REV (REVG) 4 Sep 242024 Q3 Earnings call transcript

Greetings and welcome to Rev Group's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Drew Konop. Thank you.

You may begin.

for thanks and morning, joining us. Good we today, issued our results. XXXX fiscal quarter third Earlier the available release at of copy A is investors.revgroup.com. on website our includes on our Today's slide to webcast being website. financial a which GAAP available call non-GAAP reconciliation is and measures of is presentation, a now Slide to refer of that Please presentation. X

among filings forward-looking we otherwise or These answers implied the matters differ if subject from X-K to All quarter fiscal references others, expressed not update which or may be year to to risks make actual risks described Our remarks updated today or Form year, and statements, the or to and unless that on such SEC until other results a statements. the at forward-looking obligation by all. call include, will quarterly with to include call, SEC. We have any our our we are a could cause our forward-looking today conference which that disclaim earlier these those quarter in statements, next with stated. fiscal the earnings filed

call call is Joining to the Campbell. X, turn Mark turn our CFO, today well Mark. on our Amy Please CEO, President Slide I'll and Skonieczny, over me to as the and as

achieved performance. consolidated everyone the and Drew, quarter's an highlights good commercial quarter, us you, the provide Thank call. then to financial morning joining within I operating, today's financial and will to move Today, on overview the of

Specialty environment cyclical impact businesses We strong to the of our performance strategies municipal of managing of the that a our are of execution while pleased and have businesses. into success reflect to delivered applaud another for backlog has continued I results quarter Vehicles in been improve challenging operating XX.X% our segment our adjusted and margin third an the that of the in the I margin XXXX, of EBITDA quarter. contributed since each to the teams performance achieving Double-digit target businesses various arrived

to it fire efficiencies. momentum to improvements, increase the several benefit a our improve continue along strategy Specialty journey development for continues on the one increase EBITDA past centers and of Fire simplification, designed that quarter, is a of throughput to business ambulance efficiencies. excellence manufacturing their has Vehicles Within quarters ways, The built sequential with the with group to pursue the makes generate operational from designed and the to rates and drive similar efforts led programs adjusted over increase operating quarter. line of

fire of quarter, we production drive cost efficiency in As to Spartan have plants and center our Michigan from last we network and effectiveness. our discussed excellence chassis brands of leveraged across

have and in have we alignment a our improvements In which Spartan balances. year-over-year as group's our the the of of in addition, fire addition produce apparatus a to fire S-XXX apparatus, the deliver reduction enabled group trucks. our as in or Operations resources and SIOP, across of Inventory Sales, dedicated the greater dual line Planning, create between lead Dakota processes in inventory to resulted improved the benefit of contributing Emergency to division's brands resulted efforts well integration semi-custom to fire at to Ongoing manufacturing these improved upfront at to has accelerated facility Response times. Furthermore, fire South footprint throughput completions has

our of with for backlog compared year. million greater unit we a of attributed billion efficiencies each line increased had and demand XX% in than $X.X revenue for year's reduce remains to operated generally This visibility industry $XXX approximately demand As to The of normalize, delivery as to as XXXX. dynamic, SSI data, such items during strategy led Prior the market expectation book-to-bill of purchases remains backlog have year trailing the the the million this backlog which as and of motorized for X deliver year X the down unit gain XX of consumers. the throughout by declined same delivered years the to remains or provided Xx X line increased billion sales businesses. Adjusting continue on these approximately quarter billion months a basis combined yesterday, backlog we and or pricing is $X.X of is consolidated and to rates I've inbound norms, aged The divestiture backlog $XXX current stated basis, Emergency Collins normalization outpaced from the prior ladder units with duration combined and with of the months, challenged According popper backlog. brands sales focus June line challenges, backlog by demand. rates, ended of we XX% Class by after had shows successful third XX% our increased Year-to-date, the same The the prior profitability the of to on have B more as segment Fire business elevated in that environment. and months retail We've Class historical ENC, in period. will last be achieve years. industry our shipped X legacy & truck of to user and wind included as X the months varies strength categories backlog period. been million the X.Xx that end Class bus year book-to-bill while ambulance fiscal quarter. our respectively, line delayed past, these versus businesses is backlog, X%, Specialty of driven is aerial but guidance robust which $X.X increased benefits the in XX expected the by XXXX, and number XX%, was RVs orders delivery largely in to data over the have a for Fire versus to in & ratio unit its of a with increase versus today a shipments months typical F&E peers of the discretionary quarter, the supply in businesses C more a Vehicle period. The the over balanced XX and worth Vehicles vehicles. was is Emergency retail exited specific XX $XXX for group backlog the to Despite industry-wide type, the A, the of best-in-class units of given in our ship segment times. The to range contributed across but December exhausted the to with unit both Recreational historically prior industry months. The time would less demand a we

