Oshkosh Corp: Form 10-K for the period ended Dec 31, 2024

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." All historical information has been recast to reflect this change.

The Company

Oshkosh Corporation is a global industrial technology company dedicated to moving the world forward. As an innovator and integrator, we specialize in the design, development and manufacturing of purpose-built vehicles and equipment, serving everyday heroes in the postal, firefighting, refuse and recycling collection, construction, aviation and defense industries. We are an innovator, developing and leveraging disruptive technologies across our portfolio in the areas of electrification, autonomy and connectivity, making some of the most challenging jobs in the world safe, smart, connected, quiet, clean and productive — delivering both efficiency and impact.

The Company has three reportable segments: Access, Vocational and Defense, which comprised 48%, 31% and 20%, respectively, of the Company’s 2024 consolidated net sales. Oshkosh’s leading brands include a wide range of purpose-built vehicles and equipment to serve a diverse set of end markets. Our innovations are scalable and adaptable, often expanding across many of our businesses. We believe collaboration across our diverse and resilient portfolio allows breakthroughs in technology, supply chain, materials integration and manufacturing processes to extend across multiple markets. The Company generated approximately 20%, 19% and 25% of its net sales in 2024, 2023 and 2022, respectively, to the U.S. government, a substantial majority of which were under multi-year contracts and programs in the defense vehicle market. See Note 24 of the Notes to Consolidated Financial Statements for financial information related to the Company's reportable segments.

The Access segment designs and manufactures access and material handling equipment for use in a wide range of construction, industrial, agricultural, vegetation management and maintenance applications to safely position workers and materials at height under industry-leading brands, JLG and SkyTrak. The Access segment's customer base includes equipment rental companies, construction contractors, manufacturing companies and home improvement centers. The Access segment also includes Jerr-Dan towing and recovery vehicles (wreckers, rotators and carriers).

The Vocational segment includes the Pierce, Maxi-Metal, AeroTech, Oshkosh Airport Products, McNeilus, IMT, Frontline Communications and Oshkosh S-Series businesses. The Pierce and Maxi-Metal businesses design and manufacture commercial and custom fire apparatus. AeroTech designs and manufactures airport ground support equipment and gate equipment and provides baggage and facility airport services. Oshkosh Airport Products designs and manufactures aircraft rescue and firefighting (ARFF) vehicles. McNeilus designs and manufactures refuse and recycling collection vehicles and components. The segment also includes IMT-branded field service vehicles and truck-mounted cranes, Frontline Communications-branded simulators, command vehicles and other communication vehicles and Oshkosh S-Series front-discharge concrete mixer vehicles. Vocational segment sales are made primarily to municipal and commercial customers in the Americas.

The Defense segment designs, manufactures and sustains best-in-class specialty vehicles and mobility systems for the U.S. Department of Defense (DoD) under the Oshkosh Defense brand and exports its products to approved foreign customers. This segment also includes the U.S. Postal Service (USPS) contract to produce the Next Generation Delivery Vehicle (NGDV), which was awarded to the Company in February 2021. The contract allows for the delivery of up to 165,000 vehicles over a 10-year period.

Significant Defense segment contracts as of December 31, 2024 include:

The Company has a disciplined capital allocation strategy that focuses on growth investments, including reinvesting in the Company's core businesses and growing through strategic acquisitions, as well as returns to shareholders through dividends and share repurchases. The Company's acquisition and investment strategy continues to include expanding into new categories and enhancing critical technological and lifecycle management capabilities. For example, the Company has completed the following strategic acquisitions and divestitures over the past three years:

• In September 2024, the Company acquired AUSA, a privately held Spanish manufacturer of wheeled dumpers, rough terrain forklifts and telehandlers, for $114.5 million.
• In August 2023, the Company acquired AeroTech from JBT Corporation for $804.6 million.
• In July 2023, the Defense segment sold its snow removal apparatus business for $17.1 million.
• In March 2023, the Vocational segment sold its rear-discharge concrete mixer business for $32.9 million.
• In January 2023, the Company acquired Hinowa, an Italian manufacturer of compact crawler booms and tracked equipment, for $186.8 million.
• In June 2022, the Company acquired Maxi-Metal, a Canadian manufacturer of custom fire apparatus and utility vehicles, for $19.7 million.

Business Strategy

The Company's business strategy is grounded in the Company's purpose of making a difference in the lives of the people in our communities who do tough work. The strategy is reflected in three simple words: Innovate. Serve. Advance.

Innovate. The Company innovates customer solutions by combining leading technology and operational strength to empower and protect the everyday hero. The Company is developing and integrating advanced technologies to expand production output, improve profit margins and fulfill its purpose in areas such as electrification, autonomy and connected products.

Serve. The Company serves and supports customers with a relentless focus throughout the product lifecycle. The Company believes that lifecycle services provide a robust growth opportunity while offering stability throughout business cycles.

Advance. The Company advances by expanding into new markets and geographies to move the world forward. The Company expects to continue to grow globally and expand into new categories both organically, as with the USPS program win in the delivery vehicle market, and inorganically through acquisitions.

Competitive Strengths

The following competitive strengths support the Company’s business strategy:

Strong Market Positions. The Company has developed strong market positions and brand recognition in its core businesses, which it attributes to its reputation for quality products, technology innovation, advanced engineering, vehicle and equipment performance, reliability, customer service and low total cost of ownership. The Company maintains a leading market share in nearly all of its businesses and is the sole-source supplier of a number of vehicles to the DoD.

Diversified Product Portfolios. The Company believes its broad product portfolios and end markets serve to diversify its sources of revenue, mitigate the impact of economic cyclicality and provide multiple platforms for both organic and inorganic growth. The Company’s product portfolios provide extensive opportunities to bundle products for sale to customers, leverage purchasing power and share innovation and technology within and between segments. For each of its target markets, the Company has developed advanced technology or acquired a broad product line in an effort to become a supplier of choice for purpose-built vehicles and equipment, parts and service to support its customers. In addition, the Company has established an extensive domestic and international distribution network for purpose-built vehicles and equipment tailored to each market.

Quality Products and Customer Service. The Company has developed strong brand recognition for its products as a result of its commitment to meet the stringent product quality and reliability requirements of its customers in the purpose-built vehicle and equipment markets it serves. The Company frequently achieves premium pricing due to the quality, durability and low total cost of ownership of its products and its commitment to providing high quality lifecycle support through extensive parts and service support programs.

Innovative and Proprietary Solutions. The Company’s advanced design and engineering capabilities have contributed to the development of innovative and/or proprietary, severe-duty solutions that enhance vehicle and equipment performance, reduce manufacturing costs and strengthen customer relationships. The Company’s advanced design and engineering capabilities have also allowed it to integrate many of these solutions across various segments and product lines, which enhances its ability to compete for new business and reduces its costs to manufacture its products compared to manufacturers who simply assemble purchased components. The Company has been a supplier of electric-powered products for more than 20 years and recently launched several new products that leverage zero emissions electrification for mobility across all segments.

Flexible and Efficient Manufacturing. The Company believes it has competitive advantages over larger vehicle manufacturers in its purpose-built vehicle and equipment markets due to its manufacturing flexibility and ability to effectively manage its supply base and customize products to meet customer specifications. The Company also believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, flexible and efficient manufacturing capabilities and technology sharing opportunities across product lines.

Strong Management Team. The Company is led by President and Chief Executive Officer, John Pfeifer. Mr. Pfeifer is complemented by an experienced senior management team that has been assembled through internal promotions and external hires. The Company’s Board of Directors maintains a robust succession planning process for its executive officers to ensure strong business continuity.

Products

Oshkosh Corporation is focused on the following purpose-built vehicle and equipment markets:

Access segment. JLG is a leading designer and manufacturer of aerial work platforms and telehandlers used in a wide variety of construction, industrial, agricultural, vegetation management and maintenance applications to safely position workers and materials at height. JLG also offers a broad range of parts and accessories, including technical support, training and reconditioning services. Access customers include equipment rental companies, distributors, construction contractors, manufacturing companies and home improvement centers. JLG's products are marketed worldwide through independent rental companies and distributors that purchase these products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations.

JLG also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Financing arrangements that JLG offers or arranges include various types of rental fleet loans and leases, as well as floor plan and retail financing. Terms of these arrangements vary depending on the type of transaction, but typically range from 36 to 72 months and generally require the customer to be responsible for maintenance of the equipment and to bear the risk of damage to or loss of the equipment.

Jerr-Dan is a leading designer and manufacturer of towing and recovery equipment in the U.S. The Company believes Jerr-Dan is recognized as an industry leader in quality and innovation. Jerr-Dan offers a broad line of carriers, wreckers and rotators.

In addition to manufacturing equipment, Jerr-Dan provides its customers with one-stop service support and generates revenue from the installation of equipment, as well as the sale of chassis and service parts.

Vocational segment. Through Pierce and Maxi-Metal, the Company is a leading North American designer and manufacturer of municipal fire apparatus assembled on both commercially available and custom chassis, designed and manufactured to meet the demanding requirements of firefighters. Pierce’s engineering expertise allows it to design its vehicles to meet stringent industry guidelines and government regulations for safety and effectiveness. Pierce primarily serves domestic municipal customers, but also sells fire apparatus to the DoD, airports, universities and large industrial companies, and in international markets. Pierce’s history of innovation, research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities. In an effort to be a single-source supplier for its customers, Pierce offers a full line of custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial platforms, ladder and tiller trucks, tankers, light-, medium- and heavy-duty rescue vehicles, wildland rough terrain response vehicles and other emergency response vehicles.

Through AeroTech, the Company is a leading designer and manufacturer of aviation ground support products and gate equipment for commercial airlines, airports, air freight carriers, ground handling and military customers. AeroTech specializes in special purpose aviation ground support products such as cargo loaders, push-back tractors and deicer trucks for airlines and air cargo companies. Terminal facilities and commercial aviation are supported by the Jetway passenger boarding bridge and related air and power products. AeroTech's Airport Services business specializes in the maintenance, servicing and operation of key airport facility systems such as HVAC, passenger boarding systems and baggage systems, as well as leveraging asset management technology, including our iOPS Intelligent Monitoring System, to support efficient airport operations. AeroTech Airport Services also provides contracting, project management, design and installation services for the critical and complex baggage systems and other key facility operations.

Through Oshkosh Airport Products, the Company is a leader in the design and sale of ARFF vehicles to domestic and international airports. These highly-specialized vehicles are required to be in service at most airports worldwide to support commercial airlines in the event of an emergency. Many of the largest airports in the United States are served by the Company’s ARFF vehicles. The U.S. government also maintains a fleet of ARFF vehicles that are used to support military operations throughout the world. Internationally, the Company’s vehicles serve airports worldwide, with recent deliveries to airports in Latin America, the Middle East, the United Kingdom and China. The Company believes that the performance and reliability of its ARFF vehicles contribute to the Company’s strong position in this market.

Through McNeilus, the Company is a leading designer and manufacturer of refuse and recycling collection vehicles for the waste services industry throughout the Americas.

Through IMT, the Company is a leading North American designer and manufacturer of field service vehicles and truck-mounted cranes for the construction, equipment dealer, rental, building supply, utility, tire service, railroad and mining industries.

Through its Frontline Communications business, the Company is a leading manufacturer, system designer and integrator of command trucks and military simulator shelters and trailers. The Company’s vehicles have supported disaster relief efforts for the Federal Emergency Management Agency (FEMA) and everyday incident response for federal and local law enforcement, emergency management agencies and fire departments.

Through its Oshkosh S-Series business, the Company is a leading designer and manufacturer of front-discharge concrete mixers for the concrete ready-mix industry.

The Company offers two- to fifteen-year municipal lease financing programs to its Pierce customers in the U.S. through the Pierce Financial Solutions program, provided by PNC Bank. Financing programs include competitive lease financing rates, flexible finance arrangements and the ease of one-stop shopping to meet the finance needs of Pierce customers. The Company typically provides credit support in connection with these financing and leasing arrangements. The Company also arranges equipment financing and leasing solutions for its other Vocational segment customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements.

Defense segment. Oshkosh Defense has designed and sold products to the DoD for over 100 years and also exports its products to approved foreign customers. By successfully responding to the DoD’s changing vehicle requirements, Oshkosh Defense has become a leading manufacturer of heavy, medium, and light tactical wheeled vehicles and related sustainment services, as well as a provider of next generation combat vehicle solutions for mobility, reliability and lethality, for the DoD. Oshkosh Defense designs and manufactures vehicles that perform a variety of demanding tasks such as hauling combat vehicles, missile systems, ammunition, fuel, troops and cargo for a broad range of missions. Oshkosh Defense’s proprietary product line of military heavy-payload tactical wheeled vehicles includes the Heavy Expanded Mobility Tactical Truck (HEMTT), Heavy Equipment Transporter (HET), the Palletized Load System (PLS) and the Logistic Vehicle System Replacement (LVSR). Oshkosh Defense also manufacturers the L-ATV, light combat tactical all-terrain vehicle, (domestically known as the JLTV) designed to protect, sustain and provide mobility for personnel and payloads across the full spectrum of military operations.

