Oshkosh Corporation Investor Presentation MAY 2019
(NYSE: OSK) Forward-Looking Statements This presentation contains statements that the Company believes to be “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 cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s ability to increase prices or impose surcharges to raise margins or to offset higher input costs, including increased commodity, raw material, labor and freight costs; the Company’s estimates of access equipment demand which, among other factors, is influenced by customer historical buying patterns and rental company fleet replacement strategies; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the expected level and timing of U.S. Department of Defense (DoD) and international defense customer procurement of products and services and acceptance of and funding or payments for such products and services; the Company’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy; the impact of any DoD solicitation for competition for future contracts to produce military vehicles; risks related to facilities expansion, consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; projected adoption rates of work at height machinery in emerging markets; the impact of severe weather or natural disasters that may affect the Company, its suppliers or its customers; performance issues with key suppliers or subcontractors; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’s products; risks associated with international operations and sales, including compliance with the Foreign Corrupt Practices Act; risks that an escalating trade war and related tariffs could reduce the competitiveness of the Company’s products; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; cybersecurity risks and costs of defending against, mitigating and responding to data security threats and breaches; the Company’s ability to successfully identify, complete and integrate acquisitions and to realize the anticipated benefits associated with the same; and risks related to the Company’s ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors is contained in the Company’s filings with the Securities and Exchange Commission, including the Form 8-K filed April 30, 2019. All forward-looking statements speak only as of the date of this presentation. The Company assumes no obligation, and disclaims any obligation, to update information contained in this presentation. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.
Investor Presentation May 2019 2 Oshkosh Corporation Key Messages . A different integrated global industrial
. Positioned for long-term success
. Committed to high-return capital allocation
Investor Presentation May 2019 3 Oshkosh Corporation Profile – FY19 YTD*
Revenue by Segment Revenue by Geography
48% 86% Access Equipment North America
25% 12% Defense Commercial 15% Fire & 5% Emergency Rest of World
9% EMEA
Solid demand environment across all business segments
Integrated approach drives opportunity/efficiency across enterprise * Through fiscal Q2, March 31, 2019 Investor Presentation May 2019 4 A Different Integrated Global Industrial
MARKET LEADER
SCALE
STRONG FINANCIAL LEADERSHIP DIVERSE END MARKETS
TECHNOLOGY/ OPERATIONAL SYNERGIES
Investor Presentation May 2019 5 Broad Industry Leadership
GLOBAL RANK (1)
Aerial Work Platforms/Telehandlers #1
Military Tactical Wheeled Vehicles #1
NORTH AMERICA RANK (1)
Fire Apparatus #1
Airport Products (ARFF/Snow Removal) #1 Refuse Collection Vehicles #1
Concrete Mixers/Batch Plants #1
Wreckers & Carriers #2
Strong Brands Value Creation
(1) Company estimates
Investor Presentation May 2019 6 Strong and Improving Culture Driving Team Member Engagement Industry Data Says: People First . Maturing the concept . Driving better results . Engage. Develop. Connect. . Glassdoor Best Places to Work in 2019
Investor Presentation May 2019 7 Recognized Leader in Making a Difference Customers . Innovation and quality drive market leadership ‒ Received Magnus Hendrickson award for innovative achievement in vehicle dynamics Shareholders . Long-term focus on generating returns ‒ Two year CAGR of +30% for Adjusted Operating Income* and +42% for Adjusted EPS*
Ethics and Compliance . Ethisphere Institute’s 2019 World’s Most Ethical Companies list (4th consecutive year)
Sustainability . #17 in Barron’s “Top 100 Most Sustainable Companies” (2nd consecutive year in top 20) . Earned “Industry Mover” distinction in the RobecoSAM Sustainability Yearbook 2018 * Non-GAAP results. See appendix for reconciliation to GAAP results. Investor Presentation May 2019 8 MOVE Strategy Generates Strong Results… Grew adjusted operating income at 30% CAGR from FY16 to FY18
Adjusted Operating Income* $ (millions) 700
600
500
400
300
200
100
0 FY16 FY17 FY18 Strong Foundation Leading to Solid Operating Results
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 9 …Leading to Solid Free Cash Flow
