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REV Group, Inc. Reports Fiscal 2018 Second Quarter Results

Share:

Well positioned with record Q2 revenue and backlog, however
adversely impacted by near term commodity price inflation, supply chain
constraints and shortfalls in our Commercial Segment

Updated full year guidance reflects continued year over year
revenue growth of 10% and Adjusted EBITDA growth of 11% at the midpoint
of the range

  • Net sales of $608.9 million, representing growth of 11.7% compared to
    the prior year1 quarter
  • Second quarter net income of $7.4 million, an increase of 9.2%
    compared to the prior year quarter
  • Second quarter Adjusted EBITDA2 of $34.1 million, a
    decrease of 9.2% compared to the prior year quarter
  • Total backlog of $1,270.5 million as of April 30, 2018, an increase of
    2.3% sequentially and 15.3% compared to the prior year end
  • Company revises full-year 2018 outlook; now expects net sales of $2.4
    to $2.6 billion (vs. $2.3 billion in prior year), Adjusted EBITDA of
    $175 to $185 million (vs. $163 million in prior year), net income of
    $72 million to $87 million (vs. $31 million in prior year) and
    Adjusted net income of $94 to $105 million (vs. $76 million in prior
    year)
  • Ian Walsh joins REV Group as new Chief Operating Officer
  • Company repurchased 238,547 shares under the Company's share
    repurchase authorization during the second quarter for total
    consideration of $4.8 million

REV Group, Inc. (NYSE:REVG), a manufacturer of industry-leading
specialty vehicle brands, today reported results for the three months
ended April 30, 2018 ("second quarter 2018"). Consolidated net sales in
the second quarter 2018 were $608.9 million, representing growth of
11.7% over the three months ended April 29, 2017 ("second quarter
2017"). The Company's second quarter 2018 net income was $7.4 million,
or $0.11 per diluted share. Adjusted net income for the second quarter
2018 was $15.6 million, or $0.24 per diluted share, a decline of 17.9%
compared to $19.0 million, or $0.29 per diluted share, in the second
quarter 2017. Adjusted EBITDA2 in the second quarter 2018 was
$34.1 million, representing a decline of 9.2% compared to adjusted
EBITDA of $37.6 million in the second quarter 2017. The Company ended
the quarter with total backlog of $1,270.5 million, 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." commented 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."

"Longer term, in response to these factors, we have taken mitigating
action across our business to drive targeted margin expansion. First, we
have implemented price increases and surcharges to offset material and
service cost increases for all new orders. Second, 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. We estimate these actions
will result in annualized savings of $20 million and they are already
fully implemented as of today. Given the length of our backlogs, we
estimate the impact on EBITDA of these price actions will be
approximately $7 million for fiscal year 2018. Third, we have continued
to add talent in several key areas of our business that we believe will
help accelerate our long-term growth objectives, including the recent
addition of Ian Walsh as our new Chief Operating Officer."

Mr. Sullivan concluded, "While we've revised our full-year outlook
downward, we still expect to generate solid financial performance this
year, with approximately 10% sales growth and Adjusted EBITDA growth of
approximately 11% at the midpoint of our guidance range. We are
foundationally supported by the continued strength in our order
activity, the growth in our backlogs, and our market positions remain
strong. The margin improvement initiatives we implemented during the
second quarter will help us drive performance improvement in the back
half of this year, and we expect to close the year with good momentum as
approximately 70% of full-year Adjusted EBITDA is expected to be
generated during the third and fourth quarters, consistent with our
historic seasonality. Finally, we'll continue to remain active in the
M&A market and are committed to efficient and shareholder-friendly
capital allocation policies. We opportunistically repurchased
approximately $5 million of our shares during the second quarter, in
addition to our ongoing capex investments and our regular quarterly
dividend."

REV Group Segment Highlights

Fire & Emergency Segment

Fire & Emergency ("F&E") segment net sales were $252.0 million for the
second quarter 2018, an increase of $33.0 million, or 15.1%, from
$219.0 million for the second quarter 2017. The increase in net sales of
F&E was primarily driven by results from the Ferrara acquisition
completed in April 2017, as well as an increase in ambulance unit
volumes. Excluding the impact of net sales from Ferrara, Fire &
Emergency segment net sales increased 6.0% compared to the prior year
period. F&E backlog at the end of the second quarter 2018 was up 7.4% to
$633.8 million compared to $590.3 million at the end of fiscal year 2017.

