REV Group, Inc.

Greetings. Welcome to REV Group Incorporated third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Drew Knopp, Vice President of Investor Relations and Corporate Development. Thank you. You may begin.

All right, thank you, Sherry. Good morning, and thanks for joining us. Earlier today, we issued our third quarter fiscal 2021 results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast, and the slide presentation, which includes the reconciliation of non-GAAP to GAAP financial measures, is also available on our website. Please refer now to slide two of that presentation. Our remarks and answers will include forward-looking statements, which are subject to risks that could cause actual results to differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we've described in our Form 8-K, filed with the SEC earlier today, and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings call, if at all. All references on this call to a quarter or a year, or a fiscal quarter or fiscal year, unless otherwise stated. Joining me on the call today are our president and CEO, Rod Rauschen, as well as our CFO, Mark Skanechny. Please turn now to slide three, and I'll turn the call over to Rod.

Thank you, Drew, and good morning to everyone joining us on today's call. I'd like to begin with a brief comment regarding our situation resulting from the Hurricane Ida. As you may know, our fire business is in Holden, Louisiana, which effectively was right on the path of Hurricane Ida. We are thankful that we have not had any report of injury to our employees at this time. Many of our suppliers and our own efforts have provided essentials during this difficult time as they endeavor to recover from the storm's aftermath. Vice President for our Bert McCutcheon has cooked meals for many employees, and I would simply like to thank all involved that have helped our team members. Our facility has been impacted, and Mark will speak to that momentarily. Also, we would like to thank the first responders that put themselves on the line in support of the efforts to help recover from this storm. This morning, I will provide an overview of the quarter's consolidated performance and then move to commercial, financial, and operating highlights achieved within the quarter before turning it over to Mark for detailed financial segments. We are pleased to report another strong quarter that nearly doubled our adjusted EBITDA performance versus last year, despite top line implications tied to increasing supply chain challenges and labor challenges. We continue to experience headwinds with staffing, workers, and absenteeism, as well as shortages in raw materials and components such as semiconductors, furniture, wiring harnesses, pumps, axles, and chassis. Throughout this fiscal year, our procurement team has engaged with our supplier partners and has generally been able to source to allow continued production. This has often led to inefficiencies, time to rework, but we have been able to achieve our throughput targets. However, as we moved through the quarter, these labor and material shortages became more difficult to offset, and we were unable to meet our production targets. As a result, approximately $65 million of revenue slipped out of the quarter as our deliveries were delayed. Third quarter net sales of $593 million increased 1.9 percent over last year's quarter. We estimate that roughly $50 million of vehicle starts were missed within the quarter due to the previously discussed challenges. which will have a full impact in the fourth quarter of our consolidated top line. This resulted in a full year revenue guidance adjustment that we announced today. I would like to be clear, though, that these are delayed deliveries due to timing of materials, components, and chassis, but they are not lost sales. Third quarter sales increase was driven by commercial and recreation segments. Commercial segment sales reflect improvement in market conditions and share gains within our specialty group. as well as increased sales in a municipal transit bus versus prior year. In the recreation segment, demand for all categories continue to be strong, with retail sales matching or exceeding wholesale shipments. Delivery inventories are still 60% to 70% below historic norms across all of our brands. And inbound orders remain robust. We have not yet experienced a notable restock of any of our RV categories, and most wholesale shipments are still selling through to retail bottlers. In fire and emergency, revenue declined year over year as well as sequentially. This segment was the most impacted by the current supply chain and labor constraints. Despite headwinds on the top line, our businesses have continued to improve operationally and delivered solid bottom line results. Third quarter adjusted EBDA was 41.6 million with an adjusted EBDA margin of 7%, increasing 330 basis points over last year. Sequentially, margins declined just 10 basis points on $50 million less revenue, demonstrating our improved operational performance. Over the past 15 months, our businesses have adapted under difficult conditions to deliver results. We continue to flex labor, adjust line rates, and production mix to accommodate available build and maximize profitability. Commercially, the teams have done an excellent job in mitigating today's inflationary environment, we have been able to achieve positive price cost and realize the price that is within our backlog. Turning to slide four, we have several accomplishments within the third quarter that I would like to highlight. First, our new order performance continues to gain momentum, and we closed the third quarter with our seventh consecutive record backlog. Each of our segments had strong order intake within the quarter, and we achieved a consolidated book-to-book ratio of 1.3 times our fiscal 2020 third quarter results. Our consolidated book to bill was 1.4 times, resulting in a total backlog of $2.7 billion. This positions us well for growth as we enter the fourth quarter and work our business planning for FY 2022. In Q1 of this fiscal year, we announced that we would be investing in developing our operational excellence capabilities. At our investor day in April, we provided an update on the early work that the team had accomplished. At that time, we reported that we had certified 300 bronze 150 green, and 35 black belt trainees, and we had a pipeline of 385 projects that were all aimed at delivering