Greetings and welcome to the Oshkosh Corporation fourth quarter and full year 2025 financial results conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad. As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Pat Davidson senior vice president of investor relations thank you sir you may begin good morning and thanks for joining us earlier today we published our fourth quarter 2025 results a copy of that release is available on our website at oshkoshcorp.com today's calls being webcast and is accompanied by a slide presentation which includes a reconciliation of gap to non-gap financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to slide 2 of that presentation. Our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements these risks include among others matters that we have described in our form 8k filed with the sec this morning and other filings we make with the sec as well as matters noted in our investor day in june 2025 we disclaim any obligation to update these forward-looking statements which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today are John Pfeiffer, President and Chief Executive Officer, and Matt Field, Executive Vice President and Chief Financial Officer. Please turn to slide three and I'll turn it over to you, John.

Thank you, Pat, and good morning, everyone. I want to thank our over 18,000 Oshkosh team members that work together to deliver strong results in a dynamic external environment. Before we review our fourth quarter and full year highlights, I'd like to talk about the CES show in Las Vegas earlier this month. This was the second year of showcasing our products and technologies that serve everyday heroes by making jobs safe, intuitive, and productive. Our vision for the airport of the future, the job site of the future, and the neighborhood of the future incorporates robotics, autonomy, AI, connectivity, and electrification which we highlighted at our booth. In particular, visitors to our booth saw our concept for a welding robot that utilized a JLG boom lift coupled with autonomous scissor lifts, AI software, and sensing technologies. This concept highlighted our strategy to shift from providing equipment that enables jobs at height to offering equipment that executes jobs autonomously. We believe this technology is also applicable for a wide range of AWP use cases. In addition, we demonstrated how a modular airport robot platform can serve multiple roles on the tarmac to support the airport of the future. We have trialed a perimeter detection robot at airports and are optimistic about our ability to commercialize this technology in the coming years and expand it to other applications. Lastly, through an immersive theater experience, we demonstrated how our equipment and technology, including the autonomous jet dock, modular runway robots, and IOPS software work together in any weather to deliver the perfect turn for airlines, airports, and travelers. Our industry-leading technology also received third-party recognition at the show, winning two Best of Innovation Awards. One for JLG's robotics on the jobsite and another for our hybrid electric Volterra ARF. We were also named as innovation honorees for our JLG boom lifts and our McNeilis Volterra electric refuse and recycling collection vehicle. As the show was happening we were delighted that our racetrack inspired collision avoidance mitigation system or CAMS, was awarded a CES PICS Award. The PICS Award recognize and celebrate brands at the forefront of innovation, honoring standout products and creative solutions. CAMS is the first purpose-built technology to anticipate collisions for firefighters and others on active roadways. Following a strong response to our showing this technology at CES last year, we have been field testing the AI-powered solution with fire departments in large cities over the past year and the feedback has been powerful. We are working on scaling this safety platform to support everyday heroes such as EMS crews at accident scenes, police officers managing traffic or responding to calls, and even tow truck operators assisting motorists. The awards we received at CES, as well as the resoundingly positive response we received from show attendees, demonstrate how our investments and innovation are creating safer, more efficient workplaces for America's everyday heroes. We are excited about our next generation products and are confident they will lay the foundation for long-term, profitable growth as we transform industries and help our customers achieve their goals. Please turn to slide 4 for some highlights for 2025. For the year we posted revenue of 10.4 billion dollars leading to adjusted operating income of just over 1 billion dollars and adjusted earnings per share of ten dollars and 79 cents. As we have discussed on prior calls the team pulled together across the company to respond to the evolving tariff landscape effectively managing our costs and supply chain throughout the year we also continued to make strategic investments and strengthened our leadership team to execute on our 2028 goals as laid out at our investor day in june please turn to slide five for a discussion of q4 highlights for the quarter we delivered adjusted operating margin of 8.4% on revenue of 2.7 billion dollars. This led to adjusted EPS of two dollars and 26 cents in line with the guidance we provided last quarter. Strong performance in both our access and vocational segments led to our solid finish to the year. Turning our outlook to 2026, we see a general continuation of recent economic conditions which includes expected lower capital investments at certain of our industrial customers, notably in our access equipment and refuse businesses. Without an improvement expected in non-residential construction in 