Recreation Segment Boosts REV Group’s Q1 Financial Report
BROOKFIELD, Wis. – REV Group, Inc. (REVG), a manufacturer of industry-leading specialty vehicles including the American Coach, Fleetwood and Holiday Rambler branded motorhomes, today (Marhc 8) reported results for the three months ended Jan. 31, 2023. Consolidated net sales in the first quarter 2023 were $583.5 million, representing an increase of 8.7% compared to $537.0 million for the three months ended Jan. 31, 2022. The increase in consolidated net sales was primarily due to higher net sales, including price realization, in the Commercial and Recreation segments, partially offset by a decrease in net sales in the Fire and Emergency (F&E) segment.
The company’s first quarter 2023 net loss was $13.5 million, or $0.23 per diluted share, which included $13.8 million of legal charges primarily related to settlements associated with a previously disposed business, and $5.6 million of restructuring related charges within the F&E segment and corporate. Adjusted Net Income for the first quarter 2023 was $6.9 million, or $0.12 per diluted share, compared to Adjusted Net Income of $8.0 million, or $0.13 per diluted share, in the first quarter 2022. Adjusted EBITDA in the first quarter 2023 was $21.3 million, compared to $18.3 million in the first quarter 2022. The increase in Adjusted EBITDA during the quarter was primarily due to higher contribution from the Recreation segment, partially offset by lower contribution from the F&E and Commercial segments.
Mark Skonieczny
“First quarter results reflect an improving operating environment as the efforts of our team to manage through an inconsistent supply chain take hold.” REV Group Inc. Interim President and CEO Mark Skonieczny said. “I am pleased with solid operational performance within our commercial and recreation segments that resulted in increased production and unit shipments surpassing our expectations. We continue to address inefficiencies within the fire group that have weighed on the segment performance, and I have confidence in our ability to increase its profitability throughout the year.”
REV Group First Quarter Segment Highlights
Recreation Segment
Recreation segment net sales were $226.0 million in the first quarter 2023, an increase of $23.4 million, or 11.5%, from $202.6 million in the first quarter 2022. The increase in net sales compared to the prior year quarter was primarily due to favorable mix, and price realization, partially offset by lower shipments related to supply chain disruption in certain businesses. Backlog at the end of the first quarter 2023 was $988.1 million, a decrease of $294.5 million compared to $1,282.6 million at the end of the first quarter 2022. The decrease was primarily the result of an expected normalization of order intake in several product categories, partially offset by pricing actions.
Recreation segment Adjusted EBITDA was $24.3 million in the first quarter 2023, an increase of $7.2 million, or 42.1%, from $17.1 million in the first quarter 2022. The increase was primarily due to favorable mix, and price realization, partially offset by inefficiencies related to supply chain disruptions in certain businesses, and inflationary pressures.
Fire & Emergency Segment
F&E segment net sales were $229.3 million in the first quarter 2023, a decrease of $8.1 million, or 3.4%, from $237.4 million in the first quarter 2022. The decrease in net sales compared to the prior year quarter was primarily due to decreased shipments and unfavorable mix of fire apparatus, partially offset by a favorable mix of ambulance units, and price realization. Decreased shipments of fire apparatus were primarily the result of shortages of key components, and labor inefficiencies. F&E segment backlog at the end of the first quarter 2023 was $2,674.3 million, an increase of $1,019.2 million compared to $1,655.1 million at the end of the first quarter 2022. The increase was primarily the result of continued demand and strong order intake for fire apparatus and ambulance units, pricing actions, and lower shipments against new order intake.
F&E segment Adjusted EBITDA loss was $2.0 million in the first quarter 2023, a decrease of $3.8 million, or 211% from $1.8 million in the first quarter 2022. Profitability within the segment was impacted by lower sales volume, inefficiencies related to supply chain disruption, and inflationary pressures, partially offset by a favorable mix of ambulance units, and price realization.
Commercial Segment
Commercial segment net sales were $128.7 million in the first quarter 2023, an increase of $31.2 million, or 32%, from $97.5 million in the first quarter 2022. The increase in net sales compared to the prior year quarter was primarily due to higher shipments of school buses, terminal trucks and street sweepers, and price realization, partially offset by decreased shipments of municipal transit buses. Increased shipments within the segment were primarily related to an improved supply chain environment. Shipments of municipal transit buses remained challenged by shortages of key components, primarily wiring harnesses. Commercial segment backlog at the end of the first quarter 2022 was $497.7 million, an increase of $37.9 million compared to $459.8 million at the end of the first quarter 2022. The increase was primarily the result of increased orders for school buses, terminal trucks, and municipal transit buses, and pricing actions.
Commercial segment Adjusted EBITDA was $7.3 million in the first quarter 2023, a decrease of $0.5 million, or 6.4%, from $7.8 million in the first quarter 2022. Lower profitability in the quarter was primarily the result of lower shipments and an unfavorable mix of municipal transit buses, and inflationary pressures, partially offset by increased shipments and improved mix of school buses, and price realization on the sale of school buses and terminal trucks.
Working Capital, Liquidity, and Capital Allocation
Cash and cash equivalents totaled $23.0 million as of Jan. 31, 2023. Net debt2 was $227.0 million, and the company had $285.5 million available under its ABL revolving credit facility as of Jan. 31, 2023, a decrease of $22.2 million as compared to the October 31, 2022 availability of $307.7 million. Trade working capital3 for the company as of Jan. 31, 2023 was $352.1 million, compared to $347.8 million as of October 31, 2022. The increase was primarily due to an increase in inventory, partially offset by an increase in accounts payable and customer advances. Capital expenditures in the first quarter 2023 were $3.8 million compared to $4.5 million in the first quarter 2022.
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 April 14, 2023, to shareholders of record on March 31, 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 first quarter financial results is scheduled for March 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.
1 REV Group, Inc. Adjusted Net Income and Adjusted EBITDA are non-GAAP measures that are reconciled to their nearest GAAP measure later in this release.
2 Net Debt is defined as total debt less cash and cash equivalents.
3 Trade Working Capital is defined as accounts receivable plus inventories less accounts payable and customer advances.
4 Free Cash Flow is defined as net cash from operating activities minus capital expenditures.
Source: https://rvbusiness.com/recreation-segment-boosts-rev-groups-q1-financial-report/
