Q1 2015 earnings slides final
- 1. MOVING THE WORLD AT WORK Oshkosh Corporation First Quarter Fiscal 2015 January 27, 2015 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
- 2. MOVING THE WORLD AT WORK 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 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 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. January 27, 2015OSK First Quarter 2015 Earnings Call 2
- 3. MOVING THE WORLD AT WORK Solid Start to FY15 Adjusted EPS* of $0.41 Solid execution and timing of MOVE related spend drove higher than expected results Strong orders and backlogs for all non-defense segments Repurchased 1.9 million shares for $88.1 million Maintaining FY15 adjusted EPS* estimate range of $4.00 to $4.25 despite negative FX impact expected in Q2-Q4 NetSales (billions) AdjustedEPS* OSK Fiscal Q1 Performance January 27, 2015OSK First Quarter 2015 Earnings Call 3 $1.4 $1.5 $0.41 $0.63 $0.00 $0.25 $0.50 $0.75 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 FY15 FY14 Net Sales Adjusted EPS* * Non-GAAP results. See Appendix for reconciliation to GAAP results.
- 4. MOVING THE WORLD AT WORK Defense Remain focused on efficient, operational execution Driving toward mid February JLTV production proposal submission date − Expect decision on winning bidder late Summer 2015 Continue pursuit of meaningful international opportunities – M-ATVs – Canadian MSVS Program FY15 DoD budget finalized in December − Positive funding results for OSK programs Incremental OCO opportunities January 27, 2015OSK First Quarter 2015 Earnings Call 4
- 5. MOVING THE WORLD AT WORK Access Equipment Solid start to FY15 − Higher mix of telehandlers due to Tier 4 engine emissions standards changes Strong orders and backlog evidence continued market strength Broad end market demand expected to support FY15 outlook – Customer sentiment in North America remains positive Strong construction activity, despite energy sector concerns – Outlook remains mixed in other regions Building on FY14 MOVE success January 27, 2015OSK First Quarter 2015 Earnings Call 5
- 6. MOVING THE WORLD AT WORK Fire & Emergency Continued to execute operational efficiency roadmap − Q1 results better than expected New Enforcer and Saber chassis driving customer demand Stable North American fire truck market – Modest market growth expected in FY15 Additional international success − ARFF orders in Asia, Australia and Latin America January 27, 2015OSK First Quarter 2015 Earnings Call 6
- 7. MOVING THE WORLD AT WORK Commercial Strong North American concrete mixer market recovery over last several years − Driven by slowly improving housing market RCV market picked up after a down 2013 Split-bin and automated RCV models generating incremental demand MOVE investments continue January 27, 2015OSK First Quarter 2015 Earnings Call 7
- 8. MOVING THE WORLD AT WORK Consolidated Results Sales impacted by: ‒ Lower defense segment sales ‒ Planned fire truck production rate decrease Higher access equipment and commercial segment sales EPS impacted by: ‒ Lower defense segment operating income ‒ Heavier mix of telehandlers in access equipment segment ‒ MOVE investments Comments (Dollars in millions, except per share amounts) First Quarter Net Sales $1,353.3 $1,530.2 % Change (11.6)% (12.6)% Adjusted Operating Income* $62.3 $96.5 % Change (35.5)% (0.1)% % Margin 4.6% 6.3% Adjusted EPS* $0.41 $0.63 % Change (34.9)% 1.6% 2015 2014 * Non-GAAP results. See Appendix for reconciliation to GAAP results. January 27, 2015OSK First Quarter 2015 Earnings Call 8
- 9. MOVING THE WORLD AT WORK Updated Expectations for FY15 Additional expectations Corporate expenses of $140 - $145 million Refinancing of 8.5% Sr. Notes Tax rate of ~31% CapEx of ~$150 million Free cash flow* ~$200 million Assumes share count of ~80 million Segment information Measure Access Equipment Defense Fire & Emergency Commercial 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% Revenues of $6.5 billion to $6.6 billion Adjusted operating income* of $510 million to $540 million Adjusted EPS* of $4.00 to $4.25 * Non-GAAP results. See Appendix for reconciliation to GAAP results. January 27, 2015OSK First Quarter 2015 Earnings Call 9 Q2 Commentary Expect adjusted EPS in range of Q2 FY14 adjusted EPS* Continued higher telehandler sales mix due to Tier 4 FHTV break in production until contract extension is finalized
- 10. 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 January 27, 2015OSK First Quarter 2015 Earnings Call 10
- 11. MOVING THE WORLD AT WORK Net Sales $716.7 $668.6 % Change 7.2% 15.0% Operating Income $77.2 $90.3 % Change (14.5)% 84.6% % Margin 10.8% 13.5% First Quarter (Dollars in millions) 2015 2014 Appendix: Access Equipment Sales impacted by: Higher North American telehandler and lower AWP sales Higher volume in all regions, except Latin America Operating income impacted by: Product mix Higher NPD and operating costs Prior year military contract finalization Higher sales volume Backlog up 69% vs. prior year to $793 million Comments January 27, 2015OSK First Quarter 2015 Earnings Call 11
- 12. MOVING THE WORLD AT WORK Appendix: Defense Sales impacted by: Lower sales to U.S. DoD Prior year international M-ATV sales Operating income impacted by: Lower sales volume Prior year unfavorable contract pricing adjustment Favorable aftermarket product mix Backlog down 59% vs. prior year to $670 million Comments Net Sales $269.3 $481.3 % Change (44.1)% (41.9)% Adjusted Operating Income* $6.4 $24.8 % Change (74.2)% (59.3)% % Margin 2.4% 5.2% First Quarter (Dollars in millions) 2015 2014 January 27, 2015OSK First Quarter 2015 Earnings Call 12 * Non-GAAP results. See Appendix for reconciliation to GAAP results.
