Stock trading in green: Rev Group Inc (NYSE: REVG)

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Rev Group Inc (NYSE: REVG) stock rose over 2.9% in the pre market session on December 19th, 2019 (as of 7:00 pm GMT-5; Source: Google finance) after the company posted solid results for the fourth quarter of FY 19. Adjusted Net Income1 for the fourth quarter 2019 was $3.3 million, or $0.05 per diluted share, compared to Adjusted Net Income of $17.6 million, or $0.28 per diluted share, in the fourth quarter 2018. Adjusted EBITDA in the fourth quarter 2019 was $19.3 million, compared to $39.4 million in the fourth quarter 2018. The decrease in Adjusted EBITDA during the quarter was driven by lower profitability within the F&E and Recreation segments plus approximately $6.0 million of unforeseen issues related to abnormally high medical care claims experience and inefficiencies due to the restructuring of one fire plant within the quarter, partially offset by higher sales and profitability in the Commercial segment.

Meanwhile, during the quarter, the company decided to divest its partnership interest in REV Coach LLC, a joint venture with Daimler to distribute Setra motor coaches in North America, to Daimler for an undisclosed amount. The deal is anticipated to close by the end of the first quarter of fiscal 2020.

Moreover, the Company has reduced net debt by $35.4 million during FY19. Cash and cash equivalents were of total $3.3 million at October 31, 2019. The company’s net debt stood at $373.3 million and the Company had $225.7 million available under its ABL revolving credit facility as of October 31, 2019. The cash from the sale of other assets of $24.0 million also contributed to the debt reduction within the fiscal year. REVG incurred the Capital expenditures in the fourth quarter 2019 of $6.7 million compared to $8.7 million in the prior year quarter. In addition, the Company had reached an agreement with its banking partners during the quarter to adjust its net debt to EBITDA financial maintenance covenant to 4.0x from 3.5x through the end of the third quarter 2020.

REVG in the fourth quarter of FY 19 has reported the adjusted earnings per share of 5 cents, missing the analysts’ estimates for the adjusted earnings per share of 13 cents, as per Zacks Consensus Estimate. The company had reported 1 percent decline in the adjusted revenue growth to $652.90 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue by 2.11%. The decline in sales was mainly due to lower Recreation segment shipments, partially offset by sales growth in the Commercial and Fire & Emergency segments.

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