MOVING THE WORLD AT WORK

Transcription

1 Oshkosh Corporation Fourth Quarter Fiscal 2014 October 31, 2014 Charles L. Szews Chief Executive Officer Wilson R. Jones President and Chief Operating Officer David M. Sagehorn Executive Vice President and Chief Financial Officer Patrick N. Davidson Vice President, Investor Relations

2 Forward-Looking Statements This presentation contains statements that the Company believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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; the strength of emerging market growth and projected adoption rates of work at height machinery; the expected level and timing of DoD and international defense customer procurement of products and services and funding thereof; risks related to reductions in government expenditures in light of U.S. defense budget pressures, sequestration and an uncertain DoD tactical wheeled vehicle strategy, including the Company s ability to successfully manage the cost reductions required as a result of lower customer orders in the defense segment; the Company s ability to win a U.S. JLTV production contract award and international defense contract awards; the Company s ability to increase prices to raise margins or offset higher input costs; increasing commodity and other raw material costs, particularly in a sustained economic recovery; risks related to facilities consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; global economic uncertainty, which could lead to additional impairment charges related to many of the Company s intangible assets and/or a slower recovery in the Company s cyclical businesses than Company or equity market expectations; 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 related to production or shipment delays arising from quality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; the Company s ability to comply with complex laws and regulations applicable to U.S. government contractors; the impact of severe weather or natural disasters that may affect the Company, its suppliers or its customers; cyber security risks and costs of defending against, mitigating and responding to a data security breach; and risks related to the Company s ability to successfully execute on 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 today. 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. 2

3 On the MOVE! FY14 adjusted EPS** of $3.62, above high end of Company s initial guidance FY15 adjusted EPS** estimate range of $ $4.25 within Company s 2012 Analyst Day EPS target range for FY15 Non-Defense markets continue to recover, generally slower than 2012 Analyst Day expectations Oshkosh O, V, & E initiatives expected to meet or exceed Analyst Day targets for FY15 $4.50 Adjusted EPS** Leveraging balance $4.00 $3.50 sheet strength $3.00 $2.50 Defense segment offers $2.00 biggest upside opportunities $1.50 $1.00 $0.50 $0.00 FY12* FY13* FY14 FY15F * Continuing operations only. ** Non-GAAP results. See Appendix for reconciliation to GAAP results. 3

4 Solid Q4 Performance to Close Out FY14 Adjusted results above both prior year and high end of most recent expectations Led by continued strong access equipment segment performance Repurchased 5.2 million shares for $250 million Raising quarterly cash dividend to $0.17 per share Announcing FY15 adjusted EPS** estimate range of $4.00 to $4.25 Net Sales (billions) $2.0 $1.8 $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 OSK Fiscal Q4 Performance $1.25 $1.7 $1.7 $0.96 $1.00 $0.75 $0.49 $0.50 $0.25 $0.00 FY14 FY13* Net Sales Adjusted EPS** Adjusted EPS** * Continuing operations only ** Non-GAAP results. See Appendix for reconciliation to GAAP results. 4

5 MOVE Impact Evident in Strong Full Year Results Operating income margins increased in all non-defense segments Led by access equipment segment Strong new product launches; more to come Advantageous capital allocation Repurchased 8.3 million shares for $403 million Reinstated quarterly dividend OOS activities have driven improvement Work remaining at Pierce to improve operating income margins Net Sales (billions) $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 OSK Full Year Performance $6.8 $7.7 $3.62 $3.74 FY14 Net Sales FY13* Adjusted EPS** $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Adjusted EPS** * Continuing operations only ** Non-GAAP results. See Appendix for reconciliation to GAAP results. OSK Fourth Quarter 2014 Earnings Call October 31,

6 On Track to Achieve in FY15 Initiative FY15 Targets FY15 Estimate Bottom Line Results for Shareholders (1) Compared with FY12 expectations as of September 2012 Analyst Day. (2) Net of investment costs and compared with consolidated FY11 operating income margins. * Non-GAAP results. See Appendix for reconciliation to GAAP results. OSK Fourth Quarter 2014 Earnings Call October 31,

7 Defense Successfully concluded JLTV EMD testing Expect formal Production RFP to be released in November Continue to pursue international programs Additional M-ATV sales and Canadian MSVS Re-purposed production facilities Announced additional workforce reductions Expect operating loss in FY15 Q1 & Q2; marginally profitable for year FHTV production break while new contract is finalized Investing in pursuit of JLTV and international contract awards 7

8 Access Equipment MOVE delivered in FY14 Exciting new products Strong incremental margins Record revenues, operating income and operating income margin Continued growth expected in FY15 Moderate growth in North America Mixed outlook in other regions Recent European economic slowdown muting impact of aged fleets and growing UK market Middle East strong / Latin America softer Pacific Rim expected to grow; slow recovery in Australia Increased market competitiveness 8