Oshkosh Defense was selected by the USPS to build their NGDV under an indefinite delivery, indefinite quantity (IDIQ) contract that allows the USPS to purchase up to 165,000 units over ten years. Oshkosh Defense’s offering provides the USPS with both zero-emission battery electric vehicles (BEVs) and fuel efficient, low emission internal combustion engine (ICE) vehicles. Oshkosh Defense began delivering vehicles on this contract in the first half of 2024. Through December 2024, the USPS has placed orders for 51,500 NGDVs.

Marketing, Sales, Distribution and Service

The Company believes it differentiates itself from many of its competitors by tailoring its distribution to the needs of its purpose-built vehicle and equipment markets and with its national and global sales and service capabilities. The Company’s flexible distribution model focuses on meeting customers on their terms with turnkey delivery, training and support over the life of the vehicle. The Company backs its products with rapid parts shipment, enabled by predictive tools that ensure inventory availability, and service technicians are available to domestic customers 365 days a year. The Company believes its dedication to keeping its products in-service in demanding conditions worldwide has contributed to customer loyalty.

The Company provides its salespeople, representatives and distributors with product and sales training on the operation and specifications of its products. The Company’s engineers, along with its product managers, develop user-friendly operating manuals and virtual training tools and provide field support at vehicle delivery.

U.S. dealers and representatives enter into agreements with the Company that allow for termination by either party generally upon 90 days’ notice, subject to applicable laws. Dealers and representatives, except for those utilized by JLG and IMT, are generally not permitted to market and sell competitive products.

Access segment. JLG’s products are marketed across six continents through rental companies and distributors that purchase products and then rent or sell them and provide service support, as well as through other Company owned sales and service branches. JLG maintains a broad worldwide internal sales force. Sales employees are dedicated to specific major customers, channels or geographic regions. JLG’s international sales employees are spread among international sales and service offices throughout the world.

The Company markets its Jerr-Dan-branded carriers, wreckers and rotators through its extensive network of independent distributors.

Vocational segment. The Company believes the geographic breadth, size and quality of its Pierce fire apparatus dealer network are competitive advantages in a market characterized by a few large manufacturers and numerous small, regional competitors. Pierce’s fire apparatus are sold through an extensive network of independent dealers with hundreds of sales representatives in the U.S. and Canada, which combine broad geographical reach with high frequency of contact with fire departments and municipal government officials. These dealers are supported by product and marketing support professionals and contract administrators at Pierce. The Company believes high frequency of contact, ability to customize products and local presence are important to cultivate major, and typically infrequent, purchases. After a sale, Pierce’s nationwide local parts and service capability is available to help municipalities maintain peak readiness for this vital municipal service. Pierce also sells fire apparatus to international municipal and industrial fire departments through a network of international dealers.

The Company markets its Maxi-Metal vehicles through a combination of direct sales representatives and a network of dealers. Some of these representatives and dealers also handle Pierce products.

AeroTech sales are conducted through a team of direct sales personnel strategically located across the globe and through an extensive network of sales agents.

The Company markets its Oshkosh-branded ARFF vehicles through a combination of direct sales representatives and dealerships domestically and an extensive network of representatives and distributors in international markets. Some of these international representatives and distributors also handle Pierce products.

The Company markets its McNeilus-branded refuse and recycling collection vehicles through a network of dealers and sales representatives. As part of its continuous improvement mission, McNeilus looks at ways to enhance its market share and the customer experience. As a result, in 2024, the Company changed its distribution method for non-fleet refuse and recycling collection vehicle customers to a network of dealers. The Company believes this change will enhance its industry-leading support using dedicated, local sales and service representatives to bring more access to its products, parts and service technicians. Expanding its sales and support network through experienced equipment dealers will allow the Company to tap into markets and develop relationships with customers that have historically been outside the reach of its service support network.

IMT distributes its products through a combination of direct sale representatives and a wide network of distributors in more than one hundred locations worldwide. International distributors are primarily located in Canada, Central and South America, Australia and Asia and are primarily focused on mining and construction markets.

The Company markets its Frontline Communications-branded command vehicles and shelters through both sales representatives and a network of dealers that are directed at commercial and government customers. Some of these representatives and dealers also handle Pierce products.

Defense segment. While Oshkosh Defense sells a substantial portion of its domestic defense products directly to principal branches of the DoD, it also sells defense products to numerous international governments around the globe. Oshkosh Defense locates its business development, consultants and engineering professionals near its customers’ principal commands, both domestically and internationally. Oshkosh Defense sells and services defense products to approved international governments as Direct Commercial Sales or Foreign Military Sales via U.S. government channels. Oshkosh Defense supports international sales through international sales offices, as well as through dealers, distributors and representatives.

The Company believes that its proven worldwide logistics capabilities are critical in supporting its defense parts and service business. Oshkosh Defense maintains a large parts distribution warehouse in Milwaukee, Wisconsin to fulfill stringent parts delivery schedule requirements, as well as satellite facilities near DoD bases in the U.S. and abroad.

Manufacturing

The Company manufactures its products at 31 manufacturing facilities. To reduce production costs, the Company maintains a continuing emphasis on the development of proprietary components, self-sufficiency in fabrication, just-in-time inventory management, improvement in production flows and interchangeability of components among product lines, creation of jigs and fixtures to ensure repeatability of quality processes, utilization of robotics, and performance measurements to assure progress toward cost reduction targets. The Company encourages employee involvement to improve production processes and product quality.

The Company uses a Quality Management System to support the delivery of consistent, high-quality products and services to customers. The Company requires employees at all levels to understand customer and supplier requirements, measure performance, develop systems and procedures to prevent product nonconformance and continually improve all work processes. The Company educates and trains all employees at its facilities in quality principles. The Company utilizes quality gates in its manufacturing facilities to identify issues early in the process and to analyze root cause at the source, resulting in fewer defects and less rework. The Company’s Quality Management System is based on ISO 9001, a set of internationally-accepted requirements established by the International Organization for Standardization. ISO 9001 certification indicates that a company has established and follows a rigorous set of standards aimed at achieving customer satisfaction by following a process-based approach to identify and control the quality needs of suppliers, inputs, critical processes and outputs. The Quality Management System helps ensure that the Company is continually improving and sharing successful practices across the organization. Facilities for the majority of AeroTech and Oshkosh Defense and the following brands are ISO 9001 certified: JLG, Jerr-Dan, Hinowa, AUSA, Pierce, Maxi-Metal, Oshkosh Airport Products, McNeilus and Frontline Communications.

The Company has a team of employees dedicated to leading the implementation of the Company’s simplification initiatives. The team is comprised of members with diverse backgrounds in quality, lean, data analytics, product and process engineering, and culture change management. Simplification includes lean tools to eliminate waste and provide better value for customers. It also guides customer satisfaction assessments to help identify opportunities to improve the customer experience with the Company. Within the Company’s facilities, simplification projects have contributed to manufacturing efficiency gains, materials management improvements, quality enhancements and reduced cycle times. Simplification projects have also freed up manufacturing capacity to support production increases.

Engineering, Research and Development

The Company is an innovator of purpose-built vehicles and equipment. The Company's technology and product development teams include more than 1,900 talented engineers with expertise across many disciplines including vehicle design, simulation, software and electronics. As a leading industrial technology company, the Company has facilities around the world with extensive research and development capabilities. Our team members are committed to building safer, more productive machines.

The Company leverages disruptive technologies in several key areas including electrification, autonomy and connected products. By designing and building innovative products that revolutionize the way work is done, the Company is empowering people to be safe, productive, efficient and sustainable in what they do and how they serve.

The Company is securing its heritage of innovation for the future through new product research, ideation challenges, competitions and an open framework that leverages technology partners and strategic acquisitions. The Company's acquisition of Pratt Miller, a leader in autonomous and connected systems, expanded its technological capabilities, and partnerships with leading universities such as Massachusetts Institute of Technology, Carnegie Mellon University and the University of Wisconsin- Madison, as well as the Company's corporate venture capital investments, give it access to cutting edge research, a robust talent pipeline and early access to disruptive technologies.

The Company believes it is uniquely positioned to transition technology and deliver new products at great speed across our businesses to create differentiation within the markets it serves. Recent product launches include the Pierce Volterra, North America’s first electric fire truck; the Striker Volterra Electric ARFF, an electric ARFF vehicle with advanced electric vehicle battery technology; the McNeilus Volterra ZSL and ZFL, North America’s first fully integrated electric refuse and recycling collection vehicles; the JLG DaVinci lift, the world’s first all-electric scissor lift; JLG ClearSky Smart Fleet, the construction industry’s first two-way fleet management and communication platform; and the NGDV, a delivery vehicle that leverages advanced technologies, sustainability and operational efficiency. As work environments and challenges evolve, Oshkosh responds with better, more advanced products.

Intellectual Property

Patents, trademarks, copyrights, trade secrets and licenses are important to the operation of the Company's business. The Company expects to continue growing its intellectual property portfolio as it pursues advanced innovations in electrification, autonomy, advanced analytics and connected products. The Company believes its collection of patented and patent-pending technologies are important to the operation of its business and its competitive position. The Company leverages technology across its businesses and segments to bring innovative solutions to customers around the world. Certain Oshkosh Corporation trademarks including the Oshkosh name and logomark, along with each of its business unit brands contribute to the business’ identity. The Company does not believe that any existing patent, trademark, copyright, trade secret or license is of such importance that its loss or termination would have a material adverse effect on the Company's business taken as a whole.

Competition

In all of the Company’s segments, competitors include smaller, specialized manufacturers as well as large, mass producers. The Company believes that, in its purpose-built vehicle and equipment markets, it has been able to effectively compete against large, mass producers due to its product quality, manufacturing flexibility and distribution networks. In addition, the Company believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, technology and manufacturing sharing opportunities across product lines. The Company believes that its competitive cost structure, strategic global purchasing capabilities, engineering expertise, product quality and global distribution and service systems have enabled it to compete effectively.

Certain of the Company’s competitors have greater financial, marketing, manufacturing, distribution and governmental affairs resources than the Company. There can be no assurance that the Company’s products will continue to compete effectively with the products of competitors or that the Company will be able to retain its customer base or improve or maintain its profit margins on sales to its customers, all of which could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

Access segment. JLG operates in the global construction, maintenance, agricultural, vegetation management and industrial equipment markets. JLG’s competitors range from some of the world’s largest multinational construction equipment manufacturers to small single-product niche manufacturers. Within this global market, competition for sales of aerial work platform equipment includes Genie Industries, Inc. (a subsidiary of Terex Corporation), Skyjack Inc. (a subsidiary of Linamar Corporation), Haulotte Group, Xuzhou Construction Machinery Group Co., Ltd. (XCMG), Zhejiang Dingli Machinery Co., Ltd. and numerous other manufacturers. Global competition for sales of telehandler equipment includes J C Bamford Excavators Ltd., the Manitou Group, Merlo SpA, Genie Industries, Inc., Skyjack Inc. and numerous other manufacturers. In addition, JLG faces competition from a number of manufacturers of other niche products such as boom vehicles, cherry pickers, skid steer loaders, mast climbers, straight mast and vehicle-mounted fork-lifts, rough-terrain and all-terrain cranes, vehicle-mounted cranes, portable material lifts, various types of material handling equipment, scaffolding and the common ladder that offer functionality that is similar to or overlaps that of JLG’s products. Principal methods of competition include brand awareness, product innovation and performance, price, quality, service and support, product availability and the extent to which a company offers single-source customer solutions. The Company believes its competitive strengths include: premium brand names; broad and single-source product offerings; product quality; product residual values that are generally higher than competitors’ units; worldwide distribution; safety record; service and support network; global procurement scale; and extensive manufacturing capabilities.

The principal competitor for Jerr-Dan-branded products is Miller Industries, Inc. Principal methods of competition for carriers, wreckers and rotators include product quality and innovation, product performance, price and service. The Company believes its competitive strengths in this market include its high-quality, innovative and high-performance product line and its cost competitive manufacturing capabilities.

Vocational segment. The Company produces and sells custom and commercial firefighting vehicles in North America and abroad under the Pierce and Maxi-Metal brands. Competitors for firefighting vehicles include Rosenbauer International AG, REV Group, Inc. and numerous smaller, regional manufacturers. Principal methods of competition include brand awareness, ability to meet or exceed customer specifications, price, lead times, the extent to which a company offers single-source customer solutions, product innovation, product quality, dealer distribution and service and support. The Company believes that its competitive strengths include: recognized, premium brand name; nationwide network of independent Pierce dealers; extensive, high-quality and innovative product offerings, which include single-source customer solutions for aerials, pumpers and rescue units; large-scale and high-efficiency custom manufacturing capabilities; and proprietary technologies such as the Pierce Ultimate Configuration (PUC), TAK-4 independent suspension system, Hercules and Husky foam systems, Command Zone electronics, Volterra parallel-electric drivetrain and the Ascendant family of aerial fire trucks.

AeroTech supplies aviation-related fixed gate equipment and ground support equipment (GSE) for North American and international markets. AeroTech passenger boarding bridges are produced under the Jetway brand. Competitors include China International Marine Containers (Group) Co., Ltd. and TK Elevator. The Company competes in the gate equipment space based on a robust design and strong manufacturing capability, supported by capable project management and technical product support. The Company produces AeroTech GSE products under numerous brands. The principal competition for ground support equipment includes TLD Group and ITW GSE Inc. as well as other regional competitors. The Company competes for business based on total cost of ownership, product support and technology.

