q4 2013 earnings release slides (final) - oshkosh corporation€¦ · osk fourth quarter 2013...

Oshkosh CorporationFourth Quarter Fiscal 2013October 31, 2013

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

Forward-Looking Statements

2October 31, 2013OSK Fourth Quarter 2013 Earnings Call

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, especially with the current tepid outlook for the U.S. and European economic recoveries and the struggles the U.S. government has encountered trying to resolve budgetary and debt issues; the strength of emerging market growth and projected adoption rate of work at height machinery; the expected level and timing of the DoD 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 the significant projected decrease in sales levels 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 weakness, 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; 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.

Solid Q4 Performance toClose Out FY13• Adjusted results above high

end of most recent expectations*– Solid performance despite

expected decline in defense segment

• Margins expanded in bothAccess Equipment and Commercial segments

• Reinstating quarterly cash dividend– $0.15 per share

• Repurchased 0.7 million shares

• Announcing FY14 EPS estimate range of $3.10 to $3.40

3OSK Fourth Quarter 2013 Earnings Call October 31, 2013

Net

Sal

es(m

illio

ns)

Adjusted EPS**

OSK Fiscal Q4 Performance

* Continuing operations only

** Non-GAAP results. See Appendix: Non-GAAP to GAAP Reconciliation.

$1,727

$2,051

$0.49

$0.64

$0.00

$0.25

$0.50

$0.75

$1.00

$0

$500

$1,000

$1,500

$2,000

$2,500

FY13 FY12Net Sales EPS

MOVE Impact Evident in Strong Full Year Results*• Operating income and EPS

growth despite lower revenues– Revenue growth in all non-

defense segments– Margins expanded in ALL

segments• Generated $386 million of

free cash flow**• Repurchased 6.1 million

shares for $202 million• MOVE providing roadmap for

business improvement toward FY15 targets

• OOS activities maturing and driving improvement


Net

Sal

es(b

illio

ns)

Adjusted EPS**

OSK Full Year Performance

* Continuing operations only

** Non-GAAP results. See Appendix: Non-GAAP to GAAP Reconciliation.

$7.7 $8.1$3.74

$2.30

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

FY13 FY12Net Sales EPS

FY15 Targets

FY13 MOVE ScorecardOn Track to Achieve FY15 Targets

(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

5

FY13Result

Bottom Line – Results for Shareholders

FY15Estimate

OSK Fourth Quarter 2013 Earnings Call October 31, 2013

Defense

• Staffing reductions consistent with lower production volume

• Continue to pursue international programs

– Additional M-ATV sales

– Canadian MSVS

• Submitted 22 JLTVs toDoD in August

– Testing started despite government shutdown and sequestration

• Extended union contract through 2021


Access Equipment

• MOVE drove significant operational achievements

• North American replacement demand continued to be primary driver

• Global conditions for 2014 expected to improve – Slow recovery in Europe; adverse

weather further impacted several key markets in 2013

– Growth in the Middle East– Moderate growth in Latin America– Pacific Rim expected to grow; slow

recovery in Australia• Announced annual price increase

OSK Fourth Quarter 2013 Earnings Call7

October 31, 2013

Fire & Emergency

• Strong finish to the year• Municipal demand

improving; federal demand likely has bottomed – Municipal order activity up in

most regions

• Improvements in Florida operations

• Continued focus on global sales– Asia– South America


October 31, 2013

Commercial• Early stage investments in

MOVE strategy positively impacted performance

• Improving U.S. residential construction market drove sales of concrete placement products– Strong yr/yr concrete mixer orders

and deliveries– Competition becoming more

aggressive

• Refuse collection vehicle market down slightly in FY13– Expected to grow in FY14

• Continued solid demand for CNG-powered units


October 31, 2013

Consolidated Results

• Sales impacted by:– Lower defense volume

+ Non-defense segment volumes

• Margins impacted by:‒ Lower defense volume

‒ Higher corporate expenses

+ Improved access equipment and commercial performance

• Repurchased 0.71 million shares of OSK common stock

Comments

(Dollars in millions, except per share amounts)

Fourth Quarter

Net Sales $1,726.5 $2,050.5 % Change (15.8)% (2.5)%

Adjusted Operating Income* $78.0 $108.9

% Change (28.4)% 24.7%% Margin 4.5% 5.3%

Adjusted EPS* $0.49 $0.64% Change (23.4)% 30.6%

2013 2012


October 31, 2013

* Non-GAAP results. See Appendix: Non-GAAP to GAAP Reconciliation.

