# Oshkosh Corp: Form 10-Q for the period ended Mar 31, 2024

- Company: [Oshkosh Corp](/companies/osk.md) (CIK 775158)
- Form: 10-Q
- Filed: 2024-04-25
- Accepted by EDGAR: Apr 25, 2024, 14:20 ET
- Period: 2024-03-31
- Accession: 0000950170-24-048137
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/775158/000095017024048137/osk-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/775158/000095017024048137/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.54bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.07bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $470.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $196.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $259.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $54.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $179.4m | us-gaap:ProfitLoss |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 66,127,651 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$355.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $100.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $30.1m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $15.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $69.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $4.73bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $9.47bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $3.32bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-03-31 | $598.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $641.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $3.83bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,947 characters.

### Cautionary Statement About Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption “Overview” are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Company’s access equipment, fire apparatus, refuse collection and air transportation equipment markets, which are particularly impacted by the strength of U.S. and European economies and construction seasons; the Company’s estimates of access equipment demand which, among other factors, is influenced by historical customer buying patterns and rental company fleet replacement strategies; the impact of orders and costs on the U.S. Postal Service (USPS) contract; the impact of severe weather, war, natural disasters or pandemics that may affect the Company, its suppliers or its customers; the Company’s ability to increase prices or impose surcharges to raise margins or to offset higher input costs, including increased raw material, labor, freight and overhead costs; the Company's ability to accurately predict future input costs associated with Defense contracts; the Company’s ability to attract and retain production labor in a timely manner; the Company's ability to successfully integrate the AeroTech acquisition and to realize the anticipated benefits associated with the same; the strength of the U.S. dollar and its impact on Company exports, translation of foreign sales and the cost of purchased materials; the Company’s ability to predict the level and timing of orders for indefinite delivery/indefinite quantity contracts with the U.S. federal government; budget uncertainty for the U.S. federal government, including risks of future budget cuts, the impact of continuing resolution funding mechanisms and the potential for shutdowns; the impact of any U.S. Department of Defense solicitation for competition for future contracts to produce military vehicles; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’s products; risks associated with international operations and sales, including compliance with the Foreign Corrupt Practices Act; risks that a trade war and related tariffs could reduce the competitiveness of the Company’s products; the Company’s ability to comply with complex laws and regulations applicable to U.S. government contractors; cybersecurity risks and costs of defending against, mitigating and responding to data security threats and breaches impacting the Company; the Company’s ability to successfully identify, complete and integrate other acquisitions and to realize the anticipated benefits associated with the same; and risks related to the Company’s ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including, but not limited to, the Company’s Current Report on Form 8-K filed with the SEC on April 25, 2024 and Item 1A. of Part II of this Quarterly Report on Form 10-Q.

All forward-looking statements, including those under the caption “Overview,” speak only as of the date the Company files this Quarterly Report on Form 10-Q with the SEC. The Company assumes no obligation, and disclaims any obligation, to update information contained in this Quarterly Report on Form 10-Q. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.

All references herein to earnings per share refer to earnings per share assuming dilution.

### General

Major products manufactured and marketed by each of the Company’s business segments are as follows:

*Access —* aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as carriers and wreckers. Access customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and towing companies.

*Defense —* tactical vehicles, trailers, weapons system integration and parts sold to the U.S. military and to other militaries around the world and delivery vehicles for the USPS.

*Vocational —* custom and commercial firefighting vehicles and equipment, aircraft rescue and firefighting (ARFF) vehicles, simulators, mobile command and control vehicles and other emergency vehicles primarily sold to fire departments, airports and other governmental units; refuse collection vehicles sold to commercial and municipal waste haulers; aviation ground support products, gate equipment and airport services provided to commercial airlines, airports, air-freight carriers, ground handling customers and the military; front-discharge concrete mixers sold to ready-mix companies; and field service vehicles and truck-mounted cranes sold to mining, construction and other companies.

