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OSHKOSH CORP

OSHKOSH CORPOSKEarnings & Financial Report

NYSE · automotive industry

Oshkosh Corporation, formerly Oshkosh Truck, is an American industrial company that designs and builds specialty trucks, military vehicles, truck bodies, airport fire apparatus, and access equipment. The corporation also owns Pierce Manufacturing, a fire apparatus manufacturer in Appleton, Wisconsin, and JLG Industries, a manufacturer of lift equipment, including aerial lifts, boom lifts, scissor lifts, telehandlers and low-level access lifts.

What changed in OSHKOSH CORP's 10-K — 2022 vs 2023

Top changes in OSHKOSH CORP's 2023 10-K

397 paragraphs added · 422 removed · 303 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

113 edited+32 added−50 removed46 unchanged
Access Equipment segment. JLG operates in the global construction, maintenance and industrial equipment markets. JLG’s competitors range from some of the world’s largest multi-national construction equipment manufacturers to small single-product niche manufacturers. Within this global market, competition for sales of aerial work platform equipment includes Genie Industries, Inc. (a subsidiary of Terex Corporation), Skyjack Inc.
Access segment. JLG operates in the global construction, maintenance and industrial equipment markets. JLG’s competitors range from some of the world’s largest multi-national construction equipment manufacturers to small single-product niche manufacturers. Within this global market, competition for sales of aerial work platform equipment includes Genie Industries, Inc. (a subsidiary of Terex Corporation), Skyjack Inc.
JLG’s products are marketed across six continents through independent rental companies and distributors that purchase JLG products and then rent or sell them and provide service support, as well as through other Company owned sales and service branches. JLG maintains a broad worldwide internal sales force. Sales employees are dedicated to specific major customers, channels or geographic regions.
JLG’s products are marketed across six continents through rental companies and distributors that purchase products and then rent or sell them and provide service support, as well as through other Company owned sales and service branches. JLG maintains a broad worldwide internal sales force. Sales employees are dedicated to specific major customers, channels or geographic regions.
Certain of the Company’s contracts with the DoD, including the JLTV and FMTV A2 contracts, require that the Company effectively transfer the “technical know-how” necessary to produce and support the vehicles and/or other deliverables within the contract to the customer. 9 The Competition in Contracting Act requires competition for U.S. defense programs in most circumstances.
Certain of the Company’s contracts with the DoD, including the JLTV and FMTV A2 contracts, require that the Company effectively transfer the “technical know-how” necessary to produce and support the vehicles and/or other deliverables within the contract to the customer. The Competition in Contracting Act requires competition for U.S. defense programs in most circumstances.
U.S. dealers and representatives enter into agreements with the Company that allow for termination by either party generally upon 90 days’ notice, subject to applicable laws. Dealers and representatives, except for those utilized by JLG and IMT, are generally not permitted to market and sell competitive products. Access Equipment segment.
U.S. dealers and representatives enter into agreements with the Company that allow for termination by either party generally upon 90 days’ notice, subject to applicable laws. Dealers and representatives, except for those utilized by JLG and IMT, are generally not permitted to market and sell competitive products. Access segment.
The Company’s advanced design and engineering capabilities have also allowed it to integrate many of these components across various segments and product lines, which enhances its ability to compete for new business and reduces its costs to manufacture its products compared to manufacturers who simply assemble purchased components.
The Company’s advanced design and engineering capabilities have also allowed it to integrate many of these solutions across various segments and product lines, which enhances its ability to compete for new business and reduces its costs to manufacture its products compared to manufacturers who simply assemble purchased components.
The Company maintains a People First culture that includes investing in team members’ safety, engagement, wellbeing, and personal and professional development, as well as diversity and inclusion. The Company believes its People First culture is a strength, and the Company intends to continue building upon that culture to drive long-term, sustainable performance across the business.
The Company maintains a People First culture that includes investing in team members’ safety, engagement, wellbeing, and personal and professional development, as well as diversity and inclusion. The Company believes its People First culture is a strength, and the Company intends to continue building upon that culture to drive long-term, 12 sustainable performance across the business.
The Company serves and supports customers with a relentless focus throughout the product lifecycle. The Company believes that lifecycle services provide a robust growth opportunity while offering stability throughout business cycles. A dvance. The Company advances by expanding into new markets and geographies to make a difference around the world.
The Company serves and supports customers with a relentless focus throughout the product lifecycle. The Company believes that lifecycle services provide a robust growth opportunity while offering stability throughout business cycles. 2 A dvance. The Company advances by expanding into new markets and geographies to make a difference around the world.
In addition, payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on the Company’s cash flows. Contract awards that Oshkosh Defense receives may be subject to protests by competing bidders.
In addition, 10 payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on the Company’s cash flows. Contract awards that Oshkosh Defense receives may be subject to protests by competing bidders.
The U.S. government’s right to terminate its contracts has not had a material effect on the operations or financial condition of the Company. 11 The Company, as a U.S. government contractor, is subject to financial audits and other reviews by the U.S. government relating to the performance of, and the accounting and general practices relating to, U.S. government contracts.
The U.S. government’s right to terminate its contracts has not had a material effect on the operations or financial condition of the Company. The Company, as a U.S. government contractor, is subject to financial audits and other reviews by the U.S. government relating to the performance of, and the accounting and general practices relating to, U.S. government contracts.
JLG’s international sales employees are spread among international sales and service offices throughout the world. The Company markets its Jerr-Dan-branded carriers, wreckers and rotators through its extensive network of independent distributors. Defense segment.
JLG’s international sales employees are spread among international sales and service offices throughout the world. 5 The Company markets its Jerr-Dan-branded carriers, wreckers and rotators through its extensive network of independent distributors. Defense segment.
The Company encourages employee involvement to improve production processes and product quality. 7 The Company uses a common Quality Management System globally to support the delivery of consistent, high-quality products and services to customers.
The Company encourages employee involvement to improve production processes and product quality. The Company uses a common Quality Management System globally to support the delivery of consistent, high-quality products and services to customers.
The Company markets its Frontline Communications-branded broadcast vehicles and OSV branded shelters through sales representatives and its Frontline Communications-branded command vehicles through both sales representatives and dealer organizations that are directed at government and commercial customers.
The Company markets its OSV branded shelters through sales representatives and its Frontline Communications-branded command vehicles through both sales representatives and dealer organizations that are directed at government and commercial customers.
In an effort to be a single-source supplier for its customers, Pierce offers a full line of custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial platform, ladder and tiller trucks, tankers, light-, medium- and heavy-duty rescue vehicles, wildland rough terrain response vehicles, mobile command and control centers, bomb squad vehicles, hazardous materials control vehicles and other emergency response vehicles.
In an effort to be a single-source supplier for its customers, Pierce offers a full line of custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial platforms, ladder and tiller trucks, tankers, light-, medium- and heavy-duty rescue vehicles, wildland rough terrain response vehicles, mobile command and control centers, bomb squad vehicles, hazardous materials control vehicles and other emergency response vehicles.
JLG also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Financing arrangements that JLG offers or arranges through this segment include various types of rental fleet loans and leases, as well as floor plan and retail financing.
JLG also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangements with independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Financing arrangements that JLG offers or arranges include various types of rental fleet loans and leases, as well as floor plan and retail financing.
In addition, sales are generally lower in the three months ended December 31 in all segments due to the relatively high number of holidays in the United States, which reduce available production and shipping days. 14 Available Information The Company maintains a website with the address www.oshkoshcorp.com .
In addition, sales are generally lower in the three 13 months ended December 31 in all segments due to the relatively high number of holidays in the United States, which reduce available production and shipping days. Available Information The Company maintains a website with the address www.oshkoshcorp.com .
The Company believes its competitive strengths in the Americas refuse collection vehicle markets include: strong brand recognition; innovative and comprehensive product offerings; a reputation for high-quality products; ability to offer factory-installed compressed natural gas fuel systems; ability to integrate refuse collection bodies with electric chassis; large-scale and high-efficiency manufacturing; and an extensive network of sales and service centers located throughout the U.S.
The Company believes its competitive strengths in the Americas refuse collection vehicle markets include: strong brand recognition; innovative and comprehensive product offerings; a reputation for high-quality products; ability to offer factory-installed compressed natural gas fuel systems; ability to integrate refuse collection bodies with electric chassis; the offering of a fully integrated electric refuse vehicle; large-scale and high-efficiency manufacturing; and an extensive network of sales and service centers located throughout the U.S.
In addition, JLG faces competition from numerous manufacturers of other niche products such as boom vehicles, cherry pickers, skid steer loaders, mast climbers, straight mast and vehicle-mounted fork-lifts, rough-terrain and all-terrain cranes, vehicle-mounted cranes, portable material lifts, various types of material handling equipment, scaffolding and the common ladder that offer functionality that is similar to or overlaps that of JLG’s products.
In addition, JLG faces competition from a number of manufacturers of other niche products such as boom vehicles, cherry pickers, skid steer loaders, mast climbers, straight mast and vehicle-mounted fork-lifts, rough-terrain and all-terrain cranes, vehicle-mounted cranes, portable material lifts, various types of material handling equipment, scaffolding and the common ladder that offer functionality that is similar to or overlaps that of JLG’s products.
Oshkosh Defense maintains a large parts distribution warehouse in Milwaukee, Wisconsin to fulfill stringent parts delivery schedule requirements, as well as satellite facilities near DoD bases in the U.S., Europe, Asia and the Middle East.
Oshkosh Defense maintains a large parts distribution warehouse in Milwaukee, Wisconsin to fulfill stringent parts delivery schedule requirements, as well as satellite facilities near DoD bases in the U.S., Europe, Asia and the Middle East. Vocational segment.
For the last nine years, the Company has held the Oshkosh Excellence Awards (OEAs), an annual competition and recognition event that invites team members to submit innovative ideas to foster improvements for its culture, operations, products and customers.
For the last 10 years, the Company has held the Oshkosh Excellence Awards (OEAs), an annual competition and recognition event that invites team members to submit innovative ideas to foster improvements for its culture, operations, products and customers.
The Company frequently achieves premium pricing due to the quality, durability and low total cost of ownership of its products and its commitment to providing high quality lifecycle support through extensive parts and service support programs. Innovative and Proprietary Components.
The Company frequently achieves premium pricing due to the quality, durability and low total cost of ownership of its products and its commitment to providing high quality lifecycle support through extensive parts and service support programs. Innovative and Proprietary Solutions.
The Company believes that, in its purpose-built vehicle and equipment markets, it has been able to effectively compete against large, mass producers due to its product quality, manufacturing flexibility, purchasing power and distribution networks.
The Company believes that, in its purpose-built vehicle and equipment markets, it has been able to effectively compete against large, mass producers due to its product quality, manufacturing flexibility and distribution networks.
JLG is a leading designer and manufacturer of aerial work platforms and telehandlers used in a wide variety of construction, industrial and maintenance applications to safely position workers and materials at height. In addition, through a long-term license with Caterpillar Inc. that extends to 2025, JLG produces Caterpillar-branded telehandlers for distribution through the worldwide Caterpillar Inc. dealer network.
JLG is a leading designer and manufacturer of aerial work platforms and telehandlers used in a wide variety of construction, industrial and maintenance applications to safely position workers and materials at height. In addition, through a long-term license with Caterpillar Inc. that extends through 2024, JLG produces Caterpillar-branded telehandlers for distribution through the Caterpillar Inc. dealer network.
The principal methods of competition are product quality, product performance, service and price. The Company competes for municipal business and large commercial business in the Americas, which is generally based on lowest qualified bid.
The principal methods of competition are product innovation, quality and performance, service and price. The Company competes for municipal business 9 and large commercial business in the Americas, which is generally based on lowest qualified bid.
The Company expects to continue to grow across the world and expand into new categories both organically, as with the USPS program win in the last mile delivery vehicle market, and inorganically through investments and acquisitions. Products Oshkosh Corporation is focused on the following core segments of the purpose-built vehicle and equipment markets: Access Equipment segment.
The Company expects to continue to grow across the world and expand into new categories both organically, as with the USPS program win in the last mile delivery vehicle market, and inorganically through investments and acquisitions. Products Oshkosh Corporation is focused on the following purpose-built vehicle and equipment markets: Access segment.
The Company believes it has competitive advantages over larger vehicle manufacturers in its purpose-built vehicle and equipment markets due to its product quality, manufacturing flexibility, purchasing power and distribution networks. The Company also believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, technology and manufacturing sharing opportunities across product lines.
The Company believes it has competitive advantages over larger vehicle manufacturers in its purpose-built vehicle and equipment markets due to its product quality, manufacturing flexibility and distribution networks. The Company also believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, technology and manufacturing sharing opportunities across product lines. Strong Management Team.
Over 500 nominations were submitted in 2022, with 36% focused on Cheers to Peers, our peer recognition program, highlighting the Company’s team members’ commitment to putting people first. 13 Talent and Learning . The Company’s business strategy is enabled by its ability to attract, develop and retain world-class talent.
Over 500 nominations were submitted in fiscal 2023, with 36% focused on Cheers to Peers, our peer recognition program, highlighting the Company’s team members’ commitment to putting people first. Talent and Learning . The Company’s business strategy is enabled by its ability to attract, develop and retain world-class talent.
Serve. Advance. I nnovate. The Company innovates customer solutions by combining leading technology and operational strength to empower and protect the everyday hero. The Company is developing and integrating advanced technologies to fulfill its purpose in areas such as electrification, autonomy and active safety as well as intelligent and connected products. S erve.
The Company innovates customer solutions by combining leading technology and operational strength to empower and protect the everyday hero. The Company is developing and integrating advanced technologies to fulfill its purpose in areas such as electrification, autonomy and active safety as well as intelligent and connected products. S erve.
The Company markets its Oshkosh-branded ARFF vehicles through a combination of direct sales representatives domestically and an extensive network of representatives and distributors in international markets. Certain of these international representatives and distributors also handle Pierce products. Commercial segment.
Certain of these representatives and distributors also handle Pierce products. The Company markets its Oshkosh-branded ARFF vehicles through a combination of direct sales representatives and dealerships domestically and an extensive network of representatives and distributors in international markets. Certain of these international representatives and distributors also handle Pierce products.
The Company’s advanced design and engineering capabilities have contributed to the development of innovative and/or proprietary, severe-duty components that enhance vehicle performance, reduce manufacturing costs and strengthen customer relationships.
The Company’s advanced design and engineering capabilities have contributed to the development of innovative and/or proprietary, severe-duty solutions that enhance vehicle and equipment performance, reduce manufacturing costs and strengthen customer relationships.
For each of its target markets, the Company has developed or acquired a broad product line in an effort to become a single-source provider of purpose-built vehicles and equipment, parts and service and related products to its customers. In addition, the Company has established an extensive domestic and international distribution network for purpose-built vehicles and equipment tailored to each market.
For each of its target markets, the Company has developed advanced technology or acquired a broad product line in an effort to become a single-source provider of purpose-built vehicles and equipment, parts and service to support its customers. In addition, the Company has established an extensive domestic and international distribution network for purpose-built vehicles and equipment tailored to each market.
The Company offers a competitive, inclusive and empowering benefit platform to help ensure that no matter where team members are in their wellbeing journey, they are supported in their physical, financial and emotional goals. In 2022, the Company cared for over 24,000 team members and their families on its medical plan.
The Company offers a competitive, inclusive and empowering benefit platform to help ensure that no matter where team members are in their wellbeing journey, they are supported in their physical, financial and emotional goals. In fiscal 2023, the Company cared for over 25,000 team members and their families on its medical plan.
Oshkosh Defense sells and services defense products to approved international governments as Direct Commercial Sales or Foreign Military Sales via U.S. government channels. Oshkosh Defense supports international sales through international sales offices, as well as through dealers, distributors and representatives.
Oshkosh Defense sells and services defense products to approved international governments as Direct Commercial Sales or Foreign Military Sales via U.S. government channels. Oshkosh Defense supports international sales through international sales offices, as well as through dealers, distributors and representatives. Logistics services are increasingly important to Oshkosh Defense.
In 2015, the DoD awarded Oshkosh Defense a new Family of Heavy Tactical Vehicles (FHTV) contract for the recapitalization of HEMTT, HET and PLS vehicles as well as associated logistics and configuration management support. The contract was a five-year requirements contract for the continued remanufacturing of FHTVs. In April 2021, the DoD awarded Oshkosh Defense an FHTV extension contract.
In 2015, the DoD awarded Oshkosh Defense a new Family of Heavy Tactical Vehicles (FHTV) contract for the recapitalization of HEMTT, HET and PLS vehicles as well as associated logistics and configuration management support. The contract was a 3 five-year requirements contract for the continued remanufacturing of FHTVs.
Oshkosh’s competitors for ARFF vehicle sales are Rosenbauer International AG and E-One, Inc. Commercial segment. McNeilus produces refuse collection vehicles for North America and international markets. Competitors include The Heil Company (a subsidiary of Dover Corporation), New Way Trucks, Labrie Enviroquip Group (owned by Wynnchurch Capital) and other regional competitors.
Oshkosh’s competitors for ARFF vehicle sales are Rosenbauer International AG and E-One, Inc. The Company produces refuse collection vehicles for North America and international markets under the McNeilus brand. Competitors in the refuse collection vehicles market include The Heil Company (a subsidiary of Dover Corporation), New Way Trucks, Labrie Enviroquip Group (owned by Wynnchurch Capital) and other regional competitors.
The Company measures diverse hires for full-time U.S. non-production positions and has a goal that 50% of such hires be diverse in any given year. Diverse hires include ethnicity, gender, veteran and disability status. In 2022, 49% of the Company’s hires for full-time U.S. non-production positions were diverse.
The Company measures diverse hires for full-time U.S. non-production positions and has a goal that 50% of such hires be diverse in any given year. Diverse hires include ethnicity, gender, veteran and disability status. In fiscal 2023, 51% of the Company’s hires for full-time U.S. non-production positions were diverse.
In 2022, 64% of global production and office team members participated in the Company’s Global Engagement Survey. Engagement across the enterprise was 7.3 out of 10. The Company expects all team members to adhere to the highest ethical standards every day.
