OSK - Earnings call transcript Q1 2022

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Operator

Greetings and welcome to the Oshkosh Corporation Fiscal 2022 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Investor your Relations my Vice Pat now of President for is to host introduce Davidson, It Oshkosh. Thank you, sir.

You may begin.

Patrick Davidson

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

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

calendar year ended to All year X, changed March our to quarter quarter fiscal are As to comparisons XXst, the a with call XXXX. year have January XXXX. reminder the prior align effective the during this we

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

John C. Pfeifer

morning you Thank Pat everyone. and good

$X.XX with share modestly shared we of call. earnings on we above the earnings adjusted our growth of expectations quarter reported sales last per X% For the

quarter As expected, margins we experienced throughout the peak level the price company. headwinds which challenged during cost

improve price of We by begin demand the expect second the pricing in fully benefits as remains quarter backlogs. the levels. year record during high into the the half healthy cost Customer strong order dynamics quarter of as realize we higher to to second more and activity and evidenced

in Our modest we Early improvements long commodity growth supply and strong. the chain term experienced is outlook in costs. quarter

However, in implemented further team In the across Russian our in increases industries. inflation our invasion parts segments. additional cause response price non-defense and has quickly acted of constraints Ukraine pressure has

in In of commercial fact, adjustments many these segments were the immediately. access and effective

members closely force their our team overcome challenges also production supply as chain related have logistics as Oshkosh are availability of work global well in supply the as China as as freight, work proud grit efforts impacting lockdowns as disruptions, is of We this and determination China in well I'm parts and and COVID chains. shown constraints. we monitoring who to

service next our During delivery vehicles. the our we the States first from order for quarter cutting United edge generation postal received

M&A yesterday the robotic purchased during and space. a quarter in the we and CartSeeker remained We just leader research. have in investment investment active also autonomy an minority We Robotics, completed Technology

our turn emblematic expectations share again XXXX and updates we expectations the to further will earnings previously investments. programmatic segment presentation. business later the one world's $X. accelerated to the of with companies. per Access X with we adjusted named and of talk Equipment. are growth. ethical journey steps generate as about drive eighth most our range year culture on our in to us updating and benefits Also, In chain on of be to Please is Oshkosh This right a Mike our doing heard discussion we'll supply get and is difficult Slide started You've environment are way. expect to more M&A $X in to strong our provide in rooted recognized a light These our our of once cost consecutive important Ethisphere

these Tennessee Our Pennsylvania historical well improvement Bedford, production meet Progress prior positive off which year us but supply execute continues at chain of of lines has forward. supply by the our done outstanding quarter ongoing We key Jefferson on team our an and pockets challenges. up improve prices ramp facilitate chain projects increase and to base. remain XX% to production the to job additional rates of at metrics to taken has should capacity sales strong as The executing grew metrics allows over going supply City, continue demand. saw resiliency team to which plans time and the our Access disruptions of these levels. expansion continues with commodity higher Access with production elevated our Despite short-term team spite the capacity of JLG delivery in many team steps

the During early of moderate began the as quarter, and freight commodity expected. cost we to part

the were by year. We order ages. Orders our again mitigate solid across for customer XXXX X.X the Ukraine April Russia's again only recently Market aluminum, I strong visibility rates additional risk quarter. gaining implemented quarter In to and in elevated second opening sharply outlook base invasion mentioned shipments resulting and at my robust in utilization response, and headwinds. high surcharges caused billion to next numerous we for in X, once fleet steel, books As for the increase beginning other we fuel, additional back are opened on half these of already work year. requirements fundamentals are remarks, and to input as to costs of our supported our once

wheeled vehicle many positive turn for for the budget tactical were lower next and annual in strong prior that lower We discussing segment while. I'll our year quarter we've quarter result segment. Revenues we a review to been agreements defense to as the XXXX of the Please second quarter defense a X the the versus orders in as finalize Slide expect over our several years. purchase leading outlook

begin the However, and as Striker defense late NGDV and an look we as is programs segment to beyond, MCWS to as growth ramp exciting up. such XXXX new

margin Our quarter expected due this margins We adjustments result the in increased expect be Mike details up as lower unfavorable on time. cost a do we to catch not notably cumulative in prospective will at to expectations. was than input lower his section. further operating provide basis a of

program are to continue execute the engaged the actively and We process. JLTV re-compete in well

army the bid extended date from July April of During submission the quarter XXXX. to the

final December result, a the the decision As to time expect frame. out XXXX September to we from push

be we are well that we competition to my believe the As I recompeted and remarks. won retain a ago we reminder would USPS JLTV knowing significant our positioned program. seven in the opening order years it mentioned

order prepare of and units. supplying total have look the The do factory to EVs vehicles. the to XX,XXX of includes new first as XX,XXX And South approximately convert our units in so. for USPS the which continues an battery Carolina given production up Spartanburg, richer electric of approximately nearly even is innovative of these mix USPS to billion option forward we with have we Progress the sure units they we order funding expectations for X,XXX from and are this a $X to prior

are on growth many opportunities You've the market heard we defense us in previously talk adjacent working about segment. the

