Oshkosh Q4 2025 Oshkosh Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Oshkosh Corp Earnings Call
Speaker #1: Greetings, and welcome to the Oshkosh Corporation fourth quarter and full year 2025 financial results conference call. At this time, all participants are in a listen-only mode.
Operator: Greetings, and welcome to the Oshkosh Corporation Q4 and Full Year 2025 Financial 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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. Thank you, sir. You may begin.
Operator: Greetings, and welcome to the Oshkosh Corporation Q4 and Full Year 2025 Financial 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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. Thank you, sir. You may begin.
Speaker #1: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker #1: 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; thank you, sir.
Speaker #1: You may
Speaker #1: begin. Good
Speaker #2: Good morning, and thanks for joining us. Earlier today, we published our fourth quarter 2025 results. A copy of that release is available on our website at oshkoshcorp.com.
Patrick Davidson: Good morning, and thanks for joining us. Earlier today, we published our fourth quarter 2025 results. A copy of that release is available on our website at oshkoshcorp.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to slide 2 of that presentation. Our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements.
Patrick Davidson: Good morning, and thanks for joining us. Earlier today, we published our fourth quarter 2025 results. A copy of that release is available on our website at oshkoshcorp.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to slide 2 of that presentation. Our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements.
Speaker #2: Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of gap to non-gap financial measures that we will use during this call and is also available on our website.
Speaker #2: The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to slide 2 of that presentation.
Speaker #2: Our remarks that follow, including answers to your questions contained statements that we believe to be forward-looking statements within the meaning of the private securities litigation reform act.
Speaker #2: These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements.
Speaker #2: These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning, and other filings we make with the SEC, as well as matters noted in our investor day in June 2025.
Patrick Davidson: These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC, as well as matters noted in our Investor Day in June 2025. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today are John Pfeifer, President and Chief Executive Officer, and Matt Field, Executive Vice President and Chief Financial Officer. Please turn to slide 3, and I'll turn it over to you, John.
These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC, as well as matters noted in our Investor Day in June 2025. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today are John Pfeifer, President and Chief Executive Officer, and Matt Field, Executive Vice President and Chief Financial Officer. Please turn to slide 3, and I'll turn it over to you, John.
Speaker #2: We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today are John Pfeifer, President and Chief Executive Officer, and Matt Field, Executive Vice President and Chief Financial Officer.
Speaker #2: Please turn to slide 3, and I'll turn it over to you, John. Thank you, Pat, and good morning, everyone. I want to thank our over 18,000 Oshkosh team members that work together to deliver strong results in a dynamic external environment.
John Pfeifer: Thank you, Pat, and good morning, everyone. I want to thank our over 18,000 Oshkosh team members that worked together to deliver strong results in a dynamic external environment. Before we review our Q4 and full year highlights, I'd like to talk about the CES Show in Las Vegas earlier this month. This was the second year of showcasing our products and technologies that serve everyday heroes by making jobs safe, intuitive, and productive. Our vision for the airport of the future, the job site of the future, and the neighborhood of the future incorporates robotics, autonomy, AI, connectivity, and electrification, which we highlighted at our booth. In particular, visitors to our booth saw our concept for a welding robot that utilized a JLG Boom Lift, coupled with autonomous scissor lifts, AI software, and sensing technologies.
John Pfeifer: Thank you, Pat, and good morning, everyone. I want to thank our over 18,000 Oshkosh team members that worked together to deliver strong results in a dynamic external environment. Before we review our Q4 and full year highlights, I'd like to talk about the CES Show in Las Vegas earlier this month. This was the second year of showcasing our products and technologies that serve everyday heroes by making jobs safe, intuitive, and productive. Our vision for the airport of the future, the job site of the future, and the neighborhood of the future incorporates robotics, autonomy, AI, connectivity, and electrification, which we highlighted at our booth. In particular, visitors to our booth saw our concept for a welding robot that utilized a JLG Boom Lift, coupled with autonomous scissor lifts, AI software, and sensing technologies.
Speaker #2: Before we review our fourth quarter and full year highlights, I'd like to talk about the CES show in Las Vegas earlier this month. This was the second year of showcasing our products and technologies that serve everyday heroes by making jobs safe, intuitive, and productive.
Speaker #2: Our vision for the airport of the future, the job site of the future, and the neighborhood of the future incorporates robotics, autonomy, AI, connectivity, and electrification which we highlighted at our booth.
Speaker #2: In particular, visitors to our booth saw our concept for a welding robot that utilized a JLG boom lift coupled with autonomous scissor lifts, AI software, and sensing technologies.
Speaker #2: This concept highlighted our strategy to shift from providing equipment that enables jobs at height to offering equipment that executes jobs autonomously. We believe this technology is also applicable for a wide range of AWP use cases.
John Pfeifer: This concept highlighted our strategy to shift from providing equipment that enables jobs at height to offering equipment that executes jobs autonomously. We believe this technology is also applicable for a wide range of AWP use cases. In addition, we demonstrated how a modular airport robot platform can serve multiple roles on the tarmac to support the airport of the future. We have trialed a perimeter detection robot at airports and are optimistic about our ability to commercialize this technology in the coming years and expand it to other applications. Lastly, through an immersive theater experience, we demonstrated how our equipment and technology, including the Autonomous Jet Dock, modular runway robots, and iOPS software, work together in any weather to deliver the perfect turn for airlines, airports, and travelers.
This concept highlighted our strategy to shift from providing equipment that enables jobs at height to offering equipment that executes jobs autonomously. We believe this technology is also applicable for a wide range of AWP use cases. In addition, we demonstrated how a modular airport robot platform can serve multiple roles on the tarmac to support the airport of the future. We have trialed a perimeter detection robot at airports and are optimistic about our ability to commercialize this technology in the coming years and expand it to other applications. Lastly, through an immersive theater experience, we demonstrated how our equipment and technology, including the Autonomous Jet Dock, modular runway robots, and iOPS software, work together in any weather to deliver the perfect turn for airlines, airports, and travelers.
Speaker #2: In addition, we demonstrated how a modular airport robot platform can serve multiple roles on the tarmac to support the airport of the future. We have trialed a perimeter detection robot at airports and are optimistic about our ability to commercialize this technology in the coming years, and expand it to other applications.
Speaker #2: Lastly, through an immersive theater experience, we demonstrated how our equipment and technology including the autonomous jet dock, modular runway robots, and IOPS software work together in any weather to deliver the perfect turn for airlines, airports, and travelers.
Speaker #2: Our industry-leading technology also received third-party recognition at the show, winning two Best of Innovation awards. One for JLG's robotics on the job site, and another for our hybrid electric Volterra ARF.
John Pfeifer: Our industry-leading technology also received third-party recognition at the show, winning two Best of Innovation awards, one for JLG's robotics on the job site and another for our hybrid electric Volterra ARFF. We were also named as innovation honorees for our JLG boom lifts and our McNeilus Volterra electric refuse and recycling collection vehicle. As the show was happening, we were delighted that our racetrack-inspired Collision Avoidance Mitigation System, or CAMS, was awarded a CES Picks award. The Picks Award recognize and celebrate brands at the forefront of innovation, honoring standout products and creative solutions. CAMS is the first purpose-built technology to anticipate collisions for firefighters and others on active roadways. Following a strong response to our showing this technology at CES last year, we have been field testing the AI-powered solution with fire departments in large cities over the past year, and the feedback has been powerful.
Our industry-leading technology also received third-party recognition at the show, winning two Best of Innovation awards, one for JLG's robotics on the job site and another for our hybrid electric Volterra ARFF. We were also named as innovation honorees for our JLG boom lifts and our McNeilus Volterra electric refuse and recycling collection vehicle. As the show was happening, we were delighted that our racetrack-inspired Collision Avoidance Mitigation System, or CAMS, was awarded a CES Picks award. The Picks Award recognize and celebrate brands at the forefront of innovation, honoring standout products and creative solutions. CAMS is the first purpose-built technology to anticipate collisions for firefighters and others on active roadways. Following a strong response to our showing this technology at CES last year, we have been field testing the AI-powered solution with fire departments in large cities over the past year, and the feedback has been powerful.
Speaker #2: We were also named as Innovation Honorees for our JLG boom lifts and our McNeelus Volterra electric refuse and recycling collection vehicle. As the show was happening, we were delighted that our racetrack-inspired collision avoidance mitigation system or CAMS was awarded a CES PIX award.
Speaker #2: The PIX award recognized and celebrated brands at the forefront of innovation, honoring standout products and creative solutions. CAMS is the first purpose-built technology to anticipate collisions for firefighters and others on active roadways.
Speaker #2: Following a strong response to our showing this technology at CES last year, we have been field-testing the AI-powered solution with fire departments in large cities over the past year, and the feedback has been powerful.
Speaker #2: We are working on scaling this safety platform to support everyday heroes such as EMS crews at accident scenes, police officers managing traffic or responding to calls, and even tow truck operators assisting motorists.
John Pfeifer: We are working on scaling this safety platform to support everyday heroes, such as EMS crews at accident scenes, police officers managing traffic or responding to calls, and even tow truck operators assisting motorists. The awards we received at CES, as well as the resoundingly positive response we received from show attendees, demonstrate how our investments in innovation are creating safer, more efficient workplaces for America's everyday heroes. We are excited about our next generation products and are confident they will lay the foundation for long-term, profitable growth as we transform industries and help our customers achieve their goals. Please turn to slide 4 for some highlights for 2025. For the year, we posted revenue of $10.4 billion, leading to adjusted operating income of just over $1 billion and adjusted earnings per share of $10.79.
We are working on scaling this safety platform to support everyday heroes, such as EMS crews at accident scenes, police officers managing traffic or responding to calls, and even tow truck operators assisting motorists. The awards we received at CES, as well as the resoundingly positive response we received from show attendees, demonstrate how our investments in innovation are creating safer, more efficient workplaces for America's everyday heroes. We are excited about our next generation products and are confident they will lay the foundation for long-term, profitable growth as we transform industries and help our customers achieve their goals. Please turn to slide 4 for some highlights for 2025. For the year, we posted revenue of $10.4 billion, leading to adjusted operating income of just over $1 billion and adjusted earnings per share of $10.79.
Speaker #2: The awards we received at CES, as well as the resoundingly positive response we received from show attendees, demonstrate how our investments in innovation are creating safer, more efficient workplaces for America's everyday heroes.
Speaker #2: We are excited about our next generation products and are confident they will lay the foundation for long-term profitable growth as we transform industries and help our customers achieve their goals.
Speaker #2: Please turn to slide 4 for some highlights for 2025. For the year, we posted revenue of $10.4 billion, leading to adjusted operating income of just over $1 billion, and adjusted earnings per share of $10.79.
Speaker #2: As we have discussed on prior calls, the team pulled together across the company to respond to the evolving tariff landscape effectively managing our costs and supply chain throughout the year.
John Pfeifer: As we have discussed on prior calls, the team pulled together across the company to respond to the evolving tariff landscape, effectively managing our costs and supply chain throughout the year. We also continued to make strategic investments and strengthened our leadership team to execute on our 2028 goals, as laid out at our Investor Day in June. Please turn to slide 5 for a discussion of Q4 highlights. For the quarter, we delivered adjusted operating margin of 8.4% on revenue of $2.7 billion. This led to adjusted EPS of $2.26, in line with the guidance we provided last quarter. Strong performance in both our Access and Vocational segments led to our solid finish to the year.
John Pfeifer: As we have discussed on prior calls, the team pulled together across the company to respond to the evolving tariff landscape, effectively managing our costs and supply chain throughout the year. We also continued to make strategic investments and strengthened our leadership team to execute on our 2028 goals, as laid out at our Investor Day in June. Please turn to slide 5 for a discussion of Q4 highlights. For the quarter, we delivered adjusted operating margin of 8.4% on revenue of $2.7 billion. This led to adjusted EPS of $2.26, in line with the guidance we provided last quarter. Strong performance in both our Access and Vocational segments led to our solid finish to the year.
Speaker #2: We also continued to make strategic investments and strengthened our leadership team to execute on our 2028 goals as laid out at our investor day in June.
Speaker #2: Please turn to slide 5 for a discussion of Q4 highlights. For the quarter, we delivered adjusted operating margin of 8.4% on revenue of $2.7 billion.
Speaker #2: This led to adjusted EPS of $2.26 in line with the guidance we provided last quarter. Strong performance in both our access and vocational segments led to our solid finish to the year.
Speaker #2: Turning our outlook to 2026, we see a general continuation of recent economic conditions which includes expected lower capital investments at certain of our industrial customers notably in our access equipment and refuse businesses.
John Pfeifer: Turning our outlook to 2026, we see a general continuation of recent economic conditions, which includes expected lower capital investments at certain of our industrial customers, notably in our Access equipment and refuse businesses. Without an improvement expected in non-residential construction in 2026, our outlook for the year is for adjusted EPS in the range of $11.50. Our EPS growth compared to 2025 reflects strong performance in the Vocational segment, reflecting our higher production throughput for fire trucks and the continued ramp-up of our NGDV in the Transport segment, partially offset by our expectation for weaker market conditions in the Access segment. Matt will provide additional details on segment performance and our 2026 outlook later in the call. Please turn to slide 7 for segment highlights.
Turning our outlook to 2026, we see a general continuation of recent economic conditions, which includes expected lower capital investments at certain of our industrial customers, notably in our Access equipment and refuse businesses. Without an improvement expected in non-residential construction in 2026, our outlook for the year is for adjusted EPS in the range of $11.50. Our EPS growth compared to 2025 reflects strong performance in the Vocational segment, reflecting our higher production throughput for fire trucks and the continued ramp-up of our NGDV in the Transport segment, partially offset by our expectation for weaker market conditions in the Access segment. Matt will provide additional details on segment performance and our 2026 outlook later in the call. Please turn to slide 7 for segment highlights.
Speaker #2: Without an improvement expected in non-residential construction in 2026, our outlook for the year is for adjusted EPS in the range of $11.50. Our EPS growth compared to 2025 reflects strong performance in the vocational segment reflecting our higher production throughput for fire trucks and the continued ramp-up of our NGDV in the transport segment.
Speaker #2: Partially offset by our expectation for weaker market conditions in the access segment. Matt will provide additional details on segment performance and our 2026 outlook later in the call.
Speaker #2: turn to slide 7 for segment Please highlights. Our access team managed through challenges to finish the year on a high note with fourth-quarter revenue of $1.2 billion roughly equal to last year and a higher than the third quarter as we benefited from strong demand in advance of 2026 price increases.
