Oshkosh Corporation (NYSE:OSK)

Oshkosh Corporation (NYSE:OSK) | Products & Business Units

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Introduction



Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies. The company partners with customers to deliver superior solutions that safely and efficiently move people and materials at work, around the globe, and around the clock. Oshkosh began business in 1917 as an early pioneer of four-wheel drive technology, and off road mobility technology remains one of its core competencies. Oshkosh maintains four reportable segments for financial reporting purposes: Defense, Access Equipment, Fire & Emergency and Commercial. These segments, in some way, all share common customers and distribution channels, leverage common components and suppliers, utilize common technologies and manufacturing processes and share manufacturing and distribution facilities, which results in Oshkosh being an integrated specialty vehicle manufacturer.

The company's Defense segment has manufactured and sold military tactical wheeled vehicles to the DoD for more than 90 years. In 1981, Oshkosh Defense was awarded the first Heavy Expanded Mobility Tactical Truck (HEMTT) contract for the DoD and thereafter developed into the DoD's leading supplier of severe-duty, heavy-payload tactical trucks. Since that time, Oshkosh Defense has broadened its product offerings to become the leading manufacturer of severe-duty, heavy- and medium-payload tactical trucks for the DoD, manufacturing vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel, troops and cargo for combat units and light-payload tactical vehicles, through its M-ATVs. In October 2011, Oshkosh Defense introduced the Light Combat All-Terrain Vehicle (L-ATV) to continue to expand its light protected tactical wheeled vehicle offering. The L-ATV incorporates field-proven technologies, advanced armor solutions and expeditionary levels of off-road mobility to redefine safety and performance standards. The L-ATV also is designed for future growth, with the ability to accept additional armor packages and technology upgrades as the mission requires. The L-ATV was Oshkosh Defense's entrant in the DoD's JLTV competition. In August 2015, the DoD awarded Oshkosh an eight-year fixed price contract valued at $6.7 billion for the production and delivery of approximately 17,000 vehicles and sustaining services under the U.S. Army and Marine Corps JLTV program. The JLTV program is expected to be a 20-year, $30 billion program for the production of up to 55,000 vehicles as well as support services and engineering.

Oshkosh Corporation conducts its business through four principal segments:

 

Defense
Access Equipment
Fire & Emergency
Commercial.



The following table highlights Oshkosh Corporation's sales from 2013 to 2015 by segment:
United Technologies' Segment Sales


Defense

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The company, through Oshkosh Defense, has sold products to the DoD for over 90 years. Oshkosh Defense also exports tactical wheeled vehicles to approved foreign customers. By successfully responding to the DoD's changing vehicle requirements, Oshkosh Defense has become the leading manufacturer of Heavy, Medium, and Mine Resistant Ambush Protected (MRAP) tactical wheeled vehicles and related service and sustainment for the DoD and has expanded its product offerings to include light tactical wheeled vehicles. Oshkosh Defense manufactures vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel, troops and cargo for a broad range of missions. Oshkosh Defense's proprietary military product line of heavy-payload tactical wheeled vehicles includes the HEMTT, the Heavy Equipment Transporter (HET), the Palletized Load System (PLS), and the Logistic Vehicle System Replacement (LVSR). Oshkosh Defense's proprietary military medium-payload tactical wheeled vehicles include the Medium Tactical Vehicle Replacement (MTVR). Oshkosh Defense's proprietary M-ATV was specifically designed with superior survivability as well as extreme off-road mobility for use in conditions similar to those encountered in the conflict in Afghanistan.

In June 2009, the DoD awarded Oshkosh Defense a sole source contract for M-ATVs and associated aftermarket parts packages. Oshkosh Defense completed the contract requirements in fiscal 2012, delivering more than 8,700 M-ATVs, along with aftermarket parts and services through the life of the contract with a total contract value of $6.5 billion. In fiscal 2013, Oshkosh Defense completed deliveries of 750 M-ATVs to the United Arab Emirates (UAE), and in fiscal 2014 and fiscal 2015, Oshkosh Defense completed deliveries of 195 and 66 M-ATVs, respectively, to another international customer. In August 2015, Oshkosh Defense secured an order from an international customer for 273 M-ATVs for sale in fiscal 2016 and expects to secure a contract for more than 1,000 additional M-ATVs in fiscal 2016, more than half of which would be for sales in fiscal 2016. Oshkosh Defense continues to actively market M-ATVs to approved international customers.

