REV Group(US:REVG)2024-12-11 12:15PART I Business REV Group, Inc. designs and manufactures specialty and recreational vehicles for public service, commercial, and consumer markets, consolidating segments and seeing its largest equity holder exit in fiscal 2024 - Effective January 31, 2024, the Company combined its Fire & Emergency and Commercial segments into a new Specialty Vehicles segment, and the Recreation segment was renamed Recreational Vehicles13 - In the second quarter of fiscal year 2024, the company's largest equity holder, AIP, sold its shares and ceased to have significant influence, with AIP-nominated directors resigning from the board16 Net Sales by End Market (Fiscal Year 2024) | End Market | Percentage of Net Sales | | :--- | :--- | | Government (municipalities, etc.) | 47% | | Consumer | 25% | | Industrial/Commercial | 23% | | Private Contractor | 5% | Research and Development (R&D) Expenses | Fiscal Year | R&D Costs (in millions) | | :--- | :--- | | 2024 | $3.3 | | 2023 | $4.7 | | 2022 | $4.2 | - As of October 31, 2024, the company had approximately 5,700 employees, temporary workers, and contractors, none of whom are represented by a labor union92 Risk Factors The company faces material risks including economic sensitivity, reliance on third-party suppliers, intense competition, financial constraints, cybersecurity threats, product defects, and extensive legal and regulatory compliance - The business is affected by economic factors, with RV purchases being discretionary and fire/ambulance purchases dependent on municipal tax revenues, which can be cyclical102103 - A significant risk is the reliance on major auto manufacturers (Ford, GM, etc.) for vehicle chassis, where disruptions, production delays, or quality issues could materially harm sales and operations106108 - The company faces risks from IT system failures and cybersecurity attacks, which could disrupt business operations, compromise sensitive data, and result in significant costs and reputational damage115119121 - The business is subject to numerous laws and regulations, including the NTMVSA, which could lead to costly vehicle recalls, product liability claims, and increased environmental compliance costs171172176 - The 2021 ABL Facility contains restrictive covenants that limit the company's ability to incur debt, make investments, and pay dividends, and requires maintenance of specified financial ratios under certain conditions164165 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None190 Cybersecurity The company's cybersecurity program, led by the CIO and Senior Director of IT and aligned with NIST frameworks, is overseen by the Board and Audit Committee, with no material incidents in fiscal 2024 - The cybersecurity program is led by the CIO and Senior Director of IT and is aligned with industry frameworks like the NIST Cybersecurity Framework, v2.0192 - Oversight is provided by the Board of Directors, with the Audit Committee specifically tasked with overseeing cybersecurity risk management strategy and receiving bi-annual reports193 - The company did not experience a material cybersecurity incident in fiscal year 2024192 Properties The company operates a corporate office and 17 manufacturing facilities, 3 RTCs, and 3 aftermarket parts warehouses across the U.S., comprising both owned and leased properties Manufacturing Facilities Overview | Location | Approx. Sq. Feet | Brand(s) Produced | Owned/Leased | | :--- | :--- | :--- | :--- | | Decatur, Indiana | 689,000 | Fleetwood RV, American Coach, Holiday Rambler | Owned | | Ocala, Florida | 488,000 | E-ONE | Owned/Leased | | Snyder, Nebraska | 400,000 | Smeal | Owned | | Charlotte, Michigan | 283,000 | Spartan Emergency Response | Owned | | Elkhart, Indiana | 270,000 | Fleetwood RV, Midwest Automotive Design | Owned/Leased | Legal Proceedings The company is involved in various legal proceedings, but management believes the ultimate liability will not materially affect its business, financial condition, or results of operations - The Company believes that its ultimate liability, if any, arising from pending legal proceedings should not be material to the business, financial condition or results of operations197 Mine Safety Disclosures This item is not applicable to the company - Not applicable198 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities REV Group's common stock trades on the NYSE under "REVG", with $192.0 million in dividends paid in fiscal 2024, no Q4 repurchases, and outperforming peer indices over five years - The company's common stock trades on the New York Stock Exchange under the symbol "REVG"202 - During fiscal year 2024, the Company paid cash dividends of $192.0 million, which includes a special cash dividend of $3.00 per share paid in February 2024203 - There were no purchases of common stock made by the Company during the fourth quarter of fiscal year 2024204 Cumulative Total Stockholder Return (October 31, 2019 - October 31, 2024) | Index | 10/31/2019 | 10/31/2024 | | :--- | :--- | :--- | | REVG | $100.0 | $267.2 | | Russell 2000 | $100.0 | $150.2 | | RV Peers | $100.0 | $152.9 | | Specialty Vehicle Peers | $100.0 | $171.1 | Reserved This item is reserved and contains no information - Item 6 is reserved206 Management's Discussion and Analysis of Financial Condition and Results of Operations In fiscal 2024, consolidated net sales decreased 9.8% to $2.38 billion, while net income surged to $257.6 million due to divestiture gains, with stable backlog and $53.4 million cash from operations Consolidated Results of Operations (in millions) | Metric | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Net sales | $2,380.2 | $2,638.0 | $2,331.6 | | Gross profit | $297.3 | $316.1 | $247.5 | | Net income | $257.6 | $45.3 | $15.2 | | Adjusted EBITDA | $162.8 | $156.6 | $105.1 | | Adjusted Net Income | $87.1 | $80.5 | $49.1 | - Consolidated net sales decreased by $257.8 million (9.8%) in fiscal 2024, with a 4.4% decrease excluding the Collins divestiture, driven by lower sales in the Recreational Vehicles segment219 - A gain on sale of businesses of $289.3 million was recognized in fiscal 2024 from the divestitures of Collins, Fire RTC, and ENC businesses229 Segment Performance (FY 2024 vs FY 2023, in millions) | Segment | Net Sales (FY24) | Net