Oshkosh updates 2025 EPS outlook to $10.50–$11 amid Access segment headwinds and tariff impacts

Earnings Call Insights: Oshkosh Corporation (OSK) Q3 2025

MANAGEMENT VIEW

* John Pfeifer, President and CEO, stated that "we continue to successfully navigate a dynamic external environment with resilience and a strong sense of purpose to serve our everyday heroes with high-quality products that are safe, intuitive and productive." He highlighted third quarter results of adjusted operating margin of 10.2% on revenue of $2.7 billion and adjusted earnings per share of $3.20, marking a 9.2% increase over the prior year. Pfeifer noted, "despite lower revenue, we maintained a double-digit adjusted operating income margin year-over-year, reflecting continued strong performance in our vocational segment, improved returns in our Transport segment and a resilient double-digit margin in our Access segment."
* Pfeifer announced a revision to full-year 2025 adjusted EPS guidance to a range of $10.50 to $11 due to "slightly lower revenue expectations for both Access and Transport segments," citing customer caution amid tariffs and economic headwinds. He added, "we are aggressively pursuing cost levers to offset the impact of tariffs" and preparing to raise prices in 2026.
* Notable product launches included the AG619 mid-sized ag telehandler and the LiftPod in Europe, as well as new autonomous vehicle platforms and the Tempest-si Deicer for airport operations.
* Pfeifer reported strong vocational segment orders of $1.1 billion, led by Pierce fire trucks and AeroTech products, and highlighted the McNeilus Volterra ZSL refuse collection vehicle as a significant innovation.
* Matthew Field, Executive VP & CFO, said, "consolidated sales for the third quarter were nearly $2.7 billion, a decrease of $53 million or 2% from the same quarter last year, primarily due to lower sales volume in the access segment partially offset by higher vocational and transport sales volume and improved pricing." He also noted, "free cash flow for the quarter was strong at $464 million compared to $272 million in the third quarter of 2024, primarily reflecting working capital changes, including customer advances and inventory."

OUTLOOK

* Oshkosh updated its 2025 full year adjusted EPS guidance to a range of $10.50 to $11 on revenues of approximately $10.3 billion to $10.4 billion. Field stated, "we have further moderated our expected adjusted operating income margin in the Access segment to reflect our sales outlook and in the Transport segment for our present expectations for NGDV production."
* Cash flow outlook was raised to a range of $450 million to $550 million, up $50 million from the previous outlook, with plans to continue share repurchases at a modestly higher pace for the rest of the year.
* Pfeifer reiterated the company's long-term vision to "roughly double adjusted EPS to a range of $18 to $22 per share by 2028."

FINANCIAL RESULTS

* Adjusted operating income for the quarter was $274 million, and adjusted operating income margin of 10.2% was roughly in line with last year on slightly lower sales.
* Adjusted EPS was $3.20, $0.27 higher than last year, with a $0.30 benefit from lower tax expense due to resolution of a multiyear U.S. federal income tax audit.
* Share repurchases totaled approximately 666,000 shares for $91 million in the quarter, bringing year-to-date repurchases to $159 million.
* Access segment delivered adjusted operating income margins of 11% on sales of $1.1 billion, with sales down nearly 19% year-over-year due to weaker North American markets and higher discounts.
* Vocational segment achieved an adjusted operating income margin of 15.6% on $968 million in sales, with sales up nearly 19%, led by municipal fire apparatus and airport products.
* Transport segment sales increased to $588 million, with delivery vehicle revenue growing to $146 million and representing about a quarter of segment revenue.

Q&A

* Mircea Dobre, Baird, asked about Access segment demand and tariffs for 2026. Pfeifer responded, "we'll have a lot better clarity for you when we get through the fourth quarter, but...the market long term looks very, very healthy." Field quantified tariffs at "$30 million to $40 million...for the full year. Most of that being in the fourth quarter."
* Stephen Volkmann, Jefferies, questioned tariff mitigation and vocational segment incrementals. Field replied, "our approach to tariffs is really multifaceted...certainly, the goal is we mitigate as much as we can on the cost side and then we look at what pricing we need to discuss with our customers." He added, "our guidance is about 33% actually" on vocational incrementals for the year.
* Jamie Cook, Truist, asked about Access market share and discounting. Pfeifer emphasized a "local-for-local strategy" and stated that JLG's U.S. manufacturing footprint helps manage tariffs relative to competitors. Field noted, "you saw in the third quarter is about a 3%, 4% all-in discount level."
* Tami Zakaria, JPMorgan, inquired about warranty costs. Field said, "that's really a onetime item we had in the third quarter...specifically in the defense sector."
* Michael Shlisky, D.A. Davidson, asked about Access telehandlers. Pfeifer attributed the sales drop to the end of a long-term agreement with Cat.
* Kyle Menges, Citi, queried NGDV production and CapEx. Pfeifer said, "we continue to target full rate production by the end of this year."
* Angel Castillo, Morgan Stanley, questioned Access order caution. Pfeifer replied, "equipment utilization is healthy in the market. Used market is healthy."

SENTIMENT ANALYSIS

* Analysts pressed for details on tariffs, Access demand, and production challenges, with a slightly negative to cautious tone, particularly around the sustainability of margins and tariff pass-throughs.
* Management maintained a confident tone in prepared remarks, but responses in Q&A reflected caution and some defensiveness, especially regarding tariffs and the pace of NGDV production. Field used phrases like "it would be preliminary for me to speculate" and Pfeifer highlighted uncertainty about 2026 production, indicating some hesitation.
* Compared to the previous quarter, management's tone shifted from assured margin transformation to more cautious language around guidance and short-term demand, while analysts increased focus on near-term risks and mitigation strategies.

QUARTER-OVER-QUARTER COMPARISON

* Third quarter guidance was revised down to $10.50–$11 adjusted EPS from the prior $11 target, and revenue guidance lowered to $10.3–$10.4 billion from $10.6 billion previously.
* Management cited increased customer caution in Access and Transport segments and higher-than-expected tariff impacts versus the previous quarter's expectation of full tariff offset.
* Analysts shifted focus from long-term growth and margin expansion in Q2 to short-term headwinds and mitigation in Q3, particularly in Access and Transport segments.
* The tone moved from confidence about margin expansion and backlog execution in Q2 to caution about demand visibility and production pace in Q3.

RISKS AND CONCERNS

* Management highlighted headwinds from tariffs, noting expected full-year costs of $30 million to $40 million, with most impact in Q4 and ongoing effects into 2026.
* Customer caution in the Access segment and a more challenging pricing environment were noted, with higher discounting and delayed equipment purchases.
* Ramp-up challenges in NGDV production were acknowledged, with ongoing efforts to reach full rate production by year-end.
* Warranty costs in the defense segment were described as a one-time headwind.

FINAL TAKEAWAY

Oshkosh's third quarter reflected resilience in the face of tariff headwinds and customer caution, prompting a downward revision to full-year guidance. The company remains committed to long-term margin expansion and EPS growth, actively pursuing cost mitigation and preparing for pricing actions in 2026. While demand in key segments remains fundamentally healthy, management recognized ongoing uncertainty and near-term challenges that will shape performance in the quarters ahead.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/osk/earnings/transcripts]

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