REV Group Inc. Reports Strong Second Quarter Results

BROOKFIELD, Wis. – REV Group Inc. (NYSE: REVG), a manufacturer of industry-leading specialty vehicles, on June 8 reported results for the three months ended April 30 (second quarter 2023).

Consolidated net sales in the second quarter 2023 were $681.2 million, representing an increase of 18.2% compared to $576.3 million for the three months ended April 30, 2022 (“second quarter 2022”). The increase in consolidated net sales was primarily due to higher net sales, including price realization, across all segments.

Highlights included:

• Second quarter net sales of $681.2 million compared to $576.3 million in the prior year quarter
• Second quarter net income of $14.2 million compared to a net loss of $2.3 million in the prior year quarter
• Second quarter Adjusted EBITDA¹ of $41.9 million compared to $23.8 million in the prior year quarter
• Second quarter Adjusted Net Income¹ of $20.8 million compared to $10.6 million in the prior year quarter
• Raises full-year fiscal 2023 outlook for net sales of $2.45 to $2.55 billion, Adjusted EBITDA of $120 to $135 million, Adjusted Net Income of $48 to $62 million, and Free Cash Flow of $43 to $56 million; net income outlook of $15 to $30 million
• Board of directors approves a new $175.0 million share repurchase authorization effective immediately

The company’s second quarter 2023 net income was $14.2 million, or $0.24 per diluted share, which included $3.2 million of restructuring related charges within the Fire & Emergency (“F&E”) segment and corporate. Adjusted Net Income for the second quarter 2023 was $20.8 million, or $0.35 per diluted share, compared to Adjusted Net Income of $10.6 million, or $0.17 per diluted share, in the second quarter 2022. Adjusted EBITDA in the second quarter 2023 was $41.9 million, compared to $23.8 million in the second quarter 2022. The increase in Adjusted EBITDA during the quarter was primarily due to higher contributions from F&E and Commercial segments.

“Consolidated results reflect continued momentum that was demonstrated exiting the first quarter,” REV Group Inc. President and CEO Mark Skonieczny said. “Within the quarter, several businesses in the F&E and Commercial segments improved their operational consistency with increased starts and completions resulting in improved net sales. Despite a challenged industry environment, the Recreation segment delivered revenue and earnings growth sequentially and year-over-year. As a result, we have raised the full-year outlook for consolidated revenue and EBITDA. I am pleased with the progress we are making and appreciate the efforts of the local teams to deliver these results.”

REV Group Second Quarter Segment Highlights

Fire & Emergency Segment

Fire & Emergency (F&E) segment net sales were $283.1 million in the second quarter 2023, an increase of $38.1 million, or 15.6%, from $245.0 million in the second quarter 2022. The increase in net sales compared to the prior year quarter was primarily due to increased shipments of fire apparatus and ambulance units, a favorable mix of ambulance units, and price realization, partially offset by an unfavorable mix of fire apparatus. Increased shipments of fire apparatus were primarily the result of an improved supply chain, and labor efficiencies related to initiatives put in place designed to increase productivity. Increased shipments of ambulance units were primarily the result of an improved supply chain, labor efficiencies, and increased headcount that resulted in higher line rates. F&E segment backlog at the end of the second quarter 2023 was $2,857.3 million, an increase of $1,069.0 million compared to $1,788.3 million at the end of the second quarter 2022. The increase was primarily the result of continued demand and strong order intake for fire apparatus and ambulance units, and pricing actions.

F&E segment Adjusted EBITDA was $9.6 million in the second quarter 2023, an increase of $11.8 million, or 536.4% from an Adjusted EBITDA loss of $2.2 million in the second quarter 2022. Profitability within the segment was impacted by higher sales volume, a favorable mix of ambulance units, efficiencies related to productivity initiatives, an improved supply chain and labor markets, and price realization, partially offset by an unfavorable mix of fire apparatus, and inflationary pressures.

