Q3 2024 REV Group Inc Earnings Call

Speaker Change: Thanks for watching!

Operator: Greetings and welcome to Rev Group's 3rd quarter 2024 earnings conference call. At this time, all participants are on the listen-only mode. A question answer will follow the formal presentation.

Speaker Change: Greetings and welcome to Rev Group's third quarter 2024 earnings conference call. At this time, all participants are on the list and only mode.

Operator: If anyone should require operator assistance during the conference, please press star-zero and your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: A question that will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Drew Konop: I would now like to turn the conference over to your host, Drew Konop. Thank you, you may begin.

Speaker Change: as a reminder this conference is being recorded.

Speaker Change: I would now like to turn the conference over to your host, Drew Konop. Thank you, you may begin.

Drew Konop: Good morning, and thanks for joining us. Earlier today, we issued our 3rd quarter, fiscal 2024 results. A copy of the release is available on our website at investors.revgroup.com. Today's call being webcast and a slide presentation, which includes the reconciliation of non-GAAP to GAAP financial measures, is available on our website. Please refer now to slide two of that presentation.

Drew Konop: Good morning, and thanks for joining us. Earlier today, we issued our third quarter fiscal 2024 results. A copy of the release is available on our website at investors.remgroup.com.

Speaker Change: Today's call being Webcast and the Fly Presentation, which includes the reconciliation of non-Gap to Gap Financial measures available on our website. Please return out of Fly 2 of that presentation.

Drew Konop: Our remarks and answers will include more looking statements, which are subject to risks that can cause the actual results to differ from another expressed or implied by such former looking statements. These risks include, among others, matters that we have described in our form, each case, filed with the FCC earlier today, and other filings we make with the FCC, which is claiming many obligations up to hit these former looking statements, which may not be updated until our next quarterly earnings conference call is at all. All references on the call today to a quarter or a year are our fiscal quarter or fiscal year unless otherwise stated.

Speaker Change: Our remarks and answers will include forward-looking statements which are subject to risk that can cause the actual results to differ from those expressed or imply by such forward-looking statements.

Speaker Change: These risks include among others matters that we have described in our form, East K, filed with the FCC earlier today. And other findings we may put the FCC.

Speaker Change: We just claim any obligations up to if these former 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 fiscal quarter or fiscal year, unless on the last day.

Drew Konop: Joining me on the call today is our President and CEO, Mark Skenechny, as well as their CFO, Amy Campbell.

Speaker Change: Joining me as a call today is our president and CEO Mark Skoneczny, as well as our CFO Amy Campbell. We've talked about slide three and I'll turn the call over to the morning.

Drew Konop: Please turn to slide three, and I'll turn the call over to Mark.

Mark Skonieczny: Thank you, Drew, and good morning to everyone joining us on today's call. Today, I will provide an overview of the operating, commercial, and financial highlights achieved within a quarter that moved to the quarter's consolidated financial performance. We are pleased to have delivered another strong quarter of operating results that reflect continued success and execution of our strategies to improve the performance of our municipal backlog businesses while managing the impact of a challenging environment in our cyclical businesses.

Mark Skoneczny: Thank you, Drew, and good morning to everyone joining us on today's call. Today I will provide an overview of the operating commercial and financial highlights achieved within a quarter that moved to the quarters, consolidated financial performance.

Speaker Change: We are pleased to have delivered another strong quarter of awkward results that reflect continued success and execution of our strategies to improve the performance of our municipal backlog businesses while managing the impact of a challenging environment in our cyclical businesses.

Mark Skonieczny: Double-digit margin performance has been a target for each of our businesses since I arrived in 2020, and I applaud the various teams that contributed to the specialty vehicle segment achieving an adjusted EBITDA margin of 10.3% in the third quarter. Within the quarter, our ambulance business continued to benefit from the manum it has built on the past several quarters with programs designed to increase line rates and improve efficiencies. The fire group designed a similar journey to drive operational improvements, and their efforts led to the specialty vehicle sequential adjusted EBITDA increase for the quarter. Fire continues to pursue a strategy of simplification, along with the development of manufacturing centers of excellence designed to limit waste, increase throughput, and generate operating efficiencies.

Speaker Change: Double digit margin performance has been a target for each part of this since I arrived in 2020 and I applaud the various teams that contributed to the specialty vehicle segment, achieving an adjusted EBITDA margin of 10.3% in the third quarter.

Speaker Change: Within the quarter, our ambulance business continues to benefit from the momentum and has built on the past several quarters with programs designed to increase line rates and improve efficiencies.

Speaker Change: The fire group is on the similar journey to drive operational improvements and their efforts led to the FUSH TV close to Quetzal Adjusted E58 increase for the quarter.

Speaker Change: Fire continues to pursue a strategy simplification, along with the development of manufacturing centers of excellence designed to limit waste, increase throughput, and generate operating efficiencies.

Mark Skonieczny: As we discussed last quarter, we have leveraged Spartan chassis production from our Center of Excellence in Michigan across our network of fire plants and brands that drive efficiency and cost effectiveness. In addition, we have a dedicated line at our Spartan Emergency Response Facility in South Dakota to produce an S-180 fire apparatus, which has enabled our brands to deliver semi-custom fire apparatus at accelerated lead times. Furthermore, the integration of sales, inventory, and operations planning are psi-up across the group as resulted in a dual-benefit and contributing to improved throughput as well as a year-over-year reduction of fire-division symmetry balance.

Speaker Change: As we discussed last quarter, we have leveraged Spartan chassis production from our center of excellence in Michigan, across our network of fire plants and brands that drive efficiency and cost effectiveness.

Speaker Change: In addition, we have dedicated a line at our Spartan Emergency Response Facility in South Dakota to produce a S-18 fire apparatus, which has enabled our brands to deliver semi-custom fire apparatus at accelerated lead times.

Speaker Change: Furthermore, the integration of sales, inventory, and operations planning for SIF across the group as resulted in a dual benefit of contributing to improved throughput, as well as a year over a year reduction of fire divisions and inventory balances.

Mark Skonieczny: I'm going efforts to create greater alignment between the fire group's resources and manufacturing footprint. In addition to these improvements to our upfront processes, have resulted in improved completions of trucks. As I've stayed in the past, each unit we ship today is worth more than a unit ship yesterday. Increased line rates have contributed greater profitability throughout the year as we gain efficiencies and reduce the number of age units from backlog. We've acted as quarter with a robust 4.4 billion consolidated backlog led by the strength of inbound orders for fire and emergency vehicles. Specialty vehicle segment backlog of 4.1 billion increased 306 million, or 10%, as compared to last year.

Speaker Change: I'm going efforts to create greater limits between the firegroups resources and manufacturing footprint, and in addition to these improvements to our health-front processes have resulted in improved completion of trucks.

Speaker Change: As I've stated in the past, each unit we ship today is more than the unit ship yesterday. Increased line rates have contributed to greater profitability throughout the year as we gain efficiencies and reduce the number of age units from backlog.

Speaker Change: We access this quarter with a robust 4.4 billion consolidated backlog led by the strength of inbound orders for fire and emergency vehicles.

Speaker Change: Specialty vehicle segment backlog of $4.1 billion, increased $380,000,000 or 10% as compared to last year.

Mark Skonieczny: The prior backlog of 3.7 billion included 421 million of backlog attributed to the bus businesses. Adjusting for the best served columns and winding down a E&C which had largely exhausted backlog actually in third quarter, segment backlog increased 807 million or 27% for the prior year quarters. Year to date, the combined book the bill of the F&E businesses was one times on a user basis driven by both increased shipments and in normalization of demand. This is in line with the guidance we provided in December for fiscal 2024. The benefits of our pricing strategy delivered a book-to-bill ratio of 1.3 times on a revenue basis and the legacy fire and emergency businesses during the same period.

Speaker Change: The prior's backlog, the 3.7 billion included 421 million of backlog attributed to the bus businesses.

Speaker Change: I'm Justin Ford's best-year of Collins in Winedown at E&C, which had largely exhausted his backlog actually in third quarter, segment backlog increased 800-7 million or 27% for the prior year quarters.

Speaker Change: Year to date, the combined book to bill of the Anthony Businesses with one time on a user basis, driven by both increased shipments and an normalization of demand.

Speaker Change: This is in line with the guidance we provide in December for fiscal 2024. The participants of our pricing strategy delivered a book to build ratio of 1.3 times on a revenue basis in the Legacy Fire and Emergency Businesses during the same period.

Mark Skonieczny: The duration of backlog varies by business and the specific unit type, but generally remains in the range of two to three years. The backlog is elevated versus historical norms, but is in line with our industry peers given the current demand environment. Prior to 2020, the typical delivery time for a bumper unit was approximately 9 to 12 months, while the aerial ladder truck would be approximately 12 to 15 months. The ambulance group had historically operated with less visibility and a backlog of 3 to 6 months and remains our expectation that industry demand will continue to normalize, which combined with our successful increase of delivery is expected to deliver a more balanced supply and demand dynamic as we focus to achieve best in class delivery times.

Speaker Change: The duration of backlog varies by business and the specific unit type by generally remains in the range of two to three years. The backlog is elevated versus historical norms but is in line with our industry peers given the current demand environment.

Speaker Change: Prior to 2020, the typical delivery time for a plumber unit was approximately 9-12 months, while the aerial ladder truck would be approximately 12-15 months.

Speaker Change: The ambulance proved that it's historically operating what is a bill laying back along the 3 to 6 months.

Speaker Change: and Remains our expectation that industry's demand will continue in our lives, which combined with our successful increase in line rates is expected to deliver a more balanced, supply and demand dynamic that we focus to achieve both the class delivery times.

