Oshkosh Corporation (OSK) Q4 2014 Earnings Report, Transcript and Summary

Patrick N. Davidson - Vice President of Investor Relations Charles L. Szews - Chief Executive Officer and Director Wilson R. Jones - President and Chief Operating Officer David M. Sagehorn - Chief Financial Officer and Executive Vice President

Stephen E. Volkmann - Jefferies LLC, Research Division Charles D. Brady - BMO Capital Markets Canada Seth Weber - RBC Capital Markets, LLC, Research Division Ross P. Gilardi - BofA Merrill Lynch, Research Division Jamie L. Cook - Crédit Suisse AG, Research Division Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division Jerry David Revich - Goldman Sachs Group Inc., Research Division Peter J. Skibitski - Drexel Hamilton, LLC, Research Division David Raso - ISI Group Inc., Research Division Eli S. Lustgarten - Longbow Research LLC Walter S. Liptak - Global Hunter Securities, LLC, Research Division Ann P. Duignan - JP Morgan Chase & Co, Research Division Stanley S. Elliott - Stifel, Nicolaus & Company, Incorporated, Research Division

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

Thanks, Latanya. Good morning, everybody, and thanks for joining us. Earlier today, we published our fourth quarter 2014 results. A copy of the release is available on our website at oshkoshcorporation.com. Today's call is also 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 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 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. Oshkosh is on the move. Our MOVE strategy is delivering strong results for shareholders, and we have a positive outlook for the next few years. Today, we announced full year adjusted earnings per share of $3.62, which is $0.22 more than the high end of our initial range, when we first provided our expectations for the full year. In 2014 earnings, we're well ahead of the company's internal expectations for 2014, as of our 2012 Analyst Day, and we set out ambitious target to approximately double earnings per share from 2012 to 2015, despite an expected decline in Defense earnings of more than 90%. That was nearly a $2 per share headwind that we're overcoming. Our employees have given an outstanding effort across our company to deliver MOVE for our customers, shareholders and each other. We greatly appreciate their effort and their commitment to deliver MOVE, and we expect our employees will achieve our principal MOVE targets for 2015. Today, we announced our initial 2015 adjusted earnings per share estimate range of $4 to $4.25, which is within the target range that we set out at our 2012 Analyst Day. When we announced our 2015 EPS target range back then in 2012, we shared our detailed assumptions and expectations in how we would almost double earnings per share. We pointed out that a portion of the improved performance was dependent on markets recovering, at realistic but slower rates from historical lows. While we've seen recovery in some of our markets, it has been even slower than we originally anticipated. Fortunately, we've been able to deliver outstanding performance, with the optimized cost and capital allocation portion of our MOVE strategy to largely offset the weaker-than-expected market recovery. I'll talk more about where we are with MOVE in a few minutes. We know that there'll be challenges to achieve our 2015 earnings estimate range, especially when you consider the mixed global economic headlines. But while we have initiatives to grow globally, we're still largely a U.S.-centric company, with markets that yet back -- aren't yet back to prerecession levels. We believe that the U.S. economy will continue to improve in 2015. Most importantly, we expect housing starts in nonresidential construction, which are the principal drivers of our businesses, will continue their slow recovery in 2015. Recall that the MOVE strategy was developed and launched in an effort to develop superior returns for shareholders during a particularly difficult time for the company, when we're expecting much lower U.S. Defense spending for tactical wheeled vehicles due to the wind down of the conflicts in Iraq and Afghanistan and U.S. federal budget pressures. It's probably ironic then that today, we believe our Defense segment provides the biggest upside opportunities to grow our sales and earnings. I'll also talk more about this in a few minutes. Simply put, we believe we have the right team, the right market dynamics and the right strategy to deliver in 2015 and beyond. Please turn to Slide 4. Our team pulled together and delivered solid fourth quarter results with adjusted earnings per share of $0.96, both double prior year fourth quarter adjusted earnings, backed by continued strong performance in our Access Equipment segment. For the quarter, results were a little better than our most recent estimates, and that's not a bad way to start off the year or to finish the year. We also repurchased more than 5 million shares during the quarter. Given that recent volatility in the market, the average price per share was above where the stock is currently trading. However, we believe it was a good value. We would expect to continue to repurchase shares in 2015, of course, subject to prudent leverage, if we believe the stock at the time represents a good return on our investment. I'm also pleased to announce the 13% increase in our quarterly dividend rate to $0.17 per share. This $0.02 per share increase in the quarterly dividend rate raises our annual cash dividend to $0.68, and we remain committed to growing it over time. Please turn to Slide 5. MOVE's impact in our financial results is clearly evident in 2014. We improved operating income margins at all of our non-Defense segments, including another new record for the Access Equipment segment. Defense also outperformed our expectations, as this segment battled through another year of significantly lower U.S. DoD spending on tactical wheeled vehicles. Now we launched more than 20 new products across the company, with multiple offerings from both the Access Equipment and Commercial segment segments at ConExpo in March: a particularly noteworthy industry-leading 185-foot self-propelled boom, new hybrid booms and much improved concrete mixer controls. Our Fire & Emergency segment launched an exciting new Saber Enforcer and storm chassis at the fire department structure -- fire structures show in April, while our Commercial segment launched the industry's lightest weight front loader and an improved Zero Radius Arm side loader at Waste Expo in May. And of course, our team in Defense is now offering 3 new variants of M-ATV for international customers. The Defense team developed these variants, while also continuing to compete fiercely for the Joint Light Tactical Vehicle. We also returned a significant amount of capital to shareholders, with their reinstated dividend and the repurchase of 8.3 million shares of common stock over the course of the full fiscal year. The impact of our Oshkosh Operating System was also more evident in 2014. We've rolled out training and tools in nearly all our 12,000 Oshkosh employees. The progress we have made and the maturation of our processes is impressive. All of this provides us with the tools to deliver our growth road map and will continue to do so for the foreseeable future. Now we still have work to do in the Fire & Emergency segment to greatly improve our operating income margins, but we have a good plan and a motivated team in place. Wilson will speak more about our actions in that segment. Please turn to Slide 6, and let's look at our MOVE's scorecard. The bottom line of our scorecard is that we're doing quite well for shareholders, as we initiated our adjusted earnings per share estimate range at $4 to $4.25 for 2015, again, within our EPS target range for the year. Consistent with last year, we are projecting that our markets will recover more slowly in 2015 than our 2012 Analyst Day targets. In fact, we've lowered our expectations for Europe during just the last 90 days. Fortunately, the team continues to deliver above target on our optimized cost and capital structure initiatives. We can see the benefits of disciplined cost reduction in the higher earnings and margins in each of our non-Defense segments, and we have runway to continued margin expansion in each of these segments beyond 2015. Also, opportunistic share repurchases have contributed to a more than 12% reduction in shares outstanding since our September 2012 Analyst Day. So the all-in initiative has really been an important driver of our results. This year, we've moved our expectation for the value innovation initiative to be above target, where was previously expected to be at target in 2015. We expect a steady stream of new product launches, each quarter across the company throughout 2015, that we anticipate will provide important benefits to customers and earnings. That increase is coming with higher underlying investments that are most visible in our lower margins than our Defense segment, as we invest heavily to win the JLTV program and to support our international sales efforts. We're working hard to bring those Defense upside opportunities home to Oshkosh. Lastly, our International expansion activities remain on track. We continue to add people and facilities around the world to bring the Oshkosh experience to more global customers. Again, the bottom line represents solid results for shareholders, nearly doubling earnings per share during a 3-year period, while our largest business has endured a sharp downturn. Let's turn to Slide 7 for a discussion of the Defense business. Our Defense team continues to demonstrate incredible resolve and commitment to both the war fighter and shareholders, as we manage operations in an environment of declining funding. We are encouraged by the performance of our vehicles during testing that occurred over the past year, under the JLTV-EMD contract. We believe that Oshkosh is a JLTV, and anything else would be something less for the warfighter. Nonetheless, the evaluation criteria for this proposal are more complex than anything we've seen, and certainly, our competitors feel strongly about their vehicles, so it would be a tough competition. We believe the RFP for the production contract will be issued in November, and we look forward to submitting our JLTV production proposal in January. Based on the latest announcements from the customer, we continue to believe the production contract will be awarded to the winning bidder next summer, probably in July, late July. We've talked about our efforts to capture additional international Defense business. We were awarded a contract in the fourth quarter for the Middle East for nearly 70 M-ATVs, and most of these sales are expected to occur in the third quarter. We still believe there are opportunities to sell several thousand M-ATVs to foreign customers, and we are investing to expand the range of M-ATV variants to support these opportunities. At the AUSA show in Washington, D.C. a few weeks ago, we highlighted one of our new extended wheelbased M-ATV variants. We're also eagerly awaiting an announcement from Canada on the winner of the MSVS program, which we believe will happen no later than next summer, but could possibly be awarded much sooner. Operationally, we've been quite active repurposing our Defense segment production facilities. We're in an environment of burst, of smaller contract awards and production runs. From a production standpoint, we have reconfigured our facilities to allow flexibility for shorter production runs, while at the same time, preserving our production capacity and workforce for a program like the JLTV. We recently announced the further plan, but unfortunate reduction in the size of our Defense workforce, slated for late in our first quarter. We believe this is a responsible decision, given the decreased level of production work we have scheduled beginning in December 2014, largely due to a break-in production of FHTVs, while we work with our government customer to file us a new contract for this program. As a result for the continued investment of future opportunities and the expected break in FHTV productions, our expectations for Defense segment operating income in 2015 are now below our Analyst Day target. In effect, we expect operating losses in this segment in the first 2 quarters of 2015, as we deal with that break-in FHTV production and devote large teams to JLTV proposal preparation and M-ATV variant development. We expect essentially breakeven, but positive operating income for the year, reflecting a return of profitability in the second half of 2015. Now if we are successful with the JLTV and the international opportunities, we should experience much stronger performance in Defense, starting in 2016, as the benefits of our actions and investments become evident. We think this is good business, and we're still expecting to achieve our overall EPS target range for 2015. I'll turn it over to Wilson now to discuss our non-Defense segment. Please turn to Slide 8.

Thanks, Charlie. Good morning, everyone. In 2014, the Access Equipment segment recorded a second consecutive year of record sales, operating income and operating income margin, reflecting continued recovery in the global Access Equipment markets and further operational improvements. We remain positive about the outlook for this business. While there's always more work to be done, I would like to congratulate the Access Equipment team on their performance. There's been a lot of discussion regarding outlook for the Access Equipment market. Overall, we believe we're going to see continued growth in this market in 2015. Our view is there are a lot of positive indicators in North America, which remains our largest market. Utilization rates, rental rates and used equipment values remain strong, along with average fleet ages that are at or above prerecession levels. In addition, if you believe, like we do, that housing and nonresidential construction will continue to improve in 2015, even if on a choppy basis, then we should see increased Access Equipment demand. Markets outside North America were mixed. Yes, there is concern about the economy in Europe, but Access Equipment fleets in Europe are much older than in North America. Our customers really like to bring their average fleet ages down, so deals will continue to be completed every day. One of the largest European Access Equipment markets, the United Kingdom, continues to grow. Overall, we saw a strong growth in Europe in 2014, and despite recently reducing our outlook for this region, we believe opportunities remain. Demand remains strong in the Middle East, despite the geopolitical struggles there. Latin American demand is soft but remains important, and we are beginning to see improving demand in Australia. Across the Pacific Rim, the demand is much more about adoption of the products than it is about economic growth in a given country. Labor shortages and construction contract time lines are positively influencing product adoption, along with emerging, more stringent safety standards for working at height. So as we think about 2015, we believe mid-to-high single-digit sales growth is reasonable. Please turn to Slide 9 for some comments on our Fire & Emergency segment. We reported higher operating income and operating income margin for this segment for the fourth quarter, despite lower year-over-year sales, but we still have significant work to do in Fire & Emergency. We decided to take a step back in executing our business improvement roadmap for this segment. In an effort to accelerate the turnaround of the business, we were introducing too much change too quickly in this complex manufacturing environment, where each truck is a custom-design complicated vehicle. So we slowed down the operational pace for the first quarter of 2015. We believe this will cause a loss in the segment in our first quarter, but we expect the segment to experience a gradual strengthening of performance as the year unfolds, with full year performance expected to be above 2014 levels. We believe the actions we are taking now and that we will take during the early part of the year will put us firmly on the path to exiting 2015 with strength. We continue to be active internationally in this segment. During the quarter, we completed the delivery of an order for 6 new striker ARFF units to the international airport in Manchester, United Kingdom. This leading airport is a great example of conquest activity, as Europe has traditionally been a challenging market for us. We also continued our success serving industrial customers in the Middle East, with the recent delivery of 13 Pierce fire pros [ph] to a petrochemical customer in Iraq. To remind you, we've had much success in Asia, South America and, of course, North America, and we're excited to have made more inroads into Europe and the Middle East. This segment has also had some strong recent product launches like the Enforcer and all-new Saber chassis, tailored for the North American market. The Enforcer offers enhanced performance with TAK-4 independent front suspension, a choice of 2 powerful engines, side roll protection and significant improvements in visibility, space, ergonomics and serviceability. The all-new favorite chassis was built with the value-driven firefighter in mind, delivering advanced visibility, greater space, improved ergonomics and a streamline of serviceability at an affordable price. Over the next 6 to 12 months, we expect these launches to contribute to improved margins in this segment, as they were personally designed for manufacturing. Before turning to the Commercial segment. Let's talk a little bit about the North American fire truck market, which has shown signs of improvement in areas, although we have yet to see a real breakout, as fire truck orders were hovering in the 3,800 to 4,000 unit range on an annual basis. This is the sixth year of lower-than-average North American fire truck market demand. This alone tells us that the fleet has continued to age. We expect that we'll benefit from orders for replacing aging of fleets, but we continue to believe there will be a slow recovery, including 2015. Let's turn to our Commercial segment. Please turn to Slide 10. We're pleased with the performance in 2014 of our team in the Commercial segment, as they delivered the segment's strongest full year performance since 2007. We benefit from an improving concrete mixer market and begin to see the effects of MOVE on our margins during 2014. Concrete mixer sales continue to benefit from a choppy recovery in residential and nonresidential construction. We expect U.S. housing starts to improve modestly in 2015 to perhaps 1.15 million, significantly below the 1.4 million we had assumed for 2015, at the time of our Analyst Day. We are expecting recovery in Canada, which was weak in 2014, especially in Québec. Northeast collection vehicle market looks a little bit better than it did a year ago, with 6% unit growth over the last 12 months. We expect that improving economic activity and municipal spending will help drive demand, but this could be offset somewhat by some customers trying to age their fleets. Finally, before I turn over to Dave, I'd like to talk about the success we're having with the refuse collection products. Customers are responding favorably to our enhanced Zero Radius automated collection vehicle and our split-bin units. These versatile units provide great value for our customers. Our automated units provide efficiency and safety, as the driver can spend more time in the cab running routes, letting the truck body do the work. And the split-bin product allows increased customer route flexibility, isolating regular waste, recycling and organic material in the separate body areas on the truck. We like our position in these growing applications. Okay. I'll turn it over to Dave now. Please turn to Slide 11.

Thanks, Wilson, and good morning, everyone. We're pleased to announce results today that exceeded our previous estimates. Consolidated net sales for the fourth quarter were $1.67 billion, a 3.4% decrease from the fourth quarter of 2013. Sales growth of 19.5% in the Access Equipment segment, 22.4%, when excluding military telehandlers in the prior year. And 16.4% in the Commercial segment, largely offset the nearly 44% decline in Defense segment sales. Access Equipment segment sales in the quarter were up over prior year levels in all regions, except Latin America and we're higher than we had originally expected, largely driven by higher telehandler sales in North America, which saw a pick-up in sales in advance of an engine emission standards change in January 2015. The increase in Commercial segment sales, compared to the prior year, was driven by higher concrete mixers sales, which continued to benefit from the recovering housing market in the U.S. Consolidated adjusted operating income for the fourth quarter was $116.9 million or 7% of sales, compared to adjusted operating income of $78 million or 4.5% of sales in the fourth quarter of 2013. Significantly higher Access Equipment segment operating income, up 41% from the prior year adjusted operating income, was the largest contributor to more than offset the continued decline in Defense segment earnings. Access equipment segment operating income margin for the quarter was lower than we had previously anticipated due to our stronger-than-expected sales mix of telehandlers, a more aggressive pricing dynamic in the market and higher new product development spending. Adjusted operating income in the current year quarter excludes $3.8 million of cost in the Defense segment, related to a pension curtailment due to the recently announced planned layoffs and early settlement of certain retirement pension obligations. Additional information related to this segment fourth quarter financial performance can be found in the appendix to this morning's slide deck. Adjusted earnings per share for the quarter was $0.96, compared to adjusted earnings per share of $0.49 in the fourth quarter of 2013. The increase in earnings per share for the quarter was driven by a stronger earnings growth in the Access Equipment segment, overcoming lower Defense earnings; a lower tax rate, as a result of favorable tax audit settlements during the quarter; and a lower share count. I should note, however, that the tax audit settlements were expected and were included in our previously communicated earnings outlook for the year. In fact, they were included in our initial earnings outlook for 2014 that we announced a year ago. Full year adjusted earnings per share of $3.62, down from adjusted earnings per share of $3.74 in 2013. The $3.62 compares favorably to our original estimate range for the year of $3.10 to $3.40 and our most recent estimate of $3.40 to $3.55. On a full year basis, we saw the improved performance in our non-Defense segments, along with the impact of our share repurchases earlier in the year, nearly offset a more than $1 per share negative impact related to the lower Defense segment results. Overall, we are pleased with our performance and the performance of the whole Oshkosh Corporation team in 2014, and look forward to 2015 and beyond. Please turn to Slide 12. We are pleased to be announcing our initial 2015 adjusted earnings per share estimate range of $4 to $4.25, which is a 10% to 17% improvement from 2014 adjusted earnings per share, despite another significant earnings decline headwind in the Defense segment. Given that we just started the new year, the midpoint of the range is probably a good place to assume our thinking about this. We are projecting margins to, again, improve in each of our non-Defense segments in 2015. Defense margins, however, are expected to be negatively impacted by lower sales, a mix shift to lower margin FMTV sales and heavy investments in pursuit of the JLTV program and international sales opportunities. Additionally, we're assuming that we secure an international contract in the Defense of segment, and time to recognize the sale of a couple hundred vehicles in the fourth quarter end of the year. Below the operating income line, we're assuming that we call our 8.5% senior notes when they become callable in March 2015, and refinance them with similar notes at a lower interest rates. We have excluded the estimated costs to complete the refinancing and the write-off of unamortized finance fees from our estimate, as we would expect to exclude these items when we report adjusted earnings. And finally, we're assuming a tax rate of 31% and a full year average share count of approximately $80 million. We believe free cash flow for 2015 will approximate $200 million, including an assumption of $150 million of capital expenditures. Capital expenditures are higher than we would typically see, as we continue to execute our vertical integration strategy, which we expect to contribute to our targeted margin expansion, and as we support a large number of new product launches with capitalized tooling. We expect to generate all the free cash flow for the year in the second half of the year, largely as a result of seasonality factors and the timing of capital expenditures. Regarding our first quarter outlook, we currently expect that our first quarter earnings will be down approximately 2/3 from earnings in our first quarter of 2014. The decline in earnings is expected to be driven by a more than 40% decline in Defense segment sales, along with investments in the JLTV production contract proposal and international sales opportunities. In addition, we expect an increased mix of telehandler sales and a higher new product development spending in the Access Equipment segment compared to the first quarter of 2014. Last year, we saw a heavier mix of aerial work platform sales in the first quarter, which generally have higher margins than telehandler sales, in advance of Tier 4 engine emission requirements. This year, we expect to see the same scenario play out with telehandlers, as they are facing Tier 4 engine emission requirements, effective January 1, 2015. We also expect the loss in the Fire & Emergency segment in the quarter, as Wilson noted. Despite the slow start to the year, we expect another strong performance from the Oshkosh team in fiscal 2015. Please turn to Slide 13, and I'll turn it back over to Charlie for some closing comments.

Thank you, Dave. Two years ago, we shared with you our targets to approximately double earnings per share from a little over $2 per share to $4 per share, maybe $4.50 at the high end. There have been many potential roadblocks along the way, but we have persevered. We have achieved significant cost reductions. We have launched new products and expanded our global footprint. We have acted on capital allocation opportunities, and we have introduced our initial adjusted EPS estimate range of $4 to $4.25 for 2015. We've taken a little off the high end of the ranges that we previously targeted, but in light of macro events, we are happy to maintain an adjusted EPS estimate range at $4 and above. But of course, we are looking further out in 2015, and expect that we can grow the business in 2016 and beyond with detailed margin enhancement plans that support our goals. We are planning to discuss the evolution of our MOVE strategy throughout the year in a much greater detail, when we hold our next Analyst Day in September 2015. We've intentionally set the date to be after when we expect the JLTV to be awarded, so we can discuss the outlook for our company with greater clarity. That concludes our formal comments. We are happy to answer your questions. I'll turn it back over to Pat to get the Q&A started.

Thanks, Charlie. [Operator Instructions] Latanya, let's please begin the Q&A period of this call.

[Operator Instructions] Our first question comes from Stephen Volkmann with Jefferies and Company.

Can we dig in to AWPs a little bit? And then one quick follow-up after that. But obviously your outlook is a little bit better than some others in the industry here, sort of calling for continued growth. And I'm just curious if you think there's any share shifts happening in the business, maybe have a little different sort of customer breakdown or something? And if you could give us a little color on big nationals versus sort of mom-and-pop rebels and so forth. And then any commentary you can expand on, with respect to pricing in that business would be appreciated.

Okay, Steve. This is Wilson. I'll jump in here. We don't really comment on share. I mean, you can see our performance and what we delivered for the year and form your opinions there. From a macro standpoint, looking at the national rental companies and the independents, we've talked in the past about how we used 2 or 3 different data points to bring our forecast up, and so that's what we've done again this year. Just like we did last year, you were hearing some of the comments from the national rental companies out there and then how they're looking at the business going forward. You watch nonres and res, and we believe there's opportunities there. There's some recent sell-side surveys out there from UBS and BOA that are very positive, and then you look at the fundamentals in the industry. They're just strong, even commenting on the European fleet, how old it is. So we believe the 5% to 8% is a reasonable forecast for us, going forward, and certainly, we believe we can deliver that. Providing any unforeseen market things that happen, as you know, we can't predict all of that. But the OVNE [ph] and our company is working well to deliver the 5% to 8% in Access. In regards to pricing, it has been competitive, but again, from our planning, we've been really focused on optimizing our costs, where we can't be competitive. There are some areas where we stay away from, where it's not good for our margins. But we watch all that close and do monitor our share to make sure we're not backing up in any of the bigger markets.

Are you able to recapture all of the Tier 4 costs that you incurred?

Well, we did that on AWP. We're just starting it now on telehandlers, and that's always our plan, is to capture our cost.

Okay. And then this one maybe for Dave, but -- and this is a little unfair, so I apologize in advance, Dave. But I think last year, around this time, we are talking about the first quarter being quite weak as well, and I think you ultimately came in and did it about 2x what the Street estimate was. And, I guess, I'm just trying to figure out if maybe you're one of those guys who get depressed around the holidays or if you're actually feel like you have pretty good visibility into to this next fiscal first quarter and, I guess, it's a visibility question. So I'll leave it at that.

Well, Steve, I think that, that's really an unfair question. He's so hurt by it. He just fell on the floor. But what I'd say is that the first quarter is always tough for us. It always will be. You can't look at our outlook for the next fiscal year by looking at the first quarter. Why is that? We only get 2/3 or 3/4 of the shipping days in the quarter. So right off the bat, we're struggling because of all the different holidays, and people don't want to take trucks during the holiday periods. On top of it, the northern climates, they don't want them either. They want everything to come in spring, just in time to maintain strong utilization rates, et cetera. So we're always going to struggle in that first fiscal quarter. We put on top of that, in our Defense business today, that we're -- we've got a lot of people working full time, 7-days a week on the JLTV proposal. We've got them working on M-ATV variants, so that we can pursue some of these Defense side opportunities, and you just keep adding that up, and it's a struggle for us in the first quarter. Having said that, we expect our second, third, fourth quarters to be strong, and I think our view is, overall, that we're feeling very positive about 2015, and that we're going to make shareholders happy.

Steve, it's David. Just to add on a little bit there. I think that the biggest driver to how we're looking at the first quarter year-over-year is in the Defense segment, and we've got a pretty good visibility in terms of the volume there, and we do expect it to be down significantly year-over-year. And Charlie mentioned we expect the loss in the quarter, and if you do compare that back to how we performed in the first quarter last year, that is a pretty significant difference.

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

Could you [indiscernible] just maybe a little color on Brazil. I know it's a lousy market right now. It's down for everybody. But have you -- has it stabilized? Or do you see it continuing, even outside the quarter, to trickle back, continue to move down? And then maybe you can talk about what you're seeing, kind of the growth rate you're seeing in Europe. One of your European competitors saw a pretty strong growth when they reported a few months ago. Well, I'm assuming you guys are seeing that same kind of rate of growth.

Charlie, it's Wilson. I'll start off, and I'm sure Dave and Charlie can add some color. From a Brazil standpoint, with the elections, there's not a lot of activity right now. We don't anticipate anything really getting going, until after Christmas, into January and February. Latin America for us was fairly strong in the first half. We were up year-over-year. It did slow down in the back half, again, we believe related to a lot of political things going on there. As we've said before, that's an important market for us. The middle-class is growing there, so we believe Brazil can be a good market. Right now, we're not trying to be bullish or predict anything because there's just so much uncertainty around the political scene, but we do see that as a good market going forward. And in terms of Europe, yes, we had a nice share in Europe. We were up. We don't usually give out the percentages, but we were pleased with our performance in Europe, and we're certainly hoping that Europe will stay on a healthier plan, going forward. Charlie was just in Europe. He may want to comment a little bit on what he saw there.

Sure. The -- it's a very, very strong double-digit growth rate across Europe in calendar 2014. And I would say that we were right there. We had a terrific year in Europe, and that does bode well for next year, given the fact that fleet ages are so old in Europe, so I think Europe will be another good market for us in 2015. In terms of Brazil, I do think we're going to start the year slow, like Wilson said, and then pick up toward the latter half of the year.

Great. And I'll go for one more in the equipment fire. The orders were up pretty sharply in Fire & Emergency. Can you just comment on where that's coming from? And does that include the U.K. shipments in the quarter?

Yes, the shipments, from an order standpoint, Charlie, we're pleased with the order activity going on, and you probably see their backlog growing. So fundamentally, everything is looking a little bit better for Fire & Emergency. Most of those orders are domestic orders. We are getting some international airport orders. But for the most part, the bookings has been domestic, municipal orders. Just some good conquest account activity going on in fire today.

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

I just want to kind of drawback on the Access performance again. In your comment about the more increased competitiveness, is that -- can you just give us any more color? Is that across all regions and all products? Or is it more defined on a certain geographic area?

I would say, Seth, overall, it's just a competitive environment. We've got some Asian competitors now moving around, so I think it's -- in every region, you have different levels of competitors. Some, a little more aggressive than others. But nothing that I could just give you some specifics. It's just here or just there. It's just a general competitiveness that is picking up.

Okay. If I could just take on Access for a second. There's been some discussion about the bigger -- the national rental companies trying to operate their fleets more efficiently and kind of running utilization levels higher, relative to prior cycles. Have you kind of thought about that? Have you kind of baked that into your assumptions? Or are you still seeing -- are you seeing fleet growth here? Or is it fleet replacement still? Or kind of, can you give us some puts and takes in what's in your outlook for next year?

Yes, Seth. We are seeing both, still heavy replacement, but at the same time, we are seeing pockets of fleet growth around the country, particularly related to energy projects, Texas, Louisiana. And then you have housing activities going on in the Southeast, California, et cetera. So I think that you're seeing a good marketplace, overall.

Seth, I think you also have to consider that the IRCs, independent rental guys, they were late in terms of coming back compared to the NRCs. So we think they're going to continue to be strong in '15 as well.

And as I've started off earlier, Seth, in I think talking to Stephen Volkmann, part of our forecast roll-up is including our customers, the voice of the customers. So a lot of that roll-up does come from the information that we're receiving from them.

So what we do is we build it up by customer, around the world.

Right. Okay. If I could ask just one more on the Commercial segment. Good revenue growth, not seeing a lot of margin expansion next year. Is there a mix headwind there? Or is there something going on, why the margin expansion wouldn't be better next year in commercial?

Yes, Seth. I think they are making some conscious decisions in terms of increased spending on MPD next year, as well as continued investment in MOVE initiatives, which are muting -- or will mute the incremental margins in that business in '15.

Okay. And we should see a benefit from that in '16, then?

Starting late in '15 and into '16.

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

I just -- the first question was just on the share count assumption for fiscal '15. I mean, how are you going to get it down so substantially and managing all the volatility and share price? Could you tell me where you finish the year of in terms of share count? And would you consider an accelerated share repurchase?

Sure, Ross. We did repurchase about 5.2 million shares in the fourth fiscal quarter, and with that, the actual shares outstanding, when you included in -- included all the various dilutive items, are right around 81 million. So we really don't have all that much further to go, throughout '15, to get to the 80 million target that we assumed for our '15 estimates.

Got you. And then on Europe, you guys have been back and forth a little bit with your commentary, so you had a great '14 with respect to growth, but you also commented that you lowered your expectations in the last 90 days. So can you flush that out a little bit?

Sure. Seeing the kind of growth that we hit in 2014, we're expecting stronger double-digit growth in Europe in 2015, or when you go back to, say, July time frame. But as we stand here today, we're still looking at solid growth in 2015 in Europe, but just not at the kind of a double digit rates that we were expecting earlier in the year. But there's still strength, for example, in United Kingdom, and at least which we kind of whopped into Europe, when we look at that area and in other pockets of Europe.

And what is that, Charlie? Is it the rental companies getting a little bit more selective on fleet investments and replacing the fleet? Or is it some other dynamic?

The economics -- economic environment overall in Europe might be mixed and difficult in some areas. But rental companies are buying every day right now. This is still a very active and vibrant market in Europe, and we expect it to be that way through 2015. I'm surprised we are -- we're still less than half of the prior peak.

Our next question comes from Jamie Cook with Crédit Suisse. Jamie L. Cook - Crédit Suisse AG, Research Division: Just 2 questions. Sorry to focus back on the AWP again, but can you just quantify what you're expecting the U.S. to be up versus Europe or versus rest of world? And then my second question, I understand the weakness in the first quarter and the different drivers behind that, but it seems like your implied growth in the remaining 9 months is more pronounced this year versus other years' implied EPS growth. So I mean, you talk through some of the Defense stuff, like some -- the revenues being higher in the back half of the year, based on some of the recent awards. But is there anything else that's driving the more pronounced EPS growth in the remaining 9 months this year versus previous years?

There are few things. Again, Defense, we've got this FHTV break-in production. That really hits hard in our second fiscal quarter, all right? And then when you get to the latter part of the year, we've got some international business, some of the M-ATVs and other vehicles, in the third and fourth quarters are coming in and they're uplifting the business in Defense. So that's why you see first half struggle, second half stronger in Defense. Then you get the normal figure seasonality, which is it's -- it is huge.

Yes, I think a couple of other things, Jamie. Wilson talked about some of that things we're doing in Fire & Emergency segment in the first quarter in terms of production rates. Those will increase sales later in the year, so that will be more of a tailwind for us. And then in the Access segment, we talked a little bit about MPD. So if you think about 2014, MPD kind of ramped up each quarter throughout the year. As we look at '15, we think that will begin to ramp down and become a little bit of a tailwind for us later in the fiscal year as well.

And then actually it's a pretty similar state that we have in Defense. Every year, first half, MPD spend and lighter in the second half.

And then just maybe one other item would just be mix in Access as well. So we talked about the first half here being probably more heavier -- heavily weighted to telehandlers in '15. If you think about '14, we were more heavily weighted towards AWPs in the first half of the year. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. And then just sorry, to follow-up, U.S. specifically versus Europe top line assumption, if you'll give it, within AWP.

And we're looking at 5% to 8% overall. All regions of the world, we're looking at being up in 2015, except for Latin America. We're looking at that being down. Jamie L. Cook - Crédit Suisse AG, Research Division: Okay. Is Europe, I see a more pronounced growth versus U.S.?

A little.

Our next question comes from Mig Dobre with Robert W. Baird. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: I guess, if we can go to the Fire segment. Maybe a little more clarity on exactly what it is that you're doing. You mentioned delaying some actions in the first quarter, but you're obviously doing things at the same time to improve the business and improve margins going forward. So color on your actions, and really the way we should be thinking about the cadence of margins through the year.

Yes, Mig. I don't want to be too specific here from a competitive standpoint. I guess, the bottom line upfront is we're streamlining the process there. You've been around the business a little bit. You know how complicated and complex the fire truck manufacturing process is. During the downturn, and as we mentioned, this market's been down for 6 years. Us, along with most of our competitors, have gone and competed for trucks that in the past, we might not have competed for, that where a lot of complexity range for us or another competitor. So we've all adapted to this new norm of competing and keeping share and going after trucks that normally were in our wheelhouse, so to speak. So that's created some internal issues for us to better adjust, and that's what we're doing now. Instead of taking a traditional single line approach, we're doing that in a different way, and again, I don't want to go into too much more detail. But we are getting a cadence now, the slowdown that I mentioned. We are seeing the metrics go in the right direction. So we're excited about this new process. We think it's a process that we can sustain and compete in all segments of the marketplace. So now it's just about executing through this quarter, and as Dave mentioned, continuing to take our rates up through the year there. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: But can you give us maybe more specific color on the actual cadence of margins themselves?

I think, Mig, we certainly expect that we will see a step-up in margins each quarter throughout the fiscal year.

And finishing the year ahead of last year.

Right. The full year, yes. Mircea Dobre - Robert W. Baird & Co. Incorporated, Research Division: Then I guess, my follow-up is on Defense. If I heard you correctly, your outlook embeds some additional international orders that you're supposed to receive, hopefully, sometime soon to be able to deliver on them in 2015. What would be the cut off basically for these orders to be received? And then how confident are you that these orders can actually be closed on?

All right. The exact date we need to get something under contract, we debate even internally. But certainly, by early in the second fiscal quarter, we need to have the contracts in-house because we obviously can still start building vehicles even before you have things under contract, if you're confident in the order. So somewhere in the early part of the second fiscal quarter, we really need to have the contracts in-house. And obviously, we feel good enough about the opportunities that we're putting in, in our outlook. If we thought it wasn't likely -- or, it wouldn't be in the outlook.

Our next question comes from Jerry Revich with Goldman Sachs.

Can we talk about the opportunities on the CapEx side there? How much are you building out your footprint in international markets, as you've highlighted was a strategic priority? And just can you step us through maybe some of the bigger higher returns opportunities that you're investing in?

Well, I guess, the -- there are 3 really reasons for the increase in the CapEx. One is we're investing in a vertical integration strategy. It's a strategy that we deployed in Defense since the beginning of time, and we're deploying it more aggressively in our other segments. And so I think that's probably the #1 increase in capital spending. You'll see some benefit in the second half of the fiscal year, probably most of it is going to be 2016 benefit. On top of that, we are investing significantly in tooling for all these new product launches that we're talking about in 2015, that have a cost to it. Much of that is in the first half of the fiscal year, because we're launching the products over the course of the year. So we're spending heavily in tooling to deliver the products in high quality and strong targeted product cost. And then the last is we continue to invest pretty heavily in our IT systems, ERP, some edge systems, et cetera. Again, that's an overall objective to make us a leaner, efficient, more efficient shop and secure. We really had to up our cyber security investments in IT over the last several years, in part because our Defense customers demanded, but we've also seen a real strong -- I guess, we've seen enough other companies struggle in this area that we don't want to be in the newspapers all over.

Okay. And then the follow-up on the new product launches, the tooling investment. I guess, when we saw you rollout new product launches in Access Equipment, you had better built-in margins on the new products versus the old ones. Can you just flush out for us which segments in your products are directed at and whether we should have expected those, a similar magnitude? And maybe if you're willing to comment on the vertical integration opportunities in a little bit more detail, that will be great.

Well, I can't say we're going to get into more detail in the vertical integration activities, but I would say they're across all segments. Not so much in Defense, but certainly in our non-Defense segments. In terms of new product development, again, this is across the board, and I think you're going to see some nice launches every quarter.

Our next question comes from Pete Skibitski with Drexel Hamilton.

On the CapEx, on the vertical integration, is this kind of a onetime thing? Because it is a pretty big step-up. I'm just wondering, should we model in a CapEx decline in FY '16? Or if this is kind of the new run rate?

No. Pete, this is certainly above what we would consider to be run rates for this business. I think you're normally in -- if you think around probably the -- anywhere from $60 million to $80 million in a given year. It's probably more of a normal run rate for us.

I guess, I'll start our vertical integration, right?

Right.

Okay. [indiscernible] for IT, it's a bit of an investment year. But I think shareholders are going to like the returns that they're going to get.

Got it. Okay. Now let me follow up, I guess, on Access. Just so I'm clear, on the growth you're projecting in fiscal '15, is that all unit growth was kind of flat pricing, given the competitive environment?

That it's largely volume. There are some price improvement there as well. It's going to be modest.

We have an open [ph] price increase.

And the majority of the growth is IRC-driven?

I would say the IRCs are definitely going to be bigger in 2015. There've been on a steady growth pace the last couple of years. But there is some growth in the nationals, too. So yes.

Our next question comes from David Raso with ISI Group.

Can you help split up for us the implied order growth for Access? It was over 50%. Can you help us a bit with the order growth in teles versus the aerials?

Dave, you're talking about the fourth quarter, right?

Sure. It would've been higher in telehandlers than in booms because you saw it in our sales mix, for example. And that's what we expect the heavier mix in our first fiscal quarter. So certainly, you're right. We had over 50% increase in orders compared to last year in the quarter. And a bigger piece of that was telehandlers.

But were the aerials up double digit? Just so we're clear to some perspective.

Yes.

They were. Okay. So the mix is more teles of next year. I'm just trying to square up the implied incremental margin for next year isn't much different than we just saw in fiscal '14, but the mix sounds a little more challenging than last year. Is there something else that we should be thoughtful about on why the incremental's going to be as strong this year than last year, despite a negative mix?

Well, or as strong. I think if over the course of the year, you will see a more traditional mix of sales. That's what we're projecting. So we'd say the first couple of quarters, they're going to be heavier in telehandlers. The last part of the year will be a little heavier in booms, so it's going to somewhat even out as the year progresses. I don't think necessarily that our customers are going to buy a lot more telehandlers, just because of Tier 4 over the course of the year. Just going to buy them earlier to get benefits of pre-Tier 4 or whatever. So I think that's the way you're going to see it.

So a long story short, you don't really expect a much of a negative mix on a full year basis?

Correct.

And then bigger picture. With all the majors, including yourself, now extending the life of the booms. I mean, some of the -- you went from 7 to 8 years. Skyjack went from 7 to 10. Genie went from 7 to 10. Obviously, the need to replace the boom being extended now. Now it's, again, mostly 10 years. You're at 8 years. How is that impacting the buying decision from the customers? I mean, obviously, I would suspect a lot of the guys just, obviously, legally, had to replace the boom in 7 years and then expired -- inspired a replacement demand cycle that now, I suspect, they'll just extend the life. Can we -- can you help us think about the cycle with that change, which I suspect is not a subtle change? And how they're going to age their fleet?

David, it, on paper, it looks significant. But to date, we haven't really seen any measurable impact with this. We changed back in 2013. We went from 7 to 8 then, and now again, we're conservative and responsible with tests, and test and retest. So we think we're in the sweet spot of where we should be. We always visit these issues with our customers. But to this point, we haven't seen any measurable impact.

Okay. So I mean, you would think there's 2 ways to look at it: it extends the cycle to some degree, but sort of flattens it out, right, less of a steep curve on the growth. Is that the right way to think about it? Or is it simply just stunts demand a bit by just the age? And you find a lot of the IRCs to start making the math work as well, on the aerials right now at these prices, so you're seeing a lot of used buying by the IRCs. I'm just trying to think through all those dynamics with this age extension.

Yes, I mean...

Help us with your experience on how it impacts the cycle.

It depends always in higher age, average age of the fleet, okay, so this is really meaningless to them. They kind of talked moves that we're talking here, and don't forget that we're dealing with a number of factors. That's one thing that's affecting maybe the longevity of the products. The other thing that's affecting the product in the marketplace is the fact that penetration's crazy. Work at height regulations are certainly stronger in the U.S. and across the world. You see more and more use of our product in different applications. So these are all factors that are coming together. When we look at 5% to 8% growth for the segment next year, this is very realistic, and we think that there's a long runway beyond FY '15.

Okay. And the orders were so strong, it feels like the revenue guide for the year doesn't seem that challenging. People are just trying to look out beyond '15. So okay, I appreciate the comment.

Our next question comes from Eli Lustgarten with Longbow Research.

Let me just a follow-up. When we put out our report about the extended life, we were told by AWP, the rental company, that they are aging their assets. And what we've seen is the average age of AWP stays at 52 to 57 months. Do you have any feeling that it would follow the rest of the industry down and the other product lines in the 40s? Or does it stay there for a while? I mean, I think the implication is just going to stay in the 50s and not come down.

I think you're right, Eli, and that's probably good for us because that means that the next time that there's an economic downturn, that they can't extend the age, then. So I think it should smooth out the cycle for us. It will smooth out the cycle for our rental company customers, and we won't be sweating so much in the next downturn.

And here's a follow-up question. Can you give us this idea of how much the new develop -- product development spending is going up this year versus last year? Or first half versus second half? Because it's sounded there's a problem in the first part of it. And maybe you can give us some quantification of how bad the losses will be in Defense and Fire and Equipment in the first half of the year.

Eli, in terms of new product development, we specifically refer to it for the Access Equipment segment. I mean, overall, for the year, I think we're largely looking at it flattish. But as we said earlier, it will certainly be a headwind in the first half of the year, and we expect it will be a tailwind in the second half. Probably, and I'm not going to get into the specifics for each quarter, but it's certainly meaningful enough for us to point it out as a driver.

Just like a 60-40 split? Or something like that, this year?

Yes, I don't have the numbers right in front of me, but something like that.

You're actually correct. Right.

And can you give us an idea on what the magnitude of the losses that we should expect in Defense and Fire Equipment in the first quarter or second quarter? Just -- and as you've said, but just some idea to how we model this thing correctly?

Well, again, we give you sort of overall bottom line. We said it's down about 2/3.

Our next question comes from Walter Liptak with Global Hunter Securities.

Wilson, when you were making your comments and you were talking about labor shortages, you talked about the Access and labor shortage and more penetration of AWPs, and I think that you were alluding to Asia. Is there anything -- if that's right, is there anything concrete? Are there new rental companies or growth in the distribution channel that you're seeing? Or it's just a general trend that you're thinking about?

