REVG - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to REV Group, Inc.

Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to VP, conference Treasurer like host, to now Bugbee, Sandy and would turn over the your I Investor Relations.

Sandy Bugbee

morning, our results. is being Good night, our website release Dana. and and Today’s joining on for Thanks, call investors.revgroup.com. us. is we available issued copy is second A XXXX webcast at is quarter of the our will thanks Last a GAAP financial by Please to use this to a of non-GAAP during slide Slide on reconciliation that presentation, of also call. refer now presentation. It which website. that we available includes X measures accompanied

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

over to as on turn call will CFO, I President CEO, Dean now me and Tim Sullivan; Joining call our as well today the our are the Tim. Nolden.

Tim Sullivan

for Thanks joining morning, Good Sandy. Thanks, us everyone. today.

more bottom our and as and we’ve we our quarter expectations enjoyed the effect able fell growth. factors. XXXX to fiscal where results second For markets, year XX% several Unfortunately, XX% be near-term our proved were top has result two relative below tranquility a difficult to of years, in line line past

disappointing experience continue to well-positioned second despite address our mid we our markets. in these quarter results, demand factors. the strong believe the to business remains strong And we as over taking actions end We’re long-term and

the detail positives. highlight I facing, like to Before I’d challenges some near-term we’re

of business end revenue sales. related is transit buses visibility our our city XX% our sales and fire markets government of Approximately our buses. characteristics from sales and ambulance, from These of school to apparatus, the One the come municipality necessary strongest of consistency and shuttle buses, include tax-based customers.

with remains have We and these visibility demand strong. these very good our within markets, customers,

to grow. which significant notably Cs our Bs at yard categories our see vehicles show of of truck, groups certain sweepers Most vans Additionally, a of our and division, end our order to growing $X.X is billion high growth the RV activity up product opportunities continue billion and to also $X.X from and of specialty XX% level includes XXXX. October and products, continue Class about to continues mobility Class towables, backlog

of our these in us good growth revenue strength future very All we our to organic opportunities. with the about feel line and delivering expectations growth in positive of continue result factors

appeared roughly of stronger with maintaining growth year-over-year in we’re we quarter organic segments, All expect an in stages. mix to of due a flat during Emergency but product opportunities Commercial show various pipeline the & Organic sales year. standpoint, nice robust Fire organic the seeing our growth in are and growth. inorganic active remainder From to businesses second our the M&A

of developed strength of underlines believe our compelling the integrating few a track an acquirer the industry. performance and our Over acquiring return the years, past of and businesses, acquisition complementary high we’ve as choice we record within

acquired Renegade and through their several dealer or remain acquisitions expect in pre-integration of last moving Midwest, for that notably us lines prime we grow networks to XXXX, many our and Ferrara, to sales have as tripling – of bright results were spots which success, are Lance, enabled product We our our forward. examples of acquired their doubling and

of our balance healthy repurchase investments sheet committed annual of making policies, and will forward. foster enable policy, reflects shareholder-friendly per second as to to quarter. capital our efficiencies, continued the evidenced in to shares business liquidity the $X moving position by continue we which growth Our allocation in currently us during nearly $X.XX million We’ll and And remain be the rate. with dividend improve along capital share quarterly marketplace opportunistic the

in Finally, to at months sell our of this That we’re which in Brazil, in the to startup prior pleased market, business. products all share progress business for old. is now being already compared not XX% market of with XX market the that has we the captured the startup

encouraging. is pending very the backlog Additionally,

was contractors. adversely Now and of for we in the right business with first business new This higher-quality this segment, business large and in school challenges. our our opportunities. year. and two can bus contractor performance. our bus the XXXX a units believe plan to this quarters the sales fiscal of one school But by school the our declined requested the ultimately of participate very affected by Two In Commercial struggled to for XXXX traditional end first-half believe close pre-bid Collins we recover our we decision get bus

of Chicago transit facing our the activity City bus which short-term our is in in forthcoming Commercial Angeles the in segment, end between of a our business, County our contract. beginning contract Los Additionally, delay also is

by production have we our a both performance As a be financial visibility businesses commercial the below XXXX. to in our for now but fiscal for our will year-end. higher good transit this these anticipate return of remain between business full-year, in profitability for result, and levels plan we business and bus encouraged the We

a very this expect in in base in Moving other Angeles serving commercial to the we good and Los participating share the addition activity to contract us begin forward market maintained school buses year. for business, strong

bus increasing trends in we Our mobility. particular specialty are volumes in shuttle and favorable see vehicles,

facing, Class RV on market. like we’re chain near-term Before to inefficiencies spend providing update moments supply few I’d I A turn our a to an the

of by line. product flat course this the quarters, to We’ve and we’ve with with experienced had growth in success past market, in our the the products, increase line the out C XXXX new we’ve repositioning past soft few models. similar opportunities initiatives identified prior to Over Class our playbook. Class product sell of launched and a Class own A units towable taking we a believe page than so that We’ve for profitable B, we’re more will profitability

new right selling in mode is and for now line We’re this growing. backlog product

for chain. the to service both cost our supply in supply unable in which offset are we Now also our experienced let’s significant chain, quarter quarter. freight-out, Items like supply the our talk inflation within second but chains. about and We’ve rapid during material example, freight-in,

As base a advance backlogs elements in well practice, order of necessary inputs. we matter many of match with purchased our to cost in

down of approximately cost seen our increases targets in also a tariffs the and basis, aluminum, the back-half resulting and unpredicted breaks is ahead almost steel first-half have year. has spend $X historical aluminum the the large created we we unintended of consequences. calendar annualized Clearly, on current combination particularly are an million XXXX past our year and are which $XX the months opportunity tariffs portion example, $XX the through which have when the pricing suppliers. at created the price this purchased increases year prices. In of the Nevertheless, turmoil two For million – of related – the announced disturbing, of in to not tariffs. XX% in to which million for of have The the alone, brings

