Oshkosh Corporation (OSK) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong performance and growth, particularly in the vocational and transport segments, with optimistic guidance for 2026 and beyond. Despite some challenges in the Access segment, the company anticipates improved price-cost dynamics and production ramp-ups. The Q&A highlights confidence in meeting future targets and strong demand across segments. However, the lack of specific guidance on some metrics and geopolitical concerns could temper expectations slightly. Overall, the positive outlook and strategic initiatives suggest a likely stock price increase in the near term.
Key Financial Performance
Consolidated Sales $2.3 billion, flat compared to the same quarter last year due to pricing, favorable currency, and changes in cumulative catch-up adjustments offsetting lower sales volume.
Adjusted Operating Income $96 million, down from $192 million year-over-year, primarily due to unfavorable mix, higher manufacturing overhead costs, and lower sales volume.
Adjusted Earnings Per Share (EPS) $0.85, approximately half of the prior year's amount, impacted by fewer fire truck shipments and lower sales volume.
Free Cash Flow Negative $189 million, an improvement from negative $435 million last year, due to disciplined working capital management and higher customer advances.
Access Segment Sales $943 million, roughly flat year-over-year, with lower sales volume offset by favorable currency. Adjusted operating income margin decreased to 4.1% due to mix, price-cost dynamics, and lower sales volume.
Vocational Segment Sales $825 million, down year-over-year due to lower shipment volume, partially offset by improved pricing. Adjusted operating income margin was 11.4%, impacted by lower sales volume, higher manufacturing overhead costs, and adverse sales mix.
Transport Segment Sales $513 million, up $50 million year-over-year due to higher sales volume and cumulative catch-up adjustments. Delivery Vehicle revenue grew by $166 million to $217 million, representing 42% of segment sales.
Transport Segment Operating Income $4 million, up $3.6 million year-over-year, reflecting lower adverse cumulative catch-up adjustments and higher sales volume, partially offset by higher manufacturing overhead costs and adverse mix.
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Operating Highlights
New Boom Lift and Micro-Size Scissor Lift: Introduced at ConExpo, designed to improve productivity, serviceability, and versatility. Boom lifts reduce machine weight and increase basket capacity, while micro-sized scissor lifts are tailored for confined spaces, particularly in data center applications.
Canvas Robotics and Robotic Welding End Effector: Showcased advancements in autonomy for drywall finishing and welding, addressing labor constraints and improving job site efficiency.
AI-Enabled Material Contamination Detection: Launched as part of McNeilus IQ platform, leveraging AI to identify contaminants in real-time during collection, enhancing efficiency and sustainability.
Access Segment Demand: Improved demand supported by mega projects like data center construction. Orders exceeded $1.5 billion with a book-to-bill ratio of 1.6 and a backlog of $1.8 billion.
Vocational Segment Backlog: Strong backlog of $6.6 billion, with healthy demand across the segment.
Oshkosh AeroTech: Strong demand from airports for air cargo loaders and Jetway passenger boarding bridges, with key wins in Reno, Orlando, and Nashville. Backlog extends beyond 12 months.
Fire Truck Production: Increased year-over-year production but faced shipment delays due to weather and travel disruptions. Focused on modernizing production flow and removing bottlenecks.
NGDV Production: Production on track with fleet surpassing 20 million miles across 48 states. Positive feedback from USPS and drivers, with ramp-up expected in the second half of the year.
Free Cash Flow: Improved to negative $189 million from negative $435 million last year, reflecting disciplined working capital management and higher customer advances.
2028 Targets: Actions taken in 2026 are foundational to achieving 2028 targets, focusing on innovation, production improvements, and addressing extended backlogs.
Tariff Management: Actively managing tariff impacts through supply chain and manufacturing actions to maintain competitive cost position.
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Risk or Challenges
Fire Truck Shipments: Fewer fire truck shipments in the vocational segment due to weather and travel-related disruptions, impacting customer pickups and delivery schedules.
