Oshkosh (OSK) 27 Oct 222022 Q3 Earnings call transcript

Greetings, and welcome to the Oshkosh Corporation Reports Fiscal 2022 Third Quarter Results Call. At this time, all participants are in a listen-only model. [Operator Instructions] And as a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Pat Davidson, Senior VP of Investor Relations for Oshkosh Corporation. Thank you, Mr. begin. may you Davidson,

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

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

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

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

globe. across Pat, constrained quarter everyone. chain for that companies the earnings and the have challenges good We production ongoing in in you, of morning, the strong growth delivered face supply Thank

Equipment pleased quarterly positive operating earnings growth a as are to segment, result we attainment, XX.X%. margin income the a adjusted We with returned strong Access sequential where price of our of in particularly double-digit

benefit stronger infrastructure significant backlogs into and has which constraint rates, equipment high are strong efficiencies. the by nondefense We company, aged suppressing XXXX. technology pricing our from backlogs. in solid chain fleets, sales production and manufacturing remain spending, levels fueled levels most both to across contributing are robust adoption supply utilization of expect all our and to in further businesses, nonresidential conditions impacting remained of volume and our Demand Global our

continuing constraints, components supply availability We we new qualify reengineer help are to suppliers, to which mitigate to digital tools throughout continue these XXXX. will supply and expect expand chain leverage

cost managing to We our production levels our better with constrained rates. align are also spending

with resiliency $X, we shut to of Defense $X.XX from second in adjusted billion our a Ian, modestly of I of which quarter, XXX% and team's us the segment, prior proud per caused improvement week year the weeks September earnings despite from facilities last $X.XX challenges number shortage of including in a major quarter which the our per the quarter X quarter. axle down down am revenue of as share reported results lost Hurricane these the caused production. the sequential in of For earnings Florida share of they castings of delivered for a and

category. of Oshkosh, profile environmental, we a our top in or Oshkosh's updated our shared of proud and are the AAA As rating and recognition puts strong leadership. risk social ESG for of leadership, its past, which achieved we the we us in have MSCI governance, X% industry In

results actions to to the for are taking our right dedicated responsibly We deliver stakeholders.

in share of quarter into final revenues most additional are expectations $X.X share the share, maintaining on recent will year, section. As of we in our our and $X.XX earnings expectations of details the move his the and range Mike respectively. per per we billion adjusted

to and results, While at possible contributing when chain costs it's to disciplined our prices manage increase not particularly supply are Access improve, Equipment. predict improved to actions conditions will

confident We people, company our we'll for a our X, remainder Please segment the outlook Access deliver exit we and our the believe to with XXXX, in and XXXX year and are our updates on beyond. started get and turn in position Equipment. to stronger will Slide in of growth

basis delivered expediting while limit XXX comments, and performance to elevated XXX costs. sequentially our nearly a dynamics and the well opening as in improvement freight a I production quarter point margin mentioned As Access chain basis adjusted year-over-year, team supply with improvement third strong in as to point income my Equipment operating continued contribute

pricing Our improvement. earnings drove actions strong

to alternate largely leverage remained focused on improving both the team third that qualifying will maximize allowing components including source price-protected expected, the remaining rates. parts delivering optimize worked us additional we The efficiency, Equipment backlog As sourcing returned through to margins. double-digit production and and flow quarter suppliers, dual at in operating strategies and chain Access our supply

our vehicle in billion. backlog were due year to adoption. significant and requirements beginning and is strong turn billion high planned prior driven to nearly have well in we for requirements Defense cases. and robust market I'll at XXXX Orders disruptions by on shortages quarter. market-leading result both parts the backlog strong solid and Defense some remains for current by nonresidential review production fundamentals, spending are including metrics The reductions to as our utilization JLG elevated $X Please in tactical customer wheeled believe DoD discussions versus well fleets, demand continued once vehicles. construction demand Revenues were quarter for to caused products, production continue XXXX, rates as aged X, already and a our We of segment. Slide segment our experience lower beyond lower the the the high We at visibility technology for good as again $X.X in

