OSK - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Oshkosh Corporation Reports Fiscal 2022 Second Quarter Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call over to Pat Davidson, Senior VP of Investor Relations for Oshkosh Corporation. Thank you, Mr. Davidson.

begin. may You

Pat Davidson

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

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

call prior quarter our XX, quarter XXXX, all a year XXXX. the X, calendar we the ended and reminder, with year changed this during effective a year fiscal to June align to As are comparisons January to

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

John Pfeifer

we prices are We half companies current become strong has laser-focused globe, facing healthy a environment. and impacts chain believe these constraints and raise Like you, We backlog. of many in the Oshkosh on Pat, second continued to in everyone. will supply morning, XXXX. challenges. across inflation long-term inflationary the increases remain and robust mitigating Thank a more impactful outlook, good and have the these rates order near-term

challenges than confident they will expected, longer have these While lingered remain over that time. we subside

outlook strong end across by driven Our is robust our demand markets.

large equipment technology and new wins leverage are and an our to drivers highlighted segments the along believe JLG. underpin solid of our in next position with execution are and demand future utilization to recent at New the over X investment in the our backlog be equipment in and planning and And begun that we for has is have many construction infrastructure the and fleets, In yet keep MCWS. catalyst rates which driven at Act stages. scale. aged expect high we notable Investor we we This with Stryker tied contracts drive as Aged fleets in infrastructure, innovation demand. we NGDV several growth solid outstanding nondefense Jobs to access further across the mind, Day. by projects strong, to defense accelerated that and history not And drive other years key the we a demand business, growth this have into contract Access orders spending highest were

in The to annually, over NGDV ratio brand you refreshed since Commercial to significant in goals. trucks the late Recession, XX,XXX the will high we And prior has as aged expect EPS segment, goals, annually fire autonomous the of in as by American And highest a NGDV strong North market higher of is and early in midst to returned full we rate next when our years. truck news over great we will funding to contribute vehicles units units. increase USPS fleets Pierce revenue X,XXX solid market we will Great forward believe the of achieve be to $X pandemic. May, year. our of as order returned our In have and well and during is shipping electrified product expect technology recently and we are customers transitioning investment CapEx levels deploying next expected the begin on to collection expect We the leader. our demand initial BEVs following municipal The XX% the functionality. several refuse billion coming that revenue demand level This our cycle, have we heard, of parties. spending a In the to customers fire be capital many have a over contract path the may spending and well is USPS years pause finally, introduced for we supported industry to are as all these XXXX remains offerings for the achieve production. height

Of to the Oshkosh services. execute challenges, to and members to we purpose-built we believe continue aftermarket team course, deliver will. near-term parts we persevere our need through which vehicles and

quarter, the decline sales are our which of year-over-year share earnings below of of expectations. we reported X.X% For both with $X.XX, per

We have strong backlogs.

units, Emergency as by ability Fire our particularly challenges in solely to ship sales decline the was efficiently So versus segment. complete supply and scarcity expectations parts & in our chain the limited driven

the inflationary in of We adjustment that Defense significant we In progress full during Sequentially, also through constraints will earnings chain We share. catch-up outlook investment experienced $X.XX, unfavorable for Microvast our as quarter. per pressures, challenges year supply overcome in an XXXX long-term now segment adjustments to $X.X second revenue updating respectively. in billion and well and adjusted pricing in and unfavorable costs of elevated our made believe actions. the are and the EPS mark-to-market cumulative light noncash ongoing range these the and input we recognized revenue our quarter as be in

science-based greenhouse gas more I detail, announced to in want segments targets to establish recently reduce our our discuss we to highlight emissions. Before enterprise-wide commitment

Please take committed X, are developing responsibility this plan equipment. be our our and access constructive a globe. on we'll around for that very company, with will our started our get to to Slide turn We updates the segment customers seriously. and communities We

as access the off equipment XXX to running. materials we production metrics I'm improvement point on-time supply to meaningful operating despite first performance quarter. remain quarter during delivered margin efforts allow lines well of keep over pressures compared basis proud secure a norms. and delivery people and improvement work our our team find revenue of sources that the alternative to and Sequentially, the us they historical second achieved to by grew Our XX%, we in inflationary

new continuing in are lines the and second to towards taking volumes higher We capacity, work well half to delivering production actions as are Tennessee of as Pennsylvania including additional adding necessary the our in suppliers. onboarding year production increase and

reflected of and remains have As to access high and beyond the robust mentioned quarter. billion. billion in We in backlog XXXX as for over under quarter. demand in my $X based customer our once backlog backlog equipment very meaningful Orders nearly already past requirements the the orders customer for $X were visibility strong just discussions opening on have remarks, again at good

as were turn continue are not that we've lower necessary fixed our due we quarter in lower beginning provide persistent years. additional the so changes the announced end, additional to further prices catch-up the surcharge inflationary necessary. I'll were recently an and Department to pricing expecting Slide for reminder, To been Please last as and reduced our cumulative North will catch-up adjustments a color from resulting adjust takes year a monitor unfavorable Mike we budgets his the that will deliveries, expectations versus segment X% in that couple shipments Margins of X, all tactical lower inflation result Defense for on as prior segment. the dynamics Revenue for vehicle than As volumes driven XXXX projections. the result in of Defense inflation. September is wheeled for of section. adjustments X, Defense to America effect by of review surcharge in a cumulative

