REVG - Earnings call transcript Q1 2020

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Operator

Greetings. Welcome to the REV Group, Inc.

First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. this being note, Please Instructions] conference recorded. is [Operator

conference your host, will now Konop. to the turn I Drew over

You may begin.

Drew Konop

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

the Please refer now presentation. to Slide X of

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

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

Timothy Sullivan

of you for on the quarter. developments thanks, Slide that feel foundation everyone, call. for contains year. serve note the trending we will the we Thank you, are And that remainder the number X a with today’s green fiscal And as joining positive highlights for us first may Drew. of

forecast, organizational and initial consistent results. continues in changes to which to made processes, improved, entire needed and the our staff be have First, improvements consistent structure with for year support the reliable internal we provides our and outlook deliver confidence the to

thank hard the have continue disruptions any most our initiatives like work current and I’d such that by done teams, through navigate recent year as on execute as the macro to they caused to uncertainties coronavirus. the we the

within We by adjusting to Asia are are that monitoring to and chain, issues related arisen our suppliers. X which arise may have Tier or primarily supply source to electronic date from our

any impacts disruption, material are We limit from and direct or have to virus. experienced our indirect the teams limited potential constant communication in

in or significant We our though impacted subcomponents be learned or challenges directly third-tier from prior we don’t other XXXX from our areas from these suppliers. materials sourced of supply by are susceptible China to a may second- we that impacts on areas, even as amount purchase

therefore, being our We chain proactive materials. are, to the supply protect with needed availability of

of not supply outcomes to first remainder are the expecting on on or year. material and this forecasting expect any currently from look to impact several We quarter through continue we chain. building forward positive fiscal At our time, negative the our

production our year. the First, develop Emergency in to plant, at increased largest & realized our Fire to throughout margin expect unit we segment, improvement fire we continue and primarily

introduced quarters, more allowed within rates over the we the efficient trained past quarter next and the days cab has production each lines higher working by months. the labor realignment, factory includes floor become new against With in chassis absorbed additional and of the six that hired be available three the and been past which believe will

which to produces fire our delivery a our longer lead truck, we Ocala, set and As out of respond backlogs brand times. meaningfully to to plant in increase industry-wide reminder, the higher capacity E-ONE Florida,

while And to XXX necessary at to to a plant taken much past this return per proved step to have productivity historic steps a over took back be units the a successful at production XXX XXXX, about rate. the of profitability continue Through year, year. had the output we higher

As quarter, significant benefited at driven plant, process improvement from margin division Production our first of in focus Rev the as improvements a well with the stronger its Systems new largest our the recovery gross Ambulance expected, on benefits which began management, as backlog. by a

take and go-to-market and structure is within divisional are dealers strategies. our that closely customers in Ambulance excited aligns to we a Our to with elevates beginning our hold, more work manner and best

X only new plan the to in was type the customer developing two demonstrated X division product not collaboration our the this build introductions product Wheeled experience, and of and the by but alignment across months, all new star namely our upon businesses. voice ambulance first over past This dealers customers van Coach close We with line. of

The profitability. has and growth consistent once to deliver Commercial in continued terms improving results, segment both again of revenue and

businesses, product many pricing, development, as While benefit are our as which there bus businesses, want dealer successes to commercial placement process of from across shuttle I recognize continuous well operational have both improvements. the discipline

bus and municipal increased our previously high orders backlog orders reflecting increased last the over Commercial announced within single shuttle businesses, end bus long school to transit a related duration year, solid market. and digits strong bus contract awards

approximately for flat time orders XXXX, to in have quarter the sales. be keeping with retail our While the to businesses in for line the shipments line industry continue outlook the industry the received is one sales expect as market the our which wholesale expectations for first consistent with fiscal recreation in with close full about book-to-bill we quarter, is RV to and year

begun and we and be much new model XXXX of models. the has models our than in very Introduction prior new and have are place year new more sooner is taking proven The years new production to introduced for our models to recently efficient. production on transition XXXX been successful,

space us initiatives season, floor this to dealer We lead all-important of stocking greater season dealer in a share earlier season. selling resulting the the will summer believe benefit of this greater ahead and retail in

interested Response has solidified not X have turn acquiring the number acquisition were Spartan X. REV Please to actionable. of Slide been but Emergency number became the market. February North American years, as that is the Emergency Last opportunity when player a in certainly brands business to we in This excited of acquire one and extremely this on a & we least, Fire for collection the of

strategic rationale is significant. The

First, Spartan meaningfully expands REV’s competitive product position American in across North all apparatus categories. fire

an minimal. there is aerials, geographical and overlap overlap such customer While is on as and pumpers offerings product extremely the

be XX we currently announced I’ve chiefs new and firehouses to business. fire have are creates contract X which to brand and award but Fire from to This their are and an brand incumbent apparatus before, Department. typically a Smeal morning, it fleet. Detroit Spartan can legacy said adding They new Fire vehicles for the vehicles it’s that repeating worth Smeal difficult that a displace. be year tends XX loyal, brand

also that introduces regional difficult It Spartan into us certain of presence previously and time American expands Detroit markets. like to in some entering. markets, Latin we country’s access provides Canada in had our the largest dramatically cities established

at North for are On in the OEM and us of highest The this units some product category. puts the Spartan American aerial products side, fire of the margin and Smeal market priced half brands aerials industry. share the addition approximately in apparatus of

congested unique articulating base allowing that installed the was into the improved gained areas uses of brand shorter and wheel a Tower boom The Tower for urban a has access base, designs before an in have maneuverability also the resulting in significant provides service narrow We believe which Ladder demand brand recession, much of which placed large tailwind. a streets. XXXX replacement Ladder and we