### Overview

The Company reported earnings per share of $2.71 in the first quarter of 2024, which more than doubled earnings per share of $1.34 in the first quarter of 2023. The strong results in the first quarter of 2024 were primarily the result of improved price/cost dynamics as well as favorable product and customer mix. As expected, orders in the Access segment began to normalize in the first quarter of 2024, leading to lower orders in the quarter compared to the first quarter of 2023. As the Access segment is largely booked for 2024, the Company continues to expect that the majority of 2025 orders will be booked in the second half of 2024, particularly in the fourth quarter.

The Company continues to make investments in technologies that it expects will drive demand for the next decade. In April, the Company began production of its Next Generation Delivery Vehicle (NGDV) for the USPS. The Company expects to increase NGDV production throughout 2024 and 2025 and be at full rate production by the start of 2026. This production is expected to offset the loss of the domestic Joint Light Tactical Vehicle (JLTV) program.

Consolidated net sales in the first quarter of 2024 increased $275.7 million, or 12.2%, to $2.54 billion compared to the first quarter of 2023 primarily due to the impact of sales from the acquisition of AeroTech, improved organic volume and improved pricing, offset in part by the impact of the sale of the rear-discharge concrete mixer business.

Consolidated operating income increased 98.5% to $259.7 million, or 10.2% of sales, in the first quarter of 2024 compared to $130.8 million, or 5.8% of sales, in the first quarter of 2023. The increase in operating income was primarily due to improved price/cost dynamics, favorable mix, higher organic sales volume and the absence of a loss on the sale of a business.

As a result of the positive start of 2024, solid execution and healthy demand, the Company increased its 2024 earnings per share estimate from in the range of $9.45 to in the range of $10.55 on estimated operating income of $1.0 billion and estimated consolidated sales of $10.7 billion. The revised earnings per share estimate includes a $0.70 per share charge related to amortization of purchased intangibles. Excluding amortization of purchased intangibles, the Company increased its 2024 adjusted earnings per share estimate to be in the range of $11.25.

The Company expects Access segment sales and operating margin in 2024 to be in the range of $5.4 billion and 15.25% compared to the Company’s previous expectation of $5.2 billion and 14.8%, respectively, largely as a result of expected improved production throughput and improved sales mix. Compared to the first quarter of 2024, the Company expects customer mix to moderate and new product development spending to increase for the remaining quarters of 2024.

The Company continues to expect Defense segment sales and operating margin in 2024 to be in the range of $2.1 billion and 2.25%, respectively.

The Company expects Vocational segment sales and operating margin in 2024 to be in the range of $3.2 billion and 10% compared to the Company's previous expectation of $3.1 billion and 9.4%, respectively, largely as a result of expected increased chassis availability and improved price/cost dynamics.

The Company expects corporate expenses for 2024 to be $190 million compared to its previous expectation of $180 million as a result of higher expected incentive and stock-based compensation expense.

The Company expects earnings per share in the second quarter of 2024 will be in the range of $2.82, reflecting continued strong demand and similar supply chain dynamics to those the Company experienced during the first quarter of 2024. Estimated earnings per share for the second quarter of 2024 includes an $0.18 per share charge related to amortization of purchased intangibles. The Company expects an increase in net sales of approximately 15% compared to the second quarter of 2023, largely due to the acquisition of AeroTech.

### RESULTS OF OPERATIONS

### CONSOLIDATED RESULTS

The following table presents consolidated results (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $2,543.8 | $2,268.1 | $275.7 | 12.2% |
| Cost of sales | 2,073.8 | 1,934.3 | 139.5 | 7.2% |
| Gross income | 470.0 | 333.8 | 136.2 | 40.8% |
| % of sales | 18.5% | 14.7% | 380 bps |  |
| Selling, general and administrative | 196.8 | 199.1 | (2.3) | -1.2% |
| Amortization of purchased intangibles | 13.5 | 3.9 | 9.6 | 246.2% |
| Operating income | $259.7 | $130.8 | $128.9 | 98.5% |
| % of sales | 10.2% | 5.8% | 440 bps |  |

The following table presents net sales by geographic region based on product shipment destination (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| North America | $2,243.9 | $1,928.7 | $315.2 | 16.3% |
| Europe, Africa and Middle East | 192.0 | 223.7 | (31.7) | -14.2% |
| Rest of the World | 107.9 | 115.7 | (7.8) | -6.7% |
| Consolidated | $2,543.8 | $2,268.1 | $275.7 | 12.2% |

#### First Quarter 2024 Compared to 2023

Consolidated net sales increased primarily due to the inclusion of sales related to the AeroTech acquisition ($176 million), higher sales volume ($77 million), and higher pricing in response to higher input costs ($40 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business ($14 million).