In fiscal 2023, 63% of global production and office team members participated in the Company’s Global Engagement Survey. Engagement across the enterprise was 7.3 out of 10. The Company expects all team members to adhere to the highest ethical standards every day.
Distribution personnel demonstrate to customers how to use the Company’s products properly. In addition, the Company’s flexible distribution is focused on meeting customers on their terms, whether on a job site, in an evening public meeting or at a municipality’s office, compared to the showroom sales approach of the typical dealer of large vehicle manufacturers.
In addition, the Company’s flexible distribution is focused on meeting customers on their terms, whether on a job site, in an evening public meeting or at a municipality’s office, compared to the showroom sales approach of the typical dealer of large vehicle manufacturers.
Seasonal Nature of Business In the Company’s Access Equipment and Commercial segments, business tends to be seasonal with an increase in sales occurring in the spring and summer months that constitute the traditional construction season in the northern hemisphere.
Seasonal Nature of Business The Company’s JLG business tends to be seasonal with an increase in sales occurring in the spring and summer months that constitute the traditional construction season in the northern hemisphere.
ITEM 1. BUSINESS In October 2021, the Company changed its fiscal year end from September 30 to December 31. Accordingly, the Company reported a transition quarter that ran from October 1, 2021 through December 31, 2021. Fiscal 2020 and Fiscal 2021 relate to the years ended September 30, 2020 and September 30, 2021, respectively.
ITEM 1. BUSINESS In October 2021, the Company changed its fiscal year end from September 30 to December 31. Accordingly, the Company reported a transition quarter that ran from October 1, 2021 through December 31, 2021. Fiscal 2021 relates to the year ended September 30, 2021.
The Company offers two- to fifteen-year municipal lease financing programs to its Fire & Emergency segment customers in the U.S. through the Pierce Financial Solutions program, provided by PNC Equipment Finance. Programs include competitive lease financing rates, creative and flexible finance arrangements and the ease of one-stop shopping for customers’ equipment and financing.
The Company offers two- to fifteen-year municipal lease financing programs to its Pierce customers in the U.S. through the Pierce Financial Solutions program, provided by PNC Equipment Finance. Financing programs include competitive lease financing rates, flexible finance arrangements and the ease of one-stop shopping to meet the finance needs of Pierce customers.
If more stringent environmental laws are enacted in the future, these laws could have a material adverse impact on our business, results of operations, and financial condition. Human Capital Management As of December 31, 2022, the Company had approximately 15,000 employees, approximately 9,000 of whom are production employees.
If more stringent environmental laws are enacted in the future, these laws could have a material adverse impact on our business, results of operations, and financial condition. Human Capital Management As of December 31, 2023, the Company had approximately 17,300 employees, approximately 10,800 of whom are production employees.
In 2022, the Company returned to in person leadership development, relaunching Lens of Leadership, its signature development program for team members at the director level and above. The Company continued a series of executive leadership development events and expanded virtual learning opportunities to all managers on topics of engagement, performance, diversity, equity and inclusion.
In fiscal 2023, the Company increased its in person leadership development, with multiple programs of Lens of Leadership, its signature development program for team members at the director level and above. The Company continued a series of executive leadership development events and expanded virtual learning opportunities to all managers on topics of engagement, performance, diversity, equity and inclusion.
Competitive Strengths The following competitive strengths support the Company’s business strategy: Strong Market Positions. The Company has developed strong market positions and brand recognition in its core businesses, which it attributes to its reputation for quality products, advanced engineering, market leading innovation, vehicle and equipment performance, reliability, customer service and low total cost of ownership.
The Company has developed strong market positions and brand recognition in its core businesses, which it attributes to its reputation for quality products, technology innovation, advanced engineering, vehicle and equipment performance, reliability, customer service and low total cost of ownership.
Each of our products and technologies is designed with the customer in mind, from the four-wheel drive system that the Company patented in 1917 to advances in electrification, autonomy, active safety and intelligent and connected products.
Each of our products and technologies is focused on customer-centric innovation, from the four-wheel drive system that the Company patented in 1917 to the latest advances in electrification, autonomy, active safety and intelligent and connected products.
The Company believes its distribution model allows for a more tailored distribution approach in the U.S. refuse collection vehicle and concrete mixer markets, whereas dealers frequently offer a broad and mixed product line, and accordingly, the time dealers tend to devote to refuse collection vehicle and concrete mixer sales activities is limited.
The Company believes its distribution model allows for a more tailored distribution approach in the U.S. refuse collection vehicle market, whereas dealers frequently offer a broad and mixed product line, and accordingly, the time dealers tend to devote to refuse collection vehicle sales activities is limited. The Company also performs sales and service activities at the Company’s manufacturing facilities.
Oshkosh Defense’s light-payload military tactical wheeled vehicles include the Mine Resistant Ambush Protected-All Terrain Vehicle (M-ATV), which was specifically designed with superior survivability as well as extreme off-road mobility, and the JLTV, the Company’s newest and most technologically advanced member of the light-payload vehicle category designed to protect, sustain and provide mobility for personnel and payloads across the full spectrum of military operations. 3 In 2009, the DoD awarded Oshkosh Defense a contract to be the sole producer of FMTVs under the U.S.
Oshkosh Defense’s light-payload military tactical wheeled vehicles include the Mine Resistant Ambush Protected-All Terrain Vehicle (M-ATV), which was specifically designed with superior survivability as well as extreme off-road mobility, and the Joint Light Tactical Vehicle (JLTV), the Company’s most technologically advanced member of the light-payload vehicle category designed to protect, sustain and provide mobility for personnel and payloads across the full spectrum of military operations.
Pierce’s fire apparatus are sold through an extensive network of independent sales and service 6 organizations with hundreds of sales representatives in the U.S. and Canada, which combine broad geographical reach with high frequency of contact with fire departments and municipal government officials.
Pierce’s fire apparatus are sold through an extensive network of independent sales and service organizations with hundreds of sales representatives in the U.S. and Canada, which combine broad geographical reach with high frequency of contact with fire departments and municipal government officials. These sales and service organizations are supported by product and marketing support professionals and contract administrators at Pierce.
As part of the Company’s long-term alliance with Caterpillar Inc., the Company acquired a non-exclusive, non-transferable worldwide license to use certain Caterpillar Inc. intellectual property through 2024 in connection with the design and manufacture of Caterpillar Inc.’s current telehandler products.
These marks, among others, are an integral part of the Company’s business and important to its future success. As part of the Company’s long-term alliance with Caterpillar Inc., the Company acquired a non-exclusive, non-transferable worldwide license to use certain Caterpillar Inc. intellectual property through 2024 in connection with the design and manufacture of Caterpillar Inc.’s current telehandler products.
JLG’s products are marketed worldwide through independent rental companies and distributors that purchase these products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations.
Access customers include equipment rental companies, construction contractors, manufacturing companies and home improvement centers. JLG’s products are marketed worldwide through independent rental companies and distributors that purchase these products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations.
Principal methods of competition for carriers, wreckers and rotators include product quality and innovation, product performance, price and service. The Company believes its competitive strengths in this market include its high quality, innovative and high-performance product line and its cost competitive manufacturing capabilities. Defense segment.
Principal methods of competition for carriers, wreckers and rotators include product quality and innovation, product performance, price and service. The Company believes its competitive strengths in this market include its high-quality, innovative and high-performance product line and its cost competitive manufacturing capabilities. Defense segment. Oshkosh Defense produces heavy- and medium- and light-payload tactical wheeled vehicles for militaries around the world.
Terms of these arrangements vary depending on the type of transaction, but typically range from 36 to 72 months and generally require the customer to be responsible for maintenance of the equipment and to bear the risk of damage to or loss of the equipment.
Terms of these arrangements vary depending on the type of transaction, but typically range from 36 to 72 months and generally require the customer to be responsible for maintenance of the equipment and to bear the risk of damage to or loss of the equipment. Jerr-Dan is a leading designer and manufacturer of towing and recovery equipment in the U.S.
The Company believes that the outcome of all such audits and reviews that are now pending will not have a material effect on its financial condition, results of operations or cash flows.
The Company believes that the outcome of all such audits and reviews that are now pending will not have a material effect on its financial condition, results of operations or cash flows. Suppliers The Company sources raw materials and components domestically and internationally to meet commitments to its customers.
The Company’s teams creatively identified opportunities to volunteer in 2022 donating over 18,000 hours to the communities in which they live and work.
The Company’s teams creatively identified opportunities to volunteer in fiscal 2023 donating over 21,300 hours to the communities in which they live and work.
(all four owned by REV Group, Inc.); and numerous smaller, regional manufacturers. Principal methods of competition include brand awareness, ability to meet or exceed customer specifications, price, the extent to which a company offers single-source customer solutions, product innovation, product quality, dealer distribution, and service and support.
Principal methods of competition include brand awareness, ability to meet or exceed customer specifications, price, lead times, the extent to which a company offers single-source customer solutions, product innovation, product quality, dealer distribution and service and support.
The Company’s agreement with the UAW expires in September 2027. The Company’s five-year agreement with the Boilermakers expires in May 2027. The Company’s three-year agreement with the Teamsters extends through October 2023. In addition, approximately 60% of the Company’s 2,300 employees located outside of the U.S. are represented by separate works councils or unions. People First Culture .
The Company’s agreement with the UAW expires in September 2027. The Company’s five-year agreement with the Boilermakers expires in May 2027. The United Steelworkers agreement expires in August 2024. In addition, approximately 55% of the Company’s 2,700 employees located outside of the U.S. are represented by separate works councils or unions. People First Culture .
By successfully responding to the DoD’s changing vehicle requirements, Oshkosh Defense has become the leading manufacturer of heavy, medium, and light tactical wheeled vehicles and related sustainment services for the DoD.
Oshkosh Defense has designed and sold products to the DoD for over 100 years and also exports tactical wheeled vehicles to approved foreign customers. By successfully responding to the DoD’s changing vehicle requirements, Oshkosh Defense has become a leading manufacturer of heavy, medium, and light tactical wheeled vehicles and related sustainment services for the DoD.
The principal method of competition in the Defense segment involves a competitive bid process that takes into account factors as determined by the customer, such as price, product performance, product lifecycle costs, small and disadvantaged business participation, product quality, adherence to bid specifications, production capability, project management capability, past performance and product support.
The principal method of competition for defense vehicles involves a competitive bid process that considers factors as determined by the customer, such as price, product performance, product lifecycle costs, small and disadvantaged business participation, product quality, adherence to bid specifications, production capability, project management capability, past performance and product support. Usually, the Company’s vehicle systems must also pass extensive testing.
Competition for sales of these vehicles includes, among others, Navistar Defense LLC (a subsidiary of Cerberus Capital Management, LP), General Dynamics Corporation, AM General LLC (a subsidiary of KPS Capital Partners, LP), BAE Systems plc, General Motors Defense, Utilimaster (a subsidiary of The Shyft Group), Morgan Olson (a subsidiary of JB Poindexter & Co., Inc.), Workhorse Group and Rivian.
Competition for sales of these vehicles includes, among others, Navistar Defense LLC (a subsidiary of Cerberus Capital Management, LP), General Dynamics Corporation, AM General LLC (a subsidiary of KPS Capital Partners, LP), BAE Systems 8 plc and General Motors Defense.
The main competitor for broadcast vehicles is Accelerated Media Technologies. The principal competition for command vehicles is LDV, Inc., MBF Industries, Inc., Nomad Global Communication Solutions, Incorporated, Farber Specialty Vehicles, Inc. and Matthews Specialty Vehicles, Inc. Airport Products manufactures ARFF vehicles for sale in the U.S. and abroad.
The Company produces and sells command vehicles in the U.S. and abroad under the Frontline Communications brand. The principal competition for command vehicles is LDV, Inc., MBF Industries, Inc., Nomad Global Communication Solutions, Incorporated, Farber Specialty Vehicles, Inc. and Matthews Specialty Vehicles, Inc. Airport Products manufactures ARFF vehicles for sale in the U.S. and abroad.
In February 2021, the Company was notified that the USPS selected Oshkosh Defense to build the NGDV. The IDIQ contract allows the USPS to purchase up to 165,000 units over ten years.
This contract award represents the Defense segment’s entrance into the adjacent combat vehicles market. In February 2021, the Company was notified that the USPS selected Oshkosh Defense to build the NGDV. The indefinite delivery, indefinite quantity (IDIQ) contract allows the USPS to purchase up to 165,000 units over ten years.
Environmental Matters The Company is subject to a wide variety of local, state, and federal environmental laws in the U.S., as well as in other countries where the Company conducts business.
Additionally, Caterpillar Inc. assigned to JLG certain patents and patent applications relating to the Caterpillar-branded telehandler products. Environmental Matters The Company is subject to a wide variety of local, state, and federal environmental laws in the U.S., as well as in other countries where the Company conducts business.
In addition, the Company believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, technology and manufacturing sharing opportunities across product lines.
In addition, the Company believes it has competitive advantages over smaller vehicle and equipment manufacturers due to volumes that offer purchasing power, technology and manufacturing sharing opportunities across product lines. The Company believes that its competitive cost structure, strategic global purchasing capabilities, engineering expertise, product quality and global distribution and service systems have enabled it to compete effectively.
The Company believes its competitive strengths include: strong brand recognition; large-scale and high-efficiency manufacturing; extensive product offerings; high product quality; innovative control systems; ability to offer factory-installed compressed natural gas fuel systems; a significant installed base of concrete mixers in use in the marketplace; and its nationwide network of sales and service centers.
Principal methods of competition are price, service, product features, product quality and product availability. The Company believes its competitive strengths include: strong brand recognition; large-scale and high-efficiency manufacturing; product innovation; high product quality; innovative control systems; a significant installed base of front-discharge concrete mixers in use in the marketplace; and its nationwide network of sales and service centers.
Army, which purchased Government Purpose Rights to the Oshkosh JLTV design, conducted a full and open competition for follow-on JLTV production in which Oshkosh Defense participated. In February 2023, the DoD awarded the JLTV follow on contract to another company. JLTV accounted for sales of $1.33 billion in fiscal 2022.
In fiscal 2021, the Army increased the contract ceiling from 16,901 vehicles to 23,163 vehicles. The U.S. Army, which purchased Government Purpose Rights to the Oshkosh JLTV design, conducted a full and open competition for follow-on JLTV production in which Oshkosh Defense participated. In February 2023, the DoD awarded the JLTV follow on contract to another company.
Competition in truck-mounted cranes comes primarily from European companies including Palfinger AG, Cargotec Corporation and Fassi Group SpA. Principal methods of competition are product quality, price and service.
Competition in truck-mounted cranes comes primarily from European companies including Palfinger AG, Cargotec Corporation and Fassi Group SpA. Principal methods of competition are product quality, price and service. The Company believes its competitive strengths include its high-quality products, global distribution network and low-cost manufacturing capabilities.
Strong Management Team. The Company is led by President and Chief Executive Officer John C. Pfeifer. Mr. Pfeifer is complemented by an experienced senior management team that has been assembled through internal promotions and external hires.
The Company is led by President and Chief Executive Officer John Pfeifer. Mr. Pfeifer is complemented by an experienced senior management team that has been assembled through internal promotions and external hires. The Company’s Board of Directors maintains a robust succession planning process for its executive officers to ensure strong business continuity.
The Company utilizes an extensive network of representatives and dealers supported by hundreds of internal and external sales and service representatives in North America to sell and service refuse collection vehicles and front- and rear-discharge concrete mixers. The Company also performs sales and service activities at the Company’s manufacturing facilities.
The Company utilizes an extensive network of representatives and dealers supported by hundreds of internal and external sales and service representatives in North America to sell and service refuse collection vehicles and front-discharge concrete mixers. The Company believes this network represents one of the largest refuse collection vehicle distribution networks in the U.S.
Pierce primarily serves domestic municipal customers, but also sells fire apparatus to the DoD, airports, universities and large industrial companies, and in international markets. Pierce’s history of innovation, research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities.
Pierce’s history of innovation, research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities.
Competition for DoD programs currently supplied by the Company could result in the U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to the Company at lower prices and operating margins than the Company experiences under current contracts. The Company’s principal competitors for snow removal vehicle sales are M-B Companies, Inc.
Competition for DoD programs currently supplied by the Company could result in the U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to the Company at lower prices and operating margins than the Company experiences under current contracts. Oshkosh Defense also produces postal delivery vehicles for the USPS.
International dealers are primarily located in Central and South America, Australia and Asia and are primarily focused on mining and construction markets. Manufacturing The Company manufactures its products at 29 manufacturing facilities.
IMT distributes its products through a wide network of dealers in more than one hundred locations worldwide. International dealers are primarily located in Central and South America, Australia and Asia and are primarily focused on mining and construction markets. Manufacturing The Company manufactures its products at 34 significant manufacturing facilities.
All leaders are expected to complete regular check-ins to provide feedback, review annual goal progress and hold career development conversations with team members to help ensure alignment, drive engagement and facilitate strong business outcomes. Health and Safety. The Company focuses on protecting the health and safety of its team members.
Strategic succession planning, future leader pipelines and critical role depth were reviewed and updated during fiscal 2023. All leaders are expected to complete regular check-ins to provide feedback, review annual goal progress and hold career development conversations with team members to help ensure alignment, drive engagement and facilitate strong business outcomes. Health and Safety.
The Company believes its broad product portfolios and end markets serve to diversify its sources of revenues, mitigate the impact of economic cyclicality and provide multiple platforms for both organic and inorganic growth.
The Company believes its broad product portfolios and end markets serve to diversify its sources of revenue, mitigate the impact of economic cyclicality and provide multiple platforms for both organic and inorganic growth. The Company’s product portfolios provide extensive opportunities to bundle products for sale to customers, leverage purchasing power and share innovation and technology within and between segments.
The United Auto Workers (UAW) Union represented approximately 1,425 production employees at the Company’s Oshkosh, Wisconsin facilities; the Boilermakers, Iron Shipbuilders, Blacksmiths and Forgers Union (Boilermakers) represented approximately 175 employees at the Company’s Kewaunee, Wisconsin facility; and the International Brotherhood of Teamsters Union (Teamsters) represented approximately 120 employees at the Company’s Garner, Iowa facility.
