Oshkosh Q4 2024 Earnings Report

e.l.f. Beauty EPS Results

• Actual EPS: $2.58
• Consensus EPS: $2.22
• Beat/Miss: Beat by +$0.36
• One Year Ago EPS: N/A

e.l.f. Beauty Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.42 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

e.l.f. Beauty Announcement Details

• Quarter: Q4 2024
• Date: 1/30/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 30, 2025
• Conference Call Time: 9:30AM ET

e.l.f. Beauty (NYSE:ELF) is a globally recognized cosmetics and skincare company headquartered in Oakland, California. The company operates under multiple brand names, including e.l.f. Cosmetics, e.l.f. Skin, Well People, and Keys Soulcare cater to a diverse customer base worldwide. e.l.f. Beauty, Inc. has gained prominence in the beauty industry by offering high-quality products at affordable prices, making luxurious beauty accessible to all. The company's mission is to provide innovative and inclusive beauty solutions that resonate with millennial and Gen Z consumers, who seek authenticity and affordability in their beauty routines.

At the helm of e.l.f. Beauty, Inc. is an accomplished and experienced management team. Tarang P. Amin is the Chairman, Chief Executive Officer, and President, leading the company's overall strategic direction and growth initiatives. Amin's industry expertise and vision have been instrumental in shaping the company's success. Mandy J. Fields, the Senior Vice President and Chief Financial Officer, contributes to e.l.f. Beauty, Inc.'s financial stability and growth through strategic financial planning and execution. 

e.l.f. Beauty, Inc. has achieved impressive financial performance in recent years, reflecting its strong market position. The company reported a revenue increase yearly, showcasing a substantial year-over-year growth of over 40%. This growth can be attributed to the company's successful product offerings and expanding customer base. Moreover, e.l.f. Beauty, Inc. demonstrated remarkable profitability with an impressive net income, marking a significant year-over-year increase of over 150%. The company's ability to effectively manage costs and drive revenue growth has contributed to its impressive net profit margin of over 10%.

From a valuation perspective, e.l.f. Beauty, Inc. commands a premium position in the market. The trailing price-to-earnings ratio indicates that investors are willing to pay a premium for the company's earnings. This reflects the market's confidence in e.l.f. Beauty, Inc.'s ability to generate sustainable returns and maintain its competitive edge.

Analyzing the company's stock performance, e.l.f. Beauty, Inc. has exhibited strong growth potential. The stock's day range fluctuations showcase its stability and consistent demand. 

In the broader industry landscape, e.l.f. Beauty, Inc. operates in the highly competitive cosmetics and skincare market. Dynamic trends and shifting consumer preferences characterize the industry. However, e.l.f. Beauty, Inc. has successfully positioned itself by focusing on inclusivity and affordability. The company's ability to offer high-quality products at accessible prices has resonated with its target market, placing it favorably against competitors. Moreover, e.l.f. Beauty, Inc. has leveraged digital marketing strategies to engage with consumers, staying ahead of evolving beauty trends and building brand loyalty.

Looking ahead, e.l.f. Beauty, Inc. has identified several growth opportunities to drive its future success. These opportunities include new product launches, potential acquisitions, and expansions into untapped markets by capitalizing on its existing brand equity and customer loyalty, e.l.f. Beauty, Inc. aims to expand its global footprint further and strengthen its market presence.

However, e.l.f. Beauty, Inc. faces certain risks and challenges like any company. Changing consumer preferences and market dynamics pose potential threats to the company's growth trajectory. Increased competition, regulatory changes, and economic uncertainties can impact the company's market position and profitability. e.l.f. Beauty, Inc. recognizes these risks and has implemented robust risk management strategies to mitigate potential negative impacts.

Oshkosh Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the Oshkosh Corporation Fiscal 20 24 4th Quarter and Full Year Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Pat Davidson, Senior Vice President, Investor Relations for Oshkosh Corporation.

[Operator]

Thank you, sir. You may begin.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Good morning, and thanks for joining us. Earlier today, we published our Q4 and full year 2024 results. A copy of that release is available on our website atoshkoshcorp.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 it's also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

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. These risks include, among others, matters that we have described in our Form 8 ks filed with the SEC this morning and other filings we make with the SEC. 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.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Our presenters today include John Pfeiffer, 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.

[John Pfeifer, President & CEO at Oshkosh]

Thank you, Pat, and good morning, everyone. I'm pleased to announce strong results for Oshkosh Corporation with 2024 revenue and adjusted earnings per share for the full year of $10,800,000,000 $11.74 respectively. We achieved an adjusted operating income margin of 10.5%, a 110 basis point increase over 2023. This is an exciting time for our company as we work to capitalize on solid growth opportunities, particularly in our Vocational segment. I'm also happy to welcome our new CFO, Matt Field to the company.

[John Pfeifer, President & CEO at Oshkosh]

Matt brings exceptional leadership to our team as well as extensive financial and international experience. I look forward to working with him as we continue to execute our innovate, serve, advance growth strategy. Let's get started with a recap of the Q4. We delivered another solid quarter of growth with revenue up 6.3% compared to the Q4 of 2023. Our adjusted operating income margin was 9.4%.

[John Pfeifer, President & CEO at Oshkosh]

Our adjusted EPS of $2.58 reflected strong sales growth and margin expansion in our Vocational segment. And while our Access segment is experiencing softer near term market conditions, we expect to deliver robust resilient margins and the long term prospects for this business remain favorable with mega projects, infrastructure build out and data centers driving demand for our equipment. Earlier this month, we participated at CES in Las Vegas, where we showcased Oshkosh's innovative products and technologies aimed at making the work of everyday heroes safe, intuitive and more productive. We demonstrated our strong capabilities, including AI, autonomy and connectivity, as well as our practical and thoughtful approach to applying these technologies to deliver meaningful benefits for our customers. Our display featured the job site of the future, the airport of the future and the neighborhood of the future incorporating these innovations.

[John Pfeifer, President & CEO at Oshkosh]

We also featured our next generation delivery vehicle, which we started building for the United States Postal Service in 2024. This is one of the most significant new products in the history of our company. We're pleased with the early positive feedback on the NGDV from postal carriers and look forward to ramping production throughout 2025. Our HARI concept designed for an on demand autonomous refuse collection robot was recognized with a CES Picks award as one of the best new products at the show. With Harry, residents of neighborhoods will be able to request refuse and recycling pickup with a smartphone app or a virtual home assistant.

