Mike Shlisky

Mike Shlisky asked for broad directional thoughts on each segment's top-line and bottom-line performance for 2026, inquiring which segments are expected to outperform or underperform. He also questioned the quarterly cadence for the Ag segment in 2026, specifically if the second half would be stronger than the first, and sought an update on the South America JV and the broader market situation in Brazil.

Answer

Tony Eheli, SVP and CFO, indicated that the EMC segment is expected to outperform in 2026, Ag to be flattish with small ag improving but large ag not yet, and Consumer to improve but less than EMC. He noted that EMC and Consumer bottom lines should improve, while Ag faces OE pricing pressure. For Ag, the first half is expected to be flattish with growth and recovery in large ag anticipated in the latter half. Paul Reitz, President and CEO, discussed political turmoil in Brazil and OEMs pulling back production, but expressed confidence in the JV, which is replicating the North America wheel-tire strategy and gaining momentum, with more updates expected in the back half of the year.

Mike Shlisky asked about the broad directional thoughts on each segment's top line and bottom line for 2026, the quarterly cadence for the ag segment (specifically H1 vs H2), and the situation with the South America JV and the broader market in South America.

Answer

Tony Eheli, SVP and CFO, stated that EMC is expected to outperform, Ag to be flattish (small ag improving, large ag not yet), and Consumer to improve but less than EMC. He also noted bottom-line improvements for EMC and Consumer, but more OE pricing pressure in Ag. Tony Eheli confirmed that Ag is expected to be flattish in H1 2026 with growth in H2. Paul Reitz, President and CEO, discussed political turmoil in Brazil, OEM production pullbacks, and the JV's strategy to capitalize on combined strengths, noting early days but good positioning.

Mike Shlisky with D.A. Davidson asked about the organic growth performance of Mega and New Way in 2025 and their expected organic growth in 2026. He also inquired about the company's expansion into South America, particularly with Mega, Ground Force, and TowHaul, and any implications for local sourcing or engine changeover rules. Lastly, he asked about the M&A pipeline for 2026 and target business areas.

Answer

Ian Hudson, SVP and CFO, stated that Mega experienced good organic growth in 2025 ($40 million revenue) and expects this to continue in 2026. For New Way, 2024 sales were $250 million with $36 million EBITDA, but 2026 is expected to be slightly lower due to industry normalization. Jennifer Sherman, President and CEO, confirmed that South America expansion comments focused on Mega, TowHaul, and Ground Force, leveraging existing partners and Mega's strong brand, with similar export methods for chassis. She noted the M&A pipeline remains full, with SSG and other specialty vehicle teams actively exploring opportunities, emphasizing M&A's critical role in long-term growth, managed by bandwidth.

Mike Shlisky asked about the organic growth performance of Mega and New Way in 2025 and their expected organic growth contributions in 2026. He also inquired about expansion into South America, specifically whether it extends beyond Ground Force and TowHaul, and potential challenges related to local sourcing rules. Finally, he asked about the M&A pipeline for 2026 and target areas for inorganic growth.

Answer

Ian Hudson, SVP and CFO, stated that Mega experienced nice organic growth in 2025 with revenues around $40 million, expecting continued growth in 2026. For New Way, 2024 sales were $250 million with $36 million EBITDA, but 2026 is expected to be slightly lower due to industry normalization. Jennifer Sherman, President and CEO, confirmed that South America expansion comments were focused on Mega, TowHaul, and Ground Force, leveraging Mega's strong brand and existing partners. She noted the M&A pipeline remains full, with different teams exploring opportunities in SSG and specialty vehicles, emphasizing a strategy of identifying, purchasing, integrating, delevering, and repeating, while metering activity based on bandwidth.

Mike Shlisky asked about potential market share gains in large ag given the more optimistic tone and order trends, and the adoption rates of tech attachments or subscriptions on combines, particularly the Ultimate package, and their future benefits.

Answer

Josh Beal, Director of Investor Relations, stated that after ceding some share in the past, Deere is well-positioned for share gains in 2026. He highlighted strong success with Harvest Settings Automation and Predictive Ground Speed Automation, with over 60% operator utilization last fall. He noted that 99% of combines ordered this year through the EOP included some level of harvest automation, with nearly 80% opting for the Ultimate package, a 4-5 point increase year-over-year. Josh Jepsen, Chief Financial Officer, added that Engaged Acres increased by over 10% year-over-year, with nearly a third being highly engaged, showing broad progression in tech adoption.

Mike Shlisky inquired about potential market share gains in large ag, particularly combines, and the adoption rates of tech attachments or subscriptions like the ultimate package on combines and other products, asking if more farmers were taking these options.

