5-29-13 keybanc conference presentation - final wo notes · 29/05/2013 · osk investor slides may...

OSK Investor Slides May 2013

Oshkosh Corporation

KeyBanc Capital Markets Industrial, Automotive and Transportation ConferenceMay 29, 2013


Forward-Looking Statements

This presentation includes 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, withoutlimitation, 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, areforward-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 in the current environment where there are conflicting signs regarding the global economic outlook and the ability of the U.S. government to resolve budgetary and debt issues; the expected level and timing of the U.S. 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 saleslevels in the defense segment; the Company’s ability to comply with laws and regulations applicable to U.S. government contractors; the Company’s ability to increase prices to raise margins or offset higher input costs; increasing commodity andother 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 theongoing 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; thecost of any warranty campaigns related to the Company’s products; risks related to production or shipment delays arising fromquality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; 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 April 30, 2013. All forward-looking statements speak only as of April 30, 2013. 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.

2


Framing the Opportunity


Oshkosh Corporation

• Incorporated in 1917

• Listed on NYSE (Ticker: OSK)

• Employees: ~12,500(1)

• FY12 Revenue: $8.14 billion

• FY12 Adjusted EPS (2): $2.30

• Market Capitalization (1): $3.4 billion

• 31 March 2013 Net Debt (3): $503 million

(1) As of April 30, 2013.(2) Non-GAAP results. See Appendix for reconciliation to GAAP results.(3) Net debt is total debt less cash. Source Oshkosh Form 10-Q: April 30, 2013.

Access Equipment Defense

Fire & Emergency Commercial

4


OSK Revenues – thru 6 months FY13

Mix by Segment

Access Equipment

38%

Commercial9%

Defense44%

Fire & Emergency

9%

Mix by Geography

Moving towards greater balance by business segment

Targeting higher mix of revenues outside of North America by FY15

North America

84%

EAME10%

ROW6%

5


Solid Debt Metrics

• Manageable debt maturities• Appropriate fixed / floating mix• Improved and responsible

leverage profile

$0

$100

$200

$300

$400

$500

$600

$700

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Deb

t Lev

el ($

mill

ions

)

Debt Maturity Schedule

TLA TLA Amort 8.25% Sr. Notes (Call)

8.50% Sr. Notes (Call) 8.25% Sr. Notes 8.50% Sr. Notes

0%10%20%30%40%50%60%70%80%90%

100%

Jun08

Dec08

Jun09

Dec09

Jun10

Dec10

Jun11

Dec11

Jun12

Dec12

Fixe

d-R

ate

Deb

t Per

cent

age

Fixed / Floating Debt Ratio

Fixed / Floating Debt Ratio Target Range

0

1

2

3

4

5

6

7

8

FY08 FY09 FY10 FY11 FY12

Leve

rage

Leverage

Leverage Covenant Target Range

6


Poised to Deliver Results

• MOVE strategy expected to deliver higher margins throughout cycle• Market recovery from deep cycle has commenced

– OSK expects to overcome effects of defense downturn • Oshkosh processes and team support execution of MOVE

FY12 FY15E

Industry Leading Brands (1)

Access Equipment #1 Global

Fire Apparatus #1 Global

Airport Products #1 Global

Defense TWV (2) #1 Global

Concrete Mixers #1 Americas

Refuse Collection #1 Americas

* Non-GAAP results. See Appendix for reconciliation to GAAP results.

(1) Based on Company estimates.(2) Oshkosh Defense is the leading supplier of heavy and medium tactical

wheeled vehicles for the U.S. Armed Services.

$4.00 to $4.50

Oshkosh CorporationEPS Opportunity

$2.30*

7


Leveraging a Common Structure: Oshkosh Operating System

• Customer-centric application of lean principles– Sets guiding principles for

relationships with customers

• Improves processes needed todeliver key elements of MOVE

• Supports drive to improve cash flow

• Implementation gaining momentum

• Company-wide foundation for building shareholder value

8


Strong Performance Continuesin Fiscal 2013*

• $0.96 Q2 EPS– More than double Q2FY12

• Operating income margins expanded in all segments

• Focused on disciplined execution of MOVE strategy

• Increased FY13 adjusted EPS** estimate range– $2.90 to $3.15

Net

Sal

es(m

illio

ns) EPS

OSK Fiscal Q2 Performance

$1,984 $2,062 $0.96

$0.47

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY13 FY12Net Sales EPS

* Continuing operations only.

* * FY13 expectations include certain non-GAAP adjustments (see Appendix).

