Oshkosh Truck (NYSE: OSK) manufactures fire trucks, ambulances, cement trucks, tow trucks and cranes under the Oshkosh, Pierce, Jerr-Dan, MTM and other brand names. The company also produces medium duty (able to carry up to 7 tons off-road) and heavy duty (able to carry up to 13 tons off-road) trucks for the U.S. military and its allies.
In 2009, OSK incurred a net loss of $1.10 billion on revenues of $5.23 billion. The represents a continuing drop in profitability for the company, which generated only $79.3 million in net income on $1.18 billion in revenues during 2008.
Oshkosh added the Access Equipment segment in December 2006 when it purchased JLG for $3.2 billion. The segment manufactures aerial work platforms, scissor lifts and telehandlers (a mix between a cherry-picker and a forklift). Access Equipment also provides financing and rental purchasing programs to customers. The segment sells its products to industrial equipment dealers and rental companies. Oshkosh's Access Equipment products compete with similar products manufactured by companies like Genie Industries and small private companies.
The Defense segment manufactures proprietary, all-wheel drive trucks for the military applications. The segment's products include heavy payload trucks such as the HEMTT and medium payload trucks such as the MTVR. The Defense segment sells nearly all of its products to the U.S. Department of Defense and continued growth in the segment is driven mostly by the company's continued ability to win contracts with the U.S. Department of Defense. Oshkosh's defense products compete with similar products from companies like BAE Systems (BAESY) and International Military and Government LLC.
This segment primarily manufactures fire trucks based on custom and commercial chassis but also makes specialized fire trucks for airports (ARFF vehicles), ambulances and tow-trucks. The Fire & Emergency segment sells its products to federal and local municipalities world wide as well as airports, hospitals and towing companies around the world. Oshkosh's Fire & Emergency products compete with similar products from companies such as Federal Signal (FSS).
This segment manufactures garbage trucks and other waste collection vehicles for waste management companies and utilities. The Commercial segment also manufacturers front and rear discharge cement trucks as well as truck mounted cranes. In addition to manufacturing its products, the segment offers its customers financing services. The company sells its Commercial products to construction companies, waste management companies and industrial equipment rental companies through a network of distribution and service centers. Oshkosh's Commercial products compete with similar products manufactured by companies like Terex (TEX).
If the cost of purchasing raw materials increases Oshkosh's gross margin decreases. On the other hand if the cost of purchasing raw materials decreases, Oshkosh's gross margin increases. Oshkosh attempts to pass increases in the price of raw materials on to its customers, but often can't do so because of its contract structure.
In 2009, contracts with the U.S. Government Defense Department generated 27.1% of Oshkosh's total revenues. If Oshkosh were to lose one or more of it's government contracts due to budget cuts or failure to meet contractual obligations, they would find themselves losing as much as a quarter of their total revenue.