REV Group to sell Collins Bus Corporation to Forest River for $303m
REV Group, Inc. (NYSE: REVG), a leading manufacturer of specialty vehicle brands, has announced a series of strategic actions, including the sale of its school bus business, Collins Bus Corporation, to Forest River Bus, LLC for $303 million in cash, subject to adjustments.
Effective January 26th, 2024, REV Group completed the sale of Collins, marking the end of a long and successful partnership. Mark Skonieczny, President and CEO of REV Group, expressed gratitude to the Collins team for their contributions and is optimistic about their future with Forest River.
REV Group also announced the closure of its transit bus manufacturing operations at ElDorado National-California (ENC). This decision comes in light of supply chain challenges and competitive market conditions, making it difficult for ENC to compete profitably. The wind-down is expected to be completed by the end of fiscal year 2024.
Strategic Overhaul: REV Group to Divest Collins Bus, Exits Transit Bus Manufacturing
From these strategic actions, REV Group anticipates generating at least $250 million in net cash proceeds. A significant portion, approximately $180 million, will be returned to shareholders as a special cash dividend of $3.00 per share of common stock, payable in February 2024. The remaining funds will be used to reduce debt.
REV Group is undergoing a reorganization, consolidating its Commercial and Fire & Emergency businesses into a new Specialty Vehicles segment. The Recreation segment will be renamed Recreational Vehicles. Both segments will be led by existing presidents, indicating a focused and streamlined operational approach.
Skonieczny highlighted that these changes create a more focused operating structure, aiming for growth, consistent cash generation, and improved margins. The company plans to update its fiscal 2024 guidance, including impacts from these strategic actions, in its upcoming earnings release.
REV Group’s strategic realignment, marked by the sale of Collins Bus Corporation and exiting transit bus manufacturing, demonstrates a proactive approach to navigating complex market conditions. This restructuring, coupled with the special dividend payout, signals a focus on financial health and shareholder value, setting the stage for future growth and stability in the specialty vehicle market.