OSHKOSH CORP Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Tariff Mitigation: Nearly all U.S.-sold products are built in the U.S. Proactively working to mitigate tariff impacts, with no significant secondary impacts currently. Confident in underlying operational trajectory across segments.
• Segment Updates: Access segment resilient with strong backlog; Vocational segment saw strong revenue growth and robust backlog; Defense segment progressing on NGDV production and new orders.
• Innovations: Access previewed new scissor lift and showcased innovations at Bauma; Vocational developed advanced technologies and announced new crane lineup; Defense highlighted JLTV contract and FMTV negotiations.

Segment Performance

• Access Segment: Delivered a resilient adjusted operating margin of 11.3% despite lower sales. Backlog ended the quarter at $1.8 billion with a book-to-bill ratio of 1.0. Moved production of booms from China to Italy to mitigate EU tariffs. Previewed the new micro-sized ES1930M scissor lift and showcased product innovations at Bauma.
• Vocational Segment: Achieved 12% year-over-year revenue growth and nearly 15% adjusted operating income margin. Higher volume driven by refuse and recycling vehicle sales. Backlog at $6.3 billion. Developed advanced technologies like CAMS and ClearSky intelligence, and announced a new lineup of IMT Cranes.
• Defense Segment: Confident in 2025 outlook. Progress on NGDV production ramp-up. Took orders for FMTV low-velocity aircraft vehicles and PLS A2 autonomy-ready vehicles. Wrapping up negotiations for FMTV A2 contract extension and announced a 150-unit JLTV contract with the Netherlands Ministry of Defense.

Guidance

• Full year adjusted EPS guidance in the range of $11, excluding tariff headwinds. Estimate direct tariff impact net of targeted mitigation actions could be about $1 per share, with efforts to offset up to $0.50 per share. No material impact on second quarter results as working through existing inventories.

Risks

• Tariffs could have a direct impact on earnings per share, with potential indirect impacts difficult to predict. Uncertainty in tariff policies and their evolution pose risks.

Question and Answer

Q: Stephen Volkmann asked about thinking on tariffs and pass-through to customers.

A: John Pfeifer discussed minimizing impact on customers, using pricing power but aiming to avoid passing much on, and learned from past experience to be more flexible.

Q: Mig Dobre inquired about Defense segment NGDV revenue ramp and margin cadence.

A: Matt Field said NGDV volume expected to reach full rate production by year-end, margins to ramp sequentially.

Q: Jamie Cook asked about tariff allocation across segments and Access customer sentiment.

A: Matt Field said most cost elements from tariffs hit Access, cost offsets broad-based; John Pfeifer noted strong customer relationships and healthy backlog.

Q: Jerry Revich asked about M&A and tariff focus.

A: John Pfeifer said mitigating tariffs is job one, but active corporate development group exists, with focus on growth segments.

Q: Tami Zakaria asked about Access margin in Q2 and $1 EPS headwind.

A: Matt Field said second and third quarters expected stronger than first, $1 headwind partial year, not annualized.

Q: Kyle Menges asked about Access telehandler sales and Vocational refuse/recycling revenue.

A: John Pfeifer said telehandler sales dip not affecting long-term outlook; Vocational revenue growth due to production investments and dealer network.

Q: Chad Dillard asked about Vocational margin and NGDV mix.

A: Matt Field said Vocational has strong results with capacity investments; John Pfeifer said Postal Service taking both ICE and BEV NGDV.

Q: Judah Aronovitz asked about Defense catch-up adjustments.

A: Matt Field said catch-up adjustments tied to JLTV and FMTV, not expecting material future CCAs.

Q: David Raso asked about tariff impact allocation and Access revenue cadence.

A: Matt Field said broad-based impact, John Pfeifer said revenue cadence in line with expectations, with plans to mitigate tariffs.