q1 2013 earnings release slides final · • adjusted corporate expenses ~$130 - $135 million...

Oshkosh CorporationFirst Quarter Fiscal 2013January 25, 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 StatementsThis 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 press release, 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. DoDprocurement of products and services and funding thereof; risks related to reductions in government expenditures in light of U.S. defense budget pressures and an uncertain DoD tactical wheeled vehicle strategy; the ability to comply with laws and regulations applicable to U.S. government contractors; the ability to increase prices to raise margins or offset higher inputcosts; increasing commodity and other raw material costs, particularly in a sustained economic recovery; risks related to theCompany’s exit from its ambulance business, including the amounts of related costs and charges; 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; the potential for the U.S. government to competitively bid the Company’s Army and Marine Corps contracts; 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 delaysarising from quality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; risks related to actions of activist shareholders; 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 press release. 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.

2January 25, 2013OSK First Quarter 2013 Earnings Call

Strong Start to Fiscal 2013

• Adjusted EPS* of $0.60– Results exceeded

expectations• Margins expanded in all non-

defense segments– Exceeded expectations in

defense• Generated $39 million in free

cash flow*• Repurchased 4.25 million

shares• Increasing FY13 Adjusted

EPS* estimates to a range of $2.80 to $3.05

3OSK First Quarter 2013 Earnings Call January 25, 2013

Net

Sal

es(m

illio

ns)

Adjusted EPS*

OSK Fiscal Q1 Performance

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

$1,761 $1,876 $0.60

$0.39

$0.00

$0.25

$0.50

$0.75

$1.00

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY13 FY12Net Sales EPS

Strong Foundation Supporting Outlookfor FY13 and Beyond


Source: National Association of Home Builders

• MOVE strategy provides direction and focus– Framework drives daily actions– Already delivering results

• Benefiting from strengthening U.S. housing market

• Large delivery orders received for core defense programs

Defense

• Strong execution led to outperformance

• Awarded ~$800M of DoD contracts in Q1, solidifying sales outlook for existing U.S. programs through FY14– FHTV– FMTV

• Initial U.A.E. M-ATV shipments ahead of schedule

• Progressing on JLTV EMD program; building 22 test units


Access Equipment• North American market remains

strong– Driven largely by replacement

equipment – Key metrics remain solid– Independents increasingly active

• Global markets mixed– Europe remains soft– Year over year sales growth in

Latin America and Pacific Rim

• Strong backlog growthin Q1

OSK First Quarter 2013 Earnings Call6

January 25, 2013

Fire & Emergency

• Improved results despite markets that remain soft– Evidence of municipal demand

stabilizing, but federal spending still declining

• Timing of international deliveries benefited quarter

• Florida operations continue to improve

• Ambulance business wind down expected to be complete in Q2


January 25, 2013

Commercial

• Benefiting from housing market recovery– Concrete mixer orders continue

to grow– Aftermarket parts and service

growth continues

• Refuse collection fleets continue to embrace CNG

• Remain focused on operational improvements to deliver higher margins


January 25, 2013

Consolidated Results

• Sales impacted by:‒ Lower defense M-ATV and

related aftermarket parts volumes

+ Non-defense demand

+ Timing of deliveries

• Margins impacted by:+ Price realization

+ Improved fire & emergency performance

• Repurchased 4.25 million shares at aggregate cost of $125 million

Comments

(Dollars in millions, except per share amounts)

First Quarter

Net Sales $1,761.0 $1,875.7 % Change (6.1)% 10.5%

Adjusted Operating Income* $97.7 $79.2

% Change 23.3% (56.4)%% Margin 5.6% 4.2%

Adjusted EPS* $0.60 $0.39% Change 53.8% (63.9)%

2013 2012


January 25, 2013

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

Updated Expectations for FY13*

10

Additional expectations• Adjusted corporate expenses ~$130 - $135 million

(share-based compensation and higher IT investment)

