REV Group(US:REVG)2024-09-04 16:48Financial Data and Key Metrics Changes - Consolidated net sales decreased to $579 million, down $101 million compared to the same quarter last year, with an adjusted decrease of $55 million or 8.6% after excluding the impact of Collins Bus divestiture [13][14] - Consolidated adjusted EBITDA increased to $45.2 million, up $5.8 million year-over-year, reflecting a 49.7% increase when adjusting for Collins Bus [14][17] - Net debt at the end of the quarter was $165 million, with a net debt to trailing 12-month adjusted EBITDA ratio just below 1x [12][22] Business Line Data and Key Metrics Changes - Specialty Vehicles segment sales were $432 million, a decrease of $34 million compared to the prior year, but increased by $12 million or 2.8% when excluding Collins Bus [15][17] - Recreational Vehicle segment net sales decreased to $147.4 million, down 31% year-over-year, primarily due to lower unit shipments and increased discounting [18][19] - Specialty Vehicles segment adjusted EBITDA was $44.3 million, an increase of 116% year-over-year when adjusted for Collins Bus [17] Market Data and Key Metrics Changes - Industry-wide retail sales of Class A, B, and C units declined by 15%, 20%, and 4% respectively over the trailing 12 months [10] - Dealer inventories for recreational vehicles decreased by 20% since the beginning of the calendar year, indicating improved health of dealer inventory [20][30] Company Strategy and Development Direction - The company aims to maintain double-digit margins across its specialty vehicles segment, with expectations for continued momentum in fire and emergency sales [18][23] - The strategy includes operational improvements and simplification efforts within the fire group to enhance efficiency and throughput [5][6] - The company is focused on aligning production with consumer preferences and managing costs aggressively in response to market challenges [11][19] Management's Comments on Operating Environment and Future Outlook - Management expects continued normalization of industry demand, with a balanced supply and demand dynamic anticipated [9] - The company acknowledges challenges in the recreational vehicle market but remains optimistic about the upcoming RV shows to gauge consumer sentiment [10][11] - Future guidance anticipates modest sequential revenue growth and slightly higher specialty vehicles margins as the company exits the year [18][23] Other Important Information - The company declared a regular quarterly cash dividend of $0.05 per share, payable on October 11 [22] - The wind down of the ENC municipal transit bus business is ahead of schedule, with final units expected to be completed within the fourth quarter [12][36] Q&A Session Summary Question: Can you unpack the fire and emergency portion of the performance? - Management noted that revenue growth in legacy fire and emergency was driven by mid-teens growth, with 60% from price mix and 40% from volume [26] Question: What is the breakdown of the book-to-bill ratio? - Management indicated that the book-to-bill ratio for units was about 1x, while the dollar ratio was 1.3x, with no specific breakdown between content and price available [27][28] Question: Can you provide an update on RV dealer inventories? - Management confirmed that dealer inventories are down 20% from the calendar year, indicating improved inventory health, but dealers remain hesitant to replenish orders [30] Question: What is the expected margin expansion for specialty vehicles? - Management anticipates low single-digit growth in EBITDA dollars and slight margin increases, maintaining double-digit margins into 2025 [32][33] Question: What is the status of the ENC business wind down? - Management confirmed that ENC generated around $40 million in revenue for the quarter and is ahead of schedule for wind down [36][37] Question: What is the outlook for the terminal trucks business? - Management indicated that the terminal trucks business is at a trough, with expectations for mid-single-digit margins going forward [39] Question: How is the company managing production in response to demand? - Management stated that production schedules are flexible, allowing adjustments based on order intake and demand [42]