OSHKOSH CORP Q4 FY2024 earnings call

• 2024 revenue was $10.8 billion and adjusted earnings per share was $11.74, with an adjusted operating income margin of 10.5% (a 110-basis-point increase over 2023). - Participated at CES in Las Vegas, showcasing innovative products like the next-generation delivery vehicle for USPS and HARR-E concept for autonomous refuse collection. - Named to the Dow Jones Sustainability World Index for the sixth consecutive year. - 2025 expects adjusted EPS in the range of $11. - Access team focused on execution in a softer market environment with a healthy backlog of $1.8 billion. - Vocational segment saw strong revenue growth and launched all-new Volterra ZFL eRCV. - Defense segment expects progress on FMTV contract extension and NGDV production ramp-up for USPS.

Access Segment: Fourth quarter sales were solid as the industry normalized. Anticipates lower sales in 2025, particularly in the first half, but expects improving conditions in the second half. 2025 sales estimate is approximately $4.4 billion with an adjusted operating margin of about 13%. Vocational Segment: Fourth quarter revenue grew nearly 20% year-over-year with a robust adjusted operating income margin of 14%. 2025 sales estimate is approximately $3.8 billion with an adjusted operating margin of approximately 15%. Defense Segment: 2025 sales estimate is approximately $2.3 billion with an adjusted operating margin of approximately 4%. Impacted by legacy fixed-price contracts currently, but expects better results with improved pricing terms on TWV programs and NGDV production ramp-up.

• 2025 consolidated sales expected to be approximately $10.6 billion. - Adjusted operating income estimated to be approximately $1 billion and adjusted earnings per share estimated to be approximately $11. - Access sales estimated at $4.4 billion with adjusted operating margin of about 13%. - Vocational sales estimated at $3.8 billion with adjusted operating margin of approximately 15%. - Defense sales estimated at $2.3 billion with adjusted operating margin of approximately 4%. - Expect first quarter adjusted EPS to be approximately $2. - Capital expenditures expected to be about $250 million in 2025 and free cash flow in the range of $300 million to $400 million.

• Tariffs and supply chain issues that could impact product pricing and availability. - Legacy fixed-price contracts in Defense that may continue to impact margins in the short term.

Q: What's the growth outlook in the core Vocational business, especially for the municipal fire truck segment?

A: The municipal fire truck market is strong. Municipalities want new technology and Oshkosh is providing it. They're driving investment and effort to increase throughput in manufacturing plants, including adding capacity at the Murfreesboro plant. The market for municipal fire trucks is healthy with municipalities upgrading fleets.

Q: What level of margins are anticipated from the full production rate of the US Postal contract exit in Defense?

A: While not providing specific guidance on USPS, it's seen as accretive to the overall Defense business and details will be discussed at Investor Day and closer to 2026.

Q: How to think about the visibility in Access on first half vs second half and key drivers of improving conditions in second half?

A: Market visibility comes from customer relationships and communication. Fleet utilization is healthy. Private non-residential construction is under pressure, leading to more fleet replacement. Customers give insight into the market, indicating more typical seasonality with lower first half and building momentum in second half.

Q: Evolution of AeroTech integration and synergies in 2025?

A: AeroTech is a strong business in secular growth. CES showcases cutting-edge technology like autonomous jet bridges and iOPS connected solutions. The technologies known by Oshkosh and AeroTech are common, allowing acceleration of synergies. Excited about the healthy future of AeroTech.

Q: Color on Access sales decline, price vs volume decline and split by first half vs second half?

A: More pronounced in first half. Disciplined approach to pricing, and most decline in volume is seen in first half. Good dialogues with customers provide visibility into the year's shape.

Q: Commentary on customer feedback split between nationals and independents in Access?

A: Nationals tend to get mega projects and it's accelerating. Independents' situation depends on the market they serve, with some serving healthy markets and others exposed to private construction pressure. Equipment utilization is healthy.

Q: Mix of ICE vs BEB in NGDV?

A: Consistent with what's always talked about. No changes to report on mix as it's in line with previous discussions. Postal Service is delighted with the productivity benefits of the vehicle.

Q: Exposure to tariffs from Mexico and Canada and pricing strategy?

A: Vast majority of products sold in US are made in US. For global supply chain, will make adjustments to mitigate tariff impact. In Europe, shifted production from China to European operations to serve European market. Will mitigate tariff impact on Access through similar adjustments.

Q: Defense margin cadence, especially in Q1 and towards full production of NGDV?

A: Q1 expected to be lowest quarter for Defense as it's the lowest production quarter on USPS. As NGDV production ramps up, Defense margins will be impacted, with new pricing contracts starting to provide benefit later, with heavies starting to benefit late 2025 and beyond, and mediums starting in 2026.

Q: Range of Access AWPs vs telehandlers in 2025?

A: Oshkosh doesn't give that level of guidance. Access revenue guide at $4.4 billion is in line with customer conversations and market metrics, with telehandlers being strong and expected to continue strong.

Q: Shift in annual purchase orders in Access and capacity additions cadence?

A: Slight shift with annual purchase orders now also in Q1 due to customer backlog visibility. Jefferson City telehandler plant production ramp is in guidance, with full production in back half of year and costs included in guidance.

Q: 2026 outlook for Access and Vocational backlog in Pierce?

A: Can't guide for 2026 yet, but insights come from customer project backlogs. Vocational backlog continued to grow over the quarter, with book-to-bill over 1 in Pierce.

Q: Incremental margin in second half of 2024 and its trend in 2025?

A: Strong Vocational performance drives sequential incremental margins. Strong Vocational performance in quarters impacts quarter-over-quarter performance and is expected to continue to help in 2025.

Q: Balance sheet, leverage, and M&A potential?

A: Healthy balance sheet allows for share buybacks. Oshkosh has an always-on M&A process, looking for near-adjacent targets to apply technology and capability, like AeroTech and AUSA.