oshkosh Q308_Slides

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  • 1. Earnings Conference CallThird Quarter Fiscal 2008August 1, 2008 Robert G. Bohn Chairman and Chief Executive OfficerCharles L. Szews President and Chief Operating OfficerDavid M. Sagehorn Executive Vice President and Chief Financial OfficerPatrick N. Davidson Vice President of Investor Relations

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 and the level of the Companys associated borrowing costs; the cyclical nature of the Companys access equipment, commercial and fire & emergency markets, especially during a recession, which many believe the U.S. has already entered; the Companys ability to offset rising steel, fuel and other 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; risks related to the collectibility of access equipment receivables; the Companys ability to turn around its Geesink business; 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 August 1, 2008. Except as set forth in such Form 8-K, we disclaim any obligation to update such forward-looking statements. 2 3. Oshkosh Fiscal Q3 2008 HighlightsSales increased 6.6% OSK Q3 Performanceto $1.97 billion(millions)Operating income* decreased $2,500 $300.05.9% to $181.2 millionOperating Income*Sales Revenue $250.0$1,969$2,000$1,847 EPS* decreased 1.7% to $200.0$1,500$192.7$1.19$150.0$181.2$1,000 $888 $100.0Revised FY 2008 EPS* $500 $82.6 $50.0estimate range of $0$0.0$3.15 to $3.30 20062007 2008 Sales RevenueOperating Income*$78.6 million of debt paydown* Figures exclude non-cash charges to operating income forasset impairment of $175.2 million or $173.1 million net of tax 3 4. Managing Proactively for Market Conditions Launched multiple cost reduction initiatives Reducing operating expenses Expanding global sourcing initiatives Aggressively raised pricing as previously announced Increasing focus on cash flow generation Inventory reduction Continuing to invest in areas of growth4 5. Access Equipment Europe: Double-digit growth in Q3, even withreduced outlook Mixed results expected in 2009 North America: IRC demand remained strong in Q3 Continuing to expand presence in emerging markets Adjusted production rates New pricing effective October 1 to address cost pressures5 6. DefenseSignificant parts & service growthin quarterRecently signed supplementalsupports strong sales outlookRamp-up of Harrison Streetfacility is completeJLTV downselect decisionexpected late summer or fall 6 7. Fire & EmergencyStrong orders and market sharegains for Pierce in a down marketNew product innovations continueto drive customer activity atPierceContinued strong internationalairport products activity, primarilyin AsiaWeakness remains for towing &recovery and mobile medicalmarkets7 8. CommercialGeesink Norba Group update: Impairment charges of $175.2 million due to reduced outlook and higher operating costs as announced on June 26 New managing director reinvigorating team Restructuring actions expected to yield improved performanceU.S. concrete markets remain softDomestic refuse collection productsales grew over prior year quarter inslightly down market8 9. Consolidated Results (Dollars in millions, except per share amounts) Third QuarterComments 2008*2007 Solid results in access equipment and defense Net Sales$1,969.3 $1,847.3 Challenging market% Growth 6.6%108.1% conditions impacting commercial and fire & emergency segments Operating Income $ 181.2$ 192.7 Limited third quarter% Margin 9.2%10.4% impact from rising steel% Growth (5.9)%133.2%and other commodity prices Debt reduction of $78.6 Earnings Per Share$ 1.19$ 1.21 million% Growth (1.7)%68.1%* Figures other than net sales exclude non-cash charges to operating income for asset impairment of $175.2 million, or $173.1 million net of tax ($2.33/share)9 10. Access Equipment(Dollars in millions, except per share amounts) CommentsThird Quarter 2008 2007Double-digit Europeansales growth vs. prior yearNet Sales $920.2$873.8Lower North American% Growth5.3% NAperformance driven byweak economyOperating Income$125.2$ 98.3Improvement driven by:% Margin13.6% 