OSK - Earnings call transcript Q4 2019

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Operator

Greetings. Welcome to Oshkosh Corporation Reports Fiscal ‘2019 Fourth Quarter and Full Year Results. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Patrick Davidson, Senior Vice President of Investor Relations for Oshkosh Corporation. Thank you. Mr. begin. may you Davidson,

Patrick Davidson

at replay thanks which quarter us. results. and release by our of and webcast is published is a will available we this call during available of and A to on website. today, website our XX reconciliation our use the accompanied for GAAP website on available presentation fourth X full slide is non-GAAP now Today's for morning, months. call will financial Earlier that and The being our on presentation, Please audio is joining a presentation. we copy oshkoshcorporation.com. be includes to Good measures also year XXXX slide of that approximately and Slide refer

filed this other we disclaim until all. or references our morning quarter a with conference if quarter the Form earnings stated filings call, answers we materially to statements, statements We including to are among with within or on include, implied by questions, remarks risks update at otherwise. Litigation a year, in a fiscal such Private statements forward-looking statements could any that All unless the believe not and SEC. results these year, those fiscal others, we be meaning Act. cause to to be that statements. that be to of risks updated our make obligation the the These subject different forward-looking matters described or this forward-looking that Reform from X-K Securities may SEC are which have follow, contain to expressed next your call forward-looking to These Our actual quarterly

have hired Operating Officer; Sagehorn, earnings time Wilson for to our a and recently and come John the us call, Chief Vice Officer. and you first expect Chief both Officer, Our presenters President Jones, of us. from is joining President whom Pfeifer, today Also Dave include Chief Financial on Executive Executive quarterly

Please you, I'll turn it turn to and to over Wilson. Slide X,

Wilson Jones

Pat’s to morning, Thank call. you'll the happy you, good few expertise Pat, a welcome to and John in on Pfeifer the lot everyone. to John him brings of minutes. a table, and follow comments, from hear I'm up And to

earnings since share to proud the per earnings efforts announce Fourth XXXX. And I’ll pretty earnings full of up per full share good say XX.X% That's that $X.XX, we're people posting such our delivered and share. to adjusted XX% year adjusted $X.XX, year’s per XX.X% pleased performance, strong results. fourth versus share XXXX. quarter CAGR results. strong adjusted quarter CAGR and per in since delivered first was up and share team XX% members, Today, of compared of per XXXX. again. the I'm Oshkosh culture all prior adjusted We’ve earnings the earnings of year We've was

the gold group for I'm also among last over proud We’ve ongoing leaders. organizations and Sustainability Jones to the Dow that Sustainability month, listed practices. World recognized different is proud business standard, but Jones Oshkosh’s named last the the recognizing to corporate very sustainable announce years, strong this to many Dow sustainability commitment we Index we're global Index, by and been be to were several governance of

company's XXXX That quarter, history. of a Today, XXXX. trend in will and with are estimates, range in for per our we about XXXX $X.XX, in our economic we to be would third which highest mixed talked signals. earnings earnings our reflected outlook more Dave discuss $X.XX Last our initial expectations has is year share detail. the continued announcing

in performing us execution MOVE better higher of as XXXX, a invest simplification allow strategy in strong which continuing and are earlier, while been mentioned business. has I level, also our efforts, operations and results a our the should team our As ever, at than to performing and to result deliver

the on fire outlooks a based stable benefits industrial, foundation, commercial global us integrated segments. with our a being & for different emergency, solid provides of Additionally, defense and

Please emergency talk in year. billion would in record Fire in successfully strong sales environment. segments, impending policy than performance $X in results of our X, tariffs, volatile double of with full about increases an a along We and in I to let's in trade the recession. equipment. of We our as sales posted XXXX the talk characterize Slide turn uncertain execution an digit more percentage defense and & impacts access navigated and

margins of outstanding all the or That's of just three Additionally, I more. segments income year performance. XX% operating full delivered mentioned,

for was commercial disrupted by collapse as was in partial roof a in solid well, XXXX improvement The on track team until production February.

the more track We the than returning shareholders We morning million million XX% that by disciplined $XXX shares $X.XX through be this that raised dividend ongoing are of quarterly we our cash our raising dividend to the cash percentage. digit a record by of dividends. allocation, This repurchase year rate to in capital quarterly announced double we’ve per sixth X.X of continued consecutive share. will

our JLTV year. then Please operational each several that to we've start they The the it discussion excellence this over is working JLTV off business to and earlier turn turn of as X begin including it months. over I'll we the received rate success was through moving team word that full John, will quarter, the past been who off configuration discussed defense production, segments. to changes ramp our programs, incorporating to with segments. production non-defense building our for status, discuss Slide Last team defense, and

recognized for The program is shape, in great is team and the being it.

ahead including hosted who Zulu Award just the with the Bravo programs, officials, and our hallmarks going Oshkosh Corps Spencer, standards. defense defense and Navy schedule to for to keep On on performance, performing to we delivering Navy we're are of and of JLTVs Marine budget. exceeding the Navy fact, budget presented In Secretary all and Richard on those senior of time,

community, in important participated trade defense defense the with in interest DSCI AUSA weeks ago international shows, from two DC. just multiple planning Europe Washington amazing We this JLTV purchase continues countries two to recently and in to drive vehicle. strong

At the we a new showcased wheel activity shows. defense variant engagement Our tactical as two team that AUSA, strong strengths vehicle concepts our leader. reported at displayed and JLTV

to XXXX. we beginning We that to foreign international allies will in shipment in be JLTV for book confident orders XXXX, continue

previously We’ve about US deal the two July. year off talked government hot in budget presses the was that

September, have We President timing on due we and outlook our The happen, the place. also will significant government in not, mentioned of happen, impact have XXXX resolution to in budget the the until what a finalizing November fact repeat, XXXX keeping CR that extensive Trump backlog XX. could already still is did the continuing that late as not government's will I funded in the signed

segments. I'll to X, turn to Let’s and Slide it discuss our to non-defense John pass

