Oshkosh Corporation (OSK) Earnings Call Transcript & Summary

I'm Kyle Menges, U.S. machinery analyst here at Citi. Joined by the Oshkosh team, Matt Field, CFO; and Pat Davidson, IR. I think it would be good just to get some quick overview, just how your portfolio has evolved over time, more balanced now between access, vocational and transport. Maybe that's a good place to start, just a high-level overview of the portfolio and the evolution.

Yes, thank you for having us today. So really, what Oshkosh for those who are not aware of Oshkosh Corporation, global industrial technology company, about 2026 guide was about $11 billion of revenue. We go to market in 3 different segments, Access segment, which is construction equipment. To put the relative size of these segments, I'll use our 2026 guidance to put these in a relative perspective. That segment is a little over $4 billion, $4.2 billion. It's a lot of equipment that moves people to heights to do jobs. Then we have our Vocational segment, which is -- you flip on those slides, great. It's equipment that services our neighborhoods, largely fire trucks, refuse equipment, front-loading concrete mixers and airport products. For 2026, that's also a $4.2 billion segment. And then lastly is our transport segment, used to be called our Defense segment. It's constituted of defense vehicles, tactical wheeled vehicles as well as the next-generation postal delivery vehicle, which hopefully some of you have seen in your neighborhoods. It's there in the upper left, I guess, as you're looking at the screen. And that segment is our smallest, but still $2.5 billion as we've guided for 2026. So really, 3 growing legs of the stool. Historically, we've been -- if you look at our revenue and operating income mix, we've been very heavily skewed towards Access historically. And what we've been explaining to a lot of investors, and we really talked a lot about our Investor Day was, a, the growth in Vocational and how that business has really come into its own, both with the acquisition of airport products in 2023, but also the growth in Vocational products to become a really solid second leg of the stool. But then the transformation of the transportation -- transport division and how some new contracts with the Department of Defense, Department War and the delivery contract really will transform that margin from what we guided this year to a 4% margin. Last year it was 3.7% to a 10% margin in 2028. So a really strong, stable portfolio of products.

That's a great overview. And Matt, you've, I think been in the seat of about a year now. Give or take. Would be great just to hear your high-level thoughts on what stood out so far during your time at Oshkosh. And what excites you looking ahead?

Yes, that's a great question. So when I joined Oshkosh, I knew about the quality of products. And when you build commercial products, they're such a fantastic business to be in because your customers rely on you to get their job done and to run their business, to be safe, to be productive, all those things. And that's a relationship built over decades, built over trust and reliability and all those things that make your tool to be effective, important and incredibly strong on those and incredibly long history. And so I was really pleased with that background. What I didn't fully appreciate, and I think you see in the CES booth certainly last year, this year is the technology component that moves this business forward. And what people often see is electrification of whether that's postal vehicle, refuse vehicle or some of the fire apparatus. But what they don't often think of is how connectivity, robotics, how autonomy, how AI comes to play in helping people be more productive. And that's really where I think our opportunity to grow, differentiate stands and why our CES display won a number of awards, but also had things like longer dwell times than other people because people see these products in their neighborhoods. They don't necessarily think of Oshkosh, but they know a fire truck, they know a refuse truck. And then when they see technology coming to those, automating those jobs or transforming how the work gets done, they can envision it in their own personal lives, and that's really exciting.

And you mentioned the technology, maybe to the untrained eye could seem like a disparate portfolio, but how would you say Oshkosh really leverages technology across the portfolio?