Commercial Segment

Commercial segment net sales were $141.9 million in the second quarter 2023, an increase of $51.2 million, or 56.4%, from $90.7 million in the second quarter 2022. The increase in net sales compared to the prior year quarter was primarily due to higher shipments of school buses, municipal transit buses, terminal trucks and street sweepers, and price realization, partially offset by an unfavorable mix of municipal transit buses. Increased shipments within the segment were primarily related to an improved supply chain. Commercial segment backlog at the end of the second quarter 2023 was $501.2 million, a decrease of $29.9 million compared to $531.1 million at the end of the second quarter 2022. The decrease was primarily the result of increased unit production against backlog, and lower orders for school buses, terminal trucks, and municipal transit buses, partially offset by pricing actions.

Commercial segment Adjusted EBITDA was $10.7 million in the second quarter 2023, an increase of $6.3 million, or 143.2%, from $4.4 million in the second quarter 2022. The increase was primarily the result of increased shipments of school buses, terminal trucks, and street sweepers, favorable mix of school buses, and price realization, partially offset by an unfavorable mix and supply chain challenges within municipal transit buses, and inflationary pressures.

Recreation Segment

Recreation segment net sales were $256.6 million in the second quarter 2023, an increase of $15.6 million, or 6.5%, from $241.0 million in the second quarter 2022. The increase in net sales compared to the prior year quarter was primarily due to increased unit shipments, and price realization, partially offset by an unfavorable mix of motorized units, and increased discounting. Backlog at the end of the second quarter 2023 was $495.0 million, a decrease of $807.7 million compared to $1,302.7 million at the end of the second quarter 2022. The decrease was primarily the result of increased unit production against backlog, an expected normalization of order intake and cancellations in certain product categories, partially offset by pricing actions.

Recreation segment Adjusted EBITDA was $29.1 million in the second quarter 2023, an increase of $0.4 million, or 1.4%, from $28.7 million in the second quarter 2022. The increase was primarily due to increased unit shipments, and price realization, partially offset by an unfavorable category mix, inflationary pressure, and increased discounting.

Working Capital, Liquidity, and Capital Allocation

Cash and cash equivalents totaled $9.0 million as of April 31, 2023. Net debt² was $221.0 million, and the company had $305.5 million available under its ABL revolving credit facility as of April 31, 2023, a decrease of $2.2 million as compared to the October 31, 2022 availability of $307.7 million. Trade working capital³ for the company as of April 31, 2023 was $363.3 million, compared to $347.8 million as of October 31, 2022. The increase was primarily due to an increase in accounts receivable and inventory, partially offset by an increase in accounts payable and customer advances. Capital expenditures in the second quarter 2023 were $6.8 million compared to $4.0 million in the second quarter 2022.

Share Repurchase Program

On June 1, 2023, the company’s board of directors approved the repurchase of up to $175.0 million of the company’s outstanding common stock. This new authorization replaces the previous $150.0 million repurchase program (which was terminated by the board of directors in connections with the new authorization) under which approximately $73.7 million of the company’s common stock had been repurchased since its authorization in September 2021. The new share repurchase authorization expires in 24 months and gives management flexibility to determine conditions under which the shares may be purchased.

Updated Fiscal Year 2023 Outlook

Quarterly Dividend

The company’s board of directors declared a quarterly cash dividend in the amount of $0.05 per share of common stock, payable on July 14, 2023, to shareholders of record on June 30, 2023, which equates to a rate of $0.20 per share of common stock on an annualized basis.

Conference Call

A conference call to discuss the company’s fiscal year 2023 second quarter financial results is scheduled for June 8, 2023, at 10:00 a.m. ET. A supplemental slide deck will be available on the REV Group, Inc. investor relations website. The call will be webcast simultaneously over the Internet. To access the webcast, listeners can go to http://investors.revgroup.com/investor-events-and-presentations/events at least 15 minutes prior to the event and follow instructions for listening to the webcast. An audio replay of the call and related question and answer session will be available for 12 months at this website.

Source: https://rvbusiness.com/rev-group-inc-reports-strong-second-quarter-results/