Download - oshkosh Q306_Presentation

Earnings Conference CallThird Quarter Fiscal 2006August 1, 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 fiscal 2007, 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 sustain flat operating income in its commercial segment and to raise operating income in its fire & emergency segment in fiscal 2007 despite anticipated lower industry demand resulting from changes to diesel engine emission standards effective January 1, 2007, 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 August 1, 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 Third Quarter 2006 Highlights

• Record Q3 financial results– Sales increased 8.4%– Operating income grew 31.2%

– EPS increased 38.5%

– Exceeded previous estimates

• Increased fiscal 2006 EPS estimate range to $2.70 - $2.75

• Net cash rose to $193.1 million

• Initiated fiscal 2007 EPS estimate range of $3.05 - $3.15

Third Quarter Results

$49.2

$63.0$82.6

$599.8

$818.9

$887.9

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Acquisition of AK Specialty Vehicles

• $130 million manufacturer of broadcast, homeland security and medical truck bodies

• Provides important technology and purchasing power in electronics/ broadcasting

• Growing global use of mobile MRI, CAT and PET technologies

• Expected to be $0.05 accretive to fiscal 2007

• To be reported in fire and emergency segment

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Acquisition of Iowa Mold Tooling• $115 million manufacturer of

service vehicles and niche articulated cranes

• Supports Oshkosh’s service expansion strategy

• Serves growing mining sector

• Expected to be $0.05 accretive in fiscal 2007

• To be reported in commercial segment

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Commercial• Margin recovery continued

in Q3

• Orders remained strong in North America

• Exceptional performance from CON-E-CO batch plant business– Should strengthen further in

2007

• Successfully implemented second phase of ERP installation in Q3

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Defense

• New and remanufactured truck business drove solid results in Q3

• LVSR contract awarded to OSK

• Submitted bid for Australian Defence Forces contract in July 2006

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Fire and Emergency• Sharply improved results

in Q3 as anticipated– Pierce performed well– Airport product sales

heavily weighted to second half

• Two component issues in Q2 resolved in Q3

• Strong fire apparatus orders

• Looking forward to FRI fire apparatus show in September

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Consolidated Results

Net Sales $887.9 $818.9

% Growth 8.4% 36.5%

Operating Income $ 82.6 $ 63.0

% Margin 9.3% 7.7%

% Growth 31.2% 28.1%

Earnings Per Share $ 0.72 $ 0.52

% Growth 38.5% 20.9%

Dollars in millions

Comments

• Commercial drove sharply improved results!

• Fire and emergency also reported strong results

• Defense realized steady growth

2006 2005

Third Quarter

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Fire and Emergency

Net Sales $255.3 $222.7

% Growth 14.7% 56.2%


% Margin 11.7% 10.4%

% Growth 28.7% 75.4%

Dollars in millions

Comments

• Resolved component issue sales delays

• Improved airport product sales mix, as anticipated

• Recent price increase spurred orders

• Backlog up 6.5%

2006 2005

Third Quarter

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Defense

Net Sales $291.4 $281.0

% Growth 3.7% 47.1%


% Margin 16.8% 16.4%

% Growth 6.7% 35.4%

Dollars in millions

Comments

• Remanufactured and new truck sales drove results

• Parts and service sales down due to delayed Supplemental bill

• MTVR margin adjustment of $2.1 million in Q3 of 2005

• Backlog down 9.3%

2006 2005

Third Quarter

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Commercial

Net Sales $350.6 $322.3

% Growth 8.8% 18.5%


% Margin 7.2% 2.2%

% Growth 252.0% (46.0)%

Dollars in millions

Comments

• Sales improved across segment

• Price increases benefiting earnings

• European refuse profitable in Q3; $5.1 million operating loss in Q3 of 2005

• Backlog up 69.9%

2006 2005

Third Quarter

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Fiscal 2006 Estimates

• Fire and emergency sales expected to rise by mid-teens percentage

• Defense sales expected to grow 25.0% to 27.0%

• Commercial sales expected to rise by high single digits percentage

Sales of $3.40 - $3.45 Billion, Up 14.9% - 16.6%

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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 be 2.5X higher– European refuse expected to be modestly profitable– North American margins expected to be up

over 200 basis points

Operating Income of $321.0 - $327.0 Million, Up 20% to 22%

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Interest expense and other $0.5 (expense)

Effective tax rate 37.8%

Minority interest $0.5 (expense)

Equity in earnings $2.5

Average shares outstanding 74,500,000

Fiscal 2006

Estimates

Other Estimates (Dollars in millions)

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• Annual EPS estimate range of $2.70 to $2.75, up 24% to 26%

• Fourth quarter EPS estimate range of $0.60 to $0.65 compared to $0.58 in fourth quarter of fiscal 2005

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• Capital spending expected to approximate $64 million

• Estimated balances at September 30,2006

– Debt of $100.0 - $110.0 million

– Cash of $15.0 - $20.0 million

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• Fire and emergency sales, including AK Specialty, expected to rise by mid-teens percentage

• Defense sales expected to grow by $100-$150 million

• Commercial sales, including Iowa Mold Tooling, expected to decline slightly

Sales of $3.65 - $3.75 billion

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• Anticipate fire and emergency margins to be up about 50 basis points

• Expect flat margins in defense• Expect commercial margins to improve about

150 basis points

Operating Income of $373.0 - $385.0 Million

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Interest expense and other $6.5 (expense)

Effective tax rate 37.0%

Minority interest $0.8 (expense)

Equity in earnings $1.8

Average shares outstanding 76,000,000

Fiscal 2007

Estimates

Other Estimates (Dollars in millions)

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• Annual EPS estimate range of $3.05 - $3.15

• Capital spending expected to approximate $65 million

• Estimated balances at September 30, 2007– Debt of about $40 million

– Cash of $90 - $110 million

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