MOVING THE WORLD AT WORK Second Quarter Fiscal 2016 April 28, 2016 Wilson R. Jones President and Chief Executive Officer David M. Sagehorn Executive Vice President and Chief Financial Officer Patrick N. Davidson Vice President, Investor Relations Oshkosh Corporation (NYSE:OSK)
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MOVING THE WORLD AT WORK
Second Quarter Fiscal 2016April 28, 2016
Wilson R. JonesPresident and Chief Executive Officer
David M. SagehornExecutive Vice President and Chief Financial Officer
Patrick N. DavidsonVice President, Investor Relations
Oshkosh Corporation (NYSE:OSK)
MOVING THE WORLD AT WORK
Forward-Looking StatementsThis presentation contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s estimates of access equipment demand which, among other factors, is influenced by customer historical buying patterns and rental company fleet replacement strategies; the strength of the dollar and its impact on Company exports, translation of foreign sales and purchased materials; the expected level and timing of U.S. DoD and international defense customer procurement of products and services and funding or payments thereof; the Company’s ability to utilize material and components which it has committed to purchase from suppliers; higher material costs resulting from production variability due to uncertainty of timing of funding or payments from international defense customers; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy; the impact of any DoD solicitation for competition for future contracts to produce military vehicles, including a future FMTV production contract; the Company’s ability to increase prices to raise margins or offset higher input costs; increasing commodity and other raw material costs, particularly in a sustained economic recovery; risks related to facilities expansion,consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; global economic uncertainty, which could lead to additional impairment charges related to many of the Company’s intangible assets and/or a slower recovery in the Company’s cyclical businesses than Company or equity market expectations; projected adoption rates of work at height machinery in emerging markets; the impact of severe weather or natural disasters thatmay affect the Company, its suppliers or its customers; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’s products; risksrelated to production or shipment delays arising from quality or production issues; risks associated with international operations and sales, including compliance with the Foreign Corrupt Practices Act; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; cybersecurity risks and costs of defending against, mitigating and responding to a data security breach; and risks related to the Company’s ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors is contained in the Company’s filings with the Securities and Exchange Commission, including the Form 8-K filed today. All forward-looking statements speak only as of the date of this presentation. The Company assumes no obligation, and disclaims any obligation, to update information contained in this presentation. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.
April 28, 2016OSK Second Quarter 2016 Earnings Call 2
MOVING THE WORLD AT WORK
Q2 FY16
Q2 EPS of $0.76− Exceeded expectations (timing,
performance and tax) Higher sales, operating income
and operating income margin vs. prior year in all segments except access equipment
JLTV protest resolved Awarded international contract
for more than 1,000 M-ATVs Slight increase in full year EPS
outlook range to $2.30 to $2.70− Driven primarily by lower tax rate
and increased defense estimates
Net Sales(billions)
AdjustedEPS*
3
$1.5 $1.6
$0.76 $0.81
$0.00
$0.25
$0.50
$0.75
$1.00
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
FY16 FY15Net Sales Adjusted EPS*
* Non-GAAP results for FY15. See Appendix for reconciliation to GAAP results.
OSK Fiscal Q2 Performance
April 28, 2016OSK Second Quarter 2016 Earnings Call
MOVING THE WORLD AT WORK
Access Equipment Stronger than expected demand in Q2
− Believe largely timing
− Supportive of responsible level of fleet investment
Backlog supports second half of 2016 outlook
Positive sentiment at recent trade shows− BAUMA 2016
− ARA Rental Show
Mixed global market conditions continue
Inventory reduction in Q2; expected to continue in second half
Believe long-term trends continue to be positive− Construction growth
− Global product adoption
− New applications for access equipment
April 28, 2016OSK Second Quarter 2016 Earnings Call 4
MOVING THE WORLD AT WORK
Defense Defense segment outlook
continued to improve JLTV ramp up gaining momentum− Competitor protest actions withdrawn− Production ramp up expected to be
segment results Higher corporate expenses Higher defense, fire &
emergency and commercial segment results
Discrete tax items Lower share count
Q2 Comments
(Dollars in millions, except per share amounts)
Second Quarter
Net Sales $1,524.3 $1,554.2% Change (1.9)% (7.4)%
Operating Income $91.4 $109.7% Change (16.7)% (8.1)%% Margin 6.0% 7.1%
Adjusted EPS $0.76 $0.81*% Change (6.2)% 1.3%
2016 2015
* Non-GAAP results for 2015. See Appendix for reconciliation to GAAP results.
