Q1 2024 REV Group Inc Earnings Call

Operator: Greetings. Welcome to the Rev Group's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to Rev. Group's first quarter 2024 earnings conference call.

Operator: The question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Drew Konop, Vice President, Investor Relations. Drew, you may now begin.

A question and answer session will follow the formal presentation.

If anyone should require I forgot assistance during todays conference. Please press star zero from your telephone keypad.

Please note this conference is being recorded.

At this time I'll turn the conference over to drew Konop, Vice President Investor Relations.

Drew Konop: Alright, good morning, and thanks for joining us. Earlier today, we issued our first quarter fiscal 2024 results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast and a slide presentation, which includes a reconciliation of non-GAAP to GAAP financial measures, is also available on our website. Please refer now to slide two of that presentation.

Judy you may now begin.

Alright, good morning, and thanks for joining US earlier today, we issued our first quarter fiscal 2024 results a copy of the release is available on our website at investors <unk> Dot com.

Today's call is being webcast and a slide presentation, which includes a reconciliation.

Filiation of non-GAAP to GAAP.

GAAP financial measures is also available on our website.

Please refer now to slide two of that presentation.

Drew Konop: Our remarks and answers will include forward-looking statements, which are subject to risks that could cause actual results to differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we've described in our Form 8K filed with the SEC earlier today and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. All references on the call today to a quarter or a year are to our fiscal quarter or fiscal year, unless otherwise stated. Joining me on the call today is our President and CEO, Mark Skonieczny. Please turn now to slide three, and I'll turn the call over to Mark.

Our remarks and answers will include forward looking statements, which are subject to risks that could cause actual results to differ from those expressed or implied by such forward. Looking statements. These risks include among others matters that we described in our form 8-K filed with the SEC earlier today and other filings we make with the SEC.

Claim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call if at all.

All references on the call today.

Two a quarter or a year are to our fiscal quarter or fiscal year.

Unless otherwise stated joining me on the call today is our president and CEO Mark Schenectady. Please turn now to slide three and I'll turn the call over to Mark.

Mark A. Skonieczny: Thank you, Drew, and good morning to everyone joining us on today's call. In a moment, I'll provide an overview of our consolidated first quarter performance, as well as detailed segment financing. Before I comment on the quarterly results, I would like to review the strategic initiatives, including capital allocation activities, that have recently been executed. These actions were aimed at optimizing our portfolio products, creating a more focused operating structure, and unlocking shareholder value. As we have previously announced, Rev Group will be exiting bus manufacturing through the recent sale of Collins Bus and the winding down of manufacturing operations at our El Dorado National California, or E&C, transit bus company. The sale of the Collins School Bus business to Forest River closed on January 26th with an all-cash deal price of $308 million, inclusive of certain preliminary working capital adjustments.

Thank you drew and good morning to everyone joining us on today's call. Shortly I will provide an overview of our consolidated first quarter performance as well as detailed segment financials before I comment on the quarterly results I would like to review the strategic initiatives, including capital allocation activities that had been recently.

These actions were aimed at optimizing our portfolio of products, creating a more focused operating structure and unlocking shareholder value.

As we have previously announced Rev group will be exiting bus manufacturing during the recent sale of the Collins bus and the winding down of manufacturing operations at our Eldorado National California R. E. N C Transit bus business the sale of the Collins School bus business. The Forest River closes on January 26, with an <unk>.

All cash deal price of 308 million inclusive of certain preliminary working capital adjustment the wind down of the operations of EMC is expected to be completed before the end of fiscal 2024, we expect to generate net cash proceeds of at least 250 million from the exit of the bus manufacturing business.

Mark A. Skonieczny: The wind-down of the operations of E&C is expected to be completed before the end of Fiscal 2024. We expect to generate net cash proceeds of at least $250 million from the exit of the bus manufacturing business. Approximately $179 million of the immediate proceeds were used to return cash to shareholders through a $3 special cash dividend that was paid on Friday, February 16. The remainder of the proceeds were used to participate in a secondary offering that closed on February 20 by purchasing $8 million of Rev Group common shares at an average price of $15.76, or approximately $126 million, reducing the total amount of shares outstanding by 13% and our largest shareholder's position from 46% ownership to approximately 18% We believe these actions demonstrate our commitment to delivering shareholder value.

Yes.

Approximately $179 million of immediate proceeds were used to return cash to shareholders through a $3 special cash dividend that was paid on Friday February 16.

Remainder of the proceeds were used to participate in the secondary offering that closed on February 20th by purchasing $8 million of Rev Group common shares at an average price of $15.76.

$126 million, reducing the total amount of shares outstanding by 13% and our largest shareholders position from 46% ownership to approximately 18%.

We believe these actions demonstrate our commitment to delivering shareholder value. Since 2020, we have returned over $400 million to shareholders in the form of dividends and share repurchases, while paying down debt and strengthen the balance sheet. We remain focused on generating high levels of cash from operations and are committed to a strong balance sheet.

