Mike Shlisky: Okay, great. And just to follow up on defense more broadly, can you comment on the bidding pipeline you’ve got for various contracts? Has that grown over the last 12 months? Do you feel like that there’s actually fewer opportunities out there? Maybe as a sub question there, just about the NGDV, are there any non-military vehicles that you’re looking at over the next couple of years as well, whether it’s private fleets or et cetera, for delivery.
John Pfeifer: So when – the first part of your question that was related to last mile delivery vehicles, I think, is that right?
Mike Shlisky: No, I was actually asking more broadly about the defense bidding pipeline in general.
John Pfeifer: Oh, yes.
Mike Shlisky: And then I was also asking if you could comment specifically on any private sector that you have in the pipeline, maybe after 2026?
John Pfeifer: Yes. Okay. So first of all in our defense business, our core defense business, we’ve got a really solid foundation of programs, and this includes our core product, the tactical wheeled vehicles of over $1 billion. And this is a good portfolio of businesses. I’m talking about post JLTV really, but that includes JLTV for international customers. We have been investing a lot in winning programs in the combat space, which is really important for us because that’s the priority for the Department of Defense. So that. it’s a place where we can showcase our capability and our technology and earn good margins while we do it. So when you look at that, we won the Striker vehicle that’s considered a combat program, where we won a prototype award for the RCV, which is robotic com vehicle, that’s a big program.
And we’ve won some other smaller programs as well. When you add them all up, it’s really a healthy book of business. And it’s at a healthy margin level. When you look at some of those combat vehicles, the margins are better than our core tactical wheel vehicle program. So as we go forward, our core defense business without the DoD’s contract for JLTV is a little bit smaller, but it’s still a really healthy book of business for us, and we expect it to continue to be so. And we’ll continue to buy for, and we’ll continue to win some combat programs along the way, which really help to enhance that business.
Mike Shlisky: Thank you.
John Pfeifer: Thanks Mike.
Operator: Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.
Steven Fisher: Well thanks. Good morning. I’m just curious how much visibility to margins do you think you have at this point in access in 2024? What could move it? I mean if you’re sold out and presumably, with the view that you’re sold out, I imagine you can lock in much of your costs for the year. So how much of those costs do you have locked in. And what could still move the margins from here?
Mike Pack: I think you’re spot on from a cost perspective. We from a lock perspective, we have pretty meaningful locks on steel in place, particularly the hot rolled coil, some contracts in place on plate as well. There’s we’ll obviously continue to watch inflation, which is still present as John said, that’s moderated. So I think it really comes down to production throughput supply chain, those types of things, things that you would expect in a typical year because we have – because of the great visibility we have. So overall, we’d say that and during the year we feel as though we have pretty good visibility to our margins.
Steven Fisher: Okay. Great. And then you have a $12 EPS midpoint target out there for 2025. Granted, it was introduced almost two years ago in very different conditions. I guess I’m curious how you’re thinking about momentum in vocational and to some extent in defense. I mean it seems like there’s going to be some debate about access direction for 2025 for a while, or maybe you would disagree with that. But I guess I’m curious at the moment, do you think you have enough positive momentum in your, say, non-Access businesses or even in general, just to hit your 2025 targets?
John Pfeifer: Well, the simple answer to your question is yes. I mean, we have continued to stand by our 2025 guidance. When you look at our business, we’re a bit capacity constrained in 2024. But when you look at our business and what we’re going to continue to do beyond 2024 and the health of the end markets we would – we believe that and firmly believe that Access is in a great position. The markets are strong. We talk to our customers all the time about what to expect beyond 2024. We, when you look at some of the dynamics happening we expect that to be a really good year as well in the Access Equipment segment. But then you look at all the other end markets that we’re serving; you look at the material ramp in postal service vehicles in 2025. We look at the continued expansion of our vocational business in 2025. We’ve always have never wavered from our 2025 long-range guidance that we have provided.
Steven Fisher: Terrific. Thank you.
John Pfeifer: Thanks Steve.
Operator: Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please proceed with your question.
Nicole DeBlase: Yes. Good morning guys. Thanks for squeezing me in.
John Pfeifer: Hi Nicole.
Mike Pack: Hi.
Nicole DeBlase: Hi. Maybe just first question on location all another really strong quarter of order growth there. Anything on like the underlying businesses and the drivers of that strength?
John Pfeifer: Is there anything, I’m sorry, I missed your question. Is there…
Nicole DeBlase: Yes. Just trying to understand like if you drill down to the key drivers of vocational like the individual businesses, where the order strength is coming from is it kind of across the board?
John Pfeifer: Yes. Okay. I’m sorry. I just – I maybe just missed misinterpreted your question. Sure, there’s a lot of really healthy dynamics. Long-term, look at the Fire & Emergency segment. The fleets in the Fire & Emergency segment are aged and you couple that with really healthy municipal budgets that’s continuing to propel municipalities across North America to continue to upgrade their fleets. And then when you add to that some of the new technology that we’re coming out with the Volterra electric municipal fire truck, that’s going to continue to propel the market for, we believe many years into the future as there’s a lot of municipalities around the country that are really actively wanting to electrify their product.
And when they electrify with our product, this is not just a sustainability initiative. This is a performance improvement and it’s a total cost of ownership improvement for municipalities and their fire fleets. You look at the environmental services business with our electric refuse and recycling vehicles, even the traditional product that we have. This is a healthy market where our customers are all continuing to look at fleet replacement and upgrading to electric vehicles in the future, and that’s what we’re preparing to allow them to do. The airport markets, you look at the need for more capacity every time you hear the CEO of a major airline talk about, we need to continue to expand capacity. They’re not just talking about airplanes. Every time you add an airplane to your fleet, you’ve got to add ground services equipment.
