Executive Summary / Key Takeaways

• Oshkosh Corporation demonstrates robust resilience and strategic agility, maintaining strong margins in its Access segment despite market softness, while its Vocational segment continues to deliver impressive growth driven by robust backlogs and operational efficiencies.
• The company's Transport segment is undergoing a significant transformation, fueled by the ramp-up of Next Generation Delivery Vehicle (NGDV) production for the USPS and improved pricing terms on defense contracts, setting the stage for substantial future growth.
• Technological leadership in autonomy, electrification, and connectivity is a core differentiator, with innovations like ClearSky Smart Fleet, Volterra electric vehicles, and autonomous defense platforms enhancing productivity, safety, and market positioning.
• Despite a revised 2025 adjusted EPS guidance of $10.50 to $11.00 due to near-term market caution and tariff impacts, Oshkosh remains committed to its ambitious 2028 targets of $18 to $22 adjusted EPS, underpinned by organic growth and margin expansion.
• Proactive tariff mitigation strategies and disciplined capital allocation, including increased share repurchases, underscore management's focus on shareholder value creation amidst a dynamic macroeconomic and trade environment.

Oshkosh's Foundation and Strategic Vision

Oshkosh Corporation, established in 1917, stands as a diversified industrial powerhouse, delivering purpose-built vehicles and equipment across its Access, Vocational, and Transport segments. The company's enduring mission is to serve "everyday heroes" in critical sectors such as construction, defense, emergency services, and waste management. This broad market exposure positions Oshkosh uniquely within an industry landscape characterized by both cyclical demand in certain areas, particularly construction-related Access equipment, and stable, backlog-driven demand in essential services like fire apparatus and defense.

The company's overarching strategy, "Innovate, Serve, Advance," is a testament to its commitment to accelerated innovation in autonomy, electrification, and intelligent connected products. This strategic imperative has been visibly executed through targeted acquisitions, such as AeroTech, which expanded Oshkosh into attractive adjacent airport markets, and AUSACORP S.L. (AUSA) in September 2024, bolstering the Access segment with wheeled dumpers, rough terrain forklifts, and telehandlers. These integrations are designed to leverage existing brand strength and distribution channels, enhancing market reach and improving the company's earnings profile. The strategic renaming of the Defense segment to Transport in June 2025 further underscores Oshkosh's intent to broaden its footprint into commercial markets, diversifying its revenue streams.

Technological Differentiators and Innovation Roadmap

Oshkosh's competitive edge is significantly sharpened by its relentless pursuit of technological differentiation, integrating advanced capabilities in AI, autonomy, and connectivity across its diverse product portfolio. These innovations are not merely incremental improvements; they represent a fundamental shift in how the company's vehicles operate, offering tangible benefits to customers and solidifying its market position.

A prime example is the ClearSky Smart Fleet platform, which now connects over 100,000 assets. This extensive network provides real-time data and insights, enhancing productivity, boosting efficiency, and maximizing machine uptime for customers. In the Transport segment, the Next Generation Delivery Vehicle (NGDV) for the USPS is a state-of-the-art solution, modernizing and decarbonizing the postal fleet while dramatically enhancing driver safety and productivity. By Q3 2025, NGDVs had accumulated over 4 million miles driven by postal workers, consistently receiving positive feedback.

The Vocational segment showcases groundbreaking electrification efforts, notably the McNeilus Volterra ZSL refuse collection vehicle. This product is recognized as the first fully integrated electric vehicle designed for world-class ergonomics, purpose-built performance, and a zero-emission, quiet driving experience. Similarly, the Volterra ZFL eRCV stands as the industry's first purpose-built, fully integrated electric front-end loader refuse and recycling collection vehicle. These electric offerings address growing demands for sustainability and operational efficiency in urban environments.

In defense, Oshkosh is at the forefront of autonomous capabilities. The PLS A2 autonomy-ready heavy tactical truck features by-wire functionality, enabling autonomous operation and integrating active safety systems. At the AUSA Defense Conference in October 2025, Oshkosh introduced its Family of Multi-mission Autonomous Vehicles (FMAV), demonstrating its capacity to deliver autonomous payload-agnostic platforms. The company also showcased a flexible autonomous robot for tarmac operations at the International Airport Ground Service Equipment Expo, capable of serving multiple roles.

Oshkosh's innovation roadmap extends to future concepts that promise to redefine industry standards. The Galileo all-electric boom lift and roto-telehandler concept, paired with an autonomous mobile recharging robot, demonstrates potential for enhanced safety and productivity on future job sites. The HARR-E concept, an autonomous refuse collection robot, received a CES Picks Award for its design enabling on-demand pickup via smartphone, autonomous navigation, and self-recharging, holding significant potential for large planned residential communities. Furthermore, the company is developing advanced AI capabilities to identify waste and recycling stream contamination and an all-electric side loader refuse collection arm that eliminates hydraulics and features autonomous operation.

