Oshkosh Corporation (OSK)

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Oshkosh Corporation

F4Q10 Earnings Conference Call

October 28, 2010 09:00 am ET


Patrick Davidson: - Vice President of Investor Relations

Robert Bohn - Chairman, Chief Executive Officer and Chairman of Executive Committee

Charles Szews - President, Chief Operating Officer and Director

David Sagehorn - Chief Financial Officer and Executive Vice President


Ann Duignan - JP Morgan Chase & Co

Walter Liptak - Barrington Research Associates, Inc.

Jamie Cook - Credit Suisse Group

Peter Chang -- Credit Suisse Group

Jerry Revich - Goldman Sachs Group Inc.

Andrew Obin - BofA Merrill Lynch

Alexander Blanton - Ingalls & Snyder

Charles Brady - BMO Capital Markets U.S.

Peter Savinsky -- Sun Trust

David Raso -- ISI Group Inc

Josephine Millward - The Benchmark Company, LLC

Robert McCarthy - Robert W. Baird & Co. Incorporated

Ben Elias – Sterne, Agee & Leach

Basili Alukos – Morningstar

Steve Barger - KeyBanc Capital Markets Inc.



(Operator instructions.) It is now my pleasure to introduce your host, Pat Davidson, Vice President of Investor Relations for Oshkosh Corporation. Thank you Mr. Davidson, you may begin.

Patrick Davidson

Thanks Rob. Good morning and thanks for joining us. Earlier today we published our Q4 results for fiscal 2010. A copy of the release is obtainable on our website at OshkoshCorporation.com.

Today’s call is being web cast and is accompanied by a slide presentation which is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months.

Please refer now to slide two of that slide presentation.

Our remarks that follow, including answers to your questions, include statements that we believe to be forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject risks that could cause actual results to be materially different. These risks include, among others, matters that we have described in our form 8-K filed with the FCC this morning and other filings we make with the FCC. We disclaim any obligation to update these forward-looking statements which may not be updated until our next quarterly earnings conference call, if at all.

We sold our European fire apparatus business in October of 2009 which was early in our fiscal 2010 year. All sales income and backlog figures that we discuss today refer to continuing operations only unless other wise stated.

Presenting today for Oshkosh Corporation will be Bob Bohn our Chairman and Chief Executive Officer, Charlie Szews our President and Chief Operating Officer and Dave Sagehorn our Executive Vice President and Chief Financial Officer.

Let’s begin by turning to slide three and I’ll turn it over to you Bob.

Robert Bohn

Thank you Pat. Good morning and thank you all for joining us today. I’m pleased to announce another strong quarter as we close out a record breaking fiscal year. For the quarter our sales increased 43% to $2.1 billion leading to the Q4 record sales for operating income of $234 million an earnings per share EPS of $1.28.

Our defense segment again delivered strong results in the quarter and the Access equipment segment continued to exhibit improved year over year performance. As you know, our defense M-ATV program was a major focus for us in fiscal 2010. But we’ve been working hard on other opportunities across the company. We’ve been building and delivering test vehicles for the army and support of the FMTV contract and working diligently to capture the demand that we believe is present for M-ATVs from US allies.

We have also been working hard to bring our brand new Access equipment production facility online in Tianjin, China. Charlie will talk about the grand opening that he attended just three days ago, in a few minutes.

And we’re encouraged by the positive sings that we’re seeing with respect to our Access equipment business and the comments that we’re hearing from our rental channel customers.

We continue to strengthen our balance sheet by paying down $139 million of debt in the quarter. We also completed a new credit agreement that Dave Sagehorn will talk about in a few moments.

Let me take a moment to review some of the highlights for our fiscal year. Please turn to slide four.

While I’m pleased with our Q4 results, I’m extremely proud of the results we’re able to deliver throughout fiscal 2010. Full year sales grew from $5.3 billion to $9.8 billion. Operating income increased to $1.4 billion and earnings per share came in at $8.94 each before non-cash impairment charges. These figures are records for Oshkosh Corporation.

The M-ATV program was obviously a huge driver in allowing us to announce these record results. But the hard work of all our employees at Oshkosh Corporation made it happen; they really did. Our four segments worked as a team to make the M-ATV program a success and we were able to remain focused on our other businesses at the same time in sharing a number of our non-defense businesses.

I’m going to close by noting that at the end of December, I’ll be handing the baton to my business partner of the last 14 years, Charlie Szews, who’s our President and Chief Operating Officer. The board of directors couldn’t have made a better selection to lead this corporation and I’m very confident that our company will have a very bright future.

Thank you for your continued interest in and support for Oshkosh Corporation and thank you for your faith and confidence in me as I’m soon to be retired after the first of the year. With that I’ll turn it over to Charlie.

Charles Szews

Thanks Bob. We’ve enjoyed your leadership. Let’s turn to slide five for a discussion of our operations and performance in the quarter.

The M-ATV is providing outstanding protection for men and women in Afghanistan; saving lives and enabling our war fighters to extend their missions into more remote and difficult terrain.

During the quarter we continued to produce a wide range of vehicles for the FTM Theater needs of the army and marine corp. We’ve also been busy extending a range of products and developing product modifications to meet our customers ever changing needs. During the quarter we received an award to design an M-ATV ambulance, launched a new version of our PLS and worked to accelerate deliveries of our LVSR wrecker to meet urgent requirements in Afghanistan.

Although we are producing M-ATVs at a lower rate, as we previously announced there are several foreign governments evaluating the M-ATV. Additionally, international customers have shown great interest in our global (inaudible) and our light tactical protector vehicle.

We also continued our FMTV startup efforts in Q4. Through team work, planning and execution, we are largely on schedule as we ramp up the full rig production lines in the spring of 2011 despite the lengthy protest of this award.

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