REV Group,Inc。(REVG) 首席执行官 Tim Sullivan 在 2019年 第三季度业绩 - 收益电话会议记录

[机器翻译] 电话会议 · 2019年09月08日 · 43 次阅读

REV Group, Inc. (NYSE:REVG) Q3 2019 Earnings Conference Call September 5, 2019 11:00 AM ET

REV Group,Inc。(纽约证券交易所代码:[REVG])2019年第3季度收益电话会议2019年9月5日美国东部时间上午11:00

公司参与者

Drew Konop - IR
Tim Sullivan - President and CEO
Dean Nolden - CFO
Ian Walsh - COO

  • Drew Konop - IR
  • Tim Sullivan - 总裁兼首席执行官
  • Dean Nolden - 首席财务官
  • Ian Walsh - 首席运营官

电话会议参与者

Jerry Revich - Goldman Sachs
Steve Volkmann - Jefferies
Mig Dobre - Robert W. Baird and Company
Chad Dillard - Deutsche Bank
Andrew Casey - Wells Fargo Securities
Courtney Yakavonis - Morgan Stanley
Joel Tiss - BMO Capital Markets

  • Jerry Revich - 高盛
  • Steve Volkmann - Jefferies
  • Mig Dobre - Robert W. Baird and Company
  • 乍得迪拉德 - 德意志银行
  • 安德鲁凯西 - 富国银行证券
  • Courtney Yakavonis - 摩根士丹利
  • Joel Tiss - BMO资本市场...

会议主持员

Greetings and welcome to the REV Group Inc. Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Mr. Drew Konop, Vice President of Investor Relations. Thank you. You may begin.

欢迎来到REV集团公司2019年第三季度收益电话会议。 此时,所有参与者都处于只听模式。 一个简短的问答环节将在正式的演讲之后进行。 [操作员说明]提醒一下,此会议正在录制中。

现在我很高兴向您的主持人介绍投资者关系副总裁Drew Konop先生。 谢谢。 你可以开始吧。

Drew Konop

画了Konop

Thanks, Mitchell. Good morning and thank you for joining us. Last night, we issued our third quarter 2019 results. A copy of the release is available at our website at investors.revgroup.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of non-GAAP to GAAP financial measures that we will use during this call. It is also available on our website.
Please refer now to slide two of that presentation. Our remarks and answers will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different 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 last night 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 conference call, if at all. All references on this call to a quarter or a year or our fiscal quarter or fiscal year unless otherwise stated.
Joining me on the call today, are our President and CEO, Tim Sullivan; and CFO, Dean Nolden.
Please turn to slide three. I'll turn the call over to Tim.

谢谢,米切尔。早上好,谢谢你加入我们。昨晚,我们发布了2019年第三季度业绩。可在我们的网站investor.revgroup.com上获取该版本的副本。今天的电话正在进行网络直播,并附有幻灯片演示,其中包括我们将在此次通话中使用的非GAAP与GAAP财务指标的对账。它也可以在我们的网站上找到。

现在请参阅该演示文稿的第二张幻灯片。我们的评论和答案将包括“私人证券诉讼改革法案”界定的前瞻性陈述。这些前瞻性陈述受到风险的影响,可能导致实际结果与这些前瞻性陈述中明示或暗示的结果存在重大差异。这些风险包括我们在昨晚向美国证券交易委员会提交的8-K表格中描述的事项以及我们向美国证券交易委员会提交的其他文件。

我们不承担更新这些前瞻性陈述的义务,这些前瞻性陈述在我们下一季度收益电话会议之前可能不会更新,如果有的话。除非另有说明,否则本次电话会议的所有参考文件均为一季度或一年或我们的财政季度或财政年度。

今天和我一起参加电话会议的是我们的总裁兼首席执行官蒂姆沙利文;和CFO,Dean Nolden。

请转到幻灯片三。我会把电话转给蒂姆。

Tim Sullivan

蒂姆沙利文

Thanks, Drew. Good morning, everyone. And thank you for joining us to discuss REV Group’s third quarter results.
So what happened in the past three months that caused us to fall short of our goals in the third quarter and reduce our full year earnings guidance by approximately 30%. A large portion of the change can be defined in one word, labor. Strategic decisions we made pertaining to labor during this fiscal year cannot be blamed entirely on our current situation with the tariffs, but they were a significant contributor. I will provide some commentary on what is transpired and then Dean will follow details on our Q3 financial performance, as well as a detailed financial analysis of our revised guidance.
First and foremost, we believe the fundamentals that drive our business remain strong with the exception of softness in the RV market, notwithstanding the overall strength of our markets and backlog, third quarter performance was well below our expectations. And we now know that what occurred in the third quarter will flow into our fourth quarter.
Slide three identifies three primary drivers of underperformance, as well as some positives within the quarter, including the actions we're taking to improve our financial results and drive shareholder value. I'll walk you through the challenges we faced in the quarter and order of the impact it had on our third quarter, and full year guidance.
Consolidated results were primarily driven by underperformance at our three largest businesses. First, the production ramp in plant expansion, and one of our primary fire facilities has progressed slower than we anticipated. As a reminder, we had been ramping up this facility to expand capacity in order to service increasing customer demand.
To fully understand our current situation, I must first offer some historical perspective. When this business was purchased out of bankruptcy in 2006, there was a major reduction in the physical footprint of the plant, as well as a reduction in the workforce of over 800 people. As our brand and market presence has recovered in recent years, we have been meeting our shipping requirements by engaging in an inordinate amount of overtime. This large amount of overtime was no longer sustainable at our current manufacturing labor market.
In other words, turn over became a major deterrent to continuing to rely on overtime to meet our production needs. Manufacturing labor is in high demand and people have many choices where they work.
In Q1, we embarked on a 36% expansion of our manufacturing footprint, which constituted expanding into three new buildings in close proximity to our current plant. This expansion also required a 38% increase in labor.
Those of you that appreciate manufacturing understand that this level of expansion is arduous in normal times, let alone in a very tight labor market. Our challenges have been overcoming bottlenecks as we balance our new plant flow and higher labor costs as we onboard and train new employees to fulfill our goal of doubling our plant capacity from 2017 levels. Basically, we are carrying excess labor as we expand and balance the expanded plant.

谢谢,德鲁。大家,早安。感谢您加入我们,讨论REV集团第三季度业绩。

因此,过去三个月发生的事情导致我们在第三季度达不到目标,并将全年盈利预期下调约30%。很大一部分变化可以用一个词来定义,即劳动。我们在本财政年度做出的与劳工有关的战略决策不能完全归咎于我们目前的关税状况,但它们是一个重要的贡献者。我将对所发生的事情提供一些评论,然后Dean将关注我们的第三季度财务业绩的详细信息,以及对我们修订后的指导的详细财务分析。

首先,我们认为除了房地产市场的疲软外,推动我们业务发展的基本面仍然强劲,尽管我们的市场整体实力和积压,但第三季度业绩远低于我们的预期。我们现在知道第三季度发生的事情将流入我们的第四季度。

Slide 3确定了表现不佳的三个主要驱动因素,以及本季度内的一些积极因素,包括我们为改善财务业绩和推动股东价值而采取的行动。我将带您了解我们在本季度面临的挑战以及它对第三季度的影响以及全年的指导。

合并结果主要是由于我们三大业务的表现不佳。首先,工厂扩建的生产阶段,以及我们的主要消防设施之一的进展比我们预期的要慢。提醒一下,我们一直在扩大这个设施以扩大产能,以满足不断增长的客户需求。

要完全了解我们目前的情况,我必须首先提供一些历史观点。当这项业务于2006年从破产中购买时,该工厂的实际占地面积大幅减少,以及800多名员工的减少。由于近年来我们的品牌和市场占有率已经恢复,我们通过加入过多的加班费来满足我们的运输要求。在我们目前的制造业劳动力市场上,这一大量的加班时间已不再可持续。

换句话说,翻身成为继续依赖加班来满足我们生产需求的主要威慑力量。制造业劳动力需求很大,人们在工作中有很多选择。

在第一季度,我们开始实现36%的制造业扩张,扩建到我们现有工厂附近的三栋新建筑。这种扩张还需要增加38%的劳动力。

那些欣赏制造业的人明白,这种扩张在正常时期是艰难的,更不用说在非常紧张的劳动力市场中。我们的挑战一直在克服瓶颈,因为我们在新员工的培训和培训中实现我们的工厂生产能力从2017年的水平翻倍的目标,从而平衡我们的新工厂流量和更高的劳动力成本。基本上,随着我们扩大和平衡扩建的工厂,我们正在承载过剩的劳动力。...

As we train and position this new labor, they are inefficient and unproductive, thus significantly deteriorating our earnings. We expect these conditions to alleviate in the fourth quarter, but we do not expect to hit our originally planned one rate until the first half of fiscal 2020. It is important to note that through these challenges, we have worked with our customers to continue to deliver quality fire trucks, we have not experienced any order cancellations.
Additionally, as part of our expansion, we are implementing our proprietary REV Production Systems or RPS, which has added to the accountability, predictability and stability of our operations. RPS has already allowed us to reap additional operational benefits in our Commercial segment, which is performing at very high levels.
Second, we had two situations in our Ambulance business that created a slow start to our year. Similar to our Commercial division last year, we experienced delays in large orders from some of our normal municipal accounts; in particular, a delay in one large order reduced our normal booking levels early in the year by approximately 40%. We have now received that order and we will finish the year with a strong backlog for fiscal year 2020. Although none of this particular large order was shipped in fiscal 2019.
Additionally, we experienced an unusual amount of remount activity in markets this year, although remounts have been an alternative solution to purchasing new units for some time they have become more popular recently delaying replacement of new units for two to three years.
Remounts are approximately half the margin opportunity of our new unit sale. Notwithstanding the initial lack of booking activity we decided to maintain a full workforce in anticipation of delivering against the delayed municipal orders. Quite frankly, this is a new normal in manufacturing in the era of tariffs unlike the past, if you have labor you retain it.
Again, we made a strategic decision that during unusual times like this scarcity of manufacturing labor means you carry the labor you have during times of temporary booking shortfalls. We believe that we could carry the additional labor costs in the first two quarters and approach more normal levels of absorption in the last two quarters.
We have been unable to adequately absorb these costs in the back half of the year and they have negatively impacted our earnings guidance for year-end. We do believe that now with a well-defined backlog that this excessive labor costs will be absorbed by higher expected production rates as our new backlog begins production towards the end of Q4.
On a positive note targeted inventory that was left over from the 2018 supply chain disruption has largely been liquidated and our new general manager at our largest Ambulance business is making strides with production process improvements and level loading the production line.
Third, the RV market in particular Class A and campers experienced a greater than anticipated slowdown of wholesale shipments within the quarter, although we entered the year expecting a 20% decline within the Class A market, certain product types experienced a more severe slowdown in dealer orders in wholesale shipments lagged our retail sales.

