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Oshkosh Corporation (NYSE:OSK)Baird’s 2017 Global Industrial Conference
NOVEMBER 8, 2017
Dave SagehornExecutive Vice President & CFO
Patrick DavidsonSr. Vice President, Investor Relations
November 8, 2017Baird's 2017 Global Industrial Conference 2
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 presentation, 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 U.S. dollar and its impact on Company exports, translation of foreign sales and purchased materials; the expected level and timing of U.S. Department of Defense (DoD) and international defense customer procurement of products and services and acceptance of and funding or payments for such products and services; 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 Family of Medium Tactical Vehicles 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; projected adoption rates of work at height machinery in emerging markets; the impact of severe weather or natural disasters that may 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; 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 data security threats and breaches; 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 October 31, 2017. All forward-looking statements speak only as of October 31, 2017. 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.
3
A different integrated global industrial
MOVE – Evolving to deliver more valuePositioned for long-term
success
Oshkosh Corporation Key Messages
November 8, 2017Baird's 2017 Global Industrial Conference
Leading provider of specialty vehicles Celebrating 100 years
in 2017
A different integrated global industrial
Focused on delivering value to customers and shareholders
Serial innovator of game-changing new products
ACCESS EQUIPMENT DEFENSE FIRE & EMERGENCY COMMERCIAL
Build. Serve. Defend. Protect.
November 8, 2017Baird's 2017 Global Industrial Conference 4
Oshkosh Corporation Profile - FY17
5
44%Access Equipment
27%Defense
15%Fire &
Emergency
14%Commercial
Revenue by Segment
74%United States
3%Other NA
17%EMEA
6%Rest of World
Revenue by Geography
November 8, 2017Baird's 2017 Global Industrial Conference
FY17 global revenue of $6.8 billionacross four segments
Integrated approach drives opportunity/efficiency across enterprise
Fire Apparatus
6
Concrete Mixers/Batch Plants
#1
Military Tactical Wheeled Vehicles
Airport Products (ARFF/Snow Removal)
Aerial Work Platforms/Telehandlers
Refuse Collection Vehicles
Broad Industry Leadership
Strong Brands Value Creation
Wreckers & Carriers
(1) Company estimates
NORTH AMERICA RANK (1)
#1
#1
#1
#1
#2
GLOBAL RANK (1)
Baird's 2017 Global Industrial Conference November 8, 2017
#1
Leveraging Our Unique Position
7
Diverse End Markets
Integrated Operations
November 8, 2017Baird's 2017 Global Industrial Conference
Take Advantage of Opportunities Unavailable to Many Companies
8
Grow profitably by maintaining intense focus on customer experience
Optimize our costs and capital structure to provide value for customers and shareholders - Simplify
Lead in innovation over the product life cycle
Drive international growth in targeted geographies
Evolving to Deliver More Value
November 8, 2017Baird's 2017 Global Industrial Conference
9November 8, 2017Baird's 2017 Global Industrial Conference
People First Culture
Maturing the concept
Driving better results
Engage. Develop. Connect.
OSK Full Year Performance
Strong Performance During 100th Year
Access equipment, defense and fire & emergency segments all achieved full year adjusted operating income* margin ≥10%
People First culture maturing Focus on simplifying our
businesses 4th consecutive year of
increasing dividends; goal of raising annually
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
10November 8, 2017Baird's 2017 Global Industrial Conference
Net Sales(billions) Adjusted EPS*
$3.14
$4.25
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
FY16 FY17
$6.3$6.8
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
FY16 FY17
Strong close to FY17 – full year results higher than originally expected
Customer sentiment and demand remain solid in North America‒ Rental company fleet metrics
support positive outlook Generally positive U.S.