Canada. line provide chassis business of builders builders. with included Spartan’s emergency and product continue for has Spartan Spartan customers. and Our also these which and U.S. long-standing the to support custom service and close these apparatus We fire the plan aftermarket chassis a supply acquisition regional OEM services to relationship in

charged we markup outsourced Finally, savings of no of Spartan plants. aerials our be deal generate supplied fire for an on contract assemblies one under This longer that will are immediate will has legacy latter contract. been manufacturer that a as

continuing innovation. will product development and industry company lead leverage engineering the new combined The opportunity the to have while to in

cost as work scale, that combined to eliminate back relationships from We result will large and customer dealer operations procurement leverage support. as shared our redundancies office well and our

Walsh, project I assigned teams. of our leadership Spartan the working and REV is have legacy integration, he Ian and both in COO, from with charge Spartan owners placed the

progress have identified we diligent We case to our in a process synergies realization business for part the place the both overall of of integration track have as the and of acquisition. this the

with portfolio’s potential. look the of maximizing working Spartan We the to forward our combined begin our we brands as iconic journey talented and team

to financials revised and Now that Dean first fiscal I’ll includes acquisition. review the quarter this call over the for of detailed turn outlook a

Dean Nolden

first F&E proceed performance. quarter quarter with X. Starting Tim, I sales will X% was The Consolidated review first sales the of lower partially for increased in $XXX last quarter net commercial sales good the and year. morning. Thanks, in the up of our results million, in segment. result Slide compared and level segment offset then segments, and sales by were consolidated Recreation the to first increase with the

million the driven Recreation $X of and initiatives. quarter, segment. of a the EBITDA a $XX.X Corporate partial impact million the million $XX.X Adjusted EBITDA within quarter adjusted Commercial was first as by the partially the it in was the in higher cost-out quarter profitability during expense declined compared segments, decrease by offset year-over-year. benefit lower also XXXX, F&E of X% the to XXXX reflecting of profitability was quarter targeted in in first decrease The in

to first review Page $XXX of turn our the as plant. sales of as performance X fiscal at fire to of year-over-year X% Emergency quarter increased shipments largest of Fire the our increased segment our by deck now for total unit I the to volume a Please million fire & slide move segments.

improved cab offset EBITDA The the at This of deliveries was the lines out this plant of over which of and the plant, quarter. of and at units number plant another in produced quarter. November opened of year-over-year. this shifted partially flow chassis increased XXXX, were New fire overall XX% the revenue trucks within timing at by which

this in heavily skewed towards the versus In addition, price. mix year more a average resulting lower the custom quarter commercial trucks shipped selling units was in of first trucks,

in of of remainder shipments the over the to and to be trucks towards recouped some pumpers custom aerials we year. this second the the quarter of expect shift mix expect timing We and of more

plants as Ambulance began flat were mix due sales revenue up is of believe was and delivery for an well larger The us of our municipal division order one to has quarters. approximately will our ambulance unit third the and second year-over-year in which but XX% improvement improved the a up we sales backlog Ambulances Ambulance order. as up expected, set cadence over year-over-year,

the segment the of half backlog reach year Total year-over-year as million. in X% full F&E strive backlog We the will to $XXX second believe we in grown to in has million F&E growth $X.X XXXX. duration our first XXXX a within the $X.X the in segment F&E of backlog adjusted was million division. to quarter first shorter compared quarter Fire of EBITDA as slow

margin the output adjusted in labor fire commercial a our was of mix greater costs ramp-up reduction apparatus place expenses to facility. quarter of year of in decrease in current and facilitate EBITDA gross the from additional put overhead due The impact and fire a to Ocala in a at

Partially profitability EBITDA Fire at initiatives. this began and from a ambulance our largest efficiencies division to production in the in excellence increase improvement impact an operational offsetting production and sequential it significant increase was in continued realize as from year-over-year ongoing plant

our Fire division quarter, while a the in first the with first we as expected Ambulance begin we fiscal is to its fiscal the quarter consistent expected XXXX be Fire This recovery guidance our to and year. division second of of division, mostly and second profitability the recovery in half our the to realized the quarter begin for fiscal our in be in trough

quarter developments the half in several have We gives had second recovery. that Fire confidence positive the in us within

several feel to of needed expectations. the cadence First, and at largest trucks seen improved backlog full decrease we at necessary of to weeks and reach assembly we rates number duration and our production have the achieve final our our chassis sales cab plant year deliver is

second of fiscal quarter trend quarter productivity also labor our continue believe seen year. our the given will January, where the this the at metrics We’ve and exited end half of through carry favorable within second And into more trend we productivity we the the quarter.

increase X, shuttle of XXXX revenue and one commercial order the not terminal specialty expected the large in sales. recur. the school Slide shuttle on number headwind shown an segment, increase sold in bus by up were than our more the and in quarterly transit prior division. transit related truck $XXX in number bus quarter period, million did of compared units As increased to municipal XX% This offset our Commercial unit sales bus of the decrease a bus to sales to first year driven within sales that And