John Pfeifer

morning I'm part team, the and and everybody. of Wilson, today Oshkosh proud on happy to be you the Thanks, be of to speaking call. all good with

our Asia Pacific demand sales North mentioned. years, which by experienced delivered methods. percentages this the previous its growth region quarter, is is with positive production digit strong job Full billion, site The just by led America Pacific, in work for productivity Asia The for catalyst were on operations product for to double Wilson is year in and both last versus strong team sales be China. The record on to capacity have campus, we've which expect equipment up outlook the $X this over which the us expand driven adoption, team access improvements expanding completed increased safety continued several next to current results contributing in year. equipment were region and over access year. growth, prior powered Our annual of the that in over the and just the sales we

market Last we talked expect XXXX. continued That in demand Orders order it access placement. quarter, backlog the demand and of due the timing and to were about America quarter, a and down to equipment continue we Europe. this and for in moderation significantly quarter slowing North into lower

generally with patterns rental XXXX call. orders are our national throughout into to likely the are customers annual place means will we'll and they the insight XXXX. underway, hearing for more equipment. We next when comparing companies to but differences this earnings This more their timing and we to year experience orders have demand that levels when early it's to order backlog negotiations year need the closely and expect plan on The

to expect expect as lower we continue the rental for and in long-term high XXXX. but prospects solid said, results. the our customers, also the equipment financial And the that We still sales leader, in believe access we deliver to healthy. historically With remain market, segment industry

a replacement we solid XXXX, believe of replaced. there lot translate need into equipment coming up this America, beyond know of demand XXXX. that Looking nine years North us seven, eight that We will to putting on be strong and will a on in is path demographic age for fleet out is

growing XXXX believe also a and beyond. benefit We to through from continue rapidly market will Asia

segment. again, fire discussion led Please income sales turn for X & Once the Slide operating delivered year. emergency both quarter of as growth emergency by and and they to fire example, full the for a the &

points lot to In years records been income, their income and the and past provide by operating process. sales Johnson's and year management, operating about great simplifying fire for income new margins able order their sales, talked emergency operations, XXXX. increase results. the We've & basis the & fact, leadership, the nearly results they roadmap Under positive for company team, the yielding over since operating set full hardworking Jim margin. has dedication a business impressive, several team and a are X,XXX The across entire emergency fire to

activity, firetruck benefited In addition US to Air Force in as well the timing domestic base, segment shipment from international the XXXX. customer municipal increased as

third business of in in Force rebounding solidly Orders in driver up Air be the the performance a expect XXXX. decline quarter, quarter. from slight We were again to a the strong

were orders level. backlog the For year, a keeping high full XX%, the up at

booked impact in orders the experienced Fire years. has XXXX than to trade policy. In uncertain emergency any slowdown more international last due recently, a of fact, & orders of in they the have XX Pierce in

the higher lower Fortunately, offset helped international activity domestic order volume. has

North very firetruck maintain positive long-term outlook Looking ahead to expect America. this flat a market the XXXX, slight to We in growth business. for in we

Slide about Please segment. and X talk commercial turn to we'll our

back showed simplification normal, but continues are earlier driving sales they through in some visible, impacted note, into and that their the had previously a continued to they focus in finished discussed, improvements overcome XXXX early bounce Our and on our Operations time to momentum benefits the XXXX the segment for high adversity re-gaining built the to vehicle X% nearly led we've some with back challenges It takes the from unexpected weather confident collection simplification from that up they to to XXXX. team I'm be they've initiatives. year, on are by production that quarter, refuse resiliency, commercial related business. as and

be expect of transformation XXXX key and this further We business. XXXX the in to years

XXXX in above collection markets We expect vehicle mixer mixers. the long-term be for for XXXX, average collection refuse similar long-term even with average to below levels and slightly to or concrete and at concrete refuse vehicles

choppiness some customers clues however, be the for expect macroeconomic within headed. monitor looking as to continue indicators, economy We the to may year, where

for XXXX results That to up to wraps turn it and our detail. in outlook segments. Dave our it greater I'm over discuss XXXX business to going for

Dave Sagehorn

this turn for $X.X as expected. and driven an updated sales the were over standard the fourth RCD ramp low commercial modestly, equipment Access slide We've in Thanks, chart airport XX% included finish sales. increases sales the the John, rec defense, emergency, down as products percent greater again everyone. higher morning rev higher sales. increase strong good digit continued, pleased X.X% were single results This by year Consolidated led with Page Please in include quarter deck the reporting And up We're & we will both the truck quarter though, were and ASC prior quarter. fire than JLTV last be year on year, production slide by next that with a team’s XXX be sales to we’ll basis. over XXXX. billion, and year a as comparable X. this net fire at

in or operating level impact was $XXX.X the higher Consolidated positive year, the the in income $XXX.X the drivers quarter part margin. million, nearly the of or lower operating performance. almost access by X.X% of operating operating of higher deliver sales were last Favorable income X.X% team We're prior at able for of regional the adjusted offset to margin primary that and year. and spending, to sales, income all mix lower marketing offset costs, was income fourth volume, million, of of freight pleased the to equipment compared

overcoming was delivered from stronger sales, due of emergency XX% benefited margin JLTV higher quarter, noted margin Defense operating operating operating sales was headwinds partial income the versus of commercial & in higher And to income second quarter earlier year. operating margin the to compared and the earlier. the year mix of of to nicely prior a operating income margin. contributor Fire with the than rebound year margin income leading prior the from the delivering to quarter percentage fourth X%. down segment income Favorable And largely growth, above quarter. compared the another year, the to weighting operating operating a consecutive was collapse quarter continued prior primary RCVs continue in higher operating we roof to to shift a while full a higher margin year, the expected,

share expenses & and the XX.X% completed fourth $X.XX the the $X.XX per shares during months, the higher quarter quarter year than count, increase. commercial year fourth operating Oshkosh our a Higher we generated as earnings Overall, in And free adjusted and of was in with benefited The we million defense, share quarter share per with per in $XXX year. to last the pleased cash $XX share flow Earnings year, earnings XX per emergency, a we're share repurchased compared $X.XX target and million million along share. accounted our repurchases share prior more of of for repurchases. lower of quarter, of full result segments, full of achieving in and the income corporate fire for lower $XXX performance. the

to our for review XX expectations Slide initial Please a turn for of XXXX.

