Oshkosh Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• CES Showcase: Showcased products and technologies at CES, including a welding robot, modular airport robot platform, and CAMS system, which won awards. Highlighted vision for future workplaces with robotics, autonomy, AI, connectivity, and electrification.
• Financial Results: Fourth quarter consolidated sales were nearly $2.7 billion, up 3.5% from the prior year. Adjusted operating income was $226 million, down from the prior year due to unfavorable product mix and higher manufacturing overhead costs, partly offset by lower incentive compensation costs and higher sales volume. Full year 2025 revenue was $10.4 billion, adjusted operating income was just over $1 billion, and adjusted earnings per share was $10.79.
• Transport Business Transformation: Steve Nordland joined as segment president, NGDV shipments increased, and several key defense contracts were announced for 2026, including follow-on orders for JLTV units.

Segment Performance

• Access Segment: Fourth quarter revenue was $1.2 billion, up 1% from last year. Adjusted operating income margin was 8.8% due to unfavorable price cost dynamics including tariffs and adverse product mix, partially offset by higher sales volume. For 2026, expected sales are approximately $4.2 billion with an adjusted operating margin of 10%, reflecting softer market conditions in North America.
• Vocational Segment: Fourth quarter sales were $922 million with an adjusted operating income margin of 16.2%. Full year revenue was over $3.7 billion, up nearly 13%, with a robust adjusted operating income margin of 15.8%. Fire apparatus sales were up about 17% for the year, and airport products sales were up about 13% in 2025. Backlog for the vocational segment was over $6.6 billion.
• Transport Segment: Fourth quarter sales were $567 million, up $33 million. Delivery vehicle revenue grew by $130 million to $165 million, and defense vehicle revenue was lower due to the wind down of the domestic JLTV program. For 2026, sales are expected to be approximately $2.5 billion with an operating margin of approximately 4% as it transitions out of past fixed price contracts and ramps up NGDV production.

Guidance

• 2026 consolidated sales are expected to be approximately $11 billion, representing mid-single digit growth. Adjusted operating income is estimated to be a little over $1 billion, and adjusted earnings per share is expected to improve to approximately $11.50.
• Access sales are expected to be approximately $4.2 billion in 2026, down from 2025, with an adjusted operating margin of 10%. Vocational sales are expected to be approximately $4.2 billion, growing both sales and adjusted operating income. Transport sales are expected to be approximately $2.5 billion with an operating margin of approximately 4%.
• First quarter 2026 is expected to be the lowest quarter of the year due to seasonal factors and the impact of strong fourth quarter 2025 sales, but the second half is anticipated to be more favorable.

Risks

• Forward-looking statements are subject to risks outlined in Form 8-Ks and SEC filings, including economic conditions, potential changes in tariff rates, market conditions affecting customer capital investments, and operational challenges related to supply chain and production.

Question and Answer

• Q: On access guidance and disconnect with competitors' outlooks, and transport margins: A: John Pfeifer noted a balanced approach considering strong mega projects but ongoing pressure in private nonres construction. Matthew Field discussed transport margins, stating 2026 margins are 4% with back half expected stronger as NGDV ramps up and new contracts are priced.
• Q: On U.S. and European market for products and transport margins: A: John Pfeifer said fleet health is good in both U.S. and Europe. Matthew Field explained transport margins in 2026 are 4% due to NGDV ramp-up costs and lower defense volume, but back half expected to improve.
• Q: On access first quarter expectations and transport revenue visibility: A: Matthew Field said first quarter EPS expected to be about half of last year due to access segment decline and tariffs. John Pfeifer mentioned access backlog of $1.3 billion aligns with guide, and transport revenue for 2026 includes NGDV and defense contracts.
• Q: On AeroTech margin synergies: A: John Pfeifer said AeroTech is a great business with technological synergies and operating synergies through 80/20 initiatives, expecting margins to continue expanding.
• Q: On vocational segment backlog and margin potential: A: John Pfeifer said vocational backlog is healthy, with fire and airport segments strong, though refuse and recycling has temporary CapEx lull, but long-term growth is expected.