Oshkosh - Q2 2015
April 28, 2015
Transcript
Operator (participant)
Greetings and welcome to the Oshkosh Corporation Reports Fiscal 2015 Second Quarter Results Conference Call. At this time all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Patrick Davidson, Vice President of Investor Relations. Thank you. Please go ahead.
Patrick Davidson (VP of Investor Relations)
Thank you, Brenda. Good morning, everybody, and thanks for joining us. Earlier today we published our Q2 2015 results. A copy of the release is available on our website @ oshkoshcorporation.com. Today's call is being webcast and is accompanied by a slide presentation which includes a reconciliation of non-GAAP to GAAP financial measures that we will use during this call and 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 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 to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements.
These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC. 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. All references on this call to a quarter or year are to our fiscal quarter or fiscal year unless otherwise stated. Our presenters today include Charlie Szews, Chief Executive Officer, Wilson Jones, President and Chief Operating Officer, and Dave Sagehorn, Executive Vice President and Chief Financial Officer. Please turn to slide three of the presentation and I'll turn it over to you, Charlie Szews.
Charlie Szews (CEO)
Thank you Patrick Davidson and good morning. Please bear with my cold this morning. Don't misinterpret my voice for lack of enthusiasm. We are on pace to have a good year in 2015 to achieve our 2012 Analyst Day estimates and follow that with another good year in 2016. We delivered solid Q2 results with adjusted earnings per share of $0.81 in line with expectations and slightly above prior-year-quarter adjusted earnings per share of $0.80. This performance was in spite of a more than 65% year-over-year decline in Defense segment sales driven by the previously announced FHTV program break in production, some currency headwinds and adverse weather conditions in the Northeast United States. Notably, sales and operating income increased by double digit percentages year-over-year in each of our non Defense segments.
Wilson Jones and Dave Sagehorn will talk more in a few minutes about the impact the challenges that we overcame in the quarter. This performance is a testament to the dedication and efforts of our 12,000 customer-focused employees. Many who work long hours in March deliver customer orders that have been planned for delivery in January and February but were delayed due to weather. It's also a reflection of the success that we have achieved with our MOVE strategy. Lower oil and gas activity had little impact on our results in the quarter. In fact, we continue to believe that lower oil and gas prices will have an overall positive impact on the economy and our businesses over time. Rental company surveys continue to reflect overall strong rental activity and positive rental company sentiment.
We believe this is a positive indicator of the outlook for the U.S. economy and our businesses with exposure to construction markets. While there has been some choppiness in some of the recent economic data and oil and gas activity has declined, we believe that construction activity overall will continue to improve in the U.S. and that we'll see continued improvement in some international markets as well. We also successfully refinanced $250 million of senior notes due 2020 in the quarter, replacing the existing notes with a new 10-year senior notes due 2025 and lowering the interest rate by more than 300 basis points. Now, looking forward, we expect strong second half results and are maintaining our full year adjusted earnings per share estimate range of 4-4.25 with our most likely performance in the middle of that range.
We expect inventory levels in our non-Defense segments to decline in the second half of the year, supporting strong free cash flow in the second half. In fact, we already saw inventory levels begin to decline in late March as seasonally driven shipments increased. Please turn to slide four for a discussion of our Defense business. Wilson Jones will take it from here so I can save my voice for Q&A.
Wilson Jones (President and COO)
Okay, thanks Charlie Szews. Good morning everyone. Defense segment results for the quarter reflect the impact of the FHTV program break in production that started at the beginning of the Q2. As you know, the FHTV program is one of our legacy programs and is foundational to our Defense segment. We expect to resume sales on that program in the Q4 after the new contract is finalized. In the interim, with no FHTV sales scheduled for the Q3, we expect that the Defense segment will report an operating loss in the Q3 similar in size to the operating loss in the Q2. Overall, we're excited about the opportunities for our Defense segment and expect 2015 will be the trough year for this business.
The 2015 federal budget that was passed in December and the proposed 2016 budget both contain higher funding levels for our legacy programs than the 2014 budget, which we expect will help bolster sales in this segment starting in 2016. We've already started recalling production employees to help us meet the increased sales levels that we expect in this segment. Plus, as you know, we have a number of other opportunities to help grow this business. We expect the remainder of this fiscal year to be very busy in terms of gaining clarity on these opportunities. Specifically, we believe an announcement on the winner of the Canadian MSVS program for 1,500-2,100 vehicles will be made in June. A win on this program would be a solid contribution to our 2017 and 2018 sales. We've also talked for some time about opportunities to sell significant quantity of M-ATVs internationally.
We made good progress during the quarter and believe that we will secure meaningful orders by the end of this fiscal year. These orders would support the international sales assumption, including in our 2015 estimate range as well as benefit 2016 and into 2017. As we have said many times over the last two years, we are pursuing orders for thousands of M-ATVs to international U.S. allies. Finally, we submitted our proposal for the JLTV production contract in February. We have an outstanding solution and look forward to the contract award announcement which we expect sometime between July and September of this year. The Department of Defense has expressed strong support for the JLTV program even while acknowledging the Department's overall budget challenges.
If we are awarded the eigh -year JLTV initial production contract, sales will begin at low rate levels in late calendar 2016 before increasing the full rate production as currently envisioned in the fourth production year. Please turn to slide five for some comments on our Access Equipment segment. We're pleased with our performance in the Access Equipment segment this quarter, especially when you consider the challenges the team had to battle. The Northeast U.S. is one of our stronger regions for this business and the massive amounts of snow in this region through much of the quarter caused shipping delays. The Access Equipment team stepped up and caught up on most of the deliveries by the end of the quarter.
This is important because our rental customers have seen the typical seasonal pickup in demand, telling us that projects are starting and that there are heavy maintenance and repair requirements driven by the harsh winter in that part of the country. Most importantly, they're telling us they want and need more equipment. The stronger U.S. dollar also presented some challenges compared to the prior-year-quarter when translating foreign location results into U.S. dollars. Overall, we had higher sales in all regions in the quarter on a constant currency basis with the exception of Latin America. As Charlie Szews mentioned, we didn't see much impact in North America from the slowdown in oil and gas and we believe that the impact will continue to be manageable.