Weapons One System. of Medium adjacent is most significant the programs Striker Caliber the

provides XXXX. XXXX weeks contract with very as pleased published program. growth The progress other MCWS few UPS was and -- programs defense the Request a a strong, President’s for well contains the fiscal well on the USPS late ago programs. These solid program as Budget beginning are adjacent our as long-term our We funding key as outlook with

next as to Production segment. constrained a & and leading Let’s deliveries were industry Slide Operating Demand in disruptions and strong led chain challenges. strong X. discussion another price price of deliver a turn segment. to May lower X and additional nearly online which result February year as backlog. products X increases from we the effective be announced margins the later during improved we year. manufacturing margins to Fire year increase we for another impacted $XXX as the that quarter, implemented & will expected both record coming for operating is quarter the at Emergency and sequentially our solid These of workforce the for profitability. into Fire company in disruptions to and sales, increase effective expect Emergency capacity million of and leading in Orders remain and benefit We double-digit inefficiencies price the previously a supply the

next Our for unit Wisconsin the and Indianapolis show showcased The FDIC for the Madison units Volterra will Portland electric the well just be pumper is Oregon. week. this and Fire completed we Portland at in Madison performing trade Department

class been proprietary the storage unit showcased pump The airports generation PUC INTERSCHUTZ or in Pierce cab interest Volterra generating in Hannover, debut in Configuration productivity best with resulting ARFF world in also will offers has next for the will which benefits custom strong under Expo at and Electric Germany placed a firefighters. We June. our and pumper around the be Ultimate

be and also leader. conducting supply about X over market airports and commercial the year other I've experiencing with in the which volumes Slide our innovations profitability segment as chain Please prior of talk price at that commercial affected several unit segment our summer. a The cost position to progress quarter to quarter demonstrations challenges revenues typical segment. & the our Fire and of continue this will European made These and level the the same We Emergency turn to despite margins. grew mentioned more segments we'll

of through signs biggest focus mindset a remained commercial we performance segment primary as pricing it improving, some factory and part of a we drive focused progress We've momentum higher chassis. simplification user with chassis will commercial as but gaining our this The disciplined third-party over as expect is margins Our remains segment which availability is approach XXXX. seen in of time. actions has improved supports

ship other Additionally, to certain pace ability and have impacting with been control modules on our components constrained, also demand.

quarter, curbside automation been RCVs work reinforcing with to performance autonomy Demand our operational CartSeeker technology. During for recognition throughout patented AI-based acquired high ongoing through positive providing by and customers technology. -- the our has complements outlook. solid, simplicity we CartSeeker

many We begin have placing on been for requirements working orders customers closely with and to our XXXX. want

fully books for evaluate have our watch we and to not markets. XXXX are commodity order as We opened continuing

team a the There's a Our Waste lot show. in be very it will automation. we and Expo excitement May, well-attended be EVs will believe and industry surrounding of attending in

results in space well long-term believe technology EV to XXXX. more well are automation Our positive the performing continues our updated this With we great positioned going I'm this type we over are market EPTO the environmental chassis discuss for to CartSeeker to that, for detail for in technology expectations in and it for shows to Mike trend. our bodies and turn our promise. of and Demand strengthen, RCV services

Michael E. Pack

good to Please and morning, John everyone. turn Thanks, X. Slide

sales the sales manufacturing X% and mix. after in to million by XX, $XX Before unfavorable FMTV at I cost America, everyone than volumes. quarter want lower to of quarter, quarter was X.X% Access labor and consolidated income income driven quarter. that representing XX% prior higher due to a in in the year Consolidated Consolidated consolidated to increase. with operating shortages for first compared in partially results a increase X.X% due sales $XX.X and or sales challenges, increased remind FHTV due or part I lower quarter Starting component adjusted to to months dynamics $XXX by offset comparisons particularly the ended of sales billion largely quarter $XXX.X all decreased of offset the by operating million operating was prior defense income increase three March due million or million part improved year the costs to price $X.XX Equipment or for begin, prior demand, year the North were strong at The XXXX.

the Our which approximately consolidated came expectations EPS higher $XXX the compared of price/cost Adjusted impacted headwind quarter. quarter in $X.XX adjusted $X.XX per in the adjusted approximately $X.XX. share EPS to prior year for than was million, prior earnings in quarter at by

increased credit with to repurchased our our and Slide costs loan revolver We During XXXX challenges facing X $X.X a freight a approximately to million the quarter notable we previously billion. of availability with discussion of XXXX, quarter, total repaid ago. XXXX. change XX, million from $XX outstanding term the shares steel, million of are amended for $XXX in at balance December moderated. a aluminum The of invasion to our the a during of our expectations around globe we March Please the to conjunction agreement is Prior and common turn cost Companies for expected $XXX than Russia's stock extended extension, more invasion, the had just most for Ukraine. XXX,XXX XXXX. In quarter. and

are facility we volatility lockdowns have increases introduced affecting in chains. again. parts global to pronounced experiencing for and Now China China once supply additional are availability Recent our COVID-related

improvement some experienced in we quarter, of supply a pockets & chain challenging we also While more areas, segment. in chain the including Fire during Emergency environment supply experienced our

improvements Our supply moderate assumed throughout previous outlook the chain year.

