On June 5, 2024, REV Group Inc (REVG, Financial) released its 8-K filing for the second quarter of fiscal 2024, reporting mixed results. The company, a leading designer, manufacturer, and distributor of specialty vehicles and related aftermarket parts and services, saw its net sales decrease but managed to surpass earnings per share (EPS) estimates.
Company Overview
REV Group Inc is a United States-based company that provides customized vehicle solutions for essential needs, industrial and commercial applications, and consumer leisure. The company operates through three segments: Fire & Emergency, Commercial, and Recreation. The majority of its revenue is derived from the Fire and Emergency segment, which includes the manufacturing of fire apparatus and ambulance products. REV Group operates primarily in the United States, Canada, and other international markets.
Q2 2024 Performance Highlights
For the second quarter of 2024, REV Group Inc reported net sales of $616.9 million, a decrease from $681.2 million in the same quarter of the previous year. This decline was primarily due to the divestiture of Collins Bus Corporation, which contributed $46.9 million in net sales in the prior year quarter. Excluding the impact of this divestiture, net sales decreased by 2.7% year-over-year.
Net income for the quarter was $15.2 million, or $0.28 per diluted share, compared to $14.2 million, or $0.24 per diluted share, in the prior year quarter. Adjusted Net Income was $20.9 million, or $0.39 per diluted share, slightly up from $20.8 million, or $0.35 per diluted share, in the previous year.
Adjusted EBITDA for the quarter was $37.5 million, down from $41.9 million in the prior year. However, excluding the impact of the Collins divestiture, Adjusted EBITDA increased by 18.3% year-over-year, driven by higher contributions from the Specialty Vehicles segment.
Segment Performance
The Specialty Vehicles segment reported net sales of $437.4 million, up 2.9% from $425.0 million in the prior year quarter. Excluding the Collins divestiture, net sales increased by 15.7%, primarily due to price realization and increased shipments of fire apparatus and ambulance units. Adjusted EBITDA for this segment was $33.8 million, a significant increase from $20.3 million in the prior year quarter.
In contrast, the Recreational Vehicles segment saw a decline in net sales to $179.7 million, down 30.0% from $256.6 million in the prior year quarter. This decrease was attributed to lower unit shipments and increased discounting. Adjusted EBITDA for this segment was $12.1 million, down from $29.1 million in the prior year quarter.
Financial Position and Capital Allocation
As of April 30, 2024, REV Group Inc had net debt of $181.8 million, including $38.2 million in cash on hand. The company had $280.3 million available under its ABL revolving credit facility. Trade working capital was $324.0 million, up from $318.5 million as of October 31, 2023. Capital expenditures for the quarter were $5.9 million, compared to $6.8 million in the prior year quarter.
Updated Fiscal 2024 Outlook
| Metric | Updated Guidance (Low) | Updated Guidance (High) | Prior Guidance (Low) | Prior Guidance (High) |
|---|---|---|---|---|
| Net Sales ($ millions) | 2,400 | 2,500 | 2,450 | 2,550 |
| Net Income ($ millions) | 230 | 245 | 224 | 245 |
| Adjusted EBITDA ($ millions) | 151 | 165 | 145 | 165 |
| Adjusted Net Income ($ millions) | 76 | 90 | 72 | 90 |
| Adjusted Free Cash Flow ($ millions) | 61 | 72 | 57 | 72 |
Management Commentary
“We are pleased to have delivered another strong quarter of operating results,” said Mark Skonieczny, President and CEO of REV Group Inc. “We continue to experience robust demand in our Fire and Ambulance businesses and remain focused on operating initiatives that drive throughput improvements across our manufacturing sites. The Specialty Vehicles segment results demonstrate that these initiatives are taking hold and continue to build from prior quarters’ momentum. Within the Recreational Vehicles segment, we continue to be proactive in managing our cost structure to align with end market demand and delivered operating margins in line with our expectations. The progress we have made across the enterprise provides us confidence in our ability to deliver our full-year fiscal guidance.”
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from REV Group Inc for further details.