当我们培训和定位这种新的劳动力时,它们效率低下且没有生产力,从而显着恶化了我们的收入。我们预计这些情况将在第四季度缓解,但我们预计在2020财政年度上半年之前不会达到我们原计划的一个利率。重要的是要注意,通过这些挑战,我们与客户合作继续提供优质的消防车,我们没有经历任何订单取消。

此外,作为我们扩展的一部分,我们正在实施我们专有的REV生产系统或RPS,这增加了我们运营的责任性,可预测性和稳定性。 RPS已经允许我们在我们的商业部门获得额外的运营效益,该部门的表现非常高。

其次,我们的救护车业务有两种情况,这使我们的年度起步缓慢。与我们去年的商业部门类似,我们的一些正常市政账户的大订单延迟了;特别是,一个大订单的延迟使我们在年初的正常预订水平降低了约40%。我们现在收到了这个订单,我们将在2020财年完成积压工作。尽管这个特殊的大订单都没有在2019财年发货。

此外,我们今年在市场上经历了不寻常的重新安装活动,尽管重新安装已成为购买新设备的替代解决方案,因为它们最近变得更受欢迎,最近推迟了新设备更换两到三年。

重新计算约为我们新单位销售的保证金机会的一半。尽管最初缺乏预订活动,但我们决定维持一支完整的员工队伍,以期对延迟的市政订单进行交付。坦率地说,这是关税时代制造业的新常态,与以往不同,如果你有劳动力就可以保留它。

同样,我们做出了一个战略决策,即在不寻常的时期,例如制造业劳动力的稀缺意味着您在临时预订短缺期间承担了您的劳动力。我们认为,我们可以在前两个季度承担额外的劳动力成本,并在过去两个季度接近更正常的吸收水平。

我们未能在今年下半年充分吸收这些成本,并对年底的盈利预测产生负面影响。我们确实认为,由于新的积压工作在第四季度结束时开始生产,因此现在有明确的积压,这种过度的劳动力成本将被更高的预期生产率吸收。

从积极的方面来看,2018年供应链中断所留下的目标库存大部分被清算,我们最大的救护车业务的新任总经理正在大力改进生产流程并对生产线进行水平加载。

第三,房车市场特别是A级和露营者在本季度经历了比预期更大的批发出货量放缓,尽管我们进入了预期A级市场下降20%的一年,某些产品类型经历了更严重的经销商放缓批发货的订单落后于我们的零售销售。

As a result, we have taken measures to reduce costs at our Class A business by consolidating plants from two to one and shut down one extra week during the July 4th holiday. We have already reduced the share of Class A motor homes in this segment mix from roughly 60% to closer to 45% and we continue to shift our production mix to our stronger performing lines during the demand reduction in the Class A market.
As we approached the September open house, we are excited about the 2021 line up of vehicles that we will be showcasing and we feel that dealer inventories for our products will respond quickly to any upturn in the overall market should it occur this year.
Finally, you’ll recall that at the end of Q2 reported that we have begun to experience more normal material lead times as our suppliers continue to adjust to the tariffs, while this remains the case, we did experience some critical material supply issues during the quarter, which negatively impacted our ability to ship product. Until such time that the tariffs are removed, we expect to continue to manage through some inconsistencies in our material supply.
Despite the underperformance, I’d like the highlight three key positives in the quarter that set REV up for our intermediate and long-term production of financial improvements. First, net cash provided by operating activities in the third quarter was $61 million compared to a $13 million use in the third quarter last year.
The significant year-over-year increase was a result of our focus on efficient management of net working capital and specifically the sale of targeted excess inventory. While we have reduced our full year cash flow guidance due to lower earnings, we anticipate paying down additional debt in the fourth quarter and we continue to target a normalized debt level of 2 times, which would allow REV to once again consider strategic capital allocation deployment within our key end markets.
Second, we also added key personnel within the Commercial segment in Ambulance division. Brian Perry joined us as President of the Commercial segment in July. Brian brings wide operational experience previously managing 21 facilities and his addition will continue upon the solid execution momentum we have built in our Commercial segment.
Within the Ambulance division, we are pleased to announce the addition of Anoop Prakash as the new President, when we hired subsequent to the close of our fiscal third quarter. Anoop let the start-up of Harley Davidson’s Commercial operations in India. Harley Davidson’s direct selling initiatives in Canada and realignment of its U.S. dealer network. We look forward to the positive contributions these gentlemen will bring to their respective positions.
Finally, we are formally introducing REV production systems. Our RPS team has leveraged sustainable processes to enhance operational efficiencies. This involves closely -- working closely with the individual businesses to enhance, install and measure processes, which have contributed to this year's stability and growth within our Commercial segment.

因此,我们采取措施降低A级业务的成本,将工厂从2比1整合,并在7月4日假期期间关闭一周。我们已经将这一细分市场中A级汽车房的份额从大约60%降低到接近45%,并且在A级市场的需求减少期间,我们继续将我们的生产组合转向我们更强大的生产线。

当我们接近九月份的开放式房屋时,我们对2021年将要展示的车辆阵容感到兴奋,我们认为,如果今年发生的话,我们产品的经销商库存将对整个市场的任何好转做出快速反应。

最后,你会记得在第二季度末我们已经开始经历更多的正常材料交货时间,因为我们的供应商继续调整关税,而事实仍然如此,我们确实经历了一些关键的材料供应问题。季度,这对我们的产品运输能力产生了负面影响。在关税被取消之前,我们预计将继续通过我们的材料供应中的一些不一致来管理。

尽管业绩不佳,但我还是希望本季度能够为我们的中期和长期财务改善生产提供REV的三个关键积极因素。首先,第三季度经营活动提供的净现金为6100万美元,而去年第三季度为1300万美元。

由于我们专注于净营运资金的有效管理,特别是销售有针对性的过剩库存,因此同比大幅增长。虽然我们因收益减少而减少了全年现金流量指引,但我们预计第四季度会减少额外债务,并且我们继续将标准化债务水平定为2倍,这将使REV再次考虑战略性资本配置部署在我们的主要终端市场。

其次,我们还在救护车部门的商业部门内增加了关键人员。 Brian Perry于7月加入我们,担任商业部门总裁。 Brian带来了以前管理21个设施的广泛运营经验,他将继续我们在商业领域建立的稳固执行动力。

在救护车部门内,我们很高兴地宣布,当我们在第三财季结束后雇用Anoop Prakash作为新任总裁时。 Anoop让Harley Davidson在印度开展商业运营。哈雷戴维森在加拿大的直销计划和美国经销商网络的调整。我们期待这些先生们将为各自的立场带来积极的贡献。

最后,我们正式引入REV生产系统。我们的RPS团队利用可持续流程来提高运营效率。这涉及与各个企业密切合作,以加强,安装和衡量流程,这有助于今年的商业部门的稳定和增长。

The RPS team has now been dispatched to our Fire & Emergency segment to assist driving higher accountability, output and profitability improvements. We're optimistic that they can leverage the local teams and their experience to get our F&E segment headed in the right direction.
Let's shift to our outlook for the fourth quarter and fiscal 2020, as we begin our planning process for next year. Again, first and foremost, we believe fundamental demand across the majority of our end markets remain solid and we have continued to deliver high quality products against our roughly $1.3 billion backlog.
Fire & Emergency backlog is up 28% year-over-year, which has been the result of an increase of orders across our fire truck and certain ambulance brand categories. We believe addressing the performance issues in the two Fire & Emergency businesses our two largest by far, we have mentioned is fully within our control as we leverage the key personnel additions, and continue to improve and measure the processes at these locations.
While the production cadence within fire has not increased as rapidly as anticipated and our unit sales are essentially flat sequentially. The primary cause of underperformance year-to-date has been lower absorption of increased labor. Our full year guidance now embed a slight increase to fire’s third quarter production exit rate, along with a small amount of margin improvement as we begin to normalize operations from the disruption of training workers, reconfiguring the factory footprint and realigning sales in the production line.
We fully expect that the new plant layout and staff return the fire divisions to its historical profitability and higher production rates over time. However, this guidance reset reflects the current situation within the business.
Our largest ambulance facility, we liquidated much of the targeted inventory that resulted from the chasse disruption late last year, albeit lower margins due to a higher labor content. We believe, for some time that they have become more popular recently. Ambulance remounts at dealers and contractors have increased throughout the year leading to irregular order timing within the industry and some near-term booking headwinds. As I mentioned, we retained current staffing levels relevant downsizing and flexing up to produce some of the large municipal orders that are now in our backlog.
Looking toward the end of the fiscal year and towards next fiscal year, we anticipate unit production at that plant to increase sequentially, which should alleviate the margin pressure we experienced within the business.
Recreation end markets have continued to decline in our largest Class A category. Class A has been a primary driver of recent underperformance. Through this downturn, we have focused on what we can control. Within the quarter we took cost out by rationalizing facilities from two to one and reduced production at our Class A Decatur business. We have a solid line up of product that we will introduce at the September Open House and we remain confident that these will be well received. This trade show serves as a significant venue for wholesale ordering. Dealer inventories or products are at a very low level as retail sales have outpaced replenishment orders.

RPS团队现已被派往我们的消防和紧急部门,以协助推动更高的问责制,产出和盈利能力的提升。我们乐观地认为他们可以利用当地团队和他们的经验来使我们的F&E部门朝着正确的方向前进。

当我们开始明年的规划过程时,让我们转向我们对第四季度和2020财年的展望。同样,首先,我们认为大多数终端市场的基本需求仍然稳固,我们继续为大约13亿美元的积压提供高质量的产品。

消防和紧急救援订单同比增长28%,这是因为我们的消防车和某些救护车品牌类别的订单增加。我们认为解决两个最大的消防和紧急业务中的性能问题,我们提到的完全在我们的控制范围内,因为我们利用关键人员增加,并继续改进和衡量这些地点的流程。

虽然火灾中的生产节奏没有像预期的那样迅速增加,但我们的单位销售基本持平。今年迄今表现不佳的主要原因是增加了对劳动力增加的吸收。我们的全年指导现在略微增加了火灾的第三季度生产退出率,以及少量的利润率改善,因为我们开始使运营正常化,从培训工人的中断,重新配置工厂足迹和重新调整生产线的销售。

我们充分期望新的工厂布局和员工将消防部门恢复到历史盈利能力和更高的生产率。但是,此指导重置反映了业务中的当前情况。

作为我们最大的救护设施,我们清理了去年年底因chasse中断而导致的大部分目标库存,尽管由于劳动力含量较高,利润率较低。我们相信,有一段时间他们最近变得更受欢迎。经销商和承包商的救护车重新装配全年都在增加,导致行业内的订单时间不规律以及一些近期的预订逆风。正如我所提到的,我们保留了当前人员配备水平相关的缩减规模并进行了调整,以生成一些现在正在积压的大型市政订单。

展望本财年末和下一财年,我们预计该工厂的单位产量将连续增加,这将缓解我们在业务中遇到的利润压力。

休闲终端市场继续下降,是我们最大的A类。 A类是近期表现不佳的主要驱动因素。在经济低迷时期,我们专注于我们可以控制的方面。在本季度内,我们通过将设施从二比一合理化并降低了我们的A级迪凯特业务的产量来降低成本。我们将在九月开放日推出一系列稳固的产品,我们仍然相信这些产品会受到好评。该贸易展是批发订购的重要场所。由于零售额超过补货订单,经销商库存或产品处于非常低的水平。...

Our current factory footprint would support dealer restock should it occur. However, our current full year guidance does not rely on this happening. Outside of Class A, we have continued to deliver against a solid backlog in Class B and supersede products, but again our revised guidance takes a more cautious view of those markets as well on a reduced outlook for Towables.
In Commercial, the segment has benefited from improved mix to-date versus 2018 and I would like to reiterate that all businesses in this segment have met or beat expectations this quarter. This group is doing a great job of executing on their backlog and they've embraced the model of continuous improvement and the defined processes that we're deploying.
Across these businesses we're seeing examples of improvement and throughput, lower cost of quality and higher overall profitability versus 2018. While we expect typical seasonality result and lower sales and EBITDA sequentially, the businesses are expected to continue on the path of improved year-over-year performance this quarter and into 2020.
I will now turn the call over to Dean to go through the financials.

