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Oshkosh Corporation (OSK)
F4Q 2011 Earnings Call
November 1, 2011 9:00 am ET
Patrick N. Davidson – Vice President, Investor Relations
Charles L. Szews – President and Chief Executive Officer
David M. Sagehorn – Executive Vice President, Chief Financial Officer
Robert Mccarthy – Robert W. Baird & Co., Inc.
Jamie Cook – Crédit Suisse AG
Peter Skibitski – Suntrust Robinson Humphrey
Ann Duignan – JPMorgan Chase & Co.
Charles Brady – BMO Capital Markets
Jerry Revich – Goldman Sachs
John Zolidis – Buckingham Research Group
Brian Rayle – Northcoast Research
Basili Alukos – Morningstar, Inc.
Josephine Millward – Benchmark Capital
Walter Liptak – Barrington Research
Seth Weber – RBC Capital Markets, LLC
Ben Elias – Sterne, Agee & Leach
Previous Statements by OSK
» Oshkosh's CEO Discusses Q3 2011 Results - Earnings Call Transcript
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» Oshkosh CEO Discusses F4Q10 Results - Earnings Call Transcript
It is now my pleasure to introduce your host, Pat Davidson, Vice President of Investor Relations for Oshkosh Corporation. Thank you, Mr. Davidson, you may begin.
Patrick N. Davidson
Thanks, Rob. Good morning, and thanks for joining us. Earlier today, we published our fourth quarter results for fiscal 2011. A copy of the release is available on our website at oshkoshcorporation.com.
Today's call is being webcast and is accompanied by a slide presentation, which is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months, and please refer now to Slide 2 of that presentation.
Our remarks that follow, including answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different. These risks include, among others, matters that we have described in our Form 8-K, filed with the SEC this morning, and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all.
During our fourth quarter of fiscal 2011, we recorded pre-tax non-cash charges of $7.9 million or $0.07 per share for the impairment of certain facilities in our defense segment and intangible assets in our Fire & Emergency segment. For comparison, we recorded pre-tax non-cash impairment charges of $9.1 million or $0.06 per share during the fourth quarter of fiscal 2010. Unless otherwise noted, all financial results that we discuss today are adjusted to exclude these items.
Presenting today for Oshkosh Corporation will be Charlie Szews, President and Chief Executive Officer; and Dave Sagehorn, Executive Vice President and Chief Financial Officer. Let’s begin by turning to Slide three. And I'll turn it over to you, Charlie.
Charles L. Szews
Good morning to all of you on the call. In addition to discussing our fourth quarter results, we plan to update you on our markets and operations, including our MOVE strategy and the progress we’ve made on the FMTV program. We’ll also discuss our current outlook for fiscal 2012.
No effect has contributed our better than anticipated performance in the quarter. Access Equipment sales were ahead of expectation. Our defense segment shipped more trucks than previously projected and we had expected to make a lump sum payment related to our Union contract negotiation.
Overall, total company sales increased slightly to $2.1 billion for the fourth quarter of fiscal 2011, linked adjusted earnings per share of $0.48. This compares to sales of $2.1 billion and adjusted EPS of $1.34 billion for the same quarter last year. The primary driver of the year-over-year decline in adjusted earnings per share was lower operating income in our defense segment, as higher margin M-ATV sales in the prior year quarter were replaced with FMTV sales.
Our U.S. Access Equipment customers continue to replace their aged equipment and have already began to place large orders for calendar 2012. While we are encouraged by this outlook, we are mindful that we may need to stay close to monitor our business trend. Access Equipment sales to external customers in the quarter were up more 60%, and orders were up more 90% both compared to prior year quarter.
These sales were led by strengthened North America followed by solid performance in parts of Europe. We continue to increase FMTV production rates during the quarter and are reaffirming our belief that the program will become profitable in the second quarter of fiscal 2012. 11 integrated project teams are focused in turning the program to profitability; and I’m encouraged by the progress made to-date, this is a top priority for us.
As we discussed last quarter, we spent six months reviewing, analyzing and assessing our business as we determine the best path forward for Oshkosh Corporation to deliver increased shareholder value. That path is the MOVE strategy that we have outlined last quarter. The MOVE strategy is focused on the aggressive cost reduction in organic growth initiatives involving innovation and pursuant global market opportunities as we prepare for recoveries in our market.
We are investing in fiscal 2012 to support MOVE initiative that will benefit the company in fiscal 2013 and beyond. This is too early to discuss results at this time, but we'll provide more details regarding our approach later in fiscal 2012.
Please turn to slide four. As I mentioned earlier, the U.S. access equipment market has continued to rebound. We’ve recently been discussing 2012 requirements with many of the larger national [oil] companies.
Replacement demand and increased rental penetration continues to be the primary drivers for our growth in this segment. U.S. rental companies have experienced strong utilization rates, improved rental rates, and higher used equipment values, which has given them the confidence to upgrade their fleet. We are also seeing some pull forward of telehandler orders in advance of diesel engine emission standards changes next calendar year.