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oshkosh B9FAB733-F810-4AE7-A95B-4388C6B08318_Cowen_020509


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oshkosh B9FAB733-F810-4AE7-A95B-4388C6B08318_Cowen_020509

  1. 1. Cowen and Company Aerospace & Defense Conference February 5, 2009 Charles L. Szews President and Chief Operating Officer
  2. 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. Cowen and Company A&D Conference February 5, 2009 2
  3. 3. Oshkosh: Global Leader in Specialty Vehicles Access Equipment Defense Fire & Emergency Commercial Access Equipment Defense Fire & Emergency Commercial Defense Access Equipment Fire & Emergency Commercial $1.89 billion $3.08 billion $1.19 billion $1.04 billion 14% 16% Portion of 43% 27% 2008 Sales 14% Cowen and Company A&D Conference February 5, 2009 3
  4. 4. Oshkosh Revenues: A Strong Foundation Revenues $7.1B ($B) 24% CAGR $680M 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Fiscal Year Organic CAGR 15% since 1997 Cowen and Company A&D Conference February 5, 2009 4
  5. 5. Increasing Global Footprint FY06 FY08 North America Rest of Rest of North America 72% World World 84% 6% 3% Europe, Africa and Middle East Europe, Africa 13% and Middle East 22% $3.4 billion $7.1billion Stronger International Revenues Cowen and Company A&D Conference February 5, 2009 5
  6. 6. Leader In Our Markets NORTH AMERICA RANK Heavy Defense Trucks #1 (Army & Marines) #1 Medium Defense Trucks (Marines) #1 Airport Products Concrete Mixers/Batch Plants #1 Wreckers & Carriers #2 Strong brands value creation GLOBAL RANK Aerial Work Platforms / Telehandlers #1 #1 Refuse Truck Bodies #1 Fire Apparatus Cowen and Company A&D Conference February 5, 2009 6
  7. 7. Innovative Products and Technologies Bringing game changing technologies to mature markets Cowen and Company A&D Conference February 5, 2009 7
  8. 8. 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 Cowen and Company A&D Conference February 5, 2009 8
  9. 9. Recent Conditions – Strength for Some, Soft & Uncertain for Others ■ 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 Cowen and Company A&D Conference February 5, 2009 9
  10. 10. Oshkosh Response to Softer and Uncertain Market Conditions ■ Further cost reduction actions – Workforce reduction of 7%, cumulative reduction of 17% – Reducing fiscal 2009 overhead and operating expenses by $50 million, cumulative reduction of more than $150 million since summer 2008 ■ 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 Cowen and Company A&D Conference February 5, 2009 10
  11. 11. Access Equipment ■ Competitive Advantages: – Global leader in aerial work platforms – Premium brand recognized for strong performance, technology and quality – Single-source solution provider – Outstanding global distribution ■ Challenges: – Soft construction markets; global spread of economic weakness ■ Our Actions: – Reducing cost structure: staffing, supply chain and expenses – Rationalizing production schedules – Leveraging strengths and relationships – Going global for sales Cowen and Company A&D Conference February 5, 2009 11
  12. 12. Fire & Emergency ■ Competitive advantages: – Innovation leader and #1 worldwide brand of fire and rescue apparatus – Leading market positions – Outstanding reputation for design and safety innovations, as well as customer service and distribution ■ Challenges: – Reduced tax receipts expected to lead to soft municipal spending environment – Economic weakness in North America and Europe ■ Our Actions: – New products and stronger distribution leading to share gains – Lower cost structure; selected investments in growth opportunities Cowen and Company A&D Conference February 5, 2009 12
  13. 13. Commercial ■ Competitive Advantages: – Market leader in refuse collection vehicles, concrete mixers and service vehicles – Extensive sales and service networks – Large installed base provides strong aftermarket opportunities – Reduced emission CNG-powered vehicles ■ Challenges: – Economic weakness across the globe – Soft domestic concrete demand ■ Our Actions: – Lowered cost structure; restructured European refuse operations – Serving market demands with new “green” products (CNG-powered vehicles) – International expansion of concrete products Cowen and Company A&D Conference February 5, 2009 13
  14. 14. Spotlight on Oshkosh Defense ■ Family of Heavy Tactical Vehicles (“FHTV”) for U.S. Army ■ All medium and heavy tactical vehicles for U.S. Marine Corps ■ Foreign military sales ■ Extensive reset and recapitalization activities, including in theater ■ Global parts and service access Cowen and Company A&D Conference February 5, 2009 14
  15. 15. Defense ■ Competitive advantages: – Strong brand recognized for superior performance and reliability – Broad product line supported by global service network – Innovations such as ProPulse® and TAK-4® – Efficient and flexible manufacturing capacity ■ Challenges: – Funding for reset & recapitalization of equipment – Margin pressure – Capitalizing on new business opportunities ■ Our Actions: – Expanding armored vehicle and component sales – Reinforcing leadership in heavy and medium tactical vehicles – Competing for several U.S. and int’l programs Cowen and Company A&D Conference February 5, 2009 15
