Oshkosh (OSK) 31 Jan 232022 Q4 Earnings call transcript

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

It is now my pleasure to introduce your host, Pat Davidson, Senior Vice President of Investor Relations for Oshkosh Corporation. sir. you, Thank

begin. You may

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

now Slide to that of refer presentation. Please X

statements follow, Our risks the contain implied to of to by such that Act. within Private those including Securities questions statements. different Litigation forward-looking cause or forward-looking could your be to the answers subject remarks materially statements are from Reform meaning we that results statements actual These that be believe forward-looking to expressed

These and forward-looking risks filed be this to disclaim these we obligation SEC have may with which next make the among if Form morning that in any our all. updated call, described filings the SEC. until at X-K we update with We earnings others, not our quarterly statements, other include, matters conference

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

and Financial Mike and President Officer. Pack, Pfeifer, John Executive Executive Chief include today Officer; presenters and Chief Vice-President Our

to X turn it you, turn to and I'll Please John. Slide over

compared delivered the and Pat, everyone. morning, and year. the in you, Thank quarter, prior both sequentially strong earnings with We growth good

growth share we revenue four $X.XX. $X.X to sales in per earnings For billion, of highlighted year-over-year the quarter, adjusted of all leading by reported segments,

in $X.XX even adjusted the EPS quarter. improvement improvement over year sequential the of prior stronger and third Strong over quarter

in Importantly, we for of delivered another XX.X%, which quarter with the margin a quarter. margin a is fourth calendar operating Access Equipment income double-digit record

XXXX Demand and billion. consolidated with strong remains $XX backlog we and more of record than solid a finished orders

capacity segments advantage continuing demand of to prudently to all in take our trends. of invest We in long-term are

also charge built new including future invest to We continue expect products, we growing in will our of vehicles exciting growth. stable that electric purpose

for factors. Our quarter two were expectations than approximately EPS the lower our of $X.XX caused results by

Equipment December in And the defense First, expectations. mix our aftermarket strong than were lower planned. segment than our in second, parts deliveries, Access the JLTV order less while favorable of was

We have manufacturer several JLG. other tracked important of Italian announce acquisition are to I'm the acquire quarter. this S.p.A., equipment Hinowa long-time today. announced In highlights agreement to partner booms, as we well crawler an we closing proud a that during compact on of as and November, an

approach shareholder to brings and Hinowa into bolt-on our in with is manufacturing our to supports supports in M&A another that innovation attractive platform expanded an value. Hinowa equipment represents disciplined provides Europe. growth acquisition expansion acquisition capabilities leadership believe We adjacent outstanding powered commitment this with line lithium-ion grow our that markets.

our were by Additionally, Newsweek, again World citizenship. and core America's sustainability fourth recognition values Sustainability Index commitment being for excellent once Jones our of by our named year. the consecutive to Companies Responsible for we corporate to Most strong were practices Dow We the named recognized a also of one

Defense supply largely year, inefficiencies catch-up to due recap our dynamics, the and revenues XXXX. cumulative with prior to unfavorable in associated for turn prior to delivering XXXX chain compared just of grew including adjustments Please by than unfavorable Slide $X.XX. manufacturing Adjusted over the was EPS adjusted X X% EPS in of disruptions price/cost lower a We year, segment.

the by adjusted second significantly pressure over the more as implementing teams year earnings Our inflationary triple actions than have first the the revenue us persevering next increases These supply operating and our grow multiple progress over disruptions. enabled the income and momentum few to chain past price half expect significant half through made us to from we of to with year, important years. providing combating

and and on believe scissor outlook Volterra drivers Our of Investor beyond. products as well including our growth USPS Day will these presentation pioneering our Generation XXXX be with consistent we remains our Delivery the market including fire Next electric trucks, of innovative DaVinci lifts. line all-electric based We drivers and strong products, toward products important move as as Vehicle electrified

or new truck product acquired vehicles, with manufacturing we XXXX autonomous leader collection These in Maxi-Metal, in growth technology also and include adjacencies. during headquartered that businesses to Canadian recognition leader its will Robotic addition AI-based facilitate In refuse patented global categories in a fire invested in Research, used other and a the mobility Hinowa, on in Quebec. CartSeeker

advance, growth supporting strategy, tailwinds us strong we expect in will management our cost of earnings XXXX, As XXXX. execution look significant our with to price serve, compared the we allow to innovate, drive and improvement continued business our

share XXXX initiating $X.XX. the earnings per range guidance of are in We

demand remains continue section. chains Mike in during robust, year. details will will provide very constrain While revenue the his supply we to more expect that

ninth XX.X% to our the increase Finally, announced have This dividend quarterly year today. increase are to to we $X.XX pleased announce our we of dividend. an consecutive that double-digit rate cash a is or

in more to about change segments Before business detail, our talk I we discuss wanted to exciting segments. our an

Corporation called morning, Slide a new segment are turn Please This X. forming we Vocational. to Oshkosh

combining scale tough communities and to expect better technology development Emergency board which develop leveraging our and accelerated work. for who efficiencies We while manufacture our pace. vehicles an By & and design, at are enhanced across all the we drive in purpose-built businesses, vocational Fire Commercial combining do these businesses, people our

as believe Vocational We several the will in growth important end further inorganic opportunities markets. organic for serve also segment a platform and

growth with few operating years. digit in to Vocational the be segment plus a will annual rate the to that $X $X at a plus next compound revenue billion opportunity with expect initially organically margins billion We segment the near grow high-single XX%

