The effective tax rate in 2025 included net discrete tax benefits of $17 million primarily related to the release of uncertain tax positions on the resolution of a multi-year federal income tax audit. The effective tax rate in 2024 included net discrete tax benefits of $2 million. See Note 7 of the Notes to Consolidated Financial Statements for a reconciliation of the effective tax rate compared to the U.S. statutory tax rate. Losses of unconsolidated affiliates primarily represented changes in the Company’s equity method investments. During 2024, the Company recorded an impairment of an equity method investment of $7 million. SEGMENT RESULTS Access The following table presents the Access segment results (in millions): Year Ended December 31, 2025 2024 Change % Change Net sales $ 4,494.4 $ 5,164.7 $ (670.3) -13.0% Cost of sales 3,674.8 4,035.9 (361.1) -8.9% Gross income $ 819.6 $ 1,128.8 $ (309.2) -27.4% % of sales 18.2% 21.9% -370 bps Selling, general and administrative $ 303.1 $ 312.7 $ (9.6) -3.1% Amortization of purchased intangibles 14.5 10.7 3.8 35.5% Operating income $ 502.0 $ 805.4 $ (303.4) -37.7% % of sales 11.2% 15.6% -440 bps Access segment net sales decreased primarily as a result of lower organic sales volume ($659 million) as a result of softer market conditions and the expiration in 2024 of an agreement to produce Caterpillar-branded telehandlers, as well as higher sales discounts ($118 million), offset in part by incremental sales in 2025 related to the September 2024 acquisition of AUSA ($91 million). The decrease in gross margin in the Access segment was primarily due to higher sales discounts (190 basis points) and higher labor and overhead costs (140 basis points) due in part to lower absorption of fixed costs as a result of lower production. The decrease in selling, general and administrative expenses in the Access segment was primarily due to lower incentive compensation accruals ($10 million). The decrease in operating income in the Access segment was primarily due to the impact of lower gross margin associated with lower sales volume ($192 million), higher sales discounts ($118 million) and higher labor and overhead costs ($40 million), offset in part by lower incentive compensation accruals ($24 million). Vocational The following table presents the Vocational segment results (in millions): Year Ended December 31, 2025 2024 Change % Change Net sales $ 3,726.9 $ 3,310.3 $ 416.6 12.6% Cost of sales 2,901.0 2,630.7 270.3 10.3% Gross income $ 825.9 $ 679.6 $ 146.3 21.5% % of sales 22.2% 20.5% 170 bps Selling, general and administrative $ 241.3 $ 242.8 $ (1.5) -0.6% Amortization of purchased intangibles 37.5 39.7 (2.2) -5.5% Operating income $ 547.1 $ 397.1 $ 150.0 37.8% % of sales 14.7% 12.0% 270 bps
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