Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
OSK > SEC Filings for OSK > Form 10-Q/A on 27-Sep-2013All Recent SEC Filings

Show all filings for OSHKOSH CORP | Request a Trial to NEW EDGAR Online Pro

Form 10-Q/A for OSHKOSH CORP


27-Sep-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Cautionary Statement About Forward-Looking Statements

This Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that Oshkosh Corporation (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 included in this Quarterly Report on Form 10-Q, 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, including those under the caption "Executive Overview" are forward-looking statements. When used in this Quarterly Report on Form 10-Q, 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, especially in the current environment where there are conflicting signs regarding the global economic outlook and the ability of the U.S. government to resolve budgetary and debt issues; the expected level and timing of the U.S. Department of Defense ("DoD") 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 the significant projected decrease in sales levels in the defense segment; the Company's ability to win a U.S. Joint Light Tactical Vehicle production contract award; 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 consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; the duration of the ongoing global economic weakness, 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; 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 foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; the Company's ability to comply with complex laws and regulations applicable to U.S. government contractors; 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 that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's U.S. Securities and Exchange Commission ("SEC") filings, including, but not limited to, the Company's Current Report on Form 8-K filed with the SEC on July 30, 2013 and Item 1A. of Part II of this Quarterly Report on Form 10-Q.

All forward-looking statements, including those under the caption "Executive Overview," speak only as of the date the Company files this Quarterly Report on Form 10-Q with the SEC. The Company assumes no obligation, and disclaims any obligation, to update information contained in this Quarterly Report on Form 10-Q. Investors should be aware that the Company may not update such information until the Company's next quarterly earnings conference call, if at all.

All references herein to earnings per share refer to earning per share assuming dilution. Results have been revised to exclude from continuing operations the results of the Company's ambulance and mobile medical trailers businesses. See Note 3 of the Notes to Condensed Consolidated Financial Statements.

General

Major products manufactured and marketed by each of the Company's business segments are as follows:

Access equipment - aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as wreckers and carriers. Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers, the U.S. military and towing companies in the U.S. and abroad.

Defense - tactical trucks and supply parts and services sold to the U.S. military and to other militaries around the world.


Table of Contents

Fire & emergency - custom and commercial firefighting vehicles and equipment, aircraft rescue and firefighting vehicles, snow removal vehicles, military simulator shelters and other emergency vehicles sold primarily to fire departments, airports and other governmental units, and broadcast vehicles sold to broadcasters and television stations in the U.S. and abroad.

Commercial - concrete mixers, refuse collection vehicles, portable and stationary concrete batch plants and vehicle components sold to ready-mix companies and commercial and municipal waste haulers in the Americas and other international markets and field service vehicles and truck-mounted cranes sold to mining, construction and other companies in the U.S. and abroad.

Executive Overview

Reflecting the growing momentum of its MOVE strategy, the Company reported another strong quarter of performance for the third quarter of fiscal 2013. In what is generally the Company's strongest quarter of its fiscal year from a seasonal perspective, the Company reported earnings per share from continuing operations of $1.67, nearly double last year's fiscal third quarter results of $0.84 per share. Third quarter performance exceeded the Company's expectations, led by very strong access equipment segment results and international sales of Mine Resistant Ambush Protected All-Terrain Vehicles ("M-ATVs") in the defense segment.

Consolidated net sales for the third quarter of fiscal 2013 were $2.20 billion, a 2.1% increase from the third quarter of fiscal 2012. Access equipment segment sales in the third quarter of fiscal 2013 rose 15.6% over the third quarter of fiscal 2012 due to replacement-driven demand in North America, improved pricing and higher aftermarket sales. The Company's fiscal third quarter results include revenue from shipments of more than 400 M-ATVs to the United Arab Emirates ("UAE"). The Company expects to deliver the final 100 units of a 750-unit order in the fourth quarter of fiscal 2013.

Consolidated operating income for the third quarter of fiscal 2013 was $225.6 million, or 10.2% of sales, compared to operating income of $126.2 million, or 5.8% of sales, in the third quarter of fiscal 2012. Access equipment segment operating income margin of 16.4%, compared to 10.8% in the prior year quarter, and defense segment operating income margin of 9.8%, compared to 4.2% in the prior year quarter, were the main drivers of the nearly doubling of consolidated operating income margins in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. During the third quarter of fiscal 2013, the Company repurchased approximately 1.1 million shares of its Common Stock at an aggregate cost of $43.9 million. Earnings per share in the third quarter of fiscal 2013 improved $0.07 compared to the prior year third quarter as a result of lower average shares outstanding.

The Company completed previously-announced plans to reduce its defense segment production headcount by approximately 700 employees and contractors in the third quarter of fiscal 2013. Subsequent to the end of the quarter, the Company also reduced its defense segment salaried workforce by approximately 145 employees and contractors. The Company implemented these reductions to align staffing levels with the Company's expected production requirements.

