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What changed in REV Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of REV Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+346 added−379 removedSource: 10-K (2024-12-11) vs 10-K (2023-12-13)

Top changes in REV Group, Inc.'s 2024 10-K

346 paragraphs added · 379 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

98 edited+15 added−33 removed48 unchanged
Biggest changeFire & Emergency Product Description/Application Pumper / Tanker • Most standard fire apparatus found in fire department fleets • Transports firefighters to the scene of an emergency • Onboard pump and water tank for immediate water supply upon arrival on scene to fight fires • Connects to more permanent water sources such as fire hydrants or water tenders for continuous firefighting capability Aerial • Transports firefighters to the scene of an emergency and supports fire suppression • Facilitates access or egress of firefighters and fire victims at height using a large telescopic ladder • Ladder is mounted on a turntable on a truck chassis allowing it to pivot around a stable base to transport firefighters and fire suppression to the scene • Typically contains a pump, provides a high-level water point for firefighting via elevated master water stream • Provides a platform from which tasks such as ventilation or overhaul can be executed ARFF • Transports firefighters to the scene of an airport emergency • Highly specified (by the Federal Aviation Administration, “F.A.A.”) fire engine designed for use at global airfields where F.A.A. regulated commercial planes land to assist with potential aircraft accidents • Has the ability to move on rough terrain outside the runway and airport area and provides large water capacity and a foam tank • Able to deliver a fire suppression chemical foam stream to the scene, which “flattens” the fire faster • Capability to reach an airplane quickly and rapidly extinguish large fires involving jet fuel 4 Rescue • Transports first responders to the scene of an emergency • Used in a wide array of applications from technical rescue/multi-vehicle accidents, confined space/high-angle rescue, area illumination, extrication, wet rescue (with water and pump), Haz-Mat and urban search and rescue, as well as many other disciplines • Maximum storage space and equipment capabilities in a heavy-duty platform with large transverse storage solutions for extra gear Cab & Chassis • Custom manufacture of emergency response cabs and chassis which are sold to other custom fire apparatus OEM’s and tailored to customer specifications based on such factors as application, terrain, street configuration and the nature of the community, state or country in which the fire truck will be utilized • Built to keep crews comfortable and safe with high rooflines, flat floors, advanced climate control systems, and advanced safety systems • Ergonomic and spacious cab with improved visibility, in-cab communications, storage and comfort Ambulance Type I • Transports paramedics and other emergency support technicians as well as a “mobile hospital” to the scene of an emergency • Patient compartment structural aluminum “box” mounted on a heavy truck chassis and used for advanced life support and rescue work, patient care and transport • Provides out-of-hospital medical care to the patient at the scene or while in transit Ambulance Type II • Transports paramedics and other emergency support technicians to the scene of an emergency • Van-based ambulance with relatively fewer ambulance modifications and containing relatively less medical equipment than Type I or Type III ambulances • Used for basic life support and to care for and transfer patients that require no, or only basic, life support services to a hospital or between places of medical treatment Ambulance Type III • Transports paramedics and other emergency support technicians as well as a “mobile hospital” to the scene of an emergency • Patient compartment structural aluminum “box” mounted on a cut-away van chassis and has the same use and application as a Type I ambulance 5 Our Commercial segment sells small Type A school buses, transit buses, terminal trucks and sweepers.
Biggest changeSpecialty Vehicles Product Description/Application Pumper / Tanker • Most standard fire apparatus found in fire department fleets • Transports firefighters to the scene of an emergency • Onboard pump and water tank for immediate water supply upon arrival on scene to fight fires • Connects to more permanent water sources such as fire hydrants or water tenders for continuous firefighting capability Aerial • Transports firefighters to the scene of an emergency and supports fire suppression • Facilitates access or egress of firefighters and fire victims at height using a large telescopic ladder • Ladder is mounted on a turntable on a truck chassis allowing it to pivot around a stable base to transport firefighters and fire suppression to the scene • Typically contains a pump, provides a high-level water point for firefighting via elevated master water stream • Provides a platform from which tasks such as ventilation or overhaul can be executed 5 ARFF • Transports firefighters to the scene of an airport emergency • Highly specified (by the Federal Aviation Administration, “F.A.A.”) fire engine designed for use at global airfields where F.A.A. regulated commercial planes land to assist with potential aircraft accidents • Has the ability to move on rough terrain outside the runway and airport area and provides large water capacity and a foam tank • Able to deliver a fire suppression chemical foam stream to the scene, which “flattens” the fire faster • Capability to reach an airplane quickly and rapidly extinguish large fires involving jet fuel Rescue • Transports first responders to the scene of an emergency • Used in a wide array of applications from technical rescue/multi-vehicle accidents, confined space/high-angle rescue, area illumination, extrication, wet rescue, Haz-Mat and urban search and rescue, as well as many other disciplines • Maximum storage space and equipment capabilities in a heavy-duty platform with large transverse storage solutions for extra gear Cab & Chassis • Custom manufacture of emergency response cabs and chassis which are sold to both related and third-party custom fire apparatus OEM’s and tailored to customer specifications based on such factors as application, terrain, street configuration and the nature of the community, state or country in which the fire truck will be utilized • Built to keep crews comfortable and safe with high rooflines, flat floors, advanced climate control systems, and advanced safety systems • Ergonomic and spacious cab with improved visibility, in-cab communications, storage and comfort Ambulance Type I • Transports paramedics and other emergency support technicians as well as a “mobile hospital” to the scene of an emergency • Patient compartment structural aluminum “box” mounted on a heavy truck chassis and used for advanced life support and rescue work, patient care and transport • Provides out-of-hospital medical care to the patient at the scene or while in transit Ambulance Type II • Transports paramedics and other emergency support technicians to the scene of an emergency • Van-based ambulance with relatively fewer ambulance modifications and containing relatively less medical equipment than Type I or Type III ambulances • Used for basic life support and to care for and transfer patients that require no, or only basic, life support services to a hospital or between places of medical treatment Ambulance Type III • Transports paramedics and other emergency support technicians as well as a “mobile hospital” to the scene of an emergency • Patient compartment structural aluminum “box” mounted on a cut-away van chassis and has the same use and application as a Type I ambulance Sweeper • Used in a variety of cleaning and preparation applications in road construction and paving industries • Typically used in street, highway, bridge or interstate construction projects • Applications use broom or push technology, as well as water cleaning capabilities • Some applications also include snow removal • Significant aftermarket parts such as sweeper brushes 6 Terminal Truck • Custom built tractor used to move trailers and containers within a cargo yard, warehouse facility or intermodal facility • Includes a single person cab offset to the side of the engine with a short wheelbase and rear cab exit • Some units have a fifth wheel with an integrated lifting mechanism that allows the semi-trailer landing legs to remain in the down position during movement enabling efficient movement • Steel side wall cab and floor construction for protection in harsh and dangerous work environments Our Recreational Vehicles segment serves the recreational vehicles (“RV”) market through the following principal brands: American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs and Lance Camper.
We believe we have the opportunity to grow and enhance the earnings profile of acquired businesses by expanding access to sales distribution channels, consolidating acquired businesses into our existing operations, and by introducing the REV Drive Business System and scale into the newly acquired businesses to drive profitable growth.
We believe we have the opportunity to grow and enhance the earnings profile of acquired businesses by expanding access to sales distribution channels, consolidating acquired businesses into our existing operations, and by introducing the REV Drive Business System and scale into newly acquired businesses to drive profitable growth.
We believe our diverse end markets are favorably exposed to multiple secular growth drivers such as: rising municipal spending, overall population growth, a growing aged population, the increasing popularity of outdoor and active lifestyles, technological advances, and the replacement of existing in-service vehicles including legislated replacements. Our business model utilizes our scale to drive profitable organic and acquisitive growth.
We believe our diverse end markets are favorably exposed to multiple secular growth drivers such as: municipal spending, overall population growth, a growing aged population, the increasing popularity of outdoor and active lifestyles, technological advances, and the replacement of existing in-service vehicles including legislated replacements. Our business model utilizes our scale to drive profitable organic and acquisitive growth.
Additionally, many buyers of RVs are brand loyal, repeat purchasers who make decisions based on brand, product configuration (primarily floor plan design, features and product styling), service and price. For many of these buyers, a motor home purchase is the second biggest purchase in their lifetime; therefore, the shopping timeline is longer than other consumer purchases.
Additionally, many buyers of RVs are brand loyal, repeat purchasers who make decisions based on brand, product configuration (primarily floor plan design, features and product styling), service and price. 12 For many of these buyers, a motor home purchase is the second biggest purchase in their lifetime; therefore, the shopping timeline is longer than other consumer purchases.
We use leading and lagging metrics to monitor our performance and effectiveness across our operations and individual business units. 16 Corporate Information REV Group, Inc. is a corporation organized under the laws of the state of Delaware. Our principal executive offices are located at 245 South Executive Drive, Suite 100, Brookfield, Wisconsin 53005.
We use leading and lagging metrics to monitor our performance and effectiveness across our operations and individual business units. Corporate Information REV Group, Inc. is a corporation organized under the laws of the state of Delaware. Our principal executive offices are located at 245 South Executive Drive, Suite 100, Brookfield, Wisconsin 53005.
We have ecommerce capabilities to provide our customers with real time data on parts availability and pricing for each of the vehicles we manufacturer. Pursue Value Enhancing Acquisitions— We seek to pursue acquisitions which enhance our existing market positions, facilitate our entry to new product categories and/or markets and achieve our targeted financial returns.
We have ecommerce capabilities to provide our customers with real time data on parts availability and pricing for each of the vehicles we manufacturer. 11 Pursue Value Enhancing Acquisitions— We seek to pursue acquisitions which enhance our existing market positions, facilitate our entry to new product categories and/or markets and achieve our targeted financial returns.
Customers and End Markets Our end markets include the municipal market (vehicles for essential services such as emergency response, firefighting, patient transportation and student transportation), the consumer market (vehicles for transportation and leisure needs), the industrial/commercial markets (vehicles for transportation, construction projects and global port and intermodal transportation applications), and the private contractor market (privately owned fleets that provide transportation services).
Customers and End Markets Our end markets include the municipal market (vehicles for essential services such as emergency response, firefighting and patient transportation), the consumer market (vehicles for transportation and leisure needs), the industrial/commercial markets (vehicles for construction projects and global port and intermodal transportation applications), and the private contractor market (privately owned fleets that provide transportation services).
Liability under these laws may be imposed without regard to fault and may be joint and several. Competition The markets in which we participate are highly competitive. We compete with both divisions of large, diversified companies as well as private and public companies.
Liability under these laws may be imposed without regard to fault and may be joint and several. 14 Competition The markets in which we participate are highly competitive. We compete with both divisions of large, diversified companies as well as private and public companies.
The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K, and you should not rely on any such information in making the decision whether to purchase shares of our common stock.
The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K, and you should not rely on any such information in making the decision whether to purchase shares of our common stock. 16
Our platform also allows us to leverage the combined engineering resources and product development resources from our broad network to bring new products, features and customer specific customization to market faster.
Our platform also allows us to leverage the combined engineering resources and product development resources from our broad network to bring new products, features and customer specific customization to market.
Growth in our end markets are driven by various macro-economic and demographic factors including: • Population demographics —Overall population growth and the aging population creates greater needs for essential services such as emergency care, healthcare services, transportation and interest in retirement activities including travel and leisure. • Increasing state and local government investment — Higher home values and new housing starts create an increasing tax base and greater demand for essential services provided by governmental agencies. • Replacement demand for emergency vehicles — Increasing legislated changes requiring useful life replacement cycles will create a source of recurring demand for our products as in-service vehicles achieve mileage or age limits. 9 • Increasing popularity for outdoor lifestyles —There has been a growth of interest in outdoor recreational activities, with RVs providing access to vast and diverse areas.
Growth in our end markets is driven by various macro-economic and demographic factors including: • Population demographics —Overall population growth and the aging population create greater needs for essential services such as emergency care, healthcare services, transportation and interest in retirement activities including travel and leisure. • Increasing state and local government investment — Higher home values and new housing starts create an increasing tax base and greater demand for essential services provided by governmental agencies. • Replacement demand for emergency vehicles — Increasing legislated changes requiring useful life replacement cycles will create a source of recurring demand for our products as in-service vehicles achieve mileage or age limits. • Increasing popularity for outdoor lifestyles —There has been a growth of interest in outdoor recreational activities, with RVs providing access to vast and diverse areas.
Local tax revenues are an important source of funding for fire and emergency response departments in addition to Federal grant money and other state and locally raised funding. Additionally, we provide remounting services to our ambulance dealers and customers, where we remount ambulance bodies onto new chassis, thereby extending the life of the body.
Local tax revenues are an important source of funding for fire and ambulance purchases for emergency departments in addition to Federal grant money and other state and locally raised funding. Additionally, we provide remounting services to our ambulance dealers and customers, where we remount ambulance bodies onto new chassis, thereby extending the life of the body.
Our business consists primarily of design, engineering, technology application, integration, and assembly activities, which require relatively low levels of maintenance capital expenditures. Furthermore, our broad presence across the specialty vehicle market and large manufacturing and distribution network are important differentiators in our ability to grow through acquisitions.
Our business consists primarily of design, engineering, technology application, integration, and assembly activities, which require relatively low levels of maintenance capital expenditures. Furthermore, our broad presence across the specialty vehicle market and large manufacturing and distribution network are important differentiators in our potential to grow through acquisitions.
An air conditioner, water heater, furnace and outside canopy are also typically included • Class C motorized RVs often feature a towing hitch enabling the pulling of a light weight or heavy trailers for boats, a small car or truck or other sports accessories Class B Motorized RVs • Class B motorized RVs can range from 16 to 22 feet, and are typically built on an automotive van chassis or panel-truck shell • Class B motorized RVs drive more like the family car, are easier to park and maneuver, but also offer the comforts and conveniences of a home on the road • Typically equipped with a “wet bath” configuration, which includes toilet, shower, and sink • Fewer amenities than a Class A and Class C unit, the Class B will typically have seating for 6 to 8 people, a small kitchenette complete with refrigerator and microwave, and comes equipped with flat screen TV/surround sound, roof mounted A.C., and a smaller generator • Limited sleeping capacity, typically a 2-person, overnight coach • Class B includes motorized RVs and luxury vans which have a broad appeal due to their versatility and ease of driving.
An air conditioner, water heater, furnace and outside canopy are also typically included • Class C motorized RVs often feature a towing hitch enabling the pulling of a light weight or heavy trailers for boats, a small car or truck or other sports accessories 7 Class B Motorized RVs • Class B motorized RVs can range from 16 to 22 feet, and are typically built on an automotive van chassis or panel-truck shell • Class B motorized RVs drive more like the family car, are easier to park and maneuver, but also offer the comforts and conveniences of a home on the road • Typically equipped with a “wet” or “dry” bath configuration, which includes toilet, shower, and sink • Fewer amenities than a Class A and Class C unit, the Class B will typically have seating for 6 to 8 people, a small kitchenette complete with refrigerator and microwave, and comes equipped with flat screen TV/surround sound, roof mounted A.C., and a smaller generator • Limited sleeping capacity, typically a 2-person, overnight coach • Class B includes motorized RVs and luxury vans which have a broad appeal due to their versatility and ease of driving.
Our direct sales force is responsible for sales to key accounts that operate in multiple states or require a direct OEM relationship to service their business. Approximately 50 independent dealers provide full coverage of the U.S. domestic market and provide both sales and service to our customers.
Our direct sales force is responsible for sales to key accounts that operate in multiple states or require a direct OEM relationship to service their business. Independent dealers provide full coverage of the U.S. domestic market and provide both sales and service to our customers.
We believe that we have been able to effectively compete on the basis of product quality and reliability, total cost of ownership, breadth of product offerings, manufacturing capability and flexibility, client-specific customization, price, technical capability, product innovation, customer service and delivery times.
We believe that we have been able to effectively compete on the basis of product quality and reliability, total cost of ownership, breadth of product offerings, manufacturing capability and flexibility, client-specific customization, price, technical capability, product innovation, and customer service.
We also purchase and utilize other materials in our production processes including: steel and aluminum in our apparatus and passenger compartment manufacturing, engines and drivetrain (transmissions, axles) components for our manufactured chassis in the transit bus, RV, fire apparatus and terminal truck businesses, lighting packages for our emergency and school bus products and HVAC systems and parts, seats and seatbelts, doors, lifts, electrical switches and components, hydraulic components and miscellaneous hardware.
We also purchase and utilize other materials in our production processes including: steel and aluminum in our apparatus and passenger compartment manufacturing, engines and drivetrain (transmissions, axles) components for our manufactured chassis in the RV, fire apparatus and terminal truck businesses, lighting packages for our emergency products, and HVAC systems and parts, seats and seatbelts, doors, lifts, electrical switches and components, hydraulic components and miscellaneous hardware.