2026, our outlook for the year is for adjusted EPS in the range of $11.50. cents. Our EPS growth compared to 2025 reflects strong performance in the vocational segment, reflecting our higher production throughput for fire trucks and the continued ramp up of our NGDV in the transport segment, partially offset by our expectation for weaker market conditions in the access segment. Matt will provide additional details on segment performance and our 2026 outlook later in the call. Please turn to slide seven for segment highlights. Our ACCESS team managed through challenges to finish the year on a high note with fourth quarter revenue of $1.2 billion, roughly equal to last year and higher than the third quarter as we benefited from strong demand in advance of 2026 price increases. As you will hear from Matt shortly, we believe that our strong Q4 sales will have an impact on Q1 sales. Orders were strong at more than $1.7 billion, leading to a book-to-bill ratio of 1.5 as customers continue to move toward more traditional, seasonal ordering patterns. We are pleased with this performance, and we continue to work with customers on their plans for 2026. Our backlog is $1.3 billion, which we believe is reasonable in this environment. JLG products serve many end markets in our communities, but the primary driver for demand is non-residential construction. While we continue to see underlying strength supported by data centers and infrastructure, many other construction sectors remain soft, and we therefore expect revenue in the first half of 2026 to be down compared to 2025. We believe that elevated fleet ages and improving economic conditions in the second half of the year will provide momentum for 2027. As I mentioned earlier, we generated tremendous excitement with our technology and vision for the connected job site of the future at CES. Customers, analysts, and attendees recognize the value of our innovations, positioning JLG to build on its market leadership. We look forward to the ConExpo show in March, where we'll be announcing new products and demonstrating our boom lift with robotic end effector concept that was such a hit at CES earlier this month. Turning to slide 8, Vocational delivered another quarter of growth, leading to full-year revenue of more than $3.7 billion, up nearly 13%, and a robust adjusted operating income margin of 15.8%. Our fire apparatus business continues to lead the way, with sales up about 17% for the year. We made good progress on throughput with fire truck deliveries up nearly 10% in the second half compared to a year ago. We continue to execute our plan to reduce lead times with expected capital investments of about $150 million to support improved throughput across our three key locations with about $70 million spent to date. The airport products business continues to grow with sales up about 13% in 2025, and we remain confident in our outlook as we see strength in both air passenger and cargo traffic over the long term. Airports and airlines are investing in critical infrastructure and embracing technologies like those we showcased at CES. This provides outstanding opportunities for us to grow this business. Before I turn to our transport segment, I want to briefly touch on our refuse and recycling vehicle business. We're excited about the refuse contamination detection and service verification technology that we displayed at CES, which we plan to launch in the first quarter. This technology uses AI and onboard edge computing to identify 14 different types of contaminants so customers can identify contamination in their waste streams in order to reduce the amount of recyclables going to landfills. While we have seen a moderation of near-term demand, we believe in the long-term growth of this business and our opportunities to bring technology to solve customer problems. Our backlog for the vocational segment of more than $6.6 billion provides excellent visibility as we expect the segment to deliver meaningful revenue over the coming years as we improve production throughput as outlined at our investor day. We expect our investments in production will reduce this backlog over time as we build units to meet continued, robust demand for our products. Please turn to slide 9. We made significant progress on transforming our transport business in 2025. You will recall that we changed the name of the segment to reflect the growing importance of the delivery business and the expanded opportunities we see for this segment. About six months ago, Steve Nordland joined Oshkosh as the segment president. Steve's outstanding experience and fresh perspective are shaping both the direction of delivery as well as our defense strategy going forward. We continue to increase NGDV shipments during the year and are delivering in line with or ahead of USPS expectations. We surpassed the production milestone of our 5,000th unit and are pleased to share that the fleet has exceeded 10 million miles driven. NGDVs now operate in nearly all 50 states including Alaska. Postal workers continue to praise these vehicles which include modern safety equipment and productivity enhancements that improve their working conditions and are a significant upgrade to the decades-old vehicles being replaced. On the defense side, several key contracts that we announced in 2025 will be important for 2026 as we build and ship units for programs to support the U.S. Armed Forces. In particular, both the FMTV and the Rogue Fires programs are essential for our nation's security and they will become more meaningful in our defense results as the year progresses. And just a little over two weeks ago, we announced a follow-on order for JLTV units for the Dutch Marine Corps. We expect to begin delivering on that order towards the end of 2026.

