Company remains on track for organic top-line growth, improved
profitability and operating cash flows in fiscal 2019; Company
reiterates fiscal year 2019 guidance

• Net sales of $518.7 million grew 0.7 percent compared to the prior
  year quarter

• First quarter net loss of $14.6 million and operating loss of $11.2
  million
• First quarter Adjusted EBITDA¹ of $12.3 million and
  Adjusted Net Loss¹ of $2.9 million
• First quarter net cash used in operating activities was $39.4 million
  compared to $72.4 million in the prior year quarter, a 45.6 percent
  improvement
• Total backlog increased to $1.4 billion as of January 31, 2019
• Announced a new $106 million five-year contract with the City of
  Chicago to provide multiple E-ONE fire apparatus including pumpers,
  aerials and platforms
• Company reaffirms full year expectation for net sales of $2.4 to $2.6
  billion, net income of $43 to $63 million, Adjusted Net Income of $66
  to $84 million, Adjusted EBITDAof $150 to $170 million,
  and net cash provided by operating activities of $110 to $130 million

MILWAUKEE–(BUSINESS WIRE)–REV Group, Inc. (NYSE:REVG) today reported results for the three months
ended January 31, 2019 (“first quarter 2019”). Consolidated net sales in
the first quarter 2019 were $518.7 million, representing growth of 0.7
percent over the three months ended January 31, 2018 (“first quarter
2018”). The increase in consolidated net sales was driven by continued
sales growth in both the Commercial and Recreation segments, which was
partially offset by lower net sales in the Fire & Emergency segment.

“Results for the first quarter of fiscal 2019 came in generally as
expected. As we mentioned last quarter, the beginning of fiscal year
2019 would include a reset of our operations and production cadence as a
result of the many supply headwinds we faced in fiscal 2018. In
addition, we experienced order growth across most of our product
categories during the first quarter translating into sequentially higher
backlog levels and setting us up well for the remainder of the year,”
said Tim Sullivan, CEO REV Group, Inc. “As a result of our focus on net
working capital management we drove stronger year-over-year cash flow
results. I am proud of our team’s ability to effectively manage through
several short-term issues and I believe that most of those are now
behind us. We continue to expect a successful return to organic top-line
growth and improved profitability in fiscal 2019 and we remain on track
to meet our full year objectives.”

The Company’s first quarter 2019 net loss was $14.6 million, or $0.23
per diluted share, compared to net income of $9.4 million, or $0.14 per
diluted share, in the first quarter of 2018. Adjusted Net Loss for the
first quarter 2019 was $2.9 million, or $0.05 per diluted share,
compared to Adjusted Net Income of $9.8 million, or $0.15 per diluted
share, in the first quarter 2018. Adjusted EBITDA in the first quarter
2019 was $12.3 million, compared to $21.3 million in the first quarter
2018. The decline in Net Income, Adjusted Net Income and Adjusted EBITDA
during the quarter was driven by lower sales within the normally higher
margin Fire & Emergency segment partially offset by growth in both the
Commercial and Recreation segments.

REV Group First Quarter Segment Highlights

Fire & Emergency Segment

Fire & Emergency (“F&E”) segment net sales were $204.1 million for the
first quarter 2019, a decrease of $11.2 million, or 5.2 percent, from
$215.3 million for the first quarter 2018. The decrease in F&E sales was
driven by the timing of fire and ambulance shipments due to the residual
effects of supply chain challenges and resulting production
inefficiencies that we continued to work though during the quarter. Our
operations slowed their manufacturing production rates to allow for
chassis and material lead times to catch up to production and our fire
operations made progress recovering from the labor inefficiencies that
impacted productivity late last year. F&E backlog at the end of the
first quarter 2019 was up 4.3 percent to $738.2 million compared to
$707.5 million at the end of fiscal year 2018.

First quarter 2019 F&E segment Adjusted EBITDA declined to $8.4 million,
compared to $18.2 million in the first quarter 2018 due to lower sales
volumes and the residual impact of higher labor and material costs.
First quarter 2019 F&E Adjusted EBITDA margin was 4.1 percent of net
sales, compared to 8.5 percent in the first quarter 2018.

“While our F&E operating results were lower year-over-year, we made
significant progress throughout the quarter to align our supply chain
and manufacturing operations and to increase our production capacity in
fire,” remarked Mr. Sullivan. “For example, we recently implemented a
second shift in two of our production lines to facilitate increases in
fire deliveries in subsequent quarters and have made a number of other
adjustments to adapt to the current supply chain environment.
Additionally, we are excited about our recently awarded five-year
contract with the City of Chicago for E-ONE fire apparatus including
pumpers, aerials and platforms. This contract is estimated to replace
roughly 140 units approximating $106 million. We look forward to seeing
incremental improvement in this segment’s performance as the year
progresses due to actions taken in the first quarter and supported by
valued customer relationships like the one with the City of Chicago.”