John Pfeifer: Our Access team managed through challenges to finish the year on a high note, with fourth quarter revenue of $1.2 billion, roughly equal to last year and higher than the third quarter as we benefited from strong demand in advance of 2026 price increases. As you will hear from Matt shortly, we believe that our strong Q4 sales will have an impact on Q1 sales. Orders were strong at more than $1.7 billion, leading to a Book-to-Bill Ratio of 1.5, as customers continue to move toward more traditional seasonal ordering patterns. We are pleased with this performance, and we continue to work with customers on their plans for 2026. Our Backlog is $1.3 billion, which we believe is reasonable in this environment.
Our Access team managed through challenges to finish the year on a high note, with fourth quarter revenue of $1.2 billion, roughly equal to last year and higher than the third quarter as we benefited from strong demand in advance of 2026 price increases. As you will hear from Matt shortly, we believe that our strong Q4 sales will have an impact on Q1 sales. Orders were strong at more than $1.7 billion, leading to a Book-to-Bill Ratio of 1.5, as customers continue to move toward more traditional seasonal ordering patterns. We are pleased with this performance, and we continue to work with customers on their plans for 2026. Our Backlog is $1.3 billion, which we believe is reasonable in this environment.
Speaker #2: As you will hear from Matt shortly, we believe that our strong Q4 sales will have an impact on Q1 sales. Orders were strong at more than $1.7 billion leading to a book-to-bill ratio of 1.5 as customers continue to move toward more traditional seasonal ordering patterns.
Speaker #2: We are pleased with this performance, and we continue to work with customers on their plans for 2026. Our backlog is $1.3 billion, which we believe is reasonable in this environment.
Speaker #2: JLG products serve many end markets in our communities but the primary driver for demand is non-residential construction. While we continue to see underlying strength supported by data centers and infrastructure many other construction sectors remain soft and we therefore expect revenue in the first half of 2026 to be down compared to 2025.
John Pfeifer: JLG products serve many end markets in our communities, but the primary driver for demand is non-residential construction. While we continue to see underlying strength supported by data centers and infrastructure, many other construction sectors remain soft, and we therefore expect revenue in the first half of 2026 to be down compared to 2025. We believe that elevated fleet ages and improving economic conditions in the second half of the year will provide momentum for 2027. As I mentioned earlier, we generated tremendous excitement with our technology and vision for the connected job site of the future at CES. Customers, analysts, and attendees recognize the value of our innovations, positioning JLG to build on its market leadership.
JLG products serve many end markets in our communities, but the primary driver for demand is non-residential construction. While we continue to see underlying strength supported by data centers and infrastructure, many other construction sectors remain soft, and we therefore expect revenue in the first half of 2026 to be down compared to 2025. We believe that elevated fleet ages and improving economic conditions in the second half of the year will provide momentum for 2027. As I mentioned earlier, we generated tremendous excitement with our technology and vision for the connected job site of the future at CES. Customers, analysts, and attendees recognize the value of our innovations, positioning JLG to build on its market leadership.
Speaker #2: We believe that elevated fleet ages and improving economic conditions in the second half of the year will provide momentum for 2027. As I mentioned earlier we generated tremendous excitement with our technology and vision for the connected job site of the future at CES.
Speaker #2: Customers, analysts, and attendees recognize the value of our innovations, positioning JLG to build on its market leadership. We look forward to the CONEXPO show in March, where we'll be announcing new products and demonstrating our boom lift with robotic end effector concept that was such a hit at CES earlier this month.
John Pfeifer: We look forward to the CONEXPO show in March, where we'll be announcing new products and demonstrating our boom lift with robotic end effector concept that was such a hit at CES earlier this month. Turning to slide 8. Vocational delivered another quarter of growth, leading to full-year revenue of more than $3.7 billion, up nearly 13%, and a robust adjusted operating income margin of 15.8%. Our fire apparatus business continues to lead the way, with sales up about 17% for the year. We made good progress on throughput, with fire truck deliveries up nearly 10% in the second half compared to a year ago.
We look forward to the CONEXPO show in March, where we'll be announcing new products and demonstrating our boom lift with robotic end effector concept that was such a hit at CES earlier this month. Turning to slide 8. Vocational delivered another quarter of growth, leading to full-year revenue of more than $3.7 billion, up nearly 13%, and a robust adjusted operating income margin of 15.8%. Our fire apparatus business continues to lead the way, with sales up about 17% for the year. We made good progress on throughput, with fire truck deliveries up nearly 10% in the second half compared to a year ago.
Speaker #2: Turning to slide 8. Vocational delivered another quarter of growth, leading to full-year revenue of more than $3.7 billion, up nearly 13%, and a robust adjusted operating income margin of 15.8%.
Speaker #2: Our fire apparatus business continues to lead the way, with sales up about 17% for the year. We made good progress on throughput, with fire truck deliveries up nearly 10% in the second half compared to a year ago.
Speaker #2: We continue to execute our plan to reduce lead times with expected capital investments of about $150 million to support improved throughput across our three key locations with about $70 million spent to date.
John Pfeifer: We continue to execute our plan to reduce lead times, with expected capital investments of about $150 million to support improved throughput across our three key locations, with about $70 million spent to date. The airport products business continues to grow, with sales up about 13% in 2025, and we remain confident in our outlook as we see strength in both air passenger and cargo traffic over the long term. Airports and airlines are investing in critical infrastructure and embracing technologies like those we showcased at CES. This provides outstanding opportunities for us to grow this business. Before I turn to our transport segment, I want to briefly touch on our refuse and recycling vehicle business. We're excited about the refuse contamination detection and service verification technology that we displayed at CES, which we plan to launch in Q1.
We continue to execute our plan to reduce lead times, with expected capital investments of about $150 million to support improved throughput across our three key locations, with about $70 million spent to date. The airport products business continues to grow, with sales up about 13% in 2025, and we remain confident in our outlook as we see strength in both air passenger and cargo traffic over the long term. Airports and airlines are investing in critical infrastructure and embracing technologies like those we showcased at CES. This provides outstanding opportunities for us to grow this business. Before I turn to our transport segment, I want to briefly touch on our refuse and recycling vehicle business. We're excited about the refuse contamination detection and service verification technology that we displayed at CES, which we plan to launch in Q1.
Speaker #2: The airport products business continues to grow with sales up about 13% in 2025 and we remain confident in our outlook as we see strength in both air passenger and cargo traffic over the long term.
Speaker #2: Airports and airlines are investing in critical infrastructure and embracing technologies like those we showcased at CES. This provides outstanding opportunities for us to grow this business.
Speaker #2: Before I turn to our transport segment, I want to briefly touch on our refuse and recycling vehicle business. We're excited about the refuse contamination detection and service verification technology that we displayed at CES.
Speaker #2: Which we plan to launch in the first quarter. This technology uses AI and onboard edge computing to identify 14 different types of contaminants so customers can identify contamination in their waste streams in order to reduce the amount of recyclables going to landfills.
John Pfeifer: This technology uses AI and onboard edge computing to identify 14 different types of contaminants, so customers can identify contamination in their waste streams in order to reduce the amount of recyclables going to landfills. While we have seen a moderation of near-term demand, we believe in the long-term growth of this business and our opportunities to bring technology to solve customer problems. Our backlog for the vocational segment of more than $6.6 billion provides excellent visibility, as we expect the segment to deliver meaningful revenue over the coming years as we improve production throughput, as outlined at our Investor Day. We expect our investments in production will reduce this backlog over time as we build units to meet continued robust demand for our products. Please turn to slide 9. We made significant progress on transforming our transport business in 2025.
This technology uses AI and onboard edge computing to identify 14 different types of contaminants, so customers can identify contamination in their waste streams in order to reduce the amount of recyclables going to landfills. While we have seen a moderation of near-term demand, we believe in the long-term growth of this business and our opportunities to bring technology to solve customer problems. Our backlog for the vocational segment of more than $6.6 billion provides excellent visibility, as we expect the segment to deliver meaningful revenue over the coming years as we improve production throughput, as outlined at our Investor Day. We expect our investments in production will reduce this backlog over time as we build units to meet continued robust demand for our products. Please turn to slide 9. We made significant progress on transforming our transport business in 2025.
Speaker #2: While we have seen a moderation of near-term demand, we believe in the long-term growth of this business and our opportunities to bring technology to solve customer problems.
Speaker #2: Our backlog for the vocational segment of more than $6.6 billion provides excellent visibility as we expect the segment to deliver meaningful revenue over the coming years as we improve production throughput as outlined at our investor day.
Speaker #2: We expect our investments in production will reduce this backlog over time as we build units to meet continued robust demand for our products. Please turn to slide 9.
Speaker #2: We made significant progress on transforming our transport business in 2025. You will recall that we changed the name of the segment to reflect the growing importance of the delivery business and the expanded opportunities we see for this segment.
John Pfeifer: You will recall that we changed the name of the segment to reflect the growing importance of the delivery business and the expanded opportunities we see for this segment. About six months ago, Steve Nordlund joined Oshkosh as the segment president. Steve's outstanding experience and fresh perspective are shaping both the direction of delivery as well as our defense strategy going forward. We continued to increase NGDV shipments during the year and are delivering in line with or ahead of USPS expectations. We surpassed the production milestone of our 5,000th unit and are pleased to share that the fleet has exceeded 10 million miles driven. NGDVs now operate in nearly all 50 states, including Alaska. Postal workers continue to praise these vehicles, which include modern safety equipment and productivity enhancements that improve their working conditions and are a significant upgrade to the decades-old vehicles being replaced.
You will recall that we changed the name of the segment to reflect the growing importance of the delivery business and the expanded opportunities we see for this segment. About six months ago, Steve Nordlund joined Oshkosh as the segment president. Steve's outstanding experience and fresh perspective are shaping both the direction of delivery as well as our defense strategy going forward. We continued to increase NGDV shipments during the year and are delivering in line with or ahead of USPS expectations. We surpassed the production milestone of our 5,000th unit and are pleased to share that the fleet has exceeded 10 million miles driven. NGDVs now operate in nearly all 50 states, including Alaska. Postal workers continue to praise these vehicles, which include modern safety equipment and productivity enhancements that improve their working conditions and are a significant upgrade to the decades-old vehicles being replaced.
Speaker #2: About six months ago Steve Nordlin joined Oshkosh as the segment president. Steve's outstanding experience and fresh perspective are shaping both the direction of delivery as well as our defense strategy going forward.
Speaker #2: We continue to increase NGDV shipments during the year and are delivering in line with or ahead of USPS expectations. We surpassed the production milestone of our 5,000th unit and are pleased to share that the fleet has exceeded 10 million miles driven.
Speaker #2: NGDVs now operate in nearly all 50 states, including Alaska. Postal workers continue to praise these vehicles, which include modern safety equipment and productivity enhancements that improve their working conditions and are a significant upgrade to the decades-old vehicles being replaced.
Speaker #2: On the defense side several key contracts that we announced in 2025 will be important for 2026 as we build and ship units for programs to support the US Armed Forces.
John Pfeifer: On the defense side, several key contracts that we announced in 2025 will be important for 2026, as we build and ship units for programs to support the US Armed Forces. In particular, both the FMTV and the Rogue Fires programs are essential for our nation's security, and they will become more meaningful in our defense results as the year progresses. And just a little over 2 weeks ago, we announced a follow-on order for JLTV units for the Dutch Marine Corps. We expect to begin delivering on that order towards the end of 2026. With that, I'll hand it over to Matt to walk through our detailed financial results.
On the defense side, several key contracts that we announced in 2025 will be important for 2026, as we build and ship units for programs to support the US Armed Forces. In particular, both the FMTV and the Rogue Fires programs are essential for our nation's security, and they will become more meaningful in our defense results as the year progresses. And just a little over 2 weeks ago, we announced a follow-on order for JLTV units for the Dutch Marine Corps. We expect to begin delivering on that order towards the end of 2026. With that, I'll hand it over to Matt to walk through our detailed financial results.
Speaker #2: In particular, both the FMTV and the ROG FIRES programs are essential for our nation's security, and they will become more meaningful in our defense results as the year progresses.
Speaker #2: And just a little over two weeks ago we announced a follow-on order for JLTV units for the Dutch Marine that order towards the end of Corps.
Speaker #2: We expect to begin delivering in 2026. With that, I'll hand it over to Matt to walk through our detailed financial results. Thanks, John. Please turn to slide 10.
Matthew Field: Thanks, John. Please turn to slide 10. Consolidated sales in Q4 were nearly $2.7 billion, an increase of $91 million, or 3.5% from the same quarter last year, primarily due to improved pricing in the Vocational segment and higher sales volume in the Access segment. Adjusted operating income was $226 million, down about $20 million from the prior year, primarily due to unfavorable product mix and higher manufacturing overhead costs, partly offset by lower incentive compensation costs and higher sales volume. As a result, adjusted operating income margin of 8.4% was down 100 basis points from last year.
Matthew Field: Thanks, John. Please turn to slide 10. Consolidated sales in Q4 were nearly $2.7 billion, an increase of $91 million, or 3.5% from the same quarter last year, primarily due to improved pricing in the Vocational segment and higher sales volume in the Access segment. Adjusted operating income was $226 million, down about $20 million from the prior year, primarily due to unfavorable product mix and higher manufacturing overhead costs, partly offset by lower incentive compensation costs and higher sales volume. As a result, adjusted operating income margin of 8.4% was down 100 basis points from last year.
Speaker #2: Consolidated sales in the fourth quarter were nearly $2.7 billion, an increase of $91 million, or three and a half percent, from the same quarter last year.
Speaker #2: Primarily due to improved pricing in the vocational segment and higher sales volume in the access segment. Adjusted operating income was $226 million, down about $20 million from the prior year, primarily due to unfavorable product mix and higher manufacturing overhead costs.
Speaker #2: Partly offset by lower incentive compensation costs and higher sales volume. As a result adjusted operating income margin of 8.4% was down 100 basis points from last year.
Speaker #2: Adjusted earnings per share was $2.26 in the fourth quarter resulting in full year 2025 adjusted EPS of $10.79 slightly above the midpoint of our most recent guidance on full year 2025 sales of 10.4 billion which was also in line with our most recent guidance.
Matthew Field: Adjusted Earnings Per Share was $2.26 in the fourth quarter, resulting in full year 2025 adjusted EPS of $10.79, slightly above the midpoint of our most recent guidance on full year 2025 sales of $10.4 billion, which was also in line with our most recent guidance. During the quarter, as we said on the last call, we stepped up share repurchases to approximately 912,000 shares of our stock for $119 million, bringing our total share repurchases in 2025 to $278 million, more than double the prior year. Share repurchases during the previous twelve months benefited adjusted EPS in the quarter by $0.06 compared to the fourth quarter of 2024. Free cash flow for the quarter was strong at $540 million.
