Tuesday, June 30, 2009

Enormous contract win for Oshkosh(OSK)

AlphaNinja - After hours, there are tears of joy and tears of happiness among MRAP (Mine-Resistant-Ambush-Protected) vehicle manufacturers.

Oshkosh Corp (OSK) was just awarded a $1.05billion dollar contract to supply its M-ATV to US Soldiers and Marines. To put that in perspective, it's 17% of this year's total expected sales.

As Oshkosh trades up 24% after hours this afternoon/evening, Force Protection (FRPT) and Navistar (NAV) are trading off 24% and 9% respectively.

One person who must be disappointed is James McIlree of Collins Stewart, who saw Force Protection as the lead candidate. Well he's right about the (at least) few dollars of downside...

"We continue to believe the risk/reward for Force looks attractive as a win could propel the stock into the mid-teens, while a loss could result in downside of a few dollars per share," McIlree said.

From Navistar's conciliatory press release:

WARRENVILLE, Ill.--(BUSINESS WIRE)--Navistar Defense, LLC today announced that it will continue to grow its business even though it was not selected to produce vehicles for the U.S. Army’s Mine Resistant Ambush Protected (MRAP) All Terrain Vehicle (M-ATV) program.

Navistar offers a unique value proposition of great manufacturing, engineering and sustainment capability,” said Archie Massicotte, president, Navistar Defense. “While we recognize we can’t win every new program, if it has a diesel engine and wheels, we will pursue it.”

And Oshkosh's more upbeat release - they're almost overwhelmed, and may need help from the other manufacturers...

“We are proud that Oshkosh was chosen to provide its M-ATV offering to the U.S. Armed Forces. Our M-ATV design combines the crew protection warfighters have come to expect in MRAP vehicles with the extreme mobility and durability needed to negotiate Afghanistan’s mountainous off-road terrain,” said Robert G. Bohn, Oshkosh Corporation chairman and chief executive officer.

“Due to the urgent need of our Armed Forces for a survivable and highly mobile vehicle, our Corporation’s number one priority is meeting the Department’s accelerated delivery schedule of the Oshkosh M-ATV. Oshkosh Corporation will put whatever resources are necessary to meet or exceed the government’s delivery schedule. While we believe we can meet or exceed the government’s current delivery requirements, we intend to enter into discussions with other manufacturers to determine if they can assist in the production of the Oshkosh M-ATV.”

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