We provide customized vehicle solutions for applications, including essential needs for public services (ambulances, fire apparatus, school buses, and transit buses), commercial infrastructure (terminal trucks and industrial sweepers) and consumer leisure (recreational vehicles). Our diverse portfolio is made up of well-established principal vehicle brands, including many of the most recognizable names within their industry.
We provide customized vehicle solutions for applications, including essential needs for public services (ambulances and fire apparatus), commercial infrastructure (terminal trucks and industrial sweepers) and consumer leisure (recreational vehicles). Our diverse portfolio is made up of well-established principal vehicle brands, including many of the most recognizable names within their industry.
In the Recreation segment, overall design, floorplan layout, functionality and amenities require frequent updating to address changes in consumer preferences and to enhance our existing product offerings. The Company has focused on accelerating the adoption of alternative energy by creating cost-effective, innovative solutions for the markets we serve.
In the Recreational Vehicles segment, overall design, floorplan layout, functionality and amenities require frequent updating to address changes in consumer preferences and to enhance our existing product offerings. The Company has focused on accelerating the adoption of alternative energy by creating cost-effective, innovative solutions for the markets we serve.
Our products in the Recreation segment include Class A motorized RVs (motorhomes built on a heavy-duty chassis with either diesel or gas engine configurations), Class C and “Super C” motorized RVs (motorhomes built on a van or commercial truck chassis), Class B RVs (motorhomes built out within a van chassis and high-end luxury van conversions), and towable travel trailers and truck campers.
Our products in the Recreational Vehicles segment include Class A motorized RVs (motorhomes built on a heavy-duty chassis with either diesel or gas engine configurations), Class C and “Super C” motorized RVs (motorhomes built on a van or commercial truck chassis), Class B RVs (motorhomes built out within a van chassis and high-end luxury van conversions), and towable travel trailers and truck campers.
We seek to gain market share by delivering high-quality products with customized attributes tailored to our customers’ product specifications, while simultaneously reducing costs and shortening delivery lead times.
We seek to gain market share by delivering high-quality products with customized attributes tailored to our customers’ product specifications, while simultaneously reducing costs and managing delivery lead times.
Recreation Product Description/Application Class A Motorized RVs (Gas, Diesel) • Class A motorized RVs can be as long as 45 feet and are usually equipped with a rear master suite including a full bathroom and shower and many include a washer/dryer unit on board • Today’s Class A motorized RVs tend to have multiple slide outs (some can expand to a width of over 14 feet), home sized appliances, multiple large flat screen TV’s, surround sound systems and even electric-heated fireplaces and ice machines • Keeps users comfortably on the road for long periods of time including comfortable sleeping accommodations and basement storage to carry ample supplies • Constructed on a commercial truck chassis, a specially designed motor vehicle chassis or a commercial bus chassis, a Class A motorized RV resembles a bus in design and has a flat or vertical front end with large forward windows Class C Motorized RVs • Class C and Super-C motorized RVs make use of a standard van or commercial truck chassis as the driving portion of the RV, allowing better access to the cab portion from the outside, since there are entry doors on both sides • The house (or camper) portion of the RV extends over the cab area which commonly has a sleeping compartment or other uses such as storage or entertainment • Fewer amenities and living space compared to Class A motorized RVs while meeting requirements for comfortable living • A Class C motorized RV is equipped with a kitchen/dining area featuring a refrigerator/freezer, a propane range (sometimes with an oven), a microwave oven and a table with seating.
Recreational Vehicles Product Description/Application Class A Motorized RVs (Gas, Diesel) • Class A motorized RVs can be as long as 45 feet and are usually equipped with a rear master suite including a full bathroom and shower and many include a washer/dryer unit on board • Today’s Class A motorized RVs tend to have multiple slide outs (some can expand to a width of over 14 feet), home sized appliances, multiple large flat screen TV’s, surround sound systems and even electric-heated fireplaces and ice machines • Keeps users comfortably on the road for long periods of time including comfortable sleeping accommodations and basement storage to carry ample supplies • Constructed on a commercial truck chassis, a specially designed motor vehicle chassis or a commercial bus chassis, a Class A motorized RV resembles a bus in design and has a flat or vertical front end with large forward windows Class C Motorized RVs • Class C and Super-C motorized RVs make use of a standard van or commercial truck chassis as the driving portion of the RV, allowing better access to the cab portion from the outside, since there are entry doors on both sides • The house (or camper) portion of the RV extends over the cab area which commonly has a sleeping compartment or other uses such as storage or entertainment • A Class C motorized RV is equipped with a kitchen/dining area featuring a refrigerator/freezer, a propane range (sometimes with an oven), a microwave oven and a table with seating.
While we consider our patents, trademarks and other intellectual property to be valued assets, we do not believe that our competitive position is dependent primarily on our patents or trademarks or that our operations are dependent upon any single patent or group of related patents to manufacture our products. We nevertheless face intellectual property-related risks.
While we consider our patents, trademarks and other intellectual property to be valued assets, we do not believe that our competitive position is dependent primarily on our patents or trademarks or that our operations are dependent upon any single patent or group of related patents to manufacture our products.
The operational processes across our different products are based on common elements, such as chassis preparation and production, body fabrication, product assembly and painting which allow us to develop best practices across our manufacturing system and implement those processes to drive operational efficiency.
Additionally, the operational processes across our different products are based on common elements, such as chassis preparation and production, body fabrication, product assembly and painting which allow us to develop best practices across our manufacturing footprint and implement those processes to drive operational efficiency.
For example, one of the largest municipal fire departments in the United States has the vast majority of its fleets of ambulances and fire apparatus standardized on REV branded product configuration and feature sets that satisfy this customer’s unique specifications and standards.
For example, one of the largest municipal fire departments in the United States has the vast majority of its fleet of ambulances standardized on REV branded product configuration and feature sets that satisfy this customer’s unique specifications and standards.
We believe that through this growth we are developing a relatively scaled business across all three of our segments, which creates a competitive advantage against a large number of our competitors and makes us more relevant compared to our larger competitors.
We believe that through this growth we are developing a relatively scaled business across both of our segments, which creates a competitive advantage against a large number of our competitors and makes us more relevant compared to our larger competitors.
We estimate that the replacement value of our installed base of approximately 205,000 vehicles across our segments is approximately $44.2 billion, which we believe is a significant competitive advantage for both replacement unit sales and aftermarket parts, as brand familiarity drives customer loyalty and fleet owners frequently seek to standardize their in-service fleets through repeat purchases of existing brands and product configurations.
We estimate that the replacement value of our installed base of approximately 164,000 vehicles across our segments is approximately $41.3 billion, which we believe is a significant competitive advantage for both replacement unit sales and aftermarket parts, as brand familiarity drives customer loyalty and fleet owners frequently seek to standardize their in-service fleets through repeat purchases of existing brands and product configurations.
We believe the specialty vehicle market has historically been serviced by niche companies, which has created an opportunity for market leadership by efficient producers with the ability to scale resources, such as REV.
We believe the specialty vehicle market has historically been serviced by niche companies, which has created an opportunity for market leadership by efficient producers with the ability to scale resources.
We believe our manufacturing and service network, consisting of 19 primary manufacturing facilities, 4 Regional Technical Centers (“RTCs”) and 3 aftermarket parts warehouses, provides us with a competitive advantage through the sharing of best practices, manufacturing flexibility based on relative facility utilization levels, access to geographically diverse labor pools, delivery costs and lead times, economies of scale, customer service capabilities, and a complementary distribution system.
We believe our manufacturing and service network, consisting of 17 primary manufacturing facilities, 3 Regional Technical Centers (“RTCs”) and 3 aftermarket parts warehouses, provides us with a competitive advantage through the sharing of best practices, manufacturing flexibility based on relative facility utilization levels, access to geographically diverse labor pools, lower delivery costs, economies of scale, customer service capabilities, and a complementary distribution system.
Though our net sales for all the specialty vehicles we manufacture are primarily derived from sales in the United States, similar positive market dynamics exist in other parts of the world, providing an opportunity for future global growth in each of our segments.
Though our net sales for all the specialty vehicles we manufacture are primarily derived from sales in North America, similar positive market dynamics exist in other parts of the world, providing an opportunity for future global growth in each of our segments.
The combination of our products, aftermarket support and large installed base of vehicles provides us with a competitive advantage across our end markets. 15 In the Fire & Emergency segment, our competition includes Pierce Manufacturing (Oshkosh Corp.), Rosenbauer International, Demers Braun Crestline, FWD Seagrave and Life Line Emergency Vehicles, among others.
The combination of our products, aftermarket support and large installed base of vehicles provides us with a competitive advantage across our end markets. In the Specialty Vehicles segment, our competition includes Pierce Manufacturing (Oshkosh Corp.), Rosenbauer International, Demers Braun Crestline, FWD Seagrave, Life Line Emergency Vehicles, TICO, and Cargotec, among others.
Broad Product Portfolio and Well-Recognized Brands— Our product portfolio is comprised of high-quality vehicles sold under well-established principal vehicle brands that in many instances pioneered their market segments. For example, we believe the first Type A yellow school bus was developed and sold by Collins Bus and the first Type I ambulance was developed and sold by Horton.
Broad Product Portfolio and Well-Recognized Brands— Our product portfolio is comprised of high-quality vehicles sold under well-established principal vehicle brands that in many instances pioneered their market segments. For example, we believe the first Type I ambulance was developed and sold by Horton.
Based on our long-term historical results of operations, we estimate that across all three of our segments, approximately 81% of our cost of goods sold is comprised of direct materials (including chassis) and direct labor, which are typically variable in nature.
Based on our long-term historical results of operations, we estimate that across both of our segments, approximately 80% of our cost of goods sold is comprised of direct materials (including chassis) and direct labor, which are typically variable in nature.
To enhance our market-leading positions, we complement growth from strategic acquisitions with iterative product development and new product launches across our three segments. Product development is primarily designed to provide our customers with high-quality products that have varied and unique feature sets and product capabilities at attractive price points.
To enhance our market-leading positions, we enhance organic growth with iterative product development and new product launches across our two segments. Product development is primarily designed to provide our customers with high-quality products that have varied and unique feature sets and product capabilities at attractive price points.
The Recreation segment also includes Goldshield Fiberglass, which produces a wide range of custom molded fiberglass products for the Fleetwood family of brands, RV, and broader industrial markets.
The Recreational Vehicles segment also includes Goldshield Fiberglass, which produces a wide range of custom molded fiberglass products for the Fleetwood family of brands, other RV manufacturers, and broader industrial markets.
Whether we sell directly to the customer or through a dealer depends largely on the product line, the customer base and applicable regulations. We provide our direct sales force representatives and dealers with training on the operation and specifications of our products.
Distribution We distribute our brands either through our direct sales force or our well-established dealer network. Whether we sell directly to the customer or through a dealer depends largely on the product line, the customer base and applicable regulations. We provide our direct sales force representatives and dealers with training on the operation and specifications of our products.
Our Growth Strategies We plan to continue pursuing several strategies to grow our earnings, expand our market share and further diversify our revenue stream, including: Drive Margin Expansion Through Controllable Operational Initiatives— We are focused on driving operational improvement initiatives across the organization to increase net income, free cash flow, Adjusted Net Income and Adjusted EBITDA over the long term.
Our Growth Strategies We plan to continue pursuing several strategies to grow our earnings, expand our market share and further diversify our revenue stream, including: Drive Margin Expansion Through Controllable Operational Initiatives— We are focused on driving operational improvement initiatives across the organization to increase net income, cash flow, and Adjusted Net Income and Adjusted EBITDA (as defined in “Item 7.
We have a diverse customer base with our top 10 customers representing approximately 19% of our net sales in fiscal year 2023, with no single customer representing more than 4% of our net sales over the same period.
We have a diverse customer base with our top 10 customers representing approximately 21% of our net sales in fiscal year 2024, with no single customer representing more than 5% of our net sales over the same period.
Our scale and plant network, strong end market positions, extensive distribution networks, access to low cost capital and reputation as an active and effective strategic acquirer, position us favorably to continue to grow and enhance value through strategic acquisitions.
Our scale and plant network, strong end market positions, extensive distribution networks, and access to low cost capital, position us favorably to continue to grow and enhance value through strategic acquisitions.
Our Fire & Emergency (“F&E”) segment sells (i) fire apparatus equipment under the Emergency One (“E-ONE”), Kovatch Mobile Equipment (“KME”), Ferrara and Spartan Emergency Response (“Spartan ER”) which consists of Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brands, and (ii) ambulances under the American Emergency Vehicles (“AEV”), Horton Emergency Vehicles (“Horton”), Leader Emergency Vehicles (“Leader”), Road Rescue and Wheeled Coach brands.
Our Specialty Vehicles segment sells (i) fire apparatus equipment under the Emergency One (“E-ONE”), Kovatch Mobile Equipment (“KME”), and Ferrara brands, and Spartan Emergency Response (“Spartan ER”) which consists of the Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brands, (ii) ambulances under the American Emergency Vehicles (“AEV”), Horton Emergency Vehicles (“Horton”), Leader Emergency Vehicles (“Leader”), Road Rescue and Wheeled Coach brands, and (iii) terminal trucks and sweepers under the Capacity and Laymor brands respectively.
We expect our newly created companywide intranet to become a mechanism for growing diversity awareness in our workforce as well. • Health and Safety – Our Health and Safety Management System is a consistent and standard approach to impact the work environment and culture at each REV business unit.
We expect our company-wide intranet to continue to serve as a mechanism for growing diversity awareness in our workforce as well. • Health and Safety – Our Health and Safety Management System is a consistent and standard approach to impact the work environment and culture at each REV business unit.
Luxury vans are typically used for business purposes, university and professional sports team transportation, limousine services and even larger families in need of space for a primary driving vehicle 7 Travel Trailers and Truck Campers • Travel Trailers range in sizes of 14 feet up to 35 feet, and can sleep up to anywhere from 1-10 people • Travel Trailers are towed by another vehicle, can be parked and detached for ease of use • Typically contains a kitchen, dining, bath and sleep area • Lance Camper makes one of the most popular truck campers in America • Truck campers are portable units easily loaded onto the bed of a pickup truck • Truck campers range in size from 6’- 12’ with floorplan arrangements that sleep 3-6 people • Livable areas are maximized, most floorplans offer full kitchens, bathrooms, living areas and storage space Our Markets We operate primarily in the United States in the fire and emergency, commercial and recreation markets, which represented 95% of our overall net sales for fiscal year 2023.
Luxury vans are typically used for business purposes, university and professional sports team transportation, limousine services and even larger families in need of space for a primary driving vehicle Travel Trailers and Truck Campers • Travel Trailers range in sizes of 14 feet up to 35 feet, and can sleep up to anywhere from 1-10 people • Travel Trailers are towed by another vehicle, can be parked and detached for ease of use • Typically contains a kitchen, dining, bath and sleep area • Truck campers are portable units easily loaded onto the bed of a pickup truck • Truck campers range in size from 6’- 12’ with floorplan arrangements that sleep 3-6 people • Livable areas are maximized, most floorplans offer full kitchens, bathrooms, living areas and storage space Our Markets For fiscal year 2024, our net sales within North America represented approximately 99% of our overall net sales.
Our well-respected and widely recognized proprietary trade names include: E-ONE, KME, Ferrara, Spartan, Smeal, Ladder Tower Company, Wheeled Coach, AEV, Horton, Leader, Collins, Magellan, ENC, Capacity, LayMor, Fleetwood RV, Monaco, American Coach, Holiday Rambler, Renegade, Midwest and Lance.
Our well-respected and widely recognized proprietary trade names include: E-ONE, KME, Ferrara, Spartan, Smeal, Ladder Tower Company, Wheeled Coach, Road Rescue, AEV, Horton, Leader, Capacity, LayMor, Fleetwood RV, Monaco, American Coach, Holiday Rambler, Renegade, Midwest Automotive Designs, Goldshield and Lance Camper.
Our top 10 customers combined accounted for approximately 19% of our net sales for fiscal year 2023, with no customer representing more than 4% of our net sales in the same period.
Our top 10 customers combined accounted for approximately 21% of our net sales for fiscal year 2024, with no customer representing more than 5% of our net sales in the same period.
Our companywide Code of Conduct supports this objective and in 2023 we trained all employees on Anti-Harassment/Anti-Discrimination and supervisors on Appreciating Differences as part of their leadership skills training.
Our company-wide Code of Conduct supports this objective. In 2024 we trained all employees on Anti-Harassment/Anti-Discrimination, and as part of their leadership skills training, new supervisors are trained on Appreciating Differences.
The buying process normally starts with online searches, followed by show visits and eventually a dealership visit for the purchase. Manufacturing and Service Capabilities We currently operate 19 manufacturing facilities, 4 RTCs and 3 aftermarket parts warehouses across the United States with approximately 5.1 million square feet of manufacturing and service space.
