Download - oshkosh Q206_Earnings_Presentation

Earnings Conference CallSecond Quarter Fiscal 2006May 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 May 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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$672.4

$844.8

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Oshkosh Second Quarter 2006 Highlights

• Record Q2 financial results– Sales increased 25.6%

– Operating income grew 27.3%

– EPS increased 28.8%

– Exceeded previous estimates

• Re-affirmed fiscal 2006 EPS estimate range of $2.55 - $2.65

Second Quarter Results

$35.1

$62.6

$79.7

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Stewart & Stevenson Services, Inc. Auction

• On March 30, 2006, Oshkosh acknowledged participation in auction

• Oshkosh cannot respond to questions on the auction or closely related mattersStewart & Stevenson manufactures

the U.S. Army’s Family of Medium Tactical Vehicles.

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Commercial• Margin recovery continued in Q2

• Pre-buy due to 2007 diesel engine emissions standards change accelerated in Q2– Expect segment sales to be strong

through Q1 of fiscal 2007

• Implementation of enterprise resource planning system continuing at measured pace– Not expected to cause production

issues

The new Oshkosh S-Series Front-Discharge Concrete Mixer with Revolution® drum was

introduced at the World of Concrete show in January 2006.

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Defense

• Strength of remanufacturing and new truck business drove exceptional results in Q2– But, struggle continues to locate

vehicle carcasses for remanufacturing

• No award made yet on LVSR contract

• Bidding Australian Defence Forces contract in May 2006

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Fire and Emergency• Anticipated dip in earnings

in Q2– Airport product sales

heavily weighted to second half

• Component issues also delayed sales into Q3

• Successful FDIC fire apparatus show– Introduced 100’ aluminum

ladder

• Strong carrier and wrecker orders

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Consolidated Results

Net Sales $844.8 $672.4

% Growth 25.6% 29.7%

Operating Income $ 79.7 $ 62.6

% Margin 9.4% 9.3%

% Growth 27.3% 78.5%

Earnings Per Share $ 0.67 $ 0.52

% Growth 28.8% 67.7%

Dollars in millions

Comments

• Defense drove results despite $14.1 million MTVR margin adjustment in 2005

• Commercial results also up sharply

• Fire and emergency dip expected to be temporary

2006 2005

Second Quarter

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Fire and Emergency

Net Sales $221.3 $213.2

% Growth 3.8% 57.2%


% Margin 8.1% 8.9%

% Growth (5.9)% 69.5%

Dollars in millions

Comments

• Sharply lower airport product sales, as anticipated

• Two component issues delayed revenue recognition

• Recent price increase spurred orders

• Backlog up 6.1%

2006 2005

Second Quarter

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Defense

Net Sales $334.2 $209.6

% Growth 59.4% 24.7%


% Margin 19.7% 23.6%

% Growth 33.2% 114.4%

Dollars in millions

Comments

• Remanufactured and new truck sales nearly doubled

• MTVR margin adjustment of $14.1 million in Q2 of 2005

• Backlog up 17.0%

2006 2005

Second Quarter

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Commercial

Net Sales $299.5 $255.3

% Growth 17.3% 17.2%


% Margin 5.1% 2.5%

% Growth 137.5% (31.6)%

Dollars in millions

Comments

• Sales benefiting from pre-buy

• European refuse profitable in Q2; $1.5 million operating loss in Q2 of 2005

• Price increases benefiting earnings

• Backlog up 35.7%

2006 2005

Second 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 $307.0 - $320.0 Million, Up 15% to 20%

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Interest expense and other $0.5 (income)

Effective tax rate 38.5%

Minority interest $0.5 (expense)

Equity in earnings $2.0

Average shares outstanding 75,000,000

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%

• Third quarter EPS of $0.53 to $0.57 compared to $0.52 in third quarter of fiscal 2005

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• Capital spending expected to approximate $64 million

• Estimated balances at September 30,2006

– Debt of $20.0 - $25.0 million

– Cash of $200.0 -$225.0 million