REV Group, Inc.

Good morning, and welcome to REV Group Incorporated's fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mood. 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 call is being recorded. I would now like to turn the conference over to your host, Mr. Drew Connolly.

Thank you. You may begin. All right, thanks, Rob. Good morning, and thanks for joining us. Earlier today, we issued our fourth quarter and full year fiscal 2021 results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast, and a slide presentation, which includes a reconciliation of non-GAAP to GAAP financial measures, is 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 have 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 Rushing, 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. This morning I'll provide an overview of this year's commercial, operational, and strategic achievements, including full-year financial highlights, then present our consolidated fourth quarter performance, I'll then turn it over to Mar for detailed segment financials. Early in the year, we formally introduced the RevDrive business system, defining our commitment to creating capabilities of commercial, operational, and organizational excellence to achieve value creation for our stakeholders. We've made significant progress throughout the year building capabilities in each of these areas. Today's full year results reflect these efforts. Our commercial actions combined with improved demand positioned us to exit fiscal year 2021 with a record $3.1 billion backlog. Over the past year, our sales teams have strengthened our customer relationships. We've optimized brand and dealer channels while taking the required and necessary pricing actions. As a result, we have achieved market share gains in many of our businesses this year. In February, we are hosting REV's first annual Accelerator Award event, which will recognize our highest performing dealers for fiscal year 2021. This is an annual event where we recognize and celebrate the excellent performance of our top dealer partners and encourage healthy competition for attendance at next year's event. Over the past 18 months, municipal budgets have been supported by several rounds of stimulus that includes funds being directed towards health and safety programs directly benefiting our fire and emergency segment. Within our fire group, we are still waiting on full-year industry data, but the first half data shows that we have achieved market share gains and the order bookings in the second half were very strong. Our ambulance group has reported its eighth consecutive quarter of record backlog. Since the CARES Act of 2020, industry demand has been increasing, and we estimate the North American ambulance market could grow by 30% over the historical average when it's reported for fiscal year 2021. We have invested in industry advocacy, working with a third-party resource and government officials to clarify language in federal bills to more clearly identify that the funding is available to municipalities for ambulance purchases. We believe our commercial segment is positioned to benefit from the recently passed bipartisan infrastructure bill that authorized $550 million of new spending. The bill includes allocations for electrification of buses, supports EV charging infrastructure, and calls for modernization of airports, transportation, and ports. We estimate that over $70 billion of these funds are allocated to markets that include our vehicles. While the Type A school bus customers have been slower than large diesel Type C and Type D buses to adopt an electric powertrain, we have experienced increased Type A quoting and sales activity. Within the corridor, we announced the expansion of our partnership with Lightning E-Motors to include our Taipei school bus, with a commitment to deliver over 100 electric buses in the next two years. We expect the public transportation markets to be a primary beneficiary of the $70 billion in the infrastructure bill. Our E&C transit bus business serves municipalities, universities, and airports. We recently launched our battery electric bus for this segment to position us to compete for what we believe will be a growing demand for battery electric buses. And I will speak more about this in my prepared comments ahead. Within the specialty group, our capacity terminal trucks are critical to moving and shipping containers from the congested ports that we see today and throughout the country's distribution system. Due to its operating nature, terminal trucks are a prime candidate for electrification and the infrastructure bill allocates $17 billion for modernization of ports and waterways. We produced the first North American hydrogen fuel cell electric hybrid truck with an active pilot program that includes two trucks now serving the Port of Long Beach today. Separately, our partnership with the History Yale Group for the co-development of a full battery electric terminal truck and a hydrogen fuel cell terminal truck is also progressing very well, and we expect the initial launch with a few large retail customers within the first half of 2022. Our operations across 2021 worked in an unstable and challenged environment. Exiting 2020, our end markets were still recovering from demand headwinds related to COVID-19. School buses had not fully returned to classrooms, airport travel was limited, and the public transportation spending remained challenged. As we progressed through the first half of fiscal year 2021, we saw steady improvement in demand and our supply chain was stable and our top and bottom lines showed solid improvement. We posted record first half results during demonstrating REV drive initiatives being put in place. In the third quarter, the global supply chain deteriorated and various REV business units were put on allocation of components. Perhaps the most significant was this trickle-down related to semiconductors and the implications this had on our OEM chassis partners, their ability to deliver at previously committed levels or even at historical levels. Additionally, there were challenges on all components that rely on chips, such as diesel, exhaust fuel tanks, and other electronic items. The impacts become more widespread to include other components that were not chip-dependent, such as axles, generators, wiring harnesses, seats, and windows. It became very difficult to predict what components would be shorted on supply, and this condition still exists today. We significantly improved purchasing and supply chain capabilities over the past year under the leadership of our supply chain officer, Rob Vyslowski. His team has worked to diversify the supply chain and accelerate strategies to mitigate the shortages we experienced throughout the past year. As a result, we were able to procure components and chassis that we would not have been able to acquire in the past. We also added overseas third-party services