3 Year Cumulative Free Cash Flow* $ (millions) 1200
1000
800
600
400
200
0 FY16 FY17 FY18
Focused Strategy Drives Returns
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 10 Responsible Capital Allocation Target > 50% free cash flow returned to shareholders over the cycle
3 Year Cumulative Free Cash Flow FY19 Capital Allocation $ (millions) Returned to Shareholders 600 60% Priorities
500 50% ‒ Invest to innovate and
400 40% grow
300 30% ‒ ~$350 million share
200 20% repurchase target*
100 10% ‒ Grow dividend
0 0% ‒ Opportunistically evaluate FY16 FY17 FY18 potential acquisitions Dividends Repurchases % FCF Returned to SH's
Maintain Strong and Flexible Balance Sheet * Current as of April 30, 2019
Investor Presentation May 2019 11 Solid FY19 YTD Performance
. YTD net sales and operating OSK Fiscal YTD Performance income exceeded expectations Net Sales Adjusted Operating − Double digit percentage sales (in billions) Income* growth in access equipment and (in millions) $4.0 $3.8 $400 fire & emergency segments $3.5 $336.1 $3.5 $350
− Operating income higher in all $3.0 $300 $256.5 four segments $2.5 $250
$2.0 $200 . Higher consolidated backlog $1.5 $150 . Simplification efforts gaining $1.0 $100 momentum $0.5 $50 $0.0 $0 FY18 FY19 . Evolved MOVE strategy drives FY18 FY19 continued focus on execution
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 12 Access Equipment – Recent Highlights – Sales growth in all regions in Q2 − Pacific Rim growth driven by continued product adoption in China – ARA Rental and BAUMA trade shows highlighted strong customer sentiment – Industry metrics remain solid – Lower but still solid Q2 orders and backlog − Both measures support increased full year outlook – Significant operational improvements − Supply chain more stable − Team members gaining experience
Investor Presentation May 2019 13 Defense – Recent Highlights . Continued ramp up of JLTV program − Government evaluating units with user-requested modifications − Working toward FRP milestone − FY20 President’s Budget request supports production into FY22 TWV supplier of record, with deliveries expected through: − DoD 5-year defense plan implies FHTV 2022 orders >25,000 units thru FY23 JLTV 2024 FMTV 2026 . Launched ambulance TWV in March . Strong visibility on other major U.S. programs . Continuing development work on FMTV A2 program
Investor Presentation May 2019 14 Joint Light Tactical Vehicle (JLTV) U.S. JLTV Production Utility Contract Overview . ~$6.7 billion initial announced value . Base award plus 8 order years 2Door . Program scope includes: − 4 Mission Package Configurations − Mission Kits Close Combat − Interim Contractor Support (ICS) General Purpose Weapons Carrier − Total Package Fielding (TPF) − System Technical Support (STS) − Technical Data Package . Quantity: 25,000+ vehicles* − Vehicle deliveries expected through 2024
4Door Heavy Guns Carrier Future Variants
* Source: FY20 U.S. President’s Budget Request
Investor Presentation May 2019 15 Global Light TWV Market Potential Significant international interest / opportunity
Today’s HMMWV Installed Base* JLTV is Next-Generation Protected Mobility for the Modern Battlefield . 240,000+ HMMWVs Armor Capable HMMWV . 60 countries 47% 53% Unarmored . 30+ configurations HMMWV
Jeep HMMWV JLTV
The Oshkosh JLTV is Shaping the Future of Light Military Vehicles
* Source: Government publications, IHS Jane’s, SIPRI, AM General Website
Investor Presentation May 2019 16 Fire & Emergency – Recent Highlights
. Record quarter for orders leading to record backlog >$1 billion . Remain confident in outlook for North American fire truck market . FDIC showcased Pierce leadership and innovations in fire truck market − Pierce Situational Awareness System by Fotokite . Recent administrative bottlenecks to international sales are easing
Investor Presentation May 2019 17 Commercial – Recent Highlights
. Segment results and FY19 outlook impacted by extreme weather in Q2 − Manufacturing facility partial roof collapse due to excessive snow accumulation − Strong rallying point for team as they work to mitigate impact of event − Reduced full year outlook . RCV 3rd party chassis recovery plan on target − Q2 results negatively impacted (as expected) . Waste Expo in early May . Opportunity to strengthen existing relationships and begin new ones
Investor Presentation May 2019 18 Positive Outlook for FY19*
. Targeting revenue & EPS growth Revenue growth 7%* Adjusted Operating Income growth of 11%* Adjusted EPS growth 20%* . Planned return of over $425 million to shareholders . Defense – Achieve JLTV full-rate production milestone decision; begin to receive international orders . Access equipment – leverage strength in markets and profitably to build on 25% sales growth in FY18 . Simplification matures across the company
* At the mid-point. Current as of April 30, 2019.