Mark Skonieczny: The recreational vehicle and market remains challenged as discretionary purposes for such items as our bees have been delayed by consumers. According to SSI data, industry-wide retail sale, the class A, class B and class C units, the class 15 percent, 20 percent and 4 percent respectively over the training 12 months ending in June versus the prior year period. These type of these challenges, the data shows that retail sales of our motorized brands have outpaced the industry across these categories over the same period. We are looking forward to showcasing the quality innovation of our model year 2025 units and the Hershey RV Show and Elkhart Open House in September.

Speaker Change: The recreational vehicle and marker remains challenged as the Fresner purchases for sub-titles of our bees have been delayed by the tumors.

Speaker Change: According to SSI data, industry-wide retail sales of class A, class B, and class B units, applying 15 percent, 20 percent, and 4 percent, respectively, on the training 12 months and in June, first of prior year period.

Speaker Change: The slightly challenges the data shows that retail sales of our motorized brands have outpainted industry across these categories over the same period.

Speaker Change: We are looking forward to showcasing the quality and innovation of our Model Year 2025 unit and the Hershey RV show in Elkark Openhouse in September.

Mark Skonieczny: The fall show is provide insight into customer and dealer sentiment, and the interactions and feedback are expected to provide an early read on calendar year 2025 demand. After September, the next big indication of activity will be in January as Tap RV show, which has historically set the pace for the year's retail demand. Until we gain greater clarity on end-market demand, we will continue to work closely with our dealers to focus on production of units that align with consumer preferences while we presently address our costs.

Speaker Change: The fall show is provided insight into customer and dealers' sentiment and the interactions and feedback are expected by an early read on Cal Lear 2020 by demand.

Speaker Change: After September, the next big indication of activity will be in January as Tampa RV Show, which is the Far North Leaf Festival page for the year's retail demand.

Speaker Change: and Till We Can't Greater Clarity on Enbarquered Demand, we will continue to work closely to our dealer to focus on production of units that align with consumer preferences while we've recently addressed our cost structure.

Mark Skonieczny: I would like to acknowledge the hard work by the RV segment team, which has continued to work tirelessly to navigate the market challenges and manage costs, resulting in decriminal margins of 14% year over year. The wise-out of production at our E&C municipal transit bus business in Riverside, California, is progressing and has a schedule with the last units expected to be completed within the fourth quarter. I would like to thank all our dedicated employees, as well as our suppliers and channel partners, that have made the difficult process of operational success by delivering quality boxes to our customers while exceeding the expected timeline.

Speaker Change: I would like to acknowledge the hard work on the RV segment team which has continued to work tirelessly to navigate the market challenges and manage costs resulting in detrimental margins of 14% year over year.

Speaker Change: The Wines Outer Production at our E&C minutes will tram the bus business and Riverside California is progressing ahead of schedule.

Speaker Change: with the last unit's expected to be completed in the fourth quarter. I would like to thank all our dedicated employees as well as our suppliers and channel partners that have made the difficult process and operational success by delivering quality blocks of to our customers while exceeding the expected timeline.

Mark Skonieczny: With completion of the final units, we expect to realize remaining network and capital benefits within the fourth quarter, and we will proceed with the sale of E&C or assets when the wind down is complete. Our balance sheet and financial position continued to strengthen during the quarter. Actually, the third quarter net debt was $165 million, and our net debt to trailing 12 months of just the EBITDA ratio was just below one time's leverage. Actually, in the year we expect to maintain leverage of less than one time. Over the years, we have been disciplined and nibbling our capital allocation philosophy, using our available capital to best back in the business, pay down debt, buy back shares, and pay full regular and special dividends.

Speaker Change: With the completion of the final units we expect to realize remaining network and capital benefit within the fourth quarter and we'll proceed with the sale of ENC or assets when the wind down is complete.

Speaker Change: Our balance sheet and financial position continued to strengthen during and quarter, actually in the third quarter, net debt was a $155 million in our net debt to trailing 12 months of Joseph E.B.E.A. ratio was just below one-time leverage. Actually, in the year, we expect to maintain leverage less than one-time.

Speaker Change: Over these years we have been disciplined and nimble in our capital allocation philosophy using our available capital to best back in the business, paid down debt, buy back shares and pay full regular and special dividends.

Mark Skonieczny: We have regular and ongoing discussion regarding our goal for capital allocation priorities and will communicate an updated capital allocation strategy when we share our intermediate financial targets later this year. Starting to slide four, consolidate in that sale the $579 million decreased $101 million compared to the third quarter of last year. In the prior year, reported sales included $46 million, a trivial to Collins bus, which was the best in the first quarter of this year. Adjusting for the sales impact of Collins, net sales decreased $55 million, or 8.6%, due to lower sales in the recreational vehicle segment and fewer sales of terminal trucks, partially offset by increased sales in the fire, emergency, and missile transit bus businesses.

Speaker Change: We have regular and ongoing discussions regarding our Gulf War, Capitol L case and priority, and we'll communicate and update and capitalize on strategy when we share our intermediate financial targets later this year.

Speaker Change: Turning to slide four, consolidated in that failed of 579 million, decreased 101 million compared to third quarter of last year. In the prior year, reported fails including 46 million attributable to college bus, which was the bestest in first quarter of this year.

Speaker Change: Justin from the Sales Impact of Collins, net sales decreased $55 million or 8.6% due to lower sales in the recreational vehicle segment and fewer sales of terminal trucks.

Speaker Change: Partly offset by increased sales in the fire, emergency, and missile transit bus businesses.

Mark Skonieczny: Consolidated adjusted EBITDA of $45.2 million increased $5.8 million compared to the third quarter of last year. Included in the prior year reported adjusted EBITDA was $9.2 million, a trivial to Collins bus, resulting in an increase of $15 million or 49.7% when adjusting for the sales. The increase was driven by the fire, emergency, and municipal transit bus businesses, partially offset by lower earnings in the terminal trucks business and recreational vehicle segment. Fire and emergency results benefited from higher volumes, the operational improvements mentioned earlier, and price realization. The fire and emergency results demonstrate the team success in offsetting the increased costs of doing business or operational improvements, allowing the businesses to maximize the pricing opportunity within that log.

Speaker Change: Consolidated Justin's EVCA, a 45.2 million increase, 5.8 million compared to the third quarter of last year. Included in the prior year, reported Justin's EVCA was 9.2 million in the terminal 2 pounds bus, resulting in an increase of 15 million or 49.7% when adjusting for the debesature.

Speaker Change: The increase was driven by the fire emergency and emissable transit bus businesses, partially offset by lower earnings and the terminal truck business and recreational vehicle segment.

Speaker Change: Fire and emergency results benefited from higher volumes, the operational improvements mentioned earlier in price realization.

Speaker Change: The fire emergency results demonstrate the team success and offsetting the increased cost of doing this as the operational permits allowing the businesses to maximize the pricing opportunity within backlog.

Drew Konop: Please turn to slide slide, and I'll turn the call over to Amy for detailed segment financials.

Speaker Change: Please turn to slide slide and I'll turn to Paul over to Amy for details, segments, financials.

Amy Campbell: Thank you, Mark. Especially ASL's third quarter segment sales were $432 million, a decrease of $34 million compared to the prior year. As Mark mentioned, the prior year quarter included 46 million of net sales attributed to Collins Bus.

Amy Campbell: Thank you, Mark.

Amy Campbell: Specialty equals $3,4 sales or $432 million dollars, a decrease of $34 million compared to the prior year. As Mark mentioned, the prior year corner included $46 million of net sales attributed to Colin's bus.

Amy Campbell: Excluded the impact of the College of Estature, net sales increased 12 million, or 2.8%, compared to the prior year quarter. The increase in net sales was primarily due to prior realization and increase shipments of fire apparatus, ambulance units, and municipal transit buses, partially offset by lower shipments of terminal trucks. The legacy fire and emergency businesses delivered year-over-year increases in unit shipments and revenue from both the fire and ambulance groups. Unit starts, completions, and shipments remain at or near historic highs, which has reduced the number of age units and improved the overall mix of the backlogs.

Speaker Change: Excuse me, the impact of the Collins Investors, next sale may reach 12,000, or 2.8% compared to the prior of your quarter. The increase in net sales was primarily due to price realization.

Speaker Change: and increased shipments of fire apparatus, ambulance units, and municipal transit buses, partially offset by lower shipments of terminal trucks.

Speaker Change: The Legacy Fire and Emergency Businesses delivered year-over-year increases in unit shipments and revenue from both the fire and annual increase.

Speaker Change: Units start, completion, and shipments for may add or near the store high, which has reduced the number of age units and improved overall mix of the backwall.

Amy Campbell: Terminal truck sales were lower than the previous year, which was consistent with the expectation provided and are updated to full-year guidance shared during the second quarter call. The fourth quarter is expected to be the last quarter of a difficult year-over-year comparison for the terminal truck business.

Speaker Change: Terminal truck sales were lower than the previous heater, which was consistent with the expectation provided and our update to fully your guidance, share during the second quarter call.

Speaker Change: The fourth quarter is expected to be the last quarter of a typical year over year comparisons for the terminal truck business. And accordingly, we don't anticipate simply how it's performance after we exit this fiscal year.

Amy Campbell: And accordingly, we don't anticipate singling out its performance after we access the fiscal year.

Amy Campbell: Especially vehicle segment, adjusted EBITDA was $44.3 million in the third quarter of 2024. An increase of $14.6 million compared to $29.7 million in the third quarter of 2023. Adjusting for $9.2 million of adjusted EBITDA attributed to Collins Bus and the prior year, third quarter earnings increased $23.8 million year-over-year, or 116%. The increase in adjusted EBITDA was primarily due to increased performance in the fire, ambulance, and municipal transit bus businesses, partially offset by lower adjusted EBITDA from the terminal truck business. Fire, fire, and emergency contribution was driven by increased unit shipment versus the prior year and greater price realization.