So if you think about the technology stack historically, it was -- for us, it was a hardware stack. So we often used to talk about the tack force suspension. Actually, let's stick with that one for just a second. Great. So we do this as kind of how we fit into a neighborhood. So we used to talk about the tack force suspension. It was a heavy-duty all-wheel drive go over anything suspension developed for military applications, so a little military pool over there. Then they took it and put it on fire trucks because they recognize fire trucks needed to be just as durable, just as robust. And it evolved and then upgrades were moved back to Defense. So we have that sort of hardware transfer across the industries. And that even went into the Ascendant aerial ladder, we were able to lightweight using lightweighting steel. But where technology is going is it's really in autonomy, robotics, AI, sensing cameras, perception, all those things. Well, to be able to scale that technology, there's no one business that can do it alone. And so it's great to have a portfolio of applications you can take this through. And I'll give you an example, and now you can go to your -- the next, future of -- we often talk about airport of the future, job site of the future, neighborhood of the future. We have a technology we had at CES that is a robot, and we talk about airport robots. So a lot of times, when you go to an airport and when you land, you'll see people out there with the little beacons and stuff. Those people are guiding the plane. And if there's a lot of lightning, they can't be out there, you can't dock your plane. So what we were demonstrating was a robot that could be on tarmac doing many of those jobs. And then we had a little theater experience where you saw all that come together with an autonomous jet dock technology for what we call the perfect turn, which is much more efficient. But that technology in that one robot that actually came out of a Defense application that's in market today. And it was the same technology platform that we used to trial some autonomous refuse technology, which we had last year, we had a new development. And so really looking at how do we develop one autonomy stack, one sensing and perception stack and then take it into these different end markets, but with a common architecture, whether that's connectivity like ClearSky, which we had in the Access segment. We're now bringing more connectivity into Vocational or whether that's things like autonomous robots, and we find applications there.

Great. Let's get into the segments a little bit here. Maybe starting with Access. Certainly, in recent years, you've seen competitors building out capacity in North America. In your mind, how do you think the JLG and SkyTrak brands are positioned to continue winning across the AWP and telehandler space? And on top of that, one of your competitors has its aerials business up for sale. So how do you think that could also potentially impact the industry?

So JLG, which is the go-to-market brand and SkyTrak is the other one. JLG is named after James L. Grove, I think it is -- John L. Grove, sorry. It's before my time. And that equipment has been around. He invented the boom lift. And that brand is known for its quality, its reliability. We're in a finance setting. So it's pricing discipline, but that also has a real-world benefit, which is a strong residual value. And that's important because we sell to rental companies primarily. And so they want to know that back-end residual is strong. So those principles create a strong foundation for the business as well as a strong relationship with the customer, which allows us to innovate and innovate quickly, whether that's with the microsized scissor you see in the middle there or other technologies we bring to market. But what will set us apart in the future is that that's not enough. We have to bring technology as well. So what you see on the lower left there is ClearSky Smart Fleet, which allows all our equipment to communicate with each other as well as allow users to understand the state of readiness, order parts easily and so forth. But that will evolve to providing end-user services. So the example I was given, and I always repeat because I can envision it myself, is if you have a construction site with hundreds of employees and hundreds of pieces of equipment, not everybody is trained with the same equipment. And so you have to use a scissor lift. You have to go check out the key at the main office and then the person in the main office is checking, oh, Pat Davidson, he's trained on a scissor lift, okay, and he needs a scissor lift for his job, here's the key. Well, that's all known in a system. You can have a user just badge in and activate the equipment. It doesn't exist today, but it's something the team is working on. That type of technology will keep us at the forefront of being the equipment of choice for our customers. And so that and then innovating, like I said, with things like microsized scissor other applications, innovations taking ag equipment, so developing a telehandler for the ag customer and demonstrating how a telehandler is superior to other equipment they have for the bar. That's the way we see that segment continuing to grow and thrive. I'm sorry, on the competitors. Yes, they've announced that they're for sale. Wait and see. We'll see how we go.

All right. Fair enough. Maybe we can touch on the Access guide for 2026 a little bit. It sounds like it's really large projects driving the strength, local markets remaining pretty muted. Just maybe talk about what you're hearing from customers and perhaps bifurcating across the independents versus the national players and just your confidence level also in Access maybe being in a better spot as we exit '26 and into '27?