components and most both efficiencies. related axles mentioned, drove impacting and disruptions, I significant manufacturing the As sales

quarter quarter unfavorable cumulative the expected. prior previously during below reduced our freight in recorded as more escalation than We cost material operating and charges expectations. the catch-up been events have persistent income These also

on update key manufacturing an we decision technology confident Late are that first in launch houses intention launcher-to-fire and units. our in Army's in received XxX the US the submitted another Fires XX missiles, and August, our JLTV technology JLTV week, the years. proposal for is XXXX the for in hear believe Oshkosh X contract XXXX and unmanned XXXX. with system. early expect Notably, JLTV that margin-accretive trailer in wins our substantial Dutch we additional benefits to we awarded announced program. for of to it We we an And in of one approximately that Defense several as a can successfully customer we the order Corps million Marine trailers strike value us last strengths partner, were to to program the another Fires is purchase competition. example our applying the Lithuania's the brings naval some is and its and winner announced delivery XXX achieved we quarter contract ROGUE of Broshuis. will customer, next our and developed a mobile deliver programs Moving for leveraging ROGUE Ministry the to We $XXX quarter, worth in deliver programs, DoD the conjunction our over future. important even more EHETS the well. contract for as The We during to

instrumental Finally, Tim thank were for Bleck delivering John several US Marine of And retiring we key NGDV of program his they are Stryker others. wins, service segment. for including in to together, Bryant years. years his among MCWS, to Corps. our pleased to and both new want JLTV President, our I, President personally company Bryant, and to role side-by-side our welcome many Tim as with Defense works John I the

the We team execute and are continue our drive the successful segment. will growth entire and confident to that Tim profitable in strategy defense

municipal double-digit operating taking Fire in our pace X its to are that marketplace enhancing and Slide segment demand including market products all-time is increase Demand excellent the to demand. experiencing discussion higher Emergency our strengthen by trucks, We demand is workforce sustained truck market believe evidenced production as for planned such leaders part need fire contributing our to funding during due driving in chains a margin for outstanding position the and at orders, not than very our supply Let's strong Emergency led operations backlog and with electric and the the Supply an solid rates lower team prior & features. new thus operating quarter, to we remains production our the facilities. turn and ability due Pierce to Volterra are supported more for remain improvements leading vehicles our our disruptions rates. segment. supplier achieve of will continues return challenges improvements in XX% trucks. right strong the high in and quarter, with productivity actions, compared fire and at in other & to our experienced that as for lower-than-typical have to modest consistently of purchasing X.X%. Pierce's we Fire keep This purchase produce inefficiencies up the the to targeted chain year, fire We highlighting municipal a strong to fleets our availability aged manufacturing and are improved confident margins manufacturing products, share. metrics as to we deliveries past This volumes limited some to but by

orders, partnered During highlight. secure I'd dealers like the notable quarter, two to our many to which with we of

fire second, a our city the with dealer large our a city in order the First, Florida of custom Texas And for with dealer trucks. of strategic Jacksonville order in XX won Dallas. secured

versus a Fire chassis turn truck. Commercial were the segment, latest prior technology to Slide costs. Commercial about environment operating talk as provide Volterra benefit but new will us fire Gilbert, versus a hot a year climate as & up to Emergency, segment. third-party result X, In proud prior customer of and higher sales as our increased for that Please development Arizona activities. availability with we'll down margins our is Before we the highlight our that product warranty will electric I'm Gilbert a well remained were constraint. Adjusted investments and the development year, leave

that make we believe operations investments in improve our long for and the to continue position automation our will competitive term. We

capacity, redefining vehicle, increase strategy, will is implementing while started line line additional this refuse improve we collection how For and example, reducing our need quality our efficiency RCVs. produce at raise in year, labor-constrained we Center, first is team the market. X.X a flow the headcount and in manufacturing up high its Earlier which for Commercial Dodge

benefits improves. to beyond production, the and continue in further we chain expect rate as XXXX to full ramp and We supply

to Mike in more discuss our flow I'm additional going roll RCV high the With turn of for years. over for expect lines that, out expectations to We our production remainder to in to and results XXXX the detail, it coming

