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Oshkosh Corp (OSK) Q1 2020 Earnings Call Transcript

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Oshkosh Corp (NYSE: OSK)
Q1 2020 Earnings Call
Jan 29, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Oshkosh Corporation Fiscal 2020 First Quarter Results Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce your host, Pat Davidson, Senior Vice President of Investor Relations for Oshkosh Corporation. Thank you sir, you may begin.

Patrick Davidson -- Senior Vice President of Investor Relations

Good morning, and thanks for joining us. Earlier today, we published our first quarter 2020 results. A copy of the release is available on our website at oshkoshcorp.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to Slide 2 of that presentation.

Our remarks that follow including answers to your questions contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call if at all. All references on this call to a quarter or a year are to our fiscal quarter or fiscal year, unless stated otherwise.

Our presenters today include Wilson Jones, President and Chief Executive Officer; John Pfeifer, Executive Vice President and Chief Operating Officer; and Dave Sagehorn, Executive Vice President and Chief Financial Officer.

Please turn to Slide 3, and I'll turn it over to you, Wilson.

Wilson R. Jones -- President & Chief Executive Officer

Thank you Pat. Good morning everyone. I'm going to start by welcoming Mike Pack who will soon be joining our executive leadership team. As you are aware, they Dave Sagehorn, our long-standing CFO and my partner on earnings calls and investor meetings, will be retiring this spring. We're fortunate to have somebody Mike's caliber stepping into this important position. Mike has been with Oshkosh since 2006 and for the last eight years, has been the Vice President of Finance of our Fire & Emergency segment. He has been a major contributor to the success and record operating income margins that, that segment has achieved. We all look forward to Mike assuming the bigger leadership role in the coming months. I'll share some comments on my friend Dave later in this call.

We are pleased to announce a solid first quarter and a good start to the year as we kick off 2020. First quarter earnings per share of $1.10 was in line with our expectations and supportive of our full-year outlook, but down compared to last year's first quarter. Our team members were focused on executing and delivering on our commitments in light of tough comps in the Defense segment and expected moderation of demand in our Access Equipment segment. I'm proud of the efforts of all Oshkosh team members and our people first culture in helping deliver these results. It's still early in the year, but there are a number of positive items that give us confidence in reaffirming our full-year earnings per share estimate range of $7.30 to $8.10 that Dave will talk about in more detail in a few minutes.

Some of those items include the first quarter results that were in line with our expectations as I noted. This provides a stable start to the year. Our Access Equipment team successfully concluded negotiations with most of their key rental company customers. John will talk more about that. Three of our segments had backlog levels of at least $1 billion as we exited the quarter providing good visibility into the upcoming quarters. And finally, we've seen signs of stabilization in macroeconomic data, and it appears that many economists are lowering their odds of a recession happening in the US in 2020. These examples illustrate what we consider Oshkosh to be a different integrated global industrial. All in, we're pleased with how the year has started and continue to believe the 2020 will be another good year for the Oshkosh Corporation.

Please turn to Slide 4 to begin a discussion for each of our business segments. I'll start off with the Defense. Our Defense segment highlights for the quarter led by the continued ramp-up of JLTV production as we deliver these high-tech, next-generation defense vehicles to our US government customer. We are on track to produce 4,000 to 4,500 JLTVs in 2020 as both the US Army and Marine Corps continue to integrate these units into the forces.

During the quarter, we received the JLTV order for just over $800 million that includes a small number of units for the country of Montenegro. This is important because it represents the first order we received for international JLTVs. There are a number of other potential JLTV international orders in various stages of progress that we expect will be finalized in the coming quarters. It's a very exciting time for the JLTV team, and they are working hard to successfully execute this important program. Government testing continues on the FMTV A2 program, and we are pleased with the improvements that the vehicle is demonstrating. We are still producing the current A1P2 version and expect to do so into 2021 before we begin the transition to the next-generation version, the A2.

In December, President Trump signed the fiscal 2020 budget, which included favorable funding for Oshkosh defense programs. Both the FMTV and FHTV programs were funded higher levels than the original FY '20 President's budget requests. These additional funds, approximately $66 million and $100 million respectively, will benefit our defense business primarily in 2021 and beyond.

Let's turn to Slide 5. And I'll pass it to John to discuss our non-defense segments.

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

Thanks, Wilson. And good morning everyone. Our Access Equipment team delivered impressive results for the quarter despite lower sales. The team did a great job effectively managing the lower demand level, achieving higher operating income and higher operating income margin. Sales were lower year-over-year in North America, Europe, Africa and Middle East regions, but in line with expectations. We are seeing more moderation of orders than we originally expected in Europe, and we'll continue to monitor that region. The Asia Pacific region led by China continued to be a bright spot with strong sales growth again this quarter. The catalyst in China remains product adoption, which is driven by safety and productivity improvements provided by these products.

We are expanding our production capacity in China, which we expect to be completed in the next year to support this vibrant and growing market. We concluded annual negotiations with most of our key rental company customers during the quarter. The negotiations went largely as expected with demand requirements supportive of our outlook for the year. We booked orders of more than $1.3 billion this quarter, the third highest order quarter in this segment's history and exited the quarter with backlog of slightly more than $1 billion. While both Q1 orders and ending backlog are down from last year, there has been moderation in the rate of decline. Additionally, we continue to believe the market is reverting to a more normal order pattern after several years of unusually large orders early in the fiscal year.

The team at JLG is busy building new machines that are ANSI 92.20 compliant, although the effective date of the new requirements is now March instead of the previously planned December 2019. There have been several pushouts for the safety standard, and we remain hopeful that the compliance date will not move again.

Another key event takes place in March. With once every three years construction equipment trade show, CONEXPO, we will be introducing new innovative products and services at this show as we host customers and other visitors from around the world. We look forward to seeing you in Las Vegas. If you plan to travel to the show, it will be a very special and worthwhile event.

Please turn to Slide 6 for a discussion of the Fire & Emergency segment. Our Fire & Emergency team posted a solid quarter characterized by strong order growth and an all-time high backlog, but they also dealt with some challenges caused by a supplier issue during the quarter. One of Pierce's suppliers was not able to meet its delivery commitments, which led Pierce to modify its production schedules. The team was able to adjust production to best serve our fire department customers, but this led to lower-than-expected sales as well as production inefficiencies. Fortunately, this supplier challenges now behind us and we do not expect it to impact full year results.

As I just mentioned, both orders and backlog were very strong this quarter. Year-over-year, orders were higher by more than 70%, leading to a record backlog of just over $1.1 billion at the end of the quarter. These figures are even more impressive when taken in context against the current sluggish international order environment, particularly in countries where trade dynamics have slowed demand for US fire trucks. When these trade issues get sorted out, we expect improved international order rates as well. Looking to the remainder of 2020, we continue to expect flattish to slight growth in the fire truck market in North America and maintain our positive long-term outlook for the business.