As a purchase tariffs run the and we convert. commercial soon were chassis suggested, as there’s of on many

get to chassis freight the the charges extra We’re paying need we second-half shipments. for

artificial In these time the XX,XXX-foot railcar we’re a to labor while has in quarter. this despite costs. Over near-term decided availability million $X additional some there – locations Elkhart, inefficiencies we days on stability supply to hours efforts second additional labor This get exasperated to we abnormal inefficiencies, high be in XX-day shipped build the what on these over in some resulted truck throughput maximize chassis last cases, of and alone, but via which demand. additional like challenges the We for were has view need chain expenses that resulted macro products to near-term some certain some racks, due now XX wait we escalation cost. This the and chassis labor to based Indiana, believe deliveries. two shortages in smaller density, have our events is facing, of and and creates during approximately

of to most a deliveries in First, key Germany manufacturers made the fire weeks. to move production a caused of our four to Mercedes-Benz the Sprinter shutdowns van has supplier United market domestic plant cases recent productions some up challenging. chassis our of And from States on-time

cost announced $XX new trade did cost our increases last million thought was safe Additionally, the exit additional it notwithstanding that the threats damage although of been some of has just think we moves, tariff increases We in most projections. included were week. the when and over we anticipate material recent bunker, to

While and RV fire sales buses, and were the and including for certain products. higher chassis quarter, had story In of an of gross as a big margin products many of the unfavorable of of commercial mix sales and part experienced our the bus our particular, quarter apparatus we mix large custom cost well. segments, less content ambulance

fiscal adjusting lost approximately the will XX% certain miss to for I models, of of this sales downward in mix mix EBITDA quarter for make XX% on Class revenue such as the changes our the detail specific our ranges cover certain Based of growth – But we will But guidance outlook XXXX. translates up where the in Some products likely shortly. just revised of not remainder the factors year-over-year. RV this all the and of discussed, guidance year. buses and of we second-half to adjusted the we midpoint are second-half. our transit Dean a the A growth approximately

on our impact diligently will time Furthermore, specifically that including be increases actions cases, of cost of and for year. prices quarter We implemented don’t issues infrastructure. impact to believe units during preserve differentials, But reduce weeks we where as several $X be margins, actual our second business which these management the restructuring have release, simplify we’ll earnings to compensate as million will to in of the read consolidate facility help approximately to an manage the you may cost and ensure for which we in estimate and approximately of expectations. contain which number, quickly fiscal yesterday’s increases. full annualized and we’ve year lead possible, some effort second to all price our the quarter the amount these over also XXXX. In Keep recover anticipate means able these implemented. We impacted moved year fiscal the we actions our result activities in based as negatively backlog increases, have of appropriate across much second-half the worked and cost to headcount, These a surcharges past of performance introduced $XX will in fixed less annual is earnings. in that reduction million expenses, half an XXXX this in be been have of all savings mind, realized than raising

key him operational continued pleased yesterday add long business Group welcome it at through as – with and long-term with a had to earnings Ian a which to of units in Ian to profitability. will welcome to financial Finally, Walsh REV. separate and and in invest new our some in I’m in segment release, a we’re their to go drive to and now particular, Textron very to talent business to turn and COO. details. the Dean hire over look I’ll of Ian’s in career working press growth we We excellence. forward REV pleased areas, number our further have release distinguished him our drive we the In conjunction announced which to

Dean Nolden

I Thanks, good will Tim, X. on and Slide morning. start

temporary this quarter factors driver was driven a primary the sales $XXX for up macro the the Tim net second mix of were by company, our last sales for XX.X% year. of quarter. yet some impacts. some toughest Acquisitions Total million, quarter were product As discussed, from public growth the quarter external of as one and second

for were year quarter in $X.X sales to period. net the the diluted the the Adjusted quarter Net with detailed result share. or of primarily income fell buses income second and impact Excluding second lower share. net X.X% income consolidated $XX.X or a per $X.XX grew by prior net prepared XX.X% flat acquisitions, by supply the $X.XX Tim per million, remarks. buses inefficiencies in near-term in million, of school the and sales diluted was quarter-over-quarter decline adjusted XXXX chain his quarter transit that of The to

of the quarter the Adjusted income of the second benefit due addition, million decreased year, IPO of of our by XXXX, second to EBITDA EBITDA the benefit proceeds legislation. In – $XX.X new interest X.X% last offset costs in the tax versus due we to to lowering higher U.S. partially million, tax in $XX.X timing quarter quarter – of due to second adjusted for of of the and experienced compared quarter XXXX XXXX. expense to the quarter second use

In in mix a is materials addition in down segments Commercial shipments our adjusted A EBITDA lower the in and and to the quarter increased consolidated that cost not on basis, due to RVs. sales was of Class permanent F&E

the roughly year. We first-half are material approximately the split plan. above and the impact increases costs XXXX these the nears our year will of The estimating costs and inefficiencies impact currently fiscal be of that $XX EBITDA raw in of second-half supply – chain fourth our of between increased the million increased these performance original

of performance restructuring However, other activities is operational year to and initiatives The we’re benefit a for price $XX million, increased initiatives. pricing million of the second-half increases, current cost year. implemented anticipating cost respectively, approximately and reduction the the as $X impact and of the second-half estimated the from volumes, in improve reduction will be

the adjusted year-over-year. fire sales Starting quarterly mix to quarter, quarter and Emergency this segment all the an in now On XXXX of segment Fire in The an and primary compared EBITDA our for unit performance increased to sales third XX.X% contribution were adjusted for in organic. this X% the our XXXX. the for On second to by XXXX. the Page X ambulance basis, increase XX.X% decreased a less the quarter the of drivers turn $XXX organic me of second discuss and of F&E of and April to basis, ambulance declined Ferrara to quarter of truck & quarter acquisitions labor Let our driven costs. in XX.X% quarter acquisition of volumes. grew segment prior an increase segments. the million, become organic sales increased $XX.X favorable EBITDA material million

ownership shift than and decline first owners – has ambulance reason one permanent. in years ambulance proven to more to major a products organic be in this for of a with not with These previous The The was due that is market with major change customers volatile our was sales profile ambulance in volatility skewed circumstances margin addition regular as large business the contributed larger timing to this contract international to in have mix with of and vehicles. towards the our customers division and quarter such lower the municipalities customers. second for

and toward mix this the the of skewed sales quarter content negative both apparatus In year. trucks in and addition, on fire more the the fire in pumpers improve the our the year, visibility larger remainder second-half Based custom of aerials. apparatus were custom backlog will for mix versus form fire of lower ambulance in in the retail of

and and our Fire forward Going from over ambulance both continued fire we growth in markets the the see in demand business macro positive strong continued & long-term, still Emergency trends.