Thanks, $XXX in John. Please supply of quarter shortfall turn to of line Slide chain unplanned due the our million for despite X. with was income revenue operating to $XXX expectations primarily million, disruptions. approximately third Adjusted the

shortages catch-up relative quarter was an unfavorable component number revised Further, expectations. realization recent As in most a John prudent of cost the as expectations. well the mix, dollar, also currency axle during recent due favorable offset inflation expectations as adjustment by unfavorable during $X.XX Defense production our was translation catch-up adjustments Strong for was approximately foreign our related of discussed, recent the at and and our EPS due versus management higher lower-than-expected expectations. versus cumulative negatively the Access and price most Adjusted Equipment rate consolidated particularly foreign $XX the as higher than currencies our impacts to adjustments projections quarter. defense our of cumulative most segment of a most impacted but weakening tax outlook unfavorable our versus million impacted US result by recent to approximately sales our modestly volume

$XX the Access as Emergency catch-up combination wheeled and in income the the year lower lower call by as second respectively. of as year. Moving supply to down to was $X.XX the vehicle as EPS Consolidated and EPS chain as resulting impacting million Revenue pricing supply production was versus million and and approximately discussion approximately driven dynamics. billion. quarter prior expectations by benefit & was XXXX. sales Commercial translation respectively, as Defense Defense in Emergency expected million, $X by RF DoD segment primarily America to increased the by North XX.X% versus adjusted spending a sales of This and million has increased currency lower volume, quarter. billion and updated sales for wheeled not returned to income operating prior higher adjusted vehicle by year Slide for was the by $XXX million improved a million impacted well pre-pandemic compared driven benefited operating million primarily that impacted sequentially during year Emergency product versus of was & of Adjusted result in result of $XX inflation the and $XXX XXX of income result Defense Access tactical Equipment price/cost prior or turn versus on a to million income well lower persistent the Fire due supply product down tax $X.XX versus and share, be negatively or the lower experienced prior $X.XX Adjusted year. per was year of we adjusted driven comparison earnings $X Fire chain the in rate year million tactical we versus unfavorable pricing as foreign by and to Access up a lower sales increased volume, mix. of driven prior the well sales, by and Equipment. driven DoD up prior $X.XX. Please price/cost adjustments chain of airport for our XXXX lower $XX share versus were by at $XXX Equipment incentive up effective in $XX segment unfavorable $XX Last a levels. costs prior were expected a X.X% to price/cost year. million prior quarter, and & revenues operating volume as EPS our $XX demand Fire requirements from per higher improved to as unfavorable dynamics an disruptions segment production in versus range disruptions cumulative disruptions $XXX sales costs Operating the the catching operating budgets. representing respectively, prior increase. quarter sales said per margins planned represents million, in $XX adjustments X.X% to X share a up absorption, sales compensation. by down as lower the to share Adjusted by the a aforementioned improved the actions dynamics as the year. $X.XX $X.X lower per as improvement income Share million impressive was basis well $X.XX point versus part liability

Our in expectations the supply on conditions were inflation quarter. based chain remaining second the and same as experienced we

these norms While pockets, on-time metrics improved delivery of production. smooth have well levels remain metrics below off and facilitate in historic that

As the in shortfall to Despite our most these of be a recent Access by the data third has as continue in of remained XXXX sales inflation margin our in improvement quarter contributed the previously Equipment despite and recent implies demonstrated million to to and to PPI disruptions $XXX share, chain non-Defense We inflation $X.X in segment. fiscal as This versus persistent Further, supply the per third challenges, some tend adjusted $X.XX the for respectively. in businesses revenue affirming commodities. price mentioned, supported our quarter expectations quarter of our range EPS fourth range EPS $X.XX. we improvement in by billion during expectations. are

company quarter environment. our three, and One, third key in cost the from cumulative of the increased to in to three Equipment. throughout anticipated management benefit versus of we the constrained the costs expected the Access at expected the actions Defense. factors with that the support in align volume outlook. the fourth catch-up charge fourth to the look As adjustment production quarter, orders of benefit compared a our an And quarter there incoming third are quarter Two, expected positive benefit Defense