Adjusted Earnings Per Share was $2.26 in the fourth quarter, resulting in full year 2025 adjusted EPS of $10.79, slightly above the midpoint of our most recent guidance on full year 2025 sales of $10.4 billion, which was also in line with our most recent guidance. During the quarter, as we said on the last call, we stepped up share repurchases to approximately 912,000 shares of our stock for $119 million, bringing our total share repurchases in 2025 to $278 million, more than double the prior year. Share repurchases during the previous twelve months benefited adjusted EPS in the quarter by $0.06 compared to the fourth quarter of 2024. Free cash flow for the quarter was strong at $540 million.
Speaker #2: During the quarter as we said on the last call we stepped up share repurchases to approximately 912,000 shares of our stock for 119 million bringing our total share repurchases in 2025 to 278 million more than double the prior year.
Speaker #2: Share repurchases during the previous 12 months benefited adjusted EPS in the quarter by $0.06 compared to the fourth quarter of 2024. Free cash flow for the quarter was strong at $540 million for the full year free cash flow was $618 million or 96% of net income.
Matthew Field: For the full year, free cash flow was $618 million, or 96% of net income. This was above the high end of our most recent guidance due to improved customer advances and lower capital expenditures. This is a strong proof point supporting our Investor Day target of cash conversion in excess of 90%. Turning to our segment results on slide 11, the access segment delivered Q4 sales of $1.2 billion, up 1% over last year. Adjusted operating income margin of 8.8% reflected unfavorable price cost dynamics, including about $20 million of tariffs and adverse product mix, partly offset by higher sales volume. As we expected, the impact of tariffs was largest on the access segment during the quarter. Across all segments, the impact of tariffs was approximately $25 million, in line with our prior call.
For the full year, free cash flow was $618 million, or 96% of net income. This was above the high end of our most recent guidance due to improved customer advances and lower capital expenditures. This is a strong proof point supporting our Investor Day target of cash conversion in excess of 90%. Turning to our segment results on slide 11, the access segment delivered Q4 sales of $1.2 billion, up 1% over last year. Adjusted operating income margin of 8.8% reflected unfavorable price cost dynamics, including about $20 million of tariffs and adverse product mix, partly offset by higher sales volume. As we expected, the impact of tariffs was largest on the access segment during the quarter. Across all segments, the impact of tariffs was approximately $25 million, in line with our prior call.
Speaker #2: This was above the high end of our most recent guidance due to improved customer advances and lower capital expenditures. This is a strong proof point supporting our investor day target of cash conversion in excess of 90%.
Speaker #2: Turning to our segment results on slide 11, the Access segment delivered fourth quarter sales of $1.2 billion, up 1% over last year. Adjusted operating income margin of 8.8% reflected unfavorable price/cost dynamics, including about $20 million of tariffs.
Speaker #2: An adverse product mix was partly offset by higher sales volume. As we expected, the impact of tariffs was largest on the Access segment during the quarter.
Speaker #2: Across all segments the impact of tariffs was approximately 25 million in line with our prior call. We believe that the announced 2026 tariff-related price increases for access products contributed to stronger sales performance in the fourth quarter guidance.
Matthew Field: We believe that the announced 2026 tariff-related price increases for access products contributed to stronger sales performance in Q4 compared to our most recent guidance. Our vocational segment achieved an adjusted operating income margin of 16.2% on $922 million in sales in the quarter. Sales increased by $42 million, with improved pricing partially offset by lower sales volume. Lower volume in RCVs was partially offset by improved volumes in municipal fire apparatus and airport products. Vocational adjusted operating income increased to $150 million as a result of improved price cost dynamics, partially offset by unfavorable product mix within municipal fire apparatus in the quarter. Transport segment sales increased $33 million to $567 million in the quarter.
We believe that the announced 2026 tariff-related price increases for access products contributed to stronger sales performance in Q4 compared to our most recent guidance. Our vocational segment achieved an adjusted operating income margin of 16.2% on $922 million in sales in the quarter. Sales increased by $42 million, with improved pricing partially offset by lower sales volume. Lower volume in RCVs was partially offset by improved volumes in municipal fire apparatus and airport products. Vocational adjusted operating income increased to $150 million as a result of improved price cost dynamics, partially offset by unfavorable product mix within municipal fire apparatus in the quarter. Transport segment sales increased $33 million to $567 million in the quarter.
Speaker #2: compared to our most recent Our vocational segment achieved an adjusted operating income margin of 16.2% on 922 million in sales in the quarter. Sales increased by 42 million with improved pricing partially offset by lower sales volume.
Speaker #2: Lower volume in RCVs was partially offset by improved volumes in municipal fire apparatus and airport products. Vocational adjusted operating income increased to $150 million as a result of improved price cost dynamics partially offset by unfavorable product mix within municipal fire apparatus in the quarter.
Speaker #2: Transport segment sales increased 33 million to $567 million in the quarter. Delivery vehicle revenue grew by 130 million to $165 million and represented approximately 30% of transport segment revenue during the quarter.
Matthew Field: Delivery vehicle revenue grew by $130 million to $165 million, and represented approximately 30% of transport segment revenue during the quarter. Delivery revenue grew 13% sequentially compared to Q3 of 2025. As expected, defense vehicle revenue was lower compared with last year due to the wind down of the domestic JLTV program. Transport segment operating income margin was 4%, up from 2.8% last year, reflecting the net impact of changes in CCAs and improved pricing on new contracts, partially offset by NGDV ramp-up costs. Q4 operating income margin was down sequentially from Q3 due to the non-recurrence of the one-time sale of the JLTV-related IP license to the US government.
Delivery vehicle revenue grew by $130 million to $165 million, and represented approximately 30% of transport segment revenue during the quarter. Delivery revenue grew 13% sequentially compared to Q3 of 2025. As expected, defense vehicle revenue was lower compared with last year due to the wind down of the domestic JLTV program. Transport segment operating income margin was 4%, up from 2.8% last year, reflecting the net impact of changes in CCAs and improved pricing on new contracts, partially offset by NGDV ramp-up costs. Q4 operating income margin was down sequentially from Q3 due to the non-recurrence of the one-time sale of the JLTV-related IP license to the US government.
Speaker #2: Delivery revenue grew 13% sequentially compared to the third quarter of 2025. As expected defense vehicle revenue was lower compared with last year due to the wind down of the domestic JLTV program.
Speaker #2: Transport segment operating income margin was 4%, up from 2.8% last year, reflecting the net impact of changes in CCAs and improved pricing on new contracts.
Speaker #2: Partially offset by NGDV ramp-up costs. Fourth quarter operating income margin was down sequentially from the third quarter due to the non-recurrence of the one-time sale of the JLTV-related IP license to the US government.
Speaker #2: Turning to our expectations for 2026 on slide 12, we remain on our plan to deliver strong improvements to revenue and operating margin by 2028.
Matthew Field: Turning to our expectations for 2026 on slide 12, we remain on our plan to deliver strong improvements to revenue and operating margin by 2028. For next year, we expect sales to be approximately $11 billion on a consolidated basis, which represents growth in the mid-single digits. We are estimating adjusted operating income to be a little over $1 billion, and we estimate that adjusted earnings per share will improve to approximately $11.50. Our sales outlook assumes roughly flat, non-residential construction activity, in line with many external projections. While we expect lower sales in Access, we expect to grow both sales and adjusted operating income for the Vocational and Transport segments. Also, it's worth noting that we are assuming that the present tariff rates remain in place throughout the year.
Turning to our expectations for 2026 on slide 12, we remain on our plan to deliver strong improvements to revenue and operating margin by 2028. For next year, we expect sales to be approximately $11 billion on a consolidated basis, which represents growth in the mid-single digits. We are estimating adjusted operating income to be a little over $1 billion, and we estimate that adjusted earnings per share will improve to approximately $11.50. Our sales outlook assumes roughly flat, non-residential construction activity, in line with many external projections. While we expect lower sales in Access, we expect to grow both sales and adjusted operating income for the Vocational and Transport segments. Also, it's worth noting that we are assuming that the present tariff rates remain in place throughout the year.
Speaker #2: For next year, we expect sales to be approximately $11 billion on a consolidated basis, which represents growth in the mid-single digits. We are estimating adjusted operating income to be a little over $1 billion, and we estimate that adjusted earnings per share will improve to approximately $11.50.
Speaker #2: Our sales outlook assumes roughly flat non-residential construction activity, in line with many external projections. While we expect lower sales in Access, we expect to grow both sales and adjusted operating income for the Vocational and Transport segments.
Speaker #2: Also it's worth noting that we are assuming that the present tariff rates remain in place throughout the year. The rough magnitude of these tariffs is estimated at $200 million or about $160 million higher than 2025.
Matthew Field: The rough magnitude of these tariffs is estimated at $200 million or about $160 million higher than 2025. While we expect full year results to reflect improved performance, we anticipate that the first quarter will be the lowest quarter of the year, as we would traditionally see from seasonal factors. We expect the strong fourth quarter 2025 customer response to pricing actions at Access will also adversely impact Q1 volumes. As a result, we believe our adjusted EPS for the first quarter could be about half of last year. Building on John's earlier comments, we believe our second half performance will be more favorable across the segments than in the first half.
The rough magnitude of these tariffs is estimated at $200 million or about $160 million higher than 2025. While we expect full year results to reflect improved performance, we anticipate that the first quarter will be the lowest quarter of the year, as we would traditionally see from seasonal factors. We expect the strong fourth quarter 2025 customer response to pricing actions at Access will also adversely impact Q1 volumes. As a result, we believe our adjusted EPS for the first quarter could be about half of last year. Building on John's earlier comments, we believe our second half performance will be more favorable across the segments than in the first half.
Speaker #2: While we expect full year results to reflect improved performance we anticipate that the first quarter will be the lowest quarter of the year as we would traditionally see from seasonal factors.
Speaker #2: We expect the strong fourth quarter 2025 customer response to pricing actions at access will also adversely impact Q1 volumes. As a result we believe our adjusted EPS for the first quarter could be about half of last year.
Speaker #2: Building on John's earlier comments we believe our second half performance will be more favorable across the segments than in the first half. For the full year at a segment level we are estimating access sales to be approximately $4.2 billion with an adjusted operating margin of 10% reflective of softer market conditions in North America.
Matthew Field: For the full year, at a segment level, we are estimating Access sales to be approximately $4.2 billion, with an adjusted operating margin of 10%, reflective of softer market conditions in North America. We expect to fully offset the impact of tariffs by year-end. We project Vocational sales will be approximately $4.2 billion, about equal to our Access segment, with expectations for adjusted operating margin of approximately 17%, supported by a continuation of favorable price cost dynamics and volume growth from improved production throughput. For Transport, we expect sales to be approximately $2.5 billion, with expectations for operating margin of approximately 4% as we continue to transition out of past fixed price contracts and ramp up NGDV production.
For the full year, at a segment level, we are estimating Access sales to be approximately $4.2 billion, with an adjusted operating margin of 10%, reflective of softer market conditions in North America. We expect to fully offset the impact of tariffs by year-end. We project Vocational sales will be approximately $4.2 billion, about equal to our Access segment, with expectations for adjusted operating margin of approximately 17%, supported by a continuation of favorable price cost dynamics and volume growth from improved production throughput. For Transport, we expect sales to be approximately $2.5 billion, with expectations for operating margin of approximately 4% as we continue to transition out of past fixed price contracts and ramp up NGDV production.
Speaker #2: We expect to fully offset the impact of tariffs by year end. We project vocational sales will be approximately $4.2 billion about equal to our access segment with expectations for adjusted operating margin of approximately $17% supported by a continuation of favorable price cost dynamics and volume growth from improved production throughput.
Speaker #2: For transport we expect sales to be approximately $2.5 billion with expectations for operating margin of approximately 4% as we continue to transition out of past fixed price contracts and ramp up NGDV production.
Speaker #2: Performance in the segment is anticipated to improve throughout the year as we grow revenue on NGDV deliveries receive follow on NGDV orders and build units under the new FMTV contract.
Matthew Field: Performance in the segment is anticipated to improve throughout the year as we grow revenue on NGDV deliveries, receive follow-on NGDV orders, and build units under the new FMTV contract. Our estimate for corporate and other costs is $180 million, and tax rate is approximately 24.5%. We expect to invest approximately $200 million in CapEx, and our estimate for free cash flow is approximately $550 to 650 million, or about 80% of net income. We are announcing a quarterly dividend of $0.57 per share, which reflects our expectation of strong long-term cash flow generation and our board's confidence in our ability to sustain profitable growth while continuing to fund our investments in innovation and to expand US manufacturing. We also plan to continue repurchases of shares throughout the year.
Performance in the segment is anticipated to improve throughout the year as we grow revenue on NGDV deliveries, receive follow-on NGDV orders, and build units under the new FMTV contract. Our estimate for corporate and other costs is $180 million, and tax rate is approximately 24.5%. We expect to invest approximately $200 million in CapEx, and our estimate for free cash flow is approximately $550 to 650 million, or about 80% of net income. We are announcing a quarterly dividend of $0.57 per share, which reflects our expectation of strong long-term cash flow generation and our board's confidence in our ability to sustain profitable growth while continuing to fund our investments in innovation and to expand US manufacturing. We also plan to continue repurchases of shares throughout the year.
Speaker #2: Our estimate for corporate and other costs is $180 million and tax rate is approximately 24.5%. We expect to invest approximately $200 million in CapEx and our estimate for free cash flow is approximately $550 to $650 million or about 80% of net income.
Speaker #2: We are announcing a quarterly dividend of $0.57 per share which reflects our expectation of strong long-term cash flow generation and our board's confidence in our ability to sustain profitable growth while continuing to fund our investments in innovation and to expand US manufacturing.
Speaker #2: We also plan to continue repurchases of shares throughout the year. With that, I'll turn it back over to John for some closing comments. Thanks, Matt.
Matthew Field: With that, I'll turn it back over to John for some closing comments.
With that, I'll turn it back over to John for some closing comments.
Speaker #2: We just delivered a solid fourth quarter to complete a great year and we remain confident in our long-term growth opportunities driven by our people, innovative products, and strong businesses.
John Pfeifer: Thanks, Matt. We just delivered a solid Q4 to complete a great year, and we remain confident in our long-term growth opportunities driven by our people, innovative products, and strong businesses. We believe our guidance for 2026 continues to support our plans to achieve our adjusted EPS range of $18 to 22 per share by 2028. We appreciate your continued confidence in Oshkosh and look forward to answering your questions. I'll turn it back to you, Pat, for the Q&A.