positions in these the business continued – leverage remainder year this markets to leadership beyond. our and expect of through growth and also foster market this We main in

Our mix. the during remain strong backlog X.X% with a product quarter and increased healthy

year. decline transit business Slide between awards. sweepers of Commercial by quarter As vans. in Commercial was buses, result school two to fundamentals X, and of will quarterly have compared margin that on the are the X.X% during the offset below both XXX was large bus, the of believe will sold, bus of lower were the contract a in in Based excess due in the Much in during Commercial was our up bus again and segment, backlog this shown profit second confident to such backlog for we will increased and million, we law driven average. of $XXX.X momentum very the our be which segment a decrease profit remain segment last a contribute second-half businesses average, school sales sales that the enjoyed transit to margin down in good decrease going down segment transit The EBITDA and points strong. products, meaningful EBITDA both visibility adjusted quarter on of by and decrease – XXXX higher this Commercial is have sales which better, then bus bus offset by shuttle quarter our and X%, to shuttle margins XXXX, bus basis margins of we enhancement segment. transit temporary these sales, the partially sales into school mobility units in this the

impacted segment, meaningfully availability cost described In costs. issues experienced higher chassis Tim freight and the the been material addition, earlier. has specifically the and that Commercial by segment division, bus The logistic also

fiber Slide to an grew sales Super from X. and due driven compared volumes, declined XX.X% Recreation increase molded C of timing prior to company’s Class performance glass and in the Quarterly by year specifically new Cs, unit the produced Turning number the in our of segment in volume unit to models different strong strategic and million, reduction business. Class in a sales increase $XXX model acquisitions to of A the introductions. year,

that digits we’ve Tim segment margin as from in EBITDA the A for we a prior channels up the the months the EBITDA where Renegade comments segment, last XX backlog an the the all in there and $XXX.X made benefit our businesses, Tim’s prior the in a As organic. been segment, working years, third purchasing provided capital. become earnings On to the regarding Midwest Recreation capital selling reduced – leaner margin organic profitability opportunities leverage capital and mentioned, and the review year-end we the from plans quickly to in the working $XX.X exited RV quarter XX.X% seasonal quarter experienced the and core even quarter XX% to backlog we especially to year. Like not on fiscal decline versus adjusted then the we’ve Each of Like The through sales portfolio to to our are in Recreation and prior the like REV. XXXX of also our sheet here X, million. distribution success and X% and joining acquisitions bottoming have in greater million. and the adjusted expect number year-end. years Class results by quarter, improvements in revenues quarter, organic products. We for higher-quality I’d quarter quarter we are acquisitions also, will quarter of EBITDA included over Lance, XXXX. working adjusted except in by results are floor acquired the of decreased first first-half this with the On for our elaborate to third of peak and from to in build these profit up Slide third early believe the second attributable are balance prior companies. Lance, and drive quarter Starting EBITDA companies. improvements compared models end increased acquired of double of expansion is basis, for second recreation the of

our of the of networking some of current see XX% due our can supply higher quarters. The the trailing because the strength revenues core to XX% chain approximated over capital second-half XX months percentage working capital inefficiencies last around metric quarter that chassis. for and of build has was You a four as

the company of times. and years. of sight X.X deferred not XXXX longer-term permanently costs, at financing net have next our leverage reduce lost More XX, requirements still our ratio working opportunity net very our million fact was in April or Total believe that, the is importantly, capital a debt we few XX% $XXX.X was total over there of capital and to meaningful

million availability capacity a its under facility, had million December which revolving to As $XXX result, $XXX amended credit in XXXX. we of was our increase to of

year quarter debt for provided guidance, to X.X at the approximately on X.X end based reduction We our acquisitions. expenditures times million compared net year the the for EBITDA. second-half Capital updated break-even leverage of CapEx on guide XXXX of and – to our for forecasting less $XX.X operations cash the expect upon XXXX. times of before based guidance from are meaningful Net still in impact should updated second – the the year quarter, million of $XX were adjusted second fiscal the year be in cash to

the $X the be In reducing of guidance CapEx are second-half are therefore, of the on in from million down we CapEx million ends addition, And prior we our both forecasting year. to less for guidance. of $XX to for full-year our range $XX the requirements range million,

and in our restructuring reduction spend $X.X few discussing annualized mentioned of impacted actions with million restructuring our detail these Tim corporate consolidation Now resulted office, facility expect other across charge of activities. the closure initiatives of and in that spending headcount These the actions approximately an in in and into REV we permanent year. million to of segments Class the implemented $XX more quarter. minutes savings, to be each $XX and approximately million I’d of to also second-half in cost cost Miami across existing like including B SG&A the to realized a result reductions We RV this activities organization, our office, production operating the

Slide Now please turn to XX.

be million the $XX year. still million million, is $XXX now the range revising expected of high-end range to EBITDA $XXX anticipate $X.X expect to million $XX revenue of prior year up of in million $XX $XXX versus $XXX and be timing expected $XX up from for in the Tim we concerns year. with range availability. be million outlook last adjusted chassis over up is Net from million, to income guidance of to We to in are adjusted and EBITDA the our million, billion to noted, net of income. in revenue, million $XX from last last by We As billion impacted will adjusted – million to be full-year income our $XX net range the $X.X

third historic and We to trends, rate income in and from depreciation legislation reductions consistent between generated with impact will full-year trends. a the range XX% XX% XX% Net be I’d income expected CapEx. guidance expect historic now effective XX%, and quarters reduced walk the like to also the quarter we follow effective of third during due adjusted a our less lower reductions fourth EBITDA fourth are tax guidance net EBITDA approximately than and adjusted adjusted to guidance. and adjusted to rate new through We of revised XX% to and previously, tax on earnings. our On full-year to bridge U.S. expect Slide you tax decreased from our down due XX, updated EBITDA to