Attendance at the American Rental Association show in February was up over last year and the tone was very positive, especially with the Independent Rental Companies. Replacement demand this quarter was quite strong in Europe with sales up at a strong double-digit percentage in local currency. A positive data point from Europe was a major rental customer recently announcing its plan to double capital spending in 2015 from 2014. Increasing product adoption in the Pac Rim region boosted sales which were also up a strong double-digit percentage in the Q2. While the quarter-end backlog in the segment was down from the prior-year-quarter, we believe this reflects order timing.
As expected, the backlog at the end of March contained a higher mix of AWPs versus telehandlers that we've seen for the last several quarters, which supports our stronger margin expectations for this segment in the second half of the year. We've also been very busy this year in the new product development area in this segment. We launched 15 new products in the first half of the year with a similar number of product launches expected in the second half of the year. Overall, we are launching updated products representing approximately 30% of JLG's annualized sales in 2015. These products are expected to enhance our customers' user experience while also improving our operating income margins with much of the margin benefit starting in 2016. Please turn to Slide six for some comments on our Fire & Emergency segment.
Execution of our roadmap to improve operational efficiencies in this segment is generally on track, but we still have much more work to do. Teams continued to address operational complexity and process improvements during the quarter with the near term goal of driving higher operating income margins in the second half of the year. We expect a richer mix of higher margin products and a higher delivery rate to help us meet the near term objective. We are also modifying assembly lines at Pierce in the Q3 to better manage product complexity. Delivering double digit operating income margins remains our longer term goal for this segment. Last week we announced a 3% price increase at Pierce effective in June. We believe that industry pricing since the economic downturn has understated the true cost increases that OEMs have experienced, which have been partially driven by increased vehicle complexity.
The price increase is needed to help us achieve a fair return on our investment in new products to provide the increased performance and capabilities that firefighters are looking for. In particular, we believe pricing on some of our custom chassis has been inadequate to recover the significant engineering costs necessary to meet increasingly stringent government regulations and provide custom features firefighters want. We continue to expect modest growth in North American fire apparatus market in 2015, driven by improved municipal tax receipts, stabilized federal spending levels for fire apparatus and the need to address aging fleets. Our order rate the Q2 remains strong, supporting our outlook. The attendance and customer sentiment at the recent Fire Department Instructors Conference the FDIC were also positive, supporting our view of a continued market recovery.
We launched a number of new products at the FDIC show, including a new 107 ft Aero device mounted on a chassis with a single rear axle, which we believe is the only product offering of its kind in this category in the world. Until now, a dual rear axle was required. We expect this will be a game changer in the Aero device segment of the market as fire departments will have more than 30 ft of additional reach on a single rear axle chassis. Please turn to Slide seven for an update on our Commercial segment. Both concrete mixers and refuse collection vehicles registered solid double-digit sales growth in the quarter compared to the prior-year-quarter. However, achieving this growth wasn't without its challenges. Similar to the Access equipment segment, weather conditions in the Northeast U.S.
Also negatively impacted the timing of deliveries and in the commercial segment the team was able to catch up most deliveries by the end of the quarter. In addition, lead times for third party chassis increased significantly, in some cases making it a challenge to complete units in a timely manner. Fortunately, we carry some stock chassis as well as complete stock units which helps absorb some of the chassis lead time variability that this segment experiences. We continue to invest in MOVE initiatives in this segment in the Q2. These investments are currently weighing on segment margins, but we believe they will help deliver stronger margins beyond 2015. Turning to the markets, we saw continued improvement in the refuse collection vehicle market in the Q2 evidenced by our strong backlog in this product category.
As noted earlier, municipalities are benefiting from higher tax receipts which are used to purchase many items including refuse collection vehicles. In addition, some private haulers are replacing older units. Demand for our products was also helped by customer interest in our new split body and updated automated ZR units. Customer response has been very positive to both of these new products. We expect to showcase additional new refuse collection vehicle products at the upcoming Waste Expo trade show in early June. While concrete mixer sales were strong in the quarter, we saw cautious order patterns by our multinational customers as they assess the impact of the stronger U.S. dollar on their global businesses. Independent U.S.-based customers were more active in the market in the Q2. Our aftermarket business did pick up starting in late March, suggesting a generally late start to the concrete mixer buying season.
I'm going to turn it over to Dave Sagehorn now to walk us through our financial results. Please turn to Slide eight.
Dave Sagehorn (EVP and CFO)
Thanks, Wilson Jones, and good morning, everyone. Consolidated net sales for the Q2 were $1.55 billion, a 7.4% decrease from the Q2 of 2014. On a constant currency basis, sales declined 5.7% compared to the prior-year-quarter. Sales increases in our non-Defense segments range from 13.4% in the access equipment segment to 30% in the Fire & Emergency segment. On a constant currency basis, access equipment segment sales increased 16.4% with sales up in all regions except Latin America. And while we didn't completely catch up on the weather-related delays that Wilson Jones noted, the access equipment and commercial segment teams were able to minimize the impact on sales for the quarter. Although there was significant overtime incurred in the process.
Fire & Emergency segment sales benefited from the continued recovery of the U.S. fire apparatus market as well as timing of international shipments compared to the prior-year-quarter. As Charlie Szews mentioned the 67% decline in Defense segment sales compared to the prior-year-quarter was driven by the FHTV program break in production that started at the beginning of the Q2. This segment also experienced lower FMTV sales similar to what we experienced over the past number of quarters and no international M-ATV sales compared with the prior-year-quarter. Consolidated operating income for the Q2 was $109.7 million or 7.1% of sales compared to adjusted operating income of $123.5 million or 7.4% of sales in Q2 2015. Consolidated operating income was negatively impacted by $3.4 million due to negative foreign exchange impact.
Higher operating income and operating income margins in each of the non-Defense segments mitigated a significant portion of the decline in operating results in the Defense segment. As expected, Access equipment segment operating income margin was impacted by a continued higher mix of telehandler sales and which have lower margins than aerial work platforms. In addition, foreign currency exchange movement negatively impacted Access equipment segment results by $3.3 million compared to the prior-year-quarter. A supply recovery recorded in the quarter offset some of the headwinds we experienced in the quarter. Defense segment results reflected the impact of continued investment in the JLTV program and other opportunities this segment is pursuing.