speaking As we today, and uncertain. again, freight pace remained remains businesses of our have some of commodity will the backlog. orders lag. all additional This nondefense slight these the and of With effective costs supply Nonetheless, some are are facing. additional on and chain actions. trending Notably, improvements have taken up a pricing headwinds of actions pricing price timing mitigate cost we there's agile are

which at the headwinds said was price case. we expect our on first last quarter, levels to remain cost As the call, we peak in

expect improvement quarter. price/cost While new emerged, which in have second impact will do cost we the in dynamics year, pressures the

our in we price/cost half to dynamics largely total, our neutral. we the escalation $XXX we billion expect at approximately $XXX of be baseline primary in of impacts quarters. prior our headwinds in $XXX second price/cost million to million second of price/cost $X.X million price/cost of compared an in from $X.X for of $XXX the the with On the expectations year improvements further XXXX. consolidated ends the range. is expect increase the expect before million up sales first to a million This expect billion XXXX for $XXX where year basis, both and of In We rapid prior to in XXXX, to

additional at $X of X.X per of $XXX recent result to the $XXX prior At revenue well compared to supply our Demand our compared pressures direct outlook revenue share remains $XXX a by million is to and pricing action. manufacturing reflecting of constraints. parts Access our compared our to sales $X.X our our largely primarily by dependent million We year. surcharge We to EPS $XXX now of billion now $X.XX expect million, $XXX expectations range the chain increase prior remainder as $X.XX. expectations, of as are a to price/cost to estimating is to level, Equipment million inefficiencies, driven increased billion, the disruptions income prior operating segment as $X for driven labor so EPS million robust, on of availability outlook adjusted

are XX%. The prior We are well recently freight should operating the as and Access second estimate our down will X% from component our margin that to mitigate of X% be to announced as inefficiencies estimating contributing Equipment's to expectations. begin surcharges Increased X.XX%, incremental costs during lower manufacturing to cost impacts quarter.

of estimate our X%. Turning our expectation versus adjustment a to billion remains first sales The We more approximately X.XX% environment the be expectations catch-up operating persistent prior cumulative unchanged. inflationary defense, defense XXXX our caused will higher-than-expected quarter. $X.X now in of margin

can overtime a overall mitigating assumptions. changes trigger & expectations, catch-up cumulative year. done than adjustment full with our flat margin assumptions inflation expectations While accounting expectations our are year the Fire of largely has in defense inflation margin ASC expectations our lower single outstanding the unfavorable segment an job impacts billion segment prior XXX, our with adjustments in method impacts the larger $X.X consistent for approximately prior remain program sales quarter. only modestly Emergency at importantly, to And of

The supply decline We approximately prior year, expectations the in to additional chain be to to expect and as cost our XX.XX% to expectation inefficiencies Emergency approximately from is Fire well XX%. staffing as in challenges the operating the due down pressures. & for of segment XX% margin labor contributing increased margin disruption

slightly to prior count this operating are approximately We estimate estimating prior tax sales XX.X%, for estimate margins in of share with rate XXXX of billion are for segment adjusted expecting be segment, commercial the of $X.X million from to the X.X%, will expectations X%. And we expectations. an billion continue XX.X of in We down we line and $X approximately shares. average

$XXX is million expectations decrease remain now And by and $XXX from expected cash driven our flow a approximately income. for prior expense million, prior CAPEX in Our corporate expectation for of unchanged our free expectations. versus approximately expectation

year quarter, approximately the Equipment XX%. to Access sales with versus down we by the approximately expect be to approximately flat prior defense quarter, Looking second and revenues XX% up consolidated

of non-defense the additional over price year. include during will price quarter sales realization in the increases past our We expect implemented more and our businesses surcharges as

consolidated now margin closing versus for a it comments. low expectations improvement solid half expect a the represents over We of I'll QX which to below operating in year. mid-single-digit the John our margin the to back back quarter, turn some well in

John C. Pfeifer

global strong. remain with short-term have that over of in the emerged businesses our facing the we're dynamics challenges While past events all quarter, market

environment. the in of We half will We next leadership have back that remain the are this inflationary and to innovative year margins demonstrating enable return taking we and stronger into year. highly us to are market-leading we in products, actions the confident

many excited We of our you Investor see at York at Day to next Stock are Friday New the Exchange.

our We share as drivers growth and targets in to businesses. key well out-year as for are going our sales earnings

team, also meet have addition She many be to of newest the Officer. sharing we're serves Sourcing our Technology new that Jay Strategic leadership developing. who Chief opportunity Source Chief will technologies and our will the as of Officer Iyengar, the exciting You

back Okay, Pat, to you.

Patrick Davidson

that to begin one would call. this question-and-answer please. remind I their After and please on questions you be you so. question like the of like follow-up disciplined to do to plus ask the a please questions and John. the we everyone in follow-up Thanks, queue to need to follow-up get if we additional period limit back ask Operator,

Operator

Thank Instructions]. you. [Operator

proceed comes your question Our Steven questions. from with Please UBS. with Fisher first the line of

Steven Fisher

morning. good and much very Thanks

is help little Just that within for just please? quarter, you second dispersion margin outlook give to by segment, the on you the what have a mid-single-digit there low the us can

Michael E. Pack

I higher. lot was really sort to again, I to the of -- second of the see one be first million about a board not can say, across quarter the progression as is to expect really going online. I segment quarter, in I'd the would the segments. a significantly quarter price all is don't Access bit And maybe million -- that progression comes what's $XXX It the standing we're a say it's out more versus similar Sure, cost/price. that in progression driving notably in really second we others, is that. take Again, so $XX

Steven Fisher

think reduction took at like guidance most And quarter, quarter much second I I I Okay. see half? That's with half, you the how risk guess it derisked curious guess, helpful. quarter. that the just on of do and I'm second is you biggest continuing the -- kind the this point, how for the you of that second similarly do guess, second second for here seems in what risk from

