REV Group Inc., a manufacturer of specialty vehicle brands, has completed a series of strategic actions aimed at optimizing its product portfolio and balance sheet. The company has sold its school bus business, Collins Bus Corp., to Forest River Bus LLC for a purchase price of $303.0 million in cash, subject to certain customary adjustments.
“We have a long and successful history with Collins that dates back to the initial acquisition that started REV Group,” says Mark Skonieczny, president and CEO of REV Group. “We are pleased that the Collins team has a strategic new home with Forest River. I would like to thank the Collins team members for their contributions to REV Group, and wish them continued success.”
REV Group also will be exiting transit bus manufacturing by winding down operations at its ElDorado National–California (ENC) business, which is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered.
“Delays in the supply of critical components and the buildout of infrastructure to support EV adoption, as well as the financial health of key suppliers, has created a competitive bidding environment for diesel and CNG buses that has made it difficult for ENC to compete profitably versus peers of greater scale,” says Skonieczny. “The decision to wind down operations was not made lightly; however, based on the options available to us, we believe this is the best path forward for our business. I would like to thank our ENC employees, dealers and customers for their commitment to ENC over the years.”
REV Group expects to generate at least $250 million in net cash proceeds from these strategic actions. The net proceeds will be used to return approximately $180 million of cash to shareholders in the form of a special cash dividend of $3.00 per share of common stock, payable February 16, 2024, to shareholders of record February 9, 2024, with the remainder used to pay down debt under its ABL credit facility.
REV Group will be reorganized into two reporting segments beginning with its first quarter fiscal 2024 results. The remaining Commercial segment business will be combined with the Fire & Emergency businesses in a new segment named Specialty Vehicles, led by Mike Virnig, currently the fire group president. The Recreation segment will be renamed Recreational Vehicles and will continue to be led by its current president, Mike Lanciotti.
The company expects to provide updated fiscal 2024 guidance, including the impacts of these strategic actions, with its first quarter fiscal 2024 earnings release.
