John Pfeifer

Thank you, Patrick, and good morning, everyone.
I'm pleased to announce another solid quarter with revenue growth of 9% and an adjusted operating margin of 10.3%. Our adjusted EPS of $2.93 was in line with our third quarter expectations we shared during our second quarter. Our earnings call, we continue to see improving performance and growth across our vocational business portfolio and an improving defense segment outlook with new contract award pricing.
While our Access segment is experiencing softer market conditions in North America in the near term, we expect we will continue to deliver resilient, healthy margins in light of somewhat softer access equipment markets. We are updating our full year 2024 outlook for adjusted EPS to be approximately $11.35 per share versus our prior estimate of approximately $11.75 per share.
During the quarter, we achieved a significant milestone as the United States Postal Service began placing our next-generation delivery vehicles or NGDV. is in service for last-mile delivery. The NGTV.s, leverage our market-leading innovation and technological capabilities to provide the U.S. Postal Service with the industry's most state of the are purpose-built delivery vehicles that modernize and decarbonize their fleet while enhancing driver safety.
We are pleased with early positive feedback on NGDV. performance in the field, and we remain focused on executing our production ramp up, which is per day addressing well. Last month, the Science Based Targets initiative notified us that they approved our greenhouse gas emission reduction targets.
SBTI.s. Validation of our targets reflects another important step in our journey of reducing our carbon footprint while consistently delivering groundbreaking So solutions that shape a more sustainable future.
Please turn to Slide 4. We'll get started on our segment updates.
The access team delivered year over year third quarter sales growth. While we believe mega projects and fleet ages remain tailwinds, pockets of slowing nonresidential construction activity and persistently higher interest rates have been putting pressure on the market.
Furthermore, as I mentioned on our last call, we have seen customer demand revert back to more typical seasonality. We remain confident in our ability to deliver solid margins even during a period of softer market conditions. We are working with our customers on their 2025 requirements, and we continue to expect meaningful order during the fourth quarter of 2024 and first quarter of 2025.
Overall, we believe the access market will remain healthy over our long-term planning horizon.
Our access team continues to advance its products with state-of-the-art technology are clear skies smart fleet connected solutions platform is an example of this capability.
Customers are enthusiastic about the two-way communications and other technology enhancements, including over the air software, our updates, digital access control risk commerce platform that are improving productivity.
In early September, we completed our previously announced acquisition of our saw a leading European manufacturer of specialty equipment, including we'll dumpers rough terrain, forklifts and telehandlers.
We are pleased to bring house into the Oshkosh family houses, a market leader in Spain and serves adjacent new markets for us, including vegetation management, and it expands our agricultural presence and complements our traditional access equipment markets.
We also believe that leveraging our North American sales channel for our products will support growth moving forward.
For example, our slide deck shows JLG's new E. three one three electric telehandlers manufactured by also the battery-powered E. three one three offers zero emission and low noise operation for moving materials around and critical workspaces.
Please turn to slide 5, and I'll review our vocational segment. Our vocational segment achieved strong year-over-year revenue growth of 17.6% in the third quarter, leading to another solid adjusted operating margin of 13.7%. Demand for vocational products remains very strong in our backlog continues to grow, providing long-term debt visibility.
We remain focused on achieving increased throughput in our existing facilities to support growth. Concurrently, we are reviewing our manufacturing footprint as we evaluate additional investments to increase production capacity over the next few years. Furthermore, we have continued to lead in technology insertions across our range of products from autonomous functionality to electrification and to intelligent product features.
We expect this technological advancement to provide substantial benefits to our customers and drive growth for our Company. In September, Republic Services issued another significant order for 100 of our new purpose-built zero emission electric Volterra VSL refuse and recycling collection vehicles as Republic strives to improve productivity while reinforcing its commitment toward to a reduced carbon footprint. Customer interest in these revolutionary fully integrated electric vehicles remains very high. We have more than 100 customer demonstrations scheduled that began in the third quarter and will continue over the next several months, allowing current and future customers to experience plan the significant benefits of our vote.
Volterra ZSL. I'd like to highlight two smaller but important vocational businesses on today's call, both our IMT. service vehicle and front discharge concrete mixer businesses have been performing well, delivering strong margins and contributing to the success of the vocational segment. We celebrated the one-year anniversary of the Aero Tech acquisition on August first, and we are pleased with the integration and results to date.
By combining our strengths, we expect to drive innovations and electrification, autonomous functionality and intelligent and product features. The team at Aero Tech showcased several innovative products at the ground support equipment Expo last month in Lisbon, Portugal, the show was well attended and featured our market-leading airport ground support equipment.
Our electric arc Volterra, as well as JLG equipment, which is also used extensively at airports, are displayed demonstrated the broad capabilities Oshkosh provides to the air transportation industry as well as the strong commercial synergies between our businesses.
Global air passenger metrics continued to strengthen with international air transport associations.
August figures showing growth of 8.6% year over year.
Let's turn to slide 6 for a discussion of the defense segment.
Sales were up 14% as a result of NGDV. production, higher tactical wheeled vehicle deliveries and aftermarket parts sales.
As a reminder, we expect to ramp up NGDB. production throughout 2025 and exit 2025 at full rate production, leading to stay strong revenue expectations for these vehicles in 2026.
We completed a five-year contract extension for the FHTV. program in early August, which includes a combination of better pricing and a robust economic price adjustment provision.
We also expect to complete a three-year contract extension for FMTV A2 in the first half of 2025.
With both better pricing and similar EPA.
We expect to begin delivering units under both of these contract extensions in early 2026.
We believe these contract extensions provides solid visibility to customer demand and will support stronger, more resilient margins over the next several years.
We continue to wind down domestic JLTV production and expect to ship the final domestic units in early 2025.
On the technology front, during the quarter, we submitted our product type proposal for Phase two of the robotic combat vehicle RCB. program.
Our offering leverages engineering expertise across Oshkosh, including Pratt Miller, to provide the U.S. Army with innovative adaptable technologies to enhance soldier performance and mission success.
The Oshkosh RCV is purpose built and brings capabilities necessary for increased performance, improved, maintain ability and flexibility and multi-domain operations.
With that, I'll turn it over to Michael to discuss our results in more detail in our updated expectations for 2024 things.