JLTV to Moving recompete, to Army submission date bid the the pushed mid-August recently XXXX. the

will final in focused XXXX. decision and the remain technology for a highly expect manufacturing to and early submitting customer. our in winning we result, program We highlight our a bid this key As on strengths

programs. We positioned as also competition, and already multiple such program business. The strong believe of strength win well was a MCWS key orders bolster JLTV we on and as to and EHET we for CATV our are past of additional OMFV, number quarter programs remain FHTV adjacent this our the active Stryker programs to evident received

they nations Any to receiving carriers sales There also significant June Eastern a Finally, inquiries Service, wheeled And of countries vehicles likely new elevated countries program. States in are a growing numerous host NGDV defense late on were to European test Ukraine military We the increase XXXX. interest continues. these war in our a or for their in XXXX as from from our and will We is spending. continues professionals foreign USPS delighted as United including review drive. postal Postal program begin contingent for progress tactical

progress, with the quarter track and delivering on remain of we our fourth are begin pleased in We to XXXX. vehicles

This volume year, segment, tied Supply lower guidance. in for were labor produce clear quarter, a result quarter. Emergency to products. on-time led reflected that Fire to down course volume Slide the Emergency & up compared weakened to efficiently chain the year, but and of a decrease margins was highlighting compared is delivery to the turn and will to prior making Operating which expectation. during disruptions supply manufacturing disruptions sales Let's supply a remains remained metrics our the demand ability in revised our X% discussion availability. these very and nearly inefficiencies impacted be for & Demand the were for chain impacted X excellent the to the our negatively XXX% segment. strong Fire trucks and strong of chain it of over deliver the not This prior year. our Orders as

capacity in we from As XXXX. for Appleton, a a Wisconsin, expansion benefit fire in capacity to expect additional are in we midst trucks custom of this and reminder, the

organization support. and manufacturer, of quality, quarter, our service reliability the we known announced During customer acquisition MAXIMETAL, and outstanding fire for Canadian truck an

to expect and Canada. Emergency exceptionally from Fire our experience grow with and benefit our & MAXIMETAL dealer presence and in we as We well culture network. focus customer leadership align Their

airports response around in Finally, call, demonstrations. have our our for Volterra highlighted we on expressed been electric Europe authorities customer to our multiple ordering as The ARFF. airport unit several plans overwhelmingly strong has electric quarterly innovative positive take ARFF to interest last

for will sequentially the and not was orders talk flat the Commercial are shortly. Slide we'll and so revenue Please up segment, In about to but X, accepting segment. expect we our We Commercial Volterra yet ARFF, doing year-over-year. turn begin

constrained. of commercial consumer chassis availability As and biggest third-party our is a reminder, remains

I Nonetheless, am of In addition, with we for our chain have continues that manage other have the to the production been lines impacted limited efforts pleased commercial several be produce. at running. through strong. components keep ability by team to Demand our and further our supply RCVs variability to

customers paused During the RCV purchases pandemic, elevated leading many fleet to ages.

also strong demand the to in believe are broader these factors strong for our both space. of We contributing market We seeing products. environmental are fundamentals services innovative

technology-enhanced our We inflationary experienced XXXX. dynamics. In to are and and partially displayed technology Transportation acquired leader. our We going continue Mike to and Advanced on it that, for electric continue new our Expo both at detail CartSeeker the our as recently XXXX opened input enthusiasm I'm results Transportation our Autonomous discharge to for We we front while Advanced in the Expo, we Waste have May, requirements believe will products mixer at with discuss Clean Expo. position updated we showed working turn our our attendee closely as for more to and to over industry book strong at monitor With our customers our strengthen vehicles the expectations Waste Expo. order concrete costs Clean

Mike Pack

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

did not shortfall. There X for meet factors the quarter. that As expectations results principal drove the John our discussed, our are

Defense defense change our First, segment wheeled This of adjust inflation quarter contracts. in life-to-date the unfavorable are cost to yielded approximately to in revised higher adjustments in $XX vehicle backlogs. therefore, for persistent vehicle million cumulative expectations catch-up our projections complete and tactical third-party large the tactical large wheeled indicating our margins cost expectations

addition margins contract prior these While & million basis has mentioned, for been notably components, our only $XX components. This lower impacted resulting revenues ` points a than had Emergency large chain powertrain as in key XX supply by Fire and for operating previously shortfall to the negatively estimated adjustments impact expectations challenges other lower the in quarter delivery quarter, expectations. Second, income in are the drove in inefficiencies, segment. axles versus labor second our a

significantly down in quarter. technology for markets investment during stocks $XX Microvast an and public of with noncash mark-to-market recognized even unfavorable the Finally, equity more, million we adjustment

the key joint outperformed we Microvast to expectations versus the sales. equipment Conversely, despite income growth development realization benefit electrification revenue on access in by prior at and margin first in delivered agreement largely Importantly, lower-than-expected from commercial price projects. quarter sequential with strong operating of a and access improvement driven volume. expect operating basis increased and our equipment point our XXX with second XX.X% improvement We quarter,

