Oshkosh (OSK) Tops Q4 Earnings Estimates, Issues '19 View

Shares of Oshkosh Corporation (NYSE:OSK) have gained roughly 21.4% in a day’s trading, following its fourth-quarter fiscal 2018 earnings release. During the quarter under review, the company recorded adjusted earnings of $1.78 per share, beating the Zacks Consensus Estimate of $1.45. In the year-ago quarter, adjusted earnings were $1.38. Net income was 151.3 million compared with $93.5 million in fourth-quarter fiscal 2017.

In fiscal 2018, Oshkosh generated net sales of $7.7 billion while adjusted earnings were $6.36 per share.

In the reported quarter, net sales rose 4.8% to $2.06 billion from $1.96 billion a year ago. The figure was almost in line with the Zacks Consensus Estimate of $2 billion. The rise in sales was primarily due to an increased demand for access equipment, partly offset by lower-than-anticipated sales in the defense segment.

Oshkosh Corporation Price, Consensus and EPS Surprise

During the fourth quarter of fiscal 2018, consolidated operating income increased 49.7% to $201.4 million (9.8% of sales) compared with $134.5 million (6.9% of sales).

Segmental Details

Net sales for Access equipment increased 27.2% to $1.1 billion, driven by an enhanced demand for both aerial work platforms and telehandlers. Operating income increased to $127 million (12% of sales). The rise was due to higher sales volume, improved price realization and lower restructuring-related expenses.

Defense segment’s net sales decreased 22.2% to $464.6 million due to the absence of international Mine Resistant Ambush Protected-All Terrain Vehicle (M-ATV) sales, partly offset by increased sales to the U.S. government. Operating income decreased 14.5% to $62.4 million (13.4% of sales).

Net sales for the Fire & Emergency segment rose 2.1% to $284 million. The rise was driven by improved pricing. Operating income increased 14.7% to $40 million (14% of sales) due to increased pricing and positive extended warranty experience, partly offset by higher material expenses.

Net sales for the Commercial segment decreased 2.2% to $254 million. The sales figure was impacted by lower package sales. Operating income increased 52.6% to $18 million (7% of sales).

Financial Details

Oshkosh had cash and cash equivalents of $454.6 million as of Sep 30, 2018, compared with $447 million as of Sep 30, 2017. The company’s long-term debt was $818 million at the end of fiscal 2018 compared with $808 million recorded on the prior fiscal.

For the fiscal ended on Sep 30, 2018, Oshkosh’s net cash provided by operating activities was $436.3 million compared with $246.5 million a year ago.

Share Buyback Update

During the reported quarter, the company bought shares for $82.5 million and completed repurchasing 1,162,733 units of common stock.

Dividend Announcement

Oshkosh’s board declared a quarterly cash dividend of 27 cents per share to its shareholders. The cash dividend has been increased 12.5% from the earlier payout of 24 cents. The amount will be paid on Dec 3 to shareholders as of Nov 19, 2018.

Fiscal 2019 Outlook

For fiscal 2019, the company anticipates consolidated sales of $7.85-$8.15 billion. Further, adjusted diluted earnings per share are projected to be $6.50-$7.25 while operating income is expected to be between $640 million and $710 million.

Zacks Rank & Key Picks

Oshkosh currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are AutoZone, Inc. (NYSE:AZO) , CarMax, Inc. (NYSE:KMX) and Cooper Tire & Rubber Company (NYSE:CTB) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AutoZone has an expected long-term growth rate of 12.2%. Over the past six months, shares of the company have moved up 17.1%.

CarMax has an expected long-term growth rate of 3.3%. Over the past six months, shares of the company have moved up 10.1%.

Cooper Tire has an expected long-term growth rate of 4%. Shares of the company have risen 34% over the past six months.

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