Michael Pack

Jon, please turn to Slide 7.
Consolidated sales for the third quarter were $2.74 billion, an increase of $232 million or 9% over the prior year quarter.
Our top line growth was driven by the benefit of increased organic Gannett volume in all segments, an additional month of Aero Tech sales in the current year as the business this was acquired on August first, 2023, and the benefit of improved pricing primarily in our vocational segment.
Adjusted operating income increased $6.2 million over the prior year quarter to $283 million or 10.3% of sales.
Improvement in adjusted operating income was largely driven by higher sales volumes and improved price cost dynamics, offset in part by higher SG&A and engineering costs.
Adjusted earnings per share was $0.293 in the third quarter versus $0.34 in the prior year to modestly lower adjusted earnings per share on higher operating income was driven by a higher interest expense on our revolving credit facilities.
Please turn to slide 8 for a review of our updated expectations for 2024. We are reducing our full year adjusted earnings outlook.
On a consolidated basis, we now estimate 2020 for sales to be approximately $10.6 billion versus our prior expectation of $10.7 billion.
We are estimating adjusted operating income to be up approximately $1.1 billion, down from our prior estimate of $1.14 billion.
And we are now estimating that adjusted earnings per share will be approximately $0.1135 and U.S. of approximately $0.1175.
At a segment level, we are estimating access sales to be approximately $5.1 billion with an adjusted operating margin of 16% compared to our prior expectations of approximately $5.3 billion and 16.5%, respectively.
The reduced revenue and slightly lower margin expectations reflect the softer market conditions in North America previously highlighted, we expect vocational sales will be approximately $3.25 billion, and we are increasing our expectations for adjusted operating margin to be approximately 13.25% point to 5%, up from our prior expectation of 12.75%.
We expect stronger price cost dynamics and lower spending to drive our improved margin outlook for defense, we are now we now expect sales to be approximately $2.15 billion, and we are maintaining our expectations for adjusted operating margin of approximately 2.25%.
Our estimate for corporate and other costs is $190 million.
Our expectation for tax rate remains it's 24%.
Our expectation for share count is also unchanged at 65.8 million shares.
We are reducing our Capex target by$ 25 million to $275 million.
We are also reducing our estimate for free cash flow by $25 million to $350million.
I'll turn it back over to John now for some closing comments.

John Pfeifer

We reported another solid quarter.
And while we are reducing our expectations for 2020 for adjusted EPS, we continue to expect meaningful growth in revenue, adjusted operating income and adjusted EPS compared to 2023.
We continue to benefit from strong long term growth drivers, and we believe the strength of our people, innovative products in our businesses will continue to drive long-term shareholder value.
I'll turn it back to you, Pat, for the Q&A.
Thanks, Jan. I'll remind everyone to please limit your questions to one plus a follow-up and please stay disciplined on your follow-up question.
After that follow-up, we ask that you rejoin the queue if you have additional questions.
Operator, please begin the Q&A session.

