OSK - Earnings call transcript Q2 2021

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Operator

Greetings, and welcome to the Oshkosh Corporation Fiscal 2021 Second Quarter Results Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Pat Davidson, Senior Vice President of Investor Relations for Oshkosh Corporation. Thank you, sir.

You may begin.

Patrick Davidson

for thanks and morning, joining us. Good we today, published our results. XXXX quarter second Earlier the on is oshkoshcorp.com. copy release A of available our at website Today's also reconciliation and presentation, webcast will use financial call by call we our is slide and website. this a is measures is that which on GAAP of accompanied a during to available non-GAAP includes being be The audio months. website for our replay and available slide approximately on presentation will XX to Slide X of presentation. now that refer Please

matters risks that Reform that stated Form earnings statements believe our in we with to quarterly by answers this quarter and be on of updated until or these to have forward-looking results to your forward-looking remarks implied within to statements materially others, different Our follow, such statements a forward-looking next to contain be subject call that year including risks conference the make other with or that references we update not year, to be cause at forward-looking filings We questions, all. a Private this fiscal Act. obligation unless those SEC These expressed could are described from X-K statements. filed any we actual the meaning may Securities to among include, our quarter Litigation which statements, our call, SEC. morning the the or are fiscal All if otherwise. our disclaim These

Officer Chief it and President turn Slide Executive Financial you, and to Pfeifer, and turn President to Pat, Please X, John include over Chief today presenters John. Officer. Executive Mike Our Vice and I'll

John Pfeifer

Equipment come brings billion outstanding confidence result as segment progress Demand the stronger Access $X.XX, the positive sales second faster everyone. per morning, good by than in happy marketplace. expected which of and to the quarter that, $X.X company the and both exceeded back that a year of adjusted we and highlighted has results, of prior across and vaccination our expectations. earnings and announce to share of Pat, particularly you, our and Thank We're

to supply dedicated to levels adapting economy a the job the from shortage, and back as globe Our resin as XX,XXX of production February. are across members and continue rebounds, high are challenges situations changing pandemic. from our freeze recover company rates we back to pre-pandemic the chain do an rapidly exceptional including steel the record global in facing in Companies significant shortages semiconductor the deep Texas across prices team

to members XXXX. to risk, team Our chain and a but worked disruptions production, supply we supply will have manage maintain continue chain remain the suppliers for duration hard will likely of third-party

In we February addition proud the in United to the the past our strong America. historic great federal were on with supports team over and some States second of win, I received won notified efforts we in the years jobs when zero-emission am that electrify of the that Vehicle Delivery Biden's President program quarter which Generation our create this fleet performance, Service. Next culminated we sustainable several very manufacturing with new goal Postal XX, news vehicles to

desire with continuous that contract I latest the award engineering. upgrade Service electric in zero-emission Postal drive a more as units Our will vehicles later. XX accomplishment the Defense in segment many detail exciting years our or This BEV in is discuss as to will fleet BEV they little sustainable. increasingly supply of win and electric battery be their they innovation this

is a XX and yearbook more highlights inclusive proud S&P inclusion that top safe in sustainable culture also are to a to performance Sustainability XXXX. the once in Global workplace. in We our our in future industry commitment Oshkosh and on the for and be category again Yearbook underscores The centered included creating

the technology, be in as am consumption Mike $X.XX to reduce will to details have adjusted in businesses. to in to make share pledged of our including also electric XXXX, more to $X.XX the battery range greenhouse we I guidance. of development EPS gas emissions energy we and continue as further of for all investments Additionally, products his our to announce our expectations practice section. quantitative pleased providing in we return of

this ahead are team's were the execution be has respond business to we sales a be turn for to updates schedule. strong following up demand without in These X.X% of is year. growth and today. a the to to get in pleased adjusted accelerated also expected Slide Since reporting leading to positive nonresidential to over growth. replacement not solid possible in so started year, are rapidly in forecasts prior improvements Orders second news, our XXXX, vaccine disciplined segment, Let's markets results in access believe we last return we have and customer to margin see We performance to billion of strong $X.X North we the versus Revenue demand, access few of driving year, on operating and of pandemic, half X by the backlog would America. a -- previously leading past over particularly the the solid changing the down quickly The January, most the XX%. back drive enabled months strong, through equipment. segment increased our with over started access to which construction project we helped XX% be equipment December

quarters, will market, replace As ages we've the for discussed are to coming new believe throughout for equipment need the a and significant fleets in the American aged we elevated driver past sales these be quarters. North fleet several the

signals is for returned we that and of it believe and healthy just visible robust largest This encouraged further customers, a important are cross-section We market. rental most has as not the companies. a broad demand

last full call, the in earnings U.S. production on noted we March. to returned As levels facilities JLG's production

second operations robust of supply COVID While the lower are and tracing, half in could the threat year. rates absenteeism that impact production has significantly chain we due closely our decreased in infectivity of contact the to managing challenges