With that, I'll hand it over to Matt to walk through our detailed financial results thanks John please turn to slide 10 consolidated sales in the fourth quarter were nearly 2.7 billion an increase of 91 million or three and a half percent from the same quarter last year primarily due to improved pricing in the vocational segment and higher sales volume in the access segment adjusted operating income was 226 million down about 20 million from the prior year, primarily due to unfavorable product mix and higher manufacturing overhead costs, partly offset by lower incentive compensation costs and higher sales volume. As a result, adjusted operating income margin of 8.4% was down 100 basis points from last Adjusted earnings per share was $2.26 in the fourth quarter, resulting in full year 2025 adjusted EPS at $10.79, slightly above the midpoint of our most recent guidance on full year 2025 sales of $10.4 billion, which was also in line with our most recent guidance. During the quarter, as we said on the last call, we stepped up share repurchases to approximately 912,000 shares of our stock for $119 million, bringing our total share repurchases in 2025 to $278 million, more than double the prior year. Share repurchases during the previous 12 months benefited adjusted EPS in the quarter by $0.06 compared to the fourth quarter of 2024. Free cash flow for the quarter was strong at $540 million. For the full year, free cash flow was $618 million or 96% of net income. This was above the high end of our most recent guidance due to improved customer advances and lower capital expenditures. This is a strong proof point supporting our investor day target of cash conversion in excess of 90%. Turning to our segment results on slide 11, the access segment delivered fourth quarter sales of $1.2 billion, up 1% over last year. Adjusted operating income margin of 8.8% reflected unfavorable price cost dynamics, including about $20 million of tariffs, an adverse product mix partly offset by higher sales volume. As we expected, the impact of tariffs was largest on the access segment during the quarter. Across all segments, the impact of tariffs was approximately $25 million in line with our prior call. We believe that the announced 2026 tariff-related price increases for access products contributed to stronger sales performance in the fourth quarter compared to our most recent guidance. Our vocational segment achieved an adjusted operating income margin of 16.2% on $922 million in sales in the quarter. Sales increased by $42 million with improved pricing partially offset by lower sales volume. Lower volume in RCVs was partially offset by improved volumes in municipal fire apparatus and airport products. Locational adjusted operating income increased to $150 million as a result of improved price cost dynamics partially offset by unfavorable product mix within municipal fire apparatus in the quarter. Transport segment sales increased $33 million to $567 million in the quarter. Delivery vehicle revenue grew by $130 million to $165 million and represented approximately 30% of transport segment revenue during the quarter. Delivery revenue grew 13% sequentially compared to the third quarter of 2025. As expected, defense vehicle revenue was lower compared with last year due to the wind-down of the domestic JLTV program. Transport segment operating income margin was 4%, up from 2.8% last year, reflecting the net impact of changes in CCAs and improved pricing on new contracts, partially offset by NGDV ramp-up costs. Fourth quarter operating income margin was down sequentially from the third quarter due to the non-recurrence of the one-time sale of the JLTV-related IP license to the U.S. government. Turning to our expectations for 2026 on slide 12, we remain on our plan to deliver strong improvements to revenue and operating margin by 2028. For next year, we expect sales to be approximately $11 billion on a consolidated basis, which represents growth in the mid-single digits. We are estimating adjusted operating income to be a little over $1 billion, and we estimate that adjusted earnings per share will improve to approximately $11.50. Our sales outlook assumes roughly flat non-residential construction activity in line with many external projections. While we expect lower sales and access, we expect to grow both sales and adjusted operating income for the vocational and transport segments. Also, it's worth noting that we are assuming that the present tariff rates remain in place throughout the year. The rough magnitude of these tariffs is estimated at $200 million, or about $160 million higher than 2025. While we expect full-year results to reflect improved performance, we anticipate that the first quarter will be the lowest quarter of the year, as we would traditionally see from seasonal factors. We expect the strong fourth quarter 2025 customer response to pricing actions at Access will also adversely impact Q1 volumes. As a result, we believe our adjusted EPS for the first quarter could be about half of last Building on John's earlier comments, we believe our second half performance will be more favorable across the segments than in the first half. For the full year, at a segment level, we are estimating access sales to be approximately $4.2 billion with an adjusted operating margin of 10%, reflective of softer market conditions in North America. We expect to fully offset the impact of tariffs by year end. We project vocational sales will be approximately $4.2 billion, about equal to our access segment, with expectations for adjusted operating margin of approximately 17%, supported by a continuation of favorable price cost dynamics and volume growth from improved production throughput. For transport, we expect sales to be approximately $2.5 billion, with expectations for operating margin of approximately 4% as we continue to transition out of past fixed price contracts and ramp up NGDV production. Performance in the segment is anticipated to improve throughout the year as we grow revenue on NGDV deliveries, receive follow-on NGDV orders, and billed units under the new FMTV contract. Our estimate for corporate and other costs is $180 million and tax rate is approximately 24.5%. We expect to invest approximately $200 million in CapEx, and our estimate for free cash flow is approximately $550 to $650 million, or about 80% of net income. We are announcing a quarterly dividend of $0.57 per share, which reflects our expectation of strong long-term cash flow generation and our board's confidence in our ability to sustain profitable growth while continuing to fund our investments in innovation and to expand U.S. manufacturing. We also plan to continue repurchases of shares throughout the year. With that, I'll turn it back over to John for some closing comments.

