JLG Industries, Inc. - library.corporate-ir.netlibrary.corporate-ir.net/library/77/777/77716/items/142767/JLG... · JLG …Focused on Access ... JLG Industries, Inc. Focused on Access

JLG…Focused on Access March 1, 2005

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Lehman Brothers Conference 1 March 18, 2005

JLG Industries, Inc.Focused on Access

Lehman Brothers High Yield Bond & Syndicated Loan

ConferenceMarch 18, 2005


JLG RepresentativesJLG Representatives

James H. Woodward, Jr.Executive Vice President &

Chief Financial Officer

Robert E. CribbsVice President & Treasurer

James H. Woodward, Jr.Executive Vice President &

Chief Financial Officer

Robert E. CribbsVice President & Treasurer


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Safe Harbor StatementSafe Harbor StatementForward Looking Statements represent the Company’s expectations or beliefs concerning future events. Actual results may differ materially. Any forward looking statements made by or on behalf of the Company may involve certain risks and uncertainties, including cyclical demand, a consolidating customer base, competition, continued innovation, product liability, availability of product components and other risks, as detailed in the Company’s SEC reports, including the report on Form 10-Q for the fiscal quarter ended January 30, 2005. Undue reliance should not be placed on any forward looking statements made by or on behalf of the Company. The Company undertakes no obligations to publicly update or revise any forward looking statement. Non-GAAP metrics included in this presentation reflect information that management believes is useful in analyzing the Company's performance. Reconciliation of these metrics to corresponding GAAP measures appears at the end of these presentation materials and/or on the investor relations section of our website www.jlg.com.


AgendaAgenda

Overview of JLG Five-year strategic planFinancial reviewOutlook Questions


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Product Portfolio Product Portfolio

Hydraulic Telescopic Excavator

Vertical Mast Lift

European-Design Telehandler

Rear-Pivot Telehandler

Military-Design Telehandler

Traversing Boom Telehandler

All-Wheel Steer Telehandler

Boom Lift

Scissor Lift


Good News from the Second QuarterGood News from the Second Quarter

Year-over-year consolidated results• Record revenues for the quarter up 49%

– U.S. revenues up 44%– International revenues up 65%

• Operating profit margin improved 50 bps• Trailing 12-month EBITDA up 38%


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More Good News . . .More Good News . . .

Year-over-year consolidated results• DSO improved to 84 from 115• Inventory turns improved to 6.4 from 4.6• Net debt reduced $17 million• Strong order board at $290 million vs. $111

million

New product introductions at CONEXPO


More Good News . . .More Good News . . .Steel costs – slowing escalation• Contract negotiations concluding• Commitments in place for full year demand

Supplier chain management• Component availability improving• Costs beginning to stabilize

New product pricing structure in effect


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We Are Addressing the Steel SituationWe Are Addressing the Steel SituationSteel prices began rising dramatically in the Spring of 2004 and continued into the SummerWe have responded with:― 2.755% steel surcharge in March 2004 (realized only 1.6% through calendar year end)― Increased steel surcharge to 3.5% in January 2005 (announced in September)― Increased base machine prices 3.0% in January 2005 (announced in September)― Reduced discounts by 1% in January 2005

Full effect of pricing actions will be realized in the second half of the fiscal year― ~6.0% increase in FQ3 versus prior year

Combination of price increases and cost reductions should neutralize raw material prices going forward

Steel prices began rising dramatically in the Spring of 2004 and continued into the SummerWe have responded with:― 2.755% steel surcharge in March 2004 (realized only 1.6% through calendar year end)― Increased steel surcharge to 3.5% in January 2005 (announced in September)― Increased base machine prices 3.0% in January 2005 (announced in September)― Reduced discounts by 1% in January 2005

Full effect of pricing actions will be realized in the second half of the fiscal year― ~6.0% increase in FQ3 versus prior year

Combination of price increases and cost reductions should neutralize raw material prices going forward

FQ3 FQ4 FQ1 FQ2 FQ3

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR Steel SurchargeSteel Surcharge

Base Price IncreaseBase Price Increase

Total Total

2.755% (only 1.6% realized given contracts)