Airport Products manufactures ARFF vehicles for sale in the U.S. and abroad. Oshkosh’s primary competitors for ARFF vehicle sales are Rosenbauer International AG and Albert Ziegler GmbH.

The Company produces refuse and recycling collection vehicles for North America and international markets under the McNeilus brand. Competitors in the refuse and recycling collection vehicles market include Environmental Solutions Group (a subsidiary of Terex Corporation), New Way Trucks, Labrie Enviroquip Group (owned by Wynnchurch Capital) and other regional competitors. The principal methods of competition are product innovation, quality and performance, service and price. The Company competes for municipal business and large commercial business in the Americas. The Company believes its competitive strengths in the Americas refuse and recycling collection vehicle markets include: strong brand recognition; enhanced safety features; innovative and comprehensive product offerings; product lifecycle support; a reputation for high-quality products; ability to integrate refuse and recycling collection bodies with alternative fuel technology chassis; the offering of a fully integrated electric refuse vehicle; large-scale and high-efficiency manufacturing; and a nationwide network of independent dealers.

IMT is a manufacturer of field service vehicles and truck-mounted cranes for the construction, equipment dealer, rental, building supply, utility, tire service, railroad and mining industries. IMT’s principal field service vehicle competition is from Auto Crane Company (owned by Ramsey Industries, Inc.), Stellar Industries, Inc., Maintainer Corporation of Iowa, Inc., the Knapheide Manufacturing Company and other regional companies. Competition in truck-mounted cranes comes primarily from European companies including Palfinger AG, Cargotec Corporation and Fassi Group SpA. Principal methods of competition are product quality, price and service. The Company believes its competitive strengths include its high-quality products, global distribution network and low-cost manufacturing capabilities.

The Company also produces and sells command vehicles in the U.S. and abroad under the Frontline Communications brand. The principal competition for command vehicles is LDV, Inc., MBF Industries, Inc., Nomad Global Communication Solutions, Incorporated, Farber Specialty Vehicles, Inc. and Matthews Specialty Vehicles, Inc.

The Company produces front-discharge concrete mixers for the Americas under the Oshkosh S-Series brand. Competition for front-discharge concrete mixers includes Terex Corporation. Principal methods of competition are price, service, product features, product quality and product availability. The Company believes its competitive strengths include: strong brand recognition; large-scale and high-efficiency manufacturing; product innovation; high product quality; innovative control systems and a significant installed base of front-discharge concrete mixers in use in the marketplace.

Defense segment. Oshkosh Defense produces heavy, medium and light-payload tactical wheeled vehicles and provides next generation combat vehicle solutions for militaries around the world. Competition for sales of these vehicles includes, among others, Navistar Defense LLC (a subsidiary of Cerberus Capital Management, LP), General Dynamics Corporation, AM General LLC (a subsidiary of KPS Capital Partners, LP), Mack Defense LLC and BAE Systems plc. The principal method of competition for defense vehicles involves a competitive bid process that considers factors as determined by the customer, such as price, product performance, product lifecycle costs, small and disadvantaged business participation, product quality, adherence to bid specifications, production capability, project management capability, past performance and product support. Usually, the Company’s vehicle systems must also pass extensive testing. The Company believes that its competitive strengths include:

strategic global purchasing capabilities; extensive pricing/costing and defense contracting expertise; a significant installed base of vehicles currently in use throughout the world; flexible and high-efficiency vertically-integrated manufacturing capabilities; patented and/or proprietary vehicle components such as the TAK-4 family of independent suspension systems, Oshkosh power transfer cases and Command Zone integrated vehicle diagnostics; weapons and communications integration; ability to develop new and improved product capabilities responsive to the needs of its customers; product quality; and aftermarket parts sales and service capabilities.

The Weapon Systems Acquisition Reform Act requires competition for defense programs in certain circumstances. Accordingly, it is possible that the U.S. Army and U.S. Marine Corps will conduct competitions for programs for which the Company currently has contracts upon the expiration of the existing contracts. Competition for these and other domestic programs could result in future contracts being awarded based upon different competitive factors than those described above and would primarily include price, production capability and past performance. The U.S. government has become more aggressive in seeking to acquire the design rights to the Company’s current and potential future programs to facilitate competition for manufacturing our vehicles. The willingness of the bidders to license their design rights to the DoD was an evaluation factor in the JLTV and FMTV A2 contract competitions. Certain of the Company’s contracts with the DoD, including the JLTV and FMTV A2 contracts, require that the Company effectively transfer the “technical know-how” necessary to produce and support the vehicles and/or other deliverables within the contract to the customer.

The Competition in Contracting Act requires competition for U.S. defense programs in most circumstances. Competition for DoD programs currently supplied by the Company could result in the U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to the Company at lower prices and operating margins than the Company experiences under current contracts.

Oshkosh Defense also produces postal delivery vehicles for the USPS. Competition for sales of delivery vehicles includes, among others, Utilimaster (a subsidiary of The Shyft Group), Morgan Olson (a subsidiary of JB Poindexter & Co., Inc.), Workhorse Group Incorporated and Rivian Automotive Inc.

Government Contracts

Approximately 20% of the Company's sales for 2024 were made to the U.S. government, a substantial majority of which were under multi-year contracts and programs in the defense vehicle market. Accordingly, a significant portion of the Company’s sales are subject to risks specific to doing business with the U.S. government, including uncertainty of economic conditions, changes in government policies and requirements that may reflect rapidly changing military and political developments, the availability of funds and the ability to meet specified performance thresholds. Multi-year contracts may be conditioned upon continued availability of congressional appropriations and are impacted by uncertainty regarding federal budget pressures. Variances between anticipated budget and congressional appropriations may result in a delay, reduction or termination of these contracts.

Oshkosh Defense’s sales are substantially dependent upon periodic awards of new contracts, the purchase of base vehicle quantities and the exercise of options under existing contracts. The funding of U.S. government programs is subject to an annual congressional budget authorization and appropriation process. In years when the U.S. government has not completed its budget process before the end of its fiscal year, government operations are typically funded pursuant to a “continuing resolution”, which allows federal government agencies to operate at spending levels approved in the previous budget cycle but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, delays can occur in the procurement of the products, services and solutions that Oshkosh Defense provides and may result in new initiatives being delayed or canceled, or funds could be reprogrammed away from Oshkosh Defense’s programs to pay for higher priority operational needs. In years when the U.S. government fails to complete its budget process or to provide for a continuing resolution, a federal government shutdown may result. This could in turn result in the delay or cancellation of key programs, which could have a negative effect on the Company’s cash flows and adversely affect the Company’s future results. In addition, payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on the Company’s cash flows.

Contract awards that Oshkosh Defense receives may be subject to protests by competing bidders. These protests, if successful, could result in the customer revoking part or all of any contract it awards to Oshkosh Defense and an inability on the part of Oshkosh Defense to recover amounts it has expended during the protest period in anticipation of initiating work under any such contract.

Under firm, fixed-price contracts with the U.S. government, the price paid to the Company is generally not subject to adjustment to reflect the Company’s actual costs, except costs incurred as a result of contract changes ordered by the U.S. government. The Company generally attempts to negotiate with the U.S. government the amount of increased compensation to which the Company is entitled for government-ordered changes that result in higher costs. If the Company is unable to negotiate a satisfactory agreement to provide such increased compensation, then the Company may file an appeal with the Armed Services Board of Contract Appeals or the U.S. Claims Court. The Company has no such appeals pending. The Company seeks to mitigate risks with respect to fixed-price contracts by executing firm, fixed-price contracts where possible with its suppliers of significant components for the duration of the Company’s contracts. The Company has also successfully negotiated certain contracts that include an Economic Price Adjustment (EPA) clause which provides for a price adjustment calculated on costs incurred or externally published indices.

U.S. government contracts generally permit the government to terminate a contract, in whole or part, at the government’s convenience. If the U.S. government exercises its rights under this clause, the contractor is entitled to payment for the allowable costs incurred and a reasonable profit on the work performed to date. The U.S. government can also terminate a contract for default. If a contract is terminated for default, the contractor is generally entitled to payment for work that has been accepted by the U.S. government. Termination for default may expose the Company to loss on work not yet accepted by the government and have a negative impact on the Company’s ability to obtain future orders and contracts. The U.S. government’s right to terminate its contracts has not had a material effect on the operations or financial condition of the Company.

The Company, as a U.S. government contractor, is subject to financial audits and other reviews by the U.S. government relating to the performance of, and the accounting and general practices relating to, U.S. government contracts. Like most large government contractors, the Company is audited and reviewed by the government on a continual basis. Costs and prices under such contracts may be subject to adjustment based upon the results of such audits and reviews. Additionally, such audits and reviews can lead to civil, criminal or administrative proceedings. Such proceedings could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company or one or more of its subsidiaries can also be suspended or debarred from government contracts or lose its export privileges based on the results of such proceedings. The Company believes that the outcome of all such audits and reviews that are now pending will not have a material effect on its financial condition, results of operations or cash flows.

Suppliers

The Company sources raw materials and components domestically and internationally to meet commitments to its customers. Components for the Company’s products are generally available from numerous suppliers, although some sole sourced components would require additional time to transition. The Company also purchases complete vehicle chassis from truck chassis suppliers in its Access and Vocational segments.

The Company has developed global sourcing strategies to meet its production needs while building upon long-term supplier relationships and leveraging the scale of its enterprise. The supply base is expected to maintain or continuously improve levels of quality, delivery time, cost and the agility to meet changes in market demands. The Company also maintains an extensive qualification, on-site inspection, assistance and performance measurement system to help control risks associated with reliance on suppliers. Risks are monitored by the Company to minimize the likelihood of a supply disruption, including supplier capacity, financial health, cybersecurity, geopolitical events and adverse weather conditions that would affect production and logistics.

The Company also invests in advanced technologies to provide visibility and improved orchestration of its supply chain. The Company believes these investments have improved and will continue to improve the overall efficiency and performance of the business’ global supply chain.

Environmental Matters

The Company is subject to a wide variety of local, state, and federal environmental laws in the U.S., as well as in other countries where the Company conducts business. Our facilities, operations and products are subject to increasingly stringent environmental laws and regulations globally, including laws and regulations governing air emissions, noise, releases to soil and discharges to water and the generation, handling, storage, transportation, treatment, and disposal of non-hazardous and hazardous waste materials. Some environmental laws impose strict, retroactive, and joint and several liability for the release of hazardous substances, even for conduct that was lawful at the time it occurred, or for the conduct of, or conditions caused by prior operators, predecessors or other third parties. With respect to acquired properties and businesses, the Company conducts due diligence into potential exposure to environmental liabilities but cannot be certain that it has identified or will identify all adverse environmental conditions.

The Company believes that its policies, practices, and procedures are properly designed to prevent unreasonable risk of environmental damage and the consequent financial liability to the Company. Nevertheless, the Company could incur substantial costs as a result of non-compliance with or liability for cleanup or other costs or damages under environmental laws.

The Company has established emissions reduction targets that were approved by the Science Based Targets Initiative (SBTi). The Company may also be subject to other more stringent environmental laws in the future. If more stringent environmental laws are enacted in the future, these laws could have a material adverse impact on our business, results of operations and financial condition

Human Capital Management

As of December 31, 2024, the Company had approximately 18,500 employees, approximately 11,800 of whom are production employees. Approximately 2,100 (14%) of the Company's U.S. employees were represented by unions. The United Auto Workers (UAW) Union, whose agreement expires in September 2027, represented the majority of these employees (1,338 employees), with the remaining being represented by the United Steelworkers, the Boilermakers, Iron Shipbuilders, Blacksmiths and Forgers Union (Boilermakers), International Brotherhood of Teamsters Union (Teamsters), Eastern Millwright Regional Council and International Brotherhood of Electrical Workers. In addition, approximately 63% of the Company’s 2,900 employees located outside of the U.S. are represented by separate works councils or unions.

People First Culture. The Company maintains an inclusive People First culture that supports team members’ safety, engagement, wellbeing, and personal and professional development. The Company believes its People First culture is a strength, and the Company intends to continue building upon that culture to foster innovation and drive long-term, sustainable performance across the business. In 2024, 60% of global production and office team members participated in the Company’s Global Engagement Survey. Engagement across the enterprise was 7.5 out of 10.

The Company has proactive programs to enhance an inclusive culture that leverages diverse backgrounds and perspectives and empowers engagement and innovation. The Company measures diversity of hires (i.e., ethnic, gender, veteran or disability) for full-time U.S. non-production positions. In 2024, 55% of the Company’s hires for full-time U.S. non-production positions fell into at least one of these categories.

The Company expects all team members to adhere to the highest ethical standards every day. The Company requires all team members to complete training on its Code of Conduct referred to as “The Oshkosh Way”. The Oshkosh Way provides specific guidance to team members, outlining how they are expected to act with the integrity that has defined Oshkosh since the Company was founded over 100 years ago. In addition, the Company maintains a global ethics and compliance helpline to allow for concerns of potential violations of the Code, global policies, or the law to be reported anonymously.

The Company’s connections to its communities through charitable giving, leadership and volunteering efforts have long been an important part of the Company’s culture and team member engagement. The Company’s teams creatively identified opportunities to volunteer in 2024 donating over 22,300 hours to the communities in which they live and work.

For the last 11 years, the Company has held the Oshkosh Excellence Awards (OEAs), an annual competition and recognition event that invites team members to submit innovative ideas to foster improvements for its culture, operations, products and customers. Over 600 OEA nominations were submitted in 2024.

