Download - oshkosh Q106_Presentation

Earnings Conference CallFirst Quarter Fiscal 2006February 2, 2006

Robert G. BohnChairman, President and Chief Executive Officer

Charles L. SzewsExecutive Vice President and Chief Financial Officer

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Forward Looking StatementsOur remarks that follow, including answers to your questions and these slides, include statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. All of our statements, other than statements of historical fact, including statements regarding Oshkosh Truck’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures and debt levels, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of words such as “expect,”“intend,” “estimates,” “anticipate,” “believe,” “should,” “plans,” or similar words. We cannot give any assurance that such expectations will prove to be correct. Some factors that could cause actual results to differ materially from our expectations include the accuracy of assumptions made with respect to our expectations for fiscal 2006 and beyond, the Company’s ability to continue the turnaround of the business of the Geesink Norba Group sufficiently to support its valuation resulting in no non-cash impairment charge for Geesink Norba Group goodwill, the Company’s ability to increase its operating income margins at McNeilus, the ability of the Company to recover steel and component cost increases from its customers, risks associated with a three-phase enterprise resource planning system implementation at McNeilus, the expected level of U.S. Department of Defense procurement of the Company’s products and services, the cyclical nature of the Company’s commercial and fire and emergency markets, risks related to reductions in government expenditures, the uncertainty of government contracts, the challenges of identifying, completing and integrating acquisitions, the success of the launch of the Revolution® drum, and risks associated with international operations. Additional information concerning these and other factors is contained in our filings with the SEC, including our Form 8-K filed February 2, 2006. Except as set forth in such Form 8-K, we disclaim any obligation to update such forward-looking statements.

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Oshkosh First Quarter 2006 Highlights

• Record financial results

– Sales increased 22.5%

– Operating income grew 28.6%

– EPS increased 28.6%

– Exceeded previous estimates

• Increased fiscal 2006 EPS estimate range to $2.55 - $2.65

• Raised dividend rate by 48% to $0.10 / share

First Quarter Results

$46.7

$67.6

$87.0

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Progress on Key Initiatives In First Quarter Fiscal 2006

• The Geesink Norba Group delivered second consecutive profitable quarter

– Cost reductions should accelerate in 2006 as outsourcing strategy gains ground

• Positive progress on McNeilus turnaround

– Launch of enterprise resource planning system and configurator for mixers impacted production and sales

– Production back on schedule by December 31

– Improved pricing largely offset impact of lower sales volume on earnings

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Commercial• Earnings exceeded expectations for first

quarter• Positive outlook for European refuse

business for 2006– Outsourcing strategy meeting expectations– Significant lean opportunities

• Demand favorable in U.S. concrete placement and refuse

– Modest pre-buy expected from 2007 diesel engine emissions standards change

• Continue to expect margin improvement in second and third quarters of fiscal 2006

London® is the most popular brand of concrete mixer in Canada.

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Commercial

• Launched at World of Concrete in mid-January

• Offers full 2,000 pound weight savings

• Reduces annual operating costs by $7,500

Oshkosh® S-Series front-discharge mixer with Revolution® drum

Revolution® Introduced to Front-Discharge Mixers

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Defense• Significantly outperformed again

– Sales of $363.1 million, up 68.5%

– New and remanufactured heavy-payload trucks, and parts and service sales, each up over 60%

• Received LVSR request for proposal– Submitted bid on time in 30 days– Decision anticipated in third quarter of

fiscal 2006

• Bridge supplemental bill passed in December 2005– Provided significant funding for fiscal

2007 and fiscal 2008 sales

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Fire and Emergency

• Earnings exceeded first quarter expectations

• Significant new product introductions– JerrDan® 60-ton Rotator

– Revolutionary JerrDan Side Loading Vehicle Retriever

• Pierce expansion on track to meet demand

• End markets remain healthy

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Consolidated Results

Net Sales $790.3 $644.9

% Growth 22.5% 30.8%

Operating Income $ 87.0 $ 67.6

% Margin 11.0% 10.5%

% Growth 28.6% 44.7%

Earnings Per Share $ 0.72 $ 0.56

% Growth 28.6% 33.3%

Dollars in millions

Comments

• Defense drove results

• Favorable defense adjustments totaling $12.2 million in 2005 ($0.10 per share)

• Favorable product liability settlements totaling $4.2 million at Corporate in 2005 ($0.04 per share)

2006 2005

First Quarter

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Fire and Emergency

Net Sales $216.4 $194.2

% Growth 11.5% 58.0%


% Margin 9.7% 9.5%

% Growth 13.4% 58.9%

Dollars in millions

Comments

• Strong fire apparatus sales and improved pricing benefited earnings

• Lower airport product sales

• Expansion-related costs also impacted quarter

• Backlog up 4.1%

2006 2005

First Quarter

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Defense

Net Sales $363.1 $215.5

% Growth 68.5% 13.2%


% Margin 20.0% 24.0%

% Growth 40.5% 39.1%

Dollars in millions

Comments

• Truck and parts and service sales each up more than 60%

• MTVR adjustment of $8.5 million in 2005

• Recovery of pre-contract costs of $3.7 million in 2005

• Backlog down 3.0%, but bridge supplemental funding not yet under contract

2006 2005

First Quarter

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Commercial

Net Sales $221.2 $241.6

% Growth (8.4)% 32.0%


% Margin 3.8% 2.3%

% Growth 47.6% (21.7)%

Dollars in millions

Comments• Sales impacted by ERP

implementation

• European refuse profitable in Q1; $2.6 million operating loss in 2005

• Price increases beginning to benefit earnings

• Backlog up 29.1%

2006 2005

First Quarter

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Fiscal 2006 Estimates

• Fire and emergency sales expected to rise by low teens percentage

• Defense sales expected to grow 22.5% to 27.0%

• Commercial sales expected to rise by low single digits percentage

Sales of $3.3 - $3.4 Billion, Up 11.5% - 15%

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• Anticipate flat margins in fire and emergency

• Expect defense margins to decline about 200 basis points– No MTVR margin adjustments expected in 2006

• Expect commercial margins to double– European refuse expected to be modestly

profitable– U.S. margins expected to be up over 100 basis

points

Operating Income of $316.5 - $329.0 Million, Up 18% to 23%

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Interest expense and other $3.5 (expense)

Effective tax rate 39.0%

Minority interest $0.5 (expense)

Equity in earnings $2.0

Average shares outstanding 75,500,000

Fiscal 2006

Estimates

Other Estimates (Dollars in millions)

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• Annual EPS estimate range of $2.55 to $2.65, up 17.0% to 21.6%

• Second quarter EPS of $0.58 to $0.62 compared to $0.52 in second quarter of fiscal 2005

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• Capital spending expected to approximate $60 million

• Estimated balances at September 30,2006

– Debt of $20.0 - $25.0 million

– Cash of $200.0 -$225.0 million

Ground-breaking for New Product

Development Center