02.08.2010

Strong pick up at JLG

JLG and its owner Oshkosh have reported nine month results that show a strong pick up in activity.

JLG saw its revenues almost triple to $2.4 billion, although a good deal of this is down to the intercompany subcontract work that it is doing for Oshkosh’s major defence contracts. Operating income also showed strong growth with a profit of $91 million compared to a loss in the same period last year of $1.6 million.

In the third quarter to the end of June the pick-up continued, but more encouraging was the improvement in the regular access related business. Sales were $690 million almost 330 percent up on the same quarter in 2009. Access sales jumped 77 percent to $374 million with most of the growth coming in North and South America although the company says that positive numbers were posted by all of its geographic regions.

Operating income for the quarter was $31.6 million compared to a loss last year of $71.2 million. The result was boosted by the higher access sales, higher volumes of the lower margin subcontract business and lower material costs.

The company’s access related order book at the end of the period was also up over 60 percent to $186.5 million.

The Oshkosh Group as a whole had a stellar quarter boosting nine month revenues to $7.7 billion, more than double last years levels. At the same time pre- tax profits jumped from a loss of $1.2 billion last year to a profit of just over a $ billion this year.
Revenue in the third quarter were double those of last year at $2.4 billion while pre-tax profits were $298 million, compared to a loss of $19.4 million in the same quarter of 2009.

Oshkosh chief executive Robert Bohn said: "Our dedicated and committed employees worked hard to deliver third quarter records for revenue, operating income and EPS, led once again by strong performance in our defense segment. We further improved our balance sheet during the quarter with debt reduction of $175 million. Over the past two years we have retired $1.5 billion of debt as a result of strong free cash flow and $358 million of proceeds from a stock offering. Debt reduction will remain the primary use for free cash flow by Oshkosh for the near term.”

"This quarter, we commenced low rate production of access equipment in our newly constructed Tianjin, China facility. We expect to gradually ramp up production in this facility over the next 12 months to serve Asian markets as access equipment becomes accepted as a productivity and safety tool for construction and industrial markets in this region.”

"As we enter our fourth quarter, we expect another strong quarterly performance to close what we expect will be a stellar year for Oshkosh in terms of sales and earnings. Looking forward to fiscal 2011, we expect that our defense segment performance will provide a solid foundation to what we anticipate will be a gradual economic recovery, although we will not attain defense segment revenue levels that we saw this year, because we will have completed the bulk of our M-ATV shipments in fiscal 2010.”

“We believe that our non-defense businesses will generally achieve higher revenues in fiscal 2011, as the economy improves. Fiscal 2011 will also be a year in which we continue our focus on improving both our operations and our customers' experiences with our Company.”

Vertikal Comment

This is very encouraging news from JLG with both higher access shipments and an even higher rate of order intake. It seems on the surface that the company could well be outperforming its two main rivals, at least based on the latest quarter.

If this is so, it may be down to strong telehandler growth in the Americas where the company has a very strong market share. Telehandler sales tend to lead access equipment in a pick-up and would explain the stronger improvement compared to those companies that are more dependent on aerial lift sales in the region?

Either way such positive news is good and with the Oshkosh sub-contract business likely to be winding down from here on out – necessary if JLG is to keep its head above water in the short term as the recovery gathers steam.