Greetings, and welcome to the Oshkosh Corporation Reports Fiscal 2014 Third Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Pat Davidson, VP of Investor Relations for Oshkosh Corporation. Thank you. Mr. Davidson, you may begin.

Thank you. Good morning, everybody, and thanks for joining us. Earlier today, we published our third quarter 2014 results. A copy of the release is available on our website at oshkoshcorporation.com. Today's call is being webcast and is being -- and is also accompanied by a slide presentation, which includes a reconciliation of non-GAAP to GAAP financial measures that we will use during this call and it's also available on our website. The audio replay and slide presentation will be available on the website for approximately 12 months. Please refer now to Slide 2 of that presentation. Our remarks that follow, including answers to your questions, includes 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 stated otherwise. Also, all references on this call to a quarter or a 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 3 and I'll turn it over to you, Charlie.

Thank you, Pat, and good morning, everyone. We announced solid third quarter results today of $1.23 adjusted earnings per share. As expected, we experienced sharply lower Defense sales. However, we also achieved several significant milestones in the quarter. Specifically, our Access Equipment segment delivered quarterly sales above $1 billion to third parties for the first time ever. The turnaround at this segment has delivered since the depth of the recession is impressive, but third quarter operating income margin again reaching 16%. We believe we're on target to achieve our annual operating income margin target of 15% for this business in 2015. Additionally, our Commercial segment had a breakout quarter this quarter, with operating income margins reaching 8% for the first time since 2007. You'll recall that we first deployed our MOVE initiatives at the Access Equipment segment and then deployed them to our Commercial and Fire & Emergency segments. The commercial team is beginning to deliver on our MOVE initiatives with improving production efficiencies and some strong new product launches in the third quarter. Our Fire & Emergency segment performance was down slightly relative to prior year. We are encouraged by improved production efficiencies on trucks that entered our assembly lines in June and July as we are executing towards a strategic roadmap for the business. Also in our fourth quarter, we expect a large volume of international deliveries in this segment, in part due to delays at various ports and other logistical issues that caused some deliveries to slip from the third quarter. As part of the disclosures today, we are narrowing our adjusted earnings per share estimate range for the full year to $3.40 to $3.55. This updated range is within our prior estimate range. Now I would remind you, it's above our original estimates for 2014. Among…

Thank you, Charlie. Good morning, everyone. As Charlie noted, the Access Equipment segment delivered record sales in the third quarter. It also delivered record quarterly operating income of $166.8 million. These results were achieved with the EAME market still down about 50% from its prior peak. The team at Access Equipment is quite simply doing an outstanding job balancing pricing, volume and cost reduction initiatives to deliver strong results. Year-to-date, Access Equipment improved operating income margins of 32% demonstrate the success of the teams efforts. Looking at performance in the quarter, the Access Equipment segment recorded sales growth of 10.4% compared to the prior year, or 13.2% excluding military, telehandler contract sales in the prior year quarter. From a regional standpoint, sales were up everywhere with exception of Latin America, whereas Charlie indicated, we did see a slowdown in the market. The EAME and Asia regions reported the highest growth rates, which we view as a positive sign of the continued recovery of the EAME market and the significant long-term opportunity in Asian markets. The North American market has continued to be strong and is core to this segment's performance. Independent rental company activity has continued to grow and rental fleet metrics in this region remain favorable. Utilization rates are strong, fleet rates remains elevated and used equipment values remain high. Overall, we believe the global market conditions will continue to slowly improve and together with our MOVE initiatives, will allow this segment to sustain sales and margin expansion into 2015 and beyond. The new products debuted at ConExpo in March have been well received by the market. We've been busy shipping 185-foot Ultra Booms and have received very positive feedback on the units from operators. We believe this product provides unmatched stability at height and the largest work envelope…

Thanks, Wilson, and good morning, everyone. Consolidated net sales for the third quarter were $1.93 billion, a 12.3% decrease from the third quarter of 2013. Sales growth of 10.4% in the Access Equipment segment and 27% in the Commercial segment was more than offset by a 46.5% decline in Defense segment sales, which we expected. Consolidated adjusted operating income for the third quarters was $175.3 million or 9% of sales compared to operating income of $225.6 million or 10.2% of sales in the third quarter of 2013. Higher operating income in the Access Equipment and Commercial segments wasn't enough to offset the decline in Defense segment operating income, which was impacted by the expected overall lower sales volume and lower quantities of higher margin M-ATV sales in the current year quarter. Adjusted operating income in the current year quarter excludes 2 items in the Defense segment. First, results exclude the benefit of a curtailment gain associated with the reduction and other post-employment benefit, or OPEB liabilities, resulting from the June 2014 workforce reduction. Second, results also exclude a charge related to adjustments to reimbursable costs associated with reduced OPEB expense under historical cost-plus contracts. These 2 items netted to a $1 million reduction in operating income on a GAAP basis. Additional information related to the segment third quarter financial performance can be found in the appendix in this morning's slide deck. Adjusted earnings per share for the quarter was $1.23 compared to earnings per share of $1.67 in the third quarter of 2013. The decrease in earnings per share was driven by the impact of lower Defense earnings in the current year quarter and a higher tax rate due to discrete tax items recorded in the prior-year quarter. Current quarter adjusted results exclude the impact of the other post-employment benefit…

Thanks, Dave. We are pleased with our progress executing our MOVE strategy. This team is delivering improved results in our non-Defense segments this year. We're effectively managing -- we are effectively managing a significant Defense downturn and we have a positive outlook for 2015, where we continue to target 2015 EPS of $4.00 to $4.50 per share. We also believe MOVE will continue to deliver for shareholders beyond 2015. That concludes our formal comments. We are happy to answer your questions. So I'll turn it back over to Pat to get the Q&A started.

Thanks, Charlie. I'd like to remind everyone to please limit their questions to 1 plus a follow-up then after the follow-up, if you have additional questions, please get back in queue. Stacy, let's begin the question-and-answer period.

[Operator Instructions] Our first question comes from Charley Brady with BMO Capital Markets.

Let's talk about Access for a minute. And I guess, can you maybe give us a little more granularity on the regions as far as North America and how much Europe and Asia were actually up? And as a follow-up to that, can we just kind of hone in on what you're seeing on the independents, I mean, what kind of growth are you seeing there? And given the reduction in the kind of the guidance for a '14, are you still comfortable with the initial '15 guidance you put out there that at the Analyst Day?

Okay. Just a few questions there, Charley. As we said in our prepared remarks, most of the growth was in Europe, Pac Rim, North America was up. Independent volume is up very nicely year-over-year, a good solid percentage point. So independents are clearly coming back. And in terms of 2015, for Access Equipment obviously, in October we'll give you our specific estimates for that business but still looking positive right now.

Can you put some numbers around that as far as growth rates? What you saw from independents' growth rates in the regions?

Independents' growth rates were up strong double digits. Again, Europe, Pac Rim very high percentage growth rates. Good percentage of overall growth in our segment came from those 2 regions.

Was North America up high-single, mid-single, low-double?

Year-to-date, if you look at North America, you recognize we got a 3% sales headwind from military telehandlers being -- not being in our numbers anymore as that contract expired, we're up double digits.

Our next question comes from Jamie Cook with Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: I guess, a couple of questions. One, just on the incrementals within aerial. I understand the first half of the year were strong and year-to-date, your incrementals are still pretty good. But was there anything unusual that was impacting the margins, your incrementals, I'm sorry, the incrementals recognizing your overall margins were strong, and just because one of your peers also put up some lower margins, I guess, relative to what the market would expect. And then my second question just relates to your free cash flow guide, you cut it from $200 million to $100 million, I don't know if you answered that in your prepared remarks, but if you could just help on that basis.