the and we prices expanded coalition quarter the as during will the Steel well the is or good of challenge has The action at industry. next-generation purchase expect to I'll to Defense and in there price orders United review units Service. facility. of capacity we during our over markets. out mitigate for early new Postal is program and price Access increase. future prior begin that Slide the process record really ordered risk, unfair new later steel a As on year. We the to in exceeds Much against XX,XXX we actions highs, the and benefit turn experienced of health of Please for postal and the years carriers. their our the drive X, good world-class engineers vehicles of I'd all took including stepped working share important to safety, competition their like XXX,XXX long-term our our States. and XX remain postal this our also the plan of shipping our portions delivery that be that of in on to X-year States the Recall needs. some service companies we nation's by for the foreign part the believe growth as part further Construction American long-term increased segment. a practices this Equipment, our provide Mobile efficiency fleet lag better Manufacturers supplier with operations, a beginning China this planned were we the significantly rigorous been in covers until as backlog improved sustainability, to services locks and the costs quarter increases in postal competition to experience of purchases delivery with largely cost took cost We're complete the modernize for some XXXX work an the up other additional proud reliability, steel our much for to current of like meets of through step significantly, news China units a when Tianjin in be to also product in March. to to Asian This profitable United strategy is vehicle

BEV vehicle and flexibility XXX% also the BEV to both future. units postal units postal with the the fuel-efficient, in converting the of the up ICE with The service service combination either any delivering design low-emission Our to offering ICE provides of with units zero-emission provides of model. option units

We delivering production begin expect in to vehicles XXXX. the half of calendar second

our the family. of Pratt them January. innovation are We expertise we pleased the progress and the we of the Miller close leveraging integrating call as and today, team Oshkosh with agility are following listening acquisition intensify also the the across company. to know some focus the into their to speed, welcome company, look our to We in of I forward

U.S. JLTVs, armed work to hard Our FHTVs team operations Defense that our to FMTVs the and at support deliver continues forces.

volume. we segment. quarter, line did production a and of part during onetime line move, The the new experience production onetime a We costs optimize the process. further incorporates success technology of portion as the industry-leading the the which inefficiencies supports to During new higher the long-term for of quarter established manufacturing our

another since XXXXs. believe designed been phase cold pleased Consortium CATV arctic the our the tracked We for to Army's replace Defense business. early space opportunity has in solid prototype is U.S. for the weather have represents Mobility defense small I'm the Defense that operate and participate selected leave in unit program that conditions to The we an new the the Advanced for are segment, vehicles Before and product that CATV. vehicle, announce service to adjacent or in all-terrain program vehicles Oshkosh support partner, National Engineering, a in the our ST

supplier pandemic, the sales finished to network. record. have were we challenge, The Last our past quickly and turn The performance struck, faced & year-over-year moved strong segment another quarter commitment sales success pandemic XX%. delivered Let's backlog with have continues service ensures commitment and in the we both capabilities forward. also the discussion customers. operating combined significant levels. year, quarter expected, the margin networks, believe income often an Fire our pandemic-related par recovered the to in year's Emergency and continued about had deliver the strength lower industry-leading Fire the X our and segment. on talk with of as a absenteeism, and last with demonstrating basically performance. We type to investments returned that limitations of growth pre-COVID all-time to we Despite inspection impacts. Slide their over but to team with increase is discussed a of & for largely Orders as concerns $X.X quarter Pierce surrounding dealers their We the outstanding sustainable operations billion, going We've of customer solid strong segment dealer due this of another to final the Emergency

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with sales. Our delivered a on Commercial segment quarter higher lower operating income solid

innovation the gives over improve Our that simplification us segment confidence to and which margins strategy working, is this long term. in can continue

team quarter, it we due transitioning commend Canada efforts travel want progress continue as cross-border to our as a of the focused easy excellent been the hasn't with of to factory on London, to production Ontario. mixer During on COVID. I result restrictions approach make to their

flow great refuse in modernization efficiencies from making the progress of vehicle freed This up added part investment building space strategy. in our also as and brings the Center, high leveraging Dodge mixers. a capacity are collection and of Minnesota, move We line automation

order move reopening as seeing in markets, recovery we collection as refuse up vehicles construction beyond are back the We work our mixers U.S. is backlog. as higher of our improves by through year-over-year evidenced believe again, to activity XXXX. collection, we Moving will pandemic. as We solid increased believe and continue driving the and refuse trends for business is we these the picking

pose Commercial expect, As might the supply chains in segment. also you risks

back from chassis we that managing issue XXXX. of truck half other have is instance, impact of as an semiconductor a deliveries our the result component some on shortages For and it manufacturers third-party of the availability and in could closely, are

running, last long-term a discuss keeping our Our teams This of remain our the to These will our Boise. electric valuable doing when collection. we track over on is part collection and deliver for we to refuse for these a The that significant and the to job for responding to We challenges and development production used great BEVs environment. customer benefits basis to will our I'm products insights quarter challenges are staying Mike supply units are provide believe and on going are lines business second about of vehicles journey talked remainder refuse the opportunities for on vigilant. these and our our chain across it wraps in electrification segments. we customers of company daily expectations it XXXX. up of to the results turn generate quarter