In May 2013, the Company announced it was the successful bidder on the Marines' P-19R ARFF contract. The contract is for up to 200 units, with the majority of the units scheduled for delivery in fiscal 2017 and 2018. Also in the third quarter, the Company secured a second order for M-ATVs from the Kingdom of Saudi Arabia.

In the third quarter of fiscal 2013, the fire & emergency segment reported its fourth consecutive quarterly profit. While sequestration is compounding already weak United States federal spending for fire & emergency equipment, municipal demand has shown signs of improvement in some parts of the United States.

As a result of the Company's strong performance, an expected lower tax rate and share repurchases in the third quarter of fiscal 2013, the Company increased its estimated range of adjusted earnings from continuing operations for fiscal 2013 from $2.90 to $3.15 per share to $3.60 to $3.70 per share. These estimates exclude $0.11 per share incurred in the first quarter of fiscal 2013 related to the unsolicited tender offer for the Company's Common Stock and threatened proxy contest, net of taxes. Including the costs related to the unsolicited tender offer and threatened proxy contest, the Company believes earnings from continuing operations will be in a range of $3.49 to $3.59 per share.

The Company now expects sales to external customers in the access equipment segment will be approximately $3.1 billion for fiscal 2013, up from the Company's previous sales estimate range of $2.85 billion to $3.05 billion. The Company now believes that operating income margins in the access equipment segment for fiscal 2013 will be in the 12.0% to 12.25% range, up from the


Table of Contents

Company's previous estimate range of 10.5% to 11.0%, reflecting absorption benefits associated with the higher sales estimate range and continued operational improvements.

The Company now expects sales in the defense segment will be approximately $3.1 billion for fiscal 2013, which is at the lower end of the Company's previous sales estimate range of $3.1 billion to $3.2 billion. Due to expected continued operational efficiency improvements, the Company now believes operating income margins in the defense segment for fiscal 2013 will be slightly higher than its previous expectations, increasing to approximately 7.5%.

The Company now expects sales in the fire & emergency segment will be nearly $800 million for fiscal 2013, up from the Company's previous sales estimate range of $720 million to $750 million. The Company continues to believe that fire & emergency segment operating income margins will be in the 2.0% to 2.5% range for fiscal 2013.

The Company believes that sales in the commercial segment for fiscal 2013 will be in the range of $720 million to $750 million, unchanged from previous expectations. The Company continues to believe that operating income margins in the commercial segment in fiscal 2013 will be in the 4.5% to 5.0% range.

The Company expects that corporate expenses will be approximately $161 million for fiscal 2013. Excluding $16 million of costs incurred by the Company in connection with an unsolicited tender offer for the Company's Common Stock and threatened proxy contest, the Company expects that adjusted corporate expenses will be approximately $145 million for fiscal 2013. This estimate is at the high end of the Company's previous estimate range. The Company now believes that its fiscal 2013 effective income tax rate will approximate 29.5%, down from its previous estimate of 31% as a result of the discrete items that the Company recorded in the third quarter of fiscal 2013 and lower foreign taxes. The Company's expectations assume an average full-year fiscal 2013 share count of 88.8 million shares, which reflects the Company's share repurchase activity through the end of the third fiscal quarter. The Company expects capital expenditures for fiscal 2013 to be approximately $45 million, down slightly from previous expectations.

The Company expects its fourth quarter results will be the lowest quarterly results of the Company's fiscal year as it expects to experience traditional seasonal declines in sales in the access equipment and commercial segments and the effects of the previously-discussed decline in defense segment sales.

Looking forward to fiscal 2014 and 2015, the Company believes its strong performance in fiscal 2013 reinforces the power of the MOVE strategy and the Company's ability to achieve its fiscal 2015 earnings per share target range of $4.00 to $4.50. There are many other factors in addition to recent financial performance that will impact the Company's fiscal 2014 and 2015 performance, including an expected significant decline in defense segment sales in fiscal 2014, so the Company's path from fiscal 2013 to fiscal 2015 may not be linear. The Company will comment on its expectations for fiscal 2014 and provide a scorecard of its four MOVE initiatives during its next earnings call in late October 2013.

Results of Operations

Analysis of Consolidated Net Sales

The following table presents net sales by business segment (in millions):
                             Third Quarter Fiscal         First Nine Months Fiscal
                              2013          2012            2013             2012
Net sales:
Access equipment          $    941.5     $   814.6     $    2,340.2       $ 2,202.7
Defense                        879.6         958.5          2,535.9         2,996.8
Fire & emergency               204.3         229.6            560.4           551.0
Commercial                     194.7         176.2            557.5           515.5
Intersegment eliminations      (15.7 )       (19.1 )          (55.4 )        (175.4 )
Consolidated              $  2,204.4     $ 2,159.8     $    5,938.6       $ 6,090.6


Table of Contents

Third Quarter Fiscal 2013 Compared to 2012

Consolidated net sales increased $44.6 million, or 2.1%, to $2.20 billion in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. Higher sales in the Company's access equipment segment were largely offset by an expected decline in defense segment sales.

