Greetings, and welcome to the Oshkosh Corporation Fiscal 2014 First Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Pat Davidson, VP of Investor Relations for Oshkosh. Thank you, Mr. Davidson, you may begin.

Thanks, Brenda. Good morning, everybody, and thanks for joining us. Earlier today, we published our first quarter 2014 results. A copy of the release is available on our website at oshkoshcorporation.com. Today's call is being webcast and is accompanied by a slide presentation, which includes the 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 about 12 months. Please refer now to Slide 2 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 results stated on this call are for continuing operations, unless other -- unless stated otherwise. Also, all references on this call to a quarter or a year are to our fiscal quarter or our 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 3, and I'll turn it over to you, Charlie.

Thank you, Pat, and good morning. We're pleased to announce an overall strong quarter to kick off 2014. We exceeded our expectations in many areas, which contributes to our confidence in raising our expectations for 2014 as we track toward achieving our goal of earnings per share of $4 to $4.50 in 2015. A combination of disciplined execution and favorable product mix drove our stronger-than-expected results this quarter. Dave will go into more of the detail, but I'm very pleased with the work of our team to execute our MOVE strategy and converting to culture-changing Oshkosh Operating System. Today, we reported a higher year-over-year sales and operating income margin in each of our nondefense segments. This performance offset most of the Defense segment operating decline, which was expected. Our team continues to drive forward with their MOVE initiatives, laying the foundation to achieve our 2015 financial target. MOVE has driven improved cash flow, which enabled us to complete and exceed our share repurchase program announced in November 2012, with 9.1 million shares repurchased from program launched through December 31, 2013, at a total cost of $347 million, approximately 15% over our target of $300 million, and we paid our first dividend under our reinstated dividend program during the first quarter. Based in part on our stronger-than-expected first quarter results, confidence in our MOVE strategy, we are pleased to announce that we are raising our earnings per share expectations for 2014 to a range of $3.40 to $3.65, and we'll provide more color on our outlook over the course of this call. Please turn to Slide 4 for a discussion of our Defense segment. Defense results for the quarter exceeded our expectations as the team continued to deliver improved operational efficiencies in the face of significantly lower volumes. This is another…

Thank you, Charlie, and good morning, everyone. The Accent Equipment segment results significantly exceeded our expectations in the first quarter. Dave usually talks in more detail in the quarter results, but I also wanted to share some insights. The strong margins we delivered in the first quarter were a combination of a more favorable than expected product mix, higher pricing, continued improved operational performance and the settlement of pricing on a multi-year contract for the Department of Defense. Backlog in the segment as we entered the quarter represented just under 50% of the quarter's new machine sales and reflected a typical product mix for the business. However, orders received in the first quarter for delivery in the first quarter reflected a stronger mix of aerial work platforms. We believe this was due to some customers deciding to swap the timing of their aerial work platform and telehandler purchases so they could avoid the price increase on certain aerial work platform models associated with the changeover to Tier 4 engines. The result is that we had a mix more heavily weighted to aerial work platforms than we had expected. Our current expectations for sales in the second through fourth quarters of 2014 now includes a product mix a little less weighted to aerial work platforms than our prior expectations reflecting this slot. I'm sure you're also interested in hearing about our negotiations with the national rental companies. Overall, I would say they have gone well. We believe the North American Access Equipment market remains strong and the rental companies have positive outlooks. We're nearly complete with these negotiations. Our backlog at the end of December was down year-over-year, entirely due to lower backlog in North America. The lower backlog reflects that North American national rental company negotiations continued into January. Plus,…