Certainly, I remain optimistic. The nonresidential construction sector has been weak. You reported on others have as well. And really, what's been the shock absorber for that sector has been the data centers and mega projects that get so widely reported. You've seen office equipment, warehouses, even manufacturing coming off peaks. And that's resulted in a fairly weak industry, especially when you look at the independents, you tend to do more of the local projects. They were a little more resilient than I certainly expected last year. We saw them continue to play into the fourth quarter. We announced prices. I think they were a large driver behind our sales success in the fourth quarter, which has its own implications into 2026 that I'm sure we'll talk about. But as I look ahead, I think we still see the mega projects playing the bulk of the work this year. The nationals play disproportionately on the mega projects because they are the big contractors. And then the independents basically supply some of the local contractors for those. But with more rate cuts, I think that's pretty uniformly expected now this year with more economic activity, hopefully, the rest of the economy starts to broaden out and grow. And that will be great to see, hopefully 2027, maybe 2026, but we're not planning for it.

Got it. And how to think about puts and takes of the margin guidance as well and maybe price cost as we progress throughout the year? And maybe putting a magnifying glass on price a little bit, just how are negotiations going thus far? And you've talked about positive pricing. Yes, it would be helpful to hear an update.

Yes. So we are pricing in 2026. The impact of tariffs is fully felt in 2026. It was kind of gradual throughout 2025. So we had the announcements in April. But really, you saw it start to hit the income statement a little bit in Q3, much more in Q4. Now we're fully into having all our costs, having tariff payments and so forth in them. So really to offset that, we have 2 levers. First, and we talked about this on the very first call when tariffs were announced, is it's our responsibility to address as much as we can on both the tariff engineering, but then the cost side. And shout out to Mahesh and the Access team, not that they're dialed into this, but even so, I'll call it a shout-out, they initiated cost reductions starting in 2024 to try and improve the resiliency of that business. And so that's really a 2-year project. So the more we get down the pipe, more costs are coming out of that business. And so we'll have more out at the end of the year than we have now. So that's one element to offset it. And the other element is pricing. And so we have had constructive dialogues with our partners in the rental companies and everyone agrees kind of the cost drivers, and then we just work through how the pricing will materialize. And what we did say on the call is for the full year, we will offset -- we'll have favorable price cost. But as you say, it won't be necessarily balanced across the year.

Yes. Makes sense. Maybe we can shift to Vocational, which I mean, is already hitting the 2028 margin targets.

Right in the heart of it.

I think the main question that I get from investors and would love to pose it to you is just maybe breaking it down a little bit between the F&E, refuse, AeroTech. Should we be worried at all that we could be at or near the peak in any of these end markets?

So I don't want to say peak, I think there's long fundamental drivers over the long term. There will be some ups and downs, but they generally have longer sign waves, if you will, to their cycles. For fire, let's just talk that one first. we're still working through an extended backlog that extends into 2028. So priority #1 there is build more fire trucks. It's that simple. We're investing $150 million. $70 million of that is already committed or spent to increase capacity. We said we would increase capacity roughly 25%, 30%. And so a lot of those investments are coming in this year, a lot were put in place last year. So really pleased with the growth there to address fire demand. And the earlier we can deliver fire trucks, the better that business is to healthier it is. But it's going to take a while. For those of you who have never toured a fire truck factory, it's more art than science. It's not like my background, which is automotive, high volume. And so really, you're doing a lot of small actions within a plant to improve throughput and productivity. So that's going to be a multiyear journey with a lot of growth prospects ahead because not only do we have the existing demand, we have a very aged fire truck fleet. And so a lot of demand for years to come, we think, there. On the airport side, AeroTech, we build jet bridges, as you see in the upper right, we build ground support equipment. We've talked about the robots that we're developing as well. We just had someone stop Pat. Pat has been around in this industry for a while. Somebody stopped him. Actually in our room, popped in and said, "Hey, my jet bridge was broken at Miami. Can you call up AeroTech?" We have a very strong jet bridge business. And you look at any trend on air travel, cargo, transport, it was a dip with COVID, it's right back on the line we saw for growth. So I think there's tremendous opportunity to continue to grow there as we refresh and grow our airports, but also grow cargo and then potentially expand internationally. So great business, long-term potential. Refuse is the third big business there. That one has had tremendous growth over the past couple of years. What we're seeing right now, and you can see it in the orders we had at the end of the third quarter in some of our fourth quarter sales, but also orders, you're seeing a bit of a pause. That's really coming from -- if you think about the refuse business, we all generate waste. That's the driver of the refuse business. Everyone is generating as much or more waste as they did before. So I guess thank you. Then there's the municipalities, which provide the contracts then there's the waste haulers and then there's us. So what we're seeing is those municipalities with all the tariffs in place, pausing on some of those longer-term contracts. They don't want to get locked into long-term contracts at peak pricing because with 232 tariffs, 232 heavy truck tariffs, there's just uncertainty into what that pricing dynamic will be in the near term. So you're seeing some pause in the municipalities. Instead of doing a new 5-year contract, they'll do month-to-month or what have you. Well, when that's the case, what you have with your waste haulers is they're not buying new trucks, they'll age their fleet until they have that certain long-term contract and they'll refresh their fleet to service it. So I think there, we're seeing a bit of a tepid period. I want to say it's offpeak in that sense. I just think we're in a bit of a pause. That might be 12 months. I don't know, it might be 6 months. But at some point, that will turn back on because the one thing I know is where we started this story about refuse, no change there and nothing changing the age of the fleet, which is already old. So I'm really confident in the long-term trends in all our Vocational businesses and where we're headed towards 2028.

