# Oshkosh Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Oshkosh Corp](/companies/osk.md) (CIK 775158)
- Form: 10-Q
- Filed: 2024-10-30
- Accepted by EDGAR: Oct 30, 2024, 15:24 ET
- Period: 2024-09-30
- Accession: 0000950170-24-118922
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/775158/000095017024118922/osk-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/775158/000095017024118922/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $2.74bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $8.13bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $2.24bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $6.61bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $506.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | $1.52bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $226.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-09-30 | $643.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $266.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $786.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $56.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $164.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $180.3m | us-gaap:ProfitLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $528.3m | us-gaap:ProfitLoss |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 65,663,198 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 65,892,737 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$240.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $193.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $90.1m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $65.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $160.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $5.06bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $9.88bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $3.46bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-09-30 | $602.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-09-30 | $934.5m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-09-30 | $4.10bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 42,413 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 captions “Overview,” “Results of Operations,” “Liquidity and Capital Resources” and “Non-GAAP Financial Measures” 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 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 October 30, 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. Access customers include equipment rental companies, construction contractors, manufacturing companies and home improvement centers. The Access segment also manufacturers carriers and wreckers sold to towing companies.

*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.

*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.

In July 2024, the Company moved the reporting responsibility for Pratt Miller from its Defense segment to the Chief Technology and Strategic Sourcing Officer to better utilize Pratt Miller’s expertise across the entire Oshkosh Corporation enterprise. Pratt Miller results are now reported within "Corporate and other" and historical information has been recast to reflect the change.

### Overview

The Company reported another solid quarter, with growth in both revenue and operating income. Diluted earnings per share was $2.75 in the third quarter of 2024 compared to $2.79 in the third quarter of 2023. The Company's performance was highlighted by growth in sales and operating income in the Vocational segment, where demand remained strong and backlog continued to grow.

Although the Access segment is experiencing softer market conditions in North America, the Company believes the market remains healthy and in the third quarter of 2024 the segment grew sales by 3.4% and reported strong double digit operating income margins. While the Company believes that mega projects and fleet ages will be favorable factors for the Access segment, pockets of slowing non-residential construction activity and persistently higher interest rates have recently been putting pressure on access equipment demand in North America. The Company is working with its access equipment customers on their 2025 requirements and continues to expect meaningful access equipment orders during the fourth quarter of 2024 and first quarter of 2025.

Consolidated net sales in the third quarter of 2024 increased $231.5 million, or 9.2%, to $2.74 billion compared to the third quarter of 2023 primarily due to improved organic sales volume in all three segments, an additional month of AeroTech sales and improved pricing.

Consolidated operating income increased 3.8% to $266.2 million, or 9.7% of sales, in the third quarter of 2024 compared to $256.5 million, or 10.2% of sales, in the third quarter of 2023. The increase in operating income was primarily due to the impact of higher gross margin associated with the higher sales volume and improved price/cost dynamics, offset in part by the higher selling, general and administrative and engineering costs.

The Company completed the acquisition of AUSACORP S.L. (AUSA), a European manufacturer of specialty equipment including wheeled dumpers, rough terrain forklifts and telehandlers, within the Access segment for $114.0 million during the third quarter of 2024. The acquisition supports the Company's accelerated growth strategy, strengthens the Access segment's equipment portfolio and enhances the Company's ability to serve customers globally. AUSA is a market leader in Spain, which serves adjacent new markets for Oshkosh, including vegetation management, expands the Company's agricultural presence and complements the Access segment's traditional access equipment markets.

In light of the softer access equipment markets in North America, the Company is reducing its full year 2024 earnings per share estimate to be approximately $10.00 per share compared to its most recent estimate of $10.45. The earnings per share estimate includes after-tax charges of $0.70 per share related to amortization of purchased intangibles, $0.60 per share related to intangible asset impairments in the second quarter of 2024 and $0.05 related to the amortization of inventory step-up from an acquisition during the third quarter. Excluding these items, the Company estimates full year 2024 adjusted earnings per share to be approximately $11.35 per share compared to its most recent estimate of $11.75. The Company expects net sales to be approximately $10.6 billion in 2024, compared to its most recent estimate of $10.7 billion.

The Company now expects Access segment 2024 sales to be approximately $5.1 billion and operating margin to be approximately 15.75%, compared to the Company’s most recent estimates of $5.3 billion and 16.25%, respectively. The reduced expectations are a result of the softer access equipment market conditions in North America.