如果发生,我们目前的工厂足迹将支持经销商补货。但是,我们目前的全年指导并不依赖于这种情况。在A类之外,我们继续提供B类和取代产品的积压,但我们的修订指引再次对这些市场采取更谨慎的观点以及Towables的前景减少。

在商业方面,该细分受益于迄今为止与2018年相比的改善组合,我想重申,该细分市场的所有业务在本季度都达到或超过预期。这个小组在积压的情况下做得很好,他们已经接受了我们正在部署的持续改进模型和已定义的流程。

在这些业务中,我们看到了改善和吞吐量,质量成本降低以及2018年整体盈利能力提高的例子。虽然我们预计会有典型的季节性结果,并且销售额和EBITDA会持续下降,但预计业务将继续走在改善年度的道路上 - 本季度和2020年的表现超过了今年。

我现在将把这个电话转给迪恩来完成财务报告。

Dean Nolden

Dean Nolden

Thank you, Tim and good morning. I will start on slide four. As Tim discussed, the performance at our three largest businesses was lower than expected in the quarter on a top line and bottom line basis, and the impact of those misses is evident on a consolidated adjusted EBITDA and adjusted EBITDA margin graphs on this page, as well as the update to fiscal 2019 guidance we have provided.
While our net sales have increased slightly for REV as a whole, the poor margin performance at these three specific business units make up nearly the entirety of our miss versus our expectations.
Total net sales for the third quarter were $617 million, up 3.2% compared to the third quarter of last year. The increase in consolidated net sales was primarily due to an increase in net sales in the Commercial and Fire & Emergency segments, offset by a decrease in net sales in the Recreation segment.
Net income for the quarter decreased by 69% to $5.6 million or $0.09 per diluted share, adjusted net income decreased by 45% to $13.6 million, or $0.21 per diluted share. The decrease in the third quarter 2019 net income and adjusted net income was primarily the result of a decrease in gross profit in the Fire & Emergency and Recreation segments, partially offset by an increase in the Commercial segment.
Adjusted EBITDA for the third quarter was $33.5 million versus $47.6 million in the year ago period. The decrease in third quarter was primarily due to lower gross margins in our largest Fire, largest Ambulance and largest Recreation business units. Partially offset by strong earnings in our Commercial businesses, as well as continued strong performance in Recreation by our Class B Super C and Towables businesses.
Please now turn to slide five to discuss the performance of our segments individually. Fire & Emergency segment sales increased by 3.7% to $248 million for the third quarter 2019 versus the year ago period. The primary drivers of this result were improved pricing and mix of fire trucks and ambulances, slightly offset by a decrease in volume of ambulance shipments.
F&E adjusted EBITDA for the quarter declined 52% to $12.1 million due primarily to two drivers that Tim referred to earlier. One higher labor costs associated with the process to increase the output of fire trucks at our largest fire facility. This labor is currently less productive than needed to achieve our targeted line rates.
And second, maintaining staffing levels at one ambulance facility during a period of softness of incoming orders and buildable backlog. Total F&E backlog remains healthy and was up 28% year-over-year to $776 million to both the fire trucks and ambulances.
As Tim mentioned, we now expect the production ramp at our largest fire facility to be delayed into the first half of fiscal 2020. While our operational excellence team continues to implement defined measurable, continuous improvement processes to assist the movement of chassis, cabs and trucks through production and final assembly. At our largest ambulance business, incoming orders, production levels and staffing levels will start to come into balance at the end of the fourth quarter.

谢谢蒂姆,早上好。我将从第四张幻灯片开始。正如蒂姆所讨论的那样,我们三大业务的业绩在第一季度的表现低于预期,在顶线和底线基础上,这些未命中的影响在本页的综合调整后EBITDA和调整后的EBITDA利润率图表上显而易见,以及我们提供的2019财年指导的更新。

虽然整体REV的净销售额略有增加,但这三个特定业务部门的差劲表现几乎构成我们未完成的整体预期。

第三季度的净销售总额为6.17亿美元,与去年第三季度相比增长了3.2%。综合销售净额增加的主要原因是商业及消防及紧急分部的销售净额增加,而康乐业务的净销售额则减少。

本季度净收入减少69%至560万美元或每股摊薄收益0.09美元,调整后净收入减少45%至1360万美元,或每股摊薄收益0.21美元。 2019年第三季度净收入和调整后净收入的减少主要是由于火灾和紧急和娱乐部门的毛利减少,部分被商业部门的增加所抵消。

第三季度的调整后EBITDA为3350万美元,而去年同期为4760万美元。第三季度的减少主要是由于我们最大的火灾,最大的救护车和最大的娱乐业务部门的毛利率下降。部分被我们商业业务的强劲盈利所抵消,以及我们的B级Super C和Towables业务在娱乐方面的持续强劲表现。

现在请转到第五张幻灯片,分别讨论我们细分市场的表现。 2019年第三季度的消防和紧急部门销售额与去年同期相比增长了3.7%,达到2.48亿美元。这一结果的主要驱动因素是消防车和救护车的定价和组合得到改善,但由于救护车运输量的减少而略有抵消。

本季度F&E调整后的EBITDA下降了52%,降至1210万美元,这主要归功于Tim先前提到的两位车手。与我们最大的消防设施增加消防车产量的过程相关的人工成本较高。目前,这种劳动力的生产率低于实现目标生产线所需的生产率。

第二,在收到订单的软性和可建造的积压期间,维持一个救护车设施的人员配备水平。消防车和救护车的F&E积压总量保持健康,同比增长28%至7.76亿美元。

正如蒂姆所说,我们现在预计,我们最大的消防设施的生产阶段将推迟到2020财年上半年。我们的卓越运营团队将继续实施明确的可衡量,持续改进流程,以协助底盘,驾驶室和卡车的移动通过生产和最终组装。在我们最大的救护车业务中,新订单,生产水平和人员配备水平将在第四季度末开始达到平衡。

These two factors give us confidence that profitability should improve from here, albeit at a slower rate than expected, because we won’t start delivering on a recently awarded large municipal contract this year. But we believe this sets us up for better performance in fiscal 2020. In addition, our new General Manager at our largest Ambulance business is hitting stride with improvements to operational efficiency, commercial strategies and adoption of the REV Production System.
We'll move next to the Commercial segment on slide six. Quarterly sales were up 29%, compared to the prior year period, driven by an increase in the volume of transit and school bus shipments, improved pricing and increased sales of shuttle bus and terminal trucks.
Commercial backlog at the end of the third quarter was down 6% to $395 million, compared to the third quarter 2018, resulting from the continued delivery of transit buses to a large municipal customer in the quarter.
Commercial adjusted EBITDA of $19.4 million was up 64% compared to the third quarter of last year. This increase was due to increased sales of higher margin school and transit buses, terminal trucks and improved efficiencies, driven by the implementation of our REV Production System, which started in late fiscal 2018.
Adjusted EBITDA margin increased 200 basis points year-over-year to 9.5% in the third quarter. The results in this segment are evidence of the strength of our products and market positions, the capabilities of our production and management teams, and the benefits of deployment of our RPS OpEx tools.
Turning to slide seven, quarterly sales in the recreation segment declined 16% over the year ago period to $167 million. The decrease in net sales compared to the prior year period was primarily due to a decrease in the shipment volume of Class A motorhomes and higher discounting levels as dealers continue to reduce inventory in connection with soft RV end markets. Net sales of truck campers also decreased slightly, while net sales of our Class B and Super Cs increased.
Recreation adjusted EBITDA decreased 29% compared to the third quarter of last year to $12.8 million. The decrease in adjusted EBITDA compared to the prior year period was primarily due to the lower Class A volumes and competitive discounting.
Tim mentioned the actions we have taken to reduce Class A production volumes and costs. It is important to note that while we have downsized our footprint and cost structure within the current Class A environment, we have retained manufacturing floor space that could be ramped in the event that a more robust future dealer restock within this category should happen.
On slide eight, we provided an update to our full year outlook, which reflects the lower year-to-date performance, as well as the expectation for continued slower pace of production within fire, while we train and integrate the additional workforce.
At Ambulance, due to the timing of our recently awarded larger municipal contract and in Recreation anticipation for continued softness in the Class A RV market, at least through this fall’s Open House event. While both, the fire production ramp energy and the trajectory of the RV market were identified during our last conference call as key challenges in the second half of fiscal 2019. We did not anticipate the magnitude of either outcome.

这两个因素使我们相信盈利能力应该从这里提高,尽管速度低于预期,因为我们今年不会开始交付最近获得的大型市政合同。但我们相信这为我们在2020财年取得更好的业绩奠定了基础。此外,我们最大的救护车业务的新任总经理正在努力提高运营效率,商业战略和采用REV生产系统。

我们将在第六张幻灯片旁移动商业细分市场。由于运输和校车运输量的增加,定价的改善以及穿梭巴士和终端卡车的销售增加,季度销售额与去年同期相比增长了29%。

与第二季度相比,第三季度末的商业积压下降了6%,达到3.95亿美元,这是由于本季度继续向大型市政客户提供过境巴士。

与去年第三季度相比,商业调整后的EBITDA为1,940万美元,增长了64%。这一增长是由于我们的REV生产系统(2018年末开始实施)推动了高利润学校和公共汽车,终端卡车以及提高效率的增加。

第三季度调整后EBITDA利润率同比增长200个基点至9.5%。该细分市场的结果证明了我们的产品和市场地位,我们的生产和管理团队的能力以及部署RPS OpEx工具的好处。

转到第七张幻灯片,娱乐部门的季度销售额同比下降16%至1.67亿美元。净销售额与去年同期相比减少主要是由于A级房车的出货量减少以及折扣程度较高,因为经销商继续减少与软房车终端市场相关的库存。卡车营运商的净销售额也略有下降,而我们的B级和超级C的净销售额增加。

休闲调整后的EBITDA与去年第三季度相比下降了29%,降至1280万美元。调整后的EBITDA与去年同期相比减少的主要原因是A类产量较低且竞争性折扣较低。

蒂姆提到我们为减少A级产量和成本所采取的行动。值得注意的是,虽然我们在目前的A级环境中缩小了我们的占地面积和成本结构,但我们保留了制造场地空间,如果在此类别中出现更加强大的未来经销商补货,我们可以保留这些空间。

在第八张幻灯片中,我们提供了对全年展望的更新,这反映了今年年初至今的表现较低,以及火灾期间生产节奏持续放缓的预期,同时我们培训和整合额外的员工队伍。

在Ambulance,由于我们最近获得更大的市政合同的时间安排以及休闲期待A级房车市场持续疲软的预期,至少在今年秋季的开放日活动中如此。在我们上次电话会议期间,虽然两者都将火灾产生斜坡能量和房车市场的轨迹确定为2019财年下半年的关键挑战。我们没有预料到这两种结果的重要性。

At the time we announced our second quarter results, we had seen progress in the planning for the production ramp up within fire, and fully expected that the project plan to our target cadence by year end was underway.
Unfortunately, we reached limits within the fact that the facility footprint in the third quarter given the new labor and production volume that was introduced to the shop floor. This created bottlenecks which have been challenging to resolve.
Considering the higher number of new employees who are currently under productive, our adjusted EBITDA margin dropped 120 basis points sequentially, on approximately flat sales. This was exacerbated within the F&E segment by retaining our staffing levels in the Ambulance business, despite the late award of that large municipal contract.
We believe both decisions; first, to hire and train labor within fire; and two, to retain labor in ambulance will benefit our customers and investors over the long-term. Deploying our RPS teams to F&E has identified several opportunities to adjust our production plans and processes for improvement across the segment and will add to the stability of continuous improvement as we move into fiscal 2020.
For fiscal 2019, we now expect net sales to be in the range of $2.35 billion to $2.45 billion and adjusted EBITDA in the range of $100 million to $110 million. Net income is forecasted to be in the range of a loss of $8 million to positive income of $5 million and adjusted net income is expected to be in the range of $28 million to $41 million.
You will note the decrease in adjusted EBITDA is much greater than the reduction in sales, reflecting primarily the additional labor that we carried in the third quarter and no longer anticipate will be fully efficient in the fourth quarter.
However, we believe the path to greater profitability is within our control and we will realize healthy incremental margins as we absorb this labor, implement RPS throughout the organization and further execute on our backlog within F&E.
Please turn to slide nine. It is important at this point to provide a reconciliation of where we stood with regard to our full year outlook. When we spoke to you last in early June for our second quarter results and our current guidance. After the end of the second quarter, we had line of sight to achieving the full -- to achieving the range of full year adjusted EBITDA guidance. As we disclosed in connection with our mid-year results, the biggest risks to achievement of our full year guidance were the successful execution of our ramp up in the Fire division and the progression of the RV markets during the seasonally strong summer months.
As the third quarter progressed, our largest Fire business unit progress stalled despite the investment in a large number of new production employees, support staff, additional factory space and related costs. We made the conscious effort to maintain employments and battle through the ramp-up with the assistance of our op-ex teams and certain external expert resources.