Of remain course, the on difficult environment laser-focused to remains execution. volatile and forecast to

we market-leading we John While chain products, a our well our strong current Equipment supply it by for in back challenge, outlook. confident and remain closing inflation some turn the comments. during encouraged for over I'll quarter margins conditions now Access as demand recovery remain of robust long-term the to are as

we non-Defense benefited in sequential actions We margins, markets. delivered our clear pricing from it's and improvement significant end in

We remains more inflation. will we and Supply on disciplined this supply our time will to continue approach with take chain continue to actions our significant most over to pricing resilient focused managing high costs chain drive and challenge, staying during remain of time. a

head Importantly, end we believe And the into beyond. fundamentals our in very finally, in to markets as position strong. and we we expect remain XXXX stronger a exit XXXX

to Pat, you. back Okay,

like disciplined to follow-up queue like questions. Operator, please please get question. to everybody, in that you additional Q&A if begin your limit of plus stay Afterwards, a call. please I'd questions Thanks, portion that back ask And John. we Session follow-up. to on this Question-and-Answer remind the you'd ask one

you. Thank

We your will Please from a line the now be Sachs. with session. question. Goldman Our [Operator of first comes Jerry Revich question Instructions] with conducting question-and-answer proceed

Yes, hi. Good morning, everyone.

Good Jerry. morning,

number historical from low hearing would over of to be profiles essentially this XXXX. the to rate at we're cost your And all year, past mid- Equipment. Access revenue Does for anticipated the we've increases I'm high about in make the to couple if a $X-plus that for looking single-digits up on to nice-sized we're pricing your run margin up seen Thanks. for years? John, of price billion wondering you of structure volatility customers get mid-teens that next

exit about our And the first I'll businesses. Access, contributing is really environment, and start non-Defense limiting our real we're that margin year output in within and in prior to positive approaching our XXX neutral Jerry. at labor points what basis Mike. we to to a that's I From a perspective, true price/cost inefficiencies. very a you look constrained supply of neutral, expect which This that, peak was. strong all, we're obviously, of is would still say, really

forward margin going really supply dynamic. now, would the of opportunity I chain versus improvement the the price/cost say So cadence is right

dynamic the inefficiencies Okay. or talk you if we're And that drove can Can programs quarter? just is the the unable particular Super. that, Was more freight about in cost it? Thank cumulative And additional catch-up then, input wouldn't you say mind. about catch-up on recover Defense that segment, a related mechanisms, it expedited color this adjustment. we any to you. the there was the of to with pass-through which

things. first guess, I all, of two Sure.

volume casting CCA think, I the bigger all, first due versus driver challenge. to the performance axle had the quarter, the of of for that the actually we was defense interruption

a that causing It's other We was a have inflation, items, is It negative for on and them is bigger did CCA. and really elevated of and the projections the looking FMTV. freight programs, major what's impact. it -- continually So was is, projections impact. really we're of at third-party JLTV our longer what staying really

So as be at we're that orders incoming it. we're every to at than experts much as Obviously, lot a expect, And we it's quarter. looking past CCA expected quarter our a looking with fourth quarter the benefit. we smaller do go again, this of should

Super. Thanks.

you. Thank

Thank you.

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

morning, and you Thank everyone. good

we've Just as since margin obviously, XXXX, creating are it this in there here, And be fair expect that got decent other to fourth parts or lot visibility in items distortions margins well? to CCA then, Presumably, how at about Can point? next margin us you're to here? the moving year like of is seen, to you normalize defense for thinking a quarter clarify on you've pinpoint XXXX. in might

business, business the some view I there. Mig, changed think Just had our margin obviously, good to CCAs, solid forward. we've a And this hasn't start is going but Defense off,

being bridge really Defense items the biggest. the go from from As the it's quarter, the third fourth of to quarter three one the we that, driving really

a to be And of Access see to and split more So is the in. some coming go expect to between JLTV That we're from orders because other will that margins. fourth say Defense's third we we expect volume positive half large really, about beneficial have FMTV the I certainly and to would really volume Defense. expected is piece as CCA, some going quarter. do uplift we

