Oshkosh Corporation (OSK) Q3 2025 Earnings Call Transcript

Oshkosh Corporation (NYSE: OSK) Q3 2025 Earnings Call dated Oct. 29, 2025

Corporate Participants:

Patrick Davidson — Senior Vice President, Investor Relations

John Pfeifer — President and Chief Executive Officer

Matthew Field — Executive Vice President and Chief Financial Officer

Analysts:

Mircea Dobre — Analyst

Stephen Volkmann — Analyst

Jamie Cook — Analyst

Tami Zakaria — Analyst

Michael Shlisky — Analyst

Kyle Menges — Analyst

Angel Castillo — Analyst

Tim Thein — Analyst

Unidentified Participant

David Raso — Analyst

Presentation:

Operator

Greetings, and welcome to the Corporation Third Quarter 2025 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone to require operator systems during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Pat Davidson, Senior Vice-President, Investor Relations for. Please proceed.

Patrick Davidson — Senior Vice President, Investor Relations

Good morning, and thanks for joining us. Earlier today, we published our 3rd-quarter 2025 results. A copy of that release is available on our website at oshkoshcorp.com. Today’s call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to Slide 2 of that presentation.

Our remarks that follow including answers to your questions contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC as well as matters noted at our Investor Day in June 2025.

We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Our presenters today include John Pfeiffer, President and Chief Executive Officer; and Matt Field, Executive Vice-President and Chief Financial Officer. Please turn to Slide 3, and I’ll turn it over to you, John.

John Pfeifer — President and Chief Executive Officer

Thanks, Pat, and good morning, everyone. We continue to successfully navigate a dynamic external environment with resilience and a strong sense of purpose to serve our everyday heroes with high-quality products that are safe, intuitive and productive. We do this with a strong mission of service for our everyday heroes like firefighters in our communities. We proudly sponsored the 13th Annual 9/11 Memorial Stair Climb in Green Bay, where more than 2,000 people raised over $120,000 for the National Fallen Firefighters Foundation and honored the brave firefighters that lost their lives on 9/11.

