rbc capital markets 2017 global industrials...

Oshkosh Corporation (NYSE:OSK)RBC Capital Markets 2017 Global Industrials Conference

SEPTEMBER 13, 2017

Jim JohnsonPresident, Fire & Emergency Segment

Patrick DavidsonVice President, Investor Relations

September 13, 2017RBC Capital Markets 2017 Global Industrials 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; 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 Family of Medium Tactical Vehicle 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 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 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 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 August 2, 2017. All forward-looking statements speak only as of August 2, 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

September 13, 2017RBC Capital Markets 2017 Global Industrials Conference

OSHKOSH CORPORATION100 YEARS STRONG

A DIFFERENT INTEGRATEDGLOBAL INDUSTRIAL

Leading provider of specialty vehicles Celebrating 100 years

in 2017

Focused on delivering value to customers and shareholders

Serial innovator of game-changing new products

ACCESS EQUIPMENT DEFENSE FIRE & EMERGENCY COMMERCIAL

Making a Difference


Oshkosh Corporation Profile FY17 YTD*

6

45%Access Equipment

25%Defense

15%Fire &

Emergency

15%Commercial

Revenue by Segment

76%United States

3%Other NA

15%EMEA

6%Rest of World

Revenue by Geography


Revenue growth driven by defense segment - ramp ofJLTV program and international M-ATV shipments

* Through fiscal Q3, ended June 30, 2017

Fire Apparatus

7

Concrete Mixers/Batch Plants

#1

Military Tactical Wheeled Vehicles

Airport Products (ARFF/Snow Removal)

Aerial Work Platforms/Telehandlers

Refuse Collection Vehicles

Maintaining Industry Leadership

Strong Brands Value Creation

Wreckers & Carriers

(1) Company estimates

NORTH AMERICA RANK (1)

#1

#1

#1

#1

#2

GLOBAL RANK (1)

RBC Capital Markets 2017 Global Industrials Conference September 13, 2017

#1

Favorable and Diverse End Market Drivers

8

Defense recovery– JLTV ramp-up– Solid U.S. base program funding– International opportunities

U.S. construction slowly improving, though uneven – both residential and non-residential

Municipal spending recovering

Aging fleets in multiple markets

Significant access equipment product adoption opportunities globally– Despite current market challenges

Population growth and urbanization

Expect mid-single-digit FY16 to FY17 revenue growth –despite Access Equipment Segment expected decline


Integrated Enterprise Approach Drives Opportunity/Efficiency Across Business Segments

9

Global product development

Enterprise-wide operations

Global procurement and supply chain‒ Leverage scale of OSK

One Oshkosh culture‒ People, Purpose, Performance

Take Advantage of Opportunities Unavailable to Many Companies


MOVE – EVOLVING TO DELIVER MORE VALUE

11

Grow profitably by maintaining intense focus on customer experience

Optimize our costs and capital structure to provide value for customers and shareholders

Lead in innovation over the product life cycle

Drive international growth in targeted geographies

Evolving to Deliver More Value


Market Leader Delighting CustomersGrow profitably by maintaining intense focus on customer experience

12

Enhance customer experience by:

Increasing use of standard processes and tools to drive consistent customer experience

Providing total customer caresolutions over product life cycle

Expanding use of AdvancedProduct Quality Planning

Utilizing Voice of Customer to deliver superior products and solutions


13

Targeting ~$55 million yr/yr cost reduction in FY17

Build on current practices for product, process and overhead improvements‒ Component commonality‒ Supply chain optimization‒ Weight reduction

Incrementally improve margins independent of volume through simplification actions


Optimize Cost and Capital Structure Optimize our costs and capital structure to provide value for customers and shareholders

Value InnovationTarget 15 - 20% annual revenue(1) from new products in FY17

Continue innovation leadership

Further development of value/global products

Leverage benefits of multi-generational product and technology plans

(1) Revenues from new products tracked through the first 24 months following the initial sale for all new products and new product development projects

Next generation protection and mobility

JLTV

Game-changing 107 foot two-axle aerial

Ascendant TM Aerial Ladder

Balances high payload, low body weight

JLG 1500AJP Articulating Boom Lift

World’s tallest articulating boom lift

Meridian Front-end Loader RCV

14September 13, 2017RBC Capital Markets 2017 Global Industrials Conference

24%

0%

10%

20%

30%

40%

50%

FY16 FY17E

% of OSK Sales Outside U.S.