In August 2009, the DoD awarded Oshkosh Defense a contract to be the sole producer of Family of Medium Tactical Vehicles (FMTV) under the U.S. Army's FMTV Rebuy program. Originally a five-year requirements contract, the DoD has extended the FMTV Rebuy program to allow for the delivery of vehicles and trailers through February 2017.

In October 2011, Oshkosh Defense introduced the L-ATV to continue to expand its light protected tactical wheeled vehicle offerings. The L-ATV is Oshkosh Defense's winning entrant in the DoD's JLTV competition. The L-ATV incorporates field-proven technologies, advanced armor solutions and expeditionary levels of off-road mobility to redefine safety and performance standards. The L-ATV also is designed for future growth, with the ability to accept additional armor packages and technology upgrades as the mission requires.

In August 2014, the DoD awarded Oshkosh Defense a contract for the inspection and update of up to 800 M-ATVs. After fulfilling its obligations under the initial contract award during fiscal 2015, Oshkosh Defense was awarded an extension on the contract for an additional 360 M-ATVs in May 2015. Oshkosh expects deliveries under the contract extension to occur in fiscal 2016.

In June 2015, the DoD awarded Oshkosh Defense a new Family of Heavy Tactical Vehicles (FHTV) contract for the recapitalization of HEMTT, HET and PLS vehicles as well as associated logistics and configuration management support. The contract is a five-year requirements contract for the continued remanufacturing of FHTV vehicles through fiscal 2020. The contract is fixed-price incentive firm where the price paid to Oshkosh is subject to adjustment based on actual costs incurred. The impact of pricing adjustments under fixed-price incentive firm contracts are generally shared by Oshkosh and the customer.

In August 2015, the DoD awarded Oshkosh Defense an eight-year, fixed price JLTV contract valued at $6.7 billion for production and delivery of approximately 17,000 vehicles and sustaining services. The JLTV program is expected to be a 20-year, $30 billion program for the production of up to 55,000 vehicles, support services and engineering.

In addition to retaining its current defense truck contracts, the company's objective is to continue to diversify into other areas of the U.S. and international defense vehicle markets by expanding applications, uses and vehicle body styles of its current tactical truck lines.


According to Oshkosh, as it enters competitions in the defense tactical wheeled vehicle market, it has multiple competitive advantages, including:

Engineering and testing. Domestic and international vehicle contract competitions require significant defense engineering expertise to ensure that vehicle designs excel under demanding test conditions. Oshkosh has teams of engineers and engages highly-specialized contract engineers to improve current products and develop new products. Oshkosh Defense engineers have significant expertise designing new vehicles, using sophisticated modeling and simulation, supporting disciplined testing programs at military and approved test sites, and producing detailed, comprehensive, successful contract proposals.

Proprietary components. The company's patented TAK-4 independent suspension family has been expanded to include the TAK-4 "intelligent" or TAK-4i configuration, which brings 25% more wheel travel and ride height control compared to the original TAK-4 to address the evolving requirements of the company's customers. Integrating the TAK-4 suspension with the company's proprietary power train components allows Oshkosh to deliver the market-leading off-road performance for which its defense vehicles are known. In addition, because these are typically some of the higher cost components in a vehicle, Oshkosh has a competitive cost advantage based on the in-house manufacturing and assembly of these items.

Past performance. Oshkosh has been building tactical wheeled vehicles for the DoD for more than 90 years. According to Oshkosh, its past success in delivering reliable, high quality vehicles on time, within budget and meeting specifications is a competitive advantage in future defense vehicle procurement programs. Oshkosh understands tactical wheeled vehicle mission profiles, the special contract procedures used by the DoD and other international militaries and has developed substantial expertise in contract management, quality management, program management and accounting.