construction trends Positive outlook for international
markets in FY18 Restructuring activities on track to
achieve targeted improvements Expect to grow in FY18
November 8, 2017Baird's 2017 Global Industrial Conference 11
Access EquipmentRecent Highlights
Defense Recent Highlights Strong full-year results driven by
JLTV ramp and international M-ATV shipments
JLTV program on track‒ Pleased with results during government
testing and evaluation activities − International interest is growing
Strong backlog supports FY18 outlook FMTV recompete winner expected to
be announced in Q2 FY18
U.S. operating under Continuing Resolution− Not expected to impact segment in
FY18, but FY19 could be impacted if budget delays persist
November 8, 2017Baird's 2017 Global Industrial Conference 12
Joint Light Tactical Vehicle (JLTV)U.S. JLTV Production Contract Overview
~$6.7 billion initial announced value Base award plus 8 order years Program scope includes:
– 4 Mission Package Configurations– Mission Kits– Interim Contractor Support (ICS)– Total Package Fielding (TPF)– System Technical Support (STS)– Technical Data Package
Quantity: 18,000+ vehicles(1)
– Vehicle deliveries expected through 2024
November 8, 2017Baird's 2017 Global Industrial Conference 13
Utility
2 D
oor
4 D
oor
General Purpose Close Combat Weapons Carrier
Heavy Guns Carrier Future Variants
(1) Source: FY17 U.S. President’s Budget
U.S. JLTV Program Schedule
November 8, 2017Baird's 2017 Global Industrial Conference 14
FY18 President’s Budget Funding Request
OrderQuantity
Expected SalesQuantity
FY16 804 ---
FY17(3) 2,020 ~600 to 650
FY18(4) 2,637 ~1,500 to 2,000
FY19(4) 4,737 ~3,000
FY20(4) 5,190 ~4,500
FY21(4) 3,838 ~5,000
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Deliveries& Testing
Armor Coupon Testing
Ballistic Testing
LRIP(1) YR 1 LRIP YR 2 LRIP YR 3
FRP(2) YR 1
Performance, Reliability & Live Fire Testing
Full Rate Production Milestone
Delivering unprecedented performance. On-time. On-budget.(1) Low Rate Initial Production(2) Full Rate Production(3) Actual(4) FY18-FY21 Order Quantity values based on FY18 President's Budget Request
FRP YR 2
Army First Unit Equipped
Marine Corps Fielding Decision
Global Light TWV Market PotentialToday’s HMMWV Installed Base(1)
240,000 HMMWVs
60 countries
30+ configurations
The Oshkosh JLTV Will Shape the History of Light Military Vehicles
53%47%
Armor CapableHMMWVUnarmoredHMMWV
JLTV is Next-Generation Protected Mobility for the Modern Battlefield
HMMWVJeep JLTV
(1) Source: Government publications, IHS Jane’s, SIPRI, AM General Website
November 8, 2017Baird's 2017 Global Industrial Conference 15
Achieved >10% full year operating income margin− Earlier than anticipated − Disciplined commitment to
simplification U.S. fire apparatus market stable in
FY17 compared to FY16− Aging fleets and solid municipal tax
receipts support positive outlook Solid Q4 international contribution
and positive outlook − China 5-yr Plan targets 260
international airports by 2020
November 8, 2017Baird's 2017 Global Industrial Conference 16
Fire & Emergency Recent Highlights
17
Housing prices and local property taxes have continued to recover
Aging fleets coupled with improving state and local tax receipts have led to steady growth in municipal demand
Domestic Fire Truck Market Drivers Gaining Momentum
Baird's 2017 Global Industrial Conference November 8, 2017
Increasing Home Prices and Property Taxes
1990 1995 2000 2005 2010 2015
Data through June 2017
$ Billions
Q4 results in line with expectations Committed to improved performance− Driving lasting change through
simplification activities− Time needed to translate into
meaningfully better financial results
U.S. RCV market grew in FY17− Now above pre-recession levels
U.S. concrete mixer market remains well below pre-recession levels− Fleets continue to age
Positive longer-term market outlook
November 8, 2017Baird's 2017 Global Industrial Conference 18
Commercial Recent Highlights
19
Revenues of $6.9 to $7.1 billion