[John Pfeifer, President & CEO at Oshkosh]

The robot will autonomously navigate to homes, collect refuse or recycling and return to a central collection base to unload and recharge. We believe this technology has significant potential, especially for large planned residential communities. Lastly, I'm pleased to share that we were named to the Dow Jones Sustainability World Index for the 6th consecutive year. Companies must be rated in the top 10 percent of their peer group for sustainable business practices to be considered for the index. This recognition reflects our commitment to driving profitable, sustainable growth that benefits our people, communities and environment as well as shareholders.

[John Pfeifer, President & CEO at Oshkosh]

Please turn to Slide 4 for a recap of 2024 and our 2025 expectations. I'm proud of our performance in 2024. Our 18,000 plus team members continue to deliver strong results, positioning us to be a growing, more resilient company for the future. For full year 2024, we grew revenue by 11.4 percent to $10,760,000,000 and grew adjusted operating income by 24.5 percent to $1,130,000,000 leading to adjusted earnings per share of $11.74 We are pleased with our progress. We are also announcing our 11th consecutive double digit percent increase in our dividend, raising the quarterly dividend by $0.05 to $0.51 per share, a nearly 11% increase.

[John Pfeifer, President & CEO at Oshkosh]

This reflects our expectation of strong long term cash flow generation and our Board's confidence in our ability to sustain profitable growth. Turning to our outlook for 2025, we expect to deliver adjusted EPS in the range of $11 This reflects a balanced assessment of near term outlook in access equipment, opportunities in vocational and the expected ramp up of the NGDV program in defense and investments in new products and technologies. Please turn to Slide 5 and we'll get started on our segment updates. The Access team delivered solid 4th quarter sales as the industry continues to normalize. We're seeing demand moderate in response to softer non residential construction activity and elevated interest rates.

[John Pfeifer, President & CEO at Oshkosh]

As we've previously mentioned, we anticipate lower sales in 2025, particularly in the first half of the year. Our team is focused on execution in this environment and we are confident that we can deliver resilient margins for the year. We expect improving conditions in the second half of twenty twenty five, which are expected to provide momentum going into 2026. We ended the year with a healthy backlog at $1,800,000,000 after booking orders of $856,000,000 in the quarter. We continue to engage with customers on 2025 requirements and expect to book additional annual purchase orders in the Q1.

[John Pfeifer, President & CEO at Oshkosh]

Furthermore, we remain confident in the market's long term health. Our access team continues to advance its products with state of the art technology and job site connectivity. Clear Sky Smart Fleet was also featured at our job site of the future CES exhibit driving job site productivity. We now have over 100,000 connected assets as part of this technology platform. This is one of the world's largest fleets of connected equipment on the job site.

[John Pfeifer, President & CEO at Oshkosh]

Customer adoption is strong and enthusiasm continues to build for ClearSky's ability to enhance productivity, boost efficiency and maximize machine uptime. CES attendees also experienced our Galileo all electric boom lift and rotating telehandler concept as well as its companion, our autonomous mobile recharging robot. These advanced concepts demonstrate potential opportunities to enhance safety and productivity for the job site of the future. Please turn to Slide 6, and I'll review our Vocational segment. Our Vocational segment achieved strong year over year revenue growth of nearly 20% in the 4th quarter and a robust adjusted operating income margin of 14%.

[John Pfeifer, President & CEO at Oshkosh]

Increased volume and strong price realization drove double digit revenue growth in key product lines in the segment. The backlog is also robust, providing excellent visibility into demand. We remain focused on increasing production levels across the segment to support strong demand and a healthy backlog, which we expect will deliver meaningful revenue and income growth over the coming years. Another important announcement from CES was the launch of our all new Volterra ZFL ERCV, the industry's 1st purpose built fully integrated electric front end loader refuse and recycling collection vehicle. This joins our Volterra ZSL side loader refuse and recycling vehicle to provide the most capable electric refuse vehicles on the market.

[John Pfeifer, President & CEO at Oshkosh]

We also highlighted future technologies, including our advanced AI capabilities to identify waste and recycling stream contamination as well as our all electric side loader refuse collection arm, which eliminates hydraulics and features autonomous operation. We believe these innovations will continue to revolutionize safety and productivity in the industry, which we expect will drive future growth. Global air passenger metrics continue to strengthen with the International Air Transport Association's November figures showing growth of 8.1% year over year. We believe strong market conditions combined with technology and innovations in our IOPS connected solutions, electrified product offerings and autonomy are fueling growth for our market leading products at AeroTech, where we saw revenue grow more than 9% compared with the Q4 of 2023. Let's turn to Slide 7 for a discussion of the Defense segment.

[John Pfeifer, President & CEO at Oshkosh]

Defense results continue to be impacted by legacy fixed price contracts. In the future, we expect better results with improved pricing terms on TWV programs and the launch of the next generation delivery vehicle. We look forward to finalizing our FMTV 3 year contract extension in the first half of twenty twenty five. This sole source contract is expected to include improved pricing and economic price adjustment provisions similar to our recently announced FHTV contract extension, which will improve the resiliency of margins over time. We expect to complete domestic JLTV production in early 2025.

[John Pfeifer, President & CEO at Oshkosh]

International interest in tactical wheeled vehicles, including JLTVs, remains solid and we see the potential for additional international orders during the year. We are pleased with the progress on the production ramp up for the NGDV program, which will be an important component of Oshkosh's growth over the next decade. NGDVs are the delivery industry's most state of the art vehicles and are modernizing and decarbonizing USPS's fleet while dramatically enhancing driver safety and productivity. These purpose built vehicles are equipped with the latest safety features that will support the success of USPS for the next 2 decades. We expect to increase our NGDV production rates throughout the year and achieve full rate production by the end of 2025, which should provide strong revenue growth during the year and into 2026.

[John Pfeifer, President & CEO at Oshkosh]

When we combine the NGDV ramp with revised pricing on the FMTV and FHTV programs, it's clear why we have a strong outlook for profitable growth in 2026 and beyond. With that, I'll turn it over to Matt to discuss our results in more detail, including our expectations for 2025.