down for compared with to benefits access our XXXX. leverage, in market solid diversity reflected projected to are our be of expect the again outlook. end equipment, The deliver to XXXX, We and in operational segment, this largest results market even

market. new NPD, and for China, development been access has continue XXXX Our growing expectations segment’s to that including product MOVE assume execute that production in our strategy, capacity we expanding fastest our or investment which equipment increasing in

of to billion On a in to billion consolidated sales X.XX compared basis, estimating $X.X billion, we're $X.X XXXX.

per operating to are $XXX $X.X to offset adjusted in in assumes declines adoption million, North XXXX. $X.XX decline to to years estimating growth sales segment level, by also of growth fleet and billion, the equipment the continued $XXX by share to million we are We $X.XX. rental the range to of $X.XX, the to sales compared billion XX% a share of $X.X access per earnings income compared million, $XXX of earnings X% At reflecting partially expected in that companies compared by driven region, This sales region. strong Pac to last pause in two, America compared and product a EMEA Rim, continued estimating

margin operating XX.XX%. segment XX.XX% the estimating are in We will be to

expense initiatives, amortization favorable lower positive the of of less expect offset new and impact We product regional and mix, lower higher the volume, partially and investment. development to operational impact the

and reflects XXXX are FHTV an production, we billion, compared $X.X X.XX% increase FMTV additional JLTV defense, to XXXX. estimating Turning of sales The estimate to modestly approximately lower sales. and

$X.X nearly was XXXX for September Backlog billion at XX.

other year. opportunities the booked works XXXX. time for providing currently with signed for to defense will recognize XXXX, are countries, We contracts that largely the estimate sales in is be JLTV in in sales international for So the not

margin X%, segment, digit We past this expected a in percentage NPD continued approximately JLTVs, consistent this shift margins. to our comments and segment Compared to mix the higher operating high several increased the are years margin reflects spending. over the be percent XXXX, will single with in of of estimating

roughly of see of the we at first from fourth of end similar billion, than a $XX XXXX. mostly The quarter a of in moved XXXX. emergency into what fire XXXX, approximately expected of and XXXX. sales quarter were lower sales did are $XX There expect million & million the sales be not XXXX, $X.X segment that happened will We lower reflection the shift

flat in a North especially to market America expect XXXX, slower growth trade continued Asia in and slow if the firetruck activity, in war international on. We drags

its XX.X targeted margin We benefits continued operating range effectively to & The the the fire allow that to expect to lower expects and offsetting team execute strategy, achieve simplification for in segment, additional to negative will sales & emergency and has impact operating to the them XX%, XXXX. realize income. of fire to increase emergency margin

commercial billion And last roof segment, winter. in XXXX margins a up after range margin the a $X.XX sales slightly collapse X.XX%, to with John X% negatively of to by impacted expecting XXXX, segment, from and operating estimating rebound in this consistent the described. were are we're of what We approximately for partial

corporate will of XX.X%, to of will an estimate to be We expenses we dividends the XXXX. XXXX. be And target. million $XXX the will to shareholders equivalent XXXX we of $XX Below of to estimate with similar $XXX that income full free return rate cash count for repurchases, form repurchases, and million, the to share and average operating XXXX roughly tax share we XX% share which consistent are long-term the year estimating an XX.XX% impact flow in expectation reflects million, our line,

year, the million, flow another reflecting we full of cash year generation. of For cash strong are free estimating approximately $XXX

We drive capital reflects also expenditures shareholder level million. growth long-term in This continued $XXX returns. initiatives be estimate to earnings investment CapEx designed of approximately will and

the first to defense sales. higher down be percent at lower equipment access sales more & expect Looking with compared mid-single to quarter, offsetting digit emergency segment and sales, XXXX, than fire we

of quarter year be the basis We segment. in on commercial reflecting this quarter sales to this to choppiness we modestly, expect down a some expect

which margin under a margins and XX%. than units doubled large basis, the a prior of the meaningfully to expect We impact earnings year more cumulative operating than segment, program XXX, large the percentage be under on the due JLTV receipt essentially part segment in adjustment more resulting of on the quarter ASC to of large to down sales in in a contract, order defense in that

year. first but to expects spend R&D don't in as defense they adjustment segment be last higher of the quarter. expect is cumulative also the in impact XXXX, another large order expecting as The Defense large the quarter JLTV

operating to also margin, that don't commercial XXXX. expect larger a be we expect due than We first the of quarter sales several decline, again favorable percent income XXXX, down will in repeat in adjustments their to

Wilson Jones

going for I’m comments. turn to now Wilson back some closing it to over

Dave. Thanks,

for our quarter earlier, earnings year be highest driven our third outstanding in mentioned year, execution. initiated expectations company's solid by outlook history. XXXX, strong would for We the the and I as Another includes team's results, which

right position these the are believe and impressive future. places can with sales for we manage to the have believe And in best earnings deliver to we we and right Corporation We strategy the MOVE, businesses performance. the Oshkosh investing

over get I’ll turn to Q&A it Pat started. to back

Patrick Davidson

like remind your the follow ask follow please answer to period a in get I'd we one like Wilson. you’d limit Thanks, that begin to up. the question and everybody, this please questions. additional queue After you of questions ask plus back up, Operator, if to call.

Operator

(Operator you. Thank instructions).

comes line Frohnapple proceed question. Neil question Please with your first Group. of from Our Research Buckingham the with

Neil Frohnapple

the morning. Good on nice Thanks. Hi. Congrats quarter.