Speaker Change: Specialty vehicle segment, adjusted DVDs was 44.3 million in the third quarter of 2024. An increase of 14.6 million compared to 29.7 million in the third quarter of 2023.

Speaker Change: A jetting for a 9.2 million of a jetman EBITDA attributed to Colin's bus and the prior year, third quarter earnings increased 23.8 million dollars a year for a hundred and 16 percent.

Speaker Change: The increase in a gem that even up was primarily due to any creeper performance and the fire, ambulance and municipal transit bus businesses, partially offset by lower objective even from the terminal track business.

Speaker Change: Fire, Fire, and Immortency Contribution was driven by increased unit shipments versus the prior year and greater price realization.

Amy Campbell: Improved municipal transit bus contribution versus the prior year was primarily related to favorable mix, price realization, and lower labor and operating expenses as the wind down for growth ahead of schedule. Lower terminal truck contribution was related to soft industry demand.

Speaker Change: Improved municipal transit bus contributions versus the prior year was primarily related to favorable mix, price realization, and lower labor and operating expenses, as the wind down for growth ahead of schedule.

Speaker Change: Lower Terminal truck contributions was related to soft industry demand.

Amy Campbell: Today's update to the consolidated outlook anticipates continued fire and emergency sales and earning momentum, partially offset by continued end-market softness in the terminal truck business. And as mentioned earlier, the shipment has a final EMC buses within the fourth quarter. We expect the momentum and FNE to result in modest sequential revenue growth in a slightly higher specialty vehicles margin as we exit the year.

Speaker Change: The dates of date to the consolidated outlook anticipate continues, fire and emergency sales and earnings momentum. Partially offset by continued in-market softness in the terminal trust business.

Speaker Change: and as mentioned earlier, the shipment of the final B&C buses within the fourth quarter.

Speaker Change: We expect the momentum at FNE to result in modest sequential revenue growth in a slightly higher specialty vehicle's margin as we exit the year.

Amy Campbell: On flight 6, recreational vehicle segment net sales of 147.4 million decreased 67.1 million, or 31% year-over-year. The sales decline is primarily the result of lower unit shipments in all categories versus the prior year, as well as increased discounting and an unfavorable mix of lower price units within certain businesses. Fails within the quarter are lower than our expectations, and dealers remain hesitant to replenish inventory and defer the delivery of model year 2025 orders in certain categories.

Speaker Change: on Flight 6, recreational vehicle segment, net sales of 147.4 million.

Speaker Change: D3-67.1 billion or 31% year over years.

Speaker Change: The sales decline is primarily the result of lower unit shipments in all categories versus the prior year, as well as increased discounting and an unfavorable mix of lower price units within certain businesses.

Speaker Change: Bales within the quarter are lower than our expectations, and dealers remain hesitant to replenish inventory, and deferred the delivery of model year 2025 orders and certain categories.

Amy Campbell: Recreation segment adjusted EBITDA was $9.4 million, decreased 9 million, or 49% versus the prior year. The decrease in adjusted EBITDA was primarily the result of lower unit volume, inflationary pressures, and increased discounting, partially offset by cost reductions that were executed to align fixed and variable costs with the current level of demand. The decremental margin on model sales of 14% year over year and 9% sequentially demonstrates the RB team's efforts to aggressively contain costs and manage through this difficult period of customer demand.

Speaker Change: Recreation segment adjusts the EBITDA with $9.4 million.

Speaker Change: D-create 9 million or 49% versus the prior year.

Speaker Change: The decrease in the jump and even up, which primarily the result of lowering the immune volume, inflationary pressures, and increased discounting, partially offset by cost reductions that were executed to the line fixed and variable cost with the current level of demand.

Speaker Change: The decremental margin on Moscow's 14% year over year and 9% sequentially demonstrates the RV team's efforts to aggressively contain costs and manage through the typical period of customer demand.

Amy Campbell: Recreation segment backlog of 240 million at quarter end decreased 168 million for 41% versus the prior year. The decrease is primarily due to production against backlogs, lower order intake, and order cancellations over the trailing 12 months. Some dealers, as I mentioned earlier, often deferred delivery of orders within the backlog. However, we are encouraged by the improved health of our dealer inventory, which has declined 20% since the beginning of the calendar year.

Speaker Change: Recreation segment backlog of $240 million at Porter Rens increased $168 million for 41% versus the prior year.

Speaker Change: The D-create is primarily due to production against backlog.

Speaker Change: Lower Order and Tate, and Order cancellations over the Trailing 12 Months.

Speaker Change: Some dealers, as I mentioned earlier, often deferred delivery of orders within the back wall.

Speaker Change: Over we are encouraged by the improved health of our dealer inventory.

Amy Campbell: As retail sales outpaced, are both wholesale statements. Given the current level of retail demand, dealer reluctance to restart channel inventory, and uncertainty surrounding interest rates, we expect fourth quarter sales, earnings, and margin to be sequentially about flat.

Speaker Change: which is the quiet 20% of the beginning of the calendar year as retail sales outpaced are both cold-sale shimmers.

Speaker Change: Given the current level of retail demand, dealer reluctance to reset channel inventory and uncertainties around the interest rates, we expect fourth quarter sales, earnings and margin to be sequentially about flat.

Amy Campbell: The trade is slight seven. Trade working capital on July 31st was 323 million, an increase of 4 million compared to 319 million at the end of fiscal 2023. The increase was primarily a result of lower customer advances and lower accounts payable, partially offset by a decrease in accounts receivable and inventory. As anticipated, customer advances have declined year to date. As units are shipped from the backlog, consuming deposits previously received, while incoming deposits have flowed into today's higher interest rate environment. However, for the full year, we expect inventory reductions to offset customer deposit reduction, largely this driven by shipments from finish goods in the fourth quarter.

Speaker Change: That's ready to fly seven

Speaker Change: Trade Working Capital on July 31st.

Speaker Change: was 323 million and it creates a 4 million compared to 319 million at the end of fiscal 2023.

Speaker Change: The increase was primarily a result of lower customer advances in lower accounts table, partially offset by a decrease in accounts of feedable and inventory.

Speaker Change: As anticipated, customer advances have declined year to date if users are shipped from the back wall.

Speaker Change: and Consuming the pilot's previously received while incoming the pilot has flowed in today's higher interest rate environment. However, for the full year, we expect inventory reductions to offset customer-to-public reduction.

Speaker Change: Largely, this driven by shithons from finish goods in the fourth quarter.

Amy Campbell: Year-to-date cash used by operating activities of $15.2 million, adjusted free cash flow within the quarter of $29.5 million, including $5.9 million spent on capital expenditures. Year-to-date adjusted free cash flow was $16.5 million, which excludes approximately $54 million of tax and transaction costs related to the vestiture activities that are presented within cash from operations, but offset by grossed cash proceeds included in the investing section of the statement of cash flow. that debt is July 31st was $164.5 million, including $50.5 million a cash-on-man, compared to that debt of $128.7 million as October 31st, 2023.

Speaker Change: You're today's task used by operating activities looks 15.2 million dollars.

Speaker Change: A Justin Freecat Flow was in the quarter of $29 and a half million dollars, including $5.9 million spent on capital expenditures.

Speaker Change: You're to date a trusted free cash flow with 16 and a half million dollars, which is exclusive approximately 54 million of tax and transaction costs related to the best-to-tractivities that are presented within cash from operations.

Speaker Change: with offset by gross cash properties included in the investing section of the statement of cash flows.

Speaker Change: That set of July 31st was 164.5 million, including 5.5 million a cash on man.

Speaker Change: There are two next days of 128.7 million as October 31st, 2023.

Amy Campbell: We declared a rager dealer quarterly cash dividend of five cents per share, payable October 11th to shareholders of a rager on September 27th. At quarter's end, the company maintained ample liquidity for strategic initiatives with approximately 262 million available under our AVL revolving credit facility.

Speaker Change: We declared a radio-ular quarterly cash dividend, five cents per share, Pamela October 11, to share holders of record on September 27.

Speaker Change: At Quarter Zen, the company maintained ample liquidity for strategic initiatives with approximately 262 million available under our ABL Revolving Credit Facility.

Amy Campbell: Turning to slide 8, you provide our updated 2024 fiscal pull-year outlook, which builds upon the momentum within the specialty vehicle segment, partially offset by continued end-market weakness and the recreational vehicle segment. Today's update for top-line guidance is a range of $2.35 billion to $2.45 billion. Adjust it; even a guidance is $155 million to $165 million, or $160 million at the midpoint, which reflects an improvement of $4 million at the low end of the range to account for the third quarter performance. The update for guidance today includes an approximate $50 million total revenue reduction related to softer than expected RV demand and its revolving earnings impact as we continue to manage to a 15% detrimental margin for the growth of cost actions.

Speaker Change: Turning to slide eight, we provide our updated 2024 fiscal pull-year outlook, which builds upon the momentum within the specialty vehicle segment, partially offset by continued in-market weakness, and the recreational vehicle segment.

Speaker Change: These updates for top line guidance is a range of 2.35 billion to 2.45 billion dollars.

Speaker Change: A just 15-bit of guidance is 155 million to 165 million for 160 million at the midpoint.

Speaker Change: which reflects an improvement of 4 million at the low end of the range to account for the third quarter performance.

Speaker Change: The update to guidance today includes an approximately $50 million total revenue reduction related to softer than expected RV demand. And it's worth the earnings impact as we continue to manage to a 15% detrimental margin.

