REV Group Inc at Robert W Baird Global Industrial Conference (Virtual) Transcript

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

Question: Mig Dobre - Robert W. Baird - Analyst : I know you're not going to do any prepared or info remarks so we are going to go straight to Q&A. (Conference Instructions) Now Rod and Mark, I know that we are getting fairly close to your quarter end, so I want to make sure that we keep you guys on the straight and narrow. Nonetheless, it begs the question of what are you seeing in terms of the supply chain? I know it has been a complicated environment for everyone and for you as well, but whatever update you can provide us, I think at this point, that would be helpful. So let us start there.

Question: Mig Dobre - Robert W. Baird - Analyst : I'm curious, in terms of what you are hearing from the supply chain people, is there some line of sight as to when some of these issues could potentially moderate as we look into 2022? Frankly, what we've heard are pretty mixed messages in this regard. Some folks think things are going to get better as early as the first quarter, but a good portion of them are saying, hey, no, these challenges are here to stay.

Question: Mig Dobre - Robert W. Baird - Analyst : One of the things that we have noticed over time is that companies have attempted to generate savings by consolidating suppliers and trying to get volume discounts that way. To some degree, I know that's been something that you have done as well. And I am kind of curious, does the current environment and the experience of 2021 get you to rethink at all a strategy like that? And are there some economies that sort of come with maybe taking a -- how should I say -- a more diversified view when it comes to the supply chain itself?

Question: Mig Dobre - Robert W. Baird - Analyst : Yes, so it sounds like in your case, maybe it is the other way around, where some of your initiatives are actually starting to yield benefits as opposed to maybe posing more of a risk.

Question: Mig Dobre - Robert W. Baird - Analyst : Okay. You brought up pricing, and the consistent message, I think, from everyone presenting at this conference that I cover has been that, hey, look, pricing is solid, and it is accelerating. So I am curious if you're sort of seeing something similar across your end markets? And based on what you know today -- because who knows what material costs are going to be going forward, but based on what you know today, what sort of timeline do you foresee for being able to reach some sort of price/cost stability?

Question: Mig Dobre - Robert W. Baird - Analyst : Okay. That's very good to hear. I want to get into the segments a little bit, and maybe we'll start with fire and emergency. And here, it's more of an operational question. I have noticed that you are in a process of closing a couple of plants. I think those are KME-branded plants in Pennsylvania and Virginia. I guess what I am wondering here is what's sort of the back story operationally here? How are you thinking about managing production that normally would have been associated with these plants? And are there some savings that investors should be aware of as you're thinking about 2023?

Question: Mig Dobre - Robert W. Baird - Analyst : I appreciate all the detail. And you mentioned labor. Historically, we have had some challenges in this segment with labor, and arguably speaking, the market has gotten a lot tighter in terms of availability of talent as well as being able to retain folks. So can you talk a little bit about how you're managing this dynamic, especially as you're trying to stand up production in other fire facilities?

Question: Mig Dobre - Robert W. Baird - Analyst : If my memory serves right, this was the facility that was impacted by Hurricane Ida, and I am curious how you were able to sort of get over that impact. Are you finally back to normal operations?

Question: Mig Dobre - Robert W. Baird - Analyst : Absolutely. So thanks for clarifying that. Maybe moving on to recreation. A common question here, your view on sustainability of demand. On the retail front, we have seen maybe a little bit of weakness, arguably speaking, on very tough comparisons. And last numbers that we have seen suggest that inventories are still low, but I am curious as to what your perspective is, and how your conversations with dealers are setting up for 2022?

Question: Mig Dobre - Robert W. Baird - Analyst : Sure. Last quarter, I think I asked this question as well. I was looking at your backlog here, call it $1.16 billion. The revenue run rate is $300 million below that, call it. So you kind of have more than a year's worth of business where you had more than a year's worth of business in backlog. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 09, 2021 / 7:00PM, REVG.N - REV Group Inc at Robert W Baird Global Industrial Conference (Virtual) And I guess two questions come to mind. One of them is, are you able to increase production in 2022? Do you have the capacity to increase production in 2022 to satisfy what you currently have in backlog, turn it into deliveries? And then if the answer is no, at what point in time does this extended backlog become a problem for you?

Question: Mig Dobre - Robert W. Baird - Analyst : I see. I saved commercial for last because here there are a number of things to really talk about, including the passage of the infrastructure bill finally. And I guess my question to you is we've had a few months to evaluate what is all in this bill, what is your perspective in terms of how that contributes to your business, if at all? And what is a reasonable timeline in your mind for investors to keep in mind in terms of how these funds might start to get disbursed and potentially help you out?

Question: Mig Dobre - Robert W. Baird - Analyst : And just to put a finer point because I'm still trying to learn about this bill. You talked about subsidies. So is it that the federal government would simply pay a portion of the cost of the vehicle and there would be like a matching of whatever funding a local school or municipality would ascribe to it? Or is it just outright money that really does not require any matching state or local level? It just comes from the feds and gets applied towards these programs.

Question: Mig Dobre - Robert W. Baird - Analyst : Understood. And maybe since we have time for one final question, sticking with this whole concept of electrification, thus far, I certainly have read about the various partnerships that you put together. But I am kind of curious what you perceive to be your competitive advantage, what you're kind of bringing to the table in electrifying the fleets and presenting customers with a unique solution. So can you talk a little bit about that? What's unique to REV as opposed to other potential suppliers in the space? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 09, 2021 / 7:00PM, REVG.N - REV Group Inc at Robert W Baird Global Industrial Conference (Virtual)

Question: Mig Dobre - Robert W. Baird - Analyst : That makes a lot of sense. That is a really good explanation. We are out of time, so thank you to the three of you for joining us, and best of luck, and we will be talking very soon as you report earnings. Thank you.