Awesome. That's helpful. Maybe we can touch on AeroTech a little bit more, acquired it in 2023, could still be a bit overlooked by investors. Yes, I mean, really strong positioning in North America. Good comments on potential international expansion, interesting. And then it would also be helpful to hear about 80/20 work that you're doing right now in AeroTech as well.

80/20. Sorry. Yes. So we've historically done 80/20 work in the Pierce business. We did that 5, 6, 7 years ago or so. And that allowed us to streamline our lineup and think really about that business, which started that margin transformation journey in that business. And Mike Pack, my predecessor, led that when he was in this segment. And now he's the President of the Vocational segment. So as we look at the AeroTech acquisition, again in 2023, $800 million sizable acquisition. Same time I joined, we brought in Ranjit, who's running that division. He's really been focused on how do we integrate that business more holistically as a business, how do we get more operational efficiencies. Some of that is 80/20, which they are now leading for the company this year in terms of where are the high-margin businesses? What are your high-value customers? And how do you restructure some of the businesses that are less performing that really have been overlooked for years. While JBT was a responsible owner, they certainly weren't overinvesting in the business because they were looking to sell it for a period of time. So it's a great series of businesses that is, I would call it, underloved. We've got the right leader in spending a lot of time on it. We think there's tremendous growth through both 80/20 initiatives around what products we're offering, how do we go to market with those, but also the autonomy stack, whether that's autonomous jet bridge, whether that's the software stack improving the turn of the aircraft or whether that's future robotics on the tarmac.

Great. Before I go to transport, maybe a quick question on the F&E side. You talked about you're doing everything you can -- what should I call?

Fireside. Fire & Emergency division, we combined it with the Commercial business to make Vocational. Fire -- is the preferred term.

Got it. All right. Maybe just quick on that. I know you're doing everything you can to increase throughput. I think you've mentioned trying to get a 20% to 30% efficiency increase in that business. Just what sort of time line do you think that will occur over? And when do we get the backlog down to a "normalized level"?

Yes. What you saw in the second half of last year where volume was up about 10% roughly. This year, you see volume growth with our revenue guide of $4.2 billion, so continued volume growth. In our 2028 targets, we talked about getting the backlog where right now, you're talking maybe 36 months, 3 years or so getting that to 18 months. Really, we'd like to get it closer to 12. So you're talking in 2028 down to 18 months and then after that, working it down more towards 12 months. So again, the reason is because of the nature of the production, it's a very slow progressive change to throughput and production efficiencies. So you can't -- one, I don't want to commit a bunch of capital to just build a whole new factory that we might not need in 10 years' time. But two, it's such an art to build these things that you have to be methodical because you need high-quality units. And some of them are very unique. You might build one of these trucks every 10 years, 20 years in some cases.

