REV Group Q4: Commercial, Rec Divisions See Increases

BROOKFIELD, Wis. – REV Group, Inc. (NYSE: REVG) today (Dec. 14) reported results for the three months ended Oct. 31 (“fourth quarter 2022”). Consolidated net sales in the fourth quarter 2022 were $623.6 million, representing an increase of 5.7 percent compared to $589.9 million for the three months ended Oct. 31, 2021 (“fourth quarter 2021”).

The increase in consolidated net sales was primarily due to an increase in net sales in the Commercial and Recreation segments, partially offset by a decrease in net sales in the Fire and Emergency (“F&E”) segment. Consolidated net sales were $2.3 billion for the twelve months ended Oct. 31 (“full year 2022”), which was a decrease of 2.1 percent over the twelve months ended October 31, 2021 (“full year 2021”).

Highlighs included:

• Fourth quarter and full year net sales of $623.6 million and $2,331.6 million, respectively
• Fourth quarter and full year net income of $8.7 million and $15.2 million, respectively
• Fourth quarter and full year Adjusted EBITDA¹ of $33.5 million and $105.1 million, respectively
• Fourth quarter and full year Adjusted Net Income¹ of $16.2 million and $49.1 million, respectively
• Full year cash provided by operating activities of $91.6 million and end of fourth quarter Net Debt² of $209.6 million
• Full year common share repurchases of 5.8 million shares for $70.0 million
• End of fourth quarter $4.2 billion record backlog

The company’s fourth quarter 2022 net income was $8.7 million, or $0.15 per diluted share, compared to net income of $0.0 million, or $0.00 per diluted share, in the fourth quarter 2021. Adjusted Net Income for the fourth quarter 2022 was $16.2 million, or $0.28 per diluted share, compared to Adjusted Net Income of $17.9 million, or $0.27 per diluted share, in the fourth quarter 2021. Net income for the full year 2022 was $15.2 million, or $0.25 per diluted share, compared to net income of $44.4 million, or $0.69 per diluted share in full year 2021.

Adjusted EBITDA in the fourth quarter 2022 was $33.5 million, compared to $31.1 million in the fourth quarter 2021. The increase in Adjusted EBITDA during the quarter was driven by increased contribution from the Recreation segment, partially offset by a decrease in the F&E and Commercial segments. Full year 2022 Adjusted EBITDA was $105.1 million, compared to $141.5 million in full year 2021.

During the quarter, the company appointed Dan DesRochers as President of REV Fire Group. Prior to joining REV Group, Mr. DesRochers served as President and COO at Morgan Truck Body, LLC, a division of JB Poindexter & Co, where he led a team of 2,500 and oversaw 14 plants for the largest North American manufacturer of dry freight and refrigerated truck bodies. Prior to that, he served as Chief Operating Officer for Morgan Olson. Over his 30-year career, Mr. DesRochers has held leadership roles with General Electric, United States Can Company, and Federal Signal Corporation.

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.

“Throughout fiscal 2022 we managed macro headwinds that impacted our ability to achieve consistent production flow and staffing levels within our manufacturing facilities,” REV Group Inc. President and CEO Rod Rushing said. “In the face of these challenges, we continued to deploy operational initiatives that we believe will deliver improved operational performance and shareholder value. We have made progress against supply chain headwinds with an expectation to benefit from multi-sourcing initiatives within the first half of fiscal 2023. I would like to thank our team for their efforts while working through these challenges.”

REV Group Fourth Quarter Segment Highlights

Fire & Emergency Segment

F&E segment net sales were $253.0 million in the fourth quarter 2022, a decrease of $24.3 million, from $277.3 million in the fourth quarter 2021. The decrease in net sales compared to the prior year quarter was primarily due to decreased shipments of fire apparatus and ambulance units related to supply chain disruption, partially offset by price realization. F&E segment backlog at the end of the fourth quarter 2022 was $2.6 billion, an increase of $1.1 billion compared to $1.5 billion at the end of the fourth quarter 2021. 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 backlog.

F&E segment Adjusted EBITDA was $1.9 million in the fourth quarter 2022, a decrease of $8.2 million from $10.1 million in the fourth quarter 2021. Profitability within the segment was impacted by lower sales volume, inflationary pressures, and inefficiencies related to supply chain disruption and Hurricane Ian, partially offset by price realization.

Commercial Segment

Commercial segment net sales were $110.9 million in the fourth quarter 2022, an increase of $16.4 million from $94.5 million in the fourth quarter 2021. The increase in net sales compared to the prior year quarter was primarily due to increased shipments of school buses, terminal trucks and street sweepers, and price realization, partially offset by decreased shipments of municipal transit buses. Commercial segment backlog at the end of the fourth quarter 2022 was $525.6 million, an increase of $130.9 million compared to $394.7 million at the end of the fourth quarter 2021. The increase was primarily the result of increased orders for school buses and terminal trucks, and pricing actions.

Commercial segment Adjusted EBITDA was $3.3 million in the fourth quarter 2022, a decrease of $2.4 million from $5.7 million in the fourth quarter 2021. Lower profitability in the quarter was primarily the result lower shipments and an unfavorable mix of municipal transit buses, inefficiencies related to labor constraints and supply chain disruptions, and inflationary pressures, partially offset by increased shipments and improved profitability of terminal trucks, and price realization.

Recreation Segment

Recreation segment net sales were $260.1 million in the fourth quarter 2022, an increase of $42.2 million from $217.9 million in the fourth quarter 2021. The increase in net sales compared to the prior year quarter was primarily due to price realization, and favorable mix, partially offset by lower line rates and unit shipments related to supply chain disruption and labor constraints in certain businesses. Backlog at the end of the fourth quarter 2022 was $1.1 billion, a decrease of $114.7 million compared to $1.2 billion at the end of the fourth quarter 2021. The decrease was primarily the result of a normalization of inbound orders across categories, partially offset by pricing actions.

Recreation segment Adjusted EBITDA was $35.3 million in the fourth quarter 2022, an increase of $13.6 million from $21.7 million in the fourth quarter 2021. The increase was primarily due to favorable mix and price realization, partially offset by inefficiencies related to supply chain disruptions and labor constraints in certain businesses, and inflationary pressures.

Working Capital, Liquidity, and Capital Allocation

Cash and cash equivalents totaled $20.4 million as of Oct. 31. Net debt² was $209.6 million, and the company had $307.7 million available under its ABL revolving credit facility as of Oct. 31, an increase of $17.7 million as compared to the October 31, 2021 availability of $290.0 million. During the fourth quarter 2022, the company did not repurchase any of its common shares. Trade working capital³ for the company as of Oct. 31 was $347.8 million, compared to $368.2 million as of October 31, 2021. The decrease was primarily due to an increase in accounts payable and customer advances, partially offset by an increase in accounts receivable and inventory. Capital expenditures in the fourth quarter 2022 were $8.9 million compared to $10.8 million in the fourth quarter 2021.

³ Trade Working Capital is defined as accounts receivable plus inventories less accounts payable and customer advances.

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 January 13, 2023, to shareholders of record on December 30, 2022, 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 2022 fourth quarter financial results is scheduled for today (Dec. 14) at 10 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-q4-commercial-rec-divisions-see-increases/