MOVING THE WORLD AT WORK

Transcription

1 Oshkosh Corporation (NYSE:OSK) Charles L. Szews Chief Executive Officer Wilson R. Jones President and Chief Operating Officer Third Quarter Fiscal 2015 July 30, 2015 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 Company s estimates of access equipment demand; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and purchased materials; 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 JLTV production contract award and finalize international contracts for a significant quantity of M- ATVs, with sales beginning in fiscal 2016; 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 expansion, 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; 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; 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 compliance with the Foreign Corrupt Practices Act; 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 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. July 30, 2015 OSK Third Quarter 2015 Earnings Call 2

3 Q3 FY15 Results Oshkosh Corporation Classification: Highly Restricted 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 Q3 Performance $1.6 FY15 $1.13 Net Sales $1.9 EPS FY14 $1.23* EPS $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $0.00 Q3 EPS of $ Below expectations - Shortfall due to lower year over year sales of access equipment Updated FY15 adjusted EPS* estimate to range of $3.00 to $3.25 Defense segment positioned for stronger performance in FY16 Magnitude, along with improved fire & emergency and commercial segment results, provides overall positive outlook for Oshkosh EPS growth in FY16 Expect to become active again with share repurchases * Non-GAAP results. See Appendix for reconciliation to GAAP results. OSK Third Quarter 2015 Earnings Call July 30,

4 Defense Oshkosh Corporation Classification: Highly Restricted First yr/yr backlog increase since 2011 Secured contract orders for FHTV recapitalization and FMTV FHTV sales to restart in Q4 Expect to ship 150 M-ATVs internationally in Q4; revenue recognition now assumed in FY16 Progress pursuing much larger M-ATV orders to benefit FY16 and beyond Not awarded Canadian MSVS contract Expect JLTV decision in September 4

5 Access Equipment Oshkosh Corporation Classification: Highly Restricted Believe fundamental business drivers remain intact Improving U.S. residential and non-residential construction; strong rental company metrics Moderating replacement demand for aged fleets in Europe Product adoption in developing markets Expect mid-cycle sales decline of approximately 5% - 10% in FY16 primarily due to lower U.S. and European replacement demand Actions to address inventory levels and costs Acquired Power Towers low level access business 5

6 Fire & Emergency Oshkosh Corporation Classification: Highly Restricted Progress addressing operational efficiencies Assembly line changes completed in Q3 Expect modest North American market growth in 2015 Strong orders at Pierce led to share gains Innovative new product offerings at recent industry gatherings Revolutionary Ascendant single rear axle 107 aerial ladder Oshkosh XP fire apparatus introduced at Interschutz

7 Commercial Double digit sales growth led by RCV products Growing RCV share in a slowly improving market New Meridian lighter weight RCV introduced at Waste Expo in June Concrete mixer sales up Driven by higher content units Experienced order slowdown in Q3 7

8 Consolidated Results (Dollars in millions, except per share amounts) Oshkosh Corporation Classification: Highly Restricted Third Quarter Net Sales $1,612.3 $1,932.4 % Change (16.6)% (12.3)% Operating Income $136.6 $175.3* % Change (22.1)% (22.3)% % Margin 8.5% 9.0% EPS $1.13 $1.23* % Change (8.1)% (26.3)% Sales impacted by: Lower defense and access equipment segment sales Higher commercial and fire & emergency segment sales EPS impacted by: Q3 Comments Lower defense and access equipment segment results Foreign currency exchange Higher commercial and fire & emergency segment results Lower incentive compensation Lower share count Tax audit settlement * Non-GAAP results. See Appendix for reconciliation to GAAP results. 8

9 Updated Expectations for FY15 Revenues of ~ $6.1 billion Adjusted operating income* of $400 million to $425 million Adjusted EPS* of $3.00 to $3.25 Segment information Measure Access Equipment Defense Fire & Emergency Commercial Sales (billions) ~ $3.4 ~ $0.9 ~ $0.8 ~ $1.0 Operating Income Margin ~ 12.8% Slightly Above Break Even ~ 4.25% ~ 6.5% Additional expectations Corporate expenses of $125 - $130 million Tax rate of ~ 32% CapEx of ~ $150 million Cash usage* ~ $150 million Assumes share count of ~ 79.5 million Q4 Commentary EPS lower than prior year as a result of lower expected access equipment sales and operating income OSK Third Quarter 2015 Earnings Call * Non-GAAP results. See Appendix for reconciliation to GAAP results. July 30,

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

11 Appendix: Access Equipment (Dollars in millions) Third Quarter Net Sales $932.6 $1,039.2 % Change (10.3)% 10.4% Operating Income $136.4 $166.8 % Change (18.2)% 8.0% % Margin 14.6% 16.0% Q3 Comments Sales impacted by: Reduced deliveries as a result of weather-related construction delays and oil & gas price decline Unfavorable foreign currency New product launch challenges Operating income impacted by: Lower sales volume Unfavorable currency impact of $6.9 million New product launch challenges Lower incentive compensation Backlog down 19% vs. prior year to $395 million (down 14% on a constant currency basis) 11

