UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended DecemberMarch 31, 2017
or
☐ | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number:1-31371
Oshkosh Corporation
(Exact name of registrant as specified in its charter)
Wisconsin | 39-0520270 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1917 Four Wheel Drive Oshkosh, Wisconsin | 54902 | |
(Address of principal executive offices) | (Zip Code) |
(920) 502-3400
(Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading | Name of each exchange on which registered | ||
Common Stock $0.01 par value | OSK | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ||||
☐ | Smaller reporting company | ☐ | ||
Emerging growth | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
As of January 18, 2018, 74,645,959April 20, 2022, 65,794,923 shares of the registrant’s Common Stock were outstanding.
OSHKOSH CORPORATION
FORM10-Q INDEX
PART
I - FINANCIAL INFORMATIONITEM 1. | FINANCIAL STATEMENTS |
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(InDollars in millions, except per share amounts; unaudited)
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net sales |
| $ | 1,945.7 |
|
| $ | 1,889.0 |
|
Cost of sales |
|
| 1,744.4 |
|
|
| 1,573.9 |
|
Gross income |
|
| 201.3 |
|
|
| 315.1 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
| 169.2 |
|
|
| 172.0 |
|
Amortization of purchased intangibles |
|
| 2.8 |
|
|
| 2.3 |
|
Total operating expenses |
|
| 172.0 |
|
|
| 174.3 |
|
Operating income |
|
| 29.3 |
|
|
| 140.8 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
| (12.6 | ) |
|
| (11.8 | ) |
Interest income |
|
| 1.0 |
|
|
| 0.6 |
|
Miscellaneous, net |
|
| 1.1 |
|
|
| 3.1 |
|
Income before income taxes and earnings (losses) of unconsolidated affiliates |
|
| 18.8 |
|
|
| 132.7 |
|
Provision for income taxes |
|
| 20.2 |
|
|
| 33.2 |
|
Income (loss) before earnings (losses) of unconsolidated affiliates |
|
| (1.4 | ) |
|
| 99.5 |
|
Equity in earnings (losses) of unconsolidated affiliates |
|
| (0.7 | ) |
|
| 0.1 |
|
Net income (loss) |
| $ | (2.1 | ) |
| $ | 99.6 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
| $ | (0.03 | ) |
| $ | 1.45 |
|
Diluted |
|
| (0.03 | ) |
|
| 1.44 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share on Common Stock |
| $ | 0.37 |
|
| $ | 0.33 |
|
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Net sales | $ | 1,586.3 | $ | 1,211.4 | |||
Cost of sales | 1,344.1 | 1,011.7 | |||||
Gross income | 242.2 | 199.7 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 157.8 | 151.0 | |||||
Amortization of purchased intangibles | 10.6 | 12.5 | |||||
Total operating expenses | 168.4 | 163.5 | |||||
Operating income | 73.8 | 36.2 | |||||
Other income (expense): | |||||||
Interest expense | (15.4 | ) | (14.7 | ) | |||
Interest income | 1.7 | 0.8 | |||||
Miscellaneous, net | 0.5 | 1.3 | |||||
Income before income taxes and equity in earnings of unconsolidated affiliates | 60.6 | 23.6 | |||||
Provision for income taxes | 4.7 | 5.2 | |||||
Income before equity in earnings of unconsolidated affiliates | 55.9 | 18.4 | |||||
Equity in earnings of unconsolidated affiliates | 0.5 | 0.8 | |||||
Net income | $ | 56.4 | $ | 19.2 | |||
Earnings per share attributable to common shareholders: | |||||||
Basic | $ | 0.75 | $ | 0.26 | |||
Diluted | 0.74 | 0.26 | |||||
Cash dividends declared per share on Common Stock | $ | 0.24 | $ | 0.21 |
The accompanying notes are an integral part of these financial statements
1
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(InDollars in millions; unaudited)
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net income (loss) |
| $ | (2.1 | ) |
| $ | 99.6 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
Employee pension and postretirement benefits |
|
| 0.4 |
|
|
| 1.2 |
|
Currency translation adjustments |
|
| (6.5 | ) |
|
| (20.0 | ) |
Change in fair value of derivative instruments |
|
| 0.8 |
|
|
| 0.4 |
|
Total other comprehensive income (loss), net of tax |
|
| (5.3 | ) |
|
| (18.4 | ) |
Comprehensive income (loss) |
| $ | (7.4 | ) |
| $ | 81.2 |
|
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 56.4 | $ | 19.2 | |||
Other comprehensive income (loss), net of tax: | |||||||
Employee pension and postretirement benefits | 0.5 | 0.8 | |||||
Currency translation adjustments | 2.1 | (30.4 | ) | ||||
Total other comprehensive income (loss), net of tax | 2.6 | (29.6 | ) | ||||
Comprehensive income (loss) | $ | 59.0 | $ | (10.4 | ) |
The accompanying notes are an integral part of these financial statements
2
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(InDollars in millions, except share and per share amounts; unaudited)
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 944.5 |
|
| $ | 995.7 |
|
Receivables, net |
|
| 987.4 |
|
|
| 973.4 |
|
Unbilled receivables, net |
|
| 514.3 |
|
|
| 440.8 |
|
Inventories, net |
|
| 1,527.9 |
|
|
| 1,382.7 |
|
Income taxes receivable |
|
| 255.2 |
|
|
| 250.3 |
|
Other current assets |
|
| 64.5 |
|
|
| 71.7 |
|
Total current assets |
|
| 4,293.8 |
|
|
| 4,114.6 |
|
Property, plant and equipment, net |
|
| 603.7 |
|
|
| 593.2 |
|
Goodwill |
|
| 1,044.9 |
|
|
| 1,049.0 |
|
Purchased intangible assets, net |
|
| 464.9 |
|
|
| 464.0 |
|
Deferred income taxes |
|
| 130.9 |
|
|
| 111.5 |
|
Other long-term assets |
|
| 436.3 |
|
|
| 389.5 |
|
Total assets |
| $ | 6,974.5 |
|
| $ | 6,721.8 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Revolving credit facilities |
| $ | — |
|
| $ | — |
|
Accounts payable |
|
| 982.3 |
|
|
| 747.4 |
|
Customer advances |
|
| 755.6 |
|
|
| 690.9 |
|
Payroll-related obligations |
|
| 138.5 |
|
|
| 118.4 |
|
Income taxes payable |
|
| 221.1 |
|
|
| 222.1 |
|
Other current liabilities |
|
| 348.8 |
|
|
| 364.2 |
|
Total current liabilities |
|
| 2,446.3 |
|
|
| 2,143.0 |
|
Long-term debt, less current maturities |
|
| 594.4 |
|
|
| 819.0 |
|
Long-term customer advances |
|
| 455.2 |
|
|
| 207.0 |
|
Other long-term liabilities |
|
| 510.6 |
|
|
| 476.4 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred Stock ($0.01 par value; 2,000,000 shares authorized; 0ne issued and outstanding) |
|
| — |
|
|
| — |
|
Common Stock ($0.01 par value; 300,000,000 shares authorized; 75,101,465 shares issued) |
|
| 0.7 |
|
|
| 0.7 |
|
Additional paid-in capital |
|
| 798.2 |
|
|
| 792.4 |
|
Retained earnings |
|
| 3,084.0 |
|
|
| 3,110.6 |
|
Accumulated other comprehensive loss |
|
| (133.9 | ) |
|
| (128.6 | ) |
Common Stock in treasury, at cost (9,001,160 and 8,289,347 shares, respectively) |
|
| (781.0 | ) |
|
| (698.7 | ) |
Total shareholders’ equity |
|
| 2,968.0 |
|
|
| 3,076.4 |
|
Total liabilities and shareholders’ equity |
| $ | 6,974.5 |
|
| $ | 6,721.8 |
|
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 379.1 | $ | 447.0 | |||
Receivables, net | 1,229.4 | 1,306.3 | |||||
Inventories, net | 1,219.9 | 1,198.4 | |||||
Other current assets | 88.2 | 88.1 | |||||
Total current assets | 2,916.6 | 3,039.8 | |||||
Property, plant and equipment, net | 458.0 | 469.9 | |||||
Goodwill | 1,015.8 | 1,013.0 | |||||
Purchased intangible assets, net | 497.3 | 507.8 | |||||
Other long-term assets | 74.4 | 68.4 | |||||
Total assets | $ | 4,962.1 | $ | 5,098.9 | |||
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Revolving credit facilities and current maturities of long-term debt | $ | 29.7 | $ | 23.0 | |||
Accounts payable | 554.8 | 651.0 | |||||
Customer advances | 551.3 | 513.4 | |||||
Payroll-related obligations | 129.6 | 191.8 | |||||
Other current liabilities | 300.0 | 303.9 | |||||
Total current liabilities | 1,565.4 | 1,683.1 | |||||
Long-term debt, less current maturities | 803.4 | 807.9 | |||||
Other long-term liabilities | 299.9 | 300.5 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Preferred Stock ($.01 par value; 2,000,000 shares authorized; none issued and outstanding) | — | — | |||||
Common Stock ($.01 par value; 300,000,000 shares authorized; 92,101,465 shares issued) | 0.9 | 0.9 | |||||
Additional paid-in capital | 799.3 | 802.2 | |||||
Retained earnings | 2,438.2 | 2,399.8 | |||||
Accumulated other comprehensive loss | (122.4 | ) | (125.0 | ) | |||
Common Stock in treasury, at cost (17,477,614 and 17,088,224 shares, respectively) | (822.6 | ) | (770.5 | ) | |||
Total shareholders’ equity | 2,293.4 | 2,307.4 | |||||
Total liabilities and shareholders' equity | $ | 4,962.1 | $ | 5,098.9 |
The accompanying notes are an integral part of these financial statements
3
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' SHAREHOLDERS’ EQUITY
(InDollars in millions, except per share amounts; unaudited)
|
| Three Months Ended March 31, 2022 |
| |||||||||||||||||||||
|
| Common Stock |
|
| Additional Paid-In Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury at Cost |
|
| Total |
| ||||||
Balance at December 31, 2021 |
| $ | 0.7 |
|
| $ | 792.4 |
|
| $ | 3,110.6 |
|
| $ | (128.6 | ) |
| $ | (698.7 | ) |
| $ | 3,076.4 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| (2.1 | ) |
|
| — |
|
|
| — |
|
|
| (2.1 | ) |
Employee pension and postretirement benefits, net of tax of $0.1 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.4 |
|
|
| — |
|
|
| 0.4 |
|
Currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6.5 | ) |
|
| — |
|
|
| (6.5 | ) |
Cash dividends ($0.37 per share) |
|
| — |
|
|
| — |
|
|
| (24.5 | ) |
|
| — |
|
|
| — |
|
|
| (24.5 | ) |
Repurchases of Common Stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (85.0 | ) |
|
| (85.0 | ) |
Exercise of stock options |
|
| — |
|
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
|
| 2.1 |
|
|
| 1.9 |
|
Stock-based compensation expense |
|
| — |
|
|
| 6.8 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6.8 |
|
Payment of stock-based restricted and performance shares |
|
| — |
|
|
| (0.5 | ) |
|
| — |
|
|
| — |
|
|
| 0.5 |
|
|
| — |
|
Shares tendered for taxes on stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.4 | ) |
|
| (0.4 | ) |
Other |
|
| — |
|
|
| (0.3 | ) |
|
| — |
|
|
| 0.8 |
|
|
| 0.5 |
|
|
| 1.0 |
|
Balance at March 31, 2022 |
| $ | 0.7 |
|
| $ | 798.2 |
|
| $ | 3,084.0 |
|
| $ | (133.9 | ) |
| $ | (781.0 | ) |
| $ | 2,968.0 |
|
|
| Three Months Ended March 31, 2021 |
| |||||||||||||||||||||
|
| Common Stock |
|
| Additional Paid-In Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Stock in Treasury at Cost |
|
| Total |
| ||||||
Balance at December 31, 2020 |
| $ | 0.7 |
|
| $ | 791.4 |
|
| $ | 2,793.5 |
|
| $ | (165.5 | ) |
| $ | (487.5 | ) |
| $ | 2,932.6 |
|
Net income |
|
| — |
|
|
| — |
|
|
| 99.6 |
|
|
| — |
|
|
| — |
|
|
| 99.6 |
|
Employee pension and postretirement benefits, net of tax of $0.2 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1.2 |
|
|
| — |
|
|
| 1.2 |
|
Currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (20.0 | ) |
|
| — |
|
|
| (20.0 | ) |
Cash dividends ($0.33 per share) |
|
| — |
|
|
| — |
|
|
| (22.7 | ) |
|
| — |
|
|
| — |
|
|
| (22.7 | ) |
Exercise of stock options |
|
| — |
|
|
| (0.6 | ) |
|
| — |
|
|
| — |
|
|
| 18.8 |
|
|
| 18.2 |
|
Stock-based compensation expense |
|
| — |
|
|
| 8.3 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8.3 |
|
Payment of stock-based restricted and performance shares |
|
| — |
|
|
| (0.8 | ) |
|
| — |
|
|
| — |
|
|
| 0.8 |
|
|
| — |
|
Other |
|
| — |
|
|
| — |
|
|
| 0.6 |
|
|
| 0.4 |
|
|
| — |
|
|
| 1.0 |
|
Balance at March 31, 2021 |
| $ | 0.7 |
|
| $ | 798.3 |
|
| $ | 2,871.0 |
|
| $ | (183.9 | ) |
| $ | (467.9 | ) |
| $ | 3,018.2 |
|
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock in Treasury, at Cost | Total | ||||||||||||||||||
Balance at September 30, 2016 | $ | 0.9 | $ | 782.3 | $ | 2,177.0 | $ | (175.0 | ) | $ | (808.7 | ) | $ | 1,976.5 | |||||||||
Net income | — | — | 19.2 | — | — | 19.2 | |||||||||||||||||
Employee pension and postretirement benefits, net of tax of $0.5 | — | — | — | 0.8 | — | 0.8 | |||||||||||||||||
Currency translation adjustments | — | — | — | (30.4 | ) | — | (30.4 | ) | |||||||||||||||
Cash dividends ($0.21 per share) | — | — | (15.6 | ) | — | — | (15.6 | ) | |||||||||||||||
Exercise of stock options | — | 5.7 | — | — | 20.5 | 26.2 | |||||||||||||||||
Stock-based compensation expense | — | 6.5 | — | — | — | 6.5 | |||||||||||||||||
Payment of earned performance shares | — | (1.3 | ) | — | — | 1.3 | — | ||||||||||||||||
Shares tendered for taxes on stock-based compensation | — | — | — | — | (3.0 | ) | (3.0 | ) | |||||||||||||||
Other | — | (3.1 | ) | — | — | 3.2 | 0.1 | ||||||||||||||||
Balance at December 31, 2016 | $ | 0.9 | $ | 790.1 | $ | 2,180.6 | $ | (204.6 | ) | $ | (786.7 | ) | $ | 1,980.3 | |||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock in Treasury, at Cost | Total | ||||||||||||||||||
Balance at September 30, 2017 | $ | 0.9 | $ | 802.2 | $ | 2,399.8 | $ | (125.0 | ) | $ | (770.5 | ) | $ | 2,307.4 | |||||||||
Net income | — | — | 56.4 | — | — | 56.4 | |||||||||||||||||
Employee pension and postretirement benefits, net of tax of $0.2 | — | — | — | 0.5 | — | 0.5 | |||||||||||||||||
Currency translation adjustments | — | — | — | 2.1 | — | 2.1 | |||||||||||||||||
Cash dividends ($0.24 per share) | — | — | (18.0 | ) | — | — | (18.0 | ) | |||||||||||||||
Repurchases of Common Stock | — | — | — | — | (63.7 | ) | (63.7 | ) | |||||||||||||||
Exercise of stock options | — | (1.8 | ) | — | — | 10.4 | 8.6 | ||||||||||||||||
Stock-based compensation expense | — | 7.5 | — | — | — | 7.5 | |||||||||||||||||
Payment of earned performance shares | — | (2.7 | ) | — | — | 2.7 | — | ||||||||||||||||
Shares tendered for taxes on stock-based compensation | — | — | — | — | (7.4 | ) | (7.4 | ) | |||||||||||||||
Other | — | (5.9 | ) | — | — | 5.9 | — | ||||||||||||||||
Balance at December 31, 2017 | $ | 0.9 | $ | 799.3 | $ | 2,438.2 | $ | (122.4 | ) | $ | (822.6 | ) | $ | 2,293.4 |
The accompanying notes are an integral part of these financial statements
4
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(InDollars in millions; unaudited)
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | (2.1 | ) |
| $ | 99.6 |
|
Depreciation and amortization |
|
| 26.4 |
|
|
| 21.7 |
|
Stock-based compensation expense |
|
| 6.8 |
|
|
| 8.3 |
|
Deferred income taxes |
|
| 1.0 |
|
|
| 3.8 |
|
Gain on sale of assets |
|
| (1.0 | ) |
|
| (2.1 | ) |
Foreign currency transaction gains |
|
| (1.5 | ) |
|
| (1.2 | ) |
Other non-cash adjustments |
|
| (0.6 | ) |
|
| (0.2 | ) |
Changes in operating assets and liabilities |
|
| 299.9 |
|
|
| 196.9 |
|
Net cash provided by operating activities |
|
| 328.9 |
|
|
| 326.8 |
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
| (26.1 | ) |
|
| (16.7 | ) |
Additions to equipment held for rental |
|
| (1.9 | ) |
|
| (2.2 | ) |
Acquisition of business, net of cash acquired |
|
| — |
|
|
| (112.1 | ) |
Proceeds from sale of equipment held for rental |
|
| 3.2 |
|
|
| 5.1 |
|
Other investing activities |
|
| (15.3 | ) |
|
| 3.6 |
|
Net cash used by investing activities |
|
| (40.1 | ) |
|
| (122.3 | ) |
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Repayments of debt (original maturities greater than three months) |
|
| (225.0 | ) |
|
| — |
|
Debt issuance costs |
|
| (2.5 | ) |
|
| — |
|
Repurchases of Common Stock |
|
| (85.4 | ) |
|
| — |
|
Dividends paid |
|
| (24.5 | ) |
|
| (22.7 | ) |
Proceeds from exercise of stock options |
|
| 1.9 |
|
|
| 18.2 |
|
Other financing activities |
|
| (2.4 | ) |
|
| (1.2 | ) |
Net cash used by financing activities |
|
| (337.9 | ) |
|
| (5.7 | ) |
Effect of exchange rate changes on cash |
|
| (2.1 | ) |
|
| (4.2 | ) |
Increase (decrease) in cash and cash equivalents |
|
| (51.2 | ) |
|
| 194.6 |
|
Cash and cash equivalents at beginning of period |
|
| 995.7 |
|
|
| 898.6 |
|
Cash and cash equivalents at end of period |
| $ | 944.5 |
|
| $ | 1,093.2 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | 10.1 |
|
| $ | 11.6 |
|
Cash paid for income taxes |
|
| 5.3 |
|
|
| 83.9 |
|
Proceeds from income tax refunds |
|
| 0.3 |
|
|
| — |
|
Cash paid for operating lease liabilities |
|
| 11.5 |
|
|
| 13.8 |
|
Operating right-of-use assets obtained |
|
| 2.8 |
|
|
| 7.9 |
|
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 56.4 | $ | 19.2 | |||
Depreciation and amortization | 31.4 | 32.1 | |||||
Stock-based compensation expense | 7.5 | 6.5 | |||||
Deferred income taxes | (27.8 | ) | 8.4 | ||||
Gain on sale of assets | (0.6 | ) | (0.3 | ) | |||
Foreign currency transaction (gains) losses | (0.8 | ) | 0.4 | ||||
Other non-cash adjustments | 0.9 | 0.8 | |||||
Changes in operating assets and liabilities | (37.8 | ) | 16.7 | ||||
Net cash provided by operating activities | 29.2 | 83.8 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (18.7 | ) | (14.2 | ) | |||
Additions to equipment held for rental | (1.2 | ) | (12.9 | ) | |||
Proceeds from sale of equipment held for rental | 2.5 | 5.3 | |||||
Other investing activities | (0.8 | ) | (0.2 | ) | |||
Net cash used by investing activities | (18.2 | ) | (22.0 | ) | |||
Financing activities: | |||||||
Proceeds from issuance of debt (original maturities greater than three months) | 6.5 | — | |||||
Repayments of debt (original maturities greater than three months) | (5.0 | ) | (20.0 | ) | |||
Repurchases of Common Stock | (71.1 | ) | (3.0 | ) | |||
Dividends paid | (18.0 | ) | (15.6 | ) | |||
Proceeds from exercise of stock options | 8.6 | 26.2 | |||||
Net cash used by financing activities | (79.0 | ) | (12.4 | ) | |||
Effect of exchange rate changes on cash | 0.1 | (1.7 | ) | ||||
Increase (decrease) in cash and cash equivalents | (67.9 | ) | 47.7 | ||||
Cash and cash equivalents at beginning of period | 447.0 | 321.9 | |||||
Cash and cash equivalents at end of period | $ | 379.1 | $ | 369.6 | |||
Supplemental disclosures: | |||||||
Cash paid for interest | $ | 6.8 | $ | 6.6 | |||
Cash paid for income taxes | 0.8 | 22.5 |
The accompanying notes are an integral part of these financial statements
5
OSHKOSH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. | Basis of Presentation |
In October 2021, Oshkosh Corporation and its subsidiaries (the Company) changed its fiscal year from a year beginning on October 1 and ending September 30 to a year beginning on January 1 and ending December 31. The Company’s current fiscal year runs from January 1, 2022 through December 31, 2022 (fiscal 2022).
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments, unless otherwise noted) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K of Oshkosh Corporation for the year ended September 30, 2017. The interim results2021. Results for the three months ended March 31, 2022 are not necessarily indicative of results for any other interim period or for fiscal 2022. Certain reclassifications have been made to the full year. “Oshkosh” refersprior period financial statements to Oshkosh Corporation not including its subsidiariesconform to the presentation as of and “the Company” refers to Oshkosh Corporation and its subsidiaries.
2. | Revenue Recognition |
The Defense segment utilizes the FASB has since issued several amendments to this standard, which clarifies the principles for recognizing revenue. This guidance requires an entitycost-to-cost method of percentage-of-completion to recognize revenue to depicton its performance obligations that are satisfied over time because it best depicts the transfer of promised goods or servicescontrol to customers in an amount that reflects the considerationcustomer. Under the cost-to-cost method of percentage-of-completion, the Defense segment measures progress based on the ratio of costs incurred to whichdate to total estimated costs for the entity expects to be entitled in exchange for those goods or services. The standard supersedes all existing U.S. GAAP guidance on revenue recognition and is expected to require the use of more judgment and result in additional disclosures. The new standard is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted.performance obligation. The Company plans to adoptrecognizes changes in estimated sales or costs and the standardresulting profit or loss on October 1, 2018. The Company has elected to adopt the new revenue recognition standard following the modified retrospective approach, as permitted by the standard. This approach will result in an adjustment to retained earnings fora cumulative basis. Contract adjustments represent the cumulative effect of initially applying the changes on prior periods. If a loss is expected on a performance obligation, the complete estimated loss is recorded in the period in which the loss is identified.
There is significant judgment involved in estimating sales and costs within the Defense segment. Each contract is evaluated at contract inception to identify risks and estimate revenue and costs. In performing this evaluation, the Defense segment considers risks of contract performance such as technical requirements, schedule, duration and key contract dependencies. These considerations are then factored into the Company’s estimated revenue and costs. Preliminary contract estimates are subject to change throughout the duration of the contract as additional information becomes available that impacts risks and estimated revenue and costs. In addition, as contract modifications (e.g., new standard on its adoption date.
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net sales |
| $ | (7.9 | ) |
| $ | (3.1 | ) |
Operating income |
|
| (10.6 | ) |
|
| (3.6 | ) |
Net income |
|
| (8.1 | ) |
|
| (2.8 | ) |
Diluted earnings per share |
| $ | (0.12 | ) |
| $ | (0.04 | ) |
6
Disaggregation of Revenue
Consolidated net sales disaggregated by segment and timing of revenue recognition are as follows (in millions):
|
| Three Months Ended March 31, 2022 |
| |||||||||||||||||||||
|
| Access Equipment |
|
| Defense |
|
| Fire & Emergency |
|
| Commercial |
|
| Corporate and Intersegment Eliminations |
|
| Total |
| ||||||
Point in time |
| $ | 869.9 |
|
| $ | 2.1 |
|
| $ | 282.6 |
|
| $ | 154.3 |
|
| $ | (2.3 | ) |
| $ | 1,306.6 |
|
Over time |
|
| 13.2 |
|
|
| 533.5 |
|
|
| 5.3 |
|
|
| 87.1 |
|
|
| — |
|
|
| 639.1 |
|
|
| $ | 883.1 |
|
| $ | 535.6 |
|
| $ | 287.9 |
|
| $ | 241.4 |
|
| $ | (2.3 | ) |
| $ | 1,945.7 |
|
|
| Three Months Ended March 31, 2021 |
| |||||||||||||||||||||
|
| Access Equipment |
|
| Defense |
|
| Fire & Emergency |
|
| Commercial |
|
| Corporate and Intersegment Eliminations |
|
| Total |
| ||||||
Point in time |
| $ | 721.1 |
|
| $ | 10.3 |
|
| $ | 307.6 |
|
| $ | 126.5 |
|
| $ | (7.0 | ) |
| $ | 1,158.5 |
|
Over time |
|
| 17.1 |
|
|
| 604.4 |
|
|
| 4.9 |
|
|
| 103.5 |
|
|
| 0.6 |
|
|
| 730.5 |
|
|
| $ | 738.2 |
|
| $ | 614.7 |
|
| $ | 312.5 |
|
| $ | 230.0 |
|
| $ | (6.4 | ) |
| $ | 1,889.0 |
|
See Note 18 of the Notes to Condensed Consolidated Financial Statements for further disaggregated sales information.
Contract Assets and Contract Liabilities
The Company has assembled a cross-functional team with representation from all segments that is dedicatedgenerally entitled to bill its customers upon satisfaction of its performance obligations, except for its long-term contracts in the implementation of this new accounting standard. The team, with the support of a project management office, is focused on executing a multi-phase plan that will culminate with the adoptionDefense segment which typically allow for billing upon acceptance of the standard. finished goods, payments received from customers in advance of performance and extended warranties that are billed in advance of the warranty coverage period. Customer payment is usually received shortly after billing and payment terms generally do not exceed one year. See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information on the Company’s receivables balances.
With the exception of the Fire & Emergency segment, the Company’s contracts typically do not contain a significant financing component. In the Fire & Emergency segment, customers earn interest on customer advances at a rate determined in a separate financing transaction between the Fire & Emergency segment and the customer at contract inception. Interest charges of $5.0 million and $4.5 million were recorded in “Interest expense” in the Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, respectively, for amounts attributable to customer advances.
The cross-functional team focusedtiming of billing does not always match the timing of revenue recognition. In instances where a customer pays consideration in advance or when the Company is entitled to bill a customer in advance of recognizing the related revenue, the Company records a contract liability. The Company reduces contract liabilities when the Company transfers control of the promised goods and services. Contract liabilities consisted of the following (in millions):
|
| March 31, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Customer advances |
| $ | 755.6 |
|
| $ | 690.9 |
|
Other current liabilities |
|
| 74.8 |
|
|
| 81.9 |
|
Long-term customer advances |
|
| 455.2 |
|
|
| 207.0 |
|
Other long-term liabilities |
|
| 58.6 |
|
|
| 54.9 |
|
Total contract liabilities |
| $ | 1,344.2 |
|
| $ | 1,034.7 |
|
7
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Beginning liabilities recognized in revenue |
| $ | 118.3 |
|
| $ | 129.8 |
|
In instances where the Company recognizes revenue prior to having an unconditional right to payment, the Company records a contract asset. The Company reduces contract assets when the Company has an unconditional right to payment. The Company periodically assesses its contract assets for impairment. Contract assets and liabilities are determined on concluding and documenting key accounting positionsa net basis for each contract. The Company did 0t record any impairment losses on contract assets during the three months ended DecemberMarch 31, 2017. 2022 or 2021.
The Company's Audit CommitteeDefense segment recognizes an asset for costs incurred to fulfill an existing contract or highly-probable anticipated contract if such costs generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Under the Next Generation Delivery Vehicles (NGDV) contract with the United States Postal Service (USPS), the Company has been receiving regular briefings ondetermined that it does not transfer control of any goods or services to the implementation team's progress and potential implicationsUSPS until the construction of the production vehicles. Costs required to fulfill the NGDV production contract incurred prior to production of the vehicles are capitalized to the extent that they generate or enhance resources used in the production of NGDVs. These costs will be amortized over the anticipated production volume of the NGDV contact. Deferred contract costs are included in “Other long-term assets” within the Company’s Condensed Consolidated Balance Sheets. Deferred contract costs, the majority of which related to adoptionthe NGDV contract, consisted of the new standard. following (in millions):
|
| March 31, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Costs for anticipated contracts |
| $ | 5.3 |
|
| $ | 4.9 |
|
Engineering costs |
|
| 93.6 |
|
|
| 60.0 |
|
Factory setup costs |
|
| 6.3 |
|
|
| 4.1 |
|
Supplier-owned tooling |
|
| 20.3 |
|
|
| 4.2 |
|
Deferred contract related costs |
| $ | 125.5 |
|
| $ | 73.2 |
|
The internal control and process changes necessaryCompany offers a variety of service-type warranties, including optionally priced extended warranty programs. Outstanding balances related to comply withservice-type warranties are included within contract liabilities. Revenue related to service-type warranties is deferred until after the requirements of the new standard as well as its financial impact remain under evaluation.
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Balance at beginning of period |
| $ | 66.9 |
|
| $ | 63.0 |
|
Deferred revenue for new service warranties |
|
| 7.2 |
|
|
| 6.5 |
|
Amortization of deferred revenue |
|
| (4.8 | ) |
|
| (6.4 | ) |
Foreign currency translation |
|
| (0.2 | ) |
|
| (0.2 | ) |
Balance at end of period |
| $ | 69.1 |
|
| $ | 62.9 |
|
Classification of business, less reasonably predictable costs of completion, disposal and transportation. The Company adopted ASU 2015-11 on October 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company's consolidated financial statements.
|
| March 31, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Other current liabilities |
| $ | 22.9 |
|
| $ | 22.3 |
|
Other long-term liabilities |
|
| 46.2 |
|
|
| 44.6 |
|
|
| $ | 69.1 |
|
| $ | 66.9 |
|
8
Remaining Performance Obligations
As of March 31, 2022, the Company had unsatisfied performance obligations for contracts with an original duration greater than one year totaling $9.15 billion, of which $3.08 billion is expected to be satisfied and revenue recognized in the remaining nine months of fiscal 2022, $2.36 billion is expected to be recognized in fiscal 2023 and $3.70 billion is expected to be satisfied and revenue recognized beyond fiscal 2023.
3. | Stock-Based Compensation |
In June 2016,February 2017, the FASB issued ASU 2016-13,
The Company recognizes stock-based compensation expense over the requisite service period for vesting of an amortized cost basis from an incurred loss methodaward, or to an expected loss method, thereby eliminatingemployee’s eligible retirement date, if earlier and applicable. Total stock-based compensation expense, including cash-based liability awards, for the requirement that a credit loss be considered probable to impactthree months ended March 31, 2022 was $6.5 million ($5.5 million net of tax). Total stock-based compensation expense, including cash-based liability awards, for the valuationthree months ended March 31, 2021 was $9.9 million ($8.3 million net of a financial asset measured on an amortized cost basis. The standard requires the measurement of expected credit losses to be based on relevant information about past events, including historical experience, current conditions, and a reasonable and supportable forecast that affects the collectibility of the related financial asset. The Company will be required to adopt ASU 2016-13 as of October 1, 2020. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-13 on the Company's consolidated financial statements.
4. | Employee Benefit Plans |
Components of net periodic pension and postretirementbenefit cost in the same line item or itemswere as other compensation costs arising from services rendered by the pertinent employees during the period. The remaining components of net benefit costs are required to be presented in the income statement separately from the service component and outside a subtotal of income from operations, if one is presented. The amendment further allows only the service cost componentfollows (in millions):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Components of net periodic benefit cost |
|
|
|
|
|
|
|
|
Service cost |
| $ | 2.6 |
|
| $ | 2.9 |
|
Interest cost |
|
| 4.3 |
|
|
| 4.1 |
|
Expected return on plan assets |
|
| (5.2 | ) |
|
| (5.0 | ) |
Amortization of prior service cost (benefit) |
|
| 0.5 |
|
|
| 0.5 |
|
Amortization of net actuarial loss (gain) |
|
| 0.2 |
|
|
| 1.2 |
|
Expenses paid |
|
| 0.8 |
|
|
| 0.8 |
|
Net periodic benefit cost |
| $ | 3.2 |
|
| $ | 4.5 |
|
Components of net periodic pensionother post-employment benefit cost were as follows (in millions):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Components of net periodic benefit cost |
|
|
|
|
|
|
|
|
Service cost |
| $ | 0.6 |
|
| $ | 0.5 |
|
Interest cost |
|
| 0.3 |
|
|
| 0.3 |
|
Amortization of prior service cost (benefit) |
|
| (0.3 | ) |
|
| (0.3 | ) |
Amortization of net actuarial loss (gain) |
|
| 0.1 |
|
|
| — |
|
Net periodic benefit cost |
| $ | 0.7 |
|
| $ | 0.5 |
|
Components of net periodic benefit cost other than “Service cost” and postretirement costs to be eligible for capitalization, when applicable. The Company will be required to adopt ASU 2017-07 as of October 1, 2018. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-07 on the Company's consolidated financial statements.
9
5. | Income Taxes |
The Company recorded income tax expense of $20.2 million, or 107.4% of pre-tax income, for the three months ended March 31, 2022, compared to $33.2 million, or 25.0% of pre-tax income, for the three months ended March 31, 2021. Results for the three months ended March 31, 2022 were unfavorably impacted by $15.4 million of net discrete charges, including a charge of $18.1 million related to taxes on income generated in prior periods as the Company revised its interpretation of certain foreign anti-hybrid tax legislation based upon recent comments from the corresponding taxing authorities and a benefit of $3.8 million for the release of a foreign tax credit valuation allowance in response to the issuance by the U.S. Treasury Department of final foreign tax credit regulations. Results for the three months ended March 31, 2021 were unfavorably impacted by $1.4 million of net discrete charges, including a $0.8 million charge related to state audit settlements.
The Company’s liability for gross unrecognized tax benefits, excluding related interest and penalties, was $82.2 million and $41.5 million as of March 31, 2022 and December 31, 2021, respectively. Included in the Company’s March 31, 2022 liability for gross unrecognized tax benefits is an $18.7 million reserve related to certain foreign anti-hybrid legislation and a $22.3 million U.S. federal reserve for a temporary deferred position. As of March 31, 2022, net unrecognized tax benefits, excluding interest and penalties, of $43.2 million would affect the Company’s net income if recognized.
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the “Provision for income taxes” in the Condensed Consolidated Statements of Income. During the three months ended March 31, 2022 and 2021, the Company recognized expense of $0.6 million and $0.5 million, respectively, related to interest and penalties. At March 31, 2022, the Company had accruals for the payment of interest and penalties of $4.0 million. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce net unrecognized tax benefits by approximately $2.3 million because the Company’s tax positions are sustained on audit, the Company agrees to their disallowance or the statutes of limitations close.
6. | Earnings Per Share |
The reconciliation of basic weighted-average shares outstanding to diluted weighted-average shares outstanding was as follows:
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Basic weighted-average common shares outstanding |
|
| 66,394,041 |
|
|
| 68,513,419 |
|
Dilutive stock options and other equity-based compensation awards |
|
| — |
|
|
| 775,202 |
|
Diluted weighted-average common shares outstanding |
|
| 66,394,041 |
|
|
| 69,288,621 |
|
|
|
|
|
|
|
|
|
|
Shares for stock-based compensation not included in the computation of diluted earnings per share attributable to common shareholders because they would have been anti-dilutive were as follows:
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Shares for stock-based compensation |
|
| 522,003 |
|
|
| — |
|
10
7. | Receivables |
Receivables consisted of the following (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Trade receivables - U.S. government |
| $ | 102.4 |
|
| $ | 140.7 |
|
Trade receivables - other |
|
| 848.7 |
|
|
| 797.5 |
|
Finance receivables |
|
| 7.5 |
|
|
| 8.0 |
|
Other receivables |
|
| 43.2 |
|
|
| 40.0 |
|
|
|
| 1,001.8 |
|
|
| 986.2 |
|
Less allowance for doubtful accounts |
|
| (5.9 | ) |
|
| (4.2 | ) |
|
| $ | 995.9 |
|
| $ | 982.0 |
|
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
U.S. government: | |||||||
Amounts billed | $ | 64.3 | $ | 137.8 | |||
Costs and profits not billed | 233.4 | 137.9 | |||||
297.7 | 275.7 | ||||||
Other trade receivables | 890.7 | 985.4 | |||||
Finance receivables | 13.9 | 5.8 | |||||
Notes receivable | 24.8 | 34.2 | |||||
Other receivables | 43.0 | 46.3 | |||||
1,270.1 | 1,347.4 | ||||||
Less allowance for doubtful accounts | (14.5 | ) | (18.3 | ) | |||
$ | 1,255.6 | $ | 1,329.1 |
Classification of receivables in the Condensed Consolidated Balance Sheets consisted of the following (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Current receivables |
| $ | 987.4 |
|
| $ | 973.4 |
|
Long-term receivables |
|
| 8.5 |
|
|
| 8.6 |
|
|
| $ | 995.9 |
|
| $ | 982.0 |
|
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Current receivables | $ | 1,229.4 | $ | 1,306.3 | |||
Long-term receivables (included in “Other long-term assets”) | 26.2 | 22.8 | |||||
$ | 1,255.6 | $ | 1,329.1 |
Finance Receivables | Notes Receivable | ||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2017 | September 30, 2017 | ||||||||||||
Aging of receivables that are past due: | |||||||||||||||
Greater than 30 days and less than 60 days | $ | — | $ | — | $ | — | $ | — | |||||||
Greater than 60 days and less than 90 days | — | — | — | — | |||||||||||
Greater than 90 days | 2.1 | 2.1 | 0.2 | 0.2 | |||||||||||
Receivables on nonaccrual status | 3.6 | 3.7 | 20.1 | 21.3 | |||||||||||
Receivables past due 90 days or more and still accruing | — | — | — | — | |||||||||||
Receivables subject to general reserves | 1.8 | 2.1 | — | — | |||||||||||
Allowance for doubtful accounts | (0.1 | ) | — | — | — | ||||||||||
Receivables subject to specific reserves | 12.1 | 3.7 | 24.8 | 34.2 | |||||||||||
Allowance for doubtful accounts | (1.4 | ) | (1.5 | ) | (6.1 | ) | (10.0 | ) |
Changes in the Company’s allowance for doubtful accounts by type of receivable were as follows (in millions):
|
| Three Months Ended March 31, 2022 |
|
| Three Months Ended March 31, 2021 |
| ||||||||||||||||||
|
| Finance Receivables |
|
| Trade and Other Receivables |
|
| Total |
|
| Finance Receivables |
|
| Trade and Other Receivables |
|
| Total |
| ||||||
Allowance at beginning of period |
| $ | 0.5 |
|
| $ | 3.7 |
|
| $ | 4.2 |
|
| $ | 1.4 |
|
| $ | 4.4 |
|
| $ | 5.8 |
|
Provision for doubtful accounts, net of recoveries |
|
| (0.1 | ) |
|
| 1.8 |
|
|
| 1.7 |
|
|
| (0.3 | ) |
|
| 0.2 |
|
|
| (0.1 | ) |
Allowance at end of period |
| $ | 0.4 |
|
| $ | 5.5 |
|
| $ | 5.9 |
|
| $ | 1.1 |
|
| $ | 4.6 |
|
| $ | 5.7 |
|
8. | Inventories |
Three Months Ended December 31, 2017 | Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||||||
Finance | Notes | Trade and Other | Total | Finance | Notes | Trade and Other | Total | ||||||||||||||||||||||||
Allowance for doubtful accounts at beginning of period | $ | 1.5 | $ | 10.0 | $ | 6.8 | $ | 18.3 | $ | 1.0 | $ | 13.0 | $ | 7.2 | $ | 21.2 | |||||||||||||||
Provision for doubtful accounts, net of recoveries | — | (4.0 | ) | 0.2 | (3.8 | ) | 1.1 | (0.6 | ) | (0.5 | ) | — | |||||||||||||||||||
Charge-off of accounts | — | — | (0.1 | ) | (0.1 | ) | — | (0.1 | ) | (0.2 | ) | (0.3 | ) | ||||||||||||||||||
Foreign currency translation | — | 0.1 | — | 0.1 | — | (0.7 | ) | — | (0.7 | ) | |||||||||||||||||||||
Allowance for doubtful accounts at end of period | $ | 1.5 | $ | 6.1 | $ | 6.9 | $ | 14.5 | $ | 2.1 | $ | 11.6 | $ | 6.5 | $ | 20.2 |
Inventories consisted of the following (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Raw materials |
| $ | 1,021.0 |
|
| $ | 984.4 |
|
Partially finished products |
|
| 426.5 |
|
|
| 334.0 |
|
Finished products |
|
| 254.2 |
|
|
| 239.7 |
|
Inventories at FIFO cost |
|
| 1,701.7 |
|
|
| 1,558.1 |
|
Less: Excess of FIFO cost over LIFO cost |
|
| (173.8 | ) |
|
| (175.4 | ) |
|
| $ | 1,527.9 |
|
| $ | 1,382.7 |
|
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Raw materials | $ | 606.0 | $ | 578.1 | |||
Partially finished products | 347.3 | 336.6 | |||||
Finished products | 378.5 | 398.1 | |||||
Inventories at FIFO cost | 1,331.8 | 1,312.8 | |||||
Less: Progress/performance-based payments on U.S. government contracts | (27.6 | ) | (31.6 | ) | |||
Excess of FIFO cost over LIFO cost | (84.3 | ) | (82.8 | ) | |||
$ | 1,219.9 | $ | 1,198.4 |
11
Table of unliquidated progress or performance-based payments.Contents
9. | Property, Plant and Equipment |
Property, plant and equipment consisted of the following (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Land and land improvements |
| $ | 72.7 |
|
| $ | 72.0 |
|
Buildings |
|
| 413.0 |
|
|
| 410.9 |
|
Machinery and equipment |
|
| 768.1 |
|
|
| 740.9 |
|
Software and related costs |
|
| 200.4 |
|
|
| 201.3 |
|
Equipment on operating lease to others |
|
| 9.2 |
|
|
| 9.9 |
|
Construction in progress |
|
| 45.3 |
|
|
| 45.3 |
|
|
|
| 1,508.7 |
|
|
| 1,480.3 |
|
Less accumulated depreciation |
|
| (905.0 | ) |
|
| (887.1 | ) |
|
| $ | 603.7 |
|
| $ | 593.2 |
|
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Land and land improvements | $ | 58.1 | $ | 58.5 | |||
Buildings | 298.2 | 298.5 | |||||
Machinery and equipment | 657.6 | 652.2 | |||||
Software and related costs | 151.7 | 149.6 | |||||
Equipment on operating lease to others | 28.8 | 30.0 | |||||
1,194.4 | 1,188.8 | ||||||
Less accumulated depreciation | (736.4 | ) | (718.9 | ) | |||
$ | 458.0 | $ | 469.9 |
Depreciation expense was $20.1$20.7 million and $18.9$20.2 million for the three months ended DecemberMarch 31, 20172022 and 2016,2021, respectively. Capitalized interest was insignificant for all reported periods.
Equipment on operating lease to others represents the cost of equipment shipped to customers for whom the Company has guaranteed the residual value and equipment on short-term leases. These transactions are accounted for as operating leases with the related assets capitalized and depreciated over their estimated economic lives of five to ten years. Cost less accumulated depreciation for equipment on operating lease at March 31, 2022 and December 31, 2017 and September 30, 20172021 was $19.8$8.2 million and $21.6$8.9 million, respectively.
10. | Goodwill and Purchased Intangible Assets |
Goodwill and other indefinite-lived intangible assets are not amortized but are reviewed for impairment annually or more frequently if potential interim indicators exist that could result in impairment. The Company performs its annual impairment test in the fourth quarter of its fiscal year.
The following table presents changes in goodwill during the three months ended DecemberMarch 31, 20172022 (in millions):
|
| Access Equipment |
|
| Defense |
|
| Fire & Emergency |
|
| Commercial |
|
| Total |
| |||||
Net goodwill at December 31, 2021 |
| $ | 877.6 |
|
| $ | 44.4 |
|
| $ | 106.1 |
|
| $ | 20.9 |
|
| $ | 1,049.0 |
|
Foreign currency translation |
|
| (4.1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4.1 | ) |
Net goodwill at March 31, 2022 |
| $ | 873.5 |
|
| $ | 44.4 |
|
| $ | 106.1 |
|
| $ | 20.9 |
|
| $ | 1,044.9 |
|
Access Equipment | Fire & Emergency | Commercial | Total | ||||||||||||
Net goodwill at September 30, 2017 | $ | 885.9 | $ | 106.1 | $ | 21.0 | $ | 1,013.0 | |||||||
Foreign currency translation | 2.9 | — | (0.1 | ) | 2.8 | ||||||||||
Net goodwill at December 31, 2017 | $ | 888.8 | $ | 106.1 | $ | 20.9 | $ | 1,015.8 |
The following table presents details of the Company’s goodwill allocated to the reportable segments (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||||||||||||||||
|
| Gross |
|
| Accumulated Impairment |
|
| Net |
|
| Gross |
|
| Accumulated Impairment |
|
| Net |
| ||||||
Access Equipment |
| $ | 1,805.6 |
|
| $ | (932.1 | ) |
| $ | 873.5 |
|
| $ | 1,809.7 |
|
| $ | (932.1 | ) |
| $ | 877.6 |
|
Defense |
|
| 44.4 |
|
|
| — |
|
|
| 44.4 |
|
|
| 44.4 |
|
|
| — |
|
|
| 44.4 |
|
Fire & Emergency |
|
| 108.1 |
|
|
| (2.0 | ) |
|
| 106.1 |
|
|
| 108.1 |
|
|
| (2.0 | ) |
|
| 106.1 |
|
Commercial |
|
| 188.5 |
|
|
| (167.6 | ) |
|
| 20.9 |
|
|
| 188.5 |
|
|
| (167.6 | ) |
|
| 20.9 |
|
|
| $ | 2,146.6 |
|
| $ | (1,101.7 | ) |
| $ | 1,044.9 |
|
| $ | 2,150.7 |
|
| $ | (1,101.7 | ) |
| $ | 1,049.0 |
|
December 31, 2017 | September 30, 2017 | ||||||||||||||||||||||
Gross | Accumulated Impairment | Net | Gross | Accumulated Impairment | Net | ||||||||||||||||||
Access equipment | $ | 1,820.9 | $ | (932.1 | ) | $ | 888.8 | $ | 1,818.0 | $ | (932.1 | ) | $ | 885.9 | |||||||||
Fire & emergency | 108.1 | (2.0 | ) | 106.1 | 108.1 | (2.0 | ) | 106.1 | |||||||||||||||
Commercial | 196.8 | (175.9 | ) | 20.9 | 196.9 | (175.9 | ) | 21.0 | |||||||||||||||
$ | 2,125.8 | $ | (1,110.0 | ) | $ | 1,015.8 | $ | 2,123.0 | $ | (1,110.0 | ) | $ | 1,013.0 |
12
Details of the Company’s total purchased intangible assets are as follows (in millions):
|
| March 31, 2022 |
| |||||||||||||
|
| Weighted- Average Life |
|
| Gross |
|
| Accumulated Amortization |
|
| Net |
| ||||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution network |
|
| 39.2 |
|
| $ | 55.4 |
|
| $ | (35.9 | ) |
| $ | 19.5 |
|
Technology-related |
|
| 12.0 |
|
|
| 108.4 |
|
|
| (104.1 | ) |
|
| 4.3 |
|
Customer relationships |
|
| 12.6 |
|
|
| 572.6 |
|
|
| (552.8 | ) |
|
| 19.8 |
|
Other |
|
| 12.2 |
|
|
| 23.6 |
|
|
| (19.4 | ) |
|
| 4.2 |
|
|
|
| 14.4 |
|
|
| 760.0 |
|
|
| (712.2 | ) |
|
| 47.8 |
|
Non-amortizable trade names |
|
|
|
|
|
| 417.1 |
|
|
| — |
|
|
| 417.1 |
|
|
|
|
|
|
| $ | 1,177.1 |
|
| $ | (712.2 | ) |
| $ | 464.9 |
|
|
| December 31, 2021 |
| |||||||||||||
|
| Weighted- Average Life |
|
| Gross |
|
| Accumulated Amortization |
|
| Net |
| ||||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution network |
|
| 39.2 |
|
| $ | 55.4 |
|
| $ | (35.6 | ) |
| $ | 19.8 |
|
Technology-related |
|
| 11.9 |
|
|
| 104.7 |
|
|
| (104.0 | ) |
|
| 0.7 |
|
Customer relationships |
|
| 12.6 |
|
|
| 572.6 |
|
|
| (551.3 | ) |
|
| 21.3 |
|
Other |
|
| 12.1 |
|
|
| 23.6 |
|
|
| (18.5 | ) |
|
| 5.1 |
|
|
|
| 14.4 |
|
|
| 756.3 |
|
|
| (709.4 | ) |
|
| 46.9 |
|
Non-amortizable trade names |
|
|
|
|
|
| 417.1 |
|
|
| — |
|
|
| 417.1 |
|
|
|
|
|
|
| $ | 1,173.4 |
|
| $ | (709.4 | ) |
| $ | 464.0 |
|
December 31, 2017 | |||||||||||||
Weighted- Average Life (in years) | Gross | Accumulated Amortization | Net | ||||||||||
Amortizable intangible assets: | |||||||||||||
Distribution network | 39.1 | $ | 55.4 | $ | (29.8 | ) | $ | 25.6 | |||||
Technology-related | 11.9 | 104.7 | (101.2 | ) | 3.5 | ||||||||
Customer relationships | 12.8 | 555.0 | (476.3 | ) | 78.7 | ||||||||
Other | 16.4 | 16.5 | (14.8 | ) | 1.7 | ||||||||
14.4 | 731.6 | (622.1 | ) | 109.5 | |||||||||
Non-amortizable trade names | 387.8 | — | 387.8 | ||||||||||
$ | 1,119.4 | $ | (622.1 | ) | $ | 497.3 |
September 30, 2017 | |||||||||||||
Weighted- Average Life (in years) | Gross | Accumulated Amortization | Net | ||||||||||
Amortizable intangible assets: | |||||||||||||
Distribution network | 39.1 | $ | 55.4 | $ | (29.5 | ) | $ | 25.9 | |||||
Technology-related | 11.9 | 104.7 | (99.7 | ) | 5.0 | ||||||||
Customer relationships | 12.8 | 555.0 | (467.6 | ) | 87.4 | ||||||||
Other | 16.3 | 16.4 | (14.7 | ) | 1.7 | ||||||||
14.4 | 731.5 | (611.5 | ) | 120.0 | |||||||||
Non-amortizable trade names | 387.8 | — | 387.8 | ||||||||||
$ | 1,119.3 | $ | (611.5 | ) | $ | 507.8 |
On March 1, 2022, the Company acquired 2 patents with a combined value of $3.7 million. The technology-related intangible asset is subject to amortization with an estimated life of 14.3 years.
The estimated future amortization expense of purchased intangible assets for the remainder of fiscal 20182022 and each of the five years succeeding September 30, 2018December 31, 2021 are as follows: 20182022 (remaining nine months) $8.5 million; 2023 - $27.7$5.7 million; 20192024 - $36.9$4.5 million; 20202025 - $11.0$4.4 million; 20212026 - $5.3 million; 2022 - $4.9$4.4 million; and 20232027 - $3.5$4.4 million.
11. | Credit Agreements |
The Company was obligated under the following debt instruments (in millions):
|
| March 31, 2022 |
| |||||||||
|
| Principal |
|
| Debt Issuance Costs |
|
| Debt, Net |
| |||
4.600% Senior notes due May 2028 |
|
| 300.0 |
|
|
| (2.4 | ) |
|
| 297.6 |
|
3.100% Senior notes due March 2030 |
|
| 300.0 |
|
|
| (3.2 | ) |
|
| 296.8 |
|
|
| $ | 600.0 |
|
| $ | (5.6 | ) |
| $ | 594.4 |
|
|
| December 31, 2021 |
| |||||||||
|
| Principal |
|
| Debt Issuance Costs |
|
| Debt, Net |
| |||
Senior Term Loan |
| $ | 225.0 |
|
| $ | (0.2 | ) |
| $ | 224.8 |
|
4.600% Senior notes due May 2028 |
|
| 300.0 |
|
|
| (2.5 | ) |
|
| 297.5 |
|
3.100% Senior notes due March 2030 |
|
| 300.0 |
|
|
| (3.3 | ) |
|
| 296.7 |
|
|
| $ | 825.0 |
|
| $ | (6.0 | ) |
| $ | 819.0 |
|
December 31, 2017 | |||||||||||
Principal | Debt Issuance Costs | Debt, Net | |||||||||
Senior Secured Term Loan | $ | 330.0 | $ | (0.7 | ) | $ | 329.3 | ||||
5.375% Senior Notes due March 2022 | 250.0 | (3.3 | ) | 246.7 | |||||||
5.375% Senior Notes due March 2025 | 250.0 | (2.6 | ) | 247.4 | |||||||
$ | 830.0 | $ | (6.6 | ) | 823.4 | ||||||
Less current maturities | (20.0 | ) | |||||||||
$ | 803.4 | ||||||||||
Other short-term debt | $ | 9.7 | |||||||||
Current maturities of long-term debt | 20.0 | ||||||||||
$ | 29.7 |
September 30, 2017 | |||||||||||
Principal | Debt Issuance Costs | Debt, Net | |||||||||
Senior Secured Term Loan | $ | 335.0 | $ | (0.8 | ) | $ | 334.2 | ||||
5.375% Senior Notes due March 2022 | 250.0 | (3.5 | ) | 246.5 | |||||||
5.375% Senior Notes due March 2025 | 250.0 | (2.8 | ) | 247.2 | |||||||
$ | 835.0 | $ | (7.1 | ) | 827.9 | ||||||
Less current maturities | (20.0 | ) | |||||||||
$ | 807.9 | ||||||||||
Other short-term debt | $ | 3.0 | |||||||||
Current maturities of long-term debt | 20.0 | ||||||||||
$ | 23.0 |
13
On March 2014,23, 2022, the Company entered into ana Third Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement provides for (i) aan unsecured revolving credit facility (Revolving(the “Revolving Credit Facility)Facility”) that matures in March 20192027 with an initial maximum aggregate amount of availability of $600$1.1 billion. Debt issuance costs of $2.5 million and (ii)were capitalized related to the Credit Agreement. In March 2022, the Company repaid a $400$225.0 million senior term loan (Term Loan) due in quarterly principal installmentsthat existed under the Second Amended and Restated Credit Agreement. As a result of $5 million with a balloon payment of $310 million due at maturity in March 2019. In January 2015,the repayment, the Company entered into an agreement with lenders under the Credit Agreement that increased the Revolving Credit Facility to an aggregate maximum amountexpensed $0.1 million of $850 million. previously capitalized debt issuance costs.
At DecemberMarch 31, 2017,2022, outstanding letters of credit of $94.9$18.6 million reduced available capacity under the Revolving Credit Facility to $755.1 million.
Under the Credit Agreement, the Company mustis obligated to pay (i) an unused commitment fee ranging from 0.225%0.080% to 0.35%0.225% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.625%0.4375% to 2.00%1.500% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.
Borrowings under the Credit Agreement bear interest for dollar-denominated loans at a variable rate equal to (i) LIBORTerm SOFR (the forward-looking secured overnight financing rate) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) for dollar-denominated loans only, the base rate (which is the highest of (a) the administrative agent’s(x) Bank of America, N.A.’s prime rate, (b)(y) the federal funds rate plus 0.50% or (c)(z) the sum of 1%1.00% plus one-month LIBOR)Term SOFR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At DecemberMarch 31, 2017,2022, the interest spread on the Revolving Credit Facility and Term Loan was 150112.5 basis points. The weighted-average interest rate on borrowings outstanding under the Term Loan at December 31, 2017 was 2.85%.
The Credit Agreement contains various restrictions and covenants, including requirementsa requirement that the Company maintain a leverage ratio at certain financial ratios at prescribed levels, and restrictions, subject to certain exceptions, restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional subsidiary indebtedness dispose of assets,and consummate acquisitions and make investments in joint venturesa restriction on the disposition of all or substantially all of the assets of the Company and foreign subsidiaries.
The Credit Agreement containsrequires the following financial covenants:
In February 2014,May 2018, the Company issued
In September 2019, the Company entered into a 220.0 million Chinese renminbi uncommitted line of credit to provide short-term finance support to operations in China. There were 0 outstanding borrowings on the subsidiary guarantors named therein anduncommitted line of credit as of March 31, 2022 or December 31, 2021. The line of credit carries a trustee. The Indentures contain customary affirmative and negative covenants. Certain ofvariable interest rate that is set by the Company’s subsidiaries jointly, severally, fully and unconditionally guarantee the Company’s obligations under the 2022 Senior Notes and 2025 Senior Notes. See Note 20 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.
The fair value of the long-term debt is estimated based upon Level 2 inputs to reflect the market rate of the Company’s debt. At DecemberMarch 31, 2017,2022, the fair value of the 20222028 Senior Notes and the 20252030 Senior Notes was estimated to be $257$308 million ($260338 million at September 30, 2017)December 31, 2021) and $264$278 million ($264313 million at September 30, 2017)December 31, 2021), respectively. The fair value of the Term Loan approximated its book value at both December 31, 2017 and September 30, 2017.2021. See Note 1117 of the Notes to Condensed Consolidated Financial Statements for the definition of a Level 2 input.
14
12. | Warranties |
The Company’s products generally carry explicit warranties that extend from six months to five years, based on terms that are generally accepted in the marketplace. Selected components (such as engines, transmissions, tires, etc.) included in the Company’s end products may include manufacturers’ warranties. These manufacturers’ warranties are generally passed on to the end customer of the Company’s products, and the customer would generally deal directly with the component manufacturer.
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 98.8 | $ | 89.6 | |||
Warranty provisions | 12.0 | 10.7 | |||||
Settlements made | (12.8 | ) | (11.9 | ) | |||
Changes in liability for pre-existing warranties, net | 1.2 | (1.1 | ) | ||||
Premiums received | 2.6 | 2.8 | |||||
Amortization of premiums received | (2.6 | ) | (2.9 | ) | |||
Foreign currency translation | 0.1 | (1.0 | ) | ||||
Balance at end of period | $ | 99.3 | $ | 86.2 |
Provisions for estimated warranty and other related costs are recorded at the time of sale and are periodically adjusted to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. At times, warranty issues arise that are beyond the scope of the Company'sCompany’s historical experience. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters in excess of amounts accrued; however, the Company does not expect that any such amounts, while not determinable, would have a material effect on the Company'sCompany’s consolidated financial condition, results of operations or cash flows.
Changes in the Company’s assurance-type warranty liability were as follows (in millions):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Balance at beginning of period |
| $ | 65.7 |
|
| $ | 64.6 |
|
Warranty provisions |
|
| 11.1 |
|
|
| 10.3 |
|
Settlements made |
|
| (13.6 | ) |
|
| (17.0 | ) |
Changes in liability for pre-existing warranties, net |
|
| (1.6 | ) |
|
| 5.9 |
|
Foreign currency translation |
|
| — |
|
|
| (0.1 | ) |
Acquisition |
|
| — |
|
|
| 0.3 |
|
Balance at end of period |
| $ | 61.6 |
|
| $ | 64.0 |
|
13. | Guarantee Arrangements |
Credit Guarantees:The Company is party to multiple agreements whereby at DecemberMarch 31, 2017 it2022 the Company guaranteed an aggregate of $665.3$758.1 million in indebtedness of customers. The Company estimated that its maximum loss exposure under these contracts at DecemberMarch 31, 20172022 was $122.8$132.6 million. Terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability to, among other things, take possession of the underlying collateral. If the financial condition of the customers were to deteriorate and result in their inability to make payments, then loss provisions in excess of amounts provided for at inception may be required. Given the Company’s position as original equipment manufacturer and its knowledge of end markets, the Company, when called upon to fulfill a guarantee, generally has been able to liquidate the financed equipment at a minimal loss, if any, to the Company. While the Company does not expect to experience losses under these agreements that are materially in excess of the amounts reserved, it cannot provide any assurance that the financial condition of the third parties will not deteriorate resulting in the third parties
15
Residual Value Guarantees: The Company is party to multiple agreements whereby at March 31, 2022 the Company guaranteed to support an aggregate of $96.1 million of customer equipment value. The Company estimated that its maximum loss exposure under these contracts at March 31, 2022 was $10.9 million. Terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years. Under the terms of these agreements, the Company guarantees that a piece of equipment will have a minimum residual value at a future date. If the counterparty is not able to recover the agreed upon residual value through sale, or alternative disposition, the Company is responsible for a portion of the shortfall. The Company is generally able to mitigate a portion of the risk associated with these guarantees by staggering the maturity terms of the guarantees, diversification of the portfolio and leveraging knowledge gained through the Company’s own experience in the used equipment markets. There can be no assurance the Company’s historical experience in used equipment markets will be indicative of future results. The Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in used equipment markets at the time of loss. During periods of economic weakness, residual values generally decline and can contribute to higher exposure to losses.
Changes in the non-contingent portion of the Company’s credit guarantee liabilityliabilities were as follows (in millions):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Balance at beginning of period |
| $ | 12.1 |
|
| $ | 14.7 |
|
Provision for new credit guarantees |
|
| 1.0 |
|
|
| 0.4 |
|
Changes for pre-existing guarantees, net |
|
| (2.5 | ) |
|
| (0.4 | ) |
Amortization of previous guarantees |
|
| (0.5 | ) |
|
| (0.9 | ) |
Balance at end of period |
| $ | 10.1 |
|
| $ | 13.8 |
|
Upon the adoption of Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 326, Financial Instruments – Credit Losses, the contingent portion of the guarantee liabilities that relates to current expected credit losses is recognized separately and is recorded within “Other current liabilities” and “Other long-term liabilities” in the Company’s Condensed Consolidated Balance Sheets.
Changes in the contingent portion of the Company’s guarantee liabilities were as follows (in millions):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Balance at beginning of period |
| $ | 4.0 |
|
| $ | 6.9 |
|
Provision for new credit guarantees |
|
| 0.6 |
|
|
| 0.3 |
|
Changes in allowance for pre-existing guarantees, net |
|
| 5.0 |
|
|
| (0.3 | ) |
Foreign currency translation |
|
| 0.1 |
|
|
| — |
|
Balance at end of period |
| $ | 9.7 |
|
| $ | 6.9 |
|
14. | Contingencies, Significant Estimates and Concentrations |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 9.1 | $ | 8.4 | |||
Provision for new credit guarantees | 1.3 | 0.6 | |||||
Changes for pre-existing guarantees, net | — | 0.1 | |||||
Amortization of previous guarantees | (0.6 | ) | (0.5 | ) | |||
Foreign currency translation | — | (0.1 | ) | ||||
Balance at end of period | $ | 9.8 | $ | 8.5 |
Personal Injury Actions and Other - Product and general liability claims are made against the Company from time to time in the ordinary course of business. The Company is generally self-insured for future claims up to $5.0 million per claim. Accordingly, a reserve is maintained for the estimated costs of such claims. At March 31, 2015,2022 and December 31, 2021, the Company'sestimated net liabilities for product and general liability claims totaled $44.5 million and $45.1 million, respectively. There is inherent uncertainty as to the eventual resolution of unsettled claims. Management, however, believes that any losses in excess of established reserves will not have a material effect on the Company’s financial condition, results of operations or cash flows.
16
Market Risks - The Company was contingently liable under bid, performance and specialty bonds totaling $1.46 billion and $1.24 billion at March 31, 2022 and December 31, 2021, respectively. Open standby letters of credit issued by the Company’s banks in favor of third parties totaled $21.8 million and $22.1 million at March 31, 2022 and December 31, 2021, respectively.
Other Matters - The Company is subject to environmental matters and legal proceedings and claims, including patent, antitrust, product liability, warranty and state dealership regulation compliance proceedings, that arise in the ordinary course of business. Although the final results of all such matters and claims cannot be predicted with certainty, management believes that the ultimate resolution of all such matters and claims will not have a material effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
Major contracts for military systems are performed over extended periods of time and are subject to changes in scope of work and delivery schedules. Pricing negotiations on changes and settlement of claims often extend over prolonged periods of time. The Company’s ultimate profitability on such contracts may depend on the eventual outcome of an equitable settlement of contractual issues with the Company’s customers.
15. | Shareholders’ Equity |
In May 2019, the Company’s Board of Directors increased the Company'sapproved a Common Stock repurchase authorization byof 10,000,000 shares, increasing the repurchase authorization to 10,299,198 shares. The Company repurchased 748,000751,309 shares of Common Stock under this authorization during the three months ended DecemberMarch 31, 20172022 at a cost of $63.7$85.0 million. The Company did not repurchase any shares under this authorization during the three months ended December 31, 2016. As of DecemberMarch 31, 2017,2022, the Company repurchased 3,534,624 shares under this authorization at a cost of $175.7 million. The Company had 6,764,574has remaining authority to repurchase 4,417,254 shares of Common Stock remaining under this repurchase authorizationStock.
16. | Accumulated Other Comprehensive Income (Loss) |
Changes in accumulated other comprehensive income (loss) by component were as follows (in millions):
|
| Three Months Ended March 31, 2022 |
| |||||||||||||
|
| Employee Pension and Postretirement Benefits, Net of Tax |
|
| Cumulative Translation Adjustments |
|
| Derivative Instruments, Net of Tax |
|
| Accumulated Other Comprehensive Income (Loss) |
| ||||
Balance at beginning of period |
| $ | (25.6 | ) |
| $ | (105.2 | ) |
| $ | 2.2 |
|
| $ | (128.6 | ) |
Other comprehensive income (loss) before reclassifications |
|
| — |
|
|
| (6.5 | ) |
|
| 0.9 |
|
|
| (5.6 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
| 0.4 |
|
|
| — |
|
|
| (0.1 | ) |
|
| 0.3 |
|
Net current period other comprehensive income (loss) |
|
| 0.4 |
|
|
| (6.5 | ) |
|
| 0.8 |
|
|
| (5.3 | ) |
Balance at end of period |
| $ | (25.2 | ) |
| $ | (111.7 | ) |
| $ | 3.0 |
|
| $ | (133.9 | ) |
|
| Three Months Ended March 31, 2021 |
| |||||||||||||
|
| Employee Pension and Postretirement Benefits, Net of Tax |
|
| Cumulative Translation Adjustments |
|
| Derivative Instruments, Net of Tax |
|
| Accumulated Other Comprehensive Income (Loss) |
| ||||
Balance at beginning of period |
| $ | (94.7 | ) |
| $ | (70.3 | ) |
| $ | (0.5 | ) |
| $ | (165.5 | ) |
Other comprehensive income (loss) before reclassifications |
|
| — |
|
|
| (20.0 | ) |
|
| 0.4 |
|
|
| (19.6 | ) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
| 1.2 |
|
|
| — |
|
|
| — |
|
|
| 1.2 |
|
Net current period other comprehensive income (loss) |
|
| 1.2 |
|
|
| (20.0 | ) |
|
| 0.4 |
|
|
| (18.4 | ) |
Balance at end of period |
| $ | (93.5 | ) |
| $ | (90.3 | ) |
| $ | (0.1 | ) |
| $ | (183.9 | ) |
17
Reclassifications out of accumulated other comprehensive income (loss) included in certain situations. Seethe computation of net periodic pension and postretirement benefit cost (See Note 74 of the Notes to Condensed Consolidated Financial Statements for informationadditional details regarding these restrictions.employee benefit plans) were as follows (in millions):
|
| Classification of Income (Expense) |
| Three Months Ended March 31, |
| |||||
|
|
|
| 2022 |
|
| 2021 |
| ||
Amortization of employee pension and postretirement benefits items |
|
|
|
|
|
|
|
|
|
|
Prior service costs |
| Miscellaneous, net |
| $ | 0.2 |
|
| $ | 0.2 |
|
Actuarial losses |
| Miscellaneous, net |
|
| 0.3 |
|
|
| 1.2 |
|
Total before tax |
|
|
|
| 0.5 |
|
|
| 1.4 |
|
Tax benefit |
|
|
|
| (0.1 | ) |
|
| (0.2 | ) |
Net of tax |
|
|
| $ | 0.4 |
|
| $ | 1.2 |
|
17. | Fair Value Measurement |
FASB Accounting Standards Codification (ASC)ASC Topic 820,
The three levels are defined as follows:
Level 1: | Unadjusted quoted prices in active markets for identical assets or liabilities. |
Level 2: | Observable inputs other than quoted prices in active markets for identical assets or liabilities, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. |
Level 3: | Unobservable inputs reflecting |
18
Table of assets between levels during the three months ended December 31, 2017.
The fair valuesvalue of the Company’s financial assets and liabilities were as follows (in millions):
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP plan assets (a) |
| $ | 15.8 |
|
| $ | — |
|
| $ | — |
|
| $ | 15.8 |
|
Investment in equity securities (b) |
|
| 16.8 |
|
|
| — |
|
|
| — |
|
|
| 16.8 |
|
Foreign currency exchange derivatives (c) |
|
| — |
|
|
| 5.5 |
|
|
| — |
|
|
| 5.5 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange derivatives (c) |
| $ | — |
|
| $ | 0.8 |
|
| $ | — |
|
| $ | 0.8 |
|
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP plan assets (a) |
| $ | 21.3 |
|
| $ | — |
|
| $ | — |
|
| $ | 21.3 |
|
Investment in equity securities (b) |
|
| 14.2 |
|
|
| — |
|
|
| — |
|
|
| 14.2 |
|
Foreign currency exchange derivatives (c) |
|
| — |
|
|
| 3.7 |
|
|
| — |
|
|
| 3.7 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange derivatives (c) |
| $ | — |
|
| $ | 0.9 |
|
| $ | — |
|
| $ | 0.9 |
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
December 31, 2017 | |||||||||||||||
Assets: | |||||||||||||||
SERP plan assets (a) | $ | 22.2 | $ | — | $ | — | $ | 22.2 | |||||||
Foreign currency exchange derivatives (b) | — | 0.8 | — | 0.8 | |||||||||||
Interest rate contracts (c) | — | 0.3 | — | 0.3 | |||||||||||
Liabilities: | |||||||||||||||
Foreign currency exchange derivatives (b) | $ | — | $ | 0.9 | $ | — | $ | 0.9 | |||||||
Interest rate contracts (c) | — | 0.2 | — | 0.2 | |||||||||||
September 30, 2017 | |||||||||||||||
Assets: | |||||||||||||||
SERP plan assets (a) | $ | 21.7 | $ | — | $ | — | $ | 21.7 | |||||||
Foreign currency exchange derivatives (b) | — | 0.5 | — | 0.5 | |||||||||||
Interest rate contracts (c) | — | 0.3 | — | 0.3 | |||||||||||
Liabilities: | |||||||||||||||
Foreign currency exchange derivatives (b) | $ | — | $ | 1.2 | $ | — | $ | 1.2 | |||||||
Interest rate contracts (c) | — | 0.7 | — | 0.7 |
(a) | |
Represents investments held in a rabbi trust for the |
(b) | Represents investments in equity securities for which quoted prices in active markets are available. The Company records changes in the fair value of investments in “Miscellaneous, net” in the Condensed Consolidated Statements of Income. |
(c) | Based on observable market transactions of forward currency prices. |
18. | |
Business Segment Information |
Cost of Sales | Selling, General and Administrative Expenses | Total | |||||||||
Access equipment | $ | 3.3 | $ | — | $ | 3.3 | |||||
Commercial | 0.6 | 1.9 | 2.5 | ||||||||
Total | $ | 3.9 | $ | 1.9 | $ | 5.8 |
Cost of Sales | Selling, General and Administrative Expenses | Total | |||||||||
Access equipment | $ | 0.7 | $ | — | $ | 0.7 | |||||
Commercial | — | 0.4 | 0.4 | ||||||||
Total | $ | 0.7 | $ | 0.4 | $ | 1.1 |
Employee Severance and Termination Benefits | Property, Plant and Equipment Impairment | Other Costs | Total | ||||||||||||
Balance at September 30, 2017 | $ | 19.8 | $ | — | $ | 1.0 | $ | 20.8 | |||||||
Restructuring provision | 3.7 | 1.0 | 1.1 | 5.8 | |||||||||||
Utilized - cash | (7.0 | ) | — | (1.0 | ) | (8.0 | ) | ||||||||
Utilized - noncash | — | (1.0 | ) | — | (1.0 | ) | |||||||||
Foreign currency translation | 0.3 | — | — | 0.3 | |||||||||||
Balance at December 31, 2017 | $ | 16.8 | $ | — | $ | 1.1 | $ | 17.9 |
Employee Severance and Termination Benefits | |||
Balance at September 30, 2016 | $ | 0.9 | |
Restructuring provision | 1.1 | ||
Utilized - cash | (0.3 | ) | |
Balance at December 31, 2016 | $ | 1.7 |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Components of net periodic benefit cost | |||||||
Service cost | $ | 3.1 | $ | 3.3 | |||
Interest cost | 4.5 | 4.4 | |||||
Expected return on plan assets | (5.0 | ) | (4.5 | ) | |||
Amortization of prior service cost | 0.4 | 0.4 | |||||
Amortization of net actuarial loss | 0.5 | 1.0 | |||||
Net periodic benefit cost | $ | 3.5 | $ | 4.6 |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Components of net periodic benefit cost | |||||||
Service cost | $ | 0.9 | $ | 0.6 | |||
Interest cost | 0.5 | 0.4 | |||||
Amortization of prior service cost | (0.2 | ) | (0.2 | ) | |||
Amortization of net actuarial loss | — | 0.1 | |||||
Net periodic benefit cost | $ | 1.2 | $ | 0.9 |
Three Months Ended December 31, 2017 | |||||||||||||||
Employee Pension and Postretirement Benefits, Net of Tax | Cumulative Translation Adjustments | Derivative Instruments | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Balance at beginning of period | $ | (46.2 | ) | $ | (78.6 | ) | $ | (0.2 | ) | $ | (125.0 | ) | |||
Other comprehensive income (loss) before reclassifications | — | 2.1 | — | 2.1 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0.5 | — | — | 0.5 | |||||||||||
Net current period other comprehensive income (loss) | 0.5 | 2.1 | — | 2.6 | |||||||||||
Balance at end of period | $ | (45.7 | ) | $ | (76.5 | ) | $ | (0.2 | ) | $ | (122.4 | ) |
Three Months Ended December 31, 2016 | |||||||||||
Employee Pension and Postretirement Benefits, Net of Tax | Cumulative Translation Adjustments | Accumulated Other Comprehensive Income (Loss) | |||||||||
Balance at beginning of period | $ | (73.9 | ) | $ | (101.1 | ) | $ | (175.0 | ) | ||
Other comprehensive income (loss) before reclassifications | — | (30.4 | ) | (30.4 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0.8 | — | 0.8 | ||||||||
Net current period other comprehensive income (loss) | 0.8 | (30.4 | ) | (29.6 | ) | ||||||
Balance at end of period | $ | (73.1 | ) | $ | (131.5 | ) | $ | (204.6 | ) |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Amortization of employee pension and postretirement benefits items | |||||||
Prior service costs | $ | 0.2 | $ | 0.2 | |||
Actuarial losses | 0.5 | 1.1 | |||||
Total before tax | 0.7 | 1.3 | |||||
Tax benefit | (0.2 | ) | (0.5 | ) | |||
Net of tax | $ | 0.5 | $ | 0.8 |
Three Months Ended December 31, | |||||
2017 | 2016 | ||||
Basic Earnings Per Share: | |||||
Weighted-average common shares outstanding | 74,846,829 | 74,280,377 | |||
Diluted Earnings Per Share: | |||||
Basic weighted-average common shares outstanding | 74,846,829 | 74,280,377 | |||
Dilutive stock options and other equity-based compensation awards | 1,177,636 | 1,104,540 | |||
Diluted weighted-average common shares outstanding | 76,024,465 | 75,384,917 |
Three Months Ended December 31, | |||||
2017 | 2016 | ||||
Stock options | 261,675 | 393,975 |
The Company is organized into four4 reportable segments based on the internal organization used by the President and Chief Executive Officer for making operating decisions and measuring performance and based on the similarity of customers served, common management, common use of facilities and economic results attained.
In accordance with FASB ASC Topic 280,
Segment Reporting, for purposes of business segment performance measurement, the Company does not allocate to individual business segments costs or items that are of a non-operating nature or organizational or functional expenses of a corporate nature. The caption “Corporate” includes corporate office expenses,19
Selected financial information concerning the Company’s reportable segments and product lines is as follows (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||
|
| External Customers |
|
| Inter- segment |
|
| Net Sales |
|
| External Customers |
|
| Inter- segment |
|
| Net Sales |
| ||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Access Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerial work platforms |
| $ | 439.7 |
|
| $ | — |
|
| $ | 439.7 |
|
| $ | 358.2 |
|
| $ | — |
|
| $ | 358.2 |
|
Telehandlers |
|
| 229.7 |
|
|
| — |
|
|
| 229.7 |
|
|
| 175.2 |
|
|
| — |
|
|
| 175.2 |
|
Other |
|
| 213.6 |
|
|
| 0.1 |
|
|
| 213.7 |
|
|
| 203.2 |
|
|
| 1.6 |
|
|
| 204.8 |
|
Total Access Equipment |
|
| 883.0 |
|
|
| 0.1 |
|
|
| 883.1 |
|
|
| 736.6 |
|
|
| 1.6 |
|
|
| 738.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defense |
|
| 535.2 |
|
|
| 0.4 |
|
|
| 535.6 |
|
|
| 614.3 |
|
|
| 0.4 |
|
|
| 614.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fire & Emergency |
|
| 286.5 |
|
|
| 1.4 |
|
|
| 287.9 |
|
|
| 308.7 |
|
|
| 3.8 |
|
|
| 312.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refuse collection |
|
| 129.3 |
|
|
| — |
|
|
| 129.3 |
|
|
| 104.4 |
|
|
| — |
|
|
| 104.4 |
|
Concrete placement |
|
| 85.1 |
|
|
| — |
|
|
| 85.1 |
|
|
| 97.3 |
|
|
| — |
|
|
| 97.3 |
|
Other |
|
| 26.6 |
|
|
| 0.4 |
|
|
| 27.0 |
|
|
| 27.1 |
|
|
| 1.2 |
|
|
| 28.3 |
|
Total Commercial |
|
| 241.0 |
|
|
| 0.4 |
|
|
| 241.4 |
|
|
| 228.8 |
|
|
| 1.2 |
|
|
| 230.0 |
|
Corporate and intersegment eliminations |
|
| — |
|
|
| (2.3 | ) |
|
| (2.3 | ) |
|
| 0.6 |
|
|
| (7.0 | ) |
|
| (6.4 | ) |
Consolidated |
| $ | 1,945.7 |
|
| $ | — |
|
| $ | 1,945.7 |
|
| $ | 1,889.0 |
|
| $ | — |
|
| $ | 1,889.0 |
|
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating income (loss): |
|
|
|
|
|
|
|
|
Access Equipment (a) |
| $ | 7.5 |
|
| $ | 80.5 |
|
Defense |
|
| 19.4 |
|
|
| 35.5 |
|
Fire & Emergency |
|
| 22.4 |
|
|
| 47.4 |
|
Commercial |
|
| 14.3 |
|
|
| 18.8 |
|
Corporate |
|
| (34.3 | ) |
|
| (41.4 | ) |
Consolidated |
|
| 29.3 |
|
|
| 140.8 |
|
Interest expense, net of interest income |
|
| (11.6 | ) |
|
| (11.2 | ) |
Miscellaneous other income (expense) |
|
| 1.1 |
|
|
| 3.1 |
|
Income before income taxes and earnings (losses) of unconsolidated affiliates |
| $ | 18.8 |
|
| $ | 132.7 |
|
(a) | Results for the three months ended March 31, 2021 include a $1.6 million benefit for restructuring and a $3.8 million charge for other costs related to restructuring plans. |
Three Months Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
External Customers | Inter- segment | Net Sales | External Customers | Inter- segment | Net Sales | ||||||||||||||||||
Access equipment | |||||||||||||||||||||||
Aerial work platforms | $ | 323.5 | $ | — | $ | 323.5 | $ | 233.7 | $ | — | $ | 233.7 | |||||||||||
Telehandlers | 129.5 | — | 129.5 | 93.3 | — | 93.3 | |||||||||||||||||
Other | 175.2 | — | 175.2 | 162.2 | — | 162.2 | |||||||||||||||||
Total access equipment | 628.2 | — | 628.2 | 489.2 | — | 489.2 | |||||||||||||||||
Defense | 493.2 | 0.3 | 493.5 | 294.2 | 0.3 | 294.5 | |||||||||||||||||
Fire & emergency | 224.9 | 4.2 | 229.1 | 229.1 | 3.4 | 232.5 | |||||||||||||||||
Commercial | |||||||||||||||||||||||
Concrete placement | 111.5 | — | 111.5 | 84.4 | — | 84.4 | |||||||||||||||||
Refuse collection | 101.2 | — | 101.2 | 92.2 | — | 92.2 | |||||||||||||||||
Other | 27.0 | 1.7 | 28.7 | 21.5 | 1.1 | 22.6 | |||||||||||||||||
Total commercial | 239.7 | 1.7 | 241.4 | 198.1 | 1.1 | 199.2 | |||||||||||||||||
Corporate and intersegment eliminations | 0.3 | (6.2 | ) | (5.9 | ) | 0.8 | (4.8 | ) | (4.0 | ) | |||||||||||||
Consolidated | $ | 1,586.3 | $ | — | $ | 1,586.3 | $ | 1,211.4 | $ | — | $ | 1,211.4 |
20
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Identifiable assets: |
|
|
|
|
|
|
|
|
Access Equipment: |
|
|
|
|
|
|
|
|
U.S. |
| $ | 2,453.9 |
|
| $ | 2,311.8 |
|
Europe, Africa and Middle East |
|
| 456.5 |
|
|
| 460.3 |
|
Rest of the World |
|
| 408.4 |
|
|
| 383.0 |
|
Total Access Equipment |
|
| 3,318.8 |
|
|
| 3,155.1 |
|
Defense: |
|
|
|
|
|
|
|
|
U.S. |
|
| 1,357.9 |
|
|
| 1,225.0 |
|
Rest of the World |
|
| 6.6 |
|
|
| 7.2 |
|
Total Defense |
|
| 1,364.5 |
|
|
| 1,232.2 |
|
Fire & Emergency - U.S. |
|
| 521.6 |
|
|
| 511.2 |
|
Commercial: |
|
|
|
|
|
|
|
|
U.S. |
|
| 390.0 |
|
|
| 379.6 |
|
Rest of the World |
|
| 51.0 |
|
|
| 45.1 |
|
Total Commercial |
|
| 441.0 |
|
|
| 424.7 |
|
Corporate - U.S. (a) |
|
| 1,328.6 |
|
|
| 1,398.6 |
|
Consolidated |
| $ | 6,974.5 |
|
| $ | 6,721.8 |
|
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Operating income (loss): | |||||||
Access equipment | $ | 13.8 | $ | 24.4 | |||
Defense | 65.2 | 23.8 | |||||
Fire & emergency | 25.1 | 17.0 | |||||
Commercial | 8.3 | 4.6 | |||||
Corporate | (38.6 | ) | (33.6 | ) | |||
Consolidated | 73.8 | 36.2 | |||||
Interest expense, net of interest income | (13.7 | ) | (13.9 | ) | |||
Miscellaneous other income | 0.5 | 1.3 | |||||
Income before income taxes and equity in earnings of unconsolidated affiliates | $ | 60.6 | $ | 23.6 |
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Identifiable assets: | |||||||
Access equipment: | |||||||
U.S. | $ | 1,884.5 | $ | 1,905.5 | |||
Europe | 525.0 | 541.0 | |||||
Rest of the World | 242.0 | 246.1 | |||||
Total access equipment | 2,651.5 | 2,692.6 | |||||
Defense: | |||||||
U.S. | 818.0 | 775.1 | |||||
Rest of the World | 6.5 | 7.0 | |||||
Total defense | 824.5 | 782.1 | |||||
Fire & emergency - U.S. | 526.9 | 552.6 | |||||
Commercial: | |||||||
U.S. | 359.4 | 377.3 | |||||
Rest of the World | 41.2 | 42.3 | |||||
Total commercial | 400.6 | 419.6 | |||||
Corporate: | |||||||
U.S. (a) | 457.5 | 543.9 | |||||
Rest of the World (b) | 101.1 | 108.1 | |||||
Total corporate | 558.6 | 652.0 | |||||
Consolidated | $ | 4,962.1 | $ | 5,098.9 |
(a)Primarily includes cash and short-term investments and the Company’s global headquarters.
The following table presents net sales by geographic region based on product shipment destination (in millions):
|
| Three Months Ended March 31, 2022 |
| |||||||||||||||||||||
|
| Access Equipment |
|
| Defense |
|
| Fire & Emergency |
|
| Commercial |
|
| Eliminations |
|
| Total |
| ||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | 732.9 |
|
| $ | 524.3 |
|
| $ | 275.4 |
|
| $ | 239.3 |
|
| $ | (2.3 | ) |
| $ | 1,769.6 |
|
Europe, Africa and Middle East |
|
| 81.0 |
|
|
| 11.0 |
|
|
| — |
|
|
| 0.9 |
|
|
| — |
|
|
| 92.9 |
|
Rest of the World |
|
| 69.2 |
|
|
| 0.3 |
|
|
| 12.5 |
|
|
| 1.2 |
|
|
| — |
|
|
| 83.2 |
|
Consolidated |
| $ | 883.1 |
|
| $ | 535.6 |
|
| $ | 287.9 |
|
| $ | 241.4 |
|
| $ | (2.3 | ) |
| $ | 1,945.7 |
|
|
| Three Months Ended March 31, 2021 |
| |||||||||||||||||||||
|
| Access Equipment |
|
| Defense |
|
| Fire & Emergency |
|
| Commercial |
|
| Eliminations |
|
| Total |
| ||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
| $ | 555.4 |
|
| $ | 551.2 |
|
| $ | 296.8 |
|
| $ | 228.0 |
|
| $ | (6.4 | ) |
| $ | 1,625.0 |
|
Europe, Africa and Middle East |
|
| 82.8 |
|
|
| 63.0 |
|
|
| 13.3 |
|
|
| 0.5 |
|
|
| — |
|
|
| 159.6 |
|
Rest of the World |
|
| 100.0 |
|
|
| 0.5 |
|
|
| 2.4 |
|
|
| 1.5 |
|
|
| — |
|
|
| 104.4 |
|
Consolidated |
| $ | 738.2 |
|
| $ | 614.7 |
|
| $ | 312.5 |
|
| $ | 230.0 |
|
| $ | (6.4 | ) |
| $ | 1,889.0 |
|
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Net sales: | |||||||
United States | $ | 1,233.2 | $ | 1,018.3 | |||
Other North America | 43.5 | 35.7 | |||||
Europe, Africa and Middle East | 235.5 | 71.6 | |||||
Rest of the World | 74.1 | 85.8 | |||||
Consolidated | $ | 1,586.3 | $ | 1,211.4 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net sales | $ | — | $ | 1,372.2 | $ | 267.9 | $ | (53.8 | ) | $ | 1,586.3 | ||||||||
Cost of sales | (0.9 | ) | 1,153.0 | 245.7 | (53.7 | ) | 1,344.1 | ||||||||||||
Gross income (loss) | 0.9 | 219.2 | 22.2 | (0.1 | ) | 242.2 | |||||||||||||
Selling, general and administrative expenses | 37.8 | 90.3 | 29.7 | — | 157.8 | ||||||||||||||
Amortization of purchased intangibles | — | 9.2 | 1.4 | — | 10.6 | ||||||||||||||
Operating income (loss) | (36.9 | ) | 119.7 | (8.9 | ) | (0.1 | ) | 73.8 | |||||||||||
Interest expense | (19.0 | ) | (13.5 | ) | (0.8 | ) | 17.9 | (15.4 | ) | ||||||||||
Interest income | 1.3 | 8.0 | 10.3 | (17.9 | ) | 1.7 | |||||||||||||
Miscellaneous, net | 25.2 | (62.0 | ) | 37.3 | — | 0.5 | |||||||||||||
Income (loss) before income taxes | (29.4 | ) | 52.2 | 37.9 | (0.1 | ) | 60.6 | ||||||||||||
Provision for (benefit from) income taxes | 3.0 | 36.6 | (35.1 | ) | 0.2 | 4.7 | |||||||||||||
Income (loss) before equity in earnings of affiliates | (32.4 | ) | 15.6 | 73.0 | (0.3 | ) | 55.9 | ||||||||||||
Equity in earnings of consolidated subsidiaries | 88.8 | 57.1 | (31.6 | ) | (114.3 | ) | — | ||||||||||||
Equity in earnings of unconsolidated affiliates | — | — | 0.5 | — | 0.5 | ||||||||||||||
Net income | 56.4 | 72.7 | 41.9 | (114.6 | ) | 56.4 | |||||||||||||
Other comprehensive income (loss), net of tax | 2.6 | 0.2 | 2.2 | (2.4 | ) | 2.6 | |||||||||||||
Comprehensive income | $ | 59.0 | $ | 72.9 | $ | 44.1 | $ | (117.0 | ) | $ | 59.0 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net sales | $ | — | $ | 1,049.8 | $ | 202.9 | $ | (41.3 | ) | $ | 1,211.4 | ||||||||
Cost of sales | (0.8 | ) | 874.5 | 179.5 | (41.5 | ) | 1,011.7 | ||||||||||||
Gross income | 0.8 | 175.3 | 23.4 | 0.2 | 199.7 | ||||||||||||||
Selling, general and administrative expenses | 31.6 | 91.5 | 27.9 | — | 151.0 | ||||||||||||||
Amortization of purchased intangibles | — | 9.6 | 2.9 | — | 12.5 | ||||||||||||||
Operating income (loss) | (30.8 | ) | 74.2 | (7.4 | ) | 0.2 | 36.2 | ||||||||||||
Interest expense | (13.6 | ) | (13.6 | ) | (0.5 | ) | 13.0 | (14.7 | ) | ||||||||||
Interest income | 0.7 | 4.1 | 9.0 | (13.0 | ) | 0.8 | |||||||||||||
Miscellaneous, net | 22.5 | (52.2 | ) | 31.0 | — | 1.3 | |||||||||||||
Income (loss) before income taxes | (21.2 | ) | 12.5 | 32.1 | 0.2 | 23.6 | |||||||||||||
Provision for (benefit from) income taxes | (5.1 | ) | 3.0 | 7.2 | 0.1 | 5.2 | |||||||||||||
Income (loss) before equity in earnings of affiliates | (16.1 | ) | 9.5 | 24.9 | 0.1 | 18.4 | |||||||||||||
Equity in earnings of consolidated subsidiaries | 35.3 | 15.7 | (10.7 | ) | (40.3 | ) | — | ||||||||||||
Equity in earnings of unconsolidated affiliates | — | — | 0.8 | — | 0.8 | ||||||||||||||
Net income | 19.2 | 25.2 | 15.0 | (40.2 | ) | 19.2 | |||||||||||||
Other comprehensive income (loss), net of tax | (29.6 | ) | (0.9 | ) | (29.2 | ) | 30.1 | (29.6 | ) | ||||||||||
Comprehensive income | $ | (10.4 | ) | $ | 24.3 | $ | (14.2 | ) | $ | (10.1 | ) | $ | (10.4 | ) |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 347.3 | $ | 6.0 | $ | 25.8 | $ | — | $ | 379.1 | |||||||||
Receivables, net | 22.8 | 996.9 | 258.9 | (49.2 | ) | 1,229.4 | |||||||||||||
Inventories, net | — | 802.4 | 417.5 | — | 1,219.9 | ||||||||||||||
Other current assets | 45.9 | 31.4 | 10.9 | — | 88.2 | ||||||||||||||
Total current assets | 416.0 | 1,836.7 | 713.1 | (49.2 | ) | 2,916.6 | |||||||||||||
Investment in and advances to consolidated subsidiaries | 3,209.0 | 1,411.3 | (84.3 | ) | (4,536.0 | ) | — | ||||||||||||
Intercompany receivables | 47.9 | 260.1 | 1,975.8 | (2,283.8 | ) | — | |||||||||||||
Intangible assets, net | — | 900.2 | 612.9 | — | 1,513.1 | ||||||||||||||
Other long-term assets | 107.6 | 268.7 | 156.1 | — | 532.4 | ||||||||||||||
Total assets | $ | 3,780.5 | $ | 4,677.0 | $ | 3,373.6 | $ | (6,869.0 | ) | $ | 4,962.1 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 7.3 | $ | 433.5 | $ | 162.8 | $ | (48.8 | ) | $ | 554.8 | ||||||||
Customer advances | — | 548.0 | 3.3 | — | 551.3 | ||||||||||||||
Other current liabilities | 104.4 | 240.6 | 114.7 | (0.4 | ) | 459.3 | |||||||||||||
Total current liabilities | 111.7 | 1,222.1 | 280.8 | (49.2 | ) | 1,565.4 | |||||||||||||
Long-term debt, less current maturities | 803.4 | — | — | — | 803.4 | ||||||||||||||
Intercompany payables | 468.4 | 1,767.5 | 47.9 | (2,283.8 | ) | — | |||||||||||||
Other long-term liabilities | 103.6 | 184.3 | 12.0 | — | 299.9 | ||||||||||||||
Total shareholders' equity | 2,293.4 | 1,503.1 | 3,032.9 | (4,536.0 | ) | 2,293.4 | |||||||||||||
Total liabilities and shareholders' equity | $ | 3,780.5 | $ | 4,677.0 | $ | 3,373.6 | $ | (6,869.0 | ) | $ | 4,962.1 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 399.5 | $ | 4.6 | $ | 42.9 | $ | — | $ | 447.0 | |||||||||
Receivables, net | 28.3 | 1,025.5 | 316.1 | (63.6 | ) | 1,306.3 | |||||||||||||
Inventories, net | — | 819.3 | 379.1 | — | 1,198.4 | ||||||||||||||
Other current assets | 45.4 | 31.9 | 10.8 | — | 88.1 | ||||||||||||||
Total current assets | 473.2 | 1,881.3 | 748.9 | (63.6 | ) | 3,039.8 | |||||||||||||
Investment in and advances to consolidated subsidiaries | 3,138.3 | 1,340.4 | (59.6 | ) | (4,419.1 | ) | — | ||||||||||||
Intercompany receivables | 48.0 | 261.6 | 1,971.8 | (2,281.4 | ) | — | |||||||||||||
Intangible assets, net | — | 909.5 | 611.3 | — | 1,520.8 | ||||||||||||||
Other long-term assets | 69.1 | 242.9 | 226.3 | — | 538.3 | ||||||||||||||
Total assets | $ | 3,728.6 | $ | 4,635.7 | $ | 3,498.7 | $ | (6,764.1 | ) | $ | 5,098.9 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 11.6 | $ | 517.2 | $ | 176.4 | $ | (54.2 | ) | $ | 651.0 | ||||||||
Customer advances | — | 510.7 | 2.7 | — | 513.4 | ||||||||||||||
Other current liabilities | 105.2 | 304.9 | 118.0 | (9.4 | ) | 518.7 | |||||||||||||
Total current liabilities | 116.8 | 1,332.8 | 297.1 | (63.6 | ) | 1,683.1 | |||||||||||||
Long-term debt, less current maturities | 807.9 | — | — | — | 807.9 | ||||||||||||||
Intercompany payables | 452.9 | 1,780.5 | 48.0 | (2,281.4 | ) | — | |||||||||||||
Other long-term liabilities | 43.6 | 134.1 | 122.8 | — | 300.5 | ||||||||||||||
Total shareholders' equity | 2,307.4 | 1,388.3 | 3,030.8 | (4,419.1 | ) | 2,307.4 | |||||||||||||
Total liabilities and shareholders' equity | $ | 3,728.6 | $ | 4,635.7 | $ | 3,498.7 | $ | (6,764.1 | ) | $ | 5,098.9 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net cash provided (used) by operating activities | $ | (5.8 | ) | $ | (4.4 | ) | $ | 39.4 | $ | — | $ | 29.2 | |||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and equipment | (1.5 | ) | (11.7 | ) | (5.5 | ) | — | (18.7 | ) | ||||||||||
Additions to equipment held for rental | — | — | (1.2 | ) | — | (1.2 | ) | ||||||||||||
Proceeds from sale of equipment held for rental | — | — | 2.5 | — | 2.5 | ||||||||||||||
Intercompany investing | — | 13.0 | (58.9 | ) | 45.9 | — | |||||||||||||
Other investing activities | (0.7 | ) | (0.1 | ) | — | — | (0.8 | ) | |||||||||||
Net cash provided (used) by investing activities | (2.2 | ) | 1.2 | (63.1 | ) | 45.9 | (18.2 | ) | |||||||||||
Financing activities: | |||||||||||||||||||
Proceeds from issuance of debt (original maturities greater than three months) | — | — | 6.5 | — | 6.5 | ||||||||||||||
Repayments of debt (original maturities greater than three months) | (5.0 | ) | — | — | — | (5.0 | ) | ||||||||||||
Repurchases of Common Stock | (71.1 | ) | — | — | — | (71.1 | ) | ||||||||||||
Dividends paid | (18.0 | ) | — | — | — | (18.0 | ) | ||||||||||||
Proceeds from exercise of stock options | 8.6 | — | — | — | 8.6 | ||||||||||||||
Intercompany financing | 41.3 | 4.6 | — | (45.9 | ) | — | |||||||||||||
Net cash provided (used) by financing activities | (44.2 | ) | 4.6 | 6.5 | (45.9 | ) | (79.0 | ) | |||||||||||
Effect of exchange rate changes on cash | — | — | 0.1 | — | 0.1 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (52.2 | ) | 1.4 | (17.1 | ) | — | (67.9 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 399.5 | 4.6 | 42.9 | — | 447.0 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 347.3 | $ | 6.0 | $ | 25.8 | $ | — | $ | 379.1 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net cash provided (used) by operating activities | $ | (42.8 | ) | $ | 67.0 | $ | 59.6 | $ | — | $ | 83.8 | ||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and equipment | (0.4 | ) | (9.1 | ) | (4.7 | ) | — | (14.2 | ) | ||||||||||
Additions to equipment held for rental | — | — | (12.9 | ) | — | (12.9 | ) | ||||||||||||
Proceeds from sale of equipment held for rental | — | — | 5.3 | — | 5.3 | ||||||||||||||
Intercompany investing | — | 498.1 | (39.0 | ) | (459.1 | ) | — | ||||||||||||
Other investing activities | (0.2 | ) | — | — | — | (0.2 | ) | ||||||||||||
Net cash provided (used) by investing activities | (0.6 | ) | 489.0 | (51.3 | ) | (459.1 | ) | (22.0 | ) | ||||||||||
Financing activities: | |||||||||||||||||||
Repayments of debt (original maturities greater than three months) | (20.0 | ) | — | — | — | (20.0 | ) | ||||||||||||
Repurchases of Common Stock | (3.0 | ) | — | — | — | (3.0 | ) | ||||||||||||
Dividends paid | (15.6 | ) | — | — | — | (15.6 | ) | ||||||||||||
Proceeds from exercise of stock options | 26.2 | — | — | — | 26.2 | ||||||||||||||
Intercompany financing | 93.9 | (553.0 | ) | — | 459.1 | — | |||||||||||||
Net cash provided (used) by financing activities | 81.5 | (553.0 | ) | — | 459.1 | (12.4 | ) | ||||||||||||
Effect of exchange rate changes on cash | — | (0.2 | ) | (1.5 | ) | — | (1.7 | ) | |||||||||||
Increase in cash and cash equivalents | 38.1 | 2.8 | 6.8 | — | 47.7 | ||||||||||||||
Cash and cash equivalents at beginning of period | 285.4 | 1.7 | 34.8 | — | 321.9 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 323.5 | $ | 4.5 | $ | 41.6 | $ | — | $ | 369.6 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
In October 2021, Oshkosh Corporation and its subsidiaries (the Company) changed its fiscal year from a year beginning on October 1 and ending September 30 to a year beginning on January 1 and ending December 31. The Company’s current fiscal year runs from January 1, 2022 through December 31, 2022 (fiscal 2022).
Cautionary Statement About Forward-Looking Statements
This Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that Oshkosh Corporation (the “Company”)the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption “Executive Overview”“Overview” are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the extent of supply chain and logistics disruptions; the Company’s ability to increase prices or impose surcharges to raise margins or to offset higher input costs, including increased raw material, labor and freight costs; the Company’s ability to attract and retain production labor in a timely manner; the cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s estimates of access equipment demand which, among other factors, is influenced by historical customer historical buying patterns and rental company fleet replacement strategies; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the expectedCompany’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; the impact of any U.S. Department of Defense (DoD) and international defense customer procurement of products and services and acceptance of and funding or payments for such products and services; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy; the impact of any DoD solicitation for competition for future contracts to produce military vehicles, including a future Familyvehicles; the impacts of Medium Tactical Vehicles production contract;budget constraints facing the Company’s ability to increase prices to raise margins or offset higher input costs; increasing commodityU.S. Postal Service (USPS) and other raw material costs, particularly in a sustained economic recovery; risks related to facilities expansion, consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; projected adoption rates of work at height machinery in emerging markets;continuously changing demands for postal services; the impact of severe weather, orwar, natural disasters or pandemics that may affect the Company, its suppliers or its customers; risks related to the collectibilitycollectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’s products; risks associated with international operations and sales, including compliance with the Foreign Corrupt Practices Act; risks that a trade war and related tariffs could reduce the competitiveness of the Company’s products; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; cybersecurity risks and costs of defending against, mitigating and responding to data security threats and breaches;breaches impacting the Company; the Company’s ability to successfully identify, complete and integrate acquisitions and to realize the anticipated benefits associated with the same; and risks related to the Company’s ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company'sCompany’s U.S. Securities and Exchange Commission (SEC) filings, including, but not limited to, the Company'sCompany’s Current Report on Form 8-K filed with the SEC on January 25, 2018April 27, 2022 and Item 1A. of Part II of this Quarterly Report on Form 10-Q.
All forward-looking statements, including those under the caption “Executive Overview,“Overview,” speak only as of the date the Company files this Quarterly Report on Form 10-Q with the SEC. The Company assumes no obligation, and disclaims any obligation, to update information contained in this Quarterly Report on Form 10-Q. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.
All references herein to earnings per share refer to earningearnings per share assuming dilution.
General
Major products manufactured and marketed by each of the Company’s business segments are as follows:
Access equipment
Defense
— tacticalFire & emergency
Commercial
—Overview
The Company reported earnings per sharea net loss of $0.74 in the first quarter of fiscal 2018, which exceeded both earnings$0.03 per share for the first quarter of fiscal 2017 and the Company's expectations. Improved results in the defense, fire & emergency and commercial segments and a lower provision for2022, down from net income taxes were offset in part by lower access equipment segment operating income and higher corporate expenses. Resultsof $1.44 per share for the first quarter of fiscal 2018 included $14.1 million, or $0.18three months ended March 31, 2021. The decrease in earnings per share of after-tax charges and operating inefficiencies associated with restructuring actions in the access equipment and commercial segments. Results for the first quarter of fiscal 2018 benefited from one-time discrete tax benefits of $6.5 million, or $0.08 per share, as a result of the implementation of tax reform in the United States.
Prior to Russia’s invasion of Ukraine, steel, aluminum and freight costs had moderated and the Company expected that this moderation would continue. Since the invasion, pronounced increases in these costs have occurred. With commodity and freight costs trending up again, all of the Company’s non-defense segments have remained agile and have taken additional pricing actions. Pricing actions in the Access Equipment and Commercial segments in the first quarter of fiscal 2017. The increase2022 impacted orders in backlog, which the Company expects to mitigate some of the additional cost headwinds the Company is facing.
While new cost pressures have emerged that the Company expects will impact fiscal 2022, the Company expects improvement in price/cost dynamics in the second quarter of fiscal 2022 and further improvement in the second half of fiscal 2022, when it expects to be largely price/cost neutral compared to the beginning of fiscal 2021. In total, the Company expects price/cost headwinds of approximately $180 million to $200 million for fiscal 2022, up from its previous expectation of $140 million to $150 million, with the first and second quarters of fiscal 2022 experiencing the majority of the revised impact.
Consolidated sales in the first quarter of fiscal 20182022 increased 3.0 percent compared to the first quarterthree months ended March 31, 2021 to $1.95 billion largely as a result of fiscal 2017improved pricing and increased product content. Sales volume was driven by double-digit percentage increases in the defense, access equipment and commercial segments. Order intake was up in all four segments in the first quarter of fiscal 2018 asrelatively flat compared to the first quarterthree months ended March 31, 2021 as the impact of fiscal 2017. The Company believes that the order activity experiencedincreased shipments of access equipment in North America was offset by lower sales volumes in the first quarter of fiscal 2018 in all non-defense segments reflects the broader, positive macro-economic conditions in its markets, especially in the United States.
Consolidated operating income in the first quarter of fiscal 20182022 decreased 79.2 percent to $29.3 million, or 1.5 percent of sales, compared to $140.8 million, or 7.5 percent of sales, for the three months ended March 31, 2021. The decrease was primarily due to unfavorable price/cost dynamics and higher manufacturing costs, due in part to component shortages and labor challenges, offset in part by improved mix.
23
During the first quarter of fiscal 20172022, the Company amended and extended its credit agreement to March 2027. In conjunction with the extension, the Company repaid its outstanding term loan with a balance of $225 million at December 31, 2021 and increased its revolving credit facility from $850 million to $1.1 billion.
Recent COVID related lockdowns in China have also introduced additional volatility to global supply chains. The Company’s previous outlook for fiscal 2022 assumed moderate supply chain improvements throughout the year. The pace of supply chain improvement remains uncertain. As a result of additional material and freight cost pressures, supply chain disruptions and labor challenges, the Company revised its fiscal 2022 earnings per share estimate range from $5.75 to $6.75 to a range of $4.75 to $5.75 on estimated operating income of $475 million to $560 million and consolidated sales of between $8.1 billion and $8.6 billion. The revised estimate includes an approximate $0.25 per share charge related to taxes on foreign anti-hybrid tax legislation recorded in the first quarter of fiscal 2022. Excluding this item, the Company’s adjusted earnings per share estimate range for fiscal 2022 is $5.00 to $6.00.
The Company now expects Access Equipment segment fiscal 2022 sales will be $3.8 billion to $4.2 billion compared to the Company’s previous estimate range of $3.7 billion to $4.1 billion largely due to the additional pricing actions in the first quarter of fiscal 2022. The Company now expects Access Equipment segment fiscal 2022 operating income margin to be 8.0% to 8.75% compared to the Company’s previous operating income margin estimate range of 9.0% to 10.0%. Increased freight and component costs are contributing to the lower operating income expectations.
The Company continues to expect Defense segment fiscal 2022 sales to be approximately $2.2 billion. The Company has revised the Defense segment fiscal 2022 operating income margin expectation from approximately 7.0% to approximately 6.25% as the more persistent inflationary environment caused unfavorable cumulative catch-up adjustments in the first quarter of fiscal 2022.
The Company continues to expect Fire & Emergency segment fiscal 2022 sales to be approximately $1.2 billion. The Company is reducing the Fire & Emergency segment fiscal 2022 operating income margin estimate from approximately 13.0% to a range of 11.0% to 11.75%. The decline in expectations reflects increased supply chain disruptions, labor inefficiencies and additional cost pressures.
The Company continues to expect Commercial segment fiscal 2022 sales to be $1.0 billion to $1.1 billion. The Company is reducing the Commercial segment fiscal 2022 operating income margin estimate from approximately 7.0% to approximately 6.5%.
The Company continues to expect corporate expenses in fiscal 2022 will be approximately $160 million. As a result of the tax charge associated with anti-hybrid tax legislation in the first quarter of fiscal 2022, the Company increased its estimated effective tax rate for fiscal 2022 from approximately 22.5% to approximately 26.0%.
The Company expects consolidated sales for the second quarter of fiscal 2022 to be approximately flat with the three months ended June 30, 2021, with Access Equipment segment sales up approximately 15% and Defense segment sales down by approximately 20%. The Company expects additional price realization in its non-Defense segments during the second quarter of fiscal 2022 as more sales will reflect price increases and surcharges implemented over the past twelve months. The Company expects a low to mid-single digit consolidated operating income margin in the second quarter of fiscal 2022.
24
RESULTS OF OPERATIONS – FIRST QUARTER OF FISCAL 2022 COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 2021
CONSOLIDATED RESULTS
The following table presents consolidated results (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | 1,945.7 |
|
| $ | 1,889.0 |
|
| $ | 56.7 |
|
|
| 3.0 | % |
Cost of sales |
|
| 1,744.4 |
|
|
| 1,573.9 |
|
|
| 170.5 |
|
|
| 10.8 | % |
Gross income |
|
| 201.3 |
|
|
| 315.1 |
|
|
| (113.8 | ) |
|
| -36.1 | % |
% of sales |
|
| 10.3 | % |
|
| 16.7 | % |
|
| -630 | bps |
|
|
|
|
SG&A expenses |
|
| 169.2 |
|
|
| 172.0 |
|
|
| (2.8 | ) |
|
| -1.6 | % |
Amortization |
|
| 2.8 |
|
|
| 2.3 |
|
|
| 0.5 |
|
|
| 21.7 | % |
Operating income |
|
| 29.3 |
|
|
| 140.8 |
|
|
| (111.5 | ) |
|
| -79.2 | % |
% of sales |
|
| 1.5 | % |
|
| 7.5 | % |
|
| -590 | bps |
|
|
|
|
The following table presents net sales by geographic region based on product shipment destination (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
North America |
| $ | 1,769.6 |
|
| $ | 1,625.0 |
|
| $ | 144.6 |
|
|
| 8.9 | % |
Europe, Africa and Middle East |
|
| 92.9 |
|
|
| 159.6 |
|
|
| (66.7 | ) |
|
| -41.8 | % |
Rest of the World |
|
| 83.2 |
|
|
| 104.4 |
|
|
| (21.2 | ) |
|
| -20.3 | % |
|
| $ | 1,945.7 |
|
| $ | 1,889.0 |
|
| $ | 56.7 |
|
|
| 3.0 | % |
Consolidated net sales increased largely as a result of improved pricing ($48 million) and a sales mix which included more third-party chassis ($13 million). Sales volume was relatively flat as the impact of increased shipments of access equipment in North America was offset by lower sales volumes in the Defense, Fire & Emergency and Commercial segments.
The decrease in consolidated gross margin was due to higher material & logistics costs (780 basis points) and higher manufacturing costs (100 basis points), offset in part by improved pricing (190 basis points) and improved mix (60 basis points).
The decrease in consolidated selling, general and administrative expenses was generally due to lower incentive compensation costs ($12 million), offset in part byhigher reserves for bad debts ($3 million), increased travel costs ($2 million), higher salary costs ($2 million) and higher product liability costs ($2 million).
The decrease in consolidated operating income was primarily due to unfavorable material & logistics costs ($151 million) and higher manufacturing costs ($20 million), in part due to parts shortages and labor challenges, offset in part by improved pricing ($48 million) and improved mix ($16 million).
The following table presents consolidated non-operating changes (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Interest expense, net of interest income |
| $ | (11.6 | ) |
| $ | (11.2 | ) |
| $ | (0.4 | ) |
|
| 3.6 | % |
Miscellaneous income (expense) |
|
| 1.1 |
|
|
| 3.1 |
|
|
| (2.0 | ) |
|
| -64.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
| 20.2 |
|
|
| 33.2 |
|
|
| (13.0 | ) |
|
| -39.2 | % |
Effective tax rate |
|
| 107.4 | % |
|
| 25.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) of unconsolidated affiliates |
| $ | (0.7 | ) |
| $ | 0.1 |
|
| $ | (0.8 | ) |
|
| -800.0 | % |
25
Other miscellaneous expense primarily related to gains and losses on investments, net foreign currency transaction gains and losses, and non-service costs of the Company’s pension plans.
The provision for income taxes for the three months ended March 31, 2022 included a charge of $18.1 million related to taxes on income generated in prior periods as the Company revised its interpretation of certain foreign anti-hybrid tax legislation based upon comments from the corresponding taxing authorities in the quarter.
Gains and losses of unconsolidated affiliates primarily represented changes in the Company’s equity method investments.
SEGMENT RESULTS
Access Equipment
The following table presents the Access Equipment segment results (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | 883.1 |
|
| $ | 738.2 |
|
| $ | 144.9 |
|
|
| 19.6 | % |
Cost of sales |
|
| 817.3 |
|
|
| 603.3 |
|
|
| 214.0 |
|
|
| 35.5 | % |
Gross income |
|
| 65.8 |
|
|
| 134.9 |
|
|
| (69.1 | ) |
|
| -51.2 | % |
% of sales |
|
| 7.5 | % |
|
| 18.3 | % |
|
| -1080 | bps |
|
|
|
|
SG&A expenses |
|
| 58.2 |
|
|
| 54.3 |
|
|
| 3.9 |
|
|
| 7.2 | % |
Amortization |
|
| 0.1 |
|
|
| 0.1 |
|
|
| — |
|
|
| 0.0 | % |
Operating income |
|
| 7.5 |
|
|
| 80.5 |
|
|
| (73.0 | ) |
|
| -90.7 | % |
% of sales |
|
| 0.8 | % |
|
| 10.9 | % |
|
| -1010 | bps |
|
|
|
|
Access Equipment segment net sales increased largely as a result of robust demand for access equipment in North America.
The decrease in gross margin in the Access Equipment segment was due to unfavorable material & logistics costs (1,380 basis points) offset in part by improved pricing (230 basis points).
The decrease in operating income in the Access Equipment segment was primarily due to unfavorable material & logistics costs ($121 million) and higher manufacturing costs, largely associated with the implementation of manufacturing initiatives ($15 million), offset in part by the impact of higher gross margin associated with higher sales volume ($31 million) and improved pricing ($28 million).
Defense
The following table presents the Defense segment results (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | 535.6 |
|
| $ | 614.7 |
|
| $ | (79.1 | ) |
|
| -12.9 | % |
Cost of sales |
|
| 483.1 |
|
|
| 545.3 |
|
|
| (62.2 | ) |
|
| -11.4 | % |
Gross income |
|
| 52.5 |
|
|
| 69.4 |
|
|
| (16.9 | ) |
|
| -24.4 | % |
% of sales |
|
| 9.8 | % |
|
| 11.3 | % |
|
| -150 | bps |
|
|
|
|
SG&A expenses |
|
| 31.5 |
|
|
| 33.0 |
|
|
| (1.5 | ) |
|
| -4.5 | % |
Amortization |
|
| 1.6 |
|
|
| 0.9 |
|
|
| 0.7 |
|
|
| 77.8 | % |
Operating income |
|
| 19.4 |
|
|
| 35.5 |
|
|
| (16.1 | ) |
|
| -45.4 | % |
% of sales |
|
| 3.6 | % |
|
| 5.8 | % |
|
| -220 | bps |
|
|
|
|
Defense segment net sales decreased as a result of lower Family of Heavy Tactical Vehicle and Family of Medium Tactical Vehicle program volume as U.S. government funding for these programs has decreased in recent years.
26
The decrease in gross margin in the Defense segment was due to unfavorable product mix (220 basis points) and unfavorable cumulative catch-up adjustments on contracts (80 basis points), offset in part by the absence of inefficiencies associated with the establishment of an additional production line that were incurred during the three months ended March 31, 2021 (120 basis points).
The decrease in operating inefficiencies and charges related to restructuring actionsincome in the access equipmentDefense segment increased material costswas primarily a result of the impact of lower gross margin associated with lower sales volume ($12 million) and adverseunfavorable product mix.
Fire & Emergency
The following table presents the Fire & Emergency segment results (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | 287.9 |
|
| $ | 312.5 |
|
| $ | (24.6 | ) |
|
| -7.9 | % |
Cost of sales |
|
| 241.0 |
|
|
| 242.5 |
|
|
| (1.5 | ) |
|
| -0.6 | % |
Gross income |
|
| 46.9 |
|
|
| 70.0 |
|
|
| (23.1 | ) |
|
| -33.0 | % |
% of sales |
|
| 16.3 | % |
|
| 22.4 | % |
|
| -610 | bps |
|
|
|
|
SG&A expenses |
|
| 24.2 |
|
|
| 22.2 |
|
|
| 2.0 |
|
|
| 9.0 | % |
Amortization |
|
| 0.3 |
|
|
| 0.4 |
|
|
| (0.1 | ) |
|
| -25.0 | % |
Operating income |
|
| 22.4 |
|
|
| 47.4 |
|
|
| (25.0 | ) |
|
| -52.7 | % |
% of sales |
|
| 7.8 | % |
|
| 15.2 | % |
|
| -740 | bps |
|
|
|
|
Fire & Emergency segment net sales decreased due to lower ARFF vehicle volume ($18 million) as a large multi-unit award was recognized in sales during the three months ended March 31, 2021.
The decrease in gross margin in the access equipmentFire & Emergency segment were significantlywas primarily attributable to higher than the Company had expected. The access equipment segment had made significant progress implementing the plan to outsource aftermarketmaterial & logistics costs (410 basis points), higher production costs (250 basis points) associated with parts distributionshortages and relocate manufacturing in the U.S. and Europe in fiscal 2017. During the first quarter of fiscal 2018, however, the access equipment segment experienced issues that caused operational inefficiencies resulting in additional costs. The Company believes most of the issues have been rectified but still expects that the segment will experience some additional inefficiencies in fiscal 2018. Due to the additional time and effort required to completely transition production and aftermarket warehousing and fulfillment activities, the Company now expects the total project costs will be approximately $73 million, approximately $20 million higher than the Company's previous estimate. The Company continues to expect these actions will result in ongoing savings of $20 million to $25 million per year once fully implemented.
The decrease in operating income margins in the access equipmentFire & Emergency segment in fiscal 2018 will be in the range of 10.75% to 11.25%, up from the Company's previous adjusted operating income margin outlook range for this segment of 10.5% to 11.0%.
First Quarter Fiscal | |||||||
2018 | 2017 | ||||||
Net sales: | |||||||
Access equipment | $ | 628.2 | $ | 489.2 | |||
Defense | 493.5 | 294.5 | |||||
Fire & emergency | 229.1 | 232.5 | |||||
Commercial | 241.4 | 199.2 | |||||
Intersegment eliminations and other | (5.9 | ) | (4.0 | ) | |||
$ | 1,586.3 | $ | 1,211.4 |
Commercial
The following table presents the Commercial segment results (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | 241.4 |
|
| $ | 230.0 |
|
| $ | 11.4 |
|
|
| 5.0 | % |
Cost of sales |
|
| 202.5 |
|
|
| 190.3 |
|
|
| 12.2 |
|
|
| 6.4 | % |
Gross income |
|
| 38.9 |
|
|
| 39.7 |
|
|
| (0.8 | ) |
|
| -2.0 | % |
% of sales |
|
| 16.1 | % |
|
| 17.3 | % |
|
| -110 | bps |
|
|
|
|
SG&A expenses |
|
| 23.8 |
|
|
| 20.0 |
|
|
| 3.8 |
|
|
| 19.0 | % |
Amortization |
|
| 0.8 |
|
|
| 0.9 |
|
|
| (0.1 | ) |
|
| -11.1 | % |
Operating income (loss) |
|
| 14.3 |
|
|
| 18.8 |
|
|
| (4.5 | ) |
|
| -23.9 | % |
% of sales |
|
| 5.9 | % |
|
| 8.2 | % |
|
| -230 | bps |
|
|
|
|
Commercial segment net sales increased $42.2 million, or 21.2%, in the first quarteras a result of fiscal 2018 compared to the first quarter of fiscal 2017. The increase in sales wasfavorable product mix primarily due to higher concrete placement (up $27 million) and refuse collection vehicle (up $9 million) unit volume. Fiscal 2017 first quarter sales were negatively impacted by an atypical order pattern.
First Quarter Fiscal | |||||||
2018 | 2017 | ||||||
Cost of sales: | |||||||
Access equipment | $ | 551.7 | $ | 399.5 | |||
Defense | 407.6 | 248.9 | |||||
Fire & emergency | 183.8 | 198.2 | |||||
Commercial | 206.2 | 169.9 | |||||
Intersegment eliminations and other | (5.2 | ) | (4.8 | ) | |||
$ | 1,344.1 | $ | 1,011.7 |
27
The decrease in gross margin in the first quarter of fiscal 2018 comparedCommercial segment was primarily attributable to the first quarter of fiscal 2017 was largely due to higherunfavorable material costs (120 basis points) as well as charges and operating inefficiencies related to restructuring actions in the access equipment and commercial segments (120(920 basis points), offset in part by improved manufacturing performance (130 basis points), primarily in the fire & emergency and defense segments.
