Oshkosh's Q2 2025 Earnings Call: Unpacking Contradictions in Tariff Impact, Margin Expectations, and Sales Outlook

Tariff mitigation and impact on Access segment, expectations for Access segment margins in Q2, Access segment sales and order seasonality expectations, changes in access segment margin expectations, 2025Q2 revenue and market outlook are the key contradictions discussed in Oshkosh Corporation's latest 2025Q2 earnings call.



Revenue and Segment Performance:
- Oshkosh Corporation reported revenue of $2.7 billion for Q2 2025, a decrease of $115 million (4%) from the previous year. Despite this, adjusted operating income margin remained consistent at 11.5%.
- The decrease was primarily due to lower Access and Transport segment sales, offset by higher Vocational sales. The Vocational segment's adjusted operating income margin increased to 16.3%.
- The performance reflects strong execution of their Innovate, Serve, Advanced strategy, including capacity expansions and new product launches.

Tariff Environment and Mitigation:
- Oshkosh is actively managing the dynamic tariff environment, expecting limited impact from tariffs on their business, with plans to fully offset tariff impacts by year-end.
- The company is executing a mitigation strategy of local-for-local production and negotiations with suppliers, leveraging strong internal operations and market outperformance.
- They anticipate that tariffs will impact each segment differently, with some segments like Vocational and Transport expected to benefit.

Targeted Revenue Growth and Margin Expansion:
- The company aims for a 7% to 10% compound annual growth rate in revenue and an increase in adjusted operating margin by 200 to 400 basis points by 2028.
- Growth is supported by strategic acquisitions, such as AeroTech and AUSA, and long-term trends in data centers and infrastructure.
- The execution of new contracts like FMTV and FHTV with improved pricing structures is expected to drive these targets.

Fire Segment Strength and Vocational Expansion:
- The Vocational segment, particularly the fire apparatus segment, experienced a 15% revenue increase with a 20% growth in fire apparatus sales, contributing to a 16.3% adjusted operating income margin.
- The strength in the fire segment is attributed to increased capacity and strong demand, with significant orders like the 15 trucks for Kansas City, Missouri.
- The company is committed to expanding capacity in the Vocational segment to meet growing demand.