REV Group Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Clay Williams - Goldman Sachs - Analyst : Hi. This is Clay Williams on for Jerry. In fire and emergency, how much was pricing up in the quarter, and then how much higher is pricing on what you're booking today versus what you're booking today compared to what you're delivering? Thanks.

Question: Clay Williams - Goldman Sachs - Analyst : Great. Super helpful. And then lastly, looking at the midpoint of the outlook on EBITDA margins seems to imply weaker margins than normal seasonality in the back half. Just curious if there's any specific drivers there or just double checking our math. Thanks.

Question: Clay Williams - Goldman Sachs - Analyst : Just for the company as a whole for second-half margins, just normal seasonality on a sequential basis.

Question: Mike Shlisky - D.A. Davidson Companies - Analyst : So maybe just a quick question first on recreation. Can you give us some thoughts on the margin potential there in 2025 if the orders have started out a bit soft? Are there things you can do on the cost side or mix side that might make next year an up year for the recreation margin outlook?

Question: Mike Shlisky - D.A. Davidson Companies - Analyst : Okay. No problem. Perhaps I'll just change over to fire and emergency. You had mentioned some interest in the Spartan S-180. At this point, how successful have you been with delivering that product in 180 days every time? And can customers now -- I know there has been some submissions with the supply chain over the last couple quarters. Are you at the point now where you can, say it, put the 180 in the actual name and deliver within six months?

Question: Mike Shlisky - D.A. Davidson Companies - Analyst : Okay. And then perhaps outside of that in fire, the other models, are you past any major supply chain issues? And I'm just trying to figure out how much faster you can make the run rate from here. Perhaps maybe you had mentioned you had seen the best run rate since the pandemic, but what was the prior peak? How far off are you from the prior peak run rates there?

Question: Mig Dobre - Baird - Analyst : Good morning, Amy. I look forward to working with you again. So that's great. I guess what I'm trying to make clear for myself here is -- are the moving pieces to your guidance because your commentary contains kind of a lot of moving pieces here. So can we put a finer point on the revenue in terms of what's moving here? It sounds like terminal truck is lower, RV is lower. There's a fire and emergency partial offset. You also divested that dealership in fire. I don't know how much of an impact that was. But can we parse out all these factors, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 2:00PM, REVG.N - Q2 2024 REV Group Inc Earnings Call

Question: Mig Dobre - Baird - Analyst : That's helpful. Thank you. In F&E, it sounds like you're making good strides in being able to increase throughput. And Mark, we were talking just a couple months ago about where you are relative to normal. And at the time, your throughput was still quite a bit below what you consider to be normal. So I'm curious what this throughput is going to be exiting fiscal '24 based on what you know today.

Question: Mig Dobre - Baird - Analyst : Yeah, because that's what I was trying to get at. When we're thinking about '25, in your existing footprint today in F&E, is there potential for you to further increase production volume? Or do we start to run into capacity issue where you need to add additional CapEx or whatnot?

Question: Mig Dobre - Baird - Analyst : Okay. And then maybe pivoting to recreation, I guess I'm going to try to ask Mike's question a little bit differently. Backlog continues to come down here, and you revised your outlook lower by $100 million on a revenue side for this year. But obviously, in what's embedded in here, it seems like your revenues, your shipments continue to exceed your incoming order intake. And I'm wondering what the implications are here. I mean, it's difficult for me to see how 2025 is not going to be down again just based on the fact that your backlog is contracting. Do you think differently? Should we think differently based on what you see today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 2:00PM, REVG.N - Q2 2024 REV Group Inc Earnings Call

Question: Mig Dobre - Baird - Analyst : Understood. Final question on margins in recreation. Considering the challenges that you're having with both towables, but especially with Class A, 7%, 7.5% margin is not too bad. I guess that implies that in the Class A and towables, you're still above breakeven. That's kind of how I'm interpolating here. Correct me if I'm wrong. What exactly are you doing on a go-forward basis to manage the cost structure here? Can we get a little more context and maybe what could carry into '25 relative to '24 based on your restructuring actions in the second half? Thank you.