Mark A. Skonieczny: Since 2020, we have returned over $400 million to shareholders in the form of dividends and share repurchases while paying down debt and strengthening the balance sheet. We remain focused on generating high levels of cash from operations and are committed to a strong balance sheet that allows flexibility to pursue new growth opportunities and optionality for future returns of cash to shareholders. Finally, beginning with today's earnings release, the fire and emergency businesses have been combined with a specialty group business that manufactures capacity terminal trucks and Lame or street sweepers and a new segment named specialty vehicles. The segment's first quarter results also include Collins Operating Performance through its divestiture date of January 26th and will include E&C's financial results through the wind-down period. Specialty Vehicles is being led by Mike Bernig, the former Rev Fire Group President. The recreation segment has been renamed Recreational Vehicles and remains under the leadership of Mike Lanciati.

That allows us flexibility to pursue new growth opportunities and optionality for future returns of cash to shareholders.

Finally, beginning with today's earnings release, the fire <unk> emergency businesses have been combined with the specialty group business that manufacturers' capacity terminal trucks, and landmark Street sweepers and the new segment named specialty vehicles. The segment's first quarter results also include Collins operating performance through a divesture data.

January 26th and will include <unk> financial results through the wind down period.

Specialty vehicles is being led by Mike Bernie the former Rev Fire Group President.

Recreation segment has been renamed recreational vehicles and remains under the leadership of Mike lamps Yati taken.

Mark A. Skonieczny: Taken collectively, we believe these strategic actions create a more focused portfolio that provides opportunities for growth, consistent cash generation, and improved margin performance while maintaining a strong balance. Consolidated net sales of $586 million were approximately flat compared to the first quarter of the prior year. The year-over-year revenue result was primarily due to increased net sales, including price realization within the specialty vehicle segment, offset by lower net sales from the recreational vehicle segment. The increase in net sales in the specialty vehicle segment was related to increased unit shipments and price realization within the fire and ambulance businesses and increased bus manufacturing sales, partially offset by lower sales of terminal trucks. Lower net sales in the recreational vehicle segment were primarily a result of fewer shipments of Class A, Class B, and TOBL units, partially offset by higher shipments of Class B units.

Taken collectively we believe these strategic actions trained and more focused portfolio that provides opportunities for growth consistent cash generation and improved margin performance, while maintaining a strong balance sheet.

Turning to slide four.

Consolidated net sales of $586 million were approximately flat compared to the first quarter. The prior year. The year over year revenue result was primarily due to increased net sales, including price realization within especially vehicles segment offset by lower net sales from the recreational vehicle segment the increase in that.

Sales in the specialty vehicle segment was related to increased unit shipments and price realization within the fire and ambulance businesses and increased box manufacturing sales, partially offset by lower sales of terminal trucks.

Lower net sales in the recreational vehicle segment were primarily a result of fewer shipments of class a class b and total units, partially offset by higher shipments of class C units.

Mark A. Skonieczny: Consolidated adjusted EBITDA of $30.5 million increased $9.2 million or 43% from the prior year with increased contribution from the specialty vehicle segment, partially offset by lower contribution from the recreational vehicle segment. The increased earnings in the specialty vehicle segment were primarily due to increased contributions from the fire and ambulance business. Lower earnings in the recreational vehicle segment were primarily related to lower contributions from the Class A, Class B, and Tobles businesses, partially offset by increased contributions from the Class C businesses. Please turn to slide five.

Consolidated adjusted EBITDA of $35 million increased $9 2 million or 43% from the prior year, which increase with increased contribution from the specialty vehicles segment, partially offset by lower contribution from our recreational vehicle segment. The increased earnings in our specialty vehicle segment were primarily due.

The increased contributions from the fire and ambulance businesses lower earnings in the recreational vehicle segment were primarily related to lower contributions from the class a class B and told those businesses, partially offset by increased contribution from our classic business.

Please turn to slide five.

Mark A. Skonieczny: Cushity Vehicle's first quarter segment sales were $417 million, an increase of 17% compared to the prior year. The increase in net sales was primarily due to increased shipments of fire apparatus and ambulance units, higher sales from the bus manufacturing businesses, and price realization, partially offset by lower sales of terminal trucks. Unit shipments of fire apparatus increased 24% and shipments of ambulances increased 23% versus the prior year period, reflecting continued momentum of the operational improvement initiatives put in place aimed at increasing throughput. Net sales of fire apparatus and ambulances increased 36 and 38%, respectively, and improved product mix and the benefit of price realization as we deliver a greater number of newer units from our backlog with pricing put in place throughout 2022 and 2022.

Specialty vehicles first quarter segment sales were $417 million, an increase of 17% compared to the prior year. The increase in net sales was primarily due to increased shipments of fire apparatus in the ambulance units higher sales in the bus manufacturing businesses and price realization, partially offset by lower sales of terms.

Old trucks.

Shipments of fire apparatus increased 24% and shipments of ambulances increased 23% versus the prior year period, reflecting continued momentum of the operational improvement initiatives put in place aimed at increasing throughput.

Net sales of fire apparatus, and ambulance increased 36, and 38%, respectively, and an improved product mix and the benefit of price realization as we deliver a greater number of newer units from our backlog with pricing put in place throughout 2022, and 2023 within the quarter certain fire businesses accelerated ship.