9 Fire & Emergency Stepped back to better execute business improvement roadmap Expect FY15 Q1 operating loss International progress continues Strong orders for new Enforcer and Saber chassis North American fire truck demand remains soft Slow market growth expected in FY15 9

10 Commercial Solid improvement in FY14 Strong yr/yr concrete mixer sales Early stage investments in MOVE initiatives began to impact performance Expect continued market recovery in FY15 Modest U.S. housing market growth expected to drive mixer market Slow growth in refuse collection vehicle market Success with split-bin and automated units 10

11 Consolidated Results (Dollars in millions, except per share amounts) Fourth Quarter * Net Sales $1,667.7 $1,726.5 % Change (3.4)% (15.8)% Adjusted Operating Income** $116.9 $78.0 % Change 49.7% (28.4)% % Margin 7.0% 4.5% Adjusted EPS** $0.96 $0.49 % Change 95.9% (23.4)% Comments Sales impacted by: Lower defense segment sales + Higher access equipment and commercial segment sales EPS impacted by: + Significantly higher access equipment segment operating income + Lower tax rate due to favorable settlement of tax audits + Impact of FY14 share repurchases Lower defense segment operating income * Continuing operations only. ** Non-GAAP results. See Appendix for reconciliation to GAAP results. 11

12 Expectations for FY15 Revenues of $6.5 billion to $6.6 billion Operating income of $510 million to $540 million Adjusted EPS* of $4.00 to $4.25 Segment information Measure Access Equipment Defense Fire & Emergency Commercial Sales (billions) $3.7 - $3.8 ~$1.0 ~$0.80 ~$1.0 Operating Income Margin ~15.0% Slightly above break even ~4.25% ~6.5% Additional expectations Corporate expenses of $140 - $145 million Refinancing of 8.5% Sr. Notes Tax rate of ~31% CapEx of ~$150 million Free cash flow* ~$200 million Assumes share count of ~80 million Q1 Commentary Expect EPS lower by ~2/3 vs. Q1 FY14 EPS Large sales decline and higher NPD spending in defense segment Adverse mix and NPD timing in access equipment segment Lower sales volume in fire & emergency segment Expect significant cash usage driven by seasonal factors * Non-GAAP results. See Appendix for reconciliation to GAAP results. 12

13 Executing the MOVE MOVE has driven results and continues to evolve Management completely focused on achieving adjusted EPS* of $ $4.25 for FY15 Within 2012 Analyst Day target range of $ $4.50 Positioning Oshkosh to sustain earnings growth in FY16 and beyond Planning Analyst Day in early September 2015 * Non-GAAP results. See Appendix for reconciliation to GAAP results. 13

14 For information contact: Patrick N. Davidson Vice President, Investor Relations (920) Jeffrey D. Watt Director, Investor Relations (920)

15 Appendix: Access Equipment (Dollars in millions) Fourth Quarter Net Sales $932.7 $780.6 % Change 19.5%* 8.9% Adjusted Operating Income $127.4 $90.2** % Change 41.3% 51.7% % Margin 13.7% 11.6% Comments Sales impacted by: Continued recovery of global market Prior year sales of U.S. military telehandlers Operating income impacted by: Higher sales volume Product and process cost reductions Higher NPD and operating costs Backlog up 4.5% vs. prior year to $384 million * Growth of 22.4% excluding military telehandlers. ** Non-GAAP results. See Appendix for reconciliation to GAAP results. 15

16 Appendix: Defense (Dollars in millions) Fourth Quarter Net Sales $288.1 $513.8 % Change (43.9)% (46.1)% Adjusted Operating Income* $1.8 $15.0 % Change (88.1)% (76.1)% % Margin 0.6% 2.9% Comments Sales impacted by: Lower sales to U.S. DoD Prior year international M-ATV sales Prior year JLTV test unit sales Operating income impacted by: Lower sales volume Favorable warranty experience Lower engineering and operating costs Backlog down 57.6% vs. prior year to $780 million * Non-GAAP results. See Appendix for reconciliation to GAAP results. 16

17 Appendix: Fire & Emergency (Dollars in millions) Fourth Quarter Net Sales $214.9 $232.0 % Change (7.4)% 6.6% Operating Income $12.5 $9.2 % Change 35.3% (23.7)% % Margin 5.8% 4.0% Comments Sales impacted by: Production delays Prior year large international deliveries Operating income impacted by: Favorable product mix Lower operating expenses Lower sales volume Backlog up 15.2% vs. prior year to $567 million 17