The Company now expects Vocational segment 2024 sales to be approximately $3.25 billion and operating margin to be approximately 11.75%, compared to the Company’s most recent estimates of $3.2 billion and 11.25%, respectively. The increase in operating margin is largely the result of expected continued favorable price/cost dynamics.

The Company now expects Defense segment 2024 sales to be approximately $2.15 billion, compared to its most recent estimate of $2.1 billion. The Company continues to expect Defense segment 2024 operating margin of approximately 2.25%.

Net operating costs for Corporate and other are expected to be approximately $250 million in 2024, including Pratt Miller intangible asset impairment charges of $52 million recognized in the second quarter of 2024.

### RESULTS OF OPERATIONS

### CONSOLIDATED RESULTS

The following table presents consolidated results (in millions):

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $2,741.4 | $2,509.9 | $231.5 | 9.2% | $8,132.1 | $7,191.1 | $941.0 | 13.1% |
| Cost of sales | 2,235.4 | 2,041.8 | 193.6 | 9.5% | 6,610.0 | 5,964.7 | 645.3 | 10.8% |
| Gross income | 506.0 | 468.1 | 37.9 | 8.1% | 1,522.1 | 1,226.4 | 295.7 | 24.1% |
| % of sales | 18.5% | 18.7% | -20 bps |  | 18.7% | 17.1% | 160 bps |  |
| Selling, general and administrative | 226.4 | 201.6 | 24.8 | 12.3% | 643.2 | 586.1 | 57.1 | 9.7% |
| Amortization of purchased intangibles | 13.4 | 10.0 | 3.4 | 34.0% | 40.5 | 18.1 | 22.4 | 123.8% |
| Intangible asset impairments | — | — | — | - | 51.6 | — | 51.6 | 100.0% |
| Operating income | $266.2 | $256.5 | $9.7 | 3.8% | $786.8 | $622.2 | $164.6 | 26.5% |
| % of sales | 9.7% | 10.2% | -50 bps |  | 9.7% | 8.7% | 100 bps |  |

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

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | $2,417.3 | $2,137.5 | $279.8 | 13.1% | $7,183.2 | $6,122.0 | $1,061.2 | 17.3% |
| Europe, Africa and Middle East | 204.0 | 249.6 | (45.6) | -18.3% | 610.0 | 704.6 | (94.6) | -13.4% |
| Rest of the World | 120.1 | 122.8 | (2.7) | -2.2% | 338.9 | 364.5 | (25.6) | -7.0% |
| Consolidated | $2,741.4 | $2,509.9 | $231.5 | 9.2% | $8,132.1 | $7,191.1 | $941.0 | 13.1% |

33

#### Third Quarter 2024 Compared to 2023

Consolidated net sales increased primarily due to improved organic sales volume in all three segments ($127 million), an additional month of AeroTech sales and improved pricing ($47 million). AeroTech had sales of $194.8 million during the third quarter of 2024 compared to $115.8 million from the August 1, 2023 acquisition date to September 30, 2023.

The decrease in consolidated gross margin was largely due to increases in material costs (130 basis points), higher engineering spending (40 basis points) and unfavorable cumulative catch-up adjustments on contracts in the Defense segment (40 basis points), offset in part by improved pricing (130 basis points) and favorable production variances (60 basis points).

Consolidated selling, general and administrative expenses increased due to higher consulting costs ($14 million), higher salaries ($8 million), the absence of a gain on the sale of the snow removal apparatus business ($8 million) and an additional month of AeroTech expenses ($6 million), offset in part by the absence of acquisition expenses related to AeroTech ($13 million).

Amortization of purchased intangible assets increased primarily due to an additional month of amortization related to the acquisition of AeroTech.

The increase in consolidated operating income was primarily due to the impact of improved pricing ($47 million) and higher gross margin associated with higher organic sales volume ($34 million), offset in part by increases in material costs ($35 million), higher operating costs to support higher sales volumes ($25 million) and higher engineering costs ($16 million).

#### First Nine Months 2024 Compared to 2023

Consolidated net sales increased primarily due to the inclusion of sales related to the AeroTech acquisition ($429 million), higher organic sales volume in all three segments ($416 million) and higher pricing ($131 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business ($44 million).

The improvement in consolidated gross margin was primarily due to improved pricing (120 basis points) and improved sales mix (60 basis points).