• Tax rate of ~32%; including R&D credit reinstatement benefit

• CapEx of ~$60 million• Free cash flow $100 - $125 million• Share count** of ~89 million

Segment information

Measure Access Equipment Defense Fire &

Emergency Commercial

Sales(billions) $2.8-$3.0 $3.2-$3.3 $0.72-$0.75 $0.72-$0.75

Operating Income Margin ~10.5% ~6.5% 2.0%-2.5% 4.5%-5.0%

• Revenues of $7.4 billion to $7.7 billion• Adjusted operating income of $420 million to $455 million• Adjusted EPS from continuing operations of $2.80 to $3.05

Comments on Second Quarter• Expect to benefit from seasonally

driven construction demand andU.A.E. M-ATV sales

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

January 25, 2013OSK First Quarter 2013 Earnings Call

** Excludes impact of any additional share repurchases in Q2 – Q4

For information contact:

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

Tina SchmiedelDirector, Investor Relations(920) [email protected]

Net Sales $581.3 $627.7% Change (7.4)% 91.8%

Adjusted Operating Income** $48.9 $12.6

% Change 289.3% 342.3%% Margin 8.4% 2.0%

First Quarter

(Dollars in millions)

2013 2012*

Appendix: Access Equipment

• Sales impacted by: Elimination of intersegment

M-ATV sales to defense segment

Higher telehandler and aftermarket volume in North America

Price realization• Margins impacted by:

Price realization Lower intersegment sales Product mix

• Backlog down 2.3% vs.prior year to $767 million Up sharply from prior quarter

due to timing of orders from large rental customers

Comments

January 25, 2013OSK First Quarter 2013 Earnings Call12

* FY12 results include $122.6 million of intersegment revenue for M-ATV production.

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

Appendix: Defense

• Sales impacted by: Lower M-ATV and related

aftermarket volume

Higher FHTV and FMTV volume

• Margins impacted by: Adverse product mix

Year/year improvement in FMTV margins

Favorable contract definitization and warranty adjustments

• Backlog down 26% vs. prior year to $3.1 billion

Comments

Net Sales $828.7 $1,051.0% Change (21.1)% (5.6)%

AdjustedOperating Income* $61.8 $92.4

% Change (33.1)% (57.7)%% Margin 7.5% 8.8%

First Quarter


2013 2012



Net Sales $193.3 $160.1% Change 20.7% (19.0)%

Adjusted OperatingIncome (Loss)* $5.5 $(8.4)

% Change 165.7% (325.7)%Margin 2.8% (5.2)%

First Quarter


2013 2012

Appendix: Fire & Emergency

• Sales impacted by:+ Volume, including

timing of international deliveries

+ Product mix

• Margins impacted by:+ Improved operational

efficiencies+ Improved absorption

related to higher volumes

+ Price realization

• Backlog down 3.4% vs. prior year at $472 million**

Comments



** Excludes Medtec ambulance orders in backlog at December 31, 2012 and 2011, respectively.

Appendix: Commercial

• Sales impacted by:+ Higher concrete mixer

volume + Higher parts & service

sales Lower chassis volume

• Margins impacted by:+ Product mix Investments in MOVE

initiatives

• Backlog up 21% vs. prior year to $146 million

January 25, 2013 15OSK First Quarter 2013 Earnings Call

Comments

Net Sales $177.3 $171.6% Change 3.3% 43.6%

Operating Income $8.0 $6.9% Change 16.2% 189.3%% Margin 4.5% 4.0%

First Quarter(Dollars in millions)

2013 2012

Appendix: Commonly UsedAcronyms


ARFF Aircraft Rescue and Firefighting MECV Modernized Expanded Capability Vehicle

AWP Aerial Work Platform MRAP Mine Resistant Ambush Protected

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

DoD Department of Defense MTT Medium Tactical Truck

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

FHTV Family of Heavy Tactical Vehicles PUC Pierce Ultimate Configuration

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)