In addition to the impact of the significant reduction in sales volume, Fire & Emergency and commercial segment results benefited from higher sales volumes and in the commercial segment, these benefits were partially offset by continued MOVE initiative investments that we expect to contribute to improved future margins. Additional information related to segment Q2 financial performance can be found in the appendix to this morning's slide deck. Adjusted earnings per share for the quarter was $0.81 compared to adjusted earnings per share of $0.80 in the Q2 of 2014. Current year quarter adjusted results exclude costs related to the refinancing of our senior notes due 2020, which we completed in March.
The current year quarter benefited $0.05 per share from a lower share count as a result of our share repurchase activity over the past year and foreign currency exchange negatively impacted current year quarter adjusted earnings per share by $0.05. Please turn to Slide nine for an update of our 2015 full year outlook. We are maintaining our full year adjusted earnings per share estimate range of $4-$4.25, which represents a 10%-17% improvement from 2014 adjusted earnings per share. We currently believe that we will likely perform in the middle of this range. The stronger U.S. dollar has put some pressure on expected results in our access equipment segment and to a lesser extent the commercial segment.
However, we expect to benefit somewhat from a natural hedge and continue to believe we can deliver full year results that are largely in line with our previously communicated range for each of our four segments. We continue to expect corporate costs for the year to be approximately $140 million-$145 million, although we are working to manage these costs closer to the lower end of that range and we are increasing our estimated effective tax rate to approximately 32%, reflecting the impact of a stronger U.S. dollar. Our capital expenditure and free cash flow estimates for the year remain unchanged at approximately $150 million and $200 million respectively. As Charlie Szews noted, we expect to generate strong free cash flow in the second half of the year to overcome the usage of cash in the first half of the year.
We've also slightly reduced our full year diluted share count assumption to 79.5 million from 80 million. This estimate assumes no major share repurchases in the second half of the year. Looking at the Q3, we expect this to be the strongest quarter of the year from an earnings per share standpoint and higher than the prior-year-quarter in spite of expected results in the Defense segment similar to the Q2. Like the Q2, we expect to see higher sales and operating income compared to the prior-year-quarter in each of the non-Defense segments. We will also benefit from a lower share count as a result of our share repurchase activity in prior quarters. I'll turn it back over to Charlie Szews for some closing comments.
Charlie Szews (CEO)
Thanks, Dave Sagehorn. We're pleased with our Q2 results and believe we are on track to deliver a strong second half as we drive toward attainment of our 2015 adjusted earnings per share within the target range that we set out at our 2012 analyst day. By continuing to execute our MOVE strategy, we are building momentum to deliver solid shareholder value into 2016 and beyond. That concludes our formal comments. We're happy to answer your questions. So I'll turn it back over to Patrick Davidson to get the Q&A started.
Patrick Davidson (VP of Investor Relations)
Hey, thanks a lot, Charlie Szews. I'd like to remind everybody, please limit your questions to one plus a follow up. And after that follow up, if you'd like to ask more, please get back in queue. If you'd like to ask that additional question. Brenda, let's please begin the question and answer period of this call.
Operator (participant)
Certainly. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue and you may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Stephen Volkmann with Jefferies. Please go ahead with your questions.
Stephen Volkmann (Equity Analyst)
Good morning, guys.
Dave Sagehorn (EVP and CFO)
Hey, Stephen Volkmann.
Stephen Volkmann (Equity Analyst)
Good morning, Charlie Szews. You don't sound that enthusiastic this morning. I hope you feel better. My questions are probably going to start in on the AWP segment. I'm just curious. Kind of a few moving pieces there, but it looks like the sort of the assumption for the second half for revenue growth in that market is actually fairly close to flat, I guess. And I'm wondering if you're seeing anything in your orders or inquiries or any of that kind of stuff that makes you think that the business is sort of front end loaded this year. You mentioned Europe. Maybe you can give us a little more detail on what you're seeing over there and just kind of your level of confidence that the cycle kind of continues here.
Charlie Szews (CEO)
Let me start off with the first part of the question and Wilson Jones can pick up from there. Our estimates at the beginning of the year were for sales to go up 5%-8% for the year, and our second half sales are toward the higher end of that number if you extrapolate out. So I do think that it's not as strong as the first half sales growth but it is a good solid high-single-digit number.
Wilson Jones (President and COO)
Stephen Volkmann, I'll comment on Europe. Actually, I was just over there for the Intermat show, and the way I would term Europe today, it's getting better. We're not spiking the ball that it's great or anything, but it's certainly improving. I mentioned in my prepared comments that one of the bigger rental companies over there is doubling their capex. So it's a significant sized company that's doing that, and we read that in a trade publication, so that is out there publicly. The other comments I got, it's the typical regions that have been performing are continuing to perform well there. The Benelux, the Nordics, U.K. That's where primarily the activity is picking up. We're still not seeing a whole lot in France. Obviously, Spain is not doing much, but Europe today is getting better.
You got to keep in mind that fleet age there is really high, and so there is some force replacement going on, and then we are seeing some construction pickups. So again, we're cautiously optimistic, but it is better, and as you saw, we performed some double-digit growth there this past quarter.
Stephen Volkmann (Equity Analyst)
Can you guesstimate where Europe is kind of on a unit volume basis relative to the last peak?
Wilson Jones (President and COO)
Oh, I would estimate somewhere in the 40%-50% range. The market's changed a little bit but I would say that's a pretty fair estimate. 40%-50%.
Stephen Volkmann (Equity Analyst)
How much of your revenue in AWPs was Europe at the last peak? Then I'll pass it on.
Dave Sagehorn (EVP and CFO)
Stephen Volkmann, that was about 30ish% in the prior peak.
Patrick Davidson (VP of Investor Relations)
Yeah, it was maybe even 35%.
Charlie Szews (CEO)
Yeah, I think it was closer to 35%.
Patrick Davidson (VP of Investor Relations)
Yeah, in that range.
Stephen Volkmann (Equity Analyst)
Thank you guys.
Patrick Davidson (VP of Investor Relations)
Thanks.
Operator (participant)
Our next question comes from the line of Mircea Dobre with Robert W. Baird. Please go ahead with your questions.
Mircea Dobre (Senior Research Analyst Covering Machinery and Diversified Indstrial)
Good morning, everyone. Just sort of sticking with the access segment here. You're guiding to really solid margin expansion in the back half of the year and in the slides and in your comments. I think I understand some of the moving pieces, but some clarification there in terms of your visibility would be helpful. And then, you know, longer term you talked about access equipment margins getting maybe to the 16%-17% as a target. I'm wondering how confident are you on that based on frankly the changes that we've seen in the past, call it three to six months in the environment?