Thanks, Matt. We just delivered a solid fourth quarter to complete a great year, and we remain confident in our long-term growth opportunities, driven by our people, innovative products, and strong businesses. We believe our guidance for 2026 continues to support our plans to achieve our adjusted EPS range of $18 to $22 per share by 2028. We appreciate your continued confidence in Oshkosh and look forward to answering your questions. I'll turn it back to you, Pat, for the Q&A. Thanks, John.

I'd like to remind everyone to please limit your questions to one plus a follow-up and please stay disciplined on your follow-up question. After that follow-up, we ask that you rejoin the queue if you have additional questions. Operator, please begin the Q&A session.

Thank you. We will now be conducting the question and answer session. Again, we ask that all callers limit themselves to one question and one follow-up. If you have additional questions, you may re-queue and those will be addressed time permitting. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Jamie Cook with Truist. Please proceed with your question.

Hi. Good morning. I guess just two questions. One, John, on the access guidance or the aerial guidance for the year, I think it's applied down 6% or 7%, you know, relative to United Rentals who came out, and I think their CapEx guide was up modestly. Cats retail sales and North American construction were up double digits. So there just seems to be a disconnect between, you know what I mean, like what's implied in your guide versus what we're seeing from competitors or peers or customers. So just color there, is there a, you know, I guess so color there. And then my second question, just on the transport margins, you know, it sounds like you're ramping as you expected. I think applied sales are up 20 percent, the margins of only 4 percent. I know there's some pricing that needs to happen on the defense side, but just color there how we think about margins as we exit the year, understanding you said things should get better as the year progresses.

Yeah, great, Jamie. Thanks for your questions. I'll take the first one. I'll probably pass the margin question on transport over to Matt. Starting with our access business and your question on our outlook. First of all, I want to make sure I state that we think we're taking a balanced approach to 2026. The market is unfolding right now, kind of what we all hear about on a regular daily basis in terms of what's going on, meaning really strong big mega projects and data centers, PowerGen, some large infrastructure projects. So that does drive demand, and that's very positive. On the other hand, you've got private non-res construction, which is a huge segment of non-residential construction, which is still under some pressure. And we read the stats, and we look at the outlooks for these markets. And long term, we feel really good. You know, eventually, we'll see some of these delayed starts start to come back online. And when that does, that will be really good news. But right now, we've taken a balanced approach on that. When you talk about United Rentals and what they reported today, or last night, I guess it was, versus a lot of other businesses that are out there, they're not all the same. You know, if you're highly, if one of our customers is highly exposed to these big mega projects, then that's one story. On the other story, you've got a lot of independent rental companies that are more exposed to the private non-res, which is still under pressure, and that kind of is what leads into our balanced approach on the market and what we're seeing in 2026. For example, manufacturing construction is still under pressure, and that's a big sector of non-residential construction. We kind of need to see that turn a bit. And if we do, in a future call, we'll let you know. Matt, I'll turn it to you on the transport question.

Morning, Jamie. So first, let me just say we remain confident in our 2028 outlook for the transport segment. Our guide in 2026 reflects a number of factors. There's pricing for new contracts, as you mentioned, with FMTV new pricing coming on in the second half. We'll see steady production increases for the NGDV. we do anticipate further NGDB orders to come throughout the year and then there's a couple things that are maybe nuances you'd be worth noting one is we do have lower defense volume in 2026 largely on export orders and then some investment in new product development cost reductions and so forth normal engineering that steps up over the year that's what results in the OI of four percent with the back half a bit stronger than the first half but again remain very confident in our 2028 outlook thank you our next question comes

from the line of Jerry Ravitch with Wells Fargo please proceed with your question yes hi good morning everyone morning Jerry John hi John I know you have excellent telematics data from your fleet can you tell us what you're seeing in the US and European market for your products you know you've had a Reynolds spoke about good utilization for your equipment categories. Curious what you're seeing.

