Oshkosh Corporation (NYSE:OSK) · Repurchased 9.8M OSK shares for $368M; July 2012 - Feb. 3, 2014...

MOVING THE WORLD AT WORK

Oshkosh Corporation (NYSE:OSK)2014 ISI Annual Industrials Conference

March 11, 2014


Forward-Looking Statements

22014 ISI Annual Industrials Conference March 11, 2014

This 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, withoutlimitation, 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, areforward-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, especially with the current outlook for the U.S. and European economic recoveries; the strength of emerging market growth and projected adoption rate of work at height machinery; the expected level and timing of DoD and international defense customers procurement of products and services and funding thereof; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy, including the Company’s ability to successfullymanage the cost reductions required as a result of the significant projected decrease in sales levels in the defense segment; the Company’s ability to win a U.S. JLTV production contract award; 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 consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; the duration of the ongoing 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 thanCompany or equity market expectations; 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 related to production or shipment delays arising from quality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; 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 January 28, 2014. 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.


Oshkosh Corporation Leading provider of specialty vehicles

• Moving the World at Work

Nearly 100 years in business; incorporated in 1917

Four business segments

FY13 Revenue: $7.7 billion

Market Capitalization (1): $4.9 billion

December 2013 Net Debt (2): $380 million

15 year TSR(3): ~1,200%1 year TSR(3): ~80%

(1) As of March 7, 2014(2) Net debt is total debt less cash(3) TSR is Total Shareholder Return. Source: ThomsonONE. From September 30, 1998 to September 30, 2013 and

September 28, 2012 to September 30, 2013, respectively

Access Equipment Defense

Fire & Emergency Commercial



Transforming – More Diverse, Global Industrial Company

FY15E Sales (1)

FY11 Sales

Defense Non-Defense

Non-Defense Sales Become Majority of Revenue by FY15

FY13 Sales

(1) Based on Company estimates as of September 2012 Analyst Day



MOVE is DeliveringStrong Financial Results


MOVE – The Right Strategy

Focuses on drivers that create highest shareholder value Expected to drive higher incremental margins across non-Defense

businesses over cycle

FY15 EPS Target$4.00 to $4.50



Strong Performance in FY13…

(1) Non-GAAP results. See Appendix: Non-GAAP to GAAP Reconciliation(2) Variance calculated from high end of range.

Analyst Day FY13 Measure FY13 Estimates Actual %Variance(2)Revenue $7.5 - $7.8B $7.7B (1.7%)

Solid non-defense growth largely offset anticipated defense decline

Adjusted Operating Income(1) $380 - $420M $535M 27.4% MOVE initiatives provide strong foundationfor growth to FY15 objectives

Adjusted EPS(1) $2.35 - $2.60 $3.74 43.8% Strong growth despite lower defense revenue

Free Cash Flow(1) $75 - $100M $386M 286.0%Consistent generator of strong FCF


…Driving Toward FY15 Targets


Strong Free Cash Flow(1)


Free cash flow consistently approximates net income or higher

Relatively low annual capital spending requirements:$50 - $100 million

Result: significant cash flow available to execute capital allocation strategy

(1) Free cash flow is cash from operations less net capital expenditures

Fiscal Year

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2006 2007 2008 2009 2010 2011 2012 2013

Cum

ulat

ive

Free

Cas

h Fl

ow (m

illio

ns)


Responsible Capital Allocation Strategy

Reinstated $0.15 quarterly cash dividend Repurchased 9.8M OSK shares for $368M; July 2012 - Feb. 3, 2014 Refinanced $250M in Sr. Notes due March 2022