Wilson Jones (President and COO)
Well, I'll jump in, Mircea Dobre, and start. I'm sure Dave Sagehorn and Charlie Szews can add some color to this from an AWP. What we're seeing, I think we've described it before on some of these calls, is we've got a pretty robust field sales team and today we're much more connected with our customers from a forecast standpoint than we were, say, pre-recession. Great communication, which again, gives us good line of sight by customer to what's going on, projects available, et cetera. We talked earlier this year about the first half being really focused on telehandlers and then shifting to AWP. I would tell you today where we are, that's all holding true, that's coming into play, and we are seeing much more activity around AWPs, and our backlog shows that.
So again, that's what gives us confidence through 2015 is we see what's in front of us. I won't try to sell you on where the market's going and the positive stuff, but you're hearing the sell-side analysts, sell-side surveys, nonresidential construction. There's just a lot of positives there that are leading us to be confident through 2015. Now you guys want to comment a little bit on.
Charlie Szews (CEO)
Yeah, Mircea Dobre, the other thing you should be aware of, of course, is that our OE initiative is kicking in and that does have benefit in the second half of the year because as we're launching these new products, we're targeting higher margins with them and that's certainly benefiting us in the second half. We're also getting more commodity cost benefits in the second half that will help our margins. Both of those trends should extend into 2016. Pretty positive right now about our ability to lift margins.
Mircea Dobre (Senior Research Analyst Covering Machinery and Diversified Indstrial)
I appreciate that. Thanks for the color. And then my follow up is on the Defense segment. You used the term trough in terms of fiscal 2015, and I guess I'm wondering how should we think about what follows trough here?
Charlie Szews (CEO)
We'll obviously have more to say about that in October when we give you next year's estimates. But we do see some potential for higher funding for our domestic programs next year. And as we've been saying for some time, we are pursuing some larger international business and I think we would expect to announce some of these contracts yet this fiscal year. So we'll have more to tell you as the year progresses.
Mircea Dobre (Senior Research Analyst Covering Machinery and Diversified Indstrial)
Sorry to press you on this, but I'm just trying to understand how you're thinking in terms of what acceptable return on invested capital or margin or however you want to frame that just from a longer term basis for this segment.
Dave Sagehorn (EVP and CFO)
Mircea Dobre, it's Dave Sagehorn. I think we look at Defense really as we do with any of the other segments. They all have to earn their cost of capital and being a trough, you know, some of the investments that we're currently undertaking to continue to support the JLTV program to pursue some of these international opportunities that we have out there. If we start to see higher sales come through, which I believe we expect, as noted in the commentary regarding trough year, you should see, we believe some meaningful improvement in performance in this segment going forward.
Mircea Dobre (Senior Research Analyst Covering Machinery and Diversified Indstrial)
All right, thanks for the caller. Good luck.
Wilson Jones (President and COO)
Thanks.
Operator (participant)
Our next question comes from the line of Charles Brady with BMO Capital. Please go ahead with your questions.
Charles Brady (Director and Senior Analyst)
Thanks. Morning, guys.
Wilson Jones (President and COO)
Good morning.
Charles Brady (Director and Senior Analyst)
Can you just quantify the vendor recovery settlement and the impact on margin? I'm guessing it was less than a $3 millon and change on the FX, but if you could just quantify that for us?
Dave Sagehorn (EVP and CFO)
All in on that, Charles Brady. That was $7.8 million in the quarter, but in addition. So that's something we call out, but items that I would say that go to offset that would be. We talked about some of the challenges we had in the Northeast with some overtime that we had to incur to catch up deliveries in the quarter. We had the FX obviously there. So when you net it all out, it's probably a positive $2 million in the quarter is all. When I look at supplier recovery and undisclosed, I guess other headwinds out there.
Charles Brady (Director and Senior Analyst)
Okay. Yes, fair enough. And I guess a commentary on, you know, you said, and I guess on commercial also and access, you're caught up on most of the shipment delays. But I'm just wondering, can you how much of that didn't make it into the second fiscal quarter is going to hit into Q3 and does it all, does it all wind up into Q3 or are you seeing anyone else come out and, and ask for a later delivery or are we kind of back to normal order patterns in the quarter?
Dave Sagehorn (EVP and CFO)
Yeah, I think you experienced firsthand some of the challenges of living through the winter in the Northeast. The Access team and the commercial team both did an outstanding job really of catching up deliveries in the quarter. So we probably fell just a little short, but not a lot. And I don't think it's going to have a significant impact really on our Q3 results.
Charlie Szews (CEO)
We're not seeing anyone ask us to delay shipments into the Q4 or anything like that right now. Things look solid and we should have a strong second half.
Charles Brady (Director and Senior Analyst)
Great. Thanks guys.
Operator (participant)
Our next question comes from the line of Pete Skibitski with Drexel Hamilton. Please go ahead with your questions.
Pete Skibitski (Senior Analyst)
Good morning, guys. Nice quarter.
Dave Sagehorn (EVP and CFO)
Thanks.
Pete Skibitski (Senior Analyst)
I want to ask first, maybe for Dave Sagehorn. Hey, Dave Sagehorn. The $200 million free cash flow guidance, it looks like the back half will be positive. Is that kind of evenly distributed, you know, in Q3 and Q4? Are you going to be pretty Q4 loaded on the cash?
Dave Sagehorn (EVP and CFO)
Yeah, it'll be more heavily weighted to the Q4.
Pete Skibitski (Senior Analyst)
Okay, got it. And then, yeah, just on the Defense commentary, which I was positively surprised about, could you just give us a sense of how much if you're factoring in any MSVS or M-ATV into your fiscal 2016 thought process, or is it mostly the legacy programs?
Charlie Szews (CEO)
We certainly have some tailwinds for us for our legacy programs into 2016. MSVS is yet to be awarded. Hopefully by June or July we'll hear where that program stands. So that would be an upside to what we're talking about here. But it really, I think shipments are 2017 and 2018 for MSVS, so it doesn't really impact 2016 a whole lot of opportunity would be international sales.
