View
15
Download
0
Category
Preview:
Citation preview
MOVING THE WORLD AT WORK
Oshkosh CorporationThird Quarter Fiscal 2014
July 29, 2014
Charles L. SzewsChief Executive Officer
Wilson R. JonesPresident and Chief Operating Officer
David M. SagehornExecutive Vice President and Chief Financial Officer
Patrick N. DavidsonVice President, Investor Relations
MOVING THE WORLD AT WORK
Forward-Looking StatementsThis 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 pace of U.S. and European economic recoveries; the strength of emerging market growth and projected adoption rate 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 uncertainDoD 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; 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; the duration of the ongoing global economic uncertainty, which could lead to additional impairment charges related to many of the Company’s intangible assets and/or a slower recovery inthe 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; the impact of cyber security risk 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 suchinformation until the Company’s next quarterly earnings conference call, if at all.
July 29, 2014OSK Third Quarter 2014 Earnings Call 2
MOVING THE WORLD AT WORK
Q3 Performance Highlights
Adjusted EPS* of $1.23
Improved access equipment and commercial performance offset by expected lower defense results
Narrowing FY14 adjusted EPS* range to $3.40 to $3.55
Announced quarterly dividend of $0.15 per share
Net
Sal
es(b
illio
ns)
Adjusted EPS*
OSK Fiscal Q3 Performance
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
July 29, 2014OSK Third Quarter 2014 Earnings Call 3
$1.9
$2.2
$1.23
$1.67
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
FY14 FY13Net Sales Adjusted EPS*
MOVING THE WORLD AT WORK
Positive Outlook
Non-defense markets improving, although not all at pace expected at 2012 Analyst Day Importantly, North American markets are strong
MOVE strategy, powered by the Oshkosh Operating System, is delivering Expected to continue contributing to margin expansion in
non-defense segments in 2015 and beyond
Continuing to pursue international defense opportunities
July 29, 2014OSK Third Quarter 2014 Earnings Call 4
MOVING THE WORLD AT WORK
Defense
Completed workforce reduction to match lower production volume Scalable capacity to ramp-up for
potential new vehicle programs
JLTV activities Completed 200,000 RAM miles to
support EMD testing Participated in DoD’s production
draft RFP industry session
Work continues on multiple international opportunities
July 29, 2014OSK Third Quarter 2014 Earnings Call 5
MOVING THE WORLD AT WORK
Access Equipment
Record quarterly sales and operating income In spite of EAME market at ~50%
of prior peak
Highest Q3 sales growth rates in EAME and Asia Solid demand continues in North
America Strong fleet metrics
Slowdown in Latin America Positive customer response to
recent new product launches
July 29, 2014OSK Third Quarter 2014 Earnings Call 6
1850AJ at work
MOVING THE WORLD AT WORK
Fire & Emergency
Positive operational trends evidenced later in quarter Reflects MOVE benefits Expect continued improvement in
Q4 and into 2015
Multi-unit international deliveries expected in Q4 Slight pause in U.S. market
recovery Not expected to be a trend
July 29, 2014OSK Third Quarter 2014 Earnings Call 7
MOVING THE WORLD AT WORK
Commercial Highest quarterly operating
income margin since 2007 North America concrete mixer
market still ~40% below normal
Expect slightly higher U.S. RCV sales in 2014 Remain focused on driving
improved segment results Expect greater benefits in
2015
July 29, 2014OSK Third Quarter 2014 Earnings Call 8
MOVING THE WORLD AT WORK
Consolidated Results
Sales impacted by:
‒ Significantly lower defense volume
+ Access equipment and concrete mixer demand
EPS impacted by:
Lower defense sales
Prior year discrete tax benefits
+ Improved access equipment and commercial results
Comments
(Dollars in millions, except per share amounts)
Third Quarter