Flexible manufacturing. The company's ability to produce a variety of vehicle models on lean, automated assembly lines enables manufacturing efficiencies and a competitive cost position. In addition, Oshkosh is able to leverage its global manufacturing scale to supplement its existing Oshkosh Defense vehicle manufacturing facilities in Oshkosh, Wisconsin.

Logistics. Oshkosh has gained significant experience in the development of operators' manuals and training and in the delivery of parts and services worldwide in accordance with its customers' expectations and requirements, which differ materially from commercial practices. Oshkosh has logistics capabilities to permit the DoD to order parts, receive invoices and remit payments electronically.


     Financial results for Oshkosh Corporation's Defense segment were as follows:
Performance of Oshkosh Corporation's principal lines of business

Defense segment net sales decreased $784.7 million, or 45.5%, to $939.8 million in fiscal 2015 compared to fiscal 2014. The decrease in defense segment sales was primarily due to an expected decline in sales to the DoD (down $706 million) and lower international sales of M-ATVs.

Defense segment operating income decreased 87.9% to $9.2 million, or 1.0% of sales, in fiscal 2015 compared to $76.4 million, or 4.4% of sales, in fiscal 2014. The decrease in operating income was largely due to lower gross income associated with lower sales (down $111 million), partially offset by lower operating expenses (down $14 million) and lower engineering costs (down $10 million). Operating income in fiscal 2014 was adversely impacted by an $8.9 million reduction to net sales as a result of the reversal of billings to the DoD for other post-employment benefit costs determined to be unallowable under cost-plus government contracts.


Access Equipment

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Through JLG, Oshkosh manufactures aerial work platforms and telehandlers used in a wide variety of construction, agricultural, industrial, institutional and general maintenance applications to position workers and materials at elevated heights. In addition, through a long-term license with Caterpillar Inc. that extends through 2025, JLG produces Caterpillar-branded telehandlers for distribution through the worldwide Caterpillar Inc. dealer network. JLG also produces a line of telehandlers for the agricultural market under a license from SAME Deutz-Fahr and sells SAME Deutz-Fahr-branded telehandlers directly to SAME Deutz-Fahr's dealer network. Through its acquisition of Power Towers Ltd. in 2015, Oshkosh is a leading manufacturer and marketer of low level access equipment in the United Kingdom, Europe and the Middle East. Power Towers Ltd. offers a range of award-winning low level lifts, both self-propelled and push around types, to meet the demands of the rapidly expanding low level access market within the access equipment industry.

Access equipment customers include equipment rental companies, construction contractors, manufacturing companies and home improvement centers. JLG's products are marketed in over 3,500 locations worldwide through independent rental companies and distributors that purchase these products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations in which Oshkosh holds equity positions.

JLG also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Financing arrangements that JLG offers or arranges through this segment include various types of rental fleet loans and leases, as well as floor plan and retail financing. Terms of these arrangements vary depending on the type of transaction, but typically range between 36 and 72 months and generally require the customer to be responsible for insurance, taxes and maintenance of the equipment, and to bear the risk of damage to or loss of the equipment.

Oshkosh, through its Jerr-Dan brand, is a leading manufacturer and marketer of towing and recovery equipment in the U.S. According to Oshkosh, Jerr-Dan is recognized as an industry leader in quality and innovation. Jerr-Dan offers a complete line of both carriers and wreckers. In addition to manufacturing equipment, Jerr-Dan provides its customers with one-stop service for carriers and wreckers and generates revenue from the installation of equipment, as well as the sale of chassis and service parts.


