RE V G RO U P, INC . Financial Report Fiscal First Quarter 2019 Ended January 31, 2019 N Y S E : R E V G March 7, 2019
Cautionary Statement & Non-GAAP Measures Disclaimers Note Regarding Non-GAAP Measures REV Group reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes that the evaluation of REV Group’s ongoing operating results may be enhanced by a presentation of Adjusted EBITDA and Adjusted Net Income, which are non-GAAP financial measures. Adjusted EBITDA represents net income before interest expense, income taxes, depreciation and amortization as adjusted for certain non-recurring, one-time and other adjustments which REV Group believes are not indicative of its underlying operating performance. Adjusted Net Income represents net income, as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance. REV Group believes that the use of Adjusted EBITDA and Adjusted Net Income provides additional meaningful methods of evaluating certain aspects of its operating performance from period to period on a basis that may not be otherwise apparent under GAAP when used in addition to, and not in lieu of, GAAP measures. See the Appendix to this presentation (and our other filings with the SEC) for reconciliations of Adjusted EBITDA and Adjusted Net Income to the most closely comparable financial measures calculated in accordance with GAAP. Cautionary Statement About Forward-Looking Statements This presentation contains statements that REV Group believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “strives,” “goal,” “seeks,” “projects,” “intends,” “forecasts,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this presentation and include statements regarding REV Group’s intentions, beliefs, goals or current expectations concerning, among other things, its results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which we operate, including REV Group’s outlook for the full-year fiscal 2019. REV Group’s forward-looking statements are subject to risks and uncertainties, including those highlighted under “Risk Factors” and “Cautionary Note Regarding on Forward-Looking Statements” in REV Group’s public filings with the SEC and the other risk factors described from time to time in subsequent quarterly or annual reports on Forms 10-Q or 10-K, which may cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which only speak as of the date of this presentation. REV Group does not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, expect as required by applicable law. 2
First Quarter Fiscal 2019 Summary • First quarter results positively impacted by the following items: - Strong top-line performance in Recreation and Commercial segments - Continued end-market demand strength in F&E and Commercial segments reporting year-over-year growth in backlog - Net cash used in operating activities was $39.4 million compared to $72.4 million in the prior year quarter • First quarter results negatively impacted by the following items: - Lingering chassis and material availability issues within the supply chain (increased lead-times) - Recreation backlog was lower than prior year primarily due to a softer Class A RV market • Net sales of $518.7 million increased 0.7% year-over-year, driven by sales growth in both the Commercial and Recreation segments, partially offset by a top-line decline in the Fire & Emergency segment First quarter Adjusted EBITDA 1 of $12.3 million, compared to $21.3 million in the prior year quarter • - Adjusted EBITDA margin of 2.4% declined compared to the prior year quarter, due to lower profitability within the Fire & Emergency segment • Adjusted Net Loss of $2.9 million, or $0.05 per diluted share, compared to Adjusted Net Income of $9.8 million, or $0.15 per diluted share, in the prior year quarter • Total backlog of $1.4 billion as of January 31, 2019, up 0.8% sequentially • Reaffirming fiscal year 2019 guidance which includes net sales of $2.4 to $2.6 billion, Net Income of $43 to $63 million, Adjusted Net Income of $66 to $84, Adjusted EBITDA of $150 to $170 million and net cash provided by operating activities of $110 to $130 million 3 ¹ For a reconciliation of net income (loss) to Adjusted Net Income and Adjusted EBITDA, see the Appendix to this presentation.