Wilson Jones

Neil Thanks,

Neil Frohnapple

with to better access FY’XX Starting the equipment margin performed at teens, the the how mid in last the midpoint high segment, appears for you decremental is downturn. of it implied considerably than

the So product mix? cetera, can get think margin profit walk just underpinning comfortable I et mix, could drivers we you mentioned be ’XX. through Dave mix so outlook for regional outlook, comp, price negative, some of would the customer with the

Dave Sagehorn

Sure, Neil, and good morning.

were you better would it. access, but in only when overall, think say, referenced a in we XXXX in much whole I the company So place overall, we're not than I really

coming ’XX, amortization in for we've number decrementals lower of access overall, we're You think a one think things apparent much look we're got strength prepared access, positive different. it's even as being really about base. versus we in as in, the you segments But the expense. said off of at that the very higher fiscal there, and the a non-access in And I remarks,

acquisition over So JLG million rolling off. accounting some is item of $XX about purchase from the year. That’s the favorable year a amortization

continue mix on We’ve as about base. regional supply over we is, Offsetting that as say think there's for business. can our us. that of we category which we put there, we’ve under things operational fall think of bit year higher our invest here. whole little help as really we lot improvement within things opportunities with of mentioned, is the I would that deliver simplification those, really got A a initiatives, still there. And that in working then be in control a will year, view the nothing decremental we margins as We've that out execute internally some the talked going a there. we're the that NPD to on the do to We we to headwind lot us. working have But have heroic well

Neil Frohnapple

margin X%. That’s Dave. wanted FY’XX, Okay. commercial the outlook And just helpful, segment then to the about ask for for

I to think said X.XX. have you may X

excluding I you been think in I have the believe. So of north would roof X%, FY’XX, collapse

growth? So outlook the talk considering margin sort why about digit the simplification you also and wouldn’t be year could for single sales low next the of higher initiatives when

Dave Sagehorn

and Sure. really And The talked higher about in position initiatives undertaking biggest are future. segments. driver that to they there the themselves of other our better across business. there is the then we're continued all some investment that seeing We NPD, the are for

So very this investing good that think as the long-term we I thing of future for a we're overall, the businesses. view

Wilson Jones

when if stages you're fire couple the of from Neil, that's investment. to you first because slower back, the investment seeing think go & of that margin improvement were they a of years with started in And made. their continuing what early that They’re standpoint commercial. journey, the emergency I

Neil Frohnapple

pass on. I'll it so much. Thanks Okay.

Operator

of Our next your proceed question. line Goldman the with Revich Jerry with comes question from Sachs. Please

Jerry Revich

Hi. Good everyone. morning Yes.

in or driving strong more on about, talk You and and folks the really had equipment just product gains that just Can any expand share are market? share a in performance distribution emergency. are strong the Thanks. you & bit initiatives really there momentum Can lines you gains? fire access in your specific

Wilson Jones

Jerry. Yes,

we're and share I those gain more we've where from a see areas. can been we that grow standpoint, we targeting to putting resources the focused think profitably, segments

been a and of introductions where their refuse some of good have some emergency us. area I of has the for & variants Ascendant collection the continued Fire we a competitive think clear with that, advantage.

that introducing sustainable give competitive advantage. us continued that innovation, products we're that Just long-term

the share one to have was and just ’XX. jumps didn't the that that telehandler probably in out maybe the So the really most, in because thing, you we big one but had and can’t capacity we ‘XX point was it I to

is our gained you're guess, the we would telehandlers in in if share It what biggest gain? So share asking, be back. back I But ‘XX.

Jerry Revich

then for order segment, outlook, because backlog. you any ’XX terms a in share as in And of bit embedded of are looks we delivered the rate it in course had And the the exiting run the come there the like strong topline telehandler year that Okay. access gains down backlog outlook obviously the is over ’XX, tougher.

I'm wondering the So considering if demand that's out relative market of we're you to could to CapEx should rental within tailwind more topline seeing be just industry. that touch embedded any significant we the on what cuts in mind keeping outlook, be appear

Wilson Jones

That's a Jerry. lot,

quick the answer gains is any into not forecast. think you that market significant share there's I our for

out. - some - in don’t not customer normal would market our a markets and large But working conquest through John, we year-end see do accounts to our in, you have targeted based that that if I working anything it's the through want throw plan we targeted there's year sales bit. a really like we have really an think It's know, on any annual contacts year gains. I you on basis. share you

John Pfeifer

I’ll John. is - Well, this just

just in. access, marketplace. got to outlook the in for Asia for in declines seeing what as forecasting based it’s that we're high the as right to XXXX, XX$ neighborhood that this that general a right improvement for we're got the access think leads outlook America we're upon the We've access we've And modeled in We’ve XXXX we've in we're that and or that the process but got Still you Pacific. a now we business, talking about ‘XX with like got Just not see. double and XX% digit the think forecast business, pretty the increases be in. neighborhood decline to right is in in frothy we Europe, the digit year. forecasting for double in us we've going in also ’XX. the we North and outlook robust

Jerry Revich

you. discussion. the Okay. I Thank appreciate

Operator

question Raso next ISI. from David of question. comes Please your Our Evercore proceed line with with

David Raso

of Good amortization morning. $XX Actually you first, JLG that XXXX? for off can clarify roll million

Dave Sagehorn

Yes.

the five significant - off. would If you be next years back amortization it David, in last look roll year, go numbers was put there indicated at was and there, it the a and XX-K that we

David Raso

unique trying since is something just down? I'm guess to simply that roll Is to the I or that about it's years been the understand off. deal, step it XX there

Dave Sagehorn

the some intangible that No. we XX had they're years, had lives and becoming fully XX of to amortized. assets of

David Raso

And flow dividend only all repo. of to Okay. a repo, regarding The to for returned $X.XX essentially used couple free trying the and new the some there's last XX% just of be there. flow shareholders, of messaging most figure if you've years, comment, out to free with cash dividend even rate million. And about quarter, dividend mean, mean, the the new I $XX I is cash

share looks the like why count when creep. So I'm is And for flat before X.X% whole is it XX%? should be shares able B, the to up you assumed just only the then out of A, to square trying it take year

low X.X. much is there XX%, of to creep? is So EBITDA net I to so that debt guess, cap given debt is only free flow, cash as why And net a percent the the again,

Dave Sagehorn

a in So embedded over about capital any But so talk strategy. that I missed take if We’ve remind there, disciplined time were please to questions David, you've of me. with all the tried our approach heard your allocation just XX%, us from to target is And higher. ebb course flow our of The to That that. quote couple to years the over shareholders that have and been see of year significantly of you're flow year. returning last going a cycle. cash free XX%

line XX% lower capital is the is that. the initial You early and guide than it is was go that This said, a ’XX. part back and of strategy allocation for we've and what It's approach. years with significantly few right fiscal in

as monitor with makes go that So we can this deem that time. continue to and that adjust the year, we as appropriate we think we at We’ll sense through that.

