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oshkosh 29D00BB2-1207-4948-8F93-2B2BCE9FE340_Q109_Slides


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  • 1. Earnings Conference Call First Quarter Fiscal 2009 January 29, 2009 Robert G. Bohn Chairman and Chief Executive Officer Charles L. Szews President and Chief Operating Officer David M. Sagehorn Executive Vice President and Chief Financial Officer Patrick N. Davidson Vice President of Investor Relations
  • 2. Forward Looking Statements Our 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 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 consequences of financial leverage associated with the JLG acquisition, especially given turmoil in the credit markets, the level of the Company’s borrowing costs and the Company’s ability to successfully amend its credit agreement to provide financial covenant relief; the cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, especially during a global recession and credit crisis; the Company’s ability to obtain cost reductions on steel and other raw materials following sharp cost increases in 2008, obtain other cost decreases or achieve product selling price increases; the duration of the global recession and its adverse impact on the Company’s share price, which could lead to impairment charges related to many of the Company’s intangible assets; the expected level and timing of U.S. Department of Defense procurement of products and services and funding thereof; risks related to reductions in government expenditures and the uncertainty of government contracts; risks associated with international operations and sales, including foreign currency fluctuations; the Company’s ability to turn around its Geesink business; risks related to the collectibility of receivables during a recession, especially access equipment receivables; and the potential for increased costs relating to compliance with changes in laws and regulations. Additional information concerning these and other factors and assumptions is contained in our filings with the SEC, including our Form 8-K filed January 29, 2009. Except as set forth in such Form 8-K, we disclaim any obligation to update such forward-looking statements. Earnings Conference Call First Quarter Fiscal 2009 2 January 29, 2009
  • 3. Oshkosh Fiscal Q1 2009 Results ■ Sales decreased 7.6% to $1.39 billion ■ Net loss of $20.6 million ■ Strong free cash flow – $260.8 million cash on hand at quarter end – $81.5 million of debt reduction ■ Inventory reduced by $61 million over prior year ■ Compliant with financial covenants Earnings Conference Call First Quarter Fiscal 2009 3 January 29, 2009
  • 4. Current Business Conditions ■ A few core businesses remain strong: – Defense: Strong backlog, multiple new business opportunities ■ While all other businesses remained weak or deteriorated further in Q1: – Fire apparatus/airport products: Significant market share gains; – Access equipment, concrete mixer full backlog for fiscal 2009 and towing equipment orders fell – Domestic refuse vehicles: Strong more sharply than expected in Q1 backlog and Q1 orders – Lack of available credit, volatile currencies and general economic uncertainty are limiting demand and visibility ■ Impact of volatile currencies and commodity prices increasing margin volatility Earnings Conference Call First Quarter Fiscal 2009 4 January 29, 2009
  • 5. Oshkosh Response to Softer and Uncertain Market Conditions ■ Further cost reduction actions – Reducing fiscal 2009 overhead and operating expenses by $50 million, cumulative reduction of more than $150 million since summer 2008 – Workforce reduction of 7%, cumulative reduction of 17% ■ Reducing production to better match lower demand ■ Seeking credit agreement amendment in fiscal Q2 – In discussions with lead banks – Expect to execute amendment in late February or March – Expect upfront fees and higher interest expense – Expect lower debt reduction in fiscal 2009 ■ Suspending earnings estimates Earnings Conference Call First Quarter Fiscal 2009 5 January 29, 2009
  • 6. Access Equipment ■ Demand weakness has spread across the globe – European demand particularly soft ■ Utilization and rental rates down marginally – Credit availability and uncertainty limiting order intake for now – U.S. stimulus plan could benefit second half of calendar year 2009 ■ Award-winning LiftPod® generating interest ■ Groundbreaking for factory in China Earnings Conference Call First Quarter Fiscal 2009 6 January 29, 2009
