REV Group (REVG) Morgan Stanley‘s 12th Annual Laguna Conference 2024 summary

Portfolio overview and recent changes

• Consolidated from three to two segments after divesting the Collins Bus business; now focused on Specialty Vehicles and Recreational Vehicles.

• Specialty Vehicles includes fire and emergency, terminal trucks, street sweepers, and municipal transit buses, with the latter being exited by year-end.

• Recreational Vehicles segment is mostly motorized, covering Class A, B, and C, plus a small camper towable business.

Demand trends and backlog dynamics

• Fire apparatus demand remains strong, with backlogs extending two to three years; normalization is occurring faster in ambulances than fire trucks.

• Book-to-bill ratios remain healthy, supporting continued strong demand.

• Replacement cycles are driven by municipal funding and vary widely by community size; no signs of order slowdowns.

Pricing, margins, and efficiency initiatives

• Nine price increases since 2021, totaling 40%; about halfway through price realization in fire, further along in ambulance.

• Double-digit margins achieved, with further expansion expected as price realization continues and efficiency initiatives ramp up.

• Margin enhancement over the next 2.5 years will be driven by backlog pricing and simplification efforts.