Sure, Jamie, I'll take the first question and Dave will pick up on the second. 16% quarterly OI margin for Access equipment is a very good margin for us historically. And in any one quarter, we have a lot of variables that are impacting our margin like customer and product mix. Those were very significant this quarter. New product development spend, inefficiencies, new product launches from new product launches, et cetera. So we're primarily focused on the annual margin progression as you said. Our incrementals this year are up, year-to-date, 32% incrementals margins. With our target this year of 14.6%. Our current estimates of 14.6% for the year. That's really close to our target for next year of 15% OI margins. So we think our progression is really right on plan. Jamie L. Cook - Crédit Suisse AG, Research Division: But I guess just, I mean, you mentioned mix, which I mean, your AWP sales were pretty strong in the quarter, which are higher, I think, than Telly's [ph] or whatever, so I mean, is there anyway you could break out sort of what the spend was or the inefficiencies to help us. And then this year, based on your guidance, you'll still sort of exceed your, I think, normalized incremental for that business of 20% to 25%, is that how we should think about next year?

I didn't quite hear your second question, but... Jamie L. Cook - Crédit Suisse AG, Research Division: I guess, just -- I feel like if you just take your guidance for the year on aerial work platform margins, it still implies if you look at it for a year, I mean, a good incremental margin, I think, in like the mid-30s or so. Is there any reason -- in a normalized incremental in AWP, I would think it's like 25% and change. I mean, there's no reason to believe we should be normalize sort of to the mid-20s next year just given the basic you have in 2014?

Well, we're not going to give guidance for next year all right. But I think in our prepared remarks, we did say that we expect it to continue to deliver improved margins in our non-Defense segments each year for the next few years. All right? Our -- all initiatives are clearly delivering results and we would expect in every segment to have some benefits. That would say that we have decent incremental margins going forward. But in this quarter, we did have a disproportionate mix of sales outside North America. In terms of [indiscernible]. And that does translate into lower operating income margins for us because in those smaller markets, you've got higher SG&A costs, et cetera. We've also got some pretty significant NPD spending in the quarter. So all of those things kind of factor in together. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And then sorry, just on the free cash flow cut?

Yes, Jamie, a couple of things there. One, we did raise our CapEx outlook for the year from $80 million to $100 million. But the bigger piece really is, we believe now that we'll end the year with higher inventory than we had previously assumed, and that's by design. And that's to help us be better positioned to have a smoother production schedule as we enter into fiscal '15. If you think about it, we've got some of our businesses that certainly deal with some seasonality issues and what we typically go through is, we end up laying people off for a short period of time, we bring them back, we incur over time, and as we look at it, I think the opportunity that we saw was if we would invest some more in inventory that we could eliminate some of that overtime costs, some of the inefficiencies with sending people home and bringing them back, weeks or months later.

Frankly, Jamie, we didn't really handle it too well this year. We've had more production issues than we would expect during our bigger quarters and it's just because we didn't plan properly earlier in the second... Jamie L. Cook - Crédit Suisse AG, Research Division: I guess, which segment is the inventory concentrated in? And I promise, that's my last question.

Well it's all across the board. It's not just 1 segment, all right? I think we could have handled this past year better in multiple segments if we had adjusted our production schedules in the late summer and autumn.

Our next question comes from Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Just on aerial work platforms and mix, you have exposure to the telehandler market in Europe in that business. I'm just wondering, that tends to be highly leveraged agriculture. Are you seeing any trends in the agricultural side in Europe?

Ann, I think you read it correctly. We're not probably big enough in the ag part of the market in Europe to be able to read the cycle that will in ag. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. That's fair enough. And back to the outlook for '15. I know you're not giving us 2015 guidance, but it does seem like in your prepared remarks that you are backing away from the revenue target for 2015. Is that correct?

I don't think we made any remarks on revenue. Our remarks were regarding margins overall in terms of our expectation that we can continue to deliver what the O initiative and the V initiative to drive higher margins. We did make some overall comments that some of our markets are recovering as fast as we had initially expected back at the Analyst Day. That's true. And that has yet to be seen where '15 hits and we'll have more comments on that later, but you are correct there. The base markets in North America is doing fine. Europe is better. Clearly, this year [indiscernible] than the last couple of years. So that's good for us. We had a little slow down here in Latin America recently, and I think you see that broadly about everyone that's reporting. The last several days I've heard comments on Latin America, and we're no different. So that's going to be a little bit of a headwind but they should come back as well at some point. Ann P. Duignan - JP Morgan Chase & Co, Research Division: So is LatAm the only region that you’re concerned about or are you concerned about municipal spending in the U.S. if it doesn't come back despite the fact that cash receipts are growing?

Well, Australia is still kind of flattish for us. It really hasn't recovered until mining comes back and maybe some of the bigger energy projects come back, I think that's -- we're going to be flattish or just slow growth in Australia. So I think that's probably the other bigger region. Municipalities it, we did see and made some comments I think in the quarter, but there were some slowing in the Fire & Emergency municipal markets in the quarter ended March, certainly, when we saw the final data that came out. We do have some better quoting activity now, so that could have been short-term, we'll have to see. Refuse, for us, has been sort of slow recovery but there are some decent signs of municipal recovery there as well. And you can't go on forever without replacing your garbage trucks or you don't get reelected, a lesson learned by many mayors over the years.

Our next question comes from Pete Skibitski with Drexel Hamilton.

I guess, maybe Charlie and Wilson, I'm just wondering if you guys are kind of a more confident about Access at the end of the quarter versus coming in, I mean, AWPs were up 15%. If I do the adjustment for telehandlers, looks like they're up about 10.5%. Pretty good but then backlog is down pretty sharply, right? And housing starts are kind of mix but the nonres is improving. I'm just wondering how you feel about the business at this point in time versus maybe 3 or 6 months ago?

Well I'll start and Wilson can continue. If you look at our estimates for the year and then back into the Q4, I think you're going to see that we're projecting a pretty strong Q4 in Access Equipment. So I'd say we're still pretty positive about the overall market and, Wilson, maybe you have some details to add.

Yes, I think if you look -- as I mentioned, the fundamentals are really good in North America and look to stay strong. When you take a step back, you heard the comment that the IRC's actually, from a percentage standpoint, grew faster than the NRC's this past quarter. So to see them getting bigger has really been nice. And then just looking -- still a lot of runway with nonres and res, a lot of NPD work coming out for us and then as Charlie mentioned, emerging markets offer lots of opportunities for us. So MOVE is working and we believe the outlook is very positive for Access.

Why don't you comment there more about EAME and what's going on there.

Yes, I mean, if you look around Europe today, we are seeing a lot more activity, a lot more rental companies coming back into the game. Middle East has been very strong for us. Even now, you're seeing activity in U.K., which has been one of the slower markets in Europe. So we, again, fundamentals are picking up in those market areas around Europe. There's still some slow areas, but for the most part Europe is really picking up in a nice way. Joseph M. Grabowski - Robert W. Baird & Co. Incorporated, Research Division: Okay, and then just on backlog with IRC's becoming a bigger part of the mix. Should, I mean, should we kind of deemphasize backlog or are they more of a quick turnaround business than the NRC's are?

Well I think there's a bit of a new norm in Access today and that order patterns, they're not loading up orders to try to provide or hold line slots like pre-recession method. So today, they're just a little bit more orderly. I think from a forecasting standpoint, there's a better communication today between NRCs than IRCs. They know where availability of machines are and they are not rushing out and putting those big blanket orders out like they used to.

However, as the market gets stronger the next couple of years and it's still a slow recovery but we're going to be picking up steam. That's going to become a bigger issue for all the rental companies that capacities are going to start to be consumed and it will be more important for, as the cycle continues, for people to place their orders early.

Our next question comes from Jerry Revich of Goldman Sachs.

Charlie, in your prepared remarks, it sounded like you were as positive in international M-ATV opportunity as I think we've heard you over the past couple of quarters. Could you just flesh that out for us, to the extent you're willing, and maybe update us on the long-term estimate that you have of a number of M-ATV vehicles that could potentially come up for bid in the Middle East?

Well as we've said, multiple times, Jerry, we're pursuing thousands of M-ATVs, Middle East, some Eastern Europe, North Africa. So we've got a big pipeline. We've done extremely well in the trials that we've been in to date. It's an interesting phenomenon. A lot of them have sort of black holes for budget, so you don't really get to see -- you might see a top line number, it's hard to ever see the insides. There's lots of discussion among the parties. I'd say overall, we feel good. But until we have a contract, those negotiations could move 3 months, 6 months, 12 months, it's varied. It's unfortunate, I'd like to be able to say more to you today other than, ultimately, we do think we’re going to win some additional M-ATV's in these areas. I just can't tell you how many and when.

Sure. It is possible to talk about maybe how many countries are involved, just to help us understand the breadth of demand?

We are pursuing multiple countries at the present time.

And then in Fire & Emergency, I know you're doing a lot of work on the operational turnaround, can you just talk about the key metrics that you're focusing on and how your progress is, presumably that cycle times coming down, but whatever else you think are the right metrics, just can you give us a sense how that manufacturing turnaround is going?

Well as I mentioned, Jerry, it's going better. We're seeing positive trends with our operational metrics. It's everything from starting in the front end of the business and working with our order entries through production engineering. It's basically, we're overhauling a process that we've worked with over the years, it's worked for us, but we see a better way going forward with a new process. So I would say -- in the prepared remarks, I talked about we're turn -- we're seeing the corner being turned. We like the progress they're making. The problem in Fire & Emergency is the backlog is so long. You got long lead times. So Charlie mentioned the June trucks that we're seeing now go down the line. We're seeing less openwork orders. We're seeing less parts missing. All of the general metrics that you want to see improve are going in the right direction.

Unfortunately, those won't ship until probably September. And so you still have other months in the quarter. Now I would remind you that we've also said that we're going to have some larger international deliveries in the fourth quarter for Fire & Emergency. So you should see much better comps year-on-year in the fourth fiscal quarter.

Our next question comes from Ross Gilardi with Bank of America Merrill Lynch.

You guys cut your free cash flow outlook, you didn't cut your share count forecast. Should we assume you're an active buyer of your own stock at these levels? It look like you didn't really buyback any stock in this last quarter.

Yes, Ross, if you look at year-to-date between share repurchases and dividends, I think we've returned about $190 million to $200 million of cash to shareholders. And we did signal, at the end of our first fiscal quarter, that we probably we're going to slow down just given the amount that we had repurchased in the first quarter. Certainly, as we look forward, we do believe we're going to continue to generate free cash flow and again, over time, we think that, that should approximate net income. So I would expect that we will become active again from a share repurchase standpoint. Just can't tell you exactly when and how aggressive that may be.

Okay. And then back to the Access margin. I mean obviously, you don't give profitability by geography in Access, but given the positive influence you're selling to more independents, I would think that would be boosting your margin, not taking away from your margin. So can you say directionally if you just isolated margins within North America and Access. Are you getting a positive -- would margins actually be up due to the higher mix of independents?

Yes, you certainly would expect that again. If you go back to the quarter, couple of things that we talked about here. We did have higher NPD, so that impacted things. We did have some higher operating expenses in the quarter to support some move initiatives. That impacted the quarter. And then if you look geographically, North America is a better profitability market overall for us.

Got you. And then just the last one, you seem more downbeat on refuse than some of your competitors, I mean there have been some positive comments on refuse throughout earnings season. Are you losing share at all. I know your business is very dependent on a few very big customers, but could you comment on that?

In fiscal 2014, we picked up a little bit this year.

Are you speaking to within your group of customers or the overall market?

Just the overall market in RCVs.

So what do you think is holding back that market right now. Is it just the municipal spending issue?

It's municipal spending. It's the large waste fallers who if they pull back on spending for any reason, it could be internal. That impacts the size of the market. So I think all of them are trying to become more efficient in terms of their route management. It's all these things coming into play.

Our next question comes from Eli Lustgarten with Longbow Research.

I had to go back with AWP. You had a -- the incremental margin, obviously, in this quarter was quite weak and I guess, you cited the SG&A and the new product development, stuff like that. Your fourth quarter implies that you're going to have a pretty hefty incremental margin that almost profitability goes back to more normal and probably second best quarter of the year. Is there -- what's changing in the quarter to give you so much better profitability than what we've seen or is it the inventory building also helping to the absorption rate to give you better profitability and incremental margins in the quarter?