negative a tend we So flip an benefit, having so a expected a from to positive. to get

more do expect robust fourth the we in So quarter. we as to go be Defense segment margins that will the

hey, Mig, bit little And, a I'll John. Yes. just that. it's add to

I normalized that we think would a business. good XXXX. a more term, I more in also, is it's margin -- But long want say expect defense to say we

this a But is You Defense look Corporation. and for growth a Oshkosh and the scratch last driver it's head. good quarter from at quarter, and business, long-term quarter XXXX your

we're So confident in and XXXX beyond. business the Defense in

And Access Understood. you customers. order hearing level, order what sort at Is this Then, intake of us that about Equipment. I for books had the where from of quarter. kind terms of level looking quarter, in take Thank this beyond based you last not $XXX I'm the the also thereabouts, actually you in about or position you order sustainable? guess, on my million, sort for have as we're you mean, you're intake curious, XXXX. normalized do you. are view on whether this orders is of follow-up I told sort 'XX? a Are of new you opening talked you what can If

Yes. Mig. Great question,

clarify. We're me in Access segment. really strong Equipment seeing Let the demand

the for XXXX. because You late rate. orders past order near look $X.X billion. taking And 'XX a QX, That's orders got say, really billion backlog into we at healthy we're you a now $X as this quarter,

-- for the Equipment Access that's is JLG. of territory this kind So for industry unprecedented an and

book a book versus order -- order of order in of more a we one it's from But quarter, had year book. or quarter, a also that order one flow ago, intake customers. because a gigantic free of recall, that our So, order primarily third managed biggest the huge

a versus comp ago bit little is So, a year misleading. the

to and about passed on, get unprecedented They're can't that of the adjust a our their Congress hey, got have just If there's mega bills publicly saying, to projects, they They And They're them customers shape. adding increasing take CapEx that you this fleet to customer fleet to absorbing market mega of base talk it. normally plans. more going enough to equipment, to of therefore, is talk than a and any there's customers, lot that's we've lots the of starting take keep traded by our are would. beginning replacing we shape. fleet. projects lot in They're

And why have in multiyear growth confidence that that's so, a we we're cycle.

So access now. the say in about world I'll what the that's right demand

it. Appreciate

Thanks, Mig.

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

question, I'll is Hi. answer guess want at Good going my of back for of in try look XXXX. unusual the rate you're not it. implies although trying today. a this is morning. and to to almost next XXXX, where which to things run of lot just the what Understanding, I your that earnings relative I'm there's $XXX going has sit think, we million, doubling on, of earnings but Street, earnings the to year half

not So, about back we the is take needs Thank the I run not whether should -- trying or as XXXX a think to or to and rate? good there guidance consensus I'm the out just there half mean, derisked. be you.

price Obviously, Obviously, Yes. we're significant few a things. to year. chain we driven constraint. to next cost. QX from not QX, guidance provide saw ready improvement supply by But for a yet Jamie, really remains

Obviously, quarter from So it worth expect solid quarter. -- a And mentioning the be year. be those that we variable next some might items. that's we three I into think go just growth as to fourth the will third

little production. then, one, bit now. benefit to a, challenges, the going axle more for expect events units we volume CCA there I normal right volume spending expect also now, little more the some getting think more access from number have past the back Again, a back a bit combined with -- with water They're they the have on is for another we benefit. in-transit international driver. we -- And a

CCA look if we guess, recurs And really I So is bridge. the discrete I quarter, something that's that not event. more think see every that's that next to a year then we what benefit

So, that's something rate run that's not type necessarily a item.

year. that Mike about of XXXX, half front that I of a but the Yeah. similar more to safe this than to we in this it's back think that get Jamie, few it's not recur benefits half the year it's talked say

Okay. Thank you.

line comes Stephen from with the of And Jefferies. our your question Volkmann with question. next proceed Please

three Great. back Hi, taking question. the guys. can Thanks things? Mike, your go I for to

Sure.

You've talked quantify about times. a Can couple CCA of that? you positive just the adjustment

Sure.