1.6%

3.5%

3.0%

7.5%

Summary of Pricing Actions

Reduced DiscountsReduced Discounts 1.0%


FiveFive--Year Strategic PlanYear Strategic Plan


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1FiveFive--Year Strategic PlanYear Strategic Plan

Grow access business to $2 billion

2 Diversify channels to market

3 Expand our after-market business

4 Eliminate cost from our entire business

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6

7

Institutionalize Six Sigma

Grow through acquisitions, joint ventures and alliances

Attract, develop and retain

quality people


Financial OverviewFinancial OverviewRobert E. Cribbs

Vice President & Treasurer


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Financial OverviewFinancial Overview($ in millions) Fiscal Year Ended July 31, 2001 2002 2003 2004 LTM (2) Operating Data: Machinery $835.9 $621.3 $594.5 $973.6 $1,146.1 Services & AFS 128.0 148.8 156.6 220.4 257.8 Revenues $963.9 $770.1 $751.1 $1,194.0 $1,403.9

% Growth (8.7%) (20.1%) (2.5%) 59.0% 17.6%

EBITDA 105.3 56.4 62.9 105.7 98.0 % Margin 10.9% 7.3% 8.4% 8.8% 7.0%

Capital Expenditures, net 10.7 12.4 10.3 12.0 10.4 % of Revenues 1.1% 1.6% 1.4% 1.0% 0.7%

Balance Sheet Data: Total Balance Sheet Debt $299.2 $279.3 $460.6 $423.5 $383.5 Net Debt (1) 368.6 198.9 171.1 269.6 286.1 Shareholders' Equity 333.4 236.0 247.7 281.3 284.7

Performance Ratios: Total Balance Sheet Debt /

Book Capitalization 47% 54% 65% 60% 57%

Total Balance Sheet Debt / EBITDA 2.8x 4.9x 7.3x 4.0x 3.9x

Net Debt (1) / EBITDA 3.5x 3.5x 2.7x 2.6x 2.9x Note: Acquired OmniQuip in August 2003 and Delta Manlift SAS in April 2004.

(1) Net Debt reflects total balance sheet debt plus off-balance financing, less cash and limited recourse debt from finance receivable monetizations.(2) Through January 30, 2005


$353

$282

$249

$425

$214

$156

$233

$160

$218

$307

$237

$156

$230

$207

$151

$319$292

$219 $209 $206

$234

$340

Revenues by QuarterRevenues by Quarter

% Ann. Growth 46.6 (8.7) (20.1) (2.5) 59.0 46.71

(1) Represents six months ended 1/30/05 versus six months ended 1/25/04(1) Represents six months ended 1/30/05 versus six months ended 1/25/04

Q1 Q2 Q3 Q4 Q1 Q2

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4


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Operating Profit MarginOperating Profit Margin

7.7%

4.0%4.8%

6.4%

1.4%

-3%

0%

3%

6%

9%

FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 H1


Trailing 12Trailing 12--Month EBITDAMonth EBITDA

$98$91

$106

$69 $71

$87

7.0%

7.0%

8.8%8.6%

8.0%8.6%

$0

$20

$40

$60

$80

$100

$120

FY04Q1 FY04Q2 FY04Q3 FY04Q4 FY05Q1 FY05Q2

EBIT

DA

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

EBIT

DA

Mar

gin

EBITDA EBITDA Margin$ in millions


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Net Capital ExpendituresNet Capital Expenditures

$10.4

$12.0

$10.3

$12.4

$10.7

1.6%

1.4%

1.1% 1.0%

0.9%

$0

$2

$4

$6

$8

$10

$12

$14

FY 2001 FY 2002 FY 2003 FY 2004 LTM 1-30-050.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

$ in millions


Net Debt & Free Cash FlowNet Debt & Free Cash Flow

$286$270

$369

$199$171

($226)

$17

($98)

$28

$170

$0

$100

$200

$300

$400

FY 2001 FY 2002 FY 2003 FY 2004 LTM 1-30-05

Net

Deb

t

($300)

($200)

($100)

$0

$100

$200

Free

Cas

h FL

ow

Net Debt Free Cash Flow$ in millions

Net debt reflects total balance sheet debt plus off-balance sheet financing, less cash and limited recourse debt from finance receivables monetizations.


