JLG Industries, Inc. Delivering on the Plan. Credit Suisse Global Leveraged Finance Conference March 28, 2006

Transcription

1 JLG Industries, Inc. Delivering on the Plan Credit Suisse Global Leveraged Finance Conference March 28, 2006 Credit Suisse Conference 1 March 28, 2006

2 JLG Representatives Bill Lasky Chairman, President & Chief Executive Officer Jim Woodward Executive Vice President & Chief Financial Officer Credit Suisse Conference 2 March 28, 2006

3 Safe Harbor Statement Forward Looking Statements represent the Company s expectations or beliefs concerning future events. Actual results may differ materially. Any forward looking statements made by or on behalf of the Company may involve certain risks and uncertainties, including varying and seasonal levels of demand for our products and services; risks associated with acquisitions; risks from international operations; costs of raw materials and energy, as well as other risks as detailed in the Company's SEC reports, including the report on Form 10-Q for the quarter ended January 29, Undue reliance should not be placed on any forward looking statements made by or on behalf of the Company. The Company undertakes no obligations to publicly update or revise any forward looking statement. Non-GAAP metrics included in this presentation reflect information that management believes is useful in analyzing the Company's performance. Reconciliation of these metrics to corresponding GAAP measures appears at the end of these presentation materials and/or on the investor relations section of our website Credit Suisse Conference 3 March 28, 2006

4 Agenda Overview of JLG Highlights Caterpillar alliance Financial review Questions Credit Suisse Conference 4 March 28, 2006

5 Product Portfolio Vertical Mast Lift Scissor Lift Caterpillar branded Telehandler Boom Lift European-Design Telehandler All-Wheel Steer Telehandler Rear-Pivot Telehandler Traversing Boom Telehandler Government-Design Telehandler Credit Suisse Conference 5 March 28, 2006

6 First Half Highlights Year-over-year consolidated results Record revenues up 47% U.S. revenues up 46% International revenues up 52% Operating profit margin improved 889 bps Trailing 12-month EBITDA of 11.9% of sales EPS increased to $1.05 Return on sales of 5.7% Credit Suisse Conference 6 March 28, 2006

7 More Highlights... Strong order board at $1 billion vs. $290 million Improved working capital metrics Caterpillar alliance implementation on track Dividend increase and 2-for-1 stock split Completed sale of excavator product line Improving supplier performance Credit Suisse Conference 7 March 28, 2006

8 More Highlights... & Challenges Major Manufacturing Realignment Bedford, PA & Orrville, OH reopening Sale of New Philadelphia, OH McConnellsburg to Bedford, Shippensburg and Orrville Shippensburg to Bedford New Philadelphia to Orrville CAT TMH to McConnellsburg and Maasmechelen Credit Suisse Conference 8 March 28, 2006

9 Caterpillar Alliance Overview 20-year exclusive private label agreement JLG to supply Cat-branded telehandlers for Caterpillar s global dealer network Acquisition agreement JLG acquires Cat s existing telehandler product line and attachments for $51.4 million in cash Component supply agreement JLG to utilize certain Cat components for Cat-branded telehandlers and JLG-branded telehandlers Cat components for other JLG products Credit Suisse Conference 9 March 28, 2006

10 Strategic Rationale JLG s Stated Strategic Objectives Grow access business Diversify channels to market Continuous cost reduction Growth through acquisition Cat Alliance Agreement $ million incremental revenues beginning in FY2007 Accelerates penetration of European telehandler market Positions JLG to become #1 worldwide in telehandlers Access to approximately 200 Caterpillar dealers globally Reduces exposure to mega-rental channel Caterpillar component sourcing creates opportunities for cost savings ROIC in excess of 15% by FY2007 Investment <4x EBITDA target FY2008 Credit Suisse Conference 10 March 28, 2006

11 Additional CAT Value Proposition Growth through the cycle Opportunity to reduce costs $ million of incremental revenues Caterpillar component sourcing Incremental volume with JLG suppliers Additional TMH market share penetration CAT telehandlers within their dealer network European JLG brand telehandlers Additional AWP penetration through CAT Rental Not quantified or part of the TMH model but nonetheless, real Credit Suisse Conference 11 March 28, 2006