Amy Campbell: However, we expect that the lower RV performance will be more than offset by improvements in the fire and emergency businesses. Adjusted that income is expected to be in the range of $76 million to $89 million, and net income in the range of $226 million to $240 million. Expectations for adjusted pre-cash flow, full-year capital expenditures, and interest expense remain the same, with adjusted pre-cash flow in the range of $61 to $72 million, full-year capital expenditures in the range of $30 to $35 million, and interest expense expected to be $26 million.

Speaker Change: with a crescent cost action.

Speaker Change: However, we expect as a lower RV performance, we'd more than offset the improvements in the fire and emergency businesses.

Speaker Change: adjusted that income as expected to be in the range of 76 million to 89 million and that income in the range of 200 to 26 million to 240 million.

Speaker Change: Expectations for adjusted free cash flow, full-year capital expenditures, and interest extends to remain the same.

Speaker Change: with adjusted free fast flow in the range of 61 to 72 million.

William: William your capital expenditures in the range of 30 to 35 million and interest expense is expected to be $26, $28 million.

Mark Skonieczny: Finally, as you may recall, you provided intermediate financial targets at our Investor Day in April of 2021. We will be providing updated, intermediate financial targets and a refreshed capital allocation philosophy along with our fiscal 2025 outlook during our regular fiscal fourth quarter earnings call in December. We plan to extend the length of that call while opening the line to analysts and investors. Consistent with our normal outreach, we will also be available for follow-up calls to address additional questions or clarifications.

William: Finally, as you may recall, we provide an intermediate financial target at our investor day in April 2021.

William: who will be providing updated intermediate financial chart is a refreshed capital allocation philosophy.

William: Along with our fiscal 2025 outlook, during our regular fiscal fourth quarter earnings call in December.

Speaker Change: was planned to extend the length of that call, while opening the line to analysts and investors.

Speaker Change: Consistent with our normal outreach, you'll also be available for follow-up calls to transition to questions or clarification.

Mark Skonieczny: Thank you again for joining us on today's call.

Operator: Operator, we would now like to open the call up for questions. Thank you.

Speaker Change: Thank you again for joining us on today's call. Operator, we would now like to open the call of questions.

Operator: At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone. in Keypad. It's confirmation John will indicate your line is in the question queue. You may press start 2 if you'd 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 keys. One moment, please. Let me poll for questions.

Speaker Change: Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.

Speaker Change: It got permission to all indicate your line is in the question queue.

Speaker Change: United Press Star 2, if you'd like to remove your question from the cue. For participants using speaker equipment, it may be necessary to pick up your hands before pressing the star keys.

Speaker Change: One moment please let we pull for questions.

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

Speaker Change: Our first question comes from Jerry Revick with Goldman Sachs. Please proceed with your question.

Jerry Revich: Yes, hi. Good morning, everyone. Nice performance and especially vehicles.

Amy Campbell: Amy, I'm wondering if we just unpacked the fire and emergency portion of the performance. What was the bridge for the year-rear margin? You saw how much was pricing. What did you see from inflation and productivity? Can you just unpack the margin bridge for Anthony specifically, please?

Jerry Revick: Yes, hi. Good morning, everyone. Nice performance in especially vehicles. Amy, I'm wondering if we just unpack if the fire and emergency portion of the performance, what was...

Speaker Change: the bridge for the year, Margin Bruba, you saw how much was pricing, what did you see from inflation and productivity you need to unpack the margin bridge for F&E specifically please.

Amy Campbell: Yes, thanks, Jerry. Thanks for the nice comments.

Amy Campbell: If you look at legacy, Anthony specifically, we saw revenue grow kind of mid-teens, low to mid-teens, and about 60% of that revenue growth was priced max; about 40% of it was driven by volumes. In the quarter, I would say that we largely offset inflationary costs.

Speaker Change: Revenue grow kind of mid-teens, low to mid-teens, and about 60% of that revenue growth was driven by volumes.

Speaker Change: You know, in the corner, I would say that we largely offset.

Amy Campbell: We didn't specifically give even a margin in the quarter, but saw pretty significant year over year, even a margin growth and the legacy of the business, and also saw a little over 100 basis points and even a margin growth from the second to the third quarter. Thank you.

Flationary Clark: and Flationary Clark.

Speaker Change: and Saul, we didn't specifically give you an emergency.

Speaker Change: and the quarter, but it's all pretty significant year over year, even of margin growth and the legacy of an e-doseness, and also saw a little over 100 basis points and even of margin growth from the second to the third quarter.

Jerry Revich: In terms of the comments that you folks provided on book to bill on units versus revenue, the 30% difference.

Speaker Change: Thank you, and in terms of the comments that you folks provided on Booktubell on Units.

Jerry Revich: 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?

Speaker Change: versus revenue is a 30% difference. Can we feel that? How much of that 30% difference is content?

Speaker Change: Of course, it's just pure price, in other words.

Speaker Change: which we think 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.

Jerry Revich: Because I think there are two levers. One is absolute price and two. I think you folks are driving a shift towards a more custom of the high end of the range, but please correct me if I'm wrong in that.

Speaker Change: Issue of towards more custom of high end of the range, but please correct me if I'm wrong on that.

Amy Campbell: Yeah, sure. I don't know that I have the breakout, so we talk about units for legacy F&E. The unit folks to bill at about one time and the dollar folks to bill at 1.3 times with fire, a little ahead, and ambulance had going through more of a normalization period.

Speaker Change: Yeah, sure, I don't know if and I have the breakout, so you know, we talked about units for four.

Speaker Change: Like it's the Anthony, the unit goes to Bill and about, you know, one

Speaker Change: One time, and the dollar both to bill at 1.3 times, you know, was fire, a little ahead, and ambulance had going through more of a normalization period.

Amy Campbell: Breaking out that 1.3 times an F&E between what's price and what's content. I'd say what we certainly do have a lot of custom units. We're also introducing, you know, we talked quite a bit about, marked it again this morning, the S-1-E-D, which is more of a semi-tub of custom units.

Speaker Change: Breaking out that 1.3 times an S&E between what's priced and what's content, you know, I'd say, while we certainly do have a lot of custom units, we're also introducing, you know, we talked quite a bit about Mark did again this morning, the S-1-E which is more of a semi-cubstone unit.

Operator: Greetings and welcome to Rev Group's third quarter, 2024 Earnings Conference call. At this time, all participants are on the listen only mode. A question answer will follow the formal presentation.

Amy Campbell: And so, they're- so I guess I don't have that 1.3 times both to build in terms of revenue broken out between content and price.

Speaker Change: and so there's...

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: So, I'm Agaslow, as I joke, have that 1.3 times, both to Bill in terms of revenue broken out between content and price.

Jerry Revich: Okay, I think 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 moving inventories that we typically see. Are you thinking specifically that dealer inventory is Jerry? Yes, yes, thank you, Amy. RV dealer inventors. As we said, the dealer inventory is down 20% from county year. I think we're getting more all sorts of pre-called in type of levels that are inventory levels are feeling good about the health.

Drew Konop: I would now like to turn the conference over to your host, Drew Konop. Thank you, you may begin. Good morning and thanks for joining us. Earlier today, we issued our third quarter fiscal 2024 results. A copy of the release is available on our website at investors.revgroup.com. Today, it's called being webcast and a slide presentation, which includes the reconciliation of non-gap to gas financial measures that is available on our website. Please refer now to slide two of that presentation.

Speaker Change: And okay, I think 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

Speaker Change: Captain, the movie name of the Tories that we typically see.

Speaker Change: We've already taken specifically to heal and then for his parents.

Speaker Change: Yes, yes, thank you, Amy. RB dealer in the tours.

Drew Konop: Our remarks and answers will include more looking statements, which are subject to risk that can cause the actual results to differ from those expressed or implied by such formal looking statements. These risks include, among others, matters that we have described in our form, each case, filed with the FCC earlier today, and other filings we make with the FCC, which is claiming many obligations up to hit these formal looking statements, which may not be updated until our next quarterly earnings conference call is at all. All references on the call today to a quarter or a year or our fiscal quarter or fiscal year are less otherwise stated.

Speaker Change: As we said to dealer, I'm sorry, about 20% from Calvier. I think we'll get more closer to pre-COVID type of levels that are inventory levels are feeling good about the health.

Amy Campbell: That inventory is just; they've been reluctant to replace order. So we're seeing a nice, like we talked about, retail are definitely outpacing wholesales in the current market.

Speaker Change: of that inventory area since they've been reluctant to replace orders so we're seeing the nice.

Speaker Change: It like we talked about retail, they're definitely outpacing wholesales in the current market

Amy Campbell: And so, as a matter of just, that's where we highlight a couple of shows where anxious to see what the consumer appetite is, and then coming out of those, what the dealer placements would be. In the last couple of months, deal has been waiting. So we're the retail they're showing nicely, but the wholesales have been down and you know we've been doing shutdowns, and we talked about a pair of calls to manage our costs there. So it's really a way to see if the timer wants to show us.

Speaker Change: and Phil and Samantha are just, that's where we highlighted a couple of shows where anxious to see what the consumer appetite is and then coming out of those, what to deal with placements would be in the last couple months, deal with it been waiting, so the retail they're showing nicely, but the wholesale set been down and you know we've been, you know, we've been, you know,

Drew Konop: Joining me on the call today is our president and CEO, Mark Skenechny, as well as their CFO, Amy Campbell.

Speaker Change: doing shutdowns that we, and we talked about their call to manager costs there.

Jerry Revich: I appreciate it, Mark. Thank you. Thank you both.

Speaker Change: So I'd really like to see you next time or what I'm showing.