Investor Presentation May 2019 19 Well Positioned for Success Favorable market dynamics and benefits of MOVE position OSK to deliver strong results
. Attractive End Markets . Strong free cash flow over the cycle ‒ Defense ‒ Growth optionality ‒ Access equipment ‒ Ensures strong balance sheet ‒ Fire trucks . Integrated approach to cost ‒ Refuse collection containment . Secular Tailwinds ‒ MOVE Strategy ‒ Population growth ‒ Simplification ‒ Urbanization ‒ Household formation
Positive Long-Term Outlook
Investor Presentation May 2019 20 For information Patrick N. Davidson Jeffrey D. Watt Senior Vice President, Director, Investor Relations contact: Investor Relations (920) 233-9406 (920) 966-5939 [email protected] [email protected]
Investor Presentation May 2019 21 Appendix: Oshkosh FY19 Expectations* – ASC 606 Basis . Revenues of $8.2 to $8.3 billion . Operating income of $725 to $755 million . Adjusted EPS** of $7.50 to $7.80
Segment information Access Fire & Measure Equipment Defense Emergency Commercial
Sales $3.95 - $4.05 ~ $2.0 ~ $1.225 ~ $1.025 (billions)
Operating Income 11.75% – 12.0% 9.5% – 9.75% 13.5% – 13.75% 5.75% – 6.0% Margin
Additional expectations Q3 Expectations . Corporate expenses of $150 - $155 million . Higher sales vs. FY18 . Adjusted tax rate** of ~21% . Growth in all segments except commercial . CapEx of ~$175 million . Higher EPS vs. FY18 . Free Cash Flow** of ~$450 million . Assumes share count of ~71.0 million***
* Current as of April 30, 2019 ** Non-GAAP results. See appendix for reconciliation to GAAP results. *** Assumes ~$350 million of share repurchases in FY19
Investor Presentation May 2019 22 Appendix: Consolidated Q2 Results
(Dollars in millions, except per share amounts)
Second Quarter Q2 Comments 2019 2018 . Sales impacted by: Net Sales $1,990.2 $1,886.4 + Higher access equipment, % Change 5.5% 16.6% defense and fire & emergency segment sales Adjusted Operating − Lower commercial segment Income $175.6 $163.4* sales % Change 7.5% 65.1% . Adjusted EPS* impacted by: % Margin 8.8% 8.7% + Higher operating income in access equipment segment Adjusted EPS $1.82 $1.54* + Share repurchases % Change 18.2% 102.6% − Lower commercial segment results
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 23 Appendix: Adoption of ASC 606 Q2 FY19 and Expected FY19 Results Second Quarter FY19 Results (Dollars in millions) Estimated Without Adoption Effect of Change Full Year As Reported Of ASC 606 Higher/(Lower) FY19 Impact Access Equipment Sales $ 987.6 $ 987.3 $ 0.3 $ - Operating Income 119.8 120.2 (0.4) - Operating Income Margin 12.1% 12.2% (10) bp Defense Sales $ 486.7 $ 472.8 $ 13.9 $ (20.0) Operating Income 52.2 44.8 7.4 2.0 Operating Income Margin 10.7% 9.5% 120 bp Fire & Emergency Sales $ 283.2 $ 286.1 $ (2.9) $ 45.0 Operating Income 36.6 38.0 (1.4) 8.0 Operating Income Margin 12.9% 13.3% (40) bp Commercial Sales $ 237.9 $ 233.7 $ 4.2 $ - Operating Income 7.8 6.6 1.2 - Operating Income Margin 3.3% 2.8% 50 bp Consolidated Sales $ 1,990.2 $ 1,974.7 $ 15.5 $ 25.0 Operating Income 175.6 168.8 6.8 10.0 Operating Income Margin 8.8% 8.5% 30 bp
Investor Presentation May 2019 24 Appendix: Access Equipment Q2 Results
(Dollars in millions)
Second Quarter Q2 Comments 2019 2018 . Sales impacted by: + Higher volume, led by Net Sales $987.6 $927.9 Pacific Rim % Change 6.4% 28.3% + Improved pricing . Adjusted operating income* Adjusted Operating impacted by: Income $119.8 $102.8* + Improved pricing % Change 16.5% 73.4% + Higher sales volume % Margin 12.1% 11.1% + Operational efficiencies − Higher material costs − Deferred margin recognized in prior year . Backlog down 13% vs. prior year to $1.55 billion
