Oshkosh (OSK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2025, the company reported revenue of $10.4 billion, adjusted operating income of just over $1 billion, and adjusted earnings per share (EPS) of $10.79 [8][20] - In Q4 2025, consolidated sales were nearly $2.7 billion, an increase of $91 million, or 3.5% from the same quarter last year, with an adjusted operating income margin of 8.4% [19][24] - Adjusted EPS for Q4 was $2.26, contributing to a full-year adjusted EPS of $10.79, slightly above the midpoint of guidance [20][21] Business Line Data and Key Metrics Changes - The access segment achieved Q4 sales of $1.2 billion, roughly equal to last year, with an adjusted operating income margin of 8.8% [22][11] - The vocational segment reported Q4 sales of $922 million, with an adjusted operating income margin of 16.2%, reflecting improved pricing [23][14] - The transport segment saw sales increase to $567 million in Q4, with delivery vehicle revenue growing by 13% sequentially [23][16] Market Data and Key Metrics Changes - The company noted strong demand in the access segment driven by non-residential construction, although some sectors remain soft [12][11] - The vocational segment's backlog of over $6.6 billion provides visibility for future revenue, with expectations for continued growth in fire apparatus and airport products [16][14] - The transport segment is expected to grow with increased NGDV shipments and new defense contracts, although defense vehicle revenue is anticipated to be lower in 2026 [17][24] Company Strategy and Development Direction - The company is focusing on innovation, showcasing technologies at CES that include robotics, AI, and electrification to enhance safety and productivity [4][6] - Strategic investments are being made to improve production throughput and reduce lead times, with a capital investment of about $150 million planned [14][9] - The company aims to achieve an adjusted EPS range of $18-$22 per share by 2028, supported by strong long-term growth opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management anticipates a continuation of recent economic conditions, with expected lower capital investments from industrial customers in 2026 [10][25] - The company expects Q1 2026 to be the lowest quarter of the year due to seasonal factors and the impact of pricing actions in the access segment [25][26] - Management remains optimistic about the second half of 2026, expecting improved performance across segments as economic conditions stabilize [26][29] Other Important Information - The company plans to invest approximately $200 million in capital expenditures and expects free cash flow of approximately $550-$650 million [27] - A quarterly dividend of $0.57 per share was announced, reflecting confidence in long-term cash flow generation [27] Q&A Session Summary Question: Access guidance and disconnect with competitors - Management acknowledged a balanced approach to 2026, noting strong demand from mega projects but pressure in private non-residential construction [33][36] Question: Transport margins and pricing dynamics - Management indicated that transport margins are expected to improve in the second half of 2026, with pricing for new contracts anticipated to enhance margins [40][41] Question: Telematics data and market health - Management reported healthy utilization rates in both U.S. and European markets, with a strong used equipment market [46][48] Question: First Quarter versus Fourth Quarter earnings acceleration - Management expects Q1 2026 earnings to be about half of last year due to lower sales in the access segment and adverse price costs [50][51] Question: Access segment ordering dynamics - Management noted that strong sales in Q4 were influenced by pricing pull forward, and they expect normalization in 2026 [70][71] Question: NGDV revenue expectations - Management confirmed that they are on track to meet production milestones for NGDV, with expectations for increased revenue in the second half of 2026 [62][64]