Macroeconomic Factors: Broader nonresidential construction activity is being impacted by macroeconomic factors, creating uneven demand across end markets.
Dynamic Cost Environment: The company is operating in a dynamic cost environment, including the impact of tariffs, which requires active management through supply chain and manufacturing actions.
Manufacturing Overhead Costs: Higher manufacturing overhead costs are impacting operating income, partly due to investments in future production capabilities.
Adverse Sales Mix: Adverse sales mix, including lower sales of refuse vehicles and municipal fire trucks, is affecting financial performance.
Tariff Impact: Tariffs and related cost increases are a challenge, although partially offset by IEEPA refunds.
Production Bottlenecks: Production bottlenecks in fire truck manufacturing are delaying lead times and impacting throughput.
Geopolitical Uncertainty: Geopolitical uncertainty is adding to the dynamic environment, requiring active management of pricing and supply chain actions.
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Guidance & Outlook
Full Year Adjusted EPS: The company is maintaining its full-year adjusted EPS guidance at $11.50 per share, with approximately 30% of earnings expected in the first half of the year and stronger performance anticipated in the second half.
Free Cash Flow: The company expects free cash flow for 2026 to be in the range of $550 million to $650 million, unchanged from prior guidance.
Access Segment: Demand remains robust, supported by mega projects like data center-related construction. The segment has a backlog of $1.8 billion, and the company expects improved price-cost dynamics and higher contributions in the second half of the year.
Vocational Segment: The segment has a strong backlog of $6.6 billion. Production improvements and targeted capital investments are expected to enhance throughput and reduce lead times, particularly for fire trucks and jet bridges. However, first-quarter delivery shortfalls may modestly reduce the segment's contribution for the year.
Transport Segment: NGDV production is on track, with higher contributions expected in the second half of the year. Additional NGDV orders are anticipated. The FMTV program is progressing, with production expected to grow in the second half of the year.
2028 Targets: The company remains confident in achieving its 2028 targets, supported by strong backlog and demand, production improvements, and advancements in NGDV ramp-up.
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Shareholder Return Plan
Share Repurchase: During the quarter, we repurchased approximately 300,000 shares of our stock for $47 million.
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Key Q&A
Q:What was the expected EPS for Q2 and why was there a delay in Vocational shipments?
A:The expected EPS for Q2 was about $2.60. The delay in Vocational shipments was due to production changes and timing of capacity coming on stream, which pushed some shipments later into the year.
Q:What is the expectation for USPS revenue and the need for a second tranche of orders?
A:USPS revenue is expected to grow across the quarters as production ramps up. A second tranche of orders is assumed in the back half of the year and is implicit in the guidance.
Q:Is there any expectation of pre-buy driven demand in the Vocational segment?
A:No significant levels of pre-buy are expected. If it happens, it will be upside to the current expectations.
Q:What is the expected year-over-year volume uptick in the Vocational segment?
A:Refuse vehicles are expected to be down year-over-year without a pre-buy. Fire truck production is expected to be up roughly 10% year-over-year, and capacity in AeroTech is being added for future growth.
Q:How will the updated Section 232 tariffs and IEEPA refunds impact the P&L?
A:The IEEPA refund is $23 million for the full year, with $13.5 million accrued in Q1. The impact of Section 232 tariffs is expected to be negligible to zero for the year due to mitigation efforts and IEEPA offsets.
Q:What is the outlook for price-cost dynamics through the year?
A:Price-cost dynamics are expected to improve as the year progresses, with more benefits from pricing and cost reductions in the second half.
Q:What are the factors affecting Vocational segment margins?
A:Margins are affected by volume, mix (e.g., fewer fire truck shipments), and stranded manufacturing costs. Full-year margins are expected to be within the long-term guidance range of 16%-18%, but below the originally guided 17%.
Q:How is the geopolitical situation impacting the business?
A:Geopolitical conflicts are driving inflation, particularly in steel, aluminum, and oil prices. These impacts are embedded in the current guidance. Defense business is performing well with no immediate impact on 2026.
