2015 asm presentation final
- 1. MOVING THE WORLD AT WORK Oshkosh Corporation (NYSE:OSK) 2015 Annual Shareholders’ Meeting February 3, 2015
- 2. MOVING THE WORLD AT WORK Forward-Looking Statements February 3, 20152015 Annual Shareholders' Meeting 2 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 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 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 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; 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 January 27, 2015. 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.
- 3. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 2015 Annual Shareholders’ Meeting Charlie Szews - Chief Executive Officer February 3, 2015 MOVE: Enjoy the Ride 3
- 4. MOVING THE WORLD AT WORK Outstanding Total Shareholder Returns Compared with “The Outsiders” Source: NYSE March 29,1996 to December 31, 2014 February 3, 20152015 Annual Shareholders' Meeting 4 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Mar-96 Sep-96 Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 TotalReturn(%) OSK S&P 500 BRK.A GD TDY
- 5. MOVING THE WORLD AT WORK Reflections on Fiscal 2014 February 3, 20152015 Annual Shareholders’ Meeting 5
- 6. MOVING THE WORLD AT WORK MOVE Impact Evident in Strong Full Year FY14 Results FY14 adjusted EPS* of $3.62, above high end of Company’s initial estimates Non-Defense markets continued to recover Strong new product launches Advantageous capital allocation – Repurchased 8.3 million shares for $403 million – Raised quarterly dividend in October 2014 Oshkosh Operating System improving customer satisfaction February 3, 20152015 Annual Shareholders' Meeting 6 $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 $10.0 FY14 FY13 Net Sales Adjusted EPS* OSK Full Year Performance NetSales (billions) AdjustedEPS* * Non-GAAP results. See Appendix for reconciliation to GAAP results.
- 7. MOVING THE WORLD AT WORK Non-Defense Segment Sales Growth Consolidated Net Sales ($ billions) Despite challenges from lower defense spending… $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 Net Sales FY12 FY13 FY14 February 3, 20152015 Annual Shareholders' Meeting 7 Non-Defense Segment Sales ($ billions) $0.0 $2.0 $4.0 $6.0 Net Sales FY12 FY13 FY14 …we have grown non-defense sales at a solid pace...
- 8. MOVING THE WORLD AT WORK Non-Defense Operating Income Growth * Non-GAAP results. See Appendix for reconciliation to GAAP results. February 3, 20152015 Annual Shareholders' Meeting 8 Consolidated Adjusted Operating Income* ($ millions) $0 $100 $200 $300 $400 $500 $600 $700 Non-Defense Operating Income* FY12 FY13 FY14 Non-Defense Segment Operating Income* ($ millions) …and grown non-defense operating income even faster $0 $100 $200 $300 $400 $500 $600 $700 Adjusted Operating Income** FY12 FY13 FY14
- 9. MOVING THE WORLD AT WORK Capital Allocation Contributing to TSR (1) Aggressively retiring shares at favorable prices; $605 million allocated to share repurchases in FY13 and FY14 Reinstated dividend with > 1% yield in December 2013; announced 13% increase to dividend in October 2014 (1) Total shareholder return P = Projected February 3, 20152015 Annual Shareholders' Meeting 70 75 80 85 90 95 09/30/12 09/30/13 09/30/14 # Outstanding Shares (Shares in millions) >12% Reduction $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 FY13 FY14 FY15(P) Annualized Dividend Payment 13% Increase 9
- 10. MOVING THE WORLD AT WORK Our Company – Strong Brands, Market Leaders February 3, 20152015 Annual Shareholders’ Meeting 10
- 11. MOVING THE WORLD AT WORK Access Equipment – The Market Leader MOVE delivered in FY14 – Exciting new products – Strong incremental margins – Record revenues, operating income and operating income margin Continued growth expected in FY15 – Moderate growth in North America – Mixed outlook in other regions Recent European economic slowdown muting impact of aged fleets and growing UK market Middle East strong / Latin America softer Pacific Rim expected to grow; slow recovery in Australia February 3, 20152015 Annual Shareholders' Meeting 11
- 12. MOVING THE WORLD AT WORK Defense – Reduced Cost Structure with Upside Opportunities Implemented necessary operations changes to match lower demand Canada MSVS program award decision expected by July 2015 $30 billion JLTV program award decision expected in September 2015 – DoD projects initial 8 year contract over $9 billion Continuing pursuit of sales of thousands of M-ATVs – Middle East and North Africa – Eastern Europe – Reset opportunities in U.S. February 3, 20152015 Annual Shareholders' Meeting 12
- 13. MOVING THE WORLD AT WORK Fire & Emergency – Operational Improvements Leading to Bright Future Stepped back to better execute business improvement roadmap – Expect margins to improve throughout FY15 International progress continues – Manchester, UK ARFF deliveries Strong orders for new Enforcer and Saber chassis North American fire truck demand remains soft – Slow market growth expected in FY15 February 3, 20152015 Annual Shareholders' Meeting 13 Saber Chassis Enforcer Chassis
- 14. MOVING THE WORLD AT WORK Commercial – Progress Continues Solid improvement in FY14 – Strong yr/yr concrete mixer sales – Early stage investments in MOVE initiatives began to impact performance Expect continued market recovery in FY15 – Modest U.S. housing market growth expected to drive mixer market – Slow growth in refuse collection vehicle market Success with split-bin and automated units February 3, 20152015 Annual Shareholders' Meeting 14
- 15. MOVING THE WORLD AT WORK Driving to FY15 MOVE Targets and Beyond February 3, 20152015 Annual Shareholders’ Meeting 15
- 16. MOVING THE WORLD AT WORK FY15 Target FY15 MOVE Scorecard On Track to Achieve FY15 Adjusted EPS Target Range (1) Compared with FY12 expectations as of September 2012 Analyst Day. (2) Net of investment costs and compared with consolidated FY11 operating income margins. Initiative …Bottom Line Results for Shareholders FY15 Estimate February 3, 20152015 Annual Shareholders' Meeting * Non-GAAP results. See Appendix for reconciliation to GAAP results. 16
- 17. MOVING THE WORLD AT WORK What to Expect from Oshkosh in FY15 Deliver MOVE strategy – FY15 adjusted EPS* estimate range of $4.00 - $4.25 – Margin improvement in all non- defense segments – Launch game changing new products – Compete vigorously for business around the world Target defense contract awards Maintain strong customer focus Increase industry leading quality to higher level Drive shareholder value February 3, 20152015 Annual Shareholders' Meeting 17 * Non-GAAP results. See Appendix for reconciliation to GAAP results.