Michael E. Pack

for Sure. And guidance, your just step you the progression by for makes half, that see -- because obviously, to just the can we've as is higher. notably talking back I about even call sense on it back been think implied a minute that last earnings at second

So phenomenon the it's the really is price/cost story. and pricing

again, quarter, was see expectations. So mentioned we prior second just headwinds million $XXX and that about between versus our up first price/cost I the

a the the lot the price quarter second half in coming online more largely have neutral. price/cost We of and back then we're year, in

is component of the up pressure, things Ukraine, some Commercial saw the following fairly markets we go of quickly. of decreases immediate and all inflation coming in nice invasion the commodity saw and that -- online one we obviously, action at we and and quarter. Now the leading saw Russian that But Access some the higher where following up took we to causing the freight price additional earlier impact

that margin that's of different really exit -- quarter, see half in as we're and inflation notably back by you we the for profile seeing even it's So why the additional year. solving that the a

level. increases we're by in implemented -- price to time XX% quarter, of be is backlog, across really price see we the plus second the it's So And between the exit and XX% big our price realizing segments the really we we've at level driver. that the going

Steven Fisher

Thanks a lot.

John C. Pfeifer

Steve. Thanks

Operator

of J.P. with question Zakaria comes questions. proceed the from line Tami with next your Morgan. Our Please

Tami Zakaria

questions. my taking for Thanks morning. good Hi,

for the my So year's XXXX are this year's orders Equipment of pricing you you're segment, cost magnitude neutrality meaning, question loss recoup to Access is, some next next first price that year? orders do of for what's or for for the the expect aiming you margin taking

John C. Pfeifer

John. is question. a Hey great Tami, this That's

our of at backlog because we we're We have is which lot doing gets a price past full old Mike at second half as and now, year start over just described, backlog better clearing what pricing that done versus price. materially to actions the get

now full but So give we there full orders put we in as do orders. agreements place. XXXX -- orders, segment, have Equipment yet ability we'll Access bit price, time that costs, We're and We're have annual business escalation delivery. should purchase taking on for we're further negotiations that material in have to of at say, to escalators also orders that fully XXXX yet opened in we've the price, XXXX clauses starting the for for take be we example, XXXX we'll and not take actually take us manufacturing now today conditions having in or we'll a little differently have at we'll for pricing at the reprice

pretty we we frankly, And times that we the we're what have doing quite what and XXXX. feel good right do because we have that's lead have backlogs the in now. that big long to So of about

a way to operate. but different the it's right that's operate, so of bit a us to for for little us And way

Tami Zakaria

think was it. like lower by, price/cost last it is, Makes million million it, quarter. headwind operating And the versus your to then profit it I $XX now guidance $XX year incremental sense. $XX million. about follow-up an is for is seems to Got what your But expectation my $XX call million

is the guidance is line price/cost that headwinds? driving lower item So operating the delta, what delta between and incremental profit what

Michael E. Pack

Sure. Yes, you're correct.

hitting of largely out. you year, as first pointed that's and the price/cost, the is the piece largest and first The half

really piece having in with efficiencies, supply other the manufacturing an that's remarks, is is mentioned on that lumpy chains it. impact that inefficiencies of of The I so prepared large my other the manufacturing piece

Tami Zakaria

largely half. also that's first Got it. the And

You back in don't the expect half? inefficiencies manufacturing

Michael E. Pack

course of delivery end we're a the a over accommodate the clear, be that it expecting perfect But supply scenarios by expect to And We obviously perspective. year of chain the there. year. moderates guidance not of to our the somewhat be does from do range

John C. Pfeifer

Thanks Tami.

Tami Zakaria

you. Thank perfect. it, Got

Operator

next question the from of with proceed Please your comes David Our with Evercore questions. Raso line ISI.

David Raso

Hi, thank you.

the the million the $XXX about backlog rest curious, more year in Access Just implied Access than sales. is of

obviously, math So I'm that right? doing if degree, XXXX its some to visibility into

Michael E. Pack

yes. David, right, That's

David Raso

Can us you is to more for $XXX-ish get that get on a perspective conversations majors, for already, XXXX, little where some just if to early on I'm already backlog business it's give of million the they're earmarked independents trying that's can demand willing from that lock looking where it ahead, is granularity XXXX, with a sense to in of give…? coming you

Michael E. Pack

of it agreements backlog. a my head, concluded up that are the of of Yes. IRCs in some haven't those David, a larger nationals. I completed agreements -- order are we XXXX with reflective is our couple can't our some that yet, mix as back But fully book I said but of have for and XXXX customers. those before, opened purchase purchase we It's we've

David Raso

scissors booms teles, anything just And unique the mix? aerials, curious big the mix any about I'm on from versus or that, on color

Michael E. Pack

to and From continued the record are in this seeing a ages. perspective, really aligns the fleet is categories really point. quite all at what Really the mix robustness categories, levels all we're with that aged

David Raso

get they're for give XXXX Access this meeting. going Can touch feel Access on kind about follow-up assuming the I'm in Thank Access on perspective thinking half the just plus you're the our we'll and you us of can you and north to back not might like picture give then that for lead So so, you're views color hinted I'm the this, at about bigger of some guess of think trying of the next about you but year And you I better or any of Friday XX% XX% in you. of think and how XXXX? about half mid-single-ish, that margins, at for as to any how a kind asking on us think little XXXX, margins to guidance, thoughts year the profitability of how the that perspective quarter. June back