Adjusted operating income* of $515 million to $565 million
Adjusted EPS* of $4.25 to $4.65
Additional expectations Corporate expenses of ~$150 million Adjusted tax rate* of ~30.5% CapEx of ~$100 million Free Cash Flow* of ~$350 million Assumes share count of ~76.0 million
Segment information
Measure Access Equipment Defense Fire &
Emergency Commercial
Sales(billions) $3.1 - $3.2 ~ $1.8 – $1.85 ~ $1.1 $0.95 - $0.975
Adj. Operating Income Margin 10.5% - 11.0%* 9.5% - 9.75% 10.5% - 11.0% 5.75% - 6.25%
Baird's 2017 Global Industrial Conference November 8, 2017
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Q1 Commentary Expect higher yr/yr sales and adjusted
earnings driven by defense segment Higher access equipment segment sales;
incremental margins impacted by higher material costs
FY18 Estimates – Growth Continues
Positive Long-term OutlookConvergence of favorable market dynamics and benefits of MOVE position OSK to deliver strong results
20November 8, 2017Baird's 2017 Global Industrial Conference
Favorable market dynamics‒ JLTV provides multi-year visibility
for Defense‒ Access Equipment replacement
demand opportunities‒ Fleet ages help to drive Fire &
Emergency and Commercial Segment demand
MOVE strategy drives results
Expected strong free cash flow over the cycle provides capital allocation alternatives
Expect revenue and operatingincome margin growth to continue
A Different Integrated Global Industrial Company
For informationcontact:
Patrick N. DavidsonSr. Vice President, Investor Relations(920) [email protected]
Jeffrey D. WattDirector, Investor Relations(920) [email protected]
Appendix: Consolidated Results
Comments
(Dollars in millions, except per share amounts)
Full Year
Net Sales $6,829.6 $6,279.2% Change 8.8% 3.0%
Adjusted OperatingIncome* $506.3 $391.8
% Change 29.2% (1.6)%% Margin 7.4% 6.2%
Adjusted EPS* $4.25 $3.14% Change 35.4% 4.0%
2017 2016
November 8, 2017Baird's 2017 Global Industrial Conference 22
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Sales impacted by:+ Higher sales in defense and
fire & emergency
Adjusted EPS* impacted by:+ Higher defense, fire &
emergency and access equipment segment operating income
+ Lower tax rate− Lower commercial segment
operating income
Appendix: Access Equipment
November 8, 2017Baird's 2017 Global Industrial Conference 23
Net Sales $3,026.4 $3,012.4% Change 0.5% (11.4)%
Adjusted Operating Income* $302.4 $291.2
% Change 3.8% (28.9)%% Margin 10.0% 9.7%
Full Year2017 2016
(Dollars in millions)
Sales impacted by:+ Higher AWP volume− Lower telehandler volume
Adjusted operating income* impacted by:+ Improved absorption+ Favorable mix‒ Higher incentive compensation
Backlog up 152.2% vs. prior year to $452 million
Comments
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Appendix: Defense
Net Sales $1,820.1 $1,351.1% Change 34.7% 43.8%
Operating Income $207.9 $122.5% Change 69.7% 1,983.1%% Margin 11.4% 9.1%
Full Year
(Dollars in millions)
2017 2016
November 8, 2017Baird's 2017 Global Industrial Conference 24
Sales impacted by:+ Ramp-up of JLTV program+ M-ATV international sales+ FHTV sales
Operating income impacted by:+ Higher sales volume‒ Higher SG&A
Backlog down 10.6% vs. prior year to $2.1 billion
Comments
Appendix: Fire & Emergency
Sales impacted by:+ Improved pricing+ Higher content units+ Increased volume
Operating income impacted by:+ Improved pricing
Backlog up 9.2% vs. prior year to $932 million
November 8, 2017Baird's 2017 Global Industrial Conference 25
Net Sales $1,030.9 $953.3% Change 8.1% 16.9%
Operating Income $104.2 $67.0% Change 55.5% 53.1%% Margin 10.1% 7.0%
Full Year2017 2016
(Dollars in millions)
Comments
Appendix: Commercial
November 8, 2017Baird's 2017 Global Industrial Conference 26
Net Sales $970.3 $979.2% Change (0.9)% 0.1%
Operating Income $43.8 $67.6% Change (35.2)% 4.8%% Margin 4.5% 6.9%
Full Year2017 2016
(Dollars in millions)
Sales impacted by:‒ Lower RCV volume+ Higher package sales+ Higher concrete mixer volume
Operating income impacted by:− Lower sales volume− Operational inefficiencies