April 28, 2016OSK Second Quarter 2016 Earnings Call 8
MOVING THE WORLD AT WORK
Updated Expectations for FY16
Additional expectations Corporate expenses of $140 - $145 million Tax rate of ~ 30% CapEx of ~ $100 million Free Cash Flow* ~ $275 million Assumes share count of ~ 74.5 million
Segment information
Revenues of ~ $5.7 to $6.0 billion Operating income of $305 million to $345 million EPS of $2.30 to $2.70
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
9
Earnings weighted to second half Seasonality Cautious construction equipment customers Expect higher operating income margins compared
to first half in all segments, except defense segment Expect third quarter will be highest EPS quarter of
the year
Measure Access Equipment Defense Fire &
Emergency Commercial
Sales(billions) $2.8 to $2.95 $1.15 to $1.20 ~ $0.9 ~ $1.0
Operating Income Margin ~10.0% ~ 5.25% ~ 6.0% ~ 7.0%
April 28, 2016OSK Second Quarter 2016 Earnings Call
MOVING THE WORLD AT WORK
For informationcontact:
Patrick N. DavidsonVice President, Investor Relations(920) [email protected]
April 28, 2016OSK Second Quarter 2016 Earnings Call 10
MOVING THE WORLD AT WORK
Net Sales $754.3 $981.8% Change (23.2)% 13.4%
Operating Income $75.7 $136.9% Change (44.7)% 17.4%% Margin 10.0% 13.9%
Second Quarter
(Dollars in millions)
2016 2015
Appendix: Access Equipment
Sales impacted by: Lower North American volume,
primarily telehandlers
Operating income impacted by: Lower sales volume Challenging pricing Prior year favorable vendor
recovery Unfavorable absorption Lower spending on emissions
standards changes
Backlog up 2% vs. prior year to $665 million
Q2 Comments
April 28, 2016OSK Second Quarter 2016 Earnings Call 11
MOVING THE WORLD AT WORK
Appendix: Defense
Sales impacted by: FHTV sales International M-ATV sales
Operating income impacted by: Higher sales volume Favorable product mix
Backlog up 193% vs. prior year to $1.68 billion*
Q2 Comments
Net Sales $297.0 $158.7% Change 87.1% (67.2)%
Operating Income / (Loss) $27.8 $(12.0)
% Change 333.0% (134.6)%% Margin 9.4% (7.5)%
Second Quarter
(Dollars in millions)
2016 2015
April 28, 2016OSK Second Quarter 2016 Earnings Call 12
* Recently received international contract for more than 1,000 M-ATVs excluded from defense segment March 31, 2016 backlog
MOVING THE WORLD AT WORK
Net Sales $240.4 $202.9% Change 18.5% 30.0%
Operating Income $14.9 $9.0% Change 66.0% 750.1%% Margin 6.2% 4.4%
Second Quarter
(Dollars in millions)
2016 2015
Appendix: Fire & Emergency
Sales impacted by: Higher fire apparatus volume
Operating income impacted by: Higher sales volume Improved operational efficiencies
Backlog up 26% vs. prior year to $903 million
Q2 Comments
April 28, 2016OSK Second Quarter 2016 Earnings Call 13
MOVING THE WORLD AT WORK
Appendix: Commercial
Sales impacted by: Higher RCV volume
Operating income impacted by: Improved product mix Higher sales volume
Backlog down 1% vs. prior year to $289 million
Q2 Comments
Net Sales $236.7 $220.9% Change 7.1% 21.2%
Operating Income $17.2 $8.6% Change 99.0% 59.9%% Margin 7.3% 3.9%
Second Quarter
(Dollars in millions)
2016 2015
April 28, 2016OSK Second Quarter 2016 Earnings Call 14
MOVING THE WORLD AT WORK
Appendix: Commonly Used Acronyms
15April 28, 2016OSK Second Quarter 2016 Earnings Call
ARFF Aircraft Rescue and Firefighting MRAP Mine Resistant Ambush ProtectedAWP Aerial Work Platform MSVS Medium Support Vehicle System (Canada)CapEx Capital Expenditures NOL Net Operating LossCNG Compressed Natural Gas NPD New Product DevelopmentDGE Diesel Gallon Equivalent NRC National Rental CompanyDoD Department of Defense OCO Overseas Contingency OperationsEAME Europe, Africa & Middle East OH OverheadEMD Engineering & Manufacturing Development OI Operating IncomeEPS Diluted Earnings Per Share OOS Oshkosh Operating SystemFHTV Family of Heavy Tactical Vehicles OPEB Other Post-Employment BenefitsFMS Foreign Military Sales PLS Palletized Load SystemFMTV Family of Medium Tactical Vehicles PUC Pierce Ultimate ConfigurationGAAP U.S. Generally Accepted Accounting Principles R&D Research & DevelopmentGAO Government Accountability Office RCV Refuse Collection VehicleHEMTT Heavy Expanded Mobility Tactical Truck RFP Request for ProposalHET Heavy Equipment Transporter ROW Rest of WorldHMMWV High Mobility Multi-Purpose Wheeled Vehicle SMP Standard Military Pattern (Canadian MSVS)IRC Independent Rental Company TACOM Tank-automotive and Armaments CommandIT Information Technology TDP Technical Data PackageJLTV Joint Light Tactical Vehicle TPV Tactical Protector VehicleJPO Joint Program Office TWV Tactical Wheeled VehicleJROC Joint Requirements Oversight Council UCA Undefinitized Contract ActionJUONS Joint Urgent Operational Needs Statement UIK Underbody Improvement Kit (for M-ATV)L-ATV Light Combat Tactical All-Terrain Vehicle UK United KingdomLVSR Logistic Vehicle System Replacement ZR Zero Radius
M-ATV MRAP All-Terrain Vehicle
MOVING THE WORLD AT WORK
April 28, 2016OSK Second Quarter 2016 Earnings Call 16
Appendix: Non-GAAP to GAAP Reconciliation
• The table below presents a reconciliation of the Company’s presented non-GAAP measures to the most directly comparable GAAP measures (in millions, except per share amounts):
Three Months EndedMarch 31, 2015
Adjusted earnings per share-diluted (non-GAAP) 0.81$ Debt extinguishment costs, net of tax (0.12)
Earnings per share-diluted (GAAP) 0.69$
Fiscal 2016Expectations
Net cash flows provided by operating activities 375.0$ Additions to property, plant and equipment (100.0) Free cash flow 275.0$