We also demonstrated our commitment to our communities as over 1,200 volunteers came together for Oshkosh’s eighth Annual Feed the Body, Feed the Soul event. These volunteers packed 224,000 pounds of rice in just 12 hours to support individuals and families facing food and security across Eastern Wisconsin. Turning to our financial results on Slide 4, we delivered an adjusted operating margin of 10.2% on revenue of $2.7 billion in our 3rd-quarter. This led to adjusted earnings per share of $3.20, an increase of 9.2% over the prior year. These results reflect solid performance across each of our segments. Despite lower revenue, we maintained a double-digit adjusted operating income margin year-over-year, reflecting continued strong performance in our Vocational segment, improved returns in our Transport segment and a resilient double-digit margin in our Access segment. Our adjusted EPS grew compared with last year, reflecting our operating performance and taxes. While I am pleased with the resilience demonstrated in our 3rd-quarter results, we are updating our outlook for the full-year to reflect the demand environment we have been seeing starting mostly in the 3rd-quarter. We are revising our 2025 adjusted EPS guidance to a range of $10.50 to $11, which reflects slightly lower revenue expectations for both Access and Transport segments. I want to emphasize that end-market activity in our Access segment is healthy, but we are seeing customers be more cautious in the near-term regarding new equipment purchases as a result of tariffs and the current economic environment. Matt will provide additional details on segment performance and our outlook later in the call. Please turn to Slide 6 for Q3 highlights. In September, we continued to demonstrate how Oshkosh is shaping the future of airports by showcasing our advanced technologies at the International Airport Ground Service Equipment Expo. And in Washington, DC. At the AUSA Defense Conference just two weeks ago, we introduced our family of multi-mission autonomous vehicles, FMAV. Autonomy was a key focus at both events. At the GSE Expo, we displayed our full range of ground support equipment and showcased a flexible autonomous robot that can serve multiple roles on the tarmac. We also launched the new SI deicer designed to easily navigate congested ramps while providing improved visibility and more intuitive controls for operators. At AUSA, Oshkosh featured three production-ready variants from the autonomous vehicle portfolio, that’s FMAV, highlighting our ability to deliver autonomous payload agnostic platforms. Please turn to Slide 7. As I mentioned earlier, access equipment end-market activity remains healthy as we see in equipment utilization percentages. That said, customers are being cautious with capex spending. I’m proud of our team’s execution, delivering double-digit adjusted operating margins despite this environment. While overall demand in the current environment is lower than in 2024, construction activity for data centers and infrastructure has continued to drive demand. We believe that additional long-term tailwinds related to lower interest rates, project deferrals, aged equipment and manufacturing reshoring will support a broader pickup in-construction activity. In the near-term, the team remains resilient and is working to mitigate the impacts of tariffs across our business. As we have discussed previously, we are aggressively pursuing cost levers to offset the impact of tariffs. We are also having initial discussions with customers regarding the impact of tariffs on pricing with the expectation that we will raise prices in 2026 to keep pace with input costs. Our success is driven by designing and building world-class products to meet the needs of our customers. This quarter, we introduced our new AG 619 mid-sized Ag telehandler aimed at the heart of the market, which we revealed at the World Dairy Expo last month. And in Europe, we launched the innovative Lift Pod, providing low-level access for commercial customers needing a safe, portable and stowable solution to support a wide range of projects at height. Thank you. Turning to Slide 8. In the Vocational segment, we continue to advance initiatives that support increased production of fire trucks. This is a multi-year process as we seek to improve production efficiency by addressing bottlenecks associated with building highly customized complex trucks. At the same time, we continue to support firefighters with our stock pumpers and Build My Pierce product offerings, which improve lead times by simplifying configurations. In recent quarters, we’ve seen an increase in the mix of orders for Build My Pierce pumpers, which should further support our efforts to streamline production and reduce lead times. We finished the quarter with strong orders for Vocational as the segment recorded $1.1 billion in the quarter, led by orders for trucks and our Aerotech products. Of course, we remain focused on increasing throughput and we expect to bring the backlog down over the next few years as we discussed at our Investor Day in June. Finally, for the segment, I want to recognize the team that supports our, Volterra, ZSL Refuse collection vehicle, which won the coolest thing made in Tennessee 2025. This product is a game-changer for the refuse collection industry as the first fully-integrated electric vehicle designed with the operator in mind to deliver world-class aerogonomics, purpose-built performance and a zero-emission quiet driving experience in neighborhoods. Please turn to Slide nine. As I previously mentioned, we showcase autonomy at the AUSA Defense Conference. Earlier this month, we announced an order from the United States Army valued at $89 million for the modernized PLS A2 autonomy ready heavy tactical truck designed for load handling, another example of innovation that is already available in our products today, not years in the future. We continue to advance core programs to support US and international customers, including building FHTVs under our previously-announced contract extension. We have also monetized JLTV-related technology through a one-time license of select operational software IP to the Department of Defense that occurred during the quarter. This further demonstrates our commitment to our government customers by providing cutting-edge technologies to support mission-critical requirements and fleet sustainment. Lastly, we continued to ramp production of the NGDV this quarter and are targeting line rates that support our annual production goals. As with any new product launch in a new assembly plant, challenges are to be expected, and we’ve seen this across the vehicle industry worldwide and the team continues to work with urgency to ramp production while maintaining quality. We now have over 4 million miles driven by postal workers and we remain excited about the rollout of this much-needed productivity enhancing vehicle. With that, I’ll hand it over to Matt to walk-through our detailed financial results.

Matthew Field — Executive Vice President and Chief Financial Officer

John? Thanks, John. Please turn to Slide 10. Consolidated sales for the 3rd-quarter were nearly $2.7 billion, a decrease of $53 million or 2% from the same quarter last year, primarily due to lower sales volume in the Access segment, partially offset by higher vocational and transport sales volume and improved pricing. Adjusted operating income was $274 million, down slightly from the prior year, primarily reflecting lower-volume. Adjusted operating income margin of 10.2% was roughly in-line with last year-on slightly lower sales. Adjusted earnings per share was $3.20 in the 3rd-quarter, $0.27 higher than last year.

Adjusted EPS was favorably impacted by about $0.30 due to lower tax expense resulting from the resolution of a multi-year US federal income tax audit. During the quarter, we again stepped-up share repurchases, repurchasing approximately 66,000 shares of our stock for $91 million, bringing year-to-date share repurchases to $159 million. Share repurchases during the previous 12 months benefited adjusted EPS by $0.05 compared to the 3rd-quarter of 2024. Our free-cash flow for the quarter was strong at $464 million compared to $272 million in the 3rd-quarter of 2024, primarily reflecting working capital changes, including customer advances and inventory.