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 25 Appendix: Defense Q2 Results
(Dollars in millions)
Second Quarter Q2 Comments 2019 2018 . Sales impacted by: + Ramp up of JLTV program Net Sales $486.7 $428.2 + Impact of ASC 606 % Change 13.7% (4.0)% . Operating income impacted by: + Impact of ASC 606 Operating Income $52.2 $48.4 + Higher sales volume % Change 7.9% (2.0)% − Adverse product mix % Margin 10.7% 11.3% − Facility startup costs . Backlog up 82% vs. prior year to $3.1 billion
Investor Presentation May 2019 26 Appendix: Fire & Emergency Q2 Results
(Dollars in millions)
Second Quarter Q2 Comments 2019 2018 . Sales impacted by: + Higher content units Net Sales $283.2 $273.1 + Improved pricing % Change 3.7% 15.0% . Operating income impacted by: + Improved pricing Operating Income $36.6 $36.0 − Higher material costs % Change 1.7% 60.0% . Backlog up 6.4% vs. prior year % Margin 12.9% 13.2% to $1.1 billion
Investor Presentation May 2019 27 Appendix: Commercial Q2 Results
(Dollars in millions)
Second Quarter Q2 Comments 2019 2018 . Sales impacted by: − Lower deliveries due to weather- Net Sales $237.9 $263.9 related production disruption % Change (9.9)% 22.2% . Adjusted operating income* impacted by: Adjusted Operating − Lower sales volume and Income $7.8 $18.2* inefficiencies due to weather- related production disruption % Change (57.1)% 203.3% . Backlog up 5.9% vs. prior year % Margin 3.3% 6.9% to $449 million
* Non-GAAP results. See appendix for reconciliation to GAAP results.
Investor Presentation May 2019 28 Appendix: GAAP to Non-GAAP Reconciliation • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable non-GAAP measures (in millions, except per share amounts):
Fiscal Year Ended September 30, 2018 2017 2016
Earnings per share-diluted (GAAP) $ 6.29 $ 3.77 $ 2.91 Costs and inefficiencies related to restructuring actions, net of tax 0.37 0.48 0.01 Impairment charge, net of tax - - 0.22 Litigation settlement gain, net of tax (0.21) - - Business interruption insurance proceeds, net of tax (0.07) - - Loss on sale of a small product line, net of tax 0.01 - - Debt extinguishment costs, net of tax 0.10 - - Revaluation of net deferred tax liabilities (0.39) - - Repatriation tax 0.26 - - Adjusted earnings per share-diluted (non-GAAP) $ 6.36 $ 4.25 $ 3.14
Investor Presentation May 2019 29 Appendix: GAAP to Non-GAAP Reconciliation
• The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable non-GAAP measures (in millions):
Fiscal Year Ended September 30, 2018 2017 2016
Consolidated operating income (GAAP) $ 653.5 $ 463.0 $ 364.0 Costs and inefficiencies related to restructuring actions 35.4 43.3 0.9 Litigation settlement (19.0) - - Business interruption insurance proceeds (6.6) - - Loss on sale of a small product line 1.4 - - Long-lived asset impairment charge - - 26.9 Adjusted consolidated operating income (non-GAAP) $ 664.7 $ 506.3 $ 391.8
Net cash flows provided by operating activities $ 436.3 $ 246.5 $ 583.9 Additions to property, plant and equipment (95.3) (85.8) (92.5) Proceeds from sale of equipment held for rental, net of additions 1.0 22.1 5.4 Free cash flow $ 342.0 $ 182.8 $ 496.8
Investor Presentation May 2019 30 Appendix: GAAP to Non-GAAP Reconciliation • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable non-GAAP measures (in millions, except per share amounts):
Three Months Ended Six Months Ended March 31, March 31, 2019 2018 2019 2018