And the full XX.X. basis, then we for year of at in terms average were our share ’XX, on count, a

see in is shares on will year, creep, that that year. those the into kind on XX. assumption the We’re during in and the of here Again, going components There change, timing evenly may purchase some the guiding came year. depending the the we to will how we out year. repurchase we shares the the throughout for of But that be right depending now when of those things count share calculation are play whole

David Raso

that. appreciate I

So simply That’s the repo … our only two in because dividend for to of ’XX. is again, we'll there the It's flow the XX% go in the and from baseline, acquisitive we're cash just free and going mechanical. more process messaging left in XX%. years, said thought here We’ve last

Dave Sagehorn

It’s more or repurchases. going We do were more that We're one the they look continue Yes. themselves. mean baseline. That external we the message to may and if or to intending at present mean may less not opportunities Yes. opportunistic, share to be other. way

David Raso

Thank right. it. much. appreciate you All I very

Operator

line your question. Our next of Thein Citigroup. the Tim question with from comes proceed with Please

Tim Thein

Thanks. Yes. morning. Great. Good

one would terms of you was expected on been out that be X in in XXX what's question of order defense. thinking how based I to some up to ’XX. JLTV Just on programs can of here the through magnitude Maybe walk million they're play announced.

takes. some help can and with just other So maybe of puts you the us

in Thank color that the are thought should more can help I heavies you. recent expected of and land maybe give how - here odds just be But the FHTV within terms ’XX. some you. to those budget you think helping us had I some in mediums and

Wilson Jones

Tim. Sure,

expect we've And growth sales of overall. the we in said going declines and modest expect years. the out last become As percentage in president's, we the that, along of in continued both a on sales the that's terms sales. segment really several with JLTV. the That’s remarks, the then DOD the some to what line bigger of we And do budgets or prepared mediums in seen with heavies

kind it's that what really now, think I with been major for moderation the two So saying other domestic of and a consistent programs. in grow, continuing we've while to JLTV

John Pfeifer

place. backlog that pretty is And well in

Wilson Jones

’XX. X.X backlog Yes. of for billion fiscal

the - setting for good that feel defense how we real year. is up about So

Tim Thein

terms non-possible I MATV in what from again, team And to the forecast, know to hearing international an difficult landscape but it’s of is prospects?

John Pfeifer

Tim. Yes,

continue good from We hear to international an things standpoint.

Slovenia. about talk us heard probably you've think I

State a with of Montenegro just Department approval. got the And We have agreement has State a approval. Department Lithuania letter recently, them.

We’ve UK that from testing see now. talked has some variants our two before allies. So right about more to of that activity start customer our European they're

several them had for We're this Europe because expect they an that GLTV. testing. our say Middle of to at international But order. to timing and I grow good shows, We about sure the interest countries are is continuing the the other with would point trade not East, and couple we've in order level come of a

Wilson Jones

in the this I some we year would for starting I we're are Tim, ’XX. JLTV that, get going to confident add fiscal just backlog orders think overall in sales actually international that

some but it's on seeing this taken So while, probably of we're orders. unexpected. with and activity dealing little I cusp the But of think we're into a international purchase customers, that's not actual translate

John Pfeifer

decision has the think full that production helped of rate I push And some along too.

Tim Thein

Thanks it. you. the Thank Got for time.

Operator

Please next with Our question question. the JPMorgan. comes Duignan line with Ann of your proceed

Ann Duignan

Good morning. question hi. Yes, access business. My first the on is

requiring in wondering, too? I'm when bit customers prices now price and increases If are embedded what had are list a your at rose. you asking talk steel surcharges, are could now down? prices steel surcharges And Or you list lift prices you. not cost You to those little that environment of the imposed are now those customers about looking price just

Wilson Jones

Ann. Sure,

I in saw First, I would think our you say, pattern ’XX.

important our disciplined very pricing. costs. cover their were teams to Our with It was

were those Some of significant. costs

now discussions in in the discussions actually in NRCs, with customers all we're our with the non-defense of So segments.

be a you today inflationary about, just an that there a thing are to standpoint, competitive from and would hear but factors steel. and too than other the going from us lot think talk not I specific I'm standpoint,

have today, that they look play. you the costs in If standard into safety are NC coming access

access very are with all skilled labor scarce. cost labor through going in to being increase manufacturers I think

those material think buy non-steel are and some from that but we're issues of I working exclusion probably of components in steel and those the there our to we US, an are try have we're and outside, through, approval. are standpoint, tariffs, the you to Other annual know, that the working through we those majority subject on XXX some the to buy

these going some with, lot now, market middle into hold back talk of setting would specifics on they But probably is those a And more some we're the into we in There’s that we're the what real, there that we're another are of of going are because going about costs in this and So I are even in say well. has the though significant understand get farther year. of our as going into negotiations we involved discussions pricing. cost the moved to right customers, steel Most down. move dealing with.

Ann Duignan

we help then, that on the spring? have fiscal can we into of that the you the into your Okay. outlook kind come some this see ’XX, your me before rental make for Or wait until forward? of to get expectation Just I quarter reaccelerate risks appreciate the forecast? on companies we does do end order may time with the side. for large we the heading backlog to color. into get not orders Is the access around until - access to that then And

John Pfeifer

that is Yes. this answering start Ann, John. question. I’ll by

seen shift regard First orders. ‘XX And in go big and normal. it to change, was back shift seeing and really probably ‘XX a with the really of we've to we're all, when in timing things

if some say period. we backlog expecting ’XX, past at you the in orders have point was we're time. fourth So in the But year is over big at of few quarter, a that the consistent our our years, later it with really orders the gotten ‘XX very would look backlog in those last where

that ago. abnormal It's now. it it's the right a against we when backlog look not backlog an only gigantic abnormal you had So at year