Operator

When thinking at this time, we'll be conducting a question-and-answer session.
If you'd like to ask a question, please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You may press star two to remove yourself from the queue for participants using speaker equipment.
It may be necessary to pick up your handset before pressing the star and one moment.
Please.
While we poll for questions.
Our first question is from Mig Dobre from RW Baird.
Please go soon.
We'll resume used home or tuned for more.
It will go on to our next question here from Angel has from Morgan Stanley.
Please go ahead.

Question and Answer Session

Stefan Papasoff

Hello.
This is actually stuff on DS sitting in for Angel.
Thanks for taking my question.
So, I guess regarding your lowered sales outlook, you indicated this is due to softer outlook and access.
However, if I'm not mistaken, I recall your access backlog give you full coverage for 2024.
So maybe if you could give us more color on the exact puts and takes on what drove the revenue declines and you know whether there were any order cancellations or delays, if you could help us bridge, you know, in 2024 to your more optimistic outlook for 2025, that would be great as well.
Things.

John Pfeifer

Yes.
Thanks, Angel.
Or I'm sorry, Stefan, thank you for the questions and thanks for sitting in for Angel today.
When we talk about our backlog, we talk about our backlog and how it stretches into 2025.
But in any given quarter, you know, you enter the quarter mostly booked.
There's timing to use of the thing that's important to remember, there's timing to backlog.
Some of our backlog scheduled to ship next year, some scheduled to ship in the fourth quarter.
So, in the fourth quarter where we have a lot of our backlog now that's already booked with customers, but there's still some orders to come in to fill out the quarter.
And so that some of the change that you saw, I think it's really important though, to pay attention to backlog versus just order intake mean orders are really important, of course.
But I think backlog is a little bit more telling and we have a very healthy even with low orders in the third quarter, which we expected.
We have a very healthy backlog.
And I think that that's indicative of a still relatively healthy access equipment market.
Yes, we have had some pushouts in our backlog, pushing things out to 2025 and we have had some cancellations, and the cancellations make you orders look a little bit lower in Q three.
But overall, we still have a healthy backlog at over $2 billion.
Typically, in the access equipment world, we have a three-to-six-month backlog that's considered healthy and normal and were up kind of the high end of that right now, um, so we feel pretty good about the backlog that we've got.

Stefan Papasoff

Great.
Thanks for the color.
And then for my follow up on within vocational, can you talk about the degree of incremental price upside that's embedded in your backlog?
And maybe if you could remind us how we should expect that to flow through the P&L within the next couple of years and then I'll turn it over.
Thank you.

Michael Pack

Yes, this is Mike on.
We still have a strong double digit price increases in our backlog of that will continue to read through over the next out of the next few years.
Relief on were started for fire trucks.
We start getting out into about a three-year backlog, um, so that will continue to read through.
So, what that means is we expect to continue to see not only growth on the top line of the business from volume.
We continue to expect to see the benefit of Christ price cost.
Things question is from during.

Operator

Our next question is from Jerry Revich from Goldman Sachs.
Please go ahead.

Jerry Revich

I just want to good morning, everyone.
I'm wondering, Gary, John.
Hi, John.
And I think are the updates on the improved economics in defense companies.
Can you update us on how you're thinking about the path towards the 9% to 10% margin targets you have for the business?
How big was the forward do you expect in 2025 in any updated thoughts on the cadence, please?

John Pfeifer

Yes.
I think you'll see a step forward.
And the short answer is you see a step forward in 25, and you'll see of a bigger step forward in 2026.
And a lot of this comes from our core defense business and the new contracts that were getting, you know, we've gone through 40 years with relatively low inflation until 2021.
And with fixed price contracts, when you have on expected inflation, that kind of disrupt your business as we've seen.
So, the good news is that there's this business is going to improve dramatically over the next couple of years because we're getting new fixed price contracts that are price of the reality as of today's input costs.
So, you think about the big heavies, the medium vehicles that we do, as well as then layering in some of the combat programs that we have in some international business that we have, that's all really healthy margin for us.
And we fully expect this business will recover to a to its normal kind of near 10% margins?
Tom, it's going to be lower because we won't have Jay on the core JLTV business for the DoD going forward.
But it'll be a profitable core defense business of our over $1 billion in revenue.
Then you layer on top of that, the postal contract, the NGDV., that's a gigajoule panic program.
That's what drives growth in this business into the foreseeable future. And that's also a good margin business for us. So going forward of that business is going to improve materially over the next couple of years.