facing, volumes of offset tactical for material Consolidated of was lower offset adjusted in income million lower as consolidated million part year comparison by versus in sales a a lower $XXX the due quarter caused a to decline year unfavorable X.X% quarter, adjustments and billion prior chain of defense, we part Consolidated driven or by partially sales Fire supply $XX.X or costs. quarter. are to lower was volume or and wheeled compared was the decreased result decline due X.X% the operating this manufacturing shortages, the sales and the to increased income vehicle efficiencies catch-up in by year. sales freight lower a sales largely the in increased Emergency of sales benefit second $XXX operating than X.X% and sales higher for decrease. & income million volume, quarter Defense segment prior were pricing. decreased cumulative pricing disruptions million of Moving The $X.XX representing incentive compensation costs, by the the Consolidated operating $XXX.X to prior

cost million $X.XX. price Our disciplined headwind approximately by quarter than capital stock operating was year and in $X.XX in repurchased impacted at cost per confident came we Slide second X a common of slightly and impacted share encouraged for to allocation as $XX the for Investor has quarter, shares approach. and revenue our was EPS the demand consistent $X.XX for We the $XX dependent upon our turn of EPS Please higher the versus $XX at year in adjusted total expectations products million Microvast backlog May. by the In our for our in a mark-to-market are discussion the in billion which record updated our of We're Day prior robust for during prior expectations of adjustment. our evidenced outlook earnings income not lower consolidated case. the XXXX. to EPS XXX,XXX guidance a shared quarter. April our quarter earnings compared the by in by near half This which term, stabilizing, significant of in earnings and called been constraints year. a chain for was the the moderating supply ramp-up with inflation long-term

realize inefficiencies, of able impacting to both benefits than our expectations despite relentless inflation, While manufacturing increasing sales XXXX. in disruptions lag reducing benefit. and the for disruptions we're which with we significant of been supply supply in segments, non-defense for continue timing chain engagement are our higher These continue inflation volume base. is our the Furthermore, but are has price expectations to a there prior realizing pricing,

these As per $X.X to respectively. of previous expect a achieve to revenues $X.XX EPS share share, believe of We now billion per be factors, the of adjusted our the year. EPS not do result $X that for range and $X will in and range we

conditions our for now the if update chain to next back EPS closing higher revised it improve. supply earnings contributing I'll or provide worsen call. year, our and be and conditions if on Our to could some monitor inflation lower the turn comments. John we'll factors to for over continuing We're an outlook

John Pfeifer

actions strong. fundamentals seeking end near-term remain numerous markets facing taken recover and chain to challenges, are margins. pricing our we We've the in supply surcharge While

believe outlook have match production plans updated the a have and XXXX. current better the of to we our Additionally, we half environment realistic for back

we to head exit XXXX XXXX. in expect We a as position stronger into

Okay, Pat, you. to back

Pat Davidson

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

Operator

first from Our Instructions] [Operator Tami line of come JPMorgan. with questions Zakaria the

Tami Zakaria

kind XX you mentioned spoke. second in can I time last pricing first So last you the so of about months XX% what talk or in XX% think to question we is, you realized pricing quarter? my the the

what's in the it was of quarter? the second expectation what the for So year? And your rest

Mike Pack

In cost about if price Sequentially, in Sure. cost, it million. X% the businesses, improved price was non-Defense our at about by quarter. look $XX you

year, For was be we expectation prior at cost believe midpoint. million about our the full . would the price $XXX

Now expectations we've LIFO reserves believe of the the the end we now as inflation of well that that's we some $XXX cumulative the really at the about to catch-up attributable million as more adjustment change in persistent is that year seen. quarter with the higher had

Tami Zakaria

for other have if started you next I'm And missed are orders year? next also, approaching commercial, it. you But any how And it. for year sorry Got filling I for pricing segment? besides

John Pfeifer

Yes.

So our are look segments. of across we're orders order way, a well segments, our very, great our at question. very XXXX. By you of rates all When in it, most the robust taking into

our orders in F&E, segment were fact, In in & XXXX. Fire taking Emergency

We -- the having XXXX. XXXX order books now and haven't opened said fully for we that, haven't

look than you being lot got we've bit fact the and our about orders they're lower we're we business. XXXX because commercial for the a careful that numbers, across very order business even take at of how F&E structure access But and the when artificially So business, a the the little XXXX. orders for of actual

Operator

Fargo. question next line come is the Our of from Weber Wells Seth with

Seth Weber

this. wanted the million $XX I'm color But ask sure I to make up. I trying to margin. understanding just about appreciate catch defense the the on I'm

of to of bit that like to some what's defense a then like about into trying way to think to volumes normalized X% XXXX. -- little it? some you forward? going a I'm right just other there about to And margin then lower. the continue back is would kind back half it think sounds that Is expect Or are the going So forward get in range. margins X% the of