Expectations for FY14

11

Additional expectations• Corporate expenses flat with FY13

(higher IT and OOS investments)• Tax rate of ~31%• CapEx of ~$80 million• Free cash flow* ~$200 million• Assumes share count of ~86.5 million

Segment information

Measure Access Equipment DefenseFire &

Emergency Commercial

Sales(billions) $3.3 - $3.4 $1.75 - $1.85 $0.80 - $0.825 $0.85 - $0.90

Operating Income Margin 13.5% - 13.75% 3.5% - 3.7% 4.0% - 4.5% 6.75% - 7.0%

• Revenues of $6.6B to $6.9B• Operating income of $455M to $490M• EPS of $3.10 to $3.40

Comments on 2014 First Quarter• Expect EPS meaningfully lower

than Q1 FY13 result• Significantly lower defense sales• Seasonal slowdown• MOVE investments

October 31, 2013OSK Fourth Quarter 2013 Earnings Call

* Non-GAAP result. See Appendix: Non-GAAP to GAAP Reconciliation.

For information contact:

Patrick N. DavidsonVice President, Investor Relations(920) [email protected]

Jeffrey D. WattDirector, Investor Relations(920) [email protected]

Net Sales $780.6 $716.8% Change 8.9% 6.4%

AdjustedOperating Income $90.2* $59.5

% Change 51.7% 75.6%% Margin 11.6% 8.3%

Fourth Quarter

(Dollars in millions)

2013 2012

Appendix: Access Equipment

• Sales impacted by: Higher volume in

North America Price realization Aftermarket parts Lower volume in Australia

• Margins impacted by: Product mix Price realization Product and process cost

reductions• Backlog up 2% vs.

prior year to $368 million Excluding military telehandlers,

backlog is up 28%

Comments

October 31, 2013OSK Fourth Quarter 2013 Earnings Call13


Appendix: Defense

• Sales impacted by: Lower U.S. DoD volume

JLTV test vehicles

International truck shipments

• Margins impacted by: Lower absorption due to

lower sales• Backlog down 40% vs.

prior year to $1.84 billion

Comments

Net Sales $513.8 $953.7 % Change (46.1)% (18.6)%

AdjustedOperating Income* $15.0 $62.5

% Change (76.1)% (15.6)%% Margin 2.9% 6.6%

Fourth Quarter


2013 2012



Net Sales $232.0 $217.6% Change 6.6% 12.5%

AdjustedOperating Income $9.2 $12.0*

% Change (23.7)% 341.2%% Margin 4.0% 5.6%

Fourth Quarter


2013 2012

Appendix: Fire & Emergency

• Sales impacted by: Higher international

sales volume

• Margins impacted by: Adverse product mix

• Backlog up 3% vs. prior year to $492 million

Comments



Appendix: Commercial

• Sales impacted by:+ Higher concrete mixer

sales in U.S.

• Margins impacted by: Increased absorption

from higher sales Improved cost

performance

• Backlog down 10% vs. prior year to $141 million

October 31, 2013 16OSK Fourth Quarter 2013 Earnings Call

Comments

Net Sales $209.4 $181.5% Change 15.4% 34.2%

Operating Income $15.7 $9.2% Change 70.9% 249.0%% Margin 7.5% 5.1%

Fourth Quarter(Dollars in millions)

2013 2012

Appendix: Commonly UsedAcronyms


ARFF Aircraft Rescue and Firefighting M-ATV MRAP All-Terrain Vehicle

AWP Aerial Work Platform MECV Modernized Expanded Capability Vehicle

CapEx Capital Expenditures MRAP Mine Resistant Ambush Protected

CNG Compressed Natural Gas MSVS Medium Support Vehicle System (Canada)