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Transaction OverviewTransaction OverviewTransaction SourcesTransaction Sources CapitalizationCapitalization

Transaction UsesTransaction Uses

(1) Includes fair value of interest rate swaps, current portion of long-term debt and other misc. debt(2) Based on LTM EBITDA of $98.0 million (1) Includes fair value of interest rate swaps, current portion of long-term debt and other misc. debt(2) Based on LTM EBITDA of $98.0 million

Equity clawback expireson June 15, 2005

Redeem 35% of Sr. Sub. Notes $61.3 Redemption Premium plus interest through redemption date

6.9

Fees & Expenses 6.8 General Corporate Purposes (Cash) 51.3

Total Uses $126.3

As of January 30, 2005 Actual As Adjusted Cash and Cash Equivalents $24.3 $76.8 Revolving Credit Facility 0.0 0.0 Cash Management Facility 1.9 1.9 8.25% Senior Notes Due 2008 125.0 125.0 8.375% Senior Sub. Notes Due 2012 175.0 113.8 Other Debt 1 4.0 2.2 $305.9 $242.9

Off-Balance Sheet Debt 4.5 4.5 Less: Cash & Cash Equilavents (24.3) (76.8) Net Debt $286.1 $170.6 Stockholders’ Equity $284.7 $400.8

Selected Credit Statistics: Net Debt / LTM EBITDA (x)2 2.9 1.7 Net Debt / Net Debt plus Stockholders’ Equity (%)

50.1

29.9

Common Stock $126.3 Total Sources $126.3


Capital Structure Capital Structure

$114 M* 8.375% June 14, 2012$125 M 8.25% May 1, 2008$175 M Revolver Sept 23, 2006

Financial CovenantsFinancial CovenantsLeverage ratios: Net Funded Debt / EBITDA 5 : 1

Net Funded Senior Debt / EBITDA 2 : 1Fixed charge coverage ratio: Fixed charges / EBITDA 2 : 1Tangible net worth: < $194 million + 50% Net Income

AmountAmount CouponCoupon MaturityMaturity

* Adjusted for equity share offering and clawback transaction


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YTD ReconciliationYTD ReconciliationNet RevenuesNet Revenues EBITDAEBITDA Net IncomeNet Income EPSEPS

$ in millions, except per share dataFavorable (Unfavorable)

FY2004 Actual $450.1 $37.0 $2.7 $0.06Sales volume 210.0 48.6 31.5 0.71Product & sales mix (1.1) (0.8) (0.01)Price / Currency 5.9 3.8 0.09Product costs 0.2 0.2 0.00Estimated net unrecovered steel costs (47.8) (30.8) (0.70) Integration expense 3.1 1.9 0.05Other (Warranty, Freight, Inventory, Mfg. Profit Contribution) (11.0) (7.1) (0.16)

Gross profit contribution 210.0 (2.1) (1.2) (0.02)SA&PD (9.2) (5.9) (0.13)Integration expense 1.9 1.2 0.03Currency (1.8) (1.2) (0.03)

Operating profit contribution 210.0 (11.2) (7.1) (0.15)Interest expense - 1.4 0.03Miscellaneous (1.9) (1.2) (0.03)Currency gains and losses 4.6 3.0 0.06Tax rate - - -Add back depreciation & amortization of intangibles 0.8 - -

FY2005 Actual $660.1 $29.3 ($1.2) ($0.03)


OutlookOutlook


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OutlookOutlook

Fiscal year 2005• Continuing global demand for access products• Revenue growth 30 to 35% for full year• Full effect of pricing structure in second half• Stabilizing component availability• Steel costs stable• EPS target of $1.05 to $1.15*

* Excluding one-time charge associated with early extinguishment of debt


Growth Opportunities: North AmericaGrowth Opportunities: North AmericaAerial Work PlatformsTelehandlersServicePLUSBig Box RetailersHome Improvement Industrial Distribution


