Oshkosh (OSK) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics - Consolidated sales for Q1 2024 were $2.54 billion, a 12.2$176 million from AeroTech sales, increased volume across all segments, and improved pricing [41] - Adjusted operating income increased by $124 million YoY to$275 million, with a margin of 10.8%, a 410 basis point improvement [41] - Adjusted EPS for Q1 2024 was $2.89, compared to$1.63 in the prior year [19] - Full-year 2024 adjusted EPS guidance raised to $11.25, up from$10.25, reflecting strong execution and demand [11][20] Business Segment Performance Access Segment - Revenue grew by 3.7% YoY, with an adjusted operating margin of 17% in Q1 2024 [37] - Strong demand for aerial work platforms and telehandlers in North America, supported by infrastructure investments and industrial onshoring [13] - Plans to repurpose the Jefferson City facility for telehandler production, with a meaningful ramp expected in 2025 [38] Defense Segment - 2024 is a transition year, with production of domestic JLTVs winding down and ramping up of the USPS Next Generation Delivery Vehicle (NGDV) [14] - First NGDV units produced in Spartanburg, South Carolina, with full-rate production expected by the end of 2025 [14] - Defense sales expected to be $2.1 billion in 2024, with an adjusted operating margin of 2.5$176 million from AeroTech [16] - Strong demand for fire trucks and McNeilus refuse vehicles, with customers showing enthusiasm for the electric Volterra ZSL [17] - Vocational sales expected to be $3.2 billion in 2024, with an adjusted operating margin of 11.5$15 million in Q1 2024 [19] - Corporate expenses expected to increase by $10 million due to higher incentive and stock-based compensation [22] - Tax rate guidance revised to 24%, down from 24.5% [22] Q&A Session Summary Questions on Access Segment Margins - Access margins in Q1 were driven by favorable customer mix, but margins are expected to moderate in the remaining quarters due to higher new product development spending and start-up costs [64][89] - Strong demand for Access equipment, with no significant cancellations or push-outs from customers [97] Questions on USPS NGDV Program - NGDV production is expected to ramp up significantly in 2025, with full-rate production by 2026 [28] - Margins for the NGDV program are expected to exceed traditional tactical wheeled vehicle margins [28] Questions on Vocational Segment - Price/cost dynamics were a significant driver of operating income in Q1, with continued benefits expected throughout 2024 [83] - Vocational segment margins are expected to moderate in the remaining quarters due to timing of investments and integration costs [104] Questions on Defense Segment - Defense segment is transitioning from JLTV production to NGDV, with revenue from NGDV expected to exceed JLTV revenue in 2025 [58] - No material drop in revenue or operating income expected in 2025 for the Defense segment [72] Questions on Electrification and Future Growth - Electrification programs across segments, including fire trucks, refuse vehicles, and airport equipment, are expected to drive long-term growth [29] - Company is on track to achieve 2025 Investor Day targets one year early, reflecting strong execution and demand [114] Questions on Free Cash Flow and Capital Allocation - Free cash flow guidance remains unchanged, with working capital dynamics expected to normalize throughout the year [81] - Company remains focused on driving shareholder value through strong execution and strategic investments [44]