Talent and Learning. The Company’s business strategy is enabled by its ability to attract, develop and retain world-class talent. The Company offers multiple programs of Lens of Leadership, its signature in-person development program for team members at the director level and above. The Company continued a series of executive leadership development events and expanded virtual learning opportunities to all managers on topics of leadership, fostering engagement and an inclusive culture and cultivating innovation and performance. Team members of the Company logged over 253,000 learning hours in 2024. The Company leveraged its recently upgraded enterprise Learning Management System to enable all team members to access learning content on its technology platform.

Strategic succession planning, future leader pipelines and critical role depth are regularly reviewed and updated. All leaders are expected to complete regular check-ins to provide feedback, review annual goal progress and hold career development conversations with team members to help ensure alignment, drive engagement and facilitate strong business outcomes.

Health and Safety. The Company focuses on protecting the health and safety of its team members. The Company takes a proactive collaborative approach to managing safety to ensure its workforce returns home safely every day. Safety Management System maturity, OSHA VPP Star progression, ergonomic advancements and active team member involvement have led to improved risk reduction within the Company's operations.

The Company offers a competitive benefit platform to help ensure that, no matter where team members are in their well-being journeys, they are supported in their physical, financial and emotional goals. In 2024, the Company cared for over 26,000 people, including team members and their families, on its medical plan. The Company expanded paid parental leave benefits to support team members as they grow their families. In addition, the Company supported team members’ investment in their health by providing a financial incentive to complete an annual preventive exam.

Seasonal Nature of Business

The Company’s Access segment tends to be seasonal with an increase in sales occurring in the spring and summer months that constitute the traditional construction season in the northern hemisphere. Sales are generally lower in the three months ended December 31 in all segments due to the relatively high number of holidays in the United States, which reduce available production and shipping days.

Available Information

The Company maintains a website with the address www.oshkoshcorp.com (http://www.oshkoshcorp.com). The Company is not including the information contained on the Company’s website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. The Company makes available free of charge through its website its Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after the Company electronically files such materials with, or furnishes such materials to, the Securities and Exchange Commission (SEC).

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. Investors should carefully consider information in this Annual Report on Form 10-K in light of the risk factors described below.

Business and Operational Risks

Our markets are highly cyclical. Declines in these markets could have a material adverse effect on our operating performance.

The access equipment market is highly cyclical and impacted (i) by the strength of economies in general and customers’ perceptions concerning the timing of economic cycles, (ii) by residential and non-residential construction spending, (iii) by the ability of rental companies to obtain third-party financing to purchase revenue generating assets, (iv) by capital expenditures of rental companies in general, including the rate at which they replace aged rental equipment, (v) by the timing of regulatory standard changes, and (vi) by other factors, including oil and gas related activity and government spending. Municipal fire apparatus markets are cyclical later in an economic cycle and are impacted by the economy generally and by municipal tax receipts. Refuse and recycling collection vehicle markets are also cyclical and impacted by the strength of economies in general, by municipal tax receipts and by the size and timing of capital expenditures, including replacement demand, by large waste haulers. Airport products markets are also cyclical and impacted by global demand for air transportation services. If demand for our products is lower than what we or the market expect, due to a recession or other factors, then there could be an adverse effect on our net sales, financial condition, profitability and/or cash flows. In addition, those impacts could be more than we anticipate.

Our performance under the United States Postal Service (USPS) contract may not be what we expect.

In 2021, the USPS selected us to build its Next Generation Delivery Vehicle (NGDV). The indefinite delivery, indefinite quantity (IDIQ) contract allows for the purchase of up to 165,000 units over 10 years. Through December 31, 2024, we have received orders for 51,500 vehicles. As of December 31, 2024, we have recorded an asset for deferred contract costs of $842.6 million that primarily relates to the NGDV program. Contract costs are amortized over the anticipated production volume of the related contract. The USPS contract and our performance under the contract are subject to the following risks, among others, that could have a material adverse effect on our results of operations, financial condition, and/or cash flows:

• The USPS ordering fewer units than we expect which could result in an impairment of our deferred contract asset.
• It may take longer or cost more than we anticipate to scale our production to full rate production, which may result from additional costs, product design changes, supplier product quality issues or delays in receiving products from suppliers, costs and other challenges associated with recruiting and training a new workforce or other challenges associated with scaling production.
• Our supply base may not be able to supply parts in a timely manner.
• Warranty costs may be higher than we anticipate.
• If additional orders are received, the mix of internal combustion engine and battery electric vehicles could be different from our expectations, which could reduce revenues that we expect under the contract and negatively affect anticipated margins.
• The USPS may exercise its right to terminate the contract for convenience.

Changes in trade policies and other factors beyond our control may adversely impact our results.

In 2024, we directly imported from Mexico, China and Canada approximately $600 million, $175 million and $100 million, respectively. Geopolitical tensions and trade disputes can disrupt supply chains and increase the cost of our products, which could cause our products to be more expensive for customers. Countries could adopt restrictive trade measures such as tariffs, taxation, foreign exchange controls, capital controls and controls on imports or exports of goods, technology or data, any of which could adversely affect our operations and supply chain or limit our ability to offer our products and services as intended. Changes in laws or regulations governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products or from where we import products or raw materials (either directly or through our suppliers) could have a material adverse effect on our competitive position, results of operations, financial condition, and/or cash flows. For example, in June 2024, the European Commission imposed a tariff that applies to imports of certain access equipment into European Union countries from China, which resulted in additional costs and could result in lower sales and/or profitability of the Access segment in the European Union. Countries may implement additional restrictive trade actions, including tariffs, export controls, sanctions, legislation favoring domestic investment and other actions impacting the import and export of goods in jurisdictions in which we or our suppliers operate. These kinds of restrictions could be adopted with little to no advance notice and could escalate in response to tariffs or restrictions imposed by the U.S. or other countries, and we may not be able to effectively mitigate any adverse impacts from such measures. Political uncertainty surrounding trade or other international disputes also could have a negative impact on customer confidence, inflation, interest rates and the level of investments by our customers and on the economy in general. Any of these events could increase the cost of our products, impact demand for our products, create disruptions to supply chains or impair our ability to effectively operate and compete in countries where we do business.

Fluctuations in prices of raw materials and other inputs may adversely impact our results.

We purchase, directly and indirectly through component purchases, significant amounts of steel, aluminum and other commodities. Steel, aluminum and other commodity prices have historically been highly volatile. Costs for these items may increase in the future due to a variety of factors, including: the level of tariffs that the U.S. imposes on imported steel, aluminum and other commodities; an outbreak of conflicts in regions of the world that produce the commodities or the raw materials that go into the commodities or through which the commodities are transported; or a weakening U.S. dollar.

In addition, the cost of parts, materials, components or final assemblies has increased and may continue to increase for reasons other than changes in commodity prices. Factors such as the imposition of duties and tariffs and other trade barriers, supply and demand, the level of imports, freight costs, availability of transportation, the cost of manufacturing labor, availability of labor, inventory levels and general economic conditions may affect the price of our parts, materials, components or final assembly purchases.

Increases in parts, materials, components or final assemblies costs negatively impact the profitability of orders in backlog as prices on those orders are generally less flexible. If we are not able to recover cost increases through price increases to our customers, then such increases will have an adverse effect on our financial condition, profitability and/or cash flows. Furthermore, price increases may not be accepted by our customers, resulting in them choosing to order from our competitors instead of us. Any significant decrease in orders could have an adverse effect on our net sales, financial condition, profitability and/or cash flows. Additionally, if costs decrease and we are unable to negotiate timely component cost decreases commensurate with any decrease in costs, then our higher component costs could put us at a material disadvantage as compared to our competition which could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.

We are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases.

We have experienced, and in the future are likely to experience, significant disruption of the supply of some of our parts, materials, components and final assemblies that we obtain from suppliers or subcontractors. Delays in obtaining parts, materials, components and final assemblies may result from a number of factors affecting our suppliers including shipping disruptions, capacity constraints, labor constraints, supplier product quality issues, suppliers’ impaired financial condition and suppliers’ allocations to other purchasers. Such disruptions have resulted and could further result in higher manufacturing costs caused by an inefficient parts flow to our production lines or the need to procure parts from higher cost suppliers, could delay sales and could result in a material adverse effect on our results of operations, financial condition, and/or cash flows.

We are dependent on our suppliers of engines, chassis, batteries and other power sources to continue to timely deliver such components that meet applicable emissions regulations and customer preferences. If we fail to have adequate relationships with suppliers that will supply appropriate engines, chassis, batteries and other power sources to us or fail to timely receive appropriate components from our suppliers, that could result in us being placed in an uncompetitive position or without finished product when needed.

Labor issues may adversely impact our results.

Our production, or the production of our suppliers, could be disrupted by labor issues including availability of skilled workforce in locations in which we and our suppliers operate due to competition, absenteeism, public health issues, strikes or other factors. In addition, our production schedules assume the availability of sufficient workforce in areas in which our facilities operate at anticipated labor rates. If sufficient workforce is not available or rates are higher than we anticipate, it could have an adverse effect on our net sales, financial condition, profitability and/or cash flows.

Our dependency on contracts with U.S. and foreign government agencies subjects us to a variety of risks that could materially reduce our revenues or profits.

We are dependent on U.S. and foreign government contracts for a substantial portion of our business. Approximately 20% of our net sales in 2024 were to the U.S. government. That business is subject to the following risks, among others, that could have a material adverse effect on our operating performance:

• The Weapon Systems Acquisition Reform Act and the Competition in Contracting Act require competition for U.S. defense programs in most circumstances. Competition for U.S. Department of Defense (DoD) programs that we currently have has resulted and could in the future result in the U.S. government awarding future contracts to another manufacturer or could result in the U.S. government awarding the contracts to us at lower prices and operating margins than we experience under the current contracts. As an example, in February 2023, the DoD awarded the Joint Light Tactical Vehicles (JLTV) Family of Vehicles follow on contract to another company based on, at least in part, a lower price.
• We may not receive the contracts that we expect. While we anticipate our contract for the Family of Medium Tactical Vehicles (FMTV) program will be extended and that the extension would include higher pricing to reflect current material costs and more robust economic price adjustment clauses to protect us if we experience rapid inflation in the future, there is no assurance that the contract will be extended or that any extension will include an economic price adjustment clause sufficient to protect us from inflation in the future. In addition, although we believe there is demand from international customers for our tactical wheeled vehicles, there is no assurance that additional orders will materialize.
• Competitions for U.S. government contracts are intense, and we cannot provide any assurance that we will be successful in current or future procurement competitions in which we participate, as evidenced by the award of the JLTV follow on contract to another company. In addition, the U.S. government has become more aggressive in seeking to acquire the design rights to the Company’s current and potential future programs to facilitate competition for manufacturing our vehicles.
• Most of our contracts with the DoD are multi-year firm, fixed-price contracts. These contracts typically contain annual sales price increases. We attempt to limit the risk related to raw material price fluctuations for major defense components by obtaining firm pricing from suppliers at the time a contract is awarded. However, if these suppliers do not honor their contracts, then we could face profit margin pressure. Furthermore, if our actual costs on any of these contracts exceed our projected costs, it could result in profits lower than historically realized or than we anticipate.
• We must spend significant sums on product development and testing, bid and proposal activities, and pre-contract engineering, tooling and design activities in competitions to have the opportunity to be awarded these contracts.
• Our Defense segment results may fluctuate significantly from time to time as a result of the start and completion of existing and new domestic and international contract awards that we may receive. A majority of our contracts in the Defense segment are large in size and require significant personnel and production resources, and when our government customers allow such contracts to expire or significantly reduce their vehicle requirements under such contracts, we must make adjustments to personnel and production resources. Production on the domestic JLTV contract is expected to conclude early 2025. We may incur costs in connection with the completion and wind down of that program. In addition, while we expect NGDV sales to offset the reduction in JLTV sales, we may not be able to increase NGDV production to fully offset the decline in JLTV sales and operating income.
• Our business is susceptible to changes in the annual U.S. defense budget. Such changes may reduce revenues that we expect in our Defense segment, especially in light of federal budget pressures, lower levels of U.S. ground troops deployed in foreign conflicts and the level of defense funding that will be allocated to the DoD’s tactical wheeled vehicle strategy generally.
• Certain of our U.S. government contracts could be delayed or terminated, and all such contracts expire in the future and may not be replaced, which could reduce revenues that we expect under the contracts and negatively affect margins in our Defense segment.
• The funding of DoD programs is subject to an annual congressional budget authorization and appropriations process. In years when the U.S. government has not completed its budget process before the end of its fiscal year, which is currently the case for the U.S. government's fiscal 2025 budget, government operations are typically funded

pursuant to a “continuing resolution,” which allows federal government agencies to operate at spending levels approved in the previous budget cycle but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, delays can occur in the procurement of the products, services and solutions that we provide and may result in new initiatives being delayed or canceled, or funds could be reprogrammed away from our programs to pay for higher priority operational needs. The current continuing resolution funding the U.S. government expires on March 14, 2025. Furthermore, in years when the U.S. government fails to complete its budget process or to provide for a continuing resolution, a federal government shutdown may result. This could in turn result in the delay or cancellation of key programs, which could have a negative effect on our cash flows and adversely affect our future results. In addition, payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on our cash flows.