Please turn to Slide 7, and we'll talk about our Commercial segment. Our Commercial team is off to a good start in 2020 as they continue their simplification journey to strengthen operating income margins. The concrete mixer team launched a new flagship front discharge mixer, our S-series 2.0 in 2019 and is ramping up production from pilot phase. The new model builds on the rich legacy of the product, but also brings measurable improvements in visibility, maneuverability, payload and serviceability, to name just a few of the key features. Orders have been strong, and the team will be displaying the vehicle to customers with the upcoming World of Concrete and CONEXPO shows in Las Vegas.

RCV orders were up in the quarter, evidencing a continued solid RCV market. Concrete mixer orders were down, but we attribute that to our simplification strategy and timing as several large customers placed orders for the upcoming construction season in January this year versus December in fiscal 2019. We continue to expect the RCV and concrete mixer markets in 2020 to be similar to 2019 at levels even with or slightly above the long-term average for RCVs and below the long-term average for concrete mixers accompanied by some continued choppiness.

This wraps it up for our business segments. I'm going to turn it over to Dave to discuss our first quarter results and outlook for 2020 in greater detail.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, John, and good morning everyone. Please turn to Slide 8. As Wilson noted, first quarter results were in line with our expectations. We commented on our last earnings call that we expected first quarter results to be meaningfully lower than last year. Importantly, however, these results support our unchanged earnings per share outlook for the full year that I'll discuss in a few minutes.

Consolidated net sales for the quarter were $1.7 billion, down 6% from the prior year quarter. Lower Access Equipment sales were the primary driver of the lower consolidated sales. Access Equipment sales reflected rental company customers in North America slowing down their capital expenditures for fleet growth. Sales in the EAME region were also down from the prior year, while the segment experienced continued strong sales growth in the Asia Pacific region. Defense sales growth in the quarter reflected the continued JLTV production ramp, partially offset by lower FHTV sales. Fire & Emergency sales were lower, due to favorable sales timing in the prior year. And Commercial segment sales were slightly higher than the prior year, driven by a higher mix of package sales, partially offset by lower concrete mixer sales.

Consolidated operating income for the first quarter was $109.1 million or 6.4% of sales, compared to $160.5 million or 8.9% of sales in the prior year quarter. Access Equipment was the standout from an earnings perspective as they delivered $2.6 million higher operating income and 160 basis points higher operating income margin on a 13% decline in sales. Favorable price/cost, favorable product mix and improved operational efficiencies more than offset the negative impact of lower sales.

As we expected, Defense operating income declined significantly compared to the prior year. The decline was more about last year when Defense received a very large order for JLTVs. Upon receipt of that order, the Defense team recorded the cumulative catch-up adjustment to the program margin to reflect a near doubling of the number of units on contract. The Defense team received the JLTV order again in the first quarter of this year, but the quantity of units ordered was not as large as last year and the impact of the cumulative adjustment to the program margin was not as large.

For comparison, the orders -- order this year increased the quantity of units ordered life-to-date of the program by slightly more than 25% compared to a doubling of the quantity ordered life-to-date when the order was received last year. Additional drivers of the lower year-over-year results for this segment include a higher mix of JLTVs as that program continues to ramp production, a favorable resolution of contract compliance matters in the prior year that didn't repeat this year and higher new product development spending. There were quite a few drivers for the year-over-year change in Defense results this quarter, but the important thing to keep in mind, however, is our full-year outlook for this segment has not changed.

Fire & Emergency first quarter operating income declined compared to last year, due to the lower sales volume, along with higher SG&A costs, an adverse sales mix and inefficiencies related to the previously discussed supplier issue. These were partially offset by positive pricing.

Commercial segment first quarter operating income compared to the prior year reflects an adverse product mix, higher new product development spend and a prior-year favorable warranty reserve adjustment that did not repeat, partially offset by improved price/cost.

Earnings per share for the quarter was $1.10 compared to adjusted earnings per share of $1.61 in the first quarter of 2019. Lower earnings per share was driven largely by the lower sales and the impact of the large JLTV order received in the prior year. First quarter results benefited by $0.06 per share from share repurchases completing in the -- completed in the prior 12 months.

Please turn to Slide 9 for a review of our updated expectations for fiscal 2020. As noted earlier, we are maintaining our full-year earnings per share estimate range of $7.30 to $8.10. First quarter results that were in line with our expectations support the unchanged full-year earnings per share estimate range. Additionally, Access Equipment orders in the quarter were also in line with what we are expecting. However, we are slightly reducing the high end of the Access Equipment estimate -- sales estimate range by $50 million to $3.75 billion to reflect lower expected sales in the EAME region versus our previous expectations. At the same time, we are increasing the high end of the operating income margin estimate range by 25 basis points to 12.5% as we believe the segment can deliver the previous implied operating income on the slightly lower sales. We believe backlogs in our other segments also support our full-year outlook for the individual segments and overall.

We're reaffirming the estimated tax rate of 21.25% to 21.50%, although we currently believe the rate will be near the high end of the range. Our estimated capital expenditures of $150 million remain unchanged as does our free cash flow estimate of $450 million. We repurchased a small amount of shares in the first quarter and continue to expect that we will return half of our free cash flow this year to shareholders in the form of dividends and opportunistic share repurchases.

Turning to the outlook for the second quarter, we expect flattish sales compared to the prior year as Defense sales growth should offset lower Access Equipment segment sales. We expect earnings will be modestly lower compared to the prior year, reflecting the mix impact of higher Defense sales and lower Access Equipment sales.

I'll turn it back over to Wilson now for some closing comments.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Dave. Another solid quarter, driven by our teams' execution. We reaffirmed our outlook for 2020, which includes expectations for solid earnings per share in the year when demand in our largest segment will be down. We have the right strategy with the move and believe we can manage our businesses to deliver solid sales and earnings performance despite the lower demand in our Access Equipment segment. And we believe we are investing in the right places to best position Oshkosh to take advantage when conditions improve in that market.

Also, we'll take this opportunity to thank Dave. This will be his last quarterly earnings call. We're going to miss him. Dave helped lead our Company through numerous economic and industry challenges and he partnered with all of our leadership at Oshkosh to make Oshkosh the great company it is today. We appreciate all of his many contributions and the support he will provide even after he begins his next chapter. We are truly grateful for the hard work, dedication to task and commitment to integrity and teamwork the Dave has demonstrated in his 20 years with our Company. Thank you, Dave.

I'll turn it back over to Pat to get the Q&A started.

Patrick Davidson -- Senior Vice President of Investor Relations

Thanks, Wilson. [Operator Instructions] Operator, please begin the question-and-answer period of this call.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Stephen Volkmann with Jefferies. Please proceed with your question. Stephen Volkmann, your line is live.