For investors, these technological advancements are critical. They not only contribute to Oshkosh's competitive moat by offering superior performance and efficiency but also open new market opportunities in areas like data center construction, autonomous logistics, and sustainable urban services. This technological leadership is a key driver for long-term revenue growth and margin expansion, positioning Oshkosh as an innovator in its diverse markets.

Competitive Positioning and Market Dynamics

Oshkosh operates within a dynamic competitive landscape, facing a diverse set of rivals across its segments, including Navistar International , PACCAR Inc. , Cummins Inc. , and General Dynamics . Oshkosh's strategic diversification across Access, Vocational, and Transport segments provides a distinct advantage, allowing it to mitigate cyclicality in one market with stability in another.

In the Access segment, Oshkosh, through its JLG brand, maintains a leading position, despite facing cyclical demand influenced by broader economic conditions and construction activity in North America and Europe. While the expiration of the Caterpillar (CAT) telehandler agreement impacted sales, JLG has demonstrated market share gains in telehandlers. The company's "local-for-local" manufacturing strategy, particularly evident in moving boom production from China to Italy to mitigate EU tariffs, enhances its competitive stance against rivals with less localized supply chains. Oshkosh's disciplined pricing strategy, reflected in a 3-4% discount level in Q3 2025, aims to balance market share with profitability, supported by a strong service network that contributes to high residual values for its equipment.

The Vocational segment stands out for its robust, non-cyclical demand, particularly in municipal fire apparatus and refuse collection vehicles. With a backlog of $6.40 billion as of September 30, 2025, this segment offers excellent revenue visibility. Oshkosh's technological leadership, such as its Volterra electric refuse vehicles and iOPS fleet management software for AeroTech, provides a significant edge over competitors. The company's ongoing investments in increasing production capacity for highly customized fire trucks and streamlining offerings like "Build My Pierce" pumpers further solidify its market leadership and operational efficiency.

The Transport segment (formerly Defense) competes directly with major defense contractors like General Dynamics for tactical wheeled vehicles. Oshkosh differentiates itself through specialized vehicles like the PLS A2 autonomy-ready trucks and the JLTV, emphasizing technological capability and a strong reputation for quality and service. New sole-source contracts for programs like the Family of Heavy Tactical Vehicles (FHTV) and the Family of Medium Tactical Vehicles A2 (FMTV A2), which include economic price adjustment mechanisms, are crucial for improving margin resilience against legacy fixed-price contracts. The Next Generation Delivery Vehicle (NGDV) contract for the USPS represents a unique, large-scale commercial opportunity, where Oshkosh leads in delivering purpose-built, advanced fleet modernization.

Compared to component-focused players like Cummins (CMI), Oshkosh offers integrated, end-to-end vehicle solutions. Against commercial truck manufacturers like Navistar (NAV) and PACCAR (PCAR), Oshkosh's specialization in niche, purpose-built vehicles provides greater versatility for diverse applications beyond standard trucking. While larger defense contractors like GD (GD) may have broader portfolios, Oshkosh's agility and focused R&D in specific vehicle types allow it to execute effectively on critical government contracts and drive innovation in autonomy.

Segmental Performance and Operational Excellence

Oshkosh's recent financial performance underscores its strategic execution and operational resilience across its diverse segments, even amidst a dynamic external environment.

Access Segment: Resilience in a Soft Market

The Access segment, encompassing JLG and Jerr-Dan, experienced a notable decline in sales and operating income in Q3 2025. Net sales for the three months ended September 30, 2025, were $1,109.70 million, an 18.6% decrease year-over-year, leading to an operating income of $118.00 million, down 43.2%. The operating margin stood at 10.60%. For the nine months ended September 30, 2025, net sales were $3,322.80 million, a 17.1% decrease, with operating income at $402.70 million, down 39.2%, and an operating margin of 12.10%.

This performance reflects softer market conditions in North America, primarily driven by cautious capital expenditure spending from customers due to tariffs and higher interest rates. The expiration of the agreement to produce Caterpillar-branded telehandlers also contributed significantly to the decline in telehandler sales. Despite these headwinds, the segment maintained a double-digit operating margin, demonstrating resilience. Management noted healthy equipment utilization rates, with demand from mega-projects, data centers, and infrastructure continuing to be strong. The backlog for the Access segment decreased to $721 million as of September 30, 2025, from $2.10 billion a year prior, indicating a normalization of orders and a more judicious approach to new equipment purchases by customers.