Mark A. Skonieczny: Within the quarter, Certifier Businesses accelerated shipments of aged units that were trapped in backlog, improving the overall backlog mix and future price realization opportunities. Specialty Vehicles segment adjusted EBITDA was $26.2 million in the first quarter of 2024, an increase of $21 million compared to adjusted EBITDA of $5.3 million in the first quarter of 2023. The increase was primarily due to increased contributions from the fire, ambulance, and bus businesses, partially offset by lower earnings from the terminal trucks business. The increased fire group contribution was primarily related to higher unit volume, improved efficiencies, and price realization, resulting in increased profitability of 550 basis points for the first quarter of last year. This was aided by the strongest first quarter results of the Smarten businesses since its acquisition in 2020. In addition, the KME brand had its best quarterly performance in 2019.

It's an H units that were trapped in backlog, improving the overall backlog mix and future price realization opportunity.

Specialty vehicle segment adjusted EBITDA was $26 2 million in first quarter 2024, an increase of 21 million compared to the adjusted EBITDA of $5 3 million in the first quarter of 2023. The increase was primarily due to increased contract.

<unk> from the fire ambulance and bus businesses, partially offset by lower earnings from the terminal trucks business.

Increased fire group contribution was primarily related to higher unit volume improved efficiencies and price realization, resulting in increased profitability AR 550 basis points versus the first quarter of last year. This was aided by the strongest first quarter results of the Spartan businesses since its acquisition in 2020 and addition.

<unk> brand had its best quarterly performance in 2019, the increased ambulance crews contribution was primarily due to higher unit volume improved efficiency and price realization, resulting in 600 basis points of margin expansion versus the prior year ambulance delivered the highest first quarter profitability since 2000.

Mark A. Skonieczny: The increased ambulance group's contribution was primarily due to higher unit volume, improved efficiency, and price realization, resulting in 600 basis points of margin expansion versus the prior year. Ambulance delivered the highest first quarter profitability since 2017. Adjusted EVTA contributions from the legacy commercial segment businesses were a year-over-year net improvement of $3 million, which includes improved bus performance, partially offset by lower terminal truck volume. Segment backlog of $3.9 billion increased $692 million, or 22% versus the prior year. The increase reflects strong orders for fire and ambulance units over the past year, as well as the benefits of pricing actions, partially offset by the removal of the Collins bus backlog, lower demand for terminal trucks, and a reduction in transit bus backlog. Excluding the impact of the failed Collins, segment backlog increased $867 million from prior years.

17.

Adjusted EBITDA contribution from our legacy commercial segment businesses was a year over year net improvement of $3 million, which includes improved bus performance, partially offset by lower terminal truck volume.

Segment backlog of $3 9 billion increased $692 million or 22% versus the prior year an increase.

Reflect strong orders for fire and ambulance units over the past year as well as the benefits of pricing actions, partially offset by the removal of the Collins bus backlog lower demand for terminal trucks and a reduction in transit bus backlog, excluding the impact of the sale of college segment backlog increased $867 million from prior year.

Sure.

Mark A. Skonieczny: Within the first quarter, the combined emergency vehicle book-to-bill, consisting of fire and ambulance orders, was 1.3 times, and the book-to-book ratio, which compares first quarter 2024 orders to the same period last year, was 1.5 times, demonstrating continued industry strength and demand for our product. We expect specialty vehicle segment revenue and earnings to benefit from the increased number of available working days in the second quarter compared to the first. For modeling purposes, note that future segment revenue adjusted EBTA does not include Collins Bus, which was previously disclosed at $150 million and $25 million, respectively, for the remainder of fiscal 2024.

In the first quarter, the combined emergency vehicle book to Bill consisting of fire and ambulance orders was one three times and the book them up ratio, which compares first quarter 2024 orders to the same period last year was one five times, demonstrating continued industry strength and demand for our products.

We expect specialty vehicles segment revenue and earnings to benefit from the increased number of available working days in the second quarter as compared to the first for modeling purposes note that future segment revenue and adjusted EBITDA do not include Collins bus, which was previously disclosed at $150 million and $25 million respectively for the.

Remainder of fiscal 2024 in the second quarter, we expect operating improvements while the remaining businesses to offset the loss of columns revenue in earnings, resulting in the second quarter being approximately flat versus the first quarter.

Mark A. Skonieczny: In the second quarter, we expect operating improvements from the remaining businesses to offset the loss of Collins revenue and earnings, resulting in the second quarter being approximately flat versus the first quarter. We expect continued momentum to build on the second quarter's performance, with both single-digit revenue improvements sequentially in the third and fourth quarters, and higher contributions from the fire and emergency businesses to offset declines from the wind-down of E&C. We expect sequential incremental margins in the range of 30-40% on increased revenue throughout the back half of the year. And see slide six.

We expect continued momentum to build on our second quarter's performance with both single digit revenue improvement sequentially in the third and fourth quarters as higher contribution from the fire <unk> emergency businesses offset the clients on the wind down of E&C, we expect sequential incremental margins in the range of 30% 40% on it.