Mike Pack

Yes. color, just we're complete Maybe to more inflation. our provide $X low quarter. a every persistent backlog. catch-up In just -- we sort this larger with quarter to so have cost happened cumulative expecting incremental billion little the single-digit It more was it words, adjustments other of

margin recognizing over on contracts. up complete. end the we of So all entire XX% our about We're

So are actually when you have lower our a only being about impact catch contracts than prior basis see those to expectation can have a XX that we bigger quarter. complete, that our margins XX% points up in you

what So happened. that's really

one time. But third again, assuming we seeing forecasts to looking And trended or for So they over previously from we're margins going of those outlook XX we're understand inflation, what to would would at have we we're points is need at no major upward inflation the party things those our in to expect movements always And forward. today, that an of about watch third-party versus continue perspective. were. be within the what basis where obviously,

So we're large margin not expecting going impact forward. a

Seth Weber

on just you And as Okay. you you're if helpful. into the mix? U.S. for appetite interpretation give what's your us -- feel Or like opening it the -- can their out recently what another a That's interpreting a news was potentially orders hear or and there then up of to supplier an I'd your like what's with kind for how there? just Postal, just article of follow-up, come the going on just what's NGDV, perspective there's opportunity to just around another

John Pfeifer

that's that's everything with is John. is happening question. for take Yes. that positive Service this Everything Postal happening Seth, U.S. us, I'll is positive.

of news. of a what couple you recently, you saw saw bits think I

This Service a The of part do. them nothing Think program separate always has for which with of standard plan to There the on. and buying That's contracted vehicles. those off-the-shelf has X programs. vehicle. vehicle off-the-shelf do off-the-shelf to long-term is we're had vehicles, with just what that for what COTS, are a NGDV, Postal a they do they it's commercial band. had sprinter One the of call

and order. happen. to really The the the more electric of we're XX% everybody. mile go see really that postal for that NGDV, That's want seeing battery going electric news recently All news other had last they that good with vehicles faster piece delivery initial in to was parties involved to they're on XX,XXX-unit start to

the the It's program. that's fact part relation our doesn't they electric It But have faster that So any is vehicles, really to good. program. buying more off-the-shelf NGDV always do. what of they're their

Operator

Our Cook next questions line come of from Credit Suisse. with Jamie the

Jamie. of Raso lost it Fortunately, going through David like to looks Evercore I'm we bring ISI.

David Raso

go the it if up X% were the go and So like the up, feel much or trying a guess, first that the first catch of including over sequentially And X%. was assuming pricing price sales second on through, for looks from having margins you half, just of September so. I'm X. the sense will to flow get X.X% already X% And versus first on half X%. do have revenue call guide to about cost, sequentially, half How operating that to I let's to X% margins, up X% for adjust the in that defense it, you're you you

So we a and just need get how for bps? volume margin, X%. XXX to that extra is the how And cost sense much price to account positive get your much to do swinging then trying to math on of

Mike Pack

sorry. I off you the Are good? done. end, you right at thought were you I cut Sure.

David Raso

Go done. ahead. I'm

Mike Pack

Okay.

all, increase about So from of I million the of first revenue is a pricing price. $XXX standpoint, guess, it's

by a, the From price/cost versus obviously year. a $X.XX of improves meaningful it. to half big of second about the in that's call perspective, that a first component So half $X.XX it,

So that the in price of big cost, improvement a much a EPS year. is of half driver obviously back the

David Raso

That's interesting. Okay.

been you're cost hard. increase price. points the so than feel But of would number, XXX improvement. of basically basis have XX% from actually So I a the I $X.XX even -- the like margin know you more mean wild card. price sequentially you suggest it's revenue It's the

going was that surprises locked this cost, it's I'm how you're quarter. on your you feel things. we the chassis you get sense saying easy. how And much a versus to trying a show scrambling trying obviously, can of was least just and somewhat in it I'm the saw to going have be you given this price inefficiencies, hint comfortable not at past understood, be just a didn't, do thought of quarter But I'm So and its to a cost to we get challenge. airfreight up

Mike Pack

Sure.

First I all, the the just year. of million $XXX half about price clarify second the is that cost should in of

is But down. $X.XX. break it So David, to think EPS conversion $X.XX be just may I helpful, to

of at we're or the our talking pieces kind as X neighborhood which it, mix XXX is it. it's approximate midpoint you prior impacts, volume really at then of of XXX about. is the the of of to that look If about its of And biggest about cumulative we're XX% that inflationary LIFO. inflation which the looking XX% inefficiencies, the that, catch-up is adjustment manufacturing it's and piece XX% last About

in to from catch-up that further think cost or now I the a of have What cumulative impact. price. we visibility adjustments if in getting we're obviously, watching the it inflation better really into we include that course, is, upward obviously, see visibility our year. perspective, cost extended, cost We can further year, to quarter a we're pressure

obviously, as one that's the watching impact well LIFO, there's our of receiving you're it's hadn't some movement the reserves those LIFO with last necessarily closely there that LIFO. that, still So yet year thing area the for place in orders as can we or we're sort

now. we bit So it's the sort that better have to core do visibility cost right of not FIFO a