Emerging Market Growth

15

Drive international growth in targeted geographies

Targeting 15 - 20% increase in international sales in FY17 From $1.5 billion in FY16 to an

estimated $1.75 billion in FY17– Driving international to 25% - 30% of OSK sales

Growth driven by Defense and Access Equipment

Expanding our reach across the globe(1)

25% - 30%


24%

BUSINESS SEGMENTOVERVIEW & RECENT HIGHLIGHTS

Access Equipment SummaryTargeting higher operating income margins across the cycle

Global leader in access equipment

Focused strategy built on simplifying the business, continuing to lead in innovation and expanding aftermarket parts and services

Well positioned for long-term global success as near-term headwind of replacement demand cycle becomes a tailwind and product adoption grows


Access EquipmentRecent Highlights


Strong Q3 performance Improved customer sentiment in

North America‒ Improved rental market conditions ‒ Positive U.S. construction trends

despite replacement demand headwinds

‒ Expect continued responsible rental company capital expenditure approach

Solid market conditions in Europe and product adoption growth in Asia

Restructuring actions on track

Current North America Fleet Replacement Demand Negatively impacted by low sales during last recession…

(1) Rouse Services: Age composition of Access Equipment of “Rouse 8” fleets in North America as of 06/30/2017

… Expected to Drive Demand in Future Years

0.0%

5.0%

10.0%

15.0%

20.0%

2017Partial

20162015201420132012201120102009

Model Year of Fleet

Composition of Rental Fleet in 2017 as Percent of Total Units(1)

Current Headwind


(1) Company estimates

Defense Segment SummaryTargeting high single-digit operating income margins over the next few years

#1 provider of light, medium, MRAP and heavy tactical wheeled vehicles in the world(1)

Winning strategy based on breakthrough technologies, operational agility, life cycle value and defense expertise that delivers exceptional technical, operational and economic value for our military customers

Solid budget visibility for the multi-year, multi-billion dollar U.S. JLTV program, as well as international market potential


Defense Recent Highlights


Strong Q3 results as international M-ATV and domestic JLTV sales ramped

JLTV program progressing and achieving milestones‒ Logging significant government test time − Encouraged by interest in higher JLTV

quantities

Building solid base for FY18– Expect $1.7 billion sales visibility by

September 30, 2017– Ongoing discussions with international

customers for defense products and vehicle sustainment (timing expected to allowfor sales beginning late FY18)

Submitted FMTV recompete proposal 2017 U.S. Defense Budget signed;

monitoring progress of 2018 U.S. Defense Budget request

Joint Light Tactical Vehicle (JLTV)U.S. JLTV Production Contract Overview

~$6.7 billion initial announcement 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


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


FY17 President’s Budget Funding Request

OrderQuantity

Expected SalesQuantity(3)

FY16 804

FY17 2,020 ~650 to 750

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) Estimates as of June 30, 2017(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


Delivering Long-Term Value HEMTT 1981 2016Heavy Expanded Mobility Tactical Truck 7,491 vehicles 35,000+ vehicles

M-ATV Family of Vehicles 2009 2016Mine Resistant Ambush Protected All-Terrain Vehicle 2,244 vehicles 10,000+ vehicles

HEMTT A2 HEMTT A4 HEMTT Recap

Base UIK Upgrade M-ATV Family of VehiclesRPG Upgrade

HEMTT A0 HEMTT A1 HEMTT Reset

Training

JLTV 2015 2040EJoint Light Tactical Vehicle 16,901 vehicles(1) 55,000+ vehicles(2)


(1) Estimate of customer contractual requirements as of initial award date(2) Government stated estimate of quantity – subject to funding and production contract recompete

25

P-19R ARFF

Defense Revenue Expectations


$0

$1

$2

$3

$4

$5

$6

$7

$8

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Net Sales (in billions)

Revenue JLTV Non-JLTV

Family of Heavy Tactical Vehicles (FHTV)Family of Medium Tactical Vehicles (FMTV)

Joint Light Tactical Vehicle (JLTV)

Medium Tactical Vehicle Replacement (MTVR)

