Oshkosh Corporation reported results for its fiscal 2015 first quarter, with access equipment sales up 7.2 percent over the previous year.
The company reported a fiscal 2015 first quarter net income of $34.7 million, compared to $54.9 million in the first quarter of fiscal 2014. Results for the first quarter of fiscal 2015 included a $2.1 million after-tax other postretirement benefit curtailment gain in the defense segment. Excluding this item, fiscal 2015 first quarter adjusted net income was $32.6 million.
Consolidated net sales in the first quarter of fiscal 2015 were $1.35 billion, a decrease of 11.6 percent. Expected lower defense segment sales and lower fire & emergency shipments as a result of a planned lower rate of production were offset in part by improved demand in the company’s access equipment and commercial segments.
Consolidated operating income in the first quarter of fiscal 2015 was $65.7 million compared to $96.5 million in the prior year first quarter. Excluding the curtailment benefit described above, adjusted consolidated operating income in the first quarter of fiscal 2015 was $62.3 million. The decrease in adjusted operating income in the first quarter of fiscal 2015 as compared to the first quarter of the prior year was largely the result of lower sales in the company’s defense segment and an adverse product mix in the access equipment segment. The access equipment segment sold a larger percentage of telehanders, which have lower margins than aerial work platforms, in the first quarter of fiscal 2015 ahead of Tier 4 engine price increases in North America.
“We are pleased to announce first quarter adjusted results that exceeded our expectations, driven by better than expected results in each of our four segments,” said Charles L. Szews, Oshkosh Corporation CEO. “We continued to experience, as expected, significantly lower defense segment sales in the quarter due to lower U.S. Department of Defense (DoD) spending for tactical wheeled vehicles. However, we finished the quarter with strong orders and higher backlogs in all of our non-defense segments compared with the first quarter of fiscal 2014, which we believe is a positive reflection of our non-defense customers’ expectations for 2015.
Access equipment segment sales increased 7.2 percent to $716.7 million for the first quarter of fiscal 2015. The improvement was principally the result of an increase in telehandler unit volume in North America, offset in part by lower aerial work platform unit volume. The increase in North American telehandler sales was due in part to shipments ahead of price increases related to Tier 4 engine emissions changes. Similarly, price increases related to Tier 4 engine emissions changes for aerial work platforms drove higher demand for those products in the first quarter of fiscal 2014. While North America provided for the majority of the increase in sales in the first quarter of fiscal 2015, the segment experienced higher volumes in all regions of the world except Latin America.
Access equipment segment operating income decreased 14.5 percent to $77.2 million for the first quarter of fiscal 2015 compared to $90.3 million in the first quarter of fiscal 2014. The decrease in operating income was primarily the result of adverse product mix, increased new product development spending and higher operating costs in support of ongoing MOVE initiatives, offset in part by higher sales volume. Results in the prior year quarter also benefited by $7.5 million as a result of reaching an agreement on the final pricing of a multi-year U.S. military contract.
Defense segment sales for the first quarter of fiscal 2015 decreased 44.1 percent to $269.3 million. The decrease in sales was primarily due to lower sales to the DoD as well as the absence of international sales of MRAP All-Terrain Vehicles. Segment operating income decreased 60.6 percent to $9.8 million for the first quarter of fiscal 2015.
Fire & emergency segment sales for the first quarter of fiscal 2015 decreased 15.6 percent to $167 million. Segment operating income decreased 77.6 percent to $1.5 million for the first quarter of fiscal 2015.
Commercial segment sales increased 9.1 percent to $210.2 million in the first quarter of fiscal 2015. The increase in sales was primarily attributable to higher refuse collection vehicle unit volume and improved aftermarket parts & service sales. Segment operating income increased 20.9 percent to $12.4 million for the first quarter of fiscal. The increase in operating income was primarily a result of higher sales volume and favorable warranty performance, offset in part by investment in MOVE initiatives.
The company reaffirmed its fiscal 2015 adjusted earnings per share estimate range of $4.00 to $4.25 on projected net sales of $6.5 billion to $6.6 billion. The company believes its stronger than expected first quarter performance will be offset by foreign currency headwinds later in the fiscal year due to the recent significant strengthening of the U.S. dollar. The company anticipates that second quarter adjusted earnings per share will be in the range of the second quarter of fiscal 2014 adjusted earnings per share. This estimate is based on expected improved results in all of the non-defense segments and a lower share count being offset by significantly lower defense earnings due to lower sales, including the impact of an estimated six-month break in production on the Family of Heavy Tactical Vehicles program.
The board of directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividend will be payable on Feb. 26, 2015 to shareholders of record as of Feb. 12, 2015.