OSHKOSH CORP
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
OSK$134.36-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0000950170-24-048137
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000950170-24-088482
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 118 current paragraphs.
48 unchanged; 35 reworded; 28 added; 7 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
The Company reported another strong quarter, with solid revenue growth and an increase in operating income despite $51.6 million of impairment charges in the Defense segment. Diluted earnings per share was $2.56, including an after-tax charge of $0.60 related to the impairment of intangible assets. This compares to diluted earnings per share of $2.67 in the second quarter of 2023.
Current report
Consolidated operating income increased 11.1% to $260.9 million, or 9.2% of sales, in the second quarter of 2024 compared to $234.9 million, or 9.7% of sales, in the second quarter of 2023. The increase in operating income was primarily due to improved price/cost dynamics and the impact of higher gross margin associated with the higher organic sales volume, offset in part by the intangible asset impairments in the Defense segment, higher new product development spending and higher operating costs to support the higher sales levels.
Current report
Unfavorable market conditions for mobility and motorsports led to reductions in anticipated cash flows for the Pratt Miller reporting unit in the Defense segment. As a result, the Company recorded Intangible asset impairments in the second quarter of 2024 of $51.6 million. With lower than previously anticipated third-party work, in July 2024 the Company moved reporting responsibility of Pratt Miller from the Defense segment to the Company's Chief Technology and Strategic Sourcing Officer to better utilize Pratt Miller's expertise and capabilities to benefit all Oshkosh businesses. With this change, Pratt Miller results will be combined and reported with Corporate beginning in the third quarter of 2024. The Company's guidance included herein reflects this change.
Current report
The Company is in the process of transitioning its refuse collection vehicle business from factory direct sales and service to a dealer network. The Company believes that a dealer network will provide broader and more comprehensive parts and service coverage for the wide array of customers across North America. There are several strong dealerships already operating under this model and the Company expects to have complete dealer coverage across North America by the end of the year.
Current report
The Company continues to expect Vocational segment sales to be in the range of $3.2 billion in 2024. Expected operating margin in 2024 has increased to 11.25% compared to the previous expectation of 10% largely as a result of expected favorable price/cost dynamics and manufacturing efficiencies. Backlog for Pierce fire trucks continues to grow. Increasing capacity to meet this demand represents a significant opportunity to drive long-term growth in the Vocational segment. In the near term, the Company is focused on achieving incremental gains in throughput in its existing facilities. In the longer term, the Company expects to make additional investments to increase production capacity.
Current report
Corporate and other, including Pratt Miller, is expected to have an operating loss of approximately $250 million in 2024, including the Pratt Miller intangible asset impairment charges recognized in the second quarter.
Current report
Consolidated net sales increased primarily due to improved organic sales volume in all three segments ($202 million), the inclusion of sales related to the AeroTech acquisition ($192 million) and improved pricing ($44 million).
Current report
Consolidated selling, general and administrative expenses increased due to the addition of AeroTech ($23 million) as well as higher salaries ($7 million).
Current report
Intangible asset impairments in the second quarter of 2024 related to the impairment of intangible assets at Pratt Miller within the Defense segment as market conditions for mobility and motorsports led to a downward revision of anticipated cash flows.
Current report
The increase in consolidated operating income was primarily due to the impact of higher gross margin associated with higher organic sales volume ($49 million), improved pricing ($44 million) and lower material costs ($8 million), offset in part by the intangible asset impairments ($52 million), higher new product development investments ($13 million) and higher operating costs to support higher sales volumes ($11 million).
Current report
Intangible asset impairments in the first six months of 2024 relate to the impairment charges at Pratt Miller.
Current report
Miscellaneous, net primarily related to gains and losses on investments, foreign currency transaction gains and losses and non-service costs of the Company’s pension plans. Results for the second quarter of 2024 included foreign currency transactions losses of $1 million, whereas the results for the second quarter of 2023 included foreign currency transactions gains of $3 million.
Current report
Losses of unconsolidated affiliates in the second quarter of 2024 included an impairment of an equity method investment of $6.7 million.
Current report
The increase in operating income in the Access segment was primarily due to the impact of higher gross margin associated with higher sales volume ($20 million), improved material costs ($11 million), improved sales mix ($8 million) and improved pricing ($7 million), offset in part by higher selling, general and administrative expenses to support higher sales volume ($12 million).
Current report
The improved gross margin in the Access segment was primarily due to lower material costs (160 basis points), improved sales mix (120 basis points) and favorable absorption (60 basis points).