Net Sales $1,932.4 $2,204.4 % Change (12.3)% 2.1%
Adjusted Operating Income* $175.3 $225.6
% Change (22.3)% 78.8%% Margin 9.0% 10.2%
Adjusted EPS* $1.23 $1.67% Change (26.3)% 116.9%
2014 2013
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
July 29, 2014OSK Third Quarter 2014 Earnings Call 9
MOVING THE WORLD AT WORK
Updated Expectations for FY14
Additional expectations Corporate expenses ~$10 million higher than
adjusted FY13* Tax rate* of ~32.0% CapEx of ~$100 million Free cash flow* ~$100 million Assumes share count of ~86.0 million
Segment information
Measure Access Equipment Defense Fire &
Emergency Commercial
Sales(billions) $3.40 - $3.425 $1.725 - $1.75 ~$0.775 ~$0.85
Operating Income Margin ~14.6% ~4.75%* ~3.5% ~6.0%
• Revenues of $6.7 billion to $6.75 billion• Adjusted operating income* of $490 million to $505 million• Adjusted EPS* of $3.40 to $3.55
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
July 29, 2014OSK Third Quarter 2014 Earnings Call 10
MOVING THE WORLD AT WORK
For informationcontact:
Patrick N. DavidsonVice President, Investor Relations(920) 966-5939pdavidson@oshkoshcorp.com
Jeff WattDirector, Investor Relations(920) 233-9406jwatt@oshkoshcorp.com
MOVING THE WORLD AT WORK
Net Sales $1,039.2 $941.5% Change 10.4%* 15.6%
Operating Income $166.8 $154.5% Change 8.0% 75.1%% Margin 16.0% 16.4%
Third Quarter
(Dollars in millions)
2014 2013
Appendix: Access Equipment
Sales impacted by: Higher volumes, particularly
EAME and North America Higher pricing Lower U.S. military telehandler
sales Operating Income impacted by:
Higher sales volume Cost reduction initiatives NPD spending Higher operating costs
Backlog down 21.6% vs. prior year to $487 million (down 19.3% excluding military telehandlers)
Comments
July 29, 2014OSK Third Quarter 2014 Earnings Call 12
* 13.2% excluding military telehandlers. Non-GAAP results. See Appendix for reconciliation to GAAP results.
MOVING THE WORLD AT WORK
Appendix: Defense
Sales impacted by: Significantly lower volume due to
reduced U.S. defense spending Lower international M-ATV sales
Operating Income impacted by: Lower sales volume Prior year contract adjustments
Backlog down 53.4%vs. prior year to $880 million
Comments
Net Sales $470.7 $879.6% Change (46.5)% (8.2)%
Adjusted Operating Income* $20.1 $85.8
% Change (76.6)% 113.8%% Margin 4.2% 9.8%
Third Quarter
(Dollars in millions)
2014 2013
July 29, 2014OSK Third Quarter 2014 Earnings Call 13
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
MOVING THE WORLD AT WORK
Net Sales $187.5 $204.3% Change (8.3)% (11.0)%
Operating Income $6.2 $6.5% Change (5.2)% (18.8)%% Margin 3.3% 3.2%
Third Quarter
(Dollars in millions)
2014 2013
Appendix: Fire & Emergency
Sales impacted by: Lower deliveries, mostly
international
Operating Income impacted by: Lower sales volume Lower operating expenses
Backlog up 6.9% vs. prior year to $538 million
Comments
July 29, 2014OSK Third Quarter 2014 Earnings Call 14
MOVING THE WORLD AT WORK
Appendix: Commercial
Sales impacted by: Concrete mixer and RCV
volumes, supported in partby weather delayed shipments from Q2
Operating Income impacted by: Higher sales volume Improved production efficiencies Prior year restructuring-related
costs
Backlog up 23.6% vs. prior year to $207 million
Comments
Net Sales $247.3 $194.7% Change 27.0% 10.5%
Operating Income $19.9 $10.0% Change 98.6% (17.8)%% Margin 8.0% 5.1%
Third Quarter
(Dollars in millions)
2014 2013
July 29, 2014OSK Third Quarter 2014 Earnings Call 15
MOVING THE WORLD AT WORK
Appendix: Commonly Used AcronymsARFF Aircraft Rescue and Firefighting MRAP Mine Resistant Ambush Protected
AWP Aerial Work Platform MSVS Medium Support Vehicle System (Canada)
CNG Compressed Natural Gas MTT Medium Tactical Truck
DoD Department of Defense NPD New Product Development
EAME Europe, Africa & Middle East OCO Overseas Contingency Operations
EMD Engineering & Manufacturing Development OI Operating Income
EPS Diluted Earnings Per Share OOS Oshkosh Operating System
FHTV Family of Heavy Tactical Vehicles PLS Palletized Load System