Increased revenues throughout the back half of the year.

On slide six recreational vehicle segment sales of $169 million decreased $56 6 million or 25% year over year as we navigate through a soft end market environment within the within the industry dealer inventories remain high with limited floor planning availability in reduced lot traffic.

Mark A. Skonieczny: The recreational vehicle segment sales of $169 million decreased $56.6 million, or 25% year-over-year, as we navigate through a soft-end market environment. Within the industry, dealer inventories remain high, with limited floor planning availability and reduced lot traffic. Lower segment sales versus the prior year were primarily a result of fewer shipments of Class A, Class B, and tollable units, an unfavorable mix of motorized units and discounting, partially offset by increased shipments of Class C units and price realizations. Overall, segment shipments declined by 39% for the prior year, driven primarily by an 80% decline in total units. Within motorized categories, consumer preferences for lower-end gas units as compared to higher-end diesel products continue to weigh on segment revenue within the quarter.

Lower segment sales versus the prior year were primarily a result of fewer shipments of class a class b and total units.

Unfavorable mix of motorized units of discounting partially offset by increased shipments of class C units and price realization. The segment's unit shipments declined by 39% versus the prior year, driven pilings merrily by an 80% decline in total units within motorized category as consumer preferences for lower end gas use.

As compared to higher end diesel products continued to weigh on segment revenue within the quarter.

Mark A. Skonieczny: The recreation segment adjusted EBITDA of $11.6 million was a decrease of $12.7 million, or 52%, versus the prior year. The decrease in adjusted EBITDA was primarily a result of lower unit volume, unfavorable category mix, inflationary pressures, and discounting, partially offset by price realization and cost reduction actions in the Class A and TOEBL businesses. Segment backlog of $377 million at quarter end decreased $611 million, or 62% versus the prior year. The decrease is primarily due to production against backlog, cancellations, and lower orders over the trailing 12 months. Within the quarter, the book-to-bill ratio for our most profitable Class B and Class C businesses was 1.2 times and 1.1 times, respectively.

Recreation segment, adjusted EBITDA of $11 6 million was a decrease of $12 7 million or 52% versus the prior year. The decrease in adjusted EBITDA was primarily a result of lower unit volume unfavorable category mix inflationary pressures and discounting partially offset by price realization.

<unk> and cost reduction actions in the class a and <unk> businesses.

Backlog of 377 million at quarter end decreased $611 million or 62% versus the prior year. The decrease was primarily due to production against backlog cancellations and lower orders over the trailing 12 months within the quarter. The book to Bill ratio for our most profitable class B and class.

<unk> businesses was one two times at one one times respectively. However, this was offset by reduced demand for class a in total units with seven to eight months of unit backlog in the class B class C category, we expect production to increase from the seasonally low first quarter, resulting in increased revenues.

Mark A. Skonieczny: However, this was offset by reduced demand for Class A and total units. With seven to eight months of unit backlog in the Class B and Class C categories, we expect production to increase from the seasonally low first quarter, resulting in increased revenue throughout the remainder of the year. The profitability of the combined Class B and C businesses is expected to remain in the low to mid-double digits while we continue to flex costs on the Class A and total businesses, resulting in full-year segment-adjusted EBITDA margins in line with our original guidance of high single digits. Turning to slide seven. Trade working capital on July 31, 2024 was $363 million, an increase of $45 million compared to $318 million at the end of fiscal 2023. The increase was primarily a result of lower accounts payable and customer advances, partially offset by a decrease in accounts receivable and inventory.

The remainder of the year.

Profitability of the combined class B and C businesses is expected to remain in the low to mid double digits. While we continue to flex costs out of the class a and <unk> businesses, resulting in full year segment adjusted EBITDA margin in line with our original guidance of high single digits.

Turning to slide seven.

Trade working capital on July 31, 2024 was $363 million, an increase of $45 million compared to $318 million at the end of fiscal 2023. The increase was primarily a result of lower accounts payable and customer advances, partially offset by a decrease in accounts receivable and inventory.

Mark A. Skonieczny: Cash used in operating activities was $69.7 million, which included the payment of annual management incentive compensation within the quarter, transaction expenses related to the college bus sale, as well as the timing of certain tax payments. We spent $10.5 million on capital expenditures, including the purchase of a service center for our Class C RV business, which we expect will allow additional unit production and manufacturing facilities that previously housed the service and aftermarket parts business. Next, cash on the balance sheet as of January 31st was $87.9 million prior to the special dividend payment on February 16th and the repurchase of 8 million common shares at an average price of $15.76 on February 20th. We declared a regular quarterly cash dividend of $0.05 per share, payable on April 12th, to shareholders on record on March 28th. At quarter's end, the company maintained ample liquidity for our strategic initiatives, with approximately $534 million available under our ABL revolving credit fund. Turning to slide eight.

Cash used in operating activities was $69 7 million, which includes the payment of annual management incentive compensation within the quarter transaction expenses related to the college bus sale as well as the timing of certain tax payments, we spent $10 $5 million on capital expenditures, including the purchase of a service center for our class C.

Our <unk> business, which we expect will allow additional unit production and manufacturing facility that previously how does the service and aftermarket parts business.