Thank you. Turning to our segment results on Slide 11. The Access segment delivered resilient adjusted operating income margins of 11% on-sales of $1.1 billion. Sales were $254 million or nearly 19% lower than last year, which reflected weaker market conditions in North-America and higher discounts. Our Vocational segment continued to deliver strong sales growth through higher volumes and improved pricing as we deliver our backlog, achieving An adjusted operating income margin of 15.6% on $968 million in sales. Sales grew $154 million or nearly 19% from last year, led by improved throughput for municipal fire apparatus and robust growth in airport products. Revenue in airport products was up 17% compared with last year, demonstrating our strong JetBridge and ARP businesses. The nearly 200 basis-point increase in adjusted operating income margin for the segment primarily reflected improved price/cost dynamics. Transport segment sales increased $48 million to $588 million. Delivery vehicle revenue grew by $114 million to $146 million and now represents approximately 1/4 of transport segment revenue. Delivery revenue grew 37% sequentially compared to the second-quarter of 2025. As expected, defense vehicle revenue was lower compared with last year due to the wind-down of the domestic JLTV program. This was partially offset by higher international sales of tactical wheeled vehicles and one-time revenue from the license of JLTV-related intellectual property to the US government for $25 million., the Transport segment delivered an improved operating income margin of 6.2% compared to 2.1% last year, reflecting the software IP license, improved pricing on new contracts and favorable mix offset by higher warranty costs. The onetime licensing agreement, which was contemplated in our guidance last quarter, represented a roughly 400 basis-point improvement in operating income margin. Please turn to Slide 12. Turning to our outlook for the remainder of 2025. The macro backdrop and end-market activity have remained broadly resilient. Access customer orders, however, reflect a more judicious approach to spending, as you heard from John. Our team continues to execute well amidst a dynamic government policy and the international trade environment. As John mentioned, we are updating our 2025 full-year adjusted EPS guidance to be in the range of $10.50 to $11 on revenues of approximately $10.3 billion to $10.4 billion. And as you can see on this slide, we have further moderated our expected adjusted operating income margin in the Access segment to reflect our sales outlook and in the Transport segment for our present expectations for NGDV production. Our cash-flow outlook of $450 million to $550 million, up $50 million from our previous outlook, reflects lower capital expenditures as we maintain rigorous spending controls. We also plan to continue with share repurchases through the balance of the year at a modestly higher pace than we did in the 3rd-quarter. With that, I’ll turn it back to John for some closing comments.

John Pfeifer — President and Chief Executive Officer

Thanks, Matt. It’s clear that 2025 has proven to be a dynamic year, including the tariff landscape and sustained higher interest rates. Our updated outlook reflects the impact of these conditions on our customers and in-turn on the demand for our products, notably in the Access segment. Even so, our team has shown strong focus and agility by managing through these conditions while delivering solid results. This performance reinforces our confidence in managing the near-term while supporting our long-term growth objectives.

Earlier this year at our Investor Day, we shared our vision to roughly double adjusted EPS to a range of $18 to $22 per share by 2028. Each quarter represents a step toward that goal and we’re encouraged by the steps our teams are making today to lay the groundwork for nearly doubling EPS by then. We appreciate your continued confidence in Oshkosh and look-forward to updating you as we advance our strategy and create long-term value for shareholders, customers and team members. I’ll turn it back to you now, Pat, for the Q&A.

Patrick Davidson — Senior Vice President, Investor Relations

Thanks, John. I’d like to remind everyone to please limit your questions to one plus a follow-up. Please stay disciplined on your follow-up question. And after that, we’ll ask that you rejoin the queue if you have additional questions. Operator, please begin the Q&A session.

Questions and Answers:

Operator

Thank you. Thank you. Our first question comes from Mig with Baird. Please proceed.

Mircea Dobre

Hey, good morning, everyone. Thank you for taking the question.

John Pfeifer

Good morning.

Mircea Dobre

Maybe we can start with Access a little bit. And I’m sort of curious your perspective here as you talk to your customers, obviously, not only for business covering Q4, but into 2026, you hinted at the fact that prices are going to go up, which makes sense given tariffs and whatnot. What is your sense for where demand seems to be shaken out because we have seen some that are increasing capex. At least optically, it looks like there is some signs of stabilization in that industry. I’m curious if that sort of gels with what you’re hearing or your salespeople are hearing is they’re contemplating 2026. And maybe more broadly, what should investors be thinking just as a general framework for this segment next year? It will look to me like production is likely to be down in the first-half of ’26, but perhaps you think about it differently.