F&E Adjusted EBITDA3 was $21.8 million in the second
quarter 2018, which represented a decline of 10.7% compared to $24.4
million in the second quarter 2017. The reduction in Adjusted EBITDA was
due to lower volume of higher content fire apparatus, increased input
costs and a negative sales mix shift in certain ambulance businesses.
Excluding the impact of acquisitions, Fire & Emergency segment Adjusted
EBITDA decreased 15.6% compared to the prior year period. Second quarter
2018 F&E Adjusted EBITDA margin was 8.6% of net sales compared to 11.1%
in the second quarter 2017.

Mr. Sullivan commented, "Our leadership in these markets will foster
continued growth in this business through the remainder of this year and
beyond. Our backlog remains healthy, and with our strong market position
we expect to continue benefitting from positive macro trends that are
driving strong levels of demand. Our focus is on executing on our ramp
up in production for the busiest part of our year."

Commercial Segment

Commercial segment net sales for the second quarter 2018 were $158.0
million, which were down 1.0% compared to the prior year quarter. This
decline was due primarily to a decrease in transit bus and school bus
units sold compared to the prior year period, partially offset by
increases in shuttle bus, sweeper and mobility van units. Commercial
backlog at the end of the second quarter was $397.2 million, an increase
of 8.4% compared to $366.4 million at the end of fiscal year 2017.

Commercial segment Adjusted EBITDA was $9.5 million in the second
quarter 2018 compared to $14.7 million in the second quarter 2017. This
decrease was due to reduced volumes of transit and school bus units sold
compared to the prior year, and certain higher material and freight
costs. Adjusted EBITDA margin was 6.0% of net sales in the second
quarter 2018 compared to 9.2% in the second quarter 2017.

Mr. Sullivan commented, "The decline in sales and profitability
experienced during the second quarter were largely the result of a
timing lag between two major contracts in our transit bus business. That
said, the longer term outlook of our Commercial business remains healthy
with a large municipal contract starting in 2019. In addition to that
base contract, we maintain strong market share in school buses and
expect to begin participating in more commercial bus activity yet this
year. Our shuttle bus volumes are also increasing, and there continue to
be favorable macro trends in our other specialty vehicles, particularly
in mobility."

Recreation Segment

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%, from
the prior year quarter. Recreation segment sales growth was the result
of strong performance from our 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% 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% from $144.8 million at the end of fiscal
year 2017.

Recreation segment Adjusted EBITDA grew 74.0% in the second quarter 2018
to $12.7 million, compared to $7.3 million in the second quarter 2017.
The increase in Adjusted EBITDA was primarily due to the positive impact
of the Lance and Midwest acquisitions, partially offset by higher
material costs. Adjusted EBITDA margin in the second quarter 2018 grew
to 6.4% of net sales compared to 4.4% in the second quarter 2017. The
expansion in profitability is attributable to higher unit volumes,
product mix, and continued benefit from ongoing operating initiatives.
Excluding the impact of acquisitions, Recreation segment Adjusted EBITDA
decreased 4.0% in the second quarter 2018 compared to the prior year
period, due to the reduction in the number of Class A models produced
and model year introduction timing mentioned above.

Mr. Sullivan commented, "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. 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."

Working Capital, Liquidity, and Capital Allocation

Net working capital4 for the Company at April 30, 2018 was
$377.7 million compared to $299.7 million at the end of fiscal year 2017
and $333.2 million in the prior year quarter. The increase in working
capital over the year end was primarily due to the normal seasonal
patterns (working capital generally builds in the first half of the
fiscal year and declines in the second half) as well as to a lesser
extent the inclusion of the Lance acquisition. Cash and equivalents
totaled $13.2 million at April 30, 2018. Net debt at April 30, 2018 was
$356.5 million (net of deferred financing costs). As of April 30th,
the Company maintained a strong liquidity position with $141.9 million
available under its ABL revolving credit facility. Capital expenditures
in the second quarter 2018 were $10.0 million compared to $19.1 million
in the prior year quarter. During the quarter the Company repurchased a
total of 238,547 shares for $4.8 million, an average repurchase price of
$20.26 per share.

Fiscal 2018 Full Year Outlook

As a result of lower-than-expected second-quarter performance due to the
negative factors discussed above which are impacting the Company's
margins, REV has revised its full-year outlook. The Company now expects
full-year 2018 results in the following ranges:

  • Full-year 2018 revenue of $2.4 to $2.6 billion
  • Adjusted EBITDA of $175 to $185 million
  • Net Income of $72 to $87 million
  • Adjusted Net Income of $94 to $105 million

Quarterly Dividend

Our board of directors declared a quarterly dividend for our second
quarter of fiscal 2018, payable on August 31, 2018, to holders of record
on July 31, 2018, in the amount of $0.05 per share of common stock,
which equates to a rate of $0.20 per share of common stock on an
annualized basis.

