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 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 and recycling 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; risks that a trade war and related tariffs could reduce the demand for or competitiveness of the Company’s products or cause inefficiencies in the Company's supply chain; the Company’s ability to increase prices to raise margins or to offset higher input 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 realize the anticipated benefits associated with the AeroTech acquisition; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; 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 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 potent…

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 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 and recycling 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; risks that a trade war and related tariffs could reduce the demand for or competitiveness of the Company’s products or cause inefficiencies in the Company's supply chain; the Company’s ability to increase prices to raise margins or to offset higher input costs; the Company's ability to accurately predict future input costs associated with U.S. Department of Defense contracts; the Company’s ability to attract and retain production labor in a timely manner; the Company's ability to realize the anticipated benefits associated with the AeroTech acquisition; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; 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 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 mechan…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In July 2024, the Company moved the reporting responsibility for Pratt Miller from its Defense segment to the Chief Technology and Strategic Sourcing Officer to better utilize Pratt Miller’s expertise across the entire Oshkosh Corporation enterprise. Pratt Miller results are now reported within "Corporate and other." All historical information has been recast to reflect this change.

Current wording

In July 2024, the Company moved the reporting responsibility for Pratt Miller from its Transport segment to the Chief Technology and Strategic Sourcing Officer to better utilize Pratt Miller’s expertise across the entire Oshkosh Corporation enterprise. Pratt Miller results are now reported within "Corporate and other." All historical information has been recast to reflect this change.

Previous wording

Major products manufactured and marketed by each of the Company’s business segments are as follows:

Current wording

Major products manufactured and marketed by each of the Company’s segments are as follows:

Previous wording

Access — aerial work platforms and telehandlers used in a wide variety of construction, industrial, agricultural, vegetation management and 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 manufactures carriers and wreckers sold to towing companies.

Current wording

Access — aerial work platforms and telehandlers used in a wide variety of construction, industrial, agricultural, vegetation management and maintenance applications to position workers and materials at elevated heights. Access customers include equipment rental companies, construction contractors and home improvement centers. The Access segment also manufactures carriers and wreckers sold to towing companies.

Previous wording

Vocational — custom and commercial firefighting vehicles and equipment; aviation ground support products, gate equipment and airport services provided to commercial airlines, airports, air-freight carriers, ground handling customers and the military; aircraft rescue and firefighting (ARFF) vehicles; refuse and recycling collection vehicles sold to commercial and municipal waste haulers; field service vehicles and truck-mounted cranes sold to mining, construction and other companies; simulators, mobile command and control vehicles and other emergency vehicles primarily sold to fire departments, airports and other governmental units; and front-discharge concrete mixers sold to ready-mix companies.

Current wording

Vocational — custom and commercial firefighting vehicles and equipment sold to municipal fire departments; aviation ground support products, gate equipment and airport services sold to commercial airlines, airports, air-freight carriers, ground handling customers and the military; aircraft rescue and firefighting (ARFF) vehicles sold to airports and the U.S. military; refuse and recycling collection vehicles sold to commercial and municipal waste haulers; field service vehicles and truck-mounted cranes sold to mining, construction and equipment rental companies; simulators, mobile command and control vehicles and other emergency vehicles sold to fire departments and other governmental units; and front-discharge concrete mixers sold to ready-mix 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

Transport — tactical vehicles, trailers 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

The Company continued to repurchase shares of its Common Stock throughout the quarter, repurchasing nearly 290,000 shares for $29 million. Share repurchases during the previous twelve months benefited diluted earnings per share by $0.03 compared to the first quarter of 2024.

Current wording

The Company continued to repurchase shares of its Common Stock throughout the quarter, repurchasing nearly 415,000 shares for $40 million, bringing share repurchases for the first six months of 2025 to nearly $70 million. Share repurchases during the previous twelve months benefited earnings per share by $0.06 compared to the second quarter of 2024.

Previous wording

Consolidated selling, general and administrative expenses increased due to operating costs related to the acquisition of AUSACORP S.L. (AUSA) ($4 million), higher software costs ($3 million), higher employee compensation ($2 million) and higher trade show costs ($2 million).