first-half Our bus mix million we that and temporary parts million. over for impact driven by this first-half the green slide performance the the These are the the our was sales of due outlook. the of school volumes year. first-half a adjusted ambulance of EBITDA expected $XX the partially on lower from of the previous to expect offset won’t $XXX $XX bus the midpoint material costs, product million revised EBITDA impact Slide fully cost a of have guidance decline to EBITDA midpoint primarily This end of EBITDA On EBITDA full-year previously the growth. recover estimated year, reductions $X sales the transit to challenges second-half million, price an $XXX adjusted be in and previously million bridged increase lower as our issue well by the EBITDA in We million our $X in expected from and we million the midpoint mentioned recreation bars segments a by million $X as increases. sales $X The $XX now represent year reduction XX, million. impact is from incremental in from each and from second-half of implemented of mentioned resulting higher

million, but second-half revised generate slightly of XXXX. side, the and and you higher approximates XX% apparatus F&E to EBITDA of EBITDA percent million our see Brazil the can improvements XXXX, and to EBITDA second-half of XXXX, sales more the mix in full-year content of XXXX adjusted ambulance the $XXX of second-half of is the midpoint expect to each was for At compared generated the in sales right bottom due outlook to in second-half favorable of by adjusted the adjusted second-half higher guidance. segment $XX profitability. First-half we at our continued of fire our

EBITDA in volume XXXX full-year the school the bus second-half in contractor of later seasonal rebound Commercial second-half, for later year improving in both – to due is a XX% the traditional for business. bus truck segment prior forecasted higher sales, at for is our transit than The upturn the and in terminal

The be second-half achieve in Recreation giving year forecast of for at to percentage is ability second-half in over XXXX our XX% confidence segment the us the the smaller of result a prior recreation. to the full-year

our four Lastly, Altogether, we expect analysis the guidance our in of illustrates that and in cost the to the second-half, initiatives is confidence from this restructuring to revised costs were corporate than business second-half implemented. our and and increase plan impact related other see $X includes the seasonality year. generated million negative over this lower capital recent the incremental the in but reduction for investment or is the approximately activity our Note EBITDA due for to to This that $XXX the million, second-half XXXX JV of approximately in $X company. XX% in quarters. our the million. China slide the last we M&A the of On of XX, adjusted show be allocation in Slide all results equity of

other strategies balance with capital maintaining of the our time, We to our return, and and capital shareholders decisions. goal our growth maximize our capital return always, over adequate diligent to future allocation us will M&A good enable allocation balance be we’ve delivered while to allocation sheet believe As opportunistic a and in to through being and is respect liquidity. shareholder with

authorization the see can call our that share about we closing buying some that, turn With Tim second for shares. repurchase back opportunistic to quarter You were the back comments. in XXX,XXX I’ll

Tim Sullivan

health In long-term our we near-term ability some to facing and remain Dean. growth while compelling the our closing, deliver and markets Thanks, returns. financial confident of we’re in challenges, end

Our with backlog growing is strong and activity. good order

We future questions. that, good it let’s on to visibility over have With turn demand. very

Operator

question. your Cooke comes line first Instructions] of Suisse. question Credit the Our Jamie [Operator with proceed from from Please

Jamie Cooke

good, I about, $XX demand But million structural, And over the that. just continue savings the good million what markets just add you’re concerned restructure quarter seem dismiss You how $XX Tim, we or morning. short-term to problems. is of want is in sort bone? should to seems cut question, just as disappointed guess more, availability the the you taking the more of to then do reductions Hi, to how cost I a the grow. in cetera, and just Thank if I into chassis much XXXX long-term this deal I back to color et And second take that of to I’m going is is and my because then that think to be really cost questions. on you? XXXX? you which that the trying understanding extend understand just the we to like issues, issue to a it’s little if this strategy cost does we been a with be sort short-term can out. mean, you. know, give the couple mean, And if an – your have you’re issues

Tim Sullivan

I like under little just happened, the size and was it integrating new on It good new restructuring, right it got building entire as thought the Yes. the to in of right actually assets and our were think, time assets the company. organization. the bringing the was had Well, efforts were I portfolio, we look as bringing time. fold corporate thought as a seem corporate time we them. we What these business the I to take at the a far side heavy as think,

appropriate. were reducing months we expenses will had a two really the of several areas, in really activity effort, acquisitions, We it. be seem had year. acquisitions not it’s like reductions right corporate IPO. really M&A brought just were a continue corporate other at taking tremendous out, trimmed just last in into even We we some at we integrated and company. were So just and good that that high-level effort do it that though XX some time we’ve to JVs trimmed done that that and nicely robust the I to the back Four other And post back biggest expenses required pace, Miami going had thought that think the in

had. was answer of help can us So chassis at manage a best you, was, was is The tend nicely with has situation which significant. tie timing some increases I the been well. Jamie, always think, channel, as and it unusual. least through it that cost we We little we’ve protect noise seemed in to chassis in the it – some tariff give thing the This right to relatively I’ll to have pretty

$XX million the number. just you spend. see, X% total like a As our sounds little bit It’s material even big over a of can

be situation So advantage frankly, we with took But causes a of for also the run will deal it we chassis. things don’t like of they steel to aluminum alternatives, nothing that and that with suppliers it. And a looking had price not with I some and we’re quite happy because increases. like do think on

get it to going as chassis, noise every thought channel. the that as available buying soon in increases everyone as So to were were created States announced was that and they United these lot a chassis everyone it potentially up of steel the started aluminum and relate – in they things as

of was been weeks. We’re the two pretty and weeks to plant managing we United are the The minimum it. we down top for States fire fairly for the fuel was well hit was and shut four that GM chassis Ford and manufacturer of in – it Mercedes-Benz fire. shutdown And that of much has shut kind the thought affected then it every through with on exception

turmoil as exasperated they material kind of this has biggest the buying the of in problem. with could whole quickly addition grabbing the just And issue. that as chassis frenzy the people to situation So

times managing for I the become company. in have now normal as And on of right extension almost lead through think, we’re when create issues everything. hoard, they they People hoarders. operations

So it. but It’s to been we’re get situation, a painful. it’s through going short-term

Jamie Cooke

to $XX the achieve How it And the million in then much savings? sorry that to much for should follow-up. did cost cost How – $XX the million? does

Dean Nolden

Jamie, that was the $X.X million…

Jamie Cooke

Oh, that did.

