REV Group has reported results for the three months ended April 30, showing net sales in the second quarter 2018 were $608.9 million, representing growth of 11.7percent over the three months ended April 29, 2017. The company’s second quarter 2018 net income was $7.4 million. The company ended the quarter with total backlog of $1.2 billion, representing growth quarter over quarter and year over year.
“Our fiscal second quarter results were below our expectations and were impacted by a number of factors,” said Tim Sullivan, CEO of REV Group. “In particular, cost inflation across many of the commodities and services we buy was significant in the quarter and due to the length of our backlogs we were not able to mitigate these increases. We estimate the cost inflation will have an approximate $19 million impact on our current fiscal year. Additionally, production and sales at several of our business units were adversely impacted by the availability of chassis. Finally, margins were impacted by lower-than-expected sales of certain higher-content product categories including custom fire apparatus, large commercial buses, and Class A RVs. … We have implemented a series of significant cost and spending reduction actions including: supply chain actions, consolidations of certain facilities, and reductions in overhead headcount and spending.”
The recreation segment grew net sales to $198.8 million in the second quarter 2018, representing an increase of $32.5 million, or 19.5 percent, from the prior year quarter. Recreation segment sales growth was the result of strong performance from REV’s recent Lance acquisition and the acquisition of Midwest in April 2017 (Class B and towables product categories), an increase in Class C unit volume, and an increase in sales at the company’s molded fiberglass business.
Class A unit volume declined compared to the prior year period due to a reduction in the number of models produced and the timing of new model year introductions which were targeted to occur later in this fiscal year.
Excluding the impact of net sales from acquired companies, recreation segment net sales decreased 7.1 percent compared to the prior year period. Recreation segment backlog at the end of the second quarter 2018 was $239.5 million, which was up 65.4 percent from $144.8 million at the end of fiscal year 2017.
“The diversification of our recreation segment will enable us to participate in the relatively stronger areas of this market and further broaden our product portfolio and dealer value proposition,” said Sullivan. “We expect the combination of strong performance from our acquisitions as well as our profitability improvement initiatives to deliver favorable financial performance in the segment during the back half of the year.”