Michael Pack

Thanks, Slide our well strong exceeded X. turn John, to and quarter morning, Please delivered that good everyone. a expectations. We

impacted Fire the As than in sharply due following FHTV in FHTV Pratt quarter portion received our the lower growth prior catch-up the $XXX year in part in truck driven the & segment, Fire & combined supplier Emergency to The in above higher approximately sales restrictions quality quarter and year, sales and of Access demand a modest decrease fire and $XX truck result by JLTV sales billion, of expectations. part to million a increased contract demand and impacted was by and as the increased January. a the FMTV Miller ARFF was its of quarter lower higher and sales. restrictions awards of vehicle were Asia in the much sales by Defense sales by consolidated in Equipment fire in we million shelter-in-place unfolded, late globe. second segment. sales X.X% Access in prior a higher increase offset quarter our cumulative for negatively year, the due schedules. leading year market $X.X COVID-XX-related issue XX% increased in travel sales quarter sales America. In improved acquisition effects customer truck as second demand the to increase both Last negatively the Defense year, offset Equipment and of a as the COVID-XX last Equipment in around sales impacted the that drove and Access a pandemic Emergency prior the sales, sales North adjustments delivery decreased over

mixer from in refuse fourth pandemic muted divesting contracts sales Our million demand due incentive & of manufacturing during the still year our Fire concrete expense. in second were as prior adjustments the of cumulative quarter, X.X% X.X% new volume, sales and XXXX, year. concrete Slide the multiunit of were income a in ramping was caused discussion the well XXXX. in plant as X was in of sales mix the down was of to expectations primarily delivery to liability improved dynamics, segment of adjusted result earnings sales the result sales higher as of product an and the labor COVID-XX unfavorable Access increased lower of earnings warranty to of quarter. result Defense for volume. pandemic concrete X income Please compared as adjusted by volume, to operating due the the prior for primarily the operating impact by costs, $X.XX operating lower Consolidated a the under Commercial X.X increased associated per batch in lower $X.XX a line new of result spending discharge to favorable the COVID-XX offset And the business for the inefficiencies spending income our share of year segment result higher price current sales Equipment increase turn quarter for Commercial of in And costs the and collection income by as catch-up pandemic up. mix, adjusted adjusted the Emergency improved operating prior a current S-Series the $XXX.X cost Adjusted benefited decreased performance. lower and with increased quarter. product quarter quarter of per as as the manufacturing income in or year improved sales vehicle a operating a lower share start-up costs. or $XXX.X product and part vehicles as compensation year COVID-XX million part in mixer offset quarter. compared increased Front

in positioned we half with quantitative the are the solid the well XXXX for have of year, half second which us to once We our as pleased visibility improved has provide expectations. again first the as performance of

backlogs and solid in have absenteeism. COVID-XX-related X seen have a all in We reduction segments significant

said, faced John companies the supply we most remainder the like As for of globe. chain risk the year, just around

running. Our outstanding our supply an of keeping chain manufacturing teams lines have done job

half production the possible the is interrupt could that back year. it However, in supplier shortages of

Our assume expectations $X.XX to XXXX. of major $X.XX $X.X result to sales of in billion that On shortages. a consolidated follow are chain production supply billion billion we interruptions no basis, estimating a compared as

estimating to $XXX We income estimating year operating million million to billion compared compared prior are also of segment to adjusted of to $X.XX billion, of $X.XX adjusted XXXX. in $X.XX we million the $X.XX XX% XX% equipment compared of EPS a access to $X.XX EPS $XXX adjusted in the are XXXX. to $XXX increase sales and to At level,

North although in world We led growth the of the most expect to America, out expect sales as pandemic. be by growth regions comes we

discretionary We benefit than year's expectations are of $XX year run the reductions from expected have is XX.X% elevated spending equipment in year estimating year spending versus lower trade margin first as of quarter. slower quarter. to to implemented this impact the fully the in rate other prior will due steel we half net realize primarily fourth pricing cost to the be access anticipated. second our in temporary shows full the XXXX, our The of as last actions impact returning will declined and decrease returned included that has travel, expectations XX.XX%, prices approximately will in the begin headwind expect an We we that believe more to million operating adjusted headwind

sales. of robust estimating remains sales $X.X Defense, an XXXX. solid increase billion, $X.X and billion, providing production of approximately benefit compared to XXXX to at increased XXXX. This X% Miller the estimate includes we're Turning Pratt JLTV into visibility Backlog

estimating percentages. with development the We past and lower compared our comments defense to are single-digit This reflects the new adjustments with consistent high new operating years production X%, manufacturing of the cumulative start margin associated margins catch-up several will our over operating spending, inefficiencies higher product approximately be XXXX. of estimate line

to revenue We due sales interruptions COVID-XX as than normal will increase be in expect higher $XX deliveries XXXX. and $X.X approximately due to segment production Fire Emergency billion, return The roughly customer primarily decline. to & is million more a

& margin increase approximately XX% We expect operating increased as in the Fire volume. sales to segment Emergency result to a of

to levels. the incentive XXXX rate XX.X We return $XX as average are increases X%. prior estimating the price the to XXXX $XXX realize this million we will shares. are as the of to the to Similar chassis. margins We year count million, of share early a million be approximately result approximately in million sales disruption benefits of the segment, from business. year a are of the rapid a operating the half approximately concrete expenses in an segment expect Margins $XXX and in as estimating million costs compensation estimate corporate in second down well will of $XXX this of this segment the we increase unfavorable we scale We of of tax third-party of wane for XX%, million access equipment, be Commercial be begin the an of to supply as expecting plant we of will impact of higher in batch for $XX result And as result as XXXX estimate increase steel impacted slightly June.