12 Financial Overview Credit Suisse Conference 12 March 28, 2006

13 Financial Overview ($ in millions) Fiscal Year Ended July 31, LTM (2) Operating Data: Machinery $621.3 $594.5 $973.6 $1,461.4 $1,751.0 Services & AFS Revenues $770.1 $751.1 $1,194.0 $1,735.0 $2,047.1 % Growth (20.1%) (2.5%) 59.0% 45.3% 18.0% EBITDA % Margin 7.3% 8.4% 8.8% 8.9% 11.9% Capital Expenditures, net % of Revenues 1.6% 1.4% 1.0% 0.8% 0.8% Balance Sheet Data: Total Balance Sheet Debt $279.3 $460.6 $423.5 $289.4 $273.7 Net Debt (1) Shareholders' Equity Performance Ratios: Total Balance Sheet Debt / Book Capitalization 54% 65% 60% 38% 33% Total Balance Sheet Debt / EBITDA 4.9x 7.3x 4.0x 1.9x 1.1x Net Debt (1) / EBITDA 3.5x 2.7x 2.6x 0.01x 0.2x Note: Acquired OmniQuip in August 2003 and Delta Manlift SAS in April (1) Net Debt reflects total balance sheet debt plus off-balance financing, less cash and limited recourse debt from finance receivable monetizations. (2) Through January 29, 2006 Credit Suisse Conference 13 March 28, 2006

14 $600 $ in millions Revenues by Quarters Q1 Q2 Q3 Q4 $570 $500 $505 $478 $494 $425 $400 $353 $300 $200 $249 $234 $209 $206 $156 $156 $160 $151 $214 $237 $319 $307 $100 $0 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Annual Revenue Growth % (20.1) (2.5) (1) (1) Represents six months ended 1/29/06 versus six months ended 1/30/05 Credit Suisse Conference 14 March 28, 2006

15 Operating Profit Margin 12% 10% 10.3% 8% 6% 4% 4.0% 4.8% 6.4% 6.9% 2% 0% FY 2002 FY 2003 FY 2004 FY 2005 LTM Credit Suisse Conference 15 March 28, 2006

16 $ in millions Trailing 12-Month EBITDA EBITDA EBITDA Margin $300 $ % 11.9% 14% 12% EBITDA $200 $150 $100 $50 $91 7.0% 7.0% $98 7.6% $ % $154 $211 $244 10% 8% 6% 4% 2% EBITDA Margin $0 FY05Q1 FY05Q2 FY05Q3 FY05Q4 FY06Q1 FY06Q2 0% Credit Suisse Conference 16 March 28, 2006

17 $ in millions Capital Expenditures (PP&E)* Capex % of Sales $18 $16 $14 1.6% 1.4% $ % 1.6% 1.4% Capex $12 $10 $8 $6 $12.4 $10.3 $ % $ % 0.8% 1.2% 1.0% 0.8% 0.6% % of Sales $4 0.4% $2 0.2% $0 FY 2002 FY 2003 FY 2004 FY 2005 LTM % * Net of retirements Credit Suisse Conference 17 March 28, 2006

18 Capital Expenditures (PP&E and Rental Fleet)* $ in millions Capex % of Sales $40 2.3% 2.5% Capex $35 $30 $25 $20 $15 $10 $5 $ % $ % $ % $21.3 $ % 2.0% 1.5% 1.0% 0.5% % of Sales $0 FY 2002 FY 2003 FY 2004 FY 2005 LTM % * Net of retirements and conversion of rented equipment to sales Credit Suisse Conference 18 March 28, 2006

19 $ in millions $300 Net Debt & Free Cash Flow Net Debt Free Cash Flow $241 $300 $170 $270 $148 $200 Net Debt $200 $100 $199 $171 $28 $100 $0 Free Cash FLow $0 $45 ($98) $2 FY 2002 FY 2003 FY 2004 FY 2005 LTM 1/29/06 ($100) ($200) Net debt reflects total balance sheet debt plus off-balance sheet financing, less cash and limited recourse debt from finance receivables monetizations. Free cash flow excludes proceeds from 2005 equity offering Credit Suisse Conference 19 March 28, 2006

