MOVING THE WORLD AT WORK Charles L. Szews Oshkosh Corporation - - PowerPoint PPT Presentation
MOVING THE WORLD AT WORK Charles L. Szews Oshkosh Corporation Chief Executive Officer Fourth Quarter Fiscal 2014 Wilson R. Jones President and Chief Operating Officer October 31, 2014 David M. Sagehorn Executive Vice President and Chief
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
MOVING THE WORLD AT WORK
This 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
“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.
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 2
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October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 3
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY12* FY13* FY14 FY15F Adjusted EPS**
* Continuing operations only. ** Non-GAAP results. See Appendix for reconciliation to GAAP results.
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Net Sales
(billions)
Adjusted EPS**
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 4
$1.7 $1.7 $0.96 $0.49 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0 FY14 FY13*
Net Sales Adjusted EPS**
* Continuing operations only ** Non-GAAP results. See Appendix for reconciliation to GAAP results.
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– Led by access equipment segment
– Repurchased 8.3 million shares for $403 million – Reinstated quarterly dividend
Net Sales
(billions)
Adjusted EPS**
* Continuing operations only ** Non-GAAP results. See Appendix for reconciliation to GAAP results. $6.8 $7.7 $3.62 $3.74 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 FY14 FY13*
Net Sales Adjusted EPS** 5 October 31, 2014 OSK Fourth Quarter 2014 Earnings Call
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(1) Compared with FY12 expectations as of September 2012 Analyst Day. (2) Net of investment costs and compared with consolidated FY11 operating income margins.
6
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call
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– Expect formal Production RFP to be released in November
– Additional M-ATV sales and Canadian MSVS
– Announced additional workforce reductions
– FHTV production break while new contract is finalized – Investing in pursuit of JLTV and international contract awards
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 7
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impact of aged fleets and growing UK market
in Australia
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 8
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October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 9
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October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 10
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‒ Lower defense segment sales + Higher access equipment and commercial segment sales
+ 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
(Dollars in millions, except per share amounts)
* Continuing operations only. ** Non-GAAP results. See Appendix for reconciliation to GAAP results.
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 11
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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%
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 12
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
seasonal factors
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October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 13
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
Patrick N. Davidson Vice President, Investor Relations (920) 966-5939 pdavidson@oshkoshcorp.com Jeffrey D. Watt Director, Investor Relations (920) 233-9406 jwatt@oshkoshcorp.com
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 14
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(Dollars in millions)
Continued recovery of global market Prior year sales of U.S. military telehandlers
Higher sales volume Product and process cost reductions Higher NPD and operating costs
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 15
* Growth of 22.4% excluding military telehandlers. ** Non-GAAP results. See Appendix for reconciliation to GAAP results.
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Lower sales to U.S. DoD Prior year international M-ATV sales Prior year JLTV test unit sales
Lower sales volume Favorable warranty experience Lower engineering and operating costs
(Dollars in millions)
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 16
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
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(Dollars in millions)
Production delays Prior year large international deliveries
Favorable product mix Lower operating expenses Lower sales volume
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 17
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Higher concrete mixer volume
Higher sales volume
(Dollars in millions)
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 18
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19 October 31, 2014 OSK Fourth Quarter 2014 Earnings Call
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
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comparable GAAP measures (in millions):
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 20
2014 2013 Access equipment segment sales excluding military (non-GAAP) 932.7 $ 761.9 $ Military telehandler sales
Access equipment segment sales (GAAP) 932.7 $ 780.6 $ Adjusted access equipment segment operating income (non-GAAP) 127.4 $ 90.2 $ Intangible asset impairment charge
Access equipment segment operating income (GAAP) 127.4 $ 81.2 $ Adjusted defense segment operating income (non-GAAP) 1.8 $ 15.0 $ Pension curtailment and settlement loss (3.8)
Defense segment operating income (loss) (GAAP) (2.0) $ 11.2 $ Adjusted operating income (non-GAAP) 116.9 $ 78.0 $ Pension curtailment and settlement loss (3.8)
Union contract ratification costs
Operating income (GAAP) 113.1 $ 65.2 $ Three Months Ended September 30,
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comparable GAAP measures:
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 21 2014 2013 2014 2013 2012 Adjusted earnings per share from continuing
0.96 $ 0.49 $ 3.62 $ 3.74 $ 2.30 $ Reduction of valuation allowance on net
(0.03)
Tender offer and proxy contest costs, net of tax
(0.05) Intangible asset impairment charge, net of tax
Discrete tax benefits
Earnings per share from continuing
0.93 $ 0.40 $ 3.61 $ 3.53 $ 2.67 $ Fiscal Year Ended September 30, Three Months Ended September 30,
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comparable GAAP measures (in millions, except per share amounts):
October 31, 2014 OSK Fourth Quarter 2014 Earnings Call 22
Low High Adjusted earnings per share from continuing
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 Fiscal 2015 Expectations Net cash flows provided by operating activities 368.0 $ Additions to property, plant and equipment (150.0) Net additions to equipment held for rental (18.0) Free cash flow 200.0 $