Oshkosh (NYSE:OSK) closed -10.8% in Friday’s trading in its biggest single day decline since 2014 after the unexpected loss of an $8.6B U.S. Army contract.
The Army awarded competitor AM General the contract to build more than 20K joint light tactical vehicles and nearly 10K trailers spanning five base years plus five one-year optional periods.
AM General had lost to Oshkosh (OSK) in the original 2015 competition to build the JLTV, replacing some of the aging Humvee fleet.
Oshkosh (OSK) has built nearly 19K JLTVs to date, supplying them to all four U.S. service branches as well as armies in Montenegro, Brazil, Slovenia and Lithuania.
Jefferies analyst Stephen Volkmann estimates the loss of the JLTV contract will knock $1B off potential annual revenues starting in 2025, “or half of OSK’s Defense segment and ~12% of our [estimated] 2023 total revenues,” according to Bloomberg.
Oshkosh (OSK) already was struggling with multiple operational challenges, leading to weak on-time deliveries and lower than expected earnings, Stephen Simpson writes in an analysis newly published on Seeking Alpha.