Thanks, Wilson, and good morning, everyone. Our first quarter results compared favorably to the first quarter of last year, especially when you consider that Defense segment sales were down significantly year-over-year. And as Charlie mentioned, first quarter results significantly exceeded our expectations. The improved performance versus our expectations can largely be attributed to strong execution and a strong mix. Consolidated net sales for the first quarter of 2014 were $1.53 billion, a 12.6% decline from the first quarter of 2013. As has been the trend in the last few quarters, higher sales in our nondefense segments, led by a 15% increase in sales in the Access Equipment segment, more than enough to overcome a more than 40% decline in sales in our Defense segment. The decline in Defense segment sales was expected and is in line with the outlook we provided on our most recent earnings call. Excluding sales related to military contracts, Access Equipment segment sales were up 17.2% compared to the prior year quarter. The year-over-year increase in Access Equipment sales reflected continued strong replacement demand in North America, along with a nice improvement in Europe, Africa and the Middle East sales. As Wilson mentioned, we believe that some of the increase in North America was related to customers looking to get ahead of the Tier 4 pricing increase for certain aerial work product -- platform products. Consolidated operating income for the first quarter was $96.5 million or 6.3% of sales compared to adjusted operating income of $96.6 million or 5.5% of sales in the first quarter of 2013. The improved performance in the nondefense segments offset the impact of lower Defense results. Operating income margins were up year-over-year in all nondefense segments, led by the Access Equipment segment, which reported operating income margins of 13.5%. Operating income…

Thanks, Dave. We just delivered a strong quarter, but significantly exceeded our expectations, and we raised our full year outlook. Outside of our domestic Defense business, we are competing in markets that we believe are generally improving and provide us with opportunity to drive enhanced performance. We have an outstanding strategy with MOVE, and we are still in the early, but maturing stages of our culture level transformation with the Oshkosh Operating System. It's a great time to be working at Oshkosh, and we plan to continue working hard and smart to satisfy or even delight our customers and shareholders. We believe we're on track to achieve our previously announced 2015 financial targets and to transform the business to sustain superior growth over the long-term. That concludes our formal comments. We're happy to answer your questions, so I'll turn it back over to Pat, who will give the Q&A start.

Thanks, Charlie. [Operator Instructions] Brenda, please begin the question-and-answer period of this call.

[Operator Instructions] And our first question comes from the line of Charley Brady with BMO Capital Markets.

Obviously, first question is going to Access, not surprisingly. Can you -- can we just talk about the $7.5 million military pricing? Was that sort of a one-time catch-up that you guys had, or can you expand on that? And I guess, as a follow-up to that, when you talk about the negotiations continuing to January, I guess I'm wondering in terms of looking at the backlog, maybe some color on how that impacted the current backlog at the end of the December given that negotiations still haven't been completed.

Sure. Charley, good morning. It's Dave. I'll handle the first one on the military contract and then turn it over to Wilson to talk about the backlog. The military contract, it really is finalizing pricing on work that has been done over the last several years on a contract. It was an urgent need with the government, and it just took a while to get the pricing finalized. So benefit in the first quarter, but it will not impact us in future quarters.

Hey, Charlie. On the backlog question through December, we had a good IRC mix. We did complete some negotiations. We're in the process of basically completing all the negotiations with the national rental companies, and that's why we make the statement, we do like our position in January from an order perspective for Q2 in Access.

Bottom line, Charley. This is Charlie. We negotiated with the national rental companies. We view our position in December, but that just didn't get translated into orders and to individual orders unit by unit. And that just -- and that comes in, in January. Our customers are really just ordering closer to the point in time when they want to take delivery.

Can you speak to what you're seeing on the independent side? I'm seeing you've got the rental show coming up, I guess, in February. You've got ConExpo next month after that. Is that impacting any order activity, particularly on the independent side? Are you seeing them pull back or hold off, or does it still look like it's fairly positive going into '14?

I would say it's still positive, Charley. We've said, I think, each call that it seems like the independents are getting more and more active, more and more finding financing to get back into the machine game. But obviously, exciting time of the year for us to have ARA and ConExpo back-to-back. From what we understand, both are going to have good attendance, and we'll certainly be there in full force. And I think the independents will be -- will continue to be a good story for us throughout the next couple years.