Commercial due adjusted municipal EBITDA our continuing a in the $X mix prior increased and increase transit bus business. sustainable bus and XXX% increase year to with to $XX.X in million shipments of the quarter, within million from shuttle profitability the

we has discipline began, our which preferences, products, experienced pricing alignment Production as hundred for business, bus to excellence. has this review under demands been basis shuttle our and Systems announced portfolio several deploy EBITDA quarter third to of The points market operational we since continue fortify REV improved since strategic XXXX, new introduce review margin and fiscal improvement

Overall, Commercial increased XXXX. margin which fiscal is margin in segment in quarter the points segment adjusted highest the we public experienced in basis X.X%, have since EBITDA XXX profit Commercial first going the quarter to

award and against received street sweeper watermark compared also bus large end the for orders represents of quarter announced, since first backlog to customer XXXX bus shuttle quarter bus, Backlog, the commercial the for Commercial a at municipal first of the first XXXX. of to $XXX account large the to our transit at previously X% public orders the million return the of due in increased the a the national firm segment business. increased end backlog into quarter, high going

we towable lesser sales $XXX Turning sales end declined revenue pace the in Recreation million and dealer Recreation Class year. with were line Quarterly sales. believe The in A started a of due retail destocking the X% to in the X. to last lower to Slide nearing sales year-over-year of we to segment segment unit extent, and, are more quarter,

the the the year to prior same of dollar sales lower within quarter entry-level shift mix sales business A compared approximately year-over-year. Class towards quarter, coaches a RVs resulted were this current unit for in gas Although

individual points was million. decreased lower EBITDA profitability Recreation the to reductions margin over adjusted price shift from unit EBITDA volumes XXX which $X mix basis by A by increased in year-over-year in $X This to taken realized business fiscal end Class offset categories, previously cost from the decreased certain XX% operations, lower to quarter described related for it’s our million XXXX of actions quarter and due to in year-over-year. aggregate points unit

remember, may under business a last strategic this year. You also late review was

its related introduction to of and innovations, We intake. new and model year wins timing recent are pleased order with product progress award product

in lower year categories. in Class campers, backlog segment result Class increased Segment orders for Recreation prior to towables and due XX% $XXX million B offset versus the partially the and of quarter decreased orders by the to A

compared up year-over-year, While resulting is XXXX, it to within quarter segment versus encouraging total first time the the when quarter, line that fiscal quarter Recreation book-to-bill reflects is was believe year X orders retail that down orders demand just to in fiscal prior see backlog beginning. closer more this quarter. much in dealer We that the XX% of XXXX, this a year is first to are year a with are destocking prior than

and Our we market industry for industry experts, year. the flat the with aligns anticipate approximately be to overall current view the

in provides opportunity product our of strength to the this lineup take feel we environment. However, market share

was use in the million improved Net for net compared quarter in in million year continued of activities cash decrease the use of of million related This $XX of fiscal working the is a XXXX operating quarter-over-quarter $XX in to XXXX. cash and activities of used $XX net used operating to capital first in quarter first efficiency. cash cash quarter prior

facility ABL acquired of Spartan raised to million the February on million taking anticipation $XXX $XXX balance $XXX borrowing company’s was of X. million, of this $XXX that XXXX, $XX versus our was as include purchase used XXXX. debt at January borrowed was Net to In revolving the of credit million base. fiscal and the XX, end million on And the advantage capacity cash from ER sheet acquisition,

our the January ABL net quarter revolving facility maintenance The – end million X at addition, third adequate facilitate to of term the than covenant was XXXX. In credit through times raised loan from of financial our under debt-to-EBITDA acquisition, availability of times had $XXX more company as X XXXX. liquidity of XX, fiscal the

X impact review Spartan the organic for a to a year our fiscal full Slide the full of adjusted of reaffirmation outlook turn for XXXX, which acquisition. our of guidance Please is for

We continue throughout to expect in year-over-year our to half. with taking improvement performance improve the year the sequentially place financial second

of Spartan starting of range are now $X.X quarter, estimating we in addition the fiscal beginning in billion. net results XXXX at second of our the the be With sales $X.X our billion to fiscal to

resulting for of The additional of Spartan is year, the the interest in ABL fiscal in additional updated in proceeds used million purchase an expense fiscal to to to $XX $X to million of for expected XXXX. million range cost result of total $XX REV million $X group interest remainder

estimated now for net EBITDA to in expected expected million to to million. be $XX million. $XX $XXX to companies to range the adjusted combined adjusted $X be income total is is $XX to is be income year million million Net of million and the Full $XXX

Because certain and fiscal the operations liabilities by the a the seller year, through full of increase in of of underlying business, provided approximately additional of new by profile by remainder range flow $XX the to $XX retained from fiscal Spartan year. cash also due were expect to operations to cash our million we the cash for resulting million $XX of million

financing continuing to and - In an expect as as result addition, $XX a year. of pursue inflow million approximately - full we $XX assets a the for activities result, of or activities cash additional of investing of non-operating from monetization these million approximately non-core are

call for back comments. to With that, some Tim I the will now closing turn

Timothy Sullivan

quarter. exciting consolidate in into the an segment industry we division for at F&E time Group REV as of the to a clearly opportunity major start player second is the Fire the This our Dean. Thanks, have had

revenue revenue more and by we -- our adding upon demand, ER, to and our this replacement have increased generation capabilities, longer cycle cash and Spartan predictable tax-based of visibility backlog. improves flow related and addition the With also exposure our

seen Systems of We put strategic within have those including our under review. Production have performance and now, we those implementing for Rev over that improved recently businesses, several year a been

We We are excellence, look forward confident and have operational will capacity begin a workforce. of as to that trained expansion troughed the initiatives, progresses. our the F&E traction gaining segment result delivering guidance year operational its as shortcomings against updated and

Operator, questions. up call the to we’d for like now open

Operator

Our you. your proceed first Andy Casey from [Operator Fargo. from Instructions] with Thank Please is question. Wells question

Patrick Wu

Hi. actually our Patrick Wu Good taking Thanks questions. in standing is morning, This for Andy. everyone. for

Timothy Sullivan

Good morning.