Current report
The increase in operating income in the Access segment was primarily due to improved material costs ($41 million), improved sales mix ($32 million), the impact of higher gross margin associated with higher sales volume ($29 million) and improved pricing ($13 million), offset in part by higher selling, general and administrative expenses to support higher sales volume ($11 million).
Current report
Defense segment net sales increased primarily due to higher FMTV sales volume, the commencement of production of the NGDV for the USPS and higher aftermarket parts volume.
Current report
The decrease in gross margin in the Defense segment was primarily due to start-up costs on the NGDV program (100 basis points), adverse production variances (80 basis points) and adverse sales mix (70 basis points), offset in part by lower unfavorable cumulative catch-up adjustments on contracts (110 basis points).
Current report
Intangible asset impairments in the second quarter of 2024 relate to the impairment charges at Pratt Miller.
Current report
The operating results in the Defense segment declined as a result of the intangible asset impairments at Pratt Miller ($52 million), start-up costs on the NGDV program ($6 million) and adverse production variances ($4 million), offset in part by the impact of higher gross margin associated with higher sales volume ($15 million).
Current report
The gross margin in the Defense segment remained relatively flat in the first six months of 2024 compared to the first six months of 2023 as start-up costs on the NGDV program (60 basis points) and adverse production variances (40 basis points) were offset by lower unfavorable cumulative catch-up adjustments on contracts (60 basis points) and favorable mix (40 basis points).
Current report
Intangible asset impairments in the first six months of 2024 relate to the impairment charges at Pratt Miller.
Current report
The operating results in the Defense segment declined as a result of the intangible asset impairments at Pratt Miller ($52 million) offset in part by the impact of higher gross margin associated with higher sales volume ($18 million).
Current report
The increase in amortization of purchased intangibles was due to the acquisition of AeroTech ($9 million).
Current report
The increase in operating income in the Vocational segment was largely a result of improved pricing ($37 million) and the impact of higher gross margin associated with the improved organic sales volume ($7 million).
Current report
Vocational segment net sales increased due to the inclusion of AeroTech sales ($368 million), improved pricing in response to higher input costs ($70 million) and improved organic sales volume ($37 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business in the first quarter of 2023 ($10 million).
Current report
Corporate costs increased primarily due to higher new product development investments ($4 million) and higher compensation expenses ($3 million).
Current report
Operating activities used $566.8 million of cash in the first six months of 2024 compared to $46.6 million during the first six months of 2023. Higher net income and non-cash adjustments during the first six months of 2024 compared to the first six months of 2023 were more than offset by increases in working capital. Cash used in operations in the first six months of 2024 included cash paid for income taxes, net of refunds of $326 million, which increased by $219 million compared to the first six months of 2023 primarily due to the Company's generation of significantly higher pre-tax income in 2023 compared to 2022. Cash used in operations during the first six months of 2024 included the payment of 2023 incentive compensation ($111 million), which was higher than 2022 incentive compensation due to the Company's improved performance. Other changes in working capital also impacted cash used in operations, including increases in receivables and unbilled receivables due to higher net sales levels and delayed timing of invoicing in the Defense segment, increases in inventory in the Access and Vocational segments, lower customer advances and the normalization of accounts payable due to more timely invoice processing. The Company expects to generate approximately $675 million of cash flows from operations in 2024.
Removed paragraphs (7)
Previous report
Consolidated operating income increased 98.5% to $259.7 million, or 10.2% of sales, in the first quarter of 2024 compared to $130.8 million, or 5.8% of sales, in the first quarter of 2023. The increase in operating income was primarily due to improved price/cost dynamics, favorable mix, higher organic sales volume and the absence of a loss on the sale of a business.
Previous report
The Company expects Vocational segment sales and operating margin in 2024 to be in the range of $3.2 billion and 10% compared to the Company's previous expectation of $3.1 billion and 9.4%, respectively, largely as a result of expected increased chassis availability and improved price/cost dynamics.
Previous report
The Company expects corporate expenses for 2024 to be $190 million compared to its previous expectation of $180 million as a result of higher expected incentive and stock-based compensation expense.
Previous report
The increase in operating income in the Access segment was primarily due to improved material & logistics costs ($38 million), improved customer mix ($16 million), the impact of higher gross margin associated with higher sales volume ($10 million) and improved pricing ($7 million).
Previous report
The increase in gross margin in the Defense segment was due to improved product mix (90 basis points) as a result of the higher mix of aftermarket parts sales.