We we've that into announcing discharge business. to agreement entered divest a rear definitive our are concrete mixer also

quarter. the higher will and to markets by and first We on our complete overtime end segment. innovation will Vocational technology the us margins end drive This expect in to value that attractive the enable of new sale focus

the will segment. President, have aligned led today, forward segments: Defense Vocational current segment in our three the Jim Fire be Johnson. excited sharing forward quarters. Going details over and of to successfully look our be success our performance coming Emergency businesses I force multiplier more and will segment by the Access, the both from his together a We Vocational. and in & Vocational The Emergency segment teams as future in decade, for & come transformed talented of Fire segments team for to past Jim am the

Slide and segment on Please Equipment. X our turn with we'll started Access updates get to

Our margin Access production income team limited Supply and improvements, improvement. XX% solid margin but on-time double-digit in supplier delivered above metrics output, months. December time our some operating several basis the first for climbed delivery as point particularly performance chain seen we year-over-year in quarter with XXX fourth a in challenges have the

team than to sourcing delivery, plans XX% year of in further more While The our on-time qualifying level suppliers, to progress do The XXXX and by dual improve alternate it chain leveraging of supply Access $XXX strategies. historical made improvement. with in this million parts performance. resourced still sourcing more below at is the represents additional well team plus past

implement also and efficiencies. our We improve products to continue output both changes and to to processes manufacturing

the underway remains JLG of across very the and leading for mega elevated number projects strong utilization Demand market rates, by strong our United large driven products ages fleet States.

generally In fact, Access in of deployed a as million which of than with or historical levels. the over are more doubled fleets rental mega percentage value defined projects, Equipment has $XXX more projects the

the as record We as centers projects, non-residential to billion. and continue backlog. batteries backlog projects and ended with a well for strong strong facilities foreseeable once demand chips our billion, demand to for mega beyond nearly contribute that well $X.XX the $X.X have and future. to healthcare continue orders data were visibility of such expect again quarter we at current factories equipment We Fourth quarter our to will EVs, including as for

turn opportunities, current programs. Slide well our segment segment. and engage significant in Defense Defense a I'll to as X to number as business continues new Please review The of

awards separate During $XXX JLTV total the we million. received I, for of valued contract at a quarter, two

requirements, will II late be The which the many second was this fleets bolstering we wheeled several while first and been award January decision included announcement back for domestic JLTV of from DoD's hundred pushed of the nations. vehicle military expect for sales, The award tactical contract has the quarter. European foreign units an of Eastern date

to produce to This a program expected $XXX of Stryker that vehicles. our valued Ministry is contract for Armored future. our Defense our has our MCWS been product are of to similar win beyond for the deliver be Defense customer our even foundational we success the that can the The and team demonstrate at a offerings confident Defense programs December, over segment, and another NGDV programs and Carrier Personnel In the for was tactical Israeli adjacent wheeled more team under value selected to we key in hulls JLTV Eitan million.

update initial intention approximately of to important up my XX-year our USPS's Defense made XX,XXX from to In for number of increase progress out and with which of to the order units increase comments duration Postal delivery an the vehicles USPS late units announcements Biden exciting with the and to the the President the XX%. of vehicles XXX,XXX close NGDV segment the on on program. electric program, I'll in our battery allows over a both percentage express Service's XX,XXX that December,

the at will fleet USPS to electrify their pace. a change enable This faster

company. change. great up the of significant customer XXXX engaged actively increased We units and our our contract reflect supply is and XXXX. and news modifications are to country We continue believe positioned a across to in communities expect ramp to the the percentage formalize we USPS, for to BEV with production of our well the are This

to for Fire discussion segment. turn a of Slide the Emergency X & Let's

approximately segment Emergency year & and by were made versus XX% fourth Fire sequentially prior as to that sales indicated the improve XX% approximately up Our progress quarter quarter. output

production remains chain While improvement by constrained is supply the in production deliveries output and encouraging. current outputs dynamics,

driven higher was operational on-time improvement as delivery the The well of benefit supplier as by initiatives. metrics improvement

increases primarily margins with as Our our time significant operating & on as to supply of Emergency chain below benefits price the production levels Fire due lag customers. realizing municipal in impacts remain well typical the for

return by price Demand confident leading a plus two trucks fire that and we implemented. next to increases and outlook output years. greater very municipal record for which us remained realize to $X.X remained double-digit portion of for high Order increases we supports as margins a budgets. and strong has will remain we over with production good rates solid billion the provides our fleets visibility backlog, margins strong, have aging higher We have municipal the bolstered

Our extended XXXX help have output lead But as as actions improve parts expansions, taking past move we increase robotic Dealer through including opportunity we're Pierce believe Meeting in participate us optimal month. and to this timeframes. as beyond the Appleton to capacity times supply XXXX. painting our had our into I the Annual well we will our in

impressed I these continue to our They investments term population customers to long the in make fire and continues support to be to to as of success continuing We believe are field critical by Pierce capacity in and significant the grow. trucks extremely our and investments inspired are service our dealers. parts growth. drive

and our sales chassis prior component XX% $XXX we'll million Please and limiting by the to Commercial production. Slide year, X versus discuss increased to constraints segment. persistent despite Commercial nearly third-party turn

that expect Center. highlighted the other as flow significant line in materials refuse success our high We've automated previously collection well. Dodge constraint remain first having and XXXX with We we're in vehicle a will chassis

line, live go to which are is work XXXX. half expected second We high of in to on flow our beginning the second

shorter drive times, to lines are Our increased manufacturing leverage higher margins. which high efficiencies, improved labor quality, to flow all build hours operating drive lower direct integrated of automation and cycle expected