Backlog up 85.2% vs. prior year to $321 million
Comments
November 8, 2017Baird's 2017 Global Industrial Conference 27
Appendix: Non-GAAP to GAAP Reconciliation
• The table below presents a reconciliation of the Company’s presented non-GAAP measures to the most directly comparable GAAP measures (in millions, except per share amounts):
2017 2016
Adjusted earnings per share-diluted (non-GAAP) 4.25$ 3.14$ Long-lived asset impairment charge, net of tax - (0.22) Restructuring-related costs, net of tax (0.48) (0.01) Earnings per share-diluted (GAAP) 3.77$ 2.91$
Adjusted consolidated operating income (non-GAAP) 506.3$ 391.8$ Long-lived asset impairment charge - (26.9) Restructuring-related costs (43.3) (0.9) Consolidated operating income (GAAP) 463.0$ 364.0$
Adjusted access equipment segment operating income (non-GAAP) 302.4$ 291.2$ Long-lived asset impairment charge - (26.9) Restructuring-related costs (43.3) (0.9) Access equipment segment operating income (GAAP) 259.1$ 263.4$
Fiscal Year EndedSeptember 30,
November 8, 2017Baird's 2017 Global Industrial Conference 28
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):
Low High
Adjusted earnings per share-diluted (non-GAAP) 4.25$ 4.65$ Restructuring-related costs, net of tax (0.05) (0.05) Earnings per share-diluted (GAAP) 4.20$ 4.60$
Adjusted consolidated operating income (non-GAAP) 515.0$ 565.0$ Restructuring-related costs (5.0) (5.0) Consolidated operating income (GAAP) 510.0$ 560.0$
Adjusted access equipment operating income margin (Non-GAAP) 10.5% 11.0%Restructuring-related costs (0.2%) (0.2%)Access equipment operating income margin (GAAP) 10.3% 10.8%
September 30, 2018 ExpectationsFiscal Year Ended
November 8, 2017Baird's 2017 Global Industrial Conference 29
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):
Fiscal 2018Expectations
Net cash flows provided by operating activities 450.0$ Additions to property, plant and equipment (100.0) Free cash flow 350.0$
Adjusted effective income tax rate (Non-GAAP) 30.5%Impact of restructuring-related costs on effective income tax rate (0.2%)Effective income tax rate (GAAP) 30.3%
Appendix: Commonly Used Acronyms
30November 8, 2017Baird's 2017 Global Industrial Conference
ARFF Aircraft Rescue and Firefighting LVSR Logistic Vehicle System ReplacementAWP Aerial Work Platform M-ATV MRAP All-Terrain VehicleAMPS Aftermarket Parts & Service MRAP Mine Resistant Ambush ProtectedCapEx Capital Expenditures MSVS Medium Support Vehicle System (Canada)CNG Compressed Natural Gas NOL Net Operating LossDGE Diesel Gallon Equivalent NPD New Product DevelopmentDoD Department of Defense NRC National Rental CompanyEMD Engineering & Manufacturing Development OCO Overseas Contingency OperationsEMEA Europe, Middle East & Africa OH OverheadEPS Diluted Earnings Per Share OI Operating IncomeFAST Act Fixing America’s Surface Transportation Act OOS Oshkosh Operating SystemFDIC Fire Department Instructors Conference OPEB Other Post-Employment BenefitsFHTV Family of Heavy Tactical Vehicles PLS Palletized Load SystemFMS Foreign Military Sales PUC Pierce Ultimate ConfigurationFMTV Family of Medium Tactical Vehicles R&D Research & DevelopmentGAAP U.S. Generally Accepted Accounting Principles RCV Refuse Collection VehicleGAO Government Accountability Office RFP Request for ProposalHEMTT Heavy Expanded Mobility Tactical Truck ROW Rest of WorldHET Heavy Equipment Transporter SMP Standard Military Pattern (Canadian MSVS)HMMWV High Mobility Multi-Purpose Wheeled Vehicle TACOM Tank-automotive and Armaments CommandIRC Independent Rental Company TDP Technical Data PackageIT Information Technology TPV Tactical Protector VehicleJLTV Joint Light Tactical Vehicle TWV Tactical Wheeled VehicleJPO Joint Program Office UCA Undefinitized Contract ActionJROC Joint Requirements Oversight Council UIK Underbody Improvement Kit (for M-ATV)JUONS Joint Urgent Operational Needs Statement UK United KingdomL-ATV Light Combat Tactical All-Terrain Vehicle ZR Zero Radius
LRIP Low Rate Initial Production