And our next question comes from the line of Jamie Cook with Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: Couple more questions just on the aerial work platform side. I was wondering if you guys could size. You talked about some buying ahead of sort of Tier 4. Is there any way you can sort of size that opportunity? And then how should we think about Tier 4 pricing and the impact of those products on margin going forward? And then, I guess, my other question, you did note some strength in the overseas markets within Access. Just hoping you could give a little more color on how big the order opportunity was and how we should think about the international mix impacting margins going forward.

Well, Jamie, I'll take off on the Tier question. In our comments, we've talked about how there were some aerial work platforms purchased in lieu of some planned telehandlers. So that shift, you'll see the effects of that in the second, third and fourth quarter with a slightly less AWP mix than what you just witnessed in Q1. When we look at the Tier changes, that's a big part of our negotiations as we work through with the national rental companies. And again, depending on the size of engine, the increase varies. But that is built into our 2014 budget. So what you're seeing in our forecast for the year takes into account us receiving those emissions of charges. So that's all baked into our numbers. Again, the mix varies as you just saw on our Q1. So that is covered in our full year from a Tier-change standpoint. It's been a big part of our negotiations with the national rental companies. Jamie L. Cook - Crédit Suisse AG, Research Division: But is Tier 4 margin neutral, margin accretive?

It varies, Jamie. There's -- each national rental company has different types of terms and conditions, so it's part of the negotiations. But obviously, we work to make it accretive, but there are some cases where the terms are different. So it's hard to just say yes or no to that question.

Yes, Jamie. But generally speaking, it's margin neutral. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. Then, sorry, just the international?

Sure. We are seeing strength in Europe, earlier buying patterns in Europe than traditionally in the last few years. So backlog's strong in Europe at the end of December relative to prior year. The impact on margins is -- it's a more competitive environment because the markets are still down 60%. Having said that, it's a good mix of products, so I think you'll see us achieve our overall segment margin goals for the year.

And your next question comes from the line of Mig Dobre with Robert W. Baird. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: I guess I'm going to stick with Access Equipment and maybe kind of a bigger picture question, looking into 2015. I'm trying to figure out your 2015 outlook giving the way you're guiding 2014. So in essence, you're guiding for roughly 10% of revenue growth in 2014. You've got a 2015 target of $4 billion in revenue, which would imply, say, 17% or so growth. Can you help me think through why would we see such an acceleration in the out year in growth, or maybe your 2014 guidance is too conservative? What are kind of the puts and takes here?

Mig, we're not going to update guidance and everything here this morning. But what I would say is that as the cycle progresses, nonresidential construction should improve, and that's a big driver of our Access Equipment business. And so to see that kind of a growth in '15 from nonresidential spending is certainly within the realm of possibility, plus we hope there would be some acceleration in Europe in '15. Again, Europe this year is down 60% from peak. It looks like '14 will be a better year. But if that's a nice -- if that's the first step, the next step in Europe should be a bigger step in terms of improvement in that construction environment. So we would expect '15 could be a really good year for buying. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Excellent. That's very helpful. And then on the Defense side of the business, can you give us a quick update for how much in M-ATV revenue you had this quarter? And has this, the final quarter -- has this been the final quarter for international deliveries, or are there some left in the second quarter?

Mig, we did obviously have M-ATVs in the first quarter, but we traditionally don't break that out into the specific programs. We do have some additional M-ATVs in the forecast that are under contract for international deliveries. Right now, our expectation is that we will see those come through as sales in our third fiscal quarter. And then as Charlie talked about, we did have an expectation that we might have some additional orders in time for us to get those in the fourth quarter, but we have now updated that expectation. We think we'll see those now in 2015 instead of our fiscal 2014.

Our next question comes from the line of Eli Lustgarten with Longbow Securities.

