Credit Suisse Industrials Conference

Transcription

1 REV GROUP, INC. Credit Suisse Industrials Conference NYSE:REVG November 29, 2018

2 Cautionary Statements & Non GAAP Measures Disclaimers Note Regarding Non-GAAP Measures REV Group reports its financial results in accordance with U.S. generally accepted accounting principles ( GAAP ). However, management believes that the evaluation of REV Group s ongoing operating results may be enhanced by a presentation of Adjusted EBITDA and Adjusted Net Income, which are non-gaap financial measures. Adjusted EBITDA represents net income before interest expense, income taxes, depreciation and amortization as adjusted for certain non-recurring, one-time and other adjustments which REV Group believes are not indicative of its underlying operating performance. Adjusted Net Income represents net income, as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance. REV Group believes that the use of Adjusted EBITDA and Adjusted Net Income provides additional meaningful methods of evaluating certain aspects of its operating performance from period to period on a basis that may not be otherwise apparent under GAAP when used in addition to, and not in lieu of, GAAP measures. See the Appendix to this presentation (and our other filings with the SEC) for reconciliations of Adjusted EBITDA and Adjusted Net Income to the most closely comparable financial measures calculated in accordance with GAAP. Cautionary Statement About Forward-Looking Statements This presentation contains statements that REV Group believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, strives, goal, seeks, projects, intends, forecasts, plans, may, will or should or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this presentation and include statements regarding REV Group s intentions, beliefs, goals or current expectations concerning, among other things, its results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which we operate, including REV Group s outlook for the full-year fiscal REV Group s forward-looking statements are subject to risks and uncertainties, including those highlighted under Risk Factors and Cautionary Note Regarding on Forward-Looking Statements in REV Group s public filings with the SEC and the other risk factors described from time to time in subsequent quarterly or annual reports on Forms 10-Q or 10-K, which may cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which only speak as of the date of this presentation. REV Group does not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, expect as required by applicable law. 2

3 Investment Highlights 1 A Market Leader with Iconic Brands and One of the Largest Installed Base of Vehicles 2 3 Serves Attractive, Diverse & Growing End-Markets with Strong Macro Tailwinds & Demand Drivers Multiple Growth & Synergy Levers to Drive Earnings Growth and a Long-Term Goal of 10% EBITDA Margin 4 Opportunity to Leverage Proven Track Record of Successful Acquisitions to Realize Incremental Upside from M&A 5 Unique and Attractive Financial Profile 6 Experienced & Aligned Management Team 3

4 REV HAS A DIVERSE PORTFOLIO OF VEHICLES, EACH DISTINCTLY POSITIONED TO TARGET SPECIFIC CUSTOMER REQUIREMENTS & PRICE POINTS One of the Industry s Broadest Product Portfolios of Specialty Vehicles FIRE + EMERGENCY PUMPER/TANKER AERIAL FIRE TRUCK WITH LADDER AIRCRAFT RESCUE FIRE FIGHTER AMBULANCE TYPE I AMBULANCE TYPE II AMBULANCE TYPE III COMMERCIAL TYPE A SCHOOL BUS TRANSIT BUS MOTORCOACH SHUTTLE BUS TERMINAL TRUCK SWEEPER MOBILITY VAN RECREATION CLASS A DIESEL CLASS A GASOLINE CLASS B CLASS C SUPER C TRUCK CAMPER TRAVEL TRAILER 4

5 REV is a Consolidator Disrupting the Specialty Vehicle Industry REV IS POISED TO CAPITALIZE ON MOMENTUM TO CONTINUE REDEFINING THE SPECIALTY VEHICLE INDUSTRY Unique size and scale amongst specialty vehicle manufacturers As a multi-line producer, offers unique cross-selling and cost synergy opportunities Differentiated business model versus competitors 14 acquisitions completed since 2006 ASV IS FORMED $1.2 BILLION IN SALES 1 $1.9 BILLION IN SALES 2 TIM SULLIVAN BECOMES ASV CEO 1960s SEVERAL BRANDS FOUNDED THEIR SPECAILTY VEHICLE SEGMENTS AND DATE BACK MORE THAN 50 YEARS ASV RENAMED AND REBRANDED REV GROUP AIP PORTFOLIO COMPANIES Acquisitions Milestones ¹ Represents FY Represents FY