And that 10% volume growth that you saw last year, is that in fire? Or is that just total?

Municipal fire apparatus.

That was municipal fire apparatus, there we go. And then shifting gears to transport. I know the NGDV production ramp has taken a little bit longer than initially anticipated, which is weighing on the 2026 guide a bit. Just can you elaborate on progress you've made there? And maybe what's caused the ramp to take a little bit longer? What do you think you can do to reach full rate production? When do you think you can reach full run rate production?

Sure. So first of all, it's worth saying the product is spectacular in the field. Really pleased with the performance. Those postal delivery carriers who are using it, rave about it. We've got over 10 million miles driven. And this year, we've said we're steadily increasing production. And we've always said capacity was 16,000 to 20,000 units a year. On the call, we said this year, it would be closer to the 16,000. So you're at the low end of that. So if you're steadily improving production, hitting the low rate of your annual capacity, I'm pretty comfortable with where we're headed and we're delivering consistent with what postal service needs. We were hoping for a faster ramp, I'll be honest. We were expecting that. I think what we found -- well, I know what we found is that when you have a new plant building 16,000 to 20,000 units a year, with as much robotics as we have. Not all the robots work when you turn them on at full rate production. And so what we've done is rather than push it hard and fast and have a lot of problems, we're taking a much more methodical approach through it. And what you find when you ramp from X to Y is now those robots that were working effectively sometimes will hit each other. And so you need to fix that or a bolt loose or G, X, Y and Z. And so you focus methodically through body shop, paint shop and kind of work those. And every station, we track all our stations, every station has demonstrated its capability to run at rate, but the variability across the stations, they're not all hitting consistently at rate. And so the great news is the problem is within the 4 walls of the plant. And so it's a matter of consistently knocking those down and improving our run rate over time, which is why we're taking a very systematic approach as opposed to planning for a much faster ramp, which is what we kind of had originally thought of as a more automotive style as opposed to an operational kind of commercial ramp.

And it's fine if you don't want to comment on this, but just thinking about the ramp starting in Q1 to Q4 where you exit the year? Or is it going from like a 14,000-unit run rate to 19,000 or 15,000 to 18,000.

I'd have to annualize that. Certainly, we would be exiting closer to the 20,000, the high end of the 16,000 to 20,000. Beginning of the year, I'd have to think through what our -- because we talk about daily units, so I translate that to an annual, and it's going to break my head.

That's helpful. Okay. But you think exiting the year, we will probably be at above towards the higher end of that?

Yes. That's right.

Got it. And then another question, too, on transport margins. Just how to think about -- how do we bridge from margin today to the 2028 target?

Yes. Great question. So one of the big improvements -- so when we did Investor Day, we talked about growing revenue and transforming the margin. So we've historically been a roughly 10% operating income margin business. That's roughly what we guided to this year. We ended last year at 9.6%. For 2028, we're talking about 12% to 14% OI margin. A big driver of that actually is the transport segment. So last year, it was -- there we go. Real-time slide. So in last year, we were at 3.7% margin. In 2024, it was a 2.5% business. This year, we guided to a 4% business. There's basically 3 building blocks to go from where we are at 4% to that 10%. One is FHTV. It's our heavy truck contract. So as with all aerospace and defense, and this room seems to be aerospace and defense today, with inflation and fixed price contracts, those contracts got flat to underwater or underperforming fairly quickly. And you saw that in our results in the last couple of years. So building the heavy under the new contract at the end of last year, and you saw a margin pickup in the second half versus the first half. The mediums, which is the other big contract we build, we start building under that new contract second half of this year. So first half, we're still building some lower margin units and in the second half, that improves. And so those 2 already signed contracts, those building blocks are in place. The third piece is NGDV ramp. And that's really in 2 pieces. One, it's getting to full rate production with quality. But then two, it's building out that additional order backlog towards that full 165,000 unit contract we have. So we've got 51,500. As we take on more orders, then that margin profile improves, too, because with those initial production units, they're obviously going to have lower margin, you're building them at lower rate, you're finding issues, you're just like fix it, build them, which is always what happens in launches. But because of how contract accounting is, that gets pooled. And so for that first 51,500, that's going to have a lower margin pool than the full 165,000. So as you take orders in, it gets more normalized to the margin we expect over time. And so that's the other driver that you'll see over time between now and 2028 as we get more orders. That margin normalizes into the range we would expect, you get the new contracts in Defense and then you get into that kind of 10% margin. So very comfortable with the path to 2028, but it's not going to happen this year.

