MILWAUKEE — REV Group reported results for the three months ended October 31. Consolidated net sales in the fourth quarter 2018 were $659.8 million, representing a decline of 3.5 percent over the three months ended October 31, 2017. The decline in sales was primarily the result of lower Fire & Emergency segment shipments, partially offset by sales growth in the Commercial and Recreation segments. Consolidated net sales were $2.38 billion for the twelve months ended October 31, 2018, which was an increase of 5.0 percent over the twelve months ended October 31, 2017.
“We are disappointed with our financial results for fiscal year 2018. Fiscal 2018 was a year in which we were confronted with the strong headwinds from the impacts of tariffs, chassis availability, material lead time extensions and temporary labor inefficiencies.”
Adjusted EBITDA in the fourth quarter 2018 was $39.4 million, compared to $58.4 million in the fourth quarter 2017. The decline in Adjusted EBITDA during the quarter was driven by lower profitability within the Fire & Emergency and Commercial segments, partially offset by growth in the Recreation segment. Full year 2018 Adjusted EBITDA was $148.0 million, compared to $162.5 million in full year 2017.
A non-cash impairment charge of $35.6 million was recorded as of October 31 that relates to the decision to sell certain non-core businesses, the identification of other assets that the company will monetize in fiscal year 2019, and the impairment of certain information system assets. As of October 31, 2018, management decided to divest certain businesses and activities which include the Revability mobility van business, one Regional Technical Center and the Company’s rental fleet. Total cash that the Company expects to generate in fiscal year 2019 from these initiatives is approximately $40 million. A definitive agreement to sell the Revability business was signed on December 19, 2018.
“We are disappointed with our financial results for fiscal year 2018. Fiscal 2018 was a year in which we were confronted with the strong headwinds from the impacts of tariffs, chassis availability, material lead time extensions and temporary labor inefficiencies.” said Tim Sullivan, CEO REV Group. “As we look to fiscal year 2019, we expect improvement in the availability of chassis and flow of raw materials. We are taking actions to increase manufacturing output to meet the ongoing strength of demand and to catch up with the delayed shipments we have experienced. We enter fiscal year 2019 with expectations for a return to growth in organic sales and profitability as well as significantly stronger cash flow generation and higher returns on invested capital. In addition to the monetization of businesses and assets which is expected to generate approximately $40 million of cash in fiscal 2019, we have stepped up our focus on cash generation from operations across all our businesses. We are committed to continuing to evaluate our balance sheet and the performance of our portfolio to identify opportunities and actions to achieve our long-term financial objective of greater than 10 percent Adjusted EBITDA margins and to improve shareholder return.”
SOURCE: REV Group press release