Logistics Vehicle System Replacement (LVSR)Global Integrated Product Support (GIPS) - Aftermarket

U.S. M-ATV Global MRAP All-Terrain Vehicle (M-ATV)

Targeting $1.7 - $2.0

billion of sales in FY17 – FY19

JLTV approaching

~50% of sales by FY19

(1) (1)

(1) Mid-point of revenue range expectations

Fire & Emergency Segment SummaryTargeting double-digit operating income margins in the near term

Leader in U.S. fire truck and global airport products(1) with industry-leading brands, products and distribution network

Strategy focused on operational excellence, simplification and continuing to lead in innovation

Aging fleets, technological changes and steady growth in municipal demand support solid outlook

(1) Aircraft Rescue and Firefighting (ARFF) and Snow Removal

27RBC Capital Markets 2017 Global Industrials Conference September 13, 2017

Fire & Emergency Recent Highlights


Achieved >10% operating income margin in Q3 – significant milestone

− Continued execution of proven formula

− Committed to achieving annual OI margin of 10% or more

Multiple new Ascendant models launched at recent FDIC show

U.S. fire apparatus market remains 20% - 25% below pre-recession level

Strong U.S. dollar continues to challenge international business

29

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


Increasing Home Prices and Property Taxes

1990 1995 2000 2005 2010 2015

Data through Q1 2017

30September 13, 2017

Targeting 10% operating income margins over time

Differentiated leader in North American refuse collection vehicle and concrete mixer markets with broad product lineup, operational scale and well-respected brands

Strategy focused on innovation, simplification and supporting customers through the product life cycle

Promising market fundamentals and elevated customer fleet ages drive performance opportunities

RBC Capital Markets 2017 Global Industrials Conference

Commercial Segment Summary

Commercial Recent Highlights


Revenue growth driven by higher RCV sales

Improved performance in the quarter vs. 1H FY17, but short of targets

Continued focus on simplification activities− Encouraged by opportunities− Additional time needed to capture

improvement

U.S. RCV market climbed abovepre-recession levels

U.S. concrete mixer marketremained 20% - 25% belownormal pre-recession levels

Positive longer term market outlook

Concrete mixers Fleet age is high; ~10 years Customers remain cautious near term North American rear discharge

concrete mixer market still ~25% below long-term average

Home ownership2 up slightly from 50 year low in 2016

RCVs Large operator fleet age >8 years3

Share growth past 2 years Fleet volumes growing due to

increase in waste generation Solid municipal funding as tax

receipts rebound Expect waste hauling market

consolidation to continue

32

Concrete Mixers and Refuse Collection VehiclesAged fleets positively correlated with housing and waste generation


(1) Source: 2001-2016 National Ready Mixed Concrete Association (NRMCA)(2) U.S. Census Bureau July 2017(3) Estimates based on publicly traded refuse company information and OSK internal estimates (4) Refuse Collection Vehicles 2005 – 2016 WASTEC, single-family housing starts as reported by HIS

-60%

-40%

-20%

0%

20%

40%

-25%

-15%

-5%

5%

15%

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

U.S

. RC

V m

arke

t YO

Y C

hang

e

U.S. refuse collection vehicles and single-family housing starts YOY change4

RCV domestic market YOY changeSingle Family Housing Starts YOY change

Single-family housing starts YO

Y chang

56789

1011

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Average concrete mixer fleet age¹

Average fleet age in years

POSITIONED FOR LONG-TERM SUCCESS

RBC Capital Markets 2017 Global Industrials Conference 34

Responsible Capital Allocation Strategy

Long-term targeted capital

structure

Drives sales and

EPS growth Reinvest in core

business

Invest in external growth (M&A)

Return cash to shareholders

Reduce debt

Hold cash

Debt to EBITDA

target ~2.0X

Opportunistic levers to

drive additional shareholder

value

September 13, 2017

35

Revenues of ~$6.75 billion

Adjusted operating income* of $480 million to $490 million

Adjusted EPS* of $3.80 to $3.90

Additional expectations Corporate expenses of ~$150 million Adjusted tax rate* of ~32.5% CapEx of ~$90 million Free Cash Flow* of ~$150 million Assumes share count of ~76.0 million

Segment information

Measure Access Equipment Defense Fire &

Emergency Commercial

Sales(billions) ~ $2.95 ~ $1.825 ~ $1.025 ~ $0.95

Adj. Operating Income Margin 9.75% - 10.0%* 11.0% - 11.2% ~9.7% 4.5% - 5.0%


* Non-GAAP results. See appendix for reconciliation to GAAP results.