Dave Sagehorn

are Dave, headline of there numbers add and is just look if this fourth orders quarter very you a maybe, easy backlog, terms larger were we Ann, orders the year. to that in to that little see in at placing that. - quarter then that, several now color quarter, And on orders it's when placed those there this customers fourth into are sizable year last of in look the first so

a on of couple of million. a so $XXX And magnitude

do some instead the apples orders, try an at X.X% XX%-ish, basis kind of and apples in to quarter. being look more So of on remove we to think of and more if down the we fourth orders in were a quarter like of the down this pure issue, timing

past. a shift back to we've John the of of pattern what So of more timing seen in I some that a was bit saying that the supports little just historical think kind about typical

thing to the from seen of years, also over what $X.X last billion, last other year, had quarter got kind a those was two kind how had years say we would we very in talking remember, two again stood The strong is, of about I out past. typically the we've first order It like the quarter.

surprise So see timing as we’re some of through going some out some from into wouldn't the from QX. of that customers move shifted this QX some we customers go quarter, but QX orders of of see larger it to benefits to us QX, quarter those their to and

it's different order access. year And expect going this year a to be So terms cadence should the in in I think that. all of we

Ann Duignan

That's color. could squeeze big in follow How that. of a up Asia a very as And now? real total on percent helpful quick in sales if I is access

Dave Sagehorn

expect it growing we years. quickly our strong but nowhere the continue and what I going is to becoming near double growth that's It's where there. relevant, And it seen say more We've Europe fastest into is, is region. is, coming America would and North digit

Ann Duignan

XX%, So X%? XX%, is it

Dave Sagehorn

Today it’s than less XX%.

Ann Duignan

you. Thank Okay.

Operator

of Weber question your with Please next with question. Seth RBC line from Our proceed the comes Capital Markets.

Seth Weber

I remarks more then of sounds your I growing market. margin markets may size investment of how you answered market? for that think morning there, guess, what like Asia you're it question, kind making on can or Actually level faster question, these good access you kind the just be the what up at of capacity the guys. than lower like - sounds some Dave, profile from in Hey, the And - following you'll of that it that frame the established be the and

the margins are think right So going forward, to to going that Asia-Pac way going forward? Thanks. dilutive about is be that to access

Dave Sagehorn

Sure.

And expansion. a let's a the to from capacity with from production start of I'm not production. so significant get into percentage is a increase but the standpoint, going specifics, this

and the expect growth given it's the on the So couple in overall so we think years. region, just world. surprising, given outlook best and last yes, in region years, the coming we've there America it's then in about is seen that opportunities the our a of there. And we the meaningful expansion the on mix, We're margin probably regional excited is the North in warranted, not

some still in about regions, of Asia. think building you infrastructure the one, we're international smaller If

So that we're there. for scaling expect growth that we

associated lot We shipping from there over in-country, a logistics of little things that America. in don't a drag be that on to but you see are with that's bit going there America. - still are So you've a that margins. And produce certain a do costs North North got we

those seeing over the - you're or increase regions think time, I So North we're closer and in in see get America. those to margins going to moderate what

Wilson Jones

Yes.

a is Just to It’s, country. we're add investing. because high bit. a little know, SG&A as there, The you big

So And a market very or is, market. China. with They in boom six, good the There’s in one we're call we've that and sophisticated lot working US. five to like don't heavy a And this rental it. operate about trying would NRCS it's them thing palletized them. relationships the really loads have closely built work with companies what like I we

job tower a around cranes of use So to lot booms sites. move materials

us. in the of So is to down telehandlers potential still front road develop

expect opportunity and So it's some we down road, have telehandlers. - that with that with started we’ve we’ll booms, the

So it of dynamics boom market, years Europe's been, big that this the it be won't stays the is many boom if as on the pace until it's market as market.

Pacific. China. We we like So like Asia

Seth Weber

Thanks just JLTV still a number Is Okay. is color. good that for then for to X,XXX, a X,XXX use And units. that still clarification. XXXX?

Dave Sagehorn

Yes.

Wilson Jones

Yes.

Seth Weber

Thanks guys. Okay. much very

Operator

comes question. with Dobre from line proceed your question of Baird. with Mig Please next Our

Mig Dobre

looking I'm And Hello. everyone. had assemble I'm fiscal what orders. ’XX, to and revenue I for go how fiscal framework of I I'm ’XX. at to morning appointment. in thinking guess the using, of understand just you outlook back that you billion kind want Good your $X.X I is, guess your access to And worth looking

prior of about it year. down XXX thereabouts but million worth call obviously got, million XXX from call backlog it or You've backlog, the

here puts X.X? So when X.X fiscal to looking what of talking at get sort and you're X.X are takes to about and ‘XX revenue, of you're that us billion the

me, it an really order that's your in assuming a than North from talked and flat that existing you that predominantly market about happen? re-acceleration? demand. the when clients of versus have in fiscal kind I'm ’XX? standpoint so, Are embedding correct assume factor rather of where some if that a wrong, we would Europe, if me America strikes it and Because outlook is future And backlog, And you to

me if correct maybe some would. shed you So light if I'm something, misunderstanding here or

Wilson Jones

regular real do It’s off, take question make asking, XXXX? sure for and question a are robust we review that it. And and a Mig, on John of build very I'll touched and broad we how in. we the in at assumptions. but looking right okay, process up to Dave a on terms jump it basis John let outlook you're good some our of

the our hearing or I we're the ‘XX customers, of take think of is that we the making. our of like business seen, a ‘XX we pause expansion. bit were year we are. to first buying level expanded thing But same you a and with going to to little years, understand, we Those I They haven't type categories as a of years equipment, that that good that, that conversation And had they anomalies. are order them. in think come see ‘XX a and believe they're for bit, with quite talking

years, ‘XX you'd So today. we backlog you if similar a number ’XX, go see came those into that have and back we to very when

was are in we've patterns on time. Manufacturers buying our go to There and capacity. today. similar to customers the seen performing what ’XX very So ‘XX were

down, And customers products so taking within comfortable come now that lead delivery our of and quarter. times the in same and are ordering have quarter,

today, standpoint, heroic of forecast. tell assumption forecast this to lot going what I on you from I'm we an as there's lot the you it than more can So at but a to a a with science - look big call it share don't -

be America Europe. But spending, end they will the on a commentary coming and high digits customers in We what on the guidance for this Obviously good our year. do thinking needs. about see North double construction with in looking or the and XX%, of we end see of down lower guidance, lot are of construction

and we today what with we've So the to can through there's go it you, on I’ll this a we've have than I build but guides long introduced. worked through the lot hard, up with comfortable call, and tell assumptions more the