The United Auto Workers (UAW) Union represented approximately 1,300 production employees at the Company’s Oshkosh, Wisconsin facilities; the Boilermakers, Iron Shipbuilders, Blacksmiths and Forgers Union (Boilermakers) represented approximately 185 employees at the Company’s Kewaunee, Wisconsin facility; and the United Steelworkers represented approximately 235 team members at the Company’s Ogden, Utah facility.
The Company is comprised of 12 industry-leading brands across four reportable segments for financial reporting purposes: Access Equipment, Defense, Fire & Emergency and Commercial, which comprised 48%, 26%, 13% and 13%, respectively, of the Company’s consolidated net sales in fiscal 2022. Oshkosh’s leading brands include a wide range of purpose-built vehicles and equipment to serve a diverse group of industries.
The Company maintains 12 industry-leading brands across three reportable segments: Access, Defense, and Vocational, which comprised 51%, 22%, and 27% respectively, of the Company’s consolidated net sales in fiscal 2023. Oshkosh’s leading brands include a wide range of purpose-built vehicles and equipment to serve a diverse set of end markets.
The Company believes its competitive strengths include its high-quality products, global distribution network and low-cost manufacturing capabilities. 10 Government Contracts Approximately 25% of the Company’s net sales for fiscal 2022 were made to the U.S. government, a substantial majority of which were under multi-year contracts and programs in the defense vehicle market.
Government Contracts Approximately 19% of the Company’s net sales for fiscal 2023 were made to the U.S. government, a substantial majority of which were under multi-year contracts and programs in the defense vehicle market.
The following brands are ISO 9001 certified: JLG, Oshkosh Defense, Pierce, McNeilus, Frontline, Jerr-Dan and Oshkosh Airport Products. The Company has a team of employees dedicated to leading the implementation of the Company’s simplification initiatives. The team is comprised of members with diverse backgrounds in quality, lean, data analytics, product and process engineering, and culture change management.
Facilities for the majority of AeroTech and the following brands are ISO 9001 certified: JLG, Jerr-Dan, Hinowa, Oshkosh Defense, Pierce, McNeilus, Maxi-Metal, Frontline Communications and Oshkosh Airport Products. The Company has a team of employees dedicated to leading the implementation of the Company’s simplification initiatives.
The Company believes its network of representatives and dealers is a competitive advantage in refuse collection vehicle and concrete placement markets, particularly in the U.S. waste services industry where principal competitors distribute through dealers and to a lesser extent in the ready-mix concrete industry, where several competitors in part use dealers.
The Company believes its network of representatives and dealers is a competitive advantage in the refuse collection vehicle market, where principal competitors distribute through dealers.
Army’s FMTV Rebuy program. Originally a five-year requirements contract, the DoD extended the FMTV Rebuy program several times to allow for the delivery of vehicles and trailers through fiscal 2021. In February 2018, the DoD awarded Oshkosh Defense the FMTV A2 contract for the design, development, production and support of a fleet of future generation FMTVs.
In 2009, the DoD awarded Oshkosh Defense a contract to be the sole producer of the Family of Medium Tactical Vehicles (FMTV) under the U.S. Army’s FMTV Rebuy program. In February 2018, the DoD awarded Oshkosh Defense the FMTV A2 contract for the design, development, production and support of a fleet of future generation FMTVs.
Additionally, Pierce sells fire apparatus to international municipal and industrial fire departments through a network of international dealers. The Company markets its Maxi-Metal vehicles through a combination of direct sales representatives and a network of distributors. Certain of these representatives and distributors also handle Pierce products.
After the sale, Pierce’s nationwide local parts and service capability is available to help municipalities maintain peak readiness for this vital municipal service. Additionally, Pierce sells fire apparatus to international municipal and industrial fire departments through a network of international dealers. The Company markets its Maxi-Metal vehicles through a combination of direct sales representatives and a network of distributors.
These highly-specialized vehicles are required to be in service at most airports worldwide to support commercial airlines in the event of an emergency. Many of the largest airports in the United States, including LaGuardia International Airport, John F.
Through Oshkosh Airport Products, the Company is a leader in the design and sale of ARFF vehicles to domestic and international airports. These highly-specialized vehicles are required to be in service at most airports worldwide to support commercial airlines in the event of an emergency.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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For example, the Access Equipment segment’s largest customers are rental companies that serve the end user equipment rental markets. Should larger access equipment customers continue to grow through the acquisition of smaller rental companies, their buying influence may grow and may impact the competitive environment within the industry.
For example, the Access segment’s largest customers are rental companies that serve the end user equipment rental markets. Should larger access equipment customers continue to grow through the acquisition of smaller rental companies, their buying influence may grow and may impact the competitive environment within the industry.
In addition, payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on our cash flows. • Certain of our U.S. government contracts could be delayed or terminated, and all such contracts expire in the future and may not be replaced, which could reduce revenues that we expect under the contracts and negatively affect margins in our Defense segment. • Defense tactical wheeled vehicles contract awards that we receive may be subject to protests or lawsuits by competing bidders, which protests or lawsuits, if successful, could result in the U.S. government customer revoking part or all of any defense tactical wheeled vehicle contracts it awards to us and our inability to recover amounts we have expended in anticipation of initiating production under any such contract. • We must spend significant sums on product development and testing, bid and proposal activities, and pre-contract engineering, tooling and design activities in competitions to have the opportunity to be awarded these contracts. • As a U.S. government contractor, our DoD contracts and systems are subject to audit and review by the Defense Contract Audit Agency and the Defense Contract Management Agency.
In addition, payments to contractors for services performed during a federal government shutdown may be delayed, which would have a negative effect on our cash flows. • Certain of our U.S. government contracts could be delayed or terminated, and all such contracts expire in the future and may not be replaced, which could reduce revenues that we expect under the contracts and negatively affect margins in our Defense segment. 16 • Defense tactical wheeled vehicles contract awards that we receive may be subject to protests or lawsuits by competing bidders, which protests or lawsuits, if successful, could result in the U.S. government customer revoking part or all of any defense tactical wheeled vehicle contracts it awards to us and our inability to recover amounts we have expended in anticipation of initiating production under any such contract. • We must spend significant sums on product development and testing, bid and proposal activities, and pre-contract engineering, tooling and design activities in competitions to have the opportunity to be awarded these contracts. • As a U.S. government contractor, our DoD contracts and systems are subject to audit and review by the Defense Contract Audit Agency and the Defense Contract Management Agency.
Certain of our competitors have greater financial, marketing, manufacturing, distribution and governmental affairs resources than we do, which may put us at a competitive disadvantage. We also face pricing pressure from international competitors that attempt to gain domestic market share through importing and selling products at below market prices, particularly in the Access Equipment segment.
Certain of our competitors have greater financial, marketing, manufacturing, distribution and governmental affairs resources than we do, which may put us at a competitive disadvantage. We also face pricing pressure from international competitors that attempt to gain domestic market share through importing and selling products at below market prices, particularly in the Access segment.
Events and conditions that could result in impairment include a prolonged period of global economic weakness, a decline in economic conditions or a slow, weak economic recovery, a sustained decline in the price of our common stock, adverse changes in the regulatory environment, adverse changes in the market share of our products, adverse changes in interest rates, or other factors leading to reductions in the long-term sales or profitability that we expect.
Events and conditions that could result in impairment include a prolonged period of global economic weakness, a decline in economic conditions or a slow, weak economic recovery, a sustained decline in the price of our common stock, adverse changes in the regulatory environment, adverse changes in the market share of our products, adverse changes in interest rates, or other factors leading to reductions in the long-term net sales or profitability that we expect.
Among other things, there are additional logistical requirements associated with international sales, which increase the amount of time between the completion of vehicle production and our ability to recognize related revenue. In addition, expansion into foreign markets requires the establishment of distribution networks and may require modification of products to meet local requirements or preferences.
Among other things, there are additional logistical requirements associated with international sales, which increase the amount of time between the completion of production and our ability to recognize related revenue. In addition, expansion into foreign markets requires the establishment of distribution networks and may require modification of products to meet local requirements or preferences.
While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our independent dealers experience in operating their businesses due to economic conditions or other factors, or as a result of an alleged failure by us or an independent dealer to comply with the terms of our dealer agreement.
While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our independent dealers experience in operating their businesses due to economic conditions or other factors or as a result of an alleged failure by us or an independent dealer to comply with the 17 terms of our dealer agreement.
Such fluctuations, in particular those with respect to the Euro, the Chinese renminbi, the Canadian dollar, the Mexican peso, the Australian dollar and the British pound sterling, may have a material effect on our net sales, financial condition, profitability and/or cash flows and may significantly affect the comparability of our results between financial periods.
Such fluctuations, in particular those with respect to the Euro, the Chinese renminbi, the Canadian dollar, the Mexican peso, the Australian dollar and the British pound sterling may have a material effect on our net sales, financial condition, profitability and/or cash flows and may significantly 19 affect the comparability of our results between financial periods.
As a defense contractor, we face many cyber and security threats that can range from attacks common to most industries, which could have financial or reputational consequences, to advanced persistent threats on our defense programs, which could involve information that is considered a matter of national security.
Further, as a defense contractor, we face many cyber and security threats that can range from attacks common to most industries, which could have financial or reputational consequences, to advanced persistent threats on our defense programs, which could involve information that is considered a matter of national security.
Establishment of distribution networks or modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect 20 on our ability to achieve international sales growth.
Establishment of distribution networks or modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect on our ability to achieve international sales growth.
If these audits result in assessments different from amounts that the Company has reserved for potential tax liabilities, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.
If these audits result in assessments 21 different from amounts that the Company has reserved for potential tax liabilities, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.
We also establish additional reserves based upon our perception of the quality of the current receivables, the current financial position of our customers, past collections experience, and existing and future market conditions. Prolonged or more severe economic weakness may result in additional requirements for reserves.
We also establish additional reserves based upon our 20 perception of the quality of the current receivables, the current financial position of our customers, past collections experience, and existing and future market conditions. Prolonged or more severe economic weakness may result in additional requirements for reserves.
Our results could be adversely affected by severe weather, natural disasters, and other events in the locations in which we or our customers or suppliers operate. We have manufacturing and other operations in locations prone to severe weather and natural disasters, including earthquakes, floods, hurricanes or tsunamis that could disrupt our operations.
Our results could be adversely affected by severe weather, natural disasters, and other events in the locations in which we or our customers or suppliers operate. We have manufacturing and other operations in locations prone to severe weather and natural disasters, including tornados, earthquakes, floods, hurricanes or tsunamis that could disrupt our operations.
The access equipment market is highly cyclical and impacted (i) by the strength of economies in general and customers’ perceptions concerning the timing of economic cycles, (ii) by residential and non-residential construction spending, (iii) by the ability of rental companies to obtain third-party financing to purchase revenue generating assets, (iv) by capital expenditures of rental companies in general, including the rate at which they replace aged rental equipment, which is impacted in part by historical purchase levels, (v) by the timing of regulatory standard changes, and (vi) by other factors, including oil and gas related activity.
The access equipment market is highly cyclical and impacted (i) by the strength of economies in general and customers’ perceptions concerning the timing of economic cycles, (ii) by residential and non-residential construction spending, including mega projects, (iii) by the ability of rental companies to obtain third-party financing to purchase revenue generating assets, (iv) by capital expenditures of rental companies in general, including the rate at which they replace aged rental equipment, which is impacted in part by historical purchase levels, (v) by the timing of regulatory standard changes, and (vi) by other factors, including oil and gas related activity.
Refuse collection vehicle markets are also cyclical and impacted by the strength of economies in general, by municipal 17 tax receipts and by the size and timing of capital expenditures, including replacement demand, by large waste haulers.
Refuse collection vehicle markets are also cyclical and impacted by the strength of economies in general, by municipal tax receipts and by the size and timing of capital expenditures, including replacement demand, by large waste haulers.
Our ability to match product improvements and new product offerings to diverse global customers’ anticipated needs for different types of products and 19 various product features and functions, at acceptable prices, is critical to our success.
Our ability to match product improvements and new product offerings to diverse global customers’ anticipated needs for different types of products and various product features and functions, at acceptable prices, is critical to our success.
We are dependent on our suppliers of engines, chassis and other power sources to continue to timely deliver such components that meet applicable emissions regulations and customer preferences.
We are dependent on our suppliers of engines, chassis, batteries and other power sources to continue to timely deliver such components that meet applicable emissions regulations and customer preferences.
We could be subject to fines, cleanup costs or other costs or damages under environmental laws if we are not in compliance with environmental regulations. We may be subject to other more stringent environmental laws in the future that could have a material adverse impact on our business, results of operation, and financial condition.
We could be subject to fines, cleanup costs or other costs or damages under environmental laws if we are not in compliance with environmental regulations. We may be subject to other more stringent environmental laws in the future that could have a material adverse impact on our business, results of operations and financial condition.
However, the potential consequences of a future material cybersecurity attack include reputational damage, litigation with third-parties, government enforcement actions, penalties, disruption to systems, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness, results of operations and financial condition.
However, the potential consequences of a future material cybersecurity attack may include reputational damage, litigation with third-parties, government enforcement actions, penalties, disruption to our systems or operations of our facilities, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in research, development and engineering, increased cybersecurity protection costs and unplanned remediation costs, which in turn could adversely affect our competitiveness, results of operations and financial condition.
Factors such as supply and demand, freight costs, availability of transportation, availability of labor, inventory levels, the level of imports, the imposition of duties and tariffs and other trade barriers and general economic conditions may affect the price of our parts, materials, components or final assembly purchases.
Factors such as supply and demand, freight costs, availability of transportation, the cost of manufacturing labor, availability of labor, inventory levels, the level of imports, the imposition of duties and tariffs and other trade barriers and general economic conditions may affect the price of our parts, materials, components or final assembly purchases.
A downgrade to our credit ratings could increase our interest rates, could limit our access to public debt markets, could limit the institutions willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/or difficult to obtain. In addition, a portion of our debt is subject to variable interest rates.
A downgrade to our credit ratings could increase our interest rates, could limit our access to public debt markets, could limit the institutions willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/or difficult to obtain. In addition, our revolving credit facility is subject to variable interest rates.
We do not believe our business is dependent on any single dealer, in which the loss would have a sustained material adverse effect upon our business.
We do not believe our business is dependent on any single dealer, the loss of which would have a sustained material adverse effect upon our business.
We evaluate goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently if potential interim indicators exist that could result in impairment.
We evaluate goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if potential interim indicators exist that could result in impairment.
Fire & emergency markets are cyclical later in an economic cycle and are impacted by the economy generally and by municipal tax receipts and capital expenditures.
Fire apparatus markets are cyclical later in an economic cycle and are impacted by the economy generally and by municipal tax receipts and capital expenditures.
While we are developing and offering more propulsion choices in our products, such as electric-powered vehicles or mobile equipment, with lower emissions, this will continue to require us to spend additional funds on product research and development and implementation costs and subject us to the risk that our competitors may respond to these pressures in a manner that gives them a competitive advantage.
While we continue to develop and offer more propulsion choices in our products, such as electric-powered vehicles or mobile equipment with lower emissions, this will continue to require us to spend additional funds on product research and development and implementation costs and subject us to the risk that our competitors may respond to these pressures in a manner that gives them a competitive advantage.
While we spent $113 million, $103 million and $104 million for research and development in fiscal 2022, 2021 and 2020, respectively, we cannot provide any assurance that this level of investment in research and development will be sufficient to maintain our competitive strength in product innovation, which could cause our business to suffer.
While we spent $134 million, $113 million and $103 million for research and development in 2023, 2022 and fiscal 2021, respectively, we cannot provide any assurance that this level of investment in research and development will be sufficient to maintain our competitive strength in product innovation, which could cause our business to suffer.
Similarly, the Fire & Emergency segment’s distribution channel is comprised of a relatively small number of dealers that if they were to consolidate may create additional pricing pressure, as well as concentrated credit exposures, as our reliance on a smaller group of larger individual dealerships increases.
Similarly, the fire apparatus market distribution channel is comprised of a relatively small number of dealers that if they were to consolidate may create additional pricing pressure, as well as concentrated credit exposures, as our reliance on a smaller group of larger individual dealerships increases.
During periods of economic weakness, the collateral underlying our guarantees of indebtedness of customers or receivables can decline sharply, thereby increasing our exposure to losses. We also face a concentration of credit risk as the Access Equipment segment’s ten largest debtors at December 31, 2022 represented approximately 33% of our consolidated gross receivables. Some of these customers are highly leveraged.
During periods of economic weakness, the collateral underlying our guarantees of indebtedness of customers or receivables can decline sharply, thereby increasing our exposure to losses. We also face a concentration of credit risk as the Access segment’s ten largest debtors at December 31, 2023 represented approximately 29% of our consolidated gross receivables. Some of these customers are highly leveraged.
An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results. We have a substantial amount of goodwill and other indefinite-lived intangible assets on our balance sheet as a result of acquisitions we have completed. At December 31, 2022, approximately 86% of these intangibles were concentrated in the Access Equipment segment.
An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results. We have a substantial amount of goodwill and other indefinite-lived intangible assets on our balance sheet as a result of acquisitions we have completed. At December 31, 2023, approximately 75% of these intangibles were concentrated in the Access segment.
One of our growth strategies is emphasizing our new product development as we seek to expand sales and margins by leading our core markets in the introduction of new or improved products and technologies.
One of our growth strategies is emphasizing our new product development as we seek to expand sales and margins by leading our core markets in the introduction of new or improved products and technologies or expanding our portfolio into adjacent markets.
If we fail to have adequate relationships with suppliers that will supply appropriate engines, chassis and powertrain components to us or fail to timely receive appropriate components from our suppliers, that could result in our being placed in an uncompetitive position or without finished product when needed.
If we fail to have adequate relationships with suppliers that will supply appropriate engines, chassis, batteries and other power sources to us or fail to timely receive appropriate components from our suppliers, that could result in us being placed in an uncompetitive position or without finished product when needed.