12 Appendix: Defense (Dollars in millions) Oshkosh Corporation Classification: Highly Restricted Third Quarter Net Sales $194.2 $470.7 % Change (58.7)% (46.5)% Adjusted Operating Income / (Loss) $(7.1) $20.1* % Change (135.3)% (76.6)% % Margin (3.7)% 4.2% Q3 Comments Sales impacted by: FHTV break in production Lower FMTV sales International M-ATV sales in prior year Operating income impacted by: Lower sales volume Backlog up 38% vs. prior year to $1.2 billion First increase in yr/yr backlog since Q * Non-GAAP results. See Appendix for reconciliation to GAAP results. 12

13 Appendix: Fire & Emergency (Dollars in millions) Third Quarter Net Sales $199.8 $187.5 % Change 6.6% (8.3)% Operating Income $9.6 $6.2 % Change 55.5% (5.2)% % Margin 4.8% 3.3% Q3 Comments Sales impacted by: Higher content fire trucks Higher airport products unit shipments Operating income impacted by: Higher sales volume Backlog up 42% vs. prior year to $761 million 13

14 Appendix: Commercial (Dollars in millions) Third Quarter Net Sales $294.0 $247.3 % Change 18.9% 27.0% Operating Income $22.4 $19.9 % Change 12.9% 98.6% % Margin 7.6% 8.0% Q3 Comments Sales impacted by: Higher RCV unit sales Higher content concrete mixer sales Operating income impacted by: Higher sales volume MOVE investments Backlog up 5.4% vs. prior year to $218 million 14

15 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 OCO Overseas Contingency Operations EMD Engineering & Manufacturing Development OH Overhead EPS Diluted Earnings Per Share OI Operating Income FHTV Family of Heavy Tactical Vehicles OOS Oshkosh Operating System FMS Foreign Military Sales OPEB Other Post-Employment Benefits FMTV Family of Medium Tactical Vehicles PLS Palletized Load System GAAP U.S. Generally Accepted Accounting Principles PUC Pierce Ultimate Configuration HEMTT Heavy Expanded Mobility Tactical Truck R&D Research & Development HET Heavy Equipment Transporter RCV Refuse Collection Vehicle HMMWV High Mobility Multi-Purpose Wheeled Vehicle RFP Request for Proposal IRC Independent Rental Company ROW Rest of World IT Information Technology SMP Standard Military Pattern (Canadian MSVS) JLTV Joint Light Tactical Vehicle TACOM Tank-automotive and Armaments Command JPO Joint Program Office TDP Technical Data Package JROC Joint Requirements Oversight Council TPV Tactical Protector Vehicle JUONS Joint Urgent Operational Needs Statement TWV Tactical Wheeled Vehicle L-ATV Light Combat Tactical All-Terrain Vehicle UCA Undefinitized Contract Action LVSR Logistic Vehicle System Replacement UIK Underbody Improvement Kit (for M-ATV) M-ATV MRAP All-Terrain Vehicle UK ZR United Kingdom Zero Radius OSK Third Quarter 2015 Earnings Call July 30,

16 Appendix: Non-GAAP to GAAP Reconciliation The table below presents a reconciliation of the Company s presented non-gaap measures to the most directly comparable GAAP measures (in millions, except per share amounts): Three Months Ended June 30, Nine Months Ended June 30, Adjusted defense operating income (loss) (non-gaap) $ (7.1) $ 20.1 $ (12.7) $ 83.5 Pension and OPEB curtailment Contract pricing adjustment for OPEB costs - (10.7) - (10.7) Defense operating income (loss) (GAAP) $ (7.1) $ 19.1 $ (9.3) $ 78.4 Adjusted operating income (non-gaap) $ $ $ $ Pension and OPEB curtailment Contract pricing adjustment for OPEB costs - (10.7) - (10.7) Operating income (GAAP) $ $ $ $ Adjusted net income (non-gaap) $ 89.9 $ $ $ Reduction of valuation allowance on net operating loss carryforward Pension and OPEB curtailment, net of tax Contract pricing adjustment for OPEB costs, net of tax - (6.8) - (6.8) Debt extinguishment costs, net of tax - - (9.3) (7.0) Net income (GAAP) $ 89.9 $ $ $ Adjusted earnings per share-diluted (non-gaap) $ 1.13 $ 1.23 $ 2.34 $ 2.66 Reduction of valuation allowance on net operating loss carryforward Pension and OPEB curtailment, net of tax Contract pricing adjustment for OPEB costs, net of tax - (0.08) - (0.08) Debt extinguishment costs, net of tax - - (0.12) (0.08) Earnings per share-diluted (GAAP) $ 1.13 $ 1.22 $ 2.25 $

17 Appendix: Non-GAAP to GAAP Reconciliation The table below presents 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 operating income (non-gaap) $ $ OPEB curtailment gain Operating income (GAAP) $ $ Adjusted earnings per share - diluted (non-gaap) $ 3.00 $ 3.25 OPEB curtailment gain, net of tax Debt extinguishment costs, net of tax (0.12) (0.12) Earnings per share - diluted (GAAP) $ 2.91 $ 3.16 Fiscal 2015 Expectations Net cash flows from operating activities $ 10.0 Additions to property, plant and equipment (150.0) Net additions to equipment held for rental (10.0) Cash usage $ (150.0) 17