Pete Skibitski (Senior Analyst)
Okay, got it. And then just last one again, maybe for Dave Sagehorn. Dave Sagehorn, what's your FX assumption for the.
Dave Sagehorn (EVP and CFO)
Full year in terms of the headwind?
Pete Skibitski (Senior Analyst)
Revenue? Headwind?
Dave Sagehorn (EVP and CFO)
Yeah, last quarter we talked about; we thought it would be about $0.15 a share. We've since gone back and what I would say refined our calculations on that, and we actually have a stronger natural hedge than I would have thought when we were talking to you at the end of January. So even with the continued strengthening of the dollar through the March quarter, I think we're still looking at a year-over-year of about $0.15.
Pete Skibitski (Senior Analyst)
Okay, got it. Thank you.
Dave Sagehorn (EVP and CFO)
Okay, thanks, Pete Skibitski.
Operator (participant)
Thank you. Our next question comes from the line of Ross Gilardi with Bank of America. Please go ahead with your questions.
Ross Gilardi (Managing Director and Equity Research Analyst)
Yeah, good morning, everybody. Hey, I just want to ask about inventories. I mean, they're up like 30% despite your, your revenue decline. And you said that inventories are starting to come down in March, but could you just talk a little bit more about why they're up so much versus last year kind of to begin with. And where do you expect to end the fiscal year on inventory?
Dave Sagehorn (EVP and CFO)
Sure. Ross Gilardi. This goes really back to last summer. We started commenting on this in terms of our approach to production throughout the full year. We were trying to more level load production in those businesses where we do experience a fair amount of seasonality. And that's really what you've seen play out. You saw it increase in December a little bit as we went from the December to the March quarter. But as we noted in the prepared remarks, we did see the inventory levels start to decline later in March. So we believe we will continue to see that through the remainder of the fiscal year here.
Ross Gilardi (Managing Director and Equity Research Analyst)
Where do you think you'll end up towards the end of the year? Will you still be up a pretty. Good amount or do you think you'll be back sort of closer to year-end 2014 levels?
Dave Sagehorn (EVP and CFO)
It might. It'll be probably close to year-end 2014 levels, could be a little bit higher depending on the timing of sales that we have in the remainder of the year.
Ross Gilardi (Managing Director and Equity Research Analyst)
Okay, great. And then just the last one. How would you characterize the pricing environment for your access segment overall? Has it gotten at the margin a little bit better, a little bit worse? Your Canadian competitor presumably has a little bit of an FX advantage. Wondering if that's filtering into the market at all.
Wilson Jones (President and COO)
Ross Gilardi, we've seen what I would call normal pockets where that pops up. Overall, I would say pricing has been competitive but fairly stable. Europe is where we've seen a little bit more aggressive pricing. One competitor is with Russia kind of slowing down. One competitor that does a lot of business there has obviously moved over and creating a little bit of pricing pressure in Europe. But overall I would say it remains competitive and again, the normal pockets that we're used to seeing.
Ross Gilardi (Managing Director and Equity Research Analyst)
Got it. Thanks guys.
Dave Sagehorn (EVP and CFO)
Thanks.
Operator (participant)
Our next question comes from the line of Timothy Thein with Citigroup. Please go ahead with your questions.
Timothy Thein (Analyst)
Great, thanks. Good morning, guys. Yeah, just following up on that last question on pricing. Charlie Szews, you had mentioned earlier some tailwinds from raw materials, you know, given the hot rolled prices, steel prices in the U.S., in the U.S. anyway down, call it mid-20s%, high 20s% year-to-date. Is that, I guess, just maybe comment on kind of how that's factoring in? That is your net-net assumption in terms of price cost, I guess, as you expect to play out in 2015 relative to maybe what you thought three or six months ago.
Dave Sagehorn (EVP and CFO)
Timothy Thein, it's Dave Sagehorn. I mean we certainly are seeing the movement in steel. That's kind of what I would call the headline price. If you look across the whole range of commodities and materials that we procure, we've got a mix of items that are we buy kind of more on the spot basis along with items that we've locked in for longer periods of time. And that's not necessarily raw materials or commodities, but fabrications, et cetera, where we may incur a price increase on an annual basis no matter if steel underlying steel cost is moving up or down. So to just look at the headline steel price is probably a little misleading. We do think there will be some positive impact as we look at the second half of the year here.
That's really baked into our outlook for the year, and I guess probably just leave it at that.
Timothy Thein (Analyst)
Yeah. Okay. All right, fair enough. And then maybe, Wilson Jones, just in terms of the comments on limited oil and gas impact, what do you. Or I guess maybe looking at the actual order book for telehandlers, maybe one place that you could that that would show up. I'm just curious what you're seeing in terms of the order book between maybe the lower capacity telehandlers versus some of the higher end, which presumably would be more tied to or exposed to kind of the upstream activity.
Wilson Jones (President and COO)
Well, Timothy Thein, it's hard to quantify telehandlers to oil and gas for us. If you look as we came out starting this year, we forecast and what has happened is a heavier telehandler mix in the first half and that was really around the tier changes. I would say the telehandler activity that we're seeing at the start of the second half is in line with what we thought it would be. So as Charlie Szews mentioned, and I did too, is, you know, what little impact we've seen from oil and gas is very manageable. And I couldn't tell you a specific number for anybody saying we're not ordering telehandlers because of oil and gas. It hasn't been a factor for us.
Charlie Szews (CEO)
Just to be clear, our North American outlook has improved as the months have passed in this fiscal year. So yes, there's some oil and gas impact on the fringes, but overall construction activity and rental activity has made up for that in North America.
Timothy Thein (Analyst)
Got it. Thanks a lot.
Operator (participant)
Our next question comes from the line of Jamie Cook with Credit Suisse. Please go ahead with your questions.
Jamie Cook (Managing Director)
Hi, good morning. I guess a couple quick questions. One, you know, in terms of the cadence of orders throughout the March quarter and then into April, were they fairly consistent with what you would have thought? You know, I guess outside of weather, can you talk about what you were seeing for trends in the months of April and then can you just talk about what your expectation is for ordering patterns in the back half of the year in terms of how much will come from independents versus the large national. Guys, thanks.
