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01/10 00:16
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed outlook. Despite strong revenue growth and sustainability recognition, guidance for 2025 indicates a slight decline in revenue and EPS. The Q&A section highlights concerns about tariffs, supply chain challenges, and a softer access equipment market, counterbalanced by pricing power and strong vocational segment performance. Share repurchases are positive but overshadowed by tariff risks and uncertain defense segment leadership. Overall, the sentiment is neutral, with positive elements offset by significant risks and uncertainties.
Revenue $2,300,000,000, a decrease of $231,000,000 or 9% year-over-year, primarily reflecting softer market conditions for access equipment in North America, offset by improved pricing in the vocational segment.
Adjusted Operating Income Margin 8.3%, down from the prior year due to lower sales volume, higher operating expenses, and higher new product development spending, partially offset by improved price cost dynamics.
Adjusted EPS $1.92, in line with expectations of approximately $2 per share.
Free Cash Flow Net use of cash of $435,000,000 due to seasonal working capital needs.
Backlog (Access Segment) $1,800,000,000, equal to the end of last year, with orders booked in the quarter of $930,000,000 and a book to bill ratio of 1.0.
Backlog (Vocational Segment) $6,300,000,000, providing excellent visibility to future revenue.
Adjusted Operating Income (Vocational Segment) Nearly 15%, with strong year-over-year revenue growth of 12%, driven by higher rep use in recycling vehicle sales and strong price realization.
Tariff Impact on EPS Estimated direct impact of tariffs could be about $1 per share, with mitigation efforts potentially offsetting up to $0.50 per share.
Share Repurchases Repurchased nearly 290,000 shares for $29,000,000, benefiting adjusted EPS by $0.03 compared to the first quarter of 2024.
New Product Launch: The access team previewed the new microsized ES1930M scissor lift at the ARA rental show, which is gaining market interest.
Product Innovations: JLG showcased new multi-fuel booms and Clear Sky Smart Fleet technology at the BAMA event in Munich.
New Lineup Announcement: Oshkosh announced a new lineup of IMT cranes at Work Truck Week, focusing on increased reach and reliability.
Technological Advancements: Oshkosh Aerotech is leading with innovative technologies like IOPS and autonomous baggage handling vehicles.
Market Expansion: Oshkosh secured a multiyear order for 22 Pierce fire trucks from the city of Calgary, Canada, following their positive experience with the Volterra electric fire truck.
International Contracts: Oshkosh announced a 50-unit JLTV contract with the Netherlands Ministry of Defense for the Dutch Marine Corps.
Operational Efficiency: Localization of booms at the Hinoa facility in Italy was completed in less than a year to mitigate tariff impacts.
Production Ramp-Up: Oshkosh is ramping up NGDV production for the Defense segment, targeting full-rate production by year-end.
Strategic Focus: Oshkosh is focused on minimizing tariff impacts on customers while maintaining pricing power.
Leadership Transition: The defense segment is undergoing a leadership transition, with a new segment leader expected to be announced later this year.
Tariff Impact: The company estimates a direct impact of tariffs could reduce earnings by approximately $1 per share, primarily affecting the second half of the year. They are actively working on mitigation strategies to offset this impact by up to $0.50 per share.
Supply Chain Challenges: Oshkosh Corporation has a global supply chain and is proactively addressing potential impacts from tariffs, particularly from China and Europe, which have been identified as key areas of concern.
Market Demand: The company is experiencing a softer market for access equipment in North America, which is expected to lead to a revenue decline of about 15% in the access segment.
Economic Factors: High interest rates are causing delays in private non-residential construction projects, contributing to the overall decline in demand in the access equipment market.
Competitive Pressures: Despite strong pricing power, the company is cautious about passing on tariff-related costs to customers due to potential elasticity of demand in the market.
Defense Segment Risks: The defense segment is undergoing a leadership transition, which may introduce uncertainties in execution and strategy.
Vocational Segment Performance: Achieved strong year-over-year revenue growth of 12% with a robust adjusted operating income margin of nearly 15%. The backlog remains robust at $6.3 billion, providing excellent visibility to future revenue.
Access Segment Resilience: Delivered a resilient adjusted operating margin of 11.3% despite lower sales. The backlog remains strong at $1.8 billion, with a book-to-bill ratio of 1.0.
Defense Segment Outlook: On target to increase NGDV volume to full rate production by year-end, expected to provide strong revenue growth in the back half of 2025 and into 2026.
Technological Innovations: Continued development of advanced technology such as collision avoidance systems and telematics solutions, enhancing product offerings.
M&A Strategy: Active corporate development group looking for growth opportunities in healthy segments and near adjacencies, while maintaining a focus on organic reinvestment.
Full Year Adjusted EPS Guidance: Expected to be in the range of $11, excluding headwinds from tariffs.
Tariff Impact on EPS: Estimated direct impact of tariffs could be about $1 per share, with mitigation efforts potentially offsetting up to $0.50 per share.
Second Quarter Expectations: Do not anticipate material impact from tariffs on second quarter results due to existing inventories.
Defense Segment Margin: Expected to ramp up sequentially throughout the year, with a full-year run rate of 16,000 to 20,000 units of NGDV production.
Access Segment Margin: Expected to remain strong in the second quarter, despite tariff impacts.
Share Repurchase: During the quarter, Oshkosh Corporation repurchased nearly 290,000 shares of its stock for $29,000,000. Share repurchases during the previous twelve months benefited adjusted EPS by $0.03 compared to the first quarter of 2024.
The earnings call shows mixed signals: strong free cash flow and improved margins in the transport segment are positive, but declining sales in the Access segment and weak guidance affect sentiment. Q&A highlights challenges with tariffs and production delays, while management's lack of clarity on future guidance raises concerns. Given these mixed factors, the stock is likely to see a neutral movement in the short term.
The earnings call summary and Q&A session indicate strong financial performance, robust backlog, and positive guidance across various segments. Management's strategies to offset tariff impacts and plans for increased share buybacks further bolster sentiment. While there are some uncertainties, such as tariff impacts and backlog mix, the overall outlook remains optimistic, driven by technological advancements and market demand. This suggests a positive stock price movement in the short term.
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