Answer

Director of Investor Relations Josh Beal stated that after ceding some share in the past 12-18 months due to lean inventory and used equipment focus, Deere is well-positioned for share gains in 2026. He highlighted strong adoption of harvest settings automation on combines, with 99% of combines ordered through EOP having some level of automation and nearly 80% taking the ultimate package, a 4-5 point increase year-over-year. CFO Josh Jepsen added that Engaged Acres increased by over 10% year-over-year to 500 million, with highly engaged acres up 25%, demonstrating broader tech adoption globally.

Mike Shlisky asked about the expected growth trajectory for the detection segment in 2026, considering potential tough comparisons, and also inquired if 2026 would see a significant margin recovery, potentially exceeding 100 basis points, to compensate for 2025's decline and align with long-term targets.

Answer

President and CEO Steve Blanco projected mid-single-digit revenue growth for the detection business in 2026, despite challenging prior-year comparisons. Regarding margins, Mr. Blanco indicated a focus on achieving price-cost neutrality in the first half of 2026, with sequential improvements. Stephanie Sciullo, President of Americas Segment, further clarified that margins are expected to improve sequentially, recover price-cost neutrality, and return to 30% incremental margin targets this year.

Mike Shlisky asked about the expected order of magnitude for detection growth in 2026, considering potential tough comps and new product tailwinds, and then inquired about the margin outlook, specifically if a catch-up from 2025's decline would lead to 100+ basis points of margin expansion in 2026.

Answer

President and CEO Steve Blanco projected mid-single-digit revenue growth for detection in 2026, supported by the macro environment and product solutions, despite tough comps. Regarding margins, Steve Blanco and Stephanie Sciullo (President, Americas Segment) stated they anticipate achieving price-cost neutrality in the first half of 2026, with sequential margin improvement and a return to 30% incremental margin targets for the year.

Mike Shlisky with D.A. Davidson questioned the potential impact of increased automation on Blue Bird's margins, asking if it was already factored into the 15%+ guidance or if it represented additional upside. He also probed the company's plans for excess cash if no M&A opportunities arise, suggesting options like further share buybacks or a dividend program. Finally, he asked about any anticipated market share shifts in calendar 2026 due to competitor issues or new models.

Answer

CEO John Wyskiel stated that automation returns are favorable and fit within the longer-term outlook, potentially providing tailwinds. CFO Razvan Radulescu detailed the capital allocation strategy, including the $100 million share buyback program, increased regular CapEx, and engineering investments, while mentioning a dividend program could be evaluated in the future. John Wyskiel and Mark Benfield indicated that market share seems normalized after a competitor's past supply issues, with "business as usual" expected.

Mike Shlisky asked about the potential impact of increased automation on margins, specifically whether it's already factored into the 15%+ target or if it represents additional upside. He also questioned the company's plan for excess cash if M&A opportunities don't materialize, considering the significantly higher cash balance compared to pre-pandemic levels. Lastly, Mr. Shlisky inquired about the market share outlook for calendar 2026, given past competitor issues and potential new market dynamics.

Answer

CEO John Wyskiel stated that the use case analysis for automation shows favorable returns and fits within the longer-term outlook, potentially providing 'tailwinds' towards the margin target. CFO Razvan Radulescu outlined the capital allocation strategy, including the $100 million share buyback program (with $5 million spent in Q1), the $200 million new plant investment over two years, increased regular CapEx, and engineering investments. He mentioned revisiting the strategy annually and potentially considering a dividend program in the future. Regarding market share, Mr. Wyskiel noted that a competitor's past supply issues seem resolved, leading to a normalization of market share. Head of Investor Relations Mark Benfield added that order intake suggests 'business as usual.'

Mike Shlisky asked about the importance of the federal EV bus program for Fiscal 2026 guidance, whether it relies on future funding rounds, the growth of state and local subsidy programs, and if they have surpassed federal programs as a demand driver. He also inquired about the conservatism of the 2026 outlook, the timing of the order season, and details on the commercial chassis project, including customer testing and ramp confidence.

Answer

President and CEO John Wyskiel and CFO Razvan Radulescu clarified that Fiscal 2026 guidance does not rely on EPA Clean School Bus Program rounds four or five, citing a strong outlook, stable demand, and supportive state mandates. They noted a strong EV backlog with potential upside. John Wyskiel expressed comfort with the outlook, highlighting strong underlying demand fundamentals and Blue Bird's production capabilities. Regarding the commercial chassis, John Wyskiel reported that prototypes are built, bodies mounted, and testing is underway, with positive customer reception and market openness to a new competitor.

Mike Shlisky asked about the importance of the federal EV bus program to Blue Bird's fiscal 2026 guidance, specifically if rounds four and five of EPA funding are critical. He also inquired about the growth of state and local EV subsidy programs and if they are now driving more demand than federal initiatives. Additionally, he questioned the conservatism of the fiscal 2026 outlook compared to the broader industry's retail sales projections and sought more details on the commercial chassis project, including customer testing, early reactions, and confidence in a 2027 ramp.