Vocational Segment: Backlog-Driven Growth and Innovation

The Vocational segment delivered strong growth and profitability, showcasing the benefits of its robust backlog and operational improvements. Net sales for the three months ended September 30, 2025, reached $968.00 million, an 18.9% increase year-over-year. Operating income surged by 42.3% to $141.70 million, resulting in an impressive operating margin of 14.60%. For the nine months ended September 30, 2025, net sales were $2,804.50 million, up 15.4%, with operating income of $406.80 million, a 42.1% increase, and an operating margin of 14.50%.

This strong performance was primarily driven by higher sales volume, a direct result of increased production rates, and improved pricing. The segment's gross margin benefited significantly from improved price-cost dynamics, contributing 350 basis points in Q3 2025. Strong order intake, particularly for Pierce fire trucks and AeroTech products, further bolstered the segment's position. The backlog for the Vocational segment expanded to $6.40 billion as of September 30, 2025, an 8.3% increase year-over-year, providing excellent revenue visibility for the coming years. The increase in unit backlog for municipal fire apparatus by 2.9% highlights sustained demand for these critical vehicles.

Transport Segment: Modernization and Strategic Ramps

The Transport segment, encompassing Oshkosh Defense and delivery vehicles, demonstrated significant operating income improvement, despite a mixed revenue picture. Net sales for the three months ended September 30, 2025, were $587.90 million, an 8.8% increase year-over-year. Operating income dramatically increased by 226.8% to $36.60 million, yielding an operating margin of 6.20%. For the nine months ended September 30, 2025, net sales were $1,530.00 million, a 5.6% decrease, but operating income rose 51.1% to $55.00 million, with an operating margin of 3.60%.

The revenue growth in Q3 was primarily fueled by a $114 million ramp-up in NGDV production and a $67 million increase in international tactical wheeled vehicle sales. A one-time license of JLTV intellectual property to the U.S. government contributed $25 million to sales and significantly boosted operating income. This was partially offset by a $163 million decrease in JLTV sales volume to the Department of Defense. The substantial improvement in operating margin was attributed to the software IP license, improved pricing on new contracts, and a favorable sales mix. A one-time warranty charge of $13 million in Q3 2025, related to core defense products from earlier supply chain shortages, was noted as a non-recurring item. The NGDV program is on track to reach full-rate production by the end of 2025, with over 4 million miles driven by postal workers, underscoring its successful rollout. The segment's backlog increased to $6.50 billion as of September 30, 2025, a 4.2% rise, largely due to a NGDV order received in Q4 2024.

Financial Performance and Capital Discipline

Oshkosh's consolidated financial performance in Q3 2025 and year-to-date reflects a company adept at managing operational complexities and external pressures while maintaining a focus on long-term value creation.

In the third quarter of 2025, consolidated sales decreased by 2% year-over-year to $2.69 billion. Despite this, the company achieved an adjusted operating margin of 10.2% and adjusted earnings per share (EPS) of $3.20, representing a 9.2% increase over the prior year. This EPS growth was notably bolstered by approximately $0.30 per share from a lower tax expense, resulting from the resolution of a multi-year U.S. federal income tax audit. For the first nine months of 2025, consolidated sales were $7.73 billion, a 4.9% decrease from the prior year, with adjusted operating income at $727.50 million, down 7.5%. Adjusted EPS for this period was $7.92, a slight decrease of 1.2%.

The company's gross margin saw a decline, primarily due to higher labor and overhead costs (140 basis points) and increased warranty expense (70 basis points), though partially offset by improved pricing (60 basis points) and lower material costs (50 basis points). Selling, general, and administrative expenses decreased, reflecting lower spending on consultants and reduced incentive compensation accruals. The effective tax rate in Q3 2025 was 17.5%, down from 23.8% in Q3 2024, influenced by $21.50 million in net discrete tax benefits. The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, also contributed to an approximate 40 basis point increase in the annual effective tax rate.

Liquidity and Capital Allocation

Oshkosh maintains a robust liquidity position, with cash and cash equivalents of $211.80 million and $1.41 billion in unused capacity under its Revolving Credit Facility as of September 30, 2025. The company remains in compliance with its financial covenants. In March 2025, a new $500 million unsecured term loan was secured to enhance liquidity, with proceeds used to reduce revolving credit facility balances. The debt to total capitalization ratio stood at 21% at September 30, 2025, an increase from 18.8% at December 31, 2024, primarily due to seasonal working capital needs, yet remaining within the company's targeted range for maintaining an investment-grade credit rating.

Operating activities generated $183.30 million in cash during the first nine months of 2025, a significant improvement from a net use of $240.70 million in the same period of 2024, driven by lower tax payments, reduced NGDV program investments in 2024, and increased customer advances. Investing activities utilized $136.30 million, a decrease from $309.60 million in the prior year, largely due to lower capital expenditures. The company repurchased 1.37 million shares of Common Stock for $159.30 million in the first nine months of 2025, with 8.86 million shares remaining under authorization. Oshkosh's capital allocation priorities are clear: maintaining a strong investment-grade balance sheet, funding organic growth, executing share repurchases, and pursuing strategic M&A opportunities. Management has indicated that returning capital to shareholders through buybacks is becoming a higher priority given the company's current stock multiple.

