REV Group has provided an additional financial update and further actions taken in response to the COVID-19 pandemic.
The company is temporarily lowering its executive team and vice president base salaries between 10 percent to 40 percent. During this time, the board of directors is also reducing its cash compensation by 30 percent. The company has also furloughed most salaried employees within its recreation segment which, as previously disclosed, suspended normal production activities during the week of March 23.
“We are implementing cost saving and operational actions to enhance liquidity and maintain financial flexibility,” said REV Group President and CEO Rod Rushing. “We continue to monitor our end market demand and our supply chain and have developed contingency plans should future developments warrant further action.”
Additional efforts to increase liquidity include the suspension of the company’s quarterly dividend beginning fiscal second quarter 2020, sale of non-operating assets and taking advantage of all additional cash flow opportunities available from the recently enacted CARES Act. These efforts are expected to generate additional cash proceeds in the range of $30 to $35 million in fiscal year 2020.
REV Group currently maintains a liquidity with about $200 million of availability under its existing ABL credit facility including cash on hand. Focus on cash and expense management has resulted in cash receipts exceeding cash payments in recent weeks and the company will seek to create additional positive cash flow from continuing to reduce expenses and manage working capital for cash.
“While it was necessary to suspend production within the recreation segment, we have maintained operations at approximately 70 percent of our facilities on a total revenue basis,” said Rushing. “Over the past month, we have experienced increased demand in our ambulance division, and we continue to deliver fire trucks and public transportation vehicles against our backlog. I want to thank all of our employees for their commitment and resilience and recognize the support of their families as we continue to navigate through this challenging environment. We also want to thank our customers for their support, as well as first responders and all others on the front lines of this crisis who are helping our country manage through these difficult times.”