Q:What is the utilization trend in Access equipment in North America and Europe?
A:Utilization is tightening and improving, which is a positive sign for the Access industry. The used market for Access equipment is also healthy.
Q:What is the production plan for USPS NGDV and its impact on guidance?
A:Production is expected to be at the low end of the 16,000-20,000 units range for the full year. The ramp is going well and is in line with USPS delivery schedules. The program is moving smoothly and is not dependent on congressional funding.
Q:Where is the incremental demand for Access equipment coming from?
A:Incremental demand is largely driven by mega projects such as data centers and power generation. NRCs are seeing more demand, but there is also some improvement in private non-residential end markets.
Q:What is the status of fire truck production and backlog?
A:Fire truck production is ramping up sequentially each quarter, with significant growth expected from 2025 to 2026. The backlog remains strong, and investments in production capacity are ongoing.
Q:What is the impact of weather on fire truck deliveries and orders?
A:Weather caused delays in fire truck deliveries but did not impact order rates. Deliveries have picked up in Q2 as weather conditions improved.
Q:What is the status of investments in Vocational segment capacity?
A:$150 million is being invested to improve throughput and production, with most of the capacity expected to be online by the end of the year.
Q:What is the outlook for AeroTech capacity and margins?
A:AeroTech capacity is being expanded through facility upgrades and production efficiencies. Margins are in the double digits, and the business is expected to grow.
Q:What is the full-year tax rate guidance?
A:The full-year tax rate guidance remains unchanged from prior guidance.
Q:What is the outlook for refuse vehicle volumes in the Vocational segment?
A:Refuse vehicle volumes are expected to be down 25%-30% for the year due to cautious capital expenditures by customers.
Q:What is the status of M&A activity and portfolio performance?
A:The company is actively looking for M&A opportunities but remains patient and selective. Recent smaller technology deals, like Canvas, are contributing to the business.
Q:What are the key factors supporting the back-end loaded guidance for the year?
A:Key factors include improving Access equipment business, ramping fire truck production, NGDV ramp, and higher pricing on the new FMTV contract.
Q:What is the confidence level in achieving 2028 targets?
A:The company remains confident in achieving mid-scenario 2028 targets due to strong demand, backlog, capacity improvements, and technological advancements.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on segment-level margins and inventory details, particularly for fire trucks and AeroTech. They also did not clarify the exact impact of geopolitical conflicts on defense vehicle orders or provide detailed capacity expansion figures for AeroTech.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Customer engagement
Demand segment
IEEPA
Jetway
McNeilus IQ
Oshkosh
Transport segment
access
action
air
bill ratio
book bill
boom lift
catch adjustment
contract production
contribution
currency
customer pickup
delivery fire
efficiency
facility
improvement
income mix
manufacturing investment
mix price
risk factor
segment sale
shipment
show
summer
target
time
transport
truck production
visibility
volume manufacturing
weather travel
OSK Transcript
Oshkosh Corporation (OSK) Q1 2026 Earnings Call Transcript
Positive5-8
The earnings call indicates strong performance and growth, particularly in the vocational and transport segments, with optimistic guidance for 2026 and beyond. Despite some challenges in the Access segment, the company anticipates improved price-cost dynamics and production ramp-ups. The Q&A highlights confidence in meeting future targets and strong demand across segments. However, the lack of specific guidance on some metrics and geopolitical concerns could temper expectations slightly. Overall, the positive outlook and strategic initiatives suggest a likely stock price increase in the near term.
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Oshkosh Corporation (OSK) Q4 2025 Earnings Call Transcript
Unknown1-29
The earnings call presents a mixed outlook. While there are positive elements like strong vocational segment backlog and long-term EPS growth vision, challenges include lower EPS guidance, tariff impacts, and declining Access Equipment revenue. Management's optimism about cost reductions and pricing adjustments is tempered by uncertainties and lack of detailed guidance in some areas. The Q&A reveals concerns over tariffs and cost dynamics, but also emphasizes potential improvements. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
OSK Slides
OSK Report
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