Competition for DoD programs that we currently have has resulted and could in the future result in the U.S. government awarding future contracts to another manufacturer or could result in the U.S. government awarding the contracts to us at lower prices and operating margins than we experience under the current contracts. As an example, in February 2022, the U.S.
Competition for DoD programs that we currently have has resulted and could in the future result in the U.S. government awarding future contracts to another manufacturer or could result in the U.S. government awarding the contracts to us at lower prices and operating margins than we experience under the current contracts.
In years when the U.S. government has not completed its budget process before the end of its fiscal year, government operations are typically funded pursuant to a “continuing resolution,” which allows federal government agencies to operate at spending levels approved in the previous budget cycle but does not authorize new spending 16 initiatives.
In years when the U.S. government has not completed its budget process before the end of its fiscal year, which is currently the case for the U.S. government's fiscal 2024 budget, government operations are typically funded pursuant to a “continuing resolution,” which allows federal government agencies to operate at spending levels approved in the previous budget cycle but does not authorize new spending initiatives.
We cannot provide any assurance we will be able to successfully achieve the benefits of any business acquisition due to a variety of risks, including the following: • Our ability to identify acquisition targets and close deals; • Our failure to achieve the acquisition’s assumed future financial performance or realize assumed efficiencies or assumed cost reductions; • There may be a cultural mismatch that exists between us and the acquired business; • We may incur unforeseen expenses or liabilities or may be subject to other unanticipated regulatory or government actions related to the acquired business; and • We may incur higher transaction costs than expected.
We cannot provide any assurance we will be able to successfully achieve the benefits of any business acquisition due to a variety of risks, including the following: • Our ability to identify acquisition targets and consummate transactions; 18 • Our failure to achieve the acquisition’s expected future financial performance or realize assumed efficiencies or assumed cost reductions; • There may be a cultural mismatch that exists between us and the acquired business; • We may experience delays or unexpected difficulties in integrating the acquired business; • We may incur unforeseen expenses or liabilities or may be subject to other unanticipated regulatory or government actions related to the acquired business; and • We may incur higher transaction costs than expected.
Changes in underlying assumptions, circumstances or estimates could have a material adverse effect on our net sales, financial condition and/or profitability. 21 We may experience losses in excess of our recorded reserves for doubtful accounts, finance receivables, notes receivable and guarantees of indebtedness of others. As of December 31, 2022, we had consolidated gross receivables of $1.18 billion.
Changes in underlying assumptions, circumstances or estimates could have a material adverse effect on our net sales, financial condition and/or profitability. We may experience losses in excess of our recorded reserves for doubtful accounts and guarantees of indebtedness of others. As of December 31, 2023, we had consolidated gross receivables of $1.3 billion.
Severe weather, a natural disaster or other conditions or events that result in a prolonged disruption to our operations, or the operations of our customers or suppliers could delay delivery of parts, materials or components to us or sales to our customers and could have a material adverse effect on our net sales, financial condition, results of operations and/or cash flows. 18 Disruptions within our dealer network could adversely affect our business.
Severe weather, a natural disaster or other conditions or events that result in a prolonged disruption to our operations, or the operations of our customers or suppliers, could delay delivery of parts, materials or components to us or sales to our customers and could have a material adverse effect on our net sales, financial condition, results of operations and/or cash flows.
In addition, we were subject to obligations to guarantee customer indebtedness to third parties of $731.1 million, under which we estimate our maximum exposure to be $121.6 million. We evaluate the collectability of receivables and our guarantees of indebtedness of others based on a combination of factors and establish reserves based on our estimates of potential current and future losses.
In addition, we were subject to obligations to guarantee customer indebtedness to third parties of $668.5 million, under which we estimate our maximum exposure to be $104.9 million. We evaluate the collectability of receivables and our guarantees of indebtedness of others based on a combination of factors and establish reserves based on our estimates of potential current and future losses.
In addition, the cost of parts, materials, components or final assemblies has increased and may continue to significantly increase for reasons other than changes in commodity prices, including the significant inflation that we are currently experiencing.
In addition, the cost of parts, materials, components or final assemblies has increased and may continue to increase for reasons other than changes in commodity prices, including the inflation that we continue to experience.
The IDIQ contract allows for the purchase of up to 165,000 units over 10 years. To date, we have received orders for the engineering to finalize the production vehicle design, for tooling and factory build-out activities that are necessary prior to vehicle production and for the first 50,000 vehicles.
In February 2021, the USPS selected us to build its NGDV. The IDIQ contract allows for the purchase of up to 165,000 units over 10 years. To date, we have received orders for the engineering to finalize the production vehicle design, for tooling and factory build-out activities that are necessary prior to vehicle production and for the first 50,000 vehicles.
Approximately 12% of our net sales in fiscal 2022 were attributable to products sold outside of the United States, of which approximately 49% involved export sales from the United States. The majority of export sales are denominated in U.S. dollars. Sales that originate outside the United States are typically transacted in the local currencies of those countries.
Approximately 17% of our net sales in 2023 were attributable to products sold outside of the United States, of which approximately 46% involved export sales from the United States. The majority of export sales are denominated in U.S. dollars. Sales that originate outside the United States are typically transacted in the local currencies of those countries.
Costs for these items may continue to increase and/or remain elevated in the future due to one or more of the following: a sustained economic recovery, the level of tariffs that the U.S. imposes on imported steel and aluminum, the outbreak of war or other hostilities in regions of the world that produce the commodities or raw materials that go into the commodities or a weakening U.S. dollar.
Costs for these items may remain elevated or continue to increase in the future due to one or more of the following, among others: a sustained economic recovery; the level of tariffs that the U.S. imposes on imported steel and aluminum; the outbreak of conflicts in regions of the world that produce the commodities, the raw materials that go into the commodities or through which the commodities are transported; or a weakening U.S. dollar.
If demand for our products is lower than what we or the market expect, due to a recession or other factors, then there could be an adverse effect on our net sales, financial condition, profitability and/or cash flows. Labor issues may adversely impact our results.
If demand for our products is lower than what we or the market expect, due to a recession or other factors, then there could be an adverse effect on our net sales, financial condition, profitability and/or cash flows. Our performance under the USPS contract may not be what we expect.
Such disruptions have resulted and could further result in manufacturing inefficiencies caused by us having to wait for parts to arrive on production lines, could delay sales and could result in a material adverse effect on our results of operations, financial condition, and/or cash flows.
Such disruptions have resulted and could further result in higher manufacturing costs caused by an inefficient parts flow to our production lines, could delay sales and could result in a material adverse effect on our results of operations, financial condition, and/or cash flows.
An increase in general interest rates, as has occurred during the last year, would also increase our cost of borrowing under our credit agreement. 22 Additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities could adversely impact our financial condition and cash flow.
An increase in general interest rates, as has occurred during 2023, would also increase our cost of borrowing under our credit agreement. Additional liabilities relating to changes in tax rates or exposure to additional income tax liabilities could adversely impact our financial condition and cash flow. We are subject to income taxes in the U.S. and various non-U.S. jurisdictions.
We have experienced, and in the future are likely to experience, significant disruption or termination of the supply of some of our parts, materials, components and final assemblies that we obtain from suppliers or subcontractors.
We have experienced, and in the future are likely to experience, significant disruption of the supply of some of our parts, materials, components and final assemblies that we obtain from suppliers or subcontractors. For example, global supply chains have not yet fully returned to pre-pandemic levels.
In addition, the war in Ukraine has caused and is likely to cause further strains in the global supply chain. Delays in obtaining parts, materials, components and final assemblies may result from a number of factors affecting our suppliers including capacity constraints, supplier product quality issues, suppliers’ impaired financial condition and suppliers’ allocations to other purchasers.
Delays in obtaining parts, materials, components and final assemblies may result from a number of factors affecting our suppliers including capacity constraints, labor constraints, supplier product quality issues, suppliers’ impaired financial condition and suppliers’ allocations to other purchasers.
Although we sell the majority of our products directly to the end user, we market, sell and service products through a network of independent dealers in the Fire & Emergency segment and in a limited number of markets for the Access Equipment and Commercial segments.
Disruptions within our dealer network could adversely affect our business. Although we sell the majority of our products directly to the end user, we market, sell and service products through a network of independent dealers in the Vocational segment and in a limited number of markets for the Access segment.
Furthermore, surcharges and permanent price increases may not be accepted by our customers, resulting in them 15 choosing to order from our competitors instead of us or delaying orders to us. Any significant decrease in orders could have an adverse effect on our financial condition, profitability and/or cash flows.
If we are not able to recover cost increases through surcharges or permanent price increases to our customers, then such increases will have an adverse effect on our financial condition, profitability and/or cash flows. Furthermore, surcharges or permanent price increases may not be accepted by our customers, resulting in them choosing to order from our competitors instead of us.
We may not realize all of the anticipated benefits of our acquisitions. We are continuously evaluating potential acquisitions to support our business strategy. As part of this evaluation process, we perform due diligence to identify potential risks associated with the potential transaction. We also make assumptions regarding future performance of the acquired business.
We are continuously evaluating potential acquisitions to support our business strategy. For example, in August 2023, we completed our acquisition of AeroTech from JBT Corporation. As part of this evaluation process, we perform due diligence to identify potential risks associated with the potential transaction. We also make assumptions regarding future performance of the acquired business.
In response to changes in customer preferences concerning global climate changes and related changes in regulations, we face greater pressure to develop products that generate less greenhouse gas emissions.
In response to legislative, regulatory, investment community and societal concerns regarding global climate change and related efforts to limit greenhouse gas emissions, including changes in customer preferences and changes in regulations, we face greater pressure to develop products that generate less greenhouse gas emissions.
It is possible that our information technology systems and networks, or those that third-parties manage or provide, could have vulnerabilities, which could go unnoticed for a period of time.
Cybersecurity attacks could also include attacks targeting the security, integrity and/or reliability of the hardware and software that we have installed in our products. It is possible that our information technology systems and networks, or those that third-parties manage or provide, could have vulnerabilities, which could go unnoticed for a period of time.
We are subject to income taxes in the U.S. and various non-U.S. jurisdictions. Our domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.
Our domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.
The DoD could also seek to reprogram certain funds originally planned for the purchase of vehicles we manufacture under the current defense budget allocations. The U.S.
The DoD could also seek to reprogram certain funds originally planned for the purchase of vehicles we manufacture under the current defense budget allocations. • The funding of DoD programs is subject to an annual congressional budget authorization and appropriations process.
JLTV accounted for sales of $1.33 billion in fiscal 2022. • Competitions for U.S. government contracts are intense, and we cannot provide any assurance that we will be successful in current or future procurement competitions in which we participate, as evidenced by the recent award of the JLTV follow on contract to another company.
As an example, in February 2023, the DoD awarded the JLTV Family of Vehicles follow on contract to another company based on, at least in part, a lower price. • Competitions for U.S. government contracts are intense, and we cannot provide any assurance that we will be successful in current or future procurement competitions in which we participate, as evidenced by the award of the JLTV follow on contract to another company.
In addition, the U.S. government has become more aggressive in seeking to acquire the design rights to the Company’s current and potential future programs to facilitate competition for manufacturing our vehicles.
In addition, the U.S. government has become more aggressive in seeking to acquire the design rights to the Company’s current and potential future programs to facilitate competition for manufacturing our vehicles. • Most of our contracts with the DoD are multi-year firm, fixed-price contracts. These contracts typically contain annual sales price increases.
The USPS contract and our performance under the contract are subject to the following risks, among others, that could have a material adverse effect on our operating performance: • Budget constraints facing the USPS and continuously changing demands for postal services may result in the USPS ordering fewer units than we expect the USPS to award to us under the contract. • Engineering time to finalize the production vehicle design may be greater than we anticipate. • Tooling and factory build-out activities that we must complete prior to production may be greater than we anticipate. • Costs and other challenges associated with recruiting and training a new workforce may be greater than we anticipate.
The USPS contract and our performance under the contract are subject to the following risks, among others, that could have a material adverse effect on our results of operations, financial condition, and/or cash flows: • The USPS ordering fewer units than we expect to receive under the contract. • Engineering time to finalize the production vehicle design may be greater than we anticipate. • Tooling and factory build-out activities that we must complete prior to production may be greater than we anticipate. • Costs and other challenges associated with recruiting and training a new workforce may be greater than we anticipate. • The supply base may not be able to supply parts in a timely manner. 14 We are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases.
A majority of our contracts in the Defense segment are large in size and require significant personnel and production resources, and when our government customers allow such contracts to expire or significantly reduce their vehicle requirements under such contracts, we must make adjustments to personnel and production resources. • We periodically experience difficulties with sourcing sufficient vehicle carcasses from the U.S. military to maintain our defense tactical wheeled vehicles remanufacturing schedule, which can create uncertainty and inefficiencies for this area of our business.
A majority of our contracts in the Defense segment are large in size and require significant personnel and production resources, and when our government customers allow such contracts to expire or significantly reduce their vehicle requirements under such contracts, we must make adjustments to personnel and production resources.
Furthermore, in years when the U.S. government fails to complete its budget process or to provide for a continuing resolution, a federal government shutdown may result. This could in turn result in the delay or cancellation of key programs, which could have a negative effect on our cash flows and adversely affect our future results.
This could in turn result in the delay or cancellation of key programs, which could have a negative effect on our cash flows and adversely affect our future results.
Unfavorable changes in the political, regulatory or business climate could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows. 23 We may be required to make material expenditures or incur additional liabilities to comply with changes in environmental laws, climate change regulations or to meet the increasing societal expectations on companies to address climate change.
We may be required to make material expenditures or incur additional liabilities to comply with changes in environmental laws or climate change regulations or to meet the increasing societal expectations on companies to address climate change. Both our products and the operation of our manufacturing facilities are subject to statutory and regulatory requirements.
These considerations may lead to new international, national, regional, or local legislation or regulatory response. The legislation of greenhouse gases could result in unfavorable financial impact through various forms including taxation, emission allowances, fines, requirements for facilities improvement investment and higher energy costs.
The legislation of greenhouse gases could result in unfavorable financial impacts through various forms including taxation, emission allowances, fines, requirements for facilities improvement investment and higher energy costs. The impact of any future greenhouse gas legislation, regulatory, or product standard requirements is unknown, and therefore, we are uncertain of the potential impact that future changes may have.
Our dependency on contracts with U.S. and foreign government agencies subjects us to a variety of risks that could materially reduce our revenues or profits. We are dependent on U.S. and foreign government contracts for a substantial portion of our business. Approximately 25% of our sales in fiscal 2022 were to the U.S. government.
We are dependent on U.S. and foreign government contracts for a substantial portion of our business. Approximately 19% of our net sales in 2023 were to the U.S. government.
Furthermore, under the revenue recognition accounting rules, we can only include units in our estimates of overall contract profitability after we have received a firm delivery order for those units.
For instance, cumulative catch-up adjustments on contracts in the Defense segment negatively impacted operating income by $44.9 million in 2022, primarily as a result of higher anticipated material costs. Furthermore, under the revenue recognition accounting rules, we can only include units in our estimates of overall contract profitability after we have received a firm delivery order for those units.
Our production could be disrupted by labor issues including, absenteeism, public health issues (e.g., COVID-19), stay-at-home orders, availability of skilled workforce in locations we operate due to competition or other factors. In addition, our production schedules assume the availability of sufficient workforce in areas that our facilities operate at anticipated labor rates.
Labor issues may adversely impact our results. Our production, or the production of our suppliers, could be disrupted by labor issues including availability of skilled workforce in locations in which we and our suppliers operate due to competition, absenteeism, public health issues, strikes or other factors.
Cybersecurity Risks Increased cybersecurity threats and more sophisticated computer crime pose a risk to our systems, networks, products and services.
Cybersecurity Risks Increased cybersecurity threats and more sophisticated computer crime pose a risk to our systems, networks, operations, products and services. We rely extensively on information technology systems and networks, some of which third-parties manage, supporting a variety of business activities.
Information technology security threats, from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data, are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats.
Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Financial Risks We are subject to changes in contract estimates. We account for substantially all long-term contracts in the Defense segment utilizing the cost to cost method of percentage-of-completion accounting. This accounting requires judgment relative to assessing risks, estimating revenues and costs and making assumptions regarding the timing of receipt of delivery orders from our government customer and technical issues.
This accounting requires judgment relative to assessing risks, estimating revenues and costs and making assumptions regarding the timing of receipt of delivery orders from our government customer and technical issues. Due to the size and nature of these contracts, the estimate of costs is complicated and subject to many variables.
Due to the size and nature of these contracts, the estimation of total revenues and costs is complicated and subject to many variables. We must make assumptions regarding expected increases in material costs, wages and employee benefits, engineering hours, productivity and availability of labor and allocated fixed costs.
We must make assumptions regarding expected increases in material costs, wages and employee benefits, engineering hours, productivity and availability of labor and allocated fixed costs. Changes to production costs, overhead rates, learning curves and/or supplier performance can also impact these estimates.
Both our products and the operation of our manufacturing facilities are subject to statutory and regulatory requirements. These include environmental requirements applicable to manufacturing and vehicle emissions, government contracting regulations, regulations impacting our supply chain and domestic and international trade regulations.
These include environmental requirements applicable to manufacturing and vehicle emissions, government contracting regulations, regulations impacting our supply chain and domestic and international trade regulations. A significant change to 22 these regulatory requirements could substantially increase manufacturing costs, which could make our business results more variable.
Investors should carefully consider information in this Annual Report on Form 10-K in light of the risk factors described below. Business and Operational Risks We are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases.
Investors should carefully consider information in this Annual Report on Form 10-K in light of the risk factors described below. Business and Operational Risks Our markets are highly cyclical. Declines in these markets could have a material adverse effect on our operating performance.
A significant change to these regulatory requirements could substantially increase manufacturing costs, which could make our business results more variable. Climate change attributed to increased levels of greenhouse gases, including carbon dioxide, has led to significant legislative, regulatory and societal efforts to limit greenhouse gas emissions.
Climate change attributed to increased levels of greenhouse gases, including carbon dioxide, has led to significant legislative, regulatory, investment community and societal efforts to limit greenhouse gas emissions. These considerations may lead to new international, national, regional, or local legislation or regulatory responses.