在我们公布第二季度业绩的时候,我们看到了生产规划的进展情况,并完全预计到年底我们的目标节奏计划正在进行中。

不幸的是,考虑到引入车间的新劳动力和产量,我们在第三季度的设施足迹中达到了极限。这就产生了一些难以解决的瓶颈。

考虑到目前生产率较高的新员工数量较多,我们调整后的EBITDA利润率依次下降120个基点,而销售额基本持平。尽管该大型市政合同的延期获得批准,但在F&E部门内部通过保留救护车业务的人员配置水平而加剧了这种情况。

我们相信这两个决定;首先,在火灾中雇用和培训劳动力;二,保留救护车的劳动力将使我们的客户和投资者长期受益。将我们的RPS团队部署到F&E已经确定了几个机会来调整我们的整个细分市场的生产计划和流程,并在我们进入2020财年时增加持续改进的稳定性。

对于2019财年,我们现在预计净销售额将在23.5亿美元至24.5亿美元之间,调整后的EBITDA将在1亿美元至1.1亿美元之间。预计净收入将在800万美元的损失范围内,到500万美元的正收入,调整后的净收入预计在2800万美元到4100万美元之间。

您会注意到,调整后的EBITDA的下降远远大于销售额的减少,这主要反映了我们在第三季度进行的额外劳动力以及不再预期的第四季度将完全有效。

然而,我们认为通向盈利能力的途径在我们的控制范围内,我们将实现健康的增量利润,因为我们吸收了这些劳动力,在整个组织中实施RPS并进一步执行F&E的积压工作。

请转到幻灯片九。在这一点上,重要的是要对我们对全年展望的看法进行调和。当我们在6月初最后一次与您讨论我们的第二季度业绩和我们目前的指导意见时。在第二季度结束后,我们有了实现全面的视线 - 达到全年调整后的EBITDA指导范围。正如我们在年中业绩中所披露的那样,实现全年指导的最大风险是成功执行我们在消防部门的增加以及在季节性强劲的夏季月份房车市场的发展。

随着第三季度的进展,我们最大的消防业务部门进展停滞不前,尽管投资了大量新的生产员工,支持人员,额外的工厂空间和相关成本。在我们的运营团队和某些外部专家资源的帮助下,我们有意识地努力维持就业和战斗。

In this tight labor market, we also made the decision to retain our complement of skilled manufacturing employees in one Ambulance business unit despite delayed award of the municipal contract. When these contracts are awarded, we don't include the opportunity in backlog or our production schedules until formal purchase orders are issued against the contract. In this case, POs under this contract were not provided in time, and we are now not physically capable of manufacturing and delivering on any of these trucks under this contract until fiscal 2020.
Lastly, as the summer months progressed, the RV market remains softer than anticipated and further worsened as wholesale shipments slowed faster than retail sales. Dealers remain cautious about the overall trajectory of demand and continue to manage their own balance sheets for minimum leverage and risk. Dealer inventories are now at low levels compared to history as a result. All of these three items together resulted in approximately $26 million of EBITDA leakage during the third quarter from our previous forecast. The magnitude of this impact is consistent with the relative size and profitability of the businesses that were impacted.
As we look into the fourth quarter and towards updating our full-year guidance, this $26 million shortfall, primarily from three business units is not recoverable as it relates to period costs and at the end of -- and we are at the end of the summer peak season for RV and for our model year 2020 coaches.
Given the nature of these issues, and our realistic look at the remainder of our fiscal year, we do not expect meaningful production output increases and efficiencies in our businesses, nor delivery against the large municipal ambulance contract order within this fiscal year, and is not reasonable to anticipate a meaningful rebound in the RV end markets at this point in the RV season.
Although the fourth quarter impact of these items, on our full year outlets is not as significant as it was in the third quarter in proportion to the size of the quarter in our fiscal year. Due to some improvement and the benefit of certain cost reductions, the reasonable expectation further impact in the fourth quarter is another approximately $26 million. The combination of our third quarter adjusted EBITDA miss, plus the anticipated miss from the same issues in the fourth quarter totals approximately $50 million, a second half impact, resulting in our updated guidance range of $100 million to $110 million.
On a positive note, approximately two thirds of this adjusted EBITDA reduction is unrelated to end market demand and we believe a return to prior profitability levels for these F&E businesses is within our control.
Turning to the balance sheet and cash flow results for the quarter, which is a significant positive, net cash provided by operating activities in the third quarter 2019 was positive $61 million, compared to our use of cash of negative $13 million in the third quarter of 2018. This significant $74 million increase in cash from operating activities over the prior year quarter was due to the company's ongoing focus on efficient management of net working capital, in addition to the sale of targeted excess inventory, which included completed inventory, some of which was left over from the supply chain disruptions in late 2018.

在这个紧张的劳动力市场中,尽管延迟授予市政合同,我们还决定在一个救护车业务部门保留我们的熟练制造业员工。在签订这些合同时,我们不会在积压或生产计划中包含机会,直到针对合同签发正式采购订单。在这种情况下,本合同项下的采购订单未及时提供,我们现在无法在2020年之前根据该合同在任何这些卡车上进行制造和交付。

最后,随着夏季的到来,房车市场仍然比预期更为疲软,并且随着批发出货量的增长放缓速度超过零售销售而进一步恶化。交易商对整体需求轨迹保持谨慎,并继续管理自己的资产负债表,以实现最小的杠杆和风险。因此,与历史相比,经销商库存现在处于较低水平。所有这三个项目共同导致第三季度EBITDA泄漏约为2600万美元。这种影响的程度与受影响企业的相对规模和盈利能力一致。

在我们调查第四季度以及更新我们的全年指引时,主要来自三个业务部门的这笔2600万美元的缺口无法收回,因为它与期间成本有关并且在期末 - 而且我们已经结束了RV的夏季旺季和2020年的模型教练。

鉴于这些问题的性质,以及我们对本财年剩余时间的现实看法,我们预计在本财年内我们的业务不会有意义的产量增加和提高效率,也不会对大型市政救护车合同订单进行交付,而不是有理由预计在RV季节此时房车终端市场将出现有意义的反弹。

虽然这些项目的第四季度影响,但在我们的全年网点上并没有像第三季度那样重要,与本财年的季度规模成正比。由于一些改进和某些成本降低的好处,第四季度合理预期的进一步影响是另外约2600万美元。我们的第三季度调整后的EBITDA缺失加上第四季度相同问题的预期缺失总计约为5000万美元,这是下半年的影响,导致我们的最新指导范围为1亿美元至1.1亿美元。

从积极的方面来看,调整后的EBITDA减少中约有三分之二与终端市场需求无关,我们认为这些F&E业务的盈利水平回归是我们无法控制的。

谈到本季度的资产负债表和现金流量结果,这是一个显着的积极因素,2019年第三季度经营活动提供的净现金为6100万美元,而我们在第三季度使用负现金为1300万美元。 2018.上一季度经营活动产生的现金增加7,400万美元是由于公司持续关注净营运资金的有效管理,此外还出售有针对性的过剩库存,其中包括已完成的库存,其中一些2018年末供应链中断遗留下来。

Our net increase of inventory within the third quarter includes an increase of work in process against our backlog in the large municipal orders. Net debt at July 31, 2019 was $399 million and our net leverage ratio was 3.3 times, reflecting over $15 million of net debt reduction within the quarter.
We now expect $70 million to $80 million of cash from operations and over $25 million cash flow for the full year from other initiatives. Due purely to the lower EBITDA forecast over the near-term, not any liquidity or interest coverage issues, we now expect our year-end net debt to EBITDA ratio to end in a low 3 times range, which is still below our covenant maximum.
Having said that, we believe we have strong partnerships with our lender group, we will be proactive managing this situation as appropriate, and our long-term net debt to EBITDA target remains at 2 times or less. And we plan to continue to pay down debt as we strive to improve EBITDA through the fourth quarter and into fiscal 2020.
With that, I'll turn the call back to Tim for some closing comments.

我们在第三季度的库存净增加包括增加了对大型市政订单积压的工作量。 2019年7月31日的净债务为3.99亿美元,我们的净杠杆率为3.3倍,反映了该季度内净债务减少超过1500万美元。

我们现在预计运营现金将达到7,000万至8,000万美元,全年其他计划的现金流将超过2,500万美元。纯粹由于近期EBITDA预测较低,而不是任何流动性或利息保障问题,我们现在预计我们的年终净负债与EBITDA比率将在3倍的低位结束,这仍然低于我们的契约最高值。

话虽如此,我们认为我们与贷方集团建立了牢固的合作伙伴关系,我们将积极主动地管理这种情况,我们的长期净债务与EBITDA目标保持在2倍或更低。我们计划在第四季度和2020财年努力提高EBITDA,继续偿还债务。

有了这个,我会把电话转回给蒂姆,以获得一些结束评论。

Tim Sullivan

蒂姆沙利文

Thanks, Dean. Maybe to help with understanding the magnitude of the dollars involved, it's good to know that approximately 25% of our 8,000 employees work in these two facilities. So clearly these are the two largest facilities in our entire portfolio, and they happen to create these issues at the identical time.
Once again, though, with the exception of RV, we believe we have strong tax base markets. The good news is that we are ramping our manufacturing capability to deal with record backlogs. Most people will say that that is a good problem to have. True, however, we need to be better with our execution in meeting that demand. This has been particularly exasperate in our current markets and the challenges presented by the tariffs, but we still need to manage through it better than we have in the recent past.
We have mentioned many times that 10% EBITDA margins is a target for individual businesses and REV as a whole, it has been almost three years since our IPO and we're behind at this goal on a consolidated basis. Many of our businesses are performing above that level and I would like to recognize them for the good work that they are doing.
Nevertheless, it is time to take another look at those businesses, where a near term path of this target is not yet apparent.
With that operator, I like to open up the line to questions.

谢谢,迪恩。也许是为了帮助理解所涉及的美元数量,我们很高兴知道我们的8,000名员工中约有25%在这两个设施中工作。很明显,这些是我们整个产品组合中最大的两个设施,它们碰巧在同一时间创造了这些问题。

不过,除RV外,我们认为我们拥有强大的税基市场。好消息是,我们正在提高我们的制造能力以应对创纪录的积压。大多数人会说这是一个很好的问题。诚然,我们需要在满足这种需求时更好地执行。这在我们目前的市场和关税带来的挑战中尤其令人生气,但我们仍需要比以往更好地管理它。

我们已经多次提到,10%的EBITDA利润率是个人业务和整个REV的目标,自我们首次公开募股以来已经差不多三年了,我们在合并的基础上落后于这个目标。我们的许多业务的表现都超过了这个水平,我想认识到他们正在做的好工作。

尽管如此,现在是时候再看看那些业务,这个目标的近期路径尚不明显。

有了这个操作员,我喜欢打开问题的界限。

问答环节

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question.

谢谢。 我们现在正在进行问答环节。 [操作员说明]我们的第一个问题来自Jerry Revich与Goldman Sachs的合作。 请继续你的问题。

Jerry Revich

Yes. Hi. Good morning, everyone.

是。你好。 大家,早安。

Tim Sullivan

蒂姆沙利文

Good morning, Jerry.