Access equipment segment operating income (GAAP) $ 119.8 $ 97.6 $ 186.2 $ 111.3 Costs and inefficiencies related to restructuring actions - 5.2 - 21.3 Adjusted access equipment segment operating income (non-GAAP) $ 119.8 $ 102.8 $ 186.2 $ 132.6
Commercial segment operating income (GAAP) $ 7.8 $ 16.4 $ 26.5 $ 24.7 Restructuring costs - 1.8 - 4.3 Adjusted commercial segment operating income (non-GAAP) $ 7.8 $ 18.2 $ 26.5 $ 29.0
Consolidated operating income (GAAP) $ 175.6 $ 156.4 $ 336.1 $ 230.9 Costs and inefficiencies related to restructuring actions - 7.0 - 25.6 Adjusted consolidated operating income (non-GAAP) $ 175.6 $ 163.4 $ 336.1 $ 256.5
Earnings per share-diluted (GAAP) $ 1.82 $ 1.47 $ 3.33 $ 2.21 Costs and inefficiencies related to restructuring actions, net of tax - 0.07 - 0.25 Repatriation Tax - - 0.10 0.23 Revaluation of net deferred tax liabilities - - - (0.31) Adjusted earnings per share-diluted (non-GAAP) $ 1.82 $ 1.54 $ 3.43 $ 2.38
Investor Presentation May 2019 31 Appendix: GAAP to Non-GAAP Reconciliation • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable non-GAAP measures (in millions, except per share amounts):
Fiscal Year Ended September 30, 2019 Expectations Low High
Earnings per share-diluted (GAAP) $ 7.40 $ 7.70 Repatriation tax adjustment 0.10 0.10 Adjusted earnings per share-diluted (non-GAAP) $ 7.50 $ 7.80
Fiscal 2019 Expectations
Effective income tax rate (GAAP) 22.0% Repatriation tax adjustment (1.0%) Adjusted effective income tax rate (non-GAAP) 21.0%
Net cash flows provided by operating activities $ 625.0 Additions to property, plant and equipment (175.0) Free cash flow $ 450.0
Investor Presentation May 2019 32 Appendix: Commonly Used Acronyms
ARFF Aircraft Rescue and Firefighting LVSR Logistic Vehicle System Replacement AWP Aerial Work Platform M-ATV MRAP All-Terrain Vehicle AMPS Aftermarket Parts & Service MRAP Mine Resistant Ambush Protected CapEx Capital Expenditures MSVS Medium Support Vehicle System (Canada) CNG Compressed Natural Gas NDAA National Defense Authorization Act DGE Diesel Gallon Equivalent NOL Net Operating Loss DoD Department of Defense NPD New Product Development EMD Engineering & Manufacturing Development NRC National Rental Company EMEA Europe, Middle East & Africa OCO Overseas Contingency Operations EPS Diluted Earnings Per Share OH Overhead FAST Act Fixing America’s Surface Transportation Act OI Operating Income FDIC Fire Department Instructors Conference OOS Oshkosh Operating System FHTV Family of Heavy Tactical Vehicles OPEB Other Post-Employment Benefits FMS Foreign Military Sales PLS Palletized Load System FMTV Family of Medium Tactical Vehicles PUC Pierce Ultimate Configuration FRP Full Rate Production R&D Research & Development FYDP Future Years Defense Program RCV Refuse Collection Vehicle GAAP U.S. Generally Accepted Accounting Principles RFP Request for Proposal GAO Government Accountability Office ROW Rest of World HEMTT Heavy Expanded Mobility Tactical Truck SMP Standard Military Pattern (Canadian MSVS) HET Heavy Equipment Transporter TACOM Tank-automotive and Armaments Command HMMWV High Mobility Multi-Purpose Wheeled Vehicle TDP Technical Data Package IRC Independent Rental Company TPV Tactical Protector Vehicle IT Information Technology TWV Tactical Wheeled Vehicle JLTV Joint Light Tactical Vehicle UCA Undefinitized Contract Action JPO Joint Program Office UIK Underbody Improvement Kit (for M-ATV) JROC Joint Requirements Oversight Council UK United Kingdom JUONS Joint Urgent Operational Needs Statement ZR Zero Radius L-ATV Light Combat Tactical All-Terrain Vehicle 3PL Third Party Logistics LRIP Low Rate Initial Production
Investor Presentation May 2019 33