estimating reflecting flow year, generation. we million, year $XXX strong free approximately cash an For expected the cash full are of of

approximately We capital be also expenditures estimate $XXX million. will

expect quarter, sales third year, Looking defense up access significantly. XX% over the prior with the approximately be we to equipment up most and at consolidated

business in This a headwind from single of cost quarter. our are essentially We our be benefits more to year, high over expect to incremental temporary spending for $XX and quarter markets quarter the commercial third I'll margins turn return as will in sales be to typical digits back this activity. the we rebound, levels to & year now approximately the it during be John million Emergency flat. sales up to with benefited as Last some Fire third increased to comments. closing begins expected

John Pfeifer

adjusted a outlook to We year with adjusted in share great operating just XXXX. have per quarter, compared and the strong income for expected we earnings a of the and announced remainder growth revenue,

innovate, expect but strong to Pat as advantage exit a the are to position the we years. the take our company through continue recovery We position and customers going as many to of we turn great to back the opportunities it open forward get we in to we believe several the started. serve advance to forward. over in a next remain, year Q&A to look our challenges us Supply I'll

Patrick Davidson

Thanks, question-and-answer Instructions]. please call. [Operator of John. Operator, this period the begin

Operator

Instructions]. [Operator

first Our with of comes from the Tim Thein line question Citi.

Timothy Thein

bit that, back announced $X.X does range of between on question think just it's us stop access the -- is price give please. split March, terms I terms color in if kind just first could apply a the ballpark, And more in was you just, can of The of backlog? a what even X% the you with billion of -- terms that then to increase even I'll there's hopefully, provide both a mix AWPs the product and what about in in to teles. that backlog, as if early

Michael Pack

be Sure. a first that the little product at heavier to weighted to AWPs of to mix all, over of history, little we going are saw the just look -- as look if similar at a course we the see going that you'll mix, you quarter. we this Tim, we're be year, to past the

our of take as into continue comp a I unusual we telehandlers a year-over-year the pandemic. to entered little some the think, from customers perspective, was because

what the of that's course really expecting we're So year. over the

indeed, we new effective. March. adjust to for did was did It's price that price effective go we We that the As in after point time. adjustments, orders early that

into be $XX basis. that's a going cost headwind. By that quarter, to and a start the net in getting begin million. our have to to tune It's price neutralize to in time going of on we'll are about we we headwind next fourth So that year, see will largely access

John Pfeifer

X Tim, it AWPs it's Mike's bit largest versus and telehandlers. the are those fastest-growing to be age, John. the And both China. to U.S., which right needs because are The replaced. The markets now I'll just weighted response. U.S. towards add and is AWP a fleet, little of

And so start that market we're it's seeing really And China, happen. to it's AWP China. in an mostly in -- all

So versus than as market up that also faster that continues grow telehandlers. to others pushes AWPs

Timothy Thein

Yes.

And That one Okay. sense. the John, a on just quick makes balance sheet.

You're comfortable in a number. net cash flow of is position free and $XXX cash million pretty big a

you update us in just can terms there? priorities of So maybe your

John Pfeifer

But we share the the can in Pratt us great to And look Sure. lot our we'll continue more go at forward. business, optionality importantly, opportunistically, look balance sheet, we Miller. us shareholders. make right? of of and be Yes. to dividend We to money payer We'll -- how feel invest about attention our acquisition gives you We're at buybacks. always consistent as optionality we a it of wherein returning paying saw a

be make see us work to make able to you'll to investment. that a tuck-in do investment We some and didn't organically. to going contract. but also facilitate more that We lot forward, the continue of us think make bolt-on see I investments happen development won that you without help Well, upfront win us program. had growth postal type to design acquisitions

see make to us continue you'll a of so organic And lot investment.

it, future. side investment in OpEx that of we it's Now still more on itself but the make that the manifests

optionality. our returning you'll balance to on shareholders. a of we've and money So lot And see got it both sheet, like we happen

it and You'll use terms see through growing in of the both returning the investments. shareholders to of business

Operator

of Our Baird. Dobre next line question comes with from Mig the

Mircea Dobre

clean your sheet. this balance and with of investment sticking maybe So concept guys'

through in this any here? curious to thinking capabilities help deployment about about all also to the company? your I build you in across or internally the segments that I hear think, And across investment and that that you're you your into M&A happening way plays you're about segments. your to how all dynamic John, targeting something if I out talk heard development capital I'm want more

John Pfeifer

develop Well, mobility today, We're markets. our got intelligent yes. -- product in Yes. involved the our We to to technology continue deployment we about in sophisticated the question is, which We're and to thinking capital We're today, electrification involved products. out most simple heavily are of advanced use important end autonomous build M&A programs capabilities. most to programs systems, more our today.

