News Details
Oshkosh Corporation Reports Fiscal 2015 Second Quarter Results
Apr. 28, 2015
Reaffirms Fiscal 2015 Adjusted1
Delivers Higher Sales and Operating Income in All non-Defense Segments
Declares Quarterly Cash Dividend of
Consolidated net sales in the second quarter of fiscal 2015 were
Consolidated operating income in the second quarter of fiscal 2015 was
“Our team performed well in the quarter as we managed through a
previously announced break in production under the Family of Heavy
Tactical Vehicle (FHTV) program in our defense segment, foreign currency
headwinds and severe weather conditions in the Northeast U.S. to deliver
adjusted earnings per share in line with our expectations and slightly
above the prior year quarter adjusted earnings per share,” said
“We expect to deliver strong second half results as we enter the
seasonally busy construction season, resume FHTV sales in the fourth
quarter, and continue to execute our MOVE strategy,” added Szews. “Our
solid first half performance and positive outlook for the second half of
the fiscal year give us confidence in sustaining our fiscal 2015 full
year adjusted1 earnings per share estimate range of
Factors affecting second quarter results for the Company’s business segments included:
Access Equipment – Access equipment segment sales increased
13.4 percent to
Access equipment segment operating income increased 17.4 percent to
Defense – Defense segment sales for the second quarter of fiscal
2015 decreased 67.2 percent to
The defense segment recorded an operating loss of
Fire & Emergency – Fire & emergency segment sales for the
second quarter of fiscal 2015 increased 30.0 percent to
Fire & emergency segment operating income increased 750.1 percent to
Commercial – Commercial segment sales increased 21.2 percent to
Commercial segment operating income increased 59.9 percent to
Corporate – Corporate operating expenses decreased
Interest Expense Net of Interest Income – Interest expense net of
interest income increased
Provision for Income Taxes – The Company recorded income tax
expense of
Share Repurchases – Earnings per share in the second quarter of
fiscal 2015 improved
Six-month Results
The Company reported net sales for the first six months of fiscal 2015
of
Fiscal 2015 Expectations
The Company reaffirms its fiscal 2015 adjusted1 earnings per
share estimate range of
Dividend Announcement
The Company’s Board of Directors today declared a quarterly cash
dividend of
Conference Call
The Company will comment on its fiscal 2015 second quarter earnings and
its full-year fiscal 2015 outlook during a conference call at
Forward-Looking Statements
This press 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 press
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;
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 DoD and international defense customer procurement of
products and services and funding thereof; risks related to reductions
in government expenditures in light of U.S. defense budget pressures,
sequestration and an uncertain DoD tactical wheeled vehicle strategy,
including the Company’s ability to successfully manage the cost
reductions required as a result of lower customer orders in the defense
segment; the Company’s ability to win a U.S. Joint Light Tactical
Vehicle production contract award and international defense contract
awards; 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; 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; 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; the impact of severe weather or natural disasters that may
affect the Company, its suppliers or its customers; 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
About
®, TM All brand names referred to in this news release are
trademarks of
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(Unaudited; in millions) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net sales | $ | 1,554.2 | $ | 1,677.9 | $ | 2,907.5 | $ | 3,208.1 | |||||||||
Cost of sales | 1,278.4 | 1,386.7 | 2,402.0 | 2,661.8 | |||||||||||||
Gross income | 275.8 | 291.2 | 505.5 | 546.3 | |||||||||||||