6 ATTRACTIVE CHARACTERISTICS INCLUDING VARIABLE COST STRUCTURE AND CONSERVATIVE BALANCE SHEET PHILOSOPHY Unique and Attractive Financial Profile VARIABLE COST STRUCTURE ADJUSTED EBITDA 1 LONG- TERM TARGETS ~85% of costs of goods sold are variable COGS BREAKDOWN Focus on achieving ~10% long-term EBITDA margin target Scaled and synergistic platform leveraging procurement, engineering, distribution, and support functions across businesses MANUFACTURING OVERHEAD LABOR CHASSIS OTHER COGS MATERIALS (EX. CHASSIS) 85% OF COGS ARE VARIABLE CONSERVATIVE BALANCE SHEET Cash and equivalents of $14.7 million with approximately $119 million available under our existing credit facilities as of July 31, 2018 Proforma 1 net leverage 2.6x at the end of Q3 Fiscal 2018 due to seasonal working capital and share repurchase activity LONG- TERM < 2.0x EBITDA LEVERAGE TARGET VISIBLE AND RECURRING REVENUE RECREATION Primarily replacement nature of demand and, in many products, backlog provides revenue visibility $750 $500 $607 $581 Backlog $420 Growth potential in recurring parts sales with highly attractive margins $250 $255 $250 $116 Source: Company management. Note: Some targets are forward-looking, are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management and are based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary, and these variations may be material. For discussion of some of the important factors that could cause these variations, please consult the "Risk Factors" section of the Company s Form 10-K and any subsequent 10-Q(s). Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved, and the Company undertakes no duty to update its goals. 1 Proforma for the impact of the acquisition of Lance in January $- F&E Commercial RV Q3 FY18 Q3 FY17 6

7 REV at a Glance Net Sales FISCAL 2018 YTD Q3 NET SALES BY SEGMENT FISCAL 2017 FULL YEAR NET SALES BY SEGMENT Commercial 33% Fire & Emergency 41% Commercial 29% Fire & Emergency 44% Recreation 26% Recreation 27% $1.7B YTD Q SALES $104M YTD Q ADJ. EBITDA $2.3B 2017 SALES $163M 2017 ADJ. EBITDA 7

8 REV Sales at a Glance Sales Mix 1 SALES BY VEHICLE TYPE SALES BY CUSTOMER TYPE SALS BY CHANNEL RV 29% Specialty 6% Ambulance 23% Fire Apparatus 21% Industrial / Commercial, Private 12% Contractor, 10% Consumer, 28% Government, 50% Direct 27% Dealer 73% Transit Bus 7% Commercial Bus 8% Type A School Bus 6% 1 Represents full year Fiscal 2017 ended October 31,

9 OVER 5 MILLION SQUARE FEET OF NATIONAL MANUFACTURING, SALES, & SERVICE FACILITIES PROVIDE REV WITH A COMPETITIVE ADVANTAGE A Leading Plant and Service Network 21 Domestic Manufacturing Locations 4 Ambulance Plants 5 Fire Plants 7 REV Technical Centers for Fire & Emergency 6 RV Plants 4 Parts Warehouse 4 Bus Plants 3 REV Technical Centers ("RTC") for RVs 2 Specialty Plants 14 After Market Parts and Service Locations 1 REV Corp. Office Additional International Plants: Sorocaba, Brazil; Wuhu, China (JV) 9

10 REPLACEMENT DEMAND FOR THE AGING FLEET OF REV S PRODUCTS REPRESENTS A REVENUE GROWTH OPPORTUNITY Large Installed Base Drives Recurring Replacement Sales REPLACEMENT VALUE OF REV S INSTALLED BASE AVERAGE LIFE CYCLE & SELLING PRICE INCREMENTAL IMPACT OF ACQUISITIONS SINCE IPO WHY CUSTOMERS CHOOSE REV FOR REPLACEMENT FIRE PUMPER TRUCKS: YEARS ($160K- $650K) AERIAL FIRETRUCKS: YEARS ($475K- $1.2MM) Repeat purchase to match in-service fleets ~$36 AMBULANCE AMBULANCE: 5-7 YEARS ($65K- $350K) Brand loyalty and reputation for value, quality, and reliability BILLION REPLACEMENT VALUE OF REV S IN- SERVICE FLEET BUS SHUTTLE BUS: 5-10 YEARS ($40K- $190K) TRANSIT BUS: YEARS ($100K- $500K) SCHOOL BUS: 8-10 YEARS ($35K- $55K) LUXURY BUSES Long-standing customer relationships Broad, customizable vehicle platform SPECIALTY SPECIALTY VEHICLES: 5-7 YEARS ($25K- $165K) Superior product quality and safety RV RECREATION VEHICLES: 8-15 YEARS ($65K- $600K) Network of aftermarket parts, service and remount centers Source: Management estimate Note: Replacement sales opportunity is calculated as the average number of annual units sold multiplied by the average useful life multiplied by the average selling price. 10