18 Appendix: Commercial (Dollars in millions) Fourth Quarter Net Sales $243.7 $209.4 % Change 16.4% 15.4% Operating Income $18.4 $15.7 % Change 17.3% 70.9% % Margin 7.6% 7.5% Comments Sales impacted by: Higher concrete mixer volume Operating income impacted by: Higher sales volume Backlog up 13.7% vs. prior year to $160 million 18

19 Appendix: Commonly Used Acronyms ARFF Aircraft Rescue and Firefighting MECV Modernized Expanded Capability Vehicle AWP Aerial Work Platform MRAP Mine Resistant Ambush Protected CapEx Capital Expenditures MSVS Medium Support Vehicle System (Canada) CNG Compressed Natural Gas NOL Net Operating Loss DGE Diesel Gallon Equivalent NPD New Product Development DoD Department of Defense NRC National Rental Company EAME Europe, Africa & Middle East OH Overhead EMD Engineering & Manufacturing Development OI Operating Income EPS Diluted Earnings Per Share 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 GAAP U.S. Generally Accepted Accounting Principles R&D Research & Development HEMTT Heavy Expanded Mobility Tactical Truck RCV Refuse Collection Vehicle HET Heavy Equipment Transporter RFP Request for Proposal HMMWV High Mobility Multi-Purpose Wheeled Vehicle ROW Rest of World IRC Independent Rental Company SMP Standard Military Pattern (Canadian MSVS) IT Information Technology TACOM Tank-automotive and Armaments Command JLTV Joint Light Tactical Vehicle TDP Technical Data Package JPO Joint Program Office TPV Tactical Protector Vehicle JROC Joint Requirements Oversight Council TWV Tactical Wheeled Vehicle JUONS Joint Urgent Operational Needs Statement UCA Undefinitized Contract Action L-ATV Light Combat Tactical All-Terrain Vehicle UIK Underbody Improvement Kit (for M-ATV) LVSR Logistic Vehicle System Replacement UK United Kingdom M-ATV MRAP All-Terrain Vehicle OSK Fourth Quarter 2014 Earnings Call October 31,

20 Appendix: Non-GAAP to GAAP Reconciliation The tables below present a reconciliation of the Company s presented non-gaap measures to the most directly comparable GAAP measures (in millions): Three Months Ended September 30, Access equipment segment sales excluding military (non-gaap) $ $ Military telehandler sales Access equipment segment sales (GAAP) $ $ Adjusted access equipment segment operating income (non-gaap) $ $ 90.2 Intangible asset impairment charge - (9.0) Access equipment segment operating income (GAAP) $ $ 81.2 Adjusted defense segment operating income (non-gaap) $ 1.8 $ 15.0 Pension curtailment and settlement loss (3.8) - Union contract ratification costs - (3.8) Defense segment operating income (loss) (GAAP) $ (2.0) $ 11.2 Adjusted operating income (non-gaap) $ $ 78.0 Pension curtailment and settlement loss (3.8) - Intangible asset impairment charge - (9.0) Union contract ratification costs - (3.8) Operating income (GAAP) $ $

21 Appendix: Non-GAAP to GAAP Reconciliation The tables below present a reconciliation of the Company s presented non-gaap measures to the most directly comparable GAAP measures: Three Months Ended Fiscal Year Ended September 30, September 30, Adjusted earnings per share from continuing operations-diluted (non-gaap) $ 0.96 $ 0.49 $ 3.62 $ 3.74 $ 2.30 Reduction of valuation allowance on net operating loss carryforward Debt extinguishment costs, net of tax - - (0.08) - - Contract pricing adjustment for OPEB costs, net of tax - - (0.08) - - OPEB curtailment gain, net of tax Pension curtailment and settlement loss, net of tax (0.03) - (0.06) - (0.02) Tender offer and proxy contest costs, net of tax (0.12) (0.05) Intangible asset impairment charge, net of tax - (0.06) - (0.06) - Union contract ratification costs, net of tax - (0.03) - (0.03) - Performance share valuation adjustment, net of tax (0.05) Discrete tax benefits Earnings per share from continuing operations-diluted (GAAP) $ 0.93 $ 0.40 $ 3.61 $ 3.53 $

22 Appendix: Non-GAAP to GAAP Reconciliation The tables below present a reconciliation of the Company s presented non-gaap measures to the most directly comparable GAAP measures (in millions, except per share amounts): Fiscal 2015 Expectations Low High Adjusted earnings per share from continuing operations-diluted (non-gaap) $ 4.00 $ 4.25 Debt extinguishment costs, net of tax (0.11) (0.11) Earnings per share from continuing operations-diluted (GAAP) $ 3.89 $ 4.14 Fiscal 2015 Expectations Net cash flows provided by operating activities $ Additions to property, plant and equipment (150.0) Net additions to equipment held for rental (18.0) Free cash flow $