The buying process normally starts with online searches, followed by show visits and eventually a dealership visit for the purchase. Manufacturing We currently operate 17 manufacturing facilities across the United States with approximately 4.1 million square feet of manufacturing, service, and warehouse space.
We periodically review third-party proprietary rights, including patents and patent applications, in an effort to avoid infringement on third-party proprietary rights and protect our own, identify licensing or partnership opportunities and monitor the intellectual property claims of others.
We periodically review third-party proprietary rights, including patents and patent applications, in an effort to avoid infringement on third-party proprietary rights and protect our own, identify licensing or partnership opportunities and monitor the intellectual property claims of others. We own a portfolio of intellectual property, including patents, confidential technical information, and technological expertise in manufacturing specialty vehicles.
Each of our individual brands is distinctly positioned and targets certain price and feature points in the market such that dealers often carry, and customers often buy, more than one REV Fire & Emergency product line.
Each of our individual brands is distinctly positioned and targets certain price and feature points in the market such that dealers often carry, and customers often buy, more than one product type from our Specialty Vehicles segment brands.
We integrate our acquired companies into our centralized sourcing model to lower their costs. Selling into Attractive, Growing End Markets— Each of our segments serves end markets that are supported by what we believe to be favorable, long-term demographic, economic and secular trends.
Selling into Attractive, Growing End Markets— Each of our segments serves end markets that are supported by what we believe to be favorable, long-term demographic, economic and secular trends.
We believe end customers tend to be brand-loyal and repeat buyers who make decisions based on brand, quality, product configuration (primarily floorplan design, features and product styling), service availability and experience and price. Lifestyle trends are expected to support the growth of the RV market.
We believe end customers tend to be brand-loyal and repeat buyers who make decisions based on brand, quality, product configuration (primarily floorplan design, features and product styling), service availability and experience and price.
We believe that the growing aged population in the United States will increase demand for products specifically within our F&E and RV segments, as older demographics are a key demand driver for products such as emergency vehicles and RVs.
We believe that the growing aged population in the United States will increase demand for our products, as older demographics are a key demand driver for products such as ambulances and RVs.
The Capacity brand utilizes a combination of a direct sales force, international agents and dealers to market its products worldwide. Capacity also utilizes an extensive network of dealers in the United States and Canada.
The Capacity brand utilizes its direct sales force and an extensive network of dealers in North America, along with a combination of a direct sales force, international agents and dealers to market its products worldwide.
Item 1. Bu siness. REV Group companies are leading designers, manufacturers, and distributors of specialty vehicles and related aftermarket parts and services. We serve a diversified customer base, primarily in the United States and Canada, through three segments: Fire & Emergency, Commercial, and Recreation.
REV Group companies are leading designers, manufacturers and distributors of specialty vehicles and related aftermarket parts and services. We serve a diversified customer base, primarily in the United States, through our two segments.
We strive to maintain strong and collaborative relationships with our suppliers and believe that the sources for these production process inputs are well-established, generally available on world markets and are in sufficient quantity (other than wire harnesses), such that we would expect to avoid material disruptions to our businesses if we encountered an interruption from one of our key suppliers. 14 Intellectual Property Patents and other proprietary rights are important to our business and can provide us with a competitive advantage.
We strive to maintain strong and collaborative relationships with our suppliers and believe that the sources for these production process inputs are well-established, generally available across world markets and are in sufficient quantity (other than certain chassis), such that we would expect to avoid material disruptions to our businesses if we encountered an interruption from one of our key suppliers.
We are improving diversity, equity, and inclusion (“DEI”) by living our core values, including supporting and building diversity in our teams, respecting alternative perspectives and being accountable to each other to fulfill our goals.
Roundtables are held at least quarterly at all business units and monthly at some locations. • Commitment to Diversity and Inclusion – We are improving diversity, equity, and inclusion (“DEI”) by living our core values, including supporting and building diversity in our teams, respecting alternative perspectives and being accountable to each other to fulfill our goals.
Several of our brands pioneered their specialty vehicle product categories and date back more than 50 years. The specialty vehicle market is a complex and attractive market characterized by: (i) numerous niche markets, (ii) highly customized vehicle configurations addressing unique customer applications and (iii) specialized customer bases and distribution channels (both dealer and direct).
The specialty vehicle market is a complex and attractive market characterized by: (i) numerous niche markets, (ii) highly customized vehicle configurations addressing unique customer applications and (iii) specialized customer bases and distribution channels (both dealer and direct).
These initiatives include: reviewing our product portfolio, improving brand management, developing new products, strengthening distribution, leveraging a centralized enterprise-wide procurement strategy, growing adjacent and aftermarket products, improving production processes within our facilities, driving down total cost of quality, implementing value-based pricing strategies and reducing fixed costs.
These initiatives include: reviewing our product portfolio, improving brand management, developing new products, strengthening distribution, leveraging a centralized enterprise-wide procurement strategy, growing aftermarket products, improving production processes within our facilities, driving down total cost of quality, implementing value-based pricing strategies and reducing fixed costs. 4 Our fiscal year is from November 1 to October 31, with fiscal quarters ending on the last day of January, April, July and October.
In the municipal Fire & Emergency segment, increasing legislated changes requiring useful life replacement cycles will create a source of recurring demand for our products as in-service vehicles achieve mileage or age limits.
In the Specialty Vehicles segment, specific to fire and ambulance products, increasing legislated changes requiring useful life replacement cycles will create a source of recurring demand for our products as in-service vehicles achieve mileage or age limits. We believe demand for our fire and ambulance products will grow with increasing state and local government spending.
The largest component of these purchases was for vehicle chassis, representing approximately 28% of the total purchase amount. These chassis are sourced from major automotive manufacturers, including Ford, Freightliner, General Motors, Mercedes, and other original equipment manufacturers (“OEMs”).
Suppliers and Materials In fiscal year 2024, we purchased approximately $1.5 billion of chassis, direct materials and other components from outside suppliers. The largest component of these purchases was for vehicle chassis, representing approximately 26% of the total purchase amount. These chassis are sourced from major automotive manufacturers, including Ford, Freightliner, General Motors, Mercedes, and other original equipment manufacturers (“OEMs”).
In addition, there are multiple natural product adjacencies where REV has valuable brand equity, leading technology and cost positions where we believe we can generate strong demand for new products. 11 Enhance Sales and Distribution Model— We believe that we are an attractive specialty vehicle OEM partner for dealers due to the breadth and quality of our product offerings, our brand recognition, our ability to produce products at varied price and feature points, as well as our aftermarket support capabilities.
Enhance Sales and Distribution Model— We believe that we are an attractive specialty vehicle OEM partner for dealers due to the breadth and quality of our product offerings, our brand recognition, our ability to produce products at varied price and feature points, as well as our aftermarket support capabilities.
In addition, our selling, general and administrative expenses are primarily comprised of salaried payroll expenses which we structure around the level of demand in our markets and based on each business’ sales distribution characteristics.
In addition, our selling, general and administrative expenses are primarily comprised of salaried payroll expenses which we structure around the level of demand in our markets and based on each business’ sales distribution characteristics. Finally, certain of our businesses carry a relatively long-duration backlog which enables strong visibility into future net sales.
Due to the markets in which we operate, we believe that our trade names are the most valuable component of our intellectual property. We believe that our intellectual property rights, confidentiality procedures and contractual provisions are adequate for our business and have an active program to maintain these rights.
We believe that our intellectual property rights, confidentiality procedures and contractual provisions are adequate for our business and have an active program to maintain these rights.
We believe we are the largest manufacturer by unit volume of fire and emergency vehicles in the United States and have one of the industry’s broadest portfolios of products including Type I ambulances (aluminum body mounted on a heavy truck-style chassis), Type II ambulances (van conversion ambulance), Type III ambulances (aluminum body mounted on a van-style chassis), pumpers (fire apparatus on a custom or commercial chassis with a water pump and water tank to extinguish fires), aerial trucks (fire apparatus with stainless steel or aluminum ladders), tanker trucks and rescues, aircraft rescue firefighting (“ARFF”), custom cabs & chassis and other vehicles.
We believe we have one of the industry’s broadest portfolios of products including Type I ambulances (aluminum body mounted on a heavy truck-style chassis), Type II ambulances (van conversion ambulance), Type III ambulances (aluminum body mounted on a van-style chassis), pumpers (fire apparatus on a custom or commercial chassis with a water pump and water tank to extinguish fires), aerial trucks (fire apparatus with stainless steel or aluminum ladders), tanker trucks, rescues, aircraft rescue firefighting (“ARFF”), custom cabs & chassis, terminal trucks (specialized vehicles which move freight in warehouses, intermodal yards, distribution and fulfillment centers and ports), sweepers (three- and four-wheel versions used in road construction activities), and other vehicles.
Our employees are not currently represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is good. Human Capital Management Oversight & Management We believe our success depends on the strength of our workforce. We employ 6,543 employees, excluding temporary workers and contractors, approximately 75% of whom work in production roles.
Employees As of October 31, 2024, we had approximately 5,700 employees, temporary workers and contractors. Our employees are not currently represented by a labor union or collective bargaining agreement. We believe that our relationship with our employees is generally positive. Human Capital Management Oversight & Management We believe our success depends on the strength of our workforce.
Approximately 37% of our net sales in fiscal year 2023 were made directly or indirectly to governmental bodies, including municipalities, such as fire departments, school districts, hospitals and the U.S. federal government. In fiscal year 2023, our approximate direct or indirect net sales by end market was as follows: 37% government, 32% consumer, 28% industrial/commercial, and 3% private contractor.
In fiscal year 2024, our approximate direct or indirect net sales by end market was as follows: 47% government, including municipalities, such as fire departments, hospitals and the U.S. federal government, 25% consumer, 23% industrial/commercial, and 5% private contractor. For fiscal years 2024 and 2023, approximately 99% of our net sales were to customers located in North America.
We also believe our Commercial segment is the #1 producer of Type A school buses in the United States and a leading producer of terminal trucks and sweepers. Within our Recreation segment, we are one of the top producers of Class A diesel and gas motorized RVs.
We believe we are the largest manufacturer by unit volume of fire and ambulance vehicles in the United States and a leading producer of terminal trucks and sweepers. Within our Recreational Vehicles segment, we are one of the top producers of Class A diesel and gas motorized RVs.
Business Model Produces Attractive Financial Characteristics— Our core production processes are design, engineering, component integration and assembly in nature, creating a business model that includes a variable cost structure, low required levels of maintenance capital expenditures as a percentage of net sales, structural ability to drive attractive levels of return on invested capital and strong revenue visibility in certain product categories with longer backlogs.
Our business model makes us more desirable to our distribution channel partners as we provide them with a full line of products to address our mutual customers’ needs across a wider variety of price and product feature elements which gives dealers the opportunity to sell to a larger customer base and grow their sales and earnings. 10 Business Model Produces Attractive Financial Characteristics— Our core production processes are design, engineering, component integration and assembly in nature, creating a business model that includes a variable cost structure, low required levels of maintenance capital expenditures as a percentage of net sales, structural ability to drive attractive levels of return on invested capital and strong revenue visibility in certain product categories with longer backlogs.
We also rely on trade secrets, design and manufacturing know-how, continuing technological innovations and licensing opportunities to maintain and improve our competitive position.
Intellectual Property Patents and other proprietary rights are important to our business and can provide us with a competitive advantage. We also rely on trade secrets, design and manufacturing know-how, continuing technological innovations and licensing opportunities to maintain and improve our competitive position.
The commonality and scale of the REV Drive Business System across all of our factories in the areas of chassis production/preparation, product assembly and flow processes and “body” and apparatus design and manufacturing allows us to share efficiency and operational best practices across our segments. 13 Our RTC footprint is strategically placed throughout the United States and our locations are staffed with technicians and customer service representatives to support our approximately 205,000 installed base of vehicles.
The commonality and scale of the REV Drive Business System across all of our factories in the areas of chassis production/preparation, product assembly and flow processes, and “body” and apparatus design and manufacturing allows us to share efficiency and operational best practices across our segments.
The CEO and CHRO convene meetings with senior company leadership to review talent data and plan development actions for top enterprise talent. We also provide technical, professional and leadership training to a broad range of employees through several learning formats. For example, we partner with local educational institutions and trade skills organizations to prepare workers with on-the-job technical training.
We also provide technical, professional and leadership training to a broad range of employees through several learning formats. For example, we partner with local educational institutions and trade skills organizations to prepare workers with on-the-job technical training. Employees can also access a rotating catalog of online professional skills learning through our Learning Management System (LMS).
Many of our products contain similar purchased components, such as chassis, engines, lighting, wiring and other commodities which increases our leverage with and relevance to key suppliers as compared to many of our competitors.
Only approximately 1% of our net sales in fiscal year 2024 were from sales to customers outside of North America. Unique Scale and Business Model— Many of our products contain similar purchased components, such as chassis, engines, lighting, wiring and other commodities which increases our leverage with, and relevance to, key suppliers as compared to many of our competitors.
Fire and Emergency Markets Fire and emergency products are primarily used by municipalities and private contractors to provide essential services such as fire suppression, emergency/rescue response, disaster relief, aircraft rescue and firefighting and patient transport.
At the international level, we sell through dealers and agents to end markets that utilize U.S.-style chassis and product configurations. Specialty Vehicle Markets Fire and ambulance products are primarily used by municipalities and private contractors to provide essential services such as fire suppression, emergency/rescue response, disaster relief, aircraft rescue and firefighting and patient transport.
Our Equity Sponsor The Company’s largest equity holders are (i) American Industrial Partners Capital Fund IV, LP, (ii) American Industrial Partners Capital Fund IV (Parallel), LP and (iii) AIP/CHC Holdings, LLC, which the Company collectively refers to as “AIP” or “Sponsor” and which indirectly own approximately 46.3% of REV Group’s voting shares as of October 31, 2023.
Equity Sponsor Exit Prior to the second quarter of fiscal year 2024, the Company’s largest equity holder was comprised of (i) American Industrial Partners Capital Fund IV, LP, (ii) American Industrial Partners Capital Fund IV (Parallel), LP and (iii) AIP/CHC Holdings, LLC, which the Company collectively refers to as “AIP” or “Sponsor”.
Experienced Consolidator with Proven Ability to Integrate Acquisitions— We have completed acquisitions across our Fire & Emergency, Commercial and Recreation segments and continue to actively consider future potential acquisitions that complement and expand our current product portfolio.
Where this backlog visibility exists, we are able to more effectively plan and predict our sales and production activity. Experienced Consolidator with Proven Ability to Integrate Acquisitions— We have completed acquisitions across our Specialty Vehicles and Recreational Vehicles segments and continue to actively consider future potential acquisitions that complement and expand our current product portfolio.
REV’s leadership team and Chief Human Resources Officer (“CHRO”) are responsible for developing and executing our human capital strategy. This includes the acquisition, development, and retention of talent to deliver on the Company’s strategy as well as the design of employee compensation and benefits programs.
This includes the acquisition, development, and retention of talent to deliver on the Company’s strategy as well as the design of employee compensation and benefits programs. The CHRO and the Chief Executive Officer (“CEO”) regularly update our board of directors on the operation and status of these human capital activities.
Sweepers are used in various applications within the construction and road and highway infrastructure markets. 8 Recreation Markets The RV industry includes various types and configurations of both motorized and towable RVs, of which we currently manufacture and sell Class A, Class B, Class C and Class Super-C motorized RVs, travel trailers & truck campers.
Sweeper demand is also driven by replacement of in-service fleets by contractors and rental companies as well as growth in infrastructure and construction spending. 8 Recreational Vehicles Markets The RV industry includes various types and configurations of both motorized and towable RVs, of which we currently manufacture and sell Class A, Class B, Class C and Class Super-C motorized RVs, travel trailers & truck campers.
In addition, we will target acquisitions which further diversify or broaden our product offerings and geographic reach, and simultaneously produce attractive financial returns.
We will seek acquisitions of companies with strong brands and complementary products and distribution networks that align well with our strategies and provide synergies with our existing business. In addition, we will target acquisitions which further diversify or broaden our product offerings and geographic reach, and simultaneously produce attractive financial returns.
Our fiscal year is from November 1 to October 31, with fiscal quarters ending on the last day of January, April, July and October. Our Products and Markets We sell new specialty vehicles which we design, engineer and assemble in our production facilities. Our aftermarket business consists of parts sales and service.
Our Products and Markets We sell new specialty vehicles which we design, engineer and assemble in our production facilities. Our aftermarket business consists of parts sales and service.
Our direct sales personnel work directly with national customers to ensure that LayMor equipment meets customers’ specifications and is qualified for sale throughout their national network. Recreation Segment We sell our RV products through a national independent dealer network with internal sales personnel responsible for direct distribution engagement with these dealers.
Our direct sales personnel work directly with national customers to ensure that LayMor equipment meets customers’ specifications and is qualified for sale throughout their national network. We continue to expand our distribution network into new markets. We believe there are opportunities to grow our dealer footprint to serve these markets.