Operator

line Bank. the has next of at Deutsche DeBlase come from Nicole Our question

Nicole DeBlase

XQ, of versus how like well the I normal to Or help wanted you you're with about thinking provide ask to respect remaining the can seasonality what you're XQ of kind the embedding year? thinking operating in of earnings about X quarters any as in margins just . cadence there? as volumes kind for of

Mike Pack

bit price. previous in continual particularly I And of a would just will definitely say looking at question, cadence a there the of improvement. be

progression as we to price quarter So through third fourth -- go a you're going the to of from see well. as

me, we're QX. million as excuse to progression a from we cost as QX improvement $XX -- see to We'll price QX from QX from QX. well QX So -- to nice going QX to about saw or

end progression of the of a So year. I'd see to bit the a

Nicole DeBlase

carryover could And you up fast pricing then I a That's like give it. of feels theoretically, maybe just the like for taken the should helpful. mean XXXX. margin guys down out because benefit input a nice costs that into the pricing half of that far? Can the actions to the setting potential probably cost equation actually conclusion us into sticky. that Got based we I so Okay. kind right me first looking the of year pretty we're is it forward have is have the come on mean, into piece sense XXXX of recently, 'XX. you And be as

Mike Pack

just with question. Maybe the with of side it that starting cost

that. but electronics. more I seeing and rolled hot coil input from come everything down, costs has broad components much like think are engineered we're axles than And to pretty inflation, ranging engines

And than persistent. steel. so remained Aluminum it's definitely more has

the input we're things think I So those and with happens costs. to price continuing that watch frankly, continuing to for are what

in businesses. plus increased now, we've prices. non-defense We about talked our So XX% right

to we're continue chain. watch I lot progression what again, inflationary the supply to watch of is think of the dynamic other we a continue going to to those what's just dynamics So need

quarter. back that We We half didn't hadn't expect that of supply chain would improve the the in seen see -- we the in year.

went it worse instance. Fire Emergency the it -- fact, in & business, In got for

things But are XXXX. obviously, year. looking we than those exiting -- we're that in that's we go we're So the to price as a the at cost much year entered better position

John Pfeifer

spot of Nicole, we've the lot implemented and we'll had for feel inflation. as and better going that 'XX. -- actions XXXX, get a have we're action through And done a we'll into the like much company lot towards a part, no the of we around question we we've in is there place most done how lot learnings in a managing be

Operator

questions next come UBS. from Fisher line with Our the Steven of

Steven Fisher

of details in year, bit but a about any of consecutive a can a of I'm given bake I couple different kind guidance to just all, how out if you tried you've year, was for . more talk your of of zoom just little after you've lot of cushion and guidance little or if of reductions. rest a if on know a the -- I approach the different rest the of assumptions bit the this topic this any of to at wanted curious in maybe some and the quarters approaches? in the quarter

Mike Pack

say guess have changed approach. I not our is what we I'd

I it's hot-rolled as changed over fast it would really somewhat. not think moderate inflation what the obviously We coil, was we it or quarter -- soon last expected. as expected down come is as with see but that

is And said the of didn't by piece to other we end quarter-over-quarter supply need needed that saw progression delivery the year. metrics that be We pretty on-time think chain, emergency. equipment. in in I access expect supply needed supply pretty would fire degradation a And meaningful are perfect particularly start there. chain we a & our chain but we improving. lot, similar the we we it-- And of

that are X closely. those we're the watching So businesses

So production dynamics our I really see current performance it's challenges -- that the creating between impact of forecast on inefficiencies. say well inflation then and facilities, reflection supplier conditions ultimately, we as as is would a absorption labor as really our that's having well a as some

Steven Fisher

double time it's now? do the rate would about digits still much . of a for should be exit backlog, curious how rolled still base How taking we terms in Access And do low helpful. anticipating Is as of backlog? sort you the margins in much XXXX? of that -- lot of And access you're of margin -- thinking how imagine there the there is that building longer. on That's segment? compromised then have the kind left by you see be I'm the that June Okay. you a frame. the I how And in off see orders originally, of

Mike Pack

dynamics, price the million headwinds say, back saw -- $XX of million half of we in about about again, for year we from cost $XXX would $XXX the I total a Yes. in talked holistically, half about the the of first price that's cost gets a year of million.

So -- $XXX that's or improvement second quarter million first half half. over versus

So big is of a access that. obviously, piece

that neutral there's we, businesses And largely do quarter our -- cost we're So in fourth there. in meaningful the were to positive. expect that we non-defense movements price

So that's year. as start in still next our expectation going we into going

John Pfeifer

more bit me, little Steven, that. a from Just on color

to seen. prior commensurate revenue the even peak pricing or we earnings but for prior margins peak margins. even exceed that margins, we that and Clearly, cost a prior access our On has and volatile, the been prior with exceed in margins. regard to peak we've meet achieve believe with peak certainly is piece, and And will new we peak escalation sure inflation expect

So the we good the feel I we as margin QX of continuing . feel QX development. into to access. see about trajectory mean about and we And good and even trajectory go

Operator

Our Stephen next come of Jefferies. line the Volkman question from with has

Stephen Volkmann

could. couple follow-ups, I quick a of Just if

of seems On the to pricing be I'm surcharges. question, curious, some it

sort to as any of less Some materials of Are about think how price potentially Or to going it do seems unwinding them triggers? increases. tied surcharges forward? raw we those be fade