Stephen Volkmann -- Jefferies -- Analyst

Are you guys, can you hear me? Sorry about that. I was on mute.

Wilson R. Jones -- President & Chief Executive Officer

Yeah. Good morning, Steve.

Stephen Volkmann -- Jefferies -- Analyst

Good morning. And Dave, congrats. All the best. And Mike, welcome.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Steve. Appreciate it.

Stephen Volkmann -- Jefferies -- Analyst

And Dave, before you go, maybe I can get you to explain something to me. I'm kind of figure out how this Defense accounting works because I guess I was assuming that having an order this quarter would have bumped your margin slightly above sort of full-year guidance because you'd have that catch-up albeit lower than last year, but obviously your guidance kind of assumes that the Defense margin increases going forward sequentially. So I guess, I'm just trying to figure out how that works, A and B, is it stable from here over the next three quarters or does it continue to bounce around assuming no more orders? Thank you.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Yeah. Unfortunately, as we've talked about previously, the whole revenue recognition standard ASC 606 has introduced a new level of volatility into the Defense segment for us and what we've been very consistent about when talking about the segment is that new standard was implemented is, think about the full-year guidance, there is going to be things from quarter-to-quarter that we've seen in the past. You've seen this quarter, and you're likely going to see in future quarters. That just on the surface may make you scratch your head a little bit, but in the context of the full year, everything still holds together. We've got a great backlog; we're about 90% -- I think 98% booked for the year. So we know what's coming at us. The wild cards typically are the timing of orders, and when we got the JLTV order in the first quarter, we did note in that release that we are expecting additional JLTV orders later in the quarter. That's still the case. The President's serve -- the fiscal '20 budget was finalized in the first quarter. So we will expect additional orders from our other programs as well. Some of the things we talked about in the prepared remarks, the higher NPD [Phonetic] in the quarter, so that certainly was a drag. I know last year, we had the favorable resolution of a contract compliance matter. There is a number of -- just a number of moving pieces in there, but as we look at the remainder of the year given the visibility that we have, we feel really good about the year. It is going to be -- continue to be lumpy from a quarter-to-quarter basis, because we know the orders are going to come in. We don't necessarily know, are they going to be the second quarter, the third quarter, but on a full-year basis, we feel good.

Stephen Volkmann -- Jefferies -- Analyst

Okay. And again, I guess, assuming we get an order, all things being equal, that would bump the margin up relative to not getting an order.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

All things being equal, that is the case, but if you think about going forward, Steve, another thing that is going to help us from a margin standpoint, this was the lowest sales quarter in the year for Defense. When you look at the implied guidance for the remainder of the year, that would say just if you spread it out equally that on average, remaining quarters are going to be up about 15% above where the first quarter was from a sales standpoint. So we will benefit from improved absorption in those quarters as well. And then the NPD impact probably shouldn't be as pronounced as we saw on margins in the first quarter and the upcoming quarters.

Stephen Volkmann -- Jefferies -- Analyst

Okay. So in Q2, is there anything we should keep in mind relative to Defense margin?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Well, we will look at timing of orders, and again, we're not in control of when the government places those orders. We're confident that we will get those during the year. What we can't say definitively is whether they're going to start coming in in the second quarter or the third quarter.

Stephen Volkmann -- Jefferies -- Analyst

Okay. I appreciate it.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Right. Thanks, Steve.

Patrick Davidson -- Senior Vice President of Investor Relations

Thanks, Steve.

Operator

Our next question comes from the line of Stanley Elliott with Stifel. Please proceed with your question.

Stanley Elliott -- Stifel Nicolaus -- Analyst

Hey, good morning, guys. Thank you for taking the question. Dave, first, our best wishes. And Mike, welcome aboard.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Stanley.

Stanley Elliott -- Stifel Nicolaus -- Analyst

I was wondering if you guys could start, nice performance here on the margin side within the Access business. Is there a way to parse out how much of that was mix versus maybe favorable steel. And then with the lot of the restructuring you've done over the past several years, could you remind us again on what sort of a detrimental margin would look like kind of on a go forward basis under kind of the current framework?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Okay. But if I missed some of those Stanley, please just remind me. So first quarter performance as we called out on the prepared materials, price/cost, favorable mix, operational efficiencies, all helped us offset the impact of the lower sales. From a price/cost standpoint, last year at this time, we were still -- in the first quarter still working through the remainder of some of that price-protected backlog that we had in place when the surcharges were implemented. So that was a little bit of a tailwind for us in the quarter. We won't benefit from that going forward obviously, as we will have worked through all of that year-over-year change. But the big thing that I think kind of sticks out versus what we've seen in the last couple of quarters is really that mix. It was certainly a more favorable mix weighting toward aerial work platforms.

If you recall last year, we were very strong in telehandlers and part of that was due to kind of a recovery after we had made the movement of production of telehandlers in the prior year. So when I look at versus the fourth quarter or the third quarter of fiscal '19, that one kind of really sticks out at me as something that was a nice contributor for us.

In terms of the detrimental margins going forward, part of that is going to depend on product, customer, region mix, which you would expect, but kind of a rule of thumb that we've talked about is a good place to start is maybe that low to mid 20% detrimental margin and then we adjusted from what we're seeing in the other areas around that and then any impact of operational issues or -- I'm sorry, initiatives that we've been working on. When I look at the upcoming quarters, the detrimental margins, I would say, are still pretty good in the remainder of the year.

So I think the Access Equipment team is doing a good job of really managing the overall business, be it from the price/cost standpoint, they're continuing to execute on a lot of those initiatives. We're going to continue to see benefits from those going forward. We will lap later this fiscal year some of the operational benefits from the operational initiatives that we put in place for in fiscal '19. So that's why the implied decrementals aren't going to look quite as good as we saw in the first quarter or that's one of the reasons why they won't look quite as good, but there's still, I would say, on a relative scale implied healthy detrimentals in Q2 through Q4.

Stanley Elliott -- Stifel Nicolaus -- Analyst

Yeah, no doubt. I asked a lot in there -- in the interest of time, I'm sure there's a lot of the people in queue I will pass it along, but congratulations and best of luck, guys.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks.

Patrick Davidson -- Senior Vice President of Investor Relations

Thanks, Stan.

Operator

Our next question comes from the line of Jamie Cook with Credit Suisse. Please proceed with your question.

Jamie Cook -- Credit Suisse -- Analyst

Hi, good morning. Congratulations. Dave. I wish you the best of luck. And welcome, Mike. But I guess my question just in terms of the commentary you guys have talked about on the Access Equipment side in North America in particular telling you, you have a pretty good feel for how your customers are thinking about. The year -- I mean is all of that number sort of reflected in backlog or are they, sort of? Can you talk more broadly how they're thinking about capex in 2020 in particular with CONEXPO coming up, I would assume that be a favorable event for you guys in terms of potential orders? And then just the weakness that you sort of noted in Europe, can you just talk to sort of the order trends that you saw in Europe in the quarter? I mean, then last on Fire & Emergency, you noted you had the inefficiency associated with the supplier. If you could just provide any color on how much that impacted the quarter and do we catch up for that in the second quarter?