Dean Nolden

million. that’s that that’s be the quarter, cost the going …in with associated $XX all to

Jamie Cooke

All queue. back I’ll Thank the clarification. right. get for Okay. you in

Operator

question next Mig Baird. proceed the your Dobre from Our from question. with comes of line Please

Mircea Dobre

the million. want from I on $XX Jamie’s everyone. to morning, question Good here up pick

it bit your cost So I’m is quite these to seems like low. because generate surprised, little a savings

would and bigger first like corporate. I’m quarter, some to of also how improvement the to is have wondering maybe working understand part if versus is the by there margin help you this challenges generated this is how And understand from if facility this that second still is trying an chain initiatives So initiative other that’s much anyway? items us been plan foremost out? I’m anyway taken actions you’ve that’s of then versus in that or your experienced your coming second, supply

Tim Sullivan

the I’ll big it’s of the been number expense that’s charged on answer the for restructuring. picture Mig. But let Dean question more a

operate. we regular the at and I activity months all integration I we that process. in – a bloated a have the and got the expenses look think, how M&A mean, that’s with on last basis I little I I on XX

level well. exceptionally going button the just push a time of expenses, one. think, think, these it pace not type to to reset plus I is that acquisitions I of be simple of But we execute on of at the activity. some And was

out Our marketing REV And the known, frankly, to old. names REV into quite lot high, name money quite the expenses spent of getting we name X.X the years were marketplace. the only a get

million on been just has basically money there which expense, promoting healthy just spending an corporate of stop it’s is the do, a amount it’s one So, that curtailing headcount, not $XX to marketing mean, I pretty name. easy right? that’s

Milwaukee, also, was carryover our from some that had So that, things Orlando corporate the consolidating entire that but to and and it up end was I and like efforts efficient. we it Milwaukee. change was with didn’t I’m in to that feel – consolidating was It Miami, shrinking

is a story. savings see is the that was So was as the Dean? of mean, that it. that’s – far do permanent more expense, long-term I we this as And to this – time it

Dean Nolden

$XX about charge million Mig, majority or million to million of headcount-related, $X.X related annual severance of an vast of and $XX the the two-thirds the two-thirds on is the people. basis Yes, for those

overhead – like marketing out that we costs SG&A of factories kind reductions is third said, well actually factories, as to bloated, other of to reductions that in these and fixed Tim activities Tim take some overhead needed the – as alluded had our to. The as were

low pretty actions a fact. of of the was simple relatively compared to list it’s So that total, and because cost

Mircea Dobre

really it what’s to little that already color That’s maybe presuming about is about helpful. bit Okay. lastly, And versus And talking a pricing in as this you’re surcharges your you’re this I’m how actions. outright taking, not then pricing some impacting action backlog. that going

to fair for effect of XXXX? be quarter that going sort we’re a seeing more of does what it to is assume So pricing here? mean into And fourth that

Tim Sullivan

price our Yes, mix mirrored of the mix lot versus material is frankly, surcharge interesting. The of what got from mix quite the increase we – suppliers. a

thought thing, price going just permanent. the fairly not. a thought If we they It’s increases increased, prices it be it’s was pricing. Everyone go temporary if we it back short-term want surcharges. no, So was when are no, a are says, we And permanent, down. to never

we map seeing tried to what doing by into be to material of customers our were increases So surcharges mirror responsible from we suppliers. and price to a our mix

is little industry a the different. Secondarily, bit

but Some surcharges. short-term accept not price increases, they will will accept

increases and So, price versa. but instance, ambulance not vice for accepts surcharges,

map So we in. that’s how that

that to today going out for it’s priced that when as hitting hit, are it’s in actually now things far the being backlog. are As not

actually some quarter. So see the here in and relief third fourth will we

– – Our it the an that and of the our little We that cost fire, quarter, wanted completely absolutely a increases pricing, for most the in flushed sure issue we and did us modeled That does get quarter. the estimating all going exception analysis. are we to in we the make be not increases that going that heavy to bit we had thing with on those it quarter. it fourth might we covered it’s we we that to complicated did help an do will be us forward. probably make are cost third got but sure But not might with of what covered in second get a out little

Mircea Dobre

Thank you.

Operator

of with Our line the next from proceed Please your question question. from Charlie SunTrust. comes Brady

Charley Brady

second-half Thanks. about of look little delivered much in into backlog the that? just All today guys. got Tim, in backlog the visibility in versus the emergency? on Hey, right the talk could a year, this you bit second-half morning, now of as over here carries sitting just maybe right. Good beyond fire you current How particular the and you’ve

Tim Sullivan

of rest We year, and well know the locked year Fire we so the Yes, actually set. is out visibility sold into calendar on starting sell the what second XXXX, part very of of the the we’ve quarter to literally in through complete fiscal have into got fire. for it’s fire we’re the of fire end loaded. first

this looks As backlog the us know latter of what sounds, a been because our buses for challenge part have for this year. like already as year. XXXX in it crazy transit We buses and transit

we the the good can third got price or lead got necessarily longer-term we is, times great affect where where increases But the days that, instances, can’t we we’ve backlog. less through where will lead move the on got quarter. So, in news the we’ve shorter we’ve on gain longer times, some as XX we visibility, of visibility

Charley Brady

that what’s going a it’s buses and actions that already – deal or it’s to pricing on, to transit is going going the be of is positively the kind done visibility be taking, by you’re long got In be? impacted you’ve to that

Tim Sullivan

of speaking LA No, that contract, the allows adjustments. I – contract for that and was mostly

So we contract. feel good about their

Charley Brady

right. All

me I from – parts. sorry, see can a follow-up little it’s Parts, expected. slower on than Just bit

expand maybe driving and that? Just what’s that on

Tim Sullivan

talked trucks slow Yes, it’s responses still parts. negotiating national parts, FedEx, contractors to like bus, a the then time. and we’re are quarterly call, major major doing And accounts. What supply off positive and from major we actually UPS, of last XXXX% committed start. the the take spare getting accounts in truck we’re These to for we’re We about very those ambulance are and Walmart, in and terminal long-term big contracts are yard companies. these

that, they’re global news to having with us. receptive is very positive think I a the parts arrangement

take have being in to in and XX – we times the couple to have close a that in days. are negotiate. place place next to one time They they take We

have will start. It’s and We we longer the off them us, feel preferential fingertips. spare price parts place. from contracts really have national players large can get at I a future just just demonstrate better parts those to get about these at to it’s taking a of in good if they their buy to slower that these parts, But to they

Charley Brady

Thanks.