Key Takeaways for Fiscal Year 2019 • We expect a return to growth in sales, profitability, and Return on Invested Capital in fiscal year 2019 • Supply chain conditions, including chassis and other material availability issues, are normalizing as we enter the second quarter and approach the end of the first half of fiscal year 2019 • Restructuring activities, cost control initiatives, pricing actions, and productivity improvements implemented during fiscal 2018 are expected to benefit 2019 and long-term performance and margins • We believe fundamental demand remains strong, with a healthy backlog and visibility into strong sales growth within several businesses • In addition to our focus on profitable growth, management is now incentivized to improve working capital and cash flow in 2019 to further increase cash and improve returns supporting future growth opportunities • We are focused on improving working capital and specifically inventory turns, and we plan to improve the strength of our balance sheet by reducing our leverage ratio by one turn 4
Consolidated 1Q’19 Results FIRST QUARTER RESULTS GENERALLY IN LINE WITH EXPECTATIONS Net Sales Adjusted EBITDA • First quarter Net Sales $ 30 increased 0.7% year-over-year, $ 600.0 14.0 % driven by continued sales $ 518.7 $ 514.9 growth in both the Commercial $ 500.0 12.0 % and Recreation segments, $21.3 partially offset by a decline in net sales in the Fire & $ 20 10.0 % $ 400.0 Emergency segment 8.0 % $ 300.0 • Adjusted EBITDA margin $12.3 6.0 % declined to 2.4% due to lower $ 10 $ 200.0 profitability within the Fire & 4.0 % Emergency segment, partially 4.1 % offset by higher profitability in $ 100.0 Commercial and Recreation 2.0 % 2.4 % $ 0.0 $ 0 0.0 % • Total backlog as of January 31, 1Q 1Q 1Q 1Q 2019 was $1.39 billion, FY2018 FY2019 FY2018 FY2019 compared to $1.38 billion as of October 31, 2018 Net Sales ($mm) Adj. EBITDA ($mm) Margin 5
Fire & Emergency 1Q’19 Results SUPPLY CHAIN CHALLENGES FROM 2018 IMPACTING RESULTS Net Sales Adjusted EBITDA • First quarter Net Sales declined $ 20.0 $ 240.0 5.2% year-over-year due to $ 18.2 $ 215.3 14.0 % lingering supply chain $ 204.1 challenges and residual effects $ 200.0 12.0 % of production inefficiencies $ 15.0 10.0 % $ 160.0 • F&E segment Adjusted EBITDA 8.5% margin was 4.1% of net sales in the first quarter 2019, 8.0 % $ 10.0 $ 120.0 compared to 8.5% in the first $ 8.4 quarter 2018 6.0 % $ 80.0 • F&E backlog at the end of the 4.0 % $ 5.0 first quarter was up 4.3% to 4.1 % $738.2 million, as compared to $ 40.0 $707.5 million at the end of 2.0 % fiscal year 2018 $ 0.0 $ 0.0 0.0 % 1Q 1Q 1Q 1Q • Implemented second shift in FY2018 FY2019 FY2018 FY2019 two of our production lines to facilitate increases in fire truck deliveries in subsequent Net Sales ($mm) Adj. EBITDA ($mm) Margin quarters 6
Commercial 1Q’19 Results SALES BENEFITED FROM GROWTH IN BUS Net Sales Adjusted EBITDA • First quarter Net Sales increased $ 200.0 10.0 % 6.4% year-over-year driven by higher unit sales in bus and 9.0 % terminal trucks, partially offset by $ 6.0 modestly lower sales in shuttle and 8.0 % transit buses $ 5.0 $ 150.0 $ 140.7 7.0 % $ 132.2 $ 4.5 • First quarter Adjusted EBITDA 6.0 % $ 4.0 increased 11.1% year-over-year driven by higher bus sales 5.0 % $ 100.0 4.0 % • Commercial segment Adjusted 3.6 % 3.0 % EBITDA margin was 3.6% of net $ 2.0 3.4 % sales in the first quarter 2019 $ 50.0 2.0 % compared to 3.4% in the first quarter 2018 1.0 % $ 0.0 0.0 % • Commercial backlog of $427.5 $ 0.0 1Q 1Q 1Q 1Q million at the end of the first FY2018 FY2019 FY2018 FY2019 quarter 2019 was 12.1% higher compared to $381.4 million at the Adj. EBITDA ($mm) Margin end of fiscal year 2018 Net Sales ($mm) 7
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