REV Group Inc. Shares Drop as Earnings Released

REV Group, Inc. has recently released its 10-Q report, detailing its performance for the three months ended January 31, 2024. The company, which designs, manufactures, and distributes specialty vehicles and related aftermarket parts and services, operates through three segments: Fire & Emergency, Commercial, and Recreation. In the Specialty Vehicles segment, net sales increased by 16.5% to $417.2 million compared to the prior year quarter, with Adjusted EBITDA increasing by 394.3% to $26.2 million. However, in the Recreation segment, net sales decreased by 25.0% to $169.4 million, and Adjusted EBITDA decreased by 52.3% to $11.6 million.

The company's backlog as of January 31, 2024, stood at $4,240.8 million, compared to $4,160.1 million as of January 31, 2023. The increase in consolidated backlog was primarily due to continued demand and strong order intake for fire apparatus and ambulance units in the Specialty Vehicles segment, partially offset by a decrease in the Recreational Vehicles segment backlog.

In terms of liquidity and capital resources, the company's net cash used in operating activities for the three months ended January 31, 2024, was $69.7 million, primarily related to the timing of accounts payable payments, lower receipts of customer advances, and incentive compensation payments made during the period. Net cash provided by investing activities for the same period was $297.7 million, mainly related to the cash received in connection with the sale of Collins, partially offset by cash paid for capital expenditures. Net cash used in financing activities for the three months ended January 31, 2024, was $161.4 million, primarily consisting of net payments made on the revolving credit facility, dividends paid, and payment of payroll taxes on vested share-based compensation awards.

Furthermore, the company's dividend policy entails paying a quarterly cash dividend at the rate of $0.05 per share on its common stock, subject to legally available funds and the discretion of its board of directors. Additionally, the company did not make any purchases of common stock during the first quarter of fiscal year 2024.

In terms of debt facilities, the company entered into an Amendment No. 2 to its 2021 ABL Facility on February 7, 2024, which revised the definition of Fixed Charges under the facility to exclude the Special Cash Dividend from the definition of Fixed Charges. As of January 31, 2024, the company’s availability under the ABL Facility was $534.1 million.

Finally, the company utilizes Adjusted EBITDA and Adjusted Net Income as primary financial performance measures, excluding the impact of certain items believed to be not indicative of its ongoing operating performance. Adjusted EBITDA for the three months ended January 31, 2024, was $182.7 million, while Adjusted EBITDA for the same period in 2023 was a loss of $13.5 million.

Following these announcements, the company's shares moved -3.9%, and are now trading at a price of $19.95. For more information, read the company's full 10-Q submission here.

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