to source internationally, added e-auctions for competitive online bidding, and dual-sourced a portion of our exposure that was previously sole-sourced. The initiatives had the dual benefit of filling supply gaps and lowering costs during a highly inflationary environment. Our sourcing and pricing actions allowed us to remain positive price costs throughout the year, but the implications of material shortage to our throughput did more than offset additional productivity gains that we otherwise may have realized during the year. Despite these challenges, we posted year-over-year adjusted EBDA margin improvements in each quarter of the year. In total, we delivered 290 basis points of improved margin versus last year. Not only did we convert sales to earnings, but we also converted these earnings to cash, with full-year free cash flow conversion of 174%. The quality of earnings allowed us to pay down $129 million of net debt in fiscal 2021, placing us in a strong financial position. Total liquidity under ABL credit facility is now $290 million, which provides significant flexibility and opportunity to pursue our strategic agenda. We delivered capital allocation philosophy in depth in our investor day in April. It involves deployment of capital for inorganic activity, shareholder returns of cash in forms of dividends and share repurchase, and maintaining appropriate leverage. Turning to slide four, I'd like to discuss the organic investments that we have made in the business in 2021. In April 2021, we introduced the RevDrive business system and committed to building capabilities that this required. Early, I discussed the work that we have undertaken with our supply chain and purchasing since Rob Dyslowski joined us last December. We have also been investing in our people to develop our continuous improvement and lean capabilities. Since January of 2021, We have trained nearly 12% of our 7,000 employees on the tenets of waste reduction and lean thinking through formal classroom and on-job programs. We have standardized our processes and used technology to improve reporting to gain greater visibility at the center. Today, we are actively tracking over 700 projects targeted on the elimination of waste and inefficiency to create value. We will continue to invest in advancing our employees' capabilities and the number of certified implementers will continue to grow, making continuous improvement mindset part of our culture. Within the fourth quarter, we announced the appointment of Eric Sandstrom as Senior Vice President of Engineering and Technology. This new role is critical to the achievement of our operational value engineering targets. In addition, Eric will focus on design process and engineering capabilities to deliver product platforming and innovation needed for immediate and long-term product simplification. He also will lead our technology advancement in the areas of vehicle electrification and data and analytics for our vehicles. Prior to joining REV Group, Eric was the Global Chief Engineer for Electric Propulsion Systems at General Motors and led a team responsible for the development of the propulsion system for the all-electric Hummer SUT and SUV, among others. He began his career at BorgWarner and held progressive leadership roles over a 20-year period with a focus on global product strategy, engineering, program management within the automotive industry. I'm very pleased that Eric has joined our team and look forward to the impact that he will have on advancing our business performance and innovation. There are several recent announcements that we have made in electrification of our products. In November, our E&C municipal transit bus business debuted its fully electric bus at the APTA Expo. This I mentioned previously in my comments. The bus is built on the proven access platform, which has over 20 years of trusted performance and is the first battery electric bus in the industry to also feature a 100% zero-corrosion steel construction. Upon completion of Altoona track testing, this bus will be eligible for federal funding provided to municipalities and recently increased within the infrastructure bill. We also announced a firm order for the first North American-style fully electric fire truck named Vector. The city of Mesa, Arizona ordered Vector from one of our E1 authorized dealers, but the fully electric fire truck is also available in all the Rev Group fire brands. The customizable vector has the industry's longest electric pump duration, which allows four hose lines to be in use for up to four hours on a single charge. It includes superior battery storage, offers a safer, lower center of gravity, and regenerative braking. We've been actively quoting this unit and are excited to have it planned for showing it to you at the FDIC show this spring. Earlier this week, we announced several agreements that expand the prospects of electrifying ambulance in North America as well as overseas. The agreements include an order for five ambulance from the nation's largest private medical transport company, American Medical Response. The first vehicles for AMR are expected to be completed in April of 2022. and will be delivered to five communities in California. AMR holds an option to purchase 25 additional electric ambulances under this agreement. Next, Hamad Medical Corporation, Qatar's premier not-for-profit healthcare provider, is conducting an operational trial of a state-of-the-art zero-emissions battery electric type 2 ambulance. Finally, our REVO business announced its contract with General Services Administration has been amended to include zero-emissions battery electric ambulances. GSA is the only sole source for non-tactical vehicles purchased by the federal government agencies in the United States. Agencies with access to this contract include the Department of Defense, Department of Energy, the Veterans Health Administration, the National Park Service, and Indian Health Services. The addition of the zero-emission ambulances to the GSA contract is well-timed, with the recent passing of federal infrastructure bill that contains significant investments in support of electric vehicles. Turning to slide five, fourth quarter consolidated net sales decreased 4.3% versus prior year quarter. The decrease primarily the result of lower F&E sales related to chassis and supply chain constraints, partially offset by higher sales in commercial and recreation segments. Adjusted EBDA increased by $3.1 million, or 80 basis points. The increase was primarily the result of increased sales in recreation segment and lower corporate sales. expenses partially offset by lower contribution from F&E and commercial segments. Despite the revenue challenges experienced within the quarter, our consolidated segment performance maintained a 17% decremental margin versus the fourth quarter of 2020. I'll now turn it over to Mark for details on our fourth quarter financial performance. Mark.