Fiscal year 2018 was full of challenges for Milwaukee-based specialty vehicle maker Rev Group Inc., which chief executive officer Tim Sullivan said would be an understatement.
Credit: Alex Schneider
“Quite frankly, anything that could go wrong, did go wrong and then some,” Sullivan said. “It was particularly frustrating since many of the issues were out of our control.”
A fire at a supplier delayed shipments earlier in the year and then tariffs increased costs and lead times, making it difficult for the company to meet customer demand. Rev Group said on average three to six week lead times had increased to 10 to 15 weeks by the end of the year.
“You can’t build what you don’t have and you can’t ship what you can’t build,” Sullivan said.
For the year, Rev Group’s sales increased 5 percent for the year to $2.38 billion, but net income dropped from $31.4 million to $13 million. The fourth quarter included a 3.5 percent net sales decline and a net loss of $22 million, compared to net income of $22.7 million.
After the third quarter, the company said the issues had pushed $120 million of orders into 2019. Sullivan said another $40 million of fire truck orders would also be pushed to 2019 because of “meaningful labor inefficiencies.”
“I always say never squander a good crisis and this one has been no exception,” Sullivan said. “As our shipping performance slowed due to a lack of chassis and material, we were able to review our operations to find areas of waste and significantly reduce our corporate overhead expenses. This will make us a better company moving forward.”
The company also announced it plans to sell Revability, its mobility van business, for $40 million and a regional technical center in Alvarado, Texas for $12 million. Sullivan said the company would divest non-core businesses or those that took too much effort to improve profitability.