I'll $X.XX an that it there's from that So spending XX% is expect that expected. three buckets, of the it's about last negative down about – to positive, me, About then we XX% or XX% that of uplift the XX% to break about QX And in CCA is of related. of QX those excuse from volume. flipping

And the spending is segment or more being that Okay. is others? more related, specific that Great. then affect any on done? there SG&A, that's Does than

I It's environment. production largely really SG&A. what we Obviously, the say is that, have constrained board. across a And it's would

our trying to our what board. So we're say the just prudently levels. align spending it's with constrained production across really I'd But

much. so you Thank

Sure.

Thanks, Steve.

our line your proceed And with next question Please with Tami the from Zakaria question. comes of JPMorgan.

Hi. Good morning. you Thank so much.

just So said I wanted to clarify you what about CCA.

seems prices to million stay like second If I'm trying and of quarter It $XX about year? of in this it commodity You model they year. next are, will had you in where just was the some outsized headwind negative this all year. the third adjustment next case recapture total.

it like is should So we be modeling? full a recapture

at our the what expectations of remainder for Tami, So looking really resetting, programs. we're our doing, are costs for we're what we're when is

looking the cases, costs what four and in are, So expert some we're years, or predicting out cost looking three curve. at

So to if it negative – particularly a commodities big will or will stay about going stay at, it positive, where not that fairly be net be they're neutral. is net really

a inflation outsized if benefit. higher be see versus could drop it you you'd headwind. if saw say like get a what Conversely, you leading So would levels, experts an

the in this I point estimate impact margin an an outsized think that entire now, is right the important program is, say margins program our quarter, to because – would up forward. of again, I And best So it get what catching essentially this again, reflects you're be you to get new going on level. the one

again, you we expect – for as can segment. bigger normalized Defense the So more we year next margins But a impact. have type

is comment? it. able helpful. this next very Got if about another quick That And versus we – year year, should R&D then how think one, you're spend to what

continue we'll lot a Yeah, sure. increase in We've technology. had a in and to in We've XXXX. XXXX, step-up it in invested more R&D

we You've put in into the every market almost seen serve. segment product electrified us

You've an seen I fires, rogue with a that autonomy. that's us do unmanned lot vehicle. talked about

when So in technology. invest not But we it materially it's continue at you different. think a look percent I to of as sales,

stepping when in it percent not dollars, sales we're a it's in at materially of look XXXX, While up you different. it as

so Great. you much. Thank

Tami. Thanks,

Feniger question of And with proceed our line with comes from question. the of your Please Michael next America. Bank

you that Thanks you are building And I'm normalized this taking and have finishes The backlog. to inventory? expect will we do inventories guys. kind just And Hi, question. sense where makes for more of are cash think big in building, year? a guys return we're curious XXXX? areas a seeing my free flow that what

Yes.

you're manufacturing a of -- categories, but not from mentioned being you raw where extent particularly and the see of a materials an think higher just normal And that. the bit finished some we're little certainly flow goods. right really of that's levels higher goods, I'd you're To some now. transit international I previously is seeing in WIP obviously, say reflective inventory that's perspective, seeing all

normalizing now, type looking $XXX like, driven But we the would $XXX production. as I free of as think I perspective get fourth looks say state So say the to inventories with that ultimately, production next current right say to really would probably cash highly it's production. I resolve would like, for begins cash what supply probably million year free year, are to that itself starts flow thing. by I the flow into quarter. million what chain that range. of that we're Again, in the in that looks from correlated a

the know we patterns ordering there differences branches can independent peers? what when to independents? big access, between you're the we those just the at Just seeing between love from a than national the is how some you think what we the then clip versus small from get ordering Are And Thanks. customers. the ordering and stronger there trends see two just poly smaller sense. on seeing Make any color of

aging I -- the NRCs, IRC some a go tailwind companies of big there's and of the serve and much, much equipment IRCs. need Yes. of to a really than the The in the Michael, there and that's or lot But the growth of across it's the don't the mega that big But projects. both additional them. national demand and been for I how board. equal a the that the fleet replace was mix the much applications it's acceleration nationals, know to for of both the . QX. additional overall, for in mix independent is pretty strong equipment desire does the across board, slight of demand terms fleet of to to difference think material IRCs tend the of And the projects, more though, mega in it's growth

