Post on 14-Jul-2015
MOVING THE WORLD AT WORK
Oshkosh Corporation(NYSE:OSK)
2015 Annual Shareholders’ MeetingFebruary 3, 2015
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 uncertainDoD 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 facilitiesexpansion, consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings maynot be achieved; global economic uncertainty, which could lead to additional impairment charges related to many of the Company’sintangible 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.
MOVING THE WORLD AT WORK
February 3, 20152015 Annual Shareholders' Meeting
2015 Annual Shareholders’ MeetingCharlie Szews - Chief Executive Officer
February 3, 2015MOVE: Enjoy the Ride
3
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-
96M
ar-9
7Se
p-97
Mar
-98
Sep-
98M
ar-9
9Se
p-99
Mar
-00
Sep-
00M
ar-0
1Se
p-01
Mar
-02
Sep-
02M
ar-0
3Se
p-03
Mar
-04
Sep-
04M
ar-0
5Se
p-05
Mar
-06
Sep-
06M
ar-0
7Se
p-07
Mar
-08
Sep-
08M
ar-0
9Se
p-09
Mar
-10
Sep-
10M
ar-1
1Se
p-11
Mar
-12
Sep-
12M
ar-1
3Se
p-13
Mar
-14
Sep-
14
Tota
l Ret
urn
(%)
OSKS&P 500BRK.AGDTDY
MOVING THE WORLD AT WORK
Reflections on Fiscal 2014
February 3, 20152015 Annual Shareholders’ Meeting 5
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
$10.0
FY14 FY13Net Sales Adjusted EPS*
OSK Full Year Performance
Net
Sal
es(b
illio
ns)
Adjusted EPS*
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
MOVING THE WORLD AT WORK
Non-Defense Segment Sales Growth
Consolidated Net Sales($ billions)
Despite challenges from lower defense spending…
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
Net SalesFY12 FY13 FY14
February 3, 20152015 Annual Shareholders' Meeting 7
Non-Defense Segment Sales($ billions)
$0.0
$2.0
$4.0
$6.0
Net SalesFY12 FY13 FY14
…we have grown non-defensesales at a solid pace...
MOVING THE WORLD AT WORK
Non-Defense Operating Income Growth
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
February 3, 20152015 Annual Shareholders' Meeting 8
Consolidated Adjusted Operating Income*
($ 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
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 returnP = Projected
February 3, 20152015 Annual Shareholders' Meeting
70
75
80
85
90
95
09/30/12 09/30/13 09/30/14
# Outstanding Shares
(Sha
res in m
illions)
>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
MOVING THE WORLD AT WORK
Our Company –Strong Brands, Market Leaders
February 3, 20152015 Annual Shareholders’ Meeting 10
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 recoveryin Australia
February 3, 20152015 Annual Shareholders' Meeting 11
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
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
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
MOVING THE WORLD AT WORK
Driving to FY15 MOVE Targets and Beyond
February 3, 20152015 Annual Shareholders’ Meeting 15
MOVING THE WORLD AT WORK
FY15 Target
FY15 MOVE ScorecardOn 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
FY15Estimate
February 3, 20152015 Annual Shareholders' Meeting
* Non-GAAP results. See Appendix for reconciliation to GAAP results.
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MOVING THE WORLD AT WORK
What to Expect from Oshkosh in FY15 Deliver MOVE strategy
– FY15 adjusted EPS* estimate rangeof $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.
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.
MOVING THE WORLD AT WORK
Our Commitment to Shareholders
February 3, 20152015 Annual Shareholders’ Meeting 19
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
MOVING THE WORLD AT WORK
For informationcontact:
Patrick N. DavidsonVice President, Investor Relations(920) 966-5939pdavidson@oshkoshcorp.com
Jeffrey D. WattDirector, Investor Relations(920) 233-9406jwatt@oshkoshcorp.com
February 3, 20152015 Annual Shareholders’ Meeting 21
MOVING THE WORLD AT WORK
February 3, 20152015 Annual Shareholders' Meeting 22
Appendix: Commonly Used AcronymsARFF Aircraft Rescue and Firefighting MECV Modernized Expanded Capability VehicleAWP Aerial Work Platform MRAP Mine Resistant Ambush ProtectedCapEx Capital Expenditures MSVS Medium Support Vehicle System (Canada)CNG Compressed Natural Gas NOL Net Operating LossDGE Diesel Gallon Equivalent NPD New Product DevelopmentDoD Department of Defense NRC National Rental CompanyEAME Europe, Africa & Middle East OH OverheadEMD Engineering & Manufacturing Development OI Operating IncomeEPS Diluted Earnings Per Share OOS Oshkosh Operating SystemFHTV Family of Heavy Tactical Vehicles OPEB Other Post-Employment BenefitsFMS Foreign Military Sales PLS Palletized Load SystemFMTV Family of Medium Tactical Vehicles PUC Pierce Ultimate ConfigurationGAAP U.S. Generally Accepted Accounting Principles R&D Research & DevelopmentHEMTT Heavy Expanded Mobility Tactical Truck RCV Refuse Collection VehicleHET Heavy Equipment Transporter RFP Request for ProposalHMMWV High Mobility Multi-Purpose Wheeled Vehicle ROW Rest of WorldIRC Independent Rental Company SMP Standard Military Pattern (Canadian MSVS)IT Information Technology TACOM Tank-automotive and Armaments CommandJLTV Joint Light Tactical Vehicle TDP Technical Data PackageJPO Joint Program Office TPV Tactical Protector VehicleJROC Joint Requirements Oversight Council TWV Tactical Wheeled VehicleJUONS Joint Urgent Operational Needs Statement UCA Undefinitized Contract ActionL-ATV Light Combat Tactical All-Terrain Vehicle UIK Underbody Improvement Kit (for M-ATV)LVSR Logistic Vehicle System Replacement UK United KingdomM-ATV MRAP All-Terrain Vehicle
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 0.02Earnings per share from continuing operations-diluted (GAAP) 3.91$ 4.16$
Fiscal 2015 Expectations
Fiscal Year EndedSeptember 30,
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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 EndedSeptember 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
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 EndedSeptember 30,
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 EndedSeptember 30,
Fiscal Year EndedSeptember 30,