REV Group Inc Q3 2024 Earnings Call Transcript

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

Question: Jerry Revich - Goldman Sachs - Analyst : Nice performance in specialty vehicles. Amy, I'm wondering if we could just unpack the fire and emergency portion of the performance. What was the bridge for the year-over-year margin improvement that you saw? How much was pricing? What did you see from inflation and productivity? Can you just unpack the margin bridge for F&E specifically, please?

Question: Jerry Revich - Goldman Sachs - Analyst : And in terms of the comments that you folks provided on book-to-bill on units versus revenue, the 30% difference, can we feel back, how much of that 30% difference is content versus just pure price? In other words, what should we be thinking about as the potential higher cost of that content that you folks are seeing? Because I think there are two levers, right? One is absolute price and two I think you folks are driving a shift towards more custom, high-end of the range but please correct me, if I'm wrong on that.

Question: Jerry Revich - Goldman Sachs - Analyst : And can I sneak in one last one on RV? Can you just give us an update in terms of absolute units of inventory versus prior peak and versus prior trough with the revenue reduction here? I guess what's our level of confidence that we've captured the move in inventories that we typically see? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 2:00PM, REVG.N - Q3 2024 REV Group Inc Earnings Call

Question: Jerry Revich - Goldman Sachs - Analyst : Yes. Thank you, Amy. RV dealer inventories.

Question: Angel Castillo - Morgan Stanley - Analyst : I was hoping we could expand a little bit more on the margin conversation, particularly as we look forward. I think you noted, particularly within specialty vehicles, you expect slightly higher margins. Can you just put a finer point on kind of the cadence and maybe quantify how much of margin expansion you anticipate here in the next quarter? And as we think about maybe the early days of fiscal year '25, I understand you're not going to give an outlook at this point but just any kind of sense based on what you have in your backlog, what is kind of implied in terms of margin expansion for the next few quarters?

Question: Angel Castillo - Morgan Stanley - Analyst : And then maybe just to expand on the RV side, can you talk about maybe the discounting? It sounds like the dealer inventories maybe are getting to a little bit of a better place and we'll get more clarity as we go into some of the shows. But as you think about the step change from maybe 2Q REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 2:00PM, REVG.N - Q3 2024 REV Group Inc Earnings Call to 3Q and the level of confidence that won't continue, can you talk about maybe some of the discounting or competitive dynamics in the industry and your ability to kind of outperform that?

Question: Mig Dobre - Baird - Analyst : So maybe going back to specialty vehicles, just for my own clarification, I guess. Can you remind us ENC, where we are in the process of winding down that business? Maybe how much revenue you recognize in the quarter from ENC? And my recollection is that, there is an EBITDA drag that's associated with ENC as well that at least in theory should be going away in fiscal '25?

Question: Mig Dobre - Baird - Analyst : So ENC was actually profitable?

Question: Mig Dobre - Baird - Analyst : In the terminal trucks, I do know that's been a drag and you highlighted that for several quarters. I'm trying to understand the magnitude of this drag in terms of what's embedded in your full year guidance for fiscal '24? What's the right way to think about this business beyond '24? Are we likely to see another step down in production next year? Are we at a trough? And what's going on margin wise at current production levels?

Question: Mig Dobre - Baird - Analyst : And we saw that there were some restructuring charges that impacted specialty vehicles. Can you talk at all about what some of the actions were that you took and any savings that would come into fiscal `25?

Question: Mig Dobre - Baird - Analyst : Okay. So it's all ENC driven. And then lastly for me, in recreation, I guess, one of the things that we talked about in the past was this whole concept of backlog erosion and how eventually that's going to be reflected in production. Your backlog continued to step down sequentially. So I'm sort of curious, do you think that $150 million roughly of revenue can be sustained going forward? Or is it fair for us to expect yet another round of production cuts come the first half of fiscal '25 if demand simply stays where it currently is end user demand or sell through if you would?

Question: Mike Shlisky - D.A. Davidson - Analyst : I want to follow-up with you on the some of your F&E comments. Great to see that you've got really the whole margins at least into next year of some of this business. And I'm glad to see you also were able to improve the units coming out this past quarter and for much of the year. I'm curious if you could just give us an update as to what inning you think you're in as far as production rates and how much you would be able to improve the speed of production at this point versus where you would hope it would be in the over the long-term?

Question: Mike Shlisky - D.A. Davidson - Analyst : And then Amy, I think you mentioned in one of the earlier answers to one of the questions about a little bit fewer custom type trucks and more standardized versions of trucks coming off the line. Could you remind us whether there is a significant margin change or a difference, if the mix would have go a lot more towards standardized products? Whether you think you could make it up on the volume side, if there was a large change going over time, as folks want to get their trucks faster or in a more efficient manner?