• Interest rate reduced from 8.25% to 5.375%

9

Return capital to shareholders

Re-invest in core business

Invest in external growth

opportunities

Hold cash

Reduce debt

Long-term targeted capital

structure



Powering Our Transformation –The Oshkosh Operating System Customer-centric application

of lean principles• Develops talent to deliver value

for customers

Improves processes needed todeliver key elements of MOVE

Supports drive to improve cash flow

Implementation gaining momentum

Company-wide foundation for building shareholder value



Customer Supporting Systems

11

Leaders Cascade Training

Driving Our Customer-Centric CultureOOS Foundational Training

Customer Satisfaction

Launched September 2013

Launched December 2013

Customer First

Launched November 2012



Transforming Operations –Continuous Improvement Events


Using Problem Solving Tools to Improve Paint Quality

Developing Customer-Centric Key Performance Indicators

Using Process Mapping to Reduce Lead Time

Improving Station Layout to Reduce Non-Value Added Motion


Continue to Advance OOS Culture

132014 ISI Annual Industrials Conference

The OOS Journey

Phase Zero:Exploration

Phase One:Building the foundation

Phase Two:Expanding with tools and deeper thinking

Phase Three:Integration and reinforcement

Phase Four:Building the momentum

March 11, 2014


Favorable Near-TermMarket Outlook SupportsBusiness Transformation


Access Equipment

Extensive new product launch activity at ConExpo

Replacement demand continues to drive North American market• NRCs: ~flat; IRCs: up• Fleet growth with a few customers

Improving in select global markets• Europe and Middle East stronger• Positive conditions in Latin America• Australia remains weak

Severe weather has caused supplier disruptions and production delays• Will impact Q2 sales and earnings• Full year results are not expected to

be impacted

March 11, 20142014 ISI Annual Industrials Conference 15


North American Metrics Remain SolidRefreshing Fleets, Increasing Penetration

Residential and Non-Residential Spending(Y-O-Y % Change)

N.A. Rental Equipment Access - Fleet Age(AWP & TMH)

N.A. Rental Equipment Company Fleet Utilization

Recent Used Equipment Value Trends(OLV)

Source: Global Insight Estimates, December 2013

Based on International Rental News/Dan Kaplan sample of medium to large NA rental equipment companies (United Rentals, RSC, H&E, HERC).

(% C

hang

e)(%

Tim

e U

tiliz

atio

n)

OLV

(% o

f Cos

t)

Source: Rouse Rental Report. Calendar year-end data for 2008-13

(Age

in M

onth

s)

16

Source: Rouse Asset Services, January 2014Note: Rouse rebased the Rouse Value IndexTM in January 2014

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

2008 2009 2010 2011 2012 2013E 2014E 2015E

Residential Non‐Residential

50

55

60

65

70

75

Ind. Avg.

March 11, 20142014 ISI Annual Industrials Conference

40

45

50

55

60

2008 2009 2010 2011 2012 2013

25.0

30.0

35.0

40.0

45.0

Articulating Booms Scissor LiftsTelescopic Booms Telehandlers



• Managing programs with lower expected funding• Operations continue to improve

• Working on multiple international upside opportunities- Middle East: M-ATV, Medium & Heavy

TWV platforms- Canada MSVS SMP

Defense Team Driving Hard Through Downturn

(1) FY15 estimates as of September 2012 Analyst Day

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

FY11 FY12 FY13 FY14E FY15E

Sale

s in

Bill

ions

$4.4$4.0

$3.0

$1.75 - $1.80$1.5 Target (1)

0.0%

5.0%

10.0%

15.0%

FY11 FY12 FY13 FY14E FY15E

12.4%

6.0%7.5%*

3.75% – 4.0%Baseline~2.0% (1)

Ope

ratin

g In

com

e M

argi

n

DoD Funding Drives Lower Outlook Through FY15

$0.8 Baseline (1)


Competing in Light TWV MarketJoint Light Tactical Vehicle Program

JLTV represents opportunity to rebuild the business• One of three potential suppliers • Large unit potential

o Initial contract ~17,000o Total U.S. requirements of ~55,500o Attractive global customer prospects

• Leverages Oshkosh strengths• Contract award scheduled for 2015



Fire & Emergency

Municipal fire truck demand slowly improving• Expecting market growth in 2014

Federal market remains weak• Lower equipment funding

Operational improvement initiatives underway, driven by MOVE• Expect greater benefit in 2H 2014

and throughout 2015 Multiple new product launches at

FDIC show next month



Domestic Fire Market Drivers Stabilizing • Municipal fire truck orders improving with recovering tax receipts• Stronger customer activity