Previous report
The increase in operating income in the Defense segment was primarily a result of improved product mix ($5 million) and the impact of higher gross margin associated with higher sales volume ($4 million).
Previous report
Operating activities used $355.8 million of cash in the first three months of 2024 compared to providing $79.8 million during the first three months of 2023. Higher net income during the first three months of 2024 was offset by a larger increase in working capital. The increase in working capital was primarily the result of a seasonal build in working capital, primarily in the Access segment ($134 million), the payment of 2023 incentive compensation ($111 million), a reduction in customer advances as the rate of customer advances has been lower on new orders ($96 million) and the normalization of accounts payable due to more timely invoice processing ($88 million). The Company continues to expect to generate approximately $725 million of cash flows from operations in 2024.
Reworded paragraphs (35)
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption “Overview” are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Company’s access equipment, fire apparatus, refuse collection and air transportation equipment markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s estimates of access equipment demand which, among other factors, is influenced by historical customer buying patterns and rental company fleet replacement strategies; the impact of orders and costs on the U.S. Postal Service (USPS) contract; the impact of severe weather, war, natural disasters or pandemics that may affect the Company, its suppliers or its customers; the Company’s ability to increase prices or impose surcharges to raise margins or to offset higher input costs, including increased raw material, labor, freight and overhead costs; the Company's ability to accurately predict future input costs associated with Defense contracts; the Company’s ability to attract and retain production labor in a timely manner; the Company's ability to successfully integrate the AeroTech acquisition and to realize the anticipated benefits associated with the same; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the Company’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; budget uncertainty for the U.S. federal government, including risks of future budget cuts, the impact of continuing resolution funding mechanisms and the potential for shutdowns; the impact of any U.S. Departme…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Company’s access equipment, fire apparatus, refuse collection and air transportation equipment markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s estimates of access equipment demand which, among other factors, is influenced by historical customer buying patterns and rental company fleet replacement strategies; the impact of orders and costs on the U.S. Postal Service contract; the impact of severe weather, war, natural disasters or pandemics that may affect the Company, its suppliers or its customers; the Company’s ability to increase prices to raise margins or to offset higher input costs, including increased raw material, labor, freight and overhead costs; the Company's ability to accurately predict future input costs associated with Defense contracts; the Company’s ability to attract and retain production labor in a timely manner; the Company's ability to successfully integrate the AeroTech acquisition and to realize the anticipated benefits associated with the same; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the Company’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; budget uncertainty for the U.S. federal government, including risks of future budget cuts, the impact of continuing resolution funding mechanisms and the potential for shutdowns; the impact of any U.S. Department of Defense solicitation for competition for future contracts to produce military vehicles; risks related to the colle…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Access — aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as carriers and wreckers. Access customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and towing companies.
Current wording
Access — aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights. Access customers include equipment rental companies, construction contractors, manufacturing companies and home improvement centers, as well as carriers and wreckers sold to towing companies.
Previous wording
Defense — tactical vehicles, trailers, weapons system integration and parts sold to the U.S. military and to other militaries around the world and delivery vehicles for the USPS.
Current wording
Defense — tactical vehicles, trailers, weapons system integration and parts sold to the U.S. military and to other militaries around the world and delivery vehicles for the United States Postal Service (USPS).
Previous wording
Consolidated net sales in the first quarter of 2024 increased $275.7 million, or 12.2%, to $2.54 billion compared to the first quarter of 2023 primarily due to the impact of sales from the acquisition of AeroTech, improved organic volume and improved pricing, offset in part by the impact of the sale of the rear-discharge concrete mixer business.
Current wording
Consolidated net sales in the second quarter of 2024 increased $433.8 million, or 18.0%, to $2.85 billion compared to the second quarter of 2023 primarily due to improved organic sales volume in all three segments, sales related to the AeroTech acquisition of $192.0 million and improved pricing.
Previous wording
The Company reported earnings per share of $2.71 in the first quarter of 2024, which more than doubled earnings per share of $1.34 in the first quarter of 2023. The strong results in the first quarter of 2024 were primarily the result of improved price/cost dynamics as well as favorable product and customer mix. As expected, orders in the Access segment began to normalize in the first quarter of 2024, leading to lower orders in the quarter compared to the first quarter of 2023. As the Access segment is largely booked for 2024, the Company continues to expect that the majority of 2025 orders will be booked in the second half of 2024, particularly in the fourth quarter.