John Pfeifer: Thanks, Matt. We just delivered a solid Q4 to complete a great year, and we remain confident in our long-term growth opportunities driven by our people, innovative products, and strong businesses. We believe our guidance for 2026 continues to support our plans to achieve our adjusted EPS range of $18 to 22 per share by 2028. We appreciate your continued confidence in Oshkosh and look forward to answering your questions. I'll turn it back to you, Pat, for the Q&A.
Speaker #2: We believe our guidance for 2026 continues to support our plans to achieve our adjusted EPS range of 18 to 22 dollars per share by 2028.
Speaker #2: We appreciate your continued confidence in Oshkosh and look forward to answering your questions. I'll turn it back to you Pat for the
Speaker #2: Q&A. Thanks John.
Speaker #3: I'd like to remind everyone to please limit your questions to one plus a follow up and please stay disciplined on your follow up question.
Patrick Davidson: Thanks, John. I'd like to remind everyone to please limit your questions to one plus a follow-up, and please stay disciplined on your follow-up question. After that follow-up, we ask that you rejoin the queue if you have additional questions. Operator, please begin the Q&A session.
Thanks, John. I'd like to remind everyone to please limit your questions to one plus a follow-up, and please stay disciplined on your follow-up question. After that follow-up, we ask that you rejoin the queue if you have additional questions. Operator, please begin the Q&A session.
Speaker #3: After that follow up we ask that you rejoin the queue if you have additional questions. Operator please begin the Q&A session.
Speaker #4: Thank you. We will now be conducting the question and answer session. Again we ask that all callers limit themselves to one question and one follow up.
Matthew Field: Thank you. We will now be conducting a question and answer session. Again, we ask that all callers limit themselves to one question and one follow-up. If you have additional questions, you may re-queue, and those will be addressed, time permitting.
Matthew Field: Thank you. We will now be conducting a question and answer session. Again, we ask that all callers limit themselves to one question and one follow-up. If you have additional questions, you may re-queue, and those will be addressed, time permitting.
Speaker #4: If you have additional questions, you may requeue and those will be addressed, time permitting. If you would like to ask a question, please press star one on your telephone keypad.
Operator: ... If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Jamie Cook with Truist. Please proceed with your question.
Operator: ... If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Jamie Cook with Truist. Please proceed with your question.
Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.
Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Speaker #4: Thank you. Our first question comes from the line of Jamie Cook with Truist. Please proceed with your
Speaker #4: question. Hi good morning.
Speaker #5: I guess just two questions. One John on the access guidance or the aerial guidance for the year. I think it's applied down six or seven percent.
Jamie Cook: Hi, good morning. I guess just 2 questions. One, John, on the access guidance or the aerial guidance for the year, I think it's applied down 6% or 7%. You know, relative to United Rentals, who came out, and I think their CapEx guide was up modestly. Cat's retail sales in North American construction were up double digits. So there just seems to be a disconnect between, you know what I mean, like, what's implied in your guide versus what we're seeing from competitors or peers or customers. So just color there, is there a, you know, I guess so color there. And then, my second question, just on the transport margins. You know, it sounds like you're ramping as you expected. I think implied sales are up 20%, the margins of only 4%.
Jamie Cook: Hi, good morning. I guess just 2 questions. One, John, on the access guidance or the aerial guidance for the year, I think it's applied down 6% or 7%. You know, relative to United Rentals, who came out, and I think their CapEx guide was up modestly. Cat's retail sales in North American construction were up double digits. So there just seems to be a disconnect between, you know what I mean, like, what's implied in your guide versus what we're seeing from competitors or peers or customers. So just color there, is there a, you know, I guess so color there. And then, my second question, just on the transport margins. You know, it sounds like you're ramping as you expected. I think implied sales are up 20%, the margins of only 4%.
Speaker #5: You know, relative to United Rentals, who came out—and I think their CapEx guide was up modestly—Patt's retail sales in North American construction were up double digits.
Speaker #5: So there just seems to be a disconnect between, you know, what I mean, like what's implied in your guide versus what we're seeing from competitors or peers or customers.
Speaker #5: So just color there—is there a, you know, I guess so, color there. And then my second question, just on the transport margins. You know, it sounds like you're ramping as you expected.
Speaker #5: I think implied sales are up 20%. The margins are only 4%. I know there's some pricing that needs to happen on the defense side, but just color there how we think about margins as we exit the year, understanding you said things should get better as the year progresses.
Jamie Cook: I know there's some pricing that needs to happen on the defense side, but just color there or how we think about margins as we exit the year, understanding you said things should get better as the year progresses. Thank you.
I know there's some pricing that needs to happen on the defense side, but just color there or how we think about margins as we exit the year, understanding you said things should get better as the year progresses. Thank you.
Speaker #5: Thank you.
Speaker #2: Yeah, great, Jamie. Thanks for your questions. I'll take the first one. I'll probably pass the margin question on transport over to Matt. Starting with our Access business and your question on our outlook.
John Pfeifer: Yeah, great, Jamie. Thanks for your questions. I'll take the first one. I'll probably pass the margin question on transport over to Matt. Starting with our access business and your question on our outlook. First of all, I want to make sure I state that we think we're taking a balanced approach to 2026. The market is unfolding right now, kind of what we all hear about on a regular daily basis in terms of what's going on, meaning really strong mega projects and data centers, power gen, some large infrastructure projects. So that does drive demand, and that's very positive. On the other hand, you've got private non-res construction, which is a huge segment of non-residential construction, which is still under some pressure.
John Pfeifer: Yeah, great, Jamie. Thanks for your questions. I'll take the first one. I'll probably pass the margin question on transport over to Matt. Starting with our access business and your question on our outlook. First of all, I want to make sure I state that we think we're taking a balanced approach to 2026. The market is unfolding right now, kind of what we all hear about on a regular daily basis in terms of what's going on, meaning really strong mega projects and data centers, power gen, some large infrastructure projects. So that does drive demand, and that's very positive. On the other hand, you've got private non-res construction, which is a huge segment of non-residential construction, which is still under some pressure.
Speaker #2: First of all, I want to make sure I state that we think we're taking a balanced approach to 2026. The market is unfolding right now—kind of what we all hear about on a regular, daily basis—in terms of what's going on, meaning really strong, big mega projects and data centers, power gen, some large infrastructure projects.
Speaker #2: So that does drive demand and that's very positive. On the other hand you've got private non-res res construction which is a huge segment of non-residential construction which is still under some pressure and we just we read the stats and we look at the outlooks for these markets and long term we feel really good.
John Pfeifer: And we just read the stats, and we look at the outlooks for these markets. Long term, we feel really good. You know, eventually, we'll see some of these delayed starts start to come back online, and when that does, that'll be really good news. But right now, we've taken a balanced approach on that. When you talk about United Rentals and what they reported today or last night, I guess it was, versus a lot of other businesses that are out there, they're not all the same. You know, if one of our customers is highly exposed to these big mega projects, then that's one story.
And we just read the stats, and we look at the outlooks for these markets. Long term, we feel really good. You know, eventually, we'll see some of these delayed starts start to come back online, and when that does, that'll be really good news. But right now, we've taken a balanced approach on that. When you talk about United Rentals and what they reported today or last night, I guess it was, versus a lot of other businesses that are out there, they're not all the same. You know, if one of our customers is highly exposed to these big mega projects, then that's one story.
Speaker #2: You know eventually we'll see some of these delayed starts start to come back online and when that does that'll be really good news. But right now we've taken a balanced approach on that.
Speaker #2: When you talk about United Rentals and what they reported today or last night I guess it was versus a lot of other businesses that are out there they're not all the same.
Speaker #2: You know, if one of our customers is highly exposed to these big mega projects, then that's one story. On the other story, you've got a lot of independent rental companies that are more exposed to the private non-res, which is still under pressure, and that kind of is what leads into our balanced approach on the market and what we're seeing in 2026.
John Pfeifer: On the other story, you've got a lot of independent rental companies that are more exposed to the private non-res, which is still under pressure. That kind of is what leads into our balanced approach on the market and what we're seeing in 2026. You know, for example, manufacturing construction is still under pressure, and that's a big sector of non-residential construction. We kind of need to see that turn a bit. And if we do, in a future call, we'll let you know. Matt, I'll turn it to you on the transport question.
On the other story, you've got a lot of independent rental companies that are more exposed to the private non-res, which is still under pressure. That kind of is what leads into our balanced approach on the market and what we're seeing in 2026. You know, for example, manufacturing construction is still under pressure, and that's a big sector of non-residential construction. We kind of need to see that turn a bit. And if we do, in a future call, we'll let you know. Matt, I'll turn it to you on the transport question.
Speaker #2: You know for example manufacturing construction is still under pressure and that's a big sector of non-residential construction. We kind of need to see that turn a bit.
Speaker #2: And if we do in a future call we'll let you know. Matt I'll turn it to you on the transport
Speaker #2: question.
Speaker #3: Morning
Speaker #3: Jamie, so first let me just say we remain confident in our 2028 outlook for the transport segment. Our guide in 2026 reflects a number of factors. There's pricing for new contracts, as you mentioned, with FMTV new pricing coming on in the second half.
Matthew Field: Morning, Jamie. So first, let me just say we remain confident in our 2028 outlook for the transport segment. Our guide in 2026 reflects a number of factors. There's pricing for new contracts, as you mentioned, with FMTV, new pricing coming on in the second half. We'll see steady production increases for the NGDV. We do anticipate further NGDV orders to come throughout the year. And then there's a couple things that are, are maybe nuances you- it'd be worth noting. One is we do have lower defense volume in 2026, largely on export orders, and then some investment in new product development, cost reductions and so forth, normal engineering that steps up over the year.
Matthew Field: Morning, Jamie. So first, let me just say we remain confident in our 2028 outlook for the transport segment. Our guide in 2026 reflects a number of factors. There's pricing for new contracts, as you mentioned, with FMTV, new pricing coming on in the second half. We'll see steady production increases for the NGDV. We do anticipate further NGDV orders to come throughout the year. And then there's a couple things that are, are maybe nuances you- it'd be worth noting. One is we do have lower defense volume in 2026, largely on export orders, and then some investment in new product development, cost reductions and so forth, normal engineering that steps up over the year.
Speaker #3: The NGDV—we do. We'll see steady production increases for NGDV, and we anticipate further NGDV orders to come throughout the year. And then, there are a couple things that are maybe nuances that would be worth noting.
Speaker #3: is we do have lower defense volume One in 2026 largely on export orders and then some investment in new product development cost reductions and so forth normal engineering that steps up over the year.
Speaker #3: That's what results in the OI of 4%, with the back half a bit stronger than the first half. But again, we remain very confident in our 2028 outlook.
Matthew Field: That's what results in the OI of 4%, with the back half a bit stronger than the first half, but again, remain very confident in our 2028 outlook.
That's what results in the OI of 4%, with the back half a bit stronger than the first half, but again, remain very confident in our 2028 outlook.
Speaker #5: Thank
Speaker #5: you.
Jamie Cook: Thank you.
Jamie Cook: Thank you.
Speaker #4: Jerry Revich with Wells Fargo, you are on the line. Our next question comes from you. Please proceed with your question.
Operator: Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question.
Operator: Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question.
Speaker #4: question. Yes hi good
Speaker #6: morning everyone. Morning John hi John I
Jerry Revich: Yes, hi. Good morning, everyone.
Jerry Revich: Yes, hi. Good morning, everyone.
Speaker #2: Jerry.
John Pfeifer: Morning, Jerry.
John Pfeifer: Morning, Jerry.
Jerry Revich: John, hi. John, I know you have excellent telematics data from your fleet. Can you just tell us what you're seeing in the US and European market for your products? You know, United Rentals spoke about good utilization for your equipment categories. Curious what you're seeing.
Jerry Revich: John, hi. John, I know you have excellent telematics data from your fleet. Can you just tell us what you're seeing in the US and European market for your products? You know, United Rentals spoke about good utilization for your equipment categories. Curious what you're seeing.
Speaker #6: know you have excellent telematics data from your fleet. Can you just tell us what you're seeing in the US and European market for your products United Rentals spoke about good utilization for seeing.
Speaker #2: Yeah you know we've
Speaker #2: Got a lot of machines out there that are connected, Jerry. I mean in the hundreds of your equipment categories—curious what your thousands are like, a lot of equipment that's connected.
John Pfeifer: Yeah, we've, you know, we've got a lot of machines out there that are connected, Jerry. I mean, in the hundreds of thousands, like a lot of equipment that's connected. We've got really good insight into the health of the equipment that's in the fleet, and it is - we see it as healthy. And same in Europe. The European fleet's relatively healthy, too. So that's good news, right? And the used market is also pretty healthy right now, as we see it. You know, the prices in the used market, the amount of supply that's in the used market, it's in a healthy state.
John Pfeifer: Yeah, we've, you know, we've got a lot of machines out there that are connected, Jerry. I mean, in the hundreds of thousands, like a lot of equipment that's connected. We've got really good insight into the health of the equipment that's in the fleet, and it is - we see it as healthy. And same in Europe. The European fleet's relatively healthy, too. So that's good news, right? And the used market is also pretty healthy right now, as we see it. You know, the prices in the used market, the amount of supply that's in the used market, it's in a healthy state.
Speaker #2: We've got really good insight into the health of the equipment that's in the fleet and it is we see it as healthy and same in Europe.
Speaker #2: The European fleet's relatively healthy too. So that's good news right. And the used market is also pretty healthy right now as we see it.
Speaker #2: You know the prices in the used market the amount of supply that's in the used market it's in a healthy state. So I kind of you know we that's all good news and I think we're all kind of looking forward and saying okay we've got a lot of non-res under some pressure but we've got big mega projects that are growing at a healthy rate and we're kind of all looking for the data to tell us that there's an inflection point.
John Pfeifer: So, you know, that's all good news, and I think we're all kind of looking forward and saying, "Okay, we've got a lot of non-res under some pressure, but we've got big mega projects that are growing at a healthy rate." And we're kind of all looking for the data to tell us that there's an inflection point. And right now, we don't know exactly when that's gonna happen. We just know that at some point, it will happen. And that gives us the reason for our balanced outlook on 2026 for access equipment.
So, you know, that's all good news, and I think we're all kind of looking forward and saying, "Okay, we've got a lot of non-res under some pressure, but we've got big mega projects that are growing at a healthy rate." And we're kind of all looking for the data to tell us that there's an inflection point. And right now, we don't know exactly when that's gonna happen. We just know that at some point, it will happen. And that gives us the reason for our balanced outlook on 2026 for access equipment.