Recent Headlines

Construction Spending Highest in Nearly Five Years- Reuters, January 2, 2014

Home prices rise more than expected- USA Today, February 25, 2014

Solid new-home sales lift hopes for housing market - Washington Post,February 26, 2014

HOUSING PRICES & LOCAL PROPERTY TAXES

20March 11, 20142014 ISI Annual Industrials Conference


Commercial

U.S. housing recovery driving concrete mixer sales

Remain focused on operational improvements to deliver higher margins• Expect greater benefit in 2H 2014

and throughout 2015 Expect RCV market to return to

growth in 2014



Trending in line with Analyst Day expectations through FY15

Construction: Substantial MixerOpportunities with Modest Recovery

Housing Starts and Mixer Shipments (1959-2013)

22

Sources: Housing Starts - U.S. Census Bureau. Mixer Shipments - Truck Mixer Manufacturers Bureau; U.S. and Canada.


0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2012 2013 2014E 2015EHou

sing

Sta

rts

(uni

ts in

mill

ions

)

U.S. Housing Starts Forecasts

Moodys Portland Cement AssociationGlobal Insight Average Analyst Estimate

0

2,000

4,000

6,000

8,000

10,000

12,000

0

500

1,000

1,500

2,000

2,500

Mixer units

Hou

sing

Sta

rts

in M

illio

ns

Housing Starts Mixer Units Shipped Moody’s – Jan.’14Global Insight – Dec. ’13PCA – Nov. ‘13


Slowly Recovering RCV Market• Slight market contraction in FY13‒ Lower unit volumes in western U.S.

• Municipal tax receipts continue to improve• Fleet age reduction, construction and municipal spending

increase drive demand through FY15

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E

Mar

ket S

ize

(uni

ts)

Source: WASTEC Industry Data



What to Look for in FY14


MOVE Investments Providing Returns Recovering demand for

non-defense businesses in North America• Europe looking stronger Additional cost take-out

• Focus on product, process and overhead costs

• Dedicated teams leveraging the Oshkosh Operating System

Innovations improving customers’ performance at work Increased international

orders/sales

25March 11, 20142014 ISI Annual Industrials Conference


A Strong Start to FY14 EPS of $0.63 exceeded expectations

• Disciplined execution• Favorable product mix

Improved performance in all non-defense segments offset defense earnings decline• MOVE drove higher operating income

margins

Repurchased 3.0 million shares for $146 million in Q1

Paid first dividend under reinstated program

Increased FY14 EPS expectations to a range of $3.40 to $3.65

Net

Sal

es(b

illio

ns)

Adjusted EPS

OSK Fiscal Q1 Performance

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


$1.53

$1.75

$0.63 $0.62

$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$2.0

FY14 FY13*Net Sales EPS


Expectations for FY14

Additional expectations Corporate expenses flat with adjusted FY13* Tax rate of ~32% CapEx of ~$80 million Free cash flow* ~$200 million Assumes share count of ~85.5 million

Segment information

Measure Access Equipment DefenseFire &

Emergency Commercial

Sales(billions) $3.35 - $3.40 $1.75 - $1.80 $0.80 - $0.825 $0.85 - $0.90

Operating Income Margin 14.25% - 14.5% 3.75% - 4.0% 4.0% - 4.5% 6.75% - 7.0%

• Revenues of $6.65 billion to $6.85 billion• Operating income of $490 million to $520 million• EPS of $3.40 to $3.65

Comments on FY14 Second Quarter Some impact due to severe weather Expect improved year-over-year results in non-

defense segments Expect significantly lower defense segment sales

and operating income Prior year quarter had strong

M-ATV sales

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



Our Commitment to Shareholders Continue executing MOVE to drive shareholder value

• Impressive FY13 results, strong start to FY14 in Q1• Benefiting from improved housing starts; expect follow on growth

in non-residential construction and municipal recovery• MOVE initiatives driving margin expansion• On track to achieve FY15 EPS of $4.00 to $4.50