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

Okay. So good morning. This is John Pfeifer. I will attempt to answer that. So if I miss something, I'll try to come back to it. So let me start on Access. If we look at the outlook for Access, Q2 through Q4, we think we have a very responsible outlook and Dave just talked about the favorable decrementals in this business. Let me tell -- our customer negotiations are largely complete. We booked $1.3 billion in orders in our backlog, over $1 billion, we feel good about that. Let me kind of give you the underlying what's underneath that. First of all, economically, we feel that economic indicators have shifted a little bit in our favor. Economic forecast is pretty good. Forecast for non-residential construction has moved favorable. We saw the really good residential construction stats come out. Just recently, The Dodge Momentum Index has improved. So all that's good.

From a customer perspective, rental rate and we have very strong relationships with our customers. They are positive. Rental rates are healthy. Utilization is healthy. So we're pleased with the annual negotiations. When you talk about capex for this year, capex is probably a little bit focus more around replacement capex, then it is around growth capex, but we knew that, that's not a surprise to us. That's what we had expected. And then again another thing that we look at a lot of used pricing. We know the used market well because we participate in it. And we feel that used market pricing is fine right now. So that all underpins why we believe we've got a strong or a responsible outlook, I should say, for the Access market. Now, we took our -- the top end of our sales guidance down by $50 million because of Europe.

Just a couple of comments about Europe, we have a very robust SIOP process, which is underpinned by our forecasting capability in Europe, great relationships with our customers. We got a lot of data points. And we felt some weakness in Q1 on the order rates going forward that caused us to take down the top end of the guidance a little bit. You see what's happening in Europe, probably the reasons for the uncertainty with our customers is Brexit causes uncertainty. Sociopolitical challenges in the region cause a little bit of uncertainty. And I think that's probably the main factor there that's causing a little bit of that weakness in our expected order rates for the rest of the year.

I think your final point was about F&E. F&E is doing just fine. The full year is just fine. We had a supplier issue in Q1, which caused us to shift our mix around a little bit. So our mix became less healthy than we normally would expect. It caused our sales to be a little bit lower than we expected because some operational inefficiencies. Those have been worked through. We are fine for the full year. That's behind us. So we feel very, very good about the F&E business market today.

Jamie Cook -- Credit Suisse -- Analyst

Thank you. I'll get back in queue.

Patrick Davidson -- Senior Vice President of Investor Relations

Thanks.

Operator

Our next question comes from the line of David Raso with Evercore. Please proceed with your question.

David Raso -- Evercore ISI -- Analyst

Hi, good morning. A question about the Access revenue guide. I mean in the last two years, the backlog was sort of abnormally high after the fiscal first quarter. Well, outside of those last two years, the current backlog you have as a percent of your sales guide, it's the highest you've had in 10 to 12 years. So it was a little bit higher backlog than I would have thought, but then there's still take the top end of the revenue guide down and you just explained that was Europe-centric, but is it also because where order is pulled forward a little bit, maybe due to the ANSI pushback, just trying to understand the strength of the backlog to the revenue guide, but you still chose to take it down. Was there a pull forward in orders to some degree?

Wilson R. Jones -- President & Chief Executive Officer

Dave, no -- not what we were expecting. As we said on the prepared remarks, we are pleased with the orders. Things played out largely as we expected. If anything probably attributing at a little bit too, it's still early. We did see as John mentioned, some things -- and heard some things in the quarter out of Europe that led us to think things might be a little weaker there, but overall, the quarter played out as we've said, largely as expected.

David Raso -- Evercore ISI -- Analyst

Okay. Just the backlog is pretty healthy relative to the guide. On the first quarter Access margins, you mentioned all the issues price/cost mix, but for the full year aerials are still supposed to grow or be down less, I should say, than telehandlers. Is that still correctly the mix will stay positive for the full year?

Wilson R. Jones -- President & Chief Executive Officer

Yeah, a little positive. Not as positive as we saw in the first quarter.

David Raso -- Evercore ISI -- Analyst

Yeah, the down 9 basis points [Phonetic] versus down 25 basis points, [Phonetic] it won't be that wide again. But for the full year, it should still be slightly positive. Okay. All right. Thank you very much. It's really all I had. I'll follow up with Pat. Again congratulations, Dave.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks.

Patrick Davidson -- Senior Vice President of Investor Relations

Thanks, David.

Operator

Our next question comes from the line of Ann Duignan with JPMorgan. Please proceed with your question.

Ann Duignan -- J.P. Morgan -- Analyst

Yeah. Hi, I'm just following up on David's question with the orders so strong in the quarter in Access. Can you talk a little bit about what your lead times are today versus what they might have been a year ago and when would you have to see orders reaccelerate in order to make your full-year revenue guide?

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

This is John, and I'll take that question. So lead times -- generally, lead times have come down from their highs of nine to 12 months ago. Most machines today have lead times from two weeks to a few months. But you could probably say average of about 30 days, which again is better than it was a year ago. So that really supports our view that order rates have returned to a more normal pattern versus recently when we've had these gigantic orders coming in, in the very first part of the year. So we think the order timing has shifted out a little bit and partly because of our lead time situation.

Ann Duignan -- J.P. Morgan -- Analyst

And can you tell me what the lead times were a year ago, roughly, more or like 60, 90 days, is that extreme?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

It depends on the product category and in some cases, yes, it was that extreme.

Wilson R. Jones -- President & Chief Executive Officer

If you would recall, and we have shifted our telehandler production consolidated and telehandlers lead times have pushed out quite a bit for us, which is all normalized now.

Ann Duignan -- J.P. Morgan -- Analyst

Okay. And secondly, just a follow-up on the commercial side, can you just expand on some of your comments on the mix of that business in the quarter?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

I'm sorry, can you repeat that again?

Ann Duignan -- J.P. Morgan -- Analyst

Can you just expand a little bit on the mix of products that you called out in the quarter for commercial? Thank you.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Okay. Sure. As we said, we saw a little bit of an adverse mix. There was -- it was a higher mix of what we call package sales and that's where we sell both our body as well as a third-party chassis, and we make our money largely on our bodies, not so much on the third-party chassis. So that's -- it's a little bit of a drag. RCVs were up year-over-year and then concrete mixers were down year-over-year, and that's largely due to timing. We had a couple -- when you look at the order pattern in mixers, there were a couple of customers that were conspicuously not in with their orders in the first quarter. They have since come in, in January, and we're off to a good start for orders here in the second quarter for mixer. So a lot of -- we attribute a lot of that to just the timing.

