Greetings and welcome to the Oshkosh Corporation Second Quarter 2026 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 for Oshkosh Corporation. Thank you, sir. You may begin.

Good morning and thanks for joining us. Earlier today we published our second quarter 2026 results. A copy of that release is available on our website at OshkoshCorp.com. Today's call is being webcast and is accompanied by a slide presentation which includes a reconciliation of GAAP to non-GAAP 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 two 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 and other factors that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks and factors include, among others, factors that we listed in our release this morning and matters that we have described in our most recent Form 10-K and other filings we make with the SEC, as well as matters noted at 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 Pfeifer, 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.

Good morning, everyone, and thank you for joining us today. In the second quarter, we delivered consolidated sales of $2.9 billion and adjusted earnings per share of $2.87. We continue to benefit from growth in our access segment with strong order intake of $1.5 billion. Additionally, we have robust backlogs at our transport and vocational segments, and we're focused on increasing production, which is foundational to delivering our 2028 goals. We are building momentum and remain confident in our ability to deliver on our investor day targets. Within our vocational segment, we are continuing actions to modernize our fire truck manufacturing and expand production to better serve strong customer demand and support long-term growth. Over the past quarter, we have implemented production changes to improve throughput. To support these changes, we are implementing new in-plant material flow processes that shift from a reliance on individuals and experience to standardized modern process flows that will support our continued transformation to high flow production lines. As a result of these changes, we expect to produce and ship Fewer fire trucks this year than we previously planned. However, the work we are doing positions us well for 2027 and 2028. As a result of our revised expectations for production this year, we now expect full year adjusted earnings per share in the range of $11. Across the company, we continue to hear a common theme from customers who are looking for solutions that are safe, We are investing in AI-enabled technologies, autonomy, and connectivity that are shaping the airport of the future, the job site of the future, the neighborhood of the future, and the battlefield of the future. Please turn to slide five and we'll continue to review some highlights since our last call. As expected, Our access segment delivered double-digit operating income margins with strong Q2 sales in a dynamic environment. We now expect full-year access segment revenue to grow compared to 2025 and improvement from our original expectation for a modest decline. Large infrastructure investments and megaprojects remain important sources of demand, and our newest products, including micro-sized scissors, and Clear Sky Smart Fleet Connected Technologies continue to resonate with customers. We remain focused on managing the business with discipline, improving price-cost dynamics, driving operational productivity and innovating our products and services. These innovations will drive the job site of the future where we see tremendous promise in bringing autonomous AI-enabled solutions to construction sites. Orders in the quarter were strong at $1.5 billion, resulting in a book-to-bill ratio of 1.1. We enter the second half of the year with good visibility, supported by a $2 billion backlog at the end of the quarter. Mega projects are continuing to drive demand for our access equipment, and we are working to ensure we have the inventory and production flexibility to support the demand. Turning to slide six in our vocational segment. Backlog and demand for fire apparatus and airport products provides excellent visibility and supports our investment in our manufacturing operations to drive long-term growth. We are making meaningful progress in modernizing our manufacturing operations and implementing the changes needed to improve material flow and assembly efficiency. These initiatives represent a transformation of our manufacturing operations for fire trucks. and while production throughput is improving more gradually than we initially expected in the near term, these steps remain the right actions to reduce lead times and better serve our customers. Demand for Oshkosh Aerotech remains strong as airports continue investing in expansion and modernization. Once again, order intake during the quarter was solid. particularly for passenger boarding bridges with key wins in Chicago, Denver, and Philadelphia. In addition, we continue to advance our vision for Airport of the Future including testing an autonomous AI-enabled ground support robot at Grand Rapids Airport in the quarter. Refuse collection vehicle sales were lower than last year as we previously discussed. Even amidst lower sales, the quality of our products has resulted in notable recent orders, including a significant order with the Sanitation Department of New York. Overall, we believe the long-term outlook for our vocational segment remains strong. Our backlog and market position continue to provide an excellent foundation for future growth, and we are confident in achieving our long-range targets. Please turn to slide seven. In the transport segment, we continue to ramp production of the next generation delivery vehicle. We are excited to see more of our vehicles serving postal carriers in communities across the country. The fleet has now surpassed 35 million miles, and feedback from both the United States Postal Service and its drivers remains positive, reinforcing the safety, productivity, and reliability benefits of the platform. Our defense business also continued to build momentum during the quarter. Participation at the Euro Satori exhibition in France highlighted the growing interest we are seeing from both existing and potential customers. As defense priorities continue to evolve globally, we believe Ashkosh is well positioned to leverage our engineering capabilities, manufacturing scale, and proven mobility platforms to to pursue additional opportunities in both domestic and international markets. During the quarter, we received orders from the U.S. and international customers, including a $142 million order for the FMTV A2 program and a $92 million order supporting the United States Marine Corps Rogue Fires platform. which combines next-generation autonomy with the protection, mobility, speed, and off-road capability Marines rely on in harsh environments. These awards reinforce the confidence our customers place in Oshkosh Defense while providing additional visibility beyond 2026 for these products. I'll hand it over to Matt to review our financial results and provide additional details on our outlook.