We also purchase materials that contain or are composed of certain raw or base materials such as paint, fiberglass parts and chassis body components, wood and wood parts, brass and certain petroleum-based resins such as plastic.
We also purchase materials that contain or are composed of certain raw or base materials such as paint, fiberglass parts and chassis body components, wood and wood parts, brass and certain petroleum-based resins such as plastic. 13 We utilize a centralized sourcing model that includes a dedicated team of procurement professionals to complement our segment sourcing teams so that we can coordinate and leverage our purchases across a diverse supplier base.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf such a new system or technology does not function properly or otherwise exposes us to increased cybersecurity breaches and failures, or if such a system is not implemented effectively, it could affect our ability to report accurate, timely and consistent financial results; our ability to purchase raw material from and pay our suppliers; and/or our ability to deliver products to customers on a timely basis and to collect our receivables from them. 19 Further, if the information technology systems, networks or service providers we rely upon fail to function properly or cause operational outages or aberrations, or if we or one of our third-party providers suffer significant unavailability of key operations, or inadvertent disclosure of, lack of integrity of, or loss of our sensitive business or stakeholder information, due to any number of causes, ranging from catastrophic events or power outages to improper data handling, security incidents or employee error or malfeasance, and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive, operational, financial and business harm as well as litigation and regulatory action.
Biggest changeFurther, if the information technology systems, networks or service providers we rely upon fail to function properly or cause operational outages or aberrations, or if we or one of our third-party providers suffer significant unavailability of key operations, or inadvertent disclosure of, lack of integrity of, or loss of our sensitive business or stakeholder information, due to any number of causes, ranging from catastrophic events or power outages to improper data handling, security incidents or employee error or malfeasance, and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive, operational, financial and business harm as well as litigation and regulatory action.
When a binding sale contract has been signed with a customer, the purchase price of the vehicle is included in backlog until it is completed, shipped and the revenue is recognized.
When a binding sale contract has been signed with a customer, the purchase price of the vehicle is included in the backlog until it is completed, shipped and the revenue is recognized.
We are exposed to, and may be adversely affected by, interruptions to our computer and information technology systems and sophisticated cyber-attacks. We rely on our information technology systems and networks in connection with many of our business activities. Some of these networks and systems are managed by third-party service providers and are not under our direct control.
We are exposed to, and may be adversely affected by, interruptions to our computer and information technology systems and cyber-attacks. We rely on our information technology systems and networks in connection with many of our business activities. Some of these networks and systems are managed by third-party service providers and are not under our direct control.
The cost and impact to our reputation of significant retrofit and remediation events or product recalls could have a material adverse effect on our business and operating results. 28 We are also subject to federal, state and foreign consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” In addition, certain laws and regulations affect other areas of our operations, including, labor, advertising, consumer protection, real estate, promotions, quality of services, intellectual property, tax, import and export duties, tariffs, anti-corruption and anti-competitive conduct.
The cost and impact to our reputation of significant retrofit and remediation events or product recalls could have a material adverse effect on our business and operating results. 28 We are also subject to federal, state and foreign consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” In addition, certain laws and regulations affect other areas of our operations, including, labor, advertising, consumer protection, real estate, promotions, quality of services, intellectual property, tax, import and export duties, tariffs, anti-corruption, anti-competitive conduct and regulations relating to the sale to government entities.
Although we expect that the realization of efficiencies related to the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved in the near term, or at all.
Although we generally expect that the realization of efficiencies related to the integration of any acquired businesses will offset the incremental transaction and acquisition-related costs over time, this net financial benefit may not be achieved in the near term, or at all.
We cannot assure that the outcome of all current or future litigation will not have a material adverse impact on our business and results of operations. Changes to tax laws or exposure to additional tax liabilities may have a negative impact on our operating results.
We cannot assure that the outcome of all current or future litigation will not have a material adverse impact on our business or results of operations. Changes to tax laws or exposure to additional tax liabilities may have a negative impact on our operating results.
Some of our businesses have in the past and may in the future face claims and litigation regarding accidents involving their products, including accidents involving passenger injuries and deaths, and the increasing amount of our vehicles on the road may increase our exposure to such matters.
Some of our businesses have in the past and may in the future face claims and litigation regarding accidents involving their products, including accidents involving injuries and deaths, and the increasing amount of our vehicles on the road may increase our exposure to such matters.
Our operations and the industries in which we operate are subject to environmental, health and safety laws and regulations, and we may face significant costs or liabilities associated with environmental, health and safety matters.
Our operations, products, and the industries in which we operate are subject to environmental, health and safety laws and regulations, and we may face significant costs or liabilities associated with environmental, health and safety matters.
For example, when we decide to sell a business, we may be unable to do so on our terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale may be subject to satisfaction of pre-closing conditions, which may not be satisfied, as well as regulatory and governmental approvals, which may prevent us from completing a transaction on acceptable terms.
For example, if we decide to sell a business, we may be unable to do so on our terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale may be subject to satisfaction of pre-closing conditions, which may not be satisfied, as well as regulatory and governmental approvals, which may prevent us from completing a transaction on acceptable terms.
Although we currently assume contingent obligations associated with these finance arrangements and receive only a minimal arrangement fee, we could be materially adversely affected in the future if third-party financiers were unable to provide this financing to our customers and our dealers were unable to obtain alternate financing, at least until our customers were able to find a replacement financing source.
Although we currently assume contingent obligations associated with these finance arrangements and receive only a minimal arrangement fee, we could be materially adversely affected in the future if third-party financers were unable to provide this financing to our customers and our dealers were unable to obtain alternate financing, at least until our customers were able to find a replacement financing source.
Our sales and our manufacturing processes depend on the supply of manufactured vehicle chassis and other critical components such as engines, transmissions, wire harnesses and axles from major auto manufacturers and other OEMs, including Allison Transmission, Cummins, Daimler Truck North America, Ford, General Motors, Meritor, Mercedes-Benz, and Navistar among others.
Our sales and our manufacturing processes depend on the supply of manufactured vehicle chassis and other critical components such as engines, transmissions, wire harnesses and axles from major auto manufacturers and other suppliers, including Allison Transmission, Cummins, Daimler Truck North America, Ford, General Motors, Meritor, Mercedes-Benz, and Navistar among others.
Although our exposure under these agreements is limited by the expected resale value of the inventory we may repurchase, we may receive less than anticipated on such resale and would collect payment on such resale later than originally expected. Additionally, we are party to multiple agreements whereby we guarantee indebtedness of others, including losses under loss pool agreements.
Although our exposure under these agreements is limited by the expected resale value of the inventory we may repurchase, we may receive less than anticipated on such resale and could collect payment on such resale later than originally expected. Additionally, we are party to multiple agreements whereby we guarantee indebtedness of others, including losses under loss pool agreements.
Our business, operating results and financial condition could suffer if our suppliers reduce output or make changes to chassis models that are unpopular with our customers or are incompatible with our current product designs or production process. 18 We face intense competition in our markets, which may harm our financial performance and growth prospects.
Our business, operating results and financial condition could suffer if our suppliers reduce output or make changes to chassis models that are unpopular with our customers or are incompatible with our current product designs or production process. We face competition in our markets, which may harm our financial performance and growth prospects.
During economic downturns that would result in lower demand of our vehicles, we may find it necessary to reduce production line rates and employee headcount. An economic downturn may reduce, and in the past has reduced, demand in all of our segments, resulting in lower sales volumes, lower prices and decreased operating profits or losses.
During economic downturns that would result in lower demand of our vehicles, we may find it necessary to reduce production line rates and employee headcount. An economic downturn may reduce, and in the past has reduced, demand in both of our segments, resulting in lower sales volumes, lower prices and decreased operating profits or losses.
Any of the foregoing factors could have a material adverse effect on our business, financial condition and operating results. Risks Relating to Acquisitions and Divestitures If we are unable to successfully identify and integrate acquisitions, our results of operations could be adversely affected. Acquisitions have been and are likely to continue to be a significant component of our growth strategy.
Any of the foregoing factors could have a material adverse effect on our business, financial condition and operating results. Risks Relating to Acquisitions and Divestitures If we are unable to identify and successfully integrate acquisitions, our results of operations could be adversely affected. Acquisitions have been and may continue to be a significant component of our growth strategy.
You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K, before deciding to invest in shares of our common stock.
Investors should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K, before deciding to invest in shares of our common stock.
Furthermore, Delaware law requires that our Board of Directors determine that we have adequate surplus prior to the declaration of dividends.
Furthermore, Delaware law requires that our Board of Directors determine that we have adequate surplus capital prior to the declaration of dividends.
In addition, given the nature of our customers and our markets, there is a risk that some amount of our backlog may not be fully realized in the future. Failure to realize sales from our existing or future backlog would negatively impact our financial results.
In addition, given the nature of our customers and our markets, there is a risk that some amount of our backlog may not be fully realized in the future. Failure to realize sales from our existing or future backlog could negatively impact our financial results.
Because third-party financiers serve as an important source of financing options for dealers and customers, an impairment of their ability to provide such financial services could negatively affect our future sales and therefore our profitability and financial condition.
Because third-party financers serve as an important source of financing options for dealers and customers, an impairment of their ability to provide such financial services could negatively affect our future sales and therefore our profitability and financial condition.
To the extent we cannot protect our intellectual property, unauthorized use and misuse of our intellectual property could cause significant damage to our brand name and reputation, interfere with our ability to effectively represent our Company to our customers, contractors, suppliers and/or licensees and increase litigation costs, which could harm our competitive position and have a material adverse effect on our business, financial condition and results of operations.
To the extent we cannot protect our intellectual property, unauthorized use and misuse of our intellectual property could cause significant damage to our brands and reputation, interfere with our ability to effectively represent our Company to our customers, contractors, suppliers and/or licensees and increase litigation costs, which could harm our competitive position and have a material adverse effect on our business, financial condition and results of operations.
In August 2016, the EPA and the NHTSA finalized a second phase of GHG emissions reductions to be implemented over time beginning in model year 2022 through model year 2027 (with standards for certain trailers beginning in model year 2018).
In August 2016, the EPA and the NHTSA finalized a second phase of GHG emissions reductions to be implemented over time beginning in model year 2021 through model year 2027 (with standards for certain trailers beginning in model year 2018).
In addition, regulatory proposals under consideration or those that are proposed in the future may set standards that are difficult to achieve or adversely affect our results of operations due to increased research, development, and warranty costs.
In addition, regulatory proposals under consideration or those that are proposed in the future may set standards that are difficult to achieve or adversely affect our results of operations due to increased research, development, or warranty costs or otherwise.
No dealer or customer represented more than 5% of our annual revenue for fiscal year 2023, but there may continue to be consolidation and changes in the dealership landscape over time.
No dealer or customer represented more than 5% of our annual revenue for fiscal year 2024, but there may continue to be consolidation and changes in the dealership landscape over time.
Third-party financiers face a number of business, economic and financial risks that could impair their access to capital and negatively affect their ability to provide financing solutions for our dealers and customers.
Third-party financers face a number of business, economic and financial risks that could impair their access to capital and negatively affect their ability to provide financing solutions for our dealers and customers.
Although we at times purchase steel, aluminum and other raw materials up to twenty-four months in advance in order to provide certainty regarding portions of our pricing and supply, for the majority of our raw material purchases we do not typically enter into any fixed-price contracts and may not be able to accurately anticipate future raw material prices for those inputs, including the impacts of inflation.
Although we at times purchase steel, aluminum and other raw materials in advance in order to provide certainty regarding portions of our pricing and supply, for the majority of our raw material purchases we do not typically enter into any fixed-price contracts and may not be able to accurately anticipate future raw material prices for those inputs, including the impacts of inflation.
Further, we cannot be certain that new product introductions will not reduce sales from existing models and adversely affect our results of operations. In addition, we cannot assure you that any of these new product features, designs or models will be introduced to the market in a timely manner or that they will be successful when introduced.
Further, we cannot be certain that new product introductions will not reduce sales from existing models and adversely affect our results of operations. In addition, we cannot provide assurance that any of these new product features, designs or models will be introduced to the market in a timely manner or that they will be successful when introduced.
Past or future misconduct by our employees or vendors could result in violations of law, regulatory sanctions and/or serious reputational harm or financial harm. We monitor our policies, procedures and controls; however, we cannot assure you that our policies, procedures and controls will be sufficient to prevent all forms of misconduct.
Past or future misconduct by our employees or vendors could result in violations of law, regulatory sanctions and/or serious reputational harm or financial harm. We monitor our policies, procedures and controls; however, we cannot provide assurance that our policies, procedures and controls will be sufficient to prevent all forms of misconduct.
Risks Relating to Our Indebtedness, Contingent Obligations, Liquidity and Financial Position Our business has meaningful working capital requirements and a decline in operating results or access to financing may have an adverse impact on our liquidity position. Our business has meaningful working capital requirements. We had $150 million of long-term debt outstanding as of October 31, 2023.
Risks Relating to Our Indebtedness, Contingent Obligations, Liquidity and Financial Position Our business has meaningful working capital requirements and a decline in operating results or access to financing may have an adverse impact on our liquidity position. Our business has meaningful working capital requirements. We had $85.0 million of long-term debt outstanding as of October 31, 2024.
Additionally, companies that are not currently competitors but that are involved in the specialty vehicle market (such as a supplier) or that operate in an adjacent market (such as a producer of mainstream cars and trucks) could choose to enter the specialty vehicle market.
Additionally, companies that are not currently competitors but that are involved in the specialty vehicle market (such as a supplier), that operate in other specialty vehicle market segments than us, or that operate in an adjacent market (such as a producer of mainstream cars and trucks) could choose to enter the specialty vehicle market.
In addition, laws in many of the states in which we operate make it difficult for us to terminate dealer agreements, which may make it difficult for us to optimize our dealer network.
In addition, laws in many of the states in which we operate make it difficult for us to terminate or not renew dealer agreements, which may make it difficult for us to optimize our dealer network.
Gasoline or diesel fuel is required for the operation of most of our vehicles and we cannot assure you that the supply of these petroleum products will continue uninterrupted or that the price of or tax on these petroleum products will not significantly increase.
Gasoline or diesel fuel is required for the operation of most of our vehicles and we cannot provide assurance that the supply of these petroleum products will continue uninterrupted or that the price of or tax on these petroleum products will not significantly increase.
We are therefore reliant on a consistent supply of chassis and the maintenance of our status as “approved converters” in order to maintain our sales.
We are reliant on a consistent supply of chassis and the maintenance of our status as “authorized converters” in order to maintain our sales.
Any failure to achieve earnings expectations may have an adverse impact on our available liquidity. As a result, we cannot assure you that we will continue to have sufficient liquidity to meet our operating needs.
Any failure to achieve earnings expectations may have an adverse impact on our available liquidity. As a result, we cannot provide assurance that we will continue to have sufficient liquidity to meet our operating needs.
Although we do not have operations outside the United States, we may experience indirect impacts to our operations, such as supply chain disruptions, due to our relationships with suppliers in these countries, as well as potential inflation in the cost of energy, raw materials or other supplies.
Although we do not have operations outside the United States, we may experience indirect impacts to our operations, such as supply chain disruptions, due to our relationships with suppliers in other countries where economic or political instability exists, as well as potential inflation in the cost of energy, raw materials or other supplies.
Federal, state, and local government spending and priorities may change in a manner that materially and adversely affects our future sales and limits our growth prospects. Our business depends upon continued federal, state, and local government expenditures on certain of our Commercial and Fire & Emergency products. These expenditures have not remained constant over time.
Federal, state, and local government spending and priorities may change in a manner that materially and adversely affects our future sales and limits our growth prospects. Our business depends upon continued federal, state, and local government expenditures on certain Specialty Vehicles products. These expenditures have not remained constant over time.
Additionally, imbalances in the regional supply and demand for our products could result in increased competition in the markets in which we compete. We may also face competition from companies developing zero-emissions specialty vehicles or other technologies to minimize emissions. Competition from these companies could make our specialty vehicles less desirable in the market-place.
Additionally, imbalances in the regional supply and demand for our products could result in increased competition in the markets in which we compete. We may also face competition from companies developing zero-emissions specialty vehicles or other technologies to minimize emissions.
We estimate that we distribute approximately 78% of our products through a system of independent, authorized dealers, many of whom also sell products from competing manufacturers. Our business is therefore affected by our ability to establish new relationships and maintain relationships with existing dealers.
We estimate that approximately 74% of our product revenue is distributed through a system of independent, authorized dealers, many of whom also sell products from competing manufacturers. Our business is therefore affected by our ability to establish new relationships and maintain relationships with existing dealers.
Changes in U.S. federal and state tax laws and rates could adversely affect our results of operations and cash flows. It is also possible that changes in overall profitability, changes in generally accepted accounting principles in the United States (“U.S. GAAP”), or changes in the valuation of deferred tax assets could adversely affect our future results of operations.