The improvement in consolidated gross margin was primarily due lower material & logistics costs (140 basis points), improved pricing (120 basis points) and improved sales mix (80 basis points).

Consolidated selling, general and administrative expenses were relatively flat with the prior year as the addition of selling, general and administrative expenses for AeroTech ($20 million) were offset by the absence of a loss on the sale of the rear-discharge concrete mixer business ($13 million) and a reduction of selling, general and administrative expenses related to the divested business ($5 million).

Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech ($9 million).

The increase in consolidated operating income was primarily due to improved material & logistics costs ($35 million), improved pricing ($40 million), favorable sales mix ($29 million), the impact of higher gross margin associated with higher organic sales volume ($18 million) and the absence of a loss on the sale of a business ($13 million).

The following table presents consolidated non-operating changes (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest expense, net of interest income | $(20.8) | $(7.2) | $(13.6) | 188.9% |
| Miscellaneous, net | (2.0) | 5.8 | (7.8) | -134.5% |
| Provision for income taxes | 54.7 | 34.2 | 20.5 | 59.9% |
| Effective tax rate | 23.1% | 26.4% |  |  |
| Losses of unconsolidated affiliates | $(2.8) | $(6.7) | $3.9 | -58.2% |

#### First Quarter 2024 Compared to 2023

Interest expense, net of interest income increased due to increased borrowings on the Company's Revolving Credit Facility and lower cash holdings as a result of the acquisition of AeroTech in the third quarter of 2023.

Miscellaneous, net included a gain on a settlement with the Company's pension advisor of $5 million in the first quarter of 2023.

The effective tax rate in the first quarter of 2024 included discrete tax benefits of $2 million. The effective tax rate in the first quarter of 2023 included discrete tax charges of $3 million, including a $2 million charge related to a valuation allowance recorded with respect to a deferred tax asset on marketable securities.

Losses of unconsolidated affiliates included a write-down of an investment in an equity interest in an entity in Mexico of $6 million in the first quarter of 2023.

### SEGMENT RESULTS

### Access

The following table presents the Access segment results (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $1,237.5 | $1,193.2 | $44.3 | 3.7% |
| Cost of sales | 958.9 | 988.4 | (29.5) | -3.0% |
| Gross income | 278.6 | 204.8 | 73.8 | 36.0% |
| % of sales | 22.5% | 17.2% | 530 bps |  |
| Selling, general and administrative | 68.2 | 68.8 | (0.6) | -0.9% |
| Amortization of purchased intangibles | 2.3 | 1.0 | 1.3 | 130.0% |
| Operating income | $208.1 | $135.0 | $73.1 | 54.1% |
| % of sales | 16.8% | 11.3% | 550 bps |  |

#### First Quarter 2024 Compared to 2023

Access segment net sales increased primarily as a result of improved sales volume in North America offset in part by lower sales volume in Europe.

The improved gross margin in the Access segment was primarily due to lower material & logistics costs (320 basis points), improved customer mix (130 basis points) and improved pricing (40 basis points).

The increase in operating income in the Access segment was primarily due to improved material & logistics costs ($38 million), improved customer mix ($16 million), the impact of higher gross margin associated with higher sales volume ($10 million) and improved pricing ($7 million).

