MOVING THE WORLD AT WORK. Oshkosh Corporation (NYSE:OSK) Credit Suisse Industrials Conference December 1, 2015

Transcription

1 Oshkosh Corporation (NYSE:OSK) Credit Suisse Industrials Conference December 1, 2015

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 U.S. Department of Defense ( 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; risks related to the Company s future defense segment sales as a result of the outcome of a competitor s protest of the JLTV production contract award to the Company; the Company s ability to finalize an international contract for more than 1,000 M-ATVs, with the majority of the units sold 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. 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. Credit Suisse Industrials Conference December 1,

3 Oshkosh Corporation Access Equipment Defense Fire & Emergency Commercial Leading provider of specialty vehicles Moving the World at Work Nearly 100 years in business; incorporated in 1917 Serial innovator of game changing new products Market Capitalization (1) : $3.2 billion FY15 Revenue: $6.1 billion Focused on delivering value to customers and shareholders (1) As of November 27, 2015 Credit Suisse Industrials Conference December 1,

4 Oshkosh Corporation Profile - FY15 Revenue by Segment 56% Revenue by Geography 79% 15% 7% 16% 13% 9% 5% Access Equipment Defense Fire & Emergency Commercial United States Other NA EAME Rest of World Continuing to evolve to a more global industrial Defense growing faster than other segments 4

5 MOVE Strategy Driving Performance Focuses on drivers that create highest shareholder value Supports higher margin targets across nondefense businesses over the cycle Credit Suisse Industrials Conference In FY16 and Beyond December 1,

6 Positive Near-Term Outlook Despite Some Short-Term Challenges Defense segment Pursuing significant international growth opportunities for FY16 & FY17 Re-started FHTV production Aftermarket opportunities growing Won U.S. DoD JLTV contract Raises Oshkosh profile with DoD Provides strong Defense business base beginning in FY18 Access Equipment segment Softer Q1/Q2 demand Actively managing costs and inventory levels Strong underlying drivers Fire & Emergency and Commercial segments Higher market shares Higher margin initiatives Higher backlog at Y/E FY15 Credit Suisse Industrials Conference December 1,

7 Oshkosh L-ATV is JLTV Anything Else is Something Less Named winner of intensive competition on August 25, 2015 Program requirements of ~55,000 vehicles over 20+ years Oshkosh contract valued at $6.7B for ~17,000 vehicles over 8 years Full rate production begins in 3+ years Highly protected, extreme mobility, affordable Oshkosh viewed in new light by DoD Significant international interest Confident to retain contract following protest 7

8 Capital Allocation Contributing to TSR (1) Disciples of The Outsiders # Outstanding Shares Annualized Dividend Payment 95 $ ~21% Reduction $0.80 $0.70 $0.60 $0.50 ~27% Increase 80 $0.40 $ $0.20 $ /30/12 09/30/13 09/30/14 09/30/15 $0.00 FY13 FY14 FY15 FY16E Aggressively retiring shares at favorable prices; $805 million allocated to share repurchases in FY13 - FY15 Reinstated dividend in December 2013; increased twice in two years (1.65% yield (2) ) (1) Total shareholder return (2) As of October 30, 2015 E = Estimated 8

9 What to Expect from Oshkosh? Defense driving growth Strong demand for international M-ATVs JLTV award is historic; expect contract award to Oshkosh to be affirmed Attacking costs in Access Equipment segment; expect strong 2H FY16 MOVE strategy evolves Margin improvement Launch game-changing new products Compete vigorously for business around the world Continued growth in Fire & Emergency and Commercial segments results Credit Suisse Industrials Conference December 1,

10 For information contact: Patrick N. Davidson Vice President, Investor Relations (920) Jeffrey D. Watt Director, Investor Relations (920) Credit Suisse Industrials Conference December 1,

11 Appendix: Consolidated Results (Dollars in millions, except per share amounts) Fiscal Year Net Sales $6,098.1 $6,808.2 % Change (10.4)% (11.2)% Adjusted Operating Income** $398.1 $512.2 % Change (22.3)% (4.2)% % Margin 6.5% 7.5% Adjusted EPS** $3.02 $3.62 % Change (16.6)% (3.2)% Comments Sales impacted by: Lower Defense and Access Equipment segment sales Unfavorable foreign currency Higher Fire & Emergency and Commercial segment sales EPS impacted by: Lower Access Equipment and Defense segment results Higher tax rate Higher Fire & Emergency and Commercial segment results Lower Corporate expenses Lower share count ** Non-GAAP results. See Appendix for reconciliation to GAAP results. 11

