OSHKOSH CORP

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, 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.

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 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 captions “Overview,” “Results of Operations,” “Liquidity and Capital Resources” and “Non-GAAP Financial Measures” 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 includethe 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 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 me…

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. Access customers include equipment rental companies, construction contractors, manufacturing companies and home improvement centers, as well as carriers and wreckers sold to 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. The Access segment also manufacturers 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 United States Postal Service (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 USPS.

Previous 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.

Current wording

Consolidated net sales in the third quarter of 2024 increased $231.5 million, or 9.2%, to $2.74 billion compared to the third quarter of 2023 primarily due to improved organic sales volume in all three segments, an additional month of AeroTech sales and improved pricing.

Previous wording

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 wording

Consolidated operating income increased 3.8% to $266.2 million, or 9.7% of sales, in the third quarter of 2024 compared to $256.5 million, or 10.2% of sales, in the third quarter of 2023. The increase in operating income was primarily due to the impact of higher gross margin associated with the higher sales volume and improved price/cost dynamics, offset in part by the higher selling, general and administrative and engineering costs.

Previous 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.

Current wording

In light of the softer access equipment markets in North America, the Company is reducing its full year 2024 earnings per share estimate to be approximately $10.00 per share compared to its most recent estimate of $10.45. The earnings per share estimate includes after-tax charges of $0.70 per share related to amortization of purchased intangibles, $0.60 per share related to intangible asset impairments in the second quarter of 2024 and $0.05 related to the amortization of inventory step-up from an acquisition during the third quarter. Excluding these items, the Company estimates full year 2024 adjusted earnings per share to be approximately $11.35 per share compared to its most recent estimate of $11.75. The Company expects net sales to be approximately $10.6 billion in 2024, compared to its most recent estimate of $10.7 billion.

Previous wording

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 wording

Net operating costs for Corporate and other are expected to be approximately $250 million in 2024, including Pratt Miller intangible asset impairment charges of $52 million recognized in the second quarter of 2024.

Previous wording

Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech ($19 million).

Current wording

Amortization of purchased intangible assets increased primarily due to an additional month of amortization related to the acquisition of AeroTech.

Previous wording

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 wording

The increase in consolidated operating income was primarily due to the impact of improved pricing ($47 million) and higher gross margin associated with higher organic sales volume ($34 million), offset in part by increases in material costs ($35 million), higher operating costs to support higher sales volumes ($25 million) and higher engineering costs ($16 million).

Previous 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).

Current wording

Consolidated net sales increased primarily due to the inclusion of sales related to the AeroTech acquisition ($429 million), higher organic sales volume in all three segments ($416 million) and higher pricing ($131 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business ($44 million).

Previous 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).

Current wording

The improvement in consolidated gross margin was primarily due to improved pricing (120 basis points) and improved sales mix (60 basis points).

Previous 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).

Current wording

Consolidated selling, general and administrative expenses increased due to the addition of AeroTech ($48 million), higher salaries ($14 million) and higher consulting costs ($14 million), offset in part by lower incentive compensation accruals ($8 million).

Previous wording

Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech ($9 million).

Current wording

Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech.

Previous 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).

Current wording

The increase in consolidated operating income was primarily due to improved pricing ($131 million), the impact of higher gross margin associated with higher organic sales volume ($101 million) and favorable sales mix ($52 million), offset in part by the intangible asset impairments ($52 million), higher new product development spending ($38 million) and higher unfavorable cumulative catch-up adjustments on contracts in the Defense segment ($10 million).

Previous wording

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 wording

Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility (as defined in "Liquidity") primarily to fund acquisitions.

Previous 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.

Current wording

The effective tax rate in the third quarter of 2024 included net discrete tax benefits of $1.5 million compared to net discrete tax benefits of $1.0 million in the third quarter of 2023.

Previous 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.

Current wording

Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility primarily to fund acquisitions.

Previous 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.

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 nine months of 2024 included foreign currency transactions losses of $2 million compared to foreign currency transactions gains of $5 million for the first nine months of 2023. Results for the first nine months of 2023 also included a settlement with the Company's pension advisor of $5 million.

Previous wording

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 wording

The effective tax rate in the first nine months of 2024 included net discrete tax benefits of $5.7 million, including a $3.2 million benefit from the purchase of discounted federal tax credits and a $1.1 million benefit related to amended return interest income. The effective tax rate in the first nine months of 2023 included net discrete tax charges of $3.2 million.

Previous 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.

Current wording

Losses of unconsolidated affiliates included an impairment of an equity method investment of $7 million in the first nine months of 2024 compared to an $8 million loss on sale of an equity interest in an entity in Mexico in the first nine months of 2023.

Previous wording

Access segment net sales increased primarily as a result of improved sales volume in North America.

Current 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 the Europe, Africa and Middle East and Rest of the World regions.

Previous wording

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 wording

The decrease in operating income in the Access segment was primarily due to higher material costs ($30 million) and higher selling, general and administrative expenses ($15 million), offset in part by the impact of higher gross margin associated with higher sales volume ($12 million) and improved sales mix ($7 million).