Current wording
As expected, orders in the Access segment continued to normalize, leading to lower orders in the second quarter of 2024 compared to the second quarter of 2023. As the Access segment is largely booked for new machine sales for 2024, the Company continues to expect that the majority of 2025 orders will not be booked until the fourth quarter of 2024 and into 2025.
Previous wording
The Company continues to make investments in technologies that it expects will drive demand for the next decade. In April, the Company began production of its Next Generation Delivery Vehicle (NGDV) for the USPS. The Company expects to increase NGDV production throughout 2024 and 2025 and be at full rate production by the start of 2026. This production is expected to offset the loss of the domestic Joint Light Tactical Vehicle (JLTV) program.
Current wording
In April 2024, the Company reached a significant milestone in its partnership with the USPS as the Company began shipping its Next Generation Delivery Vehicle (NGDV). The Company expects to increase NGDV production throughout 2024 and 2025 and be at full rate production by the start of 2026. The Company expects the NGDV program will be a meaningful contributor to profitable growth for the remainder of the decade.
Previous wording
As a result of the positive start of 2024, solid execution and healthy demand, the Company increased its 2024 earnings per share estimate from in the range of $9.45 to in the range of $10.55 on estimated operating income of $1.0 billion and estimated consolidated sales of $10.7 billion. The revised earnings per share estimate includes a $0.70 per share charge related to amortization of purchased intangibles. Excluding amortization of purchased intangibles, the Company increased its 2024 adjusted earnings per share estimate to be in the range of $11.25.
Current wording
The Company lowered its 2024 earnings per share estimate to be in the range of $10.45 compared to its previous estimate of approximately $10.55 as a result of the impairment charges recorded in the second quarter. The revised earnings per share estimate is based on the Company's expectations that it will generate operating income of $1.025 billion on consolidated sales of $10.7 billion. The revised earnings per share estimate includes after-tax charges of $0.60 per share related to the intangible asset impairments and $0.70 per share related to amortization of purchased intangibles. Excluding these items, the Company increased its 2024 adjusted earnings per share estimate by $0.50 to be in the range of $11.75.
Previous wording
The Company expects Access segment sales and operating margin in 2024 to be in the range of $5.4 billion and 15.25% compared to the Company’s previous expectation of $5.2 billion and 14.8%, respectively, largely as a result of expected improved production throughput and improved sales mix. Compared to the first quarter of 2024, the Company expects customer mix to moderate and new product development spending to increase for the remaining quarters of 2024.
Current wording
The Company expects Access segment sales and operating margin in 2024 to be in the range of $5.3 billion and 16.25%, respectively, compared to the Company’s previous expectations of $5.4 billion and 15.25%, respectively. The reduced revenue expectation is a result of lower expected sales outside of North America while the expected improved margins are the result of expected favorable sales mix. Compared to the first six months of 2024, the Company expects customer mix to moderate and new product development spending to increase for the second half of 2024.
Previous wording
The Company continues to expect Defense segment sales and operating margin in 2024 to be in the range of $2.1 billion and 2.25%, respectively.
Current wording
The Company expects Defense segment sales and operating margin in 2024 to be in the range of $2.1 billion and 2.25%, respectively. The Company's expectation of $2.1 billion in sales for the Defense segment represents an increase of $100 million as a result of expected improved volume compared to its previous expectation, offset by the removal of the Pratt Miller business from the segment. Defense continues to work through extensions of its existing contracts to reflect the inflation that it has experienced the past several years. To that end, the Company is nearing completion of a 5-year contract extension for the Family of Heavy Tactical Vehicles (FHTV) program and expects to complete a Family of Medium Tactical Vehicles (FMTV) contract extension in the first half of 2025. These contract extensions are expected to have significantly higher pricing to reflect current material costs and more robust economic price adjustment clauses to protect the Company if it experiences rapid inflation in the future.
Previous wording
The Company expects earnings per share in the second quarter of 2024 will be in the range of $2.82, reflecting continued strong demand and similar supply chain dynamics to those the Company experienced during the first quarter of 2024. Estimated earnings per share for the second quarter of 2024 includes an $0.18 per share charge related to amortization of purchased intangibles. The Company expects an increase in net sales of approximately 15% compared to the second quarter of 2023, largely due to the acquisition of AeroTech.
Current wording
The Company expects earnings per share in the third quarter of 2024 will be in the range of $2.85, reflecting continued strong demand and similar supply chain dynamics to those the Company experienced during the first six months of 2024. Estimated earnings per share for the third quarter of 2024 includes an expected $0.15 per share charge related to amortization of purchased intangibles. The Company expects an increase in net sales of approximately 10% compared to the third quarter of 2023, largely due to the acquisition of AeroTech, which occurred in August 2023.