So organic enhances lot investment, That inorganic Miller strong rapidly to we've to that a continue moves. robotics takes also investment that. but own to capability some takes in and rapidly their terms develop develop in got added do That ability us electrification. already to it our Pratt to technology. develop of

in it's continue that have markets in we a got part in the #X innovation, is possibly in continue of make fleet productive really around strongly make moves positions equipment life them we're innovation all the of going the vehicles We've arms we cycle wrap the big that make as can our can when that our millions -- that our So also is we in continue it. that we serve. marketplace, to product. think today. to end to sure you and sure expand those supporting -- and And use look to advance and that, we're if to be to But these that the it are at machines we customers as of

investment, also inorganic in. big new Service wheelhouse that's probably think I some that are but can that there's And our growth. we require additional some think Organic our inside mile us. last a organically. get Postal there's I That's U.S. that did stuff moves investment we into delivery that, categories in that right then inorganically. some drive win, see will will We for that the know new wheelhouse you'll category, us make

more little a So it's color, for Mig, you.

Mircea Dobre

then my That's access just follow-up helpful. on equipment. And a clarification here,

there March in get the you price to you that 'XX? in is sort through that will subsequent that 'XX you're to when 'XX, a you're understand price of going into balanced the cost you Am from standpoint. put increase I be to balanced more that that to required there increases in bring be price are order So to fiscal going enough saying status in or

Michael Pack

that's Sure. we balance. brings believe we we're additional watch based biggest will. us to And need we've steel. on it driver. obviously, continuing if back that adjustments, And to Right make done, we now to Really, the what

If on But this when we we to to XXXX, really a you to And of course, we're backlog of always not the -- And need But going similar yes, increases. there's with to look additional a it you back into rapid based new. through positions. environment plan. if so a lag take bit it, that's we're action, will. come monitor is continue steel

Operator

of the comes Stephen next line from Volkmann with Our question Jefferies.

Stephen Volkmann

legs couldn't here? a access to to you, And I'm in picture how relative segment. thoughts can years Does this of the there XX% your close sort as think we cycle? go us give of have next few big did just in any term back you here one are we over that where the Just sort Is reason thinking going And margin John. to to get you at to are you cycle replacement here? point, more medium back that? well,

John Pfeifer

question. Yes. for that Thanks

in a started timely certainly really started recover. with earlier recover to than question, thought we've as to past quarter. we've I this very good think growth that's And we

the revenues It it. bodes expect expect access about exceed revenues. expand. over you really continues equipment. used $X entering to multi-year just I to peak applications, It's we're the ago. of construction. little application absolutely too It's not it exceed of think the equipment, continuing mean, prior We more that access see We usage wider versatile. remember, talking access to well So And we The to growth prior and different not in that. I'm believe billion. for We're cycle peak continues equipment. equipment that a expand. to the in We a absolutely long was was achieve

is fleet age. Of that course, rate. there's an the the going a aged that that the There's U.S. lot -- in replacement aged of fleet that alone, growth will multi-year to fleet drive of

growth that's lot pandemic. past that positioning the multiyear to at some that we the access will benchmarks and We've helped take think -- us recently of exceed get I that developed forward. a business going operations a levels. -- facilities rationalization have for phenomenal advantage really We've done new JLG year we just includes performance, prior and to cycle. team peak been and positioned simplification of really us really our during of we've our job this has in help did done It

that's or to whether get question can a we mark. Now XX%, not

we're and see for we're prior performance. proud maybe be And goal really you'll headed the this is, last course, in a that in peak. ability now really our exceed think we're get deliver past us new margin What of is to our think we able And We peak. believe peak to the performance downturn. to to peak we than a the -- I we're downturn. that of higher every redefined to perform

it's a for on So you. little it color

Stephen Volkmann

follow-up there. Great. for my I appreciate then the all on... And detail

Patrick Davidson

you think heavy right? come but there, down asked to to your on handed Sorry up, I have we need follow Steve, mean, I access? moving. keep

Operator

question of Suisse. next comes Our the line Cook from Jamie Crédit with

Jamie Cook

So pull to One, sort order that's you forward any was I any announced you X% you for I just about in about of Is after price to margins on question. postal the increase? Is trends have my on in any accretive or there a pricing how first can help there seen talked this think second then questions. service earnings? concern guess award, that And question, the investment the continue two access, required? framework provide you guess just increase a March. my

Michael Pack

Sure.

-- are of in rates being fleet the all, order of patterns terms First order patterns, the reflective the utilization strong and out just I in that we've the now, replacement right of demand, marketplace. think seen age we

trends, think bubble orders I in. to I don't believe necessarily a there. their that work extent obviously, the customers So on there there's is don't getting know that those But -- focused we saw that certainly that,

excited the back our service deliveries to is accounting. It will postal jumping Defense of We're a We program. very great it. in postal service, other similar to about large contract-based in have the government XXXX. be contracts, production half we Just vehicles start It's our segment. of

an to up some that we the of tooling. have about investment couple for years investment the We over early From go deliverables some of the $XXX an revenue that. will next for through leading expect ramp-up capital as phase million of we and standpoint, of

closely milestone importantly, think payments. that with very investment aligns our I

cash in to have big model supportive here had there. a of have it's you're flow quarter -- may going might generally, lag see from and to But a quarter-to-quarter the You not be past. of going you sort baseline like impact versus

John Pfeifer

is that contract the that fleet really Let the and the to imagined. the have electrify a service we're lot over President This directly really for -- better make problems the win. me Biden's of to anything the postal line could a postal it's vehicle delivers the It its service. and in just productivity, a this of it designed lot postal that's carrier delivers add to safety a zero solves is ability course features. emission performance of This it with service the proud U.S. of fleet. they objectives. postal modernize postal service, It ever in And than and allows their

first for what the you for but foremost, it's for can margin. postal our and the great postal -- this and and it's that's great carrier, can That's tell also what so is about about. I the Oshkosh great it's I And service tell And you Corporation, shareholders.