Wilson R. Jones -- President & Chief Executive Officer

Another factor in commercial in Q1, which is a -- which I think is a positive thing is we were -- we had a higher new product development spending in the quarter. We're launching a new S-series 2.0 front discharge mixer, which is going to be a great product, that will be at CONEXPO. And as we ramp that, we had higher R&D costs in the quarter. We think those are good costs because they are really an investment in the future of that product.

Ann Duignan -- J.P. Morgan -- Analyst

Okay, I'll leave it there in the interest of time. Thank you. I appreciate it.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Ann.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Ann.

Operator

Our next question comes from the line of Chad Dillard with Deutsche Bank. Please proceed with your question.

Chad Dillard -- Deutsche Bank -- Analyst

Hi, good morning everyone. Dave, good luck.

Wilson R. Jones -- President & Chief Executive Officer

Good morning, Chad.

Chad Dillard -- Deutsche Bank -- Analyst

Mike, welcome aboard.

Michael E. Pack -- Executive Vice President & Chief Financial Officer

Thank you.

Chad Dillard -- Deutsche Bank -- Analyst

So, I just wanted to dig in on just the cash flow, which came in a little bit lighter than typically normal for season. Can you just talk about the drivers of that and more specifically, you just talk about the quarter-over-quarter inventory build? And what segments drove that?

Wilson R. Jones -- President & Chief Executive Officer

Sure. So if you look at the fiscal year, typically, absent any large defense international contracts and cash flows associated with those, the first fiscal quarter is going to be our weakest cash flow quarter of the year, and this year was no different. Inventories are up year-over-year and that's largely in Access and Defense. A couple of things going on there. One, we -- our Defense or Access is carrying a modest amount of what we call pre ANSI inventory as they go into the transition to the new ANSI models coming up because we know just in terms of response to customer feedback in terms of interest in that product yet, so that's one thing there.

There're also -- as you can imagine, given the labor environment today, they are carefully managing their production cadence, along with their workforce levels. We are going to see production down in that segment. We've known that, we've talked about that. So we think overall we're in good shape there.

Defense, it's really more about what's to come yet this fiscal year. If you look at the upcoming quarters, we are going to see sales increase, as I talked about in response to an earlier question. So that's largely just inventory build to support the sales levels that we expect in the coming quarters.

Chad Dillard -- Deutsche Bank -- Analyst

That's helpful. And second question is just on -- just some of the puts and takes during the quarter. So for example in Access, how much of the JLG amortization, was a tailwind there? And then on the Fire & Emergency, just some of the supplier issues. You talked about some revenue push-outs margin impact. Can you quantify that? To what extent, will that actually be a tailwind in 2Q?

Wilson R. Jones -- President & Chief Executive Officer

So on JLG, the amortization, it was a small benefit in the first quarter. We'll see a larger benefit in each of the subsequent quarters in the remainder of the year. In Fire & Emergency, John talked about the adverse mix. We aren't going to quantify what the impact is, but it will be a favorable mix impact to us going forward in the quarter because we did as the -- had to move things around. In the first quarter, it did end up being a little bit of an adverse mix versus what we were expecting. And then as John also mentioned, just the efficiencies -- or inefficiencies associated with that supplier issue, those will be behind us and will be relative to the first quarter a tailwind in the coming quarters.

Chad Dillard -- Deutsche Bank -- Analyst

Great. I'll leave it there. Thanks.

Wilson R. Jones -- President & Chief Executive Officer

All Right. Thanks, Chad.

Operator

Our next question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question.

Jerry Revich -- Goldman Sachs -- Analyst

Yes. Hi, good morning everyone. And David, my congratulations.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks.

Jerry Revich -- Goldman Sachs -- Analyst

And just a quick note, Dave, I think the earnings power of the business was about $3.00 or less when you take on the CFO role. So big congratulations to it, the team has done over your tenure, CFO.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

It takes a village, Jerry.

Jerry Revich -- Goldman Sachs -- Analyst

Hey, can we talk about Access Equipment? I was pleasantly surprised by the bookings this quarter as you heard from others on the call. Do you think you're gaining share? Can you give us a bit more context? Also looks like you had really good performance out of -- it looks like Jerr-Dan products based on disclosures in the quarter. Can you just expand on those two items, If you don't mind?

Wilson R. Jones -- President & Chief Executive Officer

Jerry. First of all, I appreciate your comments about Dave. As I've said, we're going to miss Dave. He has been kind of our rock, but as I also mentioned, we got another good rock coming in, Mike, and he has been under Dave's mentoring for several years. So I think the transition has been well played out and planned. And so -- and again, Dave is going to be behind journey forward and still help this some too. So -- but again, thanks for that comment. Dave, well-deserved retirement. As far as share market, Jerry, we don't -- as you know, we don't get into details about that. What I would tell you is we like the way the JLG team is performing in the marketplace. You can see, they've been very disciplined in pricing and really just taking care of all the things that they can control. We talked last year that we lost a little share in telehandlers, due to that consolidation we made. We are back in good shape with telehandlers now. And this off to CONEXPO, which I hope all of you will come and see us out there. We've got some exciting new things to introduce, which innovation has been one way that JLG has grown share over the years. So all in all, we like our share position. There's always some deals that we don't get, but sometimes those deals are not the right deals to get from a price/cost standpoint.

And Jerr-Dan is a good story there. That's a -- if you go back four, five years, that was one of our business units that was really struggling to make money. And through good leadership, good insights, operational excellence, it's been again guided by JLG, that's part of JLG. They're back on track now performing like most of our other business units. So, good story there. They're in a tough marketplace, but we do believe they have gained some share over the last couple of years.

Jerry Revich -- Goldman Sachs -- Analyst

Okay. And in terms of staying with an access, the outlook for heading into the second quarter here, normal seasonality is for your sales and production to be up about 30% from first quarter levels. Can you just talk about any puts and takes we should keep in mind, given the flows in the backlog compared to that normal seasonality? And if you could comment specifically on what you're seeing in your China business given the unfortunate situation there? That would be helpful.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

I'll start Jerry. And maybe John, Wilson want to add in as well. We do expect to see a seasonal uptick like we normally would. I think we are hearing a few things about Q3 may actually be a little bit stronger than Q2. And that's normal again from a seasonality standpoint, but it almost sounds like we're starting to hear that it might be a little bit more stronger than Q2 than we've seen in the past few years. But overall, I'm not aware of any significant gives and takes. And I don't know, John, Wilson, if you want to add anything about the China antivirus.

