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Oshkosh Corporation (OSK)
F1Q12 Earnings Call
January 31, 2012 09:00 a.m. ET
Patrick Davidson – VP, IR
David Sagehorn –CFO
Wilson Jones – EVP, President
Jamie Cook – Crédit Suisse
Charles Brady – BMO Capital Markets
Stephen Volkmann – Jefferies & Company
Andrew Owen – Bank of America
Jerry Revich – Goldman Sachs
Basili Alukos – Morningstar, Inc.
Previous Statements by OSK
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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.
Good morning, and thanks for joining us everybody. Earlier today, we published our first quarter results for fiscal 2012. 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. Please refer now to Slide 2 of that slide presentation.
Our remarks should 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.
Presenting today for Oshkosh Corporation will be Dave Sagehorn, Executive Vice President and Chief Financial Officer, normally Charlie Szews, our President and Chief Executive Officer will present, but Charlie has come down with a case of the flu and is unable to be with us today. Dave will be handling today’s call. Dave with that I'll turn it over to you and let’s turn to slide three everybody.
Okay, thanks Pat and good morning everyone. Over the last two months we probably talked to most of you on calls in connection with the proxy contest for which we do not yet have final results. While we have urgent views among our shareholders with regard to what the strategy should be, it’s fair to say that all shareholders want and expect management and the board to deliver superior value creation for shareholders and that’s our clear objective. We intend along with our Chairman, Dick Donnelly to share your feedback and ideas that we receive during this process with our full board and management team and respond over the next few months. We are mission driven to serve you, our shareholders, with urgency.
Overall, total company sales increased 10.5% to $1.88 billion for the first quarter of fiscal 2012 compared to the first quarter of fiscal 2011.
Earnings per share of $0.42 in the quarter was lower than the prior year quarter due primarily to an adverse sales mix in our defense segment while our access equipment segment experienced another quarter of higher year-over-year sales and orders.
Our actions to develop and implement our MOVE strategy enabled us to make important progress during the quarter. One of the most significant highlights was achieving profitability on our FMTV contract. We first announced this a few weeks back but it bears repeating as the FMTV program is an important part of our defense business.
Through hardwork and strong execution by our integrated project teams we were able to generate a profit one quarter earlier than we had most recently estimated. In the access equipment segment we introduced a new 10-meter rental rental scissor and a compact crawler boom [ph] for Asian markets.
In the commercial segment, we continue to analyze our footprint requirements resulting in our decision earlier this month to rationalize a smaller production facility.
In the fire emergency segment we downsized an additional 70 positions and overall our international sales increased 40% to 19.5% of sales in the quarter.
In our recent meetings with shareholders, we heard the message that shareholders would like us to provide more MOVE targets to measure our progress. As we go through our fiscal 2012, we’ll work on ways to provide targets. But I will reiterate that our targeted 250 basis point improvement in consolidated operating margins from our cost reduction initiatives is something we believe we can achieve even if we don’t see any improvement in our end markets.
By the way, we do expect to see improvement in our non-defense markets in the coming years and we do believe we’ll deliver consist international sales growth.
Let’s talk a little bit about our current market conditions please turn to slide 4.
President signed the fiscal year 2012 defense budget a few weeks ago, providing solid FHTV and FMTV funding and support of our sales in fiscal 2013. The administration has developed a new national defense strategy that is being implemented with the fiscal year 2013 budget. Program details are expected to be released on February 13.
While there are some uncertainties regarding future levels of US defense spending we’re busier than ever developing solutions to win multiple new programs that we believe will move forward. For example, we’re competing for the Canadian TAPV and the MSVS programs. These are two opportunities in which the Canadian Armed Forces are looking for an MRAP type high mobility vehicle and a medium payload truck respectively.