Michael E. Pack

margins a I that. price we've of several a as believe last And to margins have so, talked we price quarters, lot but just to set had more on on actions what taking as or about those the we've back we're lot it's online. circumstances we get to last been believe do about, Access. a the we lot Access, in path back a track get overall, with obviously, would Obviously, we margins over we're say Access, dynamics for cost unique of the we're and we've the over right talked year well to the in to our expect and well coming normal

John C. Pfeifer

David, think of I indicative what what half is of do in XXXX. XXXX you back the will see we in

David Raso

you helpful. Thank Okay much. so

John C. Pfeifer

Thanks.

Operator

the from Our Cook comes of Suisse. question your next line Credit Jamie with with Please proceed questions.

Jamie Cook

you where we but we defense year, just hoped. said on of back defense, and would until starts have puts what the XXXX, Service how for half is they're to of I'm margins award margin. the takes should Postal kick about about in, below Hi, good thinking first think had in margins understanding morning. I guess of question the my just sort the that

you reason it's other my more sort surcharges question mean So be is follow-up you the XXXX them. average in when announced which in Thanks. Did quarter? April maybe above to any the there. deterioration I continues or And see then surcharge to think announced ahead any nice surcharge you putting out or the that you led a there? of orders pre-buy into guys the of or after I said there are perhaps is headwind to question orders optimistic is, see

Michael E. Pack

can margins, talk first a I'll bit and one John on the Sure. about defense with start the surcharges.

what those complete the the is were and contracts in majority contracts. our invasion about by so to you had now with up method, basically, out to with Ukraine the to your a And our viewed that of calculate adjustment you that bit delivered out inflation quarter, going -- estimate and in does on accounting So the we look with sustained. more XX% is have environment and Russia look have cost, cumulative catch-up be commodities

So a at have once. you up catch all

in of as time. think done John back that expect has remarks, really managing our it. because margins don't It nice to really margins over a notably forward said program at I defense lower to we look goes prepared our I are Actually, job going and -- you defense need that.

would I that for we're a not -- year cumulative that's that in from So of necessarily perspective, that were our the catch-up a expectations rest that expect headwind expecting. the base generally

So of through margins the remainder I year. would expect stronger the

are high our initial of do up, where programs guide, MCWS with at see our in going other the as correct. year, single-digits start guide expect general some at to to ramping our hovering growth new if well look NGDV margins segment as in that that's of for going return sort programs. sort We defense You adjacent the are we're the -- until and you

-- that begins late So and XXXX.

John C. Pfeifer

to segment growth And add that, I'll emphasize, Jamie. for Yes. a Jamie I'll is us. just defense

it wheeled time, in low Presidential feel the for vehicles. would long doesn't knowing like year what a budgets been be tactical Now a XXXX, talking XXXX for we've that but the for

both This into program, XXXX, bring we to big United like the revenue we States Striker Services, like start long-term programs growth As online drives earnings. in said, Mike and programs. get the Postal

our for great business. that's So

did see that didn't in also surcharges order any of we forward any and Just we pricing because a quick pull on you our of comment see slowdown and because surcharges. surcharges, about, rates our material talked not material

agreements slowing a strong. year all a bit we quarter XXXX is have quarter in comparable haven't The because might rates annual working on little opened you have been yet, those and we're versus the only first now. this reason ago year the of fully of purchase order Our seen

to strong we logistics do have even It's full is at in And today. So why what's don't realities And do the strong. business that's order have surcharges. at on like of been we But based pricing environment even the surcharges. and it. rates to the

Jamie Cook

Okay, thank you.

John C. Pfeifer

Thanks Jamie.

Operator

question of next Our questions. Stephen your from Please the comes with Volkmann with proceed line Jefferies.

Stephen Volkmann

still basically a the inflationary you Hi, John of to taking makes to in But It I able an in like real of for which of you that now way with cover good on to second the sense surcharges Thanks sounds surcharges surcharge. questions. how half you kind you to morning are happens the difference I'm percentage go change? like whatever or things in are guys get the are maybe a there just second kind half is sort of or don't sense a environment. everybody. of back, time essentially there business, want of touch, lag in business as cost the for kind the doing a trying are protected is the side

Michael E. Pack

some circumstances, quickly I one. not surcharges quarter. a actually so the of Sure, significant. The in of kick course, lag There's, on that but take the bit little can in fairly second --

rapidly. really really going things price we're are back and all moving are without the So continue the the of half exception. these in where times realizing year -- to Obviously, we're

to watch action, so and commodities, -- agile we that's leading So to going to incurring, experts, if certainly on so. and And projections on. take we're watching we're further going we're continuing we're we're need costs what remain do to definitely

Stephen Volkmann

Are now side. on kind those on is just costs second variable for Okay, then of half are probably great. the conditions? that cost market still in And depending pretty you essentially or of XXXX locked question the

Michael E. Pack

as following locked we're we have not and see to aspect freight great again, the as had to really of prices invasion. changes. locked for those. -- going particularly and locks up been on visibility one of that on monitor, the futures with volatile, right that Obviously, that the We certainly, the steel. previous been Obviously, to But to that's act coil more a doing of just were to and aluminum, volatility we're hot-rolled the quickly going calls year, now of through For you other is XX% it. market the about north that continue something talked we just going piece. get steel we're more additional has fuel And particularly it's following on

Stephen Volkmann

Great, thank you.