早上好,杰瑞。

Jerry Revich

Tim, I'm wondering, could we just continue the discussion along that last comment that you made the areas that you folks are working hard on are seem to be core parts of the portfolio in terms of businesses that aren’t performing well now. So how big is the part of the portfolio that you're evaluating whether it's a strategic fit, it doesn't sound like it's the businesses that we're working through now based on the fit within the business model. But I just want to get your comments on that to make sure we're thinking about it the right way and understand with magnitude of the portfolio that you are looking at, for potential divestiture.

蒂姆,我想知道,我们是否可以继续讨论最后一条评论,即你所做的那些领域正在努力工作的领域似乎是现在表现不佳的企业的核心部分。 因此,您正在评估它是否具有战略契合性的投资组合部分有多大,这听起来并不像我们现在正在根据商业模式的适应性进行的业务。 但我只是想对此进行评论,以确保我们以正确的方式思考它,并了解您正在考虑的投资组合的规模,以及潜在的剥离。

Tim Sullivan

蒂姆沙利文

It's really two areas that are pretty clear. We have type A RV that is not at the 10% level, and with our other segments performing at that level, and it is shuttle bus. Those are the two specific areas that right now are lagging to our goal.

这两个领域非常清楚。 我们的A型房车不是10%的级别,而我们的其他部门在那个级别上执行,而且是班车。 这些是目前正在落后于我们目标的两个具体领域。

Jerry Revich

Okay. And then on the fire truck side at KME, can you talk about as you're making that transition to have a bigger manufacturing footprint. What are you finding, as you make that transition on product development side, I guess when we've seen plant consolidation and plant moves in this in the fire truck industry in the past, it's been tougher to get institutional knowledge on the floor in terms of all of the custom made components and how they fit together. I'm wondering if you can comment on how that part of the transition is playing out and whether that's impacting the cost structure that we're seeing this quarter and into next quarter?

好的。 然后在KME的消防车方面,你可以谈谈当你正在进行转型以获得更大的制造足迹。 你发现什么,当你在产品开发方面进行转型时,我想当我们在过去的消防车行业看到工厂整合和工厂搬迁时,就在地板上获得机构知识更加困难 所有定制组件以及它们如何组合在一起。 我想知道你是否可以评论转型的这一部分是如何发挥作用的,以及这是否会影响我们在本季度和下一季度看到的成本结构?

Tim Sullivan

蒂姆沙利文

You hit the nail on the head, we're really talking about the E-ONE facility in Ocala, Florida, which is by far our largest fire apparatus plant. That's exactly the issue, Jerry. We're trying to bring in a lot of new people and it's very difficult to have them ramped to the expertise, the level of expertise, we need them to be productive.
Having said that, we've been at this now for a few months and we're starting to see some light at the end of the tunnel, but you hit the nail on the head. That's exactly what the issues are.

你敲了敲头,我们真的在谈论佛罗里达州奥卡拉的E-ONE设施,这是迄今为止我们最大的消防设备厂。 这就是问题,杰里。 我们正试图引进很多新人,很难让他们适应专业知识,专业水平,我们需要他们提高工作效率。

话虽如此,我们现在已经在这几个月了,我们开始在隧道尽头看到一些亮光,但是你的头上钉了一针。 这正是问题所在。

Dean Nolden

Dean Nolden

And Jerry maybe to put that into a little bit of context, it's a 200 additional employees over previous levels on a base of approximately 700 direct labor employees in that facility. So it’s a pretty large magnitude.

而杰瑞可能会把它放在一个上下文中,在该设施中大约700名直接劳动力雇员的基础上增加了200名员工。 所以这是一个非常大的幅度。

Jerry Revich

And the way we’ve seen this issue addressed in the past or most recently at a competitor of yours has been to really reduce the production rates, lock-in the process and then ramp back up. Is that part of the thinking here or are the customer delivery requirements making it tough to take that path to ride the ship here?

我们在过去或最近在您的竞争对手中看到这个问题的方式一直是真正降低生产率,锁定流程然后再提升。 这是思考的一部分还是客户交付要求,这使得在这里乘船这条路很难?

Tim Sullivan

蒂姆沙利文

Yes, it's -- the good news is the customers respect our product and they’ve been infinitely really patient with us. Obviously, it's not easy for them because when they get the money they need to spend it, but I think the other thing that they appreciate to a high level is the fact that we will not ship an inferior quality product. And I think they're willing to wait, I’ve met with a couple customers here just recently. We're not happy that we were late and in one instances we’re two months late, but it complemented me on the level of quality that we’re producing he says never been any better. So they’ve been patient, we got to pick it up though, I mean, our backlog is now approaching 16 months, which is way too long.

是的,它是 - 好消息是客户尊重我们的产品,他们对我们一直非常耐心。 显然,这对他们来说并不容易,因为当他们获得他们需要花钱的钱时,但我认为他们高度欣赏的另一件事是我们不会运送劣质产品。 而且我认为他们愿意等待,最近我在这里遇到了几位顾客。 我们并不高兴我们迟到了,在一个例子中我们迟到了两个月,但它补充了我在我们生产的质量水平上他说从来没有好过。 所以他们一直很耐心,但是我们必须接受它,我的意思是,我们的积压现在接近16个月,这太长了。

Jerry Revich

Thank you.

谢谢。

会议主持员

Thank you. Our next question comes from the line of Steve Volkmann with Jefferies. Please proceed with your question.

谢谢。 我们的下一个问题来自史蒂夫沃尔克曼与杰弗里斯的合作。 请继续你的问题。

Steve Volkmann

Hi. Good morning, guys.

你好。 早上好家伙。

Tim Sullivan

蒂姆沙利文

Good morning, Steve.

早上好,史蒂夫。

Steve Volkmann

I guess, I want to just try to step back here little bit in and try to understand what's going on in the sense that obviously companies have issues here and there and they sort of address them. And it sounds like you're doing that in some cases, but they just keep coming up.
And Tim it just feels like you don't have the reporting processes in place, or maybe the people how does this stuff just keep coming up. I mean 90 days ago we had a very different message from you guys and obviously things have really going off the rails during the quarter and I'm just -- I don't understand how that can change that quickly. And that it seems like you guys just don't have the sort of the feedback loops that you’d need to stay on top of this stuff, I don’t know if you can address that, but…

我想,我想尝试回到这里一点点,并尝试了解发生了什么,显然公司在这里和那里有问题,他们有点解决它们。 听起来你在某些情况下这样做,但他们只是不断上升。

而Tim只是觉得你没有适当的报告流程,或者人们可能会不断提出报告的过程。 我的意思是90天前,我们收到了一个非常不同的信息,显然事情在本季度确实有些不合时宜而且我只是 - 我不明白这是如何迅速改变的。 并且看起来你们只是没有那种你需要保持在这些东西之上的反馈循环,我不知道你是否可以解决这个问题,但......

Tim Sullivan

蒂姆沙利文

Steve it’s a fair comment, obviously, when we were sitting here in the first week in June we were laser focused on material demand and material lead time not believing that the ramping up at E-ONE and sustaining the labor at REV will would not write itself during the third quarter little in the fourth quarter. It’s a fair comment, I mean, we got to get better, at execution, we got to get better at looking to see what's coming at us.
I think in many respects, we thought we had some light at the end of the tunnel with E-ONE, we have been at it for six months and we were making progress. I don't think there's a person in this company that really fully appreciated the fact that we were not going to get to the production levels in the third and fourth quarter because we always got there before. The problem is that this was a massive increase in capacity.
And I mentioned in my remarks this is something that’s difficult in normal times, let alone times that we’re in right now. We're battling 30% labor turnover on average in our plants right now and that’s not normal, and that really has to do with the fact that the labor market is incredibly tight. So every time you train somebody there for a couple weeks, they are gone and as you try to ramp your production you're bringing people that don't know anything about the work you're doing. So you're starting from scratch.
It's just a tough situation, your point is well taken, I mean, you get to the point where you say when you guys going to get on your game. We’ve had two years in a row now. Last year, with the material side of the tariffs, this year the labor side and just other delays, we got to get on top of it. And we're dedicated to get that done.

史蒂夫这是一个公平的评论,显然,当我们在6月的第一周坐在这里时,我们激光专注于材料需求和材料交付时间,并不相信E-ONE的升级和维持REV的劳动将不会写在第三季度,第四季度很少。这是一个公平的评论,我的意思是,我们必须变得更好,在执行时,我们必须变得更好,看看会发生什么。

我认为在很多方面,我们认为我们在E-ONE隧道尽头有一些亮点,我们已经有六个月了,我们正在取得进展。我不认为这家公司有一个人真的完全理解我们不会在第三和第四季度达到生产水平的事实,因为我们以前总是在那里。问题是这是容量的大幅增加。

我在发言中提到,这是正常时期的困难,更不用说我们现在所处的时间了。我们现在正在争取在我们工厂平均30%的劳动力流动,这不正常,这实际上与劳动力市场非常紧张的事实有关。因此,每当你在那里培训一些人几周时,他们就会离开,当你试图提高你的产量时,你会带来那些对你正在做的工作一无所知的人。所以你从头开始。

这只是一个艰难的情况,你的观点很好,我的意思是,你说到你们什么时候开始你的比赛。我们现在连续两年了。去年,由于关税的物质方面,今年的劳动力方面和其他延迟,我们得到了它的最重要。我们致力于完成这项工作。

Steve Volkmann

So, I guess, I mean, you talk about things may be starting to improve through the fourth quarter and then getting better in 2020, but how do you have any confidence in that?

所以,我想,我的意思是,你谈到的事情可能会在第四季度开始改善,然后在2020年好转,但你对此有何信心?

Tim Sullivan

蒂姆沙利文

We talked about RPS, right and that's a fairly new phenomenon for us it started Ian Walsh and his team attacked the Commercial segment last year. Last year about this time they started the process and you can see how that has stabilized and done extremely well. We believe in the process that I guess going to have a very positive effect on not only Commercial going forward, but obviously Fire & Emergency.
And it starts to address your concerns or the things that you’ve raised. We need to know daily what's happening on their production floor. And these people have to have goals set and hit targets. And those disciplines have really not been in these businesses that we bought, especially vehicle businesses are not -- as we talked about are not very sophisticated, we got to get them a lot more sophisticated. And we are very encouraged by the results of RPS in Commercial, it's done really well in a fairly short period of time.

我们谈到了RPS,对我们来说这是一个相当新的现象,它开始了Ian Walsh和他的团队去年袭击了商业部门。 去年这个时候他们开始了这个过程,你可以看到它如何稳定并且做得非常好。 我们相信这个过程,我认为不仅会对商业前进产生非常积极的影响,而且显然会对消防和紧急事件产生积极的影响。

它开始解决您的担忧或您提出的问题。 我们每天都需要知道他们在生产车间发生了什么。 这些人必须设定目标并达到目标。 这些学科真的没有进入我们购买的这些业务,特别是汽车业务不是 - 正如我们所说的不是很复杂,我们必须让它们更复杂。 我们对商业中的RPS结果感到非常鼓舞,它在相当短的时间内做得非常好。

Steve Volkmann

Okay. And have you changed any of the incentive programs around, how people get paid or the other opportunity for job security, I guess, relative to hitting these targets?

好的。 你有没有改变任何激励计划,人们如何获得报酬或其他工作保障机会,我想,相对于达到这些目标?