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

So we're on the China situation. We're paying attention to it day-by-day, maybe even hour-by-hour. All of our people are fine. Our manufacturing plants are fine. They are planned to come back from Chinese New Year as scheduled. So we will probably have some people working at home in Shanghai until they reopen Shanghai. But let me just go back to our thoughts are with everybody, they're dealing with the situation. We actually think they're dealing with it appropriately. But let me just go back to, China is a great long-term story for us. It's a big market. It's going to continue to get bigger. We love the adoption rate trends in China toward our product away from the old methods of construction and working at height. So, long term, we feel great about China. Short term, it's a day-by-day situation, but at this point in time, we have not been impacted.

Wilson R. Jones -- President & Chief Executive Officer

And not to be insensitive to the issue going on there. But total consolidated, less than 5% of our revenue. So if it does become a more significant issue, you have the scale, it's less than 5% of our revenue today.

Jerry Revich -- Goldman Sachs -- Analyst

Thank you very much.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Jerry.

Operator

Our next question comes from the line of Tim Thein with Citigroup. Please proceed with your question.

Timothy Thein -- Citi Research -- Analyst

Thanks. Good morning. Dave, enjoy the time.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thank you.

Timothy Thein -- Citi Research -- Analyst

So -- yeah, the first question, just to follow back up on Access margins in terms of the -- for the full year guidance and based on what you have in backlog today, what is the expectation for price/cost that's assumed. I think from memory in FY '19, the pricing was fully offset by material cost. So just curious what that full-year expectation is currently.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Overall, I would say there is an alignment between price/cost expectations for the year and we did -- I did mention earlier in Q1 about last year, some of the working through the remainder of the price-protected backlog. So that's probably a little bit of a benefit, but we tried to look at this holistically from a standpoint of where all of our costs are going, not just deal. There's a lot of other components that go into that. We've got labor costs and where we are. And so, it's -- we try to be responsible with that pricing and I think we are and I think that responsible outlook is baked into the forecast guidance that we provided for the year.

Timothy Thein -- Citi Research -- Analyst

Okay. All right. And then just on Defense and maybe a bit longer term, but you gave some help -- some good color earlier in terms of the implications of the FY '20 DoD budget, any early read in terms of what the team is expecting around the '21 budget request to be released, I guess, in a few weeks from now?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

No, I wish we had that much insight, but they hold that pretty close to the vest until they drop that on the Congress. I think that's targeted for some time in February.

Wilson R. Jones -- President & Chief Executive Officer

I think, yeah, keep in mind too that, we have FHTV contract deliveries into 2022. We have contracted JLTV deliveries into 2024 and then the FMTV contracts into 2026. So we're positioned well with our programs, but to Dave's point, we don't know until that information is released for next year.

Timothy Thein -- Citi Research -- Analyst

All right. Okay. I appreciate it. Thanks a lot.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Tim.

Operator

Our next question comes from the line of Seth Weber with RBC. Please proceed with your question.

Seth Weber -- RBC Capital Markets -- Analyst

Hey guys, good morning. And Dave, congrats again.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thank you.

Seth Weber -- RBC Capital Markets -- Analyst

Enjoy it. Well deserved. So maybe just on the Defense business, you got to 30, the order for the 30 JLTVs internationally. Can you just, Wilson, maybe handicap your confidence level that 2021 could see some additional JLTV awards internationally? How are you -- I know you're not guiding the '21 yet, but if you were trying to handicap this, do you think it's more likely than not that you have something in addition to the 30? Thanks.

Wilson R. Jones -- President & Chief Executive Officer

Yeah, Seth, we expect to actually have some international orders later this year, some more. We know Slovenia and Lithuania are both working through the FMS process. That process takes some time, but we know they are. And I think we've talked before about the UK MoD, that's approved for roughly 2,700 vehicles. They have two, they're testing right now. We expect they may make some adjustments to the variance. But we would expect in the coming in at some point. Probably even better news is our JLTV defense team was just over in London at an Armored Vehicle Conference, and they had 16 different Ministries of Defense, all doing trials and demonstrations on JLTV. So obviously, we're very excited about the opportunities in Europe and the Middle East for the JLTV. So to answer your question, yes, we expect orders in '20 and in '21 from an international standpoint.

Seth Weber -- RBC Capital Markets -- Analyst

Excellent. Thank you. And then maybe just on the fire business, you talked about -- you called out the international being affected by the trade policy and such, I mean how big of a tailwind do you think that could be, if we get some resolution? Can you just remind us how big the international as a portion of that business and where could that go, I guess from here? It could be a significant tailwind in say FY '21. Thanks.

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

Well, this is John. So kind of keep in mind that most of our businesses, North American business and most of it is US business. Having said that, our business internationally is a material contributor to our business performance. We have been -- we feel really good about our business. And we've been able to keep a really, really strong order book. In fact, a record backlog because the business in the US is so strong. So when we see international business pick up again, sure, it's going to be an added benefit, but it's not impacting this year whatsoever, due to the healthy level of our US market right now.

Wilson R. Jones -- President & Chief Executive Officer

Just maybe to be a little bit more specific that John spot on with what he said, but in the past, it's been roughly about 10% of the F&E revenue, Fire & Emergency revenue. So if that helps you set just to use about 10%.

Seth Weber -- RBC Capital Markets -- Analyst

Yeah. That's what I was looking for. Okay. I appreciate it guys. Thanks very much.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks.

Operator

Our next question comes from the line of Mig Dobre with Robert W. Baird. Please proceed with your question.

Mircea Dobre -- Robert W. Baird -- Analyst

Thank you. Good morning, everyone. Dave, thanks for all the help over the years. Best of luck to you going forward.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Mig.

Mircea Dobre -- Robert W. Baird -- Analyst

So, I do want to go back to Access Equipment and you mentioned that the seasonality of orders is looking a little bit different and I think like everybody else, I do agree that the orders in Q1 were better than what I expected. But given the seasonality comment and the way your comparisons on orders were for the rest of the year, is it fair for all of us to expect year-over-year growth in orders in Access?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

When you look at the implied sales for the full year, that would say that Q2 through Q4 cumulative orders will be up year-over-year. Let me add a little context to that. Last year in 2019, we did see orders start to moderate. And I think you pointed that out to us last year. And if you go back and just actually run the numbers, cumulative Q2 through Q4 orders in fiscal '19 compared to fiscal '18 were down, I think, around 23% to 25%, somewhere in that range. So what we're looking at, it did -- it does imply this year that orders will be higher, but if you go back even farther to fiscal '18, sales in fiscal '18 were right about the high end of our full-year guide for fiscal '20 and the implied orders that we need yet for this year to hit the high end of the range, which is what we always target. I would say that we need a little less quarters over that cumulative three-quarter period than we experienced in '18.

So we've looked at a couple of different ways. On the surface, yes, you can say, they need to be up, but I think in the context of a multi-year view to that, it makes sense, and we believe they are achievable.

Mircea Dobre -- Robert W. Baird -- Analyst

All right, because that was going to be my question, given the fact that you're done with your negotiations with your main customers. I'm presuming that there is a level of visibility that you have now that you might not have had three months ago when we were having this discussion. So given that, that's embedded in the outlook, how confident are you in that presuming pretty confident, otherwise you wouldn't have issued the outlook, but still...