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Growth Opportunities: InternationalGrowth Opportunities: InternationalAerial Work PlatformsTelehandlersExcavatorsIndustrial DistributionEquipment Services


Investment CharacteristicsInvestment CharacteristicsAccess industry leader• Aerial work platforms — #1 globally• Telehandlers — #3 globally and

#1 in North America

Technology leader

Extensive global presence

Proven acquisition strategy

Strong and experienced management team


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“If the work is in the air, “If the work is in the air, JLG equipmentJLG equipment

will be there”will be there”


Reconciliations of Reconciliations of NonNon--GAAP Measures GAAP Measures

to GAAPto GAAP


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Financial Overview Financial Overview –– EBITDA Reconciliation EBITDA Reconciliation $ in thousands

EBITDA AND EBITDA MARGINS(in thousands)

LTMJanuary 30,

2005 2004 2003 2002 2001Net (loss) income $22,713 $26,649 $12,392 $12,878 $34,206Interest expense 35,992 38,098 27,985 16,255 22,195Income tax (benefit) provision 12,815 15,232 2,635 6,343 20,091Depreciation and amortization 26,475 25,681 19,937 20,959 28,775EBITDA $97,995 $105,660 $62,949 $56,435 $105,267

Revenues $1,403,942 $1,193,962 $751,128 $770,070 $963,872

EBITDA Margin 7.0% 8.8% 8.4% 7.3% 10.9%

We monitor our EBITDA, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. EBITDA also is an indicator of profitability, particularlyin our capital-intensive industry. EBITDA reflects our earnings (loss) before interest, taxes and depreciation and amortization. EBITDA as presented differsfrom measures of EBITDA calculated for purposes of financial covenants in our note indentures and senior credit facilities.

Fiscal Year Ended July 31,


Trailing 12Trailing 12--Month EBITDA ReconciliationMonth EBITDA Reconciliation$ in thousands JLG INDUSTRIES, INC.

EBITDA AND EBITDA MARGINSTRAILING TWELVE MONTH PERIODS

(in thousands)

January 30, October 31, July 31, April 25, January 25, October 26,2005 2004 2004 2004 2004 2003

Net income $22,713 $17,387 $26,649 $17,050 $10,528 $12,596Interest expense 35,992 37,218 38,098 38,469 35,833 32,357Income tax provision 12,815 9,765 15,232 5,957 2,085 2,777Depreciation and amortization 26,475 26,283 25,681 25,202 22,774 21,155EBITDA $97,995 $90,653 $105,660 $86,678 $71,220 $68,885

Revenues $1,403,942 $1,287,038 $1,193,962 $1,002,360 $889,443 $804,226

EBITDA Margin 7.0% 7.0% 8.8% 8.6% 8.0% 8.6%

We monitor our EBITDA, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. EBITDA also is an indicator of profitability, particularly in our capital-intensive industry. EBITDA reflects our earnings before interest, taxes and depreciation and amortization. EBITDA as presented differsfrom measures of EBITDA calculated for purposes of financial covenants in our note indentures and senior credit facilities.


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Net Debt ReconciliationNet Debt Reconciliation$ in thousands

January 30, July 31, July 31, July 31, July 31,2005 2004 2003 2002 2001

Revolving credit facilities -$ -$ -$ -$ 275,000$ $15 million cash management facility 1,944 - - - - $25 million overdraft credit facility - - - 13,935 21,685 $125 million senior notes 125,000 125,000 125,000 - - $175 million senior subordinated notes 175,000 175,000 175,000 175,000 - Miscellaneous debt 5,128 5,236 1,983 1,909 2,502 Fair value of interest rate swaps (6,120) (8,814) (12,347) 914 - Gain on terminated interest rate swap 4,981 5,318 5,994 - - Bank debt and notes 305,933 301,740 295,630 191,758 299,187 Limited recourse debt from finance receivables monetizations 77,601 121,794 164,940 87,571 - Total balance sheet debt 383,534 423,534 460,570 279,329 299,187 Net present value of off-balance sheet rental fleet lease 755 1,070 2,341 5,582 16,656 Net present value of off-balance sheet production equipment leases 3,709 4,399 5,941 7,749 11,448 Accounts receivable securitization - - - - 50,600 Total off-balance sheet financing 4,464 5,469 8,282 13,331 78,704 Total balance sheet debt and off-balance sheet financing 387,998 429,003 468,852 292,660 377,891 Less: cash 24,305 37,656 132,809 6,205 9,254 Less: limited recourse debt from finance receivables monetizations 77,601 121,794 164,940 87,571 - Net debt $286,092 $269,553 $171,103 $198,884 $368,637