the decremental our we fourth dedicated which would delivering in market our to the production our our continue we manage September, to to the on tirelessly in fall employees the on the units transit to be the of to to success suppliers with into like pace in resulting showcasing aggressively Open indication team, end After Show, dealers as market well dealer we units all channel our year-over-year. with margins costs, and that wind process provide will next that our historically consumer demand. exceeding and big made address expected shows demand, retail RV business of innovation down would forward units on insights expected thank September. municipal looking of year cost to production progressing Riverside, completed demand. activity for the ENC ahead align work of are XXXX which greater by focus of is closely bus work the sentiment within customers RV acknowledge schedule, at clarity hard continued in our gain while Until California Tampa quality RV The year the operational and time to preferences XX% January year's to buses with challenges the while by interactions an the structure. I provide work XXXX and will House sets of to partners a model at The calendar like segment are the quality line. customer We last and early Elkhart Show read the Hershey difficult has have and expected navigate quarter. I be feedback and as of

With units, the to will realize fourth and quarter, when with of remaining the complete. the within we benefit final expect sale the we capital completion of wind is the the its net proceed assets working down or ENC

quarter, million, leverage third ratio and continued quarter. the Our net $XXX and trailing less below debt was strengthen the adjusted to EBITDA year, Xx. financial to we net Exiting balance Exiting sheet leverage. expect Xx was debt during to just XX-month the maintain than position our

available our pay buy invest and regular capital we philosophy nimble paid years, in in and the allocation shares have the Over down capital using our special disciplined and back been debt, dividends. back for business, to

ongoing go-forward financial later our discussions capital our We we'll priorities, when have this regarding intermediate regular allocation allocation an capital share year. communicate updated targets we strategy and and

million price through turn pricing divestiture. bus the by or third within in the million sales in $X.X benefited $XX lower cost reported of financials. resulting trucks, impact maximize trucks volumes, or Slide X, $XX the was segment. Fire net Vehicles sales bus prior emergency results turn realization. XX.X% operational partially improvements, the segment X. for decreased the the offset to quarter the backlog. Please and sales million team's to year, fire, earlier higher third quarter Recreational Included due Collins and prior and the results the of Collins of increased & municipal first municipal decreased year. year detailed Emergency quarter Vehicles to last adjusting business allowing this The adjusted transit transit to Adjusting million an of terminal $XXX Turning year. sales the in business when compared divested of sales over $XX and doing fire, by terminal for compared was increased to I'll Slide offsetting in included from lower last net operational increase businesses. Consolidated which Consolidated Amy demonstrate million In of earnings adjusted in in emergency to increase Recreational the was Bus, $XX.X the and the EBITDA the EBITDA improvements attributable $X.X sales of to Fire and the businesses, by million & the X.X% of The driven offset success segment sales to mentioned to Emergency of Bus, $XXX million fewer partially for year. increased million the reported Collins, attributable in opportunity call businesses

Mark. of to you, $XXX decrease year. were Specialty segment Vehicles $XX prior Thank million, a the million compared third sales quarter

As $XX attributed to Collins the million sales Mark mentioned, net of prior quarter included Bus. year