Net cash on the balance sheet as of January 31 was $87 9 million prior to the special dividend payment on February 16th and repurchase of 8 million common shares at an average price of $15.76 on February 20th.

We declared a regular quarterly cash dividend of <unk> <unk> per share payable April 12 to shareholders of record on March 28 at quarter's end the company maintain ample liquidity for our strategic initiatives with approximately $534 million available under our ABL revolving credit facility.

Turning to slide eight.

Mark A. Skonieczny: We provide a 2024 fiscal full-year outlook that builds upon the momentum experienced within the specialty vehicle segment. Today's update to top-line guidance is a range of $2.45 to $2.55 billion, which includes a $150 million adjustment for the Columbus bus divestiture that I previously mentioned. We expect continued throughput gains and strong incremental performance within the fire and ambulance businesses to offset headwinds from cyclical end-market softness within the recreational vehicle segment and terminal truck segment. At the midpoint of $2.5 billion, revenue is expected to be approximately flat to last year after adjusting for the divested revenue from the Collins bus sale.

We provided a 2020 for fiscal full year outlook, which builds upon the momentum experienced within the specialty vehicle segment. Today's updates of top line guidance is a range of $2 four 5% to 255 billion, which includes $150 million adjustment for the Collins bus divestiture as I previously mentioned, we expect continued through.

<unk> gains and strong incremental performance within the fire and ambulance businesses to offset headwinds from cyclical end market softness within the recreational vehicle segment and terminal trucks business at the midpoint of $2 5 billion revenue is expected to be approximately flat to last year after adjusting for the divested revenue.

The college bus sale.

Mark A. Skonieczny: Adjusted EBITDA guidance is $145 million to $165 million, or $155 million at the midpoint, which includes a $25 million adjustment for the Collins Buss Diversion. Given the solid performance of the first quarter, we now expect First Path Consolidated Adjusted EBTA to be approximately 40% of the full year guidance. Adjusted net income is expected to be in the range of $72 to $90 million, and net income is expected to be in the range of $224 to $245 million. Adjusted free cash flow is expected to be in the range of $57 to $72 million, which excludes approximately $71 million of tax and transaction costs related to divestiture activities that are within cash from operations and offset by gross cash proceeds included in the investing section of the statement of cash flow Full-year capital expenditures remain in the range of $30 to $35 million, including growth investments in our businesses, as well as ERP upgrades in certain businesses. Estimated interest expense of $26 to $28 million considers the typical seasonal use of cash in the first half of the year, as well as the impact of the town's bus sale.

Adjusted EBITDA guidance is $145 million to $165 million or $155 million at the midpoint, which includes a $25 million adjustment for the Collins bus divestiture given.

Given the solid performance of the first quarter. We now expect first half consolidated adjusted EBITDA to be approximately 40% of the full year guidance.

Adjusted net income is expected to be in the range of $72 million to $90 million and net income in the range of $224 million to $245 million adjusted free cash flow is expected to be in the range of $57 million to $72 million, which excludes approximately $71 million of tax and transaction costs related to divest.

Activities that are within cash from operations and offset by gross cash proceeds included in the investing section of the statement of cash flow.

Full year capital expenditures remain in the range of $30 million to $35 million, including growth investments in our businesses as well as ERP upgrades in certain businesses.

Expected interest expense of $26 million to $28 million and said there is a typical seasonal use of cash in the first half of the year as well as the impact of the Collins bus sale E&C wind down and the previously announced returns of cash to shareholders in the form of special dividend and share repurchase.

Operator: EMC will wind down in the previously announced return to cash shareholders in the form of a special dividend and share repurchase. Thank you again for joining us on today's call. With that, operator, we'd now like to open the call up for questions. Thank you. We're now conducting a question and answer session. If you would like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Thank you again for joining us on today's call and with that operator, we'd now like to open the call up for questions.

Thank you we will now be conducting the question and answer session.

Like to ask a question today. Please press star one from your telephone keypad.

Information tone will indicate your line is in the question queue do.

You May press Star two if you like to remove your question from the queue.

For participants using speaker equipment.

Be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Thank you. Thank you. And our first question comes from the line of Nick Dobre with Baird. Hey, good morning, guys. It's Joe Grabowski on for MIG this morning.

One moment. Please so we pull for questions. Thank you.

Thank you and our first question comes from the line of Nick <unk> with Baird. Please proceed with your question.

Hey, good morning.

Joseph Michael Grabowski: Hey, Joe. Hey, Joe. Good morning.

It's Joe Grabowski on for Mike This morning.

Joe Hey, Joe.

Mark A. Skonieczny: So just wanted to clarify a few things that you went over in your prepared remarks, but kind of went over them quickly. The backlog for Collins buses that you backed out of your backlog in the first quarter sounded like it was around $175 million. Did I catch that correctly?

Hey, good morning, So just wanted to clarify a few things.

You went over in your prepared remarks, Greg kind of went over them quickly.

The backlog for Collins box that you backed out of your backlog in the first quarter.

It sounded like it was around 175 million did I catch that correctly.