12 Appendix: Access Equipment (Dollars in millions) Fiscal Year Net Sales $3,400.6 $3,506.5 % Change (3.0)% 12.4% Adjusted Operating Income* $409.5 $501.1 % Change (18.3)% 28.9% % Margin 12.0% 14.3% Comments Sales impacted by: Unfavorable foreign currency Lower North America demand Higher European demand Operating income impacted by: Unfavorable product mix Unfavorable production variances Lower incentive compensation expense Backlog down 45% vs. prior year to $210 million * Non-GAAP results. See Appendix for reconciliation to GAAP results. 12

13 Appendix: Defense (Dollars in millions) Fiscal Year Net Sales $939.8 $1,724.5 % Change (45.5)% (43.5)% Adjusted Operating Income* $5.8 $85.3 % Change (93.1)% (62.7)% % Margin 0.6% 4.9% Comments Sales impacted by: Lower FHTV and FMTV sales M-ATV reset volume International M-ATV sales Operating income impacted by: Lower sales volume Lower SG&A Backlog up 81% vs. prior year to $1.4 billion, including $0.1 billion related to JLTV contract award * Non-GAAP results. See Appendix for reconciliation to GAAP results. 13

14 Appendix: Fire & Emergency (Dollars in millions) Fiscal Year Net Sales $815.1 $756.5 % Change 7.8% (4.5)% Operating Income $43.8 $26.6 % Change 64.5% 11.7% % Margin 5.4% 3.5% Comments Sales impacted by: Higher fire apparatus volume Operating income impacted by: Higher sales volume Higher pricing Favorable absorption Backlog up 39% vs. prior year to $790.7 million 14

15 Appendix: Commercial (Dollars in millions) Fiscal Year Net Sales $978.0 $865.9 % Change 12.9% 12.9% Operating Income $64.5 $53.9 % Change 19.7% 30.5% % Margin 6.6% 6.2% Comments Sales impacted by: Higher RCV volume Lower concrete mixer volume Operating income impacted by: Higher sales volume Stronger mix of RCV sales MOVE investments Backlog up 20.7% vs. prior year to $193 million 15

16 Appendix: Expectations for FY16 Revenues of ~ $6.2 - $6.5 billion Operating income of $400 million to $440 million EPS of $3.00 to $3.40 Segment information Measure Access Equipment Defense Fire & Emergency Commercial Sales (billions) Operating Income Margin $2.9 to $3.05 ~ $1.55 ~ $0.9 ~ $1.0 ~ 10.5% ~ 8.75% ~ 6.0% ~ 7.0% Additional expectations Corporate expenses of $145 - $150 million Tax rate of ~ 34% CapEx of ~ $100 million Free Cash Flow* ~ $350 million Assumes share count of ~ 75 million Quarterly commentary Earnings weighted to second half Increased international M-ATV sales Seasonality Cautious construction equipment customers First quarter slightly profitable Credit Suisse Industrials Conference * Non-GAAP results. See Appendix for reconciliation to GAAP results. December 1,

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 Year Ended, September 30, Adjusted earnings per share - diluted (non-gaap) $ 3.02 $ 3.62 Reduction of valuation allowance on net operating loss carryforward Debt extinguishment costs, net of tax (0.12) (0.08) Pension and OPEB curtailment/settlement, net of tax Contract pricing adjustment for OPEB costs, net of tax - (0.08) Workforce reduction charges, net of tax (0.03) - Earnings per share - diluted (GAAP) $ 2.90 $ 3.61 Fiscal 2016 Expectations Net cash flows provided by operating activities $ Additions to property, plant and equipment (100.0) Net additions to equipment held for rental (25.0) Free cash flow $

18 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): Fiscal Year Ended September 30, Adjusted consolidated operating income (non-gaap) $ $ Pension and OPEB curtailment/settlement Contract pricing adjustment for OPEB costs - (10.7) Workforce reduction charges (2.9) - Consolidated operating income (GAAP) $ $ Adjusted access equipment segment operating income (non-gaap) $ $ Workforce reduction charges (2.5) - Access equipment segment operating income (GAAP) $ $ Adjusted defense operating income (non-gaap) $ 5.8 $ 85.3 Pension and OPEB curtailment/settlement Contract pricing adjustment for OPEB costs - (10.7) Defense segment operating income (GAAP) $ 9.2 $