Patrick Wu

to profitability appears the to the be little the company Morning. low. ER, Spartan Related of a

As margins to the lifting do you you level? you overlap that F&E legacy closer legacy onboard, also that the over how between mentioned guys think and some Spartan time guys them about product bring And appreciate there’s F&E.

Is it product the here? your here? that or the you intention point all reduce some believe that intention SKUs will of you at overtime do some is Or at guys not

Timothy Sullivan

Yeah, let me address the profitability first.

give you interest of points of a me couple here. Let

runs SG&A, Spartans F&E X% Obviously, there’s opportunity XX%. at synergy there. Our business at about a

our We think F&E pricing traditional is also Spartan there’s believe quite structure. the that there. a than pricing different synergy structure We

to a that System some excellence which the also improve We will our also profitability believe product there’s way of of into operations, line. Production improving use the the Rev

As the have profitable; XX% very not target all a matter can a within pieces we to all showed of loss that the for we we’ve year EBITDA got same think is place Group, level that’s the and it our businesses business. fact, of this you of XXXX. that the that Rev correctly take in business said, we But fiscal in

it there that incumbent. is KME, all I overlap. this mentioned fact quite across, our the Ferrara for or is products, Spartan. that comments, product frankly, I be all the lines, of overlap my quite now is The as whether key, Fire in E-ONE, far of think, There’s As X

municipality, and department going municipality chief quite create a words, that if are the you is In fire from other incumbency a following in strong. particular you and fire the into

you at if So let just of additional an brands. give will look with we example where I the pick just Spartan up me Spartan, markets

been We markets those for these been talked markets brand Detroit, to that us of difficult plan Philadelphia, about St. have products. break of Vancouver, that Canada, markets retain any Spartan Dallas, Louis, to Spartan all with We into. have Western the are

require about the incumbency and overlap, though So products the is product the itself. some and even of to this is brand really providing markets value there that

Dean Nolden

thing. And one could maybe just I add

XX Just opportunities which XX one business additional working opportunities, for cash flow thing there’s to capital addition also which we can that combined to see add, over synergy to in months. in for the was provide the do and income organization, the the opportunities improvement next

Patrick Wu

you. Got it. super helpful. That’s Thank

on your wrapping a of for to sentiment margins or that over next three margin guess, as bit baking that incremental going heads Just your to guess, statement of moving terms us are troughed. of around in the year? your so, guys the I what the is can cadence - I the type segment of increases? throughout the how just help segment our quarters F&E, you has you progress rest margins progression the the for fiscal little absorption or And in

Timothy Sullivan

to let it’s labor question, the me answer efficiency. all specifically But speak let the F&E in segment. improve ambulance Dean about absorption Fire different how than it’s we explain I’ll on our but and me margins let expect because And business.

we operation, individuals fiscal the Xst. Ocala the the at of look start you that into for operation November loaded XXX new If year, new

their They’ve they’ve so and to They’ve They’re in learned gotten, position. sea in legs. They’re cells jobs. trained. been their now speak,

profitability So inefficiencies. primarily labor been related directly have the to losses

ramp efficiency we point where the that QX, profitability X X, to plan obviously, to As within Fire we start the move segment. back and we through gain, to

in expect more less be more which about more full want normal loaded. ambulance. so and Fire absorption. product was do the ambulance is backlog a year to again, going you and to is getting related the Maybe really to really It’s now to line we where in the Ambulance answer back-end case,

Dean Nolden

prior in to mostly prior of in closer be closer the fourth maybe margins see prior result year the much the well. prior sequentially a improve year to second continuing year-over-year better not said and expect quarter, you’ll second as And we quarter. as year. the going improvements good absorption the think, I versus margins But year, third and quarter but as to in year, quite as to F&E, the we’re the improved of With the we in half labor and Yes. benefit productivity, to

Patrick Wu

Thank you.

Operator

Thank you.

Our W. question. Mig from proceed Company. next question from is Please Robert & Baird Dobre with your

Mig Dobre

all morning, on the you. F&E topic. color I big appreciate Thank that’s Obviously, margins. Good the everyone.

maybe with F&E going as long how thinking higher operating we that, XX% this company. at goal you for do take sticking Obviously, levels it’s about to So think that, the margin to get that And in what on the the undertaking, there? business of that can basis? levels at are sustainable some you’re here to operate order near-term very are steps remember you those a than the ensure beyond maybe

Timothy Sullivan

as we To our that can, will ambulance. as simply recover very was - are close business answer one that really I ambulance has very backlog Mig, The lost think that now in back entities and backlog, we’re they quickly. just their of down some

ambulance, don’t it an all. see at we be to issue So

I fairly recovery to XX%. think a to quick be that’s going

strictly on next three, and will now of and, end Ocala fiscal approaching the will is this to as operations. to that two, well We Fire year here related recover truly, this be think sit year be our used it of by XX% at start we to time.

