Brookfield-based specialty vehicle maker
REV Group plans to return $180 million to shareholders through a special dividend after exiting its school bus and transit bus businesses.
The company announced two strategic moves on Monday. First, REV Group said it had completed the sale of Collins Bus Corp., its school bus business, to Forest River Bus LLC for $303 million in cash. Second, REV Group announced it would wind down operations at its ElDorado National-California business by the end of fiscal 2024.
“Delays in the supply of critical components and the build out 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,” said Mark Skonieczny, president and chief executive officer of REV Group. “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."
REV Group expects the two moves will generate at least $250 million in net proceeds. Around $180 million of that money will be used for the special dividend, which will be paid out at $3 per share on Feb. 16 to shareholders of record on Feb. 9.
The remainder of the funds will be used to pay down debt.
The Collins Bus business produced vehicles from a 262,000-square-foot facility in South Hutchinson, Kansas. The ENC business operated from a 227,000-square-foot facility in Riverside, California.
Combined, the two businesses accounted for around $285 million in revenue in fiscal 2023 or just under 11% of REV Group’s $2.64 billion in revenue. They also accounted for around $15.9 million in adjusted earnings before interest, taxes, depreciation and amortization this past year, a little over 10% of the company total.
Moving forward, REV Group is reorganizing its business into two segments, specialty vehicles and recreation vehicles. The company previously had three segments: Recreation, fire and emergency and commercial.