John C. Pfeifer

Steve. Thanks

Operator

line Sachs. Our your proceed next with question Revich Goldman of Jerry questions. from Please comes with the

Jerry Revich

can should majority drove Thanks. if defense commodity as contract that we've wondering the about comment Service commodity seen Yeah, we on hi. Do particular, this the inflation battery costs your how you adjustment the if on talk which on quarter Postal have Good pass-through in well? exposure about morning could I'm wondering and contract just everyone. you and of setup cumulative contract. I'm the given think on in catch-up you

John C. Pfeifer

one, protected side amount this Postal the adjustment with start the on two But of an relatively significant a other we've a got contract, contract, inflation. I'll we're Number economic things protect lot which contract. contract. in The our Postal So there's well Service us Service the suppliers. about. talk helps is There's for to of agreements it of long-term with

supply base. not also But in base bit of protection agreements it to have look supply long-term exposure on with you that there's Now of little there's there's proposal. we a our with so as a our lot agreements everything,

pretty comment catch-up good the So with are postal Mike let where we I'll the adjustments. contract. feel we about on cumulative

Michael E. Pack

Sure.

those Major just are it across pro for On on Again, the look the as But really in it's it. time proportion was Vehicle you of the the horizon cumulative at extended the the of in inflation to Programs caused programs. it's and -- adjustment, it fairly rata really size we Tactical components seeing anticipation catch-up programs.

Jerry Revich

the then in in year, of on, function move declaring majeure comment suppliers prices a Great. just of force I'm half you the is and wondering given up Okay. higher given could first the to just about to that and And if new having setting that flexible mentioned can third-tier near-term you talk be the the is drivers spot, Thanks. earlier second call? into factors suppliers of you at the volatility or in the you going folks cost

Michael E. Pack

obviously big that and generally that's freight real would a of time. freight a piece say I more it, Sure. bit happens is definitely

the in of suppliers movement piece it. a escalating a particularly in commodities that's obviously, world just events. general But with So -- of following lot with and

as general, closely it's driving on Obviously, very the of have in but factors it. to watching in obviously -- are combination is chain a impacts lockdowns really we're China we're some that thing well. that other supply just The could

John C. Pfeifer

and Mike early a bit opening my of And material we inflation. QX and forecast little have which have situation, both also but see events some cost in to caused Yes. COVID at lot of I us they've were the remarks, pretty for we commodities has adjust thing, into China's has cost use we come also we to essentially add they what those have those suppliers, and level, major I And which of Ukraine new us to very forecasts, position with in just happened a seen the felt the some changed when with is the which happened January escalation. good strong a an of mentioned, couple with have commodity part of aggregate earlier, same with put that, -- mentioned of in on and color accelerated forecasts. increases, think, as then It as some has the Jerry. said, price we

I which the and freight mean of the end those middle things quarter. side, it's to So -- the talked about. dramatically all then Mike changed the in it's there's

Jerry Revich

right. Right,

John C. Pfeifer

Jerry. Thanks

Jerry Revich

you. Thank

Operator

Our next Please question Dillard comes Chad your line proceed Bernstein. of from with questions. with the

Chad Dillard

Hi, good morning guys.

surcharge, just revised to chain, then what So I as the then manufacturing guidance, confirm just of you to seeing whether include the improvement? And want I cost well? supply just the understand in want can the you're does also, year-on-year? And you're assuming airfreight that your absorption just if lastly, like the about slope that quantify

Michael E. Pack

I for things that now -- trick. was so my just includes I It sorry, guess, lost all so the Yes, -- related.

John C. Pfeifer

Supply chain.

Michael E. Pack

moderate course expect be it a the moderation we comments Yes, -- of even we're last year. But by it supply back to the don't From it expecting perfect quarter, that year. we're not gradually does the believe over standpoint, to of to chain. need to -- end expecting I necessarily the be

improves it So some back it traditional, seen. not fully maybe what but traditionally we've to expects moderation, --

John C. Pfeifer

that based of believe third-party Again, it's on relatively believe conservative. Yes. that And we forecast. it's -- aggregate we

Michael E. Pack

Yes.

John C. Pfeifer

conservative the Now on things expect some as should happen. the to quarter be. to of external we middle not talked these events, about of where miracles deteriorated expecting any it's relatively in outlook it due to but It's a

Chad Dillard

it. Got

could Access outlook I you And how geography terms hoping by your down for also about revenue you're in the thinking was expectations break year? growth just Okay. if of

Michael E. Pack

we more in China, seeing first quarter, say and as obviously, on generally I strongest, but Europe probably so as bit the robust COVID would pressure. similar the is that's North lockdown saw the to under relatively we're with a what well. America

I America. guess meaningful the -- I'd how that's majority from So North growth the characterize coming really is most

John C. Pfeifer

very also of boom market, Equipment Access in good equipment. key by that. Access the market see to of the increases prices aged fundamentals. are Used aging and the a strong want in growth And it's We're pretty it's us. rates, -- for know forecasts general multiyear which our construction continue driven is we That's example. of strong. in of really and a the our And in It's seeing equipment, segment, see, ahead driven emphasize, high. growth for data backlog Yes. reflected to the seen are most the we've order I of it's indicator growth we continued for the ever Equipment. Nonresidential terms applications by

this that to Europe, even expect we're of segment fleet in and unfold aged is into there's where for strong starting seeing also see continue to fleet that the in for an And up to need So a of phenomenon years the leading we growth. Europe, future. demand. all We're growth to several push

Access things the the on lot horizon. of a about Equipment market positive So

Chad Dillard

Thank you.