Mark Skonieczny: Please turn to slide three and I'll turn the call over to Mark. Thank you, Drew, and good morning to everyone joining us on today's call. Today, I will provide an overview of the operating, commercial, and financial highlights achieved within the quarter that move to the quarter's consolidated financial performance. We are pleased to have delivered another strong quarter of operating results that reflect continued success and execution of our strategies to improve the performance of our municipal backlog businesses while managing the impact of a challenging environment in our cyclical businesses.

Mark Skonieczny: Thanks, Jerry.

Speaker Change: Thank you. Thank you. Thank you both. Thank you.

Angel Castillo: Our next question comes from Angel Castillo with Morgan Stanley.

Angel Castillo: Please proceed with your question. Hi, good morning, and thanks for taking my question. 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, maybe quantify how much of margin expansion you anticipate here in the next quarter.

Speaker Change: Our next question comes from Angel Castillo with Morgan Stanley, please proceed with your question.

Speaker Change: Hi, good morning and thanks for taking my question. I was hoping we could expand a little bit more on the margin conversation, particularly as we look forward. I think you noted particularly with the specialty vehicles you expect slightly higher margins. Can you just put a finer point on kind of the cadence, maybe?

Angel Castillo: As we think about maybe the early days of fiscal year 25, I understand you're not going to give a look 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.

Mark Skonieczny: Double-digit margin performance has been a target for each of our businesses since I arrived in 2020 and I applaud the various teams that contributed to the specialty vehicle segment achieving an adjusted EBITDA margin of 10.3% in the third quarter. Within the quarter, our ambulance business continued to benefit from the manum it has built on the past several quarters with programs designed to increase line rates and improve efficiencies. The fire group designed a similar journey to drive operational improvements and their efforts led to the specialty vehicle sequential adjusted EBITDA increase for the quarter.

Speaker Change: and I'm going to ask you how much of Mark's expansion you anticipate here in the next quarter, and as we think about, you know, maybe the early days of fiscal year, 25 it, I understand you're not going to give a, now look at this point, but just any kind of sense based on what you have in your backlog, you know, what is kind of implied in terms of...

Amy Campbell: Yes, thanks, Angel. So I think if you look at the third to fourth quarter sequentially, you know, and I reference we expect it to be moderate revenue and even it grows in terms of even a dollar. I think think of that in terms of kind of low single digits type of growth and with even a margin percent of just slightly.

Speaker Change: Marginne Expansion for the next two quarters.

Speaker Change: Yes, thanks Angel. So, I think if you look at the third to fourth corner sequentially, you know, and I reference to the expectancy moderate revenue and EBITDA grows in terms of EBITDA's dollar.

Speaker Change: You know, I think think of that.

Speaker Change: in terms of kind of low single digits.

Mark Skonieczny: Fire continues to pursue a strategy of simplification along with the development of manufacturing centers of excellence designed to limit waste, increase throughput, and generate operating efficiencies. As we discussed last quarter, we have leveraged Spartan chassis production from our center of excellence in Michigan across our network of fire plants and brands that drive efficiency and cost effectiveness. In addition, we have dedicated line at our Spartan Emergency Response Facility in South Dakota to produce a S-180 fire apparatus which has enabled our brands to deliver semi-custom fire apparatus at accelerated lead times.

Speaker Change: Types of growth and an even of margin per cent.

Amy Campbell: So, and where we would expect that puts us at double-digit margins for specialty vehicles, exiting 2024. Our expectation is that we would continue that trend as we move into and hold those double-digit margins in 2025. Yeah, that's helpful.

Speaker Change: of just slightly.

Speaker Change: So, and where we would expect, so that's what the double digit margins for specialty vehicles, exiting 2024, you know, our expectation is that we would continue that trend as we move into and hold those double digit margins in 2025.

Angel Castillo: Thank you. No, no, sorry, you're good.

Speaker Change: Yeah, that's helpful. Thank you. I think I'm going to admit it, but no, no, sorry, you're going.

Amy Campbell: Yeah, and I guess if you would add, you know, as we look into 2025, what we talked about in terms of pricing, and we talked about, you know, the nine innings of the game, were in kind of tier four, five for fire and tier five or six for ambulance. You know, and those are kind of mid single-digit types of pricing increases as we move from tier to tier. And so that kind of six to seven percent price increase on our value and content next year is what we would be thinking about.

Speaker Change: Yeah, and I guess if you were to add, you know, as we walked into 2025, what we've...

Mark Skonieczny: Furthermore, the integration of sales, inventory, and operations planning are psi-up across the group as resulted in a dual-benefit and contributing to improved throughput as well as a year-over-year reduction of fire-division symmetry balance. I'm going efforts to create greater alignment between the Fire Group's resources and manufacturing footprint in addition to these improvements to our upfront processes have resulted in improved completions of trucks. As I've stayed in the past, each unit we ship today is worth more than a unit ship yesterday.

Speaker Change: We talked about, in terms of pricing, and we talked about the nine innings of the game, we're in, kind of, tiered four, five, so fire, and tiered five or six, four, and the ones, you know, and those are kind of mid-single digits types of pricing increases as we move from tier to tier.

Speaker Change: and so that kind of...

Speaker Change: Six to seven percent price increase on our value end content next year is what we would be thinking about, you know, and we, as you said, we're not giving 20, 25 guidance at this time, you know, but certainly be looking to offset some of our inflationary consequences and move in the 2025.

Amy Campbell: And so we're not giving 2025 guidance at this time, you know, but certainly be looking to offset some of our inflationary headwinds.

Mark Skonieczny: Increased line rates have contributed greater profitability throughout the year as we gain efficiencies and reduce the number of age units from backlog. We've acted as quarter with a robust $4.4 billion consolidated backlog led by the strength of inbound orders for fire and emergency vehicles. Specialty Vehicles segment backlog of $4.1 billion increased $306 million or 10% as compared to last year. The prior backlog of $3.7 billion included $421 million of backlog attributed to the bus businesses.

Angel Castillo: at the end of the 25th of June. Can you talk about maybe some of the discounting or competitive dynamics in the industry and your ability to kind of outperform that? Yeah, I think that's some of the things, you know, with the revenue drop. We are participating in the discounting as others have, and that was a driver when you look at our Q3 results. So I think we'll continue to see that in providing discount as we move forward. But, you know, as the inventory gets healthier, you know, those have definitely dropped sequentially when you talk about industry-wide.

Speaker Change: got it, that's very helpful. And then maybe just to expand on the RV side. Do you talk about maybe the discounting? It sounds like the dealer and mentors maybe are getting to a little bit of a better place.

Speaker Change: are getting more clarity as we're going to some of the shows, but as you think about the step change for maybe two-cut or three-cut and the level of confidence that we will continue. Can you talk about maybe some of the discounting or competitive dynamics in the industry in your ability to kind of upperform that?

Mark Skonieczny: Adjusting for the disaster of Collins and winding down a E&C, which had largely exhausted backlog actually in third quarter, segment backlog increased $807 million or 27% for the prior year quarters. Year to date, the combined booked a bill of the F&E businesses was one times on a user basis driven by both increased shipments and an normalization of demand. This is in line with the guidance we provided in December for fiscal 2024.

Speaker Change: Yeah, I think that's some of things, you know, the revenue drop we are, we are participating in the discounting as others have and that was a driver.

Speaker Change: when you look at our Q3 results, so I think we'll continue to see that and providing discounts as we as we move forward, but you know, as the inventory gets healthier, you know, those have definitely dropped sequentially when you talk about the industry wide, so where they start and Q1's Q2, they come down to Q3 and ask.

Angel Castillo: So where they start in Q1, Q2, they come down to Q3 and as the inventory has become less age, each sitting on the deal lots in the introduction 25, Molly or 25 units, the discounting has been reduced on the new units. It's more the retail assistance that's provided on age units within the inventory. But with the retails we're seeing, the dealer inventory help is definitely, from an industry perspective, improving.

Mark Skonieczny: The benefits of our pricing strategies delivered a booked a bill ratio of 1.3 times on a revenue basis in the legacy fire and emergency businesses during the same period. The duration of backlog varies by business and the specific unit type, but generally remains in the range of two to three years. The backlog is elevated versus historical norms, but is in line with our industry peers given the current demand environment. Prior to 2020, the typical delivery time for a bumper unit was approximately 9 to 12 months, while an aerial ladder truck would be approximately 12 to 15 months.

Speaker Change: The inventory has become less aged, shedding out a beer loss in the introduction in 25.

Speaker Change: Molly of 25 units, the discounting has been reduced on the new units, it's more the retail system that's provided on each unit within the inventory, but with the retail we're seeing the dealer inventory is health is definitely from the industry perspective and proving.

Angel Castillo: Thank you.

Mick Dobry: Our next question is from Mick Dobry with Bear. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question is from Meg Dobre with Bear, please proceed with your question.

Mick Dobry: Good morning. Thanks for taking the questions.

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

Mark Skonieczny: The ambulance group had historically operated with less visibility and backlog of three to six months, and remains our expectation that industry demand will continue to normalize, which combined with our successful increase in line rates is expected to deliver a more balanced supply and demand dynamic as we focus to achieve best in class delivery times. The recreational vehicle and market remains challenged as the spread-neared purchases for such items as our bees have been delayed by consumers.

Meg Dobre: Good morning. Thanks for taking the questions. So, maybe go back to specialty vehicles, just

Meg Dobre: for...

Speaker Change: My own clarification, I guess. New Remind of ENC, where we are in a process of winding down that business, maybe how much revenue you recognize in a quarter from ENC. And my recollection is that there's an EBITDA drag that's associated with ENC as well, that at least in theory you should be going away in fiscal 25.

Mark Skonieczny: May so is around 40 million in the quarter. So, as we talked about it, we accelerated some of the shipments from Q4 that we expected, the great work that the scene did. And we were able to produce essentially five months' worth of production in a three-month period. So I'm very proud of the team, you know, even though we've been able to shut down, that we've had a very engaged workforce and suppliers and customers there.