John Pfeifer

cost very nature escalation of in regard We or essentially seeing. have a the in immediate and surcharges that benefit backlogs that with a because effective go the usually certain that in when surcharge of goes in more us place. place near the have And the that we're which It future. to goes we to place date, immediate of is allows have a

of the benefit the that's surcharge. So

when Now in if moderate of we're we a And see point then hope a will really release happen if with a to significantly, future. we point we event. good -- If get some surcharges, we the -- as where our that's can always the would releasing certainly that's to customers surcharge. as point that, we we course, that have costs at

Mike Pack

not lot scenarios steel mechanisms, based typically inflation now, tied look you But costs times and been much so they're because index it's has that really of those base we're on pricing base a Right not transparent -- we're on. now, than index. customers price broader indexed being inflation these when you or right just on at much with and It's broader our broader it. is just And an on not they're based than seeing that's to why see. inflation so pricing

Stephen Volkmann

that Okay. volume That's be Based with obviously, up some will mentioned you in out would than price, your into then, assume assume rather on stretching includes 'XX John, AWP? on would AWPs, that, you helpful. which volume 'XX. you for that And customers discussions dollars,

John Pfeifer

about customers. the We're customers in the age look look where meetings it's aged. even not -- talk XXXX. with very I 'XX is market for still, I It's demand today, at our when I've at providing But more. the to they with this The guidance at very when XX or fleet it want been where fleet from is point. big JLG months and

good about feel really that I of development the business. So

and lot onto electrification well that's products customers is as because a put The helps of developments technological lot driving other technology. thing with our want We've to fleets. a And that demand fleet their new of that new and autonomy. replacement technology drive accelerated

at of if segment you Access about -- guidance, everyone of health R the not Equipment XXXX now. And word talks I'm robustness a we tell backlog we there's we're really the while the I'll factors. rates Even if good where what from those there's providing are right customers least of feel the feel about because the and pretty and in order So to regard our market the the mild right still now. with hearing good recession about even the future,

Operator

the questions next with Revich from Our of Jerry Sachs. line come Goldman

Jerry Revich

be John, of about be looks it like revenue variance about like XX%. sounds that normally, when is you of cost. from and half in just It fill is pieces we'll would that efficiencies billion would achieving in you to $X Can manufacturing pieces? put folks gap in just half be the us? the margins this access, It year. other of much . How perspective moving chain on that price for supply other

Mike Pack

the the America and is you which we AWPs, big think lost of really Frankly, have North that I the margins. obviously some hit strong piece, obviously volume volume it's

and demand when piece other produce of at to level. we're obviously -- have we is really The it higher staffed

can So it you're rate, on add you when the this And you some manufacturing producing inefficiencies not absorption headwind. of top are at an year. have absolutely impact then

you're speaking those differential the of margin So of. are really drivers the

John Pfeifer

that cost away, up far quarter full Yes, make and see our is the biggest Jerry. we It's goes price to as with price. every and by reason, more and get that we'll by, improvement, you'll

to inconsistent creates the a be a performance. inefficiency within lot the work other said, our thing of chain in Mike forward, going Creates the and business. out we able plant, operations inefficiencies it as is difficult due very chain supply -- of manufacturing improve supply it's to we'll what The cost we that

Jerry Revich

getting into about essentially they can margins where 'XX, get there? that return. it one spoke a of we possible historically. back a of just fell makeup Is generate were degree to you fair John, swoop. a you all on Can And comment quickly to confidence How . call folks pricing do on in high so you

John Pfeifer

Well, guidance goes can XXXX. at I to that think is What I this can't we see. we I provide Jerry, it think evolve you, into tell continue you'll with every go as by XXXX time. Again, quarter see you'll that

As margins a this you saw this in nice quarter, saw quarter. access we improvement in

we have will think than forward. going we And But those I prior guidance any can't we certain to XXXX, levels sooner get margins will in continue development go I confidence what's later. as that on I give you of to happen that see exactly yet. to quarter-over-quarter when

Operator

from questions the next Dillard with Our of come Chad Bernstein. line

Chad Dillard

to wanted back like program the just understand, I contractual better NGDV So and circle terms. to just the

Just protection if much some just catch-up have adjustments trying And you to how platform? wanted I out normalize And EV [indiscernible] . inputs. inflation, margin think through, to you've any that you're there? figure taken on particularly seeing to

Mike Pack

Yes.

the There XXXX. our will similar that, -- nothing programs. we is, time, have are until or late program, all but and it on large NGDV, revenue we starts really that begin For of revenue be recognizing over to recognition,

doing there's amount say have try also that where And that can. supply of as as we we economic We in I that. price adjustments would base well. large There's -- well that we're a to with lock

cumulative again, expectation, while -- impact again, and quarter needed had a bigger you go the I -- impact we we the adjustments. margin in with back the or if catch-up think So dollar

our the defense expectations points our those think major basis within on of prior is I is margin XX point important programs expectation.

that's time. it margin these look on it have And can large So At a the more why you it's to them over challenging on contracts, looking times, really not quarter-to-quarter basis. at at be a huge change.