John Pfeifer

Well, on the last — I’ll answer that, Meg, it’s John. So first, thanks for your question. We’re not guiding today, but I can give you some context on what we see ahead for sure. We’ll guide — we’re in discussions with all of our customers about what 2026 looks like. So we’ll have a lot better clarity for you when we get through the 4th-quarter. But I’ll give you context. First of all, we don’t know if at this point in time, if production is going to be down in the first-half of 2026. I honestly don’t know that. What I will tell you is that we feel — we feel when we look at-the-market going-forward and we — all customers are not the same.

This is a vast customer-base. We’ve got thousands of independent rental customers and we’ve got a group of big national rental customers. And you’ve heard some positive things from the big national rental customers of ours. There is still a bit of hesitancy in the very near-term. When I talk about the very near-term, I’m talking about Q3, Q4 in terms of with the current environment, how much equipment do I want to take-in the here and now. But when we look-forward to ’26 and we see what’s going on in the market, we talk about long-term demand drivers a lot.

You hear about mega projects constantly. Those are real and they are ongoing and they do drive a lot of equipment. But we’re starting to also see some free-up in terms of the commercial construction activity. So there’s been a — non-res has had a lot of commercial construction kind of on-hold or pause. Some of the — a lot of those projects are starting to get cleared through into the planning phase. That’s a very positive sign for the market going-forward. So we’ll get through this year, which has been one of the most dynamic years that anybody in business has ever experienced.

We’ll manage it really well. We’ll continue to deliver strong margins even through this dynamic period of 2025. And as we get into 2026, we’ll give you some guidance in the — in January. And we think that the market long-term looks very, very healthy as we’ve been saying for a while.

Mircea Dobre

Understood. My follow-up, maybe to put a finer point on the tariffs. Give us a sense here for how the tariff picture has changed for you, maybe quantify the cost? And then as you think about next year, and again, I’m not asking for guidance, I’m just asking for your strategy. How do you think you’ll be able to mitigate these tariffs, if any at all? Thanks.

Matthew Field

Good morning, Mig. So tariffs, for this year, it’s kind of $30 million to $40 million is what we see for the full-year, most of that being in the 4th-quarter. So we would estimate that to be about $20 million to $30 million in the 4th-quarter. Obviously, as you look into 2026, you’d project a full-year impact as that — as those are implemented and feathered in. What you don’t see in the 4th-quarter is the pricing John talked about and you highlighted in your questions. So there’d be some pricing that would occur in 2026 against that. So that’s how I think about tariffs for next year and how are they kind of feathered in this year?

Patrick Davidson

Thank you thanks, Meg.

Operator

The next question comes from Steven Volkmann with Jefferies. Please proceed. Steven, your line is live.

Stephen Volkmann

Steve, sorry about that. Yeah, I’m still — I’m still kind of new at this. So I’m figuring it all-out as I go.

John Pfeifer

We are.

Stephen Volkmann

Okay. So the follow-on just to Mig’s question actually, is it reasonable to think that You can offset this a tariff headwind during 2026? Is that sort of the plan or will it take longer?

Matthew Field

Hi, Steve. So as we’ve talked about on prior calls, our approach to tariffs is really multifaceted. First, it’s negotiating the supply-chain. Second, it’s what we call tariff engineering and that can come in many forms and that could be sourcing, it could be how we import. It could be the classification as we run into 232 and other classifications, we look strongly at each part we bring in and make sure it’s classified in the right way so that we get the right tariff treatment. And then only then do we start talking about pricing. So it would be preliminary for me to speculate on how much would be — would be offset next year. But certainly, the goal is we mitigate as much as we can on the cost side and then we look at what pricing we need to discuss with our customers. John, is there anything you want to add?

John Pfeifer

I just want to make a point to say that we do a lot — we’ve got a lot of really great work happening with our teams in supply-chain first and foremost, there’s engineering, manufacturing teams. We do a lot of work to offset the impact of tariffs, and we’ve had a lot of success doing that. Our MO when we look at tariffs is we want to — we want to absolutely minimize the impact of tariffs on our customers. That’s our first goal, minimize the impact to the customer. And we’ll — we’ve been pretty good at doing that. Now you can’t — you can’t mitigate everything. So that’s why I said in my prepared remarks that there’ll be some price increase in 2026. We believe that the landscape will be calmed down enough to be able to assess what any price increase needs to be. But our MO is to get through this without impacting customers very much.