Mark Skonieczny: According to SSI data, industry-wide retail sales of class A, class B, and class C units apply 15 percent, 20 percent, and 4 percent respectively over the training 12 months ending in June versus the prior year period. These type of these challenges, the data shows that retail sales of our motorized brands have outpaced the industry across these categories over the same period. We are looking forward to showcasing the quality and innovation of our Model Year 2025 units at the Hershey RV Show and Elkhart Open House in September.

Speaker Change: Venture, Venture.

Speaker Change: May so the round 40 million in the quarter, so as we talk about it, we accelerated some of these.

Speaker Change: Shipments from Q4 that we expected, the great work that steam did, we were able to produce a 5-month-sword production in three months period, so I'm very proud of the team.

Speaker Change: You know, even else shut down that we've had at a very engaged workforce and suppliers and customers there. So we are had a schedule from that perspective and expect to have a complete line down here within early parts of the Q4. I'll just add to that.

Mark Skonieczny: So we are had a schedule from an aspect and expect to have a complete wind down here within early parts of the Q4.

Amy Campbell: I'll just add to what Mark said.

Amy Campbell: I think when you look at even a margins with that pull ahead of five month sales and some cost actions, you know, that we've been able to take in the quarter as we wind that business down. It's not only had a schedule, but it was a creda to the overall even a margin in the quarter. So, so, okay.

Mark Skonieczny: The fall show is provided insight into customer and dealer sentiment and the interactions and feedback are expected to provide an early read on calendar year 2025 demand. After September, the next big indication of activity will be in January as Tampa RV Show, which has historically set the pace for the year's retail demand. Until we gain greater clarity on end-market demand, we will continue to work closely with our dealers to focus on production of units that align with consumer preferences while we aggressively address our costs.

Speaker Change: So what Mark said, I think when you look at...

Speaker Change: And even the margins with that pull ahead of 5-1 fails and some cost actions.

Speaker Change: and you know that we've been able to take in the quarter, as we wind that business down, it's not only had a schedule, but it was a creed as to the overall even a margin in the quarter.

Mick Dobry: So ENC was actually profitable. Yeah. Okay.

Speaker Change #100: So, so, okay, so the Nc was actually profitable.

Mick Dobry: And, you know, in the terminal trucks, I do know that that's been a drag, and you highlighted that for several quarters. And I'm trying to understand the magnitude of this drag in terms of what's embedded in your full year guidance for fiscal 24.

Speaker Change #100: Yeah, yeah.

Speaker Change #100: Okay, and...

Mark Skonieczny: I would like to acknowledge the hard work by the RV segment team, which has continued to work tirelessly to navigate the market challenges and manage costs, resulting in detrimental margins of 14% year-over-year. The wise-out of production at our E&C municipal transit bus business in Riverside, California is progressing ahead of schedule with the last units expected to be completed within the fourth quarter. I would like to thank all our dedicated employees as well as our suppliers and channel partners that have made the difficult process of operational success by delivering quality boxes to our customers while exceeding the expected timeline.

Speaker Change #101: You know, in the terminal trucks, I do know that's been a drag and you highlighted that for several quarters.

Speaker Change #101: I'm trying to understand the magnitude of this drag in terms of what's embedded in your full year guidance for fiscal 24. And what's the right way to think about this business beyond 24? Are we...

Mick Dobry: And what's the right way to think about this business beyond 24?

Mark Skonieczny: 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 level? Yeah, yeah, we're definitely at a trough and it's normal in our cycle as we talked about previously, Meg. I've come into an election year that's a normal trough in this business, so you know we side that's amid single-digit margin business. You know, I've actually covered it with double-digit, but it's amid single-digit business going forward. Even the eight margin business.

Speaker Change #103: I'd like me 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?

Speaker Change #104: Yeah, work work definitely at a trough and that's normal in our cycle as we talked about previously May God's coming into an election year that's a normal trough in this.

Mark Skonieczny: With completion of the final units, we expect to realize remaining network and capital benefits within the fourth quarter, and we will proceed with the sale of E&C or assets when the wind-down is complete. Our balance sheet and financial position continued to strengthen during the quarter. Actuallying a third quarter, our net debt was $165 million, and our net debt to trailing 12 months of just the EBITDA ratio was just below one-time leverage.

Speaker Change #105: and this business, we found that the mid-single-digit margin business, you know, actually Covid it was double-digit but it's a mid-single-digit business going forward.

Mick Dobry: Okay, and we saw that there were some restructuring charges that impacted Specialty Vehicles.

Speaker Change #106: Steven C.A. Margin Business.

Speaker Change #107: Okay, and we saw that there were some restructuring charges that impacted specialty vehicles. Can you talk at all about what some of the actions that you took in?

Amy Campbell: Can you can you talk at all about what some of the actions were that you talk in any savings that would come into fiscal 25? Now that's about the continuation of the ENC closure, right? So, as we're booking restructuring as people exit the business. Okay, okay, so it's all ENC-driven.

Mark Skonieczny: Actually in the year, we expected to maintain leverage less than one times. Over the years, we have been disciplined and nibbling our capital allocation philosophy using our available capital to best back in the business, pay down debt, buy back shares, and pay full regular and special dividends. We have regular and ongoing discussion regarding our goal for capital allocation priorities and will communicate an updated capital allocation strategy when we share our intermediate financial targets later this year.

Speaker Change #108: Any savings that would come into fiscal 25? That was a continuation of the ENC closure, right? So as we're booking, we're structuring as people exit the business.

Mick Dobry: And then lastly for me in recreation, I guess you know 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. You know your backlog can continue to step down sequentially, so I'm sort of curious. Do you think that $150 million is roughly of revenue can be sustained going forward, or is it fair for us to expect yet another round of production cuts come to first half of fiscal 25 if demand simply stays where it currently is and user demand or sell through, if you would?

Speaker Change #109: Okay, okay, so it's all ENC, Drew.

Speaker Change #109: and then lastly for me in recreation.

Mark Skonieczny: Starting to slide four, consolidate in that sale the $579 million decreased 101 million compared to the third quarter of last year. In the prior year, reported sales included $46 million, a trivial to Collins bus, which was the best in the first quarter of this year. Adjusting for the sales impact of Collins, net sales decreased $55 million, or 8.6% due to lower sales in the recreational vehicle segment and fewer sales of terminal trucks, partially offset by increased sales in the fire, emergency, and missile transit bus businesses.

Speaker Change #110: I guess, you know, 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. You know, your backlog continue to step down sequentially, so I'm sort of curious.

Speaker Change #111: Do you think that $150 million roughly of revenue can be sustained going forward or is it fair for us to expect?

Speaker Change #112: Yet another round of production cuts come to first half of fiscal 25, if demand simply stays where it currently is and user demand or sell through if you would. Thank you.

Mark Skonieczny: Thank you. Yeah, I would say like I responded to Jerry at the wait and see here, but definitely where we are flexing as much cost and able us to hold that six percent margin that we delivered. So we are within the month as we get orders or don't get orders, we do flex our workforce. So I do, like I said in my fair remarks, I'm very appreciative of the people that we don't have a fixed schedule, right? So people are on a very variable schedule within the business, don't have any backlogs. What are work schedules and times that we're that we're taking out.

Mark Skonieczny: Consolidated adjusted EBITDA of $45.2 million increased $5.8 million compared to the third quarter of last year, included in the prior year, reported adjusted EBITDA was $9.2 million, a trivial to Collins bus, resulting in an increase of $15 million, or 49.7% when adjusting for the sales impact. The increase was driven by the fire, emergency, and the municipal transit bus businesses, partially offset by lower earnings in the terminal trucks business and recreational vehicle segment.

Speaker Change #113: Yeah, I wouldn't say makeup, like I responded to Jerry, it's a waiting scene here, but definitely work

Speaker Change #114: We are flexing as much cost to enable us to hold that 6%

Speaker Change #115: Marks and have we delivered so we are within.

Speaker Change #116: Within the month as we get orders, or don't get orders, we do flex our workforce. So I do, like I said, in my prepared remarks, I'm very appreciative of the people that we don't have a fixed schedule, right? So people are on a very variable schedule. In the business, they don't have the backlogs first. What are work schedules and times that we're taking out. So, you know, we will flex those. But again, to say that once 50 or whatever, you know, it's still too hard to call here, but I can assure you if you're flexing it off and our production schedules align with our demand.

Mark Skonieczny: Fire and emergency results benefited from higher volumes, the operational improvements mentioned earlier, and price realization. The fire and emergency results demonstrate the team success in offsetting the increased costs of doing business or operational improvements, allowing the businesses to maximize the pricing opportunity within that log.

Mark Skonieczny: So you know we will flex those, but again to say that $150 or whatever, you know it's still too hard to call here. But I can assure you we are flexing it off in our production schedule to align with our demand.

Mick Dobry: Understood, thank you.

Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions.

Speaker Change #117: Understood, thank you.

Amy Campbell: Please turn to slide slide, and I'll turn the call over to Amy for detailed segment financials. Thank you, Mark. Especially at all, third quarter segments sales were $432 million, a decrease of $34 million compared to the prior year. As Mark mentioned, the prior year quarter included $46 million of net sales attributed to Collins bus. Excluded the impact of the College of Estature, net sales increased 12 million or 2.8 percent compared to the prior year quarter.

Speaker Change #118: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment please while we poll for questions.

Mike Pschliski: Our next question comes from Mike Pschliski with DA Davidson. Please proceed with your question.

Speaker Change #118: Our next question comes from Mike Shlisky with DA Davidson. Please proceed with your question.