Consolidated selling, general and administrative expenses increased due to the addition of AeroTech ($48 million), higher salaries ($14 million) and higher consulting costs ($14 million), offset in part by lower incentive compensation accruals ($8 million).

Amortization of purchased intangible assets increased primarily due to the acquisition of AeroTech.

Intangible asset impairment charges of $52 million in the first nine months of 2024 relate to the impairment of intangible assets at Pratt Miller recognized in the second quarter of 2024.

The increase in consolidated operating income was primarily due to improved pricing ($131 million), the impact of higher gross margin associated with higher organic sales volume ($101 million) and favorable sales mix ($52 million), offset in part by the intangible asset impairments ($52 million), higher new product development spending ($38 million) and higher unfavorable cumulative catch-up adjustments on contracts in the Defense segment ($10 million).

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

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net of interest income | $(31.7) | $(17.7) | $(14.0) | 79.1% | $(82.8) | $(33.0) | $(49.8) | 150.9% |
| Miscellaneous, net | 3.6 | 2.6 | 1.0 | 38.5% | 0.1 | 13.2 | (13.1) | -99.2% |
| Provision for income taxes | 56.6 | 55.3 | 1.3 | 2.4% | 164.8 | 145.8 | 19.0 | 13.0% |
| Effective tax rate | 23.8% | 22.9% |  |  | 23.4% | 24.2% |  |  |
| Losses of unconsolidated affiliates | $(1.2) | $(2.4) | $1.2 | -50.0% | $(11.0) | $(9.4) | $(1.6) | 17.0% |

#### Third Quarter 2024 Compared to 2023

Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility (as defined in "Liquidity") primarily to fund acquisitions.

The effective tax rate in the third quarter of 2024 included net discrete tax benefits of $1.5 million compared to net discrete tax benefits of $1.0 million in the third quarter of 2023.

#### First Nine Months 2024 Compared to 2023

Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility primarily to fund acquisitions.

Miscellaneous, net primarily related to gains and losses on investments, foreign currency transaction gains and losses and non-service costs of the Company’s pension plans. Results for the first nine months of 2024 included foreign currency transactions losses of $2 million compared to foreign currency transactions gains of $5 million for the first nine months of 2023. Results for the first nine months of 2023 also included a settlement with the Company's pension advisor of $5 million.

The effective tax rate in the first nine months of 2024 included net discrete tax benefits of $5.7 million, including a $3.2 million benefit from the purchase of discounted federal tax credits and a $1.1 million benefit related to amended return interest income. The effective tax rate in the first nine months of 2023 included net discrete tax charges of $3.2 million.

Losses of unconsolidated affiliates included an impairment of an equity method investment of $7 million in the first nine months of 2024 compared to an $8 million loss on sale of an equity interest in an entity in Mexico in the first nine months of 2023.

### SEGMENT RESULTS

### Access

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

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $1,363.3 | $1,318.2 | $45.1 | 3.4% | $4,007.7 | $3,839.7 | $168.0 | 4.4% |
| Cost of sales | 1,066.5 | 1,014.8 | 51.7 | 5.1% | 3,106.3 | 3,052.2 | 54.1 | 1.8% |
| Gross income | 296.8 | 303.4 | (6.6) | -2.2% | 901.4 | 787.5 | 113.9 | 14.5% |
| % of sales | 21.8% | 23.0% | -120 bps |  | 22.5% | 20.5% | 200 bps |  |
| Selling, general and administrative | 86.3 | 71.6 | 14.7 | 20.5% | 231.7 | 205.7 | 26.0 | 12.6% |
| Amortization of purchased intangibles | 2.6 | 1.9 | 0.7 | 36.8% | 7.2 | 5.2 | 2.0 | 38.5% |
| Operating income | $207.9 | $229.9 | $(22.0) | -9.6% | $662.5 | $576.6 | $85.9 | 14.9% |
| % of sales | 15.2% | 17.4% | -220 bps |  | 16.5% | 15.0% | 150 bps |  |

35

#### Third 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 the Europe, Africa and Middle East and Rest of the World regions.

The decrease in gross margin in the Access segment was primarily due to higher material costs (220 basis points), offset in part by favorable absorption (50 basis points) and improved sales mix (40 basis points).

The decrease in operating income in the Access segment was primarily due to higher material costs ($30 million) and higher selling, general and administrative expenses ($15 million), offset in part by the impact of higher gross margin associated with higher sales volume ($12 million) and improved sales mix ($7 million).