Mark A. Skonieczny: Yeah, on a year over year basis, Joe. So actually, we have been talking about the backlog being over a year coming into the quarter. So it's a little bit higher than that if you were to remove it from October 31.

On a year over year basis, Joe So actually we have been talking about the backlog being over a year coming into the quarter. So it's a little bit higher than that if you.

If you were to remove it from October 31.

Okay. So the.

Mark A. Skonieczny: Okay, so the specialty vehicle backlog dropped by a little over 200 million. Again, I'm trying to figure out, is that all Collins bus or maybe ex-Collins bus backlog, and specialty vehicle was roughly flapped? Is that the right way to think about it?

TV backlog dropped by a little over 200 million again I'm trying to figure out is that all Collins box or maybe ex counterparts backlog in fashion <unk> home was roughly flat is that right.

Mark A. Skonieczny: Now, actually, there was also a decline related to the wind-down of the E&C operation of about $50 million. Okay, so maybe the apples-to-apples backlog was up modestly, sequentially? Yes. Okay, great. Thank you.

Way to think about it.

No actually there was also a decline related to the wind out of the E&C operation of about $50 million.

Okay.

So maybe apples to apples backlog was up modestly sequentially.

Okay.

Yes.

Okay, great. Thank you.

Mark A. Skonieczny: Next question, and maybe there seems to be a little confusion about this, I'm not sure why, but you raised your EBITDA guidance by 5 million versus the recast guidance back in late January. You actually beat our estimate by about 7 million versus where we were back in December. So is it safe to say that the 5 million dollar raise and guidance was basically just flowing through the first quarter upside? That's right.

Next question and maybe if there seems to be a little confusion about this I'm not sure why.

But you raised your EBITDA guidance by $5 million versus the recast our guidance.

Back in late January.

Actually beat our estimate by about $7 million versus where we were where we were back in December.

Is it safe to say that the $5 million raise in guidance.

Basically just flowing through the first quarter.

Mark A. Skonieczny: Yeah, that's right. Okay, and we're just, we're just one quarter in, and so you kept the rest of the year basically where you thought you were going to be back in December. Yeah, that's right, Joe. That's exactly right.

That's right that's right.

Okay and you just we're just one quarter in and so you kept the rest of the exact basically where you thought you were going to be back in December.

That's right Joe.

Okay perfect helpful.

Mark A. Skonieczny: Okay, perfect. Helpful. Maybe the last question for me, and I can get back in the queue. Back in December, you mentioned that you thought recreation sales would be down roughly mid-single digits. Obviously, they were down 25% in the first quarter.

Maybe last question for me and I can get back in the queue back in December you mentioned that you've got recreation sales would be down roughly mid single digits.

They were down 25% in the first quarter I think you mentioned, maybe where you thought they'd be up the rest of the quarters, but just down mid single digits still sound right or do we kind of need to tweak that a little bit.

Mark A. Skonieczny: I think you mentioned you thought they'd be up the rest of the quarters, but does down mid-single digits still sound right, or do we kind of need to tweak that a little bit? I think we've probably got to tweak that a little bit. It'd probably be more of the low single digits, and low double digits down.

Yes, I think we got we probably got to tweak that a little bit it would probably be more of a low low single digits low double digits or down obviously were off $57 million year on year in Q1. So a majority of that will be in Q1, but.

Mark A. Skonieczny: Obviously, we're off 57 million year-on-year in Q1, so a majority of that will be in Q1. But, you know, probably building in sequential increases of 10% going forward, which would be more in that low double-digit reduction. But, obviously, we're happy with the conversion that we delivered on in Q1 from a margin. So, we still feel that we're managing our costs down as sales drop.

Probably building sequentially increases of 10%.

Going forward, which would be more in that low double digit reduction, but obviously, we're happy with the conversion that we delivered on in Q1 from a margin. So we still feel that we're managing our costs down and the sales drop.

Got it okay very helpful I'll jump back in queue. Thanks very much.

Joseph Michael Grabowski: Okay. Very helpful. I'll jump back in the queue.

Thanks, Joe.

Thank you and as a reminder to ask a question today you May press Star one.

Mark A. Skonieczny: Thanks very much. Thanks. Thanks, Joe. Thank you. As a reminder, to ask a question today, you may press star 1. Our next question comes from the line of Jerry Revich with Goldman Sachs. Good morning, everyone. And next quarter. Hi, I'm Mark Drew.

Question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your questions.

Yes, hi, good morning, everyone.

Nice quarter.

Sure.

I'm wondering if we could just talk about the fire <unk> emergency business performance in the quarter can you just update us on where price realization was on units delivered in the first quarter compared to 2022 levels and as we look out in the backlog.

Jerry David Revich: I'm wondering if we could just talk about the fire and emergency business performance in the quarter. Can you just update us on where price realization was on units delivered in the first quarter compared to 2022 levels? And, you know, as we look out in the backlog, you know, out a year, year and a half plus, how much higher is that pricing point compared to flowing through the numbers now. Yeah, I don't think, Jerry. We've obviously talked about that there's, you know, six to seven percent margin realization opportunity over the year progressively, right?

