oshkosh OSK_Q4_2008_Earnings_Release_Slides

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  • 1. Robert G. BohnChairman and Chief Executive Officer Charles L. SzewsPresident and Chief Operating Officer David M. SagehornExecutive Vice President and ChiefFinancial Officer Patrick N. DavidsonVice President of Investor Relations Built strong. Building for the future. Earnings Conference Call Fourth Quarter Fiscal 2008 November 3, 2008

2. Forward Looking Statements Our remarks that follow, including answers to your questions and these slides, include statements that we believe are 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 Companys 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 Companys control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the consequences of financial leverage associated with the JLG acquisition, especially given recent turmoil in the credit markets, the level of the Companys borrowing costs and the Companys ability to maintain compliance with financial covenants in its credit agreement; the cyclical nature of the Companys access equipment, commercial and fire & emergency markets, especially during a global economic downturn and credit crisis; the Companys ability to offset higher steel and raw material costs through other cost decreases or product selling price increases; the expected level and timing of U.S. Department of Defense procurement of products and services and funding thereof; risks related to reductions in government expenditures and the uncertainty of government contracts; risks associated with international operations and sales, including foreign currency fluctuations; the Companys ability to turn around its Geesink business; risks related to the collectibility of access equipment receivables; and the potential for increased costs relating to compliance with changes in laws and regulations. Additional information concerning these and other factors and assumptions is contained in our filings with the SEC, including our Form 8-K filed November 3, 2008. Except as set forth in such Form 8-K, we disclaim any obligation to update such forward-looking statements.Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 2 3. Oshkosh Fiscal Q4 2008 HighlightsSales increased 5.8% OSK Q4 Performanceto $1.9 billion(millions)Operating income decreased$300.0$2,00032% to $122 million$1,800$1,897 Operating Income$250.0 $1,792$1,600EPS decreased 37% to $0.72, $1,400Net Sales$200.0but exceeded previous estimates $1,200$1,000$150.0 $179.2Inventory reduced by $800 $904$100.0 $600$122.1$241 million $400$50.0 $76.6 $200$202 million of debt reduction $0 $0.0 200620072008Net SalesOperating Income Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.3 4. Oshkosh Fiscal 2008 Highlights Sales increased 13.2% to $7.1 billion International sales 30% of total, reaching $2.1 billion Market share gains and record orders at Pierce and domestic refuseOperating income decreased 1.5% to $582 million* EPS decreased 5.9% to $3.37* $283 million of debt reduction Decisive actions taken to raise prices, reduce costs and drive cash flow in the face of: North American and European economic downturn, escalating steel and fuel costs and credit crisisContinued to improve talent across the Company * Figures exclude non-cash charges to operating income for asset impairment of $175.2 million or $173.1 million net of tax Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.4 5. Current State ConditionsMarket volatility and credit crisis make it very difficult to project fiscal 2009Defense, fire and domestic refuse backlogs partially mitigate difficultiesBetter positioned to address challenging conditions Improved cost structure; eliminated an expected $100 million of annual costs Lowered debt and inventories Actively sourcing in low-cost countries Re-energizing operations with Global Manufacturing Services executive Moving forward with plan seeking to avoid or delay credit agreementamendment in fiscal 2009 Action plans to drive $500 million or more in debt reduction Will assess ability to achieve plan quarterly Continuing to invest in limited global and new product development initiativesBuilt strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.5 6. Access Equipment Strong results in emerging markets did not offset weakness in North America and, to a lesser extent, Western Europe Second highest fiscal Q4 sales for JLGTiming of price increase limiting recovery of costs Responsible inventory reduction Outlook for 2009 North America Europe ROW Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 6 7. Defense Continued truck and parts & service growth during quarter Recently announced FHTV contract (HEMTT A4) Additional MTVR reducible-height armor kit award UK LET 2 preferred bidder notification Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 7 8. Fire & Emergency Pierce continued to gain share and strengthen backlog, even with softer municipal spending Continued strong international airport products activity, primarily in Asia Recent uptick in broadcast vehicle activity Wilson Jones promoted to segment president Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 8 9. CommercialU.S. concrete markets remaindepressedDomestic refuse collection vehiclesales grew in slightly down marketCNG-powered market is growing 40+% savings versus diesel After credits, affordable upfront costGeesink Norba exitingrestructuring phase Fiscal 2009 expected to benefit from actions taken in fiscal 2008 Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.9 10. Consolidated Results (Dollars in millions, except per share amounts)Fourth QuarterComments20082007Sales led by defense,Net Sales$1,896.5$1,792.4 fire & emergency anddomestic refuse % Growth5.8% 98.2%businesses Operating Income$122.1$179.2Margins impacted by: Volume % Margin6.4% 10.0% Adverse sales mix % Growth (31.9)% 134.1% Unrecovered steel and other costsEarnings Per Share $0.72$1.14$202 million of debt % Growth (36.8)% 72.7% reduction Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 10 11. Access Equipment(Dollars in millions)Comments Fourth Quarter 2008 2007 Lower revenues in North America and Net Sales$742.1 $840.0 Western Europe% Growth (11.7)% NAMargin decline due to: Lower volume Operating Income$50.2$114.5 Steel costs% Margin6.8%13.6% Adverse product mix% Growth (56.2)%NA Backlog down 61.4% vs. prior year Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.11 12. Defense(Dollars in millions) Comments Fourth Quarter 2008 2007 Increased truck and parts & service sales Net Sales$553.4 $422.5% Growth31.0%28.6% Margin impacted by higher volume on lower margin contracts Operating Income$75.1 $72.4% Margin13.6%17.1% Backlog down 22.9%% Growth 3.8%32.0% vs. prior year due largely to timing of FHTV3 contract negotiations Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.12 13. Fire & Emergency(Dollars in millions) Fourth Quarter Comments 20082007Sales driven by: Net Sales$366.5 $291.8 Domestic fire apparatus Timing of international% Growth25.6% 8.7% fire apparatus deliveries Airport products Operating Income$33.2 $26.3Margins impacted by:% Margin9.1%9.0% Volume% Growth26.2% 22.8% Higher costsBacklog up 9.6% vs. prioryear Built strong.OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future. 13 14. Commercial(Dollars in millions)Comments Fourth Quarter20082007 Concrete markets remain weak in U.S. Net Sales$261.2 $249.6% Growth 4.7% (21.8)% Continued gains with domestic refuse orders Operating Loss$(6.9) $(3.1) Margins impacted by:% Margin(2.6)%(1.2)% Geesink rationalization% Growth(123.7)%(118.0)%and efficiency costs Concrete volumes Backlog flat with prior year Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.14 15. Oshkosh Fiscal 2009 EstimatesRevenue of $6.3 to $6.7 billionExpectations: Access Equipment sales to decrease approximately 30% Defense sales to increase approximately 20-25% Fire & Emergency sales to decrease approximately 5-10% Commercial sales flat to down approximately 10%Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.15 16. Oshkosh Fiscal 2009 EstimatesOperating Income of $350 to $400 million Expectations:Access Equipment margins ofapproximately 3.5% to 4.5%Defense margins to declineby 200 to 250 bpsFire & Emergency margins to increaseapproximately 100 to 150 bpsCommercial margins slightly better thanbreak-evenCorporate expenses flatto slightly down Built strong. OSK - Fiscal Q4 2008 Conference Call - Nov. 3, 2008 Building for the future.16 17. Oshkosh Fiscal 2009 EstimatesOther EstimatesInterest expense and otherApproximately $180 million (expense)*Effective tax rate33%Equ