#### First Nine Months 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 the Europe, Africa and Middle East and Rest of the World regions.

The improved gross margin in the Access segment was primarily due to improved sales mix (90 basis points), favorable absorption (40 basis points), improved pricing (30 basis points) and improved material costs (30 basis points).

The increase in operating income in the Access segment was primarily due to the impact of higher gross margin associated with higher sales volume ($41 million), improved sales mix ($40 million), improved pricing ($15 million), favorable absorption ($10 million) and improved material costs ($9 million), offset in part by higher selling, general and administrative expenses to support higher sales volume ($26 million).

### Vocational

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

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $814.2 | $692.6 | $121.6 | 17.6% | $2,429.7 | $1,842.8 | $586.9 | 31.8% |
| Cost of sales | 642.9 | 573.1 | 69.8 | 12.2% | 1,925.5 | 1,525.5 | 400.0 | 26.2% |
| Gross income | 171.3 | 119.5 | 51.8 | 43.3% | 504.2 | 317.3 | 186.9 | 58.9% |
| % of sales | 21.0% | 17.3% | 370 bps |  | 20.8% | 17.2% | 360 bps |  |
| Selling, general and administrative | 61.7 | 60.2 | 1.5 | 2.5% | 188.2 | 167.4 | 20.8 | 12.4% |
| Amortization of purchased intangibles | 10.0 | 6.8 | 3.2 | 47.1% | 29.8 | 8.8 | 21.0 | 238.6% |
| Operating income | $99.6 | $52.5 | $47.1 | 89.7% | $286.2 | $141.1 | $145.1 | 102.8% |
| % of sales | 12.2% | 7.6% | 460 bps |  | 11.8% | 7.7% | 410 bps |  |

#### Third Quarter 2024 Compared to 2023

Vocational segment net sales increased due to an additional month of AeroTech sales, improved pricing in response to higher input costs ($45 million) and improved organic sales volume ($28 million). AeroTech had sales of $194.8 million during the third quarter of 2024 compared to $115.8 million from the August 1, 2023 acquisition date to September 30, 2023.

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing.

The increase in operating income in the Vocational segment was largely a result of improved pricing.

#### First Nine Months 2024 Compared to 2023

Vocational segment net sales increased due to the inclusion of AeroTech sales, improved pricing in response to higher input costs ($116 million) and improved organic sales volume ($86 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business in the first quarter of 2023 ($44 million). AeroTech had sales of $563.0 million during the first nine months of 2024 compared to $115.8 million from the August 1, 2023 acquisition date to September 30, 2023.

The increase in gross margin in the Vocational segment was primarily attributable to improved pricing.

The increase in amortization of purchased intangibles was due to the acquisition of AeroTech.

The increase in operating income in the Vocational segment was largely a result of improved pricing ($116 million), the impact of higher gross margin associated with higher sales volume ($21 million) and improved product mix ($19 million), offset in part by higher material costs ($18 million).

### Defense

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

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $540.4 | $474.6 | $65.8 | 13.9% | $1,621.4 | $1,440.9 | $180.5 | 12.5% |
| Cost of sales | 500.6 | 434.3 | 66.3 | 15.3% | 1,502.2 | 1,335.6 | 166.6 | 12.5% |
| Gross income | 39.8 | 40.3 | (0.5) | -1.2% | 119.2 | 105.3 | 13.9 | 13.2% |
| % of sales | 7.4% | 8.5% | -110 bps |  | 7.4% | 7.3% | 10 bps |  |
| Selling, general and administrative | 28.6 | 20.6 | 8.0 | 38.8% | 82.8 | 79.7 | 3.1 | 3.9% |
| Operating income | $11.2 | $19.7 | $(8.5) | -43.1% | $36.4 | $25.6 | $10.8 | 42.2% |
| % of sales | 2.1% | 4.2% | -210 bps |  | 2.2% | 1.8% | 40 bps |  |

#### Third Quarter 2024 Compared to 2023

Defense segment net sales increased primarily due to Next Generation Delivery Vehicle (NGDV) production for the USPS and higher sales volume for the Family of Heavy Tactical Vehicles (FHTV), the Family of Medium Tactical Vehicles (FMTV) and aftermarket parts, offset in part by lower Joint Light Tactical Vehicle (JLTV) volume.