DoD Department of Defense NPD New Product Development

EAME Europe, Africa & Middle East NOL Net Operating Loss

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 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

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)

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):

2013 2012 2013 2012

Non-GAAP operating income-Access Equipment 90.2$ 59.5$ 388.6$ 229.2$ Impairment charge (9.0) - (9.0) - GAAP operating income-Access Equipment 81.2$ 59.5$ 379.6$ 229.2$

Non-GAAP operating income-Defense 15.0$ 62.5$ 228.7$ 237.0$ Union contract ratification costs (3.8) - (3.8) - Curtailment expense - (0.5) - (0.5) GAAP operating income-Defense 11.2$ 62.0$ 224.9$ 236.5$

Non-GAAP operating income-Fire & Emergency 9.2$ 12.0$ 23.8$ 10.8$ Curtailment expense - (2.0) - (2.0) GAAP operating income-Fire & Emergency 9.2$ 10.0$ 23.8$ 8.8$

Non-GAAP operating expenses-Corporate (52.1)$ (34.4)$ (147.6)$ (104.6)$ Tender offer and proxy contest costs - (0.2) (16.3) (6.6) Performance share valuation adjustment - (7.0) - (7.0) Curtailment expense - (0.9) - (0.9) GAAP operating expenses-Corporate (52.1)$ (42.5)$ (163.9)$ (119.1)$

Non-GAAP operating income 78.0$ 108.9$ 534.8$ 404.7$ Tender offer and proxy contest costs - (0.2) (16.3) (6.6) Impairment charge (9.0) - (9.0) - Union contract ratification costs (3.8) - (3.8) - Performance share valuation adjustment - (7.0) - (7.0) Curtailment expense - (3.4) - (3.4) GAAP operating income 65.2$ 98.3$ 505.7$ 387.7$

Fiscal Year EndedSeptember 30,

Three Months EndedSeptember 30,




2013 2012 2013 2012

Non-GAAP income from continuing operations attributable to Oshkosh Corporation, net of tax 43.6$ 59.5$ 334.6$ 211.3$ Tender offer and proxy contest costs, net of tax - (0.1) (10.4) (4.2) Impairment charge, net of tax (5.5) - (5.5) - Union contract ratification costs, net of tax (2.4) - (2.4) - Performance share valuation adjustment, net of tax - (4.5) - (4.5) Curtailment expense, net of tax - (2.2) - (2.2) Discrete tax benefits - 31.0 - 44.8 GAAP income from continuing operations attributable to Oshkosh Corporation, net of tax 35.7$ 83.7$ 316.3$ 245.2$

Non-GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 0.49$ 0.64$ 3.74$ 2.30$ Tender offer and proxy contest costs, net of tax - - (0.12) (0.05) Impairment charge, net of tax (0.06) - (0.06) - Union contract ratification costs, net of tax (0.03) - (0.03) - Performance share valuation adjustment, net of tax - (0.05) - (0.05) Curtailment expense, net of tax - (0.02) - (0.02) Discrete tax benefits - 0.34 - 0.49 GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 0.40$ 0.91$ 3.53$ 2.67$

Net cash flows provided by operating activities 438.0$ 268.3$ Additions to property, plant and equipment (46.0) (55.9) Additions to equipment held for rental (13.9) (8.4) Proceeds from sale of property, plant and equipment 0.1 7.6 Proceeds from sale of equipment held for rental 7.5 3.7 Free cash flow 385.7$ 215.3$

Fiscal Year EndedSeptember 30,

Three Months EndedSeptember 30,




Fiscal 2014Expectations

Net cash flows provided by operating activities 293.0$ Additions to property, plant and equipment (80.0) Additions to equipment held for rental (13.0) Proceeds from sale of equipment held for rental -

Free cash flow 200.0$

q4 2013 earnings release slides (final) - oshkosh corporation€¦ · osk fourth quarter 2013...

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