Oshkosh Corporation Investor Presentation MAY 2019 (NYSE: OSK) - - PowerPoint PPT Presentation

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Oshkosh Corporation Investor Presentation MAY 2019 (NYSE: OSK) - - PowerPoint PPT Presentation

Oshkosh Corporation Investor Presentation MAY 2019 (NYSE: OSK) Forward-Looking Statements This presentation contains statements that the Company believes to be forward-looking statements within the meaning of the Private Securities


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Oshkosh Corporation Investor Presentation

(NYSE: OSK)

MAY 2019

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May 2019 Investor Presentation

Forward-Looking Statements

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This presentation contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, are forward-looking statements. When used in this presentation, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking

  • statements. These factors include the cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, which

are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s ability to increase prices

  • r impose surcharges to raise margins or to offset higher input costs, including increased commodity, raw material, labor and freight costs; the

Company’s estimates of access equipment demand which, among other factors, is influenced by customer historical buying patterns and rental company fleet replacement strategies; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the expected level and timing of U.S. Department of Defense (DoD) and international defense customer procurement of products and services and acceptance of and funding or payments for such products and services; the Company’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy; the impact of any DoD solicitation for competition for future contracts to produce military vehicles; risks related to facilities expansion, consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; projected adoption rates of work at height machinery in emerging markets; the impact of severe weather or natural disasters that may affect the Company, its suppliers or its customers; performance issues with key suppliers or subcontractors; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’s products; risks associated with international operations and sales, including compliance with the Foreign Corrupt Practices Act; risks that an escalating trade war and related tariffs could reduce the competitiveness of the Company’s products; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; cybersecurity risks and costs of defending against, mitigating and responding to data security threats and breaches; the Company’s ability to successfully identify, complete and integrate acquisitions and to realize the anticipated benefits associated with the same; and risks related to the Company’s ability to successfully execute

  • n its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors is contained in the

Company’s filings with the Securities and Exchange Commission, including the Form 8-K filed April 30, 2019. All forward-looking statements speak only as of the date of this presentation. The Company assumes no obligation, and disclaims any obligation, to update information contained in this presentation. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.

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  • A different integrated global industrial
  • Positioned for long-term success
  • Committed to high-return capital allocation

Oshkosh Corporation Key Messages

May 2019 Investor Presentation

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Oshkosh Corporation Profile – FY19 YTD*

May 2019 Investor Presentation

48% Access Equipment 25% Defense 15% Fire & Emergency 12% Commercial

Revenue by Segment

86% North America 9% EMEA 5% Rest of World

Revenue by Geography

Solid demand environment across all business segments

Integrated approach drives

  • pportunity/efficiency across enterprise

4 * Through fiscal Q2, March 31, 2019

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SLIDE 5

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A Different Integrated Global Industrial

May 2019 Investor Presentation

MARKET LEADER DIVERSE END MARKETS STRONG FINANCIAL LEADERSHIP SCALE TECHNOLOGY/ OPERATIONAL SYNERGIES

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SLIDE 6

Fire Apparatus

Broad Industry Leadership

May 2019 Investor Presentation

Concrete Mixers/Batch Plants #1 Military Tactical Wheeled Vehicles Airport Products (ARFF/Snow Removal) Aerial Work Platforms/Telehandlers Refuse Collection Vehicles

Strong Brands  Value Creation

Wreckers & Carriers

(1) Company estimates

NORTH AMERICA RANK (1)

#1 #1 #1 #1 #2

GLOBAL RANK (1)

#1

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May 2019 Investor Presentation 7

Strong and Improving Culture

Driving Team Member Engagement People First

  • Maturing the concept
  • Driving better results
  • Engage. Develop. Connect.
  • Glassdoor Best Places to Work in 2019

Industry Data Says:

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May 2019 Investor Presentation 8

Recognized Leader in Making a Difference

Customers

  • Innovation and quality drive market leadership

‒ Received Magnus Hendrickson award for innovative achievement in vehicle dynamics