FMS Foreign Military Sales PUC Pierce Ultimate Configuration
FMTV Family of Medium Tactical Vehicles RAM Reliability, Availability & Maintainability
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
JLTV Joint Light Tactical Vehicle SMP Standard Military Pattern (Canadian MSVS)
JPO Joint Program Office TACOM Tank-automotive and Armaments Command
JROC Joint Requirements Oversight Council TDP Technical Data Package
JUONS Joint Urgent Operational Needs Statement TFFT Tactical Fire Fighting Truck
L-ATV Light Combat Tactical All-Terrain Vehicle TPV Tactical Protector Vehicle
LVSR Logistic Vehicle System Replacement TWV Tactical Wheeled Vehicle
M-ATV MRAP All-Terrain Vehicle UCA Undefinitized Contract Action
MECV Modernized Expanded Capability Vehicle UIK Underbody Improvement Kit (for M-ATV)
July 29, 2014OSK Third Quarter 2014 Earnings Call 16
MOVING THE WORLD AT WORK
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):
July 29, 2014OSK Third Quarter 2014 Earnings Call 17
2014 2013
Access equipment segment sales excluding military (non-GAAP) 1,039.2$ 917.8$ Military telehandler sales - 23.7 Access equipment segment sales (GAAP) 1,039.2$ 941.5$
Adjusted defense segment sales (non-GAAP) 481.4$ 879.6$ Contract pricing adjustment for OPEB costs (10.7) - Defense segment sales (GAAP) 470.7$ 879.6$
Adjusted defense segment operating income (non-GAAP) 20.1$ 85.8$ Contract pricing adjustment for OPEB costs (10.7) - OPEB curtailment gain 9.7 - Defense segment operating income (GAAP) 19.1$ 85.8$
Adjusted net sales (non-GAAP) 1,943.1$ 2,204.4$ Contract pricing adjustment for OPEB costs (10.7) - Net sales (GAAP) 1,932.4$ 2,204.4$
Adjusted operating income (non-GAAP) 175.3$ 225.6$ Contract pricing adjustment for OPEB costs (10.7) - OPEB curtailment gain 9.7 - Operating income (GAAP) 174.3$ 225.6$
Three Months EndedJune 30,
MOVING THE WORLD AT WORK
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):
July 29, 2014OSK Third Quarter 2014 Earnings Call 18
2014 2013
Adjusted earnings per share from continuing operations-diluted (non-GAAP) 1.23$ 1.67$ Contract pricing adjustment for OPEB costs, net of tax (0.08) - OPEB curtailment gain, net of tax 0.07 - Earnings per share from continuing operations-diluted (non-GAAP) 1.22$ 1.67$
Three Months EndedJune 30,
MOVING THE WORLD AT WORK
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):
July 29, 2014OSK Third Quarter 2014 Earnings Call 19
Low High
Adjusted operating income (non-GAAP) 490.0$ 505.0$ Contract pricing adjustment for OPEB costs (10.7) (10.7) OPEB curtailment gain 9.7 9.7 Pension curtailment loss (4.1) (4.1) Operating income (GAAP) 484.9$ 499.9$
Adjusted earnings per share from continuing operations-diluted (non-GAAP) 3.40$ 3.55$ Reduction of valuation allowance on net operating loss carryforward 0.14 0.14Contract pricing adjustment for OPEB costs, net of tax (0.08) (0.08)OPEB curtailment gain, net of tax 0.07 0.07Pension curtailment loss, net of tax (0.03) (0.03)Debt extinguishment costs, net of tax (0.08) (0.08)Earnings per share from continuing operations-diluted (GAAP) 3.42$ 3.57$
Adjusted operating expenses-Corporate (non-GAAP) (147.6)$ Tender offer and proxy contest costs (16.3) Operating expenses-Corporate (GAAP) (163.9)$
Fiscal Year EndedSeptember 30, 2013
Fiscal 2014 Expectations
MOVING THE WORLD AT WORK
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):
July 29, 2014OSK Third Quarter 2014 Earnings Call 20
Fiscal 2014Expectations
Net cash flows provided by operating activities 213.0$ Additions to property, plant and equipment (100.0) Additions to equipment held for rental (19.0) Proceeds from sale of equipment held for rental 6.0 Free cash flow 100.0$
Effective tax rate (non-GAAP) 32.0%Reduction of valuation allowance on net operating loss carryforward (3.0)%Effective tax rate (GAAP) 29.0%
Defense adjusted operating income margin (non-GAAP) 4.75%Contract pricing adjustment for OPEB costs (0.62)%OPEB curtailment gain 0.56%Pension curtailment loss (0.24)%Defense operating income margin (GAAP) 4.45%
Recommended