Oshkosh Corporation reported fiscal 2014 second quarter net income of $71.5 million, compared to $85.9 million in the second quarter of fiscal 2013.
Access equipment segment sales increased 5.9 percent to $866 million. The improvement was principally the result of higher unit volumes, improved aftermarket parts & service sales and favorable pricing, offset in part by the absence of U.S. military telehandler sales under a contract that was completed in the fourth quarter of fiscal 2013. Sales of access equipment, excluding U.S. military contract sales, rose 9.3 percent in the second quarter, overcoming the impact of severe weather.
Consolidated net sales in the second quarter of fiscal 2014 were $1.68 billion, a decrease of 15.4 percent. Significantly lower defense segment sales were partially offset by improved demand in the company’s access equipment segment.
“A strong focus on execution has enabled a successful roll-out of our MOVE strategy over the past two years and that focus was certainly evident this quarter. Our employees and business partners worked hard to overcome a number of weather-related challenges in the United States during the quarter, and we are thankful for their efforts,” said Charles L. Szews, Oshkosh Corporation CEO. “We are optimistic about our outlook for the second half of fiscal 2014. U.S. construction spending has continued to slowly improve. We are also seeing positive trends outside the U.S. as international orders for the first six months of fiscal 2014 grew at a double digit rate in our access equipment segment. This is encouraging as we seek to broaden our sales across the globe."
Fiscal 2014 second quarter adjusted net income was $69 million, excluding after-tax costs of a pension curtailment of $2.6 million related to announced workforce reductions in the company’s defense segment, after-tax costs of $7 million incurred in connection with the refinancing of the company’s senior notes due 2017 and credit agreement as well as a $12.1 million tax benefit related to the reduction of a net operating loss valuation reserve.
Consolidated operating income in the second quarter of fiscal 2014 was $119.4 million, or 7.1 percent of sales, compared to $134.6 million, or 6.8 percent of sales, in the second quarter of fiscal 2013. Fiscal 2014 second quarter adjusted operating income was $123.5 million, or 7.4 percent of sales, excluding before-tax pension curtailment costs of $4.1 million. The 60 basis point improvement in adjusted operating income margins in the second quarter of fiscal 2014 was primarily a result of favorable performance in the Company’s access equipment segment, offset in part by lower defense segment sales.
Access equipment segment operating income increased 22.7 percent to $116.6 million, or 13.5 percent of sales, for the second quarter of fiscal 2014 compared to $95.0 million, or 11.6 percent of sales. The increase in operating income was primarily the result of higher sales volume, favorable impact of cost reduction initiatives and favorable pricing, offset in part by increased new product development spending.
Commercial segment sales decreased 1.7 percent to $182.3 million in the second quarter of fiscal 2014. The decrease in sales was primarily attributable to lower package sales, which include both a body and chassis, and lower intersegment defense sales, offset in part by higher shipments of front-discharge concrete mixer rebuilds. Severe weather contributed to delays in chassis supplier deliveries, which impacted the Company’s ability to ship completed units in the quarter. Commercial segment operating income decreased 28.8 percent to $5.4 million, or 3 percent of sales, for the second quarter of fiscal 2014 compared to $7.6 million, or 4.1 percent of sales.
Defense segment sales for the second quarter of fiscal 2014 decreased 41.5 percent to $484.4 million. Segment operating income decreased 48.6 percent to $34.5 million, or 7.1 percent of sales, for the second quarter of fiscal 2014. Excluding a pension curtailment charge, adjusted operating income was $38.6 million, or 8 percent of sales.
Fire & emergency segment sales for the second quarter of fiscal 2014 decreased 10.3 percent to $156.1 million. Fire & emergency segment operating income decreased 60.9 percent to $1 million, or 0.7 percent of sales, for the second quarter of fiscal 2014 compared to $2.7 million, or 1.6 percent of sales. The decrease in operating income was largely the result of lower sales volume.
The company is maintaining its full-year fiscal 2014 adjusted earnings per share expectations of $3.40 to $3.65. Oshkosh expects consolidated sales for fiscal 2014 will be approximately $6.7 billion to $6.8 billion, reflecting an increase of $50 million on the low end of the range and a decrease of $50 million on the high end of the range compared to the company’s previous expectations. The company’s estimated sales range reflects higher expectations in the access equipment segment and slightly lower expectations in each of the other segments. The Company expects adjusted consolidated operating income to be between $490 million and $520 million. The adjusted consolidated operating income expectations reflect improved operating income margins in the access equipment and defense segments, offset by lower operating income margins in the fire & emergency and commercial segments, and an approximate $10 million increase in corporate expenses compared to previous expectations.