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MOVING THE WORLD AT WORK
Fourth Quarter Fiscal 2017October 31, 2017
Wilson R. JonesPresident and Chief Executive Officer
David M. SagehornExecutive Vice President and Chief Financial Officer
Patrick N. DavidsonSenior Vice President, Investor Relations
Oshkosh Corporation (NYSE:OSK)
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 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.
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 2
Q4 Drove Strong Finish to FY17
Q4 adjusted EPS* of $1.38
Q4 results exceeded expectations
Sales growth in all four segments
Higher backlogs in allnon-defense segments
Announced 14% dividend increase effective November 16
Net Sales(billions) Adjusted EPS*
3
OSK Fiscal Q4 Performance
October 31, 2017OSK Fourth Quarter 2017 Earnings Call
$1.05
$1.38
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
FY16 FY17
$1.76$1.96
$0.0$0.2$0.4$0.6$0.8$1.0$1.2$1.4$1.6$1.8$2.0$2.2$2.4
FY16 FY17
* Non-GAAP results. See appendix for reconciliation to GAAP results.
OSK Full Year Performance
Impressive 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 Announcing full year FY18
adjusted EPS* estimate range of $4.25 to $4.65
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
4October 31, 2017OSK Fourth Quarter 2017 Earnings Call
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
Access Equipment
Strong close to FY17 – full year results higher than expected
Customer sentiment and demand remain solid in North America− 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 Expecting to grow in FY18
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 5
Defense Strong results driven by JLTV ramp and international 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
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 6
Fire & Emergency
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
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 7
Commercial 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
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 8
Consolidated Results
Sales impacted by:+ Higher sales in all segments, led
by defense
Adjusted EPS* impacted by:+ Higher defense and fire &
emergency segment operating income
+ Lower tax rate
− Higher incentive compensation
(Dollars in millions, except per share amounts)
Fourth Quarter
Net Sales $1,963.0 $1,755.4% Change 11.8% 11.2%
Adjusted Operating Income* $150.0 $123.3
% Change 21.7% 37.7%% Margin 7.6% 7.0%
Adjusted EPS* $1.38 $1.05% Change 31.4% 56.7%
2017 2016
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 9
Q4 Comments
* Non-GAAP results. See appendix for reconciliation to GAAP results.
FY18 Expectations
10
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%
OSK Fourth Quarter 2017 Earnings Call October 31, 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 adversely impacted by higher material costs
For informationcontact:
Patrick N. DavidsonSenior Vice President, Investor Relations(920) [email protected]
Jeffrey D. WattDirector, Investor Relations(920) [email protected]
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 11
Appendix: Access Equipment
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 12
Net Sales $833.8 $775.8% Change 7.5% 0.8%
Adjusted Operating Income* $77.9 $73.0
% Change 6.7% 23.7%% Margin 9.3% 9.4%
Fourth Quarter2017 2016
(Dollars in millions)
Sales impacted by:+ Higher aerial work platform and
telehandler sales
Adjusted operating income* impacted by:+ Higher sales volume+ Favorable mix− Higher material costs− Higher incentive compensation
Backlog up 152.2% vs. prior year to $452 million
Q4 Comments
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Appendix: Defense
Net Sales $596.8 $471.8% Change 26.5% 48.5%
Operating Income $73.0 $52.4% Change 39.3% 183.4%% Margin 12.2% 11.1%
Fourth Quarter
(Dollars in millions)
2017 2016
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 13
Sales impacted by:+ Ramp-up of JLTV program+ M-ATV international sales
Operating income impacted by:+ Higher sales volume
Backlog down 10.6% vs. prior year to $2.1 billion
Q4 Comments
Appendix: Fire & Emergency
Sales impacted by:+ Improved pricing+ Higher content units
Operating income impacted by:+ Improved pricing+ Improved labor performance− Higher incentive compensation
Backlog up 9.2% vs. prior year to $932 million
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 14
Net Sales $278.0 $256.9% Change 8.2% 4.7%
Operating Income $34.6 $22.3% Change 55.2% (5.8)%% Margin 12.4% 8.7%
Fourth Quarter2017 2016
(Dollars in millions)
Q4 Comments
Appendix: Commercial
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 15
Net Sales $259.9 $254.3% Change 2.2% 0.6%
Operating Income $11.6 $17.7% Change (34.5)% (15.9)%% Margin 4.5% 7.0%
Fourth Quarter2017 2016
(Dollars in millions)
Sales impacted by:+ Higher concrete mixer volume− Lower package (third party
chassis) sales
Operating income impacted by:− Adverse product mix− Warranty campaign
Backlog up 85.2% vs. prior year to $321 million
Q4 Comments
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 16
Appendix: Non-GAAP to GAAP Reconciliation
• The table below presents a reconciliation of the Company’s presented non-GAAP measures to the most directly comparable GAAP measures (in millions, except per share amounts):
2017 2016 2017 2016
Adjusted earnings per share-diluted (non-GAAP) 1.38$ 1.05$ 4.25$ 3.14$ Long-lived asset impairment charge, net of tax - (0.22) - (0.22) Restructuring-related costs, net of tax (0.15) (0.01) (0.48) (0.01) Earnings per share-diluted (GAAP) 1.23$ 0.82$ 3.77$ 2.91$
Adjusted consolidated operating income (non-GAAP) 150.0$ 123.3$ 506.3$ 391.8$ Long-lived asset impairment charge - (26.9) - (26.9) Restructuring-related costs (15.5) (0.9) (43.3) (0.9) Consolidated operating income (GAAP) 134.5$ 95.5$ 463.0$ 364.0$
Adjusted access equipment segment operating income (non-GAAP) 77.9$ 73.0$ 302.4$ 291.2$ Long-lived asset impairment charge - (26.9) - (26.9) Restructuring-related costs (15.5) (0.9) (43.3) (0.9) Access equipment segment operating income (GAAP) 62.4$ 45.2$ 259.1$ 263.4$
Three Months EndedSeptember 30,
Fiscal Year EndedSeptember 30,
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 17
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 Year EndedSeptember 30, 2017
Net cash flows provided by operating activities 246.5$ Additions to property, plant and equipment (85.8) Proceeds from sale of equipment held for rental, net of additions 22.1 Free cash flow 182.8$
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 18
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
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 19
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:
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
October 31, 2017OSK Fourth Quarter 2017 Earnings Call 20
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 RadiusLRIP Low Rate Initial Production