Tim Sullivan

蒂姆沙利文

Yes, we actually broke it down into finer detail we used to have -- when we first started, three years ago, I guess will be four years in November as being REV. It was a pretty broad incentive plan where we had to hit certain global targets for the company. This thing is now being broken down. It's been broken down into quarters, months and weeks. These guys have weekly targets that they need to hit. We can see what's happening. The problem is it's very exasperating to attack and when it gets down to a labor situation, material as crazy as it was last year with chassis and material lead times, that sort of thing. You can kind of -- you can see that company can kind of muscle through it.
Labor is like mercury, I mean, you've got -- they're here today, they're gone tomorrow, you got 10 under training as welders, and by the end of next week, you got two left. We will get that stabilized and we're looking at different ways to incent retention. Just because of the market we're in right now, we've never had to do that before we had very experienced workforces and as we ramp and increase our production capability, we have to figure out how to retain some of these new employees.
The good news is, the longer serving employees, the more experienced employees, they're sticking with us. Those aren't the people that we're having a problem with. The problem is, when you're increasing your labor in one plant by 38%, and you're fighting the 30% retention issue, that's a tall order. I will get there, I mean, we're absolutely convinced that we will get there, but we got to prove it. We haven't -- the last two years and I don't want to use the tariff as an excuse. But it's been hard enough to kind of grow this business and manage it as an operating company as REV without having that anchor around our neck as well trying to reach our goals. Not excuse.
We will get there, I think with RPS. We will get there with some new incentive programs that we're going to introduce here in about six weeks for the new fiscal year. We have to demonstrate it.

是的,我们实际上把它分解成了我们曾经拥有的更精细的细节 - 三年前,当我们刚开始时,我想11月将是四年的REV。这是一个非常广泛的激励计划,我们必须达到公司的某些全球目标。这件事现在正在被打破。它被分解为几个月,几个月和几个星期。这些人有他们需要击中的每周目标。我们可以看到发生了什么。问题是攻击是非常恼火的,当它遇到劳动力状况时,材料就像去年一样疯狂,因为底盘和材料的交付时间就是这样。你可以这样 - 你可以看到公司可以通过它发挥作用。

工作就像水银一样,我的意思是,你已经 - 他们今天在这里,他们明天就走了,你有10名接受培训的焊工,到下周末,你还剩下两个。我们将稳定下来,我们正在寻找不同的保留方式。正因为我们现在所处的市场,我们在拥有经验丰富的员工之前从未必须这样做,而且随着我们提高生产能力,我们必须弄清楚如何留住这些新员工。

好消息是,服务员工越长,经验越丰富的员工,他们就会坚持使用我们。那些不是我们遇到问题的人。问题是,当你将一家工厂的劳动力增加38%,而你正在解决30%的保留问题时,这是一项很高的要求。我会到达那里,我的意思是,我们绝对相信我们会到达那里,但我们必须证明这一点。我们没有 - 过去两年,我不想以关税为借口。但是,这种业务发展并将其作为一家运营公司作为REV进行管理已经很难了,而没有把这个锚定在我们的脖子上以及试图实现我们的目标。不能成为借口。

我想到了RPS,我想到了。我们将在那里提供一些新的激励计划,我们将在新的财政年度大约六周内介绍这些计划。我们必须证明这一点。

Steve Volkmann

All right, thank you. I'll pass it on.

好哒。谢谢你们。 我会传递它。

会议主持员

Thank you. Our next question comes from the line of Mig Dobre with Robert W. Baird and Company. Please proceed with your question.

谢谢。 我们的下一个问题来自于Robert W. Baird and Company的Mig Dobre系列。 请继续你的问题。

Mig Dobre

Good morning, guys. Just to sort of follow-up on the questions already asked. I'm just trying to understand kind of what's going on in Fire & Emergency. I mean, if I look at your implied revenue guidance, you haven't adjusted that a whole lot. So the way I'm kind of interpreting it as the shipments that are coming out of this segment don’t seemed to be kind of materially different than what you are thinking. But obviously, the costs are. So I understand that you're talking about labor as being an issue. The part that I'm not quite clear on is, are you essentially seeing a lot of labor turnover?
And if so, presuming that these newer employees are coming on board, and they're not as efficient shouldn't that result in lower production schedules, as well? Or is it that it simply takes more man hours just to get the product done? I'm not quite clear as to exactly what's happening here. And maybe to Jerry, -- or rather, Steve's question, how do you gain the comfort that you can resolve this problem within, call it the next three months or so?

早上好家伙。只是对已经提出的问题采取后续行动。我只想了解Fire&Emergency中发生的事情。我的意思是,如果我看一下你隐含的收入指导,你就没有调整过很多。因此,我正在解释它的方式,因为从这一部分出来的货物似乎与你的想法没有什么实质性的不同。但显然,成本是。所以我理解你所说的劳动是一个问题。我不太清楚的部分是,你基本上看到了大量的人工流动吗?

如果是这样的话,假设这些新员工加入进来,他们效率不高也不会导致生产计划缩短?或者只是为了完成产品需要更多的工时?我不太清楚到底发生了什么。也许对杰瑞来说,或者更确切地说,史蒂夫的问题,你如何获得安慰,你可以解决这个问题,在接下来的三个月左右调用它?

Tim Sullivan

蒂姆沙利文

Well, they're two different issues. They're both labor related. In the instance of the Ambulance, we basically started the New Year with a very meager small backlog. And we decided to hold that labor, retain it to the full extent possible just for the fact that we had to retain we felt our more experienced workers because we felt, because we're in municipal tax based revenue, we would eventually get that backlog. We did get that backlog. And now as we go into 2020, our ambulance business in Orlando has got a nice backlog, we retain the labor and that will self heal itself, as we move into the new fiscal year.
The orders that we got, we're just too late to really affect the fourth quarter, actually half the third quarter to the fourth quarter. So that was carrying a higher expense than we really thought we were going to, when we gave the guidance back the first week in June. E-ONE is a whole different situation. We're approaching a 16-month backlog, we're trying to significantly ramp the capability of that plant. And that is really the inefficiencies of the workforce.
So it's not holding and retaining people waiting for new business to come, which was a situation in Ambulance. This is a much more complicated problem. We're teaching people how to build fire trucks. And these are people that have never done it before. They'll be good employees overtime, we'll hit our marks overtime.
But if you ask me my confidence and give you a date when Ambulance is going to turn around, I can tell you. We're going to start hitting stride immediately, as we move into fiscal 2020. It's going to be a ramping up effect in Ocala just for the fact that we got to retain these people, train them and make them productive.

嗯,他们是两个不同的问题。他们都与劳动力有关。在救护车的情况下,我们基本上开始了新的一年,积压的积压很少。我们决定坚持劳动,尽可能地保留它,只是因为我们必须保留我们感觉更有经验的工人,因为我们觉得,因为我们在市政税收的基础上,我们最终会得到积压。我们确实得到了积压。现在,随着我们进入2020年,我们在奥兰多的救护车业务得到了很好的积压,我们保留了劳动力,随着我们进入新的财政年度,这将自我治愈。

我们得到的订单,我们来不及真正影响第四季度,实际上是第三季度到第四季度的一半。因此,当我们在六月的第一周给出指导时,这比我们想象的要花费更多。 E-ONE是一个完全不同的情况。我们正在接近16个月的积压,我们正试图大幅提升该工厂的能力。这确实是劳动力的低效率。

所以它不会让人们等待新业务的到来,这是救护车的情况。这是一个更复杂的问题。我们正在教人们如何制造消防车。而这些人以前从未这样做过。他们将是优秀的员工加班,我们将加班加点。

但如果你问我信心并给你一个救护车转身的日期,我可以告诉你。随着我们进入2020财政年度,我们将立即开始大踏步前进。这将是奥卡拉的增长效应,因为我们必须留住这些人,培训他们并使他们富有成效。

Dean Nolden

Dean Nolden

And maybe I can also provide a little bit of context on the bridge that we provided on slide nine, where we talked about $12 million of the third quarter being fire related about half of that is volume, and about half of that is labor. So, even though, we're producing and shipping units sequentially and year-over-year that are pretty consistent. We did have goals and targets at a higher level to start to bring our backlog into a shorter timeframe.
And so, we're short by about 15% or 40 units versus where we thought we'd be year-to-date or in the third quarter, sorry, third quarter in fire. And that provides about half of the mess from the standpoint of the EBITDA. The other piece -- the other half is labor and if you think about the couple hundred employees that we had, and they're not efficient and over $30 per hour kind of fully burden rate.
And then the remaining employees being almost 20% inefficient as they help to integrate and train the new employees. The numbers kind of climb pretty quickly and that's the other half of that $12 million.

也许我还可以提供我们在第九张幻灯片上提供的桥梁上的一些背景信息,我们谈到第三季度的1200万美元与火相关,其中大约一半是数量,其中大约一半是劳动力。因此,即使我们按顺序生产和运输单位,并且这些单位也非常一致。我们确实有更高级别的目标和目标,开始将我们的积压工作缩短到更短的时间范围内。

因此,与我们认为年初至今或第三季度相比,我们缩短了约15%或40个单位,对不起,第三季度火灾。从EBITDA的角度来看,这提供了大约一半的混乱。另一半 - 另一半是劳动力,如果你想到我们拥有的几百名员工,他们就没有效率,每小时超过30美元的全负担率。

然后剩下的员工因为帮助整合和培训新员工而效率低近20%。这些数字很快就会攀升,这是1200万美元的另一半。

Mig Dobre

Okay, that's helpful. I appreciate that. And then you mentioned Ian Walsh earlier, Tim, I mean, he has been on the job now about a year as Chief Operating Officer. And I guess I'm wondering two things. One, what kind of work is he doing? Or what is his view as an operating officer of this feedback loop as has been described in a previous question, and the improvements that you need to be potentially making there to have better control on a business?
And then second, how are you approaching his deployment in terms of next things to tackle, because clearly, your biggest businesses are the ones that are currently hurting? And it seems to me like there's a lot of meat on this bone rather than Commercial at this point? Thanks.

好的,这很有帮助。 我很感激。 然后你提到伊恩沃尔什,蒂姆,我的意思是,他现在已经担任首席运营官一年左右。 我想我想知道两件事。 一,他在做什么工作? 或者他作为前一个问题中描述的反馈循环的操作人员的观点是什么,以及您需要进行哪些改进才能更好地控制业务?

接下来,你将如何处理下一步要解决的问题,因为很明显,你最大的企业是那些目前受到伤害的企业? 在我看来,这个骨头上有很多肉,而不是商业上的肉? 谢谢。

Tim Sullivan

蒂姆沙利文

Well, he is sitting right next to me. So I’ll let him answer for himself.

好吧,他就坐在我旁边。 所以我会让他自己回答。

Ian Walsh

伊恩沃尔什

So, good morning. I think it's the right question. And as Tim described, the focus of main effort started with Commercial was our worst performing segment last year. There was a lot of opportunity that we went after. And we talked and architected, what Tim described is our new RPS. And I'm happy to talk a little bit about what the components are of that. But I think to your point, the focus right now is shifting pretty dramatically over to Fire & Emergency.
We did anticipate, I think that the timing issues that are plaguing them today, my team, myself, I'm spending literally all of my time with those teams, and putting together the plans that we need to have execute against not just the remainder of the quarter, but more importantly setting themselves up for success in 2020.

所以,早上好。 我认为这是正确的问题。 正如蒂姆所描述的那样,主要努力的重点始于商业是去年表现最差的部分。 我们追求了很多机会。 我们谈论和架构,Tim描述的是我们的新RPS。 我很高兴谈谈组件的内容。 但我认为,现在的重点是转移到Fire&Emergency。

我们确实预料到,我认为今天困扰他们的时间问题,我的团队,我自己,我花了我所有的时间与这些团队一起度过,并将我们需要执行的计划放在一起而不仅仅是其余的 本季度,但更重要的是为2020年的成功做好准备。

Mig Dobre

Thank you.

谢谢。

会议主持员

Thank you. Our next question comes from the line of Chad Dillard with Deutsche Bank. Please proceed with your question.

谢谢。 我们的下一个问题来自Chad Dillard与德意志银行的关系。 请继续你的问题。...

Chad Dillard

Hi. Good morning guys.

你好。 早上好家伙。

Tim Sullivan

蒂姆沙利文

Good morning, Chad.