Operating expenses: | |||||||||||||||||
Selling, general and administrative | 152.8 | 158.0 | 303.3 | 302.7 | |||||||||||||
Amortization of purchased intangibles | 13.3 | 13.8 | 26.8 | 27.7 | |||||||||||||
Total operating expenses | 166.1 | 171.8 | 330.1 | 330.4 | |||||||||||||
Operating income | 109.7 | 119.4 | 175.4 | 215.9 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest expense | (28.8 | ) | (27.0 | ) | (43.2 | ) | (43.2 | ) | |||||||||
Interest income | 0.6 | 0.5 | 1.4 | 1.0 | |||||||||||||
Miscellaneous, net | 1.3 | 0.5 | - | (1.2 | ) | ||||||||||||
Income before income taxes and equity in earnings | |||||||||||||||||
of unconsolidated affiliates | 82.8 | 93.4 | 133.6 | 172.5 | |||||||||||||
Provision for income taxes | 29.5 | 22.9 | 45.7 | 47.6 | |||||||||||||
Income before equity in earnings of unconsolidated | |||||||||||||||||
affiliates | 53.3 | 70.5 | 87.9 | 124.9 | |||||||||||||
Equity in earnings of unconsolidated affiliates | 1.3 | 1.0 | 1.4 | 1.5 | |||||||||||||
Net income | $ | 54.6 | $ | 71.5 | $ | 89.3 | $ | 126.4 | |||||||||
Amounts available to common shareholders, net of tax: | |||||||||||||||||
Net income | $ | 54.6 | $ | 71.5 | $ | 89.3 | $ | 126.4 | |||||||||
Allocated to participating securities | (0.1 | ) | (0.3 | ) | (0.2 | ) | (0.5 | ) | |||||||||
Net income available to common shareholders | $ | 54.5 | $ | 71.2 | $ | 89.1 | $ | 125.9 |
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EARNINGS PER SHARE | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Earnings per share attributable to common | |||||||||||||||||
shareholders: | |||||||||||||||||
Basic | $ | 0.70 | $ | 0.84 | $ | 1.14 | $ | 1.49 | |||||||||
Diluted | 0.69 | 0.83 | 1.12 | 1.47 | |||||||||||||
Basic weighted-average shares outstanding | 78,007,479 | 84,036,403 | 78,433,035 | 84,681,375 | |||||||||||||
Dilutive stock options and other equity-based | |||||||||||||||||
compensation awards | 1,102,424 | 1,679,070 | 1,103,796 | 1,591,580 | |||||||||||||
Participating restricted stock | (115,163 | ) | (208,409 | ) | (112,237 | ) | (201,872 | ) | |||||||||
Diluted weighted-average shares outstanding | 78,994,740 | 85,507,064 | 79,424,594 | 86,071,083 |
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CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Unaudited; in millions) | |||||||||
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2015 | 2014 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 53.4 | $ | 313.8 | |||||
Receivables, net | 993.8 | 974.9 | |||||||
Inventories, net | 1,196.5 | 960.9 | |||||||
Deferred income taxes, net | 66.8 | 66.3 | |||||||
Prepaid income taxes | 22.0 | 22.7 | |||||||
Other current assets | 43.9 | 45.7 | |||||||
Total current assets | 2,376.4 | 2,384.3 | |||||||
Investment in unconsolidated affiliates | 18.2 | 21.1 | |||||||
Property, plant and equipment: | |||||||||
Property, plant and equipment | 1,049.4 | 988.3 | |||||||
Accumulated depreciation | (604.5 | ) | (582.8 | ) | |||||
Property, plant and equipment, net | 444.9 | 405.5 | |||||||
Goodwill | 993.0 | 1,025.5 | |||||||
Purchased intangible assets, net | 628.5 | 657.9 | |||||||
Other long-term assets | 94.9 | 92.4 | |||||||
Total assets | $ | 4,555.9 | $ | 4,586.7 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Revolving credit facility and current maturities of long-term debt | $ | 33.7 | $ | 20.0 | |||||
Accounts payable | 601.8 | 586.7 | |||||||
Customer advances | 342.5 | 310.1 | |||||||
Payroll-related obligations | 120.3 | 147.2 | |||||||
Accrued warranty | 81.4 | 91.2 | |||||||
Other current liabilities | 202.0 | 156.4 | |||||||
Total current liabilities | 1,381.7 | 1,311.6 | |||||||
Long-term debt, less current maturities | 865.0 | 875.0 | |||||||
Deferred income taxes, net | 119.6 | 125.0 | |||||||
Other long-term liabilities | 291.6 | 290.1 | |||||||
Commitments and contingencies | |||||||||
Shareholders' equity | 1,898.0 | 1,985.0 | |||||||
Total liabilities and shareholders' equity | $ | 4,555.9 | $ | 4,586.7 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(Unaudited; in millions) | |||||||||