Conference Call

REV Group, Inc. will host a conference call to discuss its second
quarter 2018 results and outlook on June 7th at 11:00 a.m.
EDT. A supplemental earnings slide deck will be available tomorrow
morning on the REV Group, Inc. investor relations website prior to the
call. The call will be webcast simultaneously over the Internet. To
access the webcast, listeners can go to http://investors.revgroup.com/investor-events-and-presentations/events
at least 15 minutes prior to the event and follow instructions for
listening to the webcast. An audio replay of the call and related
question and answer session will be available for 12 months at this
website.

About REV Group

REV Group, Inc. (NYSE:REVG) is a leading designer, manufacturer and
distributor of specialty vehicles and related aftermarket parts and
services. We serve a diversified customer base primarily in the United
States through three segments: Fire & Emergency, Commercial and
Recreation. We provide customized vehicle solutions for applications
including: essential needs (ambulances, fire apparatus, school buses,
mobility vans and municipal transit buses), industrial and commercial
(terminal trucks, cut-away buses and street sweepers) and consumer
leisure (recreational vehicles ("RVs") and luxury buses). Our brand
portfolio consists of 30 well-established principal vehicle brands
including many of the most recognizable names within our served markets.
Several of our brands pioneered their specialty vehicle product
categories and date back more than 50 years.

Note Regarding Non-GAAP Measures

The Company reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP"). However, management
believes that the evaluation of our ongoing operating results may be
enhanced by a presentation of Adjusted EBITDA and Adjusted Net Income,
which are non-GAAP financial measures. Adjusted EBITDA represents net
income before interest expense, income taxes, depreciation and
amortization as adjusted for certain non-recurring, one-time and other
adjustments which we believe are not indicative of our underlying
operating performance. Adjusted Net Income represents net income as
adjusted for certain after-tax, non-recurring, one-time and other
adjustments which we believe are not indicative of our underlying
operating performance as well as for the add-back of non-cash intangible
asset amortization and stock-based compensation.

The Company believes that the use of Adjusted EBITDA and Adjusted Net
Income provide additional meaningful methods of evaluating certain
aspects of its operating performance from period to period on a basis
that may not be otherwise apparent under GAAP when used in addition to,
and not in lieu of, GAAP measures. A reconciliation of Adjusted EBITDA
and Adjusted Net Income to the most closely comparable financial
measures calculated in accordance with GAAP is included in the financial
appendix of this news release.

Forward Looking Statements

This news release contains statements that the Company believes to be
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. This news release includes
statements that express our opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or future
results and therefore are, or may be deemed to be, "forward-looking
statements." These forward-looking statements can generally be
identified by the use of forward-looking terminology, including the
terms "believes," "estimates," "anticipates," "expects," "strives,"
"goal," "seeks," "projects," "intends," "forecasts," "plans," "may,"
"will" or "should" or, in each case, their negative or other variations
or comparable terminology. They appear in a number of places throughout
this news release and include statements regarding our intentions,
beliefs, goals or current expectations concerning, among other things,
our results of operations, financial condition, liquidity, prospects,
growth, strategies and the industries in which we operate.

Our forward-looking statements are subject to risks and uncertainties,
including those highlighted under "Risk Factors" and "Cautionary
Statement on Forward-Looking Statements" in the Company's annual report
on Form 10-K, which may cause actual results to differ materially from
those projected or implied by the forward-looking statement.
Forward-looking statements are based on current expectations and
assumptions and currently available data and are neither predictions nor
guarantees of future events or performance. You should not place undue
reliance on forward-looking statements, which only speak as of the date
hereof. The Company does not undertake to update or revise any
forward-looking statements after they are made, whether as a result of
new information, future events, or otherwise, expect as required by
applicable law.

Investors-REVG

1 REV Group, Inc. changed its fiscal year end from the last
Saturday to the last calendar day in October of each year. In addition,
starting in fiscal 2018, the Company's fiscal quarters will end on the
last day of January, April, July and October.

2 REV Group, Inc. Adjusted Net Income and Adjusted EBITDA are
non-GAAP measures that are reconciled to their nearest GAAP measure
later in this release. Note: These figures do not include the impact of
acquisitions before their acquisition dates.