     Financial results for Oshkosh Corporation's Access Equipment segment were as follows:
Performance of Oshkosh Corporation's principal lines of business

Access equipment segment net sales decreased $105.9 million, or 3.0%, to $3.40 billion in fiscal 2015 compared to fiscal 2014, due largely to an unfavorable currency impact of $94 million as a result of the weakening of most major currencies against the U.S. dollar during the year. Access equipment segment sales were also negatively impacted in the second half of the fiscal year as a result of the beginning of a mid-cycle dip in North American demand.

Access equipment segment operating income decreased 18.8% to $407.0 million, or 12.0% of sales, in fiscal 2015 compared to $501.1 million, or 14.3% of sales, in fiscal 2014. The decrease in operating income was primarily the result of an adverse product mix (down $56 million) and unfavorable production variances (up $25 million).


Fire & Emergency

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The company's Fire & Emergency segment manufactures custom and commercial firefighting vehicles and equipment, aircraft rescue and firefighting (ARFF) vehicles, snow removal vehicles, simulators and other emergency vehicles primarily sold to fire departments, airports and other governmental units in the Americas and abroad and broadcast vehicles sold to broadcasters and television stations in the Americas and abroad.

Through Pierce, Oshkosh is the leading domestic manufacturer of fire apparatus assembled on custom chassis, designed and manufactured to meet the special needs of firefighters. Pierce also manufactures fire apparatus assembled on commercially available chassis, which are produced for multiple end-customer applications. Pierce’s engineering expertise allows it to design its vehicles to meet stringent industry guidelines and government regulations for safety and effectiveness. Pierce primarily serves domestic municipal customers, but also sells fire apparatus to the DoD, airports, universities and large industrial companies, and increasingly in international markets. Pierce's history of innovation and research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities. In an effort to be a single-source supplier for its customers, Pierce offers a full line of custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial platform, ladder and tiller trucks, tankers, light-, medium- and heavy-duty rescue vehicles, wildland rough terrain response vehicles, mobile command and control centers, bomb squad vehicles, hazardous materials control vehicles and other emergency response vehicles.

Oshkosh, through Airport Products, is among the leaders in sales of ARFF vehicles to domestic and international airports. These highly-specialized vehicles are required to be in service at most airports worldwide to support commercial airlines in the event of an emergency. Many of the world’s largest airports, including LaGuardia International Airport, O’Hare International Airport, Hartsfield-Jackson International Airport, Denver International Airport and Dallas/Fort Worth International Airport in the U.S., are served by the company's ARFF vehicles. Internationally, the company's vehicles serve, among others, Beijing, China and more than twenty other airports in China; Singapore; Toronto, Canada; Abu Dhabi, UAE; Birmingham and Manchester, United Kingdom; and Moscow, Russia. Oshkosh has recently delivered ARFF vehicles to multiple airports throughout Southeast Asia, Spain, Egypt, Japan, Iraq and Argentina.

Oshkosh, through Airport Products, is a global leader in airport snow removal vehicles. The company's specially designed airport snow removal vehicles are used by some of the largest airports in the world, including Denver International Airport, Minneapolis-St. Paul International Airport and O’Hare International Airport in the U.S. and Beijing, China and Montreal, Canada internationally.

Oshkosh, through its Frontline brand, is a leading manufacturer, system designer and integrator of broadcast and communication vehicles, including electronic field production trailers, satellite news gathering and electronic news gathering vehicles for broadcasters and command trucks for local and federal governments along with being a leading supplier of military simulator shelters and trailers. The company's vehicles have been used worldwide to broadcast the NFL Super Bowl, the FIFA World Cup and the Olympics.

Oshkosh offers three- to fifteen-year municipal lease financing programs to its Fire & Emergency segment customers in the U.S. through Oshkosh Equipment Finance, LLC, doing business as Oshkosh Capital. Programs include competitive lease financing rates, flexible finance arrangements and the ease of one-stop shopping for customers' equipment and financing. Oshkosh executes the lease financing transactions through a private label arrangement with an independent third-party finance company. Oshkosh typically provides credit support in connection with these financing and leasing arrangements.