Commercial Segment

Commercial segment net sales were $140.7 million for the first quarter
2019, an increase of $8.5 million, or 6.4 percent, from $132.2 million
for the first quarter of 2018. This increase was primarily the result of
higher sales of certain bus products and terminal trucks. The increase
in bus sales was due to shipments under our previously announced
paratransit bus contract with New York City Transit. Transit bus
shipments relating to our LA County contract are expected to begin in
the second quarter. Commercial backlog at the end of the first quarter
was $427.5 million, an increase of 12.1 percent compared to $381.4
million at the end of fiscal year 2018.

First quarter 2019 Commercial segment Adjusted EBITDA increased to
$5.0 million, compared to $4.5 million in the first quarter 2018. The
increase was primarily due to the higher bus sales volume. First quarter
2019 Commercial Adjusted EBITDA margin was 3.6 percent of net sales
compared to 3.4 percent in the first quarter 2018.

Mr. Sullivan commented, “We are pleased with the sales growth in the
Commercial segment and are encouraged by the improved performance and
strong demand across nearly all of the segment’s product categories. We
continue to maintain strong market share across our product categories
within the Commercial segment and are seeing increasing levels of bid
activity from multiple municipalities and contractors, which bode well
for a stronger year in fiscal 2019.”

Recreation Segment

Recreation segment net sales were $176.3 million for the first quarter
2019, an increase of $9.0 million, or 5.4 percent, from $167.3 million
for the first quarter 2018. Recreation segment sales growth was
primarily due to higher sales of our Super C and Class B RV’s as well as
a full quarter of Lance towable and camper sales, partially offset by a
reduction in Class A sales. Excluding the impact of net sales from
Lance, which was acquired late in the first quarter 2018, Recreation
segment net sales decreased $7.8 million in the first quarter 2019
compared to the first quarter 2018. Recreation segment backlog at the
end of the first quarter 2019 was $225.2 million, which was down 22.5
percent from $290.7 million at the end of fiscal year 2018. This
decrease in backlog is reflective of the softer Class A RV market,
somewhat offset by growth in our Class B and Super C’s.

First quarter 2019 Recreation segment Adjusted EBITDA increased to $9.1
million, compared to $8.1 million for the first quarter 2018. First
quarter 2019 Adjusted EBITDA margin grew 40 basis points to 5.2 percent
of net sales compared to 4.8 percent in the first quarter 2018. The
expansion in profitability was attributable to higher sales volumes,
higher margin product mix and benefit from the acquisition of Lance.
Excluding the impact of Lance, Recreation segment Adjusted EBITDA in the
first quarter 2019 was flat compared to the first quarter 2018.

Mr. Sullivan commented, “We continue to see strength in our Recreation
segment, particularly, in our Class B and Super C’s. Our efforts to
realign our Class A product line have progressed nicely. The Class B
market remains strong and we believe we are well positioned to capture
share in the market. Although we have recently seen the RV market soften
in certain categories, we continue to believe our focus on new product
introductions with attractive features and price points should enable us
to outperform the industry. We are confident that our first-class brands
and ongoing performance improvements in this segment will support
continued growth in profitability in this segment in fiscal year 2019.”

Working Capital, Liquidity and Cash Flow

Net working capital² for the Company as of January 31, 2019
was $450.3 million compared to $415.3 million as of October 31,
2018. The increase in working capital was primarily due to the normal
seasonal increase in inventory compared to the prior year-end.

Cash and equivalents totaled $13.5 million at January 31, 2019. Total
debt at January 31, 2019 was $471.7 million (net of deferred financing
costs) and as a result, the Company had $86.2 million available
under its ABL revolving credit facility. Capital expenditures in the
first quarter 2019 were $6.3 million compared to $13.6 million in the
first quarter 2018.

Net cash used in operating activities in the first quarter 2019 was
$39.4 million, compared to $72.4 million in the first quarter 2018. The
reduction in cash used in operating activities over the prior year
quarter was related to our focus on efficient management of net working
capital. Although inventory was up over prior quarter, the magnitude of
the normal seasonal build was smaller than the comparable period in the
prior year.