Mig Dobre

QX backlog Okay. for would for Recognizing how to year and here a QX? all well, as kind revenue over think us you is a out to obviously year figure margin we're this expectations trying advise on basis business, that of about and

Dave Sagehorn

during commented the remarks, do we that expect the prepared Mig, think I in we lower first quarter. sales

the about, throughout about, prior we we're Wilson's year we’ll two to as John's going over And that to years. going firm consistently equipment. actually coming obviously back to And orders to where talked sales respect, talked that to as closer are going down based here. think wanting those ‘XX see from quarters to I going ‘XX be that year probably up a be, on were we the go. we different early pretty the and were but little view have is this

Mig Dobre

guess starting out is, be what with should over thinking if that's figure year I'm QX to revenue is on to a going down we're trying we it basis? down, call Okay. on here backlog be that XX%, year XX, But XX% I in

Dave Sagehorn

We believe our believe not guide it will overall be for do line year. in that. down No. we with the

Mig Dobre

XXs. low somebody low, Last they're end think the relatively XX.XX, segment the of already Okay. question low that on for me asked margin. I about is of The margin the decrementals, in

low to Meaning, any How XXX downside? decline? Let’s advise for end just assume additional XXXX that? you decrementals revenue on talking an on think million of your that decremental should accelerate, there’s of do revenue downside would we if revenue How think to about instance us versus we're that extra guidance. the

Dave Sagehorn

I don't headed margin start I to low that, think But said, then guess - what then wouldn’t to seen I the full be and on And responsible. the again. there blown full market, on at that typical - if I decremental, at that I that is, if in that and the we've with going would thinking talking to we're with would mix, you're say a would blown we you're historically worse I recession, would is, look which mid ’XX a ’XX, in what timing. mid-XXs XX%. mitigate well, decremental say this off would is, and We’ll is first XXs magnitude absent look down. is a about based recession talking things in whatever depending to we'll the region anybody's the mix, would say I start into can get take that be, it’s we percent. as get I margin actions magnitude be we And about, low This take what something pull a like

We aren’t mitigate work this opportunity overall. would that. sacrifice the long-term and business But going for to to health we

John Pfeifer

Mig. This John, is

now do an Just not comment we're not additional on that. see right forecasting. We -

we any not a customers That’s market. we grow more ‘XX of are a seeing before We scenario.” start again our leveling what the and with to beyond. in It's “downturn see in of

Mig Dobre

I here they I just you. sure assumptions to want to understand. something and can with a that differently test make want kind the world think about than the we work everybody stress of little if have to

the Thank you guys. So color. I appreciate

Wilson Jones

Thanks. question, Mig. Good

Operator

comes Please Our proceed next question the from Jamie Suisse. with with line your Credit question. Cook of

Jamie Cook

telehandlers F&E ups off are customers is are guess other guess again view your mix The XXXX, relative mix. have couple well margins, of telling despite going in what is, And America, in my your booms XX I which just just a I talked hold you that then is there access. are different modestly color sales - the than XX on XX% up do And is on then versus down about or very Hi. to there the in third, - North which regional in to you or implied flattish. to North guidance? them? follow question America, a you

assumption Just self-help is simplification what your sort of efforts. on Thanks.

Wilson Jones

too. and are Dave customers of up XX Obviously that a North assumptions. start, down but in we But let view. roll jump I’ll and lot XX%, this John our America other on I'll the our access factors then of our view, to part in Jamie, here our is there take

good we years. from wouldn't believe are a to is category a has We be business as our next look going year at little customers the it They standpoint. just of commentary a less of year them couple than say what hearing are. I your So been for the last most it's - same

jump I’ll mix, the booms on On regional in Dave and. let

Jamie Cook

a understand boom if Well, mix. understand regional just versus mix. telehandler the there's yes, to I trying favorable I'm

Dave Sagehorn

Yes.

I significant movement have we're category. shift the believe but think down, overall, a going We we Jamie, you do to then product be don't telehandlers. to within expect

So within the within family for or telehandler boom example, family. the

a have We So from together. overall, numbers a the don't mix significant see rolled tailwind it's or headwind standpoint. product

Wilson Jones

margins. F&E And

Jamie Cook

Okay.

Dave Sagehorn

the And number past in F&E been executing of it's they’ve be margins, engaged, a and activities just and team energized to fun of in continues watch them successfully simplification The that action. to continuation the years. over

for every to think day for confidence high providing find themselves their and in ’XX. opportunities outlook they we're the they new I that and, challenge day ability every meet have them fiscal

Wilson Jones

commercial And with team what's is running needed, playbook our same that now.

with fire & going emergency. they're same type going the excited placement do of with on we're I product think about what things were to

Jamie Cook

Thank color. the appreciate I Okay. you.

Operator

comes of Shlisky next Our a line question. question your Please Company. & Mike Dougherty proceed with with

Mike Shlisky

thanks guys. To morning yes, us Good guys. -

the that could be fiscal on conference said You call access modestly. in last XXXX down

at midpoint, looking you XX% were the about at guidance probably here, down. down Now

improved has softened were or for you thinking what quarter, that is outlook So August or your last since access X?