• As a U.S. government contractor, our DoD contracts and systems are subject to audit and review by the Defense Contract Audit Agency and the Defense Contract Management Agency. These agencies review our performance under our U.S. government contracts, our cost structure and our compliance with laws and regulations applicable to U.S. government contractors. Systems that are subject to review include, but are not limited to, our accounting systems, estimating systems, material management systems, earned value management systems, purchasing systems and government property systems. If improper or illegal activities, errors or system inadequacies come to the attention of the U.S. government, as a result of an audit or otherwise, then we may be subject to civil and criminal penalties, contract adjustments and/or agreements to upgrade existing systems as well as administrative sanctions that may include the termination of our U.S. government contracts, forfeiture of profits, suspension of payments, fines and, under certain circumstances, suspension or debarment from future U.S. government contracts for a period of time. Whether or not illegal activities are alleged and regardless of materiality, the U.S. government also has the ability to decrease or withhold certain payments when it deems systems subject to its review to be inadequate. These laws and regulations affect how we do business with our customers and, in many instances, impose added costs on our business.
• Defense tactical wheeled vehicles contract awards that we receive may be subject to protests or lawsuits by competing bidders, which protests or lawsuits, if successful, could result in the U.S. government customer revoking part or all of any defense tactical wheeled vehicle contracts it awards to us and our inability to recover amounts we have expended in anticipation of initiating production under any such contract.

Our results could be adversely affected by severe weather, natural disasters, and other events in the locations in which we or our customers or suppliers operate.

We have manufacturing and other operations in locations prone to severe weather and natural disasters, including tornados, earthquakes, floods, fires, hurricanes, tsunamis or severe snowstorms, that could disrupt our operations. Our suppliers and customers also have operations in such locations. Severe weather, a natural disaster or other conditions or events that result in a prolonged disruption to our operations, or the operations of our customers or suppliers, could delay delivery of parts, materials or components to us or sales to our customers and could have a material adverse effect on our net sales, financial condition, results of operations and/or cash flows.

Consolidation within our customer and dealer bases may impact our strategy, pricing and product margins.

Significant consolidation in our customer and dealer bases could enhance the influence of customers and dealers over our business strategy. Intensified consolidation in the industries we serve may provide our customers and dealers with additional leverage in negotiations around our product and service offerings. For example, the Access segment’s largest customers are rental companies that serve the end user equipment rental markets. Should access equipment customers consolidate through mergers and acquisitions, or should larger access equipment customers continue to grow through the acquisition of smaller rental companies, the buying influence of access equipment customers may grow and may impact the competitive environment within the industry. Similarly, the municipal fire apparatus market distribution channel is comprised of a relatively small number of dealers that, if they were to consolidate, may create additional pricing pressure, as well as concentrated credit exposures, as our reliance on a smaller group of larger individual dealerships increases. If that trend in customer and dealer consolidation continues, it could have an unfavorable impact on our pricing and product margins.

Disruptions within our dealer network could adversely affect our business.

Although we sell the majority of our products directly to the end user, we market, sell and service products through a network of independent dealers in the Vocational segment and in a limited number of markets in the Access segment. As a result, our business with respect to these products is influenced by our ability to establish and manage new and existing relationships with dealers. While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our independent dealers experience in operating their businesses due to economic conditions or other factors or as a result of an alleged failure by us or an independent dealer to comply with the terms of our dealer agreement. We do not believe our business is dependent on any single dealer, the loss of which would have a sustained material adverse effect upon our business. However, disruption of dealer coverage within a specific state or other geographic market could cause difficulties in marketing, selling or servicing our products and have an adverse effect on our net sales, financial condition, results of operations and/or cash flows.

In 2024, we transitioned our non-fleet refuse and recycling collection vehicle business from factory direct sales to a dealer network. There is no assurance that the dealers will be successful in selling refuse and recycling collection vehicles. If the transition of our refuse and recycling collection vehicle business is not as successful as we anticipate, it could have an adverse effect on our net sales, financial condition, results of operations and/or cash flows.

In addition, our ability to terminate our relationship with a dealer is limited due to state dealer laws, which generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with required notices. Under many state laws, dealers may protest termination notices or petition for relief from termination actions. Responding to these protests and petitions may cause us to incur costs and, in some instances, could lead to litigation resulting in lost opportunities with other dealers or lost sales opportunities, which may have an adverse effect on our net sales, financial condition, results of operations and/or cash flows.

Competition and Strategy Risks

We face significant competition in the markets we serve.

The markets in which we operate are highly competitive. We compete worldwide with a number of other manufacturers that produce and sell similar products. Our products primarily compete on the basis of brand awareness, product innovation, performance, quality, reliability, availability, price, service and support, ability to meet customer specifications and the extent to which a company offers single-source customer solutions. Certain of our competitors have greater financial, marketing, manufacturing, distribution and governmental affairs resources than we do, which may put us at a competitive disadvantage. We also face pricing pressure from international competitors that attempt to gain domestic market share through importing and selling products at below market prices, particularly in the Access segment. If competition in our industry intensifies or if our current competitors lower their prices for competing products, we may lose sales or be required to lower the prices we charge for our products. We cannot provide any assurance that our products will continue to compete effectively with the products of competitors or that we will be able to retain our customer base or improve or maintain our profit margins on sales to our customers.

Our long-term license agreement with Caterpillar Inc. to produce Caterpillar branded telehandlers ended in the fourth quarter of 2024. Caterpillar-branded telehandlers accounted for $315 million in sales in 2024. If we are unable to replace the Caterpillar-branded revenue through sales of our other telehandlers, including our new agricultural telehandlers, then the expiration of the Caterpillar license could have a material adverse effect on our net sales, financial condition, results of operations and/or cash flows.

We may not realize all of the anticipated benefits of our acquisitions.

We are continuously evaluating potential acquisitions to support our business strategy. For example, in August 2023, we completed our acquisition of AeroTech, and in September 2024, we completed our acquisition of AUSACORP S.L. (AUSA). As part of this evaluation process, we perform due diligence to identify potential risks associated with the potential transaction.

We also make assumptions regarding future performance of the acquired business. We cannot provide any assurance we will be able to successfully achieve the benefits of any business acquisition due to a variety of risks, including the following:

• Our ability to identify acquisition targets and consummate transactions;
• Our failure to achieve the acquisition’s expected future financial performance or realize assumed efficiencies or assumed cost reductions;
• There may be a mismatch in workplace cultures between us and the acquired business;
• We may experience delays or unexpected difficulties in integrating the acquired business;
• We may incur unforeseen expenses or liabilities or may be subject to other unanticipated regulatory or government actions related to the acquired business; and
• We may incur higher transaction costs than expected.

If we are unable to continue to enhance existing products and develop new products that respond to customer needs and preferences, we may experience a decrease in demand for our products and our business could suffer.

One of our growth strategies is emphasizing our new product development as we seek to expand sales and margins by leading our core markets in the introduction of new or improved products and technologies or expanding our product portfolio into adjacent markets. Our ability to match product improvements and new product offerings to diverse global customers’ anticipated needs for different types of products and various product features and functions, at acceptable prices, is critical to our success. We may not be able to compete as effectively, and ultimately satisfy the needs and preferences of our customers, unless we can continue to improve existing products and develop new innovative products in the global markets in which we compete. While we spent $169 million for research and development in 2024, we cannot provide any assurance that this level of investment in research and development will be sufficient to maintain our competitive strength in product innovation, which could cause our business to suffer. Product improvements and new product introductions also require significant planning, design, development and testing at the technological, product and manufacturing process levels, and we may not be able to timely develop product improvements or new products. Our competitors’ new products may arrive in the market before our products arrive and be more attractive with more features and functions and/or lower prices than our products. If we are unable to provide continued technological improvements in our products that meet our customers’ or the industry’s expectations, then demand for our products could be adversely affected.

In response to legislative, regulatory, investment community and societal concerns regarding global climate change and related efforts to limit greenhouse gas emissions, including changes in customer preferences and changes in regulations, we face greater pressure to develop products that generate less greenhouse gas emissions. Many manufacturers foresee sales of electric-powered vehicles and mobile equipment becoming increasingly important to their businesses, and we may not have the expertise or resources to successfully address these pressures on a cost-effective basis. Continued development of enhanced propulsion choices will require us to spend additional funds on research and development and subject us to the risk that our competitors may respond to these pressures in a manner that gives them a competitive advantage. If we do not accurately predict, prepare for and respond to new kinds of technological innovations with respect to electric-powered vehicles or mobile equipment and other technologies that minimize emissions, competition from others could make our specialty vehicles or mobile equipment less desirable in the marketplace.

We are subject to fluctuations in exchange rates associated with our non-U.S. operations that could adversely affect our results of operations and may significantly affect the comparability of our results between financial periods.

Approximately 14% of our net sales in 2024 were attributable to products sold outside of the United States, of which approximately 40% involved export sales from the United States. The majority of export sales are denominated in U.S. dollars. Sales that originate outside the United States are typically transacted in the local currencies of those countries. Fluctuations in foreign currency can have an adverse impact on our sales and profits as amounts that are measured in foreign currency are translated to U.S. dollars. We have sales of inventory denominated in U.S. dollars to certain of our subsidiaries that have functional currencies other than the U.S. dollar. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may fluctuate significantly in the future. Such fluctuations, in particular those with respect to the Euro, the Chinese renminbi, the Canadian dollar, the Mexican peso, the Australian dollar and the British pound sterling may have a material effect on our net sales, financial condition, profitability and/or cash flows and may significantly affect the comparability of our results between financial periods. In addition, any further appreciation in the value of the U.S. dollar in relation to the value of the local currency of those countries where our products are sold will continue to increase our costs of goods in our foreign operations, to the extent such costs are payable in U.S. dollars, and impact the competitiveness of our product offerings in international markets.

We may not be able to expand international operations or increase sales and profitability consistent with our growth targets.

Expanding international operations and sales is a part of our growth strategy. International operations and sales are subject to various risks, including political, religious and economic instability, the imposition of foreign tariffs upon our products (which include tariffs in response to tariffs that the U.S. imposes) and other trade barriers, the impact of foreign government regulations and the effects of income and withholding taxes, sporadic order patterns, governmental expropriation, uncertainties or delays in collection of accounts receivable and differences in business practices. Changes in international trade policies could result in changes to our international operations and/or international growth strategy. We may incur increased costs, including increased supply chain costs, and experience delays or disruptions in production schedules, product deliveries or payments in connection with international manufacturing and sales that could cause loss of revenues and earnings. Among other things, there are additional logistical requirements associated with international sales, which increase the amount of time between the completion of production and our ability to recognize related revenue. In addition, expansion into foreign markets requires the establishment of distribution networks and may require modification of products to meet local requirements or preferences. Establishment of distribution networks or modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect on our ability to achieve international sales growth. In addition, our entry into certain markets that we wish to enter may require us to establish a joint venture or face competition from foreign state-backed competitors. Identifying an appropriate joint venture partner and creating a joint venture could be more time consuming, more costly and more difficult than we anticipate. Local government policy and influence can also impact international competition, such as in China where a state-controlled economy favors local market participants.

Financial Risks

We are subject to changes in contract estimates.

We account for substantially all long-term contracts in the Defense segment utilizing the cost-to-cost method of percentage-of-completion accounting. This accounting requires judgment relative to assessing risks, estimating revenues and costs and making assumptions regarding the timing of receipt of delivery orders from our government customers and technical issues. Due to the size and nature of these contracts, the estimate of costs is complicated and subject to many variables. We must make assumptions regarding expected increases in material costs, wages and employee benefits, engineering hours, productivity and availability of labor and allocated fixed costs. Changes to production costs, overhead rates, learning curves and/or supplier performance can also impact these estimates. For example, cumulative catch-up adjustments on contracts in the Defense segment negatively impacted operating income by $47 million in 2024. Furthermore, under the revenue recognition accounting rules, we can only include units in our estimates of overall contract profitability after we have received a firm delivery order for those units. Because new orders have the potential to significantly change the overall profitability of cumulative orders received to date, the period in which we receive those orders from the government will impact the estimated life-to-date contract profitability. Changes in underlying assumptions, circumstances or estimates could have a material adverse effect on our net sales, financial condition and/or profitability.

We may experience losses in excess of our recorded reserves for doubtful accounts and guarantees of indebtedness of others.

As of December 31, 2024, we had consolidated gross receivables of $1.3 billion. In addition, we were subject to obligations to guarantee customer indebtedness to third parties of $596 million, under which we estimate our maximum exposure to be $96 million. We evaluate the collectability of receivables and our guarantees of indebtedness of others based on a combination of factors and establish reserves based on our estimates of potential current and future losses. In circumstances where we believe it is probable that a specific customer will have difficulty meeting its financial obligations, a specific reserve is recorded to reduce the net recognized receivable to the amount we expect to collect, and/or we recognize a liability for a guarantee we expect to pay, taking into account any amounts that we would anticipate realizing if we are forced to repossess the equipment that supports the customer’s financial obligations to us. We also establish additional reserves based upon our perception of the quality of the current receivables, the current financial position of our customers, past collections experience, and existing and future market conditions. Prolonged or more severe economic weakness may result in additional requirements for reserves. During periods of economic weakness, the collateral underlying our guarantees of indebtedness of customers or receivables can decline sharply, thereby increasing our exposure to losses. We also face a concentration of credit risk as the Access segment’s ten largest debtors at December 31, 2024 represented approximately 22% of our consolidated gross receivables. Some of these customers are highly leveraged. We may incur losses in excess of our recorded reserves if the financial condition of our customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting our customers’ financial obligations is not realized. Our cash flows and overall liquidity may be materially adversely affected if any of the financial institutions that finance our customer receivables become unable or unwilling, due to unfavorable economic conditions, a weakening of our or their financial position or otherwise, to continue providing such credit.