Sales (FY23) | % Change | Adj. EBITDA (FY24) | Adj. EBITDA (FY23) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Specialty Vehicles | $1,726.4 | $1,728.0 | -0.1% | $154.5 | $98.6 | +56.7% | | Recreational Vehicles | $654.6 | $912.3 | -28.2% | $41.2 | $91.0 | -54.7% | Backlog by Segment (in millions) | Segment | Oct 31, 2024 | Oct 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | Specialty Vehicles | $4,179.8 | $4,076.7 | +2.5% | | Recreational Vehicles | $291.5 | $385.2 | -24.3% | | Total Backlog | $4,471.3 | $4,461.9 | +0.2% | Summary Cash Flow (in millions) | Activity | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $53.4 | $126.5 | $91.6 | | Net cash from (used in) investing activities | $348.5 | $(29.9) | $(14.8) | | Net cash used in financing activities | $(398.6) | $(95.7) | $(69.7) | Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from floating-rate debt interest rate fluctuations and commodity price volatility for materials like aluminum and steel, which it manages through vendor contracts and price increases - The company is exposed to interest rate risk on its $85.0 million of floating-rate debt, where a 100-basis point change in interest rates would change annualized interest expense by approximately $0.9 million292 - The company faces commodity price risk as a purchaser of aluminum and steel, rarely using financial instruments to hedge but sometimes fixing prices through vendor contracts and implementing general price increases to offset rising costs293 Financial Statements and Supplementary Data RSM US LLP issued an unqualified opinion on the financial statements and internal controls, identifying goodwill and intangible asset valuation as critical audit matters, with consolidated financial statements provided - The independent auditor, RSM US LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting297311 - Critical audit matters identified by the auditor were the valuation of reporting units for goodwill testing and the valuation of indefinite-lived intangible assets, due to the significant management estimates and judgments involved302305 Consolidated Balance Sheet Highlights (in millions) | Account | Oct 31, 2024 | Oct 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $806.5 | $933.2 | | Total Assets | $1,213.0 | $1,410.4 | | Total Current Liabilities | $469.3 | $557.2 | | Long-Term Debt | $85.0 | $150.0 | | Total Liabilities | $777.9 | $912.4 | | Total Shareholders' Equity | $435.1 | $498.0 | Consolidated Statement of Income Highlights (in millions) | Account | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Net Sales | $2,380.2 | $2,638.0 | $2,331.6 | | Gross Profit | $297.3 | $316.1 | $247.5 | | Operating Income | $79.6 | $88.6 | $36.8 | | Net Income | $257.6 | $45.3 | $15.2 | | Diluted EPS | $4.72 | $0.77 | $0.25 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None448 Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of October 31, 2024, with no material changes during the fiscal year - Management concluded that the company's disclosure controls and procedures were effective as of October 31, 2024449 - Management's assessment concluded that the company's internal control over financial reporting was effective as of October 31, 2024, based on the COSO framework (2013)452 - No changes in internal control over financial reporting occurred during fiscal year 2024 that materially affected, or are reasonably likely to materially affect, internal controls453 Other Information This item contains no information - None454 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable454 PART III Directors, Executive Officers and Corporate Governance The information required for this item, concerning the company's directors, executive officers, and corporate governance practices, is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end - Information is incorporated by reference to the definitive proxy statement to be filed with the SEC within 120 days of the fiscal year ended October 31, 2024457 Executive Compensation The information required for this item, detailing executive compensation, is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end - Information is incorporated by reference to the definitive proxy statement to be filed with the SEC within 120 days of the fiscal year ended October 31, 2024458 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item, regarding security ownership of major shareholders and management, is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end - Information is incorporated by reference to the definitive proxy statement to be filed with the SEC within 120 days of the fiscal year ended October 31, 2024458 Certain Relationships and Related Transactions, and Director Independence The information required for this item, covering related party transactions and director independence, is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end - Information is incorporated by reference to the definitive proxy statement to be filed with the SEC within 120 days of the fiscal year ended October 31, 2024459 Principal Accounting Fees and Services The information required for this item, concerning fees paid to the principal accountant and the services rendered, is incorporated by reference from the company's definitive proxy statement, which will be filed with the SEC within 120 days of the fiscal year-end - Information is incorporated by reference to the definitive proxy statement to be filed with the SEC within 120 days of the fiscal year ended October 31, 2024460 PART IV Exhibits, Financial Statement Schedules This section lists Form 10-K documents, including consolidated financial statements and an index of exhibits, with financial statement schedules omitted as information is provided elsewhere - The consolidated financial statements and notes are filed as part of this report463 - All financial statement schedules are omitted because the conditions requiring them are absent or the necessary information is already provided elsewhere in the Form 10-K463 - An index of exhibits is provided, referencing key corporate documents such as the Certificate of Incorporation, bylaws, credit agreements, and various incentive and compensation plans466467471 Form 10-K Summary This item is not applicable and contains no summary - None464