Previous wording
Consolidated net sales increased primarily due to the inclusion of sales related to the AeroTech acquisition ($176 million), higher sales volume ($77 million), and higher pricing in response to higher input costs ($40 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business ($14 million).
Current wording
Consolidated net sales increased primarily due to the inclusion of sales related to the AeroTech acquisition ($368 million), higher organic sales volume in all three segments ($269 million) and higher pricing ($83 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business ($10 million).
Previous wording
The improvement in consolidated gross margin was primarily due lower material & logistics costs (140 basis points), improved pricing (120 basis points) and improved sales mix (80 basis points).
Current wording
The improvement in consolidated gross margin was primarily due to improved pricing (120 basis points), improved sales mix (70 basis points) and lower material costs (60 basis points).
Previous wording
Consolidated selling, general and administrative expenses were relatively flat with the prior year as the addition of selling, general and administrative expenses for AeroTech ($20 million) were offset by the absence of a loss on the sale of the rear-discharge concrete mixer business ($13 million) and a reduction of selling, general and administrative expenses related to the divested business ($5 million).
Current wording
Consolidated selling, general and administrative expenses increased due to the addition of AeroTech ($42 million) as well as higher salaries ($7 million), offset in part by the absence of a loss on the sale of the rear-discharge concrete mixer business ($13 million) and lower incentive compensation accruals ($4 million).
Previous wording
The increase in consolidated operating income was primarily due to improved material & logistics costs ($35 million), improved pricing ($40 million), favorable sales mix ($29 million), the impact of higher gross margin associated with higher organic sales volume ($18 million) and the absence of a loss on the sale of a business ($13 million).
Current wording
The increase in consolidated operating income was primarily due to improved pricing ($83 million), the impact of higher gross margin associated with higher organic sales volume ($64 million), favorable sales mix ($56 million) and improved material costs ($30 million), offset in part by the intangible asset impairments ($52 million) and higher new product development spending ($18 million).
Previous wording
The effective tax rate in the first quarter of 2024 included discrete tax benefits of $2 million. The effective tax rate in the first quarter of 2023 included discrete tax charges of $3 million, including a $2 million charge related to a valuation allowance recorded with respect to a deferred tax asset on marketable securities.
Current wording
The effective tax rate in the second quarter of 2024 included discrete tax benefits of $2.0 million, including a $1.9 million benefit on the purchase of discounted federal tax credits. The effective tax rate in the second quarter of 2023 included discrete tax charges of $1.2 million, including a $2.5 million charge related to a valuation allowance recorded with respect to unrealizable foreign tax credits.
Previous wording
Interest expense, net of interest income increased due to increased borrowings on the Company's Revolving Credit Facility and lower cash holdings as a result of the acquisition of AeroTech in the third quarter of 2023.
Current wording
Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility and lower cash holdings following the acquisition of AeroTech in the third quarter of 2023.
Previous wording
Miscellaneous, net included a gain on a settlement with the Company's pension advisor of $5 million in the first quarter of 2023.
Current wording
Miscellaneous, net primarily related to gains and losses on investments, foreign currency transaction gains and losses and non-service costs of the Company’s pension plans. Results for the first six months of 2024 included foreign currency transactions losses of $4 million. Results for the first six months of 2023 included foreign currency transactions gains of $3 million and a gain on a settlement with the Company's pension advisor of $5 million.
Previous wording
Losses of unconsolidated affiliates included a write-down of an investment in an equity interest in an entity in Mexico of $6 million in the first quarter of 2023.
Current wording
Losses of unconsolidated affiliates included an impairment of an equity method investment of $6.7 million in the first six months of 2024 compared to a write-down of an investment in an equity interest in an entity in Mexico of $5.9 million in the first six months of 2023.
Previous wording
Access segment net sales increased primarily as a result of improved sales volume in North America offset in part by lower sales volume in Europe.
Current wording
Access segment net sales increased primarily as a result of improved sales volume in North America.
Previous wording
The improved gross margin in the Access segment was primarily due to lower material & logistics costs (320 basis points), improved customer mix (130 basis points) and improved pricing (40 basis points).
Current wording
The improved gross margin in the Access segment was primarily due to lower material costs (90 basis points), favorable absorption (70 basis points) and improved sales mix (50 basis points).