Thanks, John. Please turn to slide eight. Consolidated sales for the second quarter of $2.9 billion increased $183 million, or 6.7%, compared to the same quarter last year. The increase primarily reflected improved sales volume and pricing. Adjusted operating income was $258 million, down from $313 million in the prior year, primarily due to unfavorable mix and higher manufacturing overhead costs. which, in part, continues to reflect our investments for future production, partially offset by higher sales volume. Free cash flow for the quarter was $348 million, a significant improvement compared to $49 million last year. Our strong free cash flow reflected continued discipline in managing working capital, particularly related to inventory, as well as higher customer advances. Our expectation for cash conversion remains strong for the year. During the quarter, we repurchased approximately 667,000 shares of our stock for $92 million. Turning to our segment results on slide 9, access second quarter sales of $1.4 billion were up 9.4% from last year. The increase was driven by higher sales volume and improved pricing. As John mentioned, demand is improving. We delivered a book-to-bill ratio of 1.1 during the quarter, more than double the second quarter last year, as robust Q2 orders followed strong activity in the first quarter. Access achieved a solid double-digit adjusted operating income margin of 11.3%, which was lower than last year, in part due to adverse product and customer mix. As expected, price-cost dynamics also remained unfavorable compared with last year, primarily due to tariff costs. As we've previously discussed, even though tariffs were announced in the second quarter last year, we did not see the cost impact until later in 2025. For the year, we still expect to be price-cost neutral. Vocational sales of $967 million were relatively flat compared to last year, as lower volume, primarily refuse and recycling vehicles, more than offset improved pricing. Fire truck shipments were roughly in line with last year. Despite lower volume, the vocational segment delivered an adjusted operating income margin of 13.5%, as adverse sales mix and higher manufacturing overhead costs, including our investments in Pierce facilities, were partially offset by favorable price-cost dynamics. Transport segment sales increased $57 million, or 12%, to $536 million in the quarter, primarily due to higher sales volume. Delivery vehicle revenue grew by $155 million to $262 million, more than offsetting the decrease in defense volume. Delivery represented nearly half of transport segment sales during the quarter, and delivery revenue grew more than 20% sequentially compared to the first quarter of 2026. As expected, defense revenue was lower than last year. As a reminder, In the second quarter of 2025, we were still building domestic JLTVs with the last units built in May 2025. Transport segment operating income was $16 million, down $2 million compared with last year, reflecting adverse mix as well as higher warranty and manufacturing overhead costs, which were partially offset by a favorable one-time item totaling $17 million related to the NGDV program. We expect transport operating margin to grow in the back half of the year as we continue to transition out of past fixed price contracts, ramp up NGDV production and expect to receive an additional NGDV order. Turning to our expectations for 2026 on slide 10. As John mentioned earlier, we are updating our outlook with full year adjusted EPS now expected to be in the range of $11. While our outlook for access demand is improving, as we had stated, The more moderate pace of improvement for firetruck throughput has reduced our expectations by approximately 50 cents. As we execute firetruck production plans, anticipate receiving an additional order for NGDVs, increase NGDV production, and build on revised defense contracts, we expect that our results in Q4 will be stronger than Q3. We expect that this Q4 momentum carries forward into 2027 and beyond as we work towards our 2028 targets. We still expect free cash flow of $550 to $650 million unchanged from our prior guidance. With that, I'll turn it back over to John for some closing comments.