Fiscal 2019 Full Year Outlook

Mr. Sullivan concluded, “First quarter results were in-line with our
expectations for the most part and our view of end market demand and
macro conditions remains consistent. Therefore, we are reaffirming our
prior full year guidance and are still expecting fiscal year 2019
revenues of $2.4 to $2.6 billion, Adjusted EBITDA of $150 to $170
million, net income of $43 to $63 million, and Adjusted Net Income of
$66 to $84 million.”

Quarterly Dividend

Our board of directors declared the regular quarterly dividend for our
first quarter 2019, payable on May 30, 2019, to holders of record on
April 30, 2019, in the amount of $0.05 per share of common stock, which
equates to a rate of $0.20 per share of common stock on an annualized
basis.

Conference Call

REV Group, Inc. will host a conference call to discuss its first quarter
2019 results and outlook on March 7th at 11:00 a.m. EST. A supplemental
earnings slide deck will be available tomorrow morning on the REV Group,
Inc. investor relations website prior to the call. 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.

About REV Group

REV Group, Inc. (NYSE: REVG) is a leading designer, manufacturer and
distributor of specialty vehicles and related aftermarket parts and
services. We serve a diversified customer base primarily in the United
States through three segments: Fire & Emergency, Commercial and
Recreation. We provide customized vehicle solutions for applications
including: essential needs (ambulances, fire apparatus, school buses and
municipal transit buses), industrial and commercial (terminal trucks,
cut-away buses and street sweepers) and consumer leisure (recreational
vehicles (“RVs”), travel trailers and luxury buses). Our brand portfolio
consists of 29 well-established principal vehicle brands including many
of the most recognizable names within our served markets. Several of our
brands pioneered their specialty vehicle product categories and date
back more than 50 years.

Note Regarding Non-GAAP Measures

REV Group reports its financial results in accordance with U.S.
generally accepted accounting principles (“GAAP”). However, management
believes that the evaluation of REV Group’s ongoing operating results
may be enhanced by a presentation of Adjusted EBITDA and Adjusted Net
Income, which are non-GAAP financial measures. Adjusted EBITDA
represents net income before interest expense, income taxes,
depreciation and amortization as adjusted for certain non-recurring,
one-time and other adjustments which REV Group believes are not
indicative of its underlying operating performance. Adjusted Net Income
represents net income, as adjusted for certain items described below
that we believe are not indicative of our ongoing operating performance.

REV Group believes that the use of Adjusted EBITDA and Adjusted Net
Income provides additional meaningful methods of evaluating certain
aspects of its operating performance from period to period on a basis
that may not be otherwise apparent under GAAP when used in addition to,
and not in lieu of, GAAP measures. See the Appendix to this presentation
(and our other filings with the SEC) for reconciliations of Adjusted
EBITDA and Adjusted Net Income to the most closely comparable financial
measures calculated in accordance with GAAP.

Forward Looking Statements

This news release contains statements that the Company believes to be
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. This news release includes
statements that express our opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or future
results and therefore are, or may be deemed to be, “forward-looking
statements.” These forward-looking statements can generally be
identified by the use of forward-looking terminology, including the
terms “believes,” “estimates,” “anticipates,” “expects,” “strives,”
“goal,” “seeks,” “projects,” “intends,” “forecasts,” “plans,” “may,”
“will” or “should” or, in each case, their negative or other variations
or comparable terminology. They appear in a number of places throughout
this news release and include statements regarding our intentions,
beliefs, goals or current expectations concerning, among other things,
our results of operations, financial condition, liquidity, prospects,
growth, strategies and the industries in which we operate.

Our forward-looking statements are subject to risks and uncertainties,
including those highlighted under “Risk Factors” and “Cautionary
Statement on Forward-Looking Statements” in the Company’s annual report
on Form 10-K, and in the Company’s subsequent quarterly reports on Form
10-Q, together with the Company’s other filings with the SEC, which
risks and uncertainties may cause actual results to differ materially
from those projected or implied by the forward-looking statement.
Forward-looking statements are based on current expectations and
assumptions and currently available data and are neither predictions nor
guarantees of future events or performance. You should not place undue
reliance on forward-looking statements, which only speak as of the date
hereof. The Company does not undertake to update or revise any
forward-looking statements after they are made, whether as a result of
new information, future events, or otherwise, expect as required by
applicable law.

Investors-REVG

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 Working capital is defined as current assets (excluding
cash) less current liabilities (excluding current portion of long-term
debt).

Contacts

Sandy Bugbee
VP, Treasurer and Investor Relations
Email: [email protected]
Phone:
1-888-738-4037 (1-888-REVG-037)

Read full story here