[Matthew Field, Executive VP & CFO at Oshkosh]

Thanks, John. I'm grateful to join the team at Oshkosh and excited by the growth opportunities for the company, including those highlighted at CES. I also want to thank Mike Pack and the Finance and Accounting team for their support and patience during my transition. Please turn to Slide 8. Consolidated sales for the Q4 were $2,620,000,000 an increase of $157,000,000 or 6% over the same quarter last year.

[Matthew Field, Executive VP & CFO at Oshkosh]

Our top line growth primarily reflected increased volume and improved pricing in our vocational segment. In fact, solid performance at vocational is the primary driver for our strong Q4 results. Adjusted operating income was $245,000,000 or 9.4 percent of sales, an increase of $5,500,000 over the same quarter last year. The improvement in adjusted operating income was largely driven by higher sales volume and improved price cost dynamics, offset in part by CCAs and Defense. Adjusted earnings per share was $2.58 in the 4th quarter, essentially in line with 2.56 in the prior year.

[Matthew Field, Executive VP & CFO at Oshkosh]

The roughly flat adjusted earnings per share on higher operating income reflected the impact of higher interest expense on our revolving credit facility. We repurchased nearly 500,000 shares of our stock during the quarter at a cost of approximately $50,000,000 Full year free cash flow was about $270,000,000 for the year, including capital expenditures of approximately $280,000,000 This was lower than our expectation due in part to timing delays on unit deliveries and defense that we expect to reverse in 2025. Turning to our expectations for 2025 on Slide 9. We expect consolidated sales to be approximately $10,600,000,000 We are estimating adjusted operating income to be approximately $1,000,000,000 and we estimate that adjusted earnings per share will be approximately $11 While we expect lower sales and access, we expect to grow both sales and adjusted operating income for the vocational and defense segments. These estimates assume that present levels of tariff rates, raw material prices and supply chain performance continue into 2025 without significant disruption.

[Matthew Field, Executive VP & CFO at Oshkosh]

At a segment level, we are estimating access sales to be approximately $4,400,000,000 with an adjusted operating margin of about 13%, reflecting market conditions in North America and Europe. We expect the decline in revenue will be most pronounced in the 1st and 4th quarters, reflecting market softness as well as traditional seasonality. In vocational, we see sales of approximately $3,800,000,000 with expectations for adjusted operating margin to be approximately 15%. We expect a continuation of favorable price cost dynamics and volume growth to drive our improved margin outlook. For defense, we expect sales to be approximately $2,300,000,000 with expectations for adjusted operating margin of approximately 4%, reflecting less adverse CCAs and the ramp up of NGDV production.

[Matthew Field, Executive VP & CFO at Oshkosh]

We expect to invest about $250,000,000 in CapEx and our estimate for free cash flow is in the range of $300,000,000 to $400,000,000 This cash reflects the projected adverse impact of timing differences from vocational deposits on units produced as we work down the backlog. These can vary from year over year and normalize over time. We expect Q1 results to be the lowest of the year with adjusted EPS to be approximately $2 This reflects our expectations around the access industry dynamics as well as the impact from the progressive ramp up in NGDV production in defense. With that, I'll turn it back over to John for some closing comments.

[John Pfeifer, President & CEO at Oshkosh]

We reported another solid quarter to finish off an impressive year at Oshkosh, and we expect to continue to deliver healthy results moving forward. We have excellent visibility to grow revenue in our vocational segment, and our planned NGDV ramp up supports growth in our last mile delivery business. Additionally, we remain confident across the company in the long term growth opportunities driven by our people, innovative products and strong businesses, which we expect will continue to deliver shareholder value. We just announced our guidance for 2025, which we believe is balanced and realistic given current business conditions. Furthermore, we plan to share more details about our longer term outlook at our Investor Day later this year.

[John Pfeifer, President & CEO at Oshkosh]

This will be an outstanding opportunity to learn about our company and industry leading technologies from our business leaders. We look forward to speaking with you at the event. I'll turn it back to you, Pat, for the Q and A.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Thanks, John. I'd like to remind everyone to please limit your questions to 1 plus a follow-up and please stay disciplined on the follow-up question. After your follow-up, we ask that you

[Operator]

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

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Yes. Hi. Good morning, everyone.

[John Pfeifer, President & CEO at Oshkosh]

Good morning,

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Jerry. Hi. What obviously stands out in the quarter is the outstanding performance in vacation in the 4th quarter and the outlook for $425,000,000 I'm wondering if you could just talk a little bit more about what's the growth outlook in the core Pierce business versus the other parts of the portfolio, how broad based is the top line and margin strength that you're looking for in that business with a bit more context, please, if you don't mind?

[John Pfeifer, President & CEO at Oshkosh]

Yes, sure, Jerry. Thanks for the question. Yes, vocational is just continuing to do what we expect it to do, which is be a really resilient growing business, continuing to grow margins. We expect to continue to grow margins going forward. Our municipal fire truck business is a really, really important part of that business.

[John Pfeifer, President & CEO at Oshkosh]

We have big backlogs across all of our businesses and vocational, but I think that the municipal fire truck business kind of is the leader in terms of the strong order intake that we've had and we've built up this big backlog. So what we're doing in our fire business is we're really driving investment and effort in getting throughput through our core manufacturing plants. We're even adding some capacity at our new Murfreesboro plant, which is primarily building environmental vehicles, but we're also doing some cabs down there to continue to increase throughput. But we've got we'll continue to drive growth in both units as we continue to get better throughput and we'll get continued pricing realization, which is in the backlog that's also going to help us continue to perform really, really well in this business. So So the municipal the market in general for municipal fire trucks is strong.

[John Pfeifer, President & CEO at Oshkosh]

Municipalities want new technology and we're giving them new technology and they're upgrading their fleets and this is a really foundational part of that vocational story.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Really well done. And in terms of shifting gears to defense, as you hit the full production rate for the U. S. Postal contract exiting the year, what level of margins are you seeing in the

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, Jerry, it's Matt. So we're really pleased with the ramp up we're seeing. And as you mentioned, we'll progressively grow the pace of production across the year. While we don't provide specific guidance on USPS, we do see it as accretive to our overall defense business. And so we will talk more about that at our Investor Day, but also obviously once we get closer to 2026.

[Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs]

Thank you.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Thanks, Jerry.