I think we were all -- we were getting spoiled by seeing these kind of beats. You're turning us in the wrong way, I think. And then I'm -- I want a clarification, the $7.5 million settlement with the government and pricing, that falls directly to the bottom line, right? That's both the sales number and the operating profit number?

Correct.

And then -- now what you give in your guidance for AW -- for the aerial plat work -- platform telehandlers is just basically throughout the bottom slide. You got the top slide and throughout the bottom, almost implying that you expect things to be pretty much as you saw it. You just got a stronger first quarter. Is that sort of how you're seeing things? That you'll probably still see a near -- a probably less than 10% gain in the business this year, and the first quarter was just stronger, and that's why you went to $3.35 billion at the bottom instead of $3 billion?

We -- Eli, we actually raised the bottom up slightly from...

Yes, it went from $3 billion to $3.35 billion. That's the first quarter being effective, isn't it?

Well, I guess, it's just kind of an outlook on the year. I think a lot of -- as what we looked at in the first quarter, and Wilson touched on this, is we viewed it more as an exchange of telehandlers for aerial work platforms in the first quarter, and we think that will largely reverse itself for the remainder of the fiscal year.

Eli, we never gave a specific forecast for Access Equipment sales in the first quarter. So for us to say we beat or didn't beat, that wouldn't be accurate. We did take our guidance up for the year.

Can you give us some commentary or color what the rental companies are telling you? I mean, when you talk to them on the side, you hear and you see relatively flattish spending plans out of most of them, some moving back and some talk that they want to shift back more to direct [ph] this year, then AWPs-only -- because of the timing of Tier 4 spending, price increases and such. Are they telling you any of that stuff, or are they just committed to what they're saying in AWP? There's no change in their attitude, even the timing has been going a little bit.

Eli, I think what you're hearing is relatively consistent with what we're hearing. Flattish, up a little bit maybe, but flattish. Most of the growth that we're projecting for 2014 would come from the entire rental companies in North America; Europe; Latin America; Pac Rim; Australia, pretty tough yet environment, but maybe better in the second half of the year. So again, national rental company view, like you shared, is probably spot on it. Unless they see some pickup in the market in nonres spending or something, you could see some growth orders later in the year.

[Operator Instructions] Our next question comes from the line of Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Changing gears a little bit, talking about Commercial. Can you talk a little bit about what you're seeing out there in the mixer side? I know you gave us a little bit of color. And would you anticipate some pent-up demand, particularly for the larger ticket items like cement mixers, maybe refuse trucks, maybe fire trucks as we head into ConExpo, or is that too much to expect?

Ann, with the stock market going up and down here and the volatility in some of the numbers, I'd say that our customer base in concrete mixers is relatively cautious. They're optimistic, but cautious, so you saw a nice growth in our backlog in orders for mixers. And so it's going to be a nice year in '14. It could be a better year if we didn't see some of the volatility in the numbers from month to month. But I do think that means is that if we string forward a couple good months in housing starts or something like that, you could see some improved buying in the second half of the year. But that's not reflected in our estimates right now because we have a relatively positive, but still cautious customer base out there in mixers. When you get to refuse collection in fire, it's mostly based on municipal budgets. Yes, they're improved, but not that improved at the present time. And so we're expecting a pretty modest growth in both of those markets going forward in '14. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. And that's a good color. And on the cement mixers, the industry peaks at roughly 11,000 units and troughed at roughly 800 units. Where are we now, roughly, if you wanted to give us the 2013, the back of the envelope?

Ann, we're floating around the 3,000 unit range right now, give or take. And just a little bit more color on what Charlie was saying as coming out a world of concrete, I think we've certainly got more people interested, but they are still in that cautious mode. So I think more to come there, but we did have a good experience at the show last week. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. And just a real quick follow up. Tier 4 prebuying, but no tax spending. You haven't mentioned that any customer is buying because of the expiration of Section 179 or accelerated depreciation. That was not a material driver of demand in the quarter?

No. We don't believe it was, Ann.

And our next question comes from the line of Jerry Revich with Goldman Sachs. I'm sorry, the other line had dropped. Peter Skibitski with Drexel Hamilton.

First of all, great quarter, guys. Just wanted to follow up and understand better the Defense margin this quarter, I thought it was pretty solid. Was that because of international M-ATV, did you say, flowing through this quarter, or was it more so a better mix of FHTV?

We certainly did benefit, Pete, from having M-ATVs in the quarter. We aren't shipping at the volumes that we did in the second and third quarter last fiscal year, but it was still a benefit. And then obviously, Charlie talked about some of the operational efficiencies. The Defense group has done a great job in terms of managing that business in the face of some significant sales decline, and they've just been able to continue to improve their operational performance.

Okay. Can -- I guess, the balance of the year, are you expecting kind of linear decline in volumes, or is it going to be more like last year, it was pretty steady the first 3 quarters, and then kind of a sharp drop-off in the fourth quarter?

I think it will be more steady throughout the remainder of this fiscal year, probably see some drop. I don't have the numbers right in front of me. But in Q4, I'm assuming we will see a drop. But probably not to the magnitude of what we saw last fiscal year.

Okay. And let me just ask, at December 31, can you give us how much of your Defense backlog was FHTV and FMTV?

Pete, we're probably going to have to get back to you on that one.

Yes, Pete. I'll deal with you afterwards.

And our next question comes from the line of David Raso with ISI Group.

This is a pretty straightforward question. The rest of the year, you're implying Access revenue is up 7%, and you're speaking about the orders, you feel good about that. Where are -- where is the order growth currently relative to that 7% revenue growth guidance?

Yes. I mean, let me just check your numbers. I'm not sure that -- well, it's probably the mid-range or so that these numbers would be 7%. It's -- again, it's what I said, it's independents of North America. It's...

No, I apologize. I was looking for some quantification, the order growth that you're seeing relative to that revenue growth guidance for the rest of the fiscal year.

Again, remember, our backlog was filed [ph] at the end of December. You're not going to quite see that, all right? What we see is the negotiated volumes with the national rental companies, what orders are going to come in. And so that's sort of on the comp.

I guess that's sort of what I'm asking. I guess, essentially, what have you seen since the quarter closed when you say your order growth is making you comfortable with the revenue guidance for the rest of the year? I'm just trying to get a feel if there's some cushion in that number where you're seeing conversations that imply 15% growth or conversations that imply flat. I'm just trying to understand the logic behind this number.

Again, the national rental companies are flattish for the year. Independent rental companies are up nicely, double digit. And so that would come back to the point of high single digits for the rest of the year.

Which is the comment, I'm saying we're consistent with what we thought we'd be for Q2, with what we're seeing in January.

And the way to think about the incremental margin in the first quarter, you take out the military settlement number. Based on the incrementals, they're about 39%. The mix being a little less aerial the next quarter or 2, I guess that's part of the implied incremental margin slowdown a bit for the rest of the year. Is it that simple?

I think it's that, plus, David, we did have a strong mix of IRCs in the first quarter as we finalized the annual agreements with the national rental companies. So I think we will see more of their volume in subsequent quarters.

And our next question comes from the line of Walter Liptak with Global Hunter Securities.

Just wanted to ask, I guess a follow-on to the follow-on, on national versus independent, and I think that's all pretty clear. But in the past, I think, some of your sales were going direct to end users and not to the rental channel, and I'd wondered what you're seeing from that. It sounds -- it seems like construction markets are starting to pick up and if there's a channel there that you might be seeing some improvement in.

I don't know where you get that from exactly relative [ph] that they go directly to the end customers -- we go to the end customers in the sense of rental customer. Yes, we sell direct to our customers. We do have dealers and telehandlers in North America, for example. They then turn around and have some retail sales with telehandlers. But your general Joe plumber would go through a dealer or a rental company generally to buy their equipment.