Thank you. proceed Stifel. the with comes your And our with Please question. Elliott from line next Stanley of question

hear And thank Good didn't Hi. with Has question. if a quick any lot some the has whole changed that anything on CCA We for impact morning. you then curious adjustments? the A all the contract. question. taking that? USPS of And on

Yes.

comment -- Mike let it's program on steam comment the then full and NGDV ahead of First platform. Postal and CCA. go US I'll We on our Service with the all,

in to are XXXX. We production into scheduled go

start streets you'll and the Next end the delivered in hit of vehicles seeing XXXX. year,

So about say. would no The news, it. We're really is it. with progress Postal good news excited is about it. excited to is Service continuing I Everything

this great to as to collaboration with We we them have protection. continue bring vehicle

on let So the beyond that, Mike comment CCAs. I will

postal contracts, other late next units the we're there, contract similar -- is Sure. there Stanley, producing recognizing will year. be long-term but we accounting to start until won't any revenue we start not that on

impact of CCAs. So, no really

And Perfect. business. the & Emergency Fire then gears switching to

challenges, supply workforce mentioned You and as guess well. I availability and chain manufacturing

kind area, at some massive can the So the do for try things that to backlogs the of bringing other the of the are market. brand. What because are to a for and localized to peers of demand you're alleviate obviously Wisconsin tool least in much production products huge there's

Yes.

just of challenge I'll with F&E. kind I'll -- the outline So

seen supply First in continued segment. of all, Equipment progress Access a navigating the tough we've in

you So sell municipal long most take very a million complicated, you unit. go fire truck, that's for over a mean to bill and of lot a if our the I materials, them $X complicated of has a F&E segment, product.

So we go fire can the most there's equipment truck than on more make. other that that wrong a building of

Volterra And through capacity. adding capacity got at continue So adjustments. as We're for new still capacity going we'll would say are forward. as new need we We're put get that's to improvement we to many backlog. to I that continuing and we're the continue great learning we expanding electric to that business. suppliers municipalities still curve. F&E deliver upgrade on upward continued continue we're making We're the more need in strong -- we confident through I we're to confident enough products going go fleets. still new like that on that that demand or navigate see pressure capacity And where we add to suppliers going expect to we've very years because

through is margins. control confident going return line the to will it which under margins we're to we bottom and we navigate this double-digit expect, is strong F&E and So get is

Tennessee. to believe And last leveraging we that activities this, with we're down starting thing fabrication just welding Defense's mention, well call that's for X would We're Stanley, plant ramp. -- about talked in I as F&E, I doing some

will little diversity So well. That's some well. benefiting we also get we're as geographic Access getting as there a --

Thanks guys. Best luck. of

you. Our with Instructions] Fargo with comes proceed Seth question. your Wells Please line of from Weber Thank [Operator the Securities. question next

that single Defense for it digits? of high? years. about Is to of we talk going just guys high be Defense of Good Hey, heard been sort Just think morning. us number kind a over you you. normalized I've about should guys. times. for you of be? normalized any it margins place Thank thinking the might remind last couple all of you what framework It's Is the margins that kind forward? Can mid

historically, digits. say been I'd it's what high of is, So the sort single

last over year we carrying ramping I XXX that the load that think point we've a SG&A is, of up while about what postal, basis we're about ramp. are talked related to

So down takes margin temporarily. the that bit a

obviously ramping a year short-term, additional our once again, from well. few we as vehicles, benefit year. once again, new again, talked tactical things up, that our of But just views. that's these no we've other is other to when and impact. we'll But than about also margin wheeled in a maybe changes some year major expect volume those similar. Obviously, But postal bit next So with next a down get the an this that's programs start

of for the to Defense let had. cumulative They've business, recognized years, add it these economic upon me And has as XX inflation. or we've provide an economic catch-up that just contract Seth, index. all in know. reflected It's of But Inflation charges They've and EPAs that. price adjustments that's the been developed. higher highest price of has this. the based adjustment a in of contains that as a adjustment tough been Department Defense result movement developed some we the of prices cost

we feel think with we positive we our is go very that about development good So and forward. pretty a as this customer,