Got it. And I am curious on NGDV, the margin. You don't have to say what margin is on NGDV today and where it's going in 2028. But is there some sense you can give on like the basis point spread on just NGDV margin today, where it will be in 2028?

We're not going through that.

I tried. That's fine.

You tried.

And then just in Defense specifically, just how should we be thinking about top line growth exiting 2026? Is it pretty safe just given that you have these long-term contracts, is it pretty safe to assume that Defense should be growing top line in 2027 year-over-year?

2027, difficult to say, but certainly by 2028. So to put it in context, our guidance for this year is $2.5 billion, about half Defense, half delivery. 2028, $3.1 billion, half Defense, half delivery. So they both equally grow from about $1.25 billion to $2.5 billion -- I'm sorry, to $1.5 billion. So moderate growth for both of those. One of the other elements people didn't fully understand this year because it is difficult to understand is last year, we had a lot of exports for Defense. And so our revenue for last year was $1.6 billion. That comes down to roughly about $1.25 billion and then it grows back up. So we did have a number of exports last year. Happy to have them, but they are a little bit more lumpy.

Got it. And then my last transport question here. You did tease a last-mile delivery concept vehicle at CES this year. So would love to hear more about this, conversations you're having now with potential customers, what the appetite seems to be? And then how long do you think it might take to actually come out with this product?

Yes. So once we won the NGDV contract and people started to see that, there was a lot of appetite for an integrated delivery vehicle. So there's -- for those of you who are not familiar with how delivery vehicles generally are structured, you have 2 types of delivery vehicles. You have ones that you and I can drive and then there's ones that require commercial drivers like the CDL. If you think of our NGDV and the Amazon Rivian, those are what's called Class 2. Any of us could drive them. If you think about it as a FedEx truck or a UPS truck, those are heavier trucks, you need a commercial driver's license for those. So we've had great dialogues with the delivery companies because what they see with NGDV, what they see with our other products, whether that's military vehicles or refuse vehicles, is the ability to build custom integrated vehicles that have great durability and reliability because the NGDV is designed for a 20-year life, which none of us get out of our normal day-to-day drivers. And so we have had a lot of interest. And so what the team got really excited about is what are those future opportunities. And we had a video at CES, which had what looked a lot like that bigger kind of -- I'm going to call it, a UPS truck because that's what I grew up seeing in my neighborhood. So it really depends on what our go-to-market is in terms of how that materializes and the timing. If you took the NGDV, did some minor modifications because of that design, because of that front end, you probably have to do some crash. That takes a little while, but it could be a couple of years, a little bit more than a couple of years maybe because you're going to have to recash, recertify and all that stuff. It's very complicated. If you do a ground-up body on frame, which is what those heavier ones are integrated, it might be a little bit longer than that because then you are really ground up. Our engineering team is very efficient. But I think those would be normal standard timings from my experience in automotive, nothing super secret sauce there. It's just what anyone would probably quote you on some of that. So it really depends on the range of those options, but we are really excited about, one, our capability to build a unified platform and top patent platform that works together with safety metrics, but also with the demand we see.

Maybe that's a good place to pause and see if there's any questions in the audience.