As technologies, opportunities we see automation discussed, other space. the we RCV electrification, particularly previously advanced in in significant and

We the facilities more We to expect several continue overtime. look years. sharing to over to and manufacturing products in next make details forward new investments meaningful

Mike to more to our I'm XXXX. that, our detail results going in expectations for to discuss turn over With it and

year Slide Equipment, turn the was prior the segments for prior John. led sales Consolidated the versus to XX. All XX% by billion, million by million, the up quarter. $XXX Please XX% an increase increase, quarter Access to year. or of Thanks, fourth were which sales contributed $XXX $X.X or over

impacts Access sales pricing by largely than at of consolidated and consolidated driven particularly Access were quarter was Equipment. our increased expectations, sales by volume volume at most Equipment. offset increase sales the higher driven $XX The Fourth to lower million approximately lower recent inflation,

accounting been inventory better FIFO. change XX% inventory valuation at accurately more Moving of with LIFO flow implemented inventory. we and of had The matching FIFO moving of results the value in current method reflects adjusted valued operating the it income, an revenues to method to inventory quarter, expenses approximately our fourth of since physical that in the

also valuation methodology operating quarter of consistent $XXX FIFO a the Oshkosh. in sales, FIFO results operating of the year method to year. income XXX restated have versus increased aligns point improvement inventory with or throughout million and Current prior Adjusted amounts prior basis. and over X.X% peers year our on prior inventory majority our representing adjusted a million, been a basis valuation the $XXX income

by volume inefficiencies. driven the price year The prior improvement prior in versus Access dynamics partially production by at offset the income was largely versus particularly adjusted and operating year, improved increased cost Equipment,

versus the fourth share Adjusted earnings the quarter in in $X.XX year. was per prior $X.XX

was per of than JLTV Access a less our earnings lower order. and of most as lower December recent parts in at expectations favorable mix adjusted share volume result Equipment Our our a aftermarket

let's XXXX. Please income estimating outlook Now consolidated million, and our respectively. will operating We're to turn billion $XXX be of turn in Slide range $X.X and the for to sales XX.

XXXX. We increased in incentive the to $X.XX. significant representing to costs new in impact are of related $X.XX, the of to Included improve compensation approximately approximately growth product versus of of typical EPS is EPS range $X.XX investments and will expectations adjusted levels EPS in development be returning our estimating $X.XX

over of on billion our the quarter, Demand by of December remains backlog $X.X record strong in as order XX, to $XX indicated leading XXXX. billion intake fourth

modest our guidance in to supply expect chain limit improvements impacts chain to we will contribute that Our reflects but production inefficiencies supply and continue the XXXX, revenues year. during

by improvement we XX% Access be modest billion XXXX level, year range operating point The are margin versus margin segment improved is in XXX benefit and and volume basis expected respectively. operating full to pricing increase. estimating the the driven of a sales At a of in and $X.X

chain supply demand dynamics as factor We of remains growth expect remain significant revenue limiting very robust. more a

to Turning Defense.

roughly than sales estimating $XXX or million XXXX. XXXX are We of billion, $X approximately lower

As would and XXXX. in previously revenues both discussed, we that down be XXXX anticipated

begin up. that NGDV ramp the expect we production revenues as begins grow XXXX to USPS Importantly, will to in

X%. our estimating We're operating margin defense approximately will be

lower expect and aftermarket and account unfavorable the We for product mix operating expenses pre-production operating related to NGDV sales, digit margin. mid-single

XXXX as improve, new programs will and up margins expect ramp in beyond. also We

new to our segment. Moving Vocational

Commercial our our includes Rear Fire guidance Our former of during reflects the and the of combination first Mixer of Discharge planned business and & Concrete divestiture Emergency quarter segments the XXXX.

roughly be discharge planned of We the which expect in mixers. to flat revenue Commercial the range Vocational million & is of our sales sales despite rear of will XXXX divestiture $XXX in Fire approximately combined billion, segments impact our and the the $X.X Emergency of

in Similar expected to chain strong, but demand Access, is our remains constrained supply revenue be to XXXX dynamics. very by

price the chain impact new product impact orders of protected the We investments. to expect the the X.X% reflecting due output higher manufacturing inefficiencies in supply development margin will operating approximately of Vocational dynamics, be segment constraint and

XXXX delivered improved to prices higher the booked to with expect them margins and drive Municipal we orders future. be in meaningfully our were in in customer backlog significantly

our also integration from We expect overtime Vocational. the two segments benefit margin into of

tax be We rate investments are share initiatives $XXX incentive we to be We shares. levels $XXX product a corporate development. XX% expenses in and for average estimate and estimate an million XXXX count of the typical driven million growth will increased return XX.X and will approximately new of XXXX versus million in approximately by estimating compensation

complete impacted million, than approximately year, of higher approximately the as full $XXX we capital estimating typical million $XXX cash free a are new us. capital Carolina we organic flow which a is initiatives company. the product by the For of NGDV development in capacity as is for South investment in priority expenditures manufacturing well that top throughout allocation Recall and as invest facility

sales the range to expect the million Looking billion, of approximately in consolidated first quarter, quarter. $XXX down the be we versus fourth to $X.X

timing be Vocational lower by Access sales of at as expect driven as We XXXX will QX revenues well a compared the in our deliveries to segment lower Defense. and

return sales, compensation the quarter incentive will when to be and the in around Defense compared to of typical the of EPS cost reflecting expect We segment XXXX. mix unfavorable fourth $X lower order levels

year expect that first these on lowest based will EPS be the factors. the for quarter the We quarter of

I'll comments. some now for back turn John closing it to over

and overall sequential We improvement in delivered quarter. significant in strong performance earnings the

fact will XXXX. our future are output making drive that strong remain robust growth remain most very earnings end to growth, investments in We are We our to markets we that also deliver in and taking challenge chain the supply actions believe higher overtime. we expect dynamics and significant fundamentals drive

to back Pat, you. Okay,

questions follow-up to back Thanks, get additional on to like would everyone you a one that stay please your if Afterwards, questions. to queue we John. ask that after disciplined Excuse remind follow-up you'd to limit follow-up. your I me, please ask like and in plus

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

you. Thank

be We Instructions] conducting will Thank now [Operator a session. question-and-answer you.