Outlook, Guidance, and Risk Factors

Oshkosh's forward-looking perspective balances near-term market realities with ambitious long-term growth objectives, underpinned by strategic initiatives and a robust technological roadmap.

2025 Outlook and 2028 Targets

The company has revised its 2025 adjusted EPS guidance to a range of $10.50 to $11.00, down from a previous estimate of $11.00. This adjustment reflects slightly lower projected sales volumes for both the Access and Transport segments, partially offset by a lower effective income tax rate. Total sales for 2025 are now expected to be between $10.30 billion and $10.40 billion, a moderation from the earlier $10.60 billion estimate. The adjusted EPS guidance includes after-tax charges of $0.68 per share for amortization of purchased intangibles and $0.07 per share for intangible asset impairments.

Segment-specific guidance for 2025 includes Access segment sales of approximately $4.30 billion (revised from $4.40 billion) with an operating income margin of 11% (revised from 11.5%), reflecting weaker North American market conditions. The Vocational segment continues to project strong performance with sales of approximately $3.80 billion and an operating income margin of 15%. The Transport segment's sales outlook has been adjusted to approximately $2.10 billion (from $2.30 billion) with an operating income margin of 4% (from 4.5%), primarily due to updated NGDV production expectations and higher warranty costs. Corporate and Other is expected to incur an operating loss of approximately $194 million.

Cash flow from operations is projected to be between $650 million and $750 million. Capital expenditures have been reduced to $200 million (from $250 million) due to rigorous spending controls. Consequently, the free cash flow outlook has been raised to $450 million to $550 million. Looking further ahead, Oshkosh has set ambitious 2028 targets, aiming to roughly double adjusted EPS to a range of $18 to $22, driven by a 7-10% compound annual revenue growth rate and 200-400 basis points of margin expansion, all organically.

Key Risks and Mitigation Strategies

Several factors could impact Oshkosh's ability to achieve its financial targets. The cyclical nature of the Access segment, particularly its exposure to U.S. and European economies and construction seasons, poses a risk. The company mitigates this through diversification across segments and a focus on resilient margins, leveraging demand from mega-projects and data centers.

The dynamic international trade environment, characterized by expanding tariffs (e.g., Section 232 steel and aluminum derivative tariffs), presents a significant challenge. For 2025, tariffs are estimated to have a $30-$40 million impact, mostly in Q4. Oshkosh employs a multi-faceted mitigation strategy, including supply chain negotiations, "tariff engineering," and localizing production, as demonstrated by moving boom production to Italy to counter EU tariffs. While price increases in 2026 are a possibility, the primary objective is to minimize customer impact.

The NGDV production ramp-up in the Transport segment, involving a new product and assembly plant, carries inherent challenges. Management is working with urgency to increase production while maintaining quality, targeting full-rate production by the end of 2025. Defense contracts also present risks, including legacy fixed-price agreements and the potential for termination at the customer's convenience. Oshkosh addresses this by securing new sole-source contracts with improved pricing and economic price adjustment mechanisms for programs like FHTV and FMTV A2, enhancing margin resilience. A one-time warranty charge in Q3 2025 for core defense products, stemming from earlier supply chain shortages, was identified as a non-recurring item, with the company emphasizing its quality focus. Finally, prolonged higher interest rates have led to customer caution in capital expenditures, particularly in the Access segment, which the company counters with disciplined capital allocation and a focus on long-term demand drivers.

Conclusion

Oshkosh Corporation is undergoing a profound industrial evolution, strategically positioning itself for sustained growth and enhanced profitability. The company's core investment thesis is firmly rooted in its resilience across diverse markets, its commitment to technological leadership, and its disciplined execution of strategic initiatives. Despite facing near-term headwinds from market caution in the Access segment and the dynamic landscape of international tariffs, Oshkosh has demonstrated its ability to maintain robust margins and drive growth in its Vocational and Transport segments through strong backlogs and operational efficiencies.

The company's relentless pursuit of innovation in autonomy, electrification, and connectivity is not merely a strategic pillar but a tangible competitive advantage. From the widespread adoption of ClearSky Smart Fleet to the transformative NGDV program and the award-winning Volterra electric vehicles, Oshkosh is delivering solutions that enhance productivity, safety, and sustainability for its "everyday heroes." This technological edge, coupled with a diversified portfolio and proactive risk mitigation strategies, provides a durable foundation for future value creation. While the revised 2025 guidance reflects current market realities, Oshkosh's ambitious 2028 targets underscore management's confidence in its long-term trajectory, driven by organic growth and a continuous focus on operational excellence and technological leadership.