Operator

question of comes Evercore. line next from the David with Raso Our

David Raso

For I'm with curious, earlier half sounds like implied is implied in the And pretty access toward the that's second just also it to sales half, AWP. solid XX%. an question, mix second a guide the

chain a all million, headwind. extra and to $XX with what's cost. a $XXX input on you think cited incrementals the $XX million XX%. to that's So million only of 'XX, growth, XX% And on guiding million supply say, costs. least of you of then obviously, $XXX normally way steel going would at the we appreciate kind you're of the about $XX million around to that But at But

$XXX there into conservatism It is I'm logistical really the be? Or big million? issues to -- million baked is extra So trying cost to just some what a like could where that and understandable $XX seems gap. just

Michael Pack

the piece $XX that's you've steel. got million this missing, Yes, David, for the Mike. big is

really biggest costs piece other That's that. piece coming temporary is has The big the those -- access of back.

we about we this $XX reversing company, have have a -- million as Just next quarter QX. in

$XX it, from call We million, have that benefits we're of permanent quarter. benefiting about

about big obviously a it's there. So is A impacted. of most access they because headwind in that chunk million were $XX

We piece. look supply So lumpy. chain other is guidance, do, there's at that's you -- as the the really

that think an factored lumpiness for of broad in, some have but -- half we shutdown do time we don't we'll a the there's I of back some So the year. face extended have period

So that's factored in as well.

David Raso

So I more Does get to that the net in cost is the closer the say, for how back of and let's fourth company than we Is XQ, million half that repeat is referenced? in gap the $XX quarter? access that.

Michael Pack

have costs to there's quarter call of, there's the a $XX going steel in million fourth it, the another cost of as those $XX a in of The You're impact -- well. million fourth quarter. and million to $XX in kind access, reversal of temporary

access. heavy again, and -- So

Operator

of Our the next Goldman from line question with Sachs. comes Revich Jerry

Jerry Revich

production I'm look could 'XX? just touch how your there we talk components much heat touch you and have can folks about you should what monitoring electronics? any like think on are if beyond are closely John, just wondering as folks you into that capacity other supply also And about supplier labor map you on chain

John Pfeifer

pandemic right as and else that I We're due supply gone chain, would and easily. through we risk supply to had so whatever we through many most risk Jerry, Yes. get so shelter-in-place a And that, not center to that down now. we've shut suppliers has have happened. the been the because chain front able that call orders

lot working are long-term their make we got sure we way and Our that that suppliers that supply get chain people need. they actively engaged suppliers, with we've do enterprise-wide through they in out that what teams us to are what phenomenal. go -- our of got We've of a

we've course, of recently, So semiconductor issues. had

Tier a supplier It's us. a Tier to Now X semiconductors Tier and X is not a X supply.

we on commercial chassis some because is slowed the third-party with in products delivery chassis done have cases. that's where a what So that's some problems created make chassis manufacturers

itself manifests a to sure do types we're work do we chassis our suppliers, of to as We What combat of absorbing sometimes of make chassis those reshuffle but get course, more that, to have with custom-built also through we that to problems. we constraint. the production. So that production our our

There that That's middle is because middle very of of way February. down. the other in with has that they down a some that when the of This the of in we've resin supply. the variety from mostly area pandemic had different Texas it just was was in difficulty everybody The shutting in come been the is constraints had up. problems

everyone's the is manufacturing heating slowed to very of Now attention to pay And that to. down everybody we for or months. always back type now base and happened is it's up X last to I cases that difficult more isolated have through. get year think shock what's And

supply really probably going they've They to for to wrestle work discrete and it. is our quarters. we're with So cases good few think next continue been we'll got news to in I -- the they've work this know continue done people. good we -- way before, issues The through

Jerry Revich

move major lines? then And the can a out a mature say talk adding that more just the the about and additional you please? Okay. because efficiency you're flesh you're gains just Can that point defense, for on targeting you product about production little line pretty more, bit

John Pfeifer

advanced important the in lot to the investment. to We in drives past into our few production the line the this of -- segment. sure one next capabilities. we're into This we there as quality productivity automation some It we really, a to It X.X manufacturing have here of where have is today, headwinds quarter. be that most Defense want in a into really, new using really We we're very this automation, it control to or to robotics one line of don't line. of and future production our years. lot and the and We you production, investment some facility are took facilities. connected. take Yes. robotics in defense And very get had expected, and it's where defense that's to want pleased a be in But the to a use line. Oshkosh production production we put new nice that That's in that onetime want with every that in in digital going it makes operation we Industry sense tool and the make drives see

Operator

Duignan Ann of the line from question JPMorgan. comes with next Our

Ann Duignan

of a am in introduced but XXXX, not my increase have that back price questions full answered, increase. curious, price believe, a Most I been I you tariff,

that time inflation stay? just introduced more price the can this tariffs here you you do versus expect so that Or -- for and price explain you is that price to that in I'm given around, this does curious increases, just rationale And mean you've permanent steel increase?