Wilson Jones (President and COO)
Yeah, I'll jump in, Jamie Cook, and you guys can add color here. From an order pattern standpoint, I would tell you in April we're off to a good start. Our position is good. What we've been told from a forecast standpoint is coming into fruition. So we're pleased with that. I think because of the rental companies are comfortable with us now that we can produce and deliver on time. There's that comfort and communication that I've talked about several times to be a little more lax with their ordering. They're not putting in those big orders anymore. So again, our lineup of forecasts looks well for the second half in terms of the IRCs and NRCs. You know, Jamie Cook, the IRCs this past year have been growing a little faster than the NRCs. But now this past quarter, we had a little bit stronger NRC mix.
But if you look historically at our mix over the years, and we haven't really been public with what that mix is, but I would tell you it. It's consistent with what our forecast is, consistent with what it's been over the last couple years.
Jamie Cook (Managing Director)
Okay. And then just, I guess, I know you guys are still fairly optimistic on the aerial work platform cycle. Can you just talk about sort of longer term, how you think about incremental margins from these levels? I mean, I think last year you were at 29%. This year I think you'll average. It's all over the place, but I think you'll average more in the mid-20%.
Is there any reason mix or MOVE initiatives where you feel like incremental margins could sustain at this level or potentially be better, or should we expect them to moderate? And then I'll get back in queue. Thank you.
Dave Sagehorn (EVP and CFO)
I think, Jamie Cook, if we talked at 20%-25%, if you look at a typical mix, I think that's a good number to start with. And then ideally what we're targeting is to do better than that by boosting it through MOVE initiatives.
Jamie Cook (Managing Director)
All right, thanks. I'll get back in queue.
Patrick Davidson (VP of Investor Relations)
Thanks.
Operator (participant)
Our next questions come from the line of Mike Shlisky with Global Hunter. Please go ahead with your questions.
Mike Shlisky (Managing Director and Senior Equity Research Analyst)
Good morning.
Dave Sagehorn (EVP and CFO)
Morning.
Mike Shlisky (Managing Director and Senior Equity Research Analyst)
Can you just get a little bit more color on what you said about chassis availability in your commercial segment? I guess. Are you seeing those issues across all truck makers? Are you seeing any increases in your pricing for these chassis and any thoughts as to when the lead times for chassis might dissipate?
Wilson Jones (President and COO)
Well, first of all, you know, we go through this cycle quite often, and when Class 8 picks up, the vocational chassis seem to kind of suffer. So that's a little bit of the stage we're in now. We are working closer with the chassis manufacturers to have dealer available inventory that meets our specifications. So we've learned how to flex and be more agile with commercial chassis. Right now we don't see this getting better in the short term, but again, as you can see from commercial results, they are managing through that. So we actually had meetings last week with a couple of chassis OEMs and we continue to do that just to try to make sure we're connected and working as close as we can with them.
Charlie Szews (CEO)
In terms of lead times, you probably ought to ask the chassis OEM. I'm not sure we're the right ones to estimate that.
Mike Shlisky (Managing Director and Senior Equity Research Analyst)
Gotcha. And then secondly, I know it's small, but you do have a small airport snow business and with all the impacts from the weather in the fiscal Q2 here, can you maybe comment on how that did in the quarter and how that might look for next season given the heavy winter that we just finished?
Charlie Szews (CEO)
Well, our leader of our airport products business has since retired, used to always pray for snow because whenever you had a heavy snow year, the next year we had a good snow business. So it's usually a year lag.
Mike Shlisky (Managing Director and Senior Equity Research Analyst)
Gotcha.
Charlie Szews (CEO)
Thank you.
Dave Sagehorn (EVP and CFO)
Thanks, Mike Shlisky.
Operator (participant)
Our next question comes from the line of Ann Duignan with JPMorgan. Please go ahead with your questions.
Ann Duignan (Stock Analyst)
Hi, good morning. Most of my questions have been answered. If we just look at your guidance by segment, you haven't changed it quarter-over-quarter. Can you just talk a little bit about where you see the most upside potential and where you see the most risk to your outlook by segment?
Wilson Jones (President and COO)
That's our zinger for the day. Ann Duignan.
Charlie Szews (CEO)
I don't know that we see significant risk in any of the segments. I'm not saying there isn't any risk. There is probably risk in anything, but not significant risk. Modest, maybe, in some of the segments on the upside could come from multiple areas, but certainly Access is our biggest segment, and that if it's a significant upside would have to come there.
Ann Duignan (Stock Analyst)
Okay. On Defense, is there any risk that the Canadians just won't place any orders? I mean, look at their economy. There's a lot of talk in Canada about balancing the budget. And you've got currency. You know those Defense products that are sold into Canada, are they sold in U.S. dollars or Canadian dollars? You just talk about what are the risks around the Defense side.
Charlie Szews (CEO)
For MSVS. You know, we think it's going to be announced in the next couple months. That's what we hear. We believe it's going to Treasury here in the next month or so for approval and then it would be announced at some point after that, could be, you know, even a couple months after that. So it sounds positive. But you know, these are always our political kind of decisions, decisions in the end and certainly it could get derailed. But, you know, we feel good about the program. We had a vehicle that tested really well.
Ann Duignan (Stock Analyst)
Okay, I'll get back in line. Thanks, guys.
Dave Sagehorn (EVP and CFO)
Thank you.
Operator (participant)
Our next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead with your question.
Jerry Revich (Managing Director and Senior Equity Research Analyst)
Nice progress in Fire & Emergency. Can you just talk about what the price increase and the production ramp? Do you think you have the pieces in place to get back to the historical high single digit type margin range heading into Fiscal 2016?
Wilson Jones (President and COO)
We do, Jerry Revich, but over time they made a good jump in Q2. We're expecting a similar quarter in Q3-Q2. I think I mentioned we're just now splitting the lines at Pierce to further decrease complexity. So this is with the fixed cost in this business. It's not one that turns really fast. So we do like our progress. The team's working on the right things. Usually ask about the metrics and I'll tell you, the metrics are all certainly trending in the right direction. So we're pleased. And you know what's really nice now is the orders are picking up. They were up 19% on the quarter. The FDIC show was a really big hit. We saw some nice positive sentiment there from customers and dealer energy. So they're poised to continue the path they're on, but it will take some time.
Jerry Revich (Managing Director and Senior Equity Research Analyst)
Okay, thank you. And then in Access, I'm wondering, Dave Sagehorn, can you say more about the natural hedges that you found? I guess we're of the impression that there's a net export position into Brazil in Europe and sounds like you've been able to mitigate that. Can you just flesh out that comment a bit more?