While the screens up unless somebody has a question, I just want to touch on the middle left there, middle right, apologies, left and right have always been a problem. That's our ROGUE Fires. So when we talk about the future of Defense and we talk about tactical wheeled vehicles, one of the important things is autonomy. We talked a little bit about it in the airport. But what I find really fascinating is as I think about the future for Defense, I think the future is largely autonomous. And so technology like that allows you to be payload agnostic and position a vehicle where it needs to be for what it needs to do. And that could be exportable power for technologies that require exportable power. That could be rockets is the word in here. It could be satellite information, antennas. It could be all sorts of things. But you can position things without people in arms way. And so we're really excited about that line of products and the equivalents, the one above it is a PLS A2, which is autonomous-ready PLS palletized load system, really exciting name. So I think autonomy in that space is going to be a really great future. I just had to say that. And by the way, the one on the lower right there, that one can be dropped from a plane. So that's fine. Certainly some cool products, very cool stuff. That gave you all the chance to think of questions.

I have one on front here.

There's one right here in the front.

So GPS jamming, GPS in that environment is a big issue, particularly for autonomous vehicles. So how are you tackling those challenges? Is that something that you're getting from another supplier? If it's available now? Or are you developing something in-house?

I'm out of my depth on that question. You'd need one of the engineers here to answer that. To the best of my knowledge, I'll just say, I think, generally speaking, that technology is from the government. We are not the people who do that stuff. Generally, the government agrees who's going to do that, and then that's a directed supplier for us. That's my understanding. I could be wrong on that, but us -- but well, so for instance, in this. Okay, where we're focused is the systems and the software that make it autonomous. In that case there, the ROGUE Fires uses an outside company as the autonomy stack that the Department of Defense, Department of War contracts with and installs that software. We do the drive by wire system. We do the software that does the braking. We create the autonomy platform within the truck and then they decide how they want to activate that with the layer above that. And we think that's our core competency is the resilient truck that can do anything. It's how things work together, and it's the controls of the vehicle within the vehicle. The one above it, a similar thing. It's autonomy ready, so it's drive by wire as opposed to a hydraulic or electric steering column. But it's not fully autonomous. You can actually see the cab and the steering wheel in that picture that one below obviously has either. So that's how we think about it. Good question.

Any other questions? All right. I think I have one more just on capital allocation. Would just love to hear about your appetite for M&A, in particular, you've mentioned doing bolt-ons, acquisitions. Just do you envision that still being the focus? And then also just how you're thinking about share buybacks, reinvesting in the business, divided and all that stuff?

So at Investor Day, we did a slide that talked about our capital allocation priorities, and they're unchanged. First and foremost is a healthy business with a healthy balance sheet. Remaining creditworthy is critically important to me. Secondly, it's funding our business. There is no better return for our shareholders than investing in our business. Every -- Mike might disagree, but nearly every dollar he asks for, he gets to grow capacity. He may not enjoy the process, but we all recognize it's critically important. The return on that asset is very good. And then comes returning cash to shareholders. So we've steadily increased the dividend for 12 years, including an 11% increase this year to our dividend. We think a steady, reliable dividend is important for a cash flow positive company. And then the last 2 uses of capital are share repurchases and M&A. And in Investor Day, we had share repurchases first. I still think that would be a good use of capital. We bought $278 million of shares back last year. That was up. It's like, I think, our third largest year maybe of share repurchase in the last 10, 15 years. And given where our multiple was, we felt that it was a good use of capital. With that said, we have an always-on M&A pipeline. We're always looking to see if there's something for bolt-on or to support our existing businesses, whether that's something as large as AeroTech, which was $800 million or a lot of the other ones were smaller, AUSA, Hinowa, you're talking a much smaller kind of bolt-on. That's really, I think, our sweet spot right now is that kind of space of acquisition that augments our business going forward. But right now, where our multiple is, even though I'm pleased with our performance this year. Our multiple still is below where we think it would be. So share repurchase is still on the table.

Great. I think that's a good way to end it. Thank you guys for joining us, and we'll wrap it there.

Thank you for having us. Thanks all for joining.