Stephen Volkmann: I wonder if we could go back to the Access margin. I’m just trying to think about how the year progresses here. Starting off as strong as you are, but obviously, having to come down to meet your full year guidance. Is that sort of a step down and then sort of flattish for the remaining 3 quarters? Or do we kind of trend down and the exit rate might be significantly lower? I’m just trying to think about that cadence.
Michael Pack: No, I think there’s — we certainly don’t see growth slowing in that business at this time. There is strong demand. I think as we talked about in our last call, just there is definitely more seasonality to our deliveries as deliveries have normalized. So what I would expect is our strongest quarters will be the second and third quarters and then the fourth quarter, I would expect to be lower as you start getting into the winter months. And then, again, just returning to that more traditional cadence. And you even see that in the first quarter. If you were to see within the month you see more activity as you’re approaching the spring time. So certainly, March from a shipment standpoint is more — is typically more robust. So it’s really just a return of seasonality. And again, I think the big drivers — the mix was a big driver this quarter. And then I think the timing of some of those investments, I mentioned before, factor into it as well.
Stephen Volkmann: Okay. And then maybe just switching briefly back to Vocational. I know you gave the revenue impact of the acquisition. But can you say anything about the margin there and how that impacted the segment?
Michael Pack: Yes. We’re certainly benefiting from it. We certainly have some integration costs upfront and you’ll see the drivers. But it — we’re near double-digit margins. I think that will certainly improve as we have some DT or information technology integration costs and so on early in the year, but view that solidly going to be a good double-digit margin performer for us over time.
Operator: Our next question comes from the line of Steven Fisher with UBS.
Steven Fisher: So you were clear that the customer mix was an upside surprise for Q1 in Access. So I guess I’m just wondering what are the variables that you see out there for Q2 in Access that you don’t have your visibility on at the moment? I mean I know you seem to be pretty well sold out. And I would think you’d have a good view on the cost. So is it — how does that customer mix kind of take shape within a quarter? And what other variables might be a factor for Q2 at this point?
Michael Pack: Yes. I would say on the mix. It’s really just the timing of shipments. So you go back to the beginning of the quarter, we were booked. We have a production plan that you can always have timing of deliveries. So again, going back to the comment I just made a minute ago with sort of this return of seasonality, our finished goods are up a bit. In fact, one of the things we really were pleased with is the throughput we saw at Access. We had about, call it, 75 million to 80 million of additional finished goods that are ready to be shipped that will be going out early in the second quarter. So it’s really just a timing matter that it wasn’t. So I guess as I look to the rest of the year, you could have some nuance gives and takes. But I don’t — again, we’re booked for the year, so it’s really going to shake out over the course of the year, because, again those products and the customers are going to our known at this point.
John Pfeifer: Well, and Steve, you have a mix of aftermarket in there, too, right? Aftermarket is a spot order spot buy business. And sometimes it can go up or down a little bit versus expectations in a quarter, and that’s a very strong margin business, so it does affect the margins.
Steven Fisher: Okay. And then just as a follow-up. To what extent are there any cancellations that you’re seeing in the Access business or changing in timing or push-outs or anything like that coming from customers?
John Pfeifer: I’ll tell you, Steve, that we, we’re really pleased with the market in Access. We see continued demand drivers going forward. We talked about the Q4 order book was really strong. The $940 million that we just booked was better than our expectations. So we’re booked well through 2024 right now. And I’m telling you that because when I give you the health in terms of the marketplace, we don’t have any unusual cancellation activity going on. It’s just the opposite customers are focused on when can I get the equipment and when are you going to slot it for me in your production schedule.
Operator: Our next question comes from the line of Angel Castillo, Morgan Stanley.
Brendan Shea: This is Brendan on for Angel. I just want to talk about your CAT telehandler supply partnership. That should be ending, I believe, at the end of this year. So can you talk to your expectations for renewal of that relationship beyond 2025? And then just any potential implications from a price or profitability perspective?
John Pfeifer: Sure. Yes. Good to hear from you, Angel. So I want to first say, “Hey, CAT’s been a long-term partner of ours, and they’ve been a great partner.” I mean, there’s hard to find a better partner than CAT to work with in the industry. I’m not going to comment on the contract specifically. What I will say is that JLG is the premier provider of telehandlers in the industry. And if we had more capacity we would be shipping a lot more telehandlers today. We are really paced by the capacity that we have. So that’s why we’re increasing capacity. We see new markets opening up. We talk about all the time, that’s one of them. That is a real opportunity today and will continue to grow over time. So we expect, no matter what happens, that we will continue to grow our share and our revenue in the telehandler marketplace for the foreseeable future. That’s what I can tell you about that market. And it’s a — we see it as a good, healthy growth area for us.
Brendan Shea: Okay. And then just touching on the free cash flow guide. So new guidance is a little bit earnings are higher than you previously thought. You mentioned I’ll call it, CapEx is the same. So I’m just kind of curious what the puts and takes are for why the overall free cash flow hasn’t gone up as well?
Michael Pack: I would say right now, it’s early in the year. And I think exiting. We have a little bit more working capital exiting the first quarter. So that’s something we’re going to we’re going to continue to monitor throughout the year. But it is something that certainly we expect to be a good strong free cash flow generator. And so really, it comes down to timing in a lot of cases with working capital. But I think bottom line is we talked about it. We expect to be a strong free cash flow generator over time.