Six Months Ended | |||||||||
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2015 | 2014 | ||||||||
Operating activities: | |||||||||
Net income | $ | 89.3 | $ | 126.4 | |||||
Depreciation and amortization | 64.0 | 63.5 | |||||||
Stock-based compensation expense | 11.4 | 11.0 | |||||||
Deferred income taxes | (4.7 | ) | (22.2 | ) | |||||
Foreign currency transaction (gains) losses | 10.7 | (2.5 | ) | ||||||
Other non-cash adjustments | 7.8 | 6.6 | |||||||
Changes in operating assets and liabilities | (249.2 | ) | (237.1 | ) | |||||
Net cash used by operating activities | (70.7 | ) | (54.3 | ) | |||||
Investing activities: | |||||||||
Additions to property, plant and equipment | (69.8 | ) | (36.4 | ) | |||||
Additions to equipment held for rental | (15.5 | ) | (11.0 | ) | |||||
Contribution to rabbi trust | - | (1.9 | ) | ||||||
Proceeds from sale of equipment held for rental | 13.4 | 2.7 | |||||||
Other investing activities | (1.5 | ) | (0.4 | ) | |||||
Net cash used by investing activities | (73.4 | ) | (47.0 | ) | |||||
Financing activities: | |||||||||
Repayment of long-term debt | (260.0 | ) | (705.0 | ) | |||||
Proceeds from issuance of long-term debt | 250.0 | 650.0 | |||||||
Proceeds under revolving credit facility | 13.7 | - | |||||||
Repurchases of common stock | (88.1 | ) | (152.8 | ) | |||||
Debt issuance costs | (15.4 | ) | (18.8 | ) | |||||
Proceeds from exercise of stock options | 3.4 | 33.6 | |||||||
Dividends paid | (26.7 | ) | (25.4 | ) | |||||
Excess tax benefit from stock-based compensation | 4.1 | 6.5 | |||||||
Net cash used by financing activities | (119.0 | ) | (211.9 | ) | |||||
Effect of exchange rate changes on cash | 2.7 | (0.3 | ) | ||||||
Decrease in cash and cash equivalents | (260.4 | ) | (313.5 | ) | |||||
Cash and cash equivalents at beginning of period | 313.8 | 733.5 | |||||||
Cash and cash equivalents at end of period | $ | 53.4 | $ | 420.0 |
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SEGMENT INFORMATION | |||||||||||||||||||||||
(Unaudited; in millions) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
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External | Inter- | Net | External | Inter- | Net | ||||||||||||||||||
Customers | segment | Sales | Customers | segment | Sales | ||||||||||||||||||
Access equipment | |||||||||||||||||||||||
Aerial work platforms | $ | 432.5 | $ | - | $ | 432.5 | $ | 421.0 | $ | - | $ | 421.0 | |||||||||||
Telehandlers | 379.7 | - | 379.7 | 299.7 | - | 299.7 | |||||||||||||||||
Other | 169.6 | - | 169.6 | 145.3 | - | 145.3 | |||||||||||||||||
Total access equipment | 981.8 | - | 981.8 | 866.0 | - | 866.0 | |||||||||||||||||
Defense | 157.6 | 1.1 | 158.7 | 484.3 | 0.1 | 484.4 | |||||||||||||||||
Fire & emergency | 194.6 | 8.3 | 202.9 | 146.9 | 9.2 | 156.1 | |||||||||||||||||
Commercial | |||||||||||||||||||||||
Concrete placement | 111.0 | - | 111.0 | 93.7 | - | 93.7 | |||||||||||||||||
Refuse collection | 76.7 | - | 76.7 | 60.6 | - | 60.6 | |||||||||||||||||
Other | 32.5 | 0.7 | 33.2 | 26.4 | 1.6 | 28.0 | |||||||||||||||||
Total commercial | 220.2 | 0.7 | 220.9 | 180.7 | 1.6 | 182.3 | |||||||||||||||||
Intersegment eliminations | - | (10.1 | ) | (10.1 | ) | - | (10.9 | ) | (10.9 | ) | |||||||||||||
Consolidated net sales | $ | 1,554.2 | $ | - | $ | 1,554.2 | $ | 1,677.9 | $ | - | $ | 1,677.9 | |||||||||||
Six Months Ended | |||||||||||||||||||||||
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External | Inter- | Net | External | Inter- | Net | ||||||||||||||||||
Customers | segment | Sales | Customers | segment | Sales | ||||||||||||||||||
Access equipment | |||||||||||||||||||||||
Aerial work platforms | $ | 709.8 | $ | - | $ | 709.8 | $ | 737.5 | $ | - | $ | 737.5 | |||||||||||
Telehandlers | 670.1 | - | 670.1 | 517.4 | - | 517.4 | |||||||||||||||||
Other | 318.6 | - | 318.6 | 279.7 | - | 279.7 | |||||||||||||||||
Total access equipment | 1,698.5 | - | 1,698.5 | 1,534.6 | - | 1,534.6 | |||||||||||||||||
Defense | 426.8 | 1.2 | 428.0 | 965.6 | 0.1 | 965.7 | |||||||||||||||||
Fire & emergency | 354.1 | 15.8 | 369.9 | 335.9 | 18.2 | 354.1 | |||||||||||||||||