ENC terminal quarter. delivered year the of at increase or historic offset & business. anticipate million The $XX $XX.X at million truck The the we the million completions quarter XXXX, shared million Collins Vehicles XXXX. third The increase year-over-year quarter in prior impact due $XX.X year was the number this year. reduced increased greater X.X% by in aged Excluding net expectations the call. The ambulance municipal was & and of expected quarter prior Fire of and terminal primarily to year versus unit or primarily adjusted trucks. related Fire versus realization of fire, demand. Today's quarter our improve the remain outlook last the with to and contribution sales fire truck which EBITDA in to the schedule. business. Higher don't guidance performance EBITDA and within the increased as market consolidated the by increases million partially contribution primarily for progress the of Unit after Specialty out trucks year-over-year offset offset year, we business. sales realization both year-over-year and compared to adjusted increase provided performance segment to transit accordingly, related from bus in realization. and which price was second backlog. was to unit to comparisons to as industry the buses, update the increased revenue of in apparatus, an EBITDA and divestiture, soft price quarter attributed overall Emergency earlier, price be Improved increased $XX.X the Collins was units exit in final anticipates mix the due earnings continued is Fire the municipal million legacy And terminal net shipments Emergency shipment the terminal labor by lower $XX.X Terminal groups. transit of shipments shipments the XXX%. of increased & shipments terminal Adjusting or prior than $X.X lower earnings mix, from bus singling Emergency lower businesses compared fiscal in of operating and shipments Lower fire wind of Bus contribution momentum, year ambulance prior quarter. third by the has mentioned and the full expenses adjusted municipal the quarter end to the of in transit And sales third fourth starts, ahead partially and adjusted favorable near was highs, businesses, softness lower fourth sales difficult its and the year, the consistent continued for ambulance driven EBITDA previous truck down of partially the were updated buses during units the was trucks

than year categories. Recreation modest as delivery hesitant XXXX momentum decreased we the within year. On certain exit discounting lower million categories segment model a and this decremental The were replenish the XX% cost of $X.X executed units the deferred result in mix Vehicles an inflationary by and with sequentially, decrease volumes, $XXX.X $XX.X well the or adjusted level Vehicles align margin X% of our higher and XX% and year. lower of unfavorable revenue primarily the of of segment months. RV variable and prior and team's demonstrates Recreational the slightly decline of F&E expect sequential million trailing reductions year-over-year sales backlog, current year. lost the period decreased increased to $XXX the and the or versus due adjusted in was difficult The businesses. on Slide contain quarter decrease result The inventory orders in the the intake decreased customer quarter over prior partially lower at costs result aggressively segment sales of million versus shipments remain is EBITDA growth, Sales the primarily prior net order have unit costs sales XX lower-priced was certain dealers or We as to unit efforts all to Specialty of demand. Recreation reduction fixed X, in to within expectations, in year-over-year. EBITDA increased year million, $X as as were demand. pressures offset that XX% cancellations margin manage versus of end, and order discounting, million $XXX million lower through to The the backlog primarily against is XX%

backlog. earlier, mentioned the to orders defer I as dealers, opted Some delivery of within

However, of dealer calendar since the we the health are declined encouraged outpaced retail by our which wholesale as year, sales our has the beginning both shipments. inventory, of improved XX%

and fourth demand, of be inventory earnings level channel surrounding restock and uncertainties about quarter sales, current the rates, retail Given reluctance dealer we expect interest margins to to flat. sequentially

XXXX. million, by at and of an increase fiscal partially The Trade X. $XXX accounts Slide of in end accounts was to a $X to primarily $XXX a and lower compared result million lower XX payable, million advances turning on Now offset increase decrease customer receivable inventory. working the capital July of was

and advancements the shipped As in customer previously are higher have while as today's deposits declined anticipated, from consuming have interest incoming year-to-date rate units deposits environment. received, slowed backlog

$XX.X cash used that tax offset $X.X flow million However, costs cash was cash related approximately million Year-to-date, by largely to for quarter operations, $XX.X goods cash free which regular of $XXX $XX.X included per XXXX. in by maintained in driven declared proceeds on and strategic record shareholders divestiture the net July quarter's under the to $XXX.X quarter. Year-to-date was as we for available our from XX. of on of year, investing quarterly end, as October million transaction on credit of gross inventory reduction, to debt $XX but presented operating of including of shipments ample free We company just within expenditures. spent with cash of on XX section by to of including debt the million, full flow XX, $X.XX adjusted activities are was statement September facility. At million, fourth offset approximately Adjusted cash ABL capital excludes the share customer of flows. Net dividend cash $XX.X reductions cash the from hand was million. liquidity initiatives finished million, expect XX October the revolving deposit activities a $XXX.X within payable compared dealer million million