Stephen Volkmann

Got it. Thank you. And then if my math is right, I think you’re sort of implied incremental margins for vocational in the 4th-quarter like 40%, which is obviously impressive, especially with tariffs. How should we think about that going-forward? Is that a reasonable assumption for a while or is that something special?

Matthew Field

Yeah. So yeah. So 4th-quarter, the math would imply exactly, as you said, about a 40% incremental. For the year, our guidance is about 30% to 33% actually. So you know, it’s really impacted this year as higher production throughput, higher-volume. We’ve had a good mix with strong sales in airport products. Again, it’d be preliminary for me to speculate what the incrementals are. Our 2028 guidance, which we provided in June will be a little lighter than that on an annualized basis, but certainly strong results out of Vocational. Thanks for highlighting.

Stephen Volkmann

All right. Thanks.

Operator

The next question comes from Jamie Cook with Truist Securities. Please proceed.

Jamie Cook

Hi, good morning. I guess just two questions. One, John, as you think about the competitive landscape within Access Equipment and some of the market-share movement you’ve seen between you and your peers, do you feel like with Section 232 and tariffs, like are you in a position to gain share just based on your manufacturing footprint relative to some of your peers? And then my second question, if you could just quantify or talk through more some of the discounting that you noticed in the access market, quantify it and to what degree, given the tariffs situation, you know, does this ease, I guess? Thanks.

John Pfeifer

Yeah, sure. So I’ll — thanks, Jamie, for the question. On the — in the excess equipment world, what we’re doing is we’re executing what we call a local for local strategy. Now we’ve always been predominantly a footprint of US manufacturing for US sales in the US in our access business. So that’s good. We started with a strong position. We’re continuing to execute that and do more-and-more of that, particularly in the US but also in Europe. That kind of overarching strategy allows us to manage the tariff landscape as best we can and minimize the cost that it that we incur.

So yes, we think that helps us a lot versus the competitive environment, particularly against competitors that are outside the United States for sure. But JLG is the leading brand in the industry. We’ve got fantastic innovations that continue to come to-market. You know, our intent is to continue to focus on our customers, how can we drive improvement for them and that ultimately is what drives long-term share and that’s what we’re intently focused on. So that’s what I can tell you about that.

Matthew Field

So — and Jamie, just adding to your second question and follow-on. So the team practices very disciplined pricing. You’ve seen that in prior cycles. You’ve seen it prior quarters. That’s also supported by a strong service network and that in the end results in a very strong residual on our JLG equipment, and that’s important for rental customers. And so what you saw in the 3rd-quarter is about a 3% to 4% all-in discount level, which we think is very reasonable given — given the external environment we have, obviously, we’ve not gotten into pricing for tariffs in the 3rd-quarter with the limited impact and that will really be a factor-in 2026 versus 2025.

Jamie Cook

Thank you.

Patrick Davidson

Thanks, Jamie.

Operator

Thank you. The next question comes from Jakaria with JPMorgan. Please proceed.

Tami Zakaria

Hi, good morning. Thank you so much. A question from me on the warranty costs, which seemed to be an item headwind in the quarter. Are you able to elaborate on that? What’s driving it and how to think about it for the rest of the year?

Matthew Field

Hi, Tammy. So that’s really a one-time item we had in the 3rd-quarter as we’re working through the units that we’ve built, specifically in the defense sector for vehicles in the kind of supply-chain shortages, ’21 ’22 where we identified issues that we need to repair and as we built with kind of interim parts and so forth. So we took that charge in the 3rd-quarter. We think that’s behind us.

John Pfeifer

Yeah, Tammy, I want to just emphasize, that’s a core defense product. It’s not the postal vehicle. It’s core defense. We are a quality-focused company. We’re known in the Department of Defense for quality. When we see that we have an issue, we wrap it up and we address it as quickly as we can with the customer. Again, as Matt said, this is a — this is not this is not an ongoing issue to expect going-forward.

Tami Zakaria

Okay. Understood. That’s very helpful. And one question on. I remember, I think earlier in the year, you talked about taking some pricing, doing some price investments. Did that — is that still the case? Do you expect that to continue through the rest of the year or anything changed there?

John Pfeifer

Can you clarify that, Tammy? I’m not sure if I actually — if I got exactly what you were referring to.

Tami Zakaria

So my question is on access pricing, Aerials pricing for the year. The way it’s playing out, do you expect positive pricing this year as some of these types have come in or are you going back to your customers and giving some discounts. So any comments on pricing and how that’s trending in the access

John Pfeifer

Go-ahead, Matt.