Speaker #2: now we don't know exactly And right when that's going to happen. We just know that at some point it will happen. And that gives us the reason for our balanced outlook on 2026 for access
Speaker #2: equipment. Super.
Speaker #6: unpack the first quarter versus the fourth quarter because the guidance And Matt can we just implies a really meaningful earnings acceleration. So you know in access it sounds like you're expecting under absorption because of the pull forward out of price increases but maybe we could just unpack that and talk about margin expectations and access in the first quarter and the transport headwinds that you mentioned sounds like those might be heavier in one Q than four Q.
Jerry Revich: Super. And Matt, can we just unpack the first quarter versus the fourth quarter? Because the guidance implies a really meaningful earnings acceleration. So, you know, in Access, it sounds like you're expecting under absorption because of the pull forward out of price increases, but maybe we could just unpack that and talk about margin expectations in Access in the first quarter and the Transport headwinds that you mentioned. Sounds like those might be heavier in Q1 than Q4. Can we just maybe quantify those points just to build the comfort with the earnings acceleration?
Jerry Revich: Super. And Matt, can we just unpack the first quarter versus the fourth quarter? Because the guidance implies a really meaningful earnings acceleration. So, you know, in Access, it sounds like you're expecting under absorption because of the pull forward out of price increases, but maybe we could just unpack that and talk about margin expectations in Access in the first quarter and the Transport headwinds that you mentioned. Sounds like those might be heavier in Q1 than Q4. Can we just maybe quantify those points just to build the comfort with the earnings acceleration?
Speaker #6: Can we just maybe quantify those points, just to build the comfort with the—
Speaker #6: earnings acceleration? Yeah
Matthew Field: Yeah. So our Q1, as we mentioned on the call, we expect that about half of last year. Most of that decline is in the Access segment year-on-year in terms of the growth. And so if you think about that, we had a strong Q1 last year, ending kind of flowing through from 2024. This year, we did see very strong sales in the Q4 as we just reported. We think that'll have a moderate impact in the Q1. We also have some adverse price costs. While we did announce pricing, we do have a full boat of tariffs, and in the back half of the year, we'll start getting some of the cost reductions that we kicked off a couple of years ago, which progressively increased throughout the year.
Matthew Field: Yeah. So our Q1, as we mentioned on the call, we expect that about half of last year. Most of that decline is in the Access segment year-on-year in terms of the growth. And so if you think about that, we had a strong Q1 last year, ending kind of flowing through from 2024. This year, we did see very strong sales in the Q4 as we just reported. We think that'll have a moderate impact in the Q1. We also have some adverse price costs. While we did announce pricing, we do have a full boat of tariffs, and in the back half of the year, we'll start getting some of the cost reductions that we kicked off a couple of years ago, which progressively increased throughout the year.
Speaker #2: call we expect that about half of last so our first quarter as we mentioned on the year. Most of that decline is in the access segment year on year in terms of the growth.
Speaker #2: And so if you think about that we had a strong first quarter last year ending kind of flowing through from 2024. This year we did see very strong sales in the fourth quarter as we just reported we think that'll have a moderate impact in the first quarter.
Speaker #2: price costs while we did announce pricing We also have some adverse we do have a full boat of tariffs and in the back half of the year we'll start getting some of the cost reductions that we kicked off a couple years ago which progressively increased throughout the year.
Speaker #2: driver of kind of the year over year So that's the large EPS at roughly half of last year. Thanks
Matthew Field: So that's a large driver of kind of the year-over-year EPS at roughly half of last year.
So that's a large driver of kind of the year-over-year EPS at roughly half of last year.
Speaker #6: Thank you.
Speaker #2: Jerry.
Jerry Revich: Thank you.
Jerry Revich: Thank you.
John Pfeifer: Thanks, Jerry.
John Pfeifer: Thanks, Jerry.
Speaker #4: Our next question comes from the line of Migdol Ray with Baird. Please proceed with your question.
Operator: Our next question comes from the line of Mircea Dobre with Baird. Please proceed with your question.
Operator: Our next question comes from the line of Mircea Dobre with Baird. Please proceed with your question.
Speaker #7: Hey good morning. Sorry I'm going to have to stick with access equipment too because I am a little bit confused here in terms of how we're thinking about the first quarter.
Mig Dobre: Hey, good morning. Sorry, I'm gonna have to stick with access equipment, too, because I am a little bit confused here in terms of how we're thinking about the Q1. Can we be specific in terms of what you guys are thinking in terms of year-over-year revenue decline and margin? And my follow-up, you know, as you think about the full year guide, right? I mean, if we're recognizing that the order intake that you had in the Q4, maybe, as you said, pull forward some of the demand because of the announced price increases, where you're guiding the full year revenue at $4.2 billion, frankly, is still higher than what your order intake was for 2025.
Mircea Dobre: Hey, good morning. Sorry, I'm gonna have to stick with access equipment, too, because I am a little bit confused here in terms of how we're thinking about the Q1. Can we be specific in terms of what you guys are thinking in terms of year-over-year revenue decline and margin? And my follow-up, you know, as you think about the full year guide, right? I mean, if we're recognizing that the order intake that you had in the Q4, maybe, as you said, pull forward some of the demand because of the announced price increases, where you're guiding the full year revenue at $4.2 billion, frankly, is still higher than what your order intake was for 2025.
Speaker #7: Can we be specific in terms of what you guys are thinking in terms of year-over-year revenue decline and margin? My follow-up, you know, is as you think about the full-year guide, right?
Speaker #7: I mean, if we're recognizing that the order intake that you had in the fourth quarter maybe, as you said, pulled forward some of the demand because of the announced price, the full year revenue at $4.2 billion increases where you're guiding, frankly, is still for 2025.
Speaker #7: So higher than what your order intake was to me in that guidance you do imply that things are frankly getting a little bit better as the year progresses.
Mig Dobre: So to me, in that guidance, you do imply that things are frankly getting a little bit better as the year progresses. What's your visibility related to that? I mean, you know, are you hearing that from your customers in terms of how they're deploying CapEx, or are there some other assumptions that you're baking in?
So to me, in that guidance, you do imply that things are frankly getting a little bit better as the year progresses. What's your visibility related to that? I mean, you know, are you hearing that from your customers in terms of how they're deploying CapEx, or are there some other assumptions that you're baking in?
Speaker #7: What's your visibility related to that? I mean you know are you hearing that from your customers in terms of how they're deploying CapEx or are there some other assumptions that you're baking in?
Speaker #2: So I'll take first quarter and kind of how to think about that and then hand off to John to talk about some of the backlog and how we see the year developing.
Matthew Field: So I'll take first quarter and kind of how to think about that, and then hand off to John to talk about some of the backlog and how we, how we see the year developing. So again, for the full year, we're 4.2, as you mentioned, that's about a 67% decline year-over-year. We think on a year-over-year basis, that'll be higher in the first quarter. Again, first quarter last year was very strong, coming off Q4 2024. This year, we are seeing a relative weakness in part because of the pricing we announced for 2026, which resulted in strong sales in Q4. And so we would expect to see the revenue decline year-over-year, first quarter higher than what we have for our full year guide.
Matthew Field: So I'll take first quarter and kind of how to think about that, and then hand off to John to talk about some of the backlog and how we, how we see the year developing. So again, for the full year, we're 4.2, as you mentioned, that's about a 67% decline year-over-year. We think on a year-over-year basis, that'll be higher in the first quarter. Again, first quarter last year was very strong, coming off Q4 2024. This year, we are seeing a relative weakness in part because of the pricing we announced for 2026, which resulted in strong sales in Q4. And so we would expect to see the revenue decline year-over-year, first quarter higher than what we have for our full year guide.
Speaker #2: So again for the full year we're 4.2 as you mentioned that's about a six to seven percent decline year on year. We think on a year over year basis that'll be higher in the first quarter.
Speaker #2: Again first quarter last year was very strong coming off Q4 2024. This year we are seeing a relative weakness in part because of the pricing we announced for 2026 which resulted in strong sales in Q4.
Speaker #2: And so we would expect to see the revenue decline year on year first quarter higher than what we have for our full year guide.
Speaker #2: Yeah and with regard to how the year is going to progress Mig so we did in the fourth quarter our orders were 1.7 billion our book to bill was 1.5 and we have a backlog of 1.3 billion.
John Pfeifer: Yeah, and with regard to how the year is going to progress, Mig, so we did in the Q4, our orders were $1.7 billion. Our book-to-bill was 1.5, and we have a backlog of $1.3 billion. So I always pay attention to, we, we always pay attention to our backlog and how it's, how it's continuing to progress. We, and I always indicate that our backlog is, was typically, we say, should represent 3 to 6 months of demand, and it, that $1.3 billion is right in the middle of it when you look at our guide. We do look at the first half being under a continued pressure because of some of the non-residential activity that we see.
John Pfeifer: Yeah, and with regard to how the year is going to progress, Mig, so we did in the Q4, our orders were $1.7 billion. Our book-to-bill was 1.5, and we have a backlog of $1.3 billion. So I always pay attention to, we, we always pay attention to our backlog and how it's, how it's continuing to progress. We, and I always indicate that our backlog is, was typically, we say, should represent 3 to 6 months of demand, and it, that $1.3 billion is right in the middle of it when you look at our guide. We do look at the first half being under a continued pressure because of some of the non-residential activity that we see.
Speaker #2: to we always pay attention to our So I always pay attention backlog and how it's continuing to progress. And I always indicate that our backlog is typically we say should represent three to six months of demand and that 1.3 billion is right in the middle of it when you look at our half being under a guide.
Speaker #2: We do look at the first continued pressure because of some of the non-residential activity that we see we also saw you know a heavy shipments in the fourth quarter which may impact the first quarter a little bit.
John Pfeifer: We also saw, you know, heavy shipments in the fourth quarter, which may impact the first quarter a little bit, as Matt just indicated, and you indicated with your question. When you look at where our backlog is, and that backlog also shows when customers need equipment, because there's shipment dates on every order we take, that's what leads to our guide of the $4.2 billion, which is down a little bit year-over-year, but kind of consistent with our balanced outlook on where we are with the market.
John Pfeifer: We also saw, you know, heavy shipments in the fourth quarter, which may impact the first quarter a little bit, as Matt just indicated, and you indicated with your question. When you look at where our backlog is, and that backlog also shows when customers need equipment, because there's shipment dates on every order we take, that's what leads to our guide of the $4.2 billion, which is down a little bit year-over-year, but kind of consistent with our balanced outlook on where we are with the market.
Speaker #2: As Matt just indicated, and you indicated with your question, when you look at where our backlog is—and that backlog also shows when customers need equipment, because there are shipment dates on every order we take—that's what leads to our guide of the $4.2 billion.
Speaker #2: Which is down a little bit year over year, but kind of consistent with our balanced outlook on where we are with the market.
Speaker #7: Okay. Lastly if I recall we were looking at 300 million dollars of revenue quarterly at full run rate for NGDV. When do you expect that you'll be able to hit that?
Mig Dobre: Great. Lastly, if I, if I recall, we were looking at $300 million of revenue, quarterly at a full run rate for NGDV. When do you expect that you'll be able to hit that? Thank you.
Mircea Dobre: Great. Lastly, if I, if I recall, we were looking at $300 million of revenue, quarterly at a full run rate for NGDV. When do you expect that you'll be able to hit that? Thank you.
Speaker #7: Thank you.
Speaker #2: Well I want to thanks for the question on NGDV. We continue to make really good progress with this program and as I mentioned we're at more than 10 million miles and the customer with delivery with these units the customers delighted with them.
John Pfeifer: Well, thanks for the question on NGDV. We continue to make really good progress with this program. And as I mentioned, we're at more than 10 million miles, and the customer with delivery of these units, the customer is delighted with them. When you look at our performance, we are at or ahead of US Postal Service delivery requirements right now. The Postal Service is very happy with the deliveries we're making, and we have a formal schedule that we have to meet, and we're at or ahead of that formal schedule. So when you look at our revenue for the full year, you know, we've always said that we will do between 16,000 and 20,000 units a year on this program. And in 2026, we're right at the low end of that range.
John Pfeifer: Well, thanks for the question on NGDV. We continue to make really good progress with this program. And as I mentioned, we're at more than 10 million miles, and the customer with delivery of these units, the customer is delighted with them. When you look at our performance, we are at or ahead of US Postal Service delivery requirements right now. The Postal Service is very happy with the deliveries we're making, and we have a formal schedule that we have to meet, and we're at or ahead of that formal schedule. So when you look at our revenue for the full year, you know, we've always said that we will do between 16,000 and 20,000 units a year on this program. And in 2026, we're right at the low end of that range.
Speaker #2: When you look at our performance, we are at or ahead of U.S. Postal Service delivery requirements right now. The Postal Service is very happy with the deliveries we're making.
Speaker #2: And we have a formal schedule that we have to meet and we're at or ahead of that formal schedule. So when you look at our revenue for the full year you know we've always said that we will do between 16,000 and 20,000 units a year on this program and in 26 we're right at the low end of that range.
Speaker #2: We're in that range on the low end side of it. So we continue to do well with production sure we'll produce more units in the second half than the first half but we're you know we're running fairly well with this program and our customers very happy with it.
John Pfeifer: We're in that range on the low end side of it. So we continue to do well with production. Sure, we'll produce more units in the second half than the first half, but we're, you know, we're running fairly well with this program, and our customer is very happy with it. If you look at our guide for the Transport business, kind of thinking about the revenue side of it, about half of that guide is NGDV or delivery units, to give you kind of some numbers. And it's a little bit more on the back half than the first half.
We're in that range on the low end side of it. So we continue to do well with production. Sure, we'll produce more units in the second half than the first half, but we're, you know, we're running fairly well with this program, and our customer is very happy with it. If you look at our guide for the Transport business, kind of thinking about the revenue side of it, about half of that guide is NGDV or delivery units, to give you kind of some numbers. And it's a little bit more on the back half than the first half.
Speaker #2: If you look at our guide for the transport business kind of thinking about the revenue side of it about half of that guide is NGDV or delivery units.
Speaker #2: To give you kind of some numbers. And it's a little bit more on the back half than the first
Speaker #2: half. All right.
Speaker #7: Appreciate that. Thank you.
Speaker #2: Thanks Mig.
Mig Dobre: All right. Appreciate that. Thank you.
Mircea Dobre: All right. Appreciate that. Thank you.
Speaker #4: Our next question comes from the line of Steve Barger with KeyBanc. Please proceed with your question.
John Pfeifer: Thanks, Mig.
John Pfeifer: Thanks, Mig.