9


MOVE Strategy Highlights


FY15 Targets

MOVE – The Right StrategySummary of Primary Opportunities – FY12 to FY15

• Focuses on drivers that create highest shareholder value• Recognizes constraints of markets, balance sheet and

business valuations• Expected to drive higher incremental margins across non-Defense

businesses over cycle(1) Expected benefits of market recovery captured in financial estimates vs. September 2012 Analyst Day estimate of FY12. Does not

include benefits of other MOVE initiatives.(2) Net of investment costs and compared with consolidated FY11 operating income margins.(3) Compared with FY12.

Initiative

11


Market Recovery and Growth

~$220M(2)

Opportunity(FY12-FY15)

FY11 FY15EFY12

~10% CAGR(FY12-FY15)

FY11 FY15EFY12

Non-Defense Operating Income (1) ($ in Millions)

(1) Reflects estimated benefits of market recovery captured in financial estimates. Does not include benefits of other MOVE initiatives. Market recovery operating income growth opportunity from FY11 to prior peak sales levels for non-Defense segments estimated at ~$500 million.

(2) Based on September 14, 2012 Analyst Day estimate for FY12 non-Defense segments operating income, which excluded costs to exit ambulance and European mobile medical businesses.

12


Optimize Cost and Capital Structure

0

50

100

150

200

250

FY12 FY13E FY14E FY15E

8 bps

~75 bps

~130 bps

~250 bps

Targeted Operating Income Margin Impact(Basis Points Operating Income/Sales)

• Targeted margin improvements driven by reductions in product, process and overhead costs

13


New Products – Value InnovationTelehandlers

– Emissions updates: EU machines to Stage IIIB, NA machines to Tier 4i

– Improved visibility

Joint Light Tactical Vehicle (JLTV)

New North American and European Telehandler Configurations

3000 Gallon Capacity Global Striker

CNG-Powered Front and Rear Loaders

Oshkosh Defense L-ATV

14


Global PresenceMany Opportunities to Expand Sales

15

Countries with meaningful Oshkosh sales or sales & service as of FY12.


Overview by Segment


The Access Equipment Advantage

JLG is positioned for sustained industry leading performance

Global Leader in Access Equipment

Industry Leading

Innovation

Superior Product Range

Full Spectrum Parts, Service, and Support

Flexible Manufacturing

and Supply Chain

Global Market Presence

17


North American Rental Companies Refreshing Their Fleets, Increasing Market Penetration

Total Construction Spending(Y-O-Y % Change)

NA Rental Equipment Access - Fleet Age(AWP and TMH)

NA Rental Equipment Company Fleet Utilization NA Rental Equipment Company CapEx (Y-O-Y % Change)

Source: IHS Global data/projections, April 2013

Based on International Rental News/Dan Kaplan sample of medium to large NA rental equipment companies (United Rental, RSC, H&E, HERC).

Based on International Rental News/Dan Kaplan sample of medium to large NA rental equipment companies (United Rental, RSC, HERC, Ameco, Neff).

(% C

hang

e)(%

Tim

e U

tiliz

atio

n)

(% C

hang

e)

Source: Rouse Rental Report. Calendar year-end data for 2009-12

40

45

50

55

60

2009 2010 2011 2012

Age (months)

50

55

60

65

70

75

1Q'10 2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12

Ind. Avg.

‐90

‐60

‐30

0

30

60

90

120

150

2004 2005 2006 2007 2008 2009 2010 2011 2012

CapEx

(Age

in M

onth

s)

‐20

‐10

0

10

20

2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

United States Canada

18


Positive North America Leading Indicators

Source: Rouse Asset Services, April 2013.

AWP – Articulating Boom 51.8

Average Age(in months)

Recent Used Equipment Value Trends(OLV)

U.S. Housing Starts

Seasonally Adjusted Rate 2013 2012 Change

April 853,000 754,000 +13%Source: U.S. Census Bureau, April 2013.

