Dwindling Defense contracts clip earnings at Oshkosh Corp.

With the end of the Iraq War and the drawdown of troops in Afghanistan defense contractor Oshkosh Corp. today reported third quarter net income of $36.3 million, or 41 cents per share, down from $78.9 million, or 86 cents per share, in the same period a year ago.

Defense segment sales decreased 46.1 percent to $513.8 million for the fourth quarter of fiscal 2013 compared with the prior year fourth quarter. The decrease in sales was primarily due to an expected decline in sales to the U.S. Department of Defense (DoD) under the Company’s Family of Medium Tactical Vehicle and Family of Heavy Tactical Vehicle programs, as well as lower aftermarket parts sales.

“We delivered fourth quarter results that exceeded the high end of our most recently announced estimated earnings range, finishing up a year that significantly exceeded our initial expectations,” said Charles Szews, Oshkosh Corp. chief executive officer. “Continued strong demand for access equipment in North America and improved demand for concrete mixers in the U.S. partially offset a significant sales decline in our defense segment in the fourth quarter. The power of the company’s MOVE strategy was evident in fiscal 2013, as each non-defense segment – access equipment, fire & emergency and commercial – increased operating income margins over the prior year. We believe we are on track to achieve our fiscal 2015 earnings per share target range of $4.00 to $4.50.”

The company today introduced an initial outlook for fiscal 2014, with earnings expectations of $3.10 to $3.40 per share.

“Our performance in fiscal 2013, as well as the confidence we have in our business model, give us reason to believe that now is an appropriate time to reinstate a dividend. I’m pleased to say that our board of directors shares in that belief and today we are announcing a quarterly cash dividend of $0.15 per share payable on December 2 to shareholders of record on November 18,” Szews said.

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