REV To Exit School, Transit Bus Manufacturing; Announces Dividend; Stock Up In Pre-market

(RTTNews) - Specialty vehicles maker REV Group, Inc. (REVG) announced Monday its plans to exit school and transit bus manufacturing, and to reorganize into two reporting segments. Further, the company announced a special cash dividend.

In pre-market activity on the NYSE, REV shares were gaining around 9 percent to trade at $19.61.

In a statement, the company said it is taking a series of strategic actions with a view to optimize its product portfolio and balance sheet.

Effective January 26, the company has completed the sale of its school bus business, Collins Bus Corp., to Forest River Bus, LLC for a purchase price of $303.0 million in cash, subject to certain customary adjustments.

In addition, REV Group said it will be exiting transit bus manufacturing by winding down operations at its ElDorado National-California or ENC business. The deal is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered.

REV Group expects to generate at least $250 million in net cash proceeds from these strategic actions. The net proceeds will be used to return around $180 million of cash to shareholders in the form of a special cash dividend in the amount of $3.00 per share of stock. The dividend is payable on February 16, to shareholders of record on February 9. The remainder will be used to pay down debt under its ABL credit facility.

Further, beginning with its first quarter fiscal 2024 results, the company will be reorganized into two reporting segments. The remaining Commercial segment business will be combined with the Fire & Emergency businesses in a new segment named Specialty Vehicles. It will be led by Mike Virnig, the current fire group president.

The Recreation segment will be renamed Recreational Vehicles and will continue to be led by its current president, Mike Lanciotti.

REV Group expects to provide updated fiscal 2024 guidance, including the impacts of these strategic actions, with its first quarter fiscal 2024 earnings release.