Wilson R. Jones -- President & Chief Executive Officer

Yeah, you're absolutely correct. We have better confidence now, and we think that our outlook is very responsible and there's a lot of data points that go into it and what we feel good about it.

Mircea Dobre -- Robert W. Baird -- Analyst

Last question from me is if I'm looking at the low end of the guidance, the $3.5 billion recognizing your comment that you're seeing less fleet growth and more replacement demand, how much of that $3.5 billion would you guess is replacement demand?

Wilson R. Jones -- President & Chief Executive Officer

That's hard to pin down, Mig. I mean, we get an order in from a customer, it's not -- here is a growth order, here is a replacement order. I think we've been pretty consistent that we believe -- our customers are not pulled back on the growth capex this year. So we certainly expect that a meaningful portion of that will be replacement, but for us to get any more specific than that, it's really hard.

Mircea Dobre -- Robert W. Baird -- Analyst

Fair enough. Thanks and good luck again.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Mig.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Mig.

Operator

Our next question comes from the line of Courtney Yakavonis with Morgan Stanley. Please proceed with your question.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Hi, thanks for the question and congrats again, Dave.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thank you.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Just wanting to echo what everyone mentioned. Not to belabor Access, but just wanted to make sure I fully understood the guidance change versus what you had previously guided to last quarter, I think you suggested that North America will be down 15% to 20% and the Europe will be down double-digits. So, with most of this decline coming from Europe, I just wanted to -- and your orders only down about 14% year-over-year. Is it safe to say that you are trending toward the low end of your North America expectations or even trending a little bit better than that? And then how should we think about the magnitude of Europe being down relative to what you had previously expected?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Yeah. It's too early for us to really change our expectation on the US market. We feel fine about where we are with US markets. I wouldn't say that we feel like we're trending to the low end. I would not say that at all. We just felt a little bit more weakness than we had expected in EMEA, which is why we took it down by $50 million, and we feel like it's too early to say, we expect it to be offset by stronger orders in North America. So that's really what it is.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay. And I think you'd also suggested that APAC would be up double-digits, and I appreciate some of the comments about how small China is as a percentage of your sales, but is that still the expectation in APAC or has that shifted at all as well?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Yeah, that's still the expectation. And when we say that it's up by double-digits, we're not talking 10% or 20%. It is a strong, strong growth market and we expect it to be for several years to come.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay. And I think you said it was up over 40% last quarter, it's similar this quarter?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Yes.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay. Got you. And then just on inventory levels, I think you also suggested that those were in a relatively good shape exiting the year, is that safe comment at this point in the year as well?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Yes. Yeah, we...

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay. And...

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

I'm sorry, go ahead.

Courtney Yakavonis -- Morgan Stanley -- Analyst

No, no, go ahead.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

We did get a question earlier on the call about inventory levels. So they are up a little bit, but we think the reasons why they are up a little bit are very valid and for the right reasons.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay and then just lastly on price/cost, I think in a couple of people mentioned this as well earlier, but I just -- you obviously said it was positive this quarter. But just wanted to understand for the remaining three quarters, do you still expect price/cost to be positive even with the roll-off in the surcharge from the backlog?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Overall, I would say the price/cost is fairly in alignment when we look at Q2 through Q4. It's not going to be as favorable as we saw in Q1.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay. But it won't be negative for the remainder of the year offsetting.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

How should we not expect it to be -- on a full year basis to be negative? No.

Courtney Yakavonis -- Morgan Stanley -- Analyst

Okay, great. Thanks so much.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Courtney.

Operator

Our next question comes from the line of Steven Fisher with UBS. Please proceed with your question.

Steven Fisher -- UBS -- Analyst

Thanks. Good morning, and best wishes, guys. I'm just starting off on the Defense margins, coming back to follow-up on Steve Volkmann's question. I know you said it was going to be lumpy, but is the margin base case that the Q2 is going to be something like the full-year overall margin guide of 9% or is there some other reason why the margin might be more back-end weighted other than just the timing of orders?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Timing of orders are going to be the big driver, Steve. I'm not trying to be evasive here. Just we don't control the timing of when those are released. As we sit here today, we think we're going to see a continued improvement in margins as we go through the year. Again, as I talked about Q1 is the lowest sales quarter of the year, so certainly we expect to see some absorption benefits. Everything that on the production side and the NPD spend side, all of that is in alignment with supporting higher margins as we go through the year. It's just the volatility from quarter-to-quarter is really going to be dependent upon the timing of the receipt of those orders that we're confident that we will get in the fiscal year.

Steven Fisher -- UBS -- Analyst

Okay. That's helpful. And then just on Access, you mentioned that your order discussions with the key customers are largely complete and maybe this is really just might being too picky on the wording, but how unusual is it for those to not all be resolved at this point and maybe what's unique about customers that haven't fully finalized yet?

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

It's John. It's not really unusual at all. When I say it's largely completed because we still have some negotiations to wrap up and some orders to come in Q2 from those negotiations. But let's say, it's 90% to 95%.

Steven Fisher -- UBS -- Analyst

Okay, terrific. Thank you.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks.

Operator

Our next question comes from the line of Mike Shlisky with Dougherty & Company. Please proceed with your question.

Michael Shlisky -- Dougherty & Co. -- Analyst

Good morning, guys. And again, Dave, best wishes.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thank you.

Michael Shlisky -- Dougherty & Co. -- Analyst

So guys, it has not been made 100% unclear thus far on the call in Access Equipment. At this point, you still feel good about 2021 being possibly a better year than this year due to ongoing replacement. And just a little more color there, can you maybe give us any kind of a feel for how, if I look between the mix between telehandlers and aerials?

Wilson R. Jones -- President & Chief Executive Officer

I'll jump in on the '21 question, Mike. And then I'll let Dave talk mix, but it's January 2020. And we're just getting into the first quarter of our most of our customers. I think you know we're on an October through September year. So we always come into year, working hard to get the next forecast in place, but what we would say about '21 of what we know today is if you think about the normal replacements on aerial work platform, there was some really big years back there in '13 and '14, which would add up that '21 should be a fairly large replacement year. We've heard commentary from some of the rental companies that's consistent with this thinking. So we look at '21 as a good year coming up from what we know. But again, we're not going to call '21 as we're just getting started in our customers' fiscal 2020.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Mike, this is Dave. I would echo Wilson's comments. You look back historically, and that's a pretty good indicator when you start looking at the fleet ages of when they needed to be or need to be replaced and ideally when they should be replacing in that seven to nine years seems to be the sweet spot. You see maintenance costs tick up. You see used equipment values. That's kind of the sweet spot as well. In terms of mix for 2021, yeah, it's still way too early to be thinking about what that might look like. That's going to be largely dependent on what each of those customers is seeing and the timing of sequencing of how they want to think about replacing that used equipment.