- 13. MOVING THE WORLD AT WORK Net Sales $167.0 $198.0 % Change (15.6)% 8.7% Operating Income $1.5 $6.9 % Change (77.6)% 28.5% % Margin 0.9% 3.5% First Quarter (Dollars in millions) 2015 2014 Appendix: Fire & Emergency Sales impacted by: Planned reduction in fire truck production rate to implement operational improvements Prior year large international ARFF shipment Operating income impacted by: Lower sales volume Favorable warranty performance Backlog up 38% vs. prior year to $700 million Comments January 27, 2015OSK First Quarter 2015 Earnings Call 13
- 14. MOVING THE WORLD AT WORK Appendix: Commercial Sales impacted by: Higher RCV unit volume Higher aftermarket parts & service Operating income impacted by: Higher sales volume Favorable warranty performance Investments in MOVE initiatives Backlog up 39% vs. prior year to $238 million Comments Net Sales $210.2 $192.6 % Change 9.1% 8.6% Operating Income $12.4 $10.2 % Change 20.9% 27.7% % Margin 5.9% 5.3% First Quarter (Dollars in millions) 2015 2014 January 27, 2015OSK First Quarter 2015 Earnings Call 14
- 15. MOVING THE WORLD AT WORK Appendix: Commonly Used Acronyms 15January 27, 2015OSK First Quarter 2015 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 OCO Overseas Contingency Operations EMD Engineering & Manufacturing Development OH Overhead EPS Diluted Earnings Per Share OI Operating Income FHTV Family of Heavy Tactical Vehicles OOS Oshkosh Operating System FMS Foreign Military Sales OPEB Other Post-Employment Benefits FMTV Family of Medium Tactical Vehicles PLS Palletized Load System GAAP U.S. Generally Accepted Accounting Principles PUC Pierce Ultimate Configuration HEMTT Heavy Expanded Mobility Tactical Truck R&D Research & Development HET Heavy Equipment Transporter RCV Refuse Collection Vehicle HMMWV High Mobility Multi-Purpose Wheeled Vehicle RFP Request for Proposal IRC Independent Rental Company ROW Rest of World IT Information Technology SMP Standard Military Pattern (Canadian MSVS) JLTV Joint Light Tactical Vehicle TACOM Tank-automotive and Armaments Command JPO Joint Program Office TDP Technical Data Package JROC Joint Requirements Oversight Council TPV Tactical Protector Vehicle JUONS Joint Urgent Operational Needs Statement TWV Tactical Wheeled Vehicle L-ATV Light Combat Tactical All-Terrain Vehicle UCA Undefinitized Contract Action LVSR Logistic Vehicle System Replacement UIK Underbody Improvement Kit (for M-ATV) M-ATV MRAP All-Terrain Vehicle UK United Kingdom
- 16. MOVING THE WORLD AT WORK January 27, 2015OSK First Quarter 2015 Earnings Call 16 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): 2015 2014 Adjusted earnings per share - diluted (non-GAAP) 0.41$ 0.63$ OPEB curtailment gain, net of tax 0.02 - Earnings per share - diluted (GAAP) 0.43$ 0.63$ Adjusted operating income (non-GAAP) 62.3$ 96.5$ OPEB curtailment gain 3.4 - Operating income (GAAP) 65.7$ 96.5$ Adjusted defense segment operating income (non-GAAP) 6.4$ 24.8$ OPEB curtailment gain 3.4 - Defense segment operating income (GAAP) 9.8$ 24.8$ Three Months Ended December 31,
- 17. MOVING THE WORLD AT WORK January 27, 2015OSK First Quarter 2015 Earnings Call 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): Low High Adjusted operating income (non-GAAP) 510.0$ 540.0$ OPEB curtailment gain 3.4 3.4 Operating income (GAAP) 513.4$ 543.4$ Adjusted earnings per share - diluted (non-GAAP) 4.00$ 4.25$ OPEB curtailment gain, net of tax 0.02 0.02 Debt extinguishment costs, net of tax (0.11) (0.11) Earnings per share - diluted (GAAP) 3.91$ 4.16$ Fiscal 2015 Expectations Net cash flows provided by operating activities 372.0$ Additions to property, plant and equipment (150.0) Net additions to equipment held for rental (22.0) Free cash flow 200.0$ Fiscal 2015 Expectations
- 18. MOVING THE WORLD AT WORK January 27, 2015OSK First Quarter 2015 Earnings Call 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: Three Months Ended March 31, 2014 Adjusted earnings per share - diluted (non-GAAP) 0.80$ Reduction of valuation allowance on net operating loss carryforward 0.14 Pension curtailment, net of tax (0.03) Debt extinguishment costs, net of tax (0.08) Earnings per share - diluted (GAAP) 0.83$