20 Capital Structure Amount Coupon Maturity $114 M 8.375% June 14, 2012 $110 M 8.25% May 1, 2008 $200 M Revolver Nov 30, 2010 Revolver Financial Covenant Fixed charge coverage ratio*: Fixed charges / EBITDA 1.1 : 1 *In effect only when the facility borrowing availability is less than 15%, at any time, or in the event that during the 90-day period following payment of certain bond obligations, the facility borrowing availability is less than 40%. Credit Suisse Conference 20 March 28, 2006

21 Fiscal Year 2006 Outlook Revenue growth 20 to 25% for full year EPS target of $2.35 to $2.45 Incremental operating margin ~26% Projected EBITDA margin 11-12% Capital expenditures ~$52 million Cash flow from operations of ~$50 million Credit Suisse Conference 21 March 28, 2006

22 If the work is in the air, JLG equipment will be there Credit Suisse Conference 22 March 28, 2006

23 Reconciliations of Non-GAAP Measures to GAAP Credit Suisse Conference 23 March 28, 2006

24 Financial Overview EBITDA Reconciliation $ in thousands Last Twelve Months Fiscal Year Ended July 31, January 29, Net income $113,704 $57,173 $26,649 $12,392 $12,878 Interest expense 29,235 32,198 38,098 27,985 16,255 Income tax provision 71,401 35,915 15,232 2,635 6,343 Depreciation and amortization 29,293 28,899 25,681 19,937 20,959 EBITDA $243,633 $154,185 $105,660 $62,949 $56,435 Revenues $2,047,084 $1,735,030 $1,193,962 $751,128 $770,070 EBITDA Margin 11.9% 8.9% 8.8% 8.4% 7.3% We monitor our EBITDA, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. EBITDA also is an indicator of profitability, particularly in our capital-intensive industry. EBITDA reflects our earnings before interest, taxes and depreciation and amortization. EBITDA as presented differs from measures of EBITDA calculated for purposes of financial covenants in our note indentures and senior credit facilities. Credit Suisse Conference 24 March 28, 2006

25 Trailing 12-Month EBITDA Reconciliation $ in thousands January 29, October 30, July 31, May 1, January 30, October 31, Net income $113,704 $ 93,768 $ 57,173 $ 36,748 $22,713 $17,387 Interest expense 29,235 29,179 32,198 35,146 35,992 37,218 Income tax provision 71,401 60,053 35,915 22,947 12,815 9,765 Depreciation and amortization 29,293 28,344 28,899 26,604 26,475 26,283 EBITDA $243,633 $ 211,344 $ 154,185 $ 121,445 $97,995 $90,653 Revenues $2,047,084 $ 1,906,092 $ 1,735,030 $ 1,590,611 $1,403,942 $1,287,038 EBITDA Margin 11.9% 11.1% 8.9% 7.6% 7.0% 7.0% We monitor our EBITDA, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. EBITDA also is an indicator of profitability, particularly in our capital-intensive industry. EBITDA reflects our earnings before interest, taxes and depreciation and amortization. EBITDA as presented differs from measures of EBITDA calculated for purposes of financial covenants in our note indentures and senior credit facilities. Credit Suisse Conference 25 March 28, 2006

26 Year-to to-date EBITDA Reconciliation $ in thousands For the six months ended January 29, 2006 Net income $55,286 Interest expense 14,355 Income tax provision 34,663 Depreciation and amortization 14,440 EBITDA $118,744 We monitor our EBITDA, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. EBITDA also is an indicator of profitability, particularly in our capital-intensive industry. EBITDA reflects our earnings before interest, taxes and depreciation and amortization. EBITDA as presented differs from measures of EBITDA calculated for purposes of financial covenants in our note indentures and senior credit facilities. Credit Suisse Conference 26 March 28, 2006