[Operator]

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

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Thanks. Good morning. Congratulations. Just wanted to ask you a little bit about the visibility and access on the first half versus the second half and how that compares to usual at this time of the year and maybe some of the key drivers in your mind of the improving conditions you mentioned in the second half of the year in access?

[John Pfeifer, President & CEO at Oshkosh]

Yes. Thanks, Steve. I'll take your question. So I'll kind of give you a quick rundown of the market. We look at the market from a lot of different angles, but the primary angle that we have on the market is our relationship and communication with our customers.

[John Pfeifer, President & CEO at Oshkosh]

And we're always our customers have really good forecasting capability. They've got good visibility. Of course, we look at all the metrics. We look at from the Dodge Momentum Index to non residential construction metrics, but customers give us a lot of insight into the market. So it's a combination of that, that really goes into what we're expecting to see in the market in 2025.

[John Pfeifer, President & CEO at Oshkosh]

And fleet metrics in terms of fleet utilization is healthy. It's not unhealthy. Our fleet metrics are healthy, but combined with that, you've got non residential construction, primarily private non residential construction that's under a bit of pressure. And that's why we're seeing more a lot more fleet replacement happening because fleets are still aged, but not so much fleet growth happening. And when we look at the market, we pay attention to what our customers are expecting and that gives us the insight to say, hey, more typical seasonality, a little bit lower in the first half, but building momentum in the second half.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Okay. That's helpful. And then just to follow-up on the vocational side of things, maybe looking at the AeroTech business in particular, just curious how you see the evolution of that integration and the synergies looking like in 2025 as you embark on this 3rd year of ownership. We had a sense at CES that maybe still some of the best things are still to come here. How do you see the sort of incremental contributions from AeroTech here relative to other parts of vocational?

[John Pfeifer, President & CEO at Oshkosh]

Yes. Thanks for that question. AeroTech is a really strong business for us. It's doing what we had expected it would do. These markets are in secular growth.

[John Pfeifer, President & CEO at Oshkosh]

We're the leader across North America. I think CES is really a great way to view what we see the future of AeroTech being and why we acquired AeroTech. I mean, AeroTech, we showed cutting edge technology like autonomous jet bridges and our IOPS connected solutions. Those are available today, by the way, to future concepts like autonomous vehicles on the tarmac, like carrying luggage autonomously, that will happen in the near term future. But that's really the biggest synergy that we saw when we decided that AeroTech was a great fit to our portfolio is the technologies that we know and that AeroTech knows and needs are common and we can accelerate them by working together.

[John Pfeifer, President & CEO at Oshkosh]

We're really excited about AeroTech. We see a continued healthy future for this business.

[Steven Fisher, Managing Director & Equity Research Analyst at UBS Group]

Perfect. Thank you.

[Operator]

Our next question comes from the line of Angel Castillo with Morgan Stanley. Please proceed with your question.

[Angel Castillo, Executive Director at Morgan Stanley]

Hi, good morning and thanks for taking my question and congrats on the strong quarter. Maybe just wanted to dive a little bit deeper into the access sales decline. I was hoping you could give us some color or specifics as to maybe how much price decline versus volume decline is kind of embedded in the guidance? And if you could split that also in kind of first half versus second half, that would be helpful.

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, Angel, it's Matt. So overall, we do see this more pronounced in the first half. I think that's embedded in our guidance for Q1 with our EPS. In terms of price cost, we're not going to provide specific guidance, but we do obviously take a disciplined approach to pricing. And then volume is really where we see most of the decline in the access as we think the first half is going to be weaker.

[Matthew Field, Executive VP & CFO at Oshkosh]

We've had good dialogues with our customers and so we have good visibility into how we think the year is going to shape up, but that's kind of how we see access for the year.

[Angel Castillo, Executive Director at Morgan Stanley]

Got it. And then maybe just on the point or the commentary around what you're hearing from your customers, could you maybe parse that out or kind of split it up between what you're hearing from nationals versus the independents and how the kind of different channels might be suggesting the activity or the demand level is kind of shaping up across your key customers?

[John Pfeifer, President & CEO at Oshkosh]

Yes, sure, Angel. So when we talk to nationals versus the independents, it can the nationals tend to get the lion's share of the mega projects that we all talk and hear about every day and that's real and it's continuing and it's actually continuing to accelerate. So with the independents, it really is dependent upon the market that they're serving. And some are serving markets that are very healthy or they might be getting part of the big mega projects and others might be exposed to a lot of private construction where they're under a little bit of pressure. So it's a bit inconsistent between some of the rental companies depending on the end market that they're serving.

[John Pfeifer, President & CEO at Oshkosh]

I think the most important thing though is that equipment utilization is healthy. It's come down from all time highs, but it is at a healthy level. Our customers are comfortable with what their utilization rates are. And we think that 2025 is again mostly just pressured by private non residential construction being off due to persistent interest rates where they are.

[Angel Castillo, Executive Director at Morgan Stanley]

So just to clarify, is it fair to assume then that the independents in maybe some of those kind of smaller markets that don't have as much mega projects, that's where you're seeing that's what's driving the volume move more than anything or any difference in replacement demand there?

[John Pfeifer, President & CEO at Oshkosh]

Yes. In 2025, I think that you'll see we had mix that kind of went towards the independent rental companies in 2024. I think in 2025, it's going to come back to more national, a little bit more national mix than independents. That's what I can tell you. But it's very different from 1 independent rental customer to the next.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Thanks, Angel.

[Operator]

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

[Tami Zakaria, Analyst at JPMorgan Chase]

Hi, good morning. Thank you so much and very nice results.

[John Pfeifer, President & CEO at Oshkosh]

Good morning,

[John Pfeifer, President & CEO at Oshkosh]

Tami Zakaria.

[Tami Zakaria, Analyst at JPMorgan Chase]

So my first question is on NGTVs. I think I heard you say you're going to hit run rate by the end of the year. So I'm curious what's embedded in terms of the mix of ICE versus BEV in that assumption?

[John Pfeifer, President & CEO at Oshkosh]

Yes. It's business as usual, Tammy. This is a contract for 165,000 units and they've given us the first order for 50,000 that we've talked about for a little while. That makes us consistent with what it's been. It's business as usual.