Current wording

Consolidated selling, general and administrative expenses decreased due to lower integration costs related to AeroTech ($7 million) and lower expense for credit loss reserves ($3 million), offset in part by operating costs related to the acquisition of AUSACORP S.L. (AUSA) ($4 million).

Previous wording

The decrease in gross margin in the Access segment was primarily due to higher production costs (150 basis points), higher new product development spending (120 basis points) and higher sales discounts (110 basis points), offset in part by improved sales mix (90 basis points).

Current wording

The decrease in consolidated gross margin was primarily due to higher production costs (110 basis points), higher engineering costs (30 basis points) and higher warranty expense (20 basis points), offset in part by improved pricing (70 basis points) and improved sales mix (70 basis points).

Previous wording

The decrease in consolidated operating income was primarily due to the impact of lower gross margin associated with lower sales volume ($66 million), unfavorable production costs ($15 million), higher selling, general and administrative expenses ($14 million), higher new product development spending ($7 million) and higher material costs ($5 million), offset in part by the impact of improved pricing ($27 million).

Current wording

The decrease in consolidated operating income was primarily due to the impact of lower gross margin associated with lower sales volume ($103 million) and higher production costs ($44 million), offset in part by improved pricing ($50 million) and lower intangible asset impairments ($46 million).

Previous wording

Access segment net sales decreased primarily as a result of lower organic sales volume ($299 million), largely in North America, and higher sales discounts ($15 million), offset in part by sales related to the acquisition of AUSA ($37 million).

Current wording

Access segment net sales decreased primarily as a result of lower organic sales volume ($457 million) as a result of softer market conditions and the expiration of the agreement to produce Caterpillar-branded telehandlers, as well as higher sales discounts ($50 million), offset in part by sales related to the acquisition of AUSA ($75 million).

Previous wording

The decrease in operating income in the Access segment was primarily due to the impact of lower gross margin associated with lower sales volume ($77 million), higher sales discounts ($15 million), higher selling, general and administrative expenses ($11 million), unfavorable manufacturing absorption ($7 million) and higher new product development spending ($5 million), offset in part by favorable customer mix ($8 million).

Current wording

The decrease in operating income in the Access segment was primarily due to the impact of lower gross margin associated with lower sales volume ($112 million), higher sales discounts ($50 million) and unfavorable manufacturing absorption ($18 million), offset in part by favorable customer mix ($17 million).

Previous wording

Vocational segment net sales increased due to improved refuse and recycling collection vehicle sales volume ($54 million) and improved pricing in response to higher input costs ($42 million).

Current wording

Vocational segment net sales increased due to higher sales volume ($81 million) as a result of increased production rates and improved pricing in response to higher input costs ($49 million).

Previous wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (350 basis points), offset in part by higher material (50 basis points) and production costs (30 basis points).

Current wording

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (360 basis points), offset in part by higher production costs (150 basis points), higher material costs (70 basis points) and increased litigation expense (30 basis points).

Previous wording

The increase in operating income in the Vocational segment was largely a result of improved pricing ($42 million) and the impact of higher gross margin associated with higher sales volume ($15 million), offset in part by higher production costs ($6 million), higher selling, general and administrative expenses ($5 million), higher material costs ($4 million) and higher warranty costs ($4 million).

Current wording

The increase in operating income in the Vocational segment was largely a result of improved pricing ($49 million) and the impact of higher gross margin associated with higher sales volume ($24 million), offset in part by higher production costs ($13 million), higher material costs ($8 million), higher warranty expense ($3 million), higher litigation expense ($3 million) and higher engineering costs ($3 million).

Previous wording

Defense segment net sales decreased primarily due to lower sales volume of tactical wheeled vehicles for the U.S. Department of Defense, primarily Joint Light Tactical Vehicles (JLTV), offset in part by sales volume for the NGDV, which commenced in the second quarter of 2024. JLTV production under the Company's domestic JLTV contract is substantially completed.

Current wording

Transport segment net sales decreased due to lower Joint Light Tactical Vehicles (JLTV) sales volume to the U.S. Department of Defense (DoD), offset in part by increased sales volume for the NGDV, which commenced in the second quarter of 2024, and improved international tactical wheeled vehicle sales volume.