Wilson Jones

the evolved. year. our work points more roll think The get as to conversations I guidance has we Mike, we the outlook more up for data our we have,

You point meeting every with little that's and better bit data added. every get a

rolled calling specific would down it modestly. is than today. number So like is a what back we felt now we seeing And quarter, the last up other you're be to this weren't we in what

Mike Shlisky

on on then about XX comment the as buyer follow up course, wanted different and volumes. to earlier margin number of great last a on us can you margins timeframe? you've as of And clearly can question - you couple business get I Jamie’s you last as think to Okay. a secondly, years. but give plus of your where over It's an I update a mean, to points commercial commercial on far

Wilson Jones

one This be little our commercial in with tougher dealing all Mike. double chassis. is to they're with always that of margins businesses, digit is bit Well, a our goal

to look refuse where say fire emergency, commercial that's were a & have freightliner their majority products at on collection than add mac they the you or vehicle them of or more concrete mixer available much custom a chassis. chassis, value If

do more they get it. believe a that So can with margin challenging commercial, little to level to but we

them we quarters continued around good they Unfortunately, for were event And investment that simplifying they're to but really the now the February by that gain their - will quarters continue. last going principals, we'll is we momentum. them, what little and but get as be had you're last slowed down going we their there, for bit, and expect seeing actual good start just to way the carving XX/XX business two believe the we that them haven't will team, that to goal It's execution their year called forward. the when a

Mike Shlisky

it. appreciate guys Thanks Okay.

Operator

comes with of Please your line final with question. the America. proceed from Gilardi Our Ross question of Bank

Ross Gilardi

the year these type issue. of any to Thanks any was just I moved wanted huge mean, power has it has last guys. wildfire I refuse it me in. business? your - become business, at needle that become for business, your was of for Thanks parts that access California like Is structural emergency the all? obviously & is wildfires, for A, a - part for of and demand squeezing any know, the outages - driver fire it

Wilson Jones

The been build needle but example, cleanup vehicles, anything a unfortunately say But big There fire with bit. wouldn't been for lines. Ross, it's little anything significant. has I our not we because There of a devastation. moved has been say the concrete I wild product mover it's fire of land collection. one of pouring it's primary refuse has it us. that wouldn’t

Ross Gilardi

a Does what equipment needs like seeing they and and looked curious your out there's home? it. view managing at and how on it to a access your on to to just a inventories, relative that feel lot just of got into softer there this, history then year you inventories, are how you're production, demand end just how going from your find Okay, competitively? just year like competitors hear

John Pfeifer

to is steps to year. bets very question. This manage We John, to don't the any We it the didn't need we inventory. Ross. I’ll in last extraordinary answer - make directly, take put big any really

us with as in absorption XXXX we're that level of is with So But that we've And comfortable that get for in got. certainly guidance into than be the demand. lower inventory have. it production in was and we to the going we production XXXX, lower is forecast line factored

Wilson Jones

years. weekly a We on you’ve watched there, Ross, I’d just manage over our us And the that production Yes. levels basis. add

adjusting year. past so were been since And we've production orders slowing this

I stay all that slowing overtime. into to may and managing attrition. teams all with sales headcount planning management We the think that and We factored into at down the line at, letting things a look are our at We go different really good that go factors is product as John process. operations said, for our ahead that with weekly And our down. inventory be of of our way try we've that guidance got XXXX. look

Ross Gilardi

Thanks very much guys.

Operator

of the your Stanley. from question Please next Courtney with with proceed comes Our question. line Yakavonis Morgan

Courtney Yakavonis

the just access, emergency, growth and trade robust in. the out fire follow guys comments the international I me orders policy there. squeezing on some impacting up had question your called about to of in you APAC & for Thanks a quick on Hi. in yet

some elsewhere, Thanks. F&E of when of big and of to So dynamic back is I do a why you two sense And being those I also orders international and there that how understand, was of kind the guess of kind kind are percent between up resolutions, have can if we in we where in pent as just will different wanted the think F&E come get segments? international also if are or going a XXXX.

John Pfeifer

Yes. It's a question. great

to first China international market, the our back. business, is largest that little you up for that believe in American F&E we're a so But conflict material able that weighted highly international all. F&E hope at basis. fill, business an the exporter to our our Having can an the war we're growth all, is growth what's is not we easing because it resume going example And in has primarily a of do business of our when - business business look primary one said and to we for And I of bit that, there hurt export North business. our have the of is that's on First to why that of in there that's trade pent and demand trade that we China. get normal the China, on. markets

produce business access Our is in China.

So they’re trade by a we’re seeing. that lot the conflict less impacted

Dave Sagehorn

would emergency entity, the entities. customers Courtney, the Yes. as equipment the is customer, governmental other & typically a just at thing on fire look access the so commercial you end add, are and I that, customer

Courtney Yakavonis

about how Okay, that all of the between new helpful. to past of does year XX development the the then out couple over across compare your great. called million, of NPD year does growth said cost it's That’s higher think growth over you I on in And kind that split that the segments. And you just how that product years? divisions?

Dave Sagehorn

terms growth growth a - seen more. is And we standpoint, have dollar the is year, the year year that. we a As to absolute meaningful are said, highest the of that over it’s within growth sending segment it's defense development over spend. going new dollar year all this more an than going be the From with to four segments product in then in

Courtney Yakavonis

Thank great. Okay, you.

Operator

Our Elliott proceed with of Please Stanley Stifel. comes line with your from the final question question.

Stanley Elliott

mistaken, it’ I work a not higher normal question market. feel I'm year. peak new prior kind we're about? this still up framework just me we guys level. move the to quick well coming for beyond of like Normal or American If even as thinking with get I a think fitting to It mean, of of that modestly. this fire is flat, kind of sounds you trying - I Thank fairly we're North the off maybe on kind in. kind like I'm from

Wilson Jones

fire the that exports cases Middle of there US so, market lot when market, out that, there. little see growth with that of really a going We a into of believe X,XXX. has so, a was and or going we’ll on years and maybe That’s that Stanley. bit At X,XXX unit US or most in than way. so But trucks little the here was slowed, XX back East, and farther stopped

normal is believe now we with where some opportunities. the new is So about it growth

Great, guys. much. very Thank you

Operator

our question-and-answer to session. remarks. turn concludes This would the management back to And any call I over for like closing

Wilson Jones

or want appreciate us thank to conference Oshkosh everyone. care in earnings and I on our just We speaking you joining with a to look forward today. the at your Corporation, call. Take everyone next for interest

Operator

today's This concludes teleconference.

disconnect Thank You have may wonderful a day. for this you your participation time. at now and lines your

Oshkosh (OSK) 30 Oct 192019 Q4 Earnings call transcript