ongoing cost savings. In the five months since that, we now have 515 bronze, 155 green, and 84 black belt certifications, and our operations savings pipeline has nearly doubled to an active 738 total active projects. The team has fully integrated a suite of software tools, including Power BI and Lean DNA, that allow us to daily updates, and automated tracking reported to our OpEx results. One result of these operational excellence efforts is the improved profitability with our year-over-year increase in EBITDA and net income over the past four quarters. This improvement has increased the baseline for year-to-date cash generation. The third quarter marked another quarter of strong cash conversion and free cash flow. We've remained focused on networking capital efficiency with improved accounts receivable collection within the quarter. Our businesses are also working with their customers to expand our deposit program, which increased our advances by over $5 million compared to the second quarter. Improved cash from operations combined with our typically low level of capital requirements provided cash to reduce our net debt by $57.5 million. Over the past year, both the numerator and denominator of the net debt to EBITDA equation have improved significantly. We exited the quarter with 1.7 times leverage, well below our stated target of 2 to 2.5 times. This level of debt and earnings performance positions us with the capacity to pursue our strategic growth initiatives and return capital to our shareholders. Today, we announced that the Board of Directors has authorized a new $150 million share repurchase program. We are pleased that our financial performance has put us put the company in a position to follow last quarter's reinstatement of our annual dividend with a buyback authorization this quarter. It reflects an ongoing commitment to our capital allocation strategy of investing in our business, maintaining strong liquidity and appropriate leverage while returning cash to our shareholders. We strive for disciplined use of capital that maximizes the company's value and shareholder value. The authorization allows maximum flexibility to achieve our goals. Earlier I mentioned the strength of our current record $2.7 billion backlog. The backlog growth to date has resulted from solid year-over-year bookings from our improved commercial performance. Simplication of our brand and dealer network are delivering share gains, as well as the delayed throughput resulting from the external headwinds. We believe that there will be additional growth opportunities stemming from the combination of the recently passed Senate Bipartisan Infrastructure Bill and the recently passed House $3.5 trillion proposal. budget resolution. These two bills contain an additional $5 billion for electric vehicles and buses, $30 billion for modernizing public transportation, and $80 billion to upgrade the power grid and install EV charging infrastructure. The final version of these two bills is still yet to be determined, but when passed, we expect they will provide additional funding to municipalities to improve their municipal transportation and first responder assets. Our commercial teams have been working to identify and streamline the process of stimulus dollars reaching our customers. We view both the infrastructure bill and the buzzer resolution as providing incremental opportunity to the level of demand we are experiencing today. We have had a focused effort over the past year to advance the electrification of our platforms, with recent product announcements demonstrating our progress. Last week, we had a milestone announcement from both our fire group and our school bus business. First, we announced the fire group will introduce its first fully electric North American style fire apparatus across all the rev brands. Developed with partner Emergency One Group, the maker of the world's first EV fire truck, this new electric fire truck will deliver the longest electric pumping duration in the industry. It enables departments to drive and pump on electric power only, a key differentiator in the industry. Its range extender diesel engine is used for backup when pumping beyond three or four hours on the hydrant, or for extended operation in a blackout or natural disaster. It is built for strength, durability, and specifically for the fire service location. We announced that we are taking pre-orders through our dealers, and it will be available for delivery in 2022. Adding to our ambulance partnership, we expanded our relationship with Lightning E-Motors to include our Type A school bus business, Collins Bus, Under this multi-year agreement, we expect to deliver more than 100 all-electric buses across the U.S. and Canada over the next several years. The buses will support both level 2 AC charging and level 3 DC fast charging with integrated vehicle-to-grid capabilities. Other features will include a modern digital dash display, hill hold functionality for safety, advanced telemetrics and analytics, and a mobile app for drivers and fleet managers. The first orders for this all-electric Type A bus utilizing Lightning's EV technology are already in production with delivery to dealers and school districts expected this fall. Finally, our capacity business displayed its hydrogen fuel hybrid electric terminal truck at this year's Advanced Clean Transportation Conference in Long Beach, California. Two of these trucks are currently in operation at the Port of Long Beach and have been made available for ride and test drive. The trucks maximize uptime by providing hydrogen power backup when the electric battery requires recharging. This hybrid technology is designed for operation in intermodal port and warehousing or distribution applications. We are pleased to say that this product has received excellent feedback and recognition at the Clean Transportation Conference. It's an exciting time to be at REV when electrification, especially vehicle fleet, is just beginning in most of our markets while accelerating in others. There is a significant opportunity to be market leaders in this space and outpace our competition. We will continue to work our strategy of co-development and partnerships with technology leaders who will put us in a position to win. Today, we shared a few examples, but we expect additional news surrounding EV platforms to be forthcoming. I will now turn it over to Mark for details of our third quarter financial performance. Mark.