[John Pfeifer, President & CEO at Oshkosh]

We're on schedule with production. We talk to the Postal Service all the time about our current pace of continuing to increase production. The Postal Service is delighted with the vehicles that they have that are delivering mail and delivering e commerce today in terms of the productivity benefits that they get out of this vehicle, which is really the first time the industry has ever seen a vehicle like this. So there's nothing really to report on the mix. It's consistent with what we've always talked about.

[Tami Zakaria, Analyst at JPMorgan Chase]

Got it. That is very helpful to know. And then my second question is, I know the situation around tariffs remain fluid. But could you just remind us what your exposure is in terms of imports from Mexico and Canada? And how you're thinking about it?

[Tami Zakaria, Analyst at JPMorgan Chase]

Should there be any tariffs on imports from any of those countries?

[John Pfeifer, President & CEO at Oshkosh]

Yes, I will. I think it's a great thing to bring up. So thank you. First, I want to make emphasize that we are an American manufacturer. The vast majority of products that we sell in the United States are made in the United States.

[John Pfeifer, President & CEO at Oshkosh]

So I just want to make sure that that part of it is clear. Most of what we sell in the U. S. Is made in the U. S.

[John Pfeifer, President & CEO at Oshkosh]

Sure, we're a global company, so we have some movement of certain categories in and out of the U. S. And a global supply chain. We tend to be a pretty resilient company in terms of we use our global footprint to adapt based upon how we can get the best cost that we need to get. So I'll give you an example.

[John Pfeifer, President & CEO at Oshkosh]

If we have to move something from one manufacturing plant to another, we typically can do that relatively quickly. Europe instituted tariffs recently from access equipment coming from China to Europe. We were supplying product from China to Europe. Essentially, we understood what the Europeans were telling us. We want you to make product for Europe in Europe.

[John Pfeifer, President & CEO at Oshkosh]

We've already shifted our production of product from our China operations to our European existing operations, no new bricks and mortar to serve the European market because the Europeans want us to serve Europe from Europe. If there's tariffs that affect us in terms of our supply chain or products that we might be bringing in from an operation outside the U. S, we will make similar adjustments to mitigate the impact of the tariff and do what the U. S. Is telling us to do, manufacture more in the U.

[John Pfeifer, President & CEO at Oshkosh]

S. But the vast majority of what we do in the U. S. Is made in the U. S.

[Tami Zakaria, Analyst at JPMorgan Chase]

Got it. Thank you.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Thanks, Tami.

[Operator]

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

[Stephen Volkmann, Equity Analyst at Jefferies & Company Inc]

Thank you, guys. There is if there's any commentary around how we should think about the defense margin sort of trajectory through the year here. It sounds like the timing FMTV contract maybe is a catalyst, but just anything we should think about sort of as the quarters progress relative to your 4% guidance?

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, Steve. It's Matt. So as we said, we guided to 4% as this is a transition year, ramping up NGDV. So accordingly, I would expect that margin to ramp up across the year. So 4% is obviously the average and starting lower and ending a little bit higher.

[Stephen Volkmann, Equity Analyst at Jefferies & Company Inc]

Okay. All right. Thanks. And then back to Access specifically, specifically, any commentary around what you're seeing in telehandlers? I think you had a bit of a potential hole to fill in that business.

[Stephen Volkmann, Equity Analyst at Jefferies & Company Inc]

Just how should we think about that in 2025?

[John Pfeifer, President & CEO at Oshkosh]

Yes. Thanks. I'll take that, Steve. First of all, we're encouraged with our telehandler business in total, really encouraged with it. We've been encouraged by share gains that we've been getting recently, which we expected to get.

[John Pfeifer, President & CEO at Oshkosh]

We've got a new line of agricultural telehandlers that we organically developed and then we made an acquisition of AUSA in Spain that also complements and gives us other agricultural telehandler product. So that's another area that gives us a lot of optimism as we continue to be the number one provider of telehandlers in the marketplace. So we kind of finished 2020 4 on a high note and we think that that's good momentum going into 2025, especially with a new market that we're entering in the ag space. Now the other comment here is, of course, we've had a change in agreement with CAT. I'll just bring that up.

[John Pfeifer, President & CEO at Oshkosh]

That's a bit of it's a speed bump. This is not unexpected. We've known about this for a few years. So we've got great relationship with CAT. We still do.

[John Pfeifer, President & CEO at Oshkosh]

We've got a really good relationship with our dealers. We supply their dealers with a full line of product. We will continue to supply their dealers with product as we go forward and we'll continue to execute on our telehandler priorities and we feel very good about it.

[Operator]

Our next question comes from the line of Jamie Cook with Truist.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

Congrats on a nice access margin guide this year given the sales decline. But so John, question for you. Obviously, the access margins are healthy here, but just trying to understand again under possibility of tariffs, what your pricing strategy will be? I mean with access equipment relative to what happened last time, like how do you think about firm pricing versus using escalators? So questionnaire.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

And then I guess my second question, on the Postal Service award, obviously, it doesn't sound like you see any risk to that contract, but just under Doge and things that are coming out under the new administration. Do you see any risk to that contract in terms of change in ICE versus EV or push out just given risk of dose? So anything you could provide from that context? Thank you.

[John Pfeifer, President & CEO at Oshkosh]

So going to your first question, which is on access. Tariffs and pricing. Tariffs, I'm sorry. I had to go back to your first question on tariffs and pricing.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

Yes, tariffs and pricing specifically.

[John Pfeifer, President & CEO at Oshkosh]

So our access our JLGs are really is becoming more resilient every year that goes by. And that's why they're continuing to deliver healthy margins in the face of a downturn that you can see in our guidance because of the resiliency that they have. So we'll be we believe that in different we've got a whole playbook on potential different scenarios that might unfold with regard to tariffs and Access has a very good mitigation plan depending on what may or may not occur with tariffs. So we think that we can mitigate a lot of it. Now within the supply chain where you've got global supply chains, sometimes there's things that you have more difficulty mitigating and we'll try to minimize or even potentially eliminate any need for price increases as a result of tariff.

[John Pfeifer, President & CEO at Oshkosh]

But that's essentially kind of the general MO that we have with regard to tariffs. That's what we did in Europe, right? We were able to mitigate most of those tariffs by using our footprint to manufacture differently to avoid the tariffs. On the U. S.