Changes in U.S. federal and state tax laws and rates could adversely affect our results of operations and cash flows. It is also possible that changes in overall profitability, changes in generally accepted accounting principles in the United States (“U.S.
For example, reduced municipal tax revenues resulting from the 2008 recession may have led to a decline in these markets. As fire and emergency apparatus and school and transit buses are typically a larger cost item for municipalities and, because their service life is very long, their purchase is more deferrable.
For example, reduced municipal tax revenues resulting from the 2008 recession may have led to a decline in these markets. As fire and ambulance vehicles are typically a larger cost item for municipalities and, because their service life is very long, their purchase is more deferrable.
We cannot assure you that we will continue to declare dividends or have sufficient funds to pay dividends on our common stock. Future dividends on shares of common stock will be at the sole discretion of our Board of Directors and we may reduce or discontinue entirely the payment of such dividends at any time.
We may not continue to declare dividends or have sufficient funds to pay dividends on our common stock. Future dividends on shares of common stock will be at the sole discretion of our Board of Directors. We may reduce or discontinue entirely the payment of such dividends at any time.
If we are unable to renew a contract with one or more of our significant dealers or re-negotiate an agreement under advantageous terms, our sales and results of operations could be adversely affected. Our business is also affected by the availability and terms of financing to dealers and retail purchasers.
If one or more of our significant dealers chooses to not renew a contract with us or to re-negotiate an agreement under advantageous terms, our sales and results of operations could be adversely affected. 20 Our business is also affected by the availability and terms of financing to dealers and retail purchasers.
The loss of the services of one or more of these key employees could have an adverse effect, at least in the short to medium term, on significant aspects of our business, including the ability to manage our business effectively and the successful execution of our strategies.
The loss of the services of one or more of these key employees could have an adverse effect, at least in the short to medium term, on significant aspects of our business, including the ability to manage our business effectively and the successful execution of our strategies, if transitions according to our succession plans are not successful.
If union representation is implemented at such sites and we are unable to agree with the union on reasonable employment terms, including wages, benefits, and work rules, we could experience a significant disruption of our operations and incur higher ongoing labor costs.
From time to time, union organizers actively work to organize employees at some of our facilities. If union representation is implemented at such sites and we are unable to agree with the union on reasonable employment terms, including wages, benefits, and work rules, we could experience a significant disruption of our operations and incur higher ongoing labor costs.
We purchase, directly and indirectly through component purchases, significant amounts of aluminum, steel, plastics and other resins, brass and fiberglass products as well as other commodity-sensitive raw materials annually. In particular, in past years, steel and aluminum prices have experienced volatility which has been unforeseen and unexpected.
Raw material price fluctuations may adversely affect our results. We purchase, directly and indirectly through component purchases, significant amounts of aluminum, steel, plastics and other resins, brass, wood and fiberglass products as well as other commodity-sensitive raw materials annually. In particular, in past years, steel and aluminum prices have experienced volatility which has been unforeseen and unexpected.
High fuel costs generally drive greater demand for better fuel economy and substantial increases in the price of fuel have had a material adverse effect on the specialty vehicle industry as a whole in the past and could have a material adverse effect on our business in the future.
High fuel costs generally drive greater demand for better fuel economy and substantial increases in the price of fuel have had a material adverse effect on the specialty vehicle industry as a whole in the past and could have a material adverse effect on our business in the future. Fluctuations in fuel prices have also historically negatively impacted consumer confidence.
The U.S. government has reported that U.S. sanctions against Russia in response to the conflict could lead to an increased threat of cyber attacks (including increased risk of data breach and other threats from ransomware, destructive malware, distributed denial-of-service attacks, as well as fraud, spam, and fake accounts, or other illegal activity conducted generally by bad actors seeking to take advantage of us, our partners or end-customers) against U.S. companies.
These conflicts could lead to an increased threat of cyber-attacks (including increased risk of data breach and other threats from ransomware, destructive malware, distributed denial-of-service attacks, as well as fraud, spam, and fake accounts, or other illegal activity conducted generally by bad actors seeking to take advantage of us, our partners or end-customers) against U.S. companies.
This seasonality is caused primarily by school districts ordering more school buses prior to the beginning of a school year, the consumer buying habits for RVs, municipal spending and budget cycles, the impact of travel and construction in the summer months, as well as how certain seasonal months aggregate into our fiscal quarters which are different than calendar quarters.
This seasonality is caused primarily by the consumer buying habits for RVs, municipal spending and budget cycles, the impact of travel and construction in the summer months, as well as how certain seasonal months aggregate into our fiscal quarters which are different than calendar quarters.
Managing frequent product introductions and transitions poses inherent risks and additional costs. Delays in the introduction or market acceptance of new product features, designs or models could have a material adverse effect on our business. Products may not be accepted for a number of reasons, including changes in customer preferences or our failure to properly gauge customer preferences.
Delays in the introduction or market acceptance of new product features, designs or models could have a material adverse effect on our business. Products may not be accepted for a number of reasons, including changes in customer preferences or our failure to properly gauge customer preferences.
If these manufacturers experience production delays, we may receive a lower allocation of chassis than anticipated, or if the quality or design of their chassis changes, or if these manufacturers implement recalls, we could incur significant costs or disruptions to our business, which could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.
If these manufacturers experience production delays, if the quality or design of their chassis changes, if these manufacturers implement recalls, or if these manufacturers change or discontinue the specific type of chassis they manufacture, we could incur significant costs or disruptions to our business, which could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.
While less economically sensitive than the Recreation segment and our terminal truck business, our Fire & Emergency segment and the remainder of our Commercial segment are also impacted by the overall economic environment. Local tax revenues are an important source of funding for fire and emergency response departments.
While less economically sensitive than the Recreational Vehicles segment and our terminal truck business, the fire and ambulance businesses in our Specialty Vehicles segment are also impacted by the overall economic environment. Local tax revenues are an important source of funding for fire and ambulance purchases by emergency response departments.
Our success also depends to a large extent upon our ability to attract and retain key executives. These employees have extensive experience in our markets and are familiar with our business, systems and processes.
Our success also depends to a large extent upon our ability to attract and retain key executives and other key employees, as well as the existence of a succession plan for these employees. These employees have extensive experience in our markets and are familiar with our business, systems and processes.
Certain of our competitors are smaller companies which may have lower operating costs and greater operational flexibility, and may have focus on regional markets where they have competitive advantages of proximity and relationships with local municipalities or other regional customers.
Certain of our competitors are smaller companies which may have lower operating costs and greater operational flexibility and may focus on regional markets where they have competitive advantages of proximity and relationships with local municipalities or other regional customers. Other of our competitors are large, well-established companies with capacity, financial and other resources that may be in excess of ours.
Further, our systems and networks, as well as those of our dealers, customers, suppliers, service providers, and banks, may become the target of advanced cyber-attacks or information security breaches which will pose a risk to the security of our services, systems, networks and supply chain, as well as to the confidentiality, availability and integrity of data of our Company, employees, customers or consumers, as well as disrupt our operations or damage our facilities or those of third parties.
The costs and operational consequences of responding to the above items and implementing remediation measures could be significant and could adversely impact our results. 19 Further, our systems and networks, as well as those of our dealers, customers, suppliers, service providers, and banks may become the target of advanced cyber-attacks or information security breaches which will pose a risk to the security of our services, systems, networks and supply chain, as well as to the confidentiality, availability and integrity of data of our Company, employees, customers or consumers, as well as disrupt our operations or damage our facilities or those of third parties.
Our ability to execute our strategy is dependent upon our ability to attract, train and retain qualified personnel including our ability to retain and attract senior management and key employees.
Our ability to execute our strategy is dependent upon our ability to attract, retain, and develop qualified personnel, including our ability to execute proper succession plans for senior management and key employees.
Our previous or future acquisitions and the related strategies may not be successful or may not generate the financial benefits that we expected we would achieve at the time of acquisition.
From time to time, we seek to identify and complete acquisitions. We may continue making strategic acquisitions in the future. Our previous or future acquisitions and the related strategies may not be successful or may not generate the financial benefits that we expected we would achieve at the time of acquisition.
Any decline in overall customer demand in markets in which we operate could have a material adverse effect on our operating performance. Increased economic and political instability, including the Russia-Ukraine and Hamas-Israel conflicts, may adversely affect our business, financial condition, and results of operations. In late February 2022, Russia launched a military attack on Ukraine.
Any decline in overall customer demand in markets in which we operate could have a material adverse effect on our operating performance. Increased economic and political instability may adversely affect our business, financial condition, and results of operations.
In addition, early in fiscal year 2016 we began assisting dealers and retail customers with arranging their financing with third parties for purchases of our products.
In addition, we assist dealers and retail customers with arranging their financing with third parties for purchases of our products.
If any of the following risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of shares of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face.
If any of the following risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of shares of our common stock could decline and investors could lose all or part of their investment.
Certain of our other products, such as school buses, have also historically been, and are expected to continue to be, seasonal. This seasonality has an impact on the comparability of our quarterly results. Moreover, weak macroeconomic conditions can adversely affect demand for certain of our products and lead to an overall aging of product fleets beyond a typical replacement cycle.
This cyclicity has an impact on the comparability of our quarterly results. Moreover, weak macroeconomic conditions can adversely affect demand for certain of our products and lead to an overall aging of product fleets beyond a typical replacement cycle.
Accordingly, if we do not accurately predict, prepare for and respond to new kinds of technological innovations, market developments and changing customer needs, including with respect to electric vehicles and other technologies that minimize emissions, competition from these companies could make our specialty vehicles less desirable in the marketplace.
Accordingly, if we do not accurately predict, prepare for and respond to new kinds of technological innovations, market developments and changing customer needs, competition from other companies could make our specialty vehicles less desirable in the marketplace. Managing frequent product introductions and transitions poses inherent risks and additional costs.
In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future or acquire them on acceptable terms or, because of competition in the marketplace and limitations imposed by the agreements governing our indebtedness or the availability of capital, that we will be able to finance future acquisitions.
In addition, there can be no assurance that we will be able to locate suitable acquisition candidates in the future or acquire them on acceptable terms or that we will be able to finance future acquisitions.
Although we are not currently incurring material liabilities pursuant to CERCLA or state analogues, in the future we may incur such material liabilities with regard to our (or our predecessors’) current or former facilities, adjacent or nearby third-party facilities, or off-site disposal locations.
Although we are not currently incurring material liabilities pursuant to CERCLA or state analogues, in the future we may incur such material liabilities with regard to our (or our predecessors’) current or former facilities, adjacent or nearby third-party facilities, or off-site disposal locations. 29 Product compliance laws and regulations impose a variety of environmental requirements, including emissions and performance standards, on the vehicles we manufacture.
In addition, we regularly undergo tax audits in various jurisdictions in which we operate. Although we believe that our income tax provisions and accruals are reasonable and in accordance with U.S.
GAAP”), or changes in the valuation of deferred tax assets could adversely affect our future results of operations. 30 In addition, we regularly undergo tax audits in various jurisdictions in which we operate. Although we believe that our income tax provisions and accruals are reasonable and in accordance with U.S.
Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond our control, including continuing inflation. Raw material price fluctuations may adversely affect our results.
Increases in the price of commodities could impact the cost or price of our products, which could impact our ability to sustain and grow earnings. Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand factors, as well as other factors beyond our control, including continuing inflation.
We operate in a highly competitive environment in each of the markets we serve and we face competition in each of our product segments from numerous competitors. We compete principally on the basis of client-specific customization, product quality and reliability, breadth of product offering, manufacturing capability and flexibility, technical capability, product innovation, customer service, after-sales support, delivery times and price.
We compete principally on the basis of customer loyalty and repeat buyers, client-specific customization, product quality and reliability, breadth of product offering, manufacturing capability and flexibility, technical capability, product innovation, customer service, after-sales support, delivery times and price.
In addition, recent consolidation of dealers, as well as the growth of larger, multi-location dealers, may result in increased bargaining power on the part of dealers, which could have a material adverse effect on our business. 20 Our dealer agreements are typically for a multi-year term; however, the dealer can typically cancel the agreement for convenience without penalty upon 90 days’ notice.
In addition, recent consolidation of dealers, as well as the growth of larger, multi-location dealers, may result in increased bargaining power on the part of dealers, which could have a material adverse effect on our business.
As a result of the foregoing factors, we may lose customers or be forced to reduce prices, which could have a material adverse effect on our business, financial condition and operating results. Increases in the price of commodities could impact the cost or price of our products, which could impact our ability to sustain and grow earnings.
Competition from these companies could make our specialty vehicles less desirable in the marketplace. 18 As a result of the foregoing factors, we may lose customers or be forced to reduce prices, which could have a material adverse effect on our business, financial condition and operating results.
Some of the markets in which we compete are cyclical, which results in fluctuations in sales and results of operations. We have experienced, and expect to continue to experience, variability in sales, production and net income, including historically as a result of seasonality in our Recreation segment.
Our business is both cyclical and seasonal, which results in fluctuations in sales and results of operations. We have experienced, and expect to continue to experience, variability in sales, production and net income, including historically as a result of cycles of growth and contraction in consumer demand in our Recreational Vehicles segment.
If we manufacture, or are alleged to have manufactured, a defective product or if component failures result in damages, we may experience material product liability losses in the future. In addition, we may incur significant costs to defend product liability claims and reputational damage from such claims, even if we are ultimately successful in defending them.
In addition, we may incur significant costs to defend product liability claims and reputational damage from such claims, even if we are ultimately successful in defending them.
While the UAW and certain auto manufacturers have since ratified a new agreement and the targeted strikes have not caused a disruption to our business to date, a similar or more prolonged labor dispute could have an adverse impact on our ability to procure the components necessary to produce and maintain sales volumes.
For example, in 2023, the United Auto Workers Union announced targeted strikes impacting certain auto manufacturers from which we purchase chassis. While the targeted strikes did not cause a disruption to our business, a similar or more prolonged labor dispute could have an adverse impact on our ability to procure the components necessary to produce and maintain sales volumes.
As a public company, we must and do in fact undertake various actions, such as implementing internal controls and procedures and hiring accounting staff and internal auditors.
As a public company, we must and do in fact undertake various actions, such as implementing internal controls and procedures and hiring accounting staff and internal auditors. Our independent registered public accounting firm is required to formally attest to the effectiveness of our internal controls over financial reporting.
More stringent emissions standards have been issued by California and certain other states as well. 29 These standards, as well as other federal and state emissions standards applicable to the vehicles we manufacture, have increased and will continue to increase costs of development for engines and vehicles and administrative costs arising from implementation of the standards.
These standards, as well as other federal and state emissions and other standards applicable to the vehicles we manufacture, have increased and will continue to increase costs of development for engines and vehicles and administrative costs arising from implementation of the standards, and have impacted in recent years and may continue to impact the cost or availability of certain chassis used in our products.
We can provide no assurance that we will be able to renew our dealer agreements on favorable terms, or at all, at their scheduled expiration dates. Some of our dealer agreements include guarantees, which could have a negative impact on the financial performance of our Company if we are required to fulfill them.
Some of our dealer agreements include guarantees, which could have a negative impact on the financial performance of our Company if we are required to fulfill them.
Any recalls of our vehicles, voluntary or involuntary, could have a material adverse effect on our reputation and our business and operating results. In addition, we face an inherent risk of exposure to product liability claims if our products or their use results, or is alleged to result, in personal injury and/or property damage.
In addition, we face an inherent risk of exposure to product liability claims if our products or their use results, or is alleged to result, in personal injury and/or property damage. If we manufacture, or are alleged to have manufactured, a defective product or if component failures result in damages, we may experience material product liability losses in the future.
If certain of these employees decide to leave us, we could incur disruptions to the completion of certain initiatives and we could incur significant costs in hiring, training, developing and retaining their replacements. Increases in the cost of labor, union organizing activity and work stoppages at our facilities could have a negative affect on our business.
If certain of these employees decide to leave us, we could incur disruptions to the completion of certain initiatives and we could incur significant costs in hiring, training, developing and retaining their replacements if our succession plans are not adequate.
The NTMVSA authorizes the National Highway Traffic Safety Administration to require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Sales into foreign countries may be subject to similar regulations. School buses are also subject to heightened safety standards in many jurisdictions.
The NTMVSA authorizes the National Highway Traffic Safety Administration to require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Sales into foreign countries may be subject to similar regulations. Any recalls of our vehicles, voluntary or involuntary, could have a material adverse effect on our reputation and our business and operating results.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—2021 ABL Facility” and “Description of Certain Indebtedness.” Our ability to comply with these financial ratios or other covenants may be affected by events beyond our control, and our failure to comply with these ratios or other covenants could result in an event of default.
In addition, the restrictive covenants in our 2021 ABL Facility require us to maintain specified financial ratios and other business or financial conditions. Our ability to comply with these financial ratios or other covenants may be affected by events beyond our control, and our failure to comply with these ratios or other covenants could result in an event of default.
