REV Group, Inc. reported consolidated net sales in the fourth quarter ended October 31 were $623.6 million, representing an increase of 5.7 percent compared to $589.9 million for the three months ended October 31, 2021.

The increase in consolidated net sales was primarily due to an increase in net sales in its Commercial and Recreation segments, partially offset by a decrease in net sales in its Fire and Emergency (F&E) segment. Consolidated net sales were $2.3 billion for the twelve months ended October 31, 2022, which was a decrease of 2.1 percent over the twelve months ended October 31, 2021.

In the company’s fourth-quarter 2022, net income was $8.7 million, or $0.15 per diluted share, compared to net income of $0.0 million, or $0.00 per diluted share, in the fourth quarter 2021. Adjusted Net Income for the fourth quarter 2022 was $16.2 million, or $0.28 per diluted share, compared to Adjusted Net Income of $17.9 million, or $0.27 per diluted share, in the fourth quarter 2021. Net income for the full year 2022 was $15.2 million, or $0.25 per diluted share, compared to net income of $44.4 million, or $0.69 per diluted share in full year 2021.

Adjusted EBITDA in the fourth quarter 2022 was $33.5 million, compared to $31.1 million in the fourth quarter 2021. The increase in Adjusted EBITDA during the quarter was driven by increased contribution from the Recreation segment, partially offset by a decrease in the F&E and Commercial segments. Full-year 2022 Adjusted EBITDA was $105.1 million, compared to $141.5 million in full year 2021.

During the quarter, the company hired Dan DesRochers as president of REV Fire Group. Before joining the company, DesRochers was president and COO at Morgan Truck Body, LLC, a division of JB Poindexter & Co. Before that, he was the COO for Morgan Olson. Over his 30-year career, DesRochers has held leadership roles with General Electric, United States Can Company and Federal Signal Corporation.

“Throughout fiscal 2022 we managed macro headwinds that impacted our ability to achieve consistent production flow and staffing levels within our manufacturing facilities,” REV Group, Inc. President and CEO Rod Rushing said. “In the face of these challenges, we continued to deploy operational initiatives that we believe will deliver improved operational performance and shareholder value. We have made progress against supply chain headwinds with an expectation to benefit from multi-sourcing initiatives within the first half of fiscal 2023. I would like to thank our team for their efforts while working through these challenges.”

REV Group Fourth Quarter Segment Highlights

  • F&E Segment net sales were $253.0 million in the fourth quarter 2022, a decrease of $24.3 million, from $277.3 million in the fourth quarter 2021. The decrease in net sales compared to the prior year’s quarter was primarily due to decreased shipments of fire apparatus and ambulance units related to supply chain disruption, partially offset by price realization. F&E segment backlog at the end of the fourth quarter 2022 was $2.6 billion, an increase of $1.1 billion compared to $1.5 billion at the end of the fourth quarter 2021. The increase was primarily the result of continued demand and strong order intake for fire apparatus and ambulance units, pricing actions, and lower shipments against backlog. F&E segment Adjusted EBITDA was $1.9 million in the fourth quarter 2022, a decrease of $8.2 million from $10.1 million in the fourth quarter 2021. Profitability within the segment was impacted by lower sales volume, inflationary pressures, and inefficiencies related to supply chain disruption and Hurricane Ian, partially offset by price realization.
  • Commercial Segment net sales were $110.9 million in the fourth quarter 2022, an increase of $16.4 million from $94.5 million in the fourth quarter 2021. The increase in net sales compared to the prior year quarter was primarily due to increased shipments of school buses, terminal trucks and street sweepers, and price realization, partially offset by decreased shipments of municipal transit buses. Commercial segment backlog at the end of the fourth quarter 2022 was $525.6 million, an increase of $130.9 million compared to $394.7 million at the end of the fourth quarter 2021. The increase was primarily the result of increased orders for school buses and terminal trucks and pricing actions. Commercial segment Adjusted EBITDA was $3.3 million in the fourth quarter 2022, a decrease of $2.4 million from $5.7 million in the fourth quarter 2021. Lower profitability in the quarter was primarily the result of lower shipments and an unfavorable mix of municipal transit buses, inefficiencies related to labor constraints and supply chain disruptions, and inflationary pressures, partially offset by increased shipments and improved profitability of terminal trucks, and price realization.
  • Recreation Segment net sales were $260.1 million in the fourth quarter 2022, an increase of $42.2 million from $217.9 million in the fourth quarter 2021. The increase in net sales compared to the prior year quarter was primarily due to price realization, and a favorable mix, partially offset by lower line rates and unit shipments related to supply chain disruption and labor constraints in certain businesses. Backlog at the end of the fourth quarter 2022 was $1.1 billion, a decrease of $114.7 million compared to $1.2 billion at the end of the fourth quarter 2021. The decrease was primarily the result of normalization of inbound orders across categories, partially offset by pricing actions. Recreation segment Adjusted EBITDA was $35.3 million in the fourth quarter 2022, an increase of $13.6 million from $21.7 million in the fourth quarter 2021. The increase was primarily due to favorable mix and price realization, partially offset by inefficiencies related to supply chain disruptions and labor constraints in certain businesses, and inflationary pressures.

Working Capital, Liquidity, and Capital Allocation
Cash and cash equivalents totaled $20.4 million as of October 31, 2022. Net debt2 was $209.6 million, and the company had $307.7 million available under its ABL revolving credit facility as of October 31, 2022, an increase of $17.7 million as compared to the October 31, 2021 availability of $290.0 million. During the fourth quarter 2022, the company did not repurchase any of its common shares. Trade working capital3 for the company as of October 31, 2022 was $347.8 million, compared to $368.2 million as of October 31, 2021. The decrease was primarily due to an increase in accounts payable and customer advances, partially offset by an increase in accounts receivable and inventory. Capital expenditures in the fourth quarter 2022 were $8.9 million compared to $10.8 million in the fourth quarter 2021.