FY17 Estimates* - Growth from FY16

Positive Long-term OutlookConvergence of favorable market dynamics and benefits of MOVE position OSK to deliver strong results


Favorable market dynamics‒ JLTV provides multi-year visibility

for Defense‒ Current access equipment

replacement demand headwind becomes future tailwind

‒ Fleet ages help to drive Fire & Emergency and Commercial Segment demand

MOVE strategy will continue to drive results

Expected strong free cash flow over the cycle provides capital allocation alternatives

A Different Integrated Global Industrial Company

For informationcontact:

Patrick N. DavidsonVice President, Investor Relations(920) [email protected]

Jeffrey D. WattDirector, Investor Relations(920) [email protected]

Appendix: Access Equipment


Net Sales $980.2 $952.5% Change 2.9% 2.1%

Adjusted Operating Income $140.8* $122.1

% Change 15.3% (10.4)%% Margin 14.4% 12.8%

Third Quarter2017 2016

(Dollars in millions)

Sales impacted by:+ Higher AWP volume− Lower telehandler volume

Adjusted operating income* impacted by:+ Higher sales volume+ Favorable mix+ Favorable material usage

Backlog up 39.6% vs. prior year to $523 million

Q3 Comments

* Non-GAAP results. See appendix for reconciliation to GAAP results.

Appendix: Defense

Net Sales $482.7 $264.3% Change 82.6% 36.1%

Operating Income $62.4 $19.1% Change 226.7% 369.3%% Margin 12.9% 7.2%

Third Quarter


2017 2016


Sales impacted by:+ M-ATV international sales+ Ramp-up of JLTV program− Lower FMTV sales

Operating income impacted by:+ Higher sales volume

Backlog down 16.8% vs. prior year to $1.9 billion

Q3 Comments

Appendix: Fire & Emergency

Sales impacted by:+ Higher unit volume+ Improved pricing

Operating income impacted by:+ Improved pricing+ Higher sales volume



Net Sales $282.9 $248.5% Change 13.8% 24.4%

Operating Income $30.8 $19.7% Change 56.3% 105.0%% Margin 10.9% 7.9%



Q3 Comments

Appendix: Commercial


Net Sales $295.2 $287.9% Change 2.5% (2.1)%

Operating Income $21.6 $23.8% Change (9.2)% 6.2%% Margin 7.3% 8.3%



Sales impacted by:+ Higher RCV unit volume

Operating income impacted by:− Operational inefficiencies


Q3 Comments


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):

Three Months Ended

June 30, 2017

Access equipment segment adjusted operating income (Non-GAAP) 140.8$ Restructuring-related costs (10.6) Access equipment segment operating income (GAAP) 130.2$



• 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 access equipment operating income margin (Non-GAAP) 9.75% 10.00%Restructuring-related costs (1.40%) (1.40%)Access equipment operating income margin (GAAP) 8.35% 8.60%

Adjusted consolidated operating income (Non-GAAP) 480.0$ 490.0$ Restructuring-related costs (41.0) (41.0) Consolidated operating income (GAAP) 439.0$ 449.0$

Adjusted diluted earnings per share (Non-GAAP) 3.80$ 3.90$ Restructuring-related costs (0.47) (0.47) Diluted earnings per share (GAAP) 3.33$ 3.43$

Fiscal2017 Expectations



• The table below presents a reconciliation of the Company’s presented non-GAAP measures to the most directly comparable GAAP measures (in millions):

Fiscal 2017Expectations

Net cash flows provided by operating activities 225.0$ Additions to property, plant and equipment (90.0) Proceeds from sale of equipment held for rental, net of additions 15.0 Free cash flow 150.0$

Adjusted effective income tax rate (Non-GAAP) 32.5%Impact of restructuring-related costs on effective income tax rate 2.0%Effective income tax rate (GAAP) 34.5%

Appendix: Commonly Used Acronyms


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

rbc capital markets 2017 global industrials...

Documents