Previous wording

The following table presents corporate and other (in millions):

Current wording

The following table presents corporate and other results (in millions):

Previous wording

Net operating costs for corporate and other increased primarily due to lower operating results at the Company's Pratt Miller business unit.

Current wording

Net operating costs for corporate and other decreased primarily due to lower intangible asset impairments ($46 million) at the Company's Pratt Miller business unit.

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, 2025, including $210.3 million of cash and cash equivalents and $1.15 billion 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 the financial covenants contained in the Credit Agreement (as defined in “Liquidity”). The Company was in compliance as of March 31, 2025 and expects to remain in compliance with the financial covenants contained in the Credit Agreement.

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, 2025, including $191.7 million of cash and cash equivalents and $1.12 billion 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 the financial covenants contained in the Credit Agreement (as defined in “Liquidity”). The Company was in compliance as of June 30, 2025 and expects to remain in compliance with the financial covenants contained in the Credit Agreement.

Previous wording

The Company’s ratio of debt to total capitalization of 25.9% at March 31, 2025 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2024 was due to higher borrowings to fund seasonal working capital needs.

Current wording

The Company’s ratio of debt to total capitalization of 25.2% at June 30, 2025 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2024 was due to higher borrowings to fund seasonal working capital needs.

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 40 days at December 31, 2024 to 51 days at March 31, 2025. Days sales outstanding for segments other than the Defense segment increased from 44 days at December 31, 2024 to 53 days at March 31, 2025 primarily due to timing of cash receipts from customers in the Access segment at December 31, 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 3.9 times at December 31, 2024 to 3.2 times at March 31, 2025 primarily due to increases in inventory levels in the Access and Vocational 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 66 days at March 31, 2025, up slightly from 65 days at December 31, 2024.

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 40 days at December 31, 2024 to 47 days at June 30, 2025. Days sales outstanding for segments other than the Transport segment increased from 44 days at December 31, 2024 to 52 days at June 30, 2025 primarily due to timing of cash receipts from customers in the Access segment at December 31, 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 3.9 times at December 31, 2024 to 3.5 times at June 30, 2025 primarily due to increases in inventory levels in all three 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) decreased from 65 days at December 31, 2024 to 56 days at June 30, 2025 due to timing of payments.

Previous wording

Operating activities used $394.9 million of cash in the first three months of 2025 compared to $355.8 million of cash during the first three months of 2024. The increase in cash used by operating activities was primarily a result of lower net income.

Current wording

Operating activities used $305.7 million of cash in the first six months of 2025 compared to $566.8 million of cash during the first six months of 2024. The decrease in cash used by operating activities was primarily due to lower tax payments, improved management of unbilled receivables and lower investments in deferred contract assets, offset in part by higher inventory levels. The first six months of 2025 included net cash tax payments of $148 million, which was down $178 million compared to the first six months of 2024 primarily due to higher taxable income in 2023 as a result of the timing of customer advances.

Previous wording

Investing activities used cash of $43.1 million in the first three months of 2025 compared to $111.2 million during the first three months of 2024. Through the first three months of 2025, the Company used $40.3 million for capital expenditures, a decrease of $59.8 million compared to the first quarter of 2024 as the Company was investing in new facilities in South Carolina and Tennessee in the first quarter of 2024. The Company continues to expect that it will invest $250 million on capital expenditures in 2025 due to efforts to expand production capacity in the Vocational segment.

Current wording

Investing activities used cash of $99.1 million in the first six months of 2025 compared to $149.3 million during the first six months of 2024. Through the first six months of 2025, the Company used $80.9 million for capital expenditures, a decrease of $58.7 million compared to the first six months of 2024 as the Company was investing in new facilities in South Carolina and Tennessee in 2024. The Company continues to expect that it will invest $250 million on capital expenditures in 2025 due to efforts to expand production capacity in the Vocational segment.

Previous wording

Financing activities provided cash of $438.1 million in the first three months of 2025 compared to $412.5 million during the first three months of 2024. In the first three months of 2025, the Company repurchased 287,552 shares of its Common Stock at an aggregate cost of $28.7 million. As of March 31, 2025, the Company had approximately 9.9 million shares of Common Stock remaining under its repurchase authorization. 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.

