Rev Group Stock Plunges After Mixed Q3 Results, Lowered FY21 Outlook

  • Rev Group Inc REVG reported third-quarter sales growth of 1.9% year-over-year to $593.3 million, missing the consensus of $663.4 million.
  • Sales by segments: Fire & Emergency $269.5 million (-12.1% Y/Y), Commercial $111.3 million (+20.5% Y/Y) and Recreation $212.5 million (+16.3% Y/Y).
  • Adjusted EPS improved to $0.37 from $0.10 in 3Q20, beating the consensus of $0.34.
  • The gross margin expanded by 150 bps to 12.9%.
  • The operating income increased to $28.5 million from $2.1 million a year ago, and the margin expanded by 444 bps to 4.8%.
  • Rev Group generated cash from operating activities year-to-date of $100.6 million, compared to $25 million a year ago.
  • Adjusted EBITDA was $41.6 million, compared to $21.4 million in 3Q20, and margin expanded by 334 bps to 7%.
  • At the end of the quarter, the company's backlog was ~$2.7 billion.
  • Rev Group declared a quarterly cash dividend of $0.05 per share, payable on October 15, 2021, to shareholders of record on September 30, 2021.
  • The company authorized a new share repurchase program of up to $150 million, which expires in 24 months.
  • Cash and cash equivalents totaled $9.2 million as of July 31, 2021. Net debt was $240.8 million.
  • FY21 Outlook: Rev Group expects sales of $2.3 billion-$2.45 billion (prior $2.45 billion-$2.6 billion), versus the consensus of $2.54 billion.
  • Adjusted EBITDA of $140 million-$150 million (prior $145 million-$160 million).
  • Price Action: REVG shares are trading lower by 15.81% at $14.40 on the last check Wednesday.
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