[John Pfeifer, President & CEO at Oshkosh]

Postal Service, what I can tell you is that we're happy with whatever mix the United States Postal Service orders from us. This is a great contract. It's a lot of vehicles. The Postal Service needs these vehicles. They're using high cost, unproductive vehicles today that were designed 40 plus years ago.

[John Pfeifer, President & CEO at Oshkosh]

And so every time they take a new vehicle with us, from us, their productivity goes up. So this is a really important program for the United States Postal Service. We are in contact with them every day. We will again, we'll deliver the mix that they want us to deliver to them. And we're pretty pleased with progress on this program.

[John Pfeifer, President & CEO at Oshkosh]

And I think the United States Postal Service is pleased with the vehicles that they're getting, they're absolutely delighted with. So that's what I'll tell you.

[Jamie Cook, Managing Director - Equity Research at Truist Securities]

Thank you.

[John Pfeifer, President & CEO at Oshkosh]

Thanks, Jamie.

[Operator]

Our next question comes from the line of Tim Theine with Raymond James. Please proceed with your question.

[Tim Thein, Managing Director & Research Analyst at Raymond James Financial]

Thank you. Good morning. John, back to the access commentary with respect to how you think the year plays out and presumably are largely influenced and educated by what you're hearing from your customers. Do you not that you want to be in business of forecasting orders, but I guess I'll ask it anyways, just how you expect the seasonality of orders has gotten kind of thrown around in post COVID, but I guess just quite bluntly, would you expect you see maybe a year over year pickup as we get into the Q2? And then maybe a little stronger accordingly in the back half of the year?

[Tim Thein, Managing Director & Research Analyst at Raymond James Financial]

Or just any kind of thoughts with respect to the timing and how you think that looks as we go through the year from an order standpoint?

[John Pfeifer, President & CEO at Oshkosh]

Yes. I think in general, what's happening is the industry is reverting to more normalized seasonal order patterns. And I think that's why you've seen some unusual order patterns the last few quarters. I think the thing to pay most attention to with our business is we've got a $1,800,000,000 backlog. A $1,800,000,000 backlog for JLG and our Access business is a healthy backlog.

[John Pfeifer, President & CEO at Oshkosh]

A healthy backlog in normal times with JLG is 3 to 6 months of backlog and we're right in the middle of that at our current size with 1,800,000,000. And so our customers look at our lead times and they say, okay, we're going to order in accordance with your lead times. Your lead times are good right now. They're normal. We'll order in accordance with those.

[John Pfeifer, President & CEO at Oshkosh]

We did get annual purchase orders in the Q4, but we've got a lot more annual purchase orders coming in the Q1 right now that we're in today. So I think the most important thing to pay attention to is what does the backlog look like. And we're happy with the $1,800,000,000 backlog today.

[Tim Thein, Managing Director & Research Analyst at Raymond James Financial]

Okay. And then just on vocational, as you think of it, you mentioned price cost being an expected tailwind in 2025 to margins. I think from memory through the at least the 1st 9 months of 2024, pricing was kind of a 6% to 7% year over year tailwind in 'twenty four. Is that a similar number we should be thinking about, higher or lower? How would you kind of characterize that in terms of the pricing benefit you're expecting in 2025 versus what you realized in 2024?

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, Tim. It's Matt. So we're still working through the pricing in the backlog. So I would expect some of that price dynamic to continue certainly. The price cost, the team has done a nice job managing in vocational.

[Matthew Field, Executive VP & CFO at Oshkosh]

The other thing I would just highlight is we talk a lot about Pierce, but what you saw in the sales numbers and what we're really proud of as well is our refuse and recycling business, which has performed extremely well specifically in the Q4 and is also a nice healthy business for us.

[Tim Thein, Managing Director & Research Analyst at Raymond James Financial]

All righty. Thank you.

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Thanks, Tim.

[Operator]

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

[Mircea Dobre, Associate Director of Research & Senior Research Analyst at Robert W. Baird & Co]

Thank you. Good morning. I'm going to try Steve Volkmann's question one more time on defense margin in terms of cadence. I guess the way I'm going to ask it, when I'm thinking about the Q1 EPS guidance, what sort of defense margin do you have baked in there? Is it going to be lower sequentially versus what we saw in the Q4?

[Matthew Field, Executive VP & CFO at Oshkosh]

So, hey, Mig, it's Matt. So thanks for taking the second stab at a good question. So Q1, obviously, that's kind of our lowest production quarter of the year on USPS. So you can expect that, at least we would expect that to be our lowest quarter in defense as well. I'm not going to comment specifically on quarter over quarter dynamics, but I think you should think about that as the lowest quarter for defense.

[Mircea Dobre, Associate Director of Research & Senior Research Analyst at Robert W. Baird & Co]

Okay. And I guess my follow-up sticking with the segment, if we're thinking about you getting to full production on the NGDV, It sounds like the other defense contracts that you've got are starting to normalize from a pricing standpoint. Should we be thinking in 2026, this segment will be operating as you previously deemed as normalized margins or is that still pretty premature to factor in at this point?

[John Pfeifer, President & CEO at Oshkosh]

So, I'll take that Mig. I think the one of the big movers of defense of course is new pricing contracts. We've taken some of our big programs and we've gone to what's called a sole source contract, which allows us to reset price to the realities of input costs. So, when you look at it, we've got the heavies and that we've already done and the mediums will be done shortly in terms of the pricing contracts. We start to get the benefit of the heavies not until sort of the late part of 2025 and then in through 'twenty six and beyond.

[John Pfeifer, President & CEO at Oshkosh]

And then the mediums, it'll be starting in 2026 in terms of getting the benefit of those pricing contracts. So a little bit slower to get the benefit there. And of course, the NGDV margin as we're in production ramp builds throughout the year as we continue every week to increase production output.

[Mircea Dobre, Associate Director of Research & Senior Research Analyst at Robert W. Baird & Co]

So I'm going to take that as a yes. Okay.

[John Pfeifer, President & CEO at Oshkosh]

Okay.

[Operator]

Our next question comes from the line of Kyle Menjes with Citi. Please proceed with your question.

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

Thank you. I was hoping so just within the access outlook and access implied down 15% for the year. Could you just help me just with maybe some range of how you're thinking about AWPs versus telehandlers in 2025?

