REV Group, Inc.

Good day, and welcome to the REV Group fourth quarter earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Drew Knopp. Please go ahead, sir.

Good morning, and thank you for joining us. Earlier today, we issued our fourth quarter and full year fiscal 2024 results. A copy of the release is available on our website at investors.revgroup.com. This morning, we will discuss our fourth quarter and full year results, our fiscal 2025 outlook, and then transition the call to our Investor Day presentation before opening the call to questions from analysts and investors. Today's call is being webcast in a slide presentation titled, fiscal fourth quarter 2024 results, which includes a reconciliation of non-GAAP to GAAP financial measures, is available on the website. Please refer now to slide two of the 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 and Form 10-K filed with the SEC earlier today, and other filings that we make with the SEC. We just claim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. All references on the call today to a quarter or year are our fiscal quarter or fiscal year, unless otherwise stated. Joining me on the call today is our President and CEO, Mark Skanechny, and our CFO, Amy Campbell. 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. This morning, I will discuss our fiscal 2024 consolidated results before highlighting select accomplishments as we exit the year and then move on to our consolidated fourth quarter financial performance. I will then turn it over to Amy to discuss our segment financials and our fiscal 2025 outlook before we transition the call to the investor day discussion where we will provide our intermediate financial targets and a refreshed capital allocation framework. Full-year consolidated net sales decreased 258 million, or 9.8 percent, versus the prior year. Fiscal 2023 included a full-year result for Collins Bus, which was divested at the end of the first quarter of 2024. Collins contributed $147 million in revenue during the last three quarters of 2023, Adjusting for the $147 million of revenue Collins generated in the last three quarters of 2023, net sales decreased $111 million, or 4.4%, year-over-year. Lower net sales were primarily related to our cyclical, recreation, vehicle, and terminal truck businesses, which experienced $257 million and $161 million full-year sales reductions, respectively, on a year-on-year basis due to challenge market conditions that we have discussed on previous calls. Partially offsetting these impacts was a $281 million or 23% year-over-year increase in net sales within the fire and emergency groups that benefited from production ramps that drove throughput increases and price realization. Full-year consolidated adjusted EBITDA of $162.8 million increased $6.2 million or 4% year-over-year despite lower sales. Adjusting for 32.8 million of earnings that Collins contributed during the last three quarters of 2023, adjusted EBITDA increased by 39 million, or 31.5%. Programs aimed at improving operating efficiencies across the enterprise and favorable price realization within the specialty vehicles businesses resulted in an impressive 180 basis point year-on-year margin expansion when considering the sale of Collins. Discipline cost management within the recreational vehicle segment enabled the segment to maintain 19% decremental margin on a 28% sales decline and hold 6.3% margin for the full year. Turning to slide four. Throughout the year, we achieved a meaningful increase in our fire and emergency production rates, exceeding pre-pandemic levels of throughput. This improvement is a direct result of our focus on operational excellence with lean initiatives that streamline workflows, reduce inefficiencies, and improve production schedules. Our cumulative internal efforts have driven a significant improvement in specialty vehicle results and positions us well for sustained operational performance. Increased throughput has also contributed to expanded adjusted EBITDA margins as higher output enabled greater price realization and operational leverage. Our enhanced profitability also reflects disciplined cost management and strategic pricing actions, which led to a seven-year high in adjusted EBITDA margins in both the fire and ambulance groups. These results demonstrate our ability to drive both growth and efficiency, creating lasting value for our stakeholders. Specialty vehicles segment adjusted EBITDA in the fourth quarter 11.4%, provides a solid foundation for the achievement of the updated intermediate targets that Amy will present shortly. Post-pandemic, the emergency vehicles industry benefited from several favorable macro trends that increased demand for our products and has resulted in Rev Group exiting fiscal 2024 with a robust 2.5-year overall emergency vehicle backlog of units based on fourth quarter production rate. Key demand drivers include a natural replacement cycle of aging vehicles, federal stimulus funding that bolstered municipal budgets, rising real estate values and general tax basis, as well as population growth and urban sprawl. Our record high 4.2 billion specialty vehicles backlog provides a rare level of demand certainty and production planning visibility, setting us apart from industrial manufacturing peers who face greater variability in their order pipeline. In addition, within the fourth quarter, we completed the previously announced wind down of the El Dorado National California, or ENC, municipal transit bus business. Upon completion of all units within backlog, we announced the sale of ENC on October 18th for a sale price of approximately $52 million before transaction costs to Rebus, Inc. ENC has a long history with five decades in the mass transit industry, and we are pleased the brand is set to continue. I want to thank all of our customers as well as the ENC employees and dealers for their support throughout this transition. With the wind down and sale of both Collins and ENC, we successfully exited both of our bus businesses in 2024, resulting in a more streamlined and focused organization, which will drive value going forward while also creating opportunity to return capital to shareholders. I was pleased to announce that David Douck was appointed to the board of directors in the fourth quarter. David serves as chairman of the board and chief executive officer of American Axle Manufacturing, a global tier one automotive supplier headquartered in Detroit, Michigan. He has served on his board since 2009 and currently serves on the boards of Marishore Mutual Holdings and the National Association of Manufacturers. He is also a member of the Stellantis Supplier Advisory Council. We believe his significant knowledge and industry insights will further Rev Group's operational and performance imperatives. Finally, today we are announcing that our board has authorized a new $250 million share repurchase program and a 20% quarterly cash dividend increase. These actions underscore our confidence in the company's financial strength and long-term growth prospects while demonstrating a focused strategy of returning capital shareholders. The share repurchase program replaced the current program, expires in 24 months, and provides management flexibility and manage the capital structure effectively. Meanwhile, the dividend increase reflects a sustained commitment to rewarding shareholders with a growing income stream. Together, these initiatives highlight the company's dedication to creating shareholder value and allowing capital allocation with investor interest. Please turn to page five of the slide deck as I move to a review of our fourth quarter consolidated financial results. Fourth quarter segment sales were $597.9 million. As a reminder, the prior year's quarter included $54.2 million in net sales attributed to Collins bus. Excluding the impact of the Collins divestiture, net sales decreased $41.2 million, or 6.4% compared to the prior year quarter. As I previously mentioned, our cyclical, recreation, and terminal truck businesses continue to navigate through challenged markets in the fourth quarter. As we exit the year, we anticipate that these markets will remain challenged through the first half of our 2025 fiscal year. Furthermore, the wind down and sale of the E&C municipal transit bus business, which was completed early in the fourth quarter of this year, create an additional year-on-year revenue comparison headwind in the quarter. These headwinds were partially offset by continued sequential and year-on-year momentum that delivered strong performance in the fire and ambulance groups. Consolidated adjusted EBITDA of $49.6 million decreased $4.4 million. Excluding the impact of Collins Bus, which generated $13.4 million in the prior year quarter that did not recur this year, adjusted EBITDA increased $9 million, or 22.2%. This was largely due to strong performance within the FIRE Group, driven by efficiency gains, price realization, and a favorable product mix. that more than offset lower performance within the recreational vehicle segment. With that, please turn to slide six, and I'll turn the call over to Amy for detailed segment financials.