### Defense

The following table presents the Defense segment results (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $536.9 | $513.1 | $23.8 | 4.6% |
| Cost of sales | 490.4 | 474.8 | 15.6 | 3.3% |
| Gross income | 46.5 | 38.3 | 8.2 | 21.4% |
| % of sales | 8.7% | 7.5% | . 120 bps |  |
| Selling, general and administrative | 33.9 | 35.0 | (1.1) | -3.1% |
| Amortization of purchased intangibles | 1.3 | 1.6 | (0.3) | -18.8% |
| Operating income | $11.3 | $1.7 | $9.6 | 564.7% |
| % of sales | 2.1% | 0.3% | . 180 bps |  |

#### First Quarter 2024 Compared to 2023

Defense segment net sales increased primarily due to higher aftermarket parts and Family of Medium Tactical Vehicle sales volume, offset in part by lower JLTV program volume. JLTV production under the Company's domestic JLTV contract is expected to conclude early in 2025 as the domestic follow-on contract was awarded to another company. The domestic JLTV contract accounted for $229 million of sales in the first quarter of 2024.

The increase in gross margin in the Defense segment was due to improved product mix (90 basis points) as a result of the higher mix of aftermarket parts sales.

The increase in operating income in the Defense segment was primarily a result of improved product mix ($5 million) and the impact of higher gross margin associated with higher sales volume ($4 million).

### Vocational

The following table presents the Vocational segment results (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $772.4 | $562.7 | $209.7 | 37.3% |
| Cost of sales | 621.9 | 469.5 | 152.4 | 32.5% |
| Gross income | 150.5 | 93.2 | 57.3 | 61.5% |
| % of sales | 19.5% | 16.6% | . 290 bps |  |
| Selling, general and administrative | 60.5 | 63.8 | (3.3) | -5.2% |
| Amortization of purchased intangibles | 9.9 | 1.3 | 8.6 | 661.5% |
| Operating income | $80.1 | $28.1 | $52.0 | 185.1% |
| % of sales | 10.4% | 5.0% | . 540 bps |  |

#### First Quarter 2024 Compared to 2023

Vocational segment net sales increased due to the inclusion of AeroTech sales ($176 million) and higher pricing in response to higher input costs ($34 million).

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (330 basis points).

The increase in operating income in the Vocational segment was largely a result of improved pricing ($34 million), the absence of a loss on the sale of the rear-discharge concrete mixer business ($13 million) and improved product mix ($9 million).

### Corporate and Intersegment Eliminations

The following table presents the corporate costs and intersegment eliminations (in millions):

|  | First Quarter 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $(3.0) | $(0.9) | $(2.1) | 233.3% |
| Cost of sales | 2.6 | 1.6 | 1.0 | 62.5% |
| Gross income | (5.6) | (2.5) | (3.1) | 124.0% |
| Operating expenses | 34.2 | 31.5 | 2.7 | 8.6% |
| Operating income | $(39.8) | $(34.0) | $(5.8) | 17.1% |

#### First Quarter 2024 Compared to 2023

Corporate operating expenses increased primarily due to higher new product development investments ($3 million) and higher share-based compensation expenses ($3 million).

### Liquidity and Capital Resources

The Company generates significant capital resources from operating activities, which is the expected primary source of funding for the Company. In addition to cash generated from operations, the Company had other sources of liquidity available at March 31, 2024, including $69.9 million of cash and cash equivalents and $444.3 million of unused available capacity under the Revolving Credit Facility (as defined in “Liquidity”). Borrowings under the Revolving Credit Facility could, as discussed below, be limited by a financial covenant contained in the Credit Agreement (as defined in “Liquidity”). The Company was in compliance with the financial covenant at March 31, 2024 and expects to remain in compliance with the financial covenant contained in the Credit Agreement for the foreseeable future.

The Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditures related to capacity and strategic investments. The Company remains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its projected needs. To provide additional flexibility for working capital needs, organic and inorganic investments as well as share repurchases, the Company amended the Credit Agreement in April 2024 to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $0.45 billion.

### Financial Condition at March 31, 2024

The Company’s cash and cash equivalents and capitalization were as follows (in millions):

|  | March 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents | $69.9 | $125.4 |
| Total debt | 1,239.9 | 772.5 |
| Total shareholders’ equity | 3,826.0 | 3,705.3 |
| Total capitalization (debt plus equity) | 5,065.9 | 4,477.8 |
| Debt to total capitalization | 24.5% | 17.3% |

The Company’s ratio of debt to total capitalization of 24.5% at March 31, 2024 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2023 was primarily due to borrowings under the Revolving Credit Facility primarily related to working capital and capital expenditures. The increase in working capital was primarily the result of a seasonal build in working capital in the Access segment, the payment of 2023 incentive compensation, a reduction in customer advances as the rate of customer advances has been lower on new orders and the normalization of accounts payable due to more timely invoice processing.