[John Pfeifer, President & CEO at Oshkosh]

We don't really give that level of guidance within the guide that we've got. I think the most look at the down $15,000,000 we're guiding at $4,400,000,000 in revenue for access equipment. That's in line with all of the customer conversations we're having and all the metrics that we look at and what we expect with non residential construction, how it's going to impact the market. And it also includes the changing nature of the cat agreement. But suffice it to say that telehandlers have been strong for us and we expect telehandlers to continue to be strong going forward.

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

Got it. And then I was curious how you're thinking about telehandler capacity now with some puts and takes with the cat contracts, but then coming out with

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

this new line of telehandlers.

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

Just would be helpful to

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

hear how you're thinking about that.

[John Pfeifer, President & CEO at Oshkosh]

Yes. Well, what's happening with cat is not new news to us. We've known about this for a long time. And we've known about it before we put the plans in place to put more capacity in Jefferson City, Tennessee. So when we make capacity decisions, we make them because of 5 year plus outlooks.

[John Pfeifer, President & CEO at Oshkosh]

We don't make them because of a 1 year change in the market. And we see the 5 year outlook being continuously healthy for our business because of all the reasons that we talk about, new markets that we're putting the product into, mega projects, etcetera, etcetera. A lot of construction will continue to happen over the next 5 plus years, both in North America and globally. So when we put those plans together, that's what's in our line sight, not just the next 12 months. We're 100 percent continuing forward and continuing to get output and increasing output in that Jefferson City, Tennessee plant and we need the product.

[Kyle Menges, Vice President - Equity Research Analyst at Citi]

Got it. Helpful. Thank you.

[John Pfeifer, President & CEO at Oshkosh]

Thanks, Kyle.

[Operator]

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

[Chad Dillard, Analyst at Bernstein]

Hey, good morning, guys.

[Matthew Field, Executive VP & CFO at Oshkosh]

Good morning, Chad.

[John Pfeifer, President & CEO at Oshkosh]

Good morning.

[Chad Dillard, Analyst at Bernstein]

So I had a question on access. So first of all, I think you guys talked about annual purchase orders in 1Q. Just wondering if that's shifted from like a seasonal standpoint. I guess in other words, would orders be a little bit stronger than the normal seasonality would suggest in the Q1? And then secondly, in terms of like your capacity additions and access, how should we think about like the cadence in terms of ramping?

[Chad Dillard, Analyst at Bernstein]

And to what extent is there any absorption baked into the guidance for this year?

[John Pfeifer, President & CEO at Oshkosh]

Yes. Thank you. I think that there's been a slight shift in terms of annual purchase orders. In terms of what I mean is they used to mostly come in Q4 and now we're also working through annual purchase orders in Q1. And I think part of that's due to our backlog.

[John Pfeifer, President & CEO at Oshkosh]

Customers are saying, hey, I've got visibility out 4 or 5 months. So I'm going to wait a little bit to put this annual purchase order in. That's kind of the little bit of the dynamic that's happening. So a little bit of seasonality in there that's different from maybe the past. In terms of the Jefferson City telehandler plant, yes, that's all in our guidance in terms of the ramp for those products.

[John Pfeifer, President & CEO at Oshkosh]

We're in production today. We're shipping products today, but we don't get to full production until the back half of the year. And the costs for doing that are all in our guidance.

[Chad Dillard, Analyst at Bernstein]

Great. That's helpful. Second question on NGDV. Could you comment on the production rate that you're seeing, I guess, maybe exiting the Q4? And then just walk me through the, I guess, like the shape of the ramp as we go through 2025?

[John Pfeifer, President & CEO at Oshkosh]

It's kind of consistent as we go through 2025. We work with the United States Postal Service. We did a deliberate kind of a low rate production to start, which not only helps us, but also helps the Postal Service onboard vehicles and get the onboarding right. And we're continuing to progress and increase production every month and every quarter that goes by. And we will be at full rate production by the end of the year.

[Operator]

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

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Hey, guys. Good morning and thanks for taking my questions. I wanted to go back to one of your earlier first comments you made, John, about access about the first half and second half. You kind of said that it could be a bit stronger in the second half and it positions yourself well for 2026. So I know it's only January, but and of course, the economy is quite fluid still, but is your first instinct that 2020 could be an up year in access?

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

And perhaps that's a better way to ask the question is kind of what you're seeing currently in 2025 more of a blip than a multiyear downturn that you're kind of seeing the first phases up here?

[John Pfeifer, President & CEO at Oshkosh]

Yes. So first of all, I can't guide for 2026 right now. But when we make those comments, we work with our customers closely. They've got a backlog of projects. They have a visibility to their backlog of projects.

[John Pfeifer, President & CEO at Oshkosh]

And really, I think ultimately that's what gets baked into our forecast of equipment needs and when the equipment is needed and because we know when those projects are coming online because our customers tell us that. So that's really kind of what gives us the insight to say that we'll be doing a little bit more on the back half than the front half.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Okay. And then maybe secondly, if we can just dig a little bit deeper into the backlog in vocational. Could you comment on if the Pierce backlog got any better in the quarter? Was the book to bill above 1 there? Or at the very least, if you were to order a fire truck today, what year would you be able to deliver?

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, Mike, it's Matt. So the backlog continued to grow over the quarter. So we took more orders specifically in Pierce. So really pleased with the continued demand we have and the production ramp up the team is working on to support that demand. So it is the book to bill, I believe, was over 1.

[Matthew Field, Executive VP & CFO at Oshkosh]

So we're continuing to support those customers with everything we can build.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Thank you.

[Matthew Field, Executive VP & CFO at Oshkosh]

Thanks, Mike.

[Operator]

Our next question comes from the line of Steve Barger with KeyBanc. Please proceed with your question.

[Christian Zyla, Senior Associate Equity Research at KeyBanc Capital Markets]

Good morning. This is actually Christian Zeil on for Steve Barger. Thanks for taking the question.

[John Pfeifer, President & CEO at Oshkosh]

Hey, great. Good morning.

[Christian Zyla, Senior Associate Equity Research at KeyBanc Capital Markets]

Just looking at the second half of twenty twenty four, your incremental margin was 3% in 3Q and 4% in 4Q on high single digit and mid single digit revenues, respectively. Why was that? And does that get better in 2025?

[Matthew Field, Executive VP & CFO at Oshkosh]

So, in terms of that it's Matt, sorry. So you're really looking at a couple of things there. You're looking at business mix, driving that as well. So the strong vocational performance obviously impacts the sequential incremental margins. So really strong performance in vocational drives a lot of that in the quarter over quarter performance.