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

Thanks. morning, Yeah. guys. Good

Good morning, Nicole.

you for start with Access. could the outlook If just

revenue like I for going year? into and you about growth. the volume that to X% So implies your just of full talk year think you're how kind relates what customers maybe guide you're price the versus hearing embedding rental from what Can

an foundationally, the is rate. quarter. from revenue there's just Sure. year in the A guess of of we of I fourth full X.X% of where the on year, from it incremental to benefiting first a limited volume additional perspective, I guide the lot price We think increase. did that's increase implement run were

Supply very, So being right constraining very the revenue chain we robust factor now. now, higher. have right demand from obviously, really again, is

chains. supply what to the the transpired going be of course over watch is really continuing that's the So what to year we're

just that, I'll Nicole. emphasize And Yeah.

really the market. by rate. Our is not revenue We've constrained strong and in got order dynamics the Access

supply healthy it's in grow produce driven we much terms the can and continuing ship strong of really entirely backlog to how XXXX. in saw orders, chain You

Understood. X% 'XX. surprised really outlook that just sounds what cadence? I Thank a mix. the margin Thanks. or in Defense. this I could digit of the that's maybe bit normal guess, helpful. how you. mostly it margin was I And It like, -- That's little more to timeframe how is high-single then return is guess, shifting by possible a like segment to

Yeah.

we impacts that the So and last with combined have again, the lower certainly of our had obviously, we headwind. volume some is a year expectation had because again there. year And this creating that's that mix, of inflation that

think, Postal get Service as to to as look to continue well to and the as I significant we we aided into begin as up, by the So return those to typical levels, XXXX ramp future, additional we margins other programs expect volume. more

did what to One I last we X% to that in we year. forget other have XXXX, do that mention, similar have about thing still drag had

to related the SG&A that's capitalized starts. Just NGDV before program not

look So with at expect -- protection against year, as -- course, adjustments, And down should programs to those economic will to be as we particularly like as than inflation. new we grow. begin JLTV those had offer price time, we over this at look II, down should more of we've well, the programs

on. Thank pass you. I’ll it

Thanks, Nicole.

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

if us market. XXXX? morning how my questions. taking for into update Hello. Access and are on the about wondering, going can you U.S. of about one your Access Yes. I comments were for conditions thanks internationally was Good John,

you currencies constant or especially constant International for adjust hurt up been currency, America. currency, European should I Access Latin But dollar. for little really nicely. business us say, We're is the adjust a at our up with when healthy, Europe, relatively have for in strong the in if strong market positions is bit us you

on outlier how know a COVID business, of and economy starting one is Equipment the going China. really the China and the lockdowns all China, for is, China. huge in the market hindered what's that's with we think I there in course, Access

year-over-year. So down Asia-Pacific in total has been

of be pulls some nice expect We longer nice region the in over periods down, down. growth Now a of there, China time, but pockets market. growth still China of kind being do to whole

world seen maybe and where revenue. So of expected we've sharply. come so it's terms China, our shorter-term generate of than ability would been even outside to phenomenon in this is better I a conditions But say, likely China the around down

then Great. Thanks. to And Vocational. just turning

or next these in sense wanted to $X forward? years. couple going next billion just locations of be plans of mentioned waste I'm over for Just combine couple have to going strictly get why other a like the from and two. years? a fire, that Do whatever of had You billion of over grow is trying as it the might to mix to to years the what some concrete you couple this to feel look enter $X

Yeah.

a these Vocational really This specific productivity on segment. purpose built lot vehicles at or creation are market, look it's in we the market. doing a And other do things designed positive that the recycling to whether we and safety that's So are businesses really When a is truck or that going we're the we're in and what what you a segment, us. in for Vocational provide of fire in that vehicle for end refuse it's they to the collection do a do. --

business. simplifies our This

Of even some to and at course, is accelerated deliver an technology But production we're drive that's going leverage come going going more pace. scale development office to the to back our to or synergies. overhead positive real it's

lot do the a faster to coming autonomous think fire business. We trucks, online. features organically that us You've can seen electric do grow we

organically billion $X to got. expect that on to We the we've planning get horizon

can at that exceed we But potentially inorganic that even look that billion. then can when you think moves make, we we the $X we believe

this this a on So exciting that margin really with we the we drive see And growth can we our believe revenue area horizon. did company. growth we is the for because

Thanks. it I’ll Okay. pass along.

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

guys. morning, Good Hi.

as second absorption hoping as first So more a about cost versus as manufacturing year? little well your think just could cadence for you price bit you guys talk half was of I half expectations about this

and we starting half neutral the we think increases. of price price expected, cost half a the back I company We've point pretty price implemented XXXX is because a additional back were year From a in carries perspective, good as the cost so much Sure. next that into year. as of

-- So there if business, more as well commercial to neutral particularly you we were in access by our the historic that at as with increase break that positive we're implemented territory down at business. a bit that

We customers Emergency because in bonded and have a & municipal Fire bit just little of longer with orders. our leg

So necessarily and we more coming don't get better price have we online.