Across Oshkosh, we continue to invest in technologies that make a difference to the everyday hero doing essential work in communities and create enduring value for customers. Whether through connected equipment, Autonomy, Artificial Intelligence, or Electrification, we believe our Innovate, Serve, Advance strategy continues to position Oshkosh to shape the future of job sites, airports, neighborhoods, and battlefields of the future. To reiterate, we remain confident in our plans to achieve our 2028 financial targets. 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. Please stay disciplined on your follow-up question. After the 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 a question and answer session. 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 David Rasso with Evercore ISI. Please proceed with your question.

Hi, thank you. Trying to figure out the vocational. Sounds like that 50 cent comment. Just to be clear, Is there upside to access and vocational was taken down more than 50 cents? Just making sure. I mean, it sounds like you obviously bumped up the total revenue. I just wanted to be clear because it kind of sounded like vocational was 50 cents. I assume it's more than 50 cents and access has upside. I just wanted to clarify that.

Good morning, David. Thanks for joining. Yeah, that's the right way to think about it fundamentally is with the more moderate pace of production, That more than offsets the upside in access, which was the revision to the guide.

And related to that, the access upside, I know customer mix is important, price cost is important. How are you thinking about the margins and access from previously? Just how much can we think of the incremental profitability from the higher volume? Thank you.

Sure. I mean, over the year, that incrementality should improve as we improve our price cost dynamics. That's kind of the general way I would think about it.

Thanks, David.

Our next question comes from the line of Tammy Zacario with JP Morgan. Please proceed with your question.

Hi, good morning. Thank you so much. Question on access. Can you remind us where the industry access volumes you expect to be end of this year versus the prior peak levels. What I'm trying to understand is where do you expect the industry to end this year versus the prior peak?

First of all, good morning, Tammy. Tough for me to say where the overall industry is going to end up this year. I can give you some Thank you very much. and for the most part that's served by the big national rental companies because they've got the big fleets in order to serve it. So that's a good thing. It's going to go on for a long, long time as far as we can see right now. The kind of private general or non-res construction segments kind of just plodding along. There's a lot of different segments in that and that's a huge marketplace for us We expect that that will start to improve at some point in the future. Hard to call exactly when. Some metrics say it's going to improve by the end of the year, in the fourth quarter, or some say early 2027. But that's even going to just boost the demand that we're seeing even further, because right now it's just kind of plodding along. But overall, we're seeing a really... and a number of others. Thank you very much.

Hi, relative to our normal seasonality, that's really driven, as we both have on the slides and said on the script, driven by firetruck production, building under the new price contracts on defense, NGV production, and then the expectation for an NGV order. All of that we expect in Q4.

Understood. Thank you.

Our next question comes from the line of Stephen Volkman with Jefferies. Please proceed with your question.

Steve, you might be on mute.

Mr. Volkman, your line is live.

I think I got it now.

There we go. Hey, Steve.

I'm a bit of a slow learner. I apologize. So I was going to ask you if we could dive into access a little bit. And I'm trying to think about the two margin drivers that you mentioned. talked about the mix and the price cost. Do those get sort of sequentially better each quarter, or maybe not until 27? I don't know. How should we think about those two, mix and price cost driver?

Yeah, difficult to say exactly on mix. As John talked about, it's not exactly clear when we'll see broad-based recovery outside of megaprojects. That obviously affects customer mix. In terms of price cost, we would expect that to improve in part because once we have tariffs in the rearview mirror in terms of a year-over-year comp, that'll improve our year-over-year price costs, but also just through pricing activity as well as cost reductions as we've talked about on prior calls.