John C. Pfeifer

Thanks Chad.

Operator

with line of questions. Davidson. with comes Mike question Shlisky the D.A. your next from Our proceed Please

Michael Shlisky

was just any programs order NGDV backlog whether segment. was how the where just in guys. If NGDV other in morning in and entire get quarters. the talk down the good backlogs there from put curious major I bit whether Can Hey, a little color quarter as to perhaps I about that maybe you back the backlog entire parts program, the defense were? were chunks well? bigger want a you out what the prior about bit into

Michael E. Pack

just Mike. I want question. to clarify, Good Okay.

That But into the first U.S. for I that entire So for backlog. we billion. was program. first just the the sure That's clear. make Service. Postal program. the order about was order received want It's that that's went not order the to the $X

on still pressure perspective. And downward primary those and in year this the obviously would does that That's vehicles backlogs the And on beyond really that's of some wheeled tactical for bit, I backlog backlogs with from items of we're a in say the terms the wheeled on defense backlog So backlog, put -- extended out just they're those well driver varies change. -- flowing the tactical programs. backlog. based ebbing budgets down Yes. vehicle in a that other

So we visibility. good still have

comes to orders. just lot those a the down wheeled tactical again, So vehicle timing of of that,

Michael Shlisky

looks concrete have both Got quarter I those both use -- this those like about commercial it. commercial in a quarter. didn't models to versus of It chassis. refuse. ask I of also separately do wanted products great concrete past mean

outlook So and some XXXX to us concrete year how the an might through just give as color here? progress to

John C. Pfeifer

is was across the the Yes, backlog a was concrete upon strongest reason bit our I'll you supply in and and concrete based saw ability what little chain subdued the long commercial both it's that. purely strong. business, It's to of refuse because quarter in could we've The take time, get. the The produce the seen the a and markets. we

some can't Now units, of sometimes and chassis that's get. control electronic and we it's modules

ability about a number businesses of back supply it's and the headline. ship backlogs to earlier, But both those talking are chain what units. strong. of and constraining purely rates good we've So are our been have Chassis things. order It's probably good running to

Michael Shlisky

Okay, thanks so much.

Operator

from comes your Mic question of line proceed the next Baird. with Our with questions. Dobre Please

Mircea Dobre

Thank you, good morning.

questions. guess couple to going of back Access, a Just I

then goes into of curious if And XXXX. costs sort both lower commodity ways, right, both terms exposing you're escalators as to of far that as that You inflation, in but you I'm to presuming And mentioned using potentially well to heard cuts looking essentially pricing input as pricing related that you're and that, well. applies XX%, I'm at of to say price XX% now I your as I that as goes? you Access increases right this, think far as Equipment

how customers of kind move are kinds taking any from larger it this these they there your of pushback, to customers, especially Your sort seeing increases, pricing of in price? is sort comes when of

Michael E. Pack

very that, is. have like customers likes with be Yes, there Everybody Nobody of dealing to that very, very in. the don't that industry to in. to we course, our price, fair. try it in realities environment we're Mic. side answer we're And increase the that every with We I'll it's is the and transparent the but of of price climate

doing. And we're doing what customers why our so we're understand ultimately,

have Our prices sticky. been

the with had price getting not our been big order we've has issues or cancellations We because dropping increases. got have case. rates That not

but that to that's what continue more rates say, order And clearer price. than be on. Our strong at be I can't any I'd full

Mircea Dobre

escalator? the on comments Any

Michael E. Pack

Yes. margins that's we the say down we'll coming If second That's which it. good ability That's drive to drive -- situation seeing see a We'll are XXXX, lot of all better commodity all got have where about news. I'll to I'll the say of about costs in we're in half the continue a lot down. costs that. a if expect, year that we've coming the

Mircea Dobre

move this, me there's a I'm But And be ways. an to difference to how Right. you just sorry a increase that setting you're would to up to both imply on understand your I'm escalator things press trying escalator. between price and An clear? just contracts,

Michael E. Pack

we as the cost, Well, negotiated I'll can time taking that material a original in If reprice we're about ship. the what order shift for orders we we can gives from be took until XXXX I product. there's material we have basic as the It it. that the the That's time now. us upon based right

Mircea Dobre

bit from these Okay. margins able little to curious and some USPS, of us And of you adjustments. talked from lastly, and gets already on how defense. a the into talked then what's you're if that about we the about in backlog XXXX tell delivered I'm contract much

is or optimistic rate three As two this we that look or to assume ago double-digit that into at XXXX, normalizing seeing can run is we towards that are fair too margins it start point? kind of years that

Michael E. Pack

year. really the the in deliveries, Just the of we're half Postal back of talking Service about terms

going material revenue So portion yet it's be to in not a of XXXX.