So we necessarily get with XXXX. inflation don't in better

So we looked where we we're pretty have robust at like significant essentially versus for there which XXXX XXXX, is double-digit increases a price already, backlog sitting today.

So we expect as we margins back to get into will XXXX, return those normal.

But really, our to And price company back for the really expectation of cost to neutral a XXXX. inflation measuring start full year. that's is as positive at the

year, Of certainly see course, the quarter-over-quarter in back the we'll the benefits half the half we saw of first in from first that XXXX. of half,

And is backlog on in Access. you that second just That's have pretty super strong question the segment. helpful. Clearly, a

there So they supply build are the how I getting is let's slots some know do shipped but that out constraints, what just 'XX? your far go? in lift. chain share the Like, And assume backlog of

So what appetite drive have this production you further extent do to further ships year? to add

Yeah.

I'll that. So This John, is Chad. take

talk business, Access $X.X a the backlog. in So about billion we

clearly, XXXX current of capacity. So going we're into now our with level out

Now our chain primarily. by is supply capacity constrained

itself in some resourcing, improvement of a improvement we and go we'll that. analytics the as year seen, to do of supply lot all the to manifesting use they through continue And to we're that's sourcing, expect dual problems before we continue the we've of We doing predict and operate to and make how better happen. chain,

And close at quarter. have see billion over that's look creating we orders tranche a the backlog, we of long $X.X a the we look of -- dynamics the yet. another there's that business, $X healthy when billion to you entered is in with But and of been that $X.X booked not plus just orders probably of a billion This health term. at lot

we're we more actively also capacity. because to we looking know expand capacity So need

that As have the chain, shifts, capacity leverage just we can bit but we we need to the be able our we'll more facilities, to deliver we'll and add that improve supply faster. in capacity more not a facilities we'll little so need

Thank you.

Chad. Thanks,

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

wonder Equipment morning, could go second. outlook Access for Good if John, just Hi. Yes. a to you everyone. the I back

So for unit price are up essentially, up volumes increases X%, CapEx your year and to given basis. be that are looking customers this on implies down the a

in hey, chain And so the market know position our pieces particular components any supply are it business? moving specifically are in impacting not make it year a for any hard Is was of, a share? we're are folks sure hit or a to you're look, last you tough year, so let's guidance I very just function that still in other doing this there business that

to based a expect intense Well, and over we're the terms what can wanting realistic, I be be pretty of to with don't some with back on starting chain quarters our the perfect be think We to going six Jerry. what a have disruption flip realistic looking also on which sudden, six impact. to we've quarters, supply we're But through is light switch anyone of a is chain. supply past way trying that the work, of it at been we're type and all We've to the in done lot experienced expect. customers everything of improvement past is realistic we we've being -- to of

So we're trying realistic. be to really just

to so deliver can capacity faster. that Now going we're we add

doesn't chain improve. have get if that along add We the prudently capacity, matter it we supply we because do to can't

part it. improve along it. make to chain best guess the So suppliers we the way to with I have that can supply of describe do to work I that's our ability our with prudently

XX% if to volumes, And profitability deliver on to on we Is to expect are if deliveries? Super. the the ramp relative to your fair it we're to upside, guidance volumes Access able supply do surprise XX% incremental incremental if chain. any able to

would low-XXs. say in Generally, incrementals I the

generate incrementals, drag as drag a to certainly, the we be a typical but think volume, there is I manufacturing obviously, continues to is perspective. there -- obviously add a pricing from efficiency

would subside. efficiencies a though increases, of as it bit say volume probably normal. But lower obviously, I will some than So those little --

All right. Super. Thanks.

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

volume to contract on I more obviously, looking so assume Good the cost as a go which Hi. forward. get to more mix going revenue has a USPS we we side, unit, bit the it, go everybody. I per back at to difference you're that makes battery. but more morning, changed first means of started more that quite and Defense, want in obviously pretty kind significant of since

would you sorry, does are these to. R&D than be I'm otherwise trying disagree to to Please margins ICE lot but and development and the same think there's also at And throwing you, a or going costs of if it mean then might those higher as want we I'm BEV But have about, startup higher? also also assumed. that sort be

The us. XX% it's good electric, I positive. communities by USPS. BEV even that and And fact see 'XX they're for said communities they in full That's question. towards It's Great as for all good the think onwards. ‘XX, I wanting Yeah. from it's indicated they've the go opening where my and moving BEV more we great remarks, that for across country

the than higher. as on combustion said, So internal an on BEV higher costs level are price a the you is vehicle because

going look about higher likely the changes change the you to little it's they've about wouldn't investment, but the going -- little can program. are, the investment and great of initial a But of way don't bit is think the BEV, to they're talk shift gone the this or timing. I be a the XX%, started does that Now say as other. a you percents I timing same, change are XX% When at bit with the It one the little bit course, material a the when order dollars, margin dollars that But now margin could margin not. materially. timing well.

to in in essentially That's said expecting be be what and we've reach past 'XX, production into getting We'll we'll in as production full 'XX. well. calls

none So everybody This changes. program. that a the in good for involved of news is story

road that? a the Okay. to -- units tests start... sort And out follow-on, going all have must you on of if are BEV now doing that it's assume I do Great. just as and you

got units validation We've so and prototypes and forth.

is get you at else? in that charging somebody or do And involved all

provider municipal our to States Service, to a doesn't intend solutions customers. station, fire be solutions to total want a matter Postal we it's It Well, total if a provider. we the be United

provide Postal Service up to there U.S. any we're want it's it. U.S. do. they to execute of the to exactly to as recharging way support that and that's they how to the what But the So us want Postal in support ultimately Service part we'll

Thank you so much.