See Note 17 to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional discussion of these contingent liabilities. Our 2021 Asset-based Lending Facility (“2021 ABL Facility”) contains, and agreements governing future indebtedness may contain, restrictive covenants that may impair our ability to access sufficient capital and operate our business.
Our 2021 Asset-based Lending Facility (“2021 ABL Facility”) contains, and agreements governing future indebtedness may contain, restrictive covenants that may impair our ability to access sufficient capital and operate our business.
We typically have backlog due to the nature of our production and sales process, and our financial results are affected if any backlog order is deferred or canceled. Backlog represents the amount of sales that we expect to derive from signed contracts, including purchase orders and oral contracts that have been subsequently memorialized in writing.
We typically have a backlog due to the nature of our production and sales process, and our financial results are affected if any backlog order is deferred or canceled. Orders from our dealers and end customers are evidenced by a contract or firm purchase order or, in the case of the Recreational Vehicles segment, a reserved production slot.
Additional risks and uncertainties, including ones not presently known to us or that we currently believe to be immaterial, may also adversely affect our business.
It is impossible to predict or identify all such factors and, as a result, investors should not consider the following factors to be a complete discussion of risks, uncertainties and assumptions. Additional risks and uncertainties, including those not presently known to us or that we currently believe to be immaterial, may also adversely affect our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeRTCs & Aftermarket Parts Warehouses Approximate Square Feet Segment Owned or Leased Ocala, Florida 96,000 Fire & Emergency Aftermarket Parts Warehouse Leased Jefferson, North Carolina 92,000 Fire & Emergency Aftermarket Parts Warehouse Owned Decatur, Indiana 90,000 Recreation Aftermarket Parts Warehouse Owned Decatur, Indiana 85,000 Recreation Owned Coburg, Oregon 36,000 Recreation Leased Oakland Park, Florida 8,000 Fire & Emergency Leased Tallahassee, Florida 3,000 Fire & Emergency Leased Total 410,000 Manufacturing Facility Locations Approximate Square Feet Brand(s) Produced Owned or Leased Decatur, Indiana 745,000 Fleetwood RV, American Coach, Holiday Rambler Owned Ocala, Florida 488,000 E-ONE Owned/Leased Snyder, Nebraska 400,000 Smeal Owned Charlotte, Michigan 283,000 Spartan Emergency Response Owned Elkhart, Indiana 270,000 Fleetwood RV, Midwest Automotive Design Owned/Leased South Hutchinson, Kansas 262,000 Collins Bus Owned Decatur, Indiana 254,000 Goldshield Owned Grove City, Ohio 240,000 Horton Emergency Vehicles Owned/Leased Holden, Louisiana 232,000 Ferrara Fire Apparatus, KME Owned Riverside, California 227,000 ENC Owned Jefferson, North Carolina 225,000 American Emergency Vehicles Owned Winter Park, Florida 223,000 Wheeled Coach, Road Rescue Owned Bristol, Indiana 200,000 Renegade RV Leased Lancaster, California 169,000 Lance Camper, Avery Transportation Leased Longview, Texas 155,000 Capacity of Texas, LayMor Owned Ephrata, Pennsylvania 119,000 Ladder Tower Leased Brandon, South Dakota 96,000 Spartan Emergency Response Owned/Leased Hamburg, New York 87,000 E-ONE Leased South El Monte, California 34,000 Leader Emergency Vehicles Leased Total 4,709,000 32
Biggest changeRTCs & Aftermarket Parts Warehouses Approximate Square Feet Segment Owned or Leased Jefferson, North Carolina 92,000 Specialty Vehicles Aftermarket Parts Warehouse Owned Decatur, Indiana 90,000 Recreational Vehicles Aftermarket Parts Warehouse Owned Decatur, Indiana 85,000 Recreational Vehicles RTC Owned Coburg, Oregon 36,000 Recreational Vehicles RTC Leased Bristol, Indiana 44,000 Recreational Vehicles RTC Owned Ocala, Florida 33,000 Specialty Vehicles Aftermarket Parts Warehouse Leased Total 380,000 Manufacturing Facility Locations Approximate Square Feet Brand(s) Produced Owned or Leased Decatur, Indiana 689,000 Fleetwood RV, American Coach, Holiday Rambler Owned Ocala, Florida 488,000 E-ONE Owned/Leased Snyder, Nebraska 400,000 Smeal Owned Charlotte, Michigan 283,000 Spartan Emergency Response Owned Elkhart, Indiana 270,000 Fleetwood RV, Midwest Automotive Design Owned/Leased Grove City, Ohio 240,000 Horton Emergency Vehicles Owned/Leased Holden, Louisiana 232,000 Ferrara Fire Apparatus, KME Owned Jefferson, North Carolina 225,000 American Emergency Vehicles Owned Winter Park, Florida 223,000 Wheeled Coach, Road Rescue Owned Bristol, Indiana 200,000 Renegade RV Leased Lancaster, California 169,000 Lance Camper Leased Decatur, Indiana 158,000 Goldshield Owned Longview, Texas 158,000 Capacity of Texas, LayMor Owned/Leased Ephrata, Pennsylvania 119,000 Ladder Tower Leased Brandon, South Dakota 86,000 Spartan Emergency Response Owned/Leased Hamburg, New York 87,000 E-ONE Leased South El Monte, California 34,000 Leader Emergency Vehicles Leased Total 4,061,000
Item 2. Pr operties. We maintain corporate office space in Brookfield, Wisconsin. The locations of the RTCs, aftermarket parts warehouses and manufacturing properties that we currently own or lease are listed below. We believe that our facilities are suitable and adequate for the purposes for which they are used and are adequately maintained.
Item 2. Properties. We maintain corporate office space in Brookfield, Wisconsin. The locations of the RTCs, aftermarket parts warehouses and manufacturing properties that we currently own or lease are listed below. We believe that our facilities are suitable and adequate for the purposes for which they are used and are adequately maintained.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAdditionally, these claims are generally covered by third-party insurance, which for some insurance policies is subject to a retention for which the Company is responsible. Actual results could vary, among other things, due to the uncertainties involved in litigation. Item 4. Mine Saf ety Disclosures. Not applicable. 33 PART II
Biggest changeAdditionally, these claims are often covered by third-party insurance, which for some insurance policies is subject to a retention for which the Company is responsible. Actual results could vary, among other things, due to the uncertainties involved in litigation. Item 4. Mine Saf ety Disclosures. Not applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRisk Factors—Risks Related to Legal, Regulatory and Compliance Matters—We cannot assure you that we will continue to declare dividends or have sufficient funds to pay dividends on our common stock.” Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock between October 31, 2018 and October 31, 2023, based on the market price of our common stock and assumes reinvestment of dividends, with the cumulative total return of companies in the Russell 2000, RV Peers, and Specialty Vehicles.
Biggest changeStock Performance Graph The following graph compares the cumulative total stockholder return on our common stock between October 31, 2019 and October 31, 2024, based on the market price of our common stock and assumes reinvestment of dividends, with the cumulative total return of companies in the Russell 2000, RV Peers, and Specialty Vehicle Peers.
As of December 7, 2023, there were approximately 94 holders of record of our shares of common stock. The actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
As of December 6, 2024, there were approximately 63 holders of record of our shares of common stock. The actual number of shareholders is greater than this number of record holders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
During fiscal year 2023, the Company paid cash dividends of $12.1 million. Our ability to pay dividends is dependent on our ABL loan and board of directors' approval. See “Item 1A.
During fiscal year 2024, the Company paid cash dividends of $192.0 million, which includes a special cash dividend in the amount of $3.00 per share that was paid in February 2024. Our ability to pay dividends is dependent on our ABL Facility and board of directors' approval. See “Item 1A.
Removed
“Specialty Vehicles” represents an equally-weighted index comprised of OSK, BLBD, SHYF, & FSS. “RV Peers” represents an equally-weighted index comprised of THO and WGO. Equity Compensation Plan Information – see Item 12 Item 6. Reserved 34
Added
Risk Factors—Risks Related to Legal, Regulatory and Compliance Matters—We cannot assure you that we will continue to declare dividends or have sufficient funds to pay dividends on our common stock.” Equity Compensation Plan Information – see Item 12.
Added
Unregistered Sales of Equity Securities and Use of Proceeds Common stock repurchases - There were no purchases of common stock made by the Company during the fourth quarter of fiscal year 2024.
Added
October 31, 2019 October 31, 2020 October 31, 2021 October 31, 2022 October 31, 2023 October 31, 2024 REVG $ 100.0 $ 64.0 $ 123.9 $ 114.5 $ 120.5 $ 267.2 Russell 2000 100.0 99.8 150.5 122.6 112.0 150.2 RV Peers¹ 100.0 117.8 155.4 132.4 138.7 152.9 Specialty Vehicle Peers² 100.0 85.0 150.6 109.1 113.1 171.1 ¹ represents an equally-weighted index comprised of THO and WGO. ²represents an equally-weighted index comprised of OSK, BLBD, SHYF, & FSS.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table reconciles Net income to Adjusted EBITDA for the periods presented: Fiscal Year Ended (in millions) October 31, 2023 October 31, 2022 October 31, 2021 Net income $ 45.3 $ 15.2 $ 44.4 Depreciation and amortization 26.2 32.3 32.0 Interest expense, net 28.6 16.9 17.3 Loss on early extinguishment of debt — — 1.4 Provision for income taxes 12.9 4.6 11.3 EBITDA 113.0 69.0 106.4 Transaction expenses(a) 0.5 0.7 3.2 Sponsor expense reimbursement(b) 0.3 0.1 0.4 Restructuring (c) — 9.4 2.5 Restructuring related charges(d) 10.5 9.7 0.3 Impairment charges(e) — — 1.5 Stock-based compensation expense(f) 14.4 8.7 7.8 Legal matters(g) 16.6 7.4 4.0 Net loss on sale of business and assets(h) — 0.1 7.9 Loss on acquisition of business(i) — — 0.4 Other items (j) 1.3 — 6.1 Losses attributable to assets held for sale(k) — — 1.0 Adjusted EBITDA $ 156.6 $ 105.1 $ 141.5 45 The following table reconciles Net income to Adjusted Net Income for the periods presented: Fiscal Year Ended (in millions) October 31, 2023 October 31, 2022 October 31, 2021 Net income $ 45.3 $ 15.2 $ 44.4 Amortization of intangible assets 3.5 7.1 9.8 Transaction expenses(a) 0.5 0.7 3.2 Sponsor expense reimbursement(b) 0.3 0.1 0.4 Restructuring (c) — 9.4 2.5 Restructuring related charges(d) 10.5 9.7 0.3 Impairment charges(e) — — 1.5 Stock-based compensation expense(f) 14.4 8.7 7.8 Legal matters(g) 16.6 7.4 4.0 Net loss on sale of business and assets(h) — 0.1 7.9 Loss on acquisition of business(i) — — 0.4 Other Items(j) 1.3 — 6.1 Losses attributable to assets held for sale(k) — — 1.0 Loss on early extinguishment of debt(l) — — 1.4 Accelerated depreciation on certain property, plant, and equipment (m) — 2.3 — Impact of tax rate change(n) — — (4.2 ) Income tax effect of adjustments(o) (11.9 ) (11.6 ) (9.6 ) Adjusted Net Income $ 80.5 $ 49.1 $ 76.9 (a) Reflects costs incurred in connection with business dispositions and capital market transactions.
Biggest changeThe following table reconciles Net income to Adjusted EBITDA for the periods presented: Fiscal Year Ended (in millions) October 31, 2024 October 31, 2023 October 31, 2022 Net income $ 257.6 $ 45.3 $ 15.2 Depreciation and amortization 25.4 26.2 32.3 Interest expense, net 28.5 28.6 16.9 Provision for income taxes 82.8 12.9 4.6 EBITDA 394.3 113.0 69.0 Transaction expenses(a) 7.4 0.5 0.7 Sponsor expense reimbursement(b) 0.2 0.3 0.1 Restructuring costs(c) 12.3 — 9.4 Restructuring related charges(d) 7.8 10.5 9.7 Impairment charges(e) 14.5 — — Stock-based compensation expense(f) 12.7 14.4 8.7 Legal matters(g) 2.9 16.6 7.4 Net (gain) loss on sale of business and assets(h) (289.3 ) — 0.1 Other items (j) — 1.3 — Adjusted EBITDA $ 162.8 $ 156.6 $ 105.1 The following table reconciles Net income to Adjusted Net Income for the periods presented: Fiscal Year Ended (in millions) October 31, 2024 October 31, 2023 October 31, 2022 Net income $ 257.6 $ 45.3 $ 15.2 Amortization of intangible assets 2.2 3.5 7.1 Transaction expenses(a) 7.4 0.5 0.7 Sponsor expense reimbursement(b) 0.2 0.3 0.1 Restructuring costs(c) 12.3 — 9.4 Restructuring related charges(d) 7.8 10.5 9.7 Impairment charges(e) 14.5 — — Stock-based compensation expense(f) 12.7 14.4 8.7 Legal matters(g) 2.9 16.6 7.4 Net (gain) loss on sale of business and assets(h) (289.3 ) — 0.1 Accelerated depreciation on certain property, plant, and equipment (i) — — 2.3 Other Items(j) — 1.3 — Income tax effect of adjustments(k) 58.8 (11.9 ) (11.6 ) Adjusted Net Income $ 87.1 $ 80.5 $ 49.1 (a) Reflects costs incurred in connection with business acquisitions, dispositions, and capital market transactions.
Stock-based compensation expense and sponsor expense reimbursement is excluded from both Adjusted Net Income and Adjusted EBITDA because it is an expense which cannot be impacted by our business managers. Stock-based compensation expense also reflects a cost which may obscure trends in our underlying vehicle businesses for a given period, due to the timing and nature of the equity awards.
Stock-based compensation expense and sponsor expense reimbursement are excluded from both Adjusted Net Income and Adjusted EBITDA because it is an expense which cannot be impacted by our business managers. Stock-based compensation expense also reflects a cost which may obscure trends in our underlying vehicle businesses for a given period, due to the timing and nature of the equity awards.
The royalty savings are then calculated by multiplying a royalty rate, expressed as a percentage of revenues, times a determined applicable level of future revenues provided per each trade name as estimated by the Company. The royalty rate is based on research of industry and market data related to transactions involving the licensing of comparable intangible assets.
The royalty savings are then calculated by multiplying a royalty rate, expressed as a percentage of revenues, by a determined applicable level of future revenues provided per each trade name as estimated by the Company. The royalty rate is based on research of industry and market data related to transactions involving the licensing of comparable intangible assets.
In determining whether an event or transaction is exceptional, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. 44 Adjusted EBITDA and Adjusted Net Income have limitations as analytical tools. They are not presentations made in accordance with U.S.
In determining whether an event or transaction is exceptional, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. Adjusted EBITDA and Adjusted Net Income have limitations as analytical tools. They are not presentations made in accordance with U.S.
Impact of Acquisitions We actively evaluate opportunities to improve and expand our business through targeted acquisitions that are consistent with our strategy. We also may dispose of certain components of our business that no longer fit within our overall strategy. Historically, a significant component of our growth has been through acquisitions of businesses.
Impact of Acquisitions and Divestitures We actively evaluate opportunities to improve and expand our business through targeted acquisitions that are consistent with our strategy. We also may dispose of certain components of our business that no longer fit within our overall strategy. Historically, a significant component of our growth has been through acquisitions of businesses.
These measures exclude the impact of certain items which we believe have less bearing on our core operating performance because they are items that are not needed or available to the Company’s managers in the daily activities of their businesses.
These measures exclude the impact of certain items which we believe have less bearing on our core operating performance because they are items that are not needed or available to our managers in the daily activities of their businesses.
Moreover, such measures do not reflect: • our cash expenditures, or future requirements for capital expenditures or contractual commitments; • changes in, or cash requirements for, our working capital needs; • the cash requirements necessary to service interest or principal payments on our debt; • the cash requirements to pay our taxes.
Moreover, such measures do not reflect: 43 • our cash expenditures, or future requirements for capital expenditures or contractual commitments; • changes in, or cash requirements for, our working capital needs; • the cash requirements necessary to service interest or principal payments on our debt; • the cash requirements to pay our taxes.
We typically incur upfront costs as we integrate acquired businesses and implement our operating philosophy at newly acquired companies, including consolidation of supplies and materials, purchases, improvements to production processes, and other restructuring initiatives. The benefits of these integration efforts and divestiture activities may not positively impact our financial results until subsequent periods, if at all.
We typically incur upfront costs as we integrate acquired businesses and implement our operating philosophy at newly acquired companies, including consolidation of supplies and materials purchases, improvements to production processes, and other restructuring initiatives. The benefits of these acquisition, integration, and divestiture activities may not positively impact our financial results until subsequent periods, if at all.
