JLG Parent's Access Equipment Sales Drop 39 Percent

January 29, 2009 – Oshkosh Corp., Oshkosh, Wis., parent company of JLG Industries and Iowa Mold Tooling, reported its fiscal 2009 first quarter statement today, noting order activity slowed more sharply than expected in access equipment and other businesses. Oshkosh reported net sales of $1.39 billion and a net loss of $20.6 million, or $0.28 per share, for the quarter. These results compare with earnings per share of $0.50 on net sales of $1.50 billion and net income of $37.3 million for the first quarter of fiscal 2008.

 

“We are obviously disappointed in the overall performance we are reporting today,” said Robert Bohn, chairman and CEO. “It has been widely reported that global manufacturing orders and activity fell sharply in November and December 2008. Certain of our businesses shared this experience, which led to our weak performance in our first quarter.”

 

Bohn noted the company’s defense, fire apparatus, and domestic refuse collection vehicle businesses were bright spots in the company’s statement, having continued to report solid results. “Our strong outlook for these businesses, supported by significant backlog, will help us navigate through this recession and emerge as a stronger company,” he said.

 

Specifically, the access equipment segment sales decreased 39.7 percent to $368.4 million for the first quarter of fiscal 2009, compared to the prior year quarter. The company said sales reflected substantially lower demand in North America and Europe as customers remained cautious with purchases. Tightening credit markets and recessionary economies further impacted construction of new residential and nonresidential projects. European equipment sales declined 51 percent while North American equipment sales were down 45 percent, compared to the first quarter of fiscal 2008.

 

The access equipment segment incurred an operating loss of $47 million, or 12.8 percent of sales, for the first quarter of fiscal 2009 compared to operating income of $61.1 million, or 10 percent of sales, in the prior year quarter. The company reported decrease in operating results was primarily the result of lower sales volume, substantially higher raw material costs, an adverse product mix, and provisions for credit losses totaling $13.6 million as a result of the deteriorating worldwide business climate.

 

“In response to the weaker economic outlook, we have taken further measures to reduce our costs,” Bohn said. “These actions include a reduction in workforce of 7 percent, which is in addition to the workforce reduction concluded in the summer of 2008. Additionally, we have further reduced production, announced closures of a number of underutilized facilities and slashed spending in general. We understand these decisions will have wide-ranging effects on our employees, their families, and the communities in which we operate, but we believe they are necessary in the current environment.”

 

Consolidated sales in the first quarter of fiscal 2009 decreased 7.6 percent compared to last year’s first quarter. First quarter operating income decreased 84.5 percent to $17.1 million, or 1.2 percent of sales. An operating loss in the access equipment segment more than offset higher operating income in the defense segment and lower corporate expenses. Operating income in the first quarter of fiscal 2009 also included $14.3 million of provisions for bad debts and $8.3 million of charges related to cost reduction initiatives.

 

While Oshkosh generated strong operating cash flow in the quarter, due to a drop in order activity in the access segment and other businesses, the company said it does not expect earnings for the remainder of the fiscal year will be sufficient for it to avoid violating a financial covenant in its credit agreement. “We have commenced discussions with our lead banks to seek an amendment to our credit agreement in the second quarter of fiscal 2009,” Bohn said. “We believe that we will be successful in finalizing an amendment that will provide us with financial covenant relief. We anticipate that the amendment will entail upfront fees and higher interest costs than under our current credit agreement.