Previous wording
Defense segment net sales increased primarily due to higher aftermarket parts and Family of Medium Tactical Vehicle sales volume, offset in part by lower JLTV program volume. JLTV production under the Company's domestic JLTV contract is expected to conclude early in 2025 as the domestic follow-on contract was awarded to another company. The domestic JLTV contract accounted for $229 million of sales in the first quarter of 2024.
Current wording
Defense segment net sales increased primarily due to higher aftermarket parts volume, higher FMTV sales volume, and the commencement of production of delivery vehicles for the USPS in the second quarter of 2024, offset in part by lower Joint Light Tactical Vehicle (JLTV) program volume. JLTV production under the Company's domestic JLTV contract is expected to conclude in early 2025 as the domestic follow-on contract was awarded to another company. The domestic JLTV contract accounted for $461 million of sales in the first six months of 2024. An increase in NGDV revenues is expected to exceed the loss of JLTV revenues in 2025.
Previous wording
Vocational segment net sales increased due to the inclusion of AeroTech sales ($176 million) and higher pricing in response to higher input costs ($34 million).
Current wording
Vocational segment net sales increased due to the inclusion of AeroTech sales ($192 million), improved pricing in response to higher input costs ($37 million) and improved organic sales volume ($30 million).
Previous wording
The increase in operating income in the Vocational segment was largely a result of improved pricing ($34 million), the absence of a loss on the sale of the rear-discharge concrete mixer business ($13 million) and improved product mix ($9 million).
Current wording
The increase in operating income in the Vocational segment was largely a result of improved pricing ($70 million), improved product mix ($28 million) and the absence of the loss on the sale of the rear-discharge concrete mixer business ($13 million), offset in part by higher material costs ($12 million).
Previous wording
Corporate operating expenses increased primarily due to higher new product development investments ($3 million) and higher share-based compensation expenses ($3 million).
Current wording
Corporate costs increased primarily due to higher new product development investments ($8 million) and higher share-based compensation expenses ($5 million).
Previous wording
The Company generates significant capital resources from operating activities, which is the expected primary source of funding for the Company. In addition to cash generated from operations, the Company had other sources of liquidity available at March 31, 2024, including $69.9 million of cash and cash equivalents and $444.3 million of unused available capacity under the Revolving Credit Facility (as defined in “Liquidity”). Borrowings under the Revolving Credit Facility could, as discussed below, be limited by a financial covenant contained in the Credit Agreement (as defined in “Liquidity”). The Company was in compliance with the financial covenant at March 31, 2024 and expects to remain in compliance with the financial covenant contained in the Credit Agreement for the foreseeable future.
Current wording
The Company generates significant capital resources from operating activities, which is the expected primary source of funding for the Company. In addition to cash generated from operations, the Company had other sources of liquidity available at June 30, 2024, including $141.4 million of cash and cash equivalents and $501.6 million of unused available capacity under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility could, as discussed below, be limited by a financial covenant contained in the Credit Agreement (as defined in “Liquidity”). The Company was in compliance with the financial covenant at June 30, 2024 and expects to remain in compliance with the financial covenant contained in the Credit Agreement for the foreseeable future.
Previous wording
The Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditures related to capacity and strategic investments. The Company remains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its projected needs. To provide additional flexibility for working capital needs, organic and inorganic investments as well as share repurchases, the Company amended the Credit Agreement in April 2024 to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $0.45 billion.
Current wording
The Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditures related to capacity and strategic investments. The Company remains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its projected needs. To provide additional flexibility for working capital needs, organic and inorganic investments as well as share repurchases, the Company amended the Credit Agreement in April 2024 to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $450 million to $1.55 billion.
Previous wording
The Company’s ratio of debt to total capitalization of 24.5% at March 31, 2024 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2023 was primarily due to borrowings under the Revolving Credit Facility primarily related to working capital and capital expenditures. The increase in working capital was primarily the result of a seasonal build in working capital in the Access segment, the payment of 2023 incentive compensation, a reduction in customer advances as the rate of customer advances has been lower on new orders and the normalization of accounts payable due to more timely invoice processing.
Current wording
The Company’s ratio of debt to total capitalization of 29.4% at June 30, 2024 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2023 was primarily due to borrowings under the Revolving Credit Facility primarily related to working capital and capital expenditures.
Previous wording
Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) increased from 44 days at December 31, 2023 to 50 days at March 31, 2024. Days sales outstanding for segments other than the Defense segment increased from 49 days at December 31, 2023 to 56 days at March 31, 2024 due to timing of sales and receipt of cash from customers primarily within the Access segment. Consolidated inventory turns (defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) decreased from 4.2 times at December 31, 2023 to 4.1 times at March 31, 2024. Consolidated days payable outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 62 days at March 31, 2024, down from 72 days at December 31, 2023 due to more timely invoice processing.