Yeah, we've got a lot of machines out there that are connected, Jerry. I mean, in the hundreds of thousands, like a lot of equipment that's connected. We've got really good insight into the health of the equipment that's in the fleet, and we see it as healthy. And same in Europe. The European fleet is relatively healthy, too. So that's good news, right? And the used market is also pretty healthy right now as we see it. You know, the prices in the used market, the amount of supply that's in the used market, it's in a healthy state. So, you know, that's all good news, and I think we're all kind of looking forward and saying, okay, we've got a lot of non-res under some pressure, but we've got big mega projects that are growing at a healthy rate, and we're kind of all looking for the data to tell us that there's an inflection point. and right now we don't we don't know exactly when that's going to happen we just know that at some point it will happen and that gives us the reason for our balanced outlook on 2026 for access equipment super and that can we just unpack the the first quarter versus the fourth quarter because the guidance implies a really meaningful earnings acceleration so you know in access it

sounds like you're expecting under absorption because of the pull forward and if price increases but maybe we could just unpack that and talk about of margin expectations and access in the first quarter and the transport headwinds that you mentioned sounds like those might be heavier in 1Q than 4Q. Can we just maybe quantify those points just to build the comfort with the earnings acceleration?

Yeah, so our first quarter, as we mentioned on the call, we expect that about half of last year. Most of that is in the access segment year on year in terms of the growth. And so if you think about that, we had a strong first quarter last year and then kind of blowing through from 2024. This year we did see very strong sales in the fourth quarter, as we just reported. We think that'll have a moderate impact in the first quarter. We also have some adverse price costs. While we did announce pricing, we do have a full load of tariffs. And in the back half of the year, we'll start getting some of the cost reductions that we kicked off a couple years ago, which progressively increased throughout the year. So that's the large driver of kind of the year-over-year EPS at roughly half of last year.

Thank you. Thanks, Jerry.

Our next question comes from the line of Meg Delbrae with Baird. Please proceed with your question.

Hey, good morning. Sorry, I'm going to have to stick with access equipment too because I am a little bit confused here in terms of how we're thinking about the first quarter. Can we be specific in terms of what you guys are thinking in terms of year-over-year revenue decline and margin? And my follow-up, you know, as you think about the full-year guide, right, I mean, if we're recognizing that the order intake that you had in the fourth quarter, maybe, as you said, pull forward some of the demand because of the announced price increases, where you're guiding the full year revenue at $4.2 billion, frankly, is still higher than what your order intake was for 2025. So to me, in that guidance, you do imply that things are, frankly, getting a little bit better as the year progresses. What's your visibility related to that? I mean, you know, are you hearing that from your customers in terms of how they're deploying CapEx? Or are there some other assumptions that you're baking in?

So I'll take first quarter and kind of how to think about that and then hand off to john talk about some of the backlog and how we how we see the year developing um so again for the full year we're 4.2 as you mentioned that's about a six to seven percent decline year on year we think on a year over year basis that'll be higher in the first quarter again first quarter last year was very strong coming off q4 2024 this year we are seeing a relative weakness in part because of the pricing we announced for 2026 which resulted in strong sales in q4 and so we would expect to see uh the revenue decline year on year first quarter

higher than what we have for our full year guide yeah and with regard to how the year is going to progress uh mig so we did in the fourth quarter our orders were 1.7 billion our book to bill was 1.5 and we have a backlog of 1.3 billion so i always pay attention to we we always pay attention our backlog and how it's how it's continuing to progress we and I always indicate that our backlog is typically we say should represent three to six months of demand and it's that 1.3 billions right in the middle of it when you look at our guide we do look at the first half being under a continued pressure because of some of the non-residential activity that we see we We also saw, you know, heavy shipments in the fourth quarter, which may impact the first quarter a little bit, as Matt just indicated, and you indicated with your question. When you look at where our backlog is, and that backlog also shows when customers need equipment, because there's shipment dates on every order we take. That's what leads to our guide of the $4.2 billion, which is down a little bit year over year. but kind of consistent with our balanced outlook on where we are with the market.

Okay. Lastly, if I recall, we were looking at $300 million of revenue quarterly at full run rate for NGEV. When do you expect that you'll be able to hit that? Thank you.