Michael Pack

Sure, Ann. surcharges. They were

I really now, we've all our nondefense this taken is adjustments. viewing businesses. about And as but action think we're -- talked right access, in them we've of

it we're to believe continue focused that seeing had do. in dynamic once backlog start seeing the the So see at get that through we're that. that some And that of going But to that something the we on price/cost what we start evaluate benefit of obviously, we'll and We markets it's fourth is. it of increase what the time we the quarter. the benefit

million $XX to talked for we really reduce is year. which as about million that the begins $XX access, whole So a at company next

Ann Duignan

domestic your that the Chinese your market impact explain I maybe is China. follow-up for from And tariffs, thinking mean, say to They the Okay. tariffs. do you -- not any that are has surcharges I subassemblies on it somebody customers? Chinese filed buying my that That's question, about customers. I Can you mobile talking fear industry and then has And against clearly, that's the meant -- rationale equipment in sorry, backlash against equipment. and was the the in then about retaliation? petition just the

John Pfeifer

you John. a Yes. that answer I'll question Ann, give little it. and it's color on

not produce in We a any had Remember, have in of China. people We in China. employ We export from backlash China. domestically we domestically China. lot

very is Chinese So China good we do what the for in economy.

kind really to don't this in want expect China. I emphasize all we about. backlash So is what of

up. are competition, vote, unfair unanimous trade say we're case keeps that makers, an U.S. going open we an and And it traders. to about always talking going I X-X competitive, open rental that up keeps equipment means fair we're we We competition. to practices when the We're the users. industry see I'll And it I'm when talking I'm damaging, stood industry are to ITC was Well, When that have a and and is really did. And what and highlight companies fair about be. we we are which but we traders, and we that we, the -- this free And we are speak to think industry because about it that will that's pleased proceed. end We vibrant. been, had basically just always fair competition. also

that. those for unfair the innovation continue We And users, healthy and have lifeblood practices trade to rental companies undermine certainly, end to the and innovate industry. of a is

ecosystem would just "Hey, Again, be continue. stop." to unfair this and it stood industry entire unfair said, why us. up we the trade that said It So harmed, wasn't was practices that's if trade practice permitted And are has that. to the

is, As a are interested health that's leader about. we is JLG that the in what the this of and ecosystem, overall

Operator

with of from the Deutsche comes Nicole question next Bank. DeBlase line Our

Nicole DeBlase

Just seasonality. on a question

think year? typically I is you kind puts did XQ from segment at line. from for the here, the -- seasonal there guess best normally, any the a thinking is where why maybe best of quarter revenue. that really guys But and takes of would the telling third margin And I reason path revenue job and trend the of us normal think income revenue diverge I both good quarter the is the about normal

Michael Pack

robust Obviously, Nicole. backlog now. pretty Thanks, the is right

the numbers XX% similar I think revenue We talked between year-over-year. see approximately quarters. X up type you'll about being

quarter we where quarter. idea the So is to back that think kind of into gives kind an going of in third fourth be you the

you is two the if are could going supply be to in interruptions, now, of terms believe think right we now thing But robust. between main right just some bit volume a that shift that chain little pretty the or of that quarters. just I have we timing, both quarters disruptions have

Nicole DeBlase

concern big Got backlog budgets to is implies also is, Okay. here the helpful. I levels. guess outlook And deceleration second know it. with on record Emergency. Fire there, I then trying from & I But conceptually understand half. what's but follow-up municipal pretty your That's the and going understand the at what I'm on a in

for & us the Fire So maybe half? assumption second could you help understand Emergency in the

John Pfeifer

Emergency, and attention expect We be could in we're quarter-by-quarter. future give near of it bit to of just & Yes. very close that do softer you little some happening Fire activity. an to quarters overview in what's a try I'll paying the order

did in You QX. of see some that

Our strong got that strong that's year itself us manifests We've really a we've soft innovation when down QX, where were perform typically they to conditions of a very of ago. were and market dealer in healthy continue even and got are F&E network. share in in market but orders were culture and they from allowed gains, a simplification, and to

the of annual really of will the So people, market a about X,XXX decade. this simply flowed was fiscal little innovation year. network, that's ebbed The in business, for market X,XXX that expecting of between foundation a and dealer units year the is we're than and on last simplification. great and great it lower And kind be kind the basis an

that provide relief a typically Now going through help is & is stimulus for priority it's forward, Fire investment It's went an in Emergency municipalities that, XXXX, fleet. the aged relief could possible recent did possible that municipal spending around and that to that municipalities. very there's

very closely it spending all new. stimulus watching we're fairly So that is because

going market. attention paying how impact So that's the to to we're

little best continue I the grows little regardless. say The but worst quarters. to spending case, case a bit, So more we'll is perform for would or it few a and the helps stimulus soft out, a stabilizes

