REV Group Reports Strong Q1 Results, Updates its Outlook – RVBusiness – Breaking RV Industry News
BROOKFIELD, Wis. – REV Group Inc. (NYSE: REVG), a manufacturer of industry-leading specialty and RVs under such brands as Fleetwood, Holiday Rambler, America Coach, Renegade, Midwest Automotive and Lance Camper, today reported its first quarter results for the three months ended Jan. 31, 2024.
Consolidated net sales in the first quarter 2024 were $586.0 million, representing an increase of 0.4% compared to $583.5 million for the three months ended Jan. 31, 2023. The increase in consolidated net sales was primarily due to higher net sales, including price realization, within the Specialty Vehicles segment, partially offset by lower net sales in the Recreational Vehicles segment.
The company’s first quarter 2024 net income was $182.7 million, or $3.06 per diluted share, which included a $257.5 million gain on the sale of Collins Bus, partially offset by higher income tax expense, compared to a net loss of $13.5 million, or $0.23 per diluted share, in the first quarter 2023. Adjusted Net Income for the first quarter 2024 was $14.7 million, or $0.25 per diluted share, compared to Adjusted Net Income of $6.9 million, or $0.12 per diluted share, in the first quarter 2023. Adjusted EBITDA in the first quarter 2024 was $30.5 million, compared to $21.3 million in the first quarter 2023. The increase in Adjusted Net Income and Adjusted EBITDA during the quarter was primarily due to higher contributions from the Specialty Vehicles segment, partially offset by lower results in the Recreational Vehicles segment.
“We are pleased that first quarter results demonstrate continued momentum of previously announced pricing actions and operational improvements, resulting in solid year over year margin improvements and throughput increases within the Specialty Vehicles segment, which contributed to our strong first quarter earnings,” REV Group Inc. President and CEO Mark Skonieczny said. “We believe our first quarter’s results provide a solid foundation for delivering on our updated guidance and positions us for continued growth throughout the year.”
Summary of Strategic Initiatives and Capital Allocation Actions
Effective Jan. 26, 2024, the company completed the sale of its school bus business, Collins Bus Corporation, to Forest River Bus, LLC. In connection with the completion of the sale of Collins, the company received cash consideration of $308.2 million, inclusive of certain preliminary working capital adjustments. In addition to the sale of Collins, during first quarter 2024, the company announced it will discontinue manufacturing operations at its ElDorado National (California) (ENC) facility in Riverside, Calif. The wind down of ENC’s manufacturing operations is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered. Following the sale of Collins and the decision to discontinue manufacturing operations at ENC, the Company combined the remaining Commercial segment business with the Fire & Emergency businesses into a new segment named Specialty Vehicles. Additionally, the Recreation segment was renamed Recreational Vehicles. The Specialty Vehicles segment’s results will include the operating performance of Collins through its divestiture date of January 26, 2024, as well as the operating performance of ENC through its wind down.
The company used a portion of the proceeds from the sale of Collins to reduce outstanding borrowings under its 2021 ABL facility to zero. The remaining proceeds were used to return cash to shareholders as part of the $3.00 special cash dividend that was paid on Friday, February 16, 2024. Subsequently, on February 20, 2024, the company closed the previously announced registered underwritten public offering of 18,400,000 shares of its common stock by the company’s largest equity holders. 10,400,000 of these shares were sold to the public, and the remaining 8,000,000 shares were repurchased by the company for a purchase price of $126.1 million. The company funded the repurchase with borrowings under the 2021 ABL Facility. The company did not sell any shares of common stock and did not receive any proceeds in connection with this offering.
“The strategic and capital allocation actions taken by the company within and subsequent to our fiscal first quarter were aimed at optimizing our portfolio of products, creating a more focused operating structure and unlocking shareholder value,” said Skonieczny.
REV Group First Quarter Segment Highlights
Specialty Vehicles Segment
Specialty Vehicles segment net sales were $417.2 million in the first quarter 2024, an increase of $59.2 million, or 16.5%, from $358.0 million in the first quarter 2023. The increase in net sales compared to the prior year quarter was primarily due to increased shipments of fire apparatus and ambulance units, higher sales from the bus manufacturing businesses, and price realization, partially offset by lower shipments of terminal trucks. Specialty Vehicles segment backlog at the end of the first quarter 2024 was $3,864.1 million, an increase of $692.1 million compared to $3,172.0 million at the end of the first quarter 2023. The increase was primarily the result of continued demand and strong order intake for fire apparatus and ambulance units, and pricing actions, partially offset by a decrease in backlog related to the sale of Collins Bus, increased unit production against backlog and lower order intake for transit bus and terminal truck units.
Specialty Vehicles segment Adjusted EBITDA was $26.2 million in the first quarter 2024, an increase of $20.9 million, or 394.3%, from Adjusted EBITDA of $5.3 million in the first quarter 2023. Profitability within the segment benefited from higher sales volume of fire apparatus and ambulance units, higher contribution from the bus manufacturing businesses, and price realization, partially offset by inflationary pressures and lower sales volume of terminal trucks.
Recreational Vehicles Segment
Recreational Vehicles segment net sales were $169.4 million in the first quarter 2024, a decrease of $56.6 million, or 25.0%, from $226.0 million in the first quarter 2023. The decrease in net sales compared to the prior year quarter was primarily due to decreased unit shipments, an unfavorable mix of motorized units, and increased discounting, partially offset by price realization. Recreational Vehicles segment backlog at the end of the first quarter 2024 was $376.7 million, a decrease of $611.4 million compared to $988.1 million at the end of the first quarter 2023. The decrease was primarily the result of production against backlog, order cancelations, and lower order intake in certain product categories.
Recreational Vehicles segment Adjusted EBITDA was $11.6 million in the first quarter 2024, a decrease of $12.7 million, or 52.3%, from $24.3 million in the first quarter 2023. The decrease was primarily due to lower unit shipments, an unfavorable mix of motorized units, increased discounting, and inflationary pressures, partially offset by price realization.
Working Capital, Liquidity, and Capital Allocation
Cash and cash equivalents totaled $87.9 million as of January 31, 2024. The company had $534.1 million available under its ABL revolving credit facility as of January 31, 2024, an increase of $150.0 million as compared to the October 31, 2023 availability of $384.1 million. Trade working capital2 for the company as of January 31, 2024 was $363.1 million, compared to $318.5 million as of October 31, 2023. The increase was primarily due to a decrease in accounts payable and customer advances, partially offset by a decrease in accounts receivable and inventory. Capital expenditures in the first quarter 2024 were $10.5 million compared to $3.8 million in the first quarter 2023.
Updated Fiscal Year 2024 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 April 12, 2024, to shareholders of record on March 28, 2024, 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 2024 first quarter financial results and our outlook is scheduled for March 6, 2024, 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, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP measures that are reconciled to their nearest GAAP measure in this release.
2 Trade Working Capital is defined as accounts receivable plus inventories less accounts payable and customer advances.