Operator

comes line Jefferies. question of Steve Volkmann from the from next your Our with proceed question. Please

Steve Volkmann

you that kind are quarter? mix sorry just good is missed to quarter that you’d quarter versus to two give I Dean, quarters? like more third or wondering this. any of any the there I’m guys. can I just wondering, about fourth of if savings think issues, loaded, the next the Hi, relative was wisdom or guys as I’m we cost morning, But fourth the us see the

Dean Nolden

Yes, – as savings, the headcount and cost just as we about overhead other it implemented. as items, we to explained regarding have or reduction I relates think, those SG&A been

Those those will quarter. taking aren’t place immediately at all. in start back-end loaded third So the

or rebound start that, some quarter. longer prepared those I closer bus of improvements, in think, will remarks, you the as the school Tim the backlog, of the items in fourth price said, transit and related what fourth roughly place for see to in to approximate quarterly take bus, will and third the think, I we quarter as But the cadence prior is said will seasonality.

volume commercial So basis. margin in other start the in improvement than versus in be think, see think Otherwise, a I QX to everything is would seasonal increases I as on between meaningful quarters split pretty particular, expected QX. you’ll normally in evenly the

Steve Volkmann

relative is just great. sort of of price the sort do is still you everything everything to in cost it today as to looking is helpful. or be That’s were done, Okay, positive ahead, XXXX, And challenge? that if then you’ve think

Tim Sullivan

of No, we’re it. ahead

our previous I nothing we’ve mentioned all we this this, of to that that the I across with wanted the make got. covered and all to estimated I’ve estimated I the caller, segments cost alluded sure I with We’ve increases As think completely did actually static. we I think even of on mentioned, towards ahead absolutely were sure be And we’re we’ve could there more we as of as those and think increases model end we we cost XXXX. hope We complete our be could not, we into to to go roll a our make there definitely few October. that cost the bake the year increases even though of analysis.

Steve Volkmann

of view because data, one a to Okay, then guess, build curious I it’s the final quick one it’s thoughts just on. RV of dealers relative the one, relative Tim. are inventory just to great. public concern or But there? your pick And you the about seems only with I’m amongst in anything space, the kind or channels to cycle, the everybody just your seeing

Tim Sullivan

the were doing Yes, the optimistic you okay. dealers things is had But some of in feel buying going a just an record positive. slow they than obviously a I month means their well. last last available. as industry, off in of We if that we data, summer wholesale think, data retail and that the people had to season, year. are lots That’s are if the we lots start is the a were That so the they delivery at and month fuller retail are are April, little looked that’s loading which the still

but up what seeing in-between been flat, really is some the little very everything particular, in real has that, As, the high-end been think, think, bit. low-end I strong. the on of entry of you’re has has a towables kind level, softened fairly I The

to So them high I and that and regular very very doing and and well been softer very very, dealers are seems a to to the have the optimistic. talk be very, low a else basis the flat. talked very Everything little do I’ve on

Steve Volkmann

say, in the expect you of new grow launches I’m still forth? so market, because product guessing flat for a and And the would

Tim Sullivan

C’s lime. reposition doing getting in bit Usually, in XXXXs is more why ourselves them Yes, what and we to to in want about out brought frankly we quite revamped – We lot. market B, our be us that’s the we’re We April. were we the to it a like little get market. May, the late to XXXXs the a because and really repositioning help see we profitable. exactly We towables, the

that’s normally bit said less think, in of to as in market. in that, five new But are the late the into going weeks than line enthusiastic year – going hurt we but enthusiastic Dean, We’re are our in we the product we about the of A’s. the a back-half to comments, As. us, be effect, very because little were miss product profitability little We we did were additional as his I’m are, we’re about the want I bit late – market, as come potential the by the the a be dealers having market. a profitable were and not to said to I three Awe in lines. those profitable we’re hasn’t It to

Steve Volkmann

Thank you.

Operator

from question comes proceed your question. the Goldman next from of Please line Jerry with Revich Sachs. Our

Jerry Revich

Hi, everyone. good morning,

Tim Sullivan

morning. Good

Dean Nolden

Good morning.

Jerry Revich

spec how about and business in What wondering book product specifically much to some in booked the of how on your ramp you if line you I’m just up? is can you to you the year, bus order the the the that about how guiding were in you Tim, in you your that backlog already? be have talk EBITDA half industry is shuttle talk for hit side about had – much differences talk mentioned can on between there you’re cadence your product back- has could the looking to commercial and

Tim Sullivan

the Yes, on is Dean number. booking working

we calculations as a as some have line, tested our product. crash fully bus But here. shuttle differentiation We’re the in far

be in is do efficiency to our competitor to efforts with the able months go last has to a if in basis that got will. product, know, on little you really even toe-to-toe As to lesser effectively we in the the can talked more a been believe you we our about that past. plan have we’ve XX we compete markets What

year…. booking as number the second-half the for As far the of

Dean Nolden

Yes, start XXXX. in the we’ll backlog, there of LA some is it in commercial that the County activity

the So we year. million is commercial backlog deliverable $XXX second-half have the of $XXX of the within million, about million, $XXX

year half So of the our visibility second-half to for commercial. it’s the about

Jerry Revich

ambulances maintaining can mix on historical in about talk the low comfort the high first-half? spec new build versus you talk customer of about Okay, level And And you can thank in you business, among share within you normal that spec level that ambulance your level then seen base our the your around acquisition is post the of can you you. higher-end gives we’ve that just confidence folks the are ambulances? between what this

Tim Sullivan

we’re we important. sell mix, let lowest very We’ve difference. highest about Yes, That’s strong is me idea confident. ambulance got of ambulance a ambulance share. cost we we big sell The haven’t We give $XXX,XXX. market about much talked an The why that you but don’t is cost $XX,XXX. – is

some can So quarter, if take the lower-end to numbers. starting that and in of they the particular you’re skew ambulances precedence in a load

we We hadn’t – haven’t seen expensive mix had that yet. of storm. was on the are that’s more we nicely the building before. year This had all for is a actually the back-half The It’s I perfect QX an backlogs temporary. mean, ambulance ambulances. on fronts. that

it’s and for So horses again, courses.

to the of contractors like the of to ambulances lower, like lower-cost and municipalities, and some mid fire Some buy ambulances. mid buy departments the higher-end the

that first the But the We love of came time in in very it’s the business. the This mix we though kind saw feel an in So ambulance. how just is quarter. a of orders through confident come particular first-half we year. unusual the

Jerry Revich

you. Thank Okay.