Matthew Field

Yeah, thanks for the clarification. So as I just mentioned, this year really, given the weakness we see in external demand, we’ve seen a negative pricing environment in Access. Obviously, with tariffs hitting in the latter part of this year and mostly next year, we would talk about a different pricing environment into 2026.

Tami Zakaria

Understood. Thank you.

Matthew Field

Thank you.

Operator

Thank you. The next question comes from Mike with D.A. Davidson. Please proceed.

Michael Shlisky

Hey guys, good morning. In Access, it seems like a lot of this line taking — just taking a little bit deeper into the numbers, a lot of the decline in the 3rd-quarter came from. It was down like I think a little over 40% and on the sales line. And you’re actually expanding capacity there. Could you maybe just take just the asset discussion one-step deeper and just tell us a little bit about how that’s going, what’s happening there compared to the core aerials?

John Pfeifer

Yeah. The difference is cat. We’ve talked about it for a few quarters that we’ve had a long-term agreement with cat. That agreement is no longer in-place and that’s the primary reason you see the change in telehandlers. Our JLG telehandlers, including the Skytrack models, they’re doing extremely — they’re doing great. They’re not losing share there. And then you look at the aerials, we’re in a situation where, hey, the market is down because of non-residential private construction being down, but this is a — it’s a — it’s a Very temporary phenomenon. And long-term, we see very strong health in the market and we’re really pleased with how we’re able to perform with resilience during — you see in Q3, for example, our revenue in access equipment is down nearly 19% and we’re at healthy double-digit margins. That’s exactly the way we expect to operate and that’s what we’re doing. And we’ll continue through this and the market will grow as we go-forward?

Michael Shlisky

Great stuff. Thanks for that, John. And then just talking about peers real quick. Have you seen any impact over the last few weeks at peers from the federal government shutdown, especially any local effects on a assistance grants or other state loan government assistance that the federal government provides to fire departments.

Matthew Field

Hey, Mike, it’s Matt. So in terms of federal government shutdown in the near-term, we’ve not really seen a material impact if it extends much longer or significantly longer, I guess, we may have some contracts affected as we do sell directly to the government in some cases, think about products and so forth. So there would be some knock-on effects if this extends for an extended — extended period of time. Not huge numbers, but certainly something that I would watch for.

Michael Shlisky

Thanks.

Patrick Davidson

Thanks, Mike.

Operator

Thank you. The next question comes from Kyle Mingez with Citigroup. Please proceed.

Kyle Menges

Thank you. I think NGDV sales of $146 million in the quarter was a little bit below your expectation and sounds like 4th-quarter is going to be a little lower than initially expected. So I’m just curious what’s driving that? What have been some of the challenges in increasing capacity? And then don’t want to put words in your mouth, but got the sense from the prepared remarks, perhaps a walk back of the earlier guidance to get to annualized full run-rate production of, I think, 16,000 to 20,000 units by year-end. Like is that still feasible in your mind? Yeah, I would just love to hear an update on that. Thank you.

John Pfeifer

Yeah, I’ll start with the 16,000 to 20,000 units as an annualized number, so let me start from the top. I’m going to start with talking about the product, the NGDV or the new postal vehicles. It’s an amazing product. The feedback that we continue to receive with now over 4 million miles driven in delivery operations by postal carriers is really positive. We — as I said on the call-in my prepared remarks, this is a brand-new plant with a brand-new product and highly automated processes. It’s a fantastic plant. We have made progress. You see the revenue growing there, but not to date at the pace that we want it to be at.

And so we’re working really hard. We’ve got great people in-place that are working on continuing to drive production increases till we get to full-rate production. We expect to grow revenue sequentially and believe we will exit 2025 in a good position to support our plans for the United States Postal Service and a really strong 2026. So that’s kind of the state-of-the program, but for you.

Kyle Menges

Got it. And just curious, I guess, when you would expect maybe now to hit that full annualized run-rate production? And then my follow-up is just going to be on the lower capex guide, looks like you brought it down $50 million. So curious what drove that?

John Pfeifer

Yeah. So I’ll start by the full-rate production. We continue to target full-rate production by the end of this year. I want to say that’s not without challenges, of course, as I just mentioned previously. We have constant communication with the United States Postal Service to the highest levels. We’re doing everything we can, but our ex — our plans are to get to full-rate production by the end-of-the year. Matt, do you want to talk about the $0.50?

Matthew Field

Yeah, the reduction in capex reflects twofold. One, stricter spending controls in this environment, but then two, just timing of spending.