If sufficient workforce is not available or rates are higher than we anticipate, it could have an adverse effect on our sales, financial condition, profitability and/or cash flow. The USPS may not purchase quantities from us that we expect. In February 2021, the USPS notified us that it selected us to build its NGDV.
If sufficient workforce is not available or rates are higher than we anticipate, it could have an adverse effect on our net sales, financial condition, profitability and/or cash flows. 15 Our dependency on contracts with U.S. and foreign government agencies subjects us to a variety of risks that could materially reduce our revenues or profits.
Our suppliers and customers also have operations in such locations. Epidemics and pandemics, such as COVID-19, could also affect our operations or those of our suppliers or customers, which could disrupt our operations.
Our suppliers and customers also have operations in such locations.
We rely extensively on information technology systems and networks, some of which third parties manage, supporting a variety of business activities. Operating these information technology systems and networks and processing and maintaining related data in a secure manner is critical to our business operations and strategy.
Operating these information technology systems and networks and processing and maintaining related data in a secure manner is critical to our business operations and strategy. Information technology security threats, from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data, are increasing in frequency and sophistication.
Local government policy and influence can also impact international competition, such as in China where state-controlled economy favors local market participants. We may not be able to execute on our business strategy. The Company’s strategy is grounded in its purpose of making a difference in the lives of those who build, serve, and protect communities around the world.
Local government policy and influence can also impact international competition, such as in China where a state-controlled economy favors local market participants. Financial Risks We are subject to changes in contract estimates. We account for substantially all long-term contracts in the Defense segment utilizing the cost-to-cost method of percentage-of-completion accounting.
Removed
For example, the rapid increase in demand in the U.S. economy and periodic localized lockdowns in parts of the world resulting from spikes in novel coronavirus (COVID-19) infection rates has caused, and is expected to continue to cause, significant stress on global supply chains.
Added
Air transportation equipment markets are also cyclical and impacted by the rates of expansion, consolidation and replacement of equipment within the air transportation equipment markets which in turn are driven by the global demand for air transportation services.
Removed
If we are not able to recover cost increases through surcharges or permanent price increases to our customers, then such increases will have an adverse effect on our financial condition, profitability and/or cash flows.
Added
As of December 31, 2023, we have recorded deferred contract costs of $710.7 million that primarily relate to the NGDV program.
Removed
Army released a request for proposal for the re-compete of the production contract for the JLTV Family of Vehicles. The DoD conducted a full and open competition for the follow-on production in which Oshkosh Defense participated. In February 2023, the DoD awarded the JLTV follow on contract to another company.
Added
In addition, conflicts in various parts of the world, including Ukraine, Israel and the Middle East have caused strains in the global supply chain and may do so in the future.
Removed
The willingness of bidders to license their design rights to the DoD was an evaluation factor in the JLTV and FMTV A2 competitions. • Most of our contracts with the DoD are multi-year firm, fixed-price contracts. These contracts typically contain annual sales price increases.

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Item 2. Properties

Properties — owned and leased real estate

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The Access Equipment segment also leases a number of small distribution, engineering, administration or service facilities throughout the world.
The Access segment also leases a number of small distribution, engineering, administration or service facilities throughout the world.
In addition to sales and service activities at the Company’s manufacturing facilities, the Company maintains a network of sales and service centers in the U.S. The Company uses these facilities primarily for sales and service of refuse collection vehicles and concrete mixers.
In addition to sales and service activities at the Company’s manufacturing facilities, the Company maintains a network of sales and service centers in the U.S. The Company uses these facilities primarily for sales and service of refuse collection vehicles and front-discharge concrete mixers.
(b) These facilities are leased. (c) One facility is owned and the other is leased. 24 The Company’s manufacturing facilities generally operate five days per week on one or two shifts, except for seasonal shutdowns for one- to three-week periods.
(b) These facilities are leased. (c) One facility is owned, and the other is leased. (d) Facility also produces sub-components for Defense. 24 The Company’s manufacturing facilities generally operate five days per week on one or two shifts, except for seasonal shutdowns for one- to three-week periods.
ITEM 2. PROPERTIES The Company believes its equipment and buildings are well maintained and adequate for its present and anticipated needs. As of December 31, 2022, the Company operated in 29 manufacturing facilities.
ITEM 2. PROPERTIES The Company believes its equipment and buildings are well maintained and adequate for its present and anticipated needs. As of December 31, 2023, the Company operated in 34 significant manufacturing facilities.
The locations of the Company’s manufacturing facilities are provided in the table below: Segment Location (# of facilities) Segment Location (# of facilities) Access Equipment McConnellsburg, Pennsylvania (3) (a) Fire & Emergency Appleton, Wisconsin (2) Shippensburg, Pennsylvania (1) Bradenton, Florida (1) Greencastle, Pennsylvania (1) Kewaunee, Wisconsin (1) Tianjin, China (2) (c) Clearwater, Florida (1) (b) Tonneins, France (1) (b) Neenah, Wisconsin (1) (b) Port Macquarie, Australia (1) Saint-Georges, Quebec, Canada (1) Leicester, United Kingdom (1) Bedford, Pennsylvania (1) Commercial Dodge Center, Minnesota (1) Leon, Mexico (1) Garner, Iowa (1) Riceville, Iowa (1) Defense Oshkosh, Wisconsin (4) London, Canada (1) (b) Jefferson City, Tennessee (1) (b) Spartanburg, South Carolina (1) (b) (a) Two facilities are owned and the other is leased.
The locations of the Company’s manufacturing facilities are provided in the table below: Segment Location (# of facilities) Segment Location (# of facilities) Access McConnellsburg, Pennsylvania (3) (a) Vocational Appleton, Wisconsin (2) Shippensburg, Pennsylvania (1) Bradenton, Florida (1) Greencastle, Pennsylvania (1) Kewaunee, Wisconsin (1) Tianjin, China (2) (c) Clearwater, Florida (1) (b) Tonneins, France (1) (b) Neenah, Wisconsin (1) (b) Port Macquarie, Australia (1) Saint-Georges, Quebec, Canada (1) Leicester, United Kingdom (1) Dodge Center, Minnesota (1) Bedford, Pennsylvania (1) Garner, Iowa (1) Leon, Mexico (1) Riceville, Iowa (1) Norgara, Italy (1) Murfreesboro, Tennessee (1) Jefferson City, Tennessee (1) (d) Orlando, Florida (1) Ogden, Utah (1) Defense Oshkosh, Wisconsin (4) Warrenton, Oregon (1) (b) Spartanburg, South Carolina (1) (b) Ciudad Juarez, Mexico (1) (b) (a) Two facilities are owned, and the other is leased.
Removed
The Company believes its manufacturing capacity could be significantly increased with limited capital spending by operating an additional shift at each facility.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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At December 31, 2022, the estimated net liabilities for product and general liability claims totaled $41.2 million.
At December 31, 2023, the estimated net liabilities for product and general liability claims totaled $50.1 million.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Iyengar joined the Company in January 2022 as Executive Vice President and Chief Technology and Strategic Sourcing Officer. Prior to joining the Company, she served as Chief Technology and Quality Officer - CNH Industrial N.V., a designer, manufacturer and marketer of agricultural machinery and construction equipment, from 2019 to January 2022. Prior to that, Ms.
Ms. Iyengar joined the Company in January 2022 as Executive Vice President and Chief Technology and Strategic Sourcing Officer. Prior to joining the Company, she served as Chief Technology and Quality Officer - CNH Industrial N.V., a designer, manufacturer and marketer of agricultural machinery and construction equipment, from 2019 to January 2022. Prior to that, Ms.
Johnson joined the Company in 2007 as Director of Dealer Development for Pierce. He served as Senior Vice President of Sales and Marketing for Pierce from 2009 to 2010. He served as the Executive Vice President and President, Fire & Emergency Segment from 2010 to 2023.
Mr. Johnson joined the Company in 2007 as Director of Dealer Development for Pierce. He served as Senior Vice President of Sales and Marketing for Pierce from 2009 to 2010. He served as the Executive Vice President and President, Fire & Emergency Segment from 2010 to 2023.
ITEM 4. MINE SA FETY DISCLOSURES Not applicable. 25 INFORMATION ABOUT OUR EXECU TIVE OFFICERS The following table sets forth certain information as of February 21, 2023 concerning the Company’s executive officers. All of the Company’s executive officers serve terms of one year and until their successors are elected and qualified. Name Age Title John C.
ITEM 4. MINE SA FETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECU TIVE OFFICERS The following table sets forth certain information, as of February 29, 2024, concerning the Company’s executive officers. All of the Company’s executive officers serve terms of one year and until their successors are elected and qualified. Name Age Title John C.
Prior to joining the Company, he spent more than twenty years with Bemis Company, Inc., a global supplier of flexible packaging, in numerous positions of increasing responsibility, most recently as Vice President of Marketing and Transformation for Bemis North America from 2014 to 2016. Thomas P. Hawkins. Mr.
Prior to joining the Company, he spent more than twenty years with Bemis Company, Inc., a global supplier of flexible packaging, in numerous positions of increasing responsibility, most recently as Vice President of Marketing and Transformation for Bemis North America from 2014 to 2016. Anupam Khare. Mr.
Iyengar served as Senior Vice President Chief Innovation & Technology Officer - Xylem Inc., a water technology provider, from 2015 to 2019. Prior to that, Ms. Iyengar served as Vice President, Aerospace Engineering & Technology Officer - Eaton Corporation, a multinational power management company, from 2012 to 2015. James W. Johnson. Mr.
Iyengar served as Senior Vice President Chief Innovation & Technology Officer - Xylem Inc., a water technology provider, from 2015 to 2019. Prior to that, Ms. Iyengar served as Vice President, Aerospace Engineering & Technology Officer - Eaton Corporation, a multinational power management company, from 2012 to 2015. Ms. Iyengar is a director of Array Technologies, Inc. James W. Johnson.
Pfeifer is a director of The Manitowoc Company, Inc. Ignacio A. Cortina. Mr. Cortina joined the Company in 2006 with the acquisition of JLG. He has held various roles of increasing responsibility, serving as the Company’s Vice President and Deputy General Counsel from 2011 to 2015 and Senior Vice President, General Counsel and Secretary from 2015 to 2016.
Cortina joined the Company in 2006 with the acquisition of JLG. He has held various roles of increasing responsibility, serving as the Company’s Vice President and Deputy General Counsel from 2011 to 2015 and Senior Vice President, General Counsel and Secretary from 2015 to 2016.
Prior to joining the Company, he spent seven years in private practice in the Washington, D.C. area. He was appointed to Executive Vice President, General Counsel and Secretary in 2016. He was appointed to his current position of Executive Vice President, Chief Legal Officer and Secretary in February 2023. Jayanthi Iyengar. Ms.
Prior to joining the Company, he spent seven years in private practice in the Washington, D.C. area. He was appointed to Executive Vice President, General Counsel and Secretary in 2016. He was appointed to his current position of Executive Vice President, Chief Legal Officer and Secretary in February 2023. Mr. Cortina is a director of Alliant Energy Corporation. Jayanthi Iyengar.
Mr. Pack joined the Company in 2006 as Senior Director of Financial Analysis and Controls and has served in various assignments in the Commercial, Access Equipment and Fire & Emergency segments, including Vice President Finance - Fire & Emergency from 2012 to 2020.
Narang is a director of MOOG Inc. Michael E. Pack. Mr. Pack joined the Company in 2006 as Senior Director of Financial Analysis and Controls and has served in various assignments in the Commercial, Access and Fire & Emergency segments, including Vice President Finance - Fire & Emergency from 2012 to 2020.
Prior to joining the Company, he served as Senior Vice President and President - Mercury Marine, of Brunswick Corporation, a designer, manufacturer and marketer of marine engines and marine parts and accessories, from 2014 to 2019. Prior to that, Mr. Pfeifer served as Vice President and President - Mercury Marine of Brunswick Corporation from 2014 to 2018. Mr.
Prior to joining the Company, he served as Senior Vice President and President - Mercury Marine, of Brunswick Corporation, a designer, manufacturer and marketer of marine engines and marine parts and accessories, from 2014 to 2019. Mr. Pfeifer is a director of The Manitowoc Company, Inc. 25 Ignacio A. Cortina. Mr.
Pfeifer assumed the position of President and Chief Operating Officer of the Company. He was promoted to his current position of President and Chief Executive Officer on April 2, 2021.
Pfeifer joined the Company in 2019 as Executive Vice President and Chief Operating Officer. In May 2020, Mr. Pfeifer assumed the position of President and Chief Operating Officer of the Company. He was promoted to his current position of President and Chief Executive Officer on April 2, 2021.
Pfeifer 57 President and Chief Executive Officer Ignacio A. Cortina 51 Executive Vice President, Chief Legal Officer and Secretary Jayanthi Iyengar 61 Executive Vice President and Chief Technology and Strategic Sourcing Officer James W. Johnson 58 Executive Vice President and President, Vocational Segment Frank R. Nerenhausen 58 Executive Vice President and President, Access Segment Michael E.
Pfeifer 58 President and Chief Executive Officer Ignacio A. Cortina 52 Executive Vice President, Chief Legal Officer and Secretary Jayanthi Iyengar 62 Executive Vice President and Chief Technology and Strategic Sourcing Officer James W. Johnson 59 Executive Vice President and President, Vocational Segment Mahesh Narang 48 Executive Vice President and President, Access Segment Michael E.
He previously served as the Executive Director - Digital Technology at United Technologies Corporation, a global technology products and services company that serves the building systems and aerospace industries, from 2015 to April 2018. Prior to that, Mr. Khare served in positions of increasing responsibility at Koch Industries, Inc., a manufacturer of a wide variety of products. Emma M.
Khare joined the Company in April 2018 as Senior Vice President and Chief Information Officer. He previously served as the Executive Director - Digital Technology at United Technologies Corporation, a global technology products and services company that serves the building systems and aerospace industries, from 2015 to April 2018. Prior to that, Mr.
McTague . Ms. McTague joined the Company in 2015 as Vice President and Chief Human Resources Officer for the Access Equipment segment. She was appointed to her current position of Senior Vice President and Chief Human Resources Officer in February 2021. 27 PART II
She was appointed to her current position of Senior Vice President and Chief Human Resources Officer in February 2021. Ms. McTague is a director of Zurn Elkay Water Solutions Corporation. 26 PART II
He was appointed to his current position of Executive Vice President and Chief Financial Officer in April 2020. 26 Jason P. Baab. Mr. Baab joined the Company in 2017 as Vice President of Corporate Development and was appointed to his current position of Senior Vice President, Corporate Development and Strategy in October 2021.
He was appointed to his current position of Executive Vice President and Chief Financial Officer in April 2020. Timothy S. Bleck. Mr. Bleck joined the Company in 2006 as Controller of the Commercial segment and served in that role to 2010.
Pack 48 Executive Vice President and Chief Financial Officer Jason P. Baab 49 Senior Vice President, Corporate Development and Strategy Timothy S. Bleck 48 Senior Vice President and President, Defense Segment Bryan K. Brandt 54 Senior Vice President and Chief Marketing Officer Thomas P.
Pack 49 Executive Vice President and Chief Financial Officer Timothy S. Bleck 49 Senior Vice President and President, Defense Segment Bryan K. Brandt 55 Senior Vice President and Chief Marketing Officer Anupam Khare 59 Senior Vice President and Chief Information Officer Emma M. McTague 50 Senior Vice President and Chief Human Resources Officer John C. Pfeifer. Mr.
He was appointed to his current position of Executive Vice President and President, Vocational Segment in January 2023. Frank R. Nerenhausen. Mr.
He was appointed to his current position of Executive Vice President and President, Vocational Segment in January 2023. Mahesh Narang. Mr. Narang previously served as Vice President - Cummins Inc., a designer, manufacturer, and distributor of a broad portfolio of power solutions, including as President - Components at Cummins Inc. from 2021 to October 2023.
Removed
Hawkins 58 Senior Vice President, Government Relations Anupam Khare 58 Senior Vice President and Chief Information Officer Emma M. McTague 49 Senior Vice President and Chief Human Resources Officer John C. Pfeifer. Mr. Pfeifer joined the Company in 2019 as Executive Vice President and Chief Operating Officer. In May 2020, Mr.
Added
In this role, he was responsible for the strategic direction and led all operational aspects of the company’s global Components business. Components manufactures and sells filtration products, aftertreatment systems, turbochargers, electronics, fuel systems, automated transmissions, axles, drivelines, brakes and suspension systems. Prior to that role, Mr.
Removed
Nerenhausen joined the Company in 1986 and has served in various assignments, including Vice President of Concrete & Refuse Sales & Marketing for McNeilus from 2008 to 2010 and Executive Vice President and President, Commercial Segment from 2010 to 2012. He was appointed to his current position of Executive Vice President and President, Access Segment in 2012. Michael E. Pack.
Added
Narang held positions of increasing responsibility since joining Cummins in 2003, including as President - Cummins Emission Solutions from 2017- 2021. Cummins Emission Solutions is a designer, integrator, manufacturer and distributor of exhaust aftermarket systems and components. He was appointed to his current position of Executive Vice President and President, Access Segment in November 2023. Mr.
Removed
Prior to joining the Company, he served as Vice President of Corporate Development for Fortune Brands Home & Security, Inc., a home and security products company, from 2013 to 2016. Timothy S. Bleck. Mr. Bleck joined the Company in 2006 as Controller of the Commercial segment and served in that role to 2010.
Added
Khare served in positions of increasing responsibility at Koch Industries, Inc., a manufacturer of a wide variety of products. Emma M. McTague . Ms. McTague joined the Company in 2015 as Vice President and Chief Human Resources Officer for the Access segment.
Removed
Hawkins joined the Company in September 2018 as Senior Vice President of Government Relations. Mr. Hawkins has 29 years of government service, most recently as the National Security Advisor with the Office of the Senate Republican Leader from 2007 to 2018. Anupam Khare. Mr. Khare joined the Company in April 2018 as Senior Vice President and Chief Information Officer.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The total return assumes reinvestment of dividends and is adjusted for stock splits. The fiscal 2022 return listed in the charts below is based on closing prices per share on December 31, 2022.