The decrease in gross margin in the Defense segment was primarily due to unfavorable cumulative catch-up adjustments on contracts in the third quarter of 2024 (210 basis points) and higher engineering costs (50 basis points), offset in part by lower charges related to inventory (140 basis points).

Operating income in the Defense segment declined as a result of the unfavorable cumulative catch-up adjustments on contracts ($11 million) and the absence of a gain on the sale of a business ($8 million), offset in part by higher gross margin associated with higher sales volume ($9 million).

#### First Nine Months 2024 Compared to 2023

Defense segment net sales increased primarily due to higher sales volumes for the FMTV, aftermarket parts and the FHTV and initial sales of NGDVs for the USPS (which commenced in the second quarter of 2024), offset in part by lower JLTV program volume. JLTV production under the Company's domestic JLTV contract is expected to conclude in early 2025 as the domestic follow-on contract was awarded to another company. The domestic JLTV contract accounted for $661 million of sales in the first nine months of 2024. An increase in NGDV revenues is expected to exceed the impact of the decline of JLTV revenues in 2025.

The gross margin in the Defense segment remained relatively flat in the first nine months of 2024 compared to the first nine months of 2023 as favorable mix (110 basis points) was offset by adverse production variances (70 basis points) and unfavorable cumulative catch-up adjustments on contracts (40 basis points).

Operating income in the Defense segment improved due to the impact of higher gross margin associated with higher sales volume ($24 million) and improved product mix ($18 million), offset in part by adverse production variances ($11 million), higher unfavorable cumulative catch-up adjustments on contracts ($10 million) and the absence of a gain on the sale of a business ($8 million).

### Corporate and other

The following table presents corporate and other (in millions):

|  | Third Quarter 2024 | 2023 | Change | % Change | First Nine Months 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $23.5 | $24.5 | $(1.0) | -4.1% | $73.3 | $67.7 | $5.6 | 8.3% |
| Cost of sales | 25.4 | 19.6 | 5.8 | 29.6% | 76.0 | 51.4 | 24.6 | 47.9% |
| Gross income | (1.9) | 4.9 | (6.8) | -138.8% | (2.7) | 16.3 | (19.0) | -116.6% |
| Selling, general and administrative | 49.8 | 49.2 | 0.6 | 1.2% | 140.5 | 133.3 | 7.2 | 5.4% |
| Amortization of purchased intangibles | 0.8 | 1.3 | (0.5) | -38.5% | 3.5 | 4.1 | (0.6) | -14.6% |
| Intangible asset impairments | — | — | — | - | 51.6 | — | 51.6 | - |
| Operating loss | $(52.5) | $(45.6) | $(6.9) | 15.1% | $(198.3) | $(121.1) | $(77.2) | 63.7% |

#### Third Quarter 2024 Compared to 2023

Net operating costs for corporate and other increased primarily due to lower operating income at the Company's Pratt Miller business unit ($3 million) and higher new product development investments ($3 million).

#### First Nine Months 2024 Compared to 2023

Net operating costs for corporate and other increased primarily due to the intangible asset impairments in the second quarter of 2024 at Pratt Miller of $52 million, higher new product development investments ($9 million), lower operating results at Pratt Miller ($8 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 September 30, 2024, including $160.9 million of cash and cash equivalents and $591.0 million of unused available capacity under the Revolving Credit Facility. 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 September 30, 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 $450 million to $1.55 billion.

### Financial Condition at September 30, 2024

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

|  | September 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents | $160.9 | $125.4 |
| Total debt | 1,536.8 | 772.5 |
| Total shareholders’ equity | 4,102.0 | 3,705.3 |
| Total capitalization (debt plus equity) | 5,638.8 | 4,477.8 |
| Debt to total capitalization | 27.3% | 17.3% |

38

The Company’s ratio of debt to total capitalization of 27.3% at September 30, 2024 remained within its targeted range. The increase in the debt to total capitalization ratio compared to December 31, 2023 was primarily due to the funding of working capital to facilitate sales growth.

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 September 30, 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 47 days at September 30, 2024. Days sales outstanding for segments other than the Defense segment increased from 49 days at December 31, 2023 to 52 days at September 30, 2024. 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 4.0 times at September 30, 2024 primarily due to increases in inventory levels in the Vocational and Access segments. 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 57 days at September 30, 2024, down from 72 days at December 31, 2023 due to more timely invoice processing.