27 $ in thousands Net Debt Reconciliation January 29, July 31, July 31, July 31, July 31, Revolving credit facilities $ - $ - $ - $ - $ - $5 million cash management facility $25 million overdraft credit facility ,935 $125 million senior notes 109, , , ,000 - $175 million senior subordinated notes 113, , , , ,000 Miscellaneous debt 9,678 4,859 5,236 1,983 1,909 Fair value of interest rate swaps (7,799) (5,909) (8,814) (12,347) 914 Gain on terminated interest rate swap 2,799 3,018 5,318 5,994 - Bank debt and notes 228, , , , ,758 Limited recourse debt from finance receivables monetizations 45,318 63, , ,940 87,571 Total balance sheet debt 273, , , , ,329 Net present value of off-balance sheet rental fleet lease - - 1,070 2,341 5,582 Net present value of off-balance sheet production equipment leases - - 4,399 5,941 7,749 Total off-balance sheet financing - - 5,469 8,282 13,331 Total balance sheet debt and off-balance sheet financing 273, , , , ,660 Less: cash and cash equivalents 183, ,597 37, ,809 6,205 Less: limited recourse debt from finance receivables monetizations 45,318 63, , ,940 87,571 Net debt $45,059 $2,096 $269,553 $171,103 $198,884 Shareholders' Equity $566,870 $478,592 $281,270 $247,714 $236,042 Total Balance Sheet Debt-to-Total Balance Sheet Debt plus Shareholders' Equity 33% 38% 60% 65% 54% EBITDA $243,633 $154,185 $105,660 $62,949 $56,435 Total Balance Sheet Debt/EBITDA 1.1 x 1.9 x 4.0 x 7.3 x 4.9 x Net Debt/EBITDA 0.2 x 0.01 x 2.6 x 2.7 x 3.5 x We monitor our net debt, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. We define net debt as the sum of total balance sheet debt and other off-balance sheet financing, minus cash and limited recourse debt arising from our monetizations of customer finance receivables. Credit Suisse Conference 27 March 28, 2006

28 $ in thousands Free Cash Flow Reconciliation Last Twelve Months Fiscal Year Ended July 31, January 29, Net income (loss) $ 113,704 $57,173 $26,649 $12,392 ($101,592) Adjustments to reconcile net income (loss) to cash flow from operating activities: Non-cash items 31,749 25,122 30,555 21, ,468 Accounts receivable (32,588) (25,948) (66,296) (35,324) (40,110) Inventories (67,692) (15,268) 9,188 43,137 24,462 Other current assets 647 (12,553) 8,780 (15,960) 3,110 Accounts payable 54,999 60,423 33,207 (46,026) 52,685 Accrued expenses 39,478 43,176 4,726 3,254 12,084 Finance receivables 1,339 1,877 (6,112) 40,487 57,154 Other cash from operations 15,299 8,374 (11,090) (3,295) (28,136) Purchases of property, plant and equipment (17,365) (15,443) (12,387) (10,806) (12,954) Proceeds from sale of property, plant and equipment 1,034 1, Purchases of equipment held for rental (39,700) (31,249) (26,689) (16,342) (26,429) Proceeds from sale of equipment held for rental 29,621 35,065 33,269 19,063 28,924 Cash portion of acquisitions (47,035) (105) (109,557) - - Other cash from investments (689) 405 Payment of dividends (1,003) (925) (871) (859) (1,058) Net proceeds from issuance of common stock 119, , Exercise of stock options 26,955 19,826 2, ,033 Excess tax benefits from stock-based compensation 13, Effect of exchange rate changes on cash (3,748) (7,833) 258 1,852 (807) Seller financing (5,000) - (10,000) - - Capital lease assumed in OmniQuip acquisition - - (3,630) - - Debt assumed in Delta acquisition - - (103) - - Other (1) 7,457 4,898 (1,184) 15,310 63,342 Free Cash Flow $ 241,033 $267,457 ($98,450) $27,781 $169,753 (1) Includes changes in other off-balance sheet debt. In addition to measuring our cash flow generation and usage based upon the Statements of Cash Flows, we also measure our free cash flow. We define free cash flow as cash flow from operating activities, investing activities, payment of dividends, exercise of stock options, and the effect of exchange rate changes on cash less changes in accounts receivable securitization, limited recourse debt from finance receivables monetizations and off-balance sheet debt. Our measure of free cash flow may not be comparable to similarly titled measures being disclosed by other companies and is not a measure of financial performance that is in accordance with GAAP. We utilize free cash flow to explain the change in our net debt position from the prior per Credit Suisse Conference 28 March 28, 2006