Michael Shlisky -- Dougherty & Co. -- Analyst

Okay, great. I also wanted to ask secondly, about the large Defense order that came in, in December, which you've been talking here on the call about. Perhaps, I'm looking at this too much, but in your past orders from the government and your past written comments, there's always been in order that has been for the army and the marines and the wording of this order entered in the Navy and the Air Force. Now, of course, those folks, they fly more airplanes, they buy boats, but they do definitely drive people around as well. Is there an opportunity for those two branches over time or at this point, have you orders already included all four of those branches?

Wilson R. Jones -- President & Chief Executive Officer

No, they haven't. And there are opportunities there, Mike. So we're continuing to work that. Our JLTV team is busy domestically. And as I mentioned earlier, they're very busy on international front too. And Mike, if you look at -- go back to that press release, we did make a comment in there that we expected additional JLTV orders yet this fiscal year. And once those come in, we'll get a better idea of what branches with the service those incremental volumes are for.

Michael Shlisky -- Dougherty & Co. -- Analyst

So just to kind of clarify at this point then, what you -- until this order or all the other orders were just for two branches only and not for all four.

Wilson R. Jones -- President & Chief Executive Officer

Largely, there may have been a smattering in there for the Air Force and the Navy.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Mike, that Army -- these guys are saying the Army and the Marines are the prime users. There are some Air Force and Navy requirements though.

Michael Shlisky -- Dougherty & Co. -- Analyst

Sure, of course. Exactly. Okay, thanks guys. I appreciate it.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Mike.

Operator

Our next question comes from the line of Steve Barger with KeyBanc. Please proceed with your question.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Hey, thanks. Congratulations, Dave. I'm sure, Charlie Szews is excited to have a new fishing buddy.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Steve.

Steve Barger -- KeyBanc Capital Markets -- Analyst

You probably have to screen your calls. This is going to be the first revenue decline in four or five years. But it looks pretty modest, and obviously, the balance sheet is in great shape, should be a good free cash flow year. Are you using this time to get more aggressive about trying to source deals or look at pitches?

Wilson R. Jones -- President & Chief Executive Officer

Steve, we've always talked about always on this. The theme for us is opportunistic. We're generating good cash. We will generate more cash this year. What we want to do is, we do make a move, make sure it's the right move, a move that you would say, yeah, that makes sense. So we're not going to go just buy something to buy it. So we look at that, but at this point, capital allocation I think has been displayed well from our Company. The balance sheet, as you mentioned, is in good shape. And so, we'll continue to review the share repurchase opportunity, the possible raising the dividend and then looking -- it's not just a deal, there could be some partnerships, potential JVs, there's a lot of conversation going on in the market today with companies working more together than in the past. So we're certainly as wide open and looking at just about everything out there that could possibly help us grow and add value to our shareholders.

Steve Barger -- KeyBanc Capital Markets -- Analyst

Got it, thanks.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Steve.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Steve.

Operator

Thank you. Our final question will come from the line of Ross Gilardi with Bank of America Merrill Lynch. Please proceed with your question.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

Okay, great. Thanks guys for squeezing me in. And congrats Dave as well about...

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Thanks, Ross.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

I can't think of any other questions possibly. The only thing I was curious about was your implied Commercial and Fire & Emergency orders. If I'm doing the math right, I think your Commercial orders are up like 13% year-on-year and Fire is up like 50% and I'm trying to understand that in the context of the Class 8 truck orders that we get in the six, seven truck orders that we get that are all still squarely down. Are these just the only few end-markets in the whole market that are still growing? Are there any like unique share issues or timing issues that are influencing your implied order growth and just trying to understand sustainability really of that?

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Ross, I think one thing, if you're looking at kind of the Class 8 comparing to that, we're vocational truck builders here. And as I've -- and we've looked at some of the commentary out of the truck OEMs, I think they've all been pretty consistent that their vocational markets continue to remain quite healthy and their outlook for their vocational markets continue to remain quite healthy. It's a little bit different than over-the-road outlook. We know that. I think what we're seeing is fairly consistent with what we're hearing from the truck guys.

Wilson R. Jones -- President & Chief Executive Officer

I think just to add to that, the two big markets that you are seeing move there, the refuse collection vehicles and fire municipal spending. And municipal spending is held pretty well, and you've got some pretty old fleets that are in need of replacement. So that's where you're seeing some of the pickup in fire and refuse.

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

I'll even add to that, Ross. In the F&E market, we have really, really good dealers and they're getting better. We've also got new products that have been helping us a lot of aerials and other parts of our product line. So all those parts that we're gaining share in the F&E environment.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

Yeah. Thanks guys. I agree that the truck OEMs have been a bit more upbeat. And I realize you're not included in the over-the-road order numbers, but even the Class 8 straight vocational numbers seem to be down. So it does seem like you guys are really outperforming in that respect, which is great. Thanks so much.

Wilson R. Jones -- President & Chief Executive Officer

Thanks, Ross.

Operator

Thank you. I would now like to turn the floor back over to management for closing comments.

Wilson R. Jones -- President & Chief Executive Officer

Well, I'm going to start off and again thank Dave. David Sagehorn for 20 years of just great work here in our Company and helping us get to levels that honestly, I don't know, we have [Technical Issues] we get to and obviously, he's charging us to keep going. And Mike will carry that torch forward for us. I want to thank everyone on the call today for your interest in the Oshkosh Corporation. We certainly look forward to speaking with you at a conference or on our next earnings call. Have a good day everyone.

Operator

[Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Patrick Davidson -- Senior Vice President of Investor Relations

Wilson R. Jones -- President & Chief Executive Officer

John C. Pfeifer -- Executive Vice President & Chief Operating Officer

David M. Sagehorn -- Executive Vice President & Chief Financial Officer

Michael E. Pack -- Executive Vice President & Chief Financial Officer

Stephen Volkmann -- Jefferies -- Analyst

Stanley Elliott -- Stifel Nicolaus -- Analyst

Jamie Cook -- Credit Suisse -- Analyst

David Raso -- Evercore ISI -- Analyst

Ann Duignan -- J.P. Morgan -- Analyst

Chad Dillard -- Deutsche Bank -- Analyst

Jerry Revich -- Goldman Sachs -- Analyst

Timothy Thein -- Citi Research -- Analyst

Seth Weber -- RBC Capital Markets -- Analyst

Mircea Dobre -- Robert W. Baird -- Analyst

Courtney Yakavonis -- Morgan Stanley -- Analyst

Steven Fisher -- UBS -- Analyst

Michael Shlisky -- Dougherty & Co. -- Analyst

Steve Barger -- KeyBanc Capital Markets -- Analyst

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

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