OSK

Consolidated Results Overview

• Delivered Q2 2026 consolidated sales of $2.9 billion (+6.7% YoY) and adjusted EPS of $2.87. Adjusted operating income was $258 million (down from $313 million YoY due to unfavorable mix and higher manufacturing investment costs, partially offset by higher volume). Free cash flow was $348 million, up significantly from $49 million YoY, driven by working capital discipline and higher customer advances.
• Repurchased ~667,000 shares for $92 million during the quarter. Management remains confident in hitting 2028 long-term financial targets.

Strategic Innovation & Long-Term Positioning

• Investing in AI-enabled technologies, autonomy, connectivity, and electrification to shape future job sites, airports, neighborhoods, and battlefields, aligned with the company's "Innovate, Serve, Advance" strategy.
• Continues to build momentum across defense, with growing international customer interest; received two large defense orders in Q2: a $142 million FMTV A2 program order and a $92 million order for the U.S. Marine Corps Rogue Fires autonomous platform, providing visibility beyond 2026.

Access Segment Operational Highlights

• Full-year 2026 access segment revenue is now expected to grow vs. 2025, an upward revision from the prior expectation of a modest decline. Demand is driven by large infrastructure megaprojects, and new products (micro scissors, Clear Sky connected fleet tech) are well-received by customers. Strong utilization rates and an aged fleet of boom equipment support healthy long-term demand.

Vocational Segment Operational Highlights

• Is undergoing a full transformation of fire truck manufacturing, shifting from traditional bay build to standardized high-flow production lines with updated material flow processes to improve throughput and reduce lead times. Production benefits are expected to ramp through 2026 and into 2027-2028, with a targeted 25-30% total production rate increase. Near-term production output will be lower than originally planned for 2026 due to transition work.
• Demand for airport products (including passenger boarding bridges) remains strong, with major wins at Chicago, Denver, and Philadelphia airports; testing of an autonomous AI-enabled ground support robot is ongoing at Grand Rapids Airport. Refuse vehicle sales are lower YoY in 2026, but the company secured a large, notable order from the New York City Sanitation Department, and long-term demand remains healthy due to an aged fleet.

• Full-year 2026 adjusted EPS is now guided to $11, a downward revision from prior guidance, driven by slower-than-expected fire truck production ramp that more than offsets upside from the access segment. The slower production transition reduces full-year EPS expectations by approximately 50 cents.
• Full-year 2026 free cash flow guidance is maintained at $550 to $650 million.
• Access segment full-year 2026 revenue is now expected to grow compared to 2025, an upward revision from the prior expectation of a modest decline; price-cost for the full year is still expected to be neutral.
• Vocational segment 2026 adjusted operating margin is expected to be slightly below the long-term target range of 16-18%, but remains on track to improve toward this range in 2027 and 2028.
• Transport segment full-year 2026 revenue is still projected to be ~$2.5 billion, with operating margins expected to grow in the second half of 2026 as NGDV production ramps and an additional NGDV order is received. Management expects Q4 2026 results will be stronger than Q3 2026, with this momentum carrying into 2027 and beyond.

1. Access Segment: Q2 2026 sales were $1.4 billion, up 9.4% year-over-year, driven by higher volume and improved pricing. The segment delivered an adjusted operating income margin of 11.3% (double-digit, down from prior year due to adverse product mix and ongoing tariff costs). The segment contributed 48.3% of consolidated Q2 revenue. Order intake hit $1.5 billion for a 1.1 book-to-bill ratio, with a $2 billion end-of-quarter backlog.
2. Vocational Segment: Q2 2026 sales were $967 million, flat year-over-year, as lower refuse vehicle volume offset improved pricing; fire truck shipments were in line with last year. The segment delivered an adjusted operating income margin of 13.5%, with higher manufacturing overhead (for fire truck modernization investments) offset by favorable price-cost dynamics. The segment contributed 33.3% of consolidated Q2 revenue.
3. Transport Segment: Q2 2026 sales were $536 million, up 12% year-over-year, driven by higher next generation delivery vehicle (NGDV) volume that more than offset lower defense volume. NGDV revenue grew sequentially 20% from Q1 2026 and represented 48.9% of segment sales. Adjusted operating income was $16 million, down $2 million year-over-year due to adverse mix, higher warranty and overhead costs, partially offset by a $17 million one-time favorable item related to the NGDV program. The segment contributed 18.5% of consolidated Q2 revenue.

• The fire truck manufacturing transition is progressing more gradually than initially expected, reducing near-term 2026 production and earnings output. Reorganizing material flow for the complex vehicle, which requires coordination across thousands of parts from internal and supplier sources, creates near-term execution uncertainty during the transition.
• Access segment margins are pressured by adverse customer mix (driven by current concentration of demand from large megaprojects, with slow growth in the large private non-residential construction segment) and ongoing tariff costs, though full-year price-cost is expected to be neutral.
• Global geopolitical tariff environments create cost pressure that may require partial price pass-through to customers, though management has undertaken tariff engineering work to mitigate costs.
• A recovery in the large private non-residential construction segment (a key end market for access equipment) has not materialized to date, and the timing of a recovery remains uncertain.
• Defense revenue is currently lower year-over-year following the completion of domestic JLTV production in May 2025, creating near-term segment mix pressure.

Q: The 50 cent EPS downward revision was tied to vocational fire truck production. Is the upside from access smaller than the downward revision from vocational, and how will incremental higher access volume impact access segment margins? / A: Management confirms the slower vocational production pace more than offsets the upside from access, which aligns with the overall lower full-year EPS guidance. For access margins, incremental profitability from higher volume is expected to improve over the course of the year as price-cost dynamics improve. (193 characters)

Q: When will benefits from the fire truck production transformation begin to appear, and what are the main near-term challenges to hitting original production targets? / A: Initial benefits will appear in the second half of 2026, with full production improvements rolling out through 2027 to hit a 25-30% total production increase from current levels. The main challenge is re-engineering material flow for this extremely complex vehicle, which requires thousands of parts to arrive at the right time and place for the new high-flow line, creating near-term execution delays despite the proven transformation approach. (352 characters)

Q: Higher transport segment warranty costs are tied to which program, and does the transport segment still have long-term double-digit margin potential? / A: The higher warranty cost was a one-time engine-related issue on a legacy defense program, not related to the NGDV program. Long-term, transport is expected to hit double-digit margins as new defense contract pricing takes effect and NGDV reaches full rate production after the expected additional USPS order in Q4 2026, which will allow efficient supply chain scaling. (274 characters)

Q: What is the timing of independent/private non-residential construction demand recovery for access equipment, and how confident is management that it can achieve necessary price increases to offset costs in 2027? / A: Management expects private non-residential demand could begin to improve as early as the end of 2026, with broader recovery in 2027. Management is confident it can implement price increases ahead of inflation, supported by extensive cost reduction and tariff engineering work done over the prior year to minimize required price pass-through to customers. (288 characters)

Q: Is the expected additional NGDV award included in 2026 guidance, when is it expected, and is full-year 2026 transport revenue guidance still ~$2.5 billion? / A: The NGDV award is assumed to come in Q4 2026 (aligned with US government fiscal timelines, though it could arrive in Q3) and is already incorporated into guidance. Full-year 2026 transport revenue guidance remains roughly $2.5 billion, matching prior expectations. Management is in ongoing dialogue with USPS to prepare supply chains for production after the award. (276 characters)