Oshkosh Reports Strong Q2 and Raises Full-Year Outlook

Oshkosh Corporation has announced strong financial results for the second quarter of 2024, showing an impressive 18% revenue increase and a 36% rise in adjusted operating income.

The company has also raised its full-year adjusted earnings per share (EPS) forecast to $11.75, attributing this to robust performance across all segments and an optimistic outlook moving forward. The introduction of next-generation delivery vehicles (NGDVs) to the United States Postal Service is anticipated to significantly contribute to profitable growth in the upcoming years.

Moreover, Oshkosh has disclosed plans to acquire AUSA, a European specialty equipment manufacturer, and intends to shift its refuse and recycling vehicle business to a dealer network, enhancing its Vocational segment.

### Key Takeaways
– Oshkosh Corporation reported an 18% increase in revenue and a 36% rise in adjusted operating income for Q2 2024.
– Full-year adjusted EPS forecast increased to $11.75.
– The company has commenced deliveries of NGDVs to the USPS, expecting substantial growth for the rest of the decade.
– Plans to acquire European manufacturer AUSA have been revealed.
– The Access segment experienced a 6% revenue growth; the Defense segment began NGDV deliveries and received orders for Heavy Tactical Vehicles (FHTV); the Vocational segment recorded an 11% organic revenue increase.
– Oshkosh foresees strong performance across all segments with a positive outlook for 2025.

### Company Outlook
– Projected 2024 sales to be about $10.7 billion, with adjusted operating income expected at $1.14 billion.
– The Access segment is expected to generate sales of $5.3 billion with a 16.5% adjusted operating margin.
– Defense segment sales guidance remains at $2.1 billion, with an anticipated adjusted operating margin of 2.25%.
– The Vocational segment may reach sales of $3.2 billion, expecting an adjusted operating margin of 12.75%.
– Estimated sales from corporate and other at around $190 million, with a projected tax rate of 24%.
– Total shares expected to be about 65.8 million, with a capital expenditure target of $300 million and free cash flow estimated at $375 million.
– For Q3 2024, adjusted EPS is forecasted to be $3 per share, reflecting an approximately 10% year-over-year sales increase.

### Negative Highlights
– Anticipated decline in domestic JLTV revenue, projected to create a $700 million impact in 2025.
– Tariffs on Chinese goods entering the European Union will affect the company, with around 10% of total revenue from the Access segment in Europe.

### Positive Highlights
– Expected revenue growth may compensate for the decline in domestic JLTV.
– Projected growth in margins as production increases, with promising margins expected by 2026.
– Positive outlook for the Access segment, driven by a healthy customer base and equipment market.
– Strong demand and favorable pricing conditions in the Vocational segment, particularly for Pierce products expected to exceed $1 billion in Q4 orders.

### Issues
– Adjusted free cash flow guidance was lowered due to new product development and facility startups.

### Q&A Insights
– CEO John Pfeifer addressed the impact of European tariffs, stating strategies are in place to mitigate these effects.
– CFO Michael Pack commented on the reduced free cash flow guidance as a temporary situation resulting from increased working capital demands.
– Early revenue from the NGDV program is not expected to significantly impact the backlog, noting that the acquired business generated around $140 million in revenue in 2023.

Oshkosh Corporation is optimistic about the upcoming second half of 2024 and looks forward to discussing further at upcoming conferences and trade shows. Strategic initiatives, including NGDV deliveries and the AUSA acquisition, are expected to bolster its market position and drive growth in the near term.