Dave Sagehorn (EVP and CFO)
Yes. The largest change, Jerry Revich, is we do procure a fair amount of material here in the U.S. from foreign suppliers that we pay for in foreign currency. So that goes into the production of our products. Here in the U.S. we are more of a refined view of that than we had at the end of January.
Jerry Revich (Managing Director and Senior Equity Research Analyst)
How big is that as a % of your total buy?
Dave Sagehorn (EVP and CFO)
I'm not going to get into that level of detail, but it certainly is helping us in this time when we've seen the U.S. dollar strengthen.
Jerry Revich (Managing Director and Senior Equity Research Analyst)
Okay, thank you.
Operator (participant)
Thank you. Our next question comes from the line of Eli Lustgarten with Longbow Securities. Please go ahead with your questions.
Eli Lustgarten (Research Stock Analyst)
Good morning, everyone. Nice quarter.
Charlie Szews (CEO)
Thanks.
Eli Lustgarten (Research Stock Analyst)
One clarification question: Can you talk a little bit about the tax rate? The 35%+ tax rate, did it really cost you $0.04 or $0.05 in a quarter or is that underlying tax rate lower and it was boosted up because of the charges related to the refinancing?
Dave Sagehorn (EVP and CFO)
No, Eli Lustgarten, it's really, you know, as we looked at the full year, raised it from 31%-32% and then there's a little bit of a, kind of a catch up, so to speak, in the Q2 as we adjusted to that because we would have booked at a lower rate in the Q1.
Eli Lustgarten (Research Stock Analyst)
So it really did cost you a few pennies in the quarter from the tax rate. And specific questions I have two. One on access, one on Defense. On the access, you talked a little bit about the timing of orders and backlogs down. The implication is that the bulk of the backlog and what we're seeing is relatively short term and most of it will be shipped in the Q3. And the new orders are really for Q4 and beyond. Is that a fair characterization they're looking for? The Q3 is pretty well set on the backlog and it's the Q4 that are more dependent on the timing of these orders.
Charlie Szews (CEO)
It's clearly more dependent on the Q4 that we need orders now for the Q4, but we still need some orders for the Q3.
Eli Lustgarten (Research Stock Analyst)
Okay, but I mean you promised on April is that you're seeing it,
Dave Sagehorn (EVP and CFO)
Eli Lustgarten, the entire quarter is never fully ordered before we get into it.
Right. I mean this is pretty normal, right?
Eli Lustgarten (Research Stock Analyst)
Yeah, I understand that, but it's noticeably down. I was just looking at sensitivity, a way to worry. And the other questions on Defense, talking about troughs. The implication of your more positive commentary is reasonably high expectations on the big contract coming this fall. Would all these comments have to be evaluated if the politics go against you, or are you pretty confident that somehow you'll have some business that will keep the Defense as an important part of the company as you look out?
Charlie Szews (CEO)
Yeah, I mean the outlook that we've shared so far for 2016 on a qualitative basis, assume MSVS at all. Right. Because first of all, if we do win it, we wouldn't benefit our earnings until 2017 because that's when really shipments start. So really what we're looking at for 2016 is incrementally higher domestic business and the potential for some international orders.
Wilson Jones (President and COO)
JLTV would be low rate production. It wouldn't be much.
Charlie Szews (CEO)
Right.
Eli Lustgarten (Research Stock Analyst)
But it would be overhead absorption. I guess the basic feeling is that you're looking at 2016 in Defense would be higher volume and you know, something better than breakeven profitability with that, regardless of what happens to the politics is sort of the expectations at this point.
Charlie Szews (CEO)
Yes, yes.
Eli Lustgarten (Research Stock Analyst)
Thank you very much.
Dave Sagehorn (EVP and CFO)
Thanks.
Operator (participant)
Our next question comes from the line of Seth Weber with RBC. Please go ahead with your questions.
Seth Weber (Senior Equity Research Analyst)
Hey, good morning, guys. I'm just trying to go back to Access. I'm trying to understand the mix, what we should expect for mix in the second half. AWP versus telehandler. Should that revert back more to what we've seen, you know, like in 2014? And I guess are you still producing the interim Tier 4 telehandlers with credits, or does the telehandler number just really drop from here?
Dave Sagehorn (EVP and CFO)
Seth Weber, in terms of the mix, we certainly do expect to see a higher mix of aerial work platforms in the second half of the year. This is really consistent with what we've said all throughout the year as we were going through the Tier 4 issue with telehandlers in the first half of the year. When you look at the backlog at the end of March, that would support that outlook that we're going to see a stronger aerial work platform mix in the second half of the year.
Seth Weber (Senior Equity Research Analyst)
But is it like a 60/40 kind of around where you used to be, excluding the other category? Is that fair or is it more of the moderate?
Charlie Szews (CEO)
It is definitely far more skewed toward aerial work platforms in the second half of the year than would normally be. Having said that, for the year, we think both aerial work platforms and telehandlers will grow around the same percentages. All right, so for the year, you know, we're going to get back to kind of normal by the end of the year.
Seth Weber (Senior Equity Research Analyst)
Okay, so the two categories. Sorry, Charlie Szews, just to make sure I'm understood. So the two categories grow by about the same level for the full year. Is that what I think I heard?
Charlie Szews (CEO)
Correct. But it's much different within the year. So much healthier home mix in the second half.
Seth Weber (Senior Equity Research Analyst)
Understood, thanks. And then I'm just trying to calibrate the commercial segment margin guidance, the commentary about delivery issues with the chassis or availability and kind of the implied margin for the second half of the year is very high-single-digits to get to your 6.5% number. Is that possible given the supply chain issues that you're talking about?
Wilson Jones (President and COO)
It is set. We have, I think I mentioned in my remarks, our refuse collection vehicle backlog has grown. There is a margin difference between RCVs and mixers. So with a heavier mix of RCVs, that the path is there.
Dave Sagehorn (EVP and CFO)
Seth Weber, also, just on the chassis availability that you talked about, as Wilson Jones noted in the remarks, we do have a stock of raw chassis. So that will help mute some of the impact in terms of the lead times that are out there today on chassis availability.