Shareholders

  • Long-term focus on generating returns

‒ Two year CAGR of +30% for Adjusted Operating Income* and +42% for Adjusted EPS*

Ethics and Compliance

  • Ethisphere Institute’s 2019 World’s Most Ethical Companies list

(4th consecutive year)

Sustainability

  • #17 in Barron’s “Top 100 Most Sustainable Companies”

(2nd consecutive year in top 20)

  • Earned “Industry Mover” distinction in the RobecoSAM

Sustainability Yearbook 2018

* Non-GAAP results. See appendix for reconciliation to GAAP results.

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May 2019 Investor Presentation 9

MOVE Strategy Generates Strong Results… Strong Foundation Leading to Solid Operating Results

100 200 300 400 500 600 700 FY16 FY17 FY18

Adjusted Operating Income*

$ (millions)

* Non-GAAP results. See appendix for reconciliation to GAAP results.

  • Grew adjusted operating income at 30% CAGR from FY16 to FY18
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May 2019 Investor Presentation 10

…Leading to Solid Free Cash Flow

* Non-GAAP results. See appendix for reconciliation to GAAP results.

Focused Strategy Drives Returns

200 400 600 800 1000 1200 FY16 FY17 FY18

3 Year Cumulative Free Cash Flow*

$ (millions)

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May 2019 Investor Presentation 11

Responsible Capital Allocation

  • Target > 50% free cash flow returned to shareholders over the cycle

FY19 Capital Allocation Priorities

‒ Invest to innovate and grow ‒ ~$350 million share repurchase target* ‒ Grow dividend ‒ Opportunistically evaluate potential acquisitions

Maintain Strong and Flexible Balance Sheet

0% 10% 20% 30% 40% 50% 60% 100 200 300 400 500 600

FY16 FY17 FY18

3 Year Cumulative Free Cash Flow Returned to Shareholders

Dividends Repurchases % FCF Returned to SH's

$ (millions)

* Current as of April 30, 2019

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May 2019 Investor Presentation 12

Solid FY19 YTD Performance

  • YTD net sales and operating

income exceeded expectations

− Double digit percentage sales growth in access equipment and fire & emergency segments − Operating income higher in all four segments

  • Higher consolidated backlog
  • Simplification efforts gaining

momentum

  • Evolved MOVE strategy drives

continued focus on execution

Net Sales

(in billions)

Adjusted Operating Income*

(in millions)

OSK Fiscal YTD Performance

$256.5 $336.1

$0 $50 $100 $150 $200 $250 $300 $350 $400

FY18 FY19 $3.5 $3.8

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0

FY18 FY19

* Non-GAAP results. See appendix for reconciliation to GAAP results.

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– Sales growth in all regions in Q2

− Pacific Rim growth driven by continued product adoption in China

– ARA Rental and BAUMA trade shows highlighted strong customer sentiment – Industry metrics remain solid – Lower but still solid Q2 orders and backlog

− Both measures support increased full year outlook

– Significant operational improvements

− Supply chain more stable − Team members gaining experience

May 2019 Investor Presentation 13

Access Equipment – Recent Highlights

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  • Continued ramp up of JLTV

program

− Government evaluating units with user-requested modifications − Working toward FRP milestone − FY20 President’s Budget request supports production into FY22 − DoD 5-year defense plan implies

  • rders >25,000 units thru FY23
  • Launched ambulance TWV

in March

  • Strong visibility on other major

U.S. programs

  • Continuing development work
  • n FMTV A2 program

May 2019 Investor Presentation 14

Defense – Recent Highlights

TWV supplier of record, with deliveries expected through: FHTV 2022 JLTV 2024 FMTV 2026

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Joint Light Tactical Vehicle (JLTV)

U.S. JLTV Production Contract Overview

  • ~$6.7 billion initial announced value
  • Base award plus 8 order years
  • Program scope includes:

− 4 Mission Package Configurations − Mission Kits − Interim Contractor Support (ICS) − Total Package Fielding (TPF) − System Technical Support (STS) − Technical Data Package

  • Quantity: 25,000+ vehicles*

− Vehicle deliveries expected through 2024

May 2019 Investor Presentation

Utility 2 Door 4 Door General Purpose Close Combat Weapons Carrier Heavy Guns Carrier Future Variants

* Source: FY20 U.S. President’s Budget Request

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May 2019 Investor Presentation 16

Global Light TWV Market Potential

Significant international interest / opportunity

Today’s HMMWV Installed Base*

  • 240,000+ HMMWVs
  • 60 countries
  • 30+ configurations

The Oshkosh JLTV is Shaping the Future of Light Military Vehicles

53% 47% Armor Capable HMMWV Unarmored HMMWV

JLTV is Next-Generation Protected Mobility for the Modern Battlefield

HMMWV Jeep JLTV

* Source: Government publications, IHS Jane’s, SIPRI, AM General Website

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  • Record quarter for orders leading

to record backlog >$1 billion

  • Remain confident in outlook for

North American fire truck market

  • FDIC showcased Pierce

leadership and innovations in fire truck market

− Pierce Situational Awareness System by Fotokite

  • Recent administrative bottlenecks

to international sales are easing

May 2019 Investor Presentation 17

Fire & Emergency – Recent Highlights

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  • Segment results and FY19 outlook

impacted by extreme weather in Q2

− Manufacturing facility partial roof collapse due to excessive snow accumulation − Strong rallying point for team as they work to mitigate impact of event − Reduced full year outlook

  • RCV 3rd party chassis recovery plan
  • n target

− Q2 results negatively impacted (as expected)

  • Waste Expo in early May
  • Opportunity to strengthen existing

relationships and begin new ones

May 2019 Investor Presentation 18

Commercial – Recent Highlights

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  • Targeting revenue & EPS growth
  • Revenue growth 7%*
  • Adjusted Operating Income growth of 11%*
  • Adjusted EPS growth 20%*
  • Planned return of over $425 million to shareholders
  • Defense – Achieve JLTV full-rate production milestone

decision; begin to receive international orders

  • Access equipment – leverage strength in markets and

profitably to build on 25% sales growth in FY18

  • Simplification matures across the company

Positive Outlook for FY19*

May 2019 Investor Presentation * At the mid-point. Current as of April 30, 2019.

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Favorable market dynamics and benefits of MOVE position OSK to deliver strong results

20 May 2019 Investor Presentation

  • Attractive End Markets

‒ Defense ‒ Access equipment ‒ Fire trucks ‒ Refuse collection

  • Secular Tailwinds

‒ Population growth ‒ Urbanization ‒ Household formation

  • Strong free cash flow over the cycle

‒ Growth optionality ‒ Ensures strong balance sheet

  • Integrated approach to cost

containment

‒ MOVE Strategy ‒ Simplification

Positive Long-Term Outlook

Well Positioned for Success

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For information contact:

Patrick N. Davidson Senior Vice President, Investor Relations (920) 966-5939 pdavidson@oshkoshcorp.com Jeffrey D. Watt Director, Investor Relations (920) 233-9406 jwatt@oshkoshcorp.com

May 2019 Investor Presentation 21

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  • Revenues of $8.2 to $8.3 billion
  • Operating income of $725 to $755 million
  • Adjusted EPS** of $7.50 to $7.80

Additional expectations

  • Corporate expenses of $150 - $155 million
  • Adjusted tax rate** of ~21%
  • CapEx of ~$175 million
  • Free Cash Flow** of ~$450 million
  • Assumes share count of ~71.0 million***

Segment information Measure Access Equipment Defense Fire & Emergency Commercial

Sales (billions) $3.95 - $4.05 ~ $2.0 ~ $1.225 ~ $1.025 Operating Income Margin 11.75% – 12.0% 9.5% – 9.75% 13.5% – 13.75% 5.75% – 6.0%