KME, a we buy are more commercial, make is get challenging higher their a it. of run we because they bit percentage don’t of the which little to little to bit complicated much XX% mix more because chassis, products

So that probably us get little it’s really going a at level. I XX% bit think KME take to to to longer

up. guy, new it’s They’re the really probably ramp obviously, then that And take years us a going losing couple to money. And to of Spartan.

for plan challenge all obviously, production take, the to going line. relate But executing from some negative pricing a But to to to that a bottom synergies. the really obviously, and it’s put to it positive. takes we place improvements a the of in really it’s to go a think I while

we very quickly is and here path be bit SG&A weeks just attack that of we now the and that couple we’re the can towards a that that significant, a the And XX%. think at shy in next Ferrara. which right literally of little to I XX% attack difference, plan helpful will

guess there it’s certainly simple answer side XXXX. two will at of question, So maybe move in a for certainly, a would the the Fire we With and I year we next of this the in be long as process of through and, a Spartan but biggest time, to KME business. another year for work by kind

Mig Dobre

Okay.

So that or correctly, in if I fiscal level. then should level, that better get that you ‘XX, XX% operating at fair? in be theory, this Is

Timothy Sullivan

side fair. That frankly, is you we And I’ll there. this quite get that bet absolutely on

Mig Dobre

bit you’re largest. Excellent. a obviously, Fire I Then the big player a mean, demand as well. maybe little about you now, can in talk

You’re, think, I on player you impact. the the obviously, - the largest ambulance. you that in still Fire estimate side on with can’t What’s understand going I and, demand coronavirus can’t

I’m from the being from does Thanks. or for some any CapEx have the the you their that you know business are in in wondering, dispersed? demand Does reacting past, ambulance lead conversely, spikes, if what an that near-term based as on you to services? would, hospitals maybe to sort But and of investment prevent really dealers or cycle what or operators told the in how such things coronavirus

Timothy Sullivan

for ambulances tell and let for the then it means on We Yeah, actually story give us, a me you what I’ll I directly a you my got weeks air side could opinion China ago a provide to we market. call were actually able phone U.S. of think, pretty good rapidly as number we as possible ambulances. see many how and to freight to two

They thought too decided may get that late. there they - they

China. to of and have not that profit producing a RVs in basically right tremendous in China. a amount in ambulances that’s not demand are create doing Wuhu just on don’t as yet to we going meet a of that now of - profitability out We lot plant are of make But in our lot JV any JV our

key, ambulance, in discussions U.S. type our capabilities appreciate with the States. with meaningful U.S., making we’re an sure they the of government in United the outbreak any fully think, here In I is levels to of that which the

personal Knock hope standpoint. that on happen wood, let’s from a doesn’t

we not in that we able that, are with that case. the about where discussions think is would But good be I thing. government be our if help, a might to

Mig Dobre

Okay, I see.

some on Lastly, portfolio management. thoughts updated maybe

you Or Are margins shuttle right bit considering in your on something You with little the businesses? margin still as these the well now changing improvement about at a essentially you RV. are A mind, as that are talked potentially doing class track?

Timothy Sullivan

with create does improving, that XX% said EBITDA think discussion of we’re question. have the dynamic XX%. period are different Good of our arrive recovery don’t Obviously, Having time. either to we’ll Board at in type those with those we Directors. And to margins margin committed fact we have of one relatively discussions short-term short but of a a it to I that, think, ongoing, potentially of a

Mig Dobre

All right. Thank you.

Operator

Our next Credit question is from Cook Suisse. from Jamie

Jamie Cook

question issues there just on guess but you coronavirus, side, is Fire or opportunities with suppliers I about on Understanding unfortunately. talked some first the the components. Emergency back potential morning. good Hi, & that

you you’re and one, X like doing your X Are they’re suppliers to? can you can’t Tier that event suppliers Tier about: demand building in expected talk So with what the X in any to meet this, Emergency we your Fire business? And this? costs as & freight or incremental elevated particular, if a inventory result assuming associated are Tier of could any there be with upside

guess, outside And question then, coronavirus. the my of I second

to margins target? thoughts there? Emergency, You the updated And what what’s Recreation on continues get level your are to answered guess, I in Thank you. & sort Fire underperform, that long-term right revenue on to of targets questions long-term

Timothy Sullivan

Okay.

thousands coronavirus tends a pretty be, part lot and people four numbers - to first pretty this hit. Chinese New falloff, obviously, right up obtainable. a whole overstocked Because I literally easily are the those still and news, so that to distributors thing about coronavirus, The our Those levels the inventory tend came of foremost, and Year. think, before recently, On the sound literally obviously, was good there overstock there strong. is of, for short four of had out that timing good XXX,XXX we’ve were

seeing very we’re that. little issues very, And so with

Our plants in running closed and some that materials already that are also up are back of advising team the China.

on very that to a wood, either X. So us, knock there at it’s really, we least think much X going X, be Tier impact, for we don’t source or because minimal

for RV. the what season. we’re as that the - And would RV. first the election buying we’re that’s southern But much cautious in also thought it had I far very sales almost southern month we in Retail were obviously we’re year. we second on than on think we’ve an As be. happened up much, call higher XX% in by Obviously, question encouraged because January. the it of the data That’s month

where be are to year. for ‘XX XXXX, projections got look as I’m now that we ‘XX of over indication. - us actually - budgeted effectively if in move we we’re we’re January indications into our a to will basically we’re a that, market presidential good retail conservative conservative the very encouraged from ‘XX flat, because XXXX, that potential the we seeing for so the upside over we As