On a year year, and a half plus how much higher is that pricing point compared to what.

Good numbers now Mark.

Yes, I don't think Jeremy we've obviously talked about that there is six 7% margin realization opportunity over the year progressively right, so and it performed well.

Mark A. Skonieczny: So, and it performed well within the quarter, as we've highlighted, so we still believe that in the original guide that everything's performing well. I've also said in my prior remarks where, you know, we pulled forward some older units, so as we've accelerated throughput, we've been able to get through our older backlog quicker. So, the price realization in the back half of the year will improve as we move through it, which is consistent with what we've talked about, that third and fourth is really the, what we're counting on there is just fire throughput improvement. As we've talked about ambulance, if you think about a baseball game, ambulance is probably in the fifth or sixth inning of the price realization and fires in that third to fourth inning, so we expect them to catch up here in the third and fourth quarter.

Within the quarter as we've highlighted so we still believe that in the original guide that everything's performing well I've also said in my prepared remarks, where we pulled forward some.

Older units, so as we've accelerated throughput we've been able to get through our backlog of older backlog quicker. So the price realization in the back half of the year will improve as we move through it which is consistent what we've talked about the third and fourth Israeli.

What we're counting on there is just fire throughput improvement as we've talked about animal ends if you think about.

A baseball game Amazon is probably in the fifth or sixth inning of that price realization and fires in that third or fourth inning. So we expect them to catch up here in the third and fourth quarter. So.

Mark A. Skonieczny: So, you know, nothing's really changed in Q1 from what we expected entering the year and executing on it. And so just sticking with that analogy, Mark, the inning analogy, so six to seven points of margin improvement this year, somewhere between the third and fifth inning, depending on the business. Does that mean there's another six to seven points of margin improvement as we get through the backlog and we're building the units that you're booking today? Yes, yes.

Nothing has really changed in Q1 from what we expected entering the year in executing on it.

And so just sticking with that.

Analogy Mark.

Analogy, so six to seven points of margin improvement.

This year somewhere between depending.

Depending on the business does that mean theres another six to seven points of margin improvement.

As we get through.

Through the backlog and we're building the units that you are booking today.

Yes, yes.

Okay.

Good.

Jerry David Revich: Very good. And can I ask, in the RV business, you folks are still delivering good profitability at a challenging point in the cycle? Can you talk about how you expect the margin cadence to play out over the rest of the year? Typically, the first quarter, I think, is your seasonally lowest margin quarter in RV, but I don't know if that changes considering the production outlook.

Can I ask in the or.

<unk> business.

You folks are still delivering good profitability.

Challenging point in the cycle can you talk about how you expect the margin cadence to play out over the rest of the year typically first quarter. I think is your seasonally lowest margin quarter and RV, but I don't know if that change.

Changes.

Considering the production outlook could you just update us on how you expect <unk> for margins specifically to play out this year.

Mark A. Skonieczny: Can you just update us on how you expect RV cadence for margin specifically to play out this year? Yeah, I think our, you know, the cadence probably Q2, as we said, and the remarks probably similar to Q1 and Q3, a build-up there with ultimately Q4, depending on, you know, we're obviously cautious heading into the back half, but Q4 would show expansion, which would still get us into that, you know, mid single-digit for the full year, right? So progressively build from Q1 more or less flat in Q2, and then progress in 3 and 4 to build from, you know, the 6.8 we were at in Q1 up to that full year, 8% or so, a mid single digit sort of number by the end of the year.

Yes, I think.

The cadence is probably Q2 as we said in the remarks, probably similar to Q1 and Q3, a buildup there with ultimately Q4, depending on you know, we're obviously cautious heading into the back half what Q4 would show expansion, which would still get us into that.

Mid single digit for the full year right. So progressively build from Q1 more or less flat in Q2, and then progressing in three and four to build from.

The six eight we were at in Q1 up to that full year, 8% or so mid single digit sort of number by the end of the year.

Jerry David Revich: And, you know, last question for me: in prior downturns, the predecessor companies for the RV business were breakeven to slight losses, and you folks are delivering solid profitability here. How would you bridge the call it six to eight points of margin improvement, the cycle versus last in terms of the major driving pieces and the confidence and the sustainability? Yeah, I think like we've talked about previously, you know, we've managed the total business as well as Class A to more of a trough level. So we flexed out costs, and we were successful in doing that and didn't get ahead of ourselves during the COVID period, right? So we've been able to manage those costs for margin profitability versus just a volume play, right?

And.

Question from me.

Downturns.

The predecessor companies, where for the RV business, where breakeven to slight losses that you folks are delivering solid profitability here how would you bridge.

Call it six to eight points of margin improvement this cycle.

Versus last in terms of the major driving pieces and the confidence in the sustainability.

Yes, I think like we've talked about previously we've managed the totals business as well as the class eight to more of a trough level. So we flex our costs and we were successful in doing that and didn't get ahead of ourselves during the Covid period right. So we've been able to manage those costs for margin profitability versus just a volume play right. So that's.

