REV Group(US:REVG)2024-06-05 17:46Financial Data and Key Metrics Changes - Consolidated net sales of $617 million decreased by $64 million compared to the second quarter last year, with an adjusted EBITDA of $37.5 million, down $4.4 million year-over-year [92][21] - Adjusted net income is expected to be in the range of $76 million to $90 million, and net income is projected between $230 million and $245 million [33] - Consolidated adjusted EBITDA margin improved by 320 basis points sequentially and 480 basis points year-over-year in the legacy fire and emergency business [66] Business Line Data and Key Metrics Changes - Fire and emergency sales increased by 33%, with unit shipments up 18%, driven by price realization and favorable product mix [49] - Recreational vehicle segment sales of $179.7 million decreased by 30% year-over-year, primarily due to fewer unit shipments and increased discounting [30] - Terminal truck sales were down 59% year-over-year, consistent with previous guidance [57] Market Data and Key Metrics Changes - Segment backlog increased to $4.3 billion, reflecting strong orders for fire and ambulance units, with a book-to-bill ratio of 1.1x [89][74] - The recreational vehicle segment backlog decreased by 45% year-over-year to $275 million, attributed to lower order intake and cancellations [43] - Industry demand for motorized RVs remains depressed, with new wholesale unit shipments down 22% year-over-year [90] Company Strategy and Development Direction - The company is focused on operational excellence, increasing production, and optimizing manufacturing footprint to meet demand [56][88] - The strategic exit from the direct fire and ambulance sales and customer service operation in Florida supports the simplification of the operational footprint [19] - The company anticipates continued earnings momentum in fire and emergency businesses, partially offset by softness in terminal trucks [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering on existing Class B and C backlogs while managing costs across all product categories [19] - The company is addressing the challenges in the recreational vehicle segment, with expectations of improved margins in the second half of the year [31] - Management noted that the market for Class A and towables remains weak, and further cost actions may be necessary if demand does not improve [69] Other Important Information - The company returned a total of $308.5 million to shareholders through share repurchases and dividends [91] - The sale of Collins Bus provided cash proceeds of $308 million, which were largely returned to shareholders [100] - The company maintained ample liquidity with approximately $280 million available under its revolving credit facility [45] Q&A Session Summary Question: How much was pricing up in the quarter for fire and emergency? - Management indicated that total fire and emergency sales were up 33%, with the increase attributed to both price and favorable mix [49] Question: What are the margin potentials for recreation in 2025? - Management refrained from providing specific guidance for 2025, citing the need to assess market conditions in the back half of the year [53] Question: How successful has the company been with delivering the Spartan S-180 product in 180 days? - Management confirmed that they have met the 180-day delivery timeline through dedicated production lines [54] Question: What is the current state of supply chain issues? - Management stated that they have overcome major supply chain issues and are seeing the best run rate since the pandemic [55] Question: What actions are being taken to manage the cost structure? - Management has proactively reduced both direct and indirect costs in response to declining backlogs [71]