On September 4, 2024, REV Group Inc (REVG, Financial) released its 8-K filing detailing its third-quarter financial results and updated fiscal 2024 outlook. REV Group Inc is a United States-based designer, manufacturer, and distributor of specialty vehicles and related aftermarket parts and services. The company operates through three segments: Fire & Emergency, Commercial, and Recreation, with a majority of its revenue derived from the Fire and Emergency segment.
Performance Overview
For the third quarter of 2024, REV Group Inc reported net sales of $579.4 million, a decrease from $680.0 million in the same quarter of the previous year. This decline was primarily due to the divestiture of Collins Bus Corporation, which contributed $45.9 million to net sales in the prior year. Excluding the impact of this divestiture, net sales decreased by 8.6%, largely driven by lower sales in the Recreational Vehicles segment.
Despite the decline in net sales, the company reported a net income of $18.0 million, or $0.35 per diluted share, compared to $14.9 million, or $0.25 per diluted share, in the prior year quarter. Adjusted Net Income for the third quarter was $24.8 million, or $0.48 per diluted share, up from $20.9 million, or $0.35 per diluted share, in the previous year.
Segment Highlights
Specialty Vehicles Segment: Net sales for the Specialty Vehicles segment were $432.1 million, a decrease of 7.3% from $466.2 million in the prior year quarter. Excluding the impact of the Collins divestiture, net sales increased by 2.8%, driven by price realization and increased shipments of fire apparatus, ambulance units, and municipal transit buses. Adjusted EBITDA for this segment was $44.3 million, a significant increase from $29.7 million in the prior year quarter, reflecting improved profitability.
Recreational Vehicles Segment: The Recreational Vehicles segment saw a substantial decline in net sales, reporting $147.4 million, down 31.3% from $214.5 million in the prior year quarter. This decrease was attributed to lower unit shipments and increased discounting. Adjusted EBITDA for this segment was $9.4 million, down from $18.4 million in the previous year, impacted by inflationary pressures and lower sales volume.
Financial Metrics and Achievements
Adjusted EBITDA for the third quarter was $45.2 million, compared to $39.4 million in the prior year quarter. Excluding the impact of the Collins divestiture, Adjusted EBITDA increased by 14.7%, primarily due to higher contributions from the Specialty Vehicles segment.
Net debt as of July 31, 2024, was $164.5 million, with $50.5 million in cash on hand. The company had $261.8 million available under its ABL revolving credit facility. Trade working capital increased slightly to $322.7 million from $318.5 million as of October 31, 2023.
Updated Fiscal 2024 Outlook
| Metric | Updated Guidance (Low) | Updated Guidance (High) | Prior Guidance (Low) | Prior Guidance (High) |
|---|---|---|---|---|
| Net Sales | $2,350 million | $2,450 million | $2,400 million | $2,500 million |
| Net Income | $226 million | $240 million | $230 million | $245 million |
| Adjusted EBITDA | $155 million | $165 million | $151 million | $165 million |
| Adjusted Net Income | $76 million | $89 million | $76 million | $90 million |
| Adjusted Free Cash Flow | $61 million | $72 million | $61 million | $72 million |
Commentary and Analysis
“We are pleased with the results of the Specialty Vehicles segment, which delivered double digit Adjusted EBITDA margin performance in the third quarter,” said REV Group Inc. President and CEO, Mark Skonieczny. “Profitability benefited from another quarter of sequential and year-over-year improvements within the fire and ambulance businesses. The continued momentum demonstrated by these businesses positions us well for the future. Within the Recreational Vehicles segment, market conditions remain challenged, however, we continue to be proactive in managing our cost structure to align with end market demand and deliver operating margins in line with our expectations.”
Overall, while REV Group Inc faced challenges in the Recreational Vehicles segment, the company's strong performance in the Specialty Vehicles segment and improved profitability metrics highlight its resilience and strategic focus. The updated fiscal 2024 outlook reflects a balanced approach to navigating market conditions and capitalizing on growth opportunities.
Explore the complete 8-K earnings release (here) from REV Group Inc for further details.
