OSHKOSH, WI (November 1, 2011) -- Oshkosh Corporation (NYSE: OSK) reports fiscal 2011 fourth quarter income from continuing operations of $37.5 million, or $0.41 per share, a 68% decrease compared to income from continuing operations of $116.6 million, or $1.28 per share, in the fourth quarter of fiscal 2010.
Sales to external customers in the access equipment segment, served by JLG, increased 60.7 percent to $619.6 million for the fourth quarter of fiscal 2011 compared to the prior year fourth quarter. Oshkosh attributes the surge primarily to demand for replacement equipment in North America and parts of Europe. Including sales to the defense segment, access equipment sales increased 25.5 percent for the fourth quarter.
The sales increase resulted in a fourth-quarter leap in access-segment operating income of 376.7 percent to $34.8 million, or 5.2 percent sales.
Oshkosh's consolidated net sales in the fourth quarter of fiscal 2011 were $2.12 billion, a slight increase compared to the prior year fourth quarter. Higher sales of Family of Medium Tactical Vehicles (FMTV) and increased demand for aerial work platforms and telehandlers in the access equipment segment were almost entirely offset by expected lower MRAP-All Terrain Vehicle (M-ATV) sales, a decrease in TAK-4 independent suspension system kit sales to other MRAP original equipment manufacturers (OEMs) and lower fire & emergency volume.
"We are pleased with the continued improvement in our global access equipment markets during the fourth quarter, with orders rising 91 percent compared to the fourth quarter of the prior year," said Charles L. Szews, Oshkosh Corporation president and chief executive officer. "Despite the continued uncertain economic environment, rental equipment utilization and rental rates strengthened during the fourth quarter in North America, and emerging markets continue to exhibit positive growth trends. We continue to expect strong growth in this segment in fiscal 2012.
"During the fourth quarter, we made significant progress on the FMTV program, as sales increased nearly 70 percent and our operating performance improved significantly on both an absolute and on a per unit basis compared with our third quarter. The FMTV program remains on the path to profitability by the second quarter of fiscal 2012.
"As we look forward to fiscal 2012, we see the opportunity to set the foundation for another period of growth for Oshkosh. We continue to execute on our MOVE strategy with initiatives aimed at improving our cost structure, accelerating new product development and growing sales in emerging markets to drive earnings growth in fiscal 2013 and beyond. By focusing our efforts in these areas, we will be in an improved position to take full advantage of the eventual recovery in our markets," stated Szews.
Factors affecting fourth quarter results for the Company's business segments included:
Defense - Defense segment sales decreased 11.9 percent to $1.17 billion for the fourth quarter of fiscal 2011 compared with the prior year fourth quarter. The decrease was primarily due to lower production under the M-ATV contract, lower M-ATV related parts & service sales and a decrease in TAK-4independent suspension system kit sales to other MRAP OEMs. These decreases were offset in part by the continued ramp-up of production under the FMTV contract. Combined M-ATV related vehicle and parts & service sales totaled $292.2 million in the fourth quarter of fiscal 2011, a decrease of $378.6 million compared to the fourth quarter of the prior year.
In the fourth quarter of fiscal 2011, defense segment operating income decreased 68.3 percent to $71.0 million, or 6.1 percent of sales, compared to prior year fourth quarter operating income of $224.1 million, or 16.8 percent of sales. The decrease in operating income was largely due to an adverse product mix, lower sales volume and costs associated with the ramp-up of production on the FMTV contract. While costs on the FMTV contract exceeded revenues by $9.9 million during the fourth quarter of fiscal 2011, this was approximately $12.0 million better than the third fiscal quarter on a nearly 70 percent increase in FMTV sales.
Access Equipment - Access equipment segment sales to external customers increased 60.7 percent to $619.6 million for the fourth quarter of fiscal 2011 compared to the prior year fourth quarter primarily as a result of demand for replacement equipment in North America and parts of Europe. In addition to sales to external customers, access equipment segment sales in the fourth quarters of fiscal 2011 and 2010 included sales to the defense segment of $53.9 million and $151.1 million, respectively. Including sales to the defense segment, access equipment segment sales increased 25.5 percent for the fourth quarter of fiscal 2011 compared with the prior year quarter.
In the fourth quarter of fiscal 2011, access equipment segment operating income increased 376.7 percent to $34.8 million, or 5.2 percent of sales, compared to prior year fourth quarter operating income of $7.3 million, or 1.4 percent of sales. The increase in operating income reflected higher volume with external customers and lower facility rationalization costs, offset in part by an increase in raw material costs and the decrease in intersegment sales of M-ATVs at mid single-digit margins. Operating income in the fourth quarter of fiscal 2010 included $6.7 million of facility rationalization costs related to the integration of manufacturing for JerrDan, the Company's towing and recovery business, into JLG facilities.
Fire & Emergency - Fire & emergency segment sales for the fourth quarter of fiscal 2011 decreased 19.3 percent to $205.6 million compared with the prior year quarter. The decrease in sales primarily reflected lower shipments of fire apparatus. Weak municipal spending in the U.S. was the primary driver of the decrease in fire apparatus sales, with the U.S. market down by approximately 40 percent from historic averages.