Thanks, Steve.

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

than I to Good understanding have into margin not much Emergency, even It of morning. dig combining really thought, wanted improvement. Commercial lower, I & I Hi. Vocational year-over-year a Fire would guide. and it's but the guess, we're just was

given talk level you double-digit? just about the guess, the to John, to perhaps talk be your comfort the margins can path financial should to guidance that So XXXX driver And with or then, the get where gets your to there right? today, I we just you Thanks. F&E to, would pushed can targets is assume

Sure. I'll start with Vocational.

modest Rear segments Service. two you really out -- for about the together, Discharge some Jamie, to to a year million million it, back way growth on put is that Mix So there the you $XXX $XXX we're think, typical I ultimately, think

that too, think agreement. have little services this a a creates bit do of year I transition say would I noise. we

-- going we're materially we're this of going fully some year. not to the benefit from have synergies cost yet to So

to something for So the look that's for, we'll continue future.

driving well prepared pricing legs of trucks a mentioned because margins I and the bit supply What line as the in that XXXX, margins, we Fire inflation. about of and right get really remarks, online coming our thing environment. though, as chain expect, the tight is John we that's with as price biggest mentioned in or municipal some I into in -- down we and right as now typical realizing have more obviously, Emergencies manufacturing fire inefficiencies are of & think now. do the

have get levels We XXXX. we current the double-digit significant already in into backlog beyond increases as

and improve expect that beyond. our we that in pricing XXXX would to we those get get and chains back typical as supply additional So benefits business margins in to we'll

Yeah.

what your in And I'll on XXXX. that still achieve. Let outlook we're little Jamie, bit. our just look expecting break We down to question, me at provided We XXXX that May. a outlook as address

are $XX really and effective really we talk backlog now and we business continuing Defense grow. developing in to that new winning We're like. at That's you designing billion. our because If contracts programs about the over

So the really strong backlogs. that continue great rates and we is order sign strong to see

This what do, new lot of is a exciting want development, got. to we've program driving what electrification to great got programs want we autonomy. this it's and from we We've is future, to and drive backlog our that that

over and holding We've the supply getting to we've inflation a thing that short deal the the over way back a, through inflation the with, in chain had long come only the get term b, disruption problem. dynamics. to So been us getting that's is,

you'll -- to get that and to see better better. start You'll continue

continue us the And go you there long-term as But what's and improvement we back. see been we through same look holding outlook well. supply ultimately, the When the as at execute to chain you'll that's gives would of that thought and right be to and and be. business yet, we're developed winning the where being us the business we that is the are announced confidence $XX programs it it some in there

you. Thank

Jamie. Thanks,

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

Hey. Thanks. How Maybe with had $XXX targets, XXXX worth any, USPS of revenue if embedded XXXX is Good your is morning, with your And you my contract. in in the that associated revenue, this around something much contract. million guys. outlook? sticking recollection

that going the occurred guess as we're I those issued XX% to based that perspective get how is in all to you to targets, ramp reasonable question on some still So the figure. since to us give changes a you can and is, 'XX that number have

consistent in the said late a Mig, starting have margin that revenue for is we'll be were, Sure. I pretty production we've with the what this -- minimal and from NGDVs year. year, guess you

rate Certainly, based mentioned that meaningfully So with be the shift, in a production the full ramping to earlier, XXXX. XXXX, not really question, driver, a as up should that mix on in obviously, John closer be bit should we not about that were Analyst about than during we thinking necessarily guess, about that, program quantities because, Day. are XXXX and thinking or in we're a the as of on the different so I tailwind think revenue

up. But the mix could be

Speakers] [Multiple Absolutely.

That's meg tailwind to improving. XX% the is number, you because to going revenue tell that mix

don't now? I linearly of weighted if Right. this anticipating kind And if some going back or is a are ramp sort right you mechanism that more to of know, guys there's

the as production full Service Postal wants us rate U.S. can. think to to I we Well, fast get as

Great.

the follow-up, going bit trying currently your ambitions what and are some M&A, a my a lean appreciate combining lines, Vocational. me than you're years? to next here add these aggressively to Then product into do little greater some business but lines really back verticals here all I Okay. it to like obviously you new you the couple in that maybe here can little have. Is thought there more that of sounds

businesses entire we first about look like a how truck. of Volterra that market. to for expand at opportunity. M&A purpose at deploy what survey do and fruitful say vehicle to that technology ground When -- develop product. platform we electric we fire I this an business all, built be This design the When and purpose to do and what also Yeah. purpose years, many I'm Vocational end is as our That businesses, you talking a look the we we a up have product. know segment like for do, built, from where But continue can that we growth will the we that,

do do opportunity. to we the we like want to So position little a is of organic opportunity, current that's opportunity. the that hard when on But to organic beyond There bit see have. we have. will we the position grow but continue that, we inorganic It's that timing segment part we what look this at predict be inorganic certainly

organic expect any without so. alone to $X get We the M&A, position to billion

it. Appreciate Okay.

Thanks, Mig.