  16. 16. Family of Heavy Tactical Vehicles HEMTT Growth Capability 1985-2001 2002-2007 2008-2025 HEMTT A2/A2R1 (Recap) Basic HEMTT HEMTT A4 Engine: 8V92 DDEC IV Engine: 8V92 MUI Suspension: Air Ride Transmission: Allison Electronic Transmission: HT 740 • LTAS B-Kit Ready • New Oshkosh Production Suspension: Hendrickson • Modern Power Train • Recap Cost <75% • Air Trans on C130, C141 • Updated Electrical System • Corrosion Protection Upgrades • AoA Cab • ABS & Traction Control • Recap Fleet Modernization • Climate Control • Common Cab with PLS Cowen and Company A&D Conference February 5, 2009 16
  17. 17. Family of Heavy Tactical Vehicles PLS Growth Capability 1994-2008 2010 2011-2025 Basic PLS PLS A1 PLS A1 New Production • Engine: 8V92 DDEC III/IV • LTAS B-kit ready and RECAP • Transmission: CLT 755 • Modern power train • Suspension: Hendrickson • Independent front suspension • Updated electrical system • ABS & traction control • Climate control • Common cab with HEMTT FHTV 0107-1 Cowen and Company A&D Conference February 5, 2009 17
  18. 18. Family of Heavy Tactical Vehicles HET Growth Capability 1994-2003 2010 2011-2025 HET HET A1 HET A1 • Engine: 8V92 DDEC II/III • Meet future armor requirements New Production • Transmission: CLT 754 • CAT-18 700 HP • Suspension: Hendrickson • 32,000 lbs rated front suspension and RECAP • Upgraded electrical system • ABS & traction control • Climate control FHTV 0108-1 Cowen and Company A&D Conference February 5, 2009 18
  19. 19. United States Marine Corps - MTVR ■ Most mobile, durable tactical wheeled vehicle operating in Iraq and Afghanistan ■ Current developments: – MTVR 4x4 – A lighter, more agile and more embarkable vehicle to include helicopter transport – MTVR with On-board Vehicle Power – Propulse® based technology converts MTVR to diesel electric, provides exportable 120 kw stationary and 21 kw on the move – MTVR Troop Carrier – Safely moves troops through toughest terrain and back Cowen and Company A&D Conference February 5, 2009 19
  20. 20. United States Marine Corps - LVSR ■ 573 LVSR’s under contract with objective requirement of 2,397 ■ 316 Add-on armor kits under contract ■ Three variants: cargo, tractor, and wrecker Cowen and Company A&D Conference February 5, 2009 20
  21. 21. Defense Products: Cross-Company Opportunities Access Equipment: Fire & Emergency: Millennia Military Vehicle (MMV) and ATLAS II Tactical Fire Fighting Truck Fire & Emergency: Flight Simulator Cowen and Company A&D Conference February 5, 2009 21
  22. 22. Oshkosh: The Tactical Vehicle Innovator ■ ProPulse® hybrid-electric ■ Diesel-electric drive (on JLTV) ■ Three-time DARPA Challenge Finalist; autonomous vehicle HEMTT A3 with ProPulse races ■ Patented TAK-4® independent suspension – Next generation now available for light vehicles ■ Command Zone™ multiplexing technology ■ CMMI certified ■ Patented transfer case Cowen and Company A&D Conference February 5, 2009 22
  23. 23. Axles-Under-MRAP Opportunity ■ Issue: 15,000+ unit MRAP fleet has limited off road capability/durability, especially for Afghanistan ■ Opportunity: Install TAK-4, and potentially other components to improve mobility, maneuverability, durability and payload capacity of significant portion of the current MRAP fleet ■ Status: Testing in cooperation with MRAP Joint Program Office ■ SOCOM also expressing interest Cowen and Company A&D Conference February 5, 2009 23
  24. 24. Oshkosh M-ATV Survivable. Mobile. Mission proven. Production ready. Best value. Cowen and Company A&D Conference February 5, 2009 24 24
  25. 25. M-ATV Background ■ U.S. Army, Marine Corps, Air Force and Special Operations Command have an Urgent Need for a vehicle that: – Has extreme off-road mobility and durability – Is highly maneuverable – Is lighter than current MRAP – Maintains MRAP level of survivability ■ M-ATV must also: – Meet an aggressive production schedule – Be a non-developmental and mature system – Be cost competitive Cowen and Company A&D Conference February 5, 2009 25 25
  26. 26. M-ATV Program Summary ■ A requirement for “off-road” missions for the rough terrain of Afghanistan ■ Oshkosh offering is based on the rugged and durable MTVR – Over 10,000 MTVRs produced to date – TAK-4® independent suspension with high ground clearance, low center of gravity – Battle-proven in Afghanistan and Iraq; (70% off-road) mission profile – Plus Plasan’s proven crew protection capsule ■ Milestone dates for the program – Feb 23, 2009 Vehicles at test site – May 2009 Production contract awards – Summer 2009 Production begins Cowen and Company A&D Conference February 5, 2009 26 26
  27. 27. Moving Forward ■ Powerful leading brands ■ Strong defense, fire and domestic refuse vehicle backlogs ■ Aggressively attacking costs ■ Lower production volumes ■ Plans to obtain financial covenant relief ■ Pursuing new business opportunities Cowen and Company A&D Conference February 5, 2009 27
  28. 28. S.G. Cowen Aerospace & Defense Conference February 5, 2009 Charles L. Szews President and Chief Operating Officer