Seth Weber (Senior Equity Research Analyst)
Okay. All right, guys, thank you very much.
Charlie Szews (CEO)
Thanks.
Operator (participant)
Our next question comes from the line of Ted Grace with Susquehanna. Please proceed with your questions.
Ted Grace (Analyst)
Good morning, gentlemen.
Wilson Jones (President and COO)
Good morning, Ted Grace.
Dave Sagehorn (EVP and CFO)
Morning, Ted Grace.
Ted Grace (Analyst)
Dave Sagehorn, any chance you could give us somewhat of an EBIT bridge for the access equipment segment? We're able to get the revenue pretty clearly from what you've talked about and kind of the press release. But I was just wondering if you look at kind of year-on-year change in operating profits, how to think about the impact of mix of FX price, cost? I mean, you talked a bit about kind of materials, but is there any way you can give us a discrete bridge on a dollar basis?
Dave Sagehorn (EVP and CFO)
I don't have all those details right at my fingertips here, Ted Grace. You're talking the Q2, right?
Ted Grace (Analyst)
Yes.
Dave Sagehorn (EVP and CFO)
Yeah. So obviously you can get it offline if easier. Yeah. If you wouldn't mind, let us work on that. But certainly volume did help. Mix was certainly a negative. The currency was a negative. All the gives and takes around the supplier recovery and a couple other things was a small positive.
Wilson Jones (President and COO)
So.
Dave Sagehorn (EVP and CFO)
We'll work on something for you.
Charlie Szews (CEO)
I mean, basically it's more negative mix from telehandlers offset in part by the volume benefit. And that's kind of. Those are the bigger.
Ted Grace (Analyst)
Sure. And then the second question I was hoping to run by you is I know there are some questions about Canadian competitors and the impact of FX on competition. I was wondering if you look more broadly across telehandlers, some other competitors, notably from Europe trying to penetrate the U.S. do have the benefit of currency potentially. Can you just talk about competitively what you're seeing in the telehandler landscape? Are you seeing a market change in competitive dynamics with new entrants or people trying to make a bigger push in the U.S.? And I'll leave it at that and get back in queue.
Wilson Jones (President and COO)
Yes. The quick answer, Ted Grace, is our market share is up in telehandler, so we're surviving any of the competition coming in and doing well. We have seen some of them come in. You know, the rental companies in the U.S. though, they're very dependent on service and after sales support and that's hard to do, you know, quickly. So our Online Express JLG is very connected to their customers and I think most customers are a little hesitant to start with a new supplier, especially one that's from out of the state. So so far we haven't seen any major moves from any of them. And like I said, we like the way our market share is going there.
Ted Grace (Analyst)
All right, that's great to hear, guys. Best of luck this quarter.
Wilson Jones (President and COO)
Thank you.
Dave Sagehorn (EVP and CFO)
Thanks.
Operator (participant)
Thank you. And our next question comes from the line of Steve Barger with KeyBanc. Please go ahead with your questions.
Steve Barger (Managing Director and Equity Research Analyst)
Hi. Good morning, guys.
Wilson Jones (President and COO)
Good morning, Steve Barger.
Steve Barger (Managing Director and Equity Research Analyst)
Just a quick follow up on Defense. Did you say you expect both revenue and operating loss will be similar to 2Q next quarter? Which means we'd see like closer to $400 million in revenue in low to mid single digit to get to the $1 billion and breakeven. Just trying to understand the cadence.
Dave Sagehorn (EVP and CFO)
Steve Barger, was your question around Q2-Q3 in Defense?
Steve Barger (Managing Director and Equity Research Analyst)
Yeah, because I thought you said in the prepared remarks that the operating loss in Defense would be similar in 3Q as what happened in 2Q.
Dave Sagehorn (EVP and CFO)
That's true. I think we will see a little bit higher sales sequentially from Q2-Q3, but not a lot.
Steve Barger (Managing Director and Equity Research Analyst)
Okay, so you are, I mean that would put you around $600 million ± right on revenue through the three quarters, which means you need a pretty big step up in 4Q.
Dave Sagehorn (EVP and CFO)
Yeah. So if you think about the Q4, we do expect to start up production again in sales of FHTV in the Q4. That's going to be your biggest driver. And we still do have some international M-ATVs in our outlook for the year in the Q4.
Steve Barger (Managing Director and Equity Research Analyst)
Understood. Again, that'll get you back to kind of a mid-single-digit operating.
Dave Sagehorn (EVP and CFO)
Profit in the Q4
Steve Barger (Managing Director and Equity Research Analyst)
in 4Q.
Dave Sagehorn (EVP and CFO)
Yep, yep. So for the full year, slightly above breakeven.
Steve Barger (Managing Director and Equity Research Analyst)
Very good. I just wanted to understand the timing of it. Next question, Fire, I hear you on needing increased pricing due to vehicle complexity. Were you able to capture that before when you had complex vehicles and you were running high-single-digit margins or was it volume that really drove that margin before? Or are you seeing significantly less rational pricing from competitors now? Just trying to understand the dynamics of the current market versus when you were at twice the margin?
Charlie Szews (CEO)
Yes, Steve Barger, I think when the markets were stronger, when the industry was 5,500 units, that pricing was a little bit more favorable than it is today when the same number of competitors are out there, but then they're chasing 4,000 units.
Steve Barger (Managing Director and Equity Research Analyst)
Got it.
Wilson Jones (President and COO)
I'm sorry, Steve Barger. It definitely has created this complexity issue, and I think you're seeing that with the other companies we compete with in the market. Consolidation caused some. A lot of aggressive behavior in the marketplace, and that's put a lot of pressure on the Pierce margins.
Steve Barger (Managing Director and Equity Research Analyst)
You really haven't seen any competitors.
Dave Sagehorn (EVP and CFO)
Exit as a function of the weak.
Steve Barger (Managing Director and Equity Research Analyst)
Markets over the last few years?
Wilson Jones (President and COO)
Not really. Not really.
Steve Barger (Managing Director and Equity Research Analyst)
Okay, thanks.
Operator (participant)
Thank you. This concludes today's Q&A session. I'd like to turn the floor back to management for closing remarks.
Charlie Szews (CEO)
Okay. Thank you for your questions today and for your interest in Oshkosh Corporation. We're looking forward to a strong second half of the year. Have a good day, everyone.
Operator (participant)
Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.