Investor Presentation May 2019

Q3 Expectations

  • Higher sales vs. FY18
  • Growth in all segments except commercial
  • Higher EPS vs. FY18

* Current as of April 30, 2019 ** Non-GAAP results. See appendix for reconciliation to GAAP results. *** Assumes ~$350 million of share repurchases in FY19

Appendix: Oshkosh FY19 Expectations* – ASC 606 Basis

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  • Sales impacted by:

+ Higher access equipment, defense and fire & emergency segment sales − Lower commercial segment sales

  • Adjusted EPS* impacted by:

+ Higher operating income in access equipment segment + Share repurchases − Lower commercial segment results

(Dollars in millions, except per share amounts)

Second Quarter

Net Sales $1,990.2 $1,886.4 % Change 5.5% 16.6% Adjusted Operating Income $175.6 $163.4* % Change 7.5% 65.1% % Margin 8.8% 8.7% Adjusted EPS $1.82 $1.54* % Change 18.2% 102.6% 2019 2018

May 2019 Investor Presentation 23

Q2 Comments

* Non-GAAP results. See appendix for reconciliation to GAAP results.

Appendix: Consolidated Q2 Results

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May 2019 Investor Presentation 24

Access Equipment Sales $ 987.6 $ 987.3 $ 0.3 $

  • Operating Income

119.8 120.2 (0.4)

  • Operating Income Margin

12.1% 12.2% (10) bp Defense Sales $ 486.7 $ 472.8 $ 13.9 $ (20.0) Operating Income 52.2 44.8 7.4 2.0 Operating Income Margin 10.7% 9.5% 120 bp Fire & Emergency Sales $ 283.2 $ 286.1 $ (2.9) $ 45.0 Operating Income 36.6 38.0 (1.4) 8.0 Operating Income Margin 12.9% 13.3% (40) bp Commercial Sales $ 237.9 $ 233.7 $ 4.2 $

  • Operating Income

7.8 6.6 1.2

  • Operating Income Margin

3.3% 2.8% 50 bp Consolidated Sales $ 1,990.2 $ 1,974.7 $ 15.5 $ 25.0 Operating Income 175.6 168.8 6.8 10.0 Operating Income Margin 8.8% 8.5% 30 bp As Reported Without Adoption Of ASC 606 Effect of Change Higher/(Lower) Estimated Full Year FY19 Impact Second Quarter FY19 Results

(Dollars in millions)

Appendix: Adoption of ASC 606

Q2 FY19 and Expected FY19 Results

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May 2019 Investor Presentation 25

Net Sales $987.6 $927.9 % Change 6.4% 28.3% Adjusted Operating Income $119.8 $102.8* % Change 16.5% 73.4% % Margin 12.1% 11.1%

Second Quarter

2019 2018

(Dollars in millions)

  • Sales impacted by:

+ Higher volume, led by Pacific Rim + Improved pricing

  • Adjusted operating income*

impacted by:

+ Improved pricing + Higher sales volume + Operational efficiencies − Higher material costs − Deferred margin recognized in prior year

  • Backlog down 13% vs. prior

year to $1.55 billion

Q2 Comments

* Non-GAAP results. See appendix for reconciliation to GAAP results.

Appendix: Access Equipment Q2 Results

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Net Sales $486.7 $428.2 % Change 13.7% (4.0)% Operating Income $52.2 $48.4 % Change 7.9% (2.0)% % Margin 10.7% 11.3%

Second Quarter

(Dollars in millions)

2019 2018

May 2019 Investor Presentation 26

  • Sales impacted by:

+ Ramp up of JLTV program + Impact of ASC 606

  • Operating income impacted by:

+ Impact of ASC 606 + Higher sales volume − Adverse product mix − Facility startup costs

  • Backlog up 82% vs. prior year

to $3.1 billion

Q2 Comments

Appendix: Defense Q2 Results

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  • Sales impacted by:

+ Higher content units + Improved pricing

  • Operating income impacted by:

+ Improved pricing − Higher material costs

  • Backlog up 6.4% vs. prior year

to $1.1 billion

May 2019 Investor Presentation 27

Net Sales $283.2 $273.1 % Change 3.7% 15.0% Operating Income $36.6 $36.0 % Change 1.7% 60.0% % Margin 12.9% 13.2%

Second Quarter

2019 2018

(Dollars in millions)

Q2 Comments

Appendix: Fire & Emergency Q2 Results

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May 2019 Investor Presentation 28

Net Sales $237.9 $263.9 % Change (9.9)% 22.2% Adjusted Operating Income $7.8 $18.2* % Change (57.1)% 203.3% % Margin 3.3% 6.9%

Second Quarter

2019 2018

(Dollars in millions)

  • Sales impacted by:

− Lower deliveries due to weather- related production disruption

  • Adjusted operating income*

impacted by:

− Lower sales volume and inefficiencies due to weather- related production disruption

  • Backlog up 5.9% vs. prior year

to $449 million

Q2 Comments

* Non-GAAP results. See appendix for reconciliation to GAAP results.

Appendix: Commercial Q2 Results

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May 2019 Investor Presentation 29

Appendix: GAAP to Non-GAAP Reconciliation

  • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable

non-GAAP measures (in millions, except per share amounts):

2018 2017 2016 Earnings per share-diluted (GAAP) 6.29 $ 3.77 $ 2.91 $ Costs and inefficiencies related to restructuring actions, net of tax 0.37 0.48 0.01 Impairment charge, net of tax

  • 0.22

Litigation settlement gain, net of tax (0.21)

  • Business interruption insurance proceeds, net of tax

(0.07)

  • Loss on sale of a small product line, net of tax

0.01

  • Debt extinguishment costs, net of tax

0.10

  • Revaluation of net deferred tax liabilities

(0.39)

  • Repatriation tax

0.26

  • Adjusted earnings per share-diluted (non-GAAP)

6.36 $ 4.25 $ 3.14 $

Fiscal Year Ended

September 30,

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May 2019 Investor Presentation 30

Appendix: GAAP to Non-GAAP Reconciliation

  • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable

non-GAAP measures (in millions):

2018 2017 2016 Consolidated operating income (GAAP) 653.5 $ 463.0 $ 364.0 $ Costs and inefficiencies related to restructuring actions 35.4 43.3 0.9 Litigation settlement (19.0)

  • Business interruption insurance proceeds

(6.6)

  • Loss on sale of a small product line

1.4

  • Long-lived asset impairment charge
  • 26.9

Adjusted consolidated operating income (non-GAAP) 664.7 $ 506.3 $ 391.8 $ Net cash flows provided by operating activities 436.3 $ 246.5 $ 583.9 $ Additions to property, plant and equipment (95.3) (85.8) (92.5) Proceeds from sale of equipment held for rental, net of additions 1.0 22.1 5.4 Free cash flow 342.0 $ 182.8 $ 496.8 $ Fiscal Year Ended September 30,

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May 2019 Investor Presentation 31

  • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable

non-GAAP measures (in millions, except per share amounts):

Appendix: GAAP to Non-GAAP Reconciliation

2019 2018 2019 2018 Access equipment segment operating income (GAAP) 119.8 $ 97.6 $ 186.2 $ 111.3 $ Costs and inefficiencies related to restructuring actions

  • 5.2
  • 21.3

Adjusted access equipment segment operating income (non-GAAP) 119.8 $ 102.8 $ 186.2 $ 132.6 $ Commercial segment operating income (GAAP) 7.8 $ 16.4 $ 26.5 $ 24.7 $ Restructuring costs