Access equipment segment net sales increased $126.9 million, or 15.6%, to $941.5 million in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. The increase in access equipment segment sales was principally the result of higher replacement-driven demand in North America (up $85 million), the realization of previously announced price increases (up $20 million) and higher aftermarket parts & service sales (up $18 million), offset in part by lower sales volume in Australia (down $22 million) due to a slowdown in mining and energy activity.

Defense segment net sales decreased $78.9 million, or 8.2%, to $879.6 million in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. The decrease in defense segment sales was primarily due to an expected decline in sales to the DoD (down $280 million), offset in part by higher international sales of M-ATVs.

Fire & emergency segment net sales decreased $25.3 million, or 11.0%, to $204.3 million in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. The decrease in fire & emergency segment sales primarily reflected lower sales volume. The third quarter of the prior year included the delivery of 44 Rapid Intervention Vehicles under a contract with the United States Air Force and the delivery of large international orders to Hong Kong.

Commercial segment net sales increased $18.5 million, or 10.5%, to $194.7 million in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. The increase in commercial segment sales was primarily attributable to increased concrete placement products sales volume due to increased demand in the concrete mixer market (up $24 million) and the sale of higher content units, including units with both chassis and bodies (up $12 million), offset in part by lower refuse collection vehicle sales volume (down $17 million).

First Nine Months of Fiscal 2013 Compared to 2012

Consolidated net sales decreased $152.0 million, or 2.5%, to $5.94 billion in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012 due to an expected decline in defense segment sales. Sales increased in all non-defense segments in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012.

Access equipment segment net sales increased $137.5 million, or 6.2%, to $2.34 billion in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. Access equipment segment sales in the first nine months of fiscal 2012 included $124.3 million of sales to the defense segment. Access equipment segment sales to external customers in the first nine months of fiscal 2013 increased $261.7 million, or 12.6%, compared to the first nine months of fiscal 2012. Access equipment segment sales to external customers increased principally due to an increase in sales volume in North America (up $170 million), the realization of previously announced price increases (up $72 million) and improved aftermarket sales (up $40 million), offset in part by lower sales volume in Australia (down $73 million) as a result of a slowdown in mining and energy activity.

Defense segment net sales decreased $460.9 million, or 15.4%, to $2.54 billion in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. The decrease in defense segment sales was primarily due to expected lower M-ATV shipments to the DoD (down $219 million), lower M-ATV aftermarket parts sales (down $404 million) and lower non-M-ATV aftermarket parts sales (down $89 million), offset in part by expected higher international sales of M-ATVs (up $298 million).

Fire & emergency segment net sales increased $9.4 million, or 1.7%, to $560.4 million in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. The increase in fire & emergency segment sales primarily reflected the sale of a higher percentage of units built on custom built chassis, which have higher prices than units built on commercial chassis (up $48 million) and the realization of previously announced price increases (up $15 million), offset in part by lower sales volume (down $52 million).

Commercial segment net sales increased $42.0 million, or 8.1%, to $557.5 million in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. The increase in commercial segment sales was primarily attributable to increased concrete placement products volume due to increased demand in the concrete mixer market (up $79 million) and improved aftermarket parts & service sales (up $17 million), offset in part by lower refuse collection vehicle volume (down $58 million).


Table of Contents

Analysis of Consolidated Cost of Sales

Third Quarter Fiscal 2013 Compared to 2012

Consolidated cost of sales was $1.82 billion, or 82.5% of sales, in the third quarter of fiscal 2013 compared to $1.89 billion, or 87.3% of sales, in the third quarter of fiscal 2012. The 480 basis point decrease in cost of sales as a percentage of sales in the third quarter of fiscal 2013 was primarily due to favorable product mix (410 basis points) largely as a result of a higher mix of M-ATVs, which have higher margins and lower relative costs of sales, and higher sales prices (110 basis points).

First Nine Months of Fiscal 2013 Compared to 2012

Consolidated cost of sales was $5.00 billion, or 84.3% of sales, in the first nine months of fiscal 2013 compared to $5.35 billion, or 87.8% of sales, in the first nine months of fiscal 2012. The 350 basis point decrease in cost of sales as a percentage of sales in the first nine months of fiscal 2013 was primarily due to higher sales prices (180 basis points) and favorable product mix (130 basis points) largely as a result of a higher mix of M-ATVs, which have higher margins and lower relative costs of sales, and improved performance on the Family of Medium Tactical Vehicles ("FMTV") contract in the defense segment (60 basis points).

  Add OSK to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for OSK - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.