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

you. have Hi. for of Good Thank you so quick morning. questions much. I couple a

profile you $XXX you're Rear on the catch the So Concrete million the mentioned that margin sales, first the one Mixer exiting, think but I Discharge comment I that about is, of profile of didn't business in margin can business. you

Tami, very digit. low-single it's

development headwind base XXXX year, should And years, should for then the Got completely reversing or kind but in this stay couple it. $X.XX that about it we of investment next new of that in the reverses. product the think

think about how So that? we should

Hey, Tami.

strong about to you Day, if think the have next about think what years. at we talked continue I I over we that expect investments would few Analyst

I few that next So think years. representative the would of be over

Can it. F&E in quantification on one. expect segments? the synergies Got and one I last you by provide squeeze cost combining you Commercial Can the some

and we do over expect being be Yeah. And those. this year, we yet the not with a to because, a over next time. able on months them act there's as going particularly to delay bit we'll transition providing up certainly, the quantification We're updates provide of services go. But agreement, several

much. Thank you it. so Got

of proceed Stanley Elliott with Please Our line Stifel. next question comes the from with question. your

fire vehicle you pursue end Hey. collection with How testing question. currently? aggressive Thank on or marketplace question sort Good A the guys battery for group more been that the taking vehicles. vehicles of, everyone. the morning, have do with of those offering and Vocational electric EV new all you to then in the waste quick also markets you moving the see an

the take Yeah. but Volterra Stanley, the let's on end It municipal depends market, electric fire truck.

and even airport vehicle. could rescue firefighting You the take Volterra

into XXXX. release go this in and production in for we go -- we sale Now

Madison, them the that want Portland, municipalities and talk these few So places, extremely when units. going are other are really test beta development, in and about we to Wisconsin partners Oregon units unit be in There call going to a well. that's and

the from of But the amount getting is across really, be it interest of that bit country we a strong. municipalities And it's really little -- course, can are regional.

across is about to the because than I interest faster we'll their electrifying in of of California. in just as state So go But seen -- the going of think We've terms not think the think regions. product The on pull of be probably other of rate California. I one it's State leaders country. this California, this

We've of from all interest seen dealers. our every a one of over the lot country from single

growth be long-term product. will a really nice So this

and get faster even could you end Now into it in, that. markets we're that be than other

this So this new reasons on are is so segment. one bullish the we of

Thank Great it you. me. guys. for That's

Please proceed next the question. with Our your Wells with Weber of from question Seth line comes Fargo.

Hey, guidance year. guys. this understand I apologies but this, wanted missed for Good better to morning. Access I I if margin the

is cost like billion price doing are neutral positive. revenue, to If $X.X and to of you sounds guys it going be

what lower Your it's or did margin at about in you XX% with XXXX revenue. guys what in par below did is on you XXXX

I'm margins and to here changed why with the higher revenue? what's better So just understand trying Thanks. aren't

we impact one, manufacturing things, obviously, Sure. the price environment, supply It's on is because about would that really significant. I the chain Number cost talked two say that still Seth. of

So inefficiencies the though we're have we lower will from that periods, manufacturing would normalizes, there's again, a volumes chain much throughput fewer even perspective, than which units. seeing supply those And previous higher improve. as seen in

an impact of bit a well plays of has absorption as obviously that that. So that sort into

that's biggest probably really the thing. think I So

to good. and Okay. Access, that fair price XXXX neutral for positive say sounds But to it's cost your

Yeah. correct. looking you're at input costs, When

right. All

Okay. just then on… And

with guess, one What new larger say the I product obviously, equipment there's we an our -- businesses, with do other certainly is, will improve But I and over as well, volume well. I piece, one too, piece, our element would that volume would of we add their hasn't as development access being view time. absorption manufacturing increases as as those changed into get margin increases, benefits, there and

Right.

do on you just up or of it think is $XXX flow, XXXX then cash free to this the in And -- it kind here Okay. spike CapEx high a next you're of one-off the it have -- couple new a capacity plans is that level is adding bunch sounds like for addition works. of at are the you that years stays as in --

Yeah.

I and to through then and We're CapEx, pretty be at Analyst Day, really year our about XXXX, robust. in that even that's past XXXX, of think $XXX would you if expected this it still go view. we back looking XXXX averaging million

we'll So be I level it's bit this a don't is necessarily continue it probably year. to think higher. I the to little going know that at run same

this probably our peak year, of I It's number year. converging. programs think a sort of with

super you. Okay. Thank helpful. That’s

Seth. Thanks,

your Dillon with line comes Our proceed question. next Please of Stanley. from with Cumming question the Morgan

Great. Good for question. Thanks morning, guys. the

companies there feels like of will around longer-term fleet not on lot make this given construction, a have been dent ask Access rental I just able be you like to feel it still years your their well. a wanted age non-res one And a pretty too that multiple as in of it's commentary visibility still the Just to year. clear first.

consensus Investor kind actually most any Can perspective, of in access still there are speak our longer-term term? from that the confidence hitting for us targets of targets long that of at the the you give Day. kind have visibility in you the multi-year sales credit you put been Just those maybe actually still to that you out over not can giving

Sure. Yeah.