Mike Pschliski: Yes, hi, good morning. I should take it, my question. I want to talk a few on the some of your afternoon comments. Great to see that you've got really the whole margin, the least into next year of some of this business. And glad to see you also, you're able to improve the units coming out this past quarter and for much of the year. I am curious to just give us an update as to what any good 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, which is where you would hope it would be in the long term.

Speaker Change #119: Yes, hi, good morning, catch for taking my questions.

Speaker Change #120: I want to talk a few on the comments.

Speaker Change #121: Great to see you that you've got, you know, really the whole margin that leads me to next year of some of the business.

Amy Campbell: The increase in net sales was primarily due to prior realization and increase shipments of fire apparatus, ambulance units, and municipal transit buses partially offset by lower shipments of terminal trucks. The legacy fire and emergency businesses delivered year-over-year increases in unit shipments and revenue from both the fire and ambulance groups. Unit starts, completions, and shipments remain at or near historic highs, which has reduced the number of age units and improved overall mix of the backlogs.

Speaker Change #122: and quite a few also were able to improve the units coming out this past quarter and much of the year. And Chris, we just give us enough tears to what any you think you're in as far as production.

Speaker Change #123: Rape, said how much should it be able to, you know, improve the speed of production at this point versus where you would hope it would be in the long term.

Mark Skonieczny: Yeah, I think our goal here, I think from an ambulance perspective, as we talked about before, they're pretty much at pre-COVID rates and a little bit higher, so we feel good about where we are from a production perspective. We are looking at incremental capacity where we can, by adding lines and whatnot or partial second shifts, but in fire, I would say we're getting that more stabilized. We still have opportunity; more probably the efficiency perspective might than it is incremental throughput, so it's just getting more efficient on some more custom units as they're coming through. So I would say it's less the capacity discussion than it is in a production discussion, just becoming more efficient as we move more complex units through the plant.

Speaker Change #124: Yeah, yeah, I think you know where.

Speaker Change #125: Our goal here, I think from an ambulance perspective as we've talked about before, they're pretty much at pre-COVID race in a little bit higher, so we feel good about where we act from a production perspective in ambulance. We are looking at, you know, incremental capacity where we can, by adding lines in what nod or partial second shifts.

Amy Campbell: Terminal truck sales were lower than the previous year, which was consistent with the expectation provided and are updated to full year guidance shared during the second quarter call. The fourth quarter is expected to be the last quarter of a typical year-over-year comparison for the terminal truck business. And accordingly, we don't anticipate singling out its performance after we access this fiscal year. Especially vehicle segment, adjusted EBITDA was $44.3 million in the third quarter of 2024.

Speaker Change #126: But you know, in fire, I would say we're getting that more stable either still of opportunity, more from the efficiency perspective, like that it is incremental throughput, so it's just getting more efficient on some more custom units as they're coming through, so I would say it's less like the capacity discussion than it is in a production discussion, just becoming more efficient as we move.

Mark Skonieczny: I feel very good that by demonstrating on Q3 where we are at, they think ambulance. Like I said, my prepared marks continue. They are momentum that we've seen, and then fire is catching up to ambulance from the throughput as we expected, so they are on track with what we expected as Amy just said. That we will exit, we actually exit Q3 at double digits margins, and we will exit Q4 at double digit margins, especially vehicle segments. Okay, got it.

Speaker Change #126: and Mark Pop liked to use it through the plant.

Speaker Change #127: I feel very good and I demonstrated our two three where we are at, they think ambulance, like I said, my prepared marks continues.

Amy Campbell: An increase of $14.6 million compared to $29.7 million in the third quarter of 2023. Adjusting for $9.2 million of adjusted EBITDA attributed to Collins bus and the prior year, third quarter earnings increased $23.8 million in year-over-year, or 116%. The increase in adjusted EBITDA was primarily due to increased performance in the fire, ambulance, and municipal transit bus businesses, partially offset by lower adjusted EBITDA from the terminal truck business. Fire, fire, and emergency contribution was driven by increased unit shipment versus the prior year and greater price realization.

Speaker Change #128: They're a momentum that we've seen and then fire is catching up to ambulance from the through put as we've expected so they are on track with what we expected as Amy just said. We will exit, we actually exit a Q3 at double digits margins and we will exit the Q4 at double digits margins, especially vehicle.

Mike Pschliski: And then Amy, I think you mentioned in one of the earlier questions and the earlier answers to my questions about fewer, a little bit fewer custom trucks and more standardized versions of trucks coming off the line.

Speaker Change #128: Sagnon.

Speaker Change #129: Okay, got it. And then Amy, I think you mentioned in one of the earlier questions. And I won't heal your answers to one of the questions.

Speaker Change #129: about if you were accustomed to trucks and more standardized versions of trucks and stuff all the lines.

Amy Campbell: To remind us whether there is a significant margin change or a difference, if you would mix with it, go to a lot more towards standardized products. When you think you could make it up on the volume side, if there was a large change going over time, that's supposed to get their trucks faster or in a more efficient manner. Yeah, no, there is not a significant margin difference between the trucks. And that answer was more, you know, at Jerry point.

Speaker Change #130: I remind us whether there's a significant margin change or difference if you would think it makes for the go to a lot more towards standardized products.

Speaker Change #131: Well, you think you can make it up on the volume side, it was a large change going over time. That's what's going to get their trucks faster or in a more busy manner.

Amy Campbell: Improved municipal transit bus contribution versus the prior year was primarily related to favorable mix, price realization, and lower labor and operating expenses as the wind down for growth ahead of schedule. Lower terminal truck contribution was related to soft industry demand. Today's update to the consolidated outlook anticipates continued fire and emergency sales and earning momentum, partially offset by continued and market softness in the terminal truck business. And as mentioned earlier, the shipment has a final EMC buses within the fourth quarter.

Speaker Change #132: Yeah, no, there's not a significant mark in difference between the trucks. Mike and that answer was more, you know, it's Jerry Point. It's just Jerry question was that we're doing more and more custom trucks and I just wanted to clarify that we're also...

Amy Campbell: The question was that we are doing more and more custom trucks, and I just wanted to clarify that we are also, you know, we would build the design and having good customer acceptance with S180, which is a bit more of a semi-custom truck. But, as far as margins go, I think specifically to your question, there's not really a material difference between the trucks. Okay, thank you so much.

Speaker Change #133: You know, we built a design and having good, you know, customer acceptance with this S180, which is a bit more of a semi-custom truck. But as far as margins go I think specifically to your questions. There's not really material difference between between them.

Mike Pschliski: I'll leave it there.

Amy Campbell: We expect the momentum and FNE to result in modest sequential revenue growth in a slightly higher specialty vehicles margin as we exit the year. On flight 6, recreational vehicle segment net sales of 147.4 million, decreased 67.1 million, or 31% year-over-year. The sales decline is primarily the result of lower unit shipments in all categories versus the prior year, as well as increased discounting and an unfavorable mix of lower price units within certain businesses.

Speaker Change #133: and Chunks.

Operator: Thanks, Blake.

Speaker Change #133: Okay, thank you so much for all the details.

Operator: This concludes today's conference. You may disconnect your launch at this time, and we thank you for your participation.

Speaker Change #133: Thanks for watching!

Speaker Change #134: This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.

Speaker Change #134: [inaudible]

Amy Campbell: Fails within the quarter are lower than our expectations, and dealers remain hesitant to replenish inventory and defer the delivery of model year 2025 orders in certain categories. Recreation segment adjusted EBITO was $9.4 million, decreased 9 million, or 49% versus the prior year. The decrease in adjusted EBITO was primarily the result of lower unit volume, inflationary pressures, and increased discounting partially offset by cost reductions that were executed to align fixed and variable costs with the current level of demand.

Amy Campbell: The decremental margin on models sales of 14% year over year and 9% sequentially demonstrates the RB team's efforts to aggressively contain costs and manage through this difficult period of customer demand. Recreation segment backlog of 240 million at quarter end decreased 168 million or 41% versus the prior year. The decrease is primarily due to production against backlogs, lower order intake, and order cancellations over the trailing 12 months. Some dealers, as I mentioned earlier, often deferred delivery of orders within the backlog.

Amy Campbell: However, we are encouraged by the improved health of our dealer inventory, which is to quite 20% since the beginning of the calendar year, as retail sales outpaced our both wholesale statements. Given the current level of retail demand, dealer reluctance to restock channel inventory, and uncertainty surrounding interest rates, we expect fourth quarter sales, earnings, and margin to be sequentially about flat. The trade is slight seven. Trade working capital on July 31 was 323 million and increased a 4 million compared to 319 million at the end of fiscal 2023.

Amy Campbell: The increase was primarily a result of lower customer advances and lower accounts payable, partially offset by a decrease in accounts receivable and inventory. As anticipated, customer advances have declined year to date. As units are shipped from the backlog, consuming deposits previously received, while incoming deposits have slowed in today's higher interest rate environment. However, for the full year, we expect inventory reductions to offset customer deposit reduction, largely this driven by shipments from finish goods in the fourth quarter.

Amy Campbell: Year to date cash used by operating activities of $15.2 million, adjusted free cash flow within the quarter of $29.5 million, including $5.9 million spent on capital expenditures. Year to date, adjusted free cash flow was $16.5 million, which excludes approximately 54 million of tax and transaction costs related to the vestiture activities that are presented within cash from operations, but offset by grossed cash proceeds included in the investing section of the statement of cash flow, net debt of July 31 was $164.5 million, including $50.5 million a cash-on-man, compared to net debt of $128.7 million as October 31, 2023.

Amy Campbell: We declared a regular, quarterly cash dividend of five cents per share, payable October 11 to shareholders of a referendum on September 27. At quarters then, the company maintained ample liquidity for strategic initiatives with approximately 262 million available under our AVL-revolving credit facility. Turning to slide 8, we provide our updated 2024 fiscal pull-year outlook, which builds upon the momentum within the specialty vehicle segment, partially offset by continued end-market weakness and the recreational vehicle segment.

