Core Insights - Oshkosh reported strong financial results for 2025, with total revenue of $10.4 billion and adjusted EPS of $10.79, while fourth-quarter revenue reached nearly $2.7 billion, reflecting a 3.5% increase year-over-year [3][5][8] - The company is facing challenges from tariffs, which are expected to impact results significantly in 2026, with an estimated cost of about $200 million, primarily affecting the Access segment [2][7][17] - Oshkosh's management remains optimistic about long-term growth, with a 2026 sales outlook of approximately $11 billion and adjusted EPS projected at around $11.50, despite anticipated softer market conditions in certain segments [5][15] Financial Performance - In 2025, Oshkosh's adjusted operating income was just over $1 billion, with a fourth-quarter adjusted operating margin of 8.4% and adjusted EPS of $2.26 [3][6] - The company generated free cash flow of $618 million for the year, exceeding guidance due to improved customer advances and lower capital expenditures [6][8] - Share repurchases totaled $278 million for 2025, with approximately $119 million executed in the fourth quarter [1][6] Segment Performance - The Access segment reported fourth-quarter revenue of $1.2 billion, up 1% year-over-year, but faced margin pressure due to unfavorable price-cost dynamics and tariffs [9][10] - Vocational segment sales reached $922 million in the fourth quarter, with a strong adjusted operating margin of 16.2%, driven by growth in the fire apparatus business [10][11] - Transport segment sales increased to $567 million, with delivery vehicle revenue growing 13% sequentially, although defense vehicle revenue declined due to the wind-down of the JLTV program [13][14] Strategic Initiatives - Oshkosh is investing approximately $150 million to improve fire truck production throughput and reduce lead times, with about $70 million already spent [11] - The company is pursuing tariff mitigation strategies through engineering, sourcing changes, and localization efforts, while also implementing price increases where necessary [18] - Management is confident in achieving its 2028 goals, including an adjusted EPS range of $18 to $22 per share, supported by the 2026 guidance [21]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2025 were $629.1 million, an increase of $45.1 million or 7.7% compared to Q2 2024, excluding the impact of the divested E and C transit bus business [24][25] - Consolidated adjusted EBITDA was $58.9 million, up from $37.5 million in Q2 2024, representing a 63.6% year-over-year increase when excluding the impact of the divested bus business [25][27] - The company repurchased approximately 2.9 million shares for $88 million during the quarter under a $250 million share repurchase authorization [20][39] Business Line Data and Key Metrics Changes - Specialty Vehicles segment sales increased by $16.5 million to $453.9 million, with a 12.2% increase when excluding the divested transit bus business [27][28] - Specialty Vehicles adjusted EBITDA increased by $24 million or 74.3% year-over-year, driven by higher unit production and manufacturing efficiencies [28][29] - Recreational Vehicle segment sales decreased by $4.4 million or 2.4% due to lower unit shipments amid soft market demand, but maintained a 6.2% adjusted EBITDA margin [32][33] Market Data and Key Metrics Changes - Specialty Vehicles segment backlog was $4.3 billion, reflecting strong demand for fire apparatus and a book-to-bill ratio of 1.1 in Q2 [29] - Recreational Vehicle segment backlog declined by 2% to $268 million, attributed to soft end market demand and dealer caution [35] - REV brand retail sales decreased by 10% year-over-year, compared to a 13% decline in the broader industry [33] Company Strategy and Development Direction - The company is focusing on operational excellence, investing in people and equipment, and product innovation to drive sustainable growth [8][21] - A strategic decision was made to exit the non-motorized travel trailer and truck camper product categories to concentrate on scalable operations with stronger competitive positioning [15][16] - The company plans to increase capital expenditures to enhance throughput and efficiency across its operations [21][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage tariff impacts and maintain updated financial guidance for the year [11][40] - The company anticipates continued growth in the Specialty Vehicles segment, with mid-teens revenue growth expected for the second half of the fiscal year [30][40] - Management noted that the demand for fire and ambulance products is returning to long-term trend levels, with expectations for normalized demand in the back half of the year [61] Other Important Information - The company celebrated the 50th anniversary of its ambulance group, highlighting its commitment to innovation and quality [12][13] - The company has maintained a strong cash flow profile, generating $117 million in cash from operating activities during the quarter [38][42] - The company updated its full-year fiscal 2025 guidance, raising consolidated top-line expectations to a range of $2.35 billion to $2.45 billion [40][41] Q&A Session Summary Question: What is the timeframe for tariff impacts to wash through the backlog and output? - Management expects the RV tariff impact to primarily affect the back half of fiscal 2025, with some potential carryover into early 2026 [44][46] Question: What is the expected return on the $20 million investment in the Brandon facility? - Management indicated that the investment aims to reduce lead times and increase production, but specific return metrics were not disclosed [47][48] Question: How does the sale of Lance impact long-term EBITDA goals? - Management clarified that Lance represents less than 10% of total sales for recreation, thus having no material impact on the 2027 targets [49] Question: Will dealer assistance continue to increase in the second half? - Management expects a softer second half due to consumer confidence risks and the impact of tariffs, but dealer inventory is healthier overall [54][56] Question: What is the demand outlook for the S-one 80 program? - Demand for the S-one 80 program remains strong, with orders increasing across various brands [58][59] Question: What is the current state of wholesale versus retail demand in recreational vehicles? - Retail shipments showed a sequential increase for the first time in 28 months, indicating positive signs, while wholesale orders are expected to improve due to healthier dealer inventory [68][70]