The total return assumes reinvestment of dividends and is adjusted for stock splits. The fiscal 2023 return listed in the charts below is based on closing prices per share on December 31, 2023.
The Company has chosen to use the Standard & Poor’s MidCap 400 market index as the broad-based index and the companies currently in the Standard Industry Classification Code 371 Index (motor vehicles and equipment) (the SIC Code 371 Index) as a more specific comparison. 28 The comparisons assume that $100 was invested on September 30, 2017 in each of: the Company’s Common Stock, the Standard & Poor’s MidCap 400 market index and the SIC Code 371 Index.
The Company has chosen to use the Standard & Poor’s MidCap 400 market index as the broad-based index and the companies currently in the Standard Industry Classification Code 371 Index (motor vehicles and equipment) (the SIC Code 371 Index) as a more specific comparison. 27 The comparisons assume that $100 was invested on September 30, 2018 in each of: the Company’s Common Stock, the Standard & Poor’s MidCap 400 market index and the SIC Code 371 Index.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED ST OCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Repurchases The following table sets forth information with respect to purchases of Common Stock made by the Company or on the Company’s behalf during the fourth quarter of fiscal 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - October 31 — $ — — 11,550,677 November 1 - November 30 — $ — — 11,550,677 December 1 - December 31 — $ — — 11,550,677 Total — — 11,550,677 (1) In May 2019, the Company’s Board of Directors approved a Common Stock repurchase authorization for which there was remaining authority to repurchase 4,109,419 shares of Common Stock as of May 3, 2022.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED ST OCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Repurchases The following table sets forth information with respect to purchases of Common Stock made by the Company or on the Company’s behalf during the fourth quarter of fiscal 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - October 31 — $ — — 11,284,882 November 1 - November 30 — $ — — 11,284,882 December 1 - December 31 — $ — — 11,284,882 Total — — 11,284,882 (1) In May 2022, the Board of Directors approved a Common Stock repurchase authorization of 12,000,000 shares.
On that date, the closing price for the Company’s Common Stock was $88.19. * $100 invested on September 30, 2017 in stock or index, including reinvestment of dividends.
On that date, the closing price for the Company’s Common Stock was $108.41. * $100 invested on September 30, 2018 in stock or index, including reinvestment of dividends.
As of December 31, 2022, the Company had remaining authority to repurchase 11,550,677 shares of Common Stock. The Company can use the current authorization at any time as there is no expiration date associated with the authorization. From time to time, the Company may enter into a Rule 10b5-1 trading plan for the purpose of repurchasing shares under this authorization.
At December 31, 2023, the Company had repurchased 715,118 shares under this authorization. As a result, the Company had 11,284,882 shares of Common Stock remaining available for repurchase under the repurchase authorization. The Company can use the current authorization at any time as there is no expiration date associated with the authorization.
Common Stock Information The Company’s Common Stock is listed on the New York Stock Exchange (NYSE) under the symbol OSK. As of February 14, 2023, there were 2,038 holders of record of the Common Stock. Item 12 of this Annual Report on Form 10-K contains certain information relating to the Company’s equity compensation plans.
Item 12 of this Annual Report on Form 10-K contains certain information relating to the Company’s equity compensation plans.
September 30, December 31, 2018 2019 2020 2021 2022 Oshkosh Corporation $ 87.39 $ 94.38 $ 92.94 $ 131.14 $ 115.13 S&P MidCap 400 market index 114.21 111.36 108.96 156.55 146.99 SIC Code 371 Index 89.93 88.87 135.70 215.31 126.73 ITEM 6. RESE RVED 29
September 30, December 31, 2019 2020 2021 2022 2023 Oshkosh Corporation $ 108.00 $ 106.36 $ 150.07 $ 131.75 $ 164.99 S&P MidCap 400 market index 97.51 95.40 137.07 128.70 149.86 SIC Code 371 Index 97.02 221.31 368.06 201.13 314.57 ITEM 6. RESE RVED 28
Removed
On May 3, 2022, the Board of Directors increased the Common Stock repurchase authorization by 7,890,581 shares to 12,000,000 shares as of that date. The Company repurchased 1,508,467 shares of Common Stock under these authorizations during the year ended December 31, 2022 at a cost of $155.0 million.
Added
From time to time, the Company may enter into a Rule 10b5-1 trading plan for the purpose of repurchasing shares under this authorization. Common Stock Information The Company’s Common Stock is listed on the New York Stock Exchange (NYSE) under the symbol OSK. As of February 22, 2024, there were 1,939 holders of record of the Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 Senior Notes and 2030 Senior Notes at any time for a premium.
The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 and 2030 Senior Notes at any time for a premium.
The Company has concluded that its extended warranties are stand-ready obligations to perform and therefore recognizes revenue ratably over the coverage period. Defense segment revenue The majority of the Company’s Defense segment net sales are derived through long-term contracts with the U.S. government to design, develop, manufacture or modify defense and other specialty vehicles.
The Company has concluded that its extended warranties are stand-ready obligations to perform and therefore recognizes revenue ratably over the coverage period. Defense segment revenue The majority of the Company’s Defense segment sales are derived through long-term contracts with the U.S. government to design, develop, manufacture or modify defense and other specialty vehicles.
GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. On an ongoing basis, 43 management evaluates and updates its estimates. Management employs judgment in making its estimates but they are based on historical experience and currently available information and various other assumptions that the Company believes to be reasonable under the circumstances.
GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. On an ongoing basis, management evaluates and updates its estimates. Management employs judgment in making its estimates but they are based on historical experience and currently available information and various other assumptions that the Company believes to be reasonable under the circumstances.
Major products manufactured and marketed by each of the Company’s business segments are as follows: Access Equipment — aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as carriers and wreckers.
Major products manufactured and marketed by each of the Company’s business segments are as follows: Access — aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as carriers and wreckers.
Service-type warranties differ from the Company’s standard, or assurance-type warranties, as they are generally separately priced and negotiated as part of the contract and/or provide additional coverage beyond what the customer or customer group that purchases the product would receive under the Company’s standard assurance-type warranty.
Service-type warranties differ from the Company’s standard, or assurance-type warranties, as they are generally separately priced and negotiated as part of the contract and/or provide additional coverage beyond what the customer or customer group that purchases the product would receive under the 38 Company’s standard assurance-type warranty.
Under the “Pierce” and "Maxi-Metal" brand names, the Company is among the leading global designers and manufacturers of fire trucks assembled on both custom and commercial chassis. Under the “Frontline” brand name, the Company is a leading domestic designer, manufacturer and marketer of broadcast and command vehicles.
Under the “Pierce” and "Maxi-Metal" brand names, the Company is among the leading global designers and manufacturers of fire trucks assembled on both custom and commercial chassis. Under the “Frontline” brand name, the Company is a leading domestic designer, manufacturer and marketer of command vehicles.
At December 31, 2022, the long-term credit ratings assigned to the Company’s senior debt securities by the credit rating agencies engaged by the Company were as follows: Rating Agency Rating Fitch Ratings BBB Moody’s Investor Services, Inc.
At December 31, 2023, the long-term credit ratings assigned to the Company’s senior debt securities by the credit rating agencies engaged by the Company were as follows: Rating Agency Rating Fitch Ratings BBB Moody’s Investor Services, Inc.
Accordingly, revenue is recognized when control of the goods or services promised under a contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as the Company performs under the contract) in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services.
The Company recognizes revenue when control of the goods or services promised under a contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as the Company performs under the contract) in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services.
The Company was in compliance with the financial covenant contained in the Credit Agreement as of December 31, 2022 and expects to be able to meet the financial covenant contained in the Credit Agreement over the next twelve months.
The Company was in compliance with the financial covenant contained in the Credit Agreement as of December 31, 2023 and expects to be able to meet the financial covenant contained in the Credit Agreement over the next twelve months.
The Company recognizes changes in estimated sales or costs and the resulting profit or loss on a cumulative basis. In addition, as contract modifications (e.g., new orders) are received, they are evaluated to determine if they represent a separate contract or the impact on the existing contract.
The Company recognizes changes in estimated sales or costs and the resulting profit or loss on a cumulative basis. In addition, as contract modifications (e.g., new orders) are received, they are evaluated to determine if they represent a separate contract or a modification of the existing contract.
These contracts, which also include those under the U.S. Government-sponsored Foreign Military Sales (FMS) program, accounted for approximately 95% of Defense segment revenue in fiscal 2022. Contracts with Defense segment customers are generally fixed-price or cost-reimbursement type contracts.
These contracts, which also include those under the U.S. Government-sponsored Foreign Military Sales (FMS) program, accounted for approximately 84% of Defense segment revenue in fiscal 2023. Contracts with Defense segment customers are generally fixed-price or cost-reimbursement type contracts.
Revenue for performance obligations consisting of machinery, vehicles and aftermarket parts (together, “product”) is recognized when the customer obtains control of the product, which typically occurs at a point in time, based on the shipping terms within the contract. In the Commercial segment, concrete mixer and refuse collection products are sold on both Company owned chassis and customer owned chassis.
Revenue for performance obligations consisting of machinery, vehicles and aftermarket parts (together, “product”) is recognized when the customer obtains control of the product, which typically occurs at a point in time, based on the shipping terms within the contract. In the Vocational segment, refuse collection vehicles are sold on both Company owned chassis and customer owned chassis.
Due to the difficulty in determining the timing of the settlement, these obligations are not included in the summary of the Company’s fixed contractual obligations. See Note 6 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s unrecognized tax benefits as of December 31, 2022.
Due to the difficulty in determining the timing of the settlement, these obligations are not included in the summary of the Company’s fixed contractual obligations. See Note 7 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s unrecognized tax benefits as of December 31, 2023.
Baa3 Standards & Poor’s BBB Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) was 45 days at December 31, 2022, down slightly from 46 days at December 31, 2021.
Baa3 Standards & Poor’s BBB Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) was 44 days at December 31, 2023, down slightly from 45 days at December 31, 2022.
NEW ACCOUNTING STANDARDS See Note 2 of the Notes to Consolidated Financial Statements regarding the impact or potential impact of recent accounting pronouncements on the Company’s consolidated financial statements. CUSTOMERS AND BACKLOG Sales to the U.S. government comprised approximately 25% of the Company’s net sales in fiscal 2022.
NEW ACCOUNTING STANDARDS See Note 2 of the Notes to Consolidated Financial Statements regarding the impact or potential impact of recent accounting pronouncements on the Company’s consolidated financial statements. CUSTOMERS AND BACKLOG Sales to the U.S. government comprised approximately 19% of the Company’s net sales in fiscal 2023.
The Company manufactures defense trucks under the “Oshkosh” brand name and is a leading designer and manufacturer of severe-duty, tactical wheeled vehicles for the U.S. Department of Defense (DoD). The Company also designs and manufactures delivery vehicles for the United States Postal Service (USPS) and airport snow removal vehicles under the “Oshkosh” brand name.
The Company manufactures defense trucks under the “Oshkosh” brand name and is a leading designer and manufacturer of severe-duty, tactical wheeled vehicles for the U.S. Department of Defense (DoD) and other militaries. The Company also designs and manufactures delivery vehicles for the United States Postal Service (USPS) under the “Oshkosh” brand name.
The Company designs and manufactures Aircraft Rescue and Firefighting (ARFF) vehicles under the “Oshkosh” brand name. Under the “McNeilus” brand name, the Company designs and manufactures a wide range of automated, rear, front, side and top loading refuse collection vehicles. Under the “McNeilus,” “Oshkosh,” and “London” brand names, the Company designs and manufactures rear- and front-discharge concrete mixers.
The Company designs and manufactures Aircraft Rescue and Firefighting (ARFF) vehicles under the “Oshkosh” brand name. Under the “McNeilus” brand name, the Company designs and manufactures a wide range of automated, rear, front, side and top loading refuse collection vehicles. Under the “Oshkosh” brand name, the Company designs and manufactures front-discharge concrete mixers.
The Defense segment provides standard warranties for its products for periods that typically range from one to two years. These assurance-type warranties typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.
As a result, Defense segment contracts are typically accounted for as a single performance obligation. The Defense segment provides standard warranties for its products for periods that typically range from one to two years. These assurance-type warranties typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.
The Company is among the worldwide leaders in the design and manufacturing of telehandlers under the “JLG” and “SkyTrak” brand names. Under the “Jerr-Dan” brand name, the Company is a leading domestic designer and manufacturer and marketer of towing and recovery equipment.
The Company is a leading global designer and manufacturer of aerial work platforms under the “JLG” brand name. The Company is among the worldwide leaders in the design and manufacturing of telehandlers under the “JLG” and “SkyTrak” brand names. Under the “Jerr-Dan” brand name, the Company is a leading domestic designer and manufacturer of towing and recovery equipment.
Fiscal 2022 results included an after-tax charge of $25.7 million for the settlement of a frozen pension plan, a charge of $18.1 million associated with foreign anti-hybrid tax legislation, an after-tax charge $6.4 million for the impairment of intangible assets and an after-tax charge of $4.6 million for the release of cumulative translation adjustment losses.
Fiscal 2022 results included a loss of $33.6 million for the settlement of the frozen pension plan, a charge of $18.1 million associated with foreign anti-hybrid tax legislation, amortization of intangible assets of $11.6 million, a charge of $7.7 million for the impairment of intangible assets and a charge of $4.6 million for the release of cumulative translation adjustment losses.
Refer to Note 15 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s debt as of December 31, 2022. 40 Contractual Obligations The total amount of gross unrecognized tax benefits, including interest, for uncertain tax positions was $103.8 million as of December 31, 2022. Payment of these obligations would result from settlements with tax authorities.
Refer to Note 16 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s debt as of December 31, 2023. Contractual Obligations The total amount of gross unrecognized tax benefits, including interest, for uncertain tax positions was $73.6 million as of December 31, 2023. Payment of these obligations would result from settlements with tax authorities.
As a result, the Company has recognized $387.4 million of deferred contract costs related to the USPS contract at December 31, 2022 consisting of engineering costs, setup costs and tooling costs. The Company anticipates the production phase of the contract will begin in 2024.
As a result, the 39 Company has recognized $689.1 million of deferred contract costs related to the USPS contract at December 31, 2023 consisting of engineering costs, setup costs and tooling costs. The Company anticipates the production phase of the contract will begin in 2024.
Access Equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and towing companies. Defense — tactical vehicles, trailers, weapons system integration and parts sold to the U.S. military and to other militaries around the world, delivery vehicles for the USPS, and snow removal vehicles for military and civilian airports.
Access products are sold to equipment rental companies, construction contractors, manufacturing companies, home improvement centers and towing companies. Defense — tactical vehicles, trailers, weapons system integration and parts sold to the U.S. military and to other militaries around the world and delivery vehicles for the USPS.
In fiscal 2022, approximately 30% of the Company’s revenues were recognized under the percentage-of-completion accounting method. Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition.
In fiscal 2023, approximately 28% of the Company’s revenues were recognized using an over time accounting method. Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition.
The Company continues to actively monitor its liquidity position and working capital needs and prioritizes capital expenditures related to capacity and strategic investments. The Company remains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its projected needs.
The Company continues to actively monitor its liquidity position and working capital needs and prioritizes debt repayment, capital expenditures related to capacity and strategic investments. The Company remains in a stable overall capital resources and liquidity position that the Company believes is adequate to meet its projected needs. Other uses of cash include the repurchase of the Company’s Common Stock.
When transfer of control is not determined to be continuous over the term of the contract, the Company initially defers contract costs that relate to the contract or anticipated contract, as they generate or enhance assets that will be utilized to satisfy performance obligations in the future and are expected to be recovered.
The Company defers contract costs that relate to a contract prior to transfer of control or to an anticipated contract, as they generate or enhance assets that will be utilized to satisfy performance obligations in the future and are expected to be recovered.
The goods and services in Defense segment contracts are typically not distinct from one another as they are generally customized and have complex inter-relationships and the Company is responsible for overall management of the contract. As a result, Defense segment contracts are typically accounted for as a single performance obligation.
The Company evaluates the promised goods and services within Defense segment contracts at inception to identify performance obligations. The goods and services in Defense segment contracts are typically not distinct from one another as they are generally customized and have complex inter-relationships and the Company is responsible for overall management of the contract.
The Company expects earnings per share in the first quarter of fiscal 2023 will be in the range of $1.00, reflecting the lower sales, unfavorable order mix in the Defense segment and the return of incentive compensation costs to typical levels.
The Company expects earnings per share in the first quarter of fiscal 2024 will be in the range of $2.05, reflecting the lower sales and unfavorable mix in the Defense segment, offset in part by the return of incentive compensation costs to target levels.
Changes in estimates on contracts accounted for under the cost-to-cost method resulted in cumulative catch-up adjustments on contract margins that decreased Defense segment operating income by $44.9 million in fiscal 2022 primarily as a result of higher material and logistics costs.
Changes in estimates on contracts accounted for under the cost-to-cost method resulted in cumulative catch-up adjustments on contract margins that increased Defense segment operating income by $5.2 million in fiscal 2023. Changes in estimates on contracts accounted for under the cost-to-cost method decreased Defense segment operating income by $44.9 million in fiscal 2022.
BASIS OF PRESENTATION In October 2021, the Company’s changed its fiscal year end from September 30 to December 31. Accordingly, the Company reported a transition quarter that ran from October 1, 2021 through December 31, 2021. Fiscal 2020 and Fiscal 2021 relate to the years ended September 30, 2020 and September 30, 2021, respectively.
Accordingly, the Company reported a transition quarter that ran from October 1, 2021 through December 31, 2021. Fiscal 2021 relates to the year ended September 30, 2021. Fiscal 2022 and 2023 relate to the years ended December 31, 2022 and December 31, 2023, respectively.
The Company expects cash flow from operations of approximately $650 million in fiscal 2023. In addition to cash generated from operations, the Company had other sources of liquidity available at December 31, 2022, including $805.9 million of cash and cash equivalents and $1.08 billion of unused available capacity under the Revolving Credit Facility (as defined in “Liquidity”).