Operator: Our next question comes from the line of Tami Zakaria with JPMorgan.
Tami Zakaria: So I have two quick questions. One is the strength in Vocational, excluding AeroTech, can you comment on the price versus volume growth you saw in the quarter?
Michael Pack: Yes. We’re certainly seeing the benefits of improved price cost dynamics. You’ll see in the — in the Q that it is — it’s really the biggest driver in the quarter, about $30 million of our operating income year-over-year benefit was really price cost, which is what we expected, and that’s going to continue to be a nice strong driver as we look into the future.
Tami Zakaria: Got it. That’s very helpful. And then on Access equipment, I think orders were down, but still better than what you initially expected. But could you provide some color on orders in North America versus Europe or other regions?
John Pfeifer: Yes, Tami. Access has been running at a really healthy clip, and we expect that to continue due to all the demand drivers that we talk about regularly. With regard to the global outlook, U.S. is our biggest market, of course, and the U.S. is really healthy. When you look at our guide, you see that we’re going to increase our revenues for the year in the high single digits, I think 8%, 9% in terms of the revenue growth. The orders across the globe are — and the revenue creation that we’re seeing for the most part is positive and healthy. The only area that has turned not so good as Europe. Our European business this year is down and Europe’s — we’ll continue to invest in Europe for the long-term future. But Europe is the one outlier for us today when you look at the global market. Asia is doing well. South America, Latin America is doing well. That’s kind of the global outlook.
Operator: Our next question comes from the line of Nicole DeBlase with Deutsche Bank.
Nicole DeBlase: Maybe just on Vocational. You talked about price cost being a big factor there. I guess you guided to 11.5% margin for the full year. I know that’s up versus prior guidance, but it does imply like a step down versus what you achieved in the first quarter. So can we just talk about the puts and takes there going from like 1Q to the rest of the year?
Michael Pack: Sure. I would say very similar, Nicole, to Access. The timing of some of the investments we’re making in the business are occurring more Q2 — or Q2 through Q4 so Murfreesboro, Tennessee, some of the other new product development spending, some of our integration costs. We had a bit in Q1. So we talked about that a minute ago, but there’s more of the rest of the year. So it’s really that we — again, we expect price cost to be — continue to be a driver throughout the year when we look at it on a year-over-year basis.
Nicole DeBlase: Okay. Got it. That’s clear. And then sticking with the price/cost topic then. Can we also talk about that, how that’s impacting Access? So is the expectation that part of the margin — part of the explanation for margins through the year is perhaps the price cost tailwind was biggest in the first quarter and that starts to moderate through the rest of the year. Do I have that right?
Michael Pack: I guess, ultimately, from a price/cost perspective, I think we’re — our pricing is essentially fixed for the — or is set for the year. So I think — the price and cost dynamics are largely there. I would say the bigger drivers just as we go through the year is just, again, some of that customer mix nuance.
John Pfeifer: Nicole, it’s really an access Q1 to the rest of the year. It’s mix. And its R&D investment in the second half of the year that it’s not price/cost.
Michael Pack: Correct.
Operator: Our next question comes from the line of Chad Dillard with Bernstein.
Chad Dillard: So my questions on order cadence and recognizing that you’ve already booked out ’24. Like how should we think about orders over the next couple of quarters? Is it more typical seasonality? Are you going to see more of the ’25 orders in the fourth quarter? Just trying to think through that.
John Pfeifer: So right now, when customers place orders, Chad, they’re primarily placing orders for units they’re going to receive in — at some point in 2025. And so it makes it very difficult on our customers to have such — in the Access equipment market when we have such big backlogs and such, therefore, longer lead times. So that’s why we’re saying and we talk with our customers all the time about this and when is the best time for them to be placing orders for the future. And right now, as we’re booked out through in ’24 and into ’25 they’re focused on finishing up their 2024 and then starting to order for 2025 a little bit later in the year. So we think that will start probably in the second half, Q3, let’s say, and build into Q4.
That’s our expectation. Now having said that, in Q1, our orders were better than what we thought they were going to be. So we still have a lot of customers that are willing to place orders for ’25 even though we’re so far from ’25 still at this point in the year. That’s what I can say.
Chad Dillard: Great. That’s helpful. And then just shifting over to defense. I think you mentioned that you had some combat vehicle programs that you’re potentially bidding for. Could you give a little bit more color what are the programs, when should we expect that down select with the products?
John Pfeifer: So the most notable one the Robotic Combat Vehicle. It’s an autonomous vehicle with a lot of technology on it. We won the prototype contract, so they will select the production — they’ll award the production contracts in 2025, probably early 2025. It’s a $1 billion type business, maybe $1 billion-plus type contract. But right in cross airs of where the DoD priorities are, because it’s a high-tech vehicle, there’s good margins on that vehicle. That’s a prime example of where we can make a difference with our capabilities in the combat world.
Patrick Davidson: ROGUE Fires, so too, like you mentioned in the prepared remarks.
John Pfeifer: ROGUE Fires is a program that we’re selling today, and we’ll continue to sell.
Operator: Our next question comes from the line of Steve Barger with KeyBanc.