Answer

President and CEO John Wyskiel stated that the fiscal 2026 outlook is not contingent on rounds four and five of EPA funding, noting stable demand supported by state mandates. CFO Razvan Radulescu confirmed the 750 EV guidance for FY26 is strong, with potential upside, and does not rely on future federal rounds. Wyskiel also mentioned that commercial chassis prototypes are undergoing testing, have been well-received by customers, and the market is open to new competitors, with more details to follow post-release.

Mike Shlisky questioned the NFPA's role in certification delays, asking about their efforts to increase approval throughput and who bears the cost of UL testing. He also asked if the Hong Kong and Malaysia contracts would provide outsized margin benefits and if there are concerns about irrational pricing from struggling competitors.

Answer

CEO Jim Jenkins and CRO Barry Phillips clarified that NFPA is a standards-writing body, not a certification agency, and the delays are with third-party certification agencies like UL due to a backlog from combining multiple standards. Barry Phillips confirmed that each manufacturer pays for their own certification activities. Regarding the Hong Kong and Malaysia contracts, Barry Phillips stated that Malaysia is a high-margin, long-term opportunity, and Hong Kong continues to generate decent margins, with an expected bump in business in Q1 fiscal 2027 due to recent events. On competitive pricing, Barry Phillips noted that "struggling" competitors might face various issues, not just financial, and that new standard requirements for advanced fabrics will likely increase price points across the market.

Asked about the full-year organic growth outlook, the importance of the delayed Jolly order to guidance, and the expected quarterly cadence for EBITDA recovery throughout the year.

Answer

Management reiterated their high single-digit organic growth target for the year, explaining Q1 was held back by temporary issues in Canada and Latin America. The delayed Jolly order is considered an important part of the forecast, and they are confident it will proceed. The EBITDA recovery is expected to be gradual over the coming quarters, not a full reversal in Q2.

Mike Shlisky asked about the significant decline in telehandler sales within the Access segment and the impact of a potential federal government shutdown on the Pierce fire truck business.

Answer

John Pfeifer, President and CEO, attributed the telehandler sales decline to the conclusion of a long-term agreement with CAT, not a loss of JLG telehandler share, and emphasized resilient double-digit margins despite overall Access revenue decline. Matt Field, EVP and CFO, stated no material near-term impact from a federal shutdown on Pierce, but noted potential effects on direct government contracts if prolonged.

Mike Shlisky inquired about the significant decline in Access segment telehandler sales, asking for deeper insight into its drivers compared to core aerials. He also asked about any observed impact of the federal government shutdown on Pierce's fire truck business, particularly regarding firefighter assistance grants.

Answer

CEO John Pfeifer attributed the telehandler sales decline primarily to the conclusion of a long-term agreement with CAT, noting that JLG telehandlers are performing well. He emphasized the Access segment's resilience with healthy double-digit margins despite a nearly 19% revenue drop. CFO Matt Field stated no material impact from the federal government shutdown on Pierce in the near term, but noted potential effects if it extends significantly.

Inquired about the impact of tariff concerns on customer order timing and the basis for the optimistic second-half outlook for the parcel vehicle business.

Answer

The company stated they have not seen customer orders being pulled forward due to tariff concerns. The positive outlook for the second half is based on an observed increase in quoting activity from parcel customers, and these quotes include delivery timing.

Inquired about the comparative growth outlook for Aebi Schmidt, the sustainability of the high FVS margins achieved in Q4, and the company's strategy for managing potential aluminum tariffs.

Answer

Executives believe the Aebi Schmidt merger will accelerate infrastructure-related growth but declined to give specific comparative forecasts. They affirmed that the low double-digit FVS margins are sustainable due to operational efficiencies. Regarding tariffs, the company has a mitigation strategy involving supply chain diversification and potential price increases.

Inquired about the Specialty Vehicles (SV) segment's order softness despite high chassis production, the long-term (2026) EBITDA outlook for Blue Arc, and the recent performance and mix of non-Blue Arc EV upfits in the FVS segment.

Answer

The company is seeing a slight, temporary softening in SV service body demand, with slightly elevated dealer inventories, but remains confident for 2025. The 2026 Blue Arc outlook is dependent on customers building out their charging infrastructure, which is currently gating adoption. The mix of non-Blue Arc EV upfits is currently flat, holding market share and trending toward similar volumes as last year (around 3,000 units).

Inquired about potential one-time costs related to the ITU acquisition, whether ITU opens doors to new chassis providers, and the expected timing for a recovery in the motorhome business.

Answer

No material one-time integration costs are expected for the ITU acquisition. The deal provides capabilities for larger vehicles and customization but not necessarily up to Class 8. The motorhome business is expected to remain soft through 2024, with a potential recovery in 2025.