Great. And John, on refuse cycle, is this kind of a peak and we should expect a couple years of Thank you very much for joining us.

customers in the refuse business. But the good news is that overall it's a good market. Fleets remain aged and we all know that the generation of refuse and recycling remains unchanged. So we certainly expect that this business, even though it's been a little bit down in 2026, is going to return to a little bit more normal state maybe as we get into 2027. Perfect.

Thank you.

Our next question comes from the line of Jamie Cook with Truist Securities. Please proceed with your question.

Hi, good morning. Sorry, just a couple of follow-ups. Matt, again, on the third quarter versus the fourth quarter, given the items that you called out that are heavily fourth quarter weighted, it sounds like Q3 could potentially be flat to down relative to last year. I'm just wondering if that's, you know, the right way to think about it. And then also, my second question is within transport. I think before You were saying that revenue is about $2.5 billion, which I'm assuming that's still the same given you didn't really clarify that. It just implies a pretty healthy ramp. So is that still the right way to think about it and just your confidence on when we get the NGDV award and how material that is to the guide for the year? Thank you.

Jamie, roughly I think that's the right way to think about it in broad frameworks. In terms of the order, we're assuming that's In Q4, I do that just because that's when the fiscal years are for the government. It could be Q3, but for planning purposes, we're assuming Q4. And we have ongoing dialogues with USPS to make sure we have our supply chain ready to support their production.

Okay, but to the first comment, EPS in the third quarter could be flat to down. You're confirming that?

I think that's the right way to think about it with strong Q4 and where we are in our production cycle.

Okay, and then Transport's still $2.5 billion for the year.

Ballpark.

Okay, all right, cool. Thank you.

Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question.

Yes, hi. Good morning, everybody. I wanted to ask, John, just on your comment on being on track for 2028 targets, you know, for aerial platforms in particular, can you just talk about how much of a step forward you folks expect to take in 2027 to bridge the gap we're running now versus the 28 targets and your level of confidence on price cost to get there.

Yeah, so I'll provide some commentary on the market and where we think it's headed. So we feel really good about where the access market is right now. We certainly feel better today than we did in January. As you know, that's what we've been talking about. But we also feel really good about where it's headed. There's kind of two things happening. Number one, I always say pay attention to our backlog. Backlog is building. That's good, of course. And I always say we've got to pay attention to utilization rates, equipment in the market, and how much is it utilized. And the utilization rates are really, really strong. That's both our own data as well as what our customers are telling us. You've seen publicly traded customers already report really strong utilization. So you've got utilization improving and really healthy, and we've got backlogs that are building. Couple that with the fact that the boom category is still aged. So we have need for growth in boom equipment in the market, and we have aged boom equipment, so there's continued need to replace boom equipment. Those are all really healthy signs that point towards Thank you very much. Thank you. Just the context here, we feel like we're in a good spot. We've done a lot of really strong work to position our manufacturing plants as well to be able to serve the market in the recovery that we're in.

And agreed on the recovery for sure. I'm just wondering your level of confidence on the ability to push price. It feels like you might need something like a mid-single digit type. Price increases given the timing of tariffs and refunds this year and just general inflation. And John, I'm wondering, obviously it's early for 27 orders, but what's your level of confidence on being able to price ahead of inflation given the backdrop you described?

Well, the short answer is we're confident that we can do that. I'll give you a little bit more context. I mean, we've been working for the last year on positioning our cost in terms In the context of geopolitical tariff environments, really making sure that we're responding to that. We do a lot of tariff engineering. We think that we're going to get the fruits of that labor as the market continues to recover. But we always try to pay attention to cost first. How do we minimize the cost impact to our customer? That's always job one. We will have to pass some of it on. and we have done some of that and we're confident that because we're so intensely focused on the cost side that as we pass along what we need to the customers that that'll be accepted and so we're confident that we'll continue to do that and I think that history has shown that we have the ability to do that.

Thank you.

Our next question comes from the line of Mig Dobre with Baird. Please proceed with your question.

