REV Group, Inc. Q1 FY2024 earnings call

• Strategic initiatives: REV Group exited bus manufacturing by selling Collins Bus and winding down ENC transit bus. The Collins Bus sale closed for $308M cash, with $179M used for a special dividend and share repurchase.
• Consolidated results: Net sales were $586 million, flat year-over-year. Consolidated adjusted EBITDA was $30.5 million, up 43% year-over-year, driven by Specialty Vehicles but offset by Recreational Vehicles decline.
• Specialty Vehicles details: Sales up 17% due to fire apparatus, ambulance, and bus manufacturing growth. EBITDA up due to fire and ambulance contributions.
• Recreational Vehicles details: Sales down 25% due to fewer Class A, B, towable shipments. EBITDA down due to lower volume and mix issues.

Specialty Vehicles

• First quarter segment sales were $417 million, an increase of 17% compared to the prior year. Driven by increased shipments of fire apparatus (up 24%) and ambulance (up 23%), higher sales from bus manufacturing, and price realization, partially offset by lower sales of terminal trucks. Segment adjusted EBITDA was $26.2 million in Q1 2024, up from $5.3 million in Q1 2023. Segment backlog was $3.9 billion, which decreased over $200 million year-over-year due to the Collins Bus sale and ENC wind-down, but excluding these, backlog was modestly up.

Recreational Vehicles

• Segment sales were $169 million, a decrease of 25% year-over-year. Due to fewer shipments of Class A, Class B, and towable units, partially offset by increased shipments of Class C units. Segment adjusted EBITDA was $11.6 million, a decrease of 52% versus the prior year. Segment backlog was $377 million, down 62% year-over-year.

• 2024 fiscal full year top-line guidance: $2.45 billion to $2.55 billion (includes Collins divestiture adjustment).
• Adjusted EBITDA guidance: $145 million to $165 million. First half adjusted EBITDA expected to be ~40% of full year.
• Other guidance: Adjusted net income $72 million to $90 million, net income $224 million to $245 million, adjusted free cash flow $57 million to $72 million.

Q: Backlog related to Collins Bus and ENC wind-down.

A: Joe Grabowski asked about backlog drop, Mark Skonieczny responded backlog dropped over $200M, with Collins ~$175M and ENC ~$50M, and apples-to-apples backlog was up modestly.

Q: EBITDA guidance increase.

A: Joe Grabowski inquired about EBITDA guidance raise, Mark Skonieczny said $5M raise was due to first quarter upside, rest of year guidance unchanged.

Q: Recreation sales decline.

A: Joe Grabowski asked about Recreation sales decline, Mark Skonieczny said likely low-double-digit reduction, managing costs as sales drop.

Q: Fire and emergency pricing and margin.

A: Jerry Revich asked about fire emergency pricing, Mark Skonieczny said 6-7% margin realization opportunity, fire in 3-4th inning, ambulance in 5-6th, expecting improvement in back half.

Q: RV margin cadence.

A: Jerry Revich asked about RV margin cadence, Mark Skonieczny said Q2 similar to Q1, Q3-Q4 building, full year mid-single-digit margin.

Q: RV margin sustainability.

A: Jerry Revich asked about RV margin sustainability, Mark Skonieczny said managed costs, flexed for trough, right cost structures.

Q: ERP project.

A: Mike Shlisky asked about ERP project, Mark Skonieczny said ERP going live this quarter, replacing old system.

Q: Ocala facility improvements.

A: Mike Shlisky asked about Ocala facility, Mark Skonieczny said value streaming, strengthened supply chain, operational leadership, central roles in supply chain and engineering.