  • 7. Defense ■ Announcements illustrate continuing leadership for heavy-payload vehicles – Awarded $1.6 billion in recent contracts for FHTV, LVSR and MTVR programs ■ Significant armoring activity drove parts & service performance ■ MRAP suspension opportunity ■ Competing for M-ATV program ■ JLTV protest decision expected in Q2 Earnings Conference Call First Quarter Fiscal 2009 7 January 29, 2009
  • 8. Fire & Emergency ■ Weak municipal spending throughout U.S., but… ■ Strong Pierce and airport products orders ■ Continued weak towing & recovery and mobile medical ■ Snow removal and ARFF units operating in China ■ 2010-compliant engine agreement with Detroit Diesel Earnings Conference Call First Quarter Fiscal 2009 8 January 29, 2009
  • 9. Commercial ■ U.S. concrete placement markets weaker than fiscal 2008 ■ Solid activity for domestic refuse collection vehicles – But customers feeling effects of widespread recession ■ CNG-powered vehicle market providing opportunity – Green alternative with fuel savings – Seattle refuse collection deliveries ■ European refuse collection vehicle demand weakening Earnings Conference Call First Quarter Fiscal 2009 9 January 29, 2009
  • 10. Consolidated Results (Dollars in millions, except per share amounts) First Quarter Comments 2009 2008 ■ Significantly lower access Net Sales $1,386.1 $1,499.9 equipment and concrete placement sales % Change (7.6)% 49.0% ■ Higher defense, fire apparatus and domestic refuse product sales partially offset declines in other Operating Income $17.1 $109.9 areas % Margin 1.2% 7.3% ■ Margins impacted by: % Change (84.5)% 31.5% – Volume – Adverse sales mix – Unrecovered material costs – Provisions for bad debts Earnings Per Share $(0.28) $0.50 – Severance / restructuring charges % Change (156.0)% (9.1)% ■ $81.5 million of debt reduction; $260.8 million cash and investments Earnings Conference Call First Quarter Fiscal 2009 10 January 29, 2009
  • 11. Access Equipment (Dollars in millions) First Quarter Comments 2009 2008 Lower AWP and telehandler sales in North Net Sales $368.4 $610.5 America and Europe % Change (39.7)% NM Margin decline due to: Operating Income $(47.0) $61.1 – Lower volume – Adverse product mix % Margin (12.8)% 10.0% – Unrecovered material costs % Change (177.0)% NM – Provisions for bad debts Backlog down 84.9% vs. prior year Earnings Conference Call First Quarter Fiscal 2009 11 January 29, 2009
  • 12. Defense (Dollars in millions) First Quarter Comments 2009 2008 Continued increases in truck and parts & service Net Sales $543.8 $398.3 sales % Change 36.5% 27.8% Margin reflects higher Operating Income $73.7 $63.9 percentage of sales from lower margin contracts % Margin 13.6% 16.0% % Change 15.4% 16.9% Backlog up 62.0% vs. prior year due largely to timing of FHTV3 contract award Earnings Conference Call First Quarter Fiscal 2009 12 January 29, 2009
  • 13. Fire & Emergency (Dollars in millions) First Quarter Comments Fire apparatus sales growth 2009 2008 offset by weaker results in other Net Sales $271.1 $272.6 businesses % Change (0.6)% 2.5% – Record market share for Pierce fire trucks Margins impacted by: Operating Income $18.1 $22.2 – Towing & recovery volume % Margin 6.7% 8.2% – Unrecovered material costs % Change (18.5)% (9.3)% – Weaker product mix Backlog up 21.8% vs. prior year Earnings Conference Call First Quarter Fiscal 2009 13 January 29, 2009
  • 14. Commercial (Dollars in millions) Comments First Quarter Severe decline in concrete 2009 2008 placement products demand Net Sales $232.2 $230.4 continues % Change 0.8% (27.8)% Strong domestic RCV sales and backlog Operating Loss $(6.8) $(10.2) % Margin (2.9)% (4.4)% Margins impacted by: % Change 33.6% (149.1)% – Geesink severance charges and inefficiencies Backlog down 34.5% compared with prior year Earnings Conference Call First Quarter Fiscal 2009 14 January 29, 2009
  • 15. Oshkosh Credit Agreement Update ■ In compliance with financial covenants at Dec. 31, 2008 – $81.5 million debt reduction in Q1 – $260.8 million of cash and investments ■ Launching credit agreement amendment in Q2 – Expect to complete late February or March ■ On-going – Tightly managing spending – Continuing actions to reduce working capital – Limiting capital expenditures Earnings Conference Call First Quarter Fiscal 2009 15 January 29, 2009
  • 16. Oshkosh Summary ■ Oshkosh is moving forward with: – Powerful leading brands – Strong defense, fire and domestic refuse vehicle backlogs – Reduced cost structure – Lower production volumes – Plans to obtain financial covenant relief ■ The Oshkosh team is Built Strong and … …committed to Building for the Future Earnings Conference Call First Quarter Fiscal 2009 16 January 29, 2009