  • 1.8
  • 4.3

Adjusted commercial segment operating income (non-GAAP) 7.8 $ 18.2 $ 26.5 $ 29.0 $ Consolidated operating income (GAAP) 175.6 $ 156.4 $ 336.1 $ 230.9 $ Costs and inefficiencies related to restructuring actions

  • 7.0
  • 25.6

Adjusted consolidated operating income (non-GAAP) 175.6 $ 163.4 $ 336.1 $ 256.5 $ Earnings per share-diluted (GAAP) 1.82 $ 1.47 $ 3.33 $ 2.21 $ Costs and inefficiencies related to restructuring actions, net of tax

  • 0.07
  • 0.25

Repatriation Tax

  • 0.10

0.23 Revaluation of net deferred tax liabilities

  • (0.31)

Adjusted earnings per share-diluted (non-GAAP) 1.82 $ 1.54 $ 3.43 $ 2.38 $ March 31,

Three Months Ended

Six Months Ended March 31,

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May 2019 Investor Presentation 32

  • The table below presents a reconciliation of the Company’s presented GAAP measures to the most directly comparable

non-GAAP measures (in millions, except per share amounts):

Low High Earnings per share-diluted (GAAP) 7.40 $ 7.70 $ Repatriation tax adjustment 0.10 0.10 Adjusted earnings per share-diluted (non-GAAP) 7.50 $ 7.80 $ Fiscal 2019 Expectations Effective income tax rate (GAAP) 22.0% Repatriation tax adjustment (1.0%) Adjusted effective income tax rate (non-GAAP) 21.0% Net cash flows provided by operating activities 625.0 $ Additions to property, plant and equipment (175.0) Free cash flow 450.0 $

Fiscal Year Ended

September 30, 2019 Expectations

Appendix: GAAP to Non-GAAP Reconciliation

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May 2019 Investor Presentation 33

ARFF Aircraft Rescue and Firefighting LVSR Logistic Vehicle System Replacement AWP Aerial Work Platform M-ATV MRAP All-Terrain Vehicle AMPS Aftermarket Parts & Service MRAP Mine Resistant Ambush Protected CapEx Capital Expenditures MSVS Medium Support Vehicle System (Canada) CNG Compressed Natural Gas NDAA National Defense Authorization Act DGE Diesel Gallon Equivalent NOL Net Operating Loss DoD Department of Defense NPD New Product Development EMD Engineering & Manufacturing Development NRC National Rental Company EMEA Europe, Middle East & Africa OCO Overseas Contingency Operations EPS Diluted Earnings Per Share OH Overhead FAST Act Fixing America’s Surface Transportation Act OI Operating Income FDIC Fire Department Instructors Conference OOS Oshkosh Operating System FHTV Family of Heavy Tactical Vehicles OPEB Other Post-Employment Benefits FMS Foreign Military Sales PLS Palletized Load System FMTV Family of Medium Tactical Vehicles PUC Pierce Ultimate Configuration FRP Full Rate Production R&D Research & Development FYDP Future Years Defense Program RCV Refuse Collection Vehicle GAAP U.S. Generally Accepted Accounting Principles RFP Request for Proposal GAO Government Accountability Office ROW Rest of World HEMTT Heavy Expanded Mobility Tactical Truck SMP Standard Military Pattern (Canadian MSVS) HET Heavy Equipment Transporter TACOM Tank-automotive and Armaments Command HMMWV High Mobility Multi-Purpose Wheeled Vehicle TDP Technical Data Package IRC Independent Rental Company TPV Tactical Protector Vehicle IT Information Technology TWV Tactical Wheeled Vehicle JLTV Joint Light Tactical Vehicle UCA Undefinitized Contract Action JPO Joint Program Office UIK Underbody Improvement Kit (for M-ATV) JROC Joint Requirements Oversight Council UK United Kingdom JUONS Joint Urgent Operational Needs Statement ZR Zero Radius L-ATV Light Combat Tactical All-Terrain Vehicle 3PL Third Party Logistics LRIP Low Rate Initial Production

Appendix: Commonly Used Acronyms