Jerry Revich

Super.
And in access equipment from you, folks have made a lot of operational and process improvements over the past couple of years when we do see demand cycle weaker, how should we be thinking about a decremental margins look like in the fourth quarter, the implied guidance is about 35% decremental.
Um, I'm wondering if you just to talk about if we do see demand surprise to the downside, how should we think about any potential for improved decremental versus history given the process improvements?

John Pfeifer

Yes. For. First of all, I'd say is I think from a decremental incremental margin perspective, I would say it's a little bit easier to look at it on a full-year basis.
And we're expecting very strong income models on for actually on a full-year basis of around 60% based on our prior guidance.
I think when you look specifically on a quarter-to-quarter basis, you can add some nuances.
So, looking specifically to this quarter, we did have we had a particularly favorable freight material environment in Q three last year.
We saw Q3 is more favorable than Q2 last year and Q4 of last year.
So, I think a bit of a tough comp on, you know, I think we're not going to get into decremental on for next year's exit, still early in our negotiation process.
But the bottom line as we expect to continue to deliver solid margins as we've talked about, even if we see some market softness next year.

Jerry Revich

Thank you.

John Pfeifer

Thanks, Jerry.

Operator

Our next question is from Tami Zakaria occurring from JP Morgan.
Please go ahead.

Tami Zakaria

Hi, good morning.
I'm thinking some learnings.
So, my question first question is on the vocational segment and really strong performance.
I'm wondering, are you considering raising capacity for this segment?
Because it seems very high backlog.
You have visibility into demand.
So, have you considered using capacity?

John Pfeifer

Yes, Tami, that's a great question, and it's a huge focus area for us.
So, I think what you're going to see in our existing facilities, particularly on the fire and refuse and recycling sides, we are in the process of adding capacity.
We have our new ARM Murfreesboro; Tennessee facility was wrapping up the electric.
Our revenues and recycling vehicles are also using that for some fabrication activities for the broader segment of my expectation is that we're going to continue in our existing facilities to continue to increase that capacity come through on some capital investments and so on.
And we'll continue to look at additional capacity through additional facilities over time.
But that is clearly going to be a focus area.
We expect that we're going to see top-line growth from that over the next several years.

Tami Zakaria

Got it.
That's helpful.
And then one more question on our tech sneak in one year.
What are some of the themes that pleasantly surprised you versus your expectations when you bought it about a year ago?

Michael Pack

Yes, Tammy, there's a lot to like about Aero Tech, um, you know, we certainly acquired it because of the close adjacencies for particularly from a technology standpoint.
When you look at electrification, autonomy um, connected product, intelligent products, a lot of overlap with our other company-wide.com innovation initiatives.
So great synergies on that front.
And I think that can allow us to expedite across the Company and some of those efforts.
I would say the synergies between us between from a commercial standpoint between our businesses has done a very positive as well.
We, as John mentioned in the prepared remarks, we had JLG. products on ground support products as well as on as well as our vehicles at the at the Lisbon ground support equipment show a lot of overlap in our customers on.
And so, it's just been.
And of course, the industry dynamics are very strong.
So, we continue to expect to see profitable growth in that business.

John Pfeifer

Yes, I'll just make one further comment.
Tami.
Um, you know, when we after we acquired the business, we really got to know the customers better and the relationship that Aero Tech and Aero Tech people have with customers and it's really strong.
These are household names, Delta, United, Federal Express and others.
And they really are us from positive about our ability to continue to innovate the product with Mike talked about at electrification and autonomous functionality because that drive better performance for them.
And that's exactly what our business model is.
Innovation around technology to improve productivity and improve safety for our customers and for the people that are doing the tough work.
So, it just continues to be a really strong fit for what we do.

Tami Zakaria

Wonderful.
Thank you so much.

Operator

Thanks, Amy.
Our next question is from Kyle Menges images from Citigroup.
Please go ahead.

Kyle Menges

Thank you.
Morning, guys.
And I was hoping you could just talk a little bit more on what you're seeing in the access market.
And maybe if you could kind of bifurcate the market between some of the larger rental customers versus smaller, more local players.
And just really which customers you're seeing the most, I guess, some demand softness and any pushouts into 2025 and just as it's more from the big rent, big rental guys or some of the smaller players?