### Cash Flows

#### Operating Cash Flows

Operating activities used $240.7 million of cash in the first nine months of 2024 compared to providing $120.0 million of cash during the first nine months of 2023. Higher net income and non-cash adjustments during the first nine months of 2024 compared to the first nine months of 2023 were more than offset by increases in working capital. Cash used in operations in the first nine months of 2024 included cash paid for income taxes, net of refunds of $364.9 million, which increased by $242.3 million compared to the first nine months of 2023 primarily due to the Company's generation of significantly higher pre-tax income in 2023 compared to 2022. Cash used in operations during the first nine months of 2024 included the payment of 2023 incentive compensation ($111 million), which was higher than 2022 incentive compensation due to the Company's improved performance. Other changes in working capital also impacted cash used in operations, including increases in inventory in the Access and Vocational segments as well as lower customer advances and the normalization of accounts payable due to more timely invoice processing. The Company expects to generate approximately $625 million of cash flows from operations in 2024 compared to the Company's most recent estimate of $675 million.

#### Investing Cash Flows

Investing activities used cash of $309.6 million in the first nine months of 2024 compared to $1.19 billion during the first nine months of 2023. The Company used $112.9 million to fund the acquisition of AUSA during the first nine months of 2024 compared to $995.8 million to fund the acquisitions of AeroTech and Hinowa during the first nine months of 2023. Through the first nine months of 2024, the Company used $193.5 million for capital expenditures. The Company expects it will now invest $275 million on capital expenditures in 2024 as the Company completes its facilities in Tennessee and South Carolina, down from its most recent estimate of $300 million.

#### Financing Cash Flows

Financing activities provided cash of $585.7 million in the first nine months of 2024 compared to $371.3 million during the first nine months of 2023. During the first nine months of 2024, the Company borrowed under the Revolving Credit Facility to fund working capital, capital expenditures and the acquisition of AUSA, compared to borrowing approximately $575 million to fund the acquisition of AeroTech in the third quarter of 2023. In the first nine months of 2024, the Company repurchased 564,405 shares of its Common Stock at an aggregate cost of $65.6 million. As of September 30, 2024, the Company had approximately 10.7 million shares of Common Stock remaining under its repurchase authorization. In the first nine months of 2023, the Company repurchased 265,795 shares of its Common Stock at an aggregate cost of $22.6 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. On April 3, 2024, the Company amended the Credit Agreement to increase the maximum aggregate amount of availability under the Revolving Credit Facility by $450 million to $1.55 billion. At September 30, 2024, borrowings under the Revolving Credit Facility of $934.5 million and specified outstanding letters of credit of $24.5 million reduced available capacity under the Revolving Credit Facility to $591.0 million.

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 September 30, 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 September 30, 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 nine 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 September 30, 2024 decreased 9.0% to $14.32 billion compared to $15.73 billion at September 30, 2023. Access segment backlog decreased 46.4% to $2.13 billion at September 30, 2024 compared to $3.98 billion at September 30, 2023. The decrease in backlog is believed to primarily be the result of the normalization of orders in connection with improved product availability and slowing demand in North America. Vocational segment backlog increased 18.2% to $5.91 billion at September 30, 2024 compared to $5.00 billion at September 30, 2023 due to strong demand for fire apparatus and price increases. Defense segment backlog decreased 7.3% to $6.21 billion at September 30, 2024 compared to $6.70 billion at September 30, 2023 primarily as a result of the wind-down of production under the Company's domestic JLTV contract.

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 84% of the Company’s September 30, 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. However, while forecasted adjusted earnings per share excludes amortization of purchased intangibles, intangible asset impairments and amortization of inventory step-up, revenue and earnings of acquired companies are reflected in forecasted adjusted earnings per share and intangible assets contribute to the generation of revenue and earnings. 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) | $10.00 |
| Amortization of purchased intangibles, net of tax | 0.70 |
| Intangible asset impairments, net of tax | 0.60 |
| Amortization of inventory step-up, net of tax | 0.05 |
| Adjusted earnings per share-diluted (non-GAAP) | $11.35 |

## 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, 1,807 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 September 30, 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 September 30, 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.* There were no changes in the Company’s internal control over financial reporting, with the exception of those changes related to the implementation of a new Enterprise Resource Planning (ERP) system within the Defense segment, which occurred during the three months ended September 30, 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 Oct 30, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-118922. Last ingested by Listed: Oct 29, 2026, 11:20 ET. No prices; not investment advice.