of the are First demand to I factors in dynamics driving about we the that all, want underpinning really emphasize, feel the marketplace. great Access

equipment here spending. is non-residential. a the There's kind And by non-residential slower translate Our thing important note industrial to more is, to residential of seeing course, of and bifurcation of are driven we not those metrics the metrics. two

the customers well. thing. They're we're from big the same same as hearing seeing our exact thing And

with that several that CHIPS to So like demand, long passed and it's driving are -- time. seen there's both projects times huge now happen a that's as have a really unusual aged for right fleets those others we've government going been driving and of spending the Act lot mega bills with and projects mega

said in being online remarks, and the in many of my come I As yet. even lot projects, of a opening have absorbed mega them not fleets

providing equipment. they're So primarily growth as demand of to because their on time, replacement, remember, have been customers do replace we have, their you fleets said, to able fleets. over need the the for much fleet really not But that they,

dynamic that's demand. an driving So added that's

segment. this So primary these the are in see multiyear continuation the reasons of that we demand

own Microvast, a you're higher with ask chain kind own the battery still speak You've on that handle maturity ability last again. of those or their your and components of John. kind time? so? to sourcing the Thanks, ready it. supply the expecting in of to that kind the mix contract to the up getting terms over you how year overall Got been that's to USPS supply those ability supply just handle If but working chain, actually of just follow-up kind and of developed bus I over then of Can just volumes

new will the pay lithium-ion think and where is battery all chain as demand we components, get example. And will grow the a know, And type see industry most from. to it continue and to i.e., that pay And we that attention it electrify. like lot really that as cell to as we we components continue supplied to cell batteries right pay thing we lithium-ion means because ours automotive continue for supply and we coming supply the today, there's industries to other I the one and down Well, good to it is, on lithium-ion of attention the BEV Yeah. attention feel our batteries. about us to the like, the to

to close to continue attention very we'll it. pay So

we the We about good have. we current also that plans it. to have contingency path feel But

that systems They're production close terms into goes that of with a we'll year, good the go And by. about In partners. next attention the we day every BEV. pay our We'll other get continue where feel into and and it e-drives very companies household to to are program that over name is.

Great. Thank you.

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

morning. Hi. Thanks. Good

the cadence Access in of you sounds in wanted QX. It revenues the Just lower like to expect XXXX. ask about margins Access

that to think just that margins. the relative I imply And exiting should So then XX%. full higher lower year margins year than

agree So that. with curious if you I guess I'm

that follow to how to XX.X% XXXX. you above exiting question, XX.X% It margin if be exit going in this on might long-term pretty that to to And getting like be margins. that relate your before margin year, then to XXXX on rate in up close range seems Jamie's XX% should XXXX we're access

Sure.

first. start I First -- talking I'll about your all, guess, with of last the just question

with down so Defense order our in then of to to QX. so I really timing generally, issue and an I some talked deliveries lower due in remarks, you -- in have exit rate, in Access the driving related. with revenues the production Vocational mix headwind are be QX just and margin then much mix not a down. the And a of margins that's I On to my businesses all first yes, prepared think, are our look quarter, in the indeed, if think about going we

of so the that's year. -- improve over to the the So course to is going It it of the apply lowest margins year expect the to lowest notably will margins. it we be

Access our in to for of I now, are extent is my earlier than the going down extent still comes lower. to comments, back margins, a to -- exit lower like it the to terms which units -- right XXXX, think really access

So absorptions now. we and unfavorable, have been inefficiencies right manufacturing have

increases that's function that chain and are supply for so a attainable. margins unit about margin as the causing really it's So on, XXXX we're talking volume those absolutely

really that's on cadence. what focus supply really do is chain -- So I'd

did XXXX, you all thinking how there in might comment in about potential adjustment for Defense this about catch-up Okay. assuming And at be then year? you're what's inflation, catch-up expectation adjustments more your

Well, have is quarter. our them we expectation -- every

building everything in be is our this And that we're year. that's estimates. expectation lower in that going expect inflation We our certainly So certainly, to don't reflected know. is that we

variability the to months I what the the is with much think of so XX say, the cadence higher really, we've would so were, inflation extent I cumulative ago. had what year -- watch inflation expectations was catch-up and the adjustments than over past much

same not at the moving it's tends where that's I the and that's pace, in. think -- is inflation even now, though estimation it challenges you where higher come

going-in say, volatility I if that even our be is So there less higher, is inflation would proposition should there.

Makes sense. lot. a Thanks

Please comes Our line final proceed of Feniger your with question. Bank of the from with America. question Michael

view Does we that of this guys. in. impact have for or on Defense guys some Apologies asked your you to and Defense timing with that just that are me any hearing just have the the of front? on should was Curious programs if awards Hey, squeezing earlier, Thanks resolution continuing what how monitor. we headlines budget.

obviously point. any if on that CR programs. government little think, existing Really, is from impact a perspective, our bit shutdown a a impact is have really there I shouldn't It some had at really, more

might in Speakers] affected, that New program starting terms but effective up be of... [Multiple but really

its pricing programs. 'XX, In

'XX. So not going it's to impact

of that still just market? those curious, should from just in know. moderating when kind of an aerial curious, there look and the It's but price at used last values Equipment sliding are the few look you new your how then used backlog we over of highs. Access Access to equipment Good at some I'm increases there, And the just Great. signs is pricing months. elevated

at of used is. is, think to versus it's normally where you I significantly it equipment time, have over look still elevated Well, periods it

fact So we came think the down At that little a this point, it it bit. much. means don't

it. need we we of bit a points before data more more see can think I a make to of little trend much

here from I now in of right But this that market Michael, that talking think means longer-term point that because our about demand. And that, now too, we really customers. just anything is about feel strong just we and the when the not say I'm continued I'm And the time. from demand moderation and something the not at talking demand

you. sense. Make Thank

Thanks, Mike.

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

today. company. Okay. you us with and look healthy, for continue Thank joining we We're to we serve innovate, safe, Stay long-term you, forward throughout driving committed, of everyone growth profitability and advance our to course, speaking to XXXX. and as

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

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