$X.XX which today related upon to partially third segment. the Specialty $XXX an reflects Turning of by $X.XX is cost guidance X. to the we actions. momentum Vehicles update is $XXX $XX update We to fiscal at Slide with million $XXX quarter its XXXX provide in of midpoint, million the EBITDA than Adjusted includes and resulting the million continue low softer which for billion. a decremental reduction the range million million outlook, Recreational updated approximate to builds Vehicle the segment, earnings as to a top of range end full margin end account offset continued market expected at for performance. The improvement the Today's billion RV revenue line weakness total year aggressive guidance within or $X to impact to demand guidance manage to an our XX%

expect of $XX the to Fire free expenditures cash million million; flow $XX to the free and same by the is adjusted million in expenditures year net in businesses. Adjusted adjusted million and range $XX to offset to of be the will $XX $XX year flow, $XX expected interest cash $XX improvements the to $XX capital to be million. million. more million range RV to full full we of is expense remain than & that million with income of interest range the and in expense in $XXX capital However, expected performance for in net Expectations range Emergency million, million lower the $XXX income

XXXX. Finally, we as targets you Day at in Investor our may recall, of financial April intermediate provided

We questions normal us call. available you investors. address refreshed targets length along capital intermediate fourth for like allocation philosophy, to would now also of the today's calls we during quarter XXXX while earnings and will be extend outlook we the for to and a Consistent call be questions. fiscal with We our up analysts that clarifications. Thank follow-up financial the additional in plan December. again Operator, joining will providing on opening our to call for line regular our outreach, open updated with to fiscal call or

question Our Goldman first Revich comes from Instructions] with [Operator Jerry Sachs.

Specialty Nice you wondering please? just margin performance if could the and F&E just productivity? for how from was & margin did the of the much performance. specifically, unpack see in Vehicles. I'm What portion improvement Can saw, that we Amy, Emergency the the bridge What for was pricing? rate you unpack Fire inflation you year-over-year

costs margins EBITDA margin third F&E from and specifically low Yes. of to little Jerry, a you largely specifically, of I second kind points was the revenue so in saw a say and look also would revenue quarter, we at mix, over about price business in was about mid-teens, give the if to saw know, pretty driven quarter. the that growth basis the EBITDA In mid-teens, quarter XXX but in volumes. offset F&E and of margin growth XX% by inflationary legacy legacy you we didn't so we growth year-over-year EBITDA XX% the significant that saw growth it

XX% you be cost terms we should units XX% as on that higher in feel is In potential pure back book-to-bill we much provided folks content other difference. the thinking the is the And just if more I range. that are how price. versus of about revenue, wrong levers, Can there X that towards comments two, Because price, the what difference folks of issue words, versus of I on But right? you I'm you think of me driving that end that. think please, the custom One high content and absolute of are seeing? are folks correct on

breakout. I know don't the I Sure. Yes. that have

in know, of a S-XXX, a X.Xx the about Mark bit at through price about ambulance kind also while you and book-to-bill and more F&E I'd out with we about, did Breaking what's normalization certainly period, have a this a X.Xx we're that again of ahead, do the going at say morning, fire, legacy talked for between what's units talk of we content, which quite the we unit dollar custom a semi-custom is units, F&E, book-to-bill know, introducing, more Xx So of unit. little and lot you

revenue mean And price. I content book-to-bill so what don't broken between that the of so I I I have guess -- X.Xx say in out terms and

in we've see? of our I you prior sneak RV. one us in absolute revenue prior of I that trough guess level update and peak inventory versus the Can that an versus last terms moving can confidence just And here? one units of what's on with the we reduction inventories typically give captured

speaking dealer specifically inventories, Are Jerry? you the

Yes, Amy, RV dealer inventories?