Operator: Our next question comes from the line of Steve Barger with KeyBanc. Please proceed with your question.
Operator: Our next question comes from the line of Steve Barger with KeyBanc. Please proceed with your question.
Speaker #8: Morning. This is Christian Zylon for Steve Barger. Thanks for taking the questions. Just on Access, were there any other industry- or customer-specific ordering dynamics in Access that you don't think would recur as we head later into the construction season, or was it really primarily just the pricing pull-forward on top of a regular ordering cadence from your customers?
Christian Zylstra: Morning. This is Christian Zylstra for Steve Barger. Thanks for taking the questions. Just on Access, were there any other industry or customer specific ordering dynamics in Access that you don't think would recur as we head later into the construction season? Or was it really primarily just the pricing pull forward on top of a regular ordering cadence from your customers?
Christiaan Zylstra: Morning. This is Christian Zylstra for Steve Barger. Thanks for taking the questions. Just on Access, were there any other industry or customer specific ordering dynamics in Access that you don't think would recur as we head later into the construction season? Or was it really primarily just the pricing pull forward on top of a regular ordering cadence from your customers?
Speaker #2: Hi, Christian. It's Matt. So, certainly, I want to say if there's anything unique, I would just say we had, you know, a strong sale into Independence in the fourth quarter.
Matthew Field: Hi, Christian. It's Matt. So certainly we. I wouldn't say there's anything unique. I would just say we had, you know, a strong sale into independents in the fourth quarter. We think that'll reverse out, and the year will normalize. For 2025, you know, in general, we saw relative strength in independents, and I think we all expect that'll normalize more through 2026.
Matthew Field: Hi, Christian. It's Matt. So certainly we. I wouldn't say there's anything unique. I would just say we had, you know, a strong sale into independents in the fourth quarter. We think that'll reverse out, and the year will normalize. For 2025, you know, in general, we saw relative strength in independents, and I think we all expect that'll normalize more through 2026.
Speaker #2: We think that'll reverse out in the year we'll normalize for 2025 you know in general we saw relative strength in independence and I think we all expect that'll normalize more through
Speaker #2: 2026. Got it.
Speaker #8: And then maybe a slightly different question: just at CES, you guys showcased a delivery vehicle for non-USPS. As your team put together the concept, just kind of what drove you to pursue that plan?
Christian Zylstra: Got it. Then maybe a slightly different question. Just at CES, you guys showcased a delivery vehicle for non-USPS. As your team put together the concept, just kind of what drove you to pursue that, that plan? Was it the market size or unit economics that you liked? Was it the financials or, or kind of the cross synergies? Just any thoughts on that concept. Thank you so much.
Christiaan Zylstra: Got it. Then maybe a slightly different question. Just at CES, you guys showcased a delivery vehicle for non-USPS. As your team put together the concept, just kind of what drove you to pursue that, that plan? Was it the market size or unit economics that you liked? Was it the financials or, or kind of the cross synergies? Just any thoughts on that concept. Thank you so much.
Speaker #8: Was it the market size or unit economics that you liked? Was it the financials or kind of the cross-energies? Just any thoughts on that concept.
Speaker #8: Thank you so
Speaker #2: Yeah, thanks for the question on CES. We—I mean all of the above, based on what your question was. I mean, when you look at our NGDV that we developed for the United States Postal Service, there's a lot of technology on that vehicle.
John Pfeifer: Yeah, thanks for the question on CES. We, I mean, all of the above, based on what your question was. I mean, we. You know, when you look at our NGDV that we developed for the United States Postal Service, there's a lot of technology on that vehicle. It's the most advanced last mile delivery vehicle ever put into the market. It provides so much benefit for the operator to be productive, but underscore also safety. Safety for people around the vehicle and safety for the operator. And so, at CES, we wanted to showcase that we have the capability to continue to deliver this type of a vehicle for other segments of the delivery market. You know, these are purpose-built vehicles.
John Pfeifer: Yeah, thanks for the question on CES. We, I mean, all of the above, based on what your question was. I mean, we. You know, when you look at our NGDV that we developed for the United States Postal Service, there's a lot of technology on that vehicle. It's the most advanced last mile delivery vehicle ever put into the market. It provides so much benefit for the operator to be productive, but underscore also safety. Safety for people around the vehicle and safety for the operator. And so, at CES, we wanted to showcase that we have the capability to continue to deliver this type of a vehicle for other segments of the delivery market. You know, these are purpose-built vehicles.
Speaker #2: It's the most advanced last mile delivery vehicle ever put into the market. It provides so much benefit for the operator to be productive but underscore also safety.
Speaker #2: Safety for people around the vehicle, and safety for the operator. And so, at CES, we wanted to showcase that we have the capability to continue to deliver this type of a vehicle for other segments of the delivery market.
Speaker #2: You know, these are purpose-built vehicles. They're not modified COTS vehicles, which you tend to see a lot in the delivery market, or body-on-chassis, which you see a lot in the delivery market.
John Pfeifer: They're not, they're not modified, COTS vehicles, which you tend to see a lot in the delivery market, or a body on chassis, which you see a lot in the delivery market. These are purpose-built vehicles with technology on them to drive productivity, safety, and economic performance for the fleet operator. And we wanted to showcase that because we've, you know, we've always talked about future opportunity beyond NGDV. So that was the intent of it.
They're not, they're not modified, COTS vehicles, which you tend to see a lot in the delivery market, or a body on chassis, which you see a lot in the delivery market. These are purpose-built vehicles with technology on them to drive productivity, safety, and economic performance for the fleet operator. And we wanted to showcase that because we've, you know, we've always talked about future opportunity beyond NGDV. So that was the intent of it.
Speaker #2: These are purpose-built vehicles with technology on them to drive productivity, safety, and economic performance for the fleet operator. And we wanted to showcase that because we've you know we've always talked about future opportunity beyond NGDV.
Speaker #2: So that was the intent of
Speaker #2: it. Our next question comes from
Speaker #4: the line of Angel Castillo with Morgan Stanley. Please proceed with your
Operator: Our next question comes from the line of Angel Castillo with Morgan Stanley. Please proceed with your question.
Operator: Our next question comes from the line of Angel Castillo with Morgan Stanley. Please proceed with your question.
Speaker #4: question. Thanks for taking my
Speaker #9: Question: Just wanted to maybe get a little bit more color—sorry to keep harboring on the access side—but have you said exactly, I guess, how much pricing you anticipate to get in 2026 within your sales guide?
Angel Castillo: Hey, thanks for taking my question. Just wanted to maybe get a little bit more color, sorry to keep harping on the Access side, but have you said exactly, I guess, how much pricing you anticipate to get in 2026, within your sales guide? And can you just kind of talk about that in a little bit more color, just how much is kind of embedded right now at this point in your backlog? And not just for Aeros, but for each segment.
Angel Castillo: Hey, thanks for taking my question. Just wanted to maybe get a little bit more color, sorry to keep harping on the Access side, but have you said exactly, I guess, how much pricing you anticipate to get in 2026, within your sales guide? And can you just kind of talk about that in a little bit more color, just how much is kind of embedded right now at this point in your backlog? And not just for Aeros, but for each segment.
Speaker #9: And could you just kind of talk about that in a little bit more color just how much is kind of embedded right now at this point in your backlog and not just for arrows but for each segment?
Speaker #2: Yeah. Thanks Angel. I'll take the question as a great question of course. So when we look at our pricing plans you know of course we've been through a dynamic period when you look at the cost side of the equation it's been headlined by tariffs, tariffs, and tariffs in that dynamic environment.
John Pfeifer: Yeah, thanks, Angel. I'll take the question. It's a great question, of course. So when we look at our pricing plans, you know, of course, we've been through a dynamic period. When you look at our, the cost side of the equation, it's been headlined by tariffs, tariffs, and more, and tariffs in that dynamic environment. So we go to work, and we went to work in 2025 doing a lot of tariff engineering work to try to do everything we can to take the cost of tariffs and mitigate it. And a lot of that has to do with engineering, re-engineering, you know, our sourcing teams work hard on where we're sourcing what product, and we try to localize or move product when we need to.
John Pfeifer: Yeah, thanks, Angel. I'll take the question. It's a great question, of course. So when we look at our pricing plans, you know, of course, we've been through a dynamic period. When you look at our, the cost side of the equation, it's been headlined by tariffs, tariffs, and more, and tariffs in that dynamic environment. So we go to work, and we went to work in 2025 doing a lot of tariff engineering work to try to do everything we can to take the cost of tariffs and mitigate it. And a lot of that has to do with engineering, re-engineering, you know, our sourcing teams work hard on where we're sourcing what product, and we try to localize or move product when we need to.
Speaker #2: So we go to work and we went to work in 2025 doing a lot of tariff engineering work to try to do everything we can to take the cost of tariffs and mitigate it.
Speaker #2: And a lot of that has to do with engineering, re-engineering, you know our sourcing teams work hard on where we're sourcing what product and we try to localize or move product when we need to.
Speaker #2: So we've done a lot of that work and we'll continue to do that work. You know we try to minimize the impact to our customers but you can't eliminate all of it.
John Pfeifer: So we've done a lot of that work, and we'll continue to do that work. You know, we try to minimize the impact to our customers, but you can't, you can't eliminate all of it, so eventually, you have to pass some through in price. So we did. We've done that, and we believe that the price increase is reflective of something that our customers can manage, as well as something that allows us to stay whole throughout 2026 on the price cost equation. So that's the gist of it.
So we've done a lot of that work, and we'll continue to do that work. You know, we try to minimize the impact to our customers, but you can't, you can't eliminate all of it, so eventually, you have to pass some through in price. So we did. We've done that, and we believe that the price increase is reflective of something that our customers can manage, as well as something that allows us to stay whole throughout 2026 on the price cost equation. So that's the gist of it.
Speaker #2: So, eventually you have to pass some through in price. So we've done that, and we believe that the price increase is reflective of something that our customers can manage, as well as something that allows us to stay whole throughout 2026 on the price-cost equation.
Speaker #2: So that's the gist of it.
Speaker #9: That's very helpful. And maybe just following up on that point of you know localizing costs and one of the big kind of questions we've been getting is just what happens to kind of the bill of materials or just materials costs in general whether it's from commodity price inflation or memory chips and other things that we're seeing out in the market.
Angel Castillo: That's very helpful. And maybe just following up on that point of, you know, localizing costs, and one of the big kind of questions we've been getting is just what happens to kind of the bill of materials or just materials costs in general, whether it's from commodity price inflation or memory chips and other things that we're seeing out in the market. So could you just comment a little bit on, you know, what's kind of embedded in your in your guidance in terms of just broader cost buckets? And in particular for staying maybe on the Access side, if you could just kind of unpack how much is maybe of the cost or the margin potential dynamics here is tariffs versus materials versus mix of independents, you know, or any other kind of buckets here?
Angel Castillo: That's very helpful. And maybe just following up on that point of, you know, localizing costs, and one of the big kind of questions we've been getting is just what happens to kind of the bill of materials or just materials costs in general, whether it's from commodity price inflation or memory chips and other things that we're seeing out in the market. So could you just comment a little bit on, you know, what's kind of embedded in your in your guidance in terms of just broader cost buckets? And in particular for staying maybe on the Access side, if you could just kind of unpack how much is maybe of the cost or the margin potential dynamics here is tariffs versus materials versus mix of independents, you know, or any other kind of buckets here?
Speaker #9: So could you just comment a little bit on you know what's kind of embedded in your guidance in terms of just broader cost buckets and in particular for staying maybe on the access side if you could just kind of unpack how much is maybe of the cost or the margin potential dynamics here as tariffs versus materials versus mix of independence you know or any other kind of buckets here.
Speaker #2: Yeah, Angel, thanks for the question. So on the cost side, you know, I'll give kudos to the Access team, which really kicked off a cost reduction initiative going all the way back to 2024, and that progressively has resulted.
Matthew Field: Yeah, Angel, thanks for the question. So, on the cost side, you know, I'll give kudos to the Access team, which really kicked off a cost reduction initiative going all the way back to 2024, and that progressively has results. And so they're continuing to identify cost savings throughout this year. So cost savings are kind of grow cumulatively quarter over quarter. So we'll get more in the back half of this year than the front half of this year. You know, with those actions, with other actions, I'd say overall, we're seeing largely flat-ish costs, set aside tariffs. And so the team's really doing a great job to manage the cost equation of this, and offsetting as much of the tariffs as they can through those initiatives.
Matthew Field: Yeah, Angel, thanks for the question. So, on the cost side, you know, I'll give kudos to the Access team, which really kicked off a cost reduction initiative going all the way back to 2024, and that progressively has results. And so they're continuing to identify cost savings throughout this year. So cost savings are kind of grow cumulatively quarter over quarter. So we'll get more in the back half of this year than the front half of this year. You know, with those actions, with other actions, I'd say overall, we're seeing largely flat-ish costs, set aside tariffs. And so the team's really doing a great job to manage the cost equation of this, and offsetting as much of the tariffs as they can through those initiatives.
Speaker #2: And so, you know, they're continuing to identify cost savings throughout this year. So cost savings kind of grow cumulatively quarter over quarter, so we'll get more in the back half of this year than the front half of this year.
Speaker #2: You know with those actions with other actions I'd say overall we're seeing largely flat-ish costs set aside tariffs. And so the team's really doing a great job to manage the cost equation of this and offsetting as much of the tariffs as they can through those initiatives.
Speaker #2: In terms of mix you know we've historically seen a higher mix of IRCs. I can't be explicit about how that impacts the financials but you know traditionally that's been 55% NRC, 45% IRC.
Matthew Field: In terms of mix, you know, we've historically seen a higher mix of IRCs. I can't be explicit about how that impacts the financials, but, you know, traditionally, that's been 55% NRC, 45% IRC. We think that'll shift kind of more normalized to those levels in 2026. Very helpful. Thank you.
In terms of mix, you know, we've historically seen a higher mix of IRCs. I can't be explicit about how that impacts the financials, but, you know, traditionally, that's been 55% NRC, 45% IRC. We think that'll shift kind of more normalized to those levels in 2026. Very helpful. Thank you.
Speaker #2: We think that'll shift kind of more normalized to those levels in
Speaker #2: 2026. Very helpful.
Speaker #9: Thank you.
Speaker #2: Thanks Angel.
Speaker #4: Our next question comes from the line of Tim Thane with Raymond James. Please proceed with your
John Pfeifer: Thanks, Angel.
John Pfeifer: Thanks, Angel.
Operator: Our next question comes from the line of Tim Thein with Raymond James. Please proceed with your question.
Operator: Our next question comes from the line of Tim Thein with Raymond James. Please proceed with your question.
