Oshkosh Corp. expects the military will slow its purchases of the Joint Light Tactical Vehicle in the coming years, but that total acquisition objectives will remain stable, executives said today during the company's quarterly earnings call.
"We do expect that JLTV volumes are going to be lower, and that will put downward pressure on defense revenues," said Mike Pack, Oshkosh's chief financial officer and executive vice president.
Officials from Oshkosh Defense, the subsidiary that builds the JLTV, said recently the company remains committed to the program even after the Army shrank the size of a follow-on contract.
“The JLTV program will go well into the 2040s,” Oshkosh CEO John Pfeifer said on the earnings call. “It’s a great base business, and then we build on top of that some of these other programs.”
Sales for the JLTV, the partial humvee replacement, are expected to fall under the military’s fiscal year 2022 budget, and the lower figures will likely continue in FY-23, Pfeifer said.
The Medium Caliber Weapon System, an unmanned turret and 30 mm cannon that Oshkosh will integrate onto the Stryker vehicle, will begin production in FY-22, and that should make up some of the future defense revenue drop from the JLTV, Pack said.
Supply chain concerns dominated most of the analyst questions on the earnings call, which executives said were concentrated in non-defense portions of the company’s business.
“We just completed a challenging quarter, and we expect those challenges to continue for the coming quarters,” Pfeifer said. The company has added hundreds of new suppliers to make its supply chain more robust, although executives did not say if the defense segment added suppliers.
Oshkosh’s net sales for the quarter ending Sept. 30 were $2.1 billion, a 16% increase from the same period a year earlier. Adjusted operating income fell 16%, to $104 million, due to supply chain constraints and higher material costs.
Sales in the defense segment grew by 5%, to $650 million. Adjusted operating income fell to $50 million, down 10% from a year earlier. Last year’s results did not include Pratt Miller, which Oshkosh Defense bought in December.