11 REV S END- MARKETS HAVE POSITIVE MACRO DRIVERS ACROSS EACH SEGMENT Growing End-Markets Benefit from Incremental Pent-Up Demand KEY FACTS & COMMENTARY END- MARKET GROWTH FIRE + EMERGENCY Aging population and urbanization drives demand 6,000 5,000 FIRE APPARATUS UNIT SALES 7,000 6,000 AMBULANCE UNIT SALES 44% of Net Sales 2 High priority essential needs vehicles funded by municipal budgets and tax revenues Some pent-up demand remains since the last recession in 2008 and fleet replacement cycles provide opportunity 4,000 3,000 2,000 1, ,000 4,000 3,000 2,000 1,000 0 '06 '09 '12 '15 '16 '17 '06 '09 '12 '15 '16 '17 Pre-Recession Average 3 Pre-Recession Average 3 COMMERCIAL Urbanization increasing demand for buses SHUTTLE BUS UNIT SALES (000s) U.S. SCHOOL BUS SALES (000s) Outsourcing of transportation services Legislated replacement requirements Growth expected to continue Unit Sales Below 2006 peak 29% of Net Sales RECREATION Poised for long-term growth with industry recovery MOTORIZED RV UNIT SALES (000s) CLASS A MOTORIZED RV UNIT SALES (000s) 27% of Net Sales 2 Increasing participation rates demonstrate longterm trend toward RV ownership Class A sales below pre-recession average Pre-Rec. Avg Pre-Rec. Avg Pre-Recession Average 1 Pre-Recession Average 1 Source: FAMA, NTEA AMD, RVIA, Mid-Size Bus Manufacturers Association ( MSBMA ), Management Estimate ¹ Pre-recession average reflects the average from 1989 to Percentage of FY2017 net sales. 3 Pre-recession average reflects the average from 2001 to

12 REV BELIEVES THE AFTERMARKET PARTS OPPORTUNITY FOR ITS VEHICLES IN SERVICE IS ~$800 MILLION ANNUALLY Multiple Growth Levers Large Aftermarket Parts Growth Opportunity REV AFTERMARKET OPPORTUNITY & CAPABILITIES REV MARKET SHARE OF ~$800 MILLION PARTS OPPORTUNITY ~$800 MILLION ANNUAL VALUE OF REV AFTERMARKET PARTS OPPORTUNITY 14 AFTERMARKET AND PARTS FACILITIES ~240,000 UNIT INSTALLED BASE ~$27 MILLION INVESTMENT IN FY CURRENT MARKET SHARE 1 REV 10% UPSIDE OPPORTUNITY Expand market share in high margin aftermarket parts and service Dedicated management team to oversee aftermarket business executing comprehensive aftermarket strategy Invested in building out capabilities including 4 dedicated parts warehouses and 1 third party warehouse ONLINE TECHNOLOGY PLATFORM Centralizing aftermarket parts and services business to broaden market coverage Established a web-based platform to provide customers with real time data on parts availability REV ANNOUNCED THE START OF A NEW COLLABORATIVE CONNECTION WITH FORD MOTOR COMPANY DEALERS FOR PARTS IN SEPTEMBER 2017 AND THE START OF A NEW SERVICE PARTNERSHIP WITH RYDER SYSTEM IN MAY 2017 Establishing new partnerships to enhance capabilities and availability of parts in efficient manner ¹ Market share management estimate based on FY2017 results. 12

13 2018 Business Update Year-to-date results impacted by the following items: - Significant raw material price increases driven by global trade and tariff negotiations - Chassis availability (impacted Q3 shipments by approximately 570 vehicles) - Materials shortages due to timing of chassis deliveries and extended supplier lead times - Delayed timing of Class A RV new product introductions - Slower aftermarket parts sales growth Able to largely mitigate cost increases with pricing and cost reduction actions in the quarter Cost reduction initiatives implemented in Q2 benefit the second half of fiscal 2018 and fiscal 2019 Pricing actions put in place build momentum for profitability to offset cost increases in fiscal 2019 Discrete issues with certain product lines are being addressed Fiscal 2019 setting up well with visibility in sales volumes for a few key businesses such as fire apparatus, transit buses and school buses 13

14 REV GROUP, INC