John Pfeifer

Yes.
Thanks for the question.
So, to frame this, we've just come through a period of last, you know, few years of really, really strong demand.
And we're all aware of that.
You're aware of that.
And I think we're experiencing right now a market that's kind of normalizing.
And we've talked about our customers going back to a more normal seasonal pattern where there are planning in Q4 and Q1 for what's going to happen in 2025.
And they know that lead times are back to normal.
I talk about our backlog being previous six months, which is kind of where it sits right now, and that's a healthy backlog.
But I want to stress we really believe that our customers believe you heard the public customers that we serve talk about this, but we believe the long-term drivers remain intact.
You know, we talk about these significant and info structure investments, mega-projects data centers.
We can't build enough data centers.
You can't build enough building a power generation.
There are also still aged fleets in many categories that we provide of that is all those are really good things.
Now we do realize that there is some pressure right now with regard to nonresidential and residential construction, and that's kind of private construction, mainly is what we're talking about.
High interest rates, I think have been the main driver of some concern there.
So on, that's what's causing a little bit of pressure.
We don't think that 25 is going to be any kind of significant was healthy conditions and the mega projects, we'll see some softness probably in private construction.
And then we expect after a short-term period, it will continue to grow again on to our and our outlook through that calls for us to be able to deliver strong resilient margins.
So, talking about the big nationals versus the independence, I don't know if it's a national versus independent.
I think when you have an independent that is exposed to a lot of private construction, they might be feeling it a little bit more than independent independents also participate in these big mega projects that have independent that is exposed to mega projects where they operate.
So, I think the difference is it private Nornes versus kind of these big trends we're seeing.

Kyle Menges

That's helpful.
Thanks.
And then I was curious, I guess I was hoping you could talk a little bit more about just how the NGDV. ramp-up is going more.
So, in the near term, I did notice seems like NGDV. deliveries actually went down a bit sequentially in the quarter.
So, understand that just be a seasonality thing, then probably you shouldn't read into that too much, but I'd love to hear your thoughts, just how it's going so far you shouldn't read into those deliveries at all actually delivers went up not down.

John Pfeifer

It's just a cost-to-cost accounting method that drove that.
That's all it was.
Deliveries are going up.
The G. this I'll start with the other is we're really happy with where we are.
We work really closely with the Postal Service.
The carriers are delighted with the vehicles that they're using today to deliver e-commerce and mail that that are on the streets.
And with the deliveries that we've made a revolution each and every vehicle, incredible performance, safety vehicles, ease-of-use, superior ergonomics, it's really unlike any delivery vehicle that's out there.
Um, so we are today ramping up production.
You know, when you go through, you take a bit a brand-new vehicle to market.
We believe together with the Postal Service that a prudent production schedule is better than trying to start by sprinting.
So, we're ramping up today will be at full production throughout 2025 as we go through 2025, we again, vessel more than offset in 2025.
Anything we lose from the JLTV. contract going away to Great program is long term program, some good for a lot of reasons.
Thanks, Kyle.

Operator

From next question is from Jamie Cook from Truist Securities.
Please go ahead.
Paul.

Jamie Cook

Hey, good morning.
And I guess two questions.
one, Mike, on the free cash flow, we've been on lowering your free cash flow guide throughout the year.
I'm understanding some of the items this quarter and, but it still implies a pretty big ramp to keep your free cash flow guidance for 2024 in the fourth quarter.
So, if you could just help us understand what going on there.
And then understanding you don't want to talk about decremental for 2025 on access.
Sort of said in your answer, implied Eaton will have decremental in 2025 are based on an earlier question, which means you're saying that it sounds like and began for access equipment.
So, I guess one of the concerns that are out there, it's just pricing on that pricing starts to their maintenance that.
Can you give any color on how you're thinking about pricing or on you may assume sort of that you are in normalized 25% decremental margin.
Like what would be the reason why we wouldn't be able to achieve that if sales were down for.

Michael Pack

sure.
I'm starting with cash flow because there's a number of big items.
Obviously, we had another big shipping quarter.
Q4 is typically our implied the revenues lower.
So, you get a natural bleed-off of working capital and certainly some inventory timing specifically in our defense segment, there can be big timing impacts of when arm, but the acceptance process of vehicles could take place, and that's really shifts from the unbilled receivables to the billed receivables.
So, we see a big impact and benefits of those unbilled receivables coming down in the fourth quarter.
Those are really the biggest items, Tom, I think that we're not calling next year kind of shifting to the other your other question on.
So, you know, I think ultimately on obviously the market's a little bit softer right now that could continue.
So um, but again, we're going to I think the key is, is we want to get in a lot a bit further into negotiations with customers to know the mix and the volume in all those elements.
But I think importantly, we think could be going to be a solid year next year with solid margins.