AWP – Scissor Lifts 56.8

AWP – Telescopic Boom 55.2

39.7%41.1%

35.0

40.0

45.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar

OLV

(% o

f Cos

t

38.4%41.2%

35.0

40.0

45.0


OLV

(% o

f Cos

t

30.9% 31.0%

30.0

32.5

35.0


OLV

(% o

f Cos

t

19


Mixed International Markets• Europe

– Agriculture providing growth for telehandlers

– Strength in eastern and Nordic markets

– Continued softness in western and southern Europe

• Emerging areas of opportunity– Rental concept advancing in Brazil

& Russia; lagging in China– Latin American infrastructure driving

near-term demand – Energy, mining and agriculture

attractive for long-term• Australia Weak mining contributing to lower

current demand

20


The Oshkosh Defense Advantage

Defense Engineering & Product

Development

Scalable Manufacturing & Operations

Vertical Integration of Specialized

Components

Defense Program

Management

Vehicle Fleet Modernization

Service, Lifecycle

Sustainment

Defense industry expertise that leverages thefull capabilities of Oshkosh Corporation

21


Adapting to the Domestic Defense Spending Downturn

Current Operations Profile

New Vehicle Production Aftermarket &

Modernization

Tech & Product Development

Future Operations Profile

New Vehicle Production

Aftermarket & Modernization

Tech & Product Development

HEAVY, MEDIUM & MRAP VEHICLES MEDIUM, MRAP & LIGHT VEHICLES

– Compete to win in Light vehicle segment– Optimize cost structure

22


L-ATVThe Oshkosh JLTV Solution

• The future of light tactical vehicles• JLTV EMD contract award

– 22 prototypes– Reliability, Availability and

Maintainability (RAM)testing begins late 2013

– Decision expected early 2015• Oshkosh JLTV solution

– Oshkosh TAK-4i intelligent independent suspension system

– Latest automotive technologies– Advanced crew protection system

• Low rate initial production expected in 2016 for contract winner

23


The Fire & Emergency Advantage

InnovationLeader

PremierDistribution and Service

Unrivaled Product

Performance

#1 Brands

Leading global provider of specialty vehicles that serve, protect and save lives

24


Domestic Fire Market Drivers Stabilizing • Housing prices starting to recover, property taxes to follow

Recent Headlines

U.S. housing starts point to growing economic momentum- Reuters, March 19, 2013

Construction Spending in U.S. Rises on Gain in Home Building- Bloomberg, April 1, 2013

Apocalypse, Not Now, for Municipal Bonds- Barron’s, April 23, 2013

HOUSING PRICES & LOCAL PROPERTY TAXES

• Municipal market has bottomed; expect modest recovery in FY14• Federal funding likely to remain weak through FY14

25


International Market Growth Opportunities• Expect continued growth in

developing countries– Investing in safety and security– Expanding infrastructure

• World air traffic projected to continue growing– Middle East and Asia Pacific

expected to increase 8%-10% per year through 2014

– Driving increased demand for Oshkosh Airport Products

• Global customers seeking technologically superior products

Pierce Industrial Pumper, Liaoning Province, China

(1)

(1) Source: Air Traffic Growth (regional growth in passenger kilometers) per International Civil Aviation Organization.

26


The CommercialAdvantage

Broadest Product Line

Direct Distribution,

Customer Intimacy

Scalable, Flexible

Manufacturing & Operations

Access to Technology, Alternative

Fuels Leadership

Innovation and New Product Development

Best in Class Aftermarket Service and

Support

Integrated factory

Refuse collection vehicle product line

Alternative fuel technology

Street Smart, Street Tough27


Construction: SubstantialOpportunity with Modest Recovery

Housing Starts and Mixer Shipments (1959-2012)

Housing Starts and Mixer Shipments (1959-2012)

0

2,000

4,000

6,000

8,000

10,000

12,000

0

500

1,000

1,500

2,000

2,500

Mixer U

nits Shipped

Hou

sing

Sta

rts

(000

s)

Housing Starts Mixer Units Shipped

28

Sources: U.S. Census Bureau and Truck Mixer Manufacturers Bureau; U.S. and Canada.

0

2,000

4,000

6,000

8,000

10,000

12,000

500 1,000 1,500 2,000 2,500

Mix

er u

nits

shi

pped

Housing Starts ('000's)

Mixer Units Shipped Linear (Mixer Units Shipped)


U.S. Mixer Market Unit Growth Analysis

• U.S. housing starts assumed by OSK**: 0.8 million in FY13; 1.2 million in FY14; and 1.4 million in FY15

• OSK concrete mixer parts demand up 20% in FY12 vs. FY11 and up >100% from the recessionary low

• April 2013 U.S. housing starts* at 853,000

< 50% of FY06

Volume

* U.S. Census Bureau

Source: Truck Mixer Manufacturers Bureau; U.S. and Canada.