Kyle Menges

Got it.

John Pfeifer

Thank you, Skyle.

Operator

Thank you. Our next question comes from Angel Castillo with Morgan Stanley. Please proceed.

Angel Castillo

Hi, good morning, and thanks for taking my question. Just wanted to go back to some of the discussion around access. Can you just clarify, I guess, is the greater cautiousness that you talked about from your customers reflecting itself purely in just kind of the low ordering or the low book-to-bill this quarter or are you seeing any kind of order cancellations or delivery pushouts here? And just if you could add a little bit more color as part of that, kind of how the behavior maybe differs between the nationals and independents?

John Pfeifer

Yeah. So first, Angel, thanks for the question. We had a 0.6 book-to-bill. That’s a normal — that’s a normal book-to-bill for a 3rd-quarter, if you look historically. That said, the market has been a little bit softer compared to last year, as I already mentioned. I want to emphasize that end-market demand in this — here is healthy. The equipment utilization is healthy in the market. Used market is healthy. That’s all really good signs.

What we’re seeing in the dynamic market with continuously shifting tariffs, prolonged higher interest rates, that’s caused a lot of customers to say, hey, the market is healthy, but I just — in the very near-term, I’m just going to kind of hold back on my capex until I get a little bit more clarity as to how this is going to evolve, see the Fed continue to drop rates, things like that. That’s really what we feel is happening in the market.

Angel Castillo

That’s helpful. Thank you. And maybe just related to that, I know it’s still early for fiscal year ’26 and a lot of moving pieces here. But given just your ongoing kind of discussions with customers, whether on kind of the near-term environment for next year, can you just talk about the magnitude of the price increases that are currently being discussed for next year and whether that kicks-in kind of January 1? And just kind of overall discussion of those negotiations because I guess if I’m not mistaken on the discounting part, it seems like discounting may have stepped-up from 2% to 3% to 3% to 4%. So if you could just kind of help us understand perhaps the trajectory of that versus the kind of increases expected in Jan 1?

Matthew Field

Yeah, it’d be preliminary to talk about pricing for 2026. On the quarterly basis, it’s really what you see there is some seasonality in how we go-to-market.

Patrick Davidson

Thanks, Angel.

Angel Castillo

Thank you. Thank you.

Operator

Thank you. The next question comes from Tim Dine with Raymond James. Please proceed with your question.

Tim Thein

Oh, great. Thank you. Good morning. Just lots of dialog here on Access, but maybe I’ll ask yet another one. Just with respect to how your expectations, John, for kind of order activity here in the 4th-quarter and specifically maybe the composition. I would imagine more of your NRCs are the ones that pick-up the order slots in the 4th-quarter that are booking orders rather. But maybe just any kind of guardrails as to how you’re thinking and maybe how the initial discussions have shaped up just with respect to how we should be thinking about order activity, obviously that will be important as to how we think about ’26. So maybe I’ll start with that one. And then Part B of the question is just on the Vocational segment and just on Fire; Emergency, obviously, that’s a big part of the nice margin improvement that you have lined-up into that 2028 target.

As you talked earlier about more stock units and the Bill My peers, does that have any implications that we should think about from a product mix standpoint? So that’s two long questions. Thank you.

John Pfeifer

Yeah. So one on access, one-on-one on the fire industry and our fire truck business peers. Let me start on access. I mean, you kind of hit the nail on the head, Tim. The reason that we went from an $11 guide to a $10.50 to $11 guide is primarily orders in the 4th-quarter for access. And when I say orders in the 4th-quarter for access, I’m talking about orders in the 4th-quarter for delivery in the 4th-quarter. And right now it’s in terms of how much equipment our customers, I’m talking from the thousands of independents to the big guys are going to take-in the 4th-quarter, that’s why there’s a bit of a range there from $10.50 to 11.

If it’s — as we expect will be around $11. If it’s — they’re not going to take quite as much equipment in the 4th-quarter, then that — then it could come down a little bit. With regard — but hey, I want to continue to emphasize how well our people at Access Equipment and JLG are performing in this very dynamic market. We’re performing extremely well. We’ll continue to do that in this environment. But again, we see nice growth on the horizon ahead of us as we’ve talked about through the year. On the — on our Pierce business, the fire truck business, we’re continuing to get improved output. We’ll continue to get improved output as we go-forward The next few years. That will continue to draw the backlog down. The Build My Pierce and more of the off-the-shelf fire trucks are great products. We don’t see a specific margin differential between whether or not we’re shipping Build My Pierce units or we’re building our fully customized units.