In addition to cash generated from operations, the Company had other sources of liquidity available at December 31, 2023, including $125.4 million of cash and cash equivalents and $909.2 million of unused available capacity under the Revolving Credit Facility (as defined in “Liquidity”).
The projected timing of cash flows associated with these obligations is based on management’s estimates, which are based largely on historical experience. This amount also includes all liabilities under the Company’s pension and other postretirement benefit plans. See Note 5 of the Notes to Consolidated Financial Statements for information regarding these liabilities and the plan assets available to satisfy them.
The projected timing of cash flows associated with these obligations is based on management’s estimates, which are based largely on historical experience. This amount also includes all liabilities under the Company’s pension and other postretirement benefit plans.
Under the “IMT” brand name, the Company is a leading domestic designer and manufacturer of field service vehicles and truck-mounted cranes.
Under the “IMT” brand name, the Company is a leading domestic designer and manufacturer of field service vehicles and truck-mounted cranes. Under the “Jetway,” brand name, the Company is one of the leading global designers and manufacturers of aircraft passenger boarding bridges.
Financial Condition at December 31, 2022 The Company’s capitalization was as follows (in millions): December 31, December 31, September 30, 2022 2021 2021 Cash and cash equivalents $ 805.9 $ 995.7 $ 1,375.8 Total debt 604.7 819.0 818.8 Total shareholders’ equity 3,185.7 3,204.3 3,357.7 Total capitalization (debt plus equity) 3,790.4 4,023.3 4,176.5 Debt to total capitalization 16.0 % 20.4 % 19.6 % The Company’s ratio of debt to total capitalization of 16.0% at December 31, 2022 remained within its targeted range.
Financial Condition at December 31, 2023 The Company’s capitalization was as follows (in millions): December 31, 2023 2022 Cash and cash equivalents $ 125.4 $ 805.9 Total debt 772.5 604.7 Total shareholders’ equity 3,705.3 3,185.7 Total capitalization (debt plus equity) 4,477.8 3,790.4 Debt to total capitalization 17.3 % 16.0 % The Company’s ratio of debt to total capitalization of 17.3% at December 31, 2023 remained within its targeted range.
The Company also designs, develops, manufactures or modifies defense products for international customers through Direct Commercial Sale contracts. The Defense segment supports its products through the sale of aftermarket parts and services.
The Company also designs, develops, manufactures or modifies defense products for international customers through Direct Commercial Sale contracts. The Defense segment supports its products through the sale of aftermarket parts and services. Aftermarket contracts can range from long-term supply agreements to ad hoc purchase orders for replacement parts.
The Company generally recognizes revenue on service performance obligations over time using the method that results in the most faithful depiction of transfer of control to the customer. Non-defense segments also offer extended warranty coverage as an option on most products. The Company considers extended warranties to be service-type warranties and therefore a performance obligation.
All non-defense segments offer aftermarket services related to their respective products such as repair, refurbishment and maintenance (together, “services”). The Company generally recognizes revenue on service performance obligations over time using the method that results in the most faithful depiction of transfer of control to the customer. Non-defense segments also offer extended warranty coverage as an option on most products.
Demand remains strong as indicated by order intake of $3.3 billion in the fourth quarter of fiscal 2022, leading to the Company’s record backlog of $14.1 billion on December 31, 2022.
Demand for the Company's products has remained strong as indicated by order intake of $3.5 billion in the fourth quarter of fiscal 2023, leading to the Company’s record backlog of $16.8 billion on December 31, 2023.
Consolidated days payables outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 66 days, up from 55 days at December 31, 2021 due to the timing of payments near year end and significant non-inventory payables related to construction projects.
Consolidated days payables outstanding (defined as “Accounts Payable” at quarter end divided by material costs of sales for the most recent quarter multiplied by 90 days) was 72 days, up from 66 days at December 31, 2022, primarily due to the timing of cash disbursements.
The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion.
Liquidity Senior Credit Agreement On March 23, 2022, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion.
Fire & Emergency — custom and commercial firefighting vehicles and equipment, ARFF vehicles, simulators, mobile command and control vehicles and other emergency vehicles primarily sold to fire departments, airports and other governmental units, as well as broadcast vehicles sold to broadcasters and TV stations.
Vocational — custom and commercial firefighting vehicles and equipment, aircraft rescue and firefighting (ARFF) vehicles, simulators, mobile command and control vehicles and other emergency vehicles primarily sold to fire departments, airports and other governmental units. Refuse collection vehicles sold to commercial and municipal waste haulers.
Contract modifications within the Defense segment are generally accounted for as a cumulative catch-up adjustment to existing contracts as they are not distinct from the goods and services within the existing contract. For Defense segment contracts that include a variable component of the sale price, the Company estimates variable consideration.
Contract modifications within the Defense segment are generally accounted for as a cumulative catch-up adjustment to existing contracts as they are not distinct from the goods and services within the existing contract. The Company recognizes revenue on Defense segment contracts as performance obligations are satisfied and control of the underlying goods and services is transferred to the customer.
Additions to property, plant and equipment of $269.5 million in fiscal 2022 increased $147.3 million from the year ended December 31, 2021 driven by capital spending to set up the NGDV manufacturing plant in Spartanburg, SC.
Additions to property, plant and equipment of $325.3 million in fiscal 2023 increased $55.8 million from fiscal 2022, driven by capital spending to expand capacity in the Access and Vocational segments and set up the NGDV manufacturing plant in Spartanburg, SC.
The decrease in gross margin in the Commercial segment was primarily attributable to unfavorable material & logistics costs (680 basis points) and higher manufacturing costs (150 basis points), offset in part by improved pricing (600 basis points).
The increase in gross margin in the Vocational segment was primarily attributable to improved pricing (480 basis points), offset in part by higher material costs (270 basis points) and higher production costs (80 basis points).
The Company expects Defense segment operating margin will be in the range of 4% in fiscal 2023. The Company expects unfavorable product mix and NGDV-related pre-production operating expenses to account for the mid-single digit operating margin. The Company expects margins will improve as new programs ramp up in fiscal 2024.
The Company expects Defense segment operating margin will be in the range of 2.1% in fiscal 2024, down from 4.4% in fiscal 2023. The Company expects unfavorable product mix and NGDV-related start-up costs to account for the lower operating margin in fiscal 2024 as compared to fiscal 2023.
Consolidated inventory turns (defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) decreased from 4.3 times at December 31, 2021 to 4.1 times at December 31, 2022 primarily as a result of higher inventory levels in the Defense segment.
Days sales outstanding for segments other than the Defense segment was 49 days at both December 31, 2023 and 2022. Consolidated inventory turns (defined as “Cost of Sales” on an annualized basis, divided by the average “Inventory” at the past five quarter end periods) increased slightly from 4.1 times at December 31, 2022 to 4.2 times at December 31, 2023.
In aggregate, these items accounted for a net $54.8 million, or $0.83 per share, charge in fiscal 2022.
In aggregate, these items accounted for a net after-tax charge of $59.2 million, or $0.90 per share, in fiscal 2023.
Fire & Emergency segment backlog increased 85.4% to $2.9 billion at December 31, 2022 compared to $1.5 billion at December 31, 2021 due to strong demand for fire trucks coming out of the COVID-19 pandemic.
Vocational segment backlog increased 58.4% to $5.5 billion at December 31, 2023, compared to $3.5 billion at December 31, 2022, due to strong demand for fire apparatus coming out of the COVID-19 pandemic, increased pricing and the inclusion of AeroTech backlog of $775.5 million.
Following is a summary of the Company’s contractual obligations and payments due by period following December 31, 2022 (in millions): Payments Due by Period Less Than More Than Total 1 Year 1-3 Years 3-5 Years 5 Years Long-term debt (including interest) (1) $ 740.7 $ 23.1 $ 46.2 $ 46.2 $ 625.2 Lease obligations 286.4 63.8 75.0 48.5 99.1 Purchase obligations (2) 2,406.0 2,252.6 152.9 0.4 0.1 Other long-term liabilities (3) 441.3 44.3 68.8 46.4 281.8 $ 3,874.4 $ 2,383.8 $ 342.9 $ 141.5 $ 1,006.2 (1) Interest was calculated based upon the interest rate in effect on December 31, 2022.
Following is a summary of the Company’s contractual obligations and payments due by period following December 31, 2023 (in millions): Payments Due by Period Less Than More Than Total 1 Year 1-3 Years 3-5 Years 5 Years Long-term debt (including interest) (1) $ 717.6 $ 23.1 $ 46.2 $ 337.5 $ 310.8 Lease obligations 315.8 66.1 95.5 65.5 88.7 Purchase obligations (2) 2,426.2 2,281.1 144.6 0.1 0.4 Other long-term liabilities (3) 325.1 52.8 82.6 49.3 140.4 $ 3,784.7 $ 2,423.1 $ 368.9 $ 452.4 $ 540.3 (1) Interest was calculated based upon the interest rate in effect on December 31, 2023.
Defense segment backlog increased 78.1% to $6.3 billion at December 31, 2022 compared to $3.5 billion at December 31, 2021 primarily due to the initial order from the USPS for the NGDV program.
Defense segment backlog increased 7.5% to $6.8 billion at December 31, 2023, compared to $6.3 billion at December 31, 2022, primarily due to the USPS increasing the mix of battery-electric vehicles ordered for the NGDV program.
The decrease in Access Equipment segment gross margin was due to higher material & logistics costs (900 basis points), offset in part by improved pricing (650 basis points) and lower product liability costs (40 basis points). 34 The increase in Access Equipment segment operating income was primarily due to improved pricing ($348 million), the impact of higher gross margin associated with higher sales volume ($84 million) and lower incentive compensation costs ($27 million), offset in part by higher material & logistics costs ($372 million) and higher manufacturing costs ($63 million).
The increase in Access segment operating income was primarily due to improved pricing ($239 million), the impact of higher gross margin associated with higher sales volume ($181 million), improved sales mix ($65 million) and lower material & logistics costs ($30 million), offset in part by higher incentive compensation costs ($49 million) and increased operating expenses to support higher sales levels ($38 million).
Vocational segment operating income margins are expected to grow beyond fiscal 2023 as municipal customer orders in backlog for delivery in fiscal 2024 were booked at significantly higher prices and the Company expects margin benefit over time from the integration of the two segments.
The Company expects Vocational segment operating margin in fiscal 2024 will be in the range of 9.4% as compared to 7.2% in fiscal 2023. The segment's operating income margin is expected to increase in 2024 as municipal customer orders in backlog for delivery in fiscal 2024 were booked at significantly higher prices.
CRITICAL ACCOUNTING POLICIES The Company’s significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements.
See Note 6 of the Notes to Consolidated Financial Statements for information regarding these liabilities and the plan assets available to satisfy them. 37 CRITICAL ACCOUNTING POLICIES The Company’s significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements.
FISCAL 2021 COMPARED WITH FISCAL 2020 The comparison of the fiscal 2021 results with the fiscal 2020 results can be found in the “Management’s Discussion and Analysis” section in the Company’s fiscal 2021 Annual Report on Form 10-K.
Corporate operating expenses increased primarily as a result of higher incentive compensation costs ($24 million). FISCAL 2022 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2021 The comparison of the fiscal 2022 results with the year ended December 31, 2021 results can be found in the “Management’s Discussion and Analysis” section in the Company’s fiscal 2022 Annual Report on Form 10-K.
In aggregate, these items accounted for a net $82.9 million, $1.20 per share, benefit for the year ended December 31, 2021. The Company announced an increase in its quarterly dividend rate of 10.8%, to $0.41 per share, beginning in February 2023. This was the Company’s ninth straight year of a double-digit percentage increase to its dividend rate.
In aggregate, these items accounted for a net after-tax charge of $63.7 million, or $0.96 per share, in fiscal 2022. The Company announced an increase in its quarterly dividend rate of 12.2%, to $0.46 per share, beginning in February 2024. This was the Company’s tenth straight year of a double-digit percentage increase to its dividend rate.
Debt to total capitalization decreased in fiscal 2022 due to the repayment of remaining amounts due under the Company's term loan during the year. The Company’s goal is to maintain an investment-grade credit rating. The rating agencies periodically update the Company’s credit ratings as events or changes in economic conditions occur.
The increase in the debt to total capitalization compared to December 31, 2022 was primarily due to the acquisition of AeroTech and corresponding borrowings on the Revolving Credit Facility. 35 The Company’s goal is to maintain an investment-grade credit rating. The rating agencies periodically update the Company’s credit ratings as events or changes in economic conditions occur.
Results included an unrealized loss on an investment of $10.3 million in fiscal 2022 and $10.8 million for the year ended December 31, 2021. Income tax expense in fiscal 2022 included a charge of $31.3 million as the Company revised its interpretation of certain foreign anti-hybrid tax legislation based upon comments from the corresponding taxing authorities.
Income tax expense in fiscal 2022 included a charge of $31.3 million as the Company revised its interpretation of certain foreign anti-hybrid tax legislation based upon comments from the corresponding taxing authorities. See Note 7 of the Notes to Consolidated Financial Statements for a reconciliation of the effective tax rate compared to the U.S. statutory tax rate.
Reported backlog excludes purchase options, announced orders for which definitive contracts have not been executed and any potential future contract modifications. Backlog is comprised of fixed and variable priced contracts that may be canceled, modified or otherwise changed in the future. As a result, backlog may not be indicative of future operating results.
Backlog is comprised of fixed and variable priced contracts that may be canceled, modified or otherwise changed in the future. As a result, backlog may not be indicative of future operating results. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales.
Access Equipment, Fire & Emergency and Commercial segments revenue The Company derives revenue in the Access Equipment, Fire & Emergency and Commercial segments (non-defense segments) through the sale of machinery, vehicles and related aftermarket parts and services. Customers include distributors and end-users.
The identification of performance obligations within a contract requires significant judgment. The following is a description of the primary activities from which the Company generates revenue. Access and Vocational segments revenue The Company derives revenue in the Access and Vocational segments (non-defense segments) through the sale of machinery, vehicles and related aftermarket parts and services. Customers include distributors and end-users.
Global supply chain challenges and the associated delays in production are also contributing to higher backlogs in all segments. 44 Backlog represents the dollar amount of revenues that the Company anticipates from customer contracts that have been awarded and/or are in progress. Reported backlog includes the original contract amount and any contract modifications that have been agreed upon.
Backlog represents the dollar amount of revenues that the Company anticipates from customer contracts that have been awarded and/or are in progress. Reported backlog includes the original contract amount and any contract modifications that have been agreed upon. Reported backlog excludes purchase options, announced orders for which definitive contracts have not been executed and any potential future contract modifications.
The Company expects the lower revenue to be driven by the timing of deliveries in the Access and Vocational segments as well as lower sales in the Defense segment.
The Company expects sequential growth in sales and operating income margins in the Access and Vocational segments to be offset by lower Defense sales and operating income margins.
As of December 31, 2022, the estimated remaining costs on the JLTV and FMTV A2 contracts represent the majority of the total estimated costs to complete in the Defense segment. Changes in estimates on contracts accounted for under the cost-to-cost method decreased Defense segment operating income by $44.9 million in fiscal 2022.
As of December 31, 2023, the estimated remaining costs on the NGDV and JLTV contracts represent the majority of the total estimated costs to complete in the Defense segment.
When performing work on a customer owned chassis, revenue is recognized over time based on the cost-to-cost method, as the Company is enhancing a customer owned asset. All non-defense segments offer aftermarket services related to their respective products such as repair, refurbishment and maintenance (together, “services”).
When performing work on a customer owned chassis, revenue is recognized over time based on the cost-to-cost method, as the Company is enhancing a customer owned asset. Jet bridges are designed to customer specification.
The Company expects consolidated net sales in the first quarter of fiscal 2023 to be in the range of $2.1 billion, down approximately $100 million versus the fourth quarter of fiscal 2022.
The Company estimates the tax rate for fiscal 2024 will be approximately 24.5% and the average share count will be approximately 66.2 million shares. The Company expects consolidated net sales in the first quarter of fiscal 2024 to be in the range of $2.5 billion, consistent with the fourth quarter of fiscal 2023.
Defense The following table presents the Defense segment results (in millions): Year Ended December 31, 2022 2021 Change % Change Net sales $ 2,141.3 $ 2,506.8 $ (365.5 ) -14.6 % Cost of sales 1,951.5 2,208.1 (256.6 ) -11.6 % Gross income 189.8 298.7 (108.9 ) -36.5 % % of sales 8.9 % 11.9 % -300 bps SG&A expenses 131.9 129.3 2.6 2.0 % Amortization 6.1 5.9 0.2 3.4 % Impairment charge 5.6 — 5.6 100.0 % Operating income 46.2 163.5 (117.3 ) -71.7 % % of sales 2.2 % 6.5 % -430 bps Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Defense segment net sales decreased as U.S.
Defense The following table presents the Defense segment results (in millions): Year Ended December 31, 2023 2022 Change % Change Net sales $ 2,098.2 $ 2,141.3 $ (43.1 ) -2.0 % Cost of sales 1,869.9 1,951.5 (81.6 ) -4.2 % Gross income 228.3 189.8 38.5 20.3 % % of sales 10.9 % 8.9 % 200 bps SG&A expenses 131.3 131.9 (0.6 ) -0.5 % Amortization 5.4 6.1 (0.7 ) -11.5 % Impairment charge — 5.6 (5.6 ) -100.0 % Operating income 91.6 46.2 45.4 98.3 % % of sales 4.4 % 2.2 % 220 bps Defense segment net sales decreased due to lower volume ($95 million) due to lower customer requirements for the Company's JLTV, offset in part by favorable cumulative catch-up adjustments in fiscal 2023 compared to unfavorable cumulative catch-up adjustments in fiscal 2022 ($50 million).
The decrease in operating income in the Defense segment was primarily a result of the impact of lower gross margin associated with lower sales volume ($54 million), unfavorable cumulative catch-up adjustments on contracts ($42 million) and unfavorable product mix ($26 million), offset in part by lower warranty costs ($14 million).
