Oshkosh Corporation (Holding Company)Common Stock

Greetings and welcome to the Oshkosh Corporation fourth quarter and full year 2025 financial 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 of Investor Relations. Thank you, sir. You may begin.

Good morning, and thanks for joining us. Earlier today, we published our fourth 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 and that we will use during this call and 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-K filed with the SEC this morning and other filings we make with the SEC, as well as matters noted in our investor day in June 2025. 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 are 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 want to thank our over 18,000 Oshkosh team members that work together to deliver strong results in a dynamic external environment. Before we review our fourth quarter and full year highlights, I'd like to talk about the CES show in Las Vegas earlier this month. This was the second year of showcasing our products and technologies that serve everyday heroes by making jobs safe, intuitive, and productive. Our vision for the airport of the future, the job site of the future, and the neighborhood of the future incorporates robotics, autonomy, AI, connectivity, and electrification, which we highlighted at our booth. In particular, visitors to our booth saw our concept for a welding robot that utilized a JLG boom lift coupled with autonomous scissor lifts. ai software and sensing technologies this concept highlighted our strategy to shift from providing equipment that enables jobs at height to offering equipment that executes jobs autonomously we believe this technology is also applicable for a wide range of awp use cases in addition we demonstrated how a modular airport robot platform can serve multiple roles on the tarmac to support the airport of the future. We have trialed a perimeter detection robot at airports and are optimistic about our ability to commercialize this technology in the coming years and expand it to other applications. Lastly, through an immersive theater experience, we demonstrated how our equipment and technology including the autonomous jet dock, modular runway robots, and IOPS software work together in any weather to deliver the perfect turn for airlines, airports, and travelers. Our industry-leading technology also received third-party recognition at the show, winning two Best of Innovation awards, one for JLG's robotics on the job site and another for our hybrid electric Volterra ARF. We were also named as innovation honorees for our JLG boom lifts and our McNeillis Volterra electric refuse and recycling collection vehicle. As the show was happening, we were delighted that our racetrack-inspired Collision Avoidance Mitigation System, or CAMS, was awarded a CES PICS award The PICS award recognize and celebrate brands at the forefront of innovation, honoring standout products and creative solutions. CAMS is the first purpose-built technology to anticipate collisions for firefighters and others on active roadways. Following a strong response to our showing this technology at CES last year, we have been field testing the AI-powered solution with fire departments in large cities over the past year and the feedback has been powerful. We are working on scaling this safety platform to support everyday heroes, such as EMS crews at accident scenes, police officers managing traffic or responding to calls, and even tow truck operators assisting motorists. The awards we received at CES, as well as the resoundingly positive response we received from show attendees, demonstrate how our investments and innovation are creating safer, more efficient workplaces for America's everyday heroes. We are excited about our next generation products and are confident they will lay the foundation for long-term profitable growth as we transform industries and help our customers achieve their goals. Please turn to slide four for some highlights for 2025. For the year, we posted revenue of $10.4 billion, leading to adjusted operating income of just over $1 billion and adjusted earnings per share of $10.79. As we have discussed on prior calls, the team pulled together across the company to respond to the evolving tariff landscape, effectively managing our costs and supply chain throughout the year. We also continued to make strategic investments and strengthened our leadership team to execute on our 2028 goals as laid out at our investor day in June. Please turn to slide five for a discussion of Q4 highlights. For the quarter, we delivered adjusted operating margin of 8.4% on revenue of $2.7 billion. This led to adjusted EPS of $2.26, in line with the guidance we provided last quarter. Strong performance in both our access and vocational segments led to our solid finish to the year. Turning our outlook to 2026, we see a general continuation of recent economic conditions, which includes expected lower capital investments at certain of our industrial customers notably in our access equipment and refuse businesses. Without an improvement expected in non-residential construction in 2026, our outlook for the year is for adjusted EPS in the range of $11.50. Our EPS growth compared to 2025 reflects strong performance in the vocational segment, reflecting our higher production throughput for fire trucks, and the continued ramp up of our NGDV in the transport segment, partially offset by our expectation for weaker market conditions in the access