The Company’s goal is to maintain an investment-grade credit rating. The rating agencies periodically update the Company’s credit ratings as events or changes in economic conditions occur. At March 31, 2024, the long-term credit ratings assigned to the Company’s senior debt securities by the credit rating agencies engaged by the Company were as follows:

| Rating Agency | Rating |
| --- | --- |
| Fitch Ratings | BBB |
| Moody’s Investor Services, Inc. | Baa3 |
| Standards & Poor’s | BBB |

Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) increased from 44 days at December 31, 2023 to 50 days at March 31, 2024. Days sales outstanding for segments other than the Defense segment increased from 49 days at December 31, 2023 to 56 days at March 31, 2024 due to timing of sales and receipt of cash from customers primarily within the Access segment. Consolidated inventory turns (defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) decreased from 4.2 times at December 31, 2023 to 4.1 times at March 31, 2024. Consolidated days payable outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 62 days at March 31, 2024, down from 72 days at December 31, 2023 due to more timely invoice processing.

### Cash Flows

#### Operating Cash Flows

Operating activities used $355.8 million of cash in the first three months of 2024 compared to providing $79.8 million during the first three months of 2023. Higher net income during the first three months of 2024 was offset by a larger increase in working capital. The increase in working capital was primarily the result of a seasonal build in working capital, primarily in the Access segment ($134 million), the payment of 2023 incentive compensation ($111 million), a reduction in customer advances as the rate of customer advances has been lower on new orders ($96 million) and the normalization of accounts payable due to more timely invoice processing ($88 million). The Company continues to expect to generate approximately $725 million of cash flows from operations in 2024.

#### Investing Cash Flows

Investing activities used cash of $111.2 million in the first three months of 2024 compared to $277.1 million during the first three months of 2023. The Company used $187.9 million to fund the acquisition of Hinowa S.p.A. during the first three months of 2023. Through March 31, 2024, the Company used $100.1 million for capital expenditures. The Company continues to anticipate that it will invest $300 million on capital expenditures in 2024 as the Company completes its three facilities in Tennessee and South Carolina.

#### Financing Cash Flows

Financing activities provided cash of $412.5 million in the first three months of 2024 compared to the use of $71.1 million during the first three months of 2023. During the first three months of 2024, the Company used borrowings under the Revolving Credit Facility to fund working capital and capital expenditures. In the first three months of 2024, the Company repurchased 129,494 shares of its Common Stock at an aggregate cost of $15.1 million. As of March 31, 2024, the Company had approximately 11.2 million shares of Common Stock remaining under its repurchase authorization. In the first three months of 2023, the Company repurchased 173,169 shares of its Common Stock at an aggregate cost of $15.2 million.

### Liquidity

#### Senior Credit Agreement

On March 23, 2022, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion. At March 31, 2024, borrowings under the Revolving Credit Facility of $641.0 million and outstanding letters of credit of $14.7 million reduced available capacity under the

Revolving Credit Facility to $444.3 million. On April 3, 2024, the Company amended the Credit Agreement to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $0.45 billion. Following the amendment, the maximum aggregate amount of availability under the Revolving Credit Facility is $1.55 billion.

Under the Credit Agreement, the Company is obligated to pay (i) an unused commitment fee ranging from 0.080% to 0.225% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.438% to 1.500% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.

#### Covenant Compliance

The Credit Agreement contains various restrictions and covenants, including a requirement that the Company maintain a leverage ratio at certain levels, subject to certain exceptions, restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional subsidiary indebtedness and consummate acquisitions and a restriction on the disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole. The Company was in compliance with the financial covenant contained in the Credit Agreement as of March 31, 2024 and expects to be able to meet the financial covenant contained in the Credit Agreement over the next twelve months.

