Oshkosh Corporation (Holding Company)Common Stock

Greetings and welcome to the Oshkosh Corporation fiscal 2024 fourth quarter and full year results conference call. At this time, all participants are in a listen-only mode. A 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, Investor Relations for Oshkosh Corporation. Thank you, sir. You may begin.

Good morning, and thanks for joining us. Earlier today, we published our fourth quarter and full year 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 it's also available on our website. The audio replay and slide presentation will be available on our 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 Matt Field, 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 strong results for Oshkosh Corporation with 2024 revenue and adjusted earnings per share for the full year of $10.8 billion. and $11.74, respectively. We achieved an adjusted operating income margin of 10.5%, a 110 basis point increase over 2023. This is an exciting time for our company as we work to capitalize on solid growth opportunities, particularly in our vocational segment. I'm also happy to welcome our new CFO, Matt Field, to the company. Matt brings exceptional leadership to our team as well as extensive financial and international experience. I look forward to working with him as we continue to execute our innovate, serve, advance growth strategy. Let's get started with a recap of the fourth quarter. We delivered another solid quarter of growth with a revenue up 6.3% compared to the fourth quarter of 2023. Our adjusted operating income margin was 9.4%. Our adjusted EPS of $2.58 reflected strong sales growth and margin expansion in our vocational segment. And while our access segment is experiencing softer near-term market conditions, we expect to deliver robust, resilient margins, and the long-term prospects for this business remain favorable with megaprojects, infrastructure build out, and data centers driving demand for our equipment. Earlier this month, we participated at CES in Las Vegas, where we showcased Oshkosh's innovative products and technologies aimed at making the work of everyday heroes safe, intuitive, and more productive. We demonstrated our strong capabilities, including ai autonomy and connectivity as well as our practical and thoughtful approach to applying these technologies to deliver meaningful benefits for our customers our display featured the job site of the future the airport of the future and the neighborhood of the future incorporating these innovations we also featured our next generation delivery vehicle which we started building for the united states postal service in 2024 This is one of the most significant new products in the history of our company. We're pleased with the early positive feedback on the NGDV from postal carriers and look forward to ramping production throughout 2025. Our hairy concept design for an on-demand autonomous refuse collection robot was recognized with a CES PIX award as one of the best new products at the show. With Haree, residents of neighborhoods will be able to request refuse and recycling pickup with a smartphone app or a virtual home assistant. The robot will autonomously navigate to homes, collect refuse or recycling, and return to a central collection base to unload and recharge. We believe this technology has significant potential, especially for large planned residential communities. Lastly, I'm pleased to share that we were named to the Dow Jones Sustainability World Index for the sixth consecutive year. Companies must be rated in the top 10% of their peer group for sustainable business practices to be considered for the index. This recognition reflects our commitment to driving profitable, sustainable growth that benefits our people, communities, and environment, as well as shareholders. Please turn to slide four for a recap of 2024 and our 2025 expectations. I'm proud of our performance in 2024. Our 18,000 plus team members continue to deliver strong results, positioning us to be a growing, more resilient company for the future. For full year 2024, we grew revenue by 11.4% to $10.76 billion and grew adjusted operating income by 24.5% to $1.13 billion, leading to adjusted earnings per share of $11.74. We are pleased with our progress. We are also announcing our 11th consecutive double-digit percent increase in our dividend, raising the quarterly dividend by 5 cents to 51 cents per share, a nearly 11% increase. This reflects our expectation of strong long-term cash flow generation and our board's confidence in our ability to sustain profitable growth. Turning to our outlook for 2025, we expect to deliver adjusted EPS in the range of $11. This reflects a balanced assessment of near-term outlook in access equipment, opportunities in vocational, and the expected ramp-up of the NGDV program and defense and investments in new products and technologies. Please turn to slide five and we'll get started on our segment updates. The access team delivered solid fourth quarter sales as the industry continues to normalize. We're seeing demand moderate in response to softer