Yes. I think, just to add on to that, Charlie, is retail really hasn't grown coming out the recession. If you listen to the national -- from their report, the rental percentage is growing. So as long as that's going in that direction, we don't see the retail channel picking up.

Okay. All right. Fair enough. Okay, great. And then I just wanted to ask one more on the fire and rescue. The order activity looked pretty good. And I wonder if you could talk about what you're seeing in terms of the mix of product custom versus standard. And as you get some of these operational efficiencies flowing through, when do they start hitting? Is it more of a 2015 thing where you can get more margin leverage?

Yes. We have a long cycle for backlog, Walt, so most of the efficiencies you're going to see from the work that we're doing inside the facilities is going to be 2015 and beyond. You will start to see some benefits in the second half of this fiscal year, but you won't really see it next quarter.

And Walter, in terms of the mix of what we're seeing, I think you've heard us talk through the downturn that we didn't really see a big shift from custom over to Commercial. And I think that trend is continuing as we look at orders coming in the quarter. It's still pretty strong and heavily weighted towards custom only.

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

Charlie, can you just talk about -- a bit more color on the MOVE efforts in Fire & Emergency and Commercial segments? How much progress do you expect to make in the back half of this year versus the benefit that you expect in '15? And obviously, very successful efforts in Access Equipment. I'm wondering to what extent can you apply what you learned there in these businesses.

Well, it's exactly what we've done in Access that we are doing in Commercial and F&E. But as we said all along that we were a year to 18 months behind getting started at F&E and Commercial after we started our work in Access Equipment business. So clearly, if -- is it 20%, 25% of the benefit this year? I don't know. But some of the benefit is this year in the second half, a bigger piece you'll see in 2015. More question?

Okay. And in terms of the demand in Europe and Latin America for your aerial business, can you just flesh it out for us? If you have any rentals statistics in Europe, that would be helpful. And in Latin America, I'm wondering if you could talk about, is that driven by share gains or other factors? Because for other construction equipment product lines, we're seeing a softer market outlook there. I'm wondering if you're gaining share or something else is driving the strength in Europe [ph] business.

Well, I guess, Latin America is a two-phase story, and Mexico is stronger. Brazil, up a little bit, maybe in '14, but not a lot because they are more impacted by the business they do with China. So Latin America will be kind of a North and the South story, if you want to take it that way. But we do think it will be good for us. Does that answer all your questions, every one of them?

I apologize, Charlie. But on the question on Europe, what kind of rentals statistics are you seeing there? How much of utilization and pricing picked up, if you have that level of detail for your customers?

We don't get the same level of detail in Europe. But again, it's really a mix story. We've got some rental companies even in the North that are struggling a little bit. On the other hand, generally speaking, if you're in Northern Europe, you're doing better than if you're in Southern Europe. But overall, I'd say U.K. is coming on. It's probably U.K., Germany is where more of the strength would be and -- go ahead.

Well, the one big statistic is if you look at fleet age. Their fleet age in Europe is at least 1 year to 18 months older than North American fleet age, so there is going to be a replacement demand. It's just a matter of the financing.

And our next question comes from the line of Steve Barger with KeyBanc.

Between the cash balance and the free cash flow guidance, you've got a lot of liquidity. Can you talk about the capital allocation plan going forward and in terms of reloading the buyback or any other options you're thinking about?

Steve, I think we've always talked about trying to be opportunistic here. We just put the dividend back in place late last fall. Obviously, we're going to continue that. And over time, we'd like to grow that. I think we're -- I guess I wouldn't expect share repurchases in the remaining quarters of the fiscal year at the levels that we saw in the first quarter. So as we go through the remainder of the year, we do expect to generate a fair amount of free cash flow. And at this time, we're going to try to be opportunistic with that as we go through the remainder of the year.

