Hampered by decline in its military truck business, Oshkosh Truck Corp. [OSK] yesterday reported a steep drop in its net income and lower sales in its fourth quarter and its earnings forecast for 2014 was below consensus expectations.
Net income dove 57 percent to $35.7 million, 40 cents earnings per share (EPS), from $83.7 million (91 cents EPS) a year ago. Excluding various charges in the current quarter and a year ago, adjusted earnings were $43.6 million (49 cents EPS), in line with expectations.
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| MRAP ATV. Photo: Oshkosh |
Sales fell 17 percent to $1.7 billion from $2.1 billion, driven by an expected decline in its Defense segment. Sales in its commercial, industrial and fire and emergency segments all rose.
Oshkosh’s military business shrank by 46 percent, with posted sales of $513.8 million. The decline was due to lower volume on the Family of Medium Tactical Vehicle and Family of Heavy Tactical Vehicle programs as well as lower after market part sales. The company said the delivery of Joint Light Tactical Vehicle test vehicles and higher international sales of Mine Resistant Ambush Protected All-Terrain Vehicles partially offset the hit from the decline in medium and heavy vehicles.
Operating earnings in the Defense segment were down 82 percent to $11.2 million due to the decline in sales and $3.8 million in costs related to the extension of a union contract with production employees.
Oshkosh’s Fire & Emergency segment was the only other business to post a decline in operating income, which the company attributed to a product mix that favored lower margin products.
For the year, Oshkosh’s net income jumped 29 percent to $316.3 million ($3.53 EPS) from $245.2 million ($2.67 EPS) in 2012. Sales dipped 5 percent to $7.7 billion from $8.1 billion.
Free cash flow was a strong $386 million, while backlog fell about $1.2 billion from a year ago to $2.8 billion.
For 2014, Oshkosh estimates that earnings will be between $3.10 and $3.40 EPS due to continued declines in sales and earnings at its Defense segment. Analysts had projected $3.52 EPS. The company said it remains on track to achieve its 2015 earnings target of between $4 and $4.50 EPS.
Oshkosh said its overall results in 2013 gave it confidence to reintroduce its quarterly dividend, which is set at 15 cents per share payable on Dec. 2.