Current wording
(defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) were 4.2 times at December 31, 2023 and June 30, 2024. Consolidated days payable outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 55 days at June 30, 2024, down from 72 days at December 31, 2023 due to more timely invoice processing.
Previous wording
Investing activities used cash of $111.2 million in the first three months of 2024 compared to $277.1 million during the first three months of 2023. The Company used $187.9 million to fund the acquisition of Hinowa S.p.A. during the first three months of 2023. Through March 31, 2024, the Company used $100.1 million for capital expenditures. The Company continues to anticipate that it will invest $300 million on capital expenditures in 2024 as the Company completes its three facilities in Tennessee and South Carolina.
Current wording
Investing activities used cash of $149.3 million in the first six months of 2024 compared to $295.4 million during the first six months of 2023. The Company used $187.9 million to fund the acquisition of Hinowa S.p.A. during the first six months of 2023. Through the first six months of 2024, the Company used $139.6 million for capital expenditures. The Company continues to anticipate that it will invest $300 million on capital expenditures in 2024 as the Company completes its facilities in Tennessee and South Carolina.
Previous wording
Financing activities provided cash of $412.5 million in the first three months of 2024 compared to the use of $71.1 million during the first three months of 2023. During the first three months of 2024, the Company used borrowings under the Revolving Credit Facility to fund working capital and capital expenditures. In the first three months of 2024, the Company repurchased 129,494 shares of its Common Stock at an aggregate cost of $15.1 million. As of March 31, 2024, the Company had approximately 11.2 million shares of Common Stock remaining under its repurchase authorization. In the first three months of 2023, the Company repurchased 173,169 shares of its Common Stock at an aggregate cost of $15.2 million.
Current wording
Financing activities provided cash of $732.8 million in the first six months of 2024 compared to the use of $109.1 million during the first six months of 2023. During the first six months of 2024, the Company borrowed under the Revolving Credit Facility to fund working capital and capital expenditures. In the first six months of 2024, the Company repurchased 464,193 shares of its Common Stock at an aggregate cost of $54.6 million. As of June 30, 2024, the Company had approximately 10.8 million shares of Common Stock remaining under its repurchase authorization. In the first six months of 2023, the Company repurchased 265,795 shares of its Common Stock at an aggregate cost of $22.6 million.
Previous wording
On March 23, 2022, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion. At March 31, 2024, borrowings under the Revolving Credit Facility of $641.0 million and outstanding letters of credit of $14.7 million reduced available capacity under the
Current wording
On March 23, 2022, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion. On April 3, 2024, the Company amended the Credit Agreement to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $450 million to $1.55 billion. At June 30, 2024, borrowings under the Revolving Credit Facility of $1.04 billion and outstanding letters of credit of $11.9 million reduced available capacity under the Revolving Credit Facility to $501.6 million.
Previous wording
Sales to the U.S. government comprised approximately 20% of the Company’s net sales in the first three months of 2024. No other single customer accounted for more than 10% of the Company’s net sales for this period. A substantial majority of the Company’s net sales are derived from the fulfillment of customer orders that are received prior to commencing production.
Current wording
Sales to the U.S. government comprised approximately 20% of the Company’s net sales in the first six months of 2024. No other single customer accounted for more than 10% of the Company’s net sales for this period. A substantial majority of the Company’s net sales are derived from the fulfillment of customer orders that are received prior to commencing production.
Previous wording
The Company’s backlog at March 31, 2024 increased 10.2% to $16.35 billion compared to $14.84 billion at March 31, 2023. Access segment backlog decreased 3.3% to $4.23 billion at March 31, 2024 compared to $4.38 billion at March 31, 2023 which the Company believes is due to the normalizing of orders in connection with improved product availability. Defense segment backlog decreased 5.7% to $6.45 billion at March 31, 2024 compared to $6.83 billion at March 31, 2023 primarily as a result of the wind-down of production under the Company's domestic JLTV contract. Vocational segment backlog increased 56.1% to $5.67 billion at March 31, 2024 compared to $3.63 billion at March 31, 2023 due to strong demand for fire apparatus and rising prices as well as the inclusion of AeroTech backlog of $0.83 billion.