Well, I want to – thanks for the question on NGEV. We continue to make really good progress with this program. And as I mentioned, we're at more than 10 million miles, and the customer of delivery with these units, the customer is delighted with them. When you look at our performance, we are at or ahead of U.S. Postal Service delivery requirements The Postal Service is very happy with the deliveries we're making, and we have a formal schedule that we have to meet, and we're at or ahead of that formal schedule. So when you look at our revenue for the full year, you know, we've always said that we will do between 16,000 and 20,000 units a year on this program and in 26 we're right at the low end of that range we're in that range on the low end side of it so we continue to do well with production sure we'll produce more units in the second half than the first half but we're you know we're running fairly well with this program and and our customers very happy with it if you look at our guide for the transport business kind of thinking about the revenue side of it about half of that guide is NGDV or delivery units to give you kind of

some numbers and it's a little bit more on the back half than the first half all right appreciate that thank you thanks Meg our next question comes to the line of Steve Barger with T-Bank please proceed with your question this is Christian Zylon for Steve Barger thanks for taking the questions just on access were there any other industry or customer specific ordering dynamics and access that you don't think would recur as we had later into the construction season or was it really primarily just the pricing pull forward on top of a regular ordering cadence from your customers my question it's Matt so certainly we I'm going to say there's anything unique I would just say we had

you know a strong sale into independence in the fourth quarter we think that'll reverse out and that the year will normalize. For 2025, you know, in general, we saw relative strength in independence, and I think we all expect that that will normalize more through 2026.

Got it. And then maybe a slightly different question. Just at CES, you guys showcased a delivery vehicle for non-USPS. As your team put together the concept, just kind of what drove you to pursue that plan? Was it the market size or unit economics that you liked? Was it the financials or kind of the cross-energies? Just any thoughts on that concept. Thank you so much.

Yeah, thanks for the question on CES. I mean, all of the above based on what your question was. I mean, we, you know, when you look at our NGDV that we developed for the United States Federal Service, there's a lot of technology on that vehicle. It's the most advanced last mile delivery vehicle ever put into the market. It provides so much benefit for the operator to be productive but underscore also safety. Safety for people around the vehicle and safety for the operator and so in CES we wanted to showcase that we have the capability to to continue to deliver this type of a vehicle for other segments of the delivery market. You know these are purpose-built vehicles they're not they're not modified COTS vehicles which you tend to see a lot in the delivery market, or a body on chassis, which you see a lot in the delivery market. These are purpose-built vehicles with technology on them to drive productivity, safety, and economic performance for the fleet operator. And we wanted to showcase that because we've always talked about future opportunity beyond NGDB. So that was the intent of it.

Our next question comes from the line of Angel Casillo with Morgan Stanley. Please proceed with your question.

Thanks for taking my question. Just wanted to maybe get a little bit more color. Sorry to keep harping on the access side, but have you said exactly, I guess, how much pricing you anticipate to get in 2026 within your sales guide? Can you just kind of talk about that in a little bit more color, just how much is kind of embedded right now at this point in your backlog, and not just for arrows, but for each segment?

Yeah, thanks, Angel. I'll take the question. It's a great question, of course. So when we look at our pricing plans, you know, of course, we've been through a dynamic period. When you look at the cost side of the equation, it's been headlined by tariffs, tariffs, and tariffs in that dynamic environment. So we go to work, and we went to work in 2025 doing a lot of tariff engineering work to try to do everything we can to take the cost of tariffs and mitigate it. And a lot of that has to do with engineering, re-engineering. You know, our sourcing teams work hard on where we're sourcing what product, and we try to localize or move product when we need to. So we've done a lot of that work, and we'll continue to do that work. You know, we try to minimize the impact to our customers, but you can't eliminate all of it. So eventually you have to pass some through in price. so we did we've done that and we believe that the price increase is reflective of something that our customers can manage as well as something that allows us to stay whole throughout 2026 on the price cost equation that's the gist of it that's very helpful and maybe just following up on that point of you know localizing costs and one of the big kind of questions we've been getting is just just what happens to kind of the bill of materials or just materials cost in general, whether it's from commodity price inflation or memory chips and other things that we're seeing out

in the market. So could you just comment a little bit on, you know, what's kind of embedded in your guidance in terms of just broader cost buckets and in particular for staying maybe on the access side, if we could just kind of unpack how much is maybe of the cost or the margin potential dynamics here is tariffs versus materials versus mix of independence you know or any other kind of buckets here yeah angel thanks for the question so on the cost side you know I'll give kudos to the access team which really kicked off a cost reduction initiative going all the way back to 2024 and that progressively has results and so they're continuing to identify cost savings

throughout this year so cost savings are kind of grow cumulatively quarter over quarter so we'll get more in the back half of this year than the front half of this year you know with those actions with with other actions I'd say overall we're seeing largely flat ish costs set aside tariffs and so the team is really doing a great job to manage the cost equation of this and offsetting as much of the tariffs as they can through those initiatives. In terms of mix, you know, we've historically seen a higher mix of IRCs. I can't be explicit about how that impacts the financials, but, you know, traditionally that's been 55% NRC, 45% IRC. We think that'll shift kind of more normalized to those levels in 2026.