#### Senior Notes

In May 2018, the Company issued $300.0 million of 4.60% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”). In February 2020, the Company issued $300.0 million of 3.10% unsecured senior notes due March 1, 2030 (the “2030 Senior Notes”). The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 Senior Notes and 2030 Senior Notes at any time for a premium.

Refer to Note 13 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company’s debt as of March 31, 2024.

### Application of Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires the Company to make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. The accounting policies that the Company believes are most critical to the portrayal of its financial condition and results of operations are reported in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

### Critical Accounting Estimates

The Company’s disclosures of critical accounting estimates in its Annual Report on Form 10-K for the year ended December 31, 2023 have not materially changed since that report was filed.

### New Accounting Standards

See Note 2 of the Notes to Condensed Consolidated Financial Statements for a discussion of the impact of new accounting standards.

### Customers and Backlog

Sales to the U.S. government comprised approximately 20% of the Company’s net sales in the first three months of 2024. No other single customer accounted for more than 10% of the Company’s net sales for this period. A substantial majority of the Company’s net sales are derived from the fulfillment of customer orders that are received prior to commencing production.

The Company’s backlog at March 31, 2024 increased 10.2% to $16.35 billion compared to $14.84 billion at March 31, 2023. Access segment backlog decreased 3.3% to $4.23 billion at March 31, 2024 compared to $4.38 billion at March 31, 2023 which the Company believes is due to the normalizing of orders in connection with improved product availability. Defense segment backlog decreased 5.7% to $6.45 billion at March 31, 2024 compared to $6.83 billion at March 31, 2023 primarily as a result of the wind-down of production under the Company's domestic JLTV contract. Vocational segment backlog increased 56.1% to $5.67 billion at March 31, 2024 compared to $3.63 billion at March 31, 2023 due to strong demand for fire apparatus and rising prices as well as the inclusion of AeroTech backlog of $0.83 billion.

Backlog represents the dollar amount of revenues that the Company anticipates from customer contracts that have been awarded and/or are in progress. Reported backlog includes the original contract amount and any contract modifications that have been agreed upon. Reported backlog excludes purchase options, announced orders for which definitive contracts have not been executed and any potential future contract modifications. Backlog is comprised of fixed and variable priced contracts that may be canceled, modified or otherwise changed in the future. As a result, backlog may not be indicative of future operating results. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Company’s future sales to the DoD versus its sales to other customers. Approximately 57% of the Company’s March 31, 2024 backlog is not expected to be filled in 2024.

### Non-GAAP Financial Measures

The Company is forecasting earnings per share excluding items that affect comparability. When the Company forecasts earnings per share, excluding items, this is considered a non-GAAP financial measure. The Company believes excluding the impact of these items is useful to investors to allow a more accurate comparison of the Company’s operating performance to prior year results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s results or forecasts prepared in accordance with GAAP. The table below presents a reconciliation of the Company’s presented non-GAAP measure to the most directly comparable GAAP measure:

|  | 2024 Expectations |
| --- | ---: |
| Earnings per share-diluted (GAAP) | $10.55 |
| Amortization of purchased intangibles | 0.70 |
| Adjusted earnings per share-diluted (non-GAAP) | $11.25 |

## Market risk

As filed, 328 characters.

The Company’s quantitative and qualitative disclosures about market risk for changes in interest rates, commodity prices and foreign currency, which are incorporated by reference to Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, have not materially changed since that report was filed.

## Controls and procedures

As filed, 1,918 characters.

*Evaluation of Disclosure Controls and Procedures.* In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2024. Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2024 to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

*Changes in Internal Control over Financial Reporting.* On August 1, 2023, the Company completed the acquisition of AeroTech. The Company continues to evaluate AeroTech’s systems and controls and to integrate them into the Company's existing control structure. Except as it relates to the integration of the AeroTech business, there were no changes in the Company’s internal control over financial reporting that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 508 characters.

The Company’s financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, which may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2023, which have not materially changed.

Filed Apr 25, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-048137. Last ingested by Listed: Oct 29, 2026, 11:20 ET. No prices; not investment advice.