Shareholders' Equity $284,746 $281,270 $247,714 $236,042 $333,441

Total Balance Sheet Debt-to-Total Balance Sheet Debt plus Book Capitalization 57% 60% 65% 54% 47%

EBITDA $97,995 $105,660 $62,949 $56,435 $105,267

Total Balance Sheet Debt/EBITDA 3.9 x 4.0 x 7.3 x 4.9 x 2.8 x

Net Debt/EBITDA 2.9 x 2.6 x 2.7 x 3.5 x 3.5 x

We monitor our net debt, which is a supplemental measure to GAAP that provides additional information concerning our leverage position and our historical ability to meet debt service and capital expenditure and working capital requirements. We define net debt as the sum of total balance sheet debt and other off-balance sheetfinancing, minus cash and limited recourse debt arising from our monetizations of customer finance receivables.


Free Cash Flow ReconciliationFree Cash Flow Reconciliation$ in thousands

LTMJanuary 30,

2005 2004 2003 2002 2001Net (loss) income $22,713 $26,649 $12,392 ($101,592) $34,206Adjustments to reconcile net (loss) income to cash flow from operating activities:Non-cash items 17,952 30,555 21,278 136,468 34,417 Accounts receivable (6,935) (66,296) (35,324) (40,110) (18,949) Inventories (29,119) 9,188 43,137 24,462 (41,807) Other current assets (13,689) 8,780 (15,960) 3,110 (1,653) Accounts payable 43,131 33,207 (46,026) 52,685 (39,897) Accrued expenses 16,540 4,726 3,254 12,084 (1,247) Finance receivables (10,463) (6,112) 40,487 57,154 (132,790) Other cash from operations (20,396) (11,090) (3,295) (28,136) (5,722) Purchases of property, plant and equipment (10,924) (12,387) (10,806) (12,954) (15,787) Proceeds from sale of property, plant and equipment 162 90 216 172 416 Purchases of equipment held for rental (33,677) (26,689) (16,342) (26,429) (33,406) Proceeds from sale of equipment held for rental 48,758 33,269 19,063 28,924 31,251 Cash portion of acquisitions (14,291) (109,557) - - - Other cash from investments 378 333 (689) 405 (1,540) Payment of dividends (881) (871) (859) (1,058) (1,699) Purchase of common stock - - - - (22,201) Exercise of stock options 7,880 2,414 93 2,033 (781) Effect of exchange rate changes on cash (4,696) 258 1,852 (807) 102 Seller financing - (10,000) - - - Capital lease assumed in OmniQuip acquisition - (3,630) - - - Debt assumed in Delta acquisition (103) (103) - - - Other (1) 4,976 (1,184) 15,310 63,342 (8,679) Free Cash Flow $17,316 ($98,450) $27,781 $169,753 ($225,766)

(1) Includes changes in other off-balance sheet debt.

In addition to measuring our cash flow generation and usage based upon the Statements of Cash Flows, we also measure our free cash flow. We define free cash flow as cash flow from operating activities, investing activities, payment of dividends, exercise of stock options, and the effectof exchange rate changes on cash less changes in accounts receivable securitization, limited recourse debt from finance receivables monetizations andoff-balance sheet debt. Our measure of free cash flow may not be comparable to similarly titled measures being disclosed by other companies and is not ameasure of financial performance that is in accordance with GAAP. We utilize free cash flow to explain the change in our net debt position from the prior period.

Fiscal Year Ended July 31,

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JLG Industries, Inc. - library.corporate-ir.netlibrary.corporate-ir.net/library/77/777/77716/items/142767/JLG... · JLG …Focused on Access ... JLG Industries, Inc. Focused on Access