Jamie Cook

Thank you.
Customers, and thank you.

Michael Pack

Thanks, Jamie.

Operator

Our next question is from Steven Fisher from UBS.
Please go ahead.

Steven Fisher

Thanks.
Good morning.
So, the vocational bookings and book-to-bill was certainly a bright spot.
Wondering how to think about the order trajectory and vocational over the next few quarters?
Is there any visibility you have on that?
And how long do you think it might be on an ongoing basis?

Michael Pack

Yes.
I'd say from a backlog perspective, the backlog continues to grow.
The business side kind of revert back to my earlier comments to Tami that we're highly focused on throughput on the market dynamics in each of our business remains strong.
I think if you look in vocational on particular, when you look at Aero tuck-in, McNeil us that you can have some lumpiness in orders is we're booking large national account quarters on and sort of in blocks at times, but we expect demand to remain very strong going forward.
And I think the quarter to quarter there can be some quarter-to-quarter lumpiness.

John Pfeifer

Yes.
I think Steve line now about these, um, vocational markets that weren't in, they are resilient markets.
The airport market, for example, where Aero Tech is and some of our other business that's consistent will continue.
And as projected by pretty much every third party that measures that to continue to grow into the future because of shortage of capacity in the airport where world and fire truck would be the same.
These are resilient markets, not very cyclical.
And that's one of the reasons that we think these this is a great place for us to be in this segment.

Steven Fisher

Great.
And just a follow-up.
So obviously, it sounds like vocational doing very well.
You've already talked a bit about access in 25 things still way having relatively healthy backlog and overall, for reasonable market and defense, you have NGDV. ramping.
So, I guess as we think about your prior expectations on earnings per share for 2025, that range that you had, I mean, should we be assuming that you're still thinking at the moment that range is still broadly appropriate?

John Pfeifer

So, we're already in that range today.
So, I'll start there.
I can't guide for 2025.
At this point in time, we'll be able to where it was.
We go through a lot of work this quarter, particularly with our access customers, will be able to give much better guidance in January as to where we think 25 is actually going to be.
But remember, we're already in 2025.

Steven Fisher

Thanks, and thanks to you.

Operator

Our next question is from Tim Thein from Raymond James.
Please go ahead.

Tim Thein

Yes, thank you.
Good morning.
And maybe just dot of the well, first of all, Mike, congrats on your new role.
I'm sure it's turning that you're going to miss hosting these calls.
So have a fair assessment that Bill Galligan into my Tim, don't worry about if I could be pulling out the are just on access the Yum.
Yes, just kind of the market now, obviously, we'll see what it what it gives you have for next year.
But just as you think about, obviously customer and geographic and product mix can play an important role in terms of the makeup of the margins at this point today, you envision JCV, it is kind of simplify it between aerials in telehandlers.
Do you anticipate again not making a market call, but just from a product standpoint on much of a change in terms of that shift in the complexion of whatever those that revenue base may like?
I guess I'll start with that one.

Michael Pack

I would say in general, telehandlers have been strong, but I think it's early still, but I think the mix will continue to evolve as we get into next year.
So, I think it's a little bit too early to call exactly what the dynamics of each one of those buckets is going to be.
Yes, my house Graham says the same things, and telehandlers has been particularly strong while the boomers are strong as well.

John Pfeifer

The Telenet has been particularly strong.
I mentioned that because we're building new capacity for telehandlers and we're already in production will continue to improve that or increase that production in 2025.
We are not slowing down on that by any stretch.
We see lots of demand there.
We don't have enough capacity today to meet the demand of the telehandler market.
And we see new.
We talk about new end markets opening up like ag, and that's real, and that just continues to give us the confidence that that's a good place to be high.
As you know, it's hard to pinpoint today if there's going to be any kind of material mix shift, though, between one product and another in 2025.

Tim Thein

Okay.
And my follow-up is, I know I know pants counting but done.
We are the.
Yes, I'll ask the same question, John.
I think I asked you that the quarter, when you announced that then Intellon in their capacity expansion, is there an update and you have a big data, one specific customer that you've called out your filings for years in terms of a contract that is due to expire here soon?
And any update on that in terms of to the extent there's potential revenue loss associated with that?
Or just maybe an update on that.
Thank you.
Yes.

John Pfeifer

I mean, I'm out I'll comment on, and we've got a row.
We've we're talking about cash, some didn't mention it, but I'll mention it that may be cast great partner of ours.
They had been for many years.
They'll be a good partner of ours going forward as well.
We've got a good relationship with them.
Sure, the structure of our partnership with Cat is changing.
But I guess what I can say is that we'll continue to support cat and CAT dealers with JLG equipment going forward.
Tom, that's it's got great recognition and acceptance in the market.
And that I think you'll continue to see if there.

