAAP)
$
75.7
$
116.0
Earnings per share-diluted (GAAP)
$
1.10
$
1.51
Repatriation tax
—
0.10
Adjusted earnings per share-diluted
(non-GAAP)
$
1.10
$
1.61
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 the Company’s presented non-GAAP measures to the
most directly comparable GAAP measures can be found under the
caption “Non-GAAP Financial Measures” in this news release.
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Financial: Patrick Davidson Senior Vice President, Investor
Relations 920.502.3266 Media: Bryan Brandt Senior Vice President,
Chief Marketing Officer 920.502.3670
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