Current wording
The Company’s backlog at June 30, 2024 increased 2.7% to $15.37 billion compared to $14.97 billion at June 30, 2023. Access segment backlog decreased 25.4% to $3.26 billion at June 30, 2024 compared to $4.37 billion at June 30, 2023. The decrease in backlog was expected and believed to be the result of the normalization of orders in connection with improved product availability. Defense segment backlog decreased 4.7% to $6.43 billion at June 30, 2024 compared to $6.75 billion at June 30, 2023 primarily as a result of the wind-down of production under the Company's domestic JLTV contract. Vocational segment backlog increased 47.5% to $5.68 billion at June 30, 2024 compared to $3.85 billion at June 30, 2023 due to strong demand for fire apparatus and rising prices as well as the inclusion of AeroTech backlog of $780 million.
Previous wording
Backlog represents the dollar amount of revenues that the Company anticipates from customer contracts that have been awarded and/or are in progress. Reported backlog includes the original contract amount and any contract modifications that have been agreed upon. Reported backlog excludes purchase options, announced orders for which definitive contracts have not been executed and any potential future contract modifications. Backlog is comprised of fixed and variable priced contracts that may be canceled, modified or otherwise changed in the future. As a result, backlog may not be indicative of future operating results. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Company’s future sales to the DoD versus its sales to other customers. Approximately 57% of the Company’s March 31, 2024 backlog is not expected to be filled in 2024.
Current wording
Backlog represents the dollar amount of revenues that the Company anticipates from customer contracts that have been awarded and/or are in progress. Reported backlog includes the original contract amount and any contract modifications that have been agreed upon. Reported backlog excludes purchase options, announced orders for which definitive contracts have not been executed and any potential future contract modifications. Backlog is comprised of fixed and variable priced contracts that may be canceled, modified or otherwise changed in the future. As a result, backlog may not be indicative of future operating results. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Company’s future sales to the DoD versus its sales to other customers. Approximately 69% of the Company’s June 30, 2024 backlog is not expected to be filled in 2024.
Previous wording
The Company is forecasting earnings per share excluding items that affect comparability. When the Company forecasts earnings per share, excluding items, this is considered a non-GAAP financial measure. The Company believes excluding the impact of these items is useful to investors to allow a more accurate comparison of the Company’s operating performance to prior year results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s results or forecasts prepared in accordance with GAAP. The table below presents a reconciliation of the Company’s presented non-GAAP measure to the most directly comparable GAAP measure:
Current wording
The Company is forecasting earnings per share excluding items that affect comparability. When the Company forecasts earnings per share, excluding items, this is considered a non-GAAP financial measure. The Company believes excluding the impact of these items is useful to investors to allow a more accurate comparison of the Company’s operating performance to prior year results. However, while forecasted adjusted earnings per share excludes amortization of purchased intangibles and intangible asset impairments, revenue and earnings of acquired companies are reflected in forecasted adjusted earnings per share and intangible assets contribute to the generation of revenue and earnings. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s results or forecasts prepared in accordance with GAAP. The table below presents a reconciliation of the Company’s presented non-GAAP measure to the most directly comparable GAAP measure:
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
The improvement in consolidated gross margin was primarily due to improved pricing (120 basis points) and lower material costs (30 basis points).
Current report — wording carried from elsewhere
Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech ($19 million).
Current report — wording carried from elsewhere
Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility (as defined in "Liquidity") and lower cash holdings following the acquisition of AeroTech in the third quarter of 2023.
Current report — wording carried from elsewhere
The effective tax rate in the first six months of 2024 included discrete tax benefits of $4.2 million, including a $3.1 million benefit on the purchase of discounted federal tax credits. The effective tax rate in the first six months of 2023 included discrete tax charges of $4.2 million, including a $2.5 million charge related to a valuation allowance recorded with respect to unrealizable foreign tax credits.
Current report — wording carried from elsewhere
Access segment net sales increased primarily as a result of improved sales volume in North America.
Current report — wording carried from elsewhere
The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (330 basis points).
Current report — wording carried from elsewhere
Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) increased from 44 days at December 31, 2023 to 47 days at June 30, 2024 due to increases in non-Defense segments. Days sales outstanding for segments other than the Defense segment increased from 49 days at December 31, 2023 to 53 days at June 30, 2024 due to longer collection times at AeroTech. Consolidated inventory turns
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Revolving Credit Facility to $444.3 million. On April 3, 2024, the Company amended the Credit Agreement to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $0.45 billion. Following the amendment, the maximum aggregate amount of availability under the Revolving Credit Facility is $1.55 billion.