Yes.

dealer from the said, XX% is year. we down calendar inventory the As

think to of getting type more we're closer at our levels I pre-COVID levels. inventory

the about inventory, that good feeling health Jerry, we're to replace of So except reluctant orders. been they've

So we are a about, talked outpacing like the definitely nice current market. we're wholesales retails seeing in --

we so, waiting. the highlighted -- have that's see is why be. appetite of as out just those, what last shows. We're of of anxious then the to dealer and And couple dealers would consumer placements coming In been the months, couple of matter a what a

been and we shutdowns as manage down, retailers calls are nicely, there. been wholesales prepared have So to our but talked doing -- costs we've selling we're the in about

and wait [ September a really in with the shows it's So ]. see

next comes Stanley. Our Morgan Angel with from question Castillo

look I we conversation, expand a we was as could margin the forward. hoping more particularly bit on little

maybe Vehicles, you 'XX, in next of sense kind particularly you quarters? finer noted, of how much for based kind at what just the we quarter? higher in you What margin just cadence, give your few implied expansion of but to the an point, is not outlook on understand And any of a you're expect fiscal this slightly think I days the going backlog? expansion of early of I you on year terms have think kind anticipate margin in maybe, margins. and within about put the Specialty here you next Can as point quantify

referenced, look of expect I third Yes. in to dollars. and EBITDA fourth at we growth revenue moderate the and you I think sequentially, terms see Angel, quarter EBITDA to if so

of I so think, low kind that was for expect would growth think percent And where slightly. of double-digit exiting with margins margin type at and EBITDA of that -- single-digit up and in just XXXX. Specialty terms Vehicles of we

that trend X, continue move hold as that X% look about we those into margins for XXXX, I'd of XXXX. X what talked and into add and in or about kind terms and types guess would Tier as we about. Tier what is Tier X are those kind of as kind X% content value increase in X mid-single-digit we game, and from we would and is so increases be for talked thinking double-digit And of the our next we're pricing, added in X fire Tier we I to of on we ambulance, expectation that price Our we've year maybe innings of the of move pricing tier-to-tier,

as move this at guidance to but certainly XXXX XXXX. some of inflationary we giving looking be headwinds offset not we're into time, our so, And

it. about Got better little of That's place, discounting? maybe of to and some competitive go change as of sounds think XQ dealer maybe ability very in confidence are bit maybe discounting you the side. and of continue, or talk from the industry you just And talk clarity then on the It get shows. getting we'll the to inventories maybe kind about your of step extend outperform the more maybe to like that? level a Can a the and into can RV we But to the the some about that helpful. you XQ dynamics as won't

Yes.

think at our driver have, the as I look discounting results. we QX with that's the that participating revenue are was you a and of in some others the drop, when things

So sequentially as you I forward. definitely that But think inventory about those industry see have as in gets wide. talk providing when healthier, discounts we'll continue dropped the to we move

and to on they've QX, have lots sitting dealer -- been systems definitely, the industry QX, has the units. XX is come units, [ down with to new seeing become now reduction discounting we're the more they an less their has inventory helped on ] dealer from the where aged So on It's provided and started in within retail the we the reduced as retail, But inventory. QX, XX units the the improving. perspective, aged inventory that's

Our next Dobre question with Mig Baird. is from

ENC, of maybe much own Vehicles, back my process guess. clarification, you recognized that And be EBITDA we winding the associated that's quarter in as in are us, from you there's should least ENC? ENC is I business? to where my going at fiscal going revenue down how the 'XX? with theory, drag that, away that recollection So Specialty remind well in Can Maybe for in just an

That's right. right. million sold it quarter. around In the $XX in May That's

accelerated X-month X worth of the expected We that So the from production essentially period. as in shipments we we some months' talked about QX work the it, we produce a great that of to team did. were able

proud though there. down there, had very now the even a we've workforce and suppliers engaged we've team, customers very of I'm So shut and

So parts complete schedule down to wind have a expect of ahead we of from that and the QX. early are perspective within here

to Mark I'll just said. add what

of margins you I only quarter. that the wind pull been the accretive was ahead we've cost that some take look as X-month to but ahead that able sales actions overall margins with down. in EBITDA think of quarter in and business when we It's at EBITDA schedule, to not the it

Okay.

profitable? actually ENC So was

Yes.