Hey, good morning, guys. It's Joe Grabowski on for MIG this morning. Good morning. So my first question, you mentioned the fire truck shipments were roughly in line with last year, and you're making moves to improve the production flow. When do you think you'll start to see the benefits of those improvements that you're working on right now? I know you mentioned 2027, 2028, but is there a chance that we'll start to see some of the The benefits later in this year or kind of when do you think those will kind of come through?

Yeah, you should start to see it in the second half of this year for sure. You know, I'll give you a little context. This is the most complex product that we produce, the municipal fire truck. And we're really transforming how we make it. You know, we say we're going from bay build to high flow production lines, which is a big transformation. in the manufacturing operations. And we're moving through that transition right now. We're really confident in the steps that we're taking. We've got the absolute best people on it. That includes, you know, expertise from third parties where we need it. We have done this before. We did it at McNeilis, and I could give you other examples beyond that, which were all very, very successful. But what it's going to result in is a really resilient Production Flow for Fire Trucks where we can sprint. Right now we need to be sprinting because we've got huge backlogs. But when we're in normal sort of steady state production, we'll be super efficient. And so we feel really good about what we're doing.

Got it. Okay. Thank you for that update. And then my follow-up question, if you could just update us on any impact on your facilities from the severe weather in the Appleton area yesterday.

Yeah, it was a tough event for this area. I mean, luckily, we came out pretty good. We had people impacted in terms of homes damaged and things like that. And of the 7,000 people we have up here, we had one that was injured. So we're paying very close attention to that person. But Operations are intact. A couple of power outages here and there. Nothing material that would concern business performance.

Okay, thank you.

Thanks, Joe.

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

Hi, good morning, and thanks for taking my question. I just wanted to go back to the fiscal year, I guess, 26 bridge. I just wanted to understand that a little bit better if you could provide any more color. Maybe just, you know, quantifying, I guess, how much more kind of upside you see from an access perspective in terms of the guide on the EPS front. And then as we think about the segments, I guess, transport had a 16.6 million one-time item. Was that contemplated in the guide or is that kind of an incremental? Thank you for your follow-ups. You got a lot in there.

So all those things were contemplated in the quarter as we were looking for both the guide and the year. You know, whether they happened in the second quarter in some cases or later in the year were up for debate. But generally speaking, they were all contemplated. Yeah. What else did you have questions on specifically in that? You packed so much into that question that generally speaking, the one-timers were kind of understood at the beginning of the quarter.

Yeah, so I guess I just wanted to understand. Those one-time items and refunds were already contemplated, I think is what you're saying. And just if you could size the refunds was, I guess, the initial question.

Yeah, so on tariffs, remember what we talked about last quarter. We felt where we were with the 232 and other elements relative to our IEPA refunds. We were balanced for the year. We still feel that that's roughly the case In the quarter, we had about $40 to $50 million net impact on tariffs, all in line with our expectations for the full year. As we talked about last quarter, we had first quarter about $13 million recovery. That increased. Some of it was our direct flow through to Q2. Some of that was customer. And so that increased to call it roughly $20 million for the quarter. So all the numbers roughly in line with where we were expecting last quarter. So not a lot of surprises.

Got it. Thank you. And then maybe just one on 3Q. I know you didn't provide a specific number, but you talked about kind of flat to down sequentially. Can you just talk about that at the segment level? You know, where would you kind of anticipate the potential to increase production, deliver more units, versus where is it more about, you know, just more price cost and mixed factors? And, you know, just trying to understand that, and particularly as we go into the fourth quarter, kind of that ramp.

Yeah, Angel, just to clarify, Tammy's question was on a year-over-year basis, not on a sequential basis. So in terms of Q3, Q4, Q4 ramp, again, it's firetruck production, as John mentioned. That's sequential Q3 and then into Q4. And then in Q4, we get into NGDV production, the additional order, as well as we move through the year. We build more on the new revised price contracts in defense.

Thank you. Thanks, Andrew.

Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.

Thanks. Good morning. You guys had cited higher warranty costs in the transport segment. To what extent is that related to the NGDV and can you quantify it and maybe frame the potential for that to improve over time? I guess the bigger picture question here also is just on The transport margins, I think you talked to Jerry about 28 in access, but just curious how confident we can be at this point that this transport segment still has double-digit margin potential.