Speaker #4: question. Thank you.
Speaker #10: Good morning. I just have one. It's on the vocational segment. Can you maybe give some comments in terms of the backlog there and how that's kind of influencing the revenue—what you expect in terms of the revenue composition and in '26?
Tim Thein: Thank you. Good morning. I just have one. Just on the Vocational segment, can you maybe give some comments in terms of the backlog there, and how that's kind of influencing the revenue, what you expect in terms of the revenue composition in 2026? I take it that the RCVs will- are likely to step down, just given comments in some of the public waste haulers. But maybe if there's some further handholding you can give there in terms of, you know, a split across F&E and AeroTech, et cetera. Thank you.
Tim Thein: Thank you. Good morning. I just have one. Just on the Vocational segment, can you maybe give some comments in terms of the backlog there, and how that's kind of influencing the revenue, what you expect in terms of the revenue composition in 2026? I take it that the RCVs will- are likely to step down, just given comments in some of the public waste haulers. But maybe if there's some further handholding you can give there in terms of, you know, a split across F&E and AeroTech, et cetera. Thank you.
Speaker #10: I take it that the RCVs will are likely to step down just given comments on some of the public waste haulers but maybe if there's some further hand-holding you can give there in terms of you know a split across F&E and Aerotech etc.
Speaker #10: Thank
Speaker #10: you. Sure.
Speaker #2: Yeah, thanks, Tim, for the question. So, vocational, you know, continues to be a great story—a great business for us. Will be for many years into the future.
John Pfeifer: Sure. Yeah, thanks, Tim, for the question. So vocational, you know, continues to be a great story, a great business for us, will be for many years into the future. The backlog across the business is really healthy. When you look at the backlog as one step down from that, which is your question, the fire backlog's still really healthy. You know, we've had a big backlog. We're continuing to increase capacity, increase output, yet we continue to see healthy order rates. I mean, customers want our products, so the backlog is really, really healthy in the fire market. It's the same in the airport market, with our airport and AeroTech business. Healthy business conditions, healthy order rates, you know, customers are continuing to invest.
John Pfeifer: Sure. Yeah, thanks, Tim, for the question. So vocational, you know, continues to be a great story, a great business for us, will be for many years into the future. The backlog across the business is really healthy. When you look at the backlog as one step down from that, which is your question, the fire backlog's still really healthy. You know, we've had a big backlog. We're continuing to increase capacity, increase output, yet we continue to see healthy order rates. I mean, customers want our products, so the backlog is really, really healthy in the fire market. It's the same in the airport market, with our airport and AeroTech business. Healthy business conditions, healthy order rates, you know, customers are continuing to invest.
Speaker #2: The backlog, and across the business, is really healthy. When you look at the backlog at one step down from that—which is your question—the Fire backlog is still really healthy.
Speaker #2: You know, we've had a big backlog. We're continuing to increase capacity, increase output, yet we continue to see healthy order rates. I mean, customers want our products.
Speaker #2: So the backlog is really, really healthy in the fire market. It's the same in the airport market with our airport and Aerotech business. A healthy business conditions healthy order rates you know customers are continuing to invest.
Speaker #2: You see the stats on both passenger and commercial demand for airport. It's really good. There is some pressure in the Environmental business with refuse and recycling.
John Pfeifer: You see the stats on both passenger and commercial demand for airport; it's really good. There is some pressure in the environmental business with refuse and recycling. The business in total is very healthy, and our customers are very healthy in this segment. There's just a little bit of a reluctance right now to place a lot of CapEx. That's just temporary. We see the long term being fantastic, as we had indicated in our Investor Day through 2028. It just could be a little bit of a lull in CapEx, so some downward pressure on that business in 2026, but long term it's fine, and the vocational business will perform exceptionally well, even with a little of that blip in 2026. So we feel great about this segment.
You see the stats on both passenger and commercial demand for airport; it's really good. There is some pressure in the environmental business with refuse and recycling. The business in total is very healthy, and our customers are very healthy in this segment. There's just a little bit of a reluctance right now to place a lot of CapEx. That's just temporary. We see the long term being fantastic, as we had indicated in our Investor Day through 2028. It just could be a little bit of a lull in CapEx, so some downward pressure on that business in 2026, but long term it's fine, and the vocational business will perform exceptionally well, even with a little of that blip in 2026. So we feel great about this segment.
Speaker #2: The business in total is very healthy. And our customers are very healthy in this segment. There's just a little bit of a reluctance right now to place a lot of CapEx but that's just temporary.
Speaker #2: We see the long term being fantastic as we had indicated in our investor day through 2028. It just could be a little bit of a lull in CapEx.
Speaker #2: So some downward pressure on that business in 2026 but long term it's fine. And the vocational business will perform exceptionally well even with that blip in 2026.
Speaker #2: So we feel great about this segment. The segment where we really showcase our technology that makes such a big impact for our customers and that's one of the reasons it's so healthy.
John Pfeifer: The segment where we really showcase our technology that makes such a big impact for our customers, and that's one of the reasons it's so healthy.
John Pfeifer: The segment where we really showcase our technology that makes such a big impact for our customers, and that's one of the reasons it's so healthy.
Speaker #10: Great. Thank you John.
Tim Thein: Great. Thank you, John.
Tim Thein: Great. Thank you, John.
Speaker #4: Our next question comes from the line of Kyle Menges with Citi. Please proceed with your question.
Operator: Our next question comes from the line of Kyle Menges with Citi. Please proceed with your question.
Operator: Our next question comes from the line of Kyle Menges with Citi. Please proceed with your question.
Speaker #11: Thanks for taking the questions, guys. I was hoping that we could just go back to the transport margin and just how to think about the transport margin ramp throughout 2026.
Kyle Menges: Thanks for taking the questions, guys. I was hoping we could just go back to the Transport margin and just how to think about the Transport margin ramp throughout 2026. And then, Matt, you still sounded confident in hitting the Investor Day target for Transport margins in 2028. So, would be helpful to hear some color on just how to think about the bridge from Transport margin of around 4% in 2026 to meeting the Investor Day target by 2028.
Kyle Menges: Thanks for taking the questions, guys. I was hoping we could just go back to the Transport margin and just how to think about the Transport margin ramp throughout 2026. And then, Matt, you still sounded confident in hitting the Investor Day target for Transport margins in 2028. So, would be helpful to hear some color on just how to think about the bridge from Transport margin of around 4% in 2026 to meeting the Investor Day target by 2028.
Speaker #11: And then, Matt, you still sounded confident in hitting the Investor Day target for Transport margins in 2028. So it would be helpful to hear some color on just how to think about the bridge from Transport margin of around 4% in 2026 to meeting the Investor Day target by then.
Speaker #11: 2028. Yeah.
Speaker #2: Thanks Kyle. So you know as I think about going from the 4% that we got this year to the 10% all the building blocks are there.
Matthew Field: Yeah, thanks, Kyle. So, you know, as I think about going from the 4% that we got this year to the 10%, all the building blocks are there, it's just a matter of timing. And so what we've talked about is new price on, on new contracts. So we're building under FMTVs, sorry, FHTVs now, which you see in the performance in the second half of 2025. We'll build under the medium contracts, the FMTV, second half of 2026. NGDV ramp, so we'll continue to increase our production progressively throughout the year. John mentioned that about half of our revenue for next year, so the $2.5 billion, is NGDV, which is right what we said we would be in, in the long-term guide of 3.1.
Matthew Field: Yeah, thanks, Kyle. So, you know, as I think about going from the 4% that we got this year to the 10%, all the building blocks are there, it's just a matter of timing. And so what we've talked about is new price on, on new contracts. So we're building under FMTVs, sorry, FHTVs now, which you see in the performance in the second half of 2025. We'll build under the medium contracts, the FMTV, second half of 2026. NGDV ramp, so we'll continue to increase our production progressively throughout the year. John mentioned that about half of our revenue for next year, so the $2.5 billion, is NGDV, which is right what we said we would be in, in the long-term guide of 3.1.
Speaker #2: It's just a matter of timing. And so we've talked about is new price on new contracts. So we're building under FMTVs sorry FHTVs now which you see in the performance in the second half of 2025.
Speaker #2: We'll build under the medium contracts the FMTV second half of '26. NGDV ramp so we'll continue to increase our production progressively throughout the year.
Speaker #2: John mentioned that about half of our revenue for next year so the 2.5 billion dollars is NGDV which is right what we said we would be in the long term guide of 3.1.
Speaker #2: So you know you're starting to see those elements come in with us seeing more of that in the second half obviously than the first half.
Matthew Field: So you, you're starting to see those elements come in, with us seeing more of that in the second half, obviously, than the first half. So you will have some launch costs that we pick up in the first half. The other thing just to note is that, with that half of the revenue being delivery, then you can see some of the defense decrease year-over-year from the export orders. And we would expect defense volume to pick up into our future guide a bit as well relative to 2026. So that's kind of how to think about 2026. Again, all the building blocks there, it's just a matter of timing for them. And then the second half being stronger for the reasons I mentioned earlier.
So you, you're starting to see those elements come in, with us seeing more of that in the second half, obviously, than the first half. So you will have some launch costs that we pick up in the first half. The other thing just to note is that, with that half of the revenue being delivery, then you can see some of the defense decrease year-over-year from the export orders. And we would expect defense volume to pick up into our future guide a bit as well relative to 2026. So that's kind of how to think about 2026. Again, all the building blocks there, it's just a matter of timing for them. And then the second half being stronger for the reasons I mentioned earlier.
Speaker #2: So you will have some launch costs that we pick up in the first half. The other thing just to note is that with that half of the revenue being delivery then you can see some of the defense decrease year on year from the export orders.
Speaker #2: And we would expect defense volume to pick up into our future guide a bit as well, relative to 2026. So that's kind of how to think about 2026.
Speaker #2: Again, all the building blocks are there; it's just a matter of timing for them, and then the second half being stronger for the reasons I mentioned earlier.
Speaker #2: Yeah. We're and we remain really confident on the confident on this business going forward. And on the recovery of its margins. We're very confident that that will continue to progress as we head towards
John Pfeifer: Yeah, we remain really confident on this business going forward, and on the recovery of its margins. We're very confident that that will continue to progress as we head towards 2028.
John Pfeifer: Yeah, we remain really confident on this business going forward, and on the recovery of its margins. We're very confident that that will continue to progress as we head towards 2028.
Speaker #2: 2028. Helpful.
Speaker #11: Thank you. And then a question on Aerotech. Just how do you think you've been able to extract some margin synergies and what's really the potential to squeeze out some more margin from that business?
Kyle Menges: Helpful. Thank you. And then a question on AeroTech. Just how do you think you've been able to extract some margin synergies? And, what's really the potential to squeeze out some more margin from that business? And I think you guys have hinted at doing some 80/20 within AeroTech, so it would be helpful to hear just what some of those 80/20 initiatives look like. Thank you.
Kyle Menges: Helpful. Thank you. And then a question on AeroTech. Just how do you think you've been able to extract some margin synergies? And, what's really the potential to squeeze out some more margin from that business? And I think you guys have hinted at doing some 80/20 within AeroTech, so it would be helpful to hear just what some of those 80/20 initiatives look like. Thank you.
Speaker #11: And I think you guys have hinted at doing some 80/20 within AeroTech. So it would be helpful to hear just what some of those 80/20 initiatives look like.
Speaker #11: Thank
Speaker #2: Yeah.
Speaker #2: Thank you for that question. The you. Aerotech business is a great business for us. Awesome. The market that we're in and the synergies that we get between our core synergies and the capabilities of Aerotech.
John Pfeifer: Yeah, thank you for that question. The AeroTech business is a great business for us because of the market that we're in and the synergies that we get between our core synergies and the capabilities of AeroTech, and that's what you see. So the market's healthy. We're continuing to drive technological innovations within that market segment. You already see our autonomous jet dock and autonomous cargo loading being deployed right now in production, so to speak, meaning at gates. There's a lot more technology to come. Technology really helps customers be more productive, and when that's the case, it also helps our margins, of course.
John Pfeifer: Yeah, thank you for that question. The AeroTech business is a great business for us because of the market that we're in and the synergies that we get between our core synergies and the capabilities of AeroTech, and that's what you see. So the market's healthy. We're continuing to drive technological innovations within that market segment. You already see our autonomous jet dock and autonomous cargo loading being deployed right now in production, so to speak, meaning at gates. There's a lot more technology to come. Technology really helps customers be more productive, and when that's the case, it also helps our margins, of course.
Speaker #2: And that's what you see. So the market's healthy. We're continuing to drive technological innovations within that market segment. You already see our autonomous jet docking and autonomous cargo loading.
Speaker #2: Being deployed right now in so production so to speak meaning at gates. There's a lot more technology to come. Technology really helps customers be more productive and when that's the case it also helps our margins of course.
Speaker #2: But we do on the other hand have operating synergies and we do 80/20 similar to the way we do it in some of our other businesses which is dramatically helped us transform margins over the years.
John Pfeifer: But we are, we do, on the other hand, have operating synergies, and we do 80/20, similar to the way we do it in some of our other businesses, which has dramatically helped us transform margins over the years. And there's opportunity there for us to continue to get margin through improvement in operating performance. Not to say that there's anything wrong with the operations of AeroTech, there isn't, but you can always make operations better. You can always do that. And if you ever don't have that mindset, you're probably in trouble.
But we are, we do, on the other hand, have operating synergies, and we do 80/20, similar to the way we do it in some of our other businesses, which has dramatically helped us transform margins over the years. And there's opportunity there for us to continue to get margin through improvement in operating performance. Not to say that there's anything wrong with the operations of AeroTech, there isn't, but you can always make operations better. You can always do that. And if you ever don't have that mindset, you're probably in trouble.
Speaker #2: And there's opportunity there for us to continue to get margin through improvement in operating performance. Not to say that there's anything wrong with the operations of Aerotech.
Speaker #2: There isn't. But you can always make operations better. You can always do that. And if you ever don't have that mindset, you're probably in trouble.
Speaker #2: But this is a great business. We expect margins to continue to expand because of technological synergies. And continuing to be better and better with operations through our 80/20 philosophy.
Matthew Field: Mm-hmm.
Matthew Field: Mm-hmm.
John Pfeifer: But this is a great business. We expect margins to continue to expand because of technological synergies and continuing to be better and better with operations through our 80/20 philosophy. So thanks for that question.
John Pfeifer: But this is a great business. We expect margins to continue to expand because of technological synergies and continuing to be better and better with operations through our 80/20 philosophy. So thanks for that question.
Speaker #2: So thanks for that question.