早上好,乍得。

Chad Dillard

So just trying to understand, while the puts and takes on F&E side. Most importantly just I guess like your view on how the pace of margins improvement progresses over let’s say the next three to nine months? It sounds like a lot of it has to do with E-ONE facility and labor issues. So I just want to understand just like from your perspective, how long does it take for labor to ramp up to like the optimal productivity? And how far away are we from that baseline?

所以只是试图理解,而投入和采取F&E方面。 最重要的是,我想您对未来三到九个月利润率改善步伐的进展情况有何看法? 这听起来很多与E-ONE设施和劳工问题有关。 所以我只想从你的角度理解,劳动力需要多长时间才能达到最佳生产率? 我们离基线有多远?

Tim Sullivan

蒂姆沙利文

Well, Dean is going to answer financially with some numbers here, but we clearly think that we will be hitting stride as we approach the second quarter of 2020.

好吧,迪恩将在这里用一些数字来回答经济问题,但我们清楚地认为,随着我们接近2020年第二季度,我们将会大踏步前进。

Dean Nolden

Dean Nolden

And I would say that, from the standpoint of Fire & Emergency and profitability and volumes implied in our guidance for the fourth quarter is kind of a sequential flat quarter in F&E, although we're going to strive to beat that. We don't want to assume that's going to happen at this point given where we are in the year. And so therefore from a margin, and a revenue perspective, you’re going to probably see a pretty flat fourth quarter compared to the third quarter, with opportunity and goals to beat that. But we're at this point, not projecting that until early fiscal 2020.
And as Tim talked about, we've seen in the Ambulance business, particularly larger unit that we talked about, we do have that contract, we are starting to see the purchase orders, those will go on our backlog and then will start to help us absorb that labor in that Ambulance business starting immediately next year as we deliver those products.
So we'll see a ramp up in margins in Ambulance much quicker than Fire because of the proximity of that order. And if you remember, Fire & Ambulance are roughly 50-50 in terms of our total segment.

我要说的是,从消防和紧急情况的角度来看,我们对第四季度的指导意味着的盈利能力和数量在F&E中是一个连续的平坦季度,尽管我们将努力击败它。我们不想假设在这一点上将会发生这种情况。因此,从保证金和收入角度来看,与第三季度相比,第四季度可能会看到相当平淡的机会和目标。但我们现在还没有预测,直到2020财年初。

正如Tim谈到的那样,我们已经看到救护车业务,特别是我们谈到的更大的部门,我们确实有合同,我们开始看到采购订单,这些将继续我们的积压,然后将开始帮助当我们交付这些产品时,我们将在明年开始的救护车业务中吸收那些劳动力。

所以我们会看到救护车的边缘增加比Fire快得多,因为接近该顺序。如果你还记得,就我们的整个细分市场来说,消防和救护车大概是50-50。

Chad Dillard

That's helpful. And then on the REV Production System opportunity, I know you've gotten some good improvement on the Commercial side. So maybe you could perhaps just quantify how much that was? What sort of overlaps in terms of -- or commonalities in terms of problems are you seeing vis-à-vis, the Fire & Emergency group and how big of an opportunity you see for margin improvement and over what timeframe?

这很有帮助。 然后在REV生产系统的机会上,我知道你在商业方面已经有了一些很好的改进。 那么也许你可能只是量化那是多少? 您遇到的问题是什么样的重叠 - 或者问题上的共性,火灾和紧急情况小组以及您在保证金改善和时间框架方面看到的机会有多大?

Dean Nolden

Dean Nolden

Maybe I can start from the standpoint of what we've seen in Commercial and let Tim or Ian follow-up on that and the benefits of RPS. I think first of all, we don't want to say that that is the be all end all of the results we've seen because obviously there's a lot of good product, people and processes currently in place and the mix has helped us. But the RPS has provided the stability and the predictability on the plans and the accountability that it takes or it took to increase the production at two of our largest facilities, our transit bus are more profitable as well, transit bus facility and our school bus facility that have approximately doubled or more than doubled their output since 2018.
Now, you can say that that was kind of a mix benefit, but in comparison to Fire who's also trying to increase their output, we had relatively fewer hiccups. There are a lot of things going on, a lot of things to manage, but you can see that the benefits of just that predictability and the tools and processes that were put in place to make sure that happened in the due course, as we expected. That was the benefit of RPS in Commercial this year-to-date so far.
Anything else?

也许我可以从我们在商业中看到的观点开始,让Tim或Ian对此进行跟进以及RPS的好处。我想首先,我们不想说这就是我们所看到的所有结果的全部结果,因为很明显,目前有很多优秀的产品,人员和流程,而且这种结合对我们有所帮助。但RPS提供了计划的稳定性和可预测性,以及我们在两个最大的设施中增加产量所需的责任或问责制,我们的公交车也更有利可图,公共汽车设施和我们的校车设施自2018年以来,其产量增加了一倍或超过一倍。

现在,你可以说这是一种混合效益,但与Fire同时试图增加产量相比,我们的打嗝相对较少。有很多事情要发生,需要管理很多事情,但是你可以看到这种可预测性的好处以及为确保在适当的时候发生的工具和流程,正如我们预期的那样。到目前为止,这是迄今为止RPS在商业中的好处。

还要别的吗?

会议主持员

Thank you. Our next question comes from the line of Andrew Casey with Wells Fargo Securities. Please proceed with your question.

谢谢。 我们的下一个问题来自安德鲁凯西与富国银行证券的合作。 请继续你的问题。

安德鲁凯西

Thanks a lot. Good morning.

非常感谢。 早上好。

Tim Sullivan

蒂姆沙利文

Good morning, Andrew.

早上好,安德鲁。

安德鲁凯西

A few questions on the cash flow guide. First, do you expect all of that other $25 million the cash generated from other sources outside of operating cash to occur in the fourth quarter? If so, it kind of looks like the Q4 debt reduction should be about $50 million to $60 million to get to that low 3x leverage range. Are those are those correct assumptions?

关于现金流量指南的几个问题。 首先,您是否预计其他所有其他来自运营现金以外的其他来源的现金将在第四季度出现? 如果是这样的话,看起来Q4债务减少应该是大约5000万美元到6000万美元才能达到这个低3倍的杠杆范围。 那些是正确的假设吗?

Dean Nolden

Dean Nolden

Yes, you're correct. Year-to-date on our opportunities for cash reductions outside of regular cash flow, we're right on pace. We've got most of it in though the third quarter. So there's a bit left to go in the fourth quarter that'll help us. But your estimates are pretty accurate.

是的,你是对的。 今年迄今为止我们在正常现金流之外减少现金的机会,我们的步伐正确。 尽管第三季度我们已经完成了大部分工作。 所以在第四季度还有一点可以帮助我们。 但是你的估计非常准确。

安德鲁凯西

Okay, thanks, Dean. And then separately the guide -- again, the cash flow guided it seems to imply Q4 working capital benefit is going to be about half of the Q3 benefit. I'm just wondering what's driving that and does it impact any of the normal seasonality as we look into next year?

好的,谢谢,Dean。 然后单独指导 - 再次,现金流引导它似乎意味着Q4营运资本利益将约为Q3利益的一半。 我只是想知道是什么驱使这一点,并且它会影响我们明年的正常季节性吗?

Tim Sullivan

蒂姆沙利文

This will be -- you're correct and that typically at the end of the fourth quarter in the past there been a much bigger reduction in inventory and working capital and given the status of our backlog, especially in F&E the opportunities that are in front of us starting in fiscal 2020 to increase our throughput to the required levels in Fire and to start delivering on the larger contract in Ambulances, we may have a little bit higher inventory at the end of this year than we would in a typical year end.
So it wouldn’t be something that setting us up for continual year-over-year seasonality difference in change on a permanent basis, but I think the circumstances today will have a little bit in inventory at the end of the year, but still projecting a positive cash from working capital in the fourth quarter.

这将是 - 你是正确的,并且通常在过去的第四季度结束时,库存和营运资本的减少幅度大得多,并且考虑到我们积压的状态,特别是在F&E中,前面的机会 我们从2020财年开始将我们的吞吐量提高到Fire所需的水平,并开始交付更大的救护车合同,我们今年年底的库存可能会比一般年末的库存高一些。

因此,不会让我们永久性地为变化带来持续的年度季节性差异,但我认为今天的情况今天会有一些库存,但仍然预测 第四季度营运资金的正现金。

安德鲁凯西

Okay, thanks. And then lastly, there has been a lot of discussion on F&E so I wanted to ask about the Commercial margin, the improvement year-over-year was good. But I'm wondering how should we look at potential upside from the 9% that you did this quarter, because if I look at it little differently the incremental adjusted EBITDA margin seemed to moderate to 16% and change versus last quarter of about 43%, I’m just wondering, are we seeing the best that Commercial can deliver at this point or was there something in the quarter that impacted that incremental margin?

好的谢谢。 最后,关于F&E的讨论很多,所以我想问一下商业利润率,同比改善是好的。 但我想知道我们应该如何看待本季度9%的潜在上行空间,因为如果我看一下它的差别不大,增量调整后的EBITDA利润率似乎会降至16%,与上一季度相比变化约为43% ,我只是想知道,我们是否看到商业目前能够提供的最佳产品,或者该季度是否存在影响增量利润率的因素?

Tim Sullivan

蒂姆沙利文

We're not seeing the best that Commercial can do because we got two businesses that are dragging us down and that’s the two shuttle bus businesses, and those are the ones that are on watch. The rest of them all performing at very good levels above the 10% EBITDA levels. So more improvement come in Commercial, we just getting started.

我们没有看到商业可以做到的最好,因为我们有两个业务拖累我们,这是两个穿梭巴士业务,那些是值得关注的。 其余的都表现在10%EBITDA水平以上的非常好的水平。 商业方面有了更多改进,我们刚刚开始。

安德鲁凯西

Okay, thank you very much.

好的,非常感谢。

会议主持员

Thank you. Our next question comes from the line of Courtney Yakavonis with Morgan Stanley. Please proceed with your question.

谢谢。 我们的下一个问题来自Courtney Yakavonis与摩根士丹利的合作。 请继续你的问题。

Courtney Yakavonis

Thanks for the question, just wanted to understand back on the F&E labor point, I thought that most of your hiring was done as of the second quarter, obviously, you referenced a 30% churn rate. So is it fair to say you guys are continuing to hire this quarter and into the fourth quarter or is this all done and it is just about training?
And then secondly, on the capacity side you mentioned the new facilities, are those ready to go right now and it’s literally just training or is there still some more win there? And then, I think also you had referenced increase in production plant seven trucks a week to 14, I think the target was close to be 10 by the end of this year. So kind of how should we be thinking about that weekly production rate in the first half in 2020? Thanks.

感谢您提出这个问题,只是想了解F&E的劳动点,我认为您的大部分招聘都是在第二季度完成的,显然,您提到了30%的客户流失率。 那么说你们这个季度和第四季度都在继续招聘,或者这一切都完成了,这只是培训吗?

然后,在容量方面,你提到了新的设施,那些现在准备好了,它只是训练还是还有更多的胜利? 然后,我想你也提到生产工厂每周增加7辆卡车到14辆,我认为目标在今年年底接近10。 那么我们应该如何考虑2020年上半年的每周生产率呢? 谢谢。

Tim Sullivan

蒂姆沙利文

Yes, let me take them one at a time here. I will give you an example, in the third quarter we hired 225 new people in Ocala, we get 95 and those 95 are fingers crossed that we are going to retain them. So the churn is really tough, you are going from a very stable workforce to 38% more bodies in that plant that have never touched a fire truck in their life, so it’s a big challenge.
As far as the footprint, we’re in all three facilities and we’re up and running. I think our biggest challenge right now besides the labor side is making sure we smooth out the flow. We are debottlenecking some areas in the flow, obviously we got new footprint to overcome that. And having said all that it’s sounds dire, but we actually really think there's some really good light of the end of the tunnel I think Ian’s team has been on the ground now for about three months, actually three and half months and we're really making good progress.
I think the good news about that too is some of the new players that are come into play they are embracing some of the new RPS practices, they actually like them I think, I think people like to know the right way to do things. So as bad as it’s been, and as bad as it's going to be as we move through the fourth quarter here and burn through more dollars, I think we're positioned well, I think we will have some good positive news as we get into 2020.