Current wording

Financing activities provided cash of $379.4 million in the first six months of 2025 compared to $732.8 million during the first six months of 2024 primarily due to lower net borrowings. In the first six months of 2025, the Company repurchased 702,307 shares of its Common Stock at an aggregate cost of $68.7 million. 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. The Company plans to accelerate share repurchases in the second half of 2025. As of June 30, 2025, the Company had approximately 9.5 million shares of Common Stock remaining under its repurchase authorization.

Previous wording

In March 2022, the Company entered into a Third Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement, as amended, provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) with a maximum aggregate availability of$1.55 billion that matures in March 2027. At March 31, 2025, borrowings under the Revolving Credit Facility of $376.0 million and specified outstanding letters of credit of $28.0 million reduced available capacity under the Revolving Credit Facility to $1.15 billion.

Current wording

In March 2022, the Company entered into a Third Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement, as amended, provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) with a maximum aggregate availability of$1.55 billion that matures in March 2027. At June 30, 2025, borrowings under the Revolving Credit Facility of $397.0 million and specified outstanding letters of credit of $35.5 million reduced available capacity under the Revolving Credit Facility to $1.12 billion.

Previous wording

In May 2018, the Company issued $300.0 million of 4.60% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”). In February 2020, the Company issued $300.0 million of 3.10% unsecured senior notes due March 1, 2030 (the “2030 Senior Notes”). The 2028 and 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 and 2030 Senior Notes at any time for a premium.

Current wording

In May 2018, the Company issued $300.0 million of 4.60% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”). In February 2020, the Company issued $300.0 million of 3.10% unsecured senior notes due March 1, 2030 (the “2030 Senior Notes”). The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 Senior Notes and the 2030 Senior Notes at any time for a premium.

Previous wording

Sales to the U.S. government comprised approximately 17% of the Company’s net sales in the first three months of 2025. 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 17% of the Company’s net sales in the first six months of 2025. 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, 2025 decreased 10.6% to $14.62 billion compared to $16.35 billion at March 31, 2024. Access segment backlog decreased 57.3% to $1.80 billion at March 31, 2025 compared to $4.23 billion at March 31, 2024. The Company believes the decrease in backlog is primarily the result of slowing demand in North America and the normalization of orders in connection with improved product availability. Vocational segment backlog increased 11.8% to $6.34 billion at March 31, 2025 compared to $5.67 billion at March 31, 2024 due to strong demand for municipal fire apparatus and price increases. Unit backlog for municipal fire apparatus as of March 31, 2025 was up 5.8% compared to March 31, 2024. Unit backlog for refuse and recycling collection vehicles as of March 31, 2025 was down 10.7% compared to March 31, 2024. Defense segment backlog increased 0.1% to $6.40 billion at March 31, 2025 compared to $6.39 billion at March 31, 2024, as orders received in the fourth quarter of 2024 for NGDVs were almost completely offset by the completion of production under the Company's domestic JLTV contract.

Current wording

The Company’s backlog at June 30, 2025 decreased 7.4% to $14.23 billion compared to $15.37 billion at June 30, 2024. Access segment backlog decreased 63.6% to $1.19 billion at June 30, 2025 compared to $3.26 billion at June 30, 2024. The Company believes the decrease in backlog is primarily the result of the normalization of orders in connection with improved product availability as well as slowing demand in North America. Vocational segment backlog increased 10.4% to $6.27 billion at June 30, 2025 compared to $5.68 billion at June 30, 2024 due to strong demand for municipal fire apparatus and price increases. Unit backlog for municipal fire apparatus as of June 30, 2025 was up 4.4% compared to June 30, 2024. Unit backlog for refuse and recycling collection vehicles as of June 30, 2025 was down 26.3% compared to June 30, 2024. Transport segment backlog increased 5.1% to $6.71 billion at June 30, 2025 compared to $6.38 billion at June 30, 2024, due to the NGDV order received in the fourth quarter of 2024, offset in part by the completion of production under the Company's domestic JLTV contract.

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, 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. Approximately 58% of the Company’s March 31, 2025 backlog is not expected to be filled in 2025.

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, 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. Approximately 71% of the Company’s June 30, 2025 backlog is not expected to be filled in 2025.