- 18. MOVING THE WORLD AT WORK What to Expect from Oshkosh Beyond FY15? “More of Same” Execute effectively to deliver positive near-term outlook Continue operating income margin expansion – Target 16 – 17% at Access Equipment – Initially target 10% at other segments Prudent capital allocation – Target annual dividend increases – Begin building cash; deploy with crocodile patience Sustain talent and process improvement to outperform with Oshkosh Operating System February 3, 20152015 Annual Shareholders' Meeting 18 7.0% 7.5% ~ 8.0% 10.0%+ 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2013 2014 2015E Target Consolidated Adjusted Operating Income Margin * * Non-GAAP results. See Appendix for reconciliation to GAAP results.
- 19. MOVING THE WORLD AT WORK Our Commitment to Shareholders February 3, 20152015 Annual Shareholders’ Meeting 19
- 20. MOVING THE WORLD AT WORK Sustain momentum and focus on improving – Customer satisfaction – ROIC – Shareholder returns Prudent capital allocation as disciples of “The Outsiders” “Enjoy the Ride” February 3, 20152015 Annual Shareholders' Meeting Our Commitment to Shareholders 20
- 21. MOVING THE WORLD AT WORK For information contact: 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 February 3, 20152015 Annual Shareholders’ Meeting 21
- 22. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 22 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 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
- 23. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 23 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: 2014 2013 Adjusted earnings per share from continuing operations-diluted (non-GAAP) 3.62$ 3.74$ Reduction of valuation allowance on net operating loss carryforward 0.14 - Debt extinguishment costs, net of tax (0.08) - Contract pricing adjustment for OPEB costs, net of tax (0.08) - OPEB curtailment gain, net of tax 0.07 - Pension curtailment and settlement loss, net of tax (0.06) - Tender offer and proxy contest costs, net of tax - (0.12) Intangible asset impairment charge, net of tax - (0.06) Union contract ratification costs, net of tax - (0.03) Earnings per share from continuing operations-diluted (GAAP) 3.61$ 3.53$ Low High Adjusted earnings per share from continuing operations-diluted (non-GAAP) 4.00$ 4.25$ Debt extinguishment costs, net of tax (0.11) (0.11) OPEB curtailment gain, net of tax 0.02 0.02 Earnings per share from continuing operations-diluted (GAAP) 3.91$ 4.16$ Fiscal 2015 Expectations Fiscal Year Ended September 30,
- 24. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 24 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, 2012 2013 2014 2015E Adjusted operating income (non-GAAP) $ 404.7 $ 534.8 $ 512.2 $ 525.0 Union contract ratification costs - (3.8) - - Performance share valuation adjustment (7.0) - - - Pension curtailment and settlement loss (3.4) - (8.2) - OPEB curtailment gain - - 10.0 3.4 Tender offer and proxy contest costs (6.6) (16.3) - - Intangible asset impairment charge - (9.0) - - Contract pricing adjustment for OPEB costs - - (10.7) - Operating income (GAAP) $ 387.7 $ 505.7 $ 503.3 $ 528.4
- 25. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 25 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: 2013 2014 2015E Consolidated operating income margins (non-GAAP) 7.0% 7.5% 8.0% Union contract ratification costs -0.1% - - Pension curtailment and settlement loss - -0.1% - OPEB curtailment gain - 0.2% - Tender offer and proxy contest costs -0.2% - - Intangible asset impairment charge -0.1% - - Contract pricing adjustment for OPEB costs - -0.2% - Consolidated operating income margins (GAAP) 6.6% 7.4% 8.0% Fiscal Year Ended September 30,
- 26. MOVING THE WORLD AT WORK February 3, 20152015 Annual Shareholders' Meeting 26 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): 2012 2013 2014 Non-Defense Segment Sales 4,385.1$ 4,680.1$ 5,128.9$ Defense Segment Sales 3,950.5 3,049.7 1,724.5 Intersegment eliminations (194.5) (64.7) (45.2) Consolidated Net Sales 8,141.1$ 7,665.1$ 6,808.2$ 2012 2013 2014 Non-Defense Segment Operating Income 270.1$ 444.7$ 581.6$ Defense Segment Operating Income 236.5 224.9 76.4 Corporate (119.1) (163.9) (154.7) Intersegment eliminations 0.2 - - Consolidated Operating Income 387.7$ 505.7$ 503.3$ Fiscal Year Ended September 30, Fiscal Year Ended September 30,