Commercial | |||||||||||||||||||||||
Concrete placement | 197.1 | - | 197.1 | 175.1 | - | 175.1 | |||||||||||||||||
Refuse collection | 166.3 | - | 166.3 | 141.4 | - | 141.4 | |||||||||||||||||
Other | 64.7 | 3.0 | 67.7 | 55.5 | 2.9 | 58.4 | |||||||||||||||||
Total commercial | 428.1 | 3.0 | 431.1 | 372.0 | 2.9 | 374.9 | |||||||||||||||||
Intersegment eliminations | - | (20.0 | ) | (20.0 | ) | - | (21.2 | ) | (21.2 | ) | |||||||||||||
Consolidated net sales | $ | 2,907.5 | $ | - | $ | 2,907.5 | $ | 3,208.1 | $ | - | $ | 3,208.1 |
Three Months Ended | Six Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Operating income (loss): | |||||||||||||||||
Access equipment | $ | 136.9 | $ | 116.6 | $ | 214.1 | $ | 206.9 | |||||||||
Defense | (12.0 | ) | 34.5 | (2.2 | ) | 59.3 | |||||||||||
Fire & emergency | 9.0 | 1.0 | 10.5 | 7.9 | |||||||||||||
Commercial | 8.6 | 5.4 | 21.0 | 15.6 | |||||||||||||
Corporate | (32.8 | ) | (38.1 | ) | (68.1 | ) | (73.7 | ) | |||||||||
Intersegment eliminations | - | - | 0.1 | (0.1 | ) | ||||||||||||
Consolidated | $ | 109.7 | $ | 119.4 | $ | 175.4 | $ | 215.9 | |||||||||
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2015 | 2014 | ||||||||||||||||
Period-end backlog: | |||||||||||||||||
Access equipment | $ | 654.1 | $ | 726.5 | |||||||||||||
Defense | 573.9 | 1,242.0 | |||||||||||||||
Fire & emergency | 716.1 | 534.1 | |||||||||||||||
Commercial | 291.8 | 224.5 | |||||||||||||||
Consolidated | $ | 2,235.9 | $ | 2,727.1 |
Non-GAAP Financial Measures
The Company reports its financial results in accordance with generally
accepted accounting principles in
Three Months Ended | Six Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Defense operating income (loss) (non-GAAP) | $ | (12.0 | ) | $ | 38.6 | $ | (5.6 | ) | $ | 63.4 | |||||||
Pension and OPEB curtailment | - | (4.1 | ) | 3.4 | (4.1 | ) | |||||||||||
Defense operating income (loss) (GAAP) | $ | (12.0 | ) | $ | 34.5 | $ | (2.2 | ) | $ | 59.3 | |||||||
Adjusted operating income (non-GAAP) | $ | 109.7 | $ | 123.5 | $ | 172.0 | $ | 220.0 | |||||||||
Pension and OPEB curtailment | - | (4.1 | ) | 3.4 | (4.1 | ) | |||||||||||
Operating income (GAAP) | $ | 109.7 | $ | 119.4 | $ | 175.4 | $ | 215.9 | |||||||||
Adjusted interest expense net of interest | |||||||||||||||||
income (non-GAAP) | $ | (13.5 | ) | $ | (15.5 | ) | $ | (27.1 | ) | $ | (31.2 | ) | |||||
Debt extinguishment costs | (14.7 | ) | (11.0 | ) | (14.7 | ) | (11.0 | ) | |||||||||
Interest expense net of interest income (GAAP) | $ | (28.2 | ) | $ | (26.5 | ) | $ | (41.8 | ) | $ | (42.2 | ) | |||||
Adjusted net income (non-GAAP) | $ | 63.9 | $ | 69.0 | $ | 96.5 | $ | 123.9 | |||||||||
Reduction of valuation allowance on net operating | |||||||||||||||||
loss carryforward | - | 12.1 | - | 12.1 | |||||||||||||
Pension and OPEB curtailment, net of tax | - | (2.6 | ) | 2.1 | (2.6 | ) | |||||||||||
Debt extinguishment costs, net of tax | (9.3 | ) | (7.0 | ) | (9.3 | ) | (7.0 | ) | |||||||||
Net income (GAAP) | $ | 54.6 | $ | 71.5 | $ | 89.3 | $ | 126.4 | |||||||||
Adjusted earnings per share-diluted (non-GAAP) | $ | 0.81 | $ | 0.80 | $ | 1.21 | $ | 1.44 | |||||||||
Reduction of valuation allowance on net operating | |||||||||||||||||
loss carryforward | - | 0.14 | - | 0.14 | |||||||||||||
Pension and OPEB curtailment, net of tax | - | (0.03 | ) | 0.03 | (0.03 | ) | |||||||||||
Debt extinguishment costs, net of tax | (0.12 | ) | (0.08 | ) | (0.12 | ) | (0.08 | ) | |||||||||
Earnings per share-diluted (GAAP) | $ | 0.69 | $ | 0.83 | $ | 1.12 | $ | 1.47 |
Fiscal 2015 Expectations | |||||||||
Low | High | ||||||||
Adjusted earnings per share-diluted (non-GAAP) | $ | 4.00 | $ | 4.25 | |||||
OPEB curtailment gain, net of tax | 0.03 | 0.03 | |||||||
Debt extinguishment costs, net of tax | (0.12 | ) | (0.12 | ) | |||||
Earnings per share-diluted (GAAP) | $ | 3.91 | $ | 4.16 |
________________________
1 This press release refers to GAAP (U.S. generally accepted
accounting principles) and non-GAAP financial measures.
Financial:
Vice
President, Investor Relations
Media:
Vice
President, Communications
Source: