Oshkosh sees Q4 profit at or above forecast - Update

(RTTNews) - Specialty vehicle manufacturer Oshkosh Corp. (OSK | Quote | Chart | News | PowerRating) said Friday that it expects earnings for the fourth quarter to be at or above the higher end of its previously announced guidance range due to reductions in workforce and reduced discretionary spending. The company also expects debt at the end of the fourth quarter to be lower than expected on account of strong cash flow from earnings and working capital initiatives. Following the announcement, shares of the company are up 14% in the regular trading session.

The Oshkosh, Wisconsin-based company, while reporting its financial results for the third quarter in August, had forecast earnings for the fourth quarter in a range of $0.50-$0.65 per share. On average, ten analysts polled by First Call/Thomson Financial currently expect the company to report earnings for the quarter of $0.59 per share. However, earnings for the quarter represent a sharp drop from earnings of $1.14 per share reported by the company in the same period last year.

Oshkosh noted that during the last several months, it has improved its cost structure by reducing its workforce by 10% and lowering discretionary spending. In addition, the company has reduced its working capital by selling excess inventory and rationalizing production. The company expects these actions to enable it to remain competitive in fiscal 2009.

Oshkosh now expects to reduce its debt to $2.80-$2.85 billion at September 30, 2008 compared to its prior expectations of debt of $2.85-$2.90 billion.

Robert Bohn, chairman and chief executive officer of Oshkosh Corp. said, "Our ability to generate strong cash flow from earnings and working capital initiatives has driven better than anticipated debt reduction in the fourth quarter, and we expect to exit fiscal year 2008 with debt in the range of $2.80 billion - $2.85 billion."

Bohn added that with expectations of a defense business that will grow and a sharper focus on cash flow generation, the company expects to drive significant cash flow and debt reduction in fiscal 2009 despite challenging market condition and exit the year with a stronger balance sheet.

Oshkosh expects to release its financial results for the fourth quarter and fiscal year 2008 on November 3, 2008 and plans to discuss its expectations for fiscal 2009 at that time.

In August, Oshkosh reported a loss for the third quarter of $84.3 million, or $1.14 per share, compared to net income of $90.6 million, or $1.21 per share, in the year-ago quarter, hurt by charges related to the non-cash impairment of intangible assets. The company recorded pre-tax charges of $175.2 million, or $2.33 per share, related to a non-cash impairment of intangible assets of the Geesink Norba Group. Net sales for the quarter increased 6.4% to $1.97 billion from $1.85 billion in the prior-year quarter, exceeding analysts' consensus revenue estimate of $1.89 billion.

At that time, the company lowered its earnings outlook, excluding impairment charges, for fiscal 2008 to a range of $3.15-$3.30 per share from the prior range of $4.15-$4.35 per share. Analysts currently expect earnings of $3.26 per share for the year.

Earlier this month, the company's peer, Terex Corp. (TEX | Quote | Chart | News | PowerRating) cut its earnings forecast for fiscal year 2008 citing soft market conditions and rising input costs in aerial work platforms and construction segments in Western Europe and the U.S. The company lowered its earnings outlook for fiscal 2008 to a range of $6.35-46.65 per share from the prior range of $6.85-$7.15 per share. The company also lowered its net sales outlook for the full year to a range of $10.2 billion-$10.6 billion from the prior range of $10.5 billion-$10.9 billion.

In Friday's regular trading session, OSK is trading at $10.95, up $1.39 or 14.54% on a volume of 4.47 million shares. The stock has been trading in a range of $9.05-$63.55 in the past 52 weeks.

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