Tim Thein

Thank you.

Operator

Our next question is from Mircea (Mig) Dobre from Robert W. Baird.
Please go ahead.

Mircea Dobre

Yes, good morning.
Thanks for coming.
Back to me.
Just sort of follow up here on the access discussion.
I guess understanding that you're not guiding for 25, but you have added capacity in this segment and things seem to be turning softer.
So I guess, John, how do you how do you approach on next year here?
What are some of the things that you can do to manage the cost basis?
Should we maybe get ready for some restructuring here?
Or do you have enough levers to kind of deal with potentially lower volumes, not not meeting such action?
Yes.

Michael Pack

So Mig, thank you for this question.
Sorry, sorry, I got cut off some.
How and when we start the call,

Mircea Dobre

I apologize for that side of it was my fault.

Michael Pack

Yes.
Okay.
So, thanks for the question.
So, we've been working on our resilience for a while.
You know, it's not like, oh, my God, we've got to start working on resilience is has been going on for a while.
And really it starts in our manufacturing plants and how it how flexible we can be under different demand environments with rigs Guard to our fixed cost.
So, there's a lot that goes into that.
We've done a lot of work on that.
We also as we go into these continuing to improve the resilience of the business, we do a lot of work with our aftermarket, our recurring revenue stream.
So, we've made investments in the past few years on our ability to distribute it and expand our app aftermarket parts business.
And we think that that will continue to help us as we continue to manage that and grow that going forward.
The other thing that we'll do, you know, as I've talked about 2025, we look at the outlook over the over a five-year horizon.
Our plans go out five years and these are detailed plans, and we feel great about the next five years.
We think 25 is a bit of a soft period as we continue on that growth curve.
So, we may see some sales decline, although we don't think it's going to be big, but we think there'll be some sales decline.
We have some other levers, of course, with were regard to cost reduction work that we do.
I wouldn't call it significant restructuring, but we have material cost reduction initiatives.
Some of that will continue to work on to mitigate anything that might be unfavorable in 2025.
So, there's a lot of there's a lot of work that we've been doing for us while on the resiliency of this business.

Mircea Dobre

Understood.
And then my follow up on that to refuse collection on you talked about the success you're having with Vault.
Tara, I guess two questions that I'm curious as to whether or not you having this proprietary chassis represents a differentiator and competitive advantage in it.
That's the case.
Maybe you can kind of help us understand why.
And then ITO, whereas the market trending here side loaders versus front loaders.
Obviously, you have both of those products, but I'm curious as to kind of how you see demand evolving in that space.
Thanks.

Michael Pack

Sure.
First of all, with the Voltaire as the US dollar that we do believe that does the chassis gives us a on a strategic advantage and that's what that is or a competitive advantage.
And what that is because it's fully integrated.
So if you think about traditionally refuse collection vehicle, it sort of a separate body and chassis, you're limited in the level that you can integrate great those two pieces, the chassis together with a fully integrated unit, very much like our peers, fire truck, you will have more advantages that you can add safety features, the vehicle that are all fully connected ultimately.
So, safety productivity benefits from ease of entry into the Cabot and exit.
It just makes the entire driver experience more positive, of course, and benefits of at Worsley.
Our customers are seeing they have had it advantage from a total cost of ownership perspective as well on.
So that's what we see.
So, we believe that this is going to be a decade-long trend that as fleets continue to electrify.
In terms of where the market demand is, frankly, the market's pretty strong across the board as we're looking at capacity, we see capacity opportunities both on sites and fronts on so that both are going to be a focus, and we see strength in both of them right now.

Mircea Dobre

Thank you.

Michael Pack

Thanks, Mig.

Operator

Question is from Chad Dillard from Bernstein.
Please go ahead.

Chad Dillard

Hey, good morning, guys.
Chad.
So, my first questions on pricing and access.
So first of all, what was price realization in the third quarter?
And then secondly, I recognize that you guys are going through negotiations, opportunity five, but leasing now in terms of what's in backlog right now, do you expect priced in US price cost to evolve at least through the first half of 25 based on what's in backlog?