Operator

Faheem Our next Longbow with the of from comes your Research. line question proceed from Sabeiha Please question.

Faheem Sabeiha

Hi, good morning.

or additional can pull if actions already REV mitigated? in the if implemented second wondering the were can quarter, talk that With you restructuring can just be to cost about levers that what continue rise,

Tim Sullivan

Well, ahead price with price increases. to got the We stay increases.

diligent. basis done I we can everything possibly stay think cost on as we’ve the

other our not suppliers situation a of some and comment, of our that to in To think happy. say was taken previous this we’re have understatement. not alluded we’re We inappropriate. I thing is advantage happy that The

steel increases do pull those a out is as can can we We That aluminum. to with cost and that’s that for lever assure alternative suppliers are for I are another, seeking getting components. think, go I diligently products egregious we forward. that of nothing we behavior have you and

to to in our for like have. We any like we some in in going contracts we our out increases us of we’re a So sure don’t our we the We of rethinking. broaden And backlog, we make keep out third backlogs backlog. we thing, honesty, months. are all have pricing if supplier stay I puts pricing the are adjust bind. ability diligent, head think, But base, that long love cost

think, all contracts contemplating that right leg still, we’re third I is the new So now. that

We contracts, increases. can are in so putting react cost those material we adjustment to provisions

We quite isn’t enough, on it the really in depends good percentage industry. have But it some. and frankly, the

forward. base to work continue – make be to will sure covered we has that go that we So as

Faheem Sabeiha

given second thoughts on Can you the the capital with mean, you allocation shares the quarter. I today? price about provide are trading did average us in below current they’re your just where the XX%

So going just wondering your program time? at more the accelerating to focus buyback on be is this

Tim Sullivan

anyone that’s probably on in the Well, I that this most think we the all that is inexpensive one now. call of this agree market stocks right

So We’ve And that. I be open, our got has our will Board decide window a program been when action guess, very be program place. on That does will in a will announced. that soon. which Board

opens I and on think, stay Monday our window news. for tuned

Faheem Sabeiha

you. Thank Okay.

Operator

Casey question. question Wells line next the of Our from Please with Fargo. from comes proceed Andy your

Andy Casey

Good lot. morning. a Thanks

questions. of couple a First,

and EBITDA new the XX% about margin outlined you margin of X.X fiscal kind In alluded it adjusted earlier, guide be your a about second target XXXX without points a to basis. past the of basis you’ve initiatives First, you adjusted of took midpoint. in internal lot market announced add to of XXX seem the on quarter carryover you’ve growth. The likely to at that

to XXX about year? margins still the get to in next initiatives place leaves to boost EBITDA supportive it XX% that to there XX%. So Are

Tim Sullivan

year. the XX% not get next We’re going to

us in part We other right here bump But spare to move the spare parts. meaningful experiencing in second two from things, to a you’re to and slowed – quarter. contribution that get I pretty into the the lagging the XX% to speed is obviously, plan parts element XX% the a healthy in other down on think path continue we’re direction. that

in but has goal XXXX, was we’ll which a think it’s ago, ago to But have there. guess, goal positive X.X on will changed. goal we two come we to visibility, more fiscal a in Our we need get but not I things And get – guarantee I initial our can get some We happen will years we years XX% not that there. way. that can XXXX,

Dean Nolden

impact will which I’d a Tim that mix see transit see also But bus that especially opportunity, also had more of is in transit And we in that our bus and contract. with ambulance, large expect see as improve the margins in in said, XXXX. backlog visibility better deliveries to and to we from we add that initiatives. like that like healthy bus that from volumes a analysis, and we to correct to school about the

a XXX XXXX. mix the some points, from to there addition rebound tailwind basis should of that in the So will be in

Andy Casey

And you. X.X% How that X%. of of the is roughly year thank at the this revenue just related Setra any growth How the distribution the ask – is for X% to to I wanted near-term ex-price about Okay, implies organic? and guidance The midpoint then a about second-half. to in much question. moves And agreement? in

Tim Sullivan

the will to that costs in and handle some washed out but July We to No, gains effect Setra agreement. agreement actually those line. That infrastructure none of put distribution place October, to between July with effectively product do it’s really business related be takes plan gain were of X. earnings off that that

product on Setra between on up the what little able as mentioned, bit to on if of been And really it’s little all current side. now nothing going a a could our So and go Everything estimates have on to be we’re increases tailwind October. aggressive may organic. but I there be control is cost our we There group. may a that,

Andy Casey

no benefit carryover is so The there’s Lance? X% organic, from

Dean Nolden

months quarter. only next but the all one XX last have in inorganic that over become other we be is will the acquisitions the organic that Lance, will the made Yes,

versus the a inorganic we’ve to last few regarding Lance smaller quarters had organic. over compared So to report what is piece

Andy Casey

on RV Okay, thanks. could ask if market. one I then the And

Well, in the the about quality is something a likely Class past, going share competition a causing some the share. there Has we and changed, share. should product improved delay to we about introduction What’s there? loss. comments be business to to a be on Because few that perceived a some had talked going regaining You on new was what A going I gateway consider? about or

Tim Sullivan

thing levels that coach quite frankly, certain size making. more the And our offerings of I of based in product the kind we with place No, you’re view. a at pricing is on in having. complicated set It’s running the saw were

making business, in share, weren’t more some we growing it’s any all And We’re money. money. making about but

So product. we more profitability more with shook of segments that us frankly, the profit line the for different it slightly decided designs more and revamp with up quite product a opportunity little – a repositioning into some different with the provide a product the to bit to line provide do price,

Bs, to and Those industry are making and where I So the a fine our on the Cs like towables. be As. the the don’t the were we earnings were the not but we those retweaking RV enough. make we’re in was types – meaningful revamping business making returns. fine, it just could of and we As in think are a I We returns position of great wanted

So, we made the changes.