[Christian Zyla, Senior Associate Equity Research at KeyBanc Capital Markets]

Got it. Thank you. Next question, just balance sheet and leverage look pretty healthy. Are there parts of your portfolio that you think you are missing capabilities or that you can add via M and A? Or can you just frame up which of your segments could benefit the most with any incremental M and A like we saw with OSA and AeroTech?

[Christian Zyla, Senior Associate Equity Research at KeyBanc Capital Markets]

Thank you.

[John Pfeifer, President & CEO at Oshkosh]

Yes. So we do have a healthy balance sheet and we think that's good. You saw us do more aggressive share buybacks in the 4th quarter because for a lot of reasons and you'll probably see us continue to be deliberate about share buybacks going forward, one of the benefits that we have of a healthy balance sheet. But when we look at M and A, we have an always on process. We are always looking at targets.

[John Pfeifer, President & CEO at Oshkosh]

Every day, there's targets that we look at and debate. And when we look at things, we're very focused. So we look at ourselves as technology for the everyday hero. We say the purpose of the company is we deliver for the everyday hero and to make their lives better. And so where we have the opportunity to apply our technology and our capability to make a material difference, I.

[John Pfeifer, President & CEO at Oshkosh]

E, that's the synergy that's adjacent, a near adjacency to what we do. So AeroTech is a great example. We were already in airports. We saw all these categories that we weren't in. We said, hey, this is we can help with the technology on this product.

[John Pfeifer, President & CEO at Oshkosh]

We worked on that deal. It was a focus for us. It's a great business for us to be in. We're continuing to accelerate with synergies that you saw at CES. AUSA is another example.

[John Pfeifer, President & CEO at Oshkosh]

Hinoa in Italy is another example. Near adjacencies to JLG, where we can drive a lot of goodness in synergies because of technology and capability. So that's what we look at. We're always looking at targets, but we're also very careful. We are very deliberate and patient when we look at targets.

[John Pfeifer, President & CEO at Oshkosh]

Thanks, Christian.

[Operator]

Our next question is a final question from David Raso with Evercore. Please proceed with your question.

[David Raso, Senior Managing Director & Partner at Evercore]

Hi. I know we're running late. I'll be quick. Maybe I'm being a little greedy, but the vocational implied incremental margins of 25%. Can you lend some insight to why that want to be stronger?

[David Raso, Senior Managing Director & Partner at Evercore]

And maybe within that, if you look at the revenue growth for the whole segment guided shade below 15%, which of the categories within do you think will be above and below that 15% to maybe help us with the mix question? Thank you.

[Matthew Field, Executive VP & CFO at Oshkosh]

Hi, David. It's Matt. Thanks for the question. So in terms of the incremental in vocational, really what you're looking at there is some of our investments in terms of capacity and otherwise. So you're getting good growth across the business, but also investing in the business at the same time.

[Matthew Field, Executive VP & CFO at Oshkosh]

So that's a little bit what you see in the guide. And just want to point out again, I don't think you guys have highlighted enough on the call, the strong vocational operating income guidance we provided and the strength that provides to the overall business, I have to say. In terms of the mix of products, obviously, Pierce continues to deliver. I mentioned McNealys, which is a good business with good strong margins that continues to grow. You saw that in the sales numbers we posted as well.

[Matthew Field, Executive VP & CFO at Oshkosh]

And then, AeroTech is a great bolt on business that we acquired and embedded and have a fantastic new leader there as well. So I'm not going to provide specific guidance across those 3, but that's where we see the growth for the year.

[David Raso, Senior Managing Director & Partner at Evercore]

To now just a little, sorry, Matt. Is it fair to say Pierce is growing the fastest?

[Matthew Field, Executive VP & CFO at Oshkosh]

I don't we're not going to provide that level of specificity at this time. We can talk more about that in our quarterly results, but Pierce certainly has a good healthy backlog with good opportunities to grow.

[John Pfeifer, President & CEO at Oshkosh]

But David, the good news is in that vocational business, they're all growing.

[David Raso, Senior Managing Director & Partner at Evercore]

Yes. No, it just appears I think leads the show there with margins if I'm correct. So just curious how much of that backlog we can unleash in 2025 just to offset any access or wrinkles around the defense margins as the year plays out. So that was the spirit of the question. Okay.

[David Raso, Senior Managing Director & Partner at Evercore]

I appreciate it. Thank you.

[John Pfeifer, President & CEO at Oshkosh]

David, we think that the vocational business really pairs well with our access business. They're both great businesses. They're both driving really good margins. And I think that the 2 really complement one another well, and you're seeing that in 2025 as we continue to grow in vocational well access positions itself for the future.

[David Raso, Senior Managing Director & Partner at Evercore]

I appreciate that. Thank you. David?

[Operator]

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

[Patrick Davidson, Senior Vice President, Investor Relations at Oshkosh]

Yes. Thanks very much. As both Matt and John mentioned, we've got our Investor Day coming up a little bit later this year. Between now and then, we will be at a couple of different conferences in Florida and New York, and we hope to see you there. Thanks very much for dialing in today.

[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.

Participants

Executives

• Patrick Davidson, Senior Vice President, Investor Relations
• John Pfeifer, President & CEO
• Matthew Field, Executive VP & CFO

Analysts

• Jerry Revich, Senior Investment Leader & Head of US Machinery, Infrastructure, Sustainable Tech franchise at Goldman Sachs
• Steven Fisher, Managing Director & Equity Research Analyst at UBS Group
• Angel Castillo, Executive Director at Morgan Stanley
• Tami Zakaria, Analyst at JPMorgan Chase
• Stephen Volkmann, Equity Analyst at Jefferies & Company Inc
• Jamie Cook, Managing Director - Equity Research at Truist Securities
• Tim Thein, Managing Director & Research Analyst at Raymond James Financial
• Mircea Dobre, Associate Director of Research & Senior Research Analyst at Robert W. Baird & Co
• Kyle Menges, Vice President - Equity Research Analyst at Citi
• Chad Dillard, Analyst at Bernstein
• Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson
• Christian Zyla, Senior Associate Equity Research at KeyBanc Capital Markets
• David Raso, Senior Managing Director & Partner at Evercore