Michael Pack

last year, that or quality that, was half had come just interruption revenue, recall, And Nicole, would we difficult second the for supplier challenge say also, customers specific in. supplier to and it that I

a saw the back we of the of quarter half lot year. slip really from second So that volume into

into to you're consider. the the that remember, thing we as implied that's -- back going to something costs or if -- are that's coming have what is I you need temporary in another really incrementals revenues you that in are, So decrementals, at business, if well. just to think look -- some you're then backing And business

well. unfavorable mix is Our slightly as

commercial versus products that business. in We aerials chassis have some more

half. that's another So factor second in the

Operator

from of Steven Our the next line comes Fisher question with UBS.

Steven Fisher

engineering postal want do you other on you approvals? of see million need that type for $XXX the I you to notice to some ask just upfront contract in or Can about of working terms contract already giving process start to service proceed. the

John Pfeifer

with ahead. and It's feel XXXX. really And We've with forward. U.S. steam the plan. in It's production. we're No, full we for got moving and are forward moving it's getting we And our good about ready postal agreement production starts signed, really, service. the developing executed,

So U.S. fairly. I It's and we emphasize how of postal It U.S. compete I know programs. carriers. fairly, know won and sure to We won we program. why We the things make it solution That's we was we that process, do. want and it. one how we to postal that government X-year won to the for it a we for won because this this won service have best the the

We by best, objectives Our meet emission XXXX the all why out. so it. ahead the of of comfortable because zero Biden and And electrify laid was fully fleet President with And has service California's solution we're that's that. zero-emission it even ahead of to their that does make allow we're the the and over is of line zero contract. emission time life being of this postal

So steam this ahead. full is

Steven Fisher

discussed year I the next some margins return fiscal follow-up could than before. that obviously closer see as a later could or be not If think sooner the just do how But until you quickly year, you Great. XX%? the ask maybe be takes access, to that? to second there's could on it to in the and of half Would puts incrementals

Michael Pack

the just say of -- some the basically if is would for coming I back the guess correct you're you temporary the half of steel year, these headwinds, costs I in back there.

right in the or seeing around you're right now in in back half. back -- we're that So because XX% the that we're is what

are those I So factors. think the really

a to the And we range. strive generally, be call think cost year. about mid-XXs we and dynamics think I I a to getting in that as early too it's steel. timing to we've talked balance with of next price said, lot But back the

that's I those continuing watch. think think to -- are So things the we're I

Operator

line with Our Ross America. final of Bank question of comes Gilardi the from

Ross Gilardi

EV the noise going basically shift and given final EV, shift charging a asked some over service my be kind would that delivery DC, previously once to fleet have If question reaffirmation service. is much happen to more game on your there the was the like of bigger potentially needs earlier that -- the all? to award the just and stuff all all out timing other postal just all envisioned? of for mix of to on for just the But out to the to postal infrastructure Steve a because than

John Pfeifer

Yes, great question. that you I'm glad question. asked

this. So subject I'll to I kind to program clarify from not is make The U.S. approval of -- service want funding Congress. postal

we the not can has recently of about us, solution the XXXX, electric that risk provided there vehicles wants, Congress said vehicles. service. the best the can could think, does influence what we you've do And Congress award, for of said, but remote got discussion the been everybody We introduction it And no it. So to basis heard that would electric to been makes If rate emission U.S. contract. because some contract. from I that XXX% the which increasing us and is life Day funding zero the postal U.S. service would have X. we've tomorrow exert always be do about absolute changing in fleet electric the and on they the Congress from do It's it really the over to is electrifies the XXX% postal of some came unprecedented and really in

-- and up So we're they we're not Its infrastructure vehicles, to will hard electric the this It's how running work the program. delay about can to service. get but ready that with going go. to quickly recharge postal

Ross Gilardi

Just reason -- independents, season? 'XX? not could look the recovery for that general, at just the lot independents, a starting if lot get if there get in independents at to just the we CapEx orders I fleets, in a construction fiscal their going you case, then the market, are And the these for in, like least collectively real to of smaller the really even Okay. their smaller time smaller in fuller not the ask allocations in the until of see that's time,

John Pfeifer

is seen large we've customers, spectrum What that independents, as really the the as of similarly. the our nationals broad behaving across very well

pretty over from course the a mix year the perspective. expecting we're of a So buying balanced

Operator

Mr. Pfeifer, floor closing I to comments. now you the over turn to back like for would

John Pfeifer

say get virtual through joining all you stay or more safe, the positive want Thanks today, just to day. pandemic. hard as a light speaking environment this on next continue at we conference anticipate healthy end us forward as strengthen. We to a at the very work for on everyone. stay I least earnings we We to see and all great and economy of continues call. certainly with Have the look the to tunnel our a the

Operator

does this gentlemen, today's and conclude Ladies teleconference.

your and lines for have may this You at your Thank a time. wonderful participation, you disconnect day.

Oshkosh (OSK) 28 Apr 212021 Q2 Earnings call transcript