The fire & emergency segment reported an operating loss of $8.6 million, or 4.2 percent of sales, for the fourth quarter of fiscal 2011 compared to operating income of $22.0 million, or 8.6 percent of sales, in the prior year quarter. Excluding impairment charges in both periods, the fire & emergency segment adjusted operating loss in the fourth quarter of fiscal 2011 was $3.8 million, or 1.8 percent of sales, compared to adjusted operating income of $25.7 million, or 10.1 percent of sales, in the prior year quarter. Operating results during the fourth quarter were negatively impacted by lower sales volume at the Company's fire apparatus business, costs related to the move of mobile medical and ambulance production to the Company's facilities in Florida, and an adverse product mix.
Commercial - Commercial segment sales decreased 16.9 percent to $135.2 million in the fourth quarter of fiscal 2011 compared to the prior year quarter. The decrease in sales was almost entirely attributable to lower demand for refuse collection vehicles.
Commercial segment operating income in the fourth quarter of fiscal 2011 decreased 67.4 percent to $2.6 million, or 1.9 percent of sales, compared to prior year fourth quarter operating income of $7.9 million, or 4.9 percent of sales. Excluding impairment charges in the prior year quarter, adjusted operating income in the fourth quarter of fiscal 2010 was $10.2 million, or 6.3 percent of sales. The decrease in operating income primarily resulted from lower refuse collection vehicle demand and a lower LIFO benefit. The fourth quarter of fiscal 2011 included a $0.5 million LIFO inventory benefit compared to a benefit of $4.5 million in the prior year fourth quarter.
Corporate - Corporate operating expenses decreased $1.6 million to $25.9 million for the fourth quarter of fiscal 2011 compared to the prior year quarter. The decrease was primarily the result of lower share-based and incentive compensation.
Interest Expense Net of Interest Income - Interest expense net of interest income decreased $28.3 million to $19.2 million in the fourth quarter of fiscal 2011 compared to the prior year quarter. The decrease was largely due to the effects of lower borrowings as well as lower interest rates following a reduction in the amount of the Company's interest rate swap in December 2010 and the refinancing of the Company's credit agreement in September 2010. The fourth quarter of fiscal 2010 also included a write-off of deferred financing fees of $12.0 million due to the refinancing of long-term debt. Average debt outstanding decreased from $1.35 billion during the fourth quarter of fiscal 2010 to $1.09 billion during the fourth quarter of fiscal 2011. The Company repaid $51.0 million of debt during the fourth quarter of fiscal 2011.
Provision for Income Taxes - The Company recorded income tax expense of $18.8 million in the fourth quarter of fiscal 2011, or 33.3 percent of pre-tax income, compared to 35.4 percent of pre-tax income in the prior year quarter. The fourth quarter fiscal 2011 effective tax rate was adversely impacted by $2 million in additional taxes resulting from the repatriation of foreign earnings.
The Company reported consolidated net sales for the fiscal year ended September 30, 2011 of $7.58 billion and income from continuing operations of $273.4 million, or $2.99 per share. This compares with net sales of $9.84 billion and income from continuing operations of $792.9 million, or $8.72 per share, for fiscal 2010. Excluding impairment charges in both periods, adjusted income from continuing operations in fiscal 2011 was $279.5 million, or $3.06 per share, compared to $818.3 million, or $9.00 per share, in fiscal 2010. The decreases in sales and income from continuing operations were primarily due to the completion of the initial 8,079 vehicles under the Company's M-ATV contract in the first quarter of fiscal 2011. Combined M-ATV related vehicle and parts & service sales totaled $1.25 billion in fiscal 2011 compared to $4.49 billion in fiscal 2010. The decrease in M-ATV related sales was offset in part by an increase in sales to external customers in the access equipment segment of $677.3 million, or 53.5 percent, and the start of the FMTV contract in the defense segment.
The Company is lowering its outlook for fiscal 2012 primarily due to the re-allocation by the U.S. Department of Defense (DoD) of certain tires with constrained capacity from certain of the Company's defense programs to other OEM contracts with higher military priority. The Company expects this action will shift approximately $225 million of Family of Heavy Tactical Vehicle (FHTV) sales in the defense segment from fiscal 2012 to fiscal 2013. The Company will describe this change and other changes to the Company's fiscal 2012 outlook during a conference call later today.
The Company will comment on fourth quarter earnings and its fiscal 2012 outlook during a conference call at 9:00 a.m. EDT this morning. Slides for the call will be available on the Company's website beginning at 7:00 a.m. EDT this morning. The call will be webcast simultaneously over the Internet. To access the webcast, listeners can go to www.oshkoshcorporation.com at least 15 minutes prior to the event and follow instructions for listening to the broadcast. An audio replay of the call and related question and answer session will be available for 12 months at this website.
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 more information, log on to www.oshkoshcorporation.com.
All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies.