Greetings, and welcome to the Oshkosh Corporation Reports Fiscal 2015 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the call over to Pat Davidson, Vice President of Investor Relations. Thank you. Please go ahead.

Thanks, Branda. Good morning, everybody, and thanks for joining us. Earlier today, we published our second quarter 2015 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 Web site. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to Slide 2 of that presentation. Our remarks that follow, including answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our Form 8-K, filed with the SEC this morning, and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. All 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 of the presentation. And I'll turn it over to you, Charlie.

Thank you, Pat, and good morning. Please bear with my call this morning, don’t misinterpret my voice for lack of enthusiasm. We are on pace to have a good year in 2015 to achieve our 2012 Analyst Day estimate and follow that with another good year in 2016. We delivered solid second quarter results. For adjusted earnings per share $0.81 in line with the expectations and slightly above prior year quarter adjusted earnings per share of $0.80. This performance was inspire of more than 65% year-over-year decline in defense segment sales driven by the previously announced FHTV program breaking production, some currency headwinds and adverse weather conditions in North East United States. Notably sales and operating income increased by double digit percentages year-over-year in each of our non-defense segment. Wilson and Dave will talk more in a few minutes about the impact of the challenges that we overcame in the quarter. This performance is testament to the dedication and efforts of our 12,000 customer focused employee many who work long hours in March to deliver customer orders that have been planned for delivery in January and February that were delayed due to weather. It also reflection of the success that we have achieved with their move strategy. Lower oil and gas activity had little impact in our results in the quarter in fact we continue to believe that lower oil and gas price will have an overall positive impact on the economy and our businesses overtime. Rental company surveys continue to reflect overall strong rental activity and positive rental company sentiment. We feel this is a positive indicator of the outlook for the U.S economy and our businesses with exposure to construction market. While there has been some choppiness in some of the recent economic data and oil and gas activity had declined. We believe the construction activity overall will continue to improve in the U.S and then will see continued improvement in some international markets as well. We also successfully refinanced $250 million of senior notes to 2020 in the quarter replacing the existing notes with the new 10 year senior notes due to 2025 and lowering the interest rate by more than 300 basis points. Now looking forward we expect strong second half results and are maintaining our full year adjusted earnings per share at an estimate range of 4 to 4.25, with our most likely performance in middle of that range. We expect inventory levels in our non-defense segment to decline in the second half of the year supporting strong free cash flow in the second half. In fact we already saw inventory levels begin decline in late March as seasonally driven shipments increased. Please turn to Slide 4 for discussion of our defense business; Wilson will take different view so I save my voice for Q&A.

Thanks Charlie. Good morning everyone, defense segment results for the quarter reflects the impact of the FHTV program breaking production that starting to beginning of the second quarter. As you know the FHTV program is one of our legacy programs and is foundational to our defense segment. We expect to resume sales in that program in the fourth quarter after the new contract is finalized. In the interims with no FHTV sales schedule for the third quarter we expect that the defense segment will report an operating loss in the third quarter similar in size to the operating loss in the second quarter. Overall we're excited about the opportunities for our defense segment and expect 2015 will be the trough year for this business. The 2015 federal budget that was passed in December and the proposed 2016 budget both contain higher funding levels for our legacy programs than the 2014 budget which we expect will help booster sales in this segment starting in 2016. We've already started recalling production employees to help us meet the increased sales levels that we expect in this segment. Plus as you know, we have a number of other opportunities to help grow this business we expect the remainder of this fiscal year to be very busy in terms of gaining clarity on this opportunities, specifically we believe an announcement on the winner of the Canadian MSVS program for 1,500 to 2,100 vehicles will be made in June. A win on this program will be a solid a contribution to our 2017 and 2018 trails. We've also talked for some time about opportunity to sale significant quality of MATVs internationally. We made good progress during the quarter and believe that we will secure meaningful orders by the end of this fiscal year. These orders will…

Thanks, Wilson, and good morning, everyone. Consolidated net sales for the second quarter were $1.55 billion a 7.4% decrease in the second quarter of 2014. On a constant currency basis sales decline 5.7% compare to the prior year quarter. Sales increases in our non-defense segment range from 13.4% in the access equipment segment to 30% in the fire and emergency segment. On a constant currency basis access equipment segment sales increased 16.4% with sales up in all regions except Latin America. And while we didn’t the complete the catch up on the weather related delays as Wilson noted. The access equipment and commercial segment teams were able to minimize the impact on sales for the quarter although there was significant overtime incurred in the process. Fire and Emergency segment sales benefited from the continued recovery of the U.S fire apparatus market as well as timing of international shipments compare to the prior year quarter. As Charlie mentioned the 67% decline in defense segment sale compare to the prior year quarter was driven by the FHTV program breaking production that started at beginning of the second quarter. This segment also experienced lower FMTV sales similar to what we experienced over the past number of quarter and no international MATV sales compare with the prior year quarter. Consolidated operating income for the second quarter was $109.7 million or 7.1% of sales compare to adjusted operating income of $123.5 million or 7.4% of sales in the second quarter of 2014. Second quarter 2015 consolidated operating income was negatively impacted by $3.4 million due to negative foreign exchange impact. Higher operating income and operating income margins in each of the non-defense segments mitigated a significant portion of the decline and operating results in the defense segment. As expected access equipment segment operating income margin…

Thanks Dave, We are pleased with our second quarter results and believe we are on track to deliver a strong second half as we drive toward attainment of our 2015 adjusted earnings per share within the targeted range that we set up at our 2012 Analyst Day. By continuing to execute our MOVE strategy we are building momentum to deliver solid shareholder value into 2016 beyond. That concludes our formal comments we are happy to answer your question I’ll turn it back over to Pat to get the Q&A start up.

Thanks a lot Charlie. [Operator Instruction] Brenda lets please began the question and answer period of this call.

[Operator Instructions] Our first question comes from the line of Stephen Volkmann with Jefferies. Please go ahead with your question.

Charlie you don't sound that enthusiastic this morning. I hope you feel better. My questions are probably going to starting on the AWPs segment. I'm just curious. Kind of a few moving pieces there, but it looks like sort of the assumption for the second half for revenue growth in that market is actually fairly close to flat I guess. And I'm wondering, if you are seeing anything in your orders or inquiries or any of that kind of stuff that makes you think that the business is sort of front-end load of this year? You mentioned Europe and maybe you can give us a little more detail on what you are seeing over there and just kind of your level of confidence that the cycle continues here.

Let me start off at the first part of the question and Wilson can pick up from there. Our estimates at the beginning of the year were sales of about 5.8% for the year and our second half sales are towards the higher end of that number. If you extrapolate out. So I do think that it is not as strong as the first half sales growth. But, it is a good solid high school digit number.

Steve I'll comment Europe. Actually I was just over there for the Intermat show and the way I would term Europe today that it is getting better. We're not spiking the ball but it isn’t greater anything but its certainly improving. I mentioned in my prepared comments that one of the bigger companies over there is doubling their CapEx so it is a significant size company that is doing that and we read that in a trade publication so that is out there publicly. The other comments I got it's the typical regions that have been performing or continue to perform well there. [Indiscernible], The Nordics, UK. That’s where primarily the activity is picking up. We're still not seeing a whole lot in France. Obviously Spain is not doing much. But Europe today's getting better. You have to keep in mind that fleet rate there is really higher. And so there is some forced replacement going on. And then we are seeing some construction pick up. So, again were cautiously optimistic but it is better as you saw. We performed some double-digit growth there this past quarter.

Can you estimate where Europe is kind of on a unit volume basis relative to the last peak?

I would estimate somewhere in the 40% to 50% range. The markets changed a little bit, but I would say that’s a pretty fair estimate 40% to 50%.

And how much of your revenue in AWPs was Europe the last peak? And then I'll pass it on.

Steve that was about 30% in the prior peak. Maybe even 35%.

I think it was closer to 35%, in that range.

Our next question comes from the line of Mig Dobre with Robert W. Baird. Please go ahead with your question.

Good morning everyone. Just sticking with Access segment here. You are guiding to really solid margin expansion in the back half of the year. And the slides and in your comments I think I understand some of the moving pieces. But some clarification there in terms of your visibility would be helpful. And then longer-term, you talk about Access Equipment margins getting to the 16% to 17% is a target. I am wondering how confident are you on that based on the frankly the changes that we have seen in the past 3 to 6 months in the environment.

Our jump in and start and I'm sure Dave and Charlie can add some color to this. From AWP and what we're saying, think we have described it before and some of these call. We have got a pretty robust field phase sales team and today were much more connected with our customers from a forecast standpoint than we were previous session. So great communication which again gives us a good line of sight by customer to what is going on, projects available, et cetera. So we talked earlier this year but the first half being really focused on Telehandlers and then shifting to AWP and I'll tell you today where we are that is all holding true. That is coming into play and we are seeing much more activity around AWPs and our backlog shows that. So again that's what gives us confidence through ’15 is that we see what is in front of us. I won't try to sell you on where the market is going and the positive stuff. But you are hearing the [sales side] surveys, [nonrez] construction. There are just a lot of positives there that are leading us to be confidently through ’15. Now to because on the comment a little bit?

The other thing that you should be aware of course is that our own initiative is kicking in and that does have benefit in the second half of the year because as we're launching these new products, we're targeting higher margins with them. And that is certainly benefiting us in the second half. We're also getting more commodity cost benefits in the second half that will help our margins. And both of those trends and should extend into 2016. So we're pretty positive right now about our ability to lift margins.

I appreciate that. Thanks for the color. And then my follow-up is on the Defense segment. You use the term trough in terms of fiscal ’15. I guess, I'm wondering, how should we think about what follows the trough year?

Obviously, we will have more to say about that in October when we give you next year's estimate. But we do seeing a potential for higher funding for domestic programs next year. And as we have been saying for some time, where pursuing some larger international business. And I think that we would expect to announce some of these contracts this fiscal year. So we will have more to tell you as the year progresses.

Sorry to press you on this, but I'm just kind to understand how you are thinking about what acceptable return on Invested Capital our margin of however you want to frame that, just from a longer-term basis for the segment?

This is Dave. I think that we look at Defense really as we do with any of the other segments that they all have to earn their cost of capital. And being a trough, you know some of the investments that were currently undertaking to continue to support the JLTV program and to continue some of these international opportunities that we have out there. If we start to see higher sales come through, which I believe we expect as noted in the commentary regarding the trough year, so you should see we believe some meaningful improvement in performance in the segment going forward.

Our next question comes from the line of Charley Brady with BMO Capital. Please go ahead with your question.

Thanks good morning guys. Can you just quantify the vendor recovery segment and the impact on margin? I'm guessing that it was less than the three and change in the FX market if you could just quantify that for us?

All in all not Charlie those $7.8 million in the quarter. But in addition, that is something that we call out. The items that I would say that go to offset that would be -- we talked about some of the challenges that we had in the Northeast with some overtime that we had to incurred to catch up deliveries in the quarter. We had the FX obviously there's so when you net it all out. It's probably a positive couple million dollars in the quarter is all when I look at the supplier recovery an undisclosed other headwinds out there.

Okay fair enough. And aggressive commentary where you said on Commercial and all Access that you are caught up on most of the shipment delays. I'm just wondering can you -- how much of that didn't make it into the second fiscal quarter, is going to hit into Q3 and does it all wind up in the Q3 or you seeing anyone else come out and ask for a later delivery? Are we kind of back to normal order patterns in the quarter?

I think you experienced firsthand some of the challenges of living through the winter in the Northeast, the Access team and the Commercial team both did an outstanding job really of catching up deliveries in the quarter. So, we probably fell just a little short but not a lot and I don't think it's going to have a significant impact really on our Q3 results.

And we're not seeing anyone asked us to delay shipments into the fourth quarter anything like that. Right now, things look solid. And we should have a strong second half.

Our next question comes from the line of Pete Skibitski with Drexel Hamilton. Please go ahead with your question.

I want to ask first and maybe for Dave, the 250 million free cash flow guidance looks like the back half will be positive. Is that kind of evenly distributed in Q3 and Q4 or will it be pretty Q4 loaded on the cash?

It would be more heavily weighted to the fourth quarter.

Okay got it. And then yes just on the Defense commentary. Which I was positively surprised about. Could you just give us a sense of how much -- if you are factoring in any MSVS or any MATV into your fiscal 2016 thought process? Or is it mostly the legacy programs?

We certainly have some tailwinds for us for our legacy program into 2016. MSVS is yet to be awarded. Hopefully by June or July where that program stands. So, that would an upside to what we're talking about here, but I think really the shipments are 17 and 18 for MSVS, doesn’t really impact 2016 a whole lot. That would be international sales.

Okay got it. And then just a last one. And maybe for Dave. Dave what's your FX assumption for the full year?

In terms of?

The headwind, revenue headwind.

Last quarter we talked about we thought it would be about $0.15 per share. We have since gone back and what I would say refined our calculations on that and we actually have a stronger natural hedge than I would have thought when we were talking to you at the end of January. So, even with the continued strengthening of the dollar through the March quarter, I think we're still looking at a year-over-year of about $0.15.

Thank you. Our next question comes from the line of Ross Gilardi with Bank of America. Please go ahead with your question.

I just want to ask about inventories, I mean, they are up like 30% despite your revenue decline. And you said that inventories are starting to come down in March, but could you just talk a little bit more about why they are up so much versus last year to begin with? And where do you expect to end the fiscal year on inventory?

Sure. Ross it's goes really back the last summer, we started commenting on this in terms of our approach to production throughout the full year. We are trying to more level load production in those businesses where we do experience a fair amount of seasonality and that's really what you've seen play out. You saw it increase in December a little weak again a little bit as we went from the December to the March quarter, but as we noted in the prepared remarks we did see the inventory levels start to decline later in March so we believe we will continue to see that through the remainder of the fiscal year-over-year.

Where do you think you will end up towards the end of the year? Will you still be up a pretty good amount? Or do you think you'll be back sort of closer to year-end 2014 levels?

It might it will be probably close to year end 2014 levels could be a little bit higher depending on the timing of sales that we have in remainder of the year.

Okay great. And then just the last one. How would you characterize the pricing environment for your Access segment overall? Has it gotten at the margin a little bit better or a little bit worse? Your Canadian competitor presumably has a little bit of an FX advantage. Wondering if that's still a thing into the market at all?

Ross we've seen what I'll called normal pockets that pops up overall I would say pricing has been competitive but fairly stable. Europe is where we've seen a little bit more aggressive pricing when compotators with Russia kind of slowing down, one compotator that does a lot of business there is obviously moved over and creating a little bit of pricing pressure in Europe, but overall I would say it remains competitive and again the normal pockets that were used to seeing.

Got it. Thanks, guys.

Our next question comes from the line of Tim Thein with Citigroup. Please go ahead with your question.

Great, thanks. Good morning, guys. Yes, just following up on that last question on pricing. And, Charlie, you had mentioned earlier some tailwinds from raw materials and given that the hot rolled steel prices in the U.S. are down, call it, mid-20s%, high-20s% year-to-date. Is that, I guess, just maybe comment on how that is factoring in i.e. your net-net assumption in terms of price cost. I guess as you expect to play out in 2015 relative to maybe what you thought three or six months ago?

Tim its Dave. We certainly the movement in steel that’s kind of what I would call the headline price. If you look across the whole range of commodities and materials that we procure, we've got a mix of items that are and we buy kind of more on the spot basis along with items that we loft in for longer periods of time and that’s not necessarily raw material or commodities but fabrications, et cetera. where we may incur a price increase on an annual basis no matter underlying steel cost is moving up or down. So if you just look at the headlines steel price is probably a little misleading. We do think there will be some positive impact as we look at the second half of the year here and that’s really baked into our outlook for the year. And I guess probably just leave at that.

Yes, okay. Alright, fair enough. And then maybe, Wilson, just in terms of the comments on limited oil and gas impact. Maybe looking at the actual order book for Telehandlers. Maybe one place that you could -- that would show up? I'm just curious what you are seeing in terms of the order book between maybe the lower capacity Telehandlers versus some of the higher end ones, which presumably would be more tied or exposed to, kind of, the upstream activity?

It's hard to quantify Telehandlers to oil and gas for us. If we look as we came out starting this year we forecast and what’s happened is the heavier Telehandler mix in the first half and that was really around the tier changes. I would say the Telehandler activity we're seeing at the start of the second half is in line with what we thought it would be. So as Charlie mentioned and I did too is what little impact we've seen from gas, I guess is very manageable. I couldn’t tell you a specific number for anybody saying we're not ordering Telehandlers because of oil and gas it hasn’t been affected for us.

Just to be clear our North American outlook is improved as the months have passed in the fiscal years. So yes there is some oil and gas impact on the fringes but overall construction activity and rental activity is made up for that North America.

Our next question comes from the line of Jamie Cook of Credit Suisse. Please go ahead with your question.

Hi, good morning. I guess a couple quick questions. One, in terms of the cadence of orders throughout the March quarter and then into April, were they fairly consistent with what you would have thought, I guess, outside of weather? Can you talk about what you were seeing for trends in the months of April? And then can you just talk about what your expectation is for ordering patterns in the back half of the year in terms of how much will come from independence versus the large national guys? Thanks.

I'll jump in Jamie and you guys can add color here. From the order pattern standpoint I would tell you in April we're off to a good start. Our position is good what we've been tell from a forecast standpoint is coming into fruition. So we're pleased with that I think because of the more companies are comfortable with us now that we can't produce and deliver on time the comfort and communication that I've talked about several times, to be a little more relaxed with their ordering, they're not putting in those big orders any more. So again our line of forecast looks well for the second half in terms of IRCs and NRCs. Jamie the IRCs this past year have been growing a little faster than NRCs. Now this past quarter we had a little bit stronger NRC mix. But if you look historically at our mix over the years and we have really been public with what that mix but I would tell you it's consistent with our -- forecast is consistent with what’s it’s been over the last couple of years.

Okay. And then just I guess I know you guys are still fairly optimistic on the aerial work platforms cycle. Can you just talk about sort of longer term how you think about incremental margins from these levels? I mean, I think last year you were at 29%. This year I think you will average -- it's all over the place, but I think you will average more in the mid-20s. Is there any reason mix or MOVE initiatives; where you feel like incremental margins could sustain at this level or potentially be better? Or should we expect them to moderate? And then I'll get back in queue. Thank you.

I think Jamie as we talked that 20% to 25% if you look at a typical mix I think that’s a good number to start with and then ideally what we're targeting is to do better than that by boosting it through move initiatives.

Our next question comes from the line of Mike Shlisky with Global Hunter. Please go ahead with your questions.

Can I just get a little bit more color on what you said about chassis availability in your Commercial segment? I guess are you saying that those issues across all truck makers? Are you seeing any increases in your price increase to chassis? And any thoughts as to when the lead times for chassis might dissipate?

Well. First of all that we go through this cycle quiet often and when Class A picks up the vocational chassis seem to kind of suffer, so that's a little bit of stage were in now. We are working closer with the chassis manufactures just to have a dealer available inventory that meets our specification. So we’ve learn how to flex and be more agile with commercial chassis. Right now we don't see this getting better in the short term but again we've as you can see from commercial result, they are managing through that so we actually had meetings last week with a couple of chassis OEM's and we continue to do that just to try to make sure we’re connected and working as closer as we can with them.

And in terms to lead times probably I'm going to ask chassis OEM, I'm not sure where the right ones that can make that call.

Got you. And then secondly, I know it's small, but you have a small airport snow business. And with all the impacts from the weather in the fiscal second quarter here, can you maybe comment on how that did in the quarter and how that might looks for next season given the heavy winter that we just finished?

Well our leader for airport products business was since retired [indiscernible] prayed for snow because heavy snow here, the next year we had a good snow business. So it’s usually a year length.

Our next question comes from the line of Ann Duignan with JPMorgan. Please go ahead with your question.

Hi, good morning. Most of my questions have been answered, so if we just look at your guidance by segment and you haven't changed that quarter-over-quarter. Can you just talk a little bit about where you see the most upside potential and where you see the most risk to your Outlook by segment?

That's our zinger for the day Ann. I don't know that we see significant risk in any of the segments and I'm not saying there isn't any risk; there is probably risk in anything. But not significant risk, modest maybe in some of the segments on the upside could come from multiple various but certainly access as our biggest segment and that it should have significant upside will have to come there.

Okay. And on Defense, is there any risk that the Canadians just won't place any orders? I mean, look at their economy. There's a lot of talk in Canada about balancing the budget and you've got currency. Those Defense products that are sold into Canada, are they sold in U.S. dollars or Canadian dollars? And if you just talk about what are the risks around the Defense side?

For almost three years, we think it's going to be announced in the next couple of months that’s what we here, we believe it's going to treasury here in the next month or so for approval and then it would be announced. At some point after that could be even a couple of months after that. So it sounds positive but these are always political kind of decisions in the end and certainly it could get derailed. But we feel good about the program we had a vehicle that tested really well.

Our next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead with your question.

Nice progress in Fire and Emergency. Can you just talk about what the price increase and the production ramp? Do you think you have the pieces in place to get back to the historical high, single-digit type margin range heading into fiscal ’16?

We do Jerry but overtime they made a good job in Q2, we’re expecting the similar quarter in Q3 to Q2. But I think I mentioned where just now splitting the lines and it appears further decreased decrease complexity so this is what the fixed cost in these business if not one the terms really fast so we do lack our progress the teams working on the right things usually ask about the metrics and I will tell you the metrics are all certainly trending in the right direction, so were pleased and what's really nice now is the order are picking up they were up 19% on the quarter the FDIC show was a really big hit we saw some nice positive similar there from customers and deal energy sold their price to continue to plans that are on but it will take some time.

Okay, thank you. And then on Access, I am wondering, Dave, can you say more about the natural hedges that you found? I guess we're of the impression that there is a net export position into Brazil and Europe and it sounds like you have been able to mitigate that. Can you just flush out that comment a bit more?

Yes. The largest change Gary as we do procure a fair amount of material here in the U.S. from foreign suppliers that we pay for in foreign currency. So well that goes into the production of our products here in the U.S. and we have more over refined view of that than we had at the end of January.

And how big is that as a percent of your total buy?

I'm not going to get into that level of detail. But it certainly is helping us in this time when we're seeing U.S. dollar strengthening.

Our next question comes from the line of Eli Lustgarten with Longbow Securities. Please go ahead with your questions.

One clarification and question. Can you talk a little bit about the tax rate, the 35-plus tax rate? Did it really cost you $0.04 or $0.05 in a quarter or is that underlying tax rate lower and it was boost up because of the charges related to the refinancing?

No Eli, it’s just really as we looked at the full year, raised it from 31 to 32 and then there is a little bit of a kind of catch up so to speak in the second quarter as we adjusted to that because would have booked at a lower rate in the first quarter.

So it really did cost you a few pennies in the quarter?

Yes.

From the tax rate? And specific questions, I have two: one on Access, one on Defense. On the Access, you talked a little bit about the timing of orders and backlog is down. The implication is that the bulk of the backlog and what we're seeing is relatively short term and most of it will be shipped in the third quarter and the new orders that really for the fourth quarter and beyond. Is that a fair characterization that we're looking for? That it is not just, the third quarter is pretty well set on a backlog and that it’s the fourth quarter that is more dependent on the timing of these orders?

It's clearly more dependent in the fourth quarter that we will need to work now for the fourth quarter. But we still need some orders for the third quarter.

Eli, the entire quarter is never fully ordered before we get into that right. This is pretty normal.

Yes. I understand that. But it is noticeably down. I was just looking at sensitivity; a way to worry. And the other question is on Defense. Talking about troughs. The implication of your more positive commentary is reasonably high expectations on the big contract coming this fall. Would all these comments have to be reevaluated if the politics go against you or are you pretty confident that somehow you will have some business that will keep the Defenses as an important part of the Company as you look out?

Yes the outlook that we've shared so far for '16 on a qualitative basis doesn’t assume MSVSat all right because first of all if we do win it, it wouldn’t benefit our earning till ‘17. Because that’s really when shipment starts. So really what we're looking at for 2016 is incrementally higher domestic business and with potential for its international orders.

JLTV will be low rate productions with much.

But it would be upwards of overhead absorption. I guess the basic feeling is that you looking at ’16 in Defense would be higher volume and something better than breakeven profitability, with that regardless to what happens with the politics is sort of the expectations at this point.

Yes.

Our next question comes from the line of Seth Weber with RBC Capital. Please go ahead with your questions.

Hey, good morning guys. I'm just trying to -- going back to Access. I'm trying to understand the mix, what we should expect for mix in the second half, AWP versus Telehandler. Should that revert back to more we have seen in 2014? And I guess are you still producing the interim Tier 4 Telehandlers with credits? Or does the Telehandler number just really drop from here?

In terms of the mix we certainly do expect to see a higher mix of area of our platforms in the second half of the year and this really consistent with what we've said all throughout the year as we were going through Tier 4 issue with Telehandler in the first half of the year. And when you look at the backlog at the end of the March that would support that outlook that we're going see, a stronger aerial work platform mix in the second half of the year.

Okay, but is it like a 60/40 around where you used to be excluding the other category? Is that fair or is it more moderate?

It is definitely far more skewed to our aerial work platform in the second half of the year then it would normally be. Having said that for the year we think aerial work platforms and Telehandler will grow around the same percentages. So for the year we're going to get back to the kind of normal by the end of the year.

Okay. So the two categories -- sorry trying to just to make sure I'm understanding -- so the two categories grow by about the same level for the full year. Is that what I think I heard?

Correct. But it’s much different within the year, so much here for mix in the second half.

Understood. Thanks. And then I'm just trying to calibrate the Commercial segment margin guidance. The commentary about delivery issues with the chassis or availability and kind of the implied margin for the second half of the year is very high single digits to get to your 6.5% number. Is that possible given the supply-chain issues that you are talking about?

It is Seth, we have -- I think I mentioned in my remarks our refuse collection vehicle backlog has grown. There is a margin just between RCVs and mixers. So with the heavier mix of RCV that the fact is there.

And Seth also just on the chassis availability you are talking about as Wilson noted in the remarks, we do have a this stock of raw chassis so that will help mute some of the impact in terms of the lead times that are out there today on chassis availability.

And next question comes from the line of Ted Grace with Susquehanna. Please proceed with your question.

Dave, any chance you could give us somewhat of an EBIT bridge for the Access Equipment segment? We're able to get the revenue pretty clearly from what you have talked about in the press release. But I was just wondering if you look at year-on-year change in operating profits, how to think about the impact of mix of FX, price cost? You talked a bit about the kind if materials. But is there any way you can give us a discrete bridge on a dollar basis?

I don't have all those details right at my fingertips here Ted and you are talking to second quarter right.

Yes.

Yes. So, obviously.

Think we get it offline it's easier.

If you want my latest work on EBIT certainly volume did help, mix was certainly a negative, the currency was a negative, all that gives and takes around this supplier recovery and couple of other things was a small positive so that we work on some for you, I mean basically it's looking more negative mix from Telehandlers offset impart [indiscernible] the volume benefit and that's kind of -- those are the bigger piece.

Sure. And then the second question I was hoping to run by you is I know there were some questions about Canadian competitors and the impact of FX on competition. I was wondering if you look more broadly across Telehandlers from other competitors, notably from Europe, trying to penetrate the US do have the benefit of currency potentially. Can you just talk about competitively what you're seeing in the Telehandler landscape? Are you seeing a market change in competitive dynamics with new entrance? Are people trying to make a bigger push in the U.S.? And I will leave it at that and get back in queue.

Yes. The quick answer Ted is that our market share is up in Telehandler. So were surviving any other the competition coming in and doing well. We have seeing some of them coming the real companies in the U.S. they are very dependent on service and after sales support and that's hard to do quickly so our online express is very connected to their customers and I think most customers are little hesitant into start with a new supplier, especially one that's from out of the states. So far we have haven’t seen any major moves from many of them and like I said we like to wait market shares going there.

Thank you. And our next question comes from the line of Steve Barger with KeyBanc. Please go ahead with your question.

Just a quick follow-up on Defense. Did you say you expect both revenue and operating loss will be similar to Q2 next quarter? Which means we would see closer to $400 million in revenue and low to mid-single digit to get to the $1 billion and breakeven? Just trying to understand the cadence.

Steve with your question around Q2 to Q3 in defense.

Yes because I thought you said in the prepared remarks that the operating loss in Defense would be similar in 3Q as what happened in 2Q.

That's true I think we will see a little bit higher sales sequentially from Q2 to Q3 but not a lot.

Okay. So you are -- I mean that would put you around $600 million plus or minus, right, on revenue through the three quarters, which mean you would need a pretty big step up in 4Q.

Yes. So, if you think about the fourth quarter we do expect to start up production again in sales of FHTV in the fourth quarter, that's going to be your biggest driver and we still do have some international MATVs inner outlook for the year in the fourth quarter.

Understood. And again, that will get you back to a kind of mid-single digit operating profit?

In the fourth quarter?

In Q4 yes.

So for the full year slightly above breakeven.

Very good. I just wanted to understand the timing of it. And next question, Fire. I hear you are in need of increased pricing due to vehicle complexity. Were you able to capture that before when you had complex vehicles and you were running high single-digit margins? Or was it volume that really drove that margin before? Or are you seeing significantly less rational pricing from competitors now? Just trying to understand the dynamics of the current market versus when you were at twice the margin.

Yes. Steve I think when the markets were stronger when the industry was at 5,500 units, that pricing was little bit more favorable then it is today when people are seeing no more competitors are out there but they are not chasing 4,000 units.

Got it so.

It definitely has creates this complexity issue and I think you are seeing in that with the other companies we compete with. The market contracting caused some -- a lot of aggressive behavior in the market place and that's still lot pressure on the peer’s margins.

And you really have not seen any competitors exit as a function of the weak markets over the last few years?

Not really.

Thank you this concludes today's question and answer session. I would like to turn the floor back to management for closing remarks.

Okay thank you for questions today and for interest in Oshkosh Corporation. We're looking forward to a strong second half of the year. Have a good everyone.

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