OSK Q2 Deep Dive: Margin Expansion and Strategic Execution Amid Tariff Uncertainty

Specialty vehicles contractor Oshkosh (NYSE:OSK) announced better-than-expected revenue in Q2 CY2025, but sales fell by 4% year on year to $2.73 billion. The company’s full-year revenue guidance of $10.6 billion at the midpoint came in 2.4% above analysts’ estimates. Its non-GAAP profit of $3.41 per share was 15.7% above analysts’ consensus estimates.

Is now the time to buy OSK? Find out in our full research report (it’s free).

StockStory’s Take

Oshkosh’s second quarter results were met with a positive market reaction, reflecting management’s ability to drive margin expansion even as sales volumes declined. Despite a 4% year-over-year drop in revenue, management highlighted strong execution across all segments and noted resilient performance in the Vocational and Access divisions. CEO John Pfeifer credited improved pricing, disciplined cost actions, and “continued strong performance in our Vocational segment” as key factors in maintaining profitability. The company also pointed to successful contract execution and new product launches as contributors to the quarter’s performance.

Looking forward, management’s guidance is anchored by expectations for improved operating leverage and continued cost mitigation—especially in the face of ongoing tariff uncertainty. Oshkosh anticipates that actions like supply chain localization and tariff mitigation will help offset external headwinds, while investments in new products and capacity expansion in the Vocational segment are expected to support future growth. CFO Matt Field stated, “We project the impact of tariffs to be fully offset and expect our adjusted EPS for the year to be in the range of $11 per share,” emphasizing confidence in the company’s ability to execute against its targets even as macroeconomic conditions remain fluid.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to disciplined execution in cost management, aggressive backlog fulfillment, and product innovation across the core business units.

• Vocational segment momentum: Deliveries of fire apparatus increased 7% year-over-year, with management citing capacity expansion and a 20% boost in fire apparatus sales as key contributors. CEO John Pfeifer noted that the segment achieved a 15% revenue increase due to strong demand from municipal customers and ongoing backlog fulfillment.
• Access equipment resilience: The Access segment delivered nearly 15% adjusted operating income margins despite lower revenue, aided by a favorable product and geographic mix. Management pointed to healthy utilization rates among customers and highlighted large infrastructure and data center projects as sustaining equipment demand, even as private non-residential construction saw delays.
• Transport segment contract wins: Oshkosh secured a three-year sole-source contract for the Family of Medium Tactical Vehicles (FMTV) with the Department of Defense, incorporating updated pricing and an economic price adjustment mechanism. Production ramp-up for the next-generation delivery vehicle (NGDV) for the USPS also marked a milestone, with over 1.5 million miles logged on the NGDV fleet.
• Tariff mitigation strategies: Management described the tariff environment as “dynamic,” but stressed that strategies such as local-for-local supply chains, supplier negotiations, and onshoring have helped offset recent cost pressures. These efforts, combined with improved operational performance, were cited as reasons the impact of tariffs was less severe than anticipated.
• Share repurchase activity: Oshkosh increased its share repurchase pace, buying back $40 million in shares during the quarter. While not the primary driver of operating results, management sees continued capital return as a tool to enhance shareholder value amid a stable balance sheet and improving free cash flow.

Drivers of Future Performance

Oshkosh expects margin resilience and growth to be driven by new contract execution, capacity investments, and ongoing tariff management.

• Continued contract execution: Management highlighted that the recent FMTV and FHTV (Family of Heavy Tactical Vehicles) defense contracts will be primary drivers of future revenue and margin gains, especially as production under these contracts ramps up through next year.
• Vocational segment capacity expansion: Progressive increases in production capacity within the Vocational segment are expected to meet growing demand, with management confident that current backlog pricing and technology features will support sustained margin improvements over the next two to three years.
• Tariff and cost mitigation: Ongoing volatility in tariff rates remains a risk, but management believes their mitigation strategies—such as supply chain localization and supplier renegotiation—will offset most of the cost impact. However, CFO Matt Field cautioned that the environment remains fluid and segment results may vary depending on tariff changes and broader macroeconomic conditions.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be closely monitoring (1) the pace of backlog conversion and capacity expansion in the Vocational segment, (2) the margin impact from both tariff volatility and supply chain mitigation efforts across all divisions, and (3) progress on contract fulfillment and production ramp-up for defense and delivery vehicle programs. Developments in infrastructure and data center demand will also be key markers of future growth.

Oshkosh currently trades at $138.76, up from $126.60 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

Stocks That Trumped Tariffs

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.