Jamie Cook

you. the Thank color. Appreciate

Operator

BMO from Tiss with question. Joel from is Please Markets. question Capital your next proceed Our

Joel Tiss

headache. lot Thanks. seen been I’ll whole but not little doing a you’ve another of like acquiring reengineering start an you lot We’ve And this a with confidence on question, a do for manufacturing of of couple bit process. the the unfair work have in a of how off plant guys you level company of consolidations. years,

you headache? another So you that do how to is give going not feel comfortable asset Spartan the

Timothy Sullivan

probably how X are years when know X actually to or we were if ago, We above ago anything, more there. Emergency years we Fire Joel, had we confident even get & today XX%. Well, than

what through it’s by news there major encouraged expanding. of good to synergies some was it’s some expansions. is frankly, brick-and-mortar Quite very about some here Spartan. not really taken in Spartan, on muscle at probably XX The months We’re contraction last the some

the mentioned, to it’s pricing are and it’s matter hate I which be, - know. I some as can there as it a refer we and where side, as is the pretty affect lifting to things think, that you operational heavy I almost side. excellence decent of immediate to to are needs the synergy really then but it getting low-hanging fruit fruit, low-hanging SG&A obviously But on

was a meant is at is said saw about actionable. we’re headache. this experienced very very for is now. And the we’re at experience when I years and looking deal. And almost happy big good that news it we X it, been we an X, But asset we’ve opportunity this to have when were excited it, This I

that players, sell XX completes It into. And was our regionally. into cities into over break missing these all it we we’re link. also some now out of just we’re because of there, those, couldn’t regional there’s a portfolio. that which of It missing that It really and was serves the

through get the and portfolio nicely, and a really going get it So XX% this I’m very, to we’re very completes confident business. to EBITDA

Joel Tiss

numbers You the little timing things a all will And synergies that have of guys bit start and by any sense and on stuff? sort gave normalize? the you XXXX, a given Mig of to

Timothy Sullivan

haven’t, We’ve couple number, a got We Joel. weeks of I is think, this a only old.

a you pricing. get versus quickie I meaningful we’ll meaningful. this now more into color you on very X% there, did as some give acquisition, probably bit XX% But there’s deeper. little one around SG&A and think give I synergies we that

deeply we to that things even fact the materials, also our a were sourcing didn’t we side. pickup It’s achieving when little interesting And it’s on cost are into always always us. delve nice lowest versus find their It’s usually. out the buying not we what the really too so buy company a

Joel Tiss

to street of a little sense how give of us contracts we give through on us some the gears as of the and terms contracts bigger you a sense, And are look? of minute. Commercial looking XXXX you kind for run orders like switch orders And then pieces what in for can and XXXX? a at municipal go through sense Can the a municipalities

Timothy Sullivan

Yes.

backlog bus at a As ENC transit and you nice business. know, very our

years. contract. getting foothills got to we actually off couple the what have LA. over much We of didn’t We the follow-on the not to from the going We’ve suburbs talk that got contract that of follow-on, that’s a last a were we We We but of follow-on for of thought additional kind business are Chicago. LA. contract, XXX% about get,

don’t good California, to very shape, too production Riverside, in we with a really assuming we’re ENC that we’re much but So increase rates in XXXX through backlog. try solid at very, our

I’ve for Less had backlog Salina. beyond here. City at that out of our It’s decent is Champion no that’s brand, Salina, backlogs operations. school encouraged to at falloff going Collins fine. been bus. never buying largest see by solid. a at actually since very the a but is have It’s our backlog think there. got, Imlay We always we’re we’ve type the season. school still Dorado municipal our X El primarily pretty backlog And we be bus months, This on spending we’ve in We which whatsoever

level on to the also shape go in the Commercial demonstrated very and So kind we we margins. first as have the on in quarters, side, things of improve through we some going performance we’re quarter three good upon to the here of good the that think we’ve maintain next two,

right around that’s first to little been would hands the and our year, whole terminal yard a is trying The and mile, think very our activity it’s say, soft one, last now, It related quarter. get truck, to and we’re the It’s soft. I and that we was business. our very, around last worrisome was that truck strong that

if first there in off the the now our but quarter We that’s XXXX, great don’t right know really a bit fiscal little year as isn’t visibility we was second our segment and that’s only the overspending that finished quarter for either. Commercial

a the we think, the quarter. figure as doing through little cooled is but XXXX. only of first the off that’s side. strong out the Commercial I bulk on there, on That’s business we’re move lot So that of have glitch, in we going work what’s The to quite here

Joel Tiss

give free just one Okay, given... Or can great. have you XXXX then Dean, estimate? one. us flow your last cash And you

Dean Nolden

Yeah.

million. So our the CapEx. But cash we acquisition, operations we’ve excluding this from before, the of obviously. disclosed in disclosed disclosed midpoint the - We is about $XX

needed end are now just making of that CapEx spend. to the the want adequately anything I think adjust at be but to sure in I we the of as or the guidance. low be we invest Spartan we’ll think, right needs of didn’t capitalize be low digesting too going things we’re at might it there, We the aggressively CapEx end

about we disclosed Interest, million. we disclosed, and taxes plus other $XX of asset sales and

$XX free flow like that of a all about million to million $XX to comes positive. So cash

Joel Tiss

so Okay. much. Thanks

Operator

question with next Our your Bank. Deutsche from Dillard from question. comes Chad proceed Please