non-residential construction activity and elevated interest rates. As we've previously mentioned, we anticipate lower sales in 2025, particularly in the first half of the year. Our team is focused on execution in this environment, and we are confident that we can deliver resilient margins for the year. We expect improving conditions in the second half of 2025, which are expected to provide momentum going into 2026. We ended the year with a healthy backlog at $1.8 billion. after booking orders of $856 million in the quarter. We continue to engage with customers on 2025 requirements and expect to book additional annual purchase orders in the first quarter. Furthermore, we remain confident in the market's long-term health. Our access team continues to advance its products with state-of-the-art technology and jobsite connectivity. ClearSky Smart Fleet was also featured at our Job Site of the Future CES exhibit driving job site productivity. We now have over 100,000 connected assets as part of this technology platform. This is one of the world's largest fleets of connected equipment on the job site. Customer adoption is strong and enthusiasm continues to build for ClearSky's ability to enhance productivity boost efficiency, and maximize machine uptime. CES attendees also experienced our Galileo all-electric boom lift and rotating telehandler concept, as well as its companion, our autonomous mobile recharging robot. These advanced concepts demonstrate potential opportunities to enhance safety and productivity for the job site of the future. Please turn to slide six, and I'll review our vocational segment. Our vocational segment achieved strong year-over-year revenue growth of nearly 20% in the fourth quarter and a robust, adjusted operating income margin of 14%. Increased volume and strong price realization drove double-digit revenue growth in key product lines in the segment. The backlog is also robust, providing excellent visibility into demand. We remain focused on increasing production levels across the segment to support strong demand and a healthy backlog. which we expect will deliver meaningful revenue and income growth over the coming years. Another important announcement from CES was the launch of our all-new Volterra ZFL ERCV, the industry's first purpose-built, fully integrated electric front-end loader refuse and recycling collection vehicle. This joins our Volterra ZSL side loader refuse and recycling vehicle to provide the most capable electric refuse vehicles on the market. We also highlighted future technologies, including our advanced AI capabilities to identify waste and recycling stream contamination, as well as our all-electric side loader refuse collection arm, which eliminates hydraulics and features autonomous operation. We believe these innovations will continue to revolutionize safety and productivity in the industry, which we expect will drive future growth. Global air passenger metrics continue to strengthen with the International Air Transport Association's November figures showing growth of 8.1% year over year. We believe strong market conditions combined with technology and innovations in our IOPS connected solutions Electrified product offerings and autonomy are fueling growth for our market leading products at Aerotech, where we saw revenue grow more than 9% compared with the fourth quarter of 2023. Let's turn to slide seven for a discussion of the defense segment. Defense results continue to be impacted by legacy fixed price contracts. In the future, we expect better results with improved pricing terms on TWV programs and the launch of the next generation delivery vehicle. We look forward to finalizing our FMTV three-year contract extension in the first half of 2025. This sole source contract is expected to include improved pricing and economic price adjustment provisions, similar to our recently announced FHTV contract extension, which will improve the resiliency of margins over time. We expect to complete domestic JLTV production in early 2025. International interest in tactical wheeled vehicles, including JLTVs, remains solid, and we see the potential for additional international orders during the year. We are pleased with the progress on the production ramp up for the NGDV program, which will be an important component of Oshkosh's growth over the next decade. NGDVs are the delivery industry's most state-of-the-art vehicles and are modernizing and decarbonizing USPS's fleet while dramatically enhancing driver safety and productivity. These purpose-built vehicles are equipped with the latest safety features that will support the success of USPS for the next two decades. We expect to increase our NGDV production rates throughout the year and achieve full rate production by the end of 2025, which should provide strong revenue growth during the year and into 2026. When we combine the NGDV ramp with revised pricing on the FMTV and FHTV programs, it's clear why we have a strong outlook for profitable growth in 2026 and beyond. With that, I'll turn it over to Matt to discuss our results in more detail, including our expectations for 2025.