Michael Pack

Yes.
So um, ultimately from a price cost perspective, again, we think ultimately, we had a more challenging year-over-year comp that we expect to be on quite price cost positive on the year.
Are you seeing that's really what's driving that, that 60% incremental on out on a full-year basis?
Again, I think the I as we look to come to next year, again, it's going to come.
There are some backlogs there.
Obviously, that's not going to carry into next year, but we're very early in our negotiations and so on.
So that mix really matters product and regional as well as customers.
So, I think it's again, we're not going to we're not going to speculate at this point on R&M on incremental or decremental for next year.

Chad Dillard

Again, going back to we expect that the market is softer will continue to deliver solid margins in that business.
You can protect them.
And then just second on the capacity additions access, just trying to think through the cadence of the ramp up some as we go into 2025.
And then is there any absorption to consider given that they take a look at the time for factory to fill up?
And then finally, just wanted to confirm, I think in the past you talked about a 2.5% increase in capacity to make sure that that's still the plan so that you're talking about Jefferson City where we're expanding our telehandler capacity is a little bit of cost in the first part of 25 on startup costs in that facility.

Michael Pack

But as we get to the second half of the year, you'll start seeing some absorption benefits, some things and it'll be at full production by this.
It was at some point in the second half of next year.
So, this is it's a good driver of both sales and margin improvement for the Company as it gets to its full production level.

Chad Dillard

Great.
Thank you.

Michael Pack

Thanks, Chad.

Operator

my question is from Steve Barger from KeyBanc Capital Markets.
Please go ahead.

Steve Barger

Thanks, guys.
Neither Volterra question.
You've got a nice call out on the Republic call yesterday.
My question is, as you introduce more electric offerings, are those supply chains fully built out from a capacity standpoint?
Or are there potential challenges you'll face if the uptake rate is better than you expected?
On?

John Pfeifer

Yes, I think ultimately from a ramp up perspective and supply chains is one of the top focus areas.
And I think as with many of our large programs, we have a very we have a very regimented approach as we as we increase on the capacity and throughput in the facilities.
And so our work very much in lockstep with our supply chain on the product on a lot of overlap and a lot of the the components with other suppliers we have throughout the Company on.
So we at this point, we feel good about it.
And again, this is going to be something, Steve, that we're going to be ramping this up are going to continue to see growth in demand on this really over the next five to 10 years that this is going to be on.
This is going to be a long-term play on as fleets are replaced.
But also just to mention, in general, you know, it's still a relatively new market electrification of vehicles, whether they're big commercial vehicles like ours, are there further, passenger cars are still a relatively new industry.
So we're constantly working with the supply chain because it's still it's still new in terms of whether it's battery cells, battery modules, battery packaging.
And then you've got e-drives and lots of other components and where we're having constant work with our supply base to as it continues to grow and develop.
And we feel very optimistic about it because in our commercial markets, we are able to provide an economic benefit for the most part for our customers.
They can see total cost of ownership improvement because their productivity is better.
The functionality of the vehicle is better.
The ways we can integrate it with autonomous functionality and its responsiveness is better.
That's all really good economic improvement in commercial markets, different from passenger cars versus the commercial market space that we're in.
So so we feel this is going to be I know we don't feel like someone is going to flip the switch and all of a sudden everything we're going to be building is electric.
We don't see that happening.
We just see nice steady growth in electrified product in several of our end markets over the next 10, maybe even 20 years.
Remember, electric propulsion is a more efficient form of propulsion than diesel propulsion is.
So, it's not going to shift overnight, but because it's economically viable now it'll shift over a long period of time and will help the supply chain developed together with us as we go through that period.
But a very positive story for sure.

Steve Barger

Thanks for that, John.
And just for my follow up, Mike, you noted the three-year backlog and fire being really long and you've talked about how strong prices in backlog is input costs were down for some reason.
Is that pricing locked in or is there potential for adjustment?

John Pfeifer

The pricing is locked in.

Steve Barger

Got it.
Thank you.

John Pfeifer

I think you could sequence.
Sorry, this concludes the question and answer session.
I'd like to turn the floor back to Patrick Davidson for any closing comments.
Thanks, and thanks, everybody, for joining us today.

Patrick Davidson

We look forward to speaking with you at upcoming conferences and trade shows where we will be showcasing our technology.
In particular, we're displaying at the CES show in Las Vegas in early January.
We are proud of the innovation and technology we bring to the market at ASH cash and will be showing these capabilities at the Las Vegas Convention Center.
We hope you will consider making the trip in visiting us.
Please reach out if you have any follow-up questions and have a great day.

Operator

This concludes today's teleconference.
You may disconnect your lines at this time.
Thank you again for your participation.
From there or are Thanks.
Thanks.
Thanks.
Thanks.