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 Third Quarter Fiscal 2014 Wilson R. Jones President and Chief Operating Officer July 29, 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 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 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; 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 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; 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
information until the Company’s next quarterly earnings conference call, if at all.
July 29, 2014 OSK Third Quarter 2014 Earnings Call 2
MOVING THE WORLD AT WORK
Net Sales
(billions)
Adjusted EPS*
* Non-GAAP results. See Appendix for reconciliation to GAAP results. July 29, 2014 OSK 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 FY13
Net Sales Adjusted EPS*
MOVING THE WORLD AT WORK
July 29, 2014 OSK Third Quarter 2014 Earnings Call 4
MOVING THE WORLD AT WORK
July 29, 2014 OSK Third Quarter 2014 Earnings Call 5
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July 29, 2014 OSK Third Quarter 2014 Earnings Call 6
1850AJ at work
MOVING THE WORLD AT WORK
July 29, 2014 OSK Third Quarter 2014 Earnings Call 7
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July 29, 2014 OSK Third Quarter 2014 Earnings Call 8
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‒ Significantly lower defense volume + Access equipment and concrete mixer demand
Lower defense sales Prior year discrete tax benefits + Improved access equipment and commercial results
(Dollars in millions, except per share amounts)
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
July 29, 2014 OSK Third Quarter 2014 Earnings Call 9
MOVING THE WORLD AT WORK
adjusted FY13*
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%
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
July 29, 2014 OSK Third Quarter 2014 Earnings Call 10
Patrick N. Davidson Vice President, Investor Relations (920) 966-5939 pdavidson@oshkoshcorp.com Jeff Watt Director, Investor Relations (920) 233-9406 jwatt@oshkoshcorp.com
MOVING THE WORLD AT WORK
(Dollars in millions)
Higher volumes, particularly EAME and North America Higher pricing Lower U.S. military telehandler sales
Higher sales volume Cost reduction initiatives NPD spending Higher operating costs
July 29, 2014 OSK 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
Significantly lower volume due to reduced U.S. defense spending Lower international M-ATV sales
Lower sales volume Prior year contract adjustments
(Dollars in millions)
July 29, 2014 OSK Third Quarter 2014 Earnings Call 13
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
MOVING THE WORLD AT WORK
(Dollars in millions)
Lower deliveries, mostly international
Lower sales volume Lower operating expenses
July 29, 2014 OSK Third Quarter 2014 Earnings Call 14
MOVING THE WORLD AT WORK
Concrete mixer and RCV volumes, supported in part by weather delayed shipments from Q2
Higher sales volume Improved production efficiencies Prior year restructuring-related costs
(Dollars in millions)
July 29, 2014 OSK Third Quarter 2014 Earnings Call 15
MOVING THE WORLD AT WORK
ARFF 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, 2014 OSK Third Quarter 2014 Earnings Call 16
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comparable GAAP measures (in millions):
July 29, 2014 OSK Third Quarter 2014 Earnings Call 17 2014 2013 Access equipment segment sales excluding military (non-GAAP) 1,039.2 $ 917.8 $ Military telehandler sales
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)
470.7 $ 879.6 $ Adjusted defense segment operating income (non-GAAP) 20.1 $ 85.8 $ Contract pricing adjustment for OPEB costs (10.7)
9.7
19.1 $ 85.8 $ Adjusted net sales (non-GAAP) 1,943.1 $ 2,204.4 $ Contract pricing adjustment for OPEB costs (10.7)
1,932.4 $ 2,204.4 $ Adjusted operating income (non-GAAP) 175.3 $ 225.6 $ Contract pricing adjustment for OPEB costs (10.7)
9.7
174.3 $ 225.6 $ Three Months Ended June 30,
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comparable GAAP measures (in millions, except per share amounts):
July 29, 2014 OSK Third Quarter 2014 Earnings Call 18
2014 2013 Adjusted earnings per share from continuing
1.23 $ 1.67 $ Contract pricing adjustment for OPEB costs, net of tax (0.08)
0.07
1.22 $ 1.67 $ Three Months Ended June 30,
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comparable GAAP measures (in millions, except per share amounts):
July 29, 2014 OSK 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
3.40 $ 3.55 $ Reduction of valuation allowance on net operating loss carryforward 0.14 0.14 Contract pricing adjustment for OPEB costs, net of tax (0.08) (0.08) OPEB curtailment gain, net of tax 0.07 0.07 Pension 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 Ended September 30, 2013 Fiscal 2014 Expectations
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comparable GAAP measures (in millions):
July 29, 2014 OSK Third Quarter 2014 Earnings Call 20
Fiscal 2014 Expectations 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
(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%