Yes, Eli, the -- probably the biggest driver is some of the headwind year-over-year from a NPD spend. We don't anticipate that we'll have that next fiscal quarter just due to -- largely due to timing of NPD spend in the prior year.

Can you give us the magnitude of what that spending incremental change was that's impacted?

It -- I don't know if we want to get that granular, but it certainly drove the incremental margins down in the quarter. I think when you look at NPD and some of the higher operating expenses, if you remove both of those, in the third quarter, we would have been looking at incremental margins in the 30% range.

So it was a big number? Going on?

It was meaningful.

And when we look out to '15 at this point, I know you don't want to do that do that, but are we looking at -- you're now trying to stabilize the production schedule with higher inventory levels, are we also going to see relatively stable new product development costs to sell next year, which also help profitability so we won't go through this probably -- somewhat of a surprise in the quarter that incremental margin was so weak?

We can't say that for a couple of reasons. One is that certainly, with staffing levels. Those don't jump around quarter-to-quarter that much. But some of the material costs you buy or whatever for a new product development, they could get lumpy quarter -- in a certain quarter. So NPD spend is sort of lumpy generally.

And maybe you can give us some magnitude of when these new product sales will start have shipped by the end of this year and probably in '15. What kind of incremental volume you might be getting from some of these new products next year, particularly in AWPs?

Yes, we're not going to beat it. Open here, I mean, I'm sure you like us to be here as more open but our value innovation issue has always been important to this company. We've driven this business on that for many, many years. So it is important we get multi-generation product plans in every segment, you will see us launch new products throughout fiscal 2015 in all of our segments. And you'll just have to wait and see what they are.

Our next question comes from Mig Dobre with Robert Baird. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: So sort of sticking with Access. I'm wondering, can you parse out how much of this jump in EAME demand is driven by U.K. specifically, and I'm wondering where the U.K. is versus prior peak in terms of demand?

Mig, they're all 40%, 50% down from prior peak. Some countries like Spain are far much more, much bigger than the whole. So they still have a lot of room to grow. Let's not get carried away here. U.K. is improving, but we have plenty of room to grow across Europe. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Right. But you wouldn't say that the main driver of the improvement in EAME is the U.K. at this point?

No, no, no, we just singled that out as a nice example. But I'd say across Northern Europe, it's pretty good. It's been a good year for us. Southern Europe is going to be weaker. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: All right. Well then, if we ship to commercial maybe in -- I don't know if you're willing to comment on at all on margin there. You gave us a sense for how you're thinking about performance in fiscal '15 versus your target, I'm wondering, can you provide us an update on commercial there? If I recall, you were thinking something around 10% operating margin in '15.

We're not going to get that specific yet. We'll have to wait until October to give estimates for margins and commercial, but we're continuing to drive to our strategic roadmap. And I think our estimates for this year are -- we'll say, we've got a lot of room to improve to get to 10% operating income margins, but we do have initiatives in place and it is certainly a target for us. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Is it more of a internal initiative story here still or are we talking about end market improvement into fiscal '15 as the main driver?

Yes, it's always been both. If you go back to the chart that we showed in September 2012 for this segment, in terms of where the margin expansion comes, market recovery's always been a big piece of it because we have a fairly significant fixed cost base. So certainly market recovery's a big piece of driving our margins up. But if you go back in the chart, you will see that our own internal initiatives are also pretty relevant.

Our next question comes from Seth Weber with RBC Capital Markets.

So in the -- sorry, going back to Access, you specifically called out positive pricing in that segment, I was wondering if you could give us any color by region, whether you're seeing higher pricing across the board in all regions or if one, I think previously you talked about some pockets of irrationality in Europe, for example?

We mentioned pricing because it's relevant to our sales growth. We did capture higher pricing via Tier 4 pricing impact at our P&L. For the most part in fiscal 2014, pricing is, basically, recovering our cost increases. It's certainly not driving any margin enhancement in the business.

Is it pretty consistent across regions, or the major regions?

It varies. It's probably a little bit better in North America than the rest of the world.

Okay. And then just changing gears. I mean have you -- your current thoughts on the balance sheet, I mean, you're going to exit this year pretty close to a net cash, pretty low debt levels. Any change to how you're thinking about the balance sheet whether it's acquisitions, more buyback, dividend et cetera?

We would expect to have a balanced strategy over time. I think we said earlier, we're -- we'd like to build a little bit of cash to continue to build various options. But right now we've got a positive outlook for the business. We've got MOVE initiatives that are expanding margins and we don't really need to do any M&A. So we're going to be allocating capital wherever the most compelling returns are.

Our next question comes from Tim Thein with Citigroup.

Great. Just coming back to the commercial comments from a question or 2 ago. I know again we're limited in terms with what you'll say on 2015, but you, presumably, that -- I think you had mapped out kind of $1 billion in a quarter I think, if memory serves, in terms of the top line, presumably, at this point looks like that's probably going to be a bit of a stretch to grow 50% year-on-year. So can you maybe just kind of bring us back in terms of maybe the sensitivity or any kind of range in terms of what that operating margin -- just kind of put a bit of a ballpark on that if you can, just any kinds of round numbers?

On today's call we're going to be reluctant to do that. What we can say is that we would expect markets to continue to improve in Commercial segment in fiscal 2015. So we expect our sales to be up. We expect our MOVE initiatives to continue to contribute to our margin expansion in 2015. So we'd expect higher sales, higher margin and beyond that, we'll wait until October and have -- give you our best view at that time.

I think just one comment to add to Charlie's there is housing hasn't been what we thought it would be this year, but look how they're performing in commercial. We can't always control the M but we can really drive the O and execute some initiatives there, and that's really what we're seeing in commercial. So we'd love to see the markets recover faster, but if they don't, we've still got plenty of work to do to execute on our MOVE strategy.

Okay. Good and just back to Access in Europe. I know there was recently a big rental show in Amsterdam in late June, is that typically -- or one, can you maybe just, you gave a little bit of the comments by region but maybe just some of the sentiment that your guys picked up from some of the rental fleets there. And second, does that tend to be a big kind of order, you typically get a lot of orders from that show or similar to the U.S. or what are the dynamics there?

Yes, the show was positive. Again, we're seeing more rental companies get active, which is nice. I think we commented on the areas of Europe that we're seeing the improvement. Those shows in Europe that you do take orders, I would say from a magnitude standpoint, they're nothing like a ConExpo. But you do write orders in your booth.

Our next question comes from Charley Brady with BMO Capital Markets.

Just a follow-up on Access again in relation to the large national rental chains. Can you just give us a sense of how business is trending in terms of purchases from the large rental houses. Are you seeing -- I guess, what I'm trying to get too is how much of a pull back, if any, are you seeing on the large rental side relative to the growth you're seeing on independents?

Charlie, I think it's mixed between the national rental companies as some are buying more, some are buying less. Overall, maybe flattish or up a little bit. But it's most of the North American growth in the marketplace is IRCs.

Our next question comes from Pete Skibitski with Drexel Hamilton.

Yes, couple of follow-up questions, maybe one for Dave. Dave, on the new sort of inventory plan, it looks like you'll have working capital grow, maybe $200 million or so for the full year, fiscal '14 year-over-year. I'm just a little bit forward-looking. I'm just wondering directionally, should we expect that kind of inventory growth kind of on a go-forward basis or just kind of a onetime adjustment in the growth and future years will be a little bit more moderate?

Yes, I think it is more, Pete, along the lines of a onetime adjustment. Assuming that, that's the end of FY '15, we kind of positioned ourselves to have a similar more stable pattern of production as we enter into '16. So we should be -- if we kind of maintain that approach, we should be in a decent shape without having to build inventory other than what you would normally expect in improving markets.

Okay. Got it. Got it. And then just last one. Can you give us a sense on the Defense backlog with the percentage of backlog from FMTV and maybe FHTV is?

Pete, I don't have those numbers right at my fingertips. Can we get back to you on that one?

Yes, we could follow-up, Pete.

There are no further questions at this time. I would like to turn the call back over to Charlie for closing comments.

Okay. Thank you very much. Thanks, everyone, for spending time with us. We look forward to a strong finish to the year. Have a great day, everyone.

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