3 Segment Adjusted EBITDA is a non-GAAP measure that is
explained and reconciled to its nearest GAAP metric later in this
release.

4 Net Working capital is defined as current assets (excluding
cash) less current liabilities (excluding current portion of long-term
debt).

REV GROUP, INC.
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
(Unaudited; dollars in thousands)
   
April 30, October 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 13,152 $ 17,838
Accounts receivable, net 251,725 243,242
Inventories, net 483,906 452,380
Other current assets   14,731   13,372
Total current assets 763,514 726,832
 
Property, plant and equipment, net 238,793 217,083
Goodwill 187,036 133,235
Intangibles assets, net 159,634 167,887
Other long-term assets   9,688   9,395
Total assets $ 1,358,665 $ 1,254,432
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 750 $ 750
Accounts payable 188,090 217,267
Customer advances 112,275 95,774
Accrued warranty 22,693 26,047
Other current liabilities   49,563   70,241
Total current liabilities 373,371 410,079
 
Long-term debt, less current maturities 368,944 229,105
Deferred income taxes 14,878 22,527
Other long-term liabilities   20,109   20,281
Total liabilities 777,302 681,992
 
Commitments and contingencies
Shareholders' equity   581,363   572,440
Total liabilities and shareholders' equity $ 1,358,665 $ 1,254,432

REV GROUP, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except shares and per share
amounts)
       
Three Months Ended Six Months Ended
April 30, April 29, April 30, April 29,
2018 2017 2018 2017
 
Net sales $ 608,934 $ 545,316 $ 1,123,790 $ 988,253
 
Cost of sales   536,068   472,471   998,370     867,888  
 
Gross profit 72,866 72,845 125,420 120,365
 
Operating expenses:
Selling, general and administrative 48,704 42,604 89,737 99,102
Research and development costs 1,500 963 3,231 2,161
Restructuring 1,936 335 5,989 1,199
Amortization of intangible assets   4,331   2,695   9,070     5,309  
 
Total operating expenses   56,471   46,597   108,027     107,771  
 
Operating income 16,395 26,248 17,393 12,594
 
Interest expense, net 6,075 3,416 11,493 10,893
Loss on early extinguishment of debt     11,920       11,920  
 
Income (loss) before provision (benefit) for income taxes 10,320 10,912 5,900 (10,219 )
 
Provision (benefit) for income taxes   2,879   4,099   (10,963 )   (3,730 )
 
Net income (loss) $ 7,441 $ 6,813 $ 16,863   $ (6,489 )
 
Income (loss) per common share:
Basic $ 0.12 $ 0.11 $ 0.26 $ (0.11 )
Diluted $ 0.11 $ 0.10 $ 0.25 $ (0.11 )
 
Dividends declared per common share $ 0.05 $ 0.05 $ 0.10 $ 0.10
 
Adjusted earnings per common share:
Basic $ 0.24 $ 0.30 $ 0.39 $ 0.43
Diluted $ 0.24 $ 0.29 $ 0.38 $ 0.43
 
Weighted Average Shares Outstanding:
Basic 64,577,469 63,722,795 64,429,854 57,541,476
Diluted 66,267,594 65,501,330 66,388,767 57,541,476

REV GROUP, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
     
Six Months Ended
April 30, April 29,
2018 2017
 
Cash flows from operating activities:
Net income (loss) $ 16,863 $ (6,489 )
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 22,118 15,274
Amortization of debt issuance costs 882 918
Amortization of Senior Note discount 50
Stock-based compensation expense 3,697 25,817
Deferred income taxes (10,414 ) (8,563 )
Loss on early extinguishment of debt 11,920
Gain on disposal of property, plant and equipment (2,045 ) (352 )
 
Changes in operating assets and liabilities, net of effects of
business acquisitions:
  (75,046 )   (97,466 )
 
Net cash used in operating activities (43,945 ) (58,891 )
 
Cash flows from investing activities:
Purchase of property, plant and equipment (23,623 ) (37,165 )
Purchase of rental fleet vehicles (14,235 ) (7,799 )
Proceeds from sale of property, plant and equipment 5,833 1,821
Acquisition of businesses, net of cash acquired   (57,157 )   (153,534 )
 
Net cash used in investing activities (89,182 ) (196,677 )
 