An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results.

We have a substantial amount of goodwill and other indefinite-lived intangible assets on our balance sheet as a result of acquisitions we have completed. At December 31, 2024, approximately 77% of these intangibles were concentrated in the Access segment. We evaluate goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if potential interim indicators exist that could result in impairment. Events and conditions that could result in impairment include a prolonged period of global economic weakness, a decline in economic conditions or a slow, weak economic recovery, a sustained decline in the price of our common stock, adverse changes in the regulatory environment, adverse changes in the market share of our products, adverse changes in interest rates, or other factors leading to reductions in the long-term net sales or profitability that we expect. For example, in the second quarter of 2024, we identified interim indicators of impairment for the Pratt Miller reporting unit as a result of unfavorable performance compared to forecast and adverse market conditions leading to a decline in the Company's expectations for future performance of Pratt Miller. Our subsequent testing indicated that intangible asset impairments of $51.6 million were required. Determination of the fair value of a reporting unit includes developing estimates which are highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions. Management’s assumptions change as more information becomes available. Changes in these events and conditions or other assumptions could result in an impairment charge in the future, which could have a significant adverse impact on our reported earnings.

Financing costs and restrictive covenants in our current debt facilities could limit our flexibility in managing our business and increase our vulnerability to general adverse economic and industry conditions.

Our access to debt financing at competitive risk-based interest rates is partly a function of our credit ratings. A downgrade to our credit ratings could increase our interest rates, could limit our access to public debt markets, could limit the institutions willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/or difficult to obtain. In addition, our revolving credit facility is subject to variable interest rates. An increase in general interest rates would also increase our cost of borrowing under our credit agreement.

Our credit agreement contains financial and restrictive covenants which, among other things, require us to maintain a leverage ratio. Our ability to meet the leverage ratio may be affected by a number of risks or events, including the risks described in this Annual Report on Form 10-K and events beyond our control. The indentures governing our senior notes also contain restrictive covenants. Any failure by us to comply with these restrictive covenants or the financial and restrictive covenants in our credit agreement could have a material adverse effect on our financial condition, results of operations and debt service capability.

Additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities could adversely impact our financial condition and cash flow.

We are subject to income taxes in the U.S. and various non-U.S. jurisdictions. Our domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions. Changes in our effective tax rate as a result of changes in tax laws or regulations and judicial or regulatory interpretations of those laws or regulations, the mix of earnings in countries with differing statutory tax rates, changes in overall profitability, changes in U.S. generally accepted accounting principles, or changes in the valuation of deferred tax assets could adversely affect our future results of operations. In addition, certain tax policy efforts, including any tax law changes resulting from the Organization for Economic Cooperation and Development and the G20's inclusive framework on Base Erosion and Profit Sharing, could adversely impact our tax rate and subsequent tax expense. In addition, the amount of income taxes that the Company pays is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If these audits result in assessments different from amounts that the Company has reserved for potential tax liabilities, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.

Cybersecurity Risks

Increased cybersecurity threats and more sophisticated computer crime pose a risk to our systems, networks, operations, products and services.

We rely extensively on information technology systems and networks, some of which third parties manage, supporting a variety of business activities. Operating these information technology systems and networks and processing and maintaining related data in a secure manner is critical to our business operations and strategy. Information technology security threats, from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data, are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Cybersecurity attacks could also include attacks targeting the security, integrity and/or reliability of the hardware and software that we have installed in our products. It is possible that our information technology systems and networks, or those that third parties manage or provide, could have vulnerabilities, which could go unnoticed for a period of time. Further, as a defense contractor, we face many cyber and security threats that can range from attacks common to most industries, which could have financial or reputational consequences, to advanced persistent threats on our defense programs, which could involve information that is considered a matter of national security. While we have utilized and continue to utilize various procedures and controls to mitigate such risks, we cannot assure that the actions and controls we have implemented and are implementing, or that we cause or have caused third-party service providers to implement, will be sufficient to protect our systems, information or other property. We have experienced cybersecurity threats and vulnerabilities in our systems and those of our third-party providers, and we have experienced viruses and attacks targeting our information technology systems and networks. Such prior events have not had a material impact on our financial condition, results of operations or liquidity. However, the potential consequences of a future material cybersecurity attack may include reputational damage, litigation with third parties, government enforcement actions, penalties, disruption to our systems or operations of our facilities, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in research, development and engineering, increased cybersecurity protection costs and unplanned investigation, remediation and other costs, which in turn could adversely affect our competitiveness, results of operations and financial condition.

Legal and Regulatory Risks

Our international sales and operations subject us to risks that may have a material adverse effect on our business.

As a result of our international operations and sales, we are subject to the Foreign Corrupt Practices Act (FCPA) and other laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business. Our international activities create the risk of unauthorized payments or offers of payments in violation of the FCPA by one of our employees, consultants, sales agents or distributors, because these parties are not always subject to our control. Any violations of the FCPA could result in significant fines, criminal sanctions against us or our employees, and prohibitions on the conduct of our business, including our business with the U.S. government. We are also increasingly subject to export control regulations, including, but not limited to, the United States Export Administration Regulations and the International Traffic in Arms Regulations. Unfavorable changes in the political, regulatory or business climate could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.

We may be required to make material expenditures or incur additional liabilities to comply with changes in environmental laws or climate change regulations or to meet the increasing societal expectations on companies to address climate change.

Both our products and the operation of our manufacturing facilities are subject to statutory and regulatory requirements. These include environmental requirements applicable to manufacturing and vehicle emissions, government contracting regulations, regulations impacting our supply chain and domestic and international trade regulations. A significant change to these regulatory requirements could substantially increase manufacturing costs, which could make our business results more variable.

Climate change attributed to increased levels of greenhouse gases, including carbon dioxide, has led to significant legislative, regulatory, investment community and societal efforts to limit greenhouse gas emissions. These considerations may lead to new international, national, regional and/or local legislation or regulatory responses. The legislation or regulation of greenhouse gases could result in unfavorable financial impacts through various forms including taxation, emission allowances, fines, requirements for investments or facilities improvement, higher energy costs and higher compliance costs associated with complex and evolving federal, state and international public disclosures. The impact of any future greenhouse gas legislation, regulatory, or product standard requirements is unknown, and therefore, we are uncertain of the potential impact that future changes may have.

Our global facilities, operations and products are subject to increasingly stringent environmental laws and regulations, including laws and regulations governing air emissions, noise, releases to soil and discharges to water and the generation, handling, storage, transportation, treatment and disposal of non-hazardous and hazardous waste materials. Certain environmental laws impose strict, retroactive and joint and several liability for the release of hazardous substances, even for conduct that was lawful at the time it occurred, or for the conduct of, or conditions caused by, prior operators, predecessors or other third parties. We could be subject to fines, cleanup costs or other costs or damages under environmental laws if we are not in compliance with environmental regulations. We may be subject to other more stringent environmental laws in the future that could have a material adverse impact on our business, results of operations and financial condition.

Risk Management and Strategy — The Company maintains a cybersecurity risk management program, led by a Chief Information Security Officer (CISO), who is responsible for the Company’s overall cybersecurity strategy, policy, architecture and cyber threat detection and response. The CISO, who reports to the Company’s Chief Information Officer (CIO), has a Bachelor's degree in Information Systems and Master of Business Administration degree and is a Certified Information Systems Security Professional with over a decade of professional cybersecurity experience. The Company's program is aligned to industry frameworks and controls from the National Institute of Standards and Technology that allow the Company to identify the fundamental security capabilities and controls necessary to maintain and enhance the program. The Company utilizes a wide range of capabilities to maintain cybersecurity, including threat intelligence, multi-factor authentication, endpoint detection and response and security automation.

As part of the cybersecurity risk management program, the Company has a set of Company-wide cybersecurity policies and procedures, including an Acceptable Use Policy as well as other policies covering subjects such as Access Control, Awareness and Training, Audit and Accountability, Configuration Management, Identification and Authentication, Media Protection, System and Communications Protection and Incident Response. These policies and procedures go through an internal review process and are approved by appropriate members of management. The Company requires all personnel, including contingent workers and business partners handling information on the Company’s behalf to follow its cybersecurity policies and procedures. Regular training modules educate the Company’s team members on relevant cyber threats and trends and help prepare them for real-life phishing threats.

The Company implements processes to assess and manage risks associated with using third-party information system service providers. This risk assessment process assesses both the service provider's security posture as well as the security controls available from the third-party information system. The service provider’s security posture assessment includes reviewing any third-party attestations as well as third-party controls in the following areas: assets, data flows, authentication, access, monitoring, response and recovery. Depending on the type of system or data, additional controls may be assessed.

The Company maintains an Incident Response Plan that includes processes for detecting, containing, and responding to incidents including processes for reporting incidents to management and the Board of Directors. The Company periodically performs simulations and tabletop exercises at a management level and incorporates external advisors as needed. The Company engages third-party service providers to conduct evaluations of its security controls, whether through penetration testing, independent audits or consulting on best practices to address cybersecurity risks.

Assessing, identifying and managing cybersecurity-related risks is integrated into the Company's overall Organization Risk Management (ORM) program. Cybersecurity related risks are included in the risk universe that the ORM program evaluates to assess top risks to the enterprise on an annual basis. To the extent the ORM process identifies a heightened cybersecurity related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion.

Governance — The Board of Directors is responsible for general oversight of the Company's risk management program, including cybersecurity risks. The Board of Directors receives an annual report from senior management through the ORM program and material risk assessments and mitigation strategies, including with respect to cybersecurity risks.

The Audit Committee of the Board of Directors oversees management's processes for identifying and mitigating risks, including cybersecurity risks, to help align the Company's risk exposure with its strategic objectives. The CIO provides periodic updates to the Audit Committee on the status of the Company’s cybersecurity risk management program; the Company’s information systems, cybersecurity, data privacy and other risks; and the steps management has taken to identify, monitor and mitigate such risks. The Audit Committee is also briefed on cyber crisis contingency planning, incident recovery capabilities and matters related to any material cybersecurity incident the company may experience.

The Company's business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but the Company cannot provide assurance that it will not be materially affected in the future by cybersecurity risks, threats or incidents. See Item 1A under the caption "Increased cybersecurity threats and more sophisticated computer crime pose a risk to our systems, networks, operations, products and services." for additional information on cybersecurity risks applicable to the Company.

The Company believes its equipment and buildings are well maintained and adequate for its present and anticipated needs. As of December 31, 2024, the Company operated in 31 manufacturing facilities. The locations of the Company’s manufacturing facilities are provided in the table below:

(a) These facilities are leased.

(b) Two facilities are owned, and the other is leased.

(c) One facility is owned, and the other is leased.

The Company’s manufacturing facilities generally operate five days per week on one or two shifts, except for seasonal shutdowns for one- to three-week periods.

The Company also performs contract maintenance services out of multiple warehousing and service facilities owned and/or operated by the U.S. government and third parties, including locations in the U.S., Japan and multiple other countries in Europe and the Middle East.

The Company is subject to environmental matters and legal proceedings and claims, including patent, antitrust, product liability, warranty and state dealership regulation compliance proceedings that arise in the ordinary course of business. Although the final results of all such matters and claims cannot be predicted with certainty, the Company believes that the ultimate resolution of all such matters and claims will not have a material effect on the Company’s financial condition, results of operations or cash flows.

Personal injury actions and other. At December 31, 2024, the estimated net liabilities for product and general liability claims totaled $45.2 million. Although the final results of all such matters and claims cannot be predicted with certainty, the Company believes that the ultimate resolution of all such matters and claims, after considering the liabilities accrued with respect to all such matters and claims, will not have a material effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.

GENERAL

Oshkosh Corporation is a global industrial technology company dedicated to moving the world forward. As an innovator and integrator, we specialize in the design, development and manufacturing of purpose-built vehicles and equipment, serving everyday heroes. The Company is an innovator, developing and leveraging disruptive technologies across our portfolio in the areas of electrification, autonomy and connectivity, making some of the most challenging jobs in the world safe, smart, connected, quiet, clean and productive — delivering both efficiency and impact. The Company is a leading global designer and manufacturer of aerial work platforms under the “JLG” brand name. The Company is among the worldwide leaders in the design and manufacturing of telehandlers under the “JLG” and “SkyTrak” brand names. Under the “Jerr-Dan” brand name, the Company is a leading domestic designer and manufacturer of towing and recovery equipment. Under the “Pierce” and "Maxi-Metal" brand names, the Company is among the leading global designers and manufacturers of municipal fire trucks assembled on both custom and commercial chassis. Under the “Jetway,” brand name, the Company is one of the leading global designers and manufacturers of aircraft passenger boarding bridges. Under the “Commander,” “LEKTRO” and "Tempest" brand names, the Company is one of the leading global designers and manufacturers of airport ground support equipment. The Company designs and manufactures Aircraft Rescue and Firefighting (ARFF) vehicles under the “Oshkosh” brand name. Under the “McNeilus” brand name, the Company designs and manufactures a wide range of automated, rear, front, side and top loading refuse and recycling collection vehicles. Under the “IMT” brand name, the Company is a leading domestic designer and manufacturer of field service vehicles and truck-mounted cranes. Under the “Frontline” brand name, the Company is a leading domestic designer, manufacturer and marketer of command vehicles. Under the “Oshkosh” brand name, the Company designs and manufactures front-discharge concrete mixers. The Company manufactures defense trucks under the “Oshkosh” brand name and is a leading designer and manufacturer of severe-duty, tactical wheeled vehicles for the U.S. Department of Defense (DoD) and other militaries. The Company also designs and manufactures delivery vehicles for the United States Postal Service (USPS) under the “Oshkosh” brand name.

