Oshkosh Corporation (Holding Company)Common Stock

Greetings, and welcome to the Oshkosh Corporation first quarter 2024 results conference call. At this time, all participants are in the listen-only mode. Any brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Pat Davidson, Senior Vice President of Investor Relations for Oshkosh Corporation. Thank you, sir. You may begin.

Good morning, and thanks for joining us. Earlier today, we published our first quarter 2024 results. A copy of that release is available on our website at OshkoshCorp.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on the website for approximately 12 months. Please refer now to slide two of that presentation. Our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today include John Pfeiffer, President and Chief Executive Officer, and Mike Pack, Executive Vice President and Chief Financial Officer. Please turn to slide three, and I'll turn it over to you, John.

Thank you, Pat, and good morning, everyone. I'm pleased to announce another strong quarter with year-over-year growth in revenue and earnings. This solid start to 2024 is a testament to our innovate, serve, advance strategy and the hard work of our people as we continue to launch new innovative products and technologies while adding capacity for several of our businesses. For the first quarter, we achieved an 80% increase in adjusted operating income, leading to an adjusted operating margin of 10.8% and adjusted EPS of $2.89. These results were led by outstanding business execution across our segments, and supported by the benefit of acquisitions. We continue to focus on execution. Importantly, we're driving improvements in our businesses, contributing to strong performance in the quarter and supporting our positive outlook for the remainder of the year. We are also focused on becoming a more resilient company throughout the business cycle while driving long-term growth and we are confident we're making meaningful progress. Our confidence is fueled by several key factors, including significant investments in market-leading technologies that we expect will drive demand for the next decade and beyond, robust backlogs that provide strong visibility, the ramp-up of several new innovative products, including next-generation delivery vehicles, and the benefits of strategic acquisitions such as Aerotech. Based on our first quarter results, along with solid execution and healthy demand for Oshkosh products, we are raising our full year outlook for adjusted EPS to be in the range of $11.25 per share. Notably, our current expectations place us within the range of our investor day target of $11 to $13 per share a year early, and demonstrates our ability to continue to drive accelerated growth and shareholder value. Please turn to slide four and we'll get started on our segment updates. Our team at Access is performing well. For the quarter, Access grew revenue by 3.7% and delivered an adjusted operating margin of 17%. We continue to invest in new products and technologies, including Moments of Autonomy and ClearSky Smart Fleet, our next generation IoT platform, enabling two-way real-time communications that we believe will contribute to long-term success in the access market. Last quarter, we told you that we expected customer order timing to begin normalizing. leading to lower orders in the first half of 2024 relative to both the prior year and the second half of the year, given that 2024 was largely booked as we entered the year. This remains the case, although healthy orders of 940 million in the first quarter exceeded our expectations. We continue to expect that the majority of 2025 orders will be booked in the second half of 2024, particularly in the fourth quarter, which more closely aligns with historical order timing. Demand for aerial work platforms and telehandlers in North America continues to be solid, supported by infrastructure investments, megaprojects, and industrial onshoring projects, as well as elevated fleet ages. Moving to operations and supply chain, our team continued to make progress with supplier on-time deliveries in the first quarter, which were in the 85% range. The combination of improving supply chain deliveries and our continuous improvement initiatives is contributing to increased throughput in our manufacturing facilities. We are progressing well with our plans to repurpose the Jefferson City, Tennessee facility for telehandler production. We are transitioning the facility throughout 2024 as defense fabrication work moves back to Oshkosh. We expect a meaningful ramp in telehandler production capacity in the facility for 2025, which will help us capitalize on demand for our equipment. Importantly, we believe there are many opportunities to continue to drive growth and strong performance at Access over time. Please turn to slide five and I'll review our defense segment. As we have discussed, 2024 is a significant transition year for our defense segment as we are winding down production of domestic JLTVs during the year. Simultaneously, we will be ramping up production of the U.S. Postal Service's Next Generation Delivery Vehicle, or NGDV. This month, the first NGDV units came off the production line in Spartanburg, South Carolina. Our team has spent a tremendous amount of time planning and executing this program launch, and I'm pleased with our progress. We look forward to a long and successful partnership with the U.S. Postal Service as we modernize their fleet over the next 10 years. As a reminder, we expect increased vehicle production throughout 24 and 2025 and exit 2025 at full rate production. We continue to support many defense programs including the FHTV and FMTV programs. We are working on contract extensions for both of these programs with plans to complete the extensions over the next several quarters. We are also the supplier for the Stryker medium caliber weapons system a program which has contributed to the diversification of our defense business beyond tactical wheeled vehicles. And we are in the midst of the robotic combat vehicle development program, which demonstrates our broad technical capabilities in autonomy, connected vehicle systems, and mobility, among others. Finally, I want to share an outstanding technical achievement that our teams recently accomplished with the United States Army. We successfully completed airdrop testing of our low velocity airdrop or LVAD FMTV A2 cargo truck at Fort Liberty in North Carolina. Essentially, the program allows the vehicle to be parachuted from a plane and operational on the ground within 30 minutes. We expect to begin receiving orders for LVAD units in 2025. Let's turn to slide six for a discussion of the vocational segment. Our vocational segment delivered strong year-over-year revenue growth in the first quarter of 37%, including the benefit of $176 million of sales at Aerotech, which we acquired in the third quarter of 2023. We continue to invest in electrification programs as well as autonomous functionality to enhance ease of use and productivity for our customers. Given strong demand for fire trucks and our extended backlog, production throughput continues to be a meaningful opportunity for the foreseeable future. Demand remains solid for our McNeill's refuse and recycling collection vehicles. Customers are enthusiastic for our purpose-built electric Volterra ZSL zero emission vehicles and test vehicles are performing well in the field. As you know, we will be ramping up production of these units at our factory in Murfreesboro, Tennessee. And earlier this month, we completed our first pre-production pilot unit in the facility representing an important program milestone. Customers are excited by the opportunity to reduce their carbon footprint while realizing an estimated 14% improvement in total cost of ownership. We look forward to the Waste Expo show in two weeks where we will showcase these game-changing vehicles and their key features. Moving to Aerotech, we're pleased with our integration progress to date and the business is performing well. Strong financial performance, robust customer demand, and exciting new products like the AMP cart, mobile charging station, which supports sustainable operations at airports, all highlight the reasons we are so pleased with this acquisition. With that, I'm going to turn it over to Mike to discuss our results in more detail and our updated expectations for 2024. Thanks, John.