Oshkosh Corp., a leading manufacturer of specialty vehicles and vehicle bodies, and parent company of McConnellsburg, Pa.-based JLG Industries, last week reported fiscal 2008 third-quarter earnings per share of $1.19, on sales of $2.0 billion and net income of $88.8 million, excluding impairment charges. Including pre-tax charges of $175.2 million ($2.33 per share, net of taxes) related to the previously announced non-cash impairment of intangible assets of the Geesink Norba Group, the company’s European refuse collection vehicle business, the company reported a net loss of $84.3 million, or $1.14 per share, for the third quarter of fiscal 2008. These results compare with EPS of $1.21 on sales of $1.8 billion and net income of $90.6 million for the third quarter of fiscal 2007.
“We delivered solid results in our core businesses in the face of some very challenging end markets,” said Robert Bohn, chairman and CEO of Oshkosh Corp. “Strong sales of defense products and aerial work platforms highlighted our performance. In our commercial segment, we met very low domestic demand for concrete mixers with a robust increase in exports.
“Looking to the fourth fiscal quarter, our EPS forecast of $0.50 to $0.65 includes lower expectations for our access equipment segment. We expect weak residential and non-residential construction in North America and certain areas of Western Europe to limit sales volume in the quarter. We also expect higher steel, fuel and other costs to have a more significant impact on fourth quarter earnings for the access equipment segment, in advance of our product selling price increases, which are effective Oct. 1.”
Sales in the third quarter of fiscal 2008 increased 6.6 percent compared to last year’s third quarter. These results included strong demand for defense vehicles and armor kits as well as access equipment products in international markets and a decrease in sales for the company's domestic commercial and access equipment segment products as a result of the slowdown in U.S. construction.
Third-quarter fiscal 2008 operating income, excluding impairment charges, decreased 5.9 percent to $181.2 million, or 9.2 percent of sales compared to the same period last year. This decrease in operating income was related primarily to lower operating income in the commercial and fire & emergency segments as a result of lower sales and production inefficiencies at the company's European refuse collection vehicle business, offset in part by strong performance in the access equipment segment.
Access equipment segment sales increased 5.3 percent to $920.2 million for the third quarter of fiscal 2008 due to increased demand for aerial work platforms in Europe, favorable foreign exchange rates and increased demand for aftermarket parts and service, offset in part by lower worldwide shipments of telehandlers. Sales outside of North America increased more than 20 percent versus the comparable prior year quarter, while sales in North America declined nearly 5 percent as a result of the weak U.S. construction markets.
Operating income in the third quarter of fiscal 2008 increased 27.3 percent to $125.2 million, or 13.6 percent of sales, compared to the prior year quarter operating income of $98.3 million, or 11.3 percent of sales. The increase in operating income in the third quarter was primarily the result of favorable foreign exchange rates as well as higher aftermarket sales and improved product and customer mix.
Operating income was down 38.2 percent in the third quarter to $17.9 million, or 6.4 percent of sales, compared to the prior year quarter operating income of $29.0 million, or 10.0 percent of sales. The decrease in operating income during the third quarter was primarily related to lower sales, adverse product mix and a work stoppage at a fabrication facility.
For the first nine months of fiscal 2008, the company recorded net income of $25.6 million, or $0.34 per share. Excluding impairment charges, the company reported that EPS increased 8.6 percent to $2.65 for the first nine months of fiscal 2008 on sales of $5.2 billion and net income of $198.7 million, compared to EPS of $2.44 for the first nine months of fiscal 2007 on sales of $4.5 billion and net income of $182.7 million. JLG was included in the company’s operations for the first nine months of fiscal 2008 compared to only seven months in the prior year following the December 2006 acquisition of JLG. Strong international sales at JLG and increased defense segment sales also contributed to current year sales increases compared to the prior year, while the commercial segment experienced a significant decline in sales due to lower demand in North America generally as a result of lower residential construction activity in the U.S. combined with the aftereffects of the 2007 diesel engine emissions standards changes.
The company revised its fiscal 2008 EPS estimate range, excluding impairment charges, to between $3.15 and $3.30 as compared to EPS of $3.58 in fiscal 2007. Including impairment charges, the company’s 2008 EPS estimate range is $0.84 to $0.99. These estimates reflect the its performance for the first nine months of fiscal 2008, and its expectations for significantly lower results in the access equipment segment in the fourth quarter of fiscal 2008 as a result of lower sales expectations in North America and certain areas of Western Europe and increases in the costs of raw materials.
“We will continue to aggressively cut costs and optimize our operations for the benefit of our stakeholders,” said Bohn. “We are confidently moving forward with a series of actions that will improve our competitive position and our ability to succeed in difficult markets. Additionally, we will continue to invest prudently in growth initiatives to benefit our business when economies recover.”
Also last week, Oshkosh Corp.’s board of directors declared a quarterly dividend of $0.10 per share of common stock. The dividend, unchanged from the immediately preceding quarter, will be payable Aug. 25, to shareholders of record as of Aug. 15.
Oshkosh, Wis.-based Oshkosh Corp. is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, military, commercial and fire & emergency vehicles and vehicle bodies.