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, agricultural, vegetation management and 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 manufactures carriers and wreckers sold to towing companies.

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

All estimates referred to in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refer to the Company’s estimates as of February 20, 2025.

BASIS OF PRESENTATION

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." All historical information has been recast to reflect this change.

OVERVIEW

The Company delivered another successful year in 2024, demonstrating significant progress in its strategy to drive meaningful growth across the Company's businesses and to position Oshkosh for long-term success and shareholder value creation. Net sales grew in each of the Company's segments during the year, led by the Vocational segment. The Company also significantly improved profitability during the year, delivering operating income of $1.01 billion, or 9.4% of sales, in 2024, compared to $0.84 billion, or 8.7% of sales, in 2023. Diluted earnings per share also increased 14% to $10.35 per share.

The Company's success in 2024 was also highlighted by its progress on strategic priorities, each of which advances the Company's purpose — to make a difference in the lives of those who build, serve and protect communities across the globe. In April 2024, the Company reached a significant milestone in its partnership with the USPS as the Company began shipping its Next Generation Delivery Vehicle (NGDV). The Company expects to increase NGDV production throughout 2025 to reach full rate production by the start of 2026. The NGDV program is expected to be a meaningful contributor to profitable growth for the remainder of the decade. In addition to NGDV, Oshkosh also expanded its product portfolio by launching its all-electric, fully integrated Volterra refuse and recycling vehicles. Oshkosh showcased these innovative products and its technology for everyday heroes during its inaugural appearance at the CES trade show in January 2025.

The Company also focused on its strategic acquisitions. The Vocational segment continued the integration of its AeroTech business, and AeroTech contributed meaningfully to the Company's growth and broadened the end markets that the Company serves. The strategic acquisition of AeroTech increased the Company's participation in the attractive air transportation support market, an industry that continues to have strong secular growth projections. The Company also completed the acquisition of AUSACORP S.L. (AUSA), a European manufacturer of specialty equipment including wheeled dumpers, rough terrain forklifts and telehandlers, for $114.5 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.

Oshkosh also continued investing in growth through capital expenditures of $281 million, which included continued investment in the Company's production capabilities at its facilities in Tennessee and South Carolina. The Company also invested $169 million in research and development, an increase of nearly 30% compared to the previous year. Oshkosh believes these investments help to position the Company for long-term success and shareholder value creation.

The Company announced an increase in its quarterly dividend rate of 10.9%, to $0.51 per share, beginning in the first quarter of 2025. This was the Company’s eleventh straight year of a double-digit percentage increase to its dividend rate.

2025 OUTLOOK

The Company estimates consolidated sales will be approximately $10.6 billion in 2025, compared to $10.7 billion in 2024. The Company expects consolidated operating income will be approximately $990 million, resulting in diluted earnings per share of approximately $10.30. Included in the Company's expectations is amortization of intangible assets of approximately $60 million, or $0.70 per share. Excluding amortization of intangible assets, the Company expects adjusted diluted earnings per share to be approximately $11.00. The Company's estimates assume that present levels of tariff rates, raw material prices and supply chain performance continue into 2025 without significant disruption.

The Company expects Access segment sales will be approximately $4.4 billion in 2025, a decrease of approximately 15% compared to 2024 sales reflecting market conditions in North America and Europe and conclusion of the agreement to produce Caterpillar-branded telehandlers. The Company expects operating margin in the Access segment in 2025 will be approximately 12.5%, down from 15.6% in 2024 as a result of adverse sales mix and the impact of lower sales levels on fixed costs.

The Company expects Vocational segment sales of approximately $3.8 billion in 2025, an increase of approximately 15% compared to 2024 sales reflecting expected increases in production volume and pricing. The Company expects Vocational segment operating margin in 2025 will be approximately 14.0%, compared to 12.0% in 2024. The segment's operating margin is expected to increase in 2025 as a result of expected continued favorable price/cost dynamics. Customer orders in backlog for delivery in 2025 were booked at significantly higher prices.

The Company expects Defense segment sales will be approximately $2.3 billion in 2025, an increase of approximately 7% compared to 2024 sales. The Company's estimates reflect the expected ramp-up of NGDV production, offset in part by the completion of production on the domestic Joint Light Tactical Vehicle (JLTV) contract in early 2025. The Company expects Defense segment operating margin will be approximately 4.0% in 2025, compared to 2.4% in 2024, as a result of lower adverse cumulative catch-up adjustments and the ramp-up of NGDV production.

The Company estimates corporate and other costs in 2025 will be approximately $185 million. The Company estimates net interest expense will be approximately $120 million in 2025, compared to $112 million in 2024. The Company estimates the tax rate for 2025 will be approximately 23.5% and the average share count will be approximately 65.0 million shares.

The Company expects earnings per share in the first quarter of 2025 will be approximately $1.75, reflecting the Company's expectations for softness and seasonality in the access equipment markets.

RESULTS OF OPERATIONS- 2024 COMPARED WITH 2023

CONSOLIDATED RESULTS

The following table presents consolidated results (in millions):

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

Consolidated sales increased as a result of higher organic volume in all three segments ($544 million), the inclusion of sales related to the AeroTech and AUSA acquisitions ($473 million) and higher pricing ($166 million), partially offset by the impact of the sale of the rear-discharge concrete mixer business ($65 million) and changes in cumulative catch-up adjustments on contracts in the Defense segment ($48 million).

The increase in consolidated gross margin was due to improved pricing (120 basis points), offset in part by changes in cumulative catch-up adjustments on contracts in the Defense segment (50 basis points).

The increase in consolidated selling, general and administrative expenses was primarily a result of operating costs related to acquired businesses ($52 million), offset in part by lower incentive compensation costs ($14 million).

Amortization of purchased intangible assets increased primarily due to the acquisitions of AeroTech in August 2023 and AUSA in September 2024.

Intangible asset impairment charges relate to the impairments of intangible assets at Pratt Miller recognized in the second quarter of 2024 as a result of unfavorable performance compared to forecast and adverse market conditions related to mobility and motorsports leading to a decline in the Company's expectations of future performance.

The increase in consolidated operating income was primarily due to improved pricing ($166 million), the impact of higher gross margin associated with higher sales volume ($134 million) and improved sales mix ($63 million), partially offset by intangible asset impairments ($52 million), the impact of changes in cumulative catch-up adjustments on contracts ($50 million), higher engineering costs ($47 million) and higher production costs ($43 million).

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

Interest expense, net of interest income increased due to increased borrowings on the Revolving Credit Facility (as defined in "Liquidity") primarily to fund the acquisitions of AeroTech in August 2023 and AUSA in September 2024.

Miscellaneous, net includes gains and losses on investments, net foreign currency transaction gains and losses, and non-service costs of the Company’s pension plans. Miscellaneous income, net decreased primarily due to changes in foreign currency transactions ($8 million) and the recognition of a gain on a settlement with the Company's pension advisor in 2023 ($5 million).

The lower effective tax rate in 2024 as compared to 2023 is the result of a higher foreign-derived intangible income deduction due to higher export sales. See Note 7 of the Notes to Consolidated Financial Statements for a reconciliation of the effective tax rate compared to the U.S. statutory tax rate.

Losses of unconsolidated affiliates primarily represented changes in the Company’s equity method investments. During 2024, the Company recorded an impairment of an equity method investment of $7 million. During 2023, the Company wrote down its investment in an equity interest in an entity in Mexico by $6 million based on the estimated fair market value of the entity and subsequently completed the sale of its interest in the entity, resulting in an additional loss of $2 million.

SEGMENT RESULTS

Access

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

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Access segment sales increased primarily as a result of improved sales volume in North America ($277 million) and the inclusion of sales related to the AUSA acquisition ($44 million), offset in part by lower sales volume in the Europe, Africa and Middle East ($103 million) and Rest of the World ($43 million) regions. The Company's long-term license agreement with Caterpillar Inc. to produce Caterpillar branded telehandlers ended in the fourth quarter of 2024. Caterpillar-branded telehandlers accounted for $315.4 million in sales in 2024.

The increase in Access segment gross margin was primarily due to improved product and customer mix (80 basis points).

The increase in Access segment selling, general and administrative expenses was generally a result of higher spending on outside services ($16 million), higher salaries ($11 million) and the inclusion of operating costs related to AUSA ($4 million), offset in part by lower incentive compensation costs ($8 million).

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

The increase in Access segment operating income was primarily due to improved sales mix ($48 million), the impact of higher gross margin associated with higher sales volume ($33 million), favorable absorption ($15 million) and lower litigation costs ($10 million), offset in part by higher selling, general and administrative expenses to support higher sales volume ($24 million) and higher engineering costs ($21 million).

Vocational

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

Vocational segment sales increased due to the timing of the AeroTech acquisition ($429 million), improved organic sales volume ($212 million) and improved pricing in response to higher input costs ($160 million), offset in part by the impact of the sale of the rear-discharge concrete mixer business in the first quarter of 2023 ($65 million).

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

The increase in Vocational segment selling, general and administrative expenses was generally a result of incremental operating costs related to the timing of the AeroTech acquisition ($48 million), offset in part by the absence of the loss on the sale of the rear-discharge concrete mixer business ($13 million), the absence of acquisition costs related to AeroTech ($13 million) and net gains related to the sale of its sales and service locations to dealers in conjunction with its change to a dealer network in North America ($8 million).

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

The increase in operating income in the Vocational segment was primarily due to improved pricing ($160 million), the impact of higher gross margin associated with higher sales volume ($55 million), improved product mix ($31 million), the absence of the loss on the sale of the rear-discharge concrete mixer business ($13 million) and the absence of acquisition costs related to AeroTech ($13 million), offset in part by higher material costs ($25 million) and adverse production variances ($25 million).

Defense

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

Defense segment sales increased primarily due to higher volume ($202 million), partially offset by unfavorable cumulative catch-up adjustments in 2024 compared to favorable cumulative catch-up adjustments in 2023 ($48 million). Higher volume included higher Family of Medium Tactical Vehicles sales ($110 million), the start of low-rate NGDV production for the USPS ($104 million) and higher aftermarket parts ($69 million), offset in part by lower JLTV sales associated with the wind down of the contract ($110 million). The U.S. Army, which purchased Government Purpose Rights to the Oshkosh JLTV design, conducted a full and open competition for follow-on JLTV production in which Oshkosh Defense participated. In February 2023, the DoD awarded the JLTV follow-on contract to another company. The Company expects to finish production of domestic JLTVs in early 2025. The JLTV contract accounted for $860 million of sales in 2024.

The decrease in gross margin in the Defense segment was primarily due to changes in cumulative catch-up adjustments on contracts (200 basis points) and adverse production variances (60 basis points).

Selling, general and administrative expenses in the Defense segment remained relatively flat in 2024 compared to 2023.

The decrease in operating income in the Defense segment was primarily a result of the impact of changes in cumulative catch-up adjustments on contracts ($50 million) and adverse production variances ($15 million), offset in part by the impact of higher gross margin associated with higher sales volume ($30 million). Changes in estimates on contracts accounted for under the cost-to-cost method resulted in cumulative catch-up adjustments on contract margins that decreased Defense segment operating income by $46.9 million in 2024 primarily as a result of significant costs to prepare units for acceptance and receiving orders that required loss reserves. Changes in estimates on contracts accounted for under the cost-to-cost method increased Defense segment operating income by $2.8 million in 2023.

Corporate and other

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

Net operating costs for corporate and other increased primarily due to the intangible asset impairments in the second quarter of 2024 at Pratt Miller ($52 million), higher share-based compensation expenses ($6 million), lower operating results at Pratt Miller ($6 million) and higher new product development investments ($5 million).

2023 COMPARED WITH 2022

The comparison of the year ended December 31, 2023 results with the year ended December 31, 2022 results can be found in the “Management’s Discussion and Analysis” section in the Company’s 2023 Annual Report on Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

The Company generates significant capital resources from operating activities, which is the expected primary source of funding for the Company. The Company expects cash flow from operations to be between $550 million and $650 million in 2025. In addition to cash generated from operations, the Company had other sources of liquidity available at December 31, 2024, including $204.9 million of cash and cash equivalents and $1.16 billion 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 and expects to remain in compliance with the financial covenant contained in the Credit Agreement.

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 believes that its liquidity position 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 December 31, 2024

The Company’s capitalization was as follows (in millions):

The Company’s ratio of debt to total capitalization of 18.8% at December 31, 2024 remained within its targeted range. The increase in the debt to total capitalization compared to December 31, 2023 was primarily due to the acquisition of AUSA.