First Quarter Fiscal | |||||||
2018 | 2017 | ||||||
Operating income (loss): | |||||||
Access equipment | $ | 13.8 | $ | 24.4 | |||
Defense | 65.2 | 23.8 | |||||
Fire & emergency | 25.1 | 17.0 | |||||
Commercial | 8.3 | 4.6 | |||||
Corporate | (38.6 | ) | (33.6 | ) | |||
$ | 73.8 | $ | 36.2 |
The decrease in operating income in the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017Commercial segment was primarily a result of charges and operating inefficiencies relateddue to restructuring actions ($16 million), higher material costs ($1622 million), higher legal and inventory reserve adjustments ($5 million), unfavorable customer mix and an adverse foreign exchangethe impact offset in part by higherof lower gross margin associated with higherlower sales volume ($364 million).
Corporate and Intersegment Eliminations
The following table presents the corporate costs and intersegment eliminations (in millions):
|
| Three Months Ended March 31, |
| |||||||||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| % Change |
| ||||
Net sales |
| $ | (2.3 | ) |
| $ | (6.4 | ) |
| $ | 4.1 |
|
|
| -64.1 | % |
Cost of sales |
|
| 0.5 |
|
|
| (7.5 | ) |
|
| 8.0 |
|
|
| -106.7 | % |
Gross income |
|
| (2.8 | ) |
|
| 1.1 |
|
|
| (3.9 | ) |
|
| -354.5 | % |
Operating expenses |
|
| 31.5 |
|
|
| 42.5 |
|
|
| (11.0 | ) |
|
| -25.9 | % |
Operating income |
|
| (34.3 | ) |
|
| (41.4 | ) |
|
| 7.1 |
|
|
| -17.1 | % |
Corporate operating income increased 47.6% to $25.1 million, or 11.0% of sales, in the first quarter of fiscal 2018 compared to $17.0 million, or 7.3% of sales, in the first quarter of fiscal 2017. The increase in operating income in the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017 wasexpenses decreased primarily as a result of improved pricinglower incentive compensation costs ($86 million), lower healthcare costs ($4 million) and improved manufacturing performancelower share-based compensation costs ($53 million), offset in part by higher selling, general and administrative expenses ($3 million).
Liquidity and Capital Resources
The Company generates significant capital resources from operating activities, which is the expected primary source of funding for its operations. Otherthe Company. In addition to cash generated from operations, the Company had other sources of liquidity are available under the Revolving Credit Facility (as defined in “Liquidity”) and available cash and cash equivalents. At Decemberat March 31, 2017, the Company had2022, including $944.5 million of cash and cash equivalents of $379.1 million. In addition to cash and cash equivalents, the Company had $755.1$1,081.4 million of unused available capacity under the Revolving Credit Facility as of December 31, 2017.(as defined in “Liquidity”). Borrowings under the Revolving Credit Facility could, as discussed below, be limited by thea financial covenantscovenant contained in the Credit Agreement (as defined in “Liquidity”). These sources ofThe Company was in compliance with the financial covenant at March 31, 2022 and expects to remain in compliance with the financial covenant contained in the Credit Agreement for the foreseeable future.
The Company continues to actively monitor its liquidity are needed to fund the Company'sposition and working capital requirements, debt service requirements,needs and prioritizes capital expenditures dividendsrelated to capacity and share repurchases.strategic investments. The Company expectsremains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its fiscal 2018 U.S. funding needs without repatriating undistributed profits that are indefinitely reinvested outside the United States.
Financial Condition at DecemberMarch 31, 2017
The Company’s capitalization was as follows (in millions):
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Cash and cash equivalents |
| $ | 944.5 |
|
| $ | 995.7 |
|
Total debt |
|
| 594.4 |
|
|
| 819.0 |
|
Total shareholders’ equity |
|
| 2,968.0 |
|
|
| 3,076.4 |
|
Total capitalization (debt plus equity) |
|
| 3,562.4 |
|
|
| 3,895.4 |
|
Debt to total capitalization |
|
| 16.7 | % |
|
| 21.0 | % |
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Cash and cash equivalents | $ | 379.1 | $ | 447.0 | |||
Total debt | 833.1 | 830.9 | |||||
Total shareholders’ equity | 2,293.4 | 2,307.4 | |||||
Total capitalization (debt plus equity) | 3,126.5 | 3,138.3 | |||||
Debt to total capitalization | 26.6 | % | 26.5 | % |
28
The Company'sCompany’s ratio of debt to total capitalization of 26.6%16.7% at DecemberMarch 31, 20172022 remained within its targeted range. The Company’s goal is to maintain an investment-grade credit rating. The rating agencies periodically update the Company’s credit ratings as events or changes in economic conditions occur. At March 31, 2022, the long-term credit ratings assigned to the Company’s senior debt securities by the credit rating agencies engaged by the Company were as follows:
Rating Agency | Rating | |
Fitch Ratings | BBB- | |
Moody’s Investor Services, Inc. | Baa3 | |
Standards & Poor’s | BBB |
Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) increaseddecreased from 56 days at September 30, 2017 to 6546 days at December 31, 2017 primarily as a result of timing of payment on a large international order within the defense segment. Days2021 to 42 days at March 31, 2022. Likewise, days sales outstanding for segments other than the defenseDefense segment decreased slightly from 52 days at September 30, 2017 to 5053 days at December 31, 2017.2021 to 51 days at March 31, 2022. Consolidated inventory turns (defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) decreased slightlyincreased from 4.5 times at September 30, 2017 to 4.14.9 times at December 31, 2017.
Cash Flows
Operating Cash Flows
Operating activities generated $29.2$328.9 million of cash in the first three months of fiscal 20182022 compared to $83.8$326.8 million during the three months ended March 31, 2021. Lower net income during the first three months of fiscal 2022 was almost completely offset by improved working capital as a result of an increase in days payable outstanding. The Company expects to generate approximately $725 million of cash flows from operations in fiscal 2022.
Investing Cash Flows
Investing activities used cash of $40.1 million in the first three months of fiscal 2017. The decline in operating cash flow in2022 compared to $122.3 million during the first three months ended March 31, 2021. The Company used available cash to fund the acquisition of fiscal 2018 as compared toPratt Miller during the first three months ended March 31, 2021. Through March 31, 2022, the Company utilized $26.1 million for capital expenditures. The Company anticipates that it will spend $300 million on capital expenditures in fiscal 2022. The expected increase in capital spending in fiscal 2022 reflects the set-up of fiscal 2017 was primarily the result of timing of payments on an international defense contract.
Financing Cash Flows
Financing activities used cash of $18.2$337.9 million in the first three months of fiscal 20182022 compared to $22.0$5.7 million induring the first three months ended March 31, 2021. The increase in cash utilized for financing activities was due to the repayment of fiscal 2017. Capital spending, excluding equipment held for rental, of $18.7the Company’s $225 million in the first three months of fiscal 2018 reflectedterm loan and an increase in Common Stock repurchases under the authorization approved by the Company’s Board of $4.5 million compared to capital spending in the first three months of fiscal 2017.
29
Liquidity
Senior Secured Credit Agreement
On March 2014,23, 2022, the Company entered into ana Third Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement provides for (i) aan unsecured revolving credit facility (Revolving(the “Revolving Credit Facility)Facility”) that matures in March 20192027 with an initial maximum aggregate amount of availability of $600 million and (ii) a $400 million term loan due in quarterly principal installments of $5 million with a balloon payment of $310 million due at maturity in March 2019. In January 2015, the Revolving Credit Facility was increased to an aggregate maximum amount of $850 million. Refer to Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Credit Agreement.
Under the Credit Agreement, the Company mustis obligated to pay (i) an unused commitment fee ranging from 0.225%0.080% to 0.35%0.225% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.625%0.4375% to 2.00%1.500% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.
Covenant Compliance
The Credit Agreement contains various restrictions and covenants, including requirementsa requirement that the Company maintain a leverage ratio at certain financial ratios at prescribed levels, and restrictions, subject to certain exceptions, restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional subsidiary indebtedness dispose of assets,and consummate acquisitions and make investments in joint ventures and foreign subsidiaries.
Senior Notes
In February 2014,May 2018, the Company issued $250.0$300.0 million of 5.375%4.600% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”). In February 2020, the Company issued $300.0 million of 3.100% unsecured senior notes due March 1, 20222030 (the “2022“2030 Senior Notes”). In March 2015, at a discount of $1.2 million. The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company issued $250.0 million of 5.375% unsecured senior notes due March 1, 2025 (the “2025 Senior Notes”).and a trustee. The proceeds of both note issuances were used to repay existing outstanding notes of the Company.Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 20222028 Senior Notes and the 20252030 Senior Notes at any time for a premium after March 1, 2017 and March 1, 2020, respectively.
Refer to Note 7 of the Notes11 to Condensed Consolidated Financial Statements for additional information regarding the Company’s outstanding debt as of DecemberMarch 31, 2017.
Application of Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires the Company to make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. The Company's disclosures of critical accounting policies that the Company believes are most critical to the portrayal of its financial condition and results of operations are reported in itsItem 7 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2017 have not materially changed since that report was filed.
Critical Accounting Estimates
The Company'sCompany’s disclosures of critical accounting estimates in its Annual Report on Form 10-K for the year ended September 30, 20172021 have not materially changed since that report was filed.
New Accounting Standards
There are no significant impacts of the Notes to Condensed Consolidated Financial Statements for a discussion of the impactnew accounting standards on the Company’s Condensed Consolidated Financial StatementsStatements.
30
Customers and Backlog
Sales to the U.S. government comprised approximately 26%27% of the Company’s net sales in the first three months of fiscal 2018.ended March 31, 2022. No other single customer accounted for more than 10% of the Company’s net sales for this period. A significant portionsubstantial majority of the Company’s net sales are derived from the fulfillment of customer orders that are received prior to commencing production.
The Company’s backlog at DecemberMarch 31, 20172022 increased 21.0%88.4% to $4.79$12.70 billion compared to $6.74 billion at March 31, 2021. Access Equipment segment backlog increased 160.5% to $3.96 billion at DecemberMarch 31, 2016. Access equipment2022 compared to $1.52 billion at March 31, 2021 as the re-opening of economies coming out of the pandemic and elevated customer fleet ages drove higher demand. Defense segment backlog increased 165.3%76.6% to $1.58$6.19 billion at DecemberMarch 31, 20172022 compared to $594.3$3.50 billion at March 31, 2021 primarily due to the initial vehicle order from the USPS for the NGDV program. Fire & Emergency segment backlog increased 51.8% to $1.92 billion at March 31, 2022 compared to $1.27 billion at March 31, 2021 due to strong demand for fire trucks coming out of the COVID-19 pandemic. Although Fire & Emergency segment backlog remained strong, orders softened for ARFF vehicles due to the adverse impact of the COVID-19 pandemic on airport budgets. Commercial segment backlog increased 40.1% to $630.1 million at DecemberMarch 31, 2016 primarily2022 compared to $449.7 million at March 31, 2021 due to improved market conditions. The Company believes that improved rental market conditions have resulted in customers having greater confidence to place larger annual orders in fiscal 2018. The Company believes that in the past few fiscal years, some customers executed a more just-in time approach to orders due to their cautious view of the economy and the rental market. Defense segment backlog decreased 16.7% to $1.85 billion at December 31, 2017 compared to $2.23 billion at December 31, 2016 primarily due to performance on the large international contract for the delivery of M-ATVs. Fire & emergency segment backlog increased 9.3% to $985.1 million at December 31, 2017 compared to $901.1 million at December 31, 2016 due largely to improved demand for Pierce fire apparatus. Commercial segment backlog increased 57.5% to $373.9 million at December 31, 2017 compared to $237.4 million at December 31, 2016. Unit backlog for concrete mixers as of December 31, 2017 was up 23.5% due to a return to a more normal ordering pattern as compared to the atypical order pattern experienced in the prior year. Unit backlog for refuse collection vehicles as demand rebounded following the re-opening of December 31, 2017 was up 99.9% comparedeconomies and high demand for the Company’s new front-discharge concrete mixer. Global supply chain challenges and the associated delays in production are also leading to September 30, 2016 due to improved market conditions.
Reported backlog excludes purchase options and announced orders for which definitive contracts have not been executed. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Company’s future sales to the U.S. governmentDoD versus its sales to other customers. Approximately 15%52% of the Company’s DecemberMarch 31, 20172022 backlog is not expected to be filled in fiscal 2018.
Non-GAAP Financial Measures
The Company is forecasting operating income and earnings per share excluding items that affect comparability. When the Company forecasts operating income and earnings per share, excluding items, these are considered non-GAAP financial measures. The Company believes excluding the impact of these items is useful to investors to allow a more accurate comparison of the Company'sCompany’s operating performance to prior year results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company'sCompany’s results prepared in accordance with GAAP.
|
| Fiscal 2022 Expectations |
| |||||
|
| Low |
|
| High |
| ||
Earnings per share-diluted (GAAP) |
| $ | 4.75 |
|
| $ | 5.75 |
|
Charge for anti-hybrid tax on prior period income |
|
| 0.25 |
|
|
| 0.25 |
|
Adjusted earnings per share-diluted (non-GAAP) |
| $ | 5.00 |
|
| $ | 6.00 |
|
Fiscal 2018 Expectations | |||||||
Low | High | ||||||
Access equipment segment operating income margin (GAAP) | 9.95 | % | 10.50 | % | |||
Cost and inefficiencies related to restructuring actions | 0.80 | % | 0.75 | % | |||
Adjusted access equipment segment operating income margin (non-GAAP) | 10.75 | % | 11.25 | % | |||
Commercial segment operating income margin (GAAP) | 5.35 | % | 5.85 | % | |||
Restructuring-related costs | 0.40 | % | 0.40 | % | |||
Adjusted commercial segment operating income margin (non-GAAP) | 5.75 | % | 6.25 | % | |||
Consolidated operating income (GAAP) | $ | 520.0 | $ | 570.0 | |||
Cost and inefficiencies related to restructuring actions | 30.0 | 30.0 | |||||
Adjusted consolidated operating income (non-GAAP) | $ | 550.0 | $ | 600.0 | |||
Effective income tax rate (GAAP) | 21.8 | % | 21.8 | % | |||
Impact of costs and inefficiencies related to restructuring actions on the effective income tax rate | (0.1 | )% | (0.1 | )% | |||
Revaluation of net deferred tax liabilities | 5.1 | % | 4.7 | % | |||
Repatriation tax | (3.8 | )% | (3.4 | )% | |||
Adjusted effective income tax rate (non-GAAP) | 23.0 | % | 23.0 | % | |||
Earnings per share-diluted (GAAP) | $ | 4.75 | $ | 5.20 | |||
Cost and inefficiencies related to restructuring actions, net of tax | 0.33 | 0.33 | |||||
Revaluation of net deferred tax liabilities | (0.31 | ) | (0.31 | ) | |||
Repatriation tax | 0.23 | 0.23 | |||||
Adjusted earnings per share-diluted (non-GAAP) | $ | 5.00 | $ | 5.45 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company'sCompany’s quantitative and qualitative disclosures about market risk for changes in interest rates and commodity risk, which are incorporated by reference to Item 7A of the Company'sCompany’s Annual Report on Form 10-K for the year ended September 30, 2017,2021, have not materially changed since that report was filed.
31
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures.
In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as ofChanges in Internal Control over Financial Reporting.
There were no changes in theITEM 1. | LEGAL PROCEEDINGS |
None.
ITEM 1A. | RISK FACTORS |
The Company’s financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, which may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended September 30, 2017,2021, which have not materially changed.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Common Stock Repurchases
The following table sets forth information with respect to purchases of Common Stock made by the Company or on the Company'sCompany’s behalf during the first quarter of fiscal 2018:three months ended March 31, 2022:
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
|
| Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) |
| ||||
January 1 - January 31 |
|
| 251,991 |
|
| $ | 119.07 |
|
|
| 251,991 |
|
|
| 4,916,572 |
|
February 1 - February 28 |
|
| 221,116 |
|
| $ | 113.08 |
|
|
| 221,116 |
|
|
| 4,695,456 |
|
March 1 - March 31 |
|
| 278,202 |
|
| $ | 107.85 |
|
|
| 278,202 |
|
|
| 4,417,254 |
|
Total |
|
| 751,309 |
|
|
|
|
|
|
| 751,309 |
|
|
| 4,417,254 |
|
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | |||||||||
October 1 - October 31 | — | — | — | 7,512,574 | |||||||||
November 1 - November 30 | 748,000 | $ | 85.19 | 748,000 | 6,764,574 | ||||||||
December 1 - December 31 | — | — | — | 6,764,574 | |||||||||
Total | 748,000 | 748,000 | 6,764,574 |
(1) | |
In May 2019, the |
The Company intends to declare and pay dividends on a regular basis. However, the payment of future dividends is at the discretion of the Company’s Board of Directors and will depend upon, among other things, future earnings and cash flows, capital requirements, the Company’s general financial condition, general business conditions and other factors. In addition, the Company's credit agreement limits the amount of dividends and other distributions, including repurchases of shares of Common Stock, the Company may pay on or after March
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
33
ITEM 6. | EXHIBITS |
Exhibit No. | Description |
4.1 | |
10.1 | |
10.2 | |
10.3 | |
31.1 |
31.2 |
32.1 |
32.2 | |
101.INS | The instance document does not appear in the interactive data file because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document. |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OSHKOSH CORPORATION | |||
April 27, 2022 | By | /s/ John C. Pfeifer | |
John C. Pfeifer, President and Chief Executive Officer | |||
April 27, 2022 | By | /s/ Michael E. Pack | |
Michael E. Pack, Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||
April 27, 2022 | By | /s/ James C. Freeders | |
James C. Freeders, Senior Vice President Finance and Controller (Principal Accounting Officer) | |||
35