Very helpful. Thanks, Angel.

Our next question comes from the line of Kim Thain with Raymond James. Please keep with your question.

Thank you. Good morning. I just have one. Just on the vocational segment, can you maybe give some comments in terms of the backlog there and how that's kind of influencing the revenue, what you expect in terms of the revenue composition in 26? I take it that the RCVs are likely to step down, just given comments on some of the public waste haulers. But maybe if there's some further hand-holding you can give there in terms of, you know, a split across F&E and Aerotech, et cetera.

Sure, yeah. Thanks, Tim, for the question. So a vocational, you know, continues to be a great story, a great business for us, will be for for many years into the future the backlog in across the business is really healthy when you look at the backlog at a less one step down from that which is your question the the fire backlog still really healthy you know we've had a big backlog we're continuing to increase capacity increase output yet we continue to see healthy order rates I mean customers want our product so the backlog is really really healthy in the fire market it's the same Same in the airport market with our airport and Aerotech business. Healthy business conditions, healthy order rates, you know, customers are continuing to invest. You see the stats on both passenger and commercial demand for airport, it's really good. There is some pressure in the environmental business with refuse and recycling. The business in total is very healthy. and our customers are very healthy in this segment. There's just a little bit of a reluctance right now to place a lot of CapEx. That's just temporary. We see the long-term being fantastic, as we had indicated in our investor day through 2028. It just could be a little bit of a lull in CapEx, so some downward pressure on that business in 2026, but long-term it's fine, and that and the vocational business will perform exceptionally well even with that blip in in 2026 so we feel great about this segment the segment where we really showcase our technology that makes such a big impact for our customers and that's one of the reasons it's so healthy great thank you John our next question comes from line of Kyle Menges with Citi please proceed with your question thanks for taking the questions guys I was hoping we could

just go back to the transport margin and just how to think about the transport margin ramp throughout 2026. And then, Matt, you still sounded confident in hitting the Investor Day target for transport margins in 2028.

So it would be helpful to hear some color on just how to think about the bridge from transport margin of around 4% in 2026 to meeting the Investor Day target by 2028. yeah so you know as I think about going from the 4% that we got this year to the 10% all the building blocks are there it's just a matter of timing and so we've talked about is new price on new contracts so we're building under FM TV sorry FH TVs now which you see in the performance in the second half of 2025 we'll build under the medium contracts the FM TV second half of 26 NGD ramp so we'll continue to increase our production progressively throughout the year John mentioned that about half of our revenue for next year so the 2.5 billion dollars is NGDV which is right what we said we would be in in the long-term guide of 3.1 so you're starting to see those elements come in with with us seeing more of that in the second half obviously than the first half so you will have some some launch costs that we pick up in the first half The other thing, just to note, is that with that half of the revenue being delivery, then you can see some of the defense decrease year on year from the export orders. And we would expect defense going to pick up into our future guide a bit as well relative to 2026. So that's kind of how to think about 2026. Again, all the building blocks there, it's just a matter of timing for them. and then the second half being stronger for the reasons I mentioned earlier.

Yeah, and we remain really confident on this business going forward and on the recovery of its margins. We're very confident that that will continue to progress as we head towards 2028.

Helpful. Thank you. And then a question on Aerotech. Just how do you think you've been able to extract some margin synergies and what's really the potential to squeeze out some more margin from that business? And I think you guys have hinted at doing some 80-20 within Aerotech. So it would be helpful to hear just what some of those 80-20 initiatives look like. Thank you.

Yeah, thank you for that question. The Aerotech business is a great business for us because of the market that we're in and the synergies that we get between our core synergies and the capabilities of Aerotech, and that's what you see. So the market's healthy. We're continuing to drive technological innovations within that market segment. You already see our autonomous jet docking and autonomous cargo loading being deployed right now in production, so to speak, meaning at gates. There's a lot more technology to come. Technology really helps customers be more productive, and when that's the case, it also helps our margins, of course. But we do, on the other hand, have operating synergies, and we do 80-20, similar to the way we do it in some of our other businesses, which has dramatically helped us transform margins over the years. and there's opportunity there for us to continue to get margin through improvement in operating performance. It's not to say that there's anything wrong with the operations of Aerotech. There isn't, but you can always make operations better. You can always do that. If you ever don't have that mindset, you're probably in trouble. But this is a great business.

