REV Group(US:REVG)2023-12-13 17:29Financial Data and Key Metrics Changes - Full year consolidated adjusted EBITDA increased by $52 million or 49% year-over-year, primarily driven by increased contributions from the F&E and Commercial segments, partially offset by lower contributions from the Recreation segment [6][16] - Full year consolidated net sales increased by $306 million or 13% compared to fiscal 2022, mainly due to increased sales within the F&E and Commercial segments, partially offset by decreased sales in the Recreation segment [13][8] - Free cash conversion for the full year was 116%, marking the third consecutive year of conversion greater than 100% [5] Business Line Data and Key Metrics Changes - In the Fire & Emergency segment, adjusted EBITDA was $26.8 million in Q4 2023, a significant increase from $1.9 million in Q4 2022, driven by higher volume and favorable ambulance mix [17] - The Commercial segment saw adjusted EBITDA increase to $16.5 million, up $13.2 million year-over-year, primarily due to increased shipments of school buses and price realization [83] - The Recreation segment's adjusted EBITDA decreased by $16.2 million to $19 million, primarily due to lower unit volume and inflationary pressures [85] Market Data and Key Metrics Changes - The company exited the year with a record backlog of $4.5 billion, driven by strength in the Fire & Emergency segment [77] - Unit shipments of fire apparatus reached a 2.5-year high, with ambulance group net sales increasing by 46% year-over-year [36][100] - The Recreation segment backlog decreased by 66% year-over-year, primarily due to continued production against backlog and lower full year net orders [105] Company Strategy and Development Direction - The company plans to manage the impact of lower Commercial segment revenue with cost actions designed to maintain a decremental margin in the 15% range [41] - Continued investments in workforce training and efficiency improvements are expected to enhance production rates and reduce turnover [34][78] - The company anticipates low-double digit percentage revenue growth in fiscal 2024, supported by throughput gains and price realization [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of backlog and pricing realization, expecting similar increases as they exit fiscal 2024 into 2025 [91] - The company noted that demand for units remains above historic trends, with expectations for normalization in both Fire and Emergency segments [82] - Management highlighted the importance of monitoring consumer spending and general economic trends, which could impact future performance [20] Other Important Information - The company declared a quarterly cash dividend of $0.05 per share, payable on January 12 to shareholders of record on December 26 [23] - Full year capital expenditures are estimated to be in the range of $30 million to $35 million, including organic growth investments and ERP upgrades [25] Q&A Session Summary Question: What is the expected pricing trend for Fire & Emergency in fiscal 2024? - Management confirmed that pricing is expected to be in the mid-single digits year-over-year, with potential for further acceleration as they move into fiscal 2025 [26] Question: How does the company view the Recreation segment's performance in fiscal 2024? - Management acknowledged challenges in the Recreation segment but expressed hope for a positive note by the end of fiscal 2024 due to easier comparisons and resolution of current issues [31] Question: What are the plans for cash deployment in fiscal 2024? - Management indicated that while debt reduction remains a primary use of cash, they are also considering share buybacks and potential M&A opportunities [60]