Sales and earnings for other vehicles that we produce, such as essential emergency vehicles and commercial bus fleets, are less seasonal, but fluctuations in sales of these vehicles can also be impacted by timing surrounding the fiscal years of municipalities and commercial customers, as well as the timing and amounts of multi-unit orders.
Sales and earnings for other vehicles that we produce, such as essential emergency vehicles, are less seasonal, but fluctuations in sales of these vehicles can also be impacted by timing surrounding the fiscal years of municipalities and commercial customers, as well as the timing and amounts of multi-unit orders.
We cannot assure you that we will be able to obtain refinancing or additional financing on favorable terms or at all.
We cannot assure that we will be able to obtain refinancing or additional financing on favorable terms or at all.
We believe Adjusted EBITDA and Adjusted Net Income are useful to investors because these performance measures are used by our management and the Company’s Board of Directors for measuring and reporting the Company’s financial performance and as a measurement in incentive compensation for management.
We believe Adjusted EBITDA and Adjusted Net Income are useful to investors because these performance measures are used by our management and our Board of Directors for measuring and reporting our financial performance and as a measurement in incentive compensation for management.
Our products in the Recreation segment include Class A motorized RVs (motorhomes built on a heavy-duty chassis with either diesel or gas engine configurations), Class C and “Super C” motorized RVs (motorhomes built on a van or commercial truck chassis), Class B RVs (motorhomes built out within a van chassis and high-end luxury van conversions), and towable travel trailers and truck campers.
Our products in the Recreational Vehicles segment include Class A motorized RVs (motorhomes built on a heavy-duty chassis with either diesel or gas engine configurations), Class C and “Super C” motorized RVs (motorhomes built on a van or commercial truck chassis), Class B RVs (motorhomes built out within a van chassis and high-end luxury van conversions), and towable travel trailers and truck campers.
If our warranty reserve were to change by 5%, it would not have a material impact on our gross profit for the fiscal year ended October 31, 2023.
If our warranty reserve were to change by 5%, it would not have a material impact on our gross profit for the fiscal year ended October 31, 2024.
If the fair value of any reporting unit, as calculated using the income approach and weighted as necessary to the market approach, when applicable, is less than its carrying value, an impairment charge is recorded for any excess of the reporting unit’s carrying value over it’s fair value, not to exceed the carrying amount of goodwill of that reporting unit.
If the fair value of any reporting unit, as calculated using the income approach and/or the market approach, when applicable, is less than its carrying value, an impairment charge is recorded for any excess of the reporting unit’s carrying value over it’s fair value, not to exceed the carrying amount of goodwill of that reporting unit.
Our first fiscal quarter also has less working days to complete and ship units due to the number of holidays and related vacation taken by employees.
Our first fiscal quarter also has fewer working days to complete and ship units due to the number of holidays and related vacation taken by employees.
Other than the items noted in Note 17, Commitments and Contingencies, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we do not have any material off-balance sheet arrangements.
Other than the items noted in Note 16, Commitments and Contingencies, to our 2024 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we do not have any material off-balance sheet arrangements.
Recent Accounting Pronouncements Refer to Note 2 to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a discussion of the impact of new accounting standards on the Company’s consolidated financial statements. 48
Recent Accounting Pronouncements Refer to Note 2 to our 2024 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a discussion of the impact of new accounting standards on the Company’s consolidated financial statements. 46
Sales of our products have typically been higher in the second, third and fourth fiscal quarters (with the fourth fiscal quarter typically being the strongest) due to better weather, the vacation season, buying habits of RV dealers and end-users, timing of government/municipal customer fiscal years, and the beginning of a new school year.
Sales of our products have typically been higher in the second, third and fourth fiscal quarters (with the fourth fiscal quarter typically being the strongest) due to better weather, the vacation season, buying habits of RV dealers and end-users, and timing of government and municipal customer fiscal years.
Goodwill and indefinite-lived intangible assets, consisting of trade names, are not amortized, however, the Company reviews goodwill and indefinite-lived intangible assets for impairment at least annually or more often if an event occurs or circumstances change which indicates that its carrying amount may not exceed its fair value.
However, the Company reviews goodwill and indefinite-lived intangible assets for impairment at least annually or more often if an event occurs or circumstances change which indicates that its carrying amount may not exceed its fair value.
The increase within the F&E segment was due to increased shipments of fire apparatus and ambulance units, a favorable mix of ambulance units, and price realization. The increase within the Commercial segment was primarily due to higher shipments of school buses, terminal trucks, and street sweepers, and price realization, partially offset by an unfavorable mix of municipal transit buses.
The increase within the Specialty Vehicles segment was due to increased shipments of fire apparatus and ambulance units, a favorable mix of ambulance units, higher shipments of school buses, terminal trucks, and street sweepers, and price realization, partially offset by an unfavorable mix of municipal transit buses.
Adjusted EBITDA is defined as net income for the relevant period before depreciation and amortization, interest expense, loss on early extinguishment of debt and provision for income taxes, as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance.
Adjusted EBITDA is defined as Net Income for the relevant period before depreciation and amortization, interest expense and income taxes, as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance.
Adjusted Net Income Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Adjusted Net Income $ 80.5 64.0 % $ 49.1 -36.2 % $ 76.9 Refer to the “Adjusted EBITDA and Adjusted Net Income” tables and related footnotes below for a reconciliation of Net Income to Adjusted Net Income.
Adjusted Net Income Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Adjusted Net Income $ 87.1 8.2 % $ 80.5 64.0 % $ 49.1 Refer to the “Adjusted EBITDA and Adjusted Net Income” tables and related footnotes below for a reconciliation of Net Income to Adjusted Net Income.
RV markets are affected by general U.S. and global economic conditions, which create risks that future economic downturns will further reduce consumer demand and negatively impact our sales. While less economically sensitive than the Recreation segment, the Fire & Emergency segment and the Commercial segment are also impacted by the overall economic environment.
RV markets are affected by general U.S. and global economic conditions, which create risks that future economic downturns will further reduce consumer demand and negatively impact our sales. While less economically sensitive than the Recreational Vehicles segment, the Specialty Vehicles segment is also impacted by the overall economic environment.
Cash Flow The following table shows summary cash flows for fiscal years 2023, 2022 and 2021: Fiscal Years Ended (in millions) October 31, 2023 October 31, 2022 October 31, 2021 Net cash provided by operating activities $ 126.5 $ 91.6 $ 158.3 Net cash used in investing activities (29.9 ) (14.8 ) (10.2 ) Net cash used in financing activities (95.7 ) (69.7 ) (146.2 ) Net increase in cash and cash equivalents $ 0.9 $ 7.1 $ 1.9 41 Net Cash Provided by Operating Activities Net cash provided by operating activities for fiscal year 2023 was $126.5 million, compared to $91.6 million for fiscal year 2022.
Cash Flow The following table shows summary cash flows for fiscal years 2024, 2023 and 2022: Fiscal Years Ended (in millions) October 31, 2024 October 31, 2023 October 31, 2022 Net cash provided by operating activities $ 53.4 $ 126.5 $ 91.6 Net cash provided by (used in) investing activities 348.5 (29.9 ) (14.8 ) Net cash used in financing activities (398.6 ) (95.7 ) (69.7 ) Net increase in cash and cash equivalents $ 3.3 $ 0.9 $ 7.1 Net Cash Provided by Operating Activities Net cash provided by operating activities for fiscal year 2024 was $53.4 million, compared to $126.5 million for fiscal year 2023.
The 2023 Repurchase Program expires 24 months after the approval date and gives management flexibility to determine conditions under which the shares may be purchased, subject to certain limitations.
The 2023 Repurchase Program expires 24 months after the approval date and gives management flexibility to determine conditions under which the shares may be purchased, subject to certain limitations. During fiscal year 2023, the Company did not repurchase any shares under the 2023 Repurchase Program.
The increase in cash from operating activities for fiscal year 2023 compared to the prior year was primarily related to higher net income and a more efficient use of inventory as compared to the prior year.
Net cash provided by operating activities for fiscal year 2023 was $126.5 million, compared to $91.6 million for fiscal year 2022. The increase in cash from operating activities for fiscal year 2023 compared to the prior year was primarily related to higher net income and a more efficient use of inventory as compared to the prior year.
During fiscal year 2023, the Company did not repurchase any shares under the 2021 Repurchase Program. On June 1, 2023, the Company’s Board of Directors approved a new share repurchase program that allowed the repurchase of up to $175.0 million of the Company’s outstanding common stock (the “2023 Repurchase Program”). The 2023 Repurchase Program replaced the 2021 Repurchase Program.
On June 1, 2023, the Company’s Board of Directors approved a new share repurchase program that allowed the repurchase of up to $175.0 million of the Company’s outstanding common stock (the “2023 Repurchase Program”). The 2023 Repurchase Program replaced the 2021 Repurchase Program.
We believe our estimates and assumptions are reasonable; however, future results could differ from those estimates. We consider the following accounting estimates to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements.
We believe our estimates and assumptions are reasonable; however, future results could differ from those estimates. We consider the following accounting estimates to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets, consisting of trade names, are not amortized.
We believe that our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy. However, we cannot assure you that cash provided by operating activities and borrowings under the current revolving credit facility (the “2021 ABL Facility” or “2021 ABL Agreement”) will be sufficient to meet our future needs.
However, we cannot assure that cash provided by operating activities and borrowings under the current revolving credit facility (the “2021 ABL Facility” or “2021 ABL Agreement”) will be sufficient to meet our future needs.
Provision for Income Taxes Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Provision for income taxes $ 12.9 180.4 % $ 4.6 -59.3 % $ 11.3 Provision for income taxes: Consolidated income tax provision was $12.9 million or 22.2% of pretax income for fiscal year 2023.
Provision for Income Taxes Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Provision for income taxes $ 82.8 541.9 % $ 12.9 180.4 % $ 4.6 Provision for income taxes: Consolidated income tax provision was $82.8 million or 24.3% of pretax income for fiscal year 2024.
The fiscal year 2022 tax provision was favorably impacted by incentives for U.S. research and stock-based compensation tax deductions and was unfavorably impacted by valuation allowances on certain state tax attributes. Consolidated income tax provision was $11.3 million or 20.3% of pretax income for fiscal year 2021.
The fiscal year 2022 tax provision was favorably impacted by incentives for U.S. research and stock-based compensation tax deductions and was unfavorably impacted by valuation allowances on certain state tax attributes.
The increase in net cash used by investing activities was primarily due to the reduction of proceeds from the sale of certain assets during fiscal year 2022. Net Cash Used in Financing Activities Net cash used in financing activities for fiscal year 2023 was $95.7 million, compared to $69.7 million for fiscal year 2022.
The increase in net cash used in investing activities was primarily due to increased capital expenditures and a reduction of proceeds from the sale of certain assets compared to fiscal year 2022. Net Cash Used in Financing Activities Net cash used in financing activities for fiscal year 2024 was $398.6 million, compared to $95.7 million for fiscal year 2023.
During fiscal year 2021, the Company repurchased 250,000 shares under this repurchase program at a total cost of $3.9 million at an average price of $15.45, excluding commissions. During fiscal year 2022, the Company repurchased 5,803,483 shares under this repurchase program at a total cost of $70.0 million at an average price of $12.03, excluding commissions.
During fiscal year 2022, the Company repurchased and retired 5,803,483 shares under this repurchase program at a total cost of $70.0 million at an average price of $12.03, excluding commissions. During fiscal year 2023, the Company did not repurchase any shares under the 2021 Repurchase Program.
We serve a diversified customer base, primarily in the United States and Canada, through three segments: Fire & Emergency, Commercial, and Recreation. We provide customized vehicle solutions for applications, including essential needs for public services (ambulances, fire apparatus, school buses, and transit buses), commercial infrastructure (terminal trucks and industrial sweepers) and consumer leisure (recreational vehicles).
We serve a diversified customer base, primarily in North America, through our two segments. We provide customized vehicle solutions for applications, including essential needs for public services (ambulances and fire apparatus), commercial infrastructure (terminal trucks and industrial sweepers) and consumer leisure (recreational vehicles).
The decrease within the Recreation segment was primarily due to lower unit shipments, an unfavorable mix of motorized units, and increased discounting, partially offset by price realization.
The decrease within the Recreational Vehicles segment was primarily due to lower unit shipments, an unfavorable mix of motorized units, and increased discounting.
Gross Profit Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Gross profit $ 316.1 27.7 % $ 247.5 -14.9 % $ 291.0 % of net sales 12.0 % 10.6 % 12.2 % Gross Profit : Consolidated gross profit increased $68.6 million in fiscal year 2023 compared to the prior year period.
Gross Profit Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Gross profit $ 297.3 -5.9 % $ 316.1 27.7 % $ 247.5 % of net sales 12.5 % 12.0 % 10.6 % Gross Profit : Consolidated gross profit decreased $18.8 million in fiscal year 2024 compared to the prior year.
Net Cash Used in Investing Activities Net cash used by investing activities for fiscal year 2023 was $29.9 million, compared to $14.8 million cash used in investing activities for fiscal year 2022.
Net Cash Provided by (Used in) Investing Activities Net cash provided by investing activities for fiscal year 2024 was $348.5 million, compared to $29.9 million net cash used in investing activities for fiscal year 2023.
The transition from the Eurodollar rate to SOFR did not have a material impact on the Company's results of operations. The 2021 ABL Facility matures on April 13, 2026. The Company may prepay principal, in whole or in part, at any time without penalty.
The Company may prepay principal, in whole or in part, at any time without penalty. On November 1, 2022, the Company amended the ABL Facility to transition from the Eurodollar based benchmark rates to the Secured Overnight Financing Rate (“SOFR”). The transition from the Eurodollar rate to SOFR did not have a material impact on the Company's results of operations.
(in millions) 2024 2025 2026 2027 2028 Thereafter Total Debt(a) $ — $ — $ 150.0 $ — $ — $ — $ 150.0 Interest(b) 10.5 10.5 5.3 — — — 26.3 Operating leases 9.6 8.1 7.4 6.8 3.8 9.5 45.2 Purchasing obligations(c) 25.6 4.8 0.3 0.3 0.3 — 31.3 Total commitments(d) $ 45.7 $ 23.4 $ 163.0 $ 7.1 $ 4.1 $ 9.5 $ 252.8 (a) Includes estimated principal payments due under our the 2021 ABL Facility as of October 31, 2023.
(in millions) 2025 2026 2027 2028 2029 Thereafter Total Debt(a) $ — $ 85.0 $ — $ — $ — $ — $ 85.0 Interest(b) 5.8 2.9 — — — — 8.7 Operating leases 9.4 8.3 7.5 4.3 2.9 6.6 39.0 Purchasing commitments(c) 42.6 4.1 4.1 4.1 4.1 33.4 92.4 Total commitments $ 57.8 $ 100.3 $ 11.6 $ 8.4 $ 7.0 $ 40.0 $ 225.1 (a) Includes estimated principal payments due under our the 2021 ABL Facility as of October 31, 2024.
These increases were partially offset by lower collections of customer advances in fiscal year 2023 as compared to fiscal year 2022 and the timing of accounts receivable receipts. Net cash provided by operating activities for fiscal year 2022 was $91.6 million, compared to $158.3 million for fiscal year 2021.
These increases were partially offset by lower collections of customer advances in fiscal year 2023 as compared to fiscal year 2022 and the timing of accounts receivable receipts.
(h) Fiscal year 2023 includes the loss on the sale of a business within the F&E segment, which is fully offset by a gain on the sale of certain assets also within the F&E segment. Fiscal year 2022 reflects a loss on the sale of a business within the F&E segment as part of the restructuring activities within that segment.
Fiscal year 2023 includes the loss on the sale of a business within the Specialty Vehicles segment, which is fully offset by a gain on the sale of certain assets also within the Specialty Vehicles segment.
The Recreation segment also includes Goldshield Fiberglass, which produces a wide range of custom molded fiberglass products for the Fleetwood family of brands, RV, and broader industrial markets. 35 Factors Affecting Our Performance The primary factors affecting our results of operations include: General Economic Conditions Our business is impacted by the U.S. economic environment, employment levels, consumer confidence, municipal spending, municipal tax receipts, changes in interest rates and instability in securities markets around the world, among other factors.
Factors Affecting Our Performance The primary factors affecting our results of operations include: General Economic Conditions Our business is impacted by the U.S. economic environment, employment levels, consumer confidence, municipal spending, municipal tax receipts, changes in interest rates and instability in securities markets around the world, among other factors.
Our diverse portfolio is made up of well-established principal vehicle brands, including many of the most recognizable names within their industry. Several of our brands pioneered their specialty vehicle product categories and date back more than 50 years.
Our diverse portfolio is made up of well-established principal vehicle brands, including many of the most recognizable names within their industry.