是的,我来这里一次带他们一个。我将举一个例子,在第三季度,我们在奥卡拉雇用了225名新人,我们得到95人,而那些95人手指交叉,我们将保留他们。因此,流失非常艰难,你将从一个非常稳定的劳动力队伍转移到那个从未接触过消防车生命的工厂38%的身体,所以这是一个很大的挑战。

就足迹而言,我们在所有三个设施中都处于运行状态。我认为除了劳动方面,我们现在面临的最大挑战是确保我们顺利完成这一流程。我们正在消除流程中的一些领域,显然我们有了新的足迹来克服这个问题。并且说了所有这些听起来很可怕,但我们确实认为隧道尽头有一些非常好的亮点我认为Ian的团队现在已经实施了大约三个月,实际上是三个半月我们真的取得良好进展。

我认为关于这一点的好消息是一些新的参与者,他们正在接受一些新的RPS实践,他们实际上喜欢他们我认为,我认为人们喜欢知道正确的做事方式。因为我们一直很糟糕,而且当我们在这里进入第四季并烧掉更多美元时,我认为我们的定位很好,我认为随着我们的进入,我们会有一些好消息2020年

Courtney Yakavonis

Okay, got you. And then, on the recreational side, I think that's where you guys have actually decreased your outlook, not just for the As, but it sounds like also for some of the Towables and the Bs and the Cs. So is it fair to say that in that segment, you are adjusting your labor, or are we going to see the same thing that you guys mentioned in Ambulance kind of retaining the labor since it's been trained?

好的,有你。 然后,在休闲方面,我认为那些你们实际上已经减少了你的前景,不仅仅是为了As,但对于一些Towables和Bs以及Cs来说也是如此。 那么可以公平地说,在那个细分市场中,你正在调整你的劳动力,还是我们会看到你们在救护车中提到的那种保留劳动力的事情,因为它已经被训练了?

Tim Sullivan

蒂姆沙利文

Yes, no, I think that's a great question, because we have not in RV, just for the fact that we don't have good visibility into that market. It's one of the markets that's not as predictable as our other businesses, which are tax base, we can see the business it's in advance of us, we can see it coming. And we know which ones we're kind of going to get. We don't have that visibility in RV, so we have not retained labor, to the extent that we have in our other businesses.

是的,不,我认为这是一个很好的问题,因为我们没有RV,只是因为我们没有很好地了解这个市场。 这是其中一个市场不像我们的其他业务那样可预测,这些业务是税基,我们可以看到它在我们之前的业务,我们可以看到它的到来。 而且我们知道我们会得到哪些。 我们在房车中没有这种可见性,所以我们没有保留劳动力,就我们在其他业务中所做的那样。

Courtney Yakavonis

Okay. So the view is that this will be a more downturn on the Recreation side?

好的。 所以有观点认为,这将是娱乐方面的更加低迷?

Tim Sullivan

蒂姆沙利文

Well, we're prepared for it. I mean, it's been down all year and quite frankly, the predictions for 2020 from RVIA are not very encouraging. So we think we've got everything right sized right now. We can react, we haven't cut so deep that we can't react to good business that might come up this month at Open House. But we're low, we're quite a bit lower than what we were just even three months ago. So we're trying to find that rights spot that we don't cut so deep that we can't react, if this thing looks that it's going to be more protracted, we'll do some more trimming if we have to.

好吧,我们已经做好了准备。 我的意思是,它一直在下降,坦率地说,RVIA对2020年的预测不是很令人鼓舞。 所以我们认为我们现在已经拥有了一切正确的尺寸。 我们可以做出反应,我们没有削减到如此之深,以至于我们无法对本月在开放日出现的良好业务做出反应。 但是我们很低,我们比三个月前的水平要低得多。 因此,我们试图找到我们没有做到如此之深以至于我们无法做出反应的权利点,如果这件事情看起来会更加旷日持久,我们会做更多的修剪。

Courtney Yakavonis

Okay. And then, just lastly, on commercial, obviously, we saw some pretty decent sales growth there. But this was the first time that we had seen the backlog down year-over-year in a while. Just curious if you have any comments on that?

好的。 最后,就商业而言,显然,我们看到了一些相当不错的销售增长。 但这是我们第一次看到积压在一段时间内同比下降。 只是好奇你是否有任何意见?

Dean Nolden

Dean Nolden

On the backlog, we are aggressively and appropriately delivering on our larger LA County contract of buses through the end of this fiscal year and into the first quarter of next year. So that's a big focus for us. And that's been a big benefit for us, and hopefully of our customer as well.
But we have good line of sight on transit, bus market, and projects and believe that, that's just something we’ll be filling up again, fairly shortly with additional kind of base level business, larger municipal contracts that are multi-year. So that's not an issue.

在积压的情况下,我们积极适当地在本财政年度末和明年第一季度交付我们较大的洛杉矶县公交车合同。 所以这对我们来说是一个重点。 这对我们来说是一个很大的好处,对我们的客户也是如此。

但我们在运输,公交车市场和项目方面都有良好的视线,并且相信这只是我们将要再次填补的事情,很快就会有额外的基层业务,更多的多年市政合同。 所以这不是问题。

Tim Sullivan

蒂姆沙利文

Yes, I think the -- again, stay tuned for news. We're at that point right now where we should be hearing on follow-on business from both Chicago and LA. And so it's just kind of a timing thing. We don't announce and we don't put in backlog until we got firm, uncancelable business. So stay tuned, and watch that backlog number.

是的,我认为 - 再次,请继续关注新闻。 我们现在就在那里,我们应该听取芝加哥和洛杉矶的后续业务。 所以这只是时间问题。 在得到坚定,不可取消的事业之前,我们不公布,也不进行积压。 所以请继续关注,并观察积压数量。

Courtney Yakavonis

Okay, got you. And then just lastly, you mentioned you did have some critical supply issues during the quarter, I don't think, Dean that you called it out in the bridge. But just if you can quantify that, and which segments they impacted the most?

好的,有你。 然后就在最后,你提到你在本季度确实遇到了一些关键的供应问题,我不认为,Dean你在桥上叫了出来。 但是,如果你可以量化它,以及它们影响最大的部分?

Dean Nolden

Dean Nolden

Yes, that is in the bridge it’s kind of in that other. It's not huge, but it was enough to kind of move the needle slightly. It was in some areas in the shuttle bus business, some of them were in our control, some of them were not. But again, we don't want to overemphasize it, it’s not huge, but it does -- did provide some disruption.

是的,那就是在另一个桥梁中。 它并不大,但它足以让针稍微移动一下。 这是在穿梭巴士业务的一些地区,其中一些是我们控制的,其中一些不是。 但同样,我们不想过分强调它,它不是很大,但确实如此 - 确实提供了一些中断。

Tim Sullivan

蒂姆沙利文

And a shot out to our sourcing people, they've been unbelievable, the last 12 months, and they mitigated that to the full extent they could in the quarter. And I think we'll be better off here in the fourth quarter. I guess the point we just wanted to make is we're not over it. And just when you think it's good to come out from the bunker. There's more tariffs thrown out into the marketplace. And the new wave will affect us to some extent, probably not as much as last year.
But our sourcing teams are staying on top, when I look at the U.S. market and the fact that it only took the material suppliers 12 months to get their lead times back into line. That's pretty amazing. They're doing the best they can it's just -- it's challenging.

对我们的采购人员来说,在过去的12个月里他们已经令人难以置信了,他们在本季度尽可能地减轻了这一点。 而且我认为第四季度我们会好起来的。 我想我们想要提出的观点是我们还没有结束它。 当你认为从沙坑出来时很好。 市场上出现了更多的关税。 而新浪潮将在一定程度上影响我们,可能没有去年那么多。

但是,当我看到美国市场时,我们的采购团队仍处于领先地位,而且只需要材料供应商12个月就可以让他们的交货时间恢复正常。 那真是太神奇了。 他们正在尽力而为 - 这很有挑战性。

Courtney Yakavonis

Thank you.

谢谢。

会议主持员

Thank you. Our final question comes from the line of Joel Tiss with BMO Capital Markets. Please proceed with your question.

谢谢。 我们的最后一个问题来自Joel Tiss与BMO Capital Markets的合作。 请继续你的问题。

Joel Tiss

Hey, how's it gone?

嘿,怎么样了?

Tim Sullivan

蒂姆沙利文

Good morning, Joel.

早上好,乔尔。

Joel Tiss

So just, I mean, I think a lots been asked and answered. And can you update us on your parts initiative? I guess you got to put that on hold a little bit, while you've got all these other issues to work through.

所以,我的意思是,我认为有很多人被问到并回答过。 您能否就零件计划向我们提供最新信息? 我想你必须把它搁置一下,而你已经解决了所有其他问题。

Tim Sullivan

蒂姆沙利文

No, we should put that as a positive Joe, we're up again year-over-year 10%. We're not setting the world on fire obviously, but we'll take it. And I think the team has done a really nice job. We have some really pockets of excellence there where it's above the 10%, but the average is 10%. We've hit as much as 18% in some of the segments. So the initiatives are not on hold, they’re full speed ahead, and we're making good progress.

不,我们应该把它作为一个积极的乔,我们再次同比增长10%。 我们显然没有让世界着火,但我们会接受它。 而且我认为团队做得非常好。 我们有一些非常优秀的地方,超过10%,但平均值是10%。 在某些细分市场中,我们的收入高达18%。 所以这些举措并没有停止,它们全速前进,我们正在取得良好进展。

会议主持员

Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Sullivan for closing remarks.

谢谢。 目前没有其他问题。 我想把这个电话转回沙利文先生的闭幕词。...

Tim Sullivan

蒂姆沙利文

Well, thanks again everyone for joining us today. Obviously, this is another year and another tough year for us. This is not usual for any of us. We're all experienced; we've been in this business of manufacturing things for a long time. We really felt obviously, with the comments I made at the second quarter that we were through a lot of the worst situations that we could face with the tariff situation.
It's just -- you can't ramp easily in this environment right now. It's hard enough just to retain let alone ramp. And we -- the question earlier, why didn't we see it coming maybe we should have. We're dealing with it. It's something we just ask your patients, as we asked our customers to be patient. We'll get there. We know we can and we will. I think that a lot of the things that we're doing on the RPS side of the business are going to reap some tremendous benefits as we go into 2020.
Again, thanks for joining us today. Keep the faith and we'll talk to you again in December.

好的,再次感谢大家今天加入我们。显然,这是另一年,也是我们艰难的一年。这对我们任何人来说都不常见。我们都很有经验;我们长期从事制造这项业务的业务。我们真的感觉很明显,我在第二季度发表的评论表明,我们经历了很多关税情况可能面临的最糟糕的情况。

只是 - 你现在无法在这种环境中轻松崛起。仅仅保留更不用说斜坡是很难的。而我们 - 前面的问题,为什么我们没有看到它可能我们应该有。我们正在处理它。这是我们问你的病人的事情,因为我们要求我们的顾客耐心等待。我们会到达那里。我们知道我们可以而且我们会。我认为,随着我们进入2020年,我们在RPS方面所做的很多事情将会获得一些巨大的好处。

再次感谢今天加入我们。保持信心,我们将在12月再次与您交谈。

会议主持员

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

谢谢。 这就结束了今天的电话会议。 您可以在此时断开线路。 感谢您的参与。 祝你有美好的一天。

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