Well, we're primarily focused on Pac Rim with that comment, and a lot of infrastructure build going on. I think, adoption is -- we're starting to see that, get some traction there. I think we're doing a lot of work with the different agencies over there, the safety agencies, and so there's just a general awareness now. There's been some visits, over here to the U.S., to meet with different groups in the U.S. and understand really what safety and working height truly means, so we're just seeing some good traction there. And we are seeing more rental companies come on the scene. So the rental concept is coming into play, where before we were driving it through construction companies, today, we have more help from the rental concept growing.

Well, let me just expand on that a little bit. At least in my travels in Asia, where we've been surprised by recently is that it's a little less of our effort to increase work at height safety regulations that's driving the increased number of rental companies and the demand, and more so that labor shortage in construction trades, more of a emphasis on hitting construction, contract deadlines and those kinds of things that are driving demand, relative to even work at height regulations. Now I don't want you to get too frothy over this. It's not going to -- we're going to have a nice probably double-digit growth in Pac Rim, probably for a years, all right? But again, you got to remember this is a really small market overall today. Someday, it will probably be the biggest market for us in the world, but I'm not sure I'll be living then or at least [indiscernible].

Okay. Fair enough. And have there been new safety regs that have come out? Or is there, like, a date that you can that you say, "Okay, these...

In China, there were some new safety regulations that just came out that, for example, if the worker dies on a work site, that I think it went up like 4x or something like that, the compensation that the company must pay for work or death on job sites and things like that. And don't quote me too specifically on the percentage there because it's -- I'm old, and it's a while ago that this happened, maybe a couple of months. But the facts are, is that there are changes that are occurring.

Yes, absolutely. Just one addition to that, Charlie's, is there's a focus on retiring scaffolding, And there's some activity around that, too, that will help drive AWP.

Okay. Sounds good. And then for my follow-up...

That was your follow-up. Wasn't it, Walt?

I didn't know you were there. Perhaps, keeping score?

Yes, I like to monitor these. So, just an easy one, you can ask it.

It's an easy one. If you look at just the backlog in commercial, sequentially it dropped more year -- quarter-over-quarter than last year, so it's a bigger sequential decline. But you still got a pretty good solid double-digit growth forecast in that $1 billion. So I wonder if we can get some more color on the confidence that you've got in commercial and non-res markets.

Yes, Walt, I think we have very realistic outlook for the year in Commercial. 1.15 million housing starts, and that increased a whole lot, right, where our estimates are even lower than what you see most economic forecasts had at 1.25 million to 1.3 million. So I think we have a very realistic outlook in concrete. On the refuse side, where I'm look at modest market increases, market demand increases, and we've seen that kind of a modest growth in 2014, so -- and this is a market that's still down 40% from where it was, so -- or 30%, so I do think that our Commercial outlook is very realistic, positive, really for the next few years.

Our next question comes from Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Just a couple of quick follow-ups. Most of my questions have been answered at this point, obviously. Telehandler is lower margin than traditional Access equipment. Can you just tell us why that is? And how did we end up at this point? And then, philosophically, also, what was the rationale to -- for going to the extended life, for pushing that 7 years to the 8 years? I know the competitors did it first, so maybe you were just following competitors. But what was the rationale behind that move?

Okay. Let me take the first on the telehandler margins. The telehandler margins have been lower than air work platform margins for a long time. I think one big difference for us, as a company, is that JLG designed ground up all of our aerial work platform products. When you look at a telehandler product line, it's a different story. JLG historically acquired a number of brands, so there's sort of different -- just a whole different product line that we've needed to streamline, much like you see in the auto industry, where they streamline product lines or chassis offerings, for example. We got the same sort of effort going on. Today, we're -- we need to rework the product line to build, to improve our margins in that business. So I think you will see that, over time, that we're going to make some changes to our telehandler product line.

On the extended life question, Ann, I won't speak to our competitor, but we did it back in September of 2013. And we've always had a required inspection and replacement of rope extension. Looking at that through testing, we felt like 8 years was the right amount of years to do that before an inspection. And again, I can't speak to why someone does it different than 8 years, but we just felt like going from 7 to 8 was the right way to do it from our testing. Again, we look at this, and we're studying it right now, since it has become kind of a question out there. So, I think, for now, that's about all the commentary we have on it. But just to remind you, we did do it back in September of 2013. Ann P. Duignan - JP Morgan Chase & Co, Research Division: I appreciate that. But what was the value proposition for the customer? Or if I do it, I guess, I'm just trying to understand why you will go from 7 to 8.

Well, again, trying to be value-added to our customer base. At 7 years, we've felt that the rope had an earlier, a good solid year of life. And so again, trying to better support our customers.

Our next question comes from Stanley Elliott with Stifel. Stanley S. Elliott - Stifel, Nicolaus & Company, Incorporated, Research Division: I think about the Fire & Emergency business in the back half of the year, it looks like you guys are going to be tracking ahead of, at least, to where your 2012 expectations were. And it seems like this is just going to be from the internal initiatives and, I guess, my question is when we think about next year with some of the new mix, some sort of the new equipment, conceivably, is it possible for that to even take a further step up from there?

Sure, Stan. Our view is with no market improvement whatsoever in terms of market volumes, we can get this business to double digit operating income margin. It's all internal right now. We're not counting any volume. We've got initiatives in place. We can see. We can taste it. It, perhaps, it's taken a little longer than we've wanted. But it has taken longer than we desire, but again it's a very complex manufacturing environment, highly customized. Every truck is different. So some of the processes that we use in our other segments we've had to modify, to be able to apply into Fire & Emergency. And so we've had a couple times where you've taken a step forward, then you take a step back and you go back again forward, so we've done a little bit of that. But overall, we can feel it and taste it, and we do think we have a solid road map on that business. Stanley S. Elliott - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. And then last question. On the CapEx for this coming year, how firm is that number? And is it -- is there a possibility that 9 months out on another conference call, or something like that, that we would, say, maybe that number gets ratcheted back to something more kind of in line with your historical spend?

I don't think you'll see it go back more towards the historical spend. Could it dip a little bit below there? We're saying approximately $150 million. It could be a little movement around that. But I don't anticipate it dipping back to the historical levels in '15.

At this time, I would like to turn the call back over to management for closing comments.

Okay. Let's wrap up. Thanks for spending time with us. Oshkosh is on the move, and we're looking forward to a great 2015 and a strong outlook beyond that. Have a great day, everyone.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time, and have a great day.