     Financial results for Oshkosh Corporation's Fire & Emergency segment were as follows:
Performance of Oshkosh Corporation's principal lines of business

Fire & emergency segment net sales increased $58.6 million, or 7.8%, to $815.1 million in fiscal 2015 compared to fiscal 2014. The increase in sales primarily reflected higher fire apparatus deliveries (up $46 million) as a result of improved production rates and improved pricing (up $14 million).

Fire & Emergency segment operating income increased 64.5% to $43.8 million, or 5.4% of sales, in fiscal 2015, compared to $26.6 million, or 3.5% of sales, in fiscal 2014. The increase in operating income was largely due to higher gross income on increased sales (up $8 million), improved pricing, net of higher input costs (up a combined $7 million) and improved absorption (up $4 million), partially offset by increased operating expenses (up $4 million).


Commercial

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The company's Commercial segment manufactures rear- and front-discharge concrete mixers, refuse collection vehicles, portable and stationary concrete batch plants and vehicle components sold to ready-mix companies and commercial and municipal waste haulers in North America and other international markets and field service vehicles and truck-mounted cranes sold to mining, construction and other companies in the Americas and abroad.

Through Oshkosh Commercial, McNeilus, London and CON-E-CO, the company is a leading manufacturer of front- and rear-discharge concrete mixers and portable and stationary concrete batch plants for the concrete ready-mix industry throughout the Americas. Through McNeilus, Oshkosh is a leading manufacturer of refuse collection vehicles for the waste services industry throughout the Americas.

Through IMT, Oshkosh is a leading North American manufacturer of field service vehicles and truck-mounted cranes for the construction, equipment dealer, building supply, utility, tire service, railroad and mining industries. According to Oshkosh, its commercial segment vehicles and equipment have a reputation for efficient, cost-effective, dependable and low maintenance operation.

Oshkosh also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements.


     Financial results for Oshkosh Corporation's Commercial segment were as follows:
Performance of Oshkosh Corporation's principal lines of business

Commercial segment net sales increased $112.1 million, or 12.9%, to $978.0 million in fiscal 2015 compared to fiscal 2014. The increase in commercial segment sales was primarily attributable to higher refuse collection vehicle unit volume (up $46 million), an increase in sales of higher content units with both chassis and bodies (up $42 million) and improved aftermarket parts and service sales (up $20 million).

Commercial segment operating income increased 19.7% to $64.5 million, or 6.6% of sales, in fiscal 2015 compared to $53.9 million, or 6.2% of sales, in fiscal 2014. The increase in operating income was primarily a result of gross income associated with higher sales volume (up $28 million) and favorable warranty performance (down $4 million), partially offset by increased operating expenses (up $9 million).

Company Information

Revenues ('15): $6,098M -10.4%

R&D ('15): $148M +4.2%

Net Profit ('15): $230M -25.8%

CAPEX ('15): $132M +42.8%

Oshkosh - OEM

Products News Subsidiaries Acquisitions Competitors Customers R&D Spending 5-Year Financials

Aerospace Sector:

   Military Vehicles

Oshkosh - Products:


Medium and heavy payload tactical trucks and trailers; Light tactical vehicles; Fire fighting pumpers; Ladder trucks; Tanker trucks; Light-, medium- and heavy-duty rescue vehicles; Wildland rough terrain response vehicles; Mobile command and control centers; Bomb squad vehicles; Hazardous materials control vehicles; Telehandlers; Vertical mast lifts; Stock pickers; Scissor lifts; Boom lifts; ARFF vehicles; Custom ambulances; Airport snow removal vehicles; Towing and recovery vehicles; Rear-discharge mixers; Mixer drums; Front-discharge mixers; Concrete batch plants; and Refuse collection vehicle bodies. Click here for more info!

Oshkosh's Major DoD Defense Programs:


| DoD Prime ContractorFamily of Heavy Tactical Vehicles | DoD Prime ContractorFamily of Medium Tactical Vehicles |
| DoD Prime ContractorJLTV | DoD Prime ContractorMRAP/M-ATV |

Oshkosh's Commercial Programs:


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