Oshkosh Corporation (Holding Company)Common Stock

Greetings and welcome to the Oshkosh Corporation first quarter 2025 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, Patrick Davidson, Senior Vice President of Investor Relations. Thank you, sir. You may begin.

Good morning, and thanks for joining us. Earlier today, we published our first quarter 2025 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 It is 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 file 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, if at all. Our presenters today are John Pfeiffer, President and Chief Executive Officer, and Matt Field, Executive Vice President and Chief Financial Officer. Before we get started, I'd like to highlight our upcoming Investor Day. We are planning for a morning start on Thursday, June 5th at the New York Stock Exchange in Lower Manhattan. We look forward to sharing our plans for the future, and you will get to hear from several of our key leaders in addition to both John and Matt. Please reach out to Victoria Connolly or myself if you're interested in attending in person. Now, please turn to slide three, and I'll turn it over to you, John.

Thank you, Pat, and good morning, everyone. We are off to a good start in 2025 with strong performance in our vocational segment, good margins and resiliency in our access segment, and solid progress as we ramp up NGDV production in the defense segment. For the quarter, we delivered revenue of $2.3 billion and adjusted operating income margin of 8.3%. Our adjusted EPS of $1.92 was in line with our expectations of approximately $2 for the quarter. We are confident with the underlying trajectory of our operational performance across all our segments, which we believe would keep us on track to deliver our full year adjusted EPS guidance in the range of $11, excluding headwinds caused by the recent tariff announcements. Before Matt provides more details on potential tariff impacts on our results, I want to make some key tariff points upfront. First, as we've said previously, nearly all of what we sell in the United States is built in the United States, and we have a broad U.S. production footprint. which we believe puts us in a strong competitive position in our industries. Second, we have a global supply chain, and we are proactively working to mitigate potential impacts from tariffs. Third, at this time, we are not experiencing significant secondary impacts of tariffs, like supply chain disruptions or reductions in demand. And fourth, we continue to execute on our strategies despite near-term volatility, as we believe the trends that support our industry-leading businesses align with our long-term growth initiatives. Please turn to slide four, and we'll get started on our segment updates. Access performance was in line with our expectations. We delivered a resilient adjusted operating margin of 11.3% despite lower sales. We remain confident in the long-term opportunities arising from mega projects and infrastructure spending. Our backlog remains strong, ending the quarter at $1.8 billion, equal to the end of last year as we booked orders in the quarter of $930 million and achieved a book-to-bill ratio of 1.0. We did not experience any notable order cancellations from customers in the quarter. we continue to stay close to our customers to respond quickly to any changes in the macroeconomic environment. A good example of our team's ability to respond quickly to tariffs was the localization of booms at our Hinoa facility in Italy in response to duties that the European Union applied to Chinese imports. I'm proud to report that it took our team less than a year to move production from China to Italy and begin shipping our first units to customers, thus mitigating the tariff impact. On the product front, the access team previewed our new micro-sized ES1930M scissor lift at the ARA rental show in February. This category of scissor lifts is creating excitement in the market, growing at a solid clip and being used in places like data centers. Customers are particularly eager for our entry into this emerging category as they value JLG's quality, service, and support. Finally, JLG hosted international customers at the BAMA event in Munich earlier this month. Attendees were enthusiastic about our product innovations, including our new line of multi-fuel booms and ClearSky Smart Fleet with its many technological advantages. This was another outstanding opportunity for us to showcase our products and technology that lead the industry toward a connected and productive job site of the future. Please turn to slide five and I'll review our vocational segment. We achieved strong year-over-year revenue growth of 12% in the quarter and a robust adjusted operating income margin of nearly 15%. The higher volume was led by higher refuse and recycling vehicle sales and strong price realization across the segment. The backlog remains robust at $6.3 billion, providing excellent visibility to future revenue. We continue investing in people and resources toward our goal of increasing production levels across the segment to support strong demand, which we expect to lead to meaningful revenue and operating income growth. A great example of a growth opportunity that I'd like to share is with the city of Calgary in Alberta, Canada. Some of you may recall that Calgary was an early adopter of our Pierce Volterra electric fire truck. Previous to that, they purchased limited apparatus from Pierce, but their experience with our Volterra custom pumper EV helped us, along with our dealer commercial truck equipment in Canada, secure a multi-year order for 22 conventional Pierce fire trucks for the city of Calgary. Innovations are key to our success, and we continue to develop advanced technology such as our CAMS, that's Collision Avoidance Mitigation System, and Clear Sky Intelligence fully integrated telematics solutions showcased at FDIC earlier this month. These are great examples of our neighborhood of the future technological advances. Additionally, we announced a new lineup of Oshkosh's IMT cranes, at Work Truck Week in March. The updated family delivers increased reach, lifting capacity, and reliability across 16 models. We've incorporated customer feedback into the design and focused on commonality, ease of maintenance, and exceptional performance. Finally, Oshkosh Aerotech continues to perform very well and lead with innovative technologies like IOPS, fleet management software, and investments in autonomous baggage handling vehicles. Several of you on this call today experienced these products at our CES Airport of the Future display earlier this year. Customer demand for our jet bridges, ground support equipment, and advanced technologies continues to grow as customers seek to improve efficiency of airport operations. Let's turn to slide six for a discussion of the defense segment. We're confident in the defense outlook for 2025. Although first quarter results reflected lower volume and higher cumulative catch-up adjustments, we are pleased with our progress on the production ramp-up for the NGDV program and deliveries to the United States Postal Service. We are on target to increase NGDV volume to full rate production by year-end. This should provide strong revenue growth in the back half of 2025 and into 2026. We continue to execute programs for the United States Department of Defense. During the quarter, we took orders for the FMTV low velocity air drop vehicles, as well as PLS A2 autonomy ready vehicles for the U.S. Army. We are also wrapping up negotiations for a sole source FMTV A2 contract extension later this year. We expect the extension to include an economic price adjustment mechanism similar to our agreement for the FHTV program we announced in 2024. Just last week, we announced a 150-unit JLTV contract with the Netherlands Ministry of Defense for the Dutch Marine Corps. The contract calls for design modifications to the JLTV that fulfill requirements for the Dutch Expeditiary Patrol vehicles. This order is an excellent example of the attractive international opportunities for our tactical wheeled vehicles, and we look forward to sharing more of these successes in the future. Before I turn it over to Matt, I want to note that our defense business is going through a leadership transition. I am overseeing the segment for the time being, and we expect to announce a new segment leader later this year. Thanks, John.