Yes, if you look forward the next quarter, it's -- we do a lot of building of inventory, and et cetera, for the third fiscal quarter, which is always a strong quarter, too. So you won't see the strength of our cash flow in the next quarter. So we'd probably be a little bit more cautious, certainly in the near term, and then we'll be opportunistic after that. And we'll just have to see where values are and where we can best allocate capital.

Just philosophically, do you think that the board has a preference for dividend increases going forward versus a buyback, or are both those things under consideration?

I think we're going to try to use all the tools in our toolbox.

And our next question comes from the line of Charley Brady with BMO Capital Markets.

Just a little bit back on capital allocation. You've got some bonds that are able to be called, I think it's in March. Just wondering what your thought process is. I mean, they are 8-and-change percent rate. Are you guys thinking about calling those, or what's your thought on that?

Charley, it's certainly something that we would take a look at, but we don't have any announcements to make today.

And our next question comes from the line of Alex Balton (sic) [Blanton] with Clear Harbor Asset Management.

I have a question about a report from the Defense Department on the MRAPs that are being retained by the Army, and this said that 8,585 vehicles in total are going to be retained, of which almost 2/3 or 5,650 are Oshkosh vehicles that were sold some time ago. So the rest came from -- are going to be Navistar vehicles. And I'm wondering what, if any, of the financial implications of that are in terms of repair parts in the future or possibly future new vehicles to be ordered by the Army and so on. What do you have to say about that?

Alex, I think going forward with the lower off tempo, you can expect that our U.S. Department of Defense part business is going to be in a decline. We're obviously doing some activities as much as we can to strengthen it or buttress it as much as possible. In terms of new vehicles, the Department of Defense clearly has a strategy to buy JLTV going forward, and we're heavily into that competition. I don't see them buying additional other MRAPs in part because they can get really good performance with the JLTV at a very competitive price, low weight, really all the things that they're looking for. And for that kind of a mission profile, they're going to be looking to the JLTV going forward.

Well, it does -- it is an endorsement of the quality, I suppose. 2/3 of vehicles they're keeping are yours. And also, that's -- isn't it better, though, than if they didn't in terms of your repair parts?

Absolutely. But those MRAPs aren't exactly going away. I mean, a lot of them are Access Defense articles that are going to our allies around the world, and those allies are looking for probably some help to refurbish some of the MRAPs that are going overseas. And so those are also opportunities for us.

Well, in terms of that, just to follow-up here, all these vehicles that are not being retained by the U.S. Army, a lot of them are going to others who might otherwise buy new vehicles from you. Doesn't that tend to depress your opportunities for foreign sales, the fact that all these used vehicles are on the market?

It's mixed. There's no question that it does impact it. However, we have a few countries that do prefer to buy new and really don't want to buy a vehicle that's been operating in Afghanistan, taking heavy flak, so to speak. And so there's still a number who want to buy new, and that's why we're pursuing more new M-ATVs than ever before globally. And the other thing I'd say is that some of these MRAPs are going to countries that typically wouldn't buy U.S. They've got local manufacturers in their own markets that they would have purchased from, but they're getting them free, and they're going to take them.

Alex, maybe just one other item to add on to that. If you think about the vehicles that are going to foreign militaries, they're largely the Category 1 or the original versions of the MRAPs, which are much heavier and less mobile-type vehicle than our M-ATVs as well.

Just one more thing. On the margins in the aerial work platforms, what's the potential there? Is it significantly above where you are now, or just a modest amount above?

For 2015, back at the Analyst Day, we said that our target was 15% operating income margins for the year, and we haven't updated anything beyond that.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the floor back over to Charlie Szews for closing comments.

All right, thank you. Let's wrap up. We do look forward to meeting with both of you who plan to attend our Annual Shareholders Meeting next week here in Oshkosh, and we also invite you to ConExpo and FDIC trade shows in March and April for some very exciting new product launches. Have a great day, everyone.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.