Amy Campbell: Today's update for top-line guidance is a range of $2.35 billion to $2.45 billion. Adjust it even a guidance is $155 million to $165 million or $160 million at the midpoint, which reflects an improvement of $4 million at the low end of the range to account for the third quarter performance. The updated guidance today includes an approximate $50 million total revenue reduction related to softer than expected RV demand and its resulting earnings impact as we continue to manage to a 15 percent detrimental margin with aggressive cost actions.

Amy Campbell: However, we expect that the lower RV performance will be more than offset by improvements in the fire and emergency businesses. Adjusted that income is expected to be in the range of $76 million to $89 million and net income in the range of $226 million to $240 million. Expectations for adjusted pre-cash flow, full-year capital expenditures, and interest expense remain the same with adjusted pre-cash flow and the range of $61 to $72 million, full-year capital expenditures and the range of $30 to $35 million, and interest expense expected to be $26 million.

Amy Campbell: Finally, as you may recall, you provided intermediate financial targets at our investor day in April of 2021. We will be providing updated intermediate financial targets and a refreshed capital allocation philosophy along with our fiscal 2025 outlook during our regular fiscal fourth quarter earnings call in December. We plan to extend the length of that call while opening the line to analysts and investors. Consistent with our normal outreach, we will also be available for follow-up calls to address additional questions or clarifications.

Drew Konop: Thank you again for joining us on today's call.

Operator: Operator, we would now like to open the call up for questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone, and Keypad. It's confirmation John will indicate your line is in the question queue. You may press start 2 if you'd 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 keys. One moment please, let me poll for questions.

Jerry Revich: Our first question comes from Jerry Revich with Goldman Sachs. Please proceed with your question. Yes, hi. Good morning, everyone. Nice performance and especially vehicles. Amy, I'm wondering if we just unpacked the fire and emergency portion of the performance. What was the bridge for the year-rear margin? You saw how much was pricing? What did you see from inflation and productivity? Can you just unpack the margin bridge for Anthony specifically, please? Yes, thanks, Jerry.

Jerry Revich: Thanks for the nice comments. So if you look at legacy, Anthony specifically, you know, we saw revenue grow kind of mid-teens, low to mid-teens and about 60% of that revenue growth was priced max, about 40% of it was driven by volumes. You know, in the quarter, I would say that we largely offset, you know, inflationary cost. And so we didn't specifically give even a margin in the quarter, but it's all pretty significant year over year, even a bit of margin growth and the legacy of the business and also saw, you know, a little over 100 basis points and even a margin growth from the second to the third quarter.

Jerry Revich: Thank you. 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.

Jerry Revich: I think you folks are driving a shift towards a more custom of the high end of the range, but please correct me if I'm wrong in that. Yeah, sure. I don't know that I have the breakout. So, you know, we talk about units for, for like it's the F and E unit, both to bill at about, you know, one, one times and the dollar both to bill at 1.3 times, you know, with fire, a little ahead and ambulance had going through more of a normalization period.

Jerry Revich: Breaking out that 1.3 times an F and E between what's price and what's content. You know, I'd say well, we certainly do have a lot of custom units. We're also introducing, you know, we talked quite a bit about marked it again this morning, the S-1-E-D, which is more of a semi-custom unit. And so there So I guess I don't have that 1.3 times both to build in terms of revenue broken out between content and price.

Jerry Revich: Okay, I think 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 moving inventories that we typically see. Are you thinking specifically that dealer inventory is Jerry? Yes, yeah, thank you, Amy. RV dealer inventors. As we said, the dealer inventory is down 20% from county year.

Jerry Revich: I think we're getting more all sorts of pre-called in type of levels that are inventory levels are feeling good about the health. That inventory is just they've been reluctant to replace order. So we're seeing a nice and like we talked about retail, they're definitely outpacing wholesales in the current market. And so as a matter of just that's where we highlight a couple of shows where anxious to see what the consumer appetite is and then coming out of those what the dealer placements would be in the last couple of months deal has been waiting.

Jerry Revich: So we're the retail they're showing nicely, but the wholesales have been down and you know we've been doing shutdowns and we talked about a pair of calls to manage our costs there. So it's really a way to see if the timer wants to show us. I appreciate it Mark. Thank you. Thank you both. Thanks, Jerry.

Angel Castillo: Our next question comes from Angel Castillo with Morgan Stanley. Please proceed with your question. Hi, good morning and thanks for taking my question.

Angel Castillo: 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 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 a now look at this point, but just any kind of sense based on what you have in your backlog.

Angel Castillo: What is kind of implied in terms of margin expansion for the next few quarters. Yes, thanks, Angel. So I think if you look at the third to fourth quarter sequentially, you know, and I reference we expect it to be moderate revenue and even it grows in terms of even a dollar. I think think of that in terms of kind of low single digit type of growth and with even a margin percent of just slightly.

Angel Castillo: So and where we would expect that puts us at double digit margins for specialty vehicles exiting 2024. Our expectation is that we would continue that trend as we move into and hold those double digit margins in 2025.

Angel Castillo: Yeah, that's helpful. Thank you. No, no, sorry, you're good. Yeah, and I guess if you would add, you know, as we look into 2025, what we talked about in terms of pricing and we talked about, you know, the nine innings of the game or in kind of tier four, five for fire and tier five or six for ambulance. So once, you know, and those are kind of mid single digit types of pricing increases as we move from tier to tier.

Angel Castillo: And so that kind of six to seven percent price increase on our value and content next year is what we would be thinking about. And so we're not giving 2025 guidance at this time, you know, but certainly be looking to offset some of our inflationary headwinds, at the end of the 25th year of the 25th year of the 25th year[inaudible] of the 25th year of the 25th year of the 25th year[inaudible] year of the 25th year Yeah, yeah, we're definitely at a trough and it's normal in our cycle as we talked about previously Meg, I've come into an election year that's a normal trough in this business. So, you know, we've sat at the mid single-digit margin business, you know, actually covered it with double-digit, but it's a mid single-digit business going forward. Even the margin business.

Angel Castillo: Okay, 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'd talk in any savings that would come into fiscal 25? That was a continuation of the EMC closure, right? So, as we're booking restructuring as people exit the business. Okay, okay, so it's all EMC-driven.

Angel Castillo: And then lastly, for me, in recreation, I guess, you know, 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. You know, your backlog continued to step down sequentially. So, I'm sort of curious, do you think that $110,000,000 is 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 and user demand or sell through, if you would.

Angel Castillo: Thank you. Yeah, I would say maybe, like I responded to Jerry at the wait and see here, but definitely where we are flexing as much cost to enable us to hold that 6% margin that we delivered. So, we are within the month as we get orders, or don't get orders, we do flex our workforce. So, I do, like I said, in my spare remarks, I'm very appreciative of the people that we don't have a fixed schedule, right?

Angel Castillo: So, people are on a very variable schedule within the business, still having the backlogs, as far as what I work schedules and times that we're taking out. So, you know, we will flex those, but again, to say that 150 or whatever, you know, it's still too hard to call here, but I can assure you we are flexing the costs and our production schedules to align with our demand.

Operator: Understood. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please while we poll for questions.

Mike Pschliski: Our next question comes from Mike Pschliski with DA Davidson. Please proceed with your question. Yes, hi, good morning.

Mark Skonieczny: I should take it my question. I want to talk a few on some of your revenue comments. Great to see that you've got, you know, really the whole margin, the least into next year of some of this business. And glad to see you also, you're able to improve the units coming out this past quarter and for much of the year. I am curious to just give us an update as to what any good think you're in as far as production.

Mark Skonieczny: Rates and how much you would be able to improve the speed of production at this point, which is where you would hope it would be in the long term. Yeah, I think our goal here, I think from an ambulance perspective, as we've talked about before, they're pretty much at pre-COVID rates in a little bit higher, so we feel good about where we are from a production perspective. We are looking at incremental capacity where we can, by adding lines and whatnot or partial second shifts, but in fire, I would say we're getting that more stabilized.

Mark Skonieczny: We still have opportunity, more from the efficiency perspective, might than it is incremental throughput, so it's just getting more efficient on some more custom units as they're coming through. So, I would say it's less the capacity discussion than it is in a production discussion, just becoming more efficient as we move more complex units through the plant. I feel very good that by demonstrating on Q3 where we are at, they think ambulance, like I said, my prepared marks continue.

Mark Skonieczny: They're momentum that we've seen, and then fire is catching up to ambulance from the throughput as we've expected, so they are on track with what we expected as Amy just said. We will exit, we actually exit Q3 at double digits margins, and we will exit Q4 at double digit margins, especially vehicle segments.

Amy Campbell: Okay, got it. And then Amy, I think you mentioned in one of the earlier questions, and the earlier answers to one of the questions about fewer, a little bit fewer custom trucks and more standardized versions of trucks coming off the line. To remind us whether there's a significant margin change or a difference, if you want to go to a lot more towards standardized products, when you think you could make it up on the volume side, if there was a large change going over time, that's supposed to get their trucks faster or in a more efficient manner.

Amy Campbell: Yeah, no, there's not a significant margin difference between the trucks. And that answer was more, you know, at Jerry Point, the question was that we're doing more and more custom trucks, and I just wanted to clarify that we're also, you know, we would build a design and having good customer acceptance with this S180, which is a bit more of a semi-custom truck. But as far as margins go, I think specifically to your question, there's not really material difference between the trucks.

Speaker: Okay.

Speaker: Thank you so much.

Operator: I'll leave it there. Thanks, Blake.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.