Historically, the slowest sales volume quarter has been the first fiscal quarter when the purchasing seasons for vehicles, such as school buses, RVs and sweepers are the lowest due to the colder weather and the relatively long time until the summer vacation season, and the fact that the school year is underway with municipalities and school bus contractors utilizing their existing fleets to transport student populations.
Historically, the slowest sales volume quarter has been the first fiscal quarter when the purchasing seasons for vehicles, such as RVs, are the lowest due to the colder weather and the relatively long time until the summer vacation season.
Each of our individual brands is distinctly positioned and targets certain price and feature points in the market such that dealers often carry, and customers often buy, more than one REV Fire & Emergency product line. Commercial – Our Commercial segment sells small Type A school buses, transit buses, terminal trucks and sweepers.
Each of our individual brands is distinctly positioned and targets certain price and feature points in the market such that dealers often carry, and customers often buy, more than one product type from our Specialty Vehicles brands.
The inputs and assumptions used in the determination of fair value are considered Level 3 inputs within the fair value hierarchy, as further described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements. 47 Under the market approach, the Company utilizes multiples of revenue and earnings from other publicly traded companies with comparable operations, to determine the fair value of the reporting unit.
The inputs and assumptions used in the determination of fair value are considered Level 3 inputs within the fair value hierarchy, as further described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements.
We believe we are the largest manufacturer by unit volume of fire and emergency vehicles in the United States and have one of the industry’s broadest portfolios of products including Type I ambulances (aluminum body mounted on a heavy truck-style chassis), Type II ambulances (van conversion ambulance), Type III ambulances (aluminum body mounted on a van-style chassis), pumpers (fire apparatus on a custom or commercial chassis with a water pump and water tank to extinguish fires), ladder trucks (fire apparatus with stainless steel or aluminum ladders), tanker trucks and rescue, aircraft rescue firefighting (“ARFF”), custom cabs & chassis and other vehicles.
We believe we have one of the industry’s broadest portfolios of products including Type I ambulances (aluminum body mounted on a heavy truck-style chassis), Type II ambulances (van conversion ambulance), Type III ambulances (aluminum body mounted on a van-style chassis), pumpers (fire apparatus on a custom or commercial chassis with a water pump and water tank to extinguish fires), aerial trucks (fire apparatus with stainless steel or aluminum ladders), tanker trucks, rescues, aircraft rescue firefighting (“ARFF”), custom cabs & chassis, terminal trucks (specialized vehicles which move freight in warehouses, intermodal yards, distribution and fulfillment centers and ports), and sweepers (three- and four-wheel versions used in road construction activities).
The increase was primarily related to higher sales volume of fire apparatus and ambulance units, a favorable mix of ambulance units, and price realization, partially offset by inflationary pressures. F&E segment Adjusted EBITDA decreased $55.2 million in fiscal year 2022.
The increase was primarily related to price realization, a favorable mix of fire apparatus, and increased shipments of fire apparatus and ambulance units, partially offset by inflationary pressures and lower shipments of terminal trucks. Specialty Vehicles segment Adjusted EBITDA increased $73.8 million in fiscal year 2023 compared to fiscal year 2022.
During the fiscal year 2023, the Company performed its annual goodwill test using both a quantitative and qualitative approach and did not identify any goodwill impairments. The goodwill balances at the F&E segment are $88.6 million, Commercial segment of $26.2 million and Recreation segment of $42.5 million.
During fiscal year 2024, the Company performed its annual goodwill test using a quantitative approach and did not identify any goodwill impairments. The goodwill balances at the Specialty Vehicles segment and Recreational Vehicles segments are $95.2 million and $42.5 million, respectively.
Refer to Note 10, Long-Term Debt, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. 43 Contractual Obligations Significant contractual commitments at October 31, 2023 are expected to affect our cash flows in future periods as set forth in the table below.
Refer to Note 9, Long-Term Debt, of the Notes to the Consolidated Financial Statements for further details. 42 Contractual Obligations Significant contractual commitments at October 31, 2024 are expected to affect our cash flows in future periods as set forth in the table below.
The increase in gross profit was primarily attributable to higher net sales and gross margin within the F&E and Commercial segments, partially offset by lower net sales and gross margin in the Recreation segment. Consolidated gross profit decreased $43.5 million in fiscal year 2022 compared to the prior year period.
Consolidated gross profit increased $68.6 million in fiscal year 2023 compared to fiscal year 2022. The increase in gross profit was primarily attributable to higher net sales and gross margin within the Specialty Vehicles segment, partially offset by lower net sales and gross margin in the Recreational Vehicles segment.
Adjusted EBITDA : Recreation segment Adjusted EBITDA decreased $19.9 million in fiscal year 2023 primarily due to lower unit shipments, an unfavorable mix of motorized units, increased discounting, and inflationary pressures, partially offset by price realization.
Recreational Vehicles segment Adjusted EBITDA decreased $19.9 million in fiscal year 2023 compared to fiscal year 2022 primarily due to lower unit shipments, an unfavorable mix of motorized units, increased discounting, and inflationary pressures. Backlog Backlog represents orders received from dealers or directly from end customers.
In particular, changes in the U.S. economic climate can impact demand in key end markets. In addition, we are susceptible to supply chain disruptions resulting from the impact of tariffs and global macro-economic factors which can have a dramatic effect, either directly or indirectly, on the availability, lead-times and costs associated with raw materials and parts.
In addition, we are susceptible to supply chain disruptions resulting from the impact of tariffs and global macro-economic factors which can have a dramatic effect, either directly or indirectly, on the availability, lead-times and costs associated with raw materials and parts. 35 RV purchases are discretionary in nature and therefore sensitive to the cost and availability of financing, consumer confidence, unemployment levels, levels of disposable income and changing levels of consumer home equity, among other factors.
Commercial segment net sales increased $22.9 million in fiscal year 2022 primarily due to increased shipments of school buses, terminal trucks and street sweepers, and price realization, partially offset by decreased shipments of municipal transit buses. Adjusted EBITDA : Commercial segment Adjusted EBITDA increased $23.8 million in fiscal year 2023.
Specialty Vehicles segment net sales increased $352.4 million in fiscal year 2023 compared to fiscal year 2022, primarily due to increased shipments of fire apparatus, ambulance units, school buses, terminal trucks, and street sweepers, a favorable mix of ambulance units, and price realization, partially offset by an unfavorable mix of municipal transit buses.
Net income Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Net income $ 45.3 198.0 % $ 15.2 -65.8 % $ 44.4 Net income: Consolidated net income increased $30.1 million in fiscal year 2023 primarily due to the factors detailed above, partially offset by the unfavorable impact of higher interest expense incurred in fiscal year 2023 as compared to fiscal year 2022.
Net income Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Net income $ 257.6 468.7 % $ 45.3 198.0 % $ 15.2 Net income: Consolidated net income increased $212.3 million in fiscal year 2024 compared to the prior year primarily due to the factors detailed above. 38 Consolidated net income increased $30.1 million in fiscal year 2023 compared to fiscal year 2022 primarily due to the factors detailed above.
(o) Income tax effect of adjustments using a 26.5% effective income tax rate for fiscal years 2023, 2022 and 2021, except for certain items with differing tax treatments. Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 2 to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
(j) Fiscal year 2023 reflects a loss on the disposition of a company investment, and other insignificant adjusting items. (k) Income tax effect of adjustments using estimated tax rates. Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 2 to our 2024 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Local tax revenues are an important source of funding for fire and emergency response departments. Fire and emergency products and buses are typically a larger cost item for municipalities and their service life is relatively long, making the purchase more deferrable, which can result in reduced demand for our products.
Additionally, these products are typically a larger cost item for municipalities and their service life is relatively long, making the purchase more deferrable, which can result in reduced demand for our products. Seasonality In a typical year, our operating results are impacted by seasonality.
Segments Fire & Emergency – The Fire & Emergency (“F&E”) segment sells (i) fire apparatus equipment under the Emergency One (“E-ONE”), Kovatch Mobile Equipment (“KME”) Ferrara, and Spartan Emergency Response (“Spartan ER”) which consists of Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower, brands and (ii) ambulances under the American Emergency Vehicles (“AEV”), Horton Emergency Vehicles (“Horton”), Leader Emergency Vehicles (“Leader”), Road Rescue and Wheeled Coach brands.
Segments Specialty Vehicles – Our Specialty Vehicles segment sells (i) fire apparatus equipment under the E-ONE, KME, and Ferrara brands, and Spartan ER, which consists of the Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brands, (ii) ambulances under the AEV, Horton, Leader, Road Rescue and Wheeled Coach brands, and (iii) terminal trucks and sweepers under the Capacity and Laymor brands, respectively.
In addition to commercial demand, local, state and federal tax revenues can be an important source of funding for many of our bus products including Type A school buses and transit buses. Volatility in tax revenues or availability of funds via budgetary appropriation can have a negative impact on the demand for these products.
For example, local tax revenues are an important source of funding for fire and ambulance purchases from emergency response departments. Volatility in tax revenues or availability of funds via budgetary appropriation can have a negative impact on the demand for these products.
In addition, assets acquired and liabilities assumed generally include tangible assets as well as contingent assets and liabilities. 36 Results of Operations The following table compares results for fiscal years 2023, 2022 and 2021 Fiscal Year Ended (in millions except per share data) October 31, 2023 October 31, 2022 October 31, 2021 Net sales $ 2,638.0 $ 2,331.6 $ 2,380.8 Gross profit 316.1 247.5 291.0 Selling, general and administrative 224.0 194.2 193.4 Restructuring — 9.4 2.5 Provision for income taxes 12.9 4.6 11.3 Net income 45.3 15.2 44.4 Net income per common share Basic $ 0.77 $ 0.25 $ 0.70 Diluted $ 0.77 $ 0.25 $ 0.69 Dividends declared per common share $ 0.20 $ 0.20 $ 0.10 Adjusted EBITDA $ 156.6 $ 105.1 $ 141.5 Adjusted Net Income $ 80.5 $ 49.1 $ 76.9 Net Sales Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Net sales $ 2,638.0 13.1 % $ 2,331.6 -2.1 % $ 2,380.8 Net Sales : Consolidated net sales increased $306.4 million in fiscal year 2023 primarily due to an increase in net sales in the Fire and Emergency (“F&E”) and Commercial segments, partially offset by lower net sales in the Recreation segment.
Results of Operations The following table compares results for fiscal years 2024, 2023 and 2022 Fiscal Year Ended (in millions except per share data) October 31, 2024 October 31, 2023 October 31, 2022 Net sales $ 2,380.2 $ 2,638.0 $ 2,331.6 Gross profit 297.3 316.1 247.5 Selling, general and administrative 188.7 224.0 194.2 Restructuring 12.3 — 9.4 Impairment charges 14.5 — — (Gain) Loss on sale of business (289.3 ) 1.1 0.1 Provision for income taxes 82.8 12.9 4.6 Net income 257.6 45.3 15.2 Net income per common share Basic $ 4.79 $ 0.77 $ 0.25 Diluted 4.72 0.77 0.25 Dividends declared per common share 3.20 0.20 0.20 Adjusted EBITDA $ 162.8 $ 156.6 $ 105.1 Adjusted Net Income 87.1 80.5 49.1 36 Net Sales Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Net sales $ 2,380.2 -9.8 % $ 2,638.0 13.1 % $ 2,331.6 Net Sales : Consolidated net sales decreased $257.8 million in fiscal year 2024 compared to the prior year.
The decrease was primarily due to lower sales volume, inefficiencies related to chassis and supply chain disruption, labor constraints, and inflationary pressures, partially offset by price realization. 39 Commercial Segment Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Net sales $ 553.6 35.0 % $ 410.2 5.9 % $ 387.3 Adjusted EBITDA 46.1 106.7 % 22.3 -28.1 % 31.0 Adjusted EBITDA % of net sales 8.3 % 5.4 % 8.0 % Net Sales : Commercial segment net sales increased $143.4 million in fiscal year 2023 primarily due to increased shipments of school buses, terminal trucks, and street sweepers, and price realization, partially offset by an unfavorable mix of municipal transit buses.
The increase was primarily related to higher sales volume of fire apparatus, ambulance units, school buses, terminal trucks, and street sweepers, a favorable mix of ambulance units and school buses, and price realization, partially offset by an unfavorable mix and supply chain challenges within municipal transit buses, and inflationary pressures. 39 Recreational Vehicles Segment Fiscal Year Ended (in millions) October 31, 2024 Change October 31, 2023 Change October 31, 2022 Net sales $ 654.6 -28.2 % $ 912.3 -4.8 % $ 957.8 Adjusted EBITDA 41.2 -54.7 % 91.0 -17.9 % 110.9 Adjusted EBITDA % of net sales 6.3 % 10.0 % 11.6 % Net Sales : Recreational Vehicles segment net sales decreased $257.7 million in fiscal year 2024 compared to the prior year primarily due to decreased unit shipments and increased discounting.
To determine Adjusted EBITDA, we adjust Net income for the following items: non-cash depreciation and amortization, interest expense, loss on early extinguishment of debt, income taxes and other items as described below.
We also believe that decisions utilizing Adjusted EBITDA and Adjusted Net Income allow for a more meaningful comparison of operating fundamentals between companies within our markets. To determine Adjusted EBITDA, we adjust Net Income for the following items: non-cash depreciation and amortization, interest expense, income taxes and other items as described below.
The increase in F&E segment backlog was primarily the result of continued demand and strong order intake for fire apparatus and ambulance units, and pricing actions, partially offset by increased unit production and shipment activity against backlog.
The increase in Specialty Vehicles segment backlog was primarily the result of continued demand and order intake for fire apparatus and ambulance units, along with pricing actions, partially offset by a decrease in backlog related to the wind down of municipal transit operations, increased unit shipments, and lower order intake for terminal truck units.
The increase in the Commercial segment net sales compared to the prior year period was primarily due to increased shipments of school buses, terminal trucks and street sweepers, and price realization, partially offset by decreased shipments of municipal transit buses.
Excluding the impact of the Collins divestiture, segment net sales increased $145.4 million, or 9.2% compared to the prior year. The increase in net sales was primarily due to price realization and increased shipments of fire apparatus and ambulance units, partially offset by lower shipments of terminal trucks.
Dividends In fiscal year 2023, we paid a quarterly cash dividend at the rate of $0.05 per share on our common stock. Our dividend policy has certain risks and limitations, particularly with respect to liquidity and the discretion of our board or directors, and we may not pay dividends according to our policy, or at all.
Dividends During fiscal year 2024, 2023, and 2022, we paid a quarterly cash dividend at the rate of $0.05 per share on our common stock.
Qualitative testing includes the evaluation of economic conditions, financial performance and other factors such as key events when they occur. The Company then estimates the fair value of each reporting unit and each indefinite-lived intangible asset not meeting the qualitative criteria and compares their fair values to their carrying values.
Qualitative testing includes the evaluation of economic conditions, financial performance and other factors such as key events when they occur.
The decrease in positive cash generation from operating activities for fiscal year 2022 compared to the prior year was related to a decrease in net income, an increase in accounts receivable due to lower sales rates offset by higher collections, an increase in inventories due to supply chain and labor constraints, increase in accounts payable related to increased payment terms and higher purchases of inventory, partially offset by an increase in customer advances.
The decrease in cash from operating activities in fiscal year 2024 compared to the prior year was primarily related to higher income tax payments, including those associated with the sale of Collins and ENC, lower receipts of customer advances, and higher accounts payable payments, partially offset by higher collections of accounts receivable and lower inventory purchases.
Within each market, we produce many customized configurations to address the diverse needs of our customers. Recreation – Our Recreation segment serves the RV market through the following principal brands: American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs and Lance Camper.
Recreational Vehicles – Our Recreational Vehicles segment serves the RV market through the following principal brands: American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs and Lance Camper. We believe our brand portfolio contains some of the longest standing, most recognized brands in the RV industry.
The 2021 ABL Facility provides for revolving loans and letters of credit in an aggregate amount of up to $550.0 million.
Refer to Note 19, Subsequent Events, of the Notes to the Consolidated Financial Statements for further details. 2021 ABL Facility On April 13, 2021, the Company entered into a $550.0 million revolving credit agreement with a syndicate of lenders. The 2021 ABL Facility provides for revolving loans and letters of credit in an aggregate amount of up to $550.0 million.
Under the quantitative method, the fair value of each reporting unit of the Company is determined by using a combination of the income approach and market approach. The income approach involves the use of significant estimates and assumptions.
The Company then estimates the fair value of each reporting unit and each indefinite-lived intangible asset not meeting the qualitative criteria and compares their fair values to their carrying values. 45 Under the quantitative method, the fair value of each reporting unit of the Company is determined by using the income approach and/or the market approach.
Net cash used in financing activities for fiscal year 2022 was $69.7 million, compared to $146.2 million for fiscal year 2021.
The increase in net cash used in financing activities was primarily due to higher dividends payments and share repurchases of $126.1 million. Net cash used in financing activities for fiscal year 2023 was $95.7 million, compared to $69