Previous wording

Access segment net sales increased primarily as a result of improved sales volume in North America.

Current 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 the Europe, Africa and Middle East and Rest of the World regions.

Previous 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).

Current wording

The improved gross margin in the Access segment was primarily due to improved sales mix (90 basis points), favorable absorption (40 basis points), improved pricing (30 basis points) and improved material costs (30 basis points).

Previous wording

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 wording

The increase in operating income in the Access segment was primarily due to the impact of higher gross margin associated with higher sales volume ($41 million), improved sales mix ($40 million), improved pricing ($15 million), favorable absorption ($10 million) and improved material costs ($9 million), offset in part by higher selling, general and administrative expenses to support higher sales volume ($26 million).

Previous 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).

Current wording

Vocational segment net sales increased due to an additional month of AeroTech sales, improved pricing in response to higher input costs ($45 million) and improved organic sales volume ($28 million). AeroTech had sales of $194.8 million during the third quarter of 2024 compared to $115.8 million from the August 1, 2023 acquisition date to September 30, 2023.

Previous wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (330 basis points).

Current wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing.

Previous wording

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 wording

Vocational segment net sales increased due to the inclusion of AeroTech sales, improved pricing in response to higher input costs ($116 million) and improved organic sales volume ($86 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business in the first quarter of 2023 ($44 million). AeroTech had sales of $563.0 million during the first nine months of 2024 compared to $115.8 million from the August 1, 2023 acquisition date to September 30, 2023.

Previous wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (330 basis points).

Current wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing.

Previous wording

The increase in amortization of purchased intangibles was due to the acquisition of AeroTech ($9 million).

Current wording

The increase in amortization of purchased intangibles was due to the acquisition of AeroTech.

Previous wording

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 wording

The increase in operating income in the Vocational segment was largely a result of improved pricing ($116 million), the impact of higher gross margin associated with higher sales volume ($21 million) and improved product mix ($19 million), offset in part by higher material costs ($18 million).

Previous wording

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 wording

Defense segment net sales increased primarily due to Next Generation Delivery Vehicle (NGDV) production for the USPS and higher sales volume for the Family of Heavy Tactical Vehicles (FHTV), the Family of Medium Tactical Vehicles (FMTV) and aftermarket parts, offset in part by lower Joint Light Tactical Vehicle (JLTV) volume.

Previous wording

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 wording

Operating income in the Defense segment declined as a result of the unfavorable cumulative catch-up adjustments on contracts ($11 million) and the absence of a gain on the sale of a business ($8 million), offset in part by higher gross margin associated with higher sales volume ($9 million).

Previous 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.

Current wording

Defense segment net sales increased primarily due to higher sales volumes for the FMTV, aftermarket parts and the FHTV and initial sales of NGDVs for the USPS (which commenced in the second quarter of 2024), offset in part by lower 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 $661 million of sales in the first nine months of 2024. An increase in NGDV revenues is expected to exceed the impact of the decline of JLTV revenues in 2025.

Previous wording

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 wording

The gross margin in the Defense segment remained relatively flat in the first nine months of 2024 compared to the first nine months of 2023 as favorable mix (110 basis points) was offset by adverse production variances (70 basis points) and unfavorable cumulative catch-up adjustments on contracts (40 basis points).

Previous wording

Corporate costs increased primarily due to higher new product development investments ($8 million) and higher share-based compensation expenses ($5 million).

Current wording

Net operating costs for corporate and other increased primarily due to the intangible asset impairments in the second quarter of 2024 at Pratt Miller of $52 million, higher new product development investments ($9 million), lower operating results at Pratt Miller ($8 million) and higher share-based compensation expenses ($3 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 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.

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 September 30, 2024, including $160.9 million of cash and cash equivalents and $591.0 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 September 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’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.

Current wording

The Company’s ratio of debt to total capitalization of 27.3% at September 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 the funding of working capital to facilitate sales growth.

Previous 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.

Current 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 47 days at September 30, 2024. Days sales outstanding for segments other than the Defense segment increased from 49 days at December 31, 2023 to 52 days at September 30, 2024. 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 4.0 times at September 30, 2024 primarily due to increases in inventory levels in the Vocational and Access segments. 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 57 days at September 30, 2024, down from 72 days at December 31, 2023 due to more timely invoice processing.

Previous wording

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.

Current wording

Operating activities used $240.7 million of cash in the first nine months of 2024 compared to providing $120.0 million of cash during the first nine months of 2023. Higher net income and non-cash adjustments during the first nine months of 2024 compared to the first nine months of 2023 were more than offset by increases in working capital. Cash used in operations in the first nine months of 2024 included cash paid for income taxes, net of refunds of $364.9 million, which increased by $242.3 million compared to the first nine 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 nine 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 inventory in the Access and Vocational segments as well as lower customer advances and the normalization of accounts payable due to more timely invoice processing. The Company expects to generate approximately $625 million of cash flows from operations in 2024 compared to the Company's most recent estimate of $675 million.