Acquisitions, improved margins boost REV Group

Increased costs lead to lower net income

Tim Sullivan
Photo from the 2017 IndyCar race at Road America. Les Tension Photography

Milwaukee-based REV Group Inc. saw its net income and earnings slide in the second quarter, but acquisitions helped bolster the company’s revenue and gross profit margins improved.

Tim Sullivan

The specialty vehicle maker reported $6.8 million in net income, down 15.3 percent from the same time last year. Earnings were down from 16 to 10 cents per diluted share.

Revenue increased 13.6 percent to $545.3 million and gross profit increased 24.1 percent to $72.9 million. As a percentage of sales, gross profit moved from 12.2 percent to 13.4 percent.

Higher selling, general and administrative costs along with a loss on the early extinguishment of debt contributed to lower bottom-line results.

“We are very pleased with where we sit right now from both a backlog standpoint, a profitability standpoint, every market that we’re in remains very, very strong, (and there are) lots of M&A opportunities out there,” said Tim Sullivan, REV Group president and chief executive officer. “If we can maintain our march forward organically … we’ll be very pleased and we plan to do that.”

Organic revenue was down $1.2 million during the quarter to $477 million. The largest decline came from the commercial vehicle segment, where organic sales were down $16.8 million or 9.5 percent. The company has been more selective about which sales opportunities it pursues, limiting sales.

The fire and emergency segment was down $1.9 million organically or 1.1 percent. The segment was up 23.4 percent overall on the strength of the company’s Kovatch Mobile Equipment acquisition in April 2016.

The recreation segment almost made up for those declines as it increased $17.1 million or 13.5 percent. The segment was up 31.6 percent overall with the increase being driven by the acquisition of Renegade RV and growing end markets.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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