Earnings Call: Oshkosh Reports Steady Growth Amid Market Challenges

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Earnings Call: Oshkosh Reports Steady Growth Amid Market Challenges

Oshkosh Corporation (OSK) announced a 9% revenue increase to $2.74 billion in the third quarter of 2024, with an adjusted operating margin of 10.3% and adjusted earnings per share (EPS) of $2.93. Despite facing softer market conditions in North America, the company has begun servicing with the new generation delivery vehicles from the U.S. Postal Services and anticipates strong long-term growth. However, Oshkosh revised its full-year EPS outlook downward and expects some market softness in 2025.

Key Points:

  • Oshkosh Corporation reported a 9% revenue increase in Q3 2024.
  • Adjusted EPS met expectations at $2.93, while the full-year outlook was lowered to $11.35.
  • U.S. Postal Services began using Oshkosh's new generation delivery vehicles.
  • The Access segment showed growth but is under pressure from high interest rates.
  • The Professional segment's revenue increased by 17.6%, with strong demand backlog.
  • Defense segment sales rose by 14%, significantly contributed by NGDV production.
  • Oshkosh acquired AUSA to enhance its specialty equipment offerings.
  • The company remains optimistic about long-term growth despite current challenges.

Company Outlook:

  • Oshkosh expects consolidated sales of approximately $10.6 billion for 2024.
  • Adjusted operating income is projected to be around $1.1 billion.
  • The Access segment is expected to reach $5.1 billion in sales.
  • Professional sales are expected to reach $3.25 billion.
  • Capital expenditures were lowered to $275 million, with free cash flow projected at $350 million.
  • The company forecasts around $3.25 billion in sales for the upcoming period and a 13.25% adjusted operating margin.

Negative Highlights:

  • Full-year EPS outlook was lowered due to softer market conditions in North America.
  • Some orders have been delayed or canceled, affecting the backlog.
  • Market softness is expected in 2025, particularly in the specialty construction sector.

Positive Highlights:

  • Strong demand and increasing backlog in the Professional segment.
  • Positive synergies from the AeroTech acquisition, focusing on electrification and autonomy.
  • Healthy backlogs and growth expectations in infrastructure investments.
  • The Defense segment is expected to maintain a 2.25% adjusted operating margin.

Misses:

  • The adjusted EPS outlook for 2024 was revised from $11.75 to $11.35.
  • Free cash flow estimates were reduced by $25 million to $350 million.

Q&A Highlights:

  • Deliveries of the NGDV program are increasing, with production expected to ramp up through 2025.
  • Pricing of existing backlog orders has remained fixed despite possible input cost fluctuations.
  • The electrification market for commercial vehicles is developing, with gradual growth expected over the next 10 to 20 years.
  • Oshkosh will showcase its innovations at the CES trade show in Las Vegas in early January.

Oshkosh Corporation continues to manage market fluctuations through a focus on innovation, technological advancements, and strategic acquisitions. With robust backlogs and strategic initiatives, the company is positioned for long-term growth despite short-term market softness.

InvestingPro Insights: Oshkosh Corporation's (OSK) recent financial performance and market position are further illuminated by data from InvestingPro. The company's market capitalization stands at $7.02 billion, reflecting its significant presence in the specialty vehicle and vehicle body segments.

InvestingPro data shows that Oshkosh's P/E ratio currently stands at 10.39, with a trailing twelve-month adjusted P/E of 9.24 as of Q2 2024. These figures align with the information that the company is trading at a low earnings multiple according to "InvestingPro Tip," making it potentially attractive for value investors, especially considering the company's 15.82% revenue growth over the past twelve months.

The company’s financial health appears solid, with the "InvestingPro Tip" indicating that liquid assets exceed short-term liabilities. This financial stability is crucial for Oshkosh as it navigates the softer market conditions outlined in its earnings report and prepares for potential challenges in 2025.

Another noteworthy "InvestingPro Tip" is that Oshkosh has increased its dividend for eleven consecutive years, with a current yield of 1.73%. This consistent dividend growth, alongside a 12.2% increase over the last twelve months, emphasizes the company’s commitment to shareholder returns amid market volatility.

The company's profitability is further underscored by an impressive 65.16% EBITDA growth over the past twelve months, supporting its positive outlook for long-term growth.

For investors seeking a more comprehensive analysis, InvestingPro provides 9 additional tips and insights on Oshkosh Corporation. This supplementary information can offer valuable context for understanding the company's market position and future prospects.