Cash flows from financing activities:
Net proceeds from borrowings under revolving credit facility 139,625 127,749
Proceeds from Term Loan 75,000
Net proceeds from initial public offering 253,593
Payment of dividends (6,436 )
Payment of debt issuance costs (411 ) (6,744 )
Repayment of long-term debt (180,000 )
Senior Note prepayment premium (7,650 )
Redemption of common stock options including employer payroll taxes (1,918 ) (3,251 )
Payments of withholding and employer payroll taxes for vesting of
restricted stock
(149 )
Proceeds from exercise of common stock options, net of employer
payroll taxes
2,564
Repurchase and retirement of common stock   (4,834 )    
 
Net cash provided by financing activities   128,441     258,697  
 
Net (decrease) increase in cash and cash equivalents (4,686 ) 3,129
Cash and cash equivalents, beginning of period   17,838     10,821  
 
Cash and cash equivalents, end of period $ 13,152   $ 13,950  
REV GROUP, INC.
SEGMENT INFORMATION
(Unaudited; dollars in thousands)
       
Three Months Ended Six Months Ended
April 30, April 29, April 30, April 29,
2018 2017 2018 2017

Net Sales:

Fire & Emergency $ 252,018 $ 219,002 $ 467,269 $ 404,373
Commercial 157,995 159,524 290,234 289,745
Recreation 198,794 166,337 366,042 293,043
Corporate & Other   127     453     245     1,092  
Total Company Net Sales $ 608,934   $ 545,316   $ 1,123,790   $ 988,253  
 

Adjusted EBITDA:

Fire & Emergency $ 21,788 $ 24,399 $ 39,943 $ 41,112
Commercial 9,530 14,663 13,903 22,837
Recreation 12,735 7,292 20,826 10,065
Corporate & Other   (9,960 )   (8,793 )   (19,274 )   (15,342 )
Total Company Adjusted EBITDA $ 34,093   $ 37,561   $ 55,398   $ 58,672  
 

Adjusted EBITDA Margin:

Fire & Emergency 8.6 % 11.1 % 8.5 % 10.2 %
Commercial 6.0 % 9.2 % 4.8 % 7.9 %
Recreation 6.4 % 4.4 % 5.7 % 3.4 %
Total Company Adjusted EBITDA Margin 5.6 % 6.9 % 4.9 % 5.9 %
 
 
 

 

April 30, January 31, October 31,

Period-End Backlog:

2018 2018 2017
Fire & Emergency $ 633,814 $ 622,329 $ 590,295
Commercial 397,152 337,754 366,447
Recreation   239,523     281,813     144,847  
Total Company Backlog $ 1,270,489   $ 1,241,896   $ 1,101,589  

REV GROUP, INC.
ADJUSTED EBITDA BY SEGMENT
(Unaudited; dollars in thousands)
     
Three Months Ended April 30, 2018
Fire & Emergency Commercial Recreation Corporate & Other Total
 
Net Income (loss) $ 16,347 $ 5,756 $ 9,370 $ (24,032 ) $ 7,441
 
Depreciation & amortization 4,006 2,830 3,055 1,210 11,101
Interest expense, net 981 753 140 4,201 6,075
Provision for income taxes   2   2     2,875     2,879
EBITDA 21,336 9,341 12,565 (15,746 ) 27,496
 
Transaction expenses 1 514 515
Sponsor expenses 120 120
Restructuring costs 259 156 170 1,351 1,936
Stock-based compensation expense 1,947 1,947
Non-cash purchase accounting 33 33
Legal settlements 192 192
Deferred purchase price payment         1,854     1,854
Adjusted EBITDA $ 21,788 $ 9,530 $ 12,735 $ (9,960 ) $ 34,093
 
Three Months Ended April 29, 2017
Fire & Emergency Commercial Recreation Corporate & Other Total
 
Net Income (loss) $ 19,844 $ 12,089 $ 3,904 $ (29,024 ) $ 6,813
 
Depreciation & amortization 2,819 1,748 2,599 687 7,853
Interest expense, net 954 491 53 1,918 3,416
Provision for income taxes 4,099 4,099
Loss on early extinguishment of debt         11,920     11,920
EBITDA 23,617 14,328 6,556 (10,400 ) 34,101
 
Transaction expenses 772 1,089 1,861
Sponsor expenses 207 207
Restructuring costs 335 335
Stock-based compensation expense 311 311
Non-cash purchase accounting   10     736       746
Adjusted EBITDA $ 24,399 $ 14,663 $ 7,292 $ (8,793 ) $ 37,561

REV GROUP, INC.
ADJUSTED EBITDA BY SEGMENT
(Unaudited; dollars in thousands)
     
Six Months Ended April 30, 2018
Fire & Emergency Commercial Recreation Corporate & Other Total
 