Unidentified Analyst

Hi. I end ‘XX? George things RV you trending question for where This on to just inventories. had is expect How on currently? the are Chad. a dealer fiscal And

Timothy Sullivan

an at inventories RV remain all-time low.

and on I probably level last of to X, years disciplined of very there was - sales retail definitely of X we’re were think kind than is seeing keeping lower lower current everyone drive what an also retail. they the what than lots, the the wholesale they towards their when equalization

are as people So they lesser sell. buying units

unusual at Decatur. So locations, if for X they intakes have in backlog they XX. the moving good. good. years. not were We things last sell it’s It’s XX, our That’s four are of necessarily is Order steady. all how X, But actually buy RV which

backlog but not our locations, in reduced We good bit meaningful A’s Class towards. have rates work But production at obviously we last a huge, all a Our to four quite have year. not years. a had backlog X

year-over-year. - year. We’re again, an we It’s election planned flat basically

going move with But in think, cautious. retail the is with are. I as better-than-average saw levels retail everyone to as year they we’re that be think inventories a that cautiously everyone low I especially January, we optimistic I into think XXXX, now it’s as

Unidentified Analyst

That’s helpful. Great.

walk margin you for of year? the the kind question commercial. the cadence of the Could trajectory of Another through remainder on

Dean Nolden

Yeah.

than better So was the know, perspective quarter year the significantly commercial from as you a first prior quarter.

- the if the because of transit fiscal As buses larger on XXXX. in we second municipal quarter-over-quarter the larger producing started, comparables move we you tougher throughout we have some though, remember, year, in contracts quarter

from quarter, quarter-over-quarter on expect basis we beat as our commercial don’t I sequentially grow they that continue I the go expect as but So will to through progresses. comparable the the margins, year

Timothy Sullivan

yard my mind, trucks. in comments keep And on

be through year as the fact headwind bit we the not I little year, We started that a think as has of this to that’s through projections of bit going that just headwind we move a but segment our year. we as for move to a yard with a truck Commercial the for the aggressive it started be well. were before soften fiscal will

Operator

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

Jerry Revich

us, achieve pricing, morning. to for operating the operational you talk there? that the Commercial would mind. out turnaround be that just folks for major It the improvement, you you able don’t Was on efficiencies business? about Can bus Good helpful the margin are Yes. context. if flesh just segment buckets shuttle How

Timothy Sullivan

starting REV with Systems bus too. we more reap that we to that the did of attacked takes - little deals All - take, and months over I We on Jerry. press bus. shuttle did first was we last we’re improved above, Production it and our there We everything. a in Shuttle full-court the It a bit was do XX benefits the the discerning the pricing. really are think area

its price both and efficiency. So operational

Jerry Revich

possible? in And then, little declined? man give per productivity having context unit hours us just just Okay. past context, talk Ocala, much about your around little Just a corner, this if more have can quarter, you more a how bit a turned

Timothy Sullivan

we’re first you as moving XX% compared now numbers, as not of reduction, quarter, fourth February, the the second of if round we’re Well, huge. about far month the how into the unit. the started look per significantly we at a just at to man-hours as to But number much, quarter. is In ended it drop quarter, which

as think XXX trained that expected to start we kind there second people remember, third But guys young they and that these of trade. to and in the understand we job that this - learn and are move pretty new to are should and through these accelerate guys When happen We nicely way. quarter. that their their come

Jerry Revich

I can think expected the for concern that Okay. And their ambulance there’s order lastly, cadence wondering I’m in orders impacting about what private of on is ‘XX? out market billing, the and over is you some just side, the plans talk balanced about course the ambulance buyers? of

Timothy Sullivan

of bit little quarter, privates, the you the of to ambulances interesting we’ve types their because been their reimbursements different starting because some And look about that. we’ve maybe they and of lag down some And last a for What’s that at quickly looking here to to selling very the they’re is billing what in product. they’re in if that are and receivables, buy. reacted de-content

come the not still volumes is there. if demand it’s as the So down,

would past. lower of morphing a into sold it’s that content historically It’s them something they have that than ambulance in think has the type want. the we’ve what I

Jerry Revich

of then? number units comparable But

Timothy Sullivan

kind just Yes, these. Yes. de-content the is the want same. of to content demand about It’s they the

which really, our good get maintain to up we is plants. do So got how our margins we’ve again, the by challenge efficiencies de-contenting, means, in

Jerry Revich

Thank you.

Operator

question. our from proceed with Morgan from Please is Stanley. Yakavonis [Operator And your Instructions] Courtney next question

Courtney Yakavonis

that called the you morning, commercial wondering of year. could you -- can, the I headwinds of to you everyone. if kind think the for Hi. segment remainder of Good out just into was the some come

bus commercial. to that. guided growth I the single-digit had mid- pretty was being overall I quarter about to think talking you’ve think Collins a actually, last much in order quarter, been Obviously, And than big stronger last this quarter, you headwind. low

obviously, were lot estimating. versus So surprised of a in what we that sales came

year? for So from sales just the quarter can the thoughts first the give And you around shifted us curious if remainder whether the segment any your of year? full the - of what into kind