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 December 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:

Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) was 40 days at December 31, 2024, down from 44 days at December 31, 2023. Days sales outstanding for segments other than the Defense segment was 44 days at December 31, 2024, down from 49 days at December 31, 2023, primarily due to the impact of sales mix on average payment terms in 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 3.9 times at December 31, 2024, primarily due to increases in inventory levels in the Vocational and Access segments. Consolidated days payables outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 65 days, down from 72 days at December 31, 2023, primarily due to the timing of cash disbursements.

Operating Cash Flows

Operating activities provided $550.1 million of cash in 2024 compared to $599.6 million in 2023. Cash used in operations in 2024 included cash paid for income taxes, net of refunds of $398.5 million, which increased by $236.8 million compared to 2023 primarily due to the Company's generation of significantly higher pre-tax income in 2023 compared to 2022. Cash used in operations during 2024 included the payment of 2023 incentive compensation, which was higher than 2022 incentive compensation due to the Company's improved performance.

Investing Cash Flows

Investing activities used cash of $388.8 million in 2024 compared to $1.29 billion in 2023. The Company used $113.5 million to fund the acquisition of AUSA in 2024 compared to $995.8 million to fund the acquisitions of AeroTech and Hinowa during 2023. Additions to property, plant and equipment of $281.0 million in 2024 decreased $44.3 million from 2023. The Company anticipates that it will spend $250 million on capital expenditures in 2025. Capital expenditures remains elevated due to efforts to expand production capacity in the Vocational segment.

Financing Cash Flows

Financing activities used cash of $75.1 million in 2024 compared to provided cash of $3.4 million in 2023. In 2024, the Company repurchased 1,058,474 shares of its Common Stock at an aggregate cost of $116.0 million. The Company's Board of Directors authorized the repurchase of 12 million shares in May 2022, of which approximately 10.2 million shares remained as of December 31, 2024. In 2023, the Company repurchased 265,795 shares of its Common Stock at an aggregate cost of $22.5 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 $1.10 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 December 31, 2024, borrowings under the Revolving Credit Facility of $360.0 million and specified outstanding letters of credit of $26.3 million reduced available capacity under the Revolving Credit Facility to $1.16 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 0.4375% 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 December 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 and 2030 Senior Notes at any time for a premium.

Refer to Note 16 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s debt as of December 31, 2024.

Contractual Obligations

The total amount of gross unrecognized tax benefits, including interest, for uncertain tax positions was $61.6 million as of December 31, 2024. Future settlements with tax authorities could result in payment of these obligations. Due to the difficulty in determining the timing of such settlements, these obligations are not included in the summary of the Company’s fixed contractual obligations. See Note 7 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s unrecognized tax benefits as of December 31, 2024. Following is a summary of the Company’s contractual obligations and payments due by period following December 31, 2024 (in millions):

(1) Interest was calculated based upon the interest rate in effect on December 31, 2024.

(2) The amounts for purchase obligations included above represent all obligations to purchase goods or services under agreements that are enforceable and legally binding and that specify all significant terms.

(3) Represents other non-current liabilities on the Company’s Consolidated Balance Sheet, including the current portion of these liabilities. The projected timing of cash flows associated with these obligations is based on management’s estimates, which are based largely on historical experience. This amount also includes all liabilities under the Company’s pension and other post-employment benefit plans. See Note 6 of the Notes to Consolidated Financial Statements for information regarding these liabilities and the plan assets available to satisfy them.

CRITICAL ACCOUNTING ESTIMATES

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on the Company’s Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. On an ongoing basis, management evaluates and updates its estimates. Management employs judgment in making its estimates but they are based on historical experience and currently available information and various other assumptions that the Company believes to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates.

Management believes that its judgment is applied consistently and produces financial information that fairly depicts the results of operations for all periods presented.

Estimate-at-Completion (EAC). The Company has concluded that control of substantially all of the Defense segment’s performance obligations transfers to the customer continuously and therefore revenue is recognized over time. The Defense segment recognizes revenue on its performance obligations that are satisfied over time by measuring progress using the cost-to-cost method of percentage-of-completion because it best depicts the transfer of control to the customer. Under the cost-to-cost method of percentage-of-completion, the Defense segment measures progress based on the ratio of costs incurred to date to total estimated costs for the performance obligations. Due to the size and nature of these contracts, the estimation of total revenues and costs is complex and requires judgment by management. The Company must make assumptions regarding expected increases in wages and employee benefits, productivity and availability of labor, material costs and allocated fixed costs, as well as expected impacts on pricing related to certain economic price adjustment clauses. Each contract is evaluated at contract inception to identify risks and estimate revenue and costs. In performing this evaluation, the Defense segment considers risks of contract performance such as technical requirements, schedule, duration and key contract dependencies. Occasionally, the Company incurs production costs not planned or budgeted, or in excess of its original budget. The Company reviews such costs to determine if they are contributing and proportionate to the Company's progress in satisfying the performance obligation. Costs that are contributing but not proportionate to the Company's progress are reviewed to determine if they meet the definition of learning curve costs, which requires significant judgment. Learning curve costs are included in the cost-to-cost method of percentage-of-completion while costs that do not contribute to the Company's progress in satisfying the performance obligation are considered inefficiencies and expensed as incurred. The above considerations are then factored into the Company’s estimated revenue and costs. If a loss is expected on a performance obligation, the complete estimated loss is recorded in the period in which the loss is identified. Preliminary contract estimates are subject to change throughout the duration of the contract as additional information becomes available that impacts risks and estimated revenue and costs. Changes to production costs, overhead rates, learning curve and/or supplier performance can also impact these estimates. These estimates require significant judgment by management. The Company recognizes changes in estimated sales or costs and the resulting profit or loss on a cumulative basis. In addition, as contract modifications (e.g., new orders) are received, they are evaluated to determine if they represent a separate contract or a modification of the existing contract. As of December 31, 2024, the estimated remaining costs on the NGDV and FMTV A2 contracts represent the majority of the total estimated costs to complete in the Defense segment. Changes in estimates on contracts accounted for under the cost-to-cost method resulted in cumulative catch-up adjustments on contract margins that decreased Defense segment operating income by $46.9 million in 2024, increased operating income by $2.8 million in 2023 and decreased operating income by $45.7 million in 2022.

Goodwill. Goodwill reflects the cost of an acquisition in excess of the aggregate fair value assigned to identifiable net assets acquired. Goodwill is not amortized; however, it is assessed for impairment annually and as triggering events or “indicators of potential impairment” occur. The Company performs its annual impairment test at the beginning of the fourth quarter. The Company evaluates the recoverability of goodwill by estimating the fair value of the businesses to which the goodwill relates. Estimated cash flows and related goodwill are grouped at the reporting unit level. A reporting unit is an operating segment or, under certain circumstances, a component of an operating segment. When a reporting unit's fair value is less than its carrying value, an impairment loss is recognized for the difference between the fair value and carrying value of the reporting unit. The Company had $1.4 billion of goodwill at December 31, 2024.

The Company estimates the fair value of the reporting units utilizing the income approach and the market approach. The income approach is weighted more heavily (75%) as the Company believes the income approach more accurately considers long-term fluctuations in the U.S. and European construction markets compared to the market approach. Under the income approach, the Company estimates fair values based on discounted estimated future cash flows. Future cash flows are estimated based on the Company’s internal projection models, industry projections, terminal growth rates and other assumptions, including the Company's estimates for revenue growth and operating income margins. The Company estimates discounts rates based on the Company’s estimated weighted-average cost of capital, adjusted based on risk, which reflects the overall level of inherent risk of a reporting unit and the rate of return a market participant would expect to earn. Under the market approach, the Company estimates the fair value of its reporting units based on revenue and earnings multiples of comparable publicly traded companies. There are inherent uncertainties related to the Company’s estimates and assumptions and management uses significant judgment in estimating them. In evaluating the fair values of its reporting units, the Company also reconciles its total estimated fair value to within a reasonable range of the Company’s market capitalization.

During the second quarter of 2024, the Company determined that a triggering event occurred at Pratt Miller and assessed the reporting unit for impairment. For the income approach, a discount rate of 13.0% (14.0% at October 1, 2023) and a terminal growth rate of 3.0% (3.0% at October 1, 2023) were used. As a result of the assessment, the Company recorded an impairment charge of $38.7 million in the second quarter of 2024. Changes in estimates or the application of alternative assumptions could have produced significantly different results. At December 31, 2024, the Pratt Miller reporting unit had $5.7 million of goodwill remaining.

For the annual impairment test, the Company used discount rates, depending on reporting unit, of 13.0% to 17.0% (12.0% to 14.5% at October 1, 2023) and a terminal growth rate of 3.0% (3.0% at October 1, 2023). The Company’s annual impairment assessment indicated that no additional impairments to goodwill were required. The fair value of all but one reporting unit exceeded its carrying value by more than 10%. Changes in estimates or the application of alternative assumptions could have produced significantly different results. For example, an increase in the discount rate of 100 basis points or a decrease in the terminal growth rate of 200 basis points would likely cause impairment of a reporting unit in the Vocational segment. That reporting unit had $262.0 million of goodwill at December 31, 2024. See Note 12 of the Notes to Consolidated Financial Statements for information regarding the Company’s goodwill.

NEW ACCOUNTING STANDARDS

See Note 2 of the Notes to Consolidated Financial Statements regarding the impact or potential impact of recent accounting pronouncements on the Company’s consolidated financial statements.

CUSTOMERS AND BACKLOG

Sales to the U.S. government comprised approximately 20% of the Company’s net sales in 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 as of December 31, 2024 decreased 12.0% to $14.74 billion compared to $16.75 billion at December 31, 2023. Access segment backlog decreased 59.5% to $1.83 billion at December 31, 2024, compared to $4.53 billion at December 31, 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 15.6% to $6.32 billion at December 31, 2024, compared to $5.46 billion at December 31, 2023, due to strong demand for municipal fire apparatus and price increases. Unit backlog for municipal fire apparatus as of December 31, 2024 was up 3.8% compared to December 31, 2023. Unit backlog for refuse and recycling collection vehicles as of December 31, 2024 was up 5.3% compared to December 31, 2023. Defense segment backlog decreased 2.7% to $6.53 billion at December 31, 2024, compared to $6.71 billion at December 31, 2023, primarily due to 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, 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. Approximately 53% of the Company’s December 31, 2024 backlog is not expected to be filled in 2025.

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, 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:

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The Company is exposed to market risk from changes in interest rates, certain commodity prices and foreign currency exchange rates. To mitigate the risk from changes in foreign currency exchange and interest rates, the Company selectively uses financial instruments. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which strictly prohibit the use of financial instruments for speculative purposes.

Interest Rate Risk. The Company’s earnings exposure related to adverse movements in interest rates is primarily derived from outstanding floating rate debt instruments that are indexed to short-term market interest rates. In this regard, changes in U.S. and offshore interest rates affect interest payable on the Company’s borrowings under the Credit Agreement. The Company had variable rate-based debt of $360.0 million outstanding on its Revolving Credit Facility at December 31, 2024 with an interest rate of 5.6%. This debt is classified as a current liability, resulting in limited exposure to adverse movements in interest rates given the short term expected maturity.

Commodity Price Risk. The Company is a purchaser of certain commodities, including steel, aluminum and composites. In addition, the Company is a purchaser of components and parts containing various commodities, including steel, aluminum, rubber and others which are integrated into the Company’s end products. The Company generally buys these commodities and components based upon market prices that are established with the vendor as part of the purchasing process. The Company does not use commodity financial instruments to hedge commodity prices.

The Company generally obtains firm quotations from its significant components’ suppliers for its orders under firm, fixed-price contracts in its Defense segment when possible. In the Company’s Access and Vocational segments, the Company generally attempts to obtain firm pricing from most of its suppliers, consistent with backlog requirements and/or forecasted annual sales. To the extent that commodity prices increase and the Company does not have firm pricing from its suppliers, or its suppliers are not able to honor such prices, then the Company may experience margin declines to the extent it is not able to increase selling prices of its products.

Foreign Currency Risk. The Company’s operations consist of manufacturing in the U.S., Mexico, Canada, France, Australia, the United Kingdom, Italy, Spain and China and sales and limited vehicle body mounting activities on five continents. International sales comprised approximately 14% of overall net sales in 2024, of which approximately 40% involved exports from the U.S. The majority of export sales in 2024 were denominated in U.S. dollars. As a result of the manufacture and sale of the Company’s products in foreign markets, the Company’s earnings are affected by fluctuations in the value of foreign currencies in which certain of the Company’s transactions are denominated as compared to the value of the U.S. dollar. The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and Euro, British pound sterling, Australian dollar, Mexican peso, Chinese renminbi and Canadian dollar.

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 December 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 December 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.

Management’s Report on Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles.

The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, the Company’s management has concluded that, as of December 31, 2024, the Company’s internal controls over financial reporting were effective based on that framework.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Deloitte & Touche LLP, the Company’s independent registered public accounting firm, issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, which is included herein.

Attestation Report of Independent Registered Public Accounting Firm. The attestation report required under this Item 9A is contained in Item 8 of Part II of this Annual Report on Form 10-K under the heading “Report of Independent Registered Public Accounting Firm.”

Changes in Internal Control over Financial Reporting. There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.