HEWATT HEMTT-Based Water Tender TACOM Tank-automotive and Armaments Command

HMMWV High Mobility Multi-Purpose Wheeled Vehicle TDP Technical Data Package

JLTV Joint Light Tactical Vehicle TFFT Tactical Fire Fighting Truck

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

M-ATV MRAP All-Terrain Vehicle

Appendix: Non-GAAP to GAAP Reconciliation


January 25, 2013

• The tables 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):

2012 2011ConsolidatedNon-GAAP provision for income taxes 29.0$ 19.2$ Income tax benefit associated with pre-tax charges (6.1) (1.4) Discrete tax benefits (1.9) (6.7) GAAP provision for income taxes 21.0$ 11.1$

Non-GAAP income from continuing operations attributable to Oshkosh Corporation, net of tax 55.1$ 34.6$ Restructuring-related benefits (charges), net of tax 0.2 (0.6) Curtailment expense, net of tax (0.6) - Tender offer and proxy contest costs, net of tax (10.4) (1.8) Discrete tax benefits 1.9 6.7 GAAP income from continuing operations attributable to Oshkosh Corporation, net of tax 46.2$ 38.9$

Non-GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 0.60$ 0.39$ Restructuring-related benefits (charges), net of tax - (0.01) Curtailment expense, net of tax - - Tender offer and proxy contest costs, net of tax (0.11) (0.02) Discrete tax benefits 0.02 0.07 GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 0.51$ 0.43$

Net cash flows provided by operating activities 45.1$ 61.9$ Additions to property, plant and equipment (8.3) (14.2) Additions to equipment held for rental (1.1) (3.5) Proceeds from sale of equipment held for rental 3.5 1.1 Free cash flow 39.2$ 45.3$

December 31,Three Months Ended

2012 2011Access equipment segmentNon-GAAP operating income 48.9$ 12.6$ Restructuring-related benefits - 0.5 GAAP operating income 48.9$ 13.1$

Defense segmentNon-GAAP operating income 61.8$ 92.4$ Curtailment expense (0.9) - GAAP operating income 60.9$ 92.4$

Fire & emergency segmentNon-GAAP operating income (loss) 5.5$ (8.4)$ Restructuring-related benefits (charges) 0.3 (1.5) GAAP operating income (loss) 5.8$ (9.9)$

CorporateNon-GAAP operating expenses (26.4)$ (24.3)$ Tender offer and proxy contest costs (16.3) (2.8) GAAP operating expenses (42.7)$ (27.1)$

ConsolidatedNon-GAAP operating income 97.7$ 79.2$ Restructuring-related benefits (charges) 0.3 (1.0) Curtailment expense (0.9) - Tender offer and proxy contest costs (16.3) (2.8) GAAP operating income 80.8$ 75.4$

Three Months EndedDecember 31,

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 HighCorporateNon-GAAP operating expenses (130.0)$ (135.0)$ Tender offer and proxy contest costs (16.3) (16.3) GAAP operating expenses (146.3)$ (151.3)$

ConsolidatedNon-GAAP operating income 420.0$ 455.0$ Restructuring-related benefits 0.3 0.3 Curtailment expense (0.9) (0.9) Tender offer and proxy contest costs (16.3) (16.3) GAAP operating income 403.1$ 438.1$

Non-GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 2.80$ 3.05$ Restructuring-related benefits, net of tax - - Curtailment expense, net of tax - - Tender offer and proxy contest costs, net of tax (0.11) (0.11) Discrete tax benefits 0.02 0.02 GAAP earnings per share attributable to Oshkosh Corporation from continuing operations-diluted 2.71$ 2.96$

Net cash flows provided by operating activities 175.5$ 200.5$ Additions to property, plant and equipment (60.0) (60.0) Additions to equipment held for rental (19.0) (19.0) Proceeds from sale of equipment held for rental 3.5 3.5 Free cash flow 100.0$ 125.0$

Fiscal 2013 Expecations

q1 2013 earnings release slides final · • adjusted corporate expenses ~$130 - $135 million...

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