Oshkosh (US:OSK)2025-10-29 14:30Financial Data and Key Metrics Changes - The company reported adjusted operating margin of 10.2% on revenue of $2.7 billion for Q3 2025, with adjusted earnings per share (EPS) of $3.20, reflecting a 9.2% increase year-over-year [5][14] - Consolidated sales decreased by $53 million, or 2%, compared to the same quarter last year, primarily due to lower sales volume in the access segment [14] - Adjusted operating income was $274 million, slightly down from the prior year, with an adjusted operating income margin of 10.2% remaining consistent year-over-year [14] Business Segment Data and Key Metrics Changes - The access segment reported sales of $1.1 billion, down nearly 19% year-over-year, with adjusted operating income margins of 11% [15][16] - The vocational segment achieved sales of $968 million, up nearly 19% from last year, with an adjusted operating income margin of 15.6% [16] - The transport segment saw sales increase by $48 million to $588 million, with delivery vehicle revenue growing by 37% sequentially compared to Q2 2025 [16] Market Data and Key Metrics Changes - The access segment's sales decline was attributed to weaker market conditions in North America and higher discounts [15] - The vocational segment's growth was driven by improved throughput for municipal fire apparatus and robust growth in airport products, with airport product revenue up 17% year-over-year [16] - The transport segment's improved operating income margin of 6.2% was influenced by a one-time licensing agreement and improved pricing on new contracts [17] Company Strategy and Development Direction - The company is focused on increasing production efficiency in the vocational segment, particularly for fire trucks, and is advancing initiatives to streamline production [10] - The company aims to double adjusted EPS to a range of $18 to $22 per share by 2028, with each quarter representing a step toward that goal [19] - The company is pursuing cost levers to offset the impact of tariffs and plans to raise prices in 2026 to keep pace with input costs [9][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a dynamic external environment, including tariffs and sustained higher interest rates, impacting customer demand, particularly in the access segment [19] - Despite the challenges, management expressed confidence in the company's ability to manage near-term conditions while supporting long-term growth objectives [19] - The company updated its 2025 adjusted EPS guidance to a range of $10.50 to $11.00, reflecting lower revenue expectations for the access and transport segments [6][18] Other Important Information - The company repurchased approximately 666,000 shares for $91 million during the quarter, with year-to-date repurchases totaling $159 million [15] - Free cash flow for the quarter was strong at $464 million, compared to $272 million in Q3 2024, primarily due to working capital changes [15] Q&A Session Summary Question: What is the outlook for demand in the access segment for 2026? - Management indicated that while there is hesitancy in the near term, long-term demand drivers remain strong, with ongoing mega projects and a positive sign in commercial construction activity [24][26] Question: How has the tariff situation changed and what is the strategy to mitigate it? - The estimated tariff impact for the year is $30 to $40 million, with plans to implement pricing adjustments in 2026 to offset these costs [29][33] Question: What is the expected pricing environment for access equipment? - Management noted a negative pricing environment in access due to external demand weakness, but anticipates a different pricing landscape in 2026 due to tariffs [47][66] Question: How is the company addressing warranty costs? - Warranty costs were attributed to one-time issues related to defense sector vehicles, and management expects this to be resolved moving forward [43][44] Question: What is the impact of the federal government shutdown on the business? - Management stated that there has not been a material impact from the shutdown, but potential future effects could arise if it extends significantly [53]