Oshkosh Operating System developing processes and talent to sustain superior growth for shareholders

28

Transforming to Sustain Long-Term Value Creation for Shareholders



For informationcontact:

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

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


Appendix: Commonly Used Acronyms

30

ARFF Aircraft Rescue and Firefighting M-ATV MRAP All-Terrain VehicleAWP Aerial Work Platform MECV Modernized Expanded Capability VehicleCapEx Capital Expenditures MRAP Mine Resistant Ambush ProtectedCNG Compressed Natural Gas MSVS Medium Support Vehicle System (Canada)DGE Diesel Gallon Equivalent NOL Net Operating LossDoD Department of Defense NPD New Product Development

EAME Europe, Africa & Middle East NRC National Rental Company

EMD Engineering & Manufacturing Development OI Operating IncomeEPS Diluted Earnings Per Share OOS Oshkosh Operating SystemFHTV Family of Heavy Tactical Vehicles PLS Palletized Load SystemFMS Foreign Military Sales PUC Pierce Ultimate ConfigurationFMTV Family of Medium Tactical Vehicles R&D Research & DevelopmentHEMTT Heavy Expanded Mobility Tactical Truck RCV Refuse Collection VehicleHET Heavy Equipment Transporter RFP Request for ProposalHMMWV High Mobility Multi-Purpose Wheeled Vehicle ROW Rest of WorldIRC Independent Rental Company SMP Standard Military Pattern (Canadian MSVS)

IT Information Technology TACOM Tank-automotive and Armaments Command

JLTV Joint Light Tactical Vehicle TDP Technical Data PackageJPO Joint Program Office TPV Tactical Protector VehicleJROC Joint Requirements Oversight Council TWV Tactical Wheeled VehicleJUONS Joint Urgent Operational Needs Statement UCA Undefinitized Contract Action

L-ATV Light Combat Tactical All-Terrain Vehicle UIK Underbody Improvement Kit (for M-ATV)

LVSR Logistic Vehicle System Replacement



Appendix: Non-GAAP to GAAP Reconciliation

31

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):

Fiscal Year EndedSeptember 30,

2013

Non-GAAP operating income 534.8$ Tender offer and proxy contest costs (16.3) Impairment charge (9.0) Union contract ratification costs (3.8) GAAP operating income 505.7$

Non-GAAP earnings per share from continuing operations-diluted 3.74$ Tender offer and proxy contest costs, net of tax (0.12) Impairment charge, net of tax (0.06) Union contract ratification costs, net of tax (0.03) GAAP earnings per share from continuing operations-diluted 3.53$

Net cash flows provided by operating activities 438.0$ Additions to property, plant and equipment (46.0) Additions to equipment held for rental (13.9) Proceeds from sale of property, plant and equipment 0.1 Proceeds from sale of equipment held for rental 7.5 Free cash flow 385.7$

Non-GAAP operating expenses-Corporate (147.6)$ Tender offer and proxy contest costs (16.3) GAAP operating expenses-Corporate (163.9)$



Appendix: Non-GAAP to GAAP Reconciliation

32

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):

Fiscal 2014Expectations

Net cash flows provided by operating activities 293.0$ Additions to property, plant and equipment (80.0) Additions to equipment held for rental (13.0) Proceeds from sale of equipment held for rental - Free cash flow 200.0$

2013 2012

Non-GAAP earnings per share from continuing operations-diluted 0.63$ 0.62$ Tender offer and proxy contest costs, net of tax - (0.11) GAAP earnings per share from continuing operations-diluted 0.63$ 0.51$

Three Months EndedDecember 31,


Oshkosh Corporation (NYSE:OSK) · Repurchased 9.8M OSK shares for $368M; July 2012 - Feb. 3, 2014...

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Transcript of Oshkosh Corporation (NYSE:OSK) · Repurchased 9.8M OSK shares for $368M; July 2012 - Feb. 3, 2014...