Jerry David Revich: So that's really what we've been focused on for the last two years to make sure that we have the right cost structures and have the ability to flex out as units come out as well as as we build on different product types that may have less hours, that we have the appropriate staffing, and we don't have trapped labor sitting in those facilities. So it's really been all the way from an overhead down to the shop floor, managing those businesses to a trough level, which we're experiencing right now. Well done!

We've been focused on that for the last two years to make sure that we have the right cost structures and have the ability to flex out as units come out as well as as we build on different product types that may have less hours that we have the appropriate staffing we don't have trapped labor saving in those facilities. So it's really been all the way from an overhead down to the shop floor.

Our managing those business to a trough levels, which were experiencing right now.

Well done thanks.

Mark A. Skonieczny: Thanks. Thank you. Thanks, Jerry.

Thanks, Eric Thanks, Sir.

Operator: Thank you. Our next question is from the line of Mike Shlisky with C.A. Davidson.

Thank you.

Our next question is from the line of Mike <unk> with D. A Davidson. Please proceed with your question.

Michael Shlisky: Please proceed with my question. Hi, good morning. Thanks for taking my question. You mentioned in your comments, Mark, that you have an ERP project underway. Can you share with us a little bit about how far along you are with getting that changeover done and when we might start to see some of the marginal implications of that changeover? So, what was your last point? Marginal implications, or not?

Hi, Good morning, Thanks for taking my quick Hey, there.

My question you had mentioned in your comments Mark that that you have an ERP projects underway.

Can you share with us about how far along you are with something that change on the guidance.

And when we might start to see some of the Boston locations of that changeover.

Well what was your last point margin implications are.

Mark A. Skonieczny: Yeah, I was curious when you start to see the operational benefits of the inflation of the new ERP. Yeah, that's really what we're doing there. It's not, you know, it's more just a replacement of a very dated system. And in our RV space, our Class A business, as well as our B business, we're implementing ERP. So it's replacing a really old operation or ERP system with a new Microsoft application.

I was curious when you start to see the.

Operational benefits of the installation of the new ERP.

That's really what we're doing there it's that.

It's more.

Just a replacement of a very dated system in it.

RV space, our class eight business as well as our B business, we're implementing a ERP, so if you're replacing old us really old Biz ops.

Operation.

With our new Microsoft application.

Mark A. Skonieczny: And we are, we'll be going live this quarter, so it's gone very well, and we're expecting to go live this quarter and kick off. Yeah. Got it.

And we are we'll be going live this quarter. So it's gone very well and order expected to go live this quarter and kicked off.

That.

Got it.

Michael Shlisky: I also wanted to ask secondly about the changes you're making in your Ocala, Florida facility for fire and emergency. Can you say something about some of your latest developments there, things you've done to make that even more efficient over the last couple of months? I'm curious to see how far you've gone from kind of where you started to where you think you'll end up in that particular facility.

I also wanted to ask secondly about.

It seems to be making near Ocala, Florida facility.

So a little bit about some of your developments there.

Got you that makes that even more efficient for the last couple of months.

Curious to see.

You've gone from kind of where you started to what do you think you'll end up in that particular facility. Thank you. Yes. So like we've talked about previously we've really done a lot of work to a value stream perspective, we brought in.

Mark A. Skonieczny: Thank you. Yeah, so like we talked about previously, we've really done a lot of work from a value stream perspective. We brought in people from an upfront process, so we've strengthened our purchasing and supply chain specific to that location to make sure that we're getting parts in when operations need them. We've also bolstered the operational leadership there as well, so we have a really nice cadence from a management perspective as far as, first off, value stream managers in each of the facilities. Again, that location is made up of 10 building manufacturing sites that go across four miles, so we talk about the site being pretty expansive within a four-mile radius. So we have value stream managers based on the product that they do, but we've also implemented some central people within that facility specifically around supply chain and engineering as well to make sure that our built-in materials are being done accurately and on time.

People from an upfront process. So we've strengthened our purchasing and supply chain specific to that location to make sure that we're getting parts in went operations Nita. We've also bolstered the operational leadership there as well. So we got a really nice cadence from a management perspective as far as first off value stream managers in each of the.

The facilities that again that location is made up of 10 buildings manufacturing site that go across four miles. So we can talk about the size is actually pretty expansive around a four mile radius. So we have value stream managers based on the product that they do but we've also implemented some central people within that facility specifically around.

<unk> supply chain and engineering as well to make sure that our bills of material are being done accurately and on time. So it's really been a microscopic change are a.

Michael Shlisky: So it's really been a microscopic change or a microcosm, I guess, of what you would expect a whole company to do, and we're doing that on a site-by-site basis, so that's really been the improvement there. Thanks so much. Thank you. All right. Thanks, Mike. Thank you. At this time, we've reached the end of our question and answer session, and I'll also conclude today's conference. You may now disconnect your lines. I thank you for your participation, and have a wonderful day.

Microcosm I guess of what you would expect our whole company to do we're doing that on a site by site basis. So that's really been the improvement there.

Thanks, so much.

Thank you alright. Thanks, Mike. Thank you at this time, we've reached the end of our question and answer session and also concludes today's conference. You May now disconnect. Your lines at this time. Thank you for your participation have a wonderful day.