John Pfeifer

Yes, NGDV. it's go you, we on production into I'll John. just year remind next

into we'll quarter. in year. in the third So production go delivering start vehicles next fourth the quarter

see of But economic said, show we've adjustment long-term a that So to environment, start Mike us will got on have that's we're you'll in happens up of place about contracts should from, inflationary just an talking how that when escalation revenue. the we managing start. also in costs. through into be It lot programs. material we that go But benefit these as terms there

for event -- carriers. the we them time we It feel We're was had they good just postal with with postal line We are here with drive vehicles phenomenal really an fantastically. the where service. NGDV. meeting a the and recently, So the about some test had performed vehicle event, where came even to

development, about terms where to are about of with are we production great the feel in where for we ready managing good And are we So regard getting cost program. the with we of we year. feel the where next

So it's going planned. as

Chad Dillard

non-defense break think I helpful. versus Can XX% how talked surcharge That's down And about just then a your increase you guys you price in segments. list is price? much

Mike Pack

in some not even I really at I of but in for guess varies And the think by and set it I line, that is totality the next again, look our it's segment -- pricing year. our would XX%. product really -- It businesses,

surcharge actions. much read -- into versus wouldn't I they're pricing what too So all

Operator

come question Suisse. Jamie from Cook is next of the line Our with Credit

Jamie Cook

run seeing earnings the or $X guess in of China, to of trends So in rate -- have can a One, it questions any asked. of most $X to like as of and comment giving do starting deterioration Europe is run least want half -- rate? that? you rate been Europe up? can in guess of a approaching, Just concerns China order I and talk pick question, we I sort not don't over if base signs back think for in about my $X And want might about that XXXX, estimating, you answer thinking ramp think there's XXXX? you material that at is know, then this, place to the the second all Street the earnings like least right on about just run a the XXXX. at $X.XX, Street's the to that. to I And XXXX, something implies earnings in Is you to we're Or $X.XX as back think but

John Pfeifer

market strongest that surprise Europe. and North The with been in shutdowns for China's regarding through. start for right most you China very where your orders specifically, now, come us the economy reasons very, America. gone Asia, there Let seeing in has is to me lockdowns the and It's we're with the all market obvious no has demand through. question volatile

versus it's certainly So activity construction work that I'll methods. the long-term, still prior economy strong market that signs the really of AWPs remind the towards that happens do and we that say, there And showing the stabilizing. amount of size of I'd is see China move all because market, you and in intact. That's

people stable to think big say we fleet perhaps North The market market. expect European and in that's maybe growing Europe, more now is, in certainly a European continue call lot market, but just and like there to America I'd and time. an it's America. would as bad some aged of not as there's guess macro right it is like fear, not I because as North So I instability the would over I in It's stabilizing, a grow it it's there's

because for to stable, situation part of fleet turn you. age that. that still it's the So primarily we're getting orders I'll Mike, where

Mike Pack

we're not that guidance for a in to just highlighted to few we've just a that year, provide know. again, as next look we a position things we few as And next things But year. said, John

demand as right -- to this So talk as our talked so now we robust see customers. John number demand, one, we about

to to course, pricing continues but to you lag. we're known. our what disciplined a be going to inflation, down have of actions Then with continue that, that's it in So can't comes happen around

got improving and what when to then inflation. what Does start a And And continue exactly. to it with supply rapid we chain? occur So happens pace? comes really watch does that down to more at it

to big Obviously, the that now, we're into right year. to continuing that the through now in watch as are of dynamic back are have and of continue very the back the we go So all half things half here monitor to year. I those and the the we'll think things

Operator

Our of with next from the line questions Cumming Dillon come Stanley. Morgan

Dillon Cumming

Maybe just one on the top line. first the defense

some imagine Eastern a there I'd Just development. from FMS material of are inquiries recent curious the pretty was Europe how

of the targets all, just represent Investor So first month. of I last of guess 'XX Day upside you that curious, kind would the at gave

John Pfeifer

to taking of going when the in talk just lot ordered. I'll Eastern expect as the in talk you about to that you we've dozens that Defense, orders neighborhood talking thousands remind maybe in certainly And European When Europe. you We typically terms of are a it's of be with of We've the the XXX Europe, in happened units be U.S. a European of to result of orders had we So orders about about Department what's many big recently countries and Eastern orders them. had. be Eastern how talk from about units. inquiries more order in orders a would

do So this 'XX, see similar they're number for a what future XX 'XX the probably that but scale. positive early is with I 'XX years us deliveries. as it's of would you at say not Department a could clearly as to that's Defense. smaller a and But -- be

just keeping it perspective. So in

Dillon Cumming

And would if Yes, XX% wanted taken was curious initial leg another more And upper increase. kind the bed as on up on USPS maybe was of more contract. then do request going battery that have mix just sense. mentioned Or the you like that was to your higher feel that you the from of just I USPS guess, I an supplier? bound that one to makes you it?