We expect margins to continue to expand because of technological synergies and continuing to be better and better with operations through our 80-20 philosophy. so thanks for that question great thank you guys thank you our next question comes from the line of Stephen Fisher with UVS please proceed with your question thanks good morning just on within the vocational side of things on fireside just curious how much of a surprise was this municipal mix in the quarter relative to kind of what your expectations were at the start of the quarter and what's your baseline expectation of mix in 26 versus 25 I think

so what we see in the fire business is some quarters you kind of have a mix of products that has a bit of a lower margin as you kind of work through the one-offs and so forth what we've seen in prior quarters is more batches and you've seen us talk about those even on the call where we have you know 13 15 trucks being delivered to a department in the fourth quarter we had a few more snowflakes I guess I'd say then we would have in other quarters and that resulted in a little bit of adverse mix you know I don't see that being anything sustained it's more of a periodic thing and over the year and kind of over the long arc it really gets lost in the shuffle but it was something we saw in the fourth

quarter specifically okay that's helpful and then just coming back to the access this segment, to the cost elements. Just curious how much visibility you have to the costs for this year at this point. How locked in are you for what you expect to produce? And then I think, John, you mentioned you expect to be whole on the price versus cost, but just on the second half of the year in particular, is price versus cost expected to be positive for that second half? Thank you.

Yes, Steve. So we have good visibility into the cost at this stage for the year. We think we're in as stable of an environment as we've seen for a while, in terms of tariffs at least. And we've got good visibility into our raw material prices as well as our cost reduction initiative. So we feel we've got a good handle on the cost for the year. We do anticipate price costs to turn positive in the back half of this year. That's one of the drivers of some of the better performance in the second half. And it is a bit of a drag in the first quarter as we work through some of those cost reduction initiatives throughout the year.

Terrific.

Thanks, Steve.

Our final question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.

Hey, good morning, guys. I was hoping you could quantify the incremental tariffs in 26, split them up by segment. And then also you talked about, you know, taking price increases to cover them. In the event that IEPA gets overturned, I guess, how do you think about that? Are you able to maintain the margin, or do you revisit the pricing discussions with your customers for 26?

Thanks, Chad. So as I mentioned on the call, full-year impact is about $200 million. That's roughly $160 higher than last year. I think of that as mostly in access, so about three-quarters is in access segment, to put some ballpark numbers on that. If there is anything overturned, our assumption, and certainly our planning assumption, is that something equivalent will go in place. So our guidance assumes that the present tariff rate is sustained throughout the year. I think that's a probably fair assumption based off everything I've read. But, you know, as the situation evolves, we'll adapt as we did in 2025.

Gotcha. That's helpful. And then I was hoping you could bridge your incremental margins in the vocational business. They're pretty sizable. So it's one of you to get split it out, you know, how much comes from price realization versus volume. And then secondly, you know, with 17%, you're kind of at that midpoint of your long-term guidance. So I guess what's stopping you guys from taking that target a bit higher now?

Sound like a CFO. So we're at 17%. We're really pleased with that margin. It's a good step forward. and what you see in that growth, and I won't be explicit about the breakout between volume and price costs, but volume plays a larger driver in 2026 than it did in 2025 as we bring on more capacity. John referenced the amount of capital we're investing into our assembly plants for fire capacity, so we started to see that come to the fore in 2026 relative to 2025. Price costs we do see still favorable in 2026 and then we do have some investments that help us support our business growth and that's really what drives the 17 percent but that's a great margin it is right within the sweet spot of the 16 18 percent we got it in 2028 with revenue growth in the 2028 guide relative to where we are in 2026 so really pleased with the progress we're making in that segment and pleased with the performance we're seeing yeah I'll just say that you know we're at we are we're expecting to be at 70 percent margins which which we'd all look at and say that's that's good compared to our 28 guidance we got a lot

of good things still happening in this business a lot of good things on deck to come so we feel good about it thanks mr. Davidson I'd like to turn the floor back over to you for closing comments all right appreciate it Christine thanks for joining us everybody on the call today we will be meeting with investors at several conferences during February and March we're also looking forward to another con expo show as John mentioned earlier during his comments on the access business if you're interested in learning more about our company and our construction equipment leaders consider a trip to Vegas in March for the show last held back in 2023 right three years ago so it's a great opportunity to gain exposure to our industries and hear about the new products and technology have a good rest of the day ladies and gentlemen this does conclude today's teleconference You may disconnect your lines at this time.

Thank you for your participation and have a wonderful day.