The increase in consolidated operating income was primarily due to improved price ($401 million), the impact of higher gross margin associated with higher sales volume ($138 million), improved sales mix ($112 million) and the absence of unfavorable cumulative catch-up adjustments on contracts in the Defense segment ($45 million), offset in part by higher incentive compensation costs ($110 million), higher manufacturing costs ($49 million) and increased operating expenses to support higher sales levels in the Access segment ($38 million).
The Company expects consolidated operating income will be in the range of $530 million, resulting in diluted earnings per share in the range of $5.50. The fiscal 2023 estimate assumes an average share count of 65.7 million shares.
FISCAL 2024 OUTLOOK The Company estimates consolidated net sales will be in the range of $10.4 billion in fiscal 2024, compared to $9.7 billion in fiscal 2023. The Company expects consolidated operating income will be in the range of $925 million, resulting in diluted earnings per share in the range of $9.45.
SEGMENT RESULTS Access Equipment The following table presents the Access Equipment segment results (in millions): Year Ended December 31, 2022 2021 Change % Change Net sales $ 3,972.1 $ 3,341.9 $ 630.2 18.9 % Cost of sales 3,432.2 2,828.4 603.8 21.3 % Gross income 539.9 513.5 26.4 5.1 % % of sales 13.6 % 15.4 % -180 bps SG&A expenses 226.3 221.9 4.4 2.0 % Amortization 0.4 0.4 — 0.0 % Operating income 313.2 291.2 22.0 7.6 % % of sales 7.9 % 8.7 % -80 bps Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Access Equipment segment net sales increased as a result of higher pricing ($348 million) in response to higher input costs and increased volume ($337 million).
The Company completed the sale of its interest in the entity during the third quarter of fiscal 2023, resulting in an additional loss of $2 million. 32 SEGMENT RESULTS Access The following table presents the Access segment results (in millions): Year Ended December 31, 2023 2022 Change % Change Net sales $ 4,990.0 $ 3,972.1 $ 1,017.9 25.6 % Cost of sales 3,954.0 3,432.2 521.8 15.2 % Gross income 1,036.0 539.9 496.1 91.9 % % of sales 20.8 % 13.6 % 720 bps SG&A expenses 288.6 226.3 62.3 27.5 % Amortization 8.6 0.4 8.2 2050.0 % Operating income 738.8 313.2 425.6 135.9 % % of sales 14.8 % 7.9 % 690 bps Access segment net sales increased as a result of improved sales volume ($703 million) as supply chain improvements supported higher production levels, higher pricing in response to higher input costs ($239 million) and the inclusion of sales related to the Hinowa acquisition ($73 million).
Based on these factors, the Company expects that the first quarter will be the lowest quarter of fiscal 2023 for diluted earnings per share. 32 RESULTS OF OPERATIONS CONSOLIDATED RESULTS - YEAR ENDED DECEMBER 31, 2022 The following table presents consolidated results (in millions): Year Ended December 31, 2022 2021 Change % Change Net sales $ 8,282.0 $ 7,952.5 $ 329.5 4.1 % Cost of sales 7,227.6 6,734.8 492.8 7.3 % Gross income 1,054.4 1,217.7 (163.3 ) -13.4 % % of sales 12.7 % 15.3 % -260 bps SG&A expenses 662.8 672.0 (9.2 ) -1.4 % Amortization 11.6 11.1 0.5 4.5 % Impairment charge 7.7 — 7.7 100.0 % Operating income 372.3 534.6 (162.3 ) -30.4 % % of sales 4.5 % 6.7 % -220 bps The following table presents net sales by geographic region based on product shipment destination (in millions): Year Ended December 31, 2022 2021 Change % Change North America $ 7,468.2 $ 7,019.9 $ 448.3 6.4 % Europe, Africa and Middle East 455.2 460.9 (5.7 ) -1.2 % Rest of the world 358.6 471.7 (113.1 ) -24.0 % $ 8,282.0 $ 7,952.5 $ 329.5 4.1 % Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Consolidated net sales increased as a result of improved pricing ($467 million), offset in part by the unfavorable impact of foreign currency exchange rates ($57 million), lower consolidated volume ($52 million) and unfavorable cumulative catch-up adjustments on contracts in the Defense segment ($27 million).
RESULTS OF OPERATIONS- FISCAL 2023 COMPARED WITH FISCAL 2022 CONSOLIDATED RESULTS The following table presents consolidated results (in millions): Year Ended December 31, 2023 2022 Change % Change Net sales $ 9,657.9 $ 8,282.0 $ 1,375.9 16.6 % Cost of sales 7,977.1 7,227.6 749.5 10.4 % Gross income 1,680.8 1,054.4 626.4 59.4 % % of sales 17.4 % 12.7 % 470 bps SG&A expenses 810.4 662.8 147.6 22.3 % Amortization 32.8 11.6 21.2 182.8 % Impairment charge — 7.7 (7.7 ) -100.0 % Operating income 837.6 372.3 465.3 125.0 % % of sales 8.7 % 4.5 % 420 bps The following table presents net sales by geographic region based on product shipment destination (in millions): Year Ended December 31, 2023 2022 Change % Change North America $ 8,216.8 $ 7,468.2 $ 748.6 10.0 % Europe, Africa and Middle East 948.6 455.2 493.4 108.4 % Rest of the world 492.5 358.6 133.9 37.3 % $ 9,657.9 $ 8,282.0 $ 1,375.9 16.6 % Consolidated net sales increased as a result of higher consolidated volume ($630 million), higher pricing in response to higher input costs ($401 million) and the inclusion of sales related to acquisitions ($365 million) .
Corporate and Intersegment eliminations The following table presents the corporate costs and intersegment eliminations (in millions): Year Ended December 31, 2022 2021 Change % Change Net sales $ (7.1 ) $ (20.0 ) $ 12.9 64.5 % Cost of sales 1.7 (18.5 ) 20.2 109.2 % Gross income (8.8 ) (1.5 ) (7.3 ) -486.7 % Operating expenses 132.7 148.0 (15.3 ) 10.3 % Operating income (141.5 ) (149.5 ) 8.0 5.4 % Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Corporate operating expenses decreased as a result of lower incentive compensation costs ($16 million), offset in part by higher engineering and new product development spending ($7 million). 36 THREE MONTHS ENDED DECEMBER 31, 2021 COMPARED WITH THE THREE MONTHS ENDED DECEMBER 31, 2020 The comparison of the results for the three months ended December 31, 2021 with the results for the three months ended December 31, 2020 can be found in the “Management’s Discussion and Analysis” section in the Company’s Transition Report on Form 10-Q for the transition period from October 1, 2021 to December 31, 2021.
The increase in operating income in the Vocational segment was primarily due to improved pricing ($161 million), offset in part by higher material costs ($69 million), higher incentive compensation costs ($21 million), higher production costs ($21 million), the loss on the sale of the rear discharge concrete mixer business ($13 million) and acquisition costs related to AeroTech ($13 million). 34 Corporate and Intersegment eliminations The following table presents the corporate costs and intersegment eliminations (in millions): Year Ended December 31, 2023 2022 Change % Change Net sales $ (8.4 ) $ (7.1 ) $ (1.3 ) -18.3 % Cost of sales 10.0 1.7 8.3 488.2 % Gross income (18.4 ) (8.8 ) (9.6 ) -109.1 % Operating expenses 159.9 132.7 27.2 20.5 % Operating income (178.3 ) (141.5 ) (36.8 ) -26.0 % Corporate cost of sales increased primarily as a result of higher engineering and new product development costs ($5 million) and higher incentive compensation costs ($4 million).
The Company’s backlog as of December 31, 2022 increased 52.3% to $14.1 billion compared to $9.3 billion at December 31, 2021. Access Equipment segment backlog increased 22.1% to $4.4 billion at December 31, 2022 compared to $3.6 billion at December 31, 2021 as the re-opening of economies coming out of the pandemic and elevated customer fleet ages drove higher demand.
The Company’s backlog as of December 31, 2023 increased 18.8% to $16.8 billion compared to $14.1 billion at December 31, 2022. Access segment backlog increased 3.9% to $4.5 billion at December 31, 2023, compared to $4.4 billion at December 31, 2022, primarily due to higher pricing.
Commercial The following table presents the Commercial segment results (in millions): Year Ended December 31, 2022 2021 Change % Change Net sales $ 1,064.1 $ 952.5 $ 111.6 11.7 % Cost of sales 912.4 796.2 116.2 14.6 % Gross income 151.7 156.3 (4.6 ) -2.9 % % of sales 14.3 % 16.4 % -210 bps SG&A expenses 86.6 82.4 4.2 5.1 % Amortization 3.5 3.5 — 0.0 % Impairment charge 2.1 — 2.1 100.0 % Operating income 59.5 70.4 (10.9 ) -15.5 % % of sales 5.6 % 7.4 % -180 bps Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Commercial segment net sales increased as a result of higher pricing ($87 million) in response to higher input costs and favorable product mix primarily due to a greater percentage of sales that included a third-party chassis ($37 million).
Vocational The following table presents the Commercial segment results (in millions): Year Ended December 31, 2023 2022 Change % Change Net sales $ 2,578.1 $ 2,175.7 $ 402.4 18.5 % Cost of sales 2,143.2 1,842.2 301.0 16.3 % Gross income 434.9 333.5 101.4 30.4 % % of sales 16.9 % 15.3 % 160 bps SG&A expenses 230.6 171.9 58.7 34.1 % Amortization 18.8 5.1 13.7 268.6 % Impairment charge — 2.1 (2.1 ) -100.0 % Operating income 185.5 154.4 31.1 20.1 % % of sales 7.2 % 7.1 % 10 bps Vocational segment net sales increased as a result of the inclusion of sales related to acquisitions ($292 million) and higher pricing in response to higher input costs ($161 million), offset in part by the impact of the sale of the rear discharge concrete mixer business in the first quarter of fiscal 2023 ($79 million).
The decrease in consolidated gross margin was due to higher material & logistics costs (580 basis points) and higher manufacturing costs (130 basis points) largely as a result of supply chain disruptions, offset in part by improved pricing (430 basis points).
The increase in Access segment gross margin was due to improved pricing (360 basis points), lower material & logistics costs (150 basis points), improved sales mix (140 basis points) and favorable manufacturing absorption (100 basis points), offset in part by higher incentive compensation costs (50 basis points).
Other uses of cash include the repayment of debt and the repurchase of the Company’s Common Stock. In fiscal 2022, the Company used available cash to repay $225.0 million of debt and repurchase $155.0 million of its Common Stock.
In fiscal 2023, the Company used available cash to repurchase 265,795 shares of Common Stock ($22.5 million).
Fiscal 2022 results included a charge of $33.6 million for the settlement of a frozen pension plan. Foreign currency transactions resulted in losses of $6.9 million in fiscal 2022 and gains of $4.9 million for the year ended December 31, 2021.
Miscellaneous expense, net in fiscal 2022 included a loss on the settlement of a frozen pension plan ($34 million), unrealized loss on an investment ($10 million) and losses on foreign currency transactions ($7 million).
Changes in estimates on contracts accounted for under the cost-to-cost method decreased Defense segment operating income by $3.3 million in the year ended December 31, 2021.
Changes in estimates on contracts accounted for under the cost-to-cost method resulted in cumulative catch-up adjustments on contract margins that increased Defense segment operating income by $5.2 million in fiscal 2023 and decreased Defense segment operating income by $44.9 million in fiscal 2022. Fair Value of Intangible Assets.
The Company anticipates that it will spend $350 million on capital expenditures in fiscal 2023 as the Company completes the NGDV facility in South Carolina and invests in manufacturing capacity in the Access and Vocational segments.
The Company anticipates that it will spend $300 million on capital expenditures in fiscal 2024 as the Company completes its facilities in Tennessee and South Carolina. Financing Cash Flows Financing activities provided cash of $3.4 million in fiscal 2023 compared to the use of cash of $485.0 million in fiscal 2022.
During the year ended December 31, 2021, the Company repurchased 2,290,765 shares of its Common Stock at an aggregate cost of $257.8 million. The Company’s Board of Directors increased the Company’s repurchase authorization to 12 million shares on May 3, 2022.
The Company's Board of Directors authorized the repurchase of 12 million shares in May 2022, of which approximately 11.3 million shares remained as of December 31, 2023. In fiscal 2022, the Company repurchased 1,508,467 shares at an aggregate cost of $155.0 million.
The Company believes Access segment net sales will be in the range of $4.2 billion in fiscal 2023, a 6% increase compared to fiscal 2022 net sales. The Company’s estimates reflect expectations of improved pricing and a modest volume increase. Supply chain dynamics are expected to remain the limiting factor for more significant revenue growth as demand remains very robust.
The Company believes Access segment net sales will be in the range of $5.2 billion in fiscal 2024, a 4% increase compared to fiscal 2023 net sales. The Company experienced order growth in fiscal 2023 that resulted in the Access segment exiting the year largely booked for fiscal 2024.
The decrease in consolidated operating income was primarily due to unfavorable material & logistics costs ($482 million), manufacturing inefficiencies ($119 million) associated with supply chain disruptions, unfavorable cumulative catch-up adjustments on contracts in the Defense segment ($42 million), higher engineering and new product development spending ($32 million) and higher operating expenses ($28 million), offset in part by improved pricing ($467 million) and lower incentive compensation costs ($58 million). 33 The following table presents consolidated non-operating changes (in millions): Year Ended December 31, 2022 2021 Change Interest expense, net of interest income $ (43.9 ) $ (45.2 ) $ 1.3 Miscellaneous income (expense) (52.8 ) (6.2 ) (46.6 ) Provision for income taxes 97.5 23.7 73.8 Effective tax rate 35.4 % 4.9 % Gains (losses) of unconsolidated affiliates $ (4.2 ) $ 1.5 $ (5.7 ) Fiscal 2022 Compared to Year Ended December 31, 2021 (unaudited) Other miscellaneous income (expense) primarily related to gains and losses on investments, net foreign currency transaction gains and losses, and non-service costs of the Company’s pension plans.
The following table presents consolidated non-operating changes (in millions): Year Ended December 31, 2023 2022 Change Interest expense, net of interest income $ (53.8 ) $ (43.9 ) $ (9.9 ) Miscellaneous, net 13.8 (52.8 ) 66.6 Provision for income taxes 190.0 97.5 92.5 Effective tax rate 23.8 % 35.4 % Gains (losses) of unconsolidated affiliates $ (9.6 ) $ (4.2 ) $ (5.4 ) Interest expense, net of interest income increased in fiscal 2023 due to increased borrowings on the Company's revolving credit facility and lower cash holdings as a result of the acquisition of AeroTech.
The decrease in consolidated selling, general and administrative expenses was generally a result of lower incentive compensation costs ($46 million), offset in part by higher salaries ($11 million), higher reserves for credit losses ($10 million), higher software costs ($9 million) and increased travel ($5 million).
The decrease in Defense segment selling, general and administrative expenses was primarily due to a gain on the sale of the Company's snow removal apparatus business ($8 million), offset in part by higher incentive compensation costs ($6 million).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates, certain commodity prices and foreign currency exchange rates. To reduce the risk from changes in foreign currency exchange and interest rates, the Company selectively uses financial instruments.
ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates, certain commodity prices and foreign currency exchange rates. To reduce the risk from changes in foreign currency exchange and interest rates, the Company selectively uses 41 financial instruments.
The majority of export sales in fiscal 2022 were denominated in U.S. dollars. As a result of the manufacture and sale of the Company’s products in foreign markets, the Company’s earnings are affected by fluctuations in the value of foreign currencies in which certain of the Company’s transactions are denominated as compared to the value of the U.S. dollar.
The majority of export sales in fiscal 2023 were denominated in U.S. dollars. As a result of the manufacture and sale of the Company’s products in foreign markets, the Company’s earnings are affected by fluctuations in the value of foreign currencies in which certain of the Company’s transactions are denominated as compared to the value of the U.S. dollar.
The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and the European currencies, primarily the Euro and the U.K. pound sterling, changes between the U.S. dollar and the Australian dollar, changes between the U.S. dollar and the Brazilian real, changes between the U.S. dollar and the Mexican peso, changes between the U.S. dollar and the Chinese renminbi and changes between the U.S. dollar and the Canadian dollar. 45
The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and the European currencies, primarily the Euro and the U.K. pound sterling, changes between the U.S. dollar and the Australian dollar, changes between the U.S. dollar and the Mexican peso, changes between the U.S. dollar and the Chinese renminbi and changes between the U.S. dollar and the Canadian dollar. 42
In the Company’s Access Equipment, Fire & Emergency and Commercial segments, the Company generally attempts to obtain firm pricing from most of its suppliers, consistent with backlog requirements and/or forecasted annual sales.
In the Company’s Access and Vocational segments, the Company generally attempts to obtain firm pricing from most of its suppliers, consistent with backlog requirements and/or forecasted annual sales.
The Company’s operations consist of manufacturing in the U.S., Mexico, Canada, France, Australia, the United Kingdom and China and sales and limited vehicle body mounting activities on five continents. International sales comprised approximately 12% of overall net sales in fiscal 2022, of which approximately 49% involved exports from the U.S.
The Company’s operations consist of manufacturing in the U.S., Mexico, Canada, France, Australia, the United Kingdom, Italy and China and sales and limited vehicle body mounting activities on five continents. International sales comprised approximately 17% of overall net sales in fiscal 2023, of which approximately 46% involved exports from the U.S.
In this regard, changes in U.S. and off-shore interest rates affect interest payable on the Company’s borrowings under its Credit Agreement. The Company had no variable rate-based debt outstanding at December 31, 2022. Commodity Price Risk. The Company is a purchaser of certain commodities, including steel, aluminum and composites.
In this regard, changes in U.S. and offshore interest rates affect interest payable on the Company’s borrowings under its Credit Agreement. The Company had variable rate-based debt of $175.0 million outstanding on its Revolving Credit Facility at December 31, 2023 with an interest rate of 6.6%.
Added
This debt is classified as a current liability, resulting in limited exposure to adverse movements in interest rates given the short term expected maturity. Commodity Price Risk. The Company is a purchaser of certain commodities, including steel, aluminum and composites.

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