Thanks. as or that follow-up just much you're helpful. just then How at, year? can of firm how orders to next is how right talk now sitting for like And has a that pricing the That's pricing, -- orders the backlog are you pricing? customers your the or your on backlog excess much just provisional the Thanks. around you're for in conversations your with going how that's to

Yeah.

talk it's So that, John. about I'll

to backlog, that Ts XXXX, also quarter expectations. pricing proceed the As the entire beyond and have have make we should our we are on adjustments Cs us of we fourth allow but here in inflation

to we've at that to want of little us because least process you our everything price protection going we But the our more the we've to in. little bit But customers, don't at look because our the based costs do a order. to changed And time to our need. we're we're keep that ourselves down if give upon has and been environment to shipped if in we at the it continues XXXX, that protection exact to Now of power bit a that. inflationary everything accelerate, do gives do not have it certainly

So in it's the That change significant got a stay price same it. will is unless price a there on inflation.

indexed Okay. to watching commodity we index, indicate And tied that? it's or some be that's should what

get should beyond it continues or You watching inflation predicting But will go mechanics into at. up works. to whether the and not don't up economists of I what are how want it be go to

right guys, thank All Okay. you.

Thanks Seth.

UBS. with Steven your our with of line And question from the Fisher proceed next Please comes question.

or because gives and good but I the that minute, I dropped relative I'm for QX. you benefits that factors constraints. to expand, mentioned Thanks not XX% any volume confidence morning. production there in off QX a will missed the sure if this other you What those of be on given been are have to run that there your volumes Is able based production, some ongoing sort there? current of rate

two Sure. really It's items.

that's just going built The to one water already. some is JLG, at volume locations. some That's the first really additional international in inventory

number to build So there's one, that that's that. inventory to leverage not further

not due but second some for to rates of businesses, We're -- weeks. running casting challenges hasn't to the really is -- that half They've the defense really axle our to line had certainly had of -- supply back shut second chain. our right significant a with with now. The of two down defense other some, lot the magnitude some at really of the that of disruption mentioned

So that's rate. of typical just at more reflective a running us

the you. previously. your prices into then, what are was cost embedding I where guidance? a price with And for versus QX you Thank steel $XX And say of the you're did helpful. there That's you year? million number Okay. are think kind

Sure.

$XXX much million pretty million in headwind, measuring to remains year year, said call, last the the that price/cost back $XXX half in on with So half full beginning what back of $XX first about the the the of million of the of we of year. again, headwind inflation

we did So of quarter. little ahead in a the get bit price third of pull

saw Access. You benefit in that some the in of

comes lag inflation And still expect is six as down, me, our quarter. general. in that's of a steel all commodity coil I really elevated. months -- with So from of There hot-rolled fourth much to come certainly coil in plates one dynamics a just get perspective, excuse hot-rolled try the element again, down with or -- benefit. as to price/cost similar that has as a costs would But,

Yes. I'll on topic. just additional an make comment this

this. to it's I a little think, bit related

bit, income, it's came shutdown in and I below our with of Defense at at operating if look And If good you or ahead but is were clear. EPS that at you our or operating pulled the some catch-up to there unexpected that's at When income we're about an our charge. is think ahead expectations. of you plant loud for -- I showing And the price items that our thing think an a our we're two-week expectation. able look our inflation. QX through cumulative and line, unexpected that And down

So XXXX, QX, to about think we’re it where as and we pricing going feeling go we needs be into then good with to this.

you. Thank Perfect.

of Thanks, Steve. End Q&A

And now like are further this Pfeifer for turn comments. any at John I'd to There questions time. back no closing over floor the to

joining Yes. everyone. for Thanks us today,

look safe lot driving very long-term to got we've there We stay out that. and you a and committed deliver that's forward Please healthy, we to profitable with and growth, to going are soon. certainly speaking

Thank you. This does today's call. conclude conference

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