XXXX and to beyond. You're much meaningful a in ramp seeing start going more

think I baseline. a of sort just that's So

cumulative of margins, we expect resets it -- we when of our catch-up baseline sort a margins going adjustment, once we the we terms of have forward. In what have

our margins. change delivered. not that of unfavorable things could -- the large different. an you see this have that's that a impact you commodities my quarter. that with ultimately, prepared down that quarter at can assumption, So on catch-up complete could margins there's higher I where is cumulative program, thing, remarks, estimating said only margins the program of that's some change in single because we But if It's type the in reflective faster, have bigger it come some adjustment, and again, -- inflation are if in you're But you a and you as modestly estimate contract, again, your

seen in again, last forward have margins what be meaningfully So cumulative different the so or didn't we've expect year the over we not adjustments. do where going to quarters we than defense catch-up

John C. Pfeifer

Mic. Thanks

Mircea Dobre

thank you. Alright,

Operator

from Our Nicole questions. Deutsche line DeBlase next your with Please question comes the Bank. of proceed with

Nicole DeBlase

dead competitive and Can -- like here. like the with peers in Thanks perspective questions I lot a -- is a seeing has guys. what surcharge morning. you're Good like horse on with just squeezing you're to bit hate what a here, maybe Yeah, for a thanks from has consistent beat instituting But about pricing? there little the everyone seeing in you of like we surcharges, been talk about doing this what started are price/cost. is me industry,

Michael E. Pack

very, what just general. Well, say very I can about pricing competitive is

freight, freight. cost what And logistics there's And upon based who's All is recently I'm way are, of in. not realities are to and to that particularly going same our that to which up. they're continues competitors of the pricing try causing our And of continue happen course, the They're segment of climate seeing. operate of all that the to surcharges, with lot with go at doing related We regardless a that's increasing analyze to go doing surcharges. in. -- we and prices. same we're into disruption we to it's in who's been business

surcharge that are analysis something, way deal it at is and it. that. of leave so to the I'll our And all our told doing best competitors us But with

Nicole DeBlase

there's and That's discussion Access maybe on Fire lot been on Emergency. thank a Okay. call. of this just But helpful, you. And & on then one Defense

came little quarter. margins a weaker the the than think expected in first I bit in

to know should -- in about? it price/cost you a guys be that major have thinking path embedded we double-digit just that factors margins other I segment, any or Is there. back there Just are

Michael E. Pack

less much revenues. as Access relatively or some cost, percentage -- and but than their speaking their price Commercial There's I'd say than of it's it's business like a

into we did shortage part lot see my as mentioned levels John obviously, I The other did, and that And higher there. of in parts go remarks, piece there's there some a prepared is, fire mentioned trucks. we

So -- some Again, those part to supply it's shortages that going over are inefficiencies time stabilize. chains in really driving labor the quarter.

to So throughout us. a We'll margin And some concern it's that implied to the year. improvements to normalcy the in not are -- that guidance. expect continue long-term will for return drive our we

Nicole DeBlase

Thank you.

Operator

comes proceed Yakavonis Courtney Stanley. of with questions. question with next Our your Morgan the Please from line

Courtney Yakavonis

Hi, good morning guys.

for to revenue go wanted guidance the Just change the back in Access. to

mentioned obviously by of disruption. in, that put I think been you a but you'd the supply surcharges that you mentioned times output chain couple limited has

whether taking to on But confirm are the if some via of there is question same line? the guess, we guidance you're expecting that it you marginal did just and pricing? So see increase just change guidance change. all And original or guidance output I versus didn't mention same pricing the too just top was other that you just on segments volume of your I then, upside volume wanted to reduced

Michael E. Pack

similar, volume Access, change. change in all mix maybe biggest the is driving thing is pretty revenue small some in of that first but surcharge the Yeah, there,

our in largely is yes, there's particular, with our commercial, within the revenue business, sort non-defense but with their of of surcharges for it's assumption And additional volume So rounding unchanged. would other say, coming online range I the businesses, guidance.

within So less a pickup it's a there's Access. that, meaningful but bit there, of than

Courtney Yakavonis

about on some be side could significant there's that? margin a the that platforms in the and difference if some there great, then earlier were thanks. And just two Okay, versus we'd the between But contract. now discrepancy a have sales USPS BEV know modeling be you I clarity those ICE, on curious especially how comments there as well,

Michael E. Pack

the is dollars A unit. There Yes. unit The is a think bit therefore, about BEV more best higher margin margin the BEV in ICE unit. than the the is a cost price way little are has ICE versus higher higher that to and BEV BEV technology. an point,

I'll So margin They drive points. higher dollars price and that's about what higher say it.

Courtney Yakavonis

Okay, got Thanks. you.

Operator

comments. I now have the questions. We the back like floor closing for allotted turn to over for of to end reached our management would time

John C. Pfeifer

global talk the our they talked over we're fact really We that that past challenges also and market have quarter. events lot that all We've facing the dynamics emerged the you. strong. businesses in a of remain short-term about about with Thank

We are leadership have and certainly market-leading in environment. we tough demonstrating products, this innovative

most next confident that year return the the us will year actions to and the importantly, in taking half in are margins We and to beyond. the we're enable back stronger of

We earnings Friday excited many We by Stock Exchange. We're for to you next are very the there. at way share see York our the in to appreciate look very today. and and Investor our look you. out-year very, about Day we time hope targets New going doing your for of and key Thank our sales and forward business, growth much to attention that drivers and

Operator

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

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

Oshkosh (OSK) 27 Apr 222022 Q1 Earnings call transcript