0.00.20.40.60.81.01.21.41.61.82.0

2012A 2013E 2014E 2015E

Hou

sing

Sta

rts

in m

illio

ns

U.S. Housing Starts Forecast

Moodys Portland Cement Association

Global Insight Average Analyst Estimate

0

2,000

4,000

6,000

8,000

10,000

12,000

Mar

ket S

ize

(Uni

ts)

FY12 - FY15 CAGR ~45%

** As presented by the Company during its Analyst Day on September 14, 2012.

29


Wrap Up


Committed to Shareholders• Aggressively driving to achieve MOVE targets

– Earnings per share of $4.00 to $4.50 in 2015

• Attacking product, process and overhead costs to raise margins

• Applying disciplined capital allocation strategy

• Will sustain active shareholder outreach

• Deploying Oshkosh Operating System globally to sustain lean culture and drive results

31


For more information contact: Patrick N. Davidson

Vice President, Investor Relations(920) [email protected]

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


Appendix: OSK Expectationsfor FY13*

Additional expectations• Adjusted corporate expenses ~$140 - $145 million

(higher share-based compensation and IT investments)

• Tax rate of ~31%; including R&D credit reinstatement benefit

• CapEx of ~$50 million• Free cash flow $110 - $135 million• Assumes share count** of ~89 million

Segment information

Measure Access Equipment Defense Fire &

Emergency Commercial

Sales(billions) $2.85 - $3.05 $3.1 - $3.2 $0.72 - $0.75 $0.72 - $0.75

Operating Income Margin 10.5%-11.0% ~7.0% 2.0%-2.5% 4.5%-5.0%

• Revenues range of $7.35 billion to $7.65 billion• Adjusted operating income range of $430 million to $465 million• Adjusted EPS from continuing operations range of $2.90 to $3.15

Comments on Third Quarter• Expect highest quarter for EPS driven

by seasonality and international M-ATV sales volume

* Current: April 30, 2013. FY13 expectations include certain non-GAAP adjustments (see Appendix).

** Excludes impact of any additional share repurchases in Q3 – Q4.

33


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):

Fiscal Year EndedSeptember 30,

2012Non-GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted $ 2.30

Performance share valuation adjustment, net of tax (0.05)Curtailment expense, net of tax (0.02)Tender offer and proxy contest costs, net of tax (0.05)Discrete tax benefits 0.49 GAAP earnings per share attributable to

Oshkosh Corporation from continuing operations-diluted $ 2.67

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

Non-GAAP operating income margin 5.0%Non-GAAP operating income $ 404.7 Performance share valuation adjustment (7.0)Curtailment expense (3.4)Tender offer and proxy contest costs (6.6)GAAP operating income $ 387.7 GAAP operating income margin 4.8%

34


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

CorporateNon-GAAP operating expenses (140.0)$ (145.0)$ Tender offer and proxy contest costs (16.3) (16.3)

GAAP operating expenses (156.3)$ (161.3)$

ConsolidatedNon-GAAP operating income 430.0$ 465.0$ Tender offer and proxy contest costs (16.3) (16.3)

GAAP operating income 413.7$ 448.7$

Non-GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 2.90$ 3.15$ Tender offer and proxy contest costs, net of tax (0.11) (0.11)

GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 2.79$ 3.04$

Net cash flows provided by operating activities 175.0$ 200.0$ Additions to property, plant and equipment (50.0) (50.0) Additions to equipment held for rental (19.0) (19.0) Proceeds from sale of equipment held for rental 4.0 4.0

Free cash flow 110.0$ 135.0$

Fiscal 2013 Expectations

35


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 NA North America

EAME Europe, Africa & Middle East NPD New Product Development

EMD Engineering & Manufacturing Development OI Operating Income

EPS Diluted Earnings Per Share PLS Palletized Load System

EU European Union PUC Pierce Ultimate Configuration

FHTV Family of Heavy Tactical Vehicles R&D Research & Development

FMS Foreign Military Sales RCV Refuse Collection Vehicle

FMTV Family of Medium Tactical Vehicles RFP Request for Proposal

HEMTT Heavy Expanded Mobility Tactical Truck ROW Rest of World

HET Heavy Equipment Transporter SMP Standard Military Pattern (Canadian MSVS)

HMMWV High Mobility Multi-Purpose Wheeled Vehicle TACOM Tank-automotive and Armaments Command

IT Information Technology TDP Technical Data Package

JLTV Joint Light Tactical Vehicle TLA Term Loan A

JPO Joint Program Office TFFT Tactical Fire Fighting Truck

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)

36

5-29-13 keybanc conference presentation - final wo notes · 29/05/2013 · osk investor slides may...

Documents