segment. Matt will provide additional details on segment performance and our 2026 outlook later in the call. Please turn to slide seven for segment highlights. Our access team managed through challenges to finish the year on a high note with fourth quarter revenue of $1.2 billion, roughly equal to last year and a higher than the third quarter as we benefited from strong demand in advance of 2026 price increases. As you will hear from Matt shortly, we believe that our strong Q4 sales will have an impact on Q1 sales. Orders were strong at more than $1.7 billion, leading to a book-to-bill ratio of 1.5 as customers continue to move toward more traditional seasonal ordering patterns. We are pleased with this performance, and we continue to work with customers on their plans for 2026. Our backlog is $1.3 billion, which we believe is reasonable in this environment. JLG products serve many end markets in our communities. but the primary driver for demand is non-residential construction. While we continue to see underlying strengths supported by data centers and infrastructure, many other construction sectors remain soft, and we therefore expect revenue in the first half of 2026 to be down compared to 2025. We believe that elevated fleet ages and improving economic conditions in the second half of the year will provide momentum for 2027. As I mentioned earlier, we generated tremendous excitement with our technology and vision for the connected job site of the future at CES. Customers, analysts, and attendees recognize the value of our innovations positioning JLG to build on its market leadership. We look forward to the ConExpo show in March where we'll be announcing new products and demonstrating our boom lift with robotic end effector concept that was such a hit at CES earlier this month. Turning to slide eight. Vocational delivered another quarter of growth, leading to full year revenue of more than $3.7 billion, up nearly 13%, and a robust adjusted operating income margin of 15.8%. Our fire apparatus business continues to lead the way with sales up about 17% for the year. We made good progress on throughput with fire truck deliveries up nearly 10% in the second half compared to a year ago. We continue to execute our plan to reduce lead times with expected capital investments of about $150 million to support improved throughput across our three key locations with about $70 million spent to date. The airport products business continues to grow with sales up about 13% in 2025, and we remain confident in our outlook as we see strength in both air passenger and cargo traffic over the long term. Airports and airlines are investing in critical infrastructure and embracing technologies like those we showcased at CES. This provides outstanding opportunities for us to grow this business. Before I turn to our transport segment, I want to briefly touch on our refuse and recycling vehicle business. We're excited about the refuse contamination detection and service verification technology that we displayed at CES, which we plan to launch in the first quarter. This technology uses AI and onboard edge computing to identify 14 different types of contaminants so customers can identify contamination in their waste streams, in order to reduce the amount of recyclables going to landfills. While we have seen a moderation of near-term demand, we believe in the long-term growth of this business and our opportunities to bring technology to solve customer problems. Our backlog for the vocational segment of more than $6.6 billion provides excellent visibility as we expect the segment to deliver meaningful revenue over the coming years as we improve production throughput as outlined at our investor day. We expect our investments in production will reduce this backlog over time as we build units to meet continued robust demand for our products. Please turn to slide nine. We made significant progress on transforming our transport business in 2025. You will recall that we changed the name of the segment to reflect the growing importance of the delivery business and the expanded opportunities we see for this segment. About six months ago, Steve Nordland joined Oshkosh as the segment president. Steve's outstanding experience and fresh perspective are shaping both the direction of delivery as well as our defense strategy going forward. We continue to increase NGDV shipments during the year and are delivering in line with or ahead of USPS expectations. We surpass the production milestone of our 5,000th unit and are pleased to share that the fleet has exceeded 10 million miles driven. NGDVs now operate in nearly all 50 states, including Alaska. Postal workers continue to praise these vehicles, which include modern safety equipment and productivity enhancements that improve their working conditions and are a significant upgrade to the decades-old vehicles being replaced. On the defense side, several key contracts that we announced in 2025 will be important for 2026 as we build and ship units for programs to support the U.S. Armed Forces. In particular, both the FMTV and the Rogue Fires programs are essential for our nation's security, and they will become more meaningful in our defense results as the year progresses. And just a little over two weeks ago, we announced a follow-on order for JLTV units for the Dutch Marine Corps. We expect to begin delivering on that order towards the end of 2026. With that, I'll hand it over to Matt to walk through our detailed financial results.