Yes.

this at to the Are in another in -- guidance of what's of current in you what's for what's production 'XX? to know we we highlighted quarters. I at beyond embedded And likely understand going the fiscal that, And that been year? next business drag Are the what's terminal been see right And full margin-wise magnitude terms step about trough? way levels? And trucks, down think production this 'XX? trying I'm to on in a drag, a year do your and Okay. for several that's

it's Yes. this a in Yes. trough into a business. We're previously, normal that's trough definitely in our talked we and about cycle, normal coming as year, at election Mig, an

going business double COVID, EBITDA we've business, margin mid-single forward, digit it's So but the it that actually digit was mid-single digit, business. said margin a

charges we some come savings you And about there were impacted of into 'XX? Vehicles. talk talk were that would Specialty restructuring saw Can fiscal that what some at the all in, any actions that Okay. that you

continuation closure, ENC business. a right? we're of as was That exit people the the booking So as restructuring

Okay.

Okay.

lastly in And I past one talked backlog in all be to the me, going it's we things eventually and So about of reflected the of ENC that whole this production. how Recreation, was erosion guess then in driven. that's concept for

continued down backlog Your sequentially. to step

call Or of it of curious, do $XXX roughly is simply going us be sort I'm is yet if sustained would? it first sell-through, 'XX, fiscal forward? or think it round you demand if that cuts where stays to come currently fair expect another demand you to So production half of can revenue for million end-user of

I as responded would it's we see to Mig, I but margin are that and to say, reflecting that hold wait us here, X% definitely, to much Jerry, Yes. a like we delivered. cost enabled

we we orders So or don't month within as we are get orders, flex the workforce. get our do

the work appreciative the that times in backlog people taking a we schedule as the remarks, So people very on a don't within business, out. don't So like I I do have fixed said schedule, are about my as schedules variable and what that our prepared we're have -- I'm far right? very

it So our flexing demand. align costs to I $XXX can flex But our hard is you say but and we to those. or production whatever, it's too the to here, again, with are will assure we schedule call still million

Instructions] Our with Mike Davidson. question next from [Operator Shlisky D.A. comes

to some as the give you've to some this And the your units as the you over production just the be and in you of quarter be also able would long-term? next versus I'm see to business. I'm us curious, Great got this of year. rates, of to at at into you on year can -- it able you comments. of an what think -- point inning the improve really F&E much much would you in past you update hope as would to follow-up for margins where I least to to the you're speed production how far coming the improve out whole see and glad that this on want be

Yes. Yes.

here, from pre-COVID bit much perspective, an goal little our and rates higher. think, about before, think we've pretty at as they're I a ambulance I talked

where feel in ambulance. we we're perspective So at a from production about good

what stabilized. where say we're We capacity or in I out are more we it efficiency perspective, an have fire, Mike, We and not shifts. adding still is opportunity incremental by getting lines partial looking from second more But throughput. would can incremental than at

So units are that it's coming some custom efficient more just getting more on through.

very say I we good a discussion more units is I becoming So less production that just it plant. would complex than I efficient demonstrated in more a move the through it's feel a capacity in remarks, discussion we've of to I as QX ambulance like prepared at, from is continue in where and we ambulance said we've as I their fire think up expected. throughput catching are my then seen momentum that

expected. what track on are they So we with

said, in Amy actually As double-digit exited just We segment. margin double-digit Vehicles will will we we exit. at QX margins, Specialty exit and at QX

-- the questions there's questions off earlier -- it. And towards faster a get Whether I efficient bit you Got you answers whether you Okay. remind go to more the -- and a make trucks on us little margin large in a standardized Can a earlier custom-type side, of trucks or one to standardized change difference think if you a fewer fewer significant change or trucks about versions their line. the time? the then of products? there suppose coming want Amy, mentioned it over were you up think more in manner. I volume if more going on can lot a was the to mix

acceptance built not and difference think bit margins answer No, a having -- clarify of we're with -- S-XXX, was Jerry's good specifically margin a pointed trucks, a customer a and that we that to I not difference was between Mike. Yes. that more material just go, the wanted as add custom your as I design Jerry we're question, really a doing significant question which and more is also the more And trucks, semi-custom truck. to far there's as But between trucks. there's more the

This concludes today's conference.

at You may for participation. lines time, disconnect we your and thank your this you