Yeah, Steve, thanks for the question. First of all, let me just clarify the warranty was one time. It was on a defense program. It was an engine-related issue. The one time, that's all I'll say about it. I don't think it warrants more comment. The defense business, though, is, you know, it's getting to a point where we're getting new contract pricing on really important programs. And we have NGDV getting to full rate production. and the the expectation with us and our customer the United States Postal Service is they'll be yet another order in the second half of the year likely in the fourth quarter and that gives us the ability to understand what their their go-forward mix is and we can prime the supply chain and make sure that we can supply efficiently and and that's part of the expectation for the fourth quarter but that contract pricing is Full rate production on NGDVs and an order coming in with 606 accounting, that's what takes it to a much better margin level.

Okay, that's helpful. And then can you talk about some of the positive price versus cost dynamics within vocational? Was that all price that was already in backlog or were you able to capture additional cost recovery as costs have been rising in general?

primarily that that pricing is in backlog most of it is is already defined there are a couple markets where we have shorter lead times that have kind of pricing here and there but for the most part that's all in backlog okay thank you thanks Steve our next question comes from line of Chad Dillard with Bernstein please proceed with your question hey good morning guys

Question for you on your delivery of business. Hey, good morning. So first of all, can you give a little bit more color on the orders and backlog trends in the quarter for delivery? And then secondly, I think it's hitting in the fourth quarter, but can you size the cumulative catch-up adjustment that's embedded in your guidance?

So you're talking about delivery, right?

Correct.

Yeah. So, you know, the In the quarter, we're working off the large order that we received initially, plus a supplemental order to that. So we didn't have any orders in the quarter. We expect an order in the fourth quarter. And we continue to work off the order and mix that we've already received. But this is a fantastic program for us and for the United States Postal Service. really enhances the USPS's ability to deliver e-commerce efficiently and effectively. As I said on the prepared remarks, they're coming to every neighborhood around you. If you haven't seen one yet, you will probably in the very near future. We feel great about the program. And again, the order that we expect to receive in the second half is part of our guidance in the second half.

Got it. Okay. And then what's the new shape of the fire truck capacity ramp? When do you expect to hit full rate production? And then can you just frame what that looks like versus your production rates today?

Yeah, so we expect this year will be about a 10% increase, and that's a material amount of fire, additional fire trucks coming off the line. But in total, we're expecting to get to a 25-30% production rate increase. So we expect to be increasing production in Q3, yet again in Q4, and as we go through 2027. And that's all really, really important. It's why we talk so much about moving to transformational high-flow production lines that are much more efficient and allow us to sprint more because we need more fire trucks right now. But they'll allow us to be really efficient in the future in steady-state production environments. So we're continuing to drive more output on our firetruck production capabilities.

Thank you. Thanks, Chad.

Our next question comes from the line of Kyle Menges with Citi. Please proceed with your question.

Good morning. Thanks for taking my questions. Maybe just digging into vocational a little bit more and the fire truck production ramp. I'm just curious, what have been some of the main challenges to hitting the production targets and just your confidence level in those challenges alleviating over time?

Yeah, so I hit on it a little bit in my prepared remarks about material flow. Right, because when you go to a bay build to a more high-flow production environment with different workstations and you're organizing production very differently, this is a very complicated vehicle. There's thousands and thousands of parts both from our internal component plants as well as our many great suppliers that have to come together at the right time and at the right place. And when you re-engineer all of that, we know what we're doing. We have done this before. We're not reinventing anything here. We have to go through a lot of very methodical work and make sure that it's right to get to the level of production that we expect. Sometimes when you're in the near term, it's hard to predict the next week what you're going to do, but we know that we're doing the right thing for the long-term health of this business. But material flow is probably a big thing to think about when you have to reroute everything that comes to the line.