Speaker #11: Great. Thank you guys.
Speaker #2: Thanks Kyle.
Speaker #4: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.
Matthew Field: Great. Thank you, guys.
Matthew Field: Great. Thank you, guys.
John Pfeifer: Thanks, Kyle.
John Pfeifer: Thanks, Kyle.
Operator: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.
Operator: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.
Speaker #11: Thanks. Good morning. Just on within the vocational side of things on fire side. Just curious how much of us surprised was this municipal mix in the quarter relative to kind of what your expectations were at the start of the quarter?
Steven Fisher: Thanks. Good morning. Just on within the Vocational side of things, on the fire side, just curious, how much of a surprise was this municipal mix in the quarter relative to kind of what your expectations were at the start of the quarter? And what's your baseline expectation of mix in 2026 versus 2025?
Steven Fisher: Thanks. Good morning. Just on within the Vocational side of things, on the fire side, just curious, how much of a surprise was this municipal mix in the quarter relative to kind of what your expectations were at the start of the quarter? And what's your baseline expectation of mix in 2026 versus 2025?
Speaker #11: And what's your baseline expectation of mix in 2026 versus—
Speaker #11: 2025? I
Speaker #2: see. So what we see in the fire business is some quarters you kind of have a mix of products that has a bit of a lower margin as you kind of work through the one-offs and so forth.
Matthew Field: Hi, Steve. So, what we see in the fire business is some quarters you kind of have a mix of products that has a bit of a lower margin as you kind of work through the one-offs and so forth. What we've seen in prior quarters is more batches, and you've seen us talk about those even on the call, where we have, you know, 13, 15 trucks being delivered to a department. In the Q4, we had two more snowflakes, I guess I'd say, than we would have in other quarters, and that resulted in a little bit of adverse mix. You know, I don't see that being anything sustained. It's more of a periodic thing, and over the year and kind of over the long arc, it really gets lost in the shuffle.
Matthew Field: Hi, Steve. So, what we see in the fire business is some quarters you kind of have a mix of products that has a bit of a lower margin as you kind of work through the one-offs and so forth. What we've seen in prior quarters is more batches, and you've seen us talk about those even on the call, where we have, you know, 13, 15 trucks being delivered to a department. In the Q4, we had two more snowflakes, I guess I'd say, than we would have in other quarters, and that resulted in a little bit of adverse mix. You know, I don't see that being anything sustained. It's more of a periodic thing, and over the year and kind of over the long arc, it really gets lost in the shuffle.
Speaker #2: What we've seen in prior quarters is more batches and you've seen us talk about those even on the call where we have 13, 15 trucks being delivered to a department.
Speaker #2: In the fourth quarter, we had a few more snowflakes, I guess I'd say. Then we would have another quarter, and that resulted in a little bit of adverse mix.
Speaker #2: You know I don't see that being anything sustained. It's more of a periodic thing. And over the year and kind of over the long arc it really gets lost in the shuffle.
Speaker #2: But it was something we saw in the fourth quarter
Speaker #2: specifically. Okay.
Matthew Field: But it was something we saw in Q4 specifically.
But it was something we saw in Q4 specifically.
Speaker #11: That's helpful. And then just coming back to the access segment to the cost elements. Just curious how much visibility you have to the costs for this year at this point.
Steven Fisher: Okay, that's helpful. And then just coming back to the Access segment, to the cost elements, just curious how much visibility you have to the costs for this year at this point. How locked in are you for what you expect to produce? And then I think, John, you mentioned you expect to be whole on the price versus cost, but just on the second half of the year in particular, is price versus cost expected to be positive for that second half? Thank you.
Steven Fisher: Okay, that's helpful. And then just coming back to the Access segment, to the cost elements, just curious how much visibility you have to the costs for this year at this point. How locked in are you for what you expect to produce? And then I think, John, you mentioned you expect to be whole on the price versus cost, but just on the second half of the year in particular, is price versus cost expected to be positive for that second half? Thank you.
Speaker #11: How locked in are you for what you expect to produce? And then I think John you mentioned you're expect to be whole on the price versus cost.
Speaker #11: But just on the second half of the year in particular is price versus cost expected to be positive for that second half? Thank you.
Speaker #2: Yes Steve. So we have good visibility into the cost at this stage for the year. We think we're in a stable environment as we've seen for a while in terms of tariffs at least.
Matthew Field: Yes, Steve. So we have good visibility into the cost at this stage for the year. We think we're in as stable of an environment as we've seen for a while in terms of tariffs at least. And we've got good visibility into our raw material prices as well as our cost reduction initiatives. So we feel we've got a good handle on the cost for the year. We do anticipate price cost to turn positive in the back half of this year. That's one of the drivers of some of the better performance in the second half and is a bit of a drag in the first quarter as we work through some of those cost reduction initiatives throughout the year.
Matthew Field: Yes, Steve. So we have good visibility into the cost at this stage for the year. We think we're in as stable of an environment as we've seen for a while in terms of tariffs at least. And we've got good visibility into our raw material prices as well as our cost reduction initiatives. So we feel we've got a good handle on the cost for the year. We do anticipate price cost to turn positive in the back half of this year. That's one of the drivers of some of the better performance in the second half and is a bit of a drag in the first quarter as we work through some of those cost reduction initiatives throughout the year.
Speaker #2: And we've got good visibility into our raw material prices as well as our cost reduction initiatives. So we feel we've got a good handle on the cost for the year.
Speaker #2: We do anticipate price cost to turn positive in the back half of this year. That's one of the drivers of some of the better performance in the second half.
Speaker #2: And it is a bit of a drag in the first quarter as we work through some of those cost reduction initiatives throughout the year.
Speaker #11: Thank you.
Speaker #2: Thanks Terrific.
Speaker #4: Our final Steve question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.
Steven Fisher: Terrific. Thank you.
Steven Fisher: Terrific. Thank you.
Matthew Field: Thanks, Steve.
Matthew Field: Thanks, Steve.
Operator: Our final question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.
Operator: Our final question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.
Speaker #3: Hey, good morning, guys. I was hoping you could quantify the incremental tariffs in 2026. It's both not by segment. And then also, you talked about taking price increases to cover them.
Chad Dillard: Hey, good morning, guys. I was hoping you could quantify the incremental tariffs in 2026, split them out by segment. And then also, you talked about, you know, taking price increases to cover them. In the event that ITC gets overturned, I guess, how do you think about that? Are you able to maintain the margin, or do you revisit the pricing discussions with your customers for 2026?
Chad Dillard: Hey, good morning, guys. I was hoping you could quantify the incremental tariffs in 2026, split them out by segment. And then also, you talked about, you know, taking price increases to cover them. In the event that ITC gets overturned, I guess, how do you think about that? Are you able to maintain the margin, or do you revisit the pricing discussions with your customers for 2026?
Speaker #3: In the event that I predict a return, I guess, how do you think about that? Are you able to maintain the margin, or do you revisit the pricing discussions with your customers for 2026?
Speaker #2: Thanks, Chad. So, as I mentioned on the call, fully, your impact's about $200 million. That's roughly $160 million higher than last year. I think of that as mostly in access.
Matthew Field: Thanks, Chad. So, as I mentioned on the call, full year impact's about $200 million. That's roughly $160 higher than last year. I'd think of that as mostly in Access, so about 3/4 is in Access segment, to put some ballpark numbers on that. If there is anything overturned, our assumption and certainly our planning assumption, is that something equivalent will go in place. So our guidance assumes that the present tariff rates sustain throughout the year. I think that's a probably fair assumption based off everything I've read, but, you know, as the situation evolves, we'll adapt as we did in 2025.
Matthew Field: Thanks, Chad. So, as I mentioned on the call, full year impact's about $200 million. That's roughly $160 higher than last year. I'd think of that as mostly in Access, so about 3/4 is in Access segment, to put some ballpark numbers on that. If there is anything overturned, our assumption and certainly our planning assumption, is that something equivalent will go in place. So our guidance assumes that the present tariff rates sustain throughout the year. I think that's a probably fair assumption based off everything I've read, but, you know, as the situation evolves, we'll adapt as we did in 2025.
Speaker #2: So about three-quarters is in the Access segment, to put some ballpark numbers on that. If there is anything overturned, our assumption—and certainly our planning assumption—is that something equivalent will go in place.
Speaker #2: So our guidance assumes that the present tariff rate sustained throughout the year. I think that's probably a fair assumption based off everything I've read.
Speaker #2: But as the situation evolves we'll adapt as we did in
Speaker #2: 2025. Gotcha.
Speaker #3: That's helpful. And then I was hoping you could bridge your incremental margins in the vocational business. They're pretty sizable. So I was wondering if you could split it out.
Chad Dillard: Gotcha. That's, that's helpful. And then I was hoping you could bridge your, your incremental margins in the vocational business. They're pretty sizable. So I was wondering if you could split it out, you know, how much comes from price realization versus volume. And then secondly, you know, with 17%, you're kind of at that midpoint of your long-term guidance. So I guess, what's stopping you guys from, from taking that, that target a bit higher now?
Chad Dillard: Gotcha. That's, that's helpful. And then I was hoping you could bridge your, your incremental margins in the vocational business. They're pretty sizable. So I was wondering if you could split it out, you know, how much comes from price realization versus volume. And then secondly, you know, with 17%, you're kind of at that midpoint of your long-term guidance. So I guess, what's stopping you guys from, from taking that, that target a bit higher now?
Speaker #3: How much comes from price realization versus volume? And then, secondly, with 17%, you're kind of at that midpoint of your long-term guidance. So, I guess what's stopping you guys from taking that target a bit higher now?
Speaker #2: Sounds like a CFO. So we're at 17%. We're really pleased with that margin. It's a good step forward in what you see in that growth.
Matthew Field: Sounds like a CFO. So, so we're at 17%. We're really pleased with that margin. It's, it's a good step forward and what you see in that growth, and I won't be explicit about the breakout between volume and price costs, but volume plays a larger driver in 2026 than it did in 2025. As we bring on more capacity, John referenced the amount of capital we're investing into our assembly plants for fire capacity. So we start to see that come to the fore in 2026 relative to 2025. Price costs, we do see still favorable in 2026, and then we do have some investments that, that help us support our business growth, and that's really what drives the 17%. But that's a great margin. It is, right within the sweet spot of the 16% to 18%.
Matthew Field: Sounds like a CFO. So, so we're at 17%. We're really pleased with that margin. It's, it's a good step forward and what you see in that growth, and I won't be explicit about the breakout between volume and price costs, but volume plays a larger driver in 2026 than it did in 2025. As we bring on more capacity, John referenced the amount of capital we're investing into our assembly plants for fire capacity. So we start to see that come to the fore in 2026 relative to 2025. Price costs, we do see still favorable in 2026, and then we do have some investments that, that help us support our business growth, and that's really what drives the 17%. But that's a great margin. It is, right within the sweet spot of the 16% to 18%.
Speaker #2: The breakout between volume and—and I won't be explicit about price/cost. But volume plays a larger driver in 2026 than it did in 2025.
Speaker #2: As we bring on more capacity, John referenced the amount of capital we're investing into our assembly plants for fire capacity. So we start to see that come to the fore in 2026 relative to 2025.
Speaker #2: Price cost we do see still favorable in 2026. And then we do have some investments that help us support our business growth. And that's really what drives the 17%.
Speaker #2: But that's a great margin. It is right within the sweet spot of the 16% to 18% we got it in 2028, with revenue growth in the 2028 guide relative to where we are in 2026.
Matthew Field: We got it in 2028 with revenue growth in the 2028 guide relative to where we are in 2026. So really pleased with the progress we're making in that segment and pleased with the performance we're seeing.
We got it in 2028 with revenue growth in the 2028 guide relative to where we are in 2026. So really pleased with the progress we're making in that segment and pleased with the performance we're seeing.
Speaker #2: So really pleased with the progress we're making in that segment and pleased with the performance we're seeing. Yeah. I'll just say that we're expecting to be at 17% margins.
John Pfeifer: Yeah, I'll just say that, you know, we're expecting to be at 70% margins, which we'd all look at and say that's good compared to our 2028 guidance. So we got a lot of good things still happening in this business, a lot of good things on deck to come, so we feel good about it.
John Pfeifer: Yeah, I'll just say that, you know, we're expecting to be at 70% margins, which we'd all look at and say that's good compared to our 2028 guidance. So we got a lot of good things still happening in this business, a lot of good things on deck to come, so we feel good about it.
Speaker #2: Which we'd all look at and say that's good compared to our 28 guidance. So we got a lot of good things still happening in this business.
Speaker #2: A lot of good things on deck to come. So we feel good about
Speaker #2: it. Thanks Chad. Okay guys.
Speaker #3: Thanks.
Speaker #4: Mr. Davidson I'd like to turn the floor back over to you for closing comments.
Chad Dillard: Great, guys. Thanks, John.
Chad Dillard: Great, guys. Thanks, John.
John Pfeifer: Thanks.
John Pfeifer: Thanks.
Speaker #2: All right. Appreciate it, Christine. Thanks for joining us, everybody, on the call today. We will be meeting with investors at several conferences during February and March.
Operator: Mr. Davidson, I'd like to turn the floor back over to you for closing comments.
Operator: Mr. Davidson, I'd like to turn the floor back over to you for closing comments.
John Pfeifer: All right. Appreciate it, Christine. Thanks for joining us, everybody, on the call today. We will be meeting with investors at several conferences during February and March. We're also looking forward to another CONEXPO show, as John mentioned earlier during his comments on the access business. If you're interested in learning more about our company and our construction equipment leaders, consider a trip to Vegas in March for the show, last held back in 2023, right? Three years ago. So it's a great opportunity to gain exposure to our industries and hear about the new products and technology. Have a good rest of the day.
John Pfeifer: All right. Appreciate it, Christine. Thanks for joining us, everybody, on the call today. We will be meeting with investors at several conferences during February and March. We're also looking forward to another CONEXPO show, as John mentioned earlier during his comments on the access business. If you're interested in learning more about our company and our construction equipment leaders, consider a trip to Vegas in March for the show, last held back in 2023, right? Three years ago. So it's a great opportunity to gain exposure to our industries and hear about the new products and technology. Have a good rest of the day.
Speaker #2: We're also looking forward to another CONEXPO show as John mentioned earlier during his comments on the access business. If you're interested in learning more about our company and our construction equipment leaders consider a trip to Vegas in March for the show.
Speaker #2: Last held back in 2023 right three years ago. So it's a great opportunity to gain exposure to our industries and hear about the new products and technology.
Speaker #2: Have a good rest of the
Speaker #2: day. Ladies and gentlemen this does
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