Timothy Sullivan

Commercial. the for sales. guidance of that and guidance part segment for know yard New shifting budgeted as the is we a it’s the we that not in our time us York It’s plenty year. already Obviously, segments. And really No or our of to softness obviously The Collins, of have smallest think, weren’t for baked into huge so the as correctly only order the headwind that you We the -- say, for trucks. going budget of I was accordingly. projections the to our projections repeat not into was put

that Commercial guidance but what think the could the what we’re year, as Dean it for will guidance. comfortable and shuttle through transit, have if we positive and that’s hit on segment. our typical bit should our We have again, with being But Collins and happening be reconfirmed, unknown year, placed we as impact Collins, move a have now. orders we year are for easily a So very typical the reiterated little we negative on as

Courtney Yakavonis

then EBITDA decline was if F&E. in just you disaggregate the Great. of margin And help us Okay. can I wondering just

efforts your fire increase also production plants, out out the you called at mix. some from to called but You

mix? custom within you backlog, return segment, the those much of in a what you the And to going was us you’re result versus how that the confidence So of gives the a Can quarters then, remaining this quarter non-custom three more year? as was custom see orders understand help of drag? that mix what of

Timothy Sullivan

it, and - let because got simple. of jump let numbers. he’s Well, not is keep Dean the color me to kind I if me give but I’ll let the it fire start a in try on this But it’s answer, one simple you on and can. Mix

build categories, two chassis; on on the got we chassis. obviously, manufacture. can there’s Commercial, can’t custom, chassis we because up and custom. the we margin like commercial less You commercial we chassis And a big the buy we mark

and we obviously, But the big difference. have, difference between also pumpers aerials,

$XXX,XXX are trucks. of $X.X of truck. You’re the number million you’ve Those also which through. ARFFs going ARFFs, fairly we truck a talking Then airport have a versus significant got your

about year back element in unusual backlog through now through, and $X.X XXXX, the of as that into go right an the million. at sell roll our those we That’s half

number that percents big little got points. And hurts the in comparable, that’s commercial. kind we of a of where you have bit of with are the sell array if So fire when a us in pumpers margin mix pretty inordinate really an comes

But bigger, and That to have, We we give higher of you it’s Dean of trucks commercial the tell numbers. people quarter. percentage planned. little bit hard in first that did I did have can for a lot a got understand the you, was The this.

the doesn’t people doing, lot have you’re you’re you XXX But that size out commercial a don’t maybe it you on the when exact just building Dean bit those they’re got on the numbers eat and what in or getting there you a people trucks a to paying or and But XXX not plant you quite any custom of margins of know long versus where fire Ocala, first quarter. of output little you in on there color dollar trucks. take will up margin the percentage more put give

Dean Nolden

describe And to don’t fire. little versus guidance we it’s ambulance on a Yes. along give because hard

ambulance talked a we to year-over-year did compared basis as on about So in year. prepared well remarks, last

of year-over-year Fire to related about related is Emergency mix. that in that the Fire for & most margin of the to reduction is see So division, third and a you

said there, backlog. in the We that what’s So know as was Tim anticipated.

have out production the XX-month future. We into slots scheduled to X-

also to that the in through and Fire. so know backlog and the as QX what’s production the in schedule gives year QX confidence the And us remainder for of

Courtney Yakavonis

sounds A like of increases in the Okay, like then increase It lastly, great. was A improving is B in and pretty if disaggregate towables then the but from most and what you’re can in And recreation. towables looks is and down, B, and significantly. the orders your seeing between Thanks. coming data I Class just you industry think towables

is the versus towable just So going And how kind there? can the industry? on you if else segment curious if us understand help there’s doing anything of

Timothy Sullivan

it No, right. you got

the Bs are I Bs. millennials People the not some not respects, think have They as I think fact same Ironically, the Cs, this phenomenon little we’re the and but lot it’s up RVs, remained a that picking think just a to good of actually of really bit really that into is the As. share so like products the I on I In got buy. ironically, think now, to And continue level. towables strong. but we’ve Bs. -

the we’re retail lots. products they’re think are off products our because still very very XXXX, for fall, I of As in The but soft, back the and new the introduced moving we that and new popular they’re that introducing

got we think The I we market dialed So slightly. improving think our in. is product the shares soft, but are

end strong be as number some spectrum, Cs well. good Super right of area similar higher the we’re that market to other Super a position the now the to having we’re Cs. As. And The pretty that but continues are traction in on good actually the on are Super They’re one in us for purchase marketplace. Cs

summarize, They’re for the maybe fine, and we’re Bs towables to doing guess are market. and good. keeping I pace So

As the I that sense. if in and is think makes super Cs of probably we’re -- demand bit what showing, picking up a share market above little is

Courtney Yakavonis

Okay, great. Thanks.

Operator

will And And call Sullivan we turn I session. Tim over for have reached remarks. the the end closing of the question-and-answer to now

Timothy Sullivan

this joining for everybody, We time hour that’s Thanks, took and the us. full great.

exciting all It’s here in We a in very us the X company. that and element, it the or missing very full last acquisition. Provides get as couple the we’ll a years. statements to we are execute times, that I of able expect. we that for us think profitability with be that on It levels I excited we’ve near-term very the portfolio. really as X said desired about fulfills a think to my Spartan well the now for

feel As It’s there. good Dean more we happened Ocala. we’ve matter encouraged We time day in heals what’s every gone fiscal confirmed, down just through and what XXXX. time feel of by about a

in you June. So a appreciate interest we’ll our year, company, quarter, and your and to again, for again good looking in good talk

Operator

you disconnect This concludes lines may for you today’s your time. at Thank and your conference, participation. this

REV (REVG) 5 Mar 202020 Q1 Earnings call transcript