Net Income (loss) $ 27,905 $ 6,224 $ 12,220 $ (29,486 ) $ 16,863
 
Depreciation & amortization 8,518 5,571 5,923 2,106 22,118
Interest expense, net 2,029 1,398 259 7,807 11,493
Provision (benefit) for income taxes   1   2     (10,966 )   (10,963 )
EBITDA 38,453 13,195 18,402 (30,539 ) 39,511
 
Restructuring costs 315 156 2,424 3,094 5,989
Transaction expenses 157 1,913 2,070
Stock-based compensation expense 3,697 3,697
Non-cash purchase accounting expense 396 272 668
Sponsor expenses 315 315
Legal Settlements 622 280 902
Deferred purchase price payment         2,246     2,246  
Adjusted EBITDA $ 39,943 $ 13,903 $ 20,826 $ (19,274 ) $ 55,398  
 
Six Months Ended April 29, 2017
Fire & Emergency Commercial Recreation Corporate & Other Total
 
Net Income (loss) $ 32,542 $ 16,652 $ 4,044 $ (59,727 ) $ (6,489 )
 
Depreciation & amortization 5,628 3,678 4,756 1,212 15,274
Interest expense, net 2,126 1,308 94 7,365 10,893
Provision (benefit) for income taxes 4 (3,734 ) (3,730 )
Loss on early extinguishment of debt 11,920 11,920
EBITDA 40,300 21,638 8,894 (42,964 ) 27,868
 
Transaction expenses 772 1,467 2,239
Sponsor expenses 338 338
Restructuring costs 1,199 1,199
Stock-based compensation expense 25,817 25,817
Non-cash purchase accounting   40     1,171       1,211  
Adjusted EBITDA $ 41,112 $ 22,837 $ 10,065 $ (15,342 ) $ 58,672  

REV GROUP, INC.
ADJUSTED NET INCOME
(Unaudited; dollars in thousands)
       
Three Months Ended Six Months Ended
April 30, April 29, April 30, April 29,
2018 2017 2018 2017
Net income (loss) $ 7,441 $ 6,813 $ 16,863 $ (6,489 )
Amortization of Intangible Assets 4,340 2,695 9,106 5,309
Restructuring Costs 1,936 335 5,989 1,199
Transaction Expenses 515 1,861 2,070 2,239
Stock-based Compensation Expense 1,947 311 3,697 25,817
Non-cash Purchase Accounting Expense 33 746 668 1,211
Loss on Early Extinguishment of Debt 11,920 11,920
Sponsor Expenses 120 207 315 338
Legal Settlements 192 902
Deferred Purchase Price Payment 1,854 2,246
Impact of Tax Rate Change (10,414 )
Income Tax Effect of Adjustments   (2,762 )   (5,919 )   (6,074 )   (16,715 )
Adjusted Net Income $ 15,616   $ 18,969   $ 25,368   $ 24,829  
REV GROUP, INC.
ADJUSTED EBITDA OUTLOOK RECONCILIATION
(Dollars in thousands)
  Fiscal Year 2018
Low   High
Net Income $ 72,000 $ 87,000
Depreciation and Amortization 45,000 43,000
Interest Expense, net 23,000 21,000
Income Tax Expense   9,000   12,000
 
EBITDA 149,000 163,000
 
Restructuring Costs 7,000 6,000
Transaction Expenses 4,000 3,000
Stock-based Compensation Expense 6,000 5,000
Non-cash Purchase Accounting Expense 1,300 1,000
Legal Settlements 1,000 900
Sponsor Expenses 400 300
Deferred Purchase Price Payout   6,300   5,800
Adjusted EBITDA $ 175,000 $ 185,000

REV GROUP, INC.
ADJUSTED NET INCOME OUTLOOK RECONCILIATION
(Dollars in thousands)
  Fiscal Year 2018
Low   High
Net Income $ 72,000 $ 87,000
Amortization of Intangible Assets 17,500 15,500
Restructuring Costs 7,000 6,000
Transaction Expenses 4,000 3,000
Stock-based Compensation Expense 6,000 5,000
Non-cash Purchase Accounting Expense 1,300 1,000
Legal Settlements 1,000 900
Sponsor Expenses 400 300
Deferred Purchase Price Payout 6,300 5,800
One-time Benefit of U.S. Tax Reform (10,400 ) (10,400 )
Income Tax Effect of Adjustments   (11,000 )   (9,000 )
Adjusted Net Income $ 94,100   $ 105,100  

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