11.3% Currency Aftermarket parts & service% Growth27.3%NA Product mixBacklog down 51.7%vs. prior year10 11. Defense(Dollars in millions, except per share amounts) CommentsThird Quarter2008 2007 Strong performancefrom both parts &Net Sales $489.5$376.3service and truck % Growth 30.1% 29.1%deliveriesMargin impacted byOperating Income$ 66.5$ 65.3product mix & % Margin 13.6% 17.3% development costs % Growth2.0% 33.1% Backlog down 21.9%vs. prior year 11 12. Fire & Emergency(Dollars in millions, except per share amounts) Third Quarter Comments2008 2007 Solid performance by domestic fire apparatusNet Sales $281.3$290.2 and international airport % Growth (3.1)%13.7% products offset by towing & recovery and mobile medicalOperating Income$ 17.9$ 29.0 Margins impacted by: % Margin6.4% 10.0% Lower volumes % Growth (38.2)% (2.7)% Product mix Facility work stoppage Backlog up 10.3% vs. prior year 12 13. Commercial(Dollars in millions, except per share amounts) CommentsThird Quarter Geesink inefficiencies2008*2007 and lower concreteNet Sales$294.5 $317.8 mixer sales drove loss % Growth (7.3)% (9.3)% Continued solid domestic refuseOperating Income $ (6.2)$ 17.8 collection orders % Margin (2.1)% 5.6%Backlog up 11.6% vs. prior year % Growth(134.5)%(29.7)%* Figures other than net sales exclude non-cash charges to operating income for asset impairment of $175.2 million13 14. Oshkosh Fiscal 2008 EstimatesRevenue of $7.03 to $7.10 billionExpectations:Access Equipment sales toincrease approximately 20%Defense sales toincrease approximately 35%Fire & Emergency salesto increase slightlyCommercial sales todecrease approximately 15% 14 15. Oshkosh Fiscal 2008 Estimates Operating Income* of $560 to $575 million Expectations: Access Equipment margins to improve by 80 to 100 bps Defense margins to decline by 330 to 350 bps Fire & Emergency margins to decline by 150 to 170 bps Commercial operating loss* of 2.5% to 3.0% of sales Corporate expense to increase by approximately $20 million* Figures exclude non-cash charges to operating income for asset impairment of $175.2 million15 16. Oshkosh Fiscal 2008 EstimatesOther EstimatesInterest expense and otherApproximately $215 million (expense)Effective tax rate34%*Equity in earnings$8.0 to $8.5 million (income)Average shares outstanding 75 million* Figures exclude non-cash charges to operating income for asset impairment of $175.2 million16 17. Oshkosh Fiscal 2008 EstimatesFY08 EPS* estimate range of $3.15 to $3.30 Q4 EPS estimate range of $0.50 to $0.65 Capital spending expected to approximate $85 million Expect debt between $2.85 and $2.90 billion at fiscal year-end* Figures exclude non-cash charges for asset impairment of $2.31/share 17 18. Oshkosh Fiscal 2009 Comments Segment outlooks: DefenseTop line growth with modestly lower operating income margin Fire & EmergencySteady performer with solid backlog CommercialRecent restructuring actions expected to yield improvedperformance at GeesinkSlightly improved outlook for concrete mixers and domesticrefuse collection Access EquipmentGrowth in select markets, but lower expected total revenue Driving cost reduction and resizing of operations Focus on cash flow18 19. Appendix: Non-GAAP Financial Measures Fiscal 2008 Estim atesThe tables below present reconciliations of the Companys presented non-GAAP measures Low Highto the most directly comparable GAAP measures (in millions, except per share amounts): End EndThree Months Non-GAAP pre-tax incom e$ 345$360 Ended Intangible asset im pairm ent charges(175) (175)June 30, 2008GAAP pre-tax incom e$ 170$185 Non-GAAP operating incom e$ 181.2Non-GAAP incom e tax expense$ 118$122Intangible asset im pairm ent charges(175.2) Incom e tax benefit associated w ith intangibleGAAP operating incom e$ 6.0 asset im pairm ent charges(2)(2) GAAP incom e tax expense$ 116$120Non-GAAP net incom e$88.8Intangible asset im pairm ent charges(175.2) Non-GAAP effective incom e tax rate 34.0%34.0%Incom e tax benefit assoicated w ith intangibleGAAP effective incom e tax rate 68.2%64.9% asset im pairm ent charges 2.1GAAP net (loss) incom e $ (