Oshkosh Corporation (NYSE: OSK) today reported fiscal 2009 fourth-quarter net sales of $1.49 billion and income from continuing operations of $52.4 million, or $0.63 per share, compared with net sales of $1.85 billion and income from continuing operations of $62.4 million, or $0.84 per share, in the prior year’s fourth quarter.
Results from continuing operations for the fourth quarter of fiscal 2009 included a tax benefit of $0.18 per share related to tax strategies in connection with investments in the company’s foreign subsidiaries and LIFO inventory benefits of $0.18 per share. All results exclude the operations of Geesink Group B.V., Geesink Norba Limited and Norba A. B. (collectively, the Geesink Norba Group), which have been reclassified to discontinued operations due to the company’s sale of these businesses on July 1.
Excluding non-cash intangible asset impairment charges, for the fiscal year ended September 30, the company reported income from continuing operations of $3.8 million, or $0.05 per share, on sales of $5.30 billion compared with income from continuing operations for fiscal 2008 of $287.5 million, or $3.84 per share, on sales of $6.94 billion. Including impairment charges, the company recorded a loss from continuing operations of $1.17 billion, or $15.33 per share, for fiscal 2009. The lower results were due to a decrease in sales at the company’s access equipment and commercial segments due to the global recession and credit crisis, offset in part by strong demand for defense vehicles and armor kits.
“Our positive results for the quarter were led by strength in our defense business,” said Robert G. Bohn, Oshkosh Corporation chairman and chief executive officer. “In addition to our strong legacy medium- and heavy-payload tactical wheeled vehicle programs, we have been aggressively ramping up our factories to achieve our December 2009 production target of 1,000 M-ATVs per month to support our warfighters in Afghanistan. Dedicated employees from our defense and access equipment segments have been working tirelessly with our suppliers and our customer to deliver these vehicles as quickly as possible, as we know they greatly improve the protection and mobility of our American men and women in the military who are sacrificing to help the people of Afghanistan and to make the world a safer place.
“At this time next year, we expect to be serving our men and women in the U.S. Army by delivering FMTVs to our soldiers. Although the losing bidders have protested the Army’s source selection decision, we believe that the source selection was performed fairly and objectively. We expect that U.S. taxpayers will receive improved value and that U.S. soldiers will benefit from Oshkosh’s expertise as a producer of high quality, high performance tactical wheeled vehicles.
“We significantly enhanced our balance sheet with debt reduction of $736 million during the year, supported by our successful equity offering in August 2009 and strong cash flows from operations. We enter fiscal 2010 with a strong focus on lean implementation, operations improvement and cash generation that we expect to lead to further debt reduction,” added Bohn.
Bohn further commented, “We expect to be solidly profitable in fiscal 2010, led by significant revenue growth in our defense business, which should more than offset anticipated low demand at our construction-related businesses. And, we continue to make investments to position the company to perform well when the global economy rebounds."
The company reported that consolidated net sales in the fourth quarter of fiscal 2009 decreased 19.8 percent compared with the prior year’s fourth quarter. Significantly higher defense segment sales were not sufficient to overcome a decrease in sales in the company’s other segments.
Operating income from continuing operations decreased 10.8 percent to $118.1 million, or 7.9 percent of sales, for the fourth quarter of fiscal 2009 compared with operating income from continuing operations of $132.4 million, or 7.1 percent of sales, in the prior year fourth quarter. Significantly improved performance in the defense segment as a result of higher unit volume, improved manufacturing efficiencies and consolidated LIFO inventory benefits of approximately $24 million were not sufficient to offset the effects of substantially lower volume in the company’s other segments.
Factors affecting fourth quarter results for the company’s business segments included:
Defense – Defense segment sales increased 54.6 percent to $855.4 million for the fourth quarter of fiscal 2009 compared with the prior year fourth quarter. The increase was due to an increase in sales of new and remanufactured Family of Heavy Tactical Vehicles (FHTV), the start of MRAP-All Terrain Vehicle (M-ATV) production and higher parts & service sales, offset in part by lower medium-payload tactical vehicle sales. Defense parts & service sales during the fourth quarter of fiscal 2009 benefited from the sale of TAK-4 independent suspension systems for Mine Resistant Ambush Protected (MRAP) vehicles. M-ATV sales were approximately $100 million in the fourth quarter of fiscal 2009.
Operating income in the fourth quarter more than doubled to $161.7 million, or 18.9 percent of sales, compared with prior year fourth quarter operating income of $75.1 million, or 13.6 percent of sales. The increase in operating income as a percent of sales reflected a combination of substantially improved manufacturing efficiencies, a LIFO inventory benefit of $12.0 million and lower material costs.
Fire & Emergency – Fire & emergency segment sales for the fourth quarter of fiscal 2009 decreased 16.7 percent to $305.2 million compared with the prior year quarter. The sales decrease reflected lower sales at the company’s European fire apparatus and mobile medical businesses as a result of large multiple-unit sales deliveries in the fourth quarter of fiscal 2008 and weaker sales of towing & recovery equipment in the fourth quarter of fiscal 2009. The towing & recovery business continues to be impacted by low levels of consumer spending and limitations on available financing for its customers as a result of the tight credit markets.
Operating income decreased 4.7 percent in the fourth quarter of fiscal 2009 to $31.7 million, or 10.4 percent of sales, compared with the prior year quarter operating income of $33.2 million, or 9.1 percent of sales. The increase in operating income as a percent of sales during the fourth quarter was primarily the result of improved product mix and LIFO inventory benefits of $3.7 million.
Commercial – Commercial segment sales decreased 40.4 percent to $130.4 million in the fourth quarter of fiscal 2009 compared with the prior year quarter. The sales decrease was largely due to a 69 percent decline in sales of concrete placement products as a result of lower construction activity in North America and a 31 percent decrease in domestic refuse collection vehicle sales. The prior year’s fourth quarter refuse collection vehicle sales were unusually high.
Operating income increased 13.5 percent in the fourth quarter to $3.8 million, or 2.9 percent of sales, compared with operating income of $3.4 million, or 1.5 percent of sales, in the prior year quarter. The increase in operating income primarily reflected LIFO inventory benefits of $8.5 million and lower operating expenses as a result of cost reduction initiatives, offset in large part by the effect of the further decline in sales in the fourth quarter of fiscal 2009.