Got it. That's helpful. And then just would be helpful to hear a little bit of color on the updated vocational outlook relative to your, I guess, last quarter expectations where you had effectively taken out 100 to 200 million from the initial top line guide and then guided the margins to, I'd say, about 16 to 17%. Just curious what the top line and margin range could look like now for vocational for the full year.

We're not going to get into the specific details, but I think the way to think about it with the revised production plan, our long-term target remains 16% to 18% for vocational. I think we'll be below the low end of that a little bit, but all headed in the right direction for 2027 and 2028.

This is a great business. We have great positions in the industries we serve. You know, this is a high margin business long term. It's a really good business.

Got it. Thank you. Thanks Kyle.

Our next question comes from the line of Mike Schliske with DA Davidson. Please proceed with your question.

Hey guys, good morning. Good morning. So you've got a lot of fire trucks. Good morning guys. There are a lot of firetrucks still left to build in the backlog, but how are firetruck orders progressing today, maybe compared to a normal or maybe average year? Is it still a pretty robust environment for brand new truck orders?

Yeah, I think that the environment right now is fine. You know, we look at the industry being in the, you know, in the four thousands of units per year, kind of the run rate. It peaked at about 6,000, which was unusual, right? That happened kind of coming out of the pandemic. But we think that a fire truck industry that has somewhere in the 4,000s of units a year, that's a healthy state. That's something that will be very good for us. Remember, fire trucks are aged out there. We might have had a big blip of orders, but the fire trucks are still aged. So we think this is a long-term healthy market in the 4,000s. Great.

Can I also turn to the pipeline in defense? Obviously lots of headlines around conflicts around the world. You're starting to hear about companies that don't normally participate in defense in any kind of large way being asked to by the federal government to kind of get themselves ready or prepare for new orders. Some of these might not be products that Oshkosh does directly, but I'm just curious as to your pipeline of orders and whether, or sorry, or your pipeline contracts and what you could win going forward given the heavily, heavier amount of armed conflicts out there.

Yeah, thanks for the question. Well, we certainly see a lot of momentum in our defense business right now. I'm going to start with our leadership team. We've got a leadership team which has a combination of new leadership talent with existing leadership talent. And we're really focused on integrating our commercial capabilities because, you know, we're about 10% defense, about 90% commercial. and we're able to take commercial technology and integrate it with our defense capability where it makes sense. That's something the DOW is really, really wanting us to do. I can, you know, I talked about some of the near-term orders that we've received, the FM TV A2, $140-plus million, and the Rogue Fires, almost $100 million. Rogue Fires is really interesting. You know, this is something that, it's very unique. Thank you. Thanks, Mike.

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Steve Barger with KeyBank Capital Markets. Please proceed with your question.

Thanks. Good morning. John, in access, I heard you say activity is being driven more by the nationals right now, but you also said utilization rates are running high and fleet age is extended. Do you have a view on when the independents could be back in the market in a bigger way?

I do. You know, we think that maybe by as early as the end of the calendar year, sometime in 27, you know, it's been muddling along for quite a while, this kind of private non-res environment, which is a gigantic market that we serve, has a lot of different subsegments in it. But when you look at where we pay attention to an aggregation of economic metrics that are directly related to non-residential construction. And so when I make my comments, I'm really making them grounded in those aggregate of those metrics that we look at, which says maybe by the end of the year, it'll start to improve. But you know that right now our Our guidance is built upon what we are seeing today, which is really based upon the big megaprojects and the demand that those are pulling in terms of our equipment.

Yeah, but either way, from where you started the year in terms of outlook to where you are now, it seems like there's positive momentum.

Yes, absolutely.

And then, great to hear about that big New York order for McNeilist. Is that takeover business or a new relationship or is there any more backstory on taking that sizable order in a generally quiet year for refuse?

Well, it's certainly good news for us. I'll call it an expanded win for us in New York. That's what I'll call it.

All right. Thanks. Thanks, Steve.

This concludes our question and answer session. I would like to turn the floor back over to Mr. Davidson for closing remarks.

Thank you and thanks everybody for joining us today. We'll be at several conferences in August and September. We look forward to speaking with you. Take care and have a good rest of the day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.