John Pfeifer

wants to the country, Remember, they support USPS That you electric the battery more emission the able doesn't of have to wants what to have the based into Oh, low market plan but in This upon to importantly, really of can place thousands of engines. of that those upon We versus it's have And based States to place there's they do not of upon vehicles. as XXX%. overnight. as to XXX%. vehicles. vehicles in do United Postal amount funding happen infrastructure put -- they infrastructure offices the putting to an go the terms go and based they combustion upper putting to that bound and Services to postal their going by We're have pace is be is tens support in USPS us. high to. it electric around

XX% It could thing But from that is another good a paces up that's So it. number. XX%. go

up lot continue a to going limiting wanted But to people think Service as U.S. they're we're of the what up. go to to I do. It's to them. not Postal

Operator

line come has Steve question with Capital next KeyBanc from Our Markets. of the Barger

Steve Barger

potentially a seen It's mix thinking looks I'm have early BEV one, What's right? Just Because mix I'm about talk schedule? about NGDV. margin, dollar but probably talking versus . And to the is end higher that just to looks the follow-up higher front John. about end? this, what and production you And like back like.

John Pfeifer

higher dollars, revenue, margin Margin higher Yes Bev product, is sales Correct. correct.

Steve Barger

production you that be be or schedule said between mixed just because infrastructure? evenly BEV ICE of back-end loaded what will BEV So will and about

John Pfeifer

of order Remember, -- thing this I over contract to XX don't No. this units. we've XXX,XXX years an XX,XXX so is units. and goes initial is got up

So order when unit order is But from only I that the believe XX,XXX that that's mix The don't going into it it the year. next of X. production first contract be. in what what go is We'll cadence certain produce to first the expect will I day few be the I that, for roughly it to know but be, order. XX-XX the years from of of we late

Steve Barger

when from . benefit just and And talk it relationship? you that it. Got I Microvast was the that. noncash. But about how get adjustment, operationally, can you'll

John Pfeifer

integration their that batteries. with we agreements in we to Yes. strategic lithium-ion their vertical When investment Microvast, strategic regard as we partnership have part did of have with joint capability, of But because of a development them. components a

do we the most with that development markets the structure putting to developing the we into want with for end on serve. work electrification right on us program and we're of for And work certain that the programs, us they into on. So they them vehicle battery

a the market us Microvast and suppliers is. the what in product depending that, on development. is for have big close partner a we battery different what they're end few of is Now and part

Steve Barger

using? different to related you're all? at NGDV that . that Is programs Or those are

John Pfeifer

to I'm I program, for supply. regard U.S. we've got not about a at Postal -- but supplying Service plan in where the who's place talk I'm with not an what outstanding can

Operator

day final of from the Boeschen come with Raymond line big Our will Felix James. a questions

Felix Boeschen

how But It curious before think & a taking on backlog that's segment. the is quick like the electric I'm I'm X out had just Emergency into stretching I maybe Europe. thinking of it. backlog about about Fire I should of to you you could and next I you're have. if XXXX the the if X.X appreciate curious, even I years your that costs over or kind business. orders ability that seems already. managing And reprice in talk input just just all about orders That's so? talk

John Pfeifer

Thanks, Yes. Felix.

it. and Let something add Mike may me to start, want to

for Emergency & Fire we have orders sale future. & will vehicles backlog lot But the ever Emergency. demand we the the any had product. of a released Those within Fire segment, not There's for the strongest our be in have we've for taken yet. in electric near So

adding It what goes correct. doing is You're into we'll we're point -- out XXXX. right now we're capacity.

drive going that's for help see us chain to we're chain in the and to the our for right today, back for by manufacturing we demand, what's products. the causing we emergency disruptions in inefficiency plants. not our chain But We order because fire now first, purely and us but our holding peers needs here supply sit is are growth believe because a first paced we it lot are future capacity As term, them of rates in long It supply today things of we just and & now adding that supply long-term is lot -- disruption. see peers, continue. Pierce we expect strong a of

if then work doing. the capacity term. will to And that short the benefit We through those get problems additions I know don't the we're in Mike, from you... start

Mike Pack

from municipal backlog fire versus a perspective, would Yes. ARRF. ARFF is I for say trucks longer backlog for our

over be very those to we're start ARFF Volterra to able quarters here. And taking excited time so

John Pfeifer

aggressive We're We cost market product and very as and pricing we're forecast But managing got also the margin in best to of leader. very, have far well. we that those fire products very carefully. because we and emergency. lead the we're And able 'XX for and and by 'XX do away the

the where these our issues, So chain good be F&E. at to to just we and feel with in F&E. a about we'll get great leading ability them. growth margin for continue generator We supply -- manage feel we we are through about company

Felix Boeschen

Thanks.

John Pfeifer

We'll company stay profitable -- continue with want to today. we joining forward everybody want committed all to just to forward. us look I thank Stay safe, We'll speaking driving go innovate. I very So continue We're growth. as to long-term to and and our advance for absolutely we soon. growth you healthy,

Operator

appreciate your you. conclude today's participation. We does This Thank teleconference.

of at may You time. disconnect day. rest Enjoy your your lines this the

Oshkosh (OSK) 28 Jul 222022 Q2 Earnings call transcript