Tim Thein

Thank you.

Operator

The next question comes from Steve Berger with KeyBanc. Please proceed with your question.

Unidentified Participant

Good morning. This is actually Christian on for Steve Barger. This is a follow-up maybe to Tim’s first question on Access. I heard your comments about the near-term uncertainty your customers are facing. Just historically, 4Q was a big sequential order quarter for Access as your customers plan for next year. So do you still see a normal step-up in or in 4Q or is that more of a 1Q event now? And then is your Access backlog split evenly or does this ski one-way between bigger nationals or the smaller independents?

Matthew Field

Good question. It’s Matt. So the way to think about Q4 is you’re right, traditionally the book-to-bill would be higher. Honestly, I think it would be presumptive of me to assume that’s the same as you end-up with price negotiations, some of that might sub to January versus December, but honestly, it’s too early to make a call like that. So traditionally, I would say it’s higher, how it’s going to shape up this year is unclear.

Unidentified Participant

Got it. Okay. And then just switching gears to your defense-related business. It seems like the industry is wanting more transport type vehicles. Is that what you’re seeing as well? It may be a pitch for the CTT program. What differentiates your portfolio capabilities versus the other bidders in that program? Thank you.

John Pfeifer

Yeah, thanks for the question. Sure. I mean what’s really differentiating us in this market today is our technological capability as well as our quality. We’ve got a really strong quality and service reputation. So they know what they get when we supply them with tactical wheeled vehicles. But going-forward, as I talked in my prepared remarks, it’s a lot about things like autonomous functionality or full autonomy. And that’s why you see a lot of our products moving that way with the technology that we have. And that’s kind of what we see as the future of this. And it’s why we’re a — why we stand-out in that industry is that reliability and the technological performance and capabilities of our vehicles that get better and better and better as we go-forward.

Patrick Davidson

Thank you. Thanks, Christian.

Operator

Thank you. Our next question comes from David with Evercore. Please proceed.

David Raso

Hi, thank you. Of the defense revenue cut by $200 million, how much of that was the Postal truck?

John Pfeifer

Yeah. It was all on the delivery side, David. All of it. Yeah.

David Raso

And when it comes to that, is that the ramp-up of the BEV truck that’s giving you a little bit of struggle to ramp-up or is it the ICE truck as well.

John Pfeifer

It is unrelated to and bev, David. The vehicles are produced on the same line. It’s just continuing to dial-in all of the autonomous functionality of this manufacturing plant and it’s normal ramp-up of challenges that we’re addressing and we will get to full-rate production. But it’s not related to Ice and bed.

David Raso

I mean just so I know-how much of this feels under your control because 35% to 40% of the EBIT cut actually came from defense and that program is hugely significant next year for driving defense profits to take, say, take a little pressure off access. So it’s not immaterial. I think most people feel vocational that backlog should carry you, but that interplay between transport, defense and access is not immaterial. So can you be a little clear on when do you feel you’ll have the ability to ramp that — I was looking for revenues getting close to $300 million a quarter at some point, not too far in the future. So apologize to push a little bit, but just a little more clarity, it’s very important for ’26.

Matthew Field

That’s fine, David. So just on the OI, remember, the warranty charge we took in the 3rd-quarter, which is about $13 million, that’s flowing into OI for the full-year. We did fully expect the licensing, which was in our guidance, the warranty, however, would flow-through to OI. So you shouldn’t look at the top-line change in revenue as the full impact on the OI.

David Raso

Okay. The licensing was in the guide. Okay. Thank you.

Matthew Field

Yeah, it was. We were expecting that was under negotiation when we set-up our guidance for the year previously.

John Pfeifer

And David, I will just say your expectation for quarterly revenue on the on the delivery side is that — is in-line with ours.

David Raso

Okay. That’s important. All right. I appreciate it. Thank you.

Patrick Davidson

Thanks, David.

Operator

Thank you. Thank you. At this time, I would like to turn the call-back over to Mr Pat Davidson for closing comments.

Patrick Davidson

Thank you. Thank you and thanks for joining us today. We’ll be meeting with investors at several conferences during the 4th-quarter in Chicago, Florida and New York. We’d be happy to connect. And in early-January, we’ll be showcasing our technology at the Annual CES Show in Las Vegas. We encourage you to stop by our booth and learn about technology that supports airports, job sites and neighborhoods of the future. Take care, everyone, and have a great rest of the day.

Operator

Thank you. Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day