REV Group, manufacturer of specialty vehicle brands, announced today a series of strategic actions aimed at optimizing its product portfolio and balance sheet.
Effective Jan. 26, the company has completed the sale of its school bus business, Collins Bus Corp. to Forest River Bus for a purchase price of $303 million in cash, subject to certain customary adjustments.
“We have a long and successful history with Collins that dates back to the initial acquisition that started REV Group. We are pleased that the Collins team has a strategic new home with Forest River. I would like to thank the Collins team members for their contributions to REV Group and wish them continued success,” said Mark Skonieczny, president and CEO of REV Group.
In addition to the sale of Collins, REV Group announced it will be exiting transit bus manufacturing by winding down operations at its El Dorado National-California (ENC) business, which is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered.
“Delays in the supply of critical components and the build out of infrastructure to support EV adoption, as well as the financial health of key suppliers, has created a competitive bidding environment for diesel and CNG buses that has made it difficult for ENC to compete profitably versus peers of greater scale,” said Skonieczny. “The decision to wind down operations was not made lightly; however, based on the options available to us, we believe this is the best path forward for our business. I would like to thank our ENC employees, dealers and customers for their commitment to ENC over the years.”
REV Group expects to generate at least $250 million in net cash proceeds from these strategic actions. The net proceeds will be used to return approximately $180 million of cash to shareholders in the form of a special cash dividend in the amount of $3 per share of common stock, payable on Feb. 16 to shareholders of record on Feb. 9, with the remainder used to pay down debt under its ABL credit facility.
REV Group said it will be reorganized into two reporting segments beginning with its first quarter fiscal 2024 results. The remaining Commercial segment business will be combined with the Fire & Emergency businesses in a new segment named Specialty Vehicles, led by Mike Virnig, the current fire group president. The Recreation segment will be renamed Recreational Vehicles and will continue to be led by its current president, Mike Lanciotti. The company expects to provide updated fiscal 2024 guidance, including the impacts of these strategic actions, with its first quarter fiscal 2024 earnings release.
“Today’s announcement creates a more focused operating structure that provides opportunities for growth, consistent cash generation and improved margin performance,” said Skonieczny. “The net cash proceeds generated from these actions and strength of our balance sheet allow us to return cash to shareholders in the form of a special cash dividend while retaining ample liquidity and flexibility to continue to pursue our strategic agenda.”