Stock into Earnings: REV Group, Inc. (NYSE:REVG)

On 13 Sep 2019, REV Group, Inc. (NYSE:REVG) oscillated between $10.35 and $10.85 before concluding trading period lower/higher +2.50% at $10.65. The stock recorded total trading quantity of 502,690 shares as compared to its average volume of 238,506 shares.

REV Group, Inc. (REVG) recently stated results for the three months ended July 31, 2019 (“third quarter 2019”). Consolidated net sales in the third quarter 2019 were $617.0M, a raise of 3.2 percent contrast to $597.7M for the three months ended July 31, 2018 (“third quarter 2018”). Sales growth in Fire & Emergency and Commercial was partially offset by lower net sales in the Recreation section.

The Company’s third quarter 2019 net income was $5.6M, or $0.09 per diluted share, contrast to net income of $18.3M, or $0.28 per diluted share, in the third quarter 2018. Adjusted Net Income for the third quarter 2019 was $13.6M, or $0.21 per diluted share, contrast to Adjusted Net Income of $24.7M, or $0.38 per diluted share, in the third quarter 2018. Adjusted EBITDA in the third quarter 2019 was $33.5M, contrast to $47.6M in the third quarter 2018. The decreases in consolidated net income, Adjusted Net Income and Adjusted EBITDA were primarily Because of reduced earnings in the Fire & Emergency and Recreation sections, partially offset by improved earnings in the Commercial section.

Working Capital, Liquidity and Cash Flow

Net working capital2 for the Company as of July 31, 2019 was $412.7M contrast to $415.3M as of October 31, 2018 and $434.8M at the end of the previous year third quarter. The decrease in working capital year over year was primarily Because of our focus on improved working capital turns, offset partially by higher inventory levels at July 31, 2019.

Capital expenditures in the third quarter 2019 were $4.7M contrast to $8.2M in the third quarter 2018. Proceeds from the sale of assets in the third quarter 2019 were $5.5M resulting in total proceeds year-to-date fiscal 2019 of $22.6M contrast to $6.4M year-to-date third quarter in fiscal 2018.

Fiscal 2019 Full Year Outlook

Mr. Sullivan concluded, “Third quarter results were well below our expectations Because of the performance in three of our largest business units. Looking forward, we do not expect that our new workforce in the largest Fire business unit will be sufficiently efficient through the remainder of this year as they continue to be trained and integrated into the business. Further, Because of the late receipt of a large multi-year ambulance contract, we believe we will be unable to achieve these forecast-ed shipments and associated profitability this year. Finally, we expect the RV industry softness to continue through at least the end of fiscal 2019. Primarily as a result of these factors, we are lowering our full year guidance for fiscal 2019 revenues to $2.35 to $2.45B from $2.4 to $2.6B, net income to $(8) to $5M from $43 to $63M, Adjusted EBITDA to $100 to $110M from $150 to $170M, and Adjusted Net Income to $28 to $41M from $66 to $84M.”

“We are updating our cash flow forecast for the full fiscal year to $70 to $80M, from $110 to $130M, in net cash provided by operating activities and over $25M, from over $40M, of additional cash flow from other initiatives,” Mr. Sullivan added. “We are focused on maximizing our cash flow and debt reduction targets in this environment in order to set the Company up for a better fiscal 2020.”

REVG its monthly performance is -6.41% and a quarterly performance of -18.01%. The stock price is trading downbeat from its 200 days moving average with -3.94% and down from 50 days moving average with -15.63%.

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