Andy Casey

Thank you Okay. much. very

Operator

comes Our Mike line Stifel. next your question. from Baudendistel of question the from Please proceed with

Michael Baudendistel

Thank you.

year, be if $XX million And want you at heard I Just those processes make ask costs sure break by segment? will you headwind the from down headwinds think those just mitigation I down right, wanted place? won’t in by in all of that XXXX that hit you, you beginning that you to next input a the could to

Tim Sullivan

as the a material but segment, have for don’t I everything on at, But the might. side. where basis, numbers? get it as just the it’s on across I by macro Dean includes Dean, broken down far Board it it

Dean Nolden

for in the of across some that commercial total for that bit of There’s shorter segments. the fact It and in a over businesses more of mirrors not. times kind lead Board times materials, because our the it’s all buying X% the little of but production

Tim Sullivan

this just one one this, ones. because Yes, those other the egregious mention and of was I’ll

out with largest area, commodities certain one coming on RV I of XX%. think, price was the in increases of suppliers our and XX%

bothers me a that will so that it’s in guess. I of me particular, alternatives segment, be one the most, the But of Board kind bothered RV that, kind And there. really we lot, for the looking and across

Michael Baudendistel

you going mitigation year? the – processes you don’t that’s what be XXXX, headwind all by a earlier? So think be to of is continue And to Okay. are in next be to going place beginning said

Tim Sullivan

is for me. the No, disappointment Yes. here I think,

now on team how getting alternative typically be good out down. our sourcing suppliers working costs is Our can going their get to to tied with versus we figure suppliers

of as get that to momentum bit work months bit set into is is quarter and over felt So five to nicely our to we’ll The way were alternative momentum the as some the the get some up XXXX. for cost – that three will out that XXXX possible, be suppliers, a little we alternative back seek best goal hard cost going the find us first we lose, little suppliers. But unjustified. of where down unfortunately I in we next to increases think, a

Michael Baudendistel

it. Got that what you, is ask wanted the niche trying the That And A segment RV just sense. the fill that or A class of Class gasoline segment makes you’re the segment, to to then is on that?

Tim Sullivan

It’s diesel. job. both gas great and did The a team

did, right getting it’s dealers pleased I But diesel. some I’m new up. think, did is less less I two an bit as both But feedback more. a really think, are have now. enthusiastic really the I’m it out the The We rocking that is little from by have products. thumbs gas and far in We do as that really we we of instances, models the models the there. number

new orders really some getting good for stuff. the We’re in

Michael Baudendistel

all good. That’s have. Sounds you. I Thank

Operator

of question question. with line from next Please Morgan proceed Courtney Stanley. the comes from Our Yakavonis your

Dillon Cumming

This Cumming Courtney. Hi. is Yes, guys. good morning, for Dillon on

clarification – you a more one segment there of that out feel Just is evenly of the segments? quick availability. spread first was kind of point that the pronounced, across chassis on Was or more where did any issue

Tim Sullivan

those that highest our It’s we’re are now. on plants. of at carts the and volume the right is basically Ambulance the all hurting – ones one that’s building our that’s Ambulance. most

up our to chassis discussions starting that’s most right high very the We’re one network. a Trust bit. little loosen hurting – that’s the within ambulance, it’s now. it’s we’ve supplier me, But had level

Dillon Cumming

back & come to I Emergency. result helpful. to the last here. that’s just one then the Okay, wanted in Fire And

quarter the taking got million about last XQ into mentioned $X.X pushed from in that I last the million back you think shipments. EBITDA to out $X quarters

that aggressive the of it XQ back the margin kind of back-half implies in in you the still a And so, number, if more out year. of ramp

you that detail and be your in just second-half mix think of we when guide. helpful? embedded about that million through Any more chain that’s tailwind? get much supply parse So we’ll $XX incremental to out would EBITDA how Can improvement, normalization, pricing

Dean Nolden

a on in in that a is second-half. it surprising backlog. and more of to a schedules not the little mix. custom – and be increase, less truck, repricing It’s characteristic pumpers had have kind some the we lot do fire also volume delivery the bit of referred have backlog What the the higher first the on would it’s first-half we and visibility more more we the to we because of retail the for see much side, custom but as more mix we lot aerials that in Yes,

coming where that’s quarter fire, it’s division that the side volume, We’ll in not cost of probably benefit So then initiated the XXXX. is towards price some in to from, overhead of last-half see which in business strongest in to end fourth addition the into we’ve the for the fire volume the benefit that of and headcount the of the from F&E reductions and the the the perspective mix, or but price. the

Dillon Cumming

color. I great. the Okay, appreciate

Operator

turn for and question-and-answer back Ladies to would call I end the closing And to we reached the session. the remarks. like of Sullivan have gentlemen, Tim

Tim Sullivan

for Well, us. thanks, joining everyone,

tried that we all quarter. macro to group as future. Sorry, on. makes great and will XXXX. us has business and This as learning lesson we us look nothing we could a a changed. at they with a good we concentrate we’ve the will you a visibility products We’ll of markets to that the as on we you, information and through to finish again, doesn’t to quarter to that was. level, have execute But sure let tweak what say ran fully quality, the end and solid good here stronger. the been Tough looking towards the transparent in as best that make as in to strong of I should and with backlogs And not been could respects second understand continue Obviously, to over. kill many our descriptive it’s our better, continue the a – you products quarter, is heart as make and use company, in year to we from for it we efforts great think, take was what are for difficult group – them This be

at consternation of talking forward the to looking end a and forward again Thanks, lot we as complete Looking less again, for our all QX, year. us. to you hopefully to joining

Operator

This conference. concludes today’s

your You may your Thank participation. disconnect time. at for lines this you

REV (REVG) 7 Jun 182018 Q2 Earnings call transcript