• Revenue Growth: 9% increase in third quarter revenue.
• Adjusted Operating Margin: 10.3% for the third quarter.
• Adjusted EPS: $2.93, in line with expectations.
• Full Year 2024 Adjusted EPS Outlook: Updated to approximately $11.35 per share, down from $11.75.
• Vocational Segment Revenue Growth: 17.6% year-over-year increase in the third quarter.
• Vocational Segment Adjusted Operating Margin: 13.7% for the third quarter.
• Defense Segment Sales Growth: 14% increase due to NGDV production and higher tactical wheeled vehicle deliveries.
• Consolidated Sales for Q3: $2.74 billion, a $232 million increase over the prior year quarter.
• Adjusted Operating Income: $283 million, a $6.2 million increase over the prior year quarter.
• Full Year 2024 Sales Estimate: Approximately $10.6 billion, down from $10.7 billion.
• Capex Target for 2024: Reduced by $25 million to $275 million.
• Free Cash Flow Estimate for 2024: Reduced by $25 million to $350 million.

• Warning! GuruFocus has detected 4 Warning Signs with OSK.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Oshkosh Corp (NYSE:OSK) reported a solid quarter with a 9% revenue growth and an adjusted operating margin of 10.3%.
• The company achieved a significant milestone with the U.S. Postal Service beginning to use their next-generation delivery vehicles, which are receiving positive feedback.
• Oshkosh Corp (NYSE:OSK) completed the acquisition of a leading European manufacturer, expanding their market presence and product offerings.
• The vocational segment showed strong year-over-year revenue growth of 17.6%, with a solid adjusted operating margin of 13.7%.
• The defense segment saw a 14% sales increase due to higher tactical wheeled vehicle deliveries and aftermarket parts sales.

Negative Points

• The Access segment is experiencing softer market conditions in North America, impacting revenue expectations.
• Oshkosh Corp (NYSE:OSK) lowered its full-year 2024 adjusted EPS outlook from $11.75 to $11.35 per share.
• The company is facing pressure from slowing nonresidential construction activity and higher interest rates.
• There have been some order cancellations and delays in the Access segment, affecting revenue projections.
• The defense segment is winding down domestic JLTV production, which may impact future revenue streams.

Q & A Highlights

Q: Regarding your lowered sales outlook, you indicated this is due to a softer outlook in access. Can you give more color on what drove the revenue declines and whether there were any order cancellations or delays? A: (John Pfeifer, CEO) The backlog stretches into 2025, but in any given quarter, timing affects shipments. Some backlog is scheduled for next year, and some for the fourth quarter. We've had some pushouts and cancellations, but overall, we maintain a healthy backlog over $2 billion, indicating a relatively healthy access equipment market.

Q: Can you update us on the path towards the 9% to 10% margin targets for the defense segment? A: (John Pfeifer, CEO) You'll see a step forward in 2025 and a bigger step in 2026. New contracts are priced with today's input costs, improving margins. The postal contract, NGDV, is a significant program that will drive growth and is a good margin business for us.

Q: Are you considering raising capacity for the vocational segment given the high backlog and visibility into demand? A: (John Pfeifer, CEO) Yes, we are adding capacity in existing facilities, particularly for fire and refuse vehicles. We are also evaluating additional facilities for future capacity increases, expecting top-line growth over the next several years.

Q: How is the NGDV ramp-up going, and what should we expect in terms of deliveries? A: (John Pfeifer, CEO) Deliveries are increasing, and we are ramping up production prudently. We expect to be at full production throughout 2025, with NGDV more than offsetting any loss from the JLTV contract.

Q: With the introduction of more electric offerings, are the supply chains fully built out, or are there potential challenges if uptake is better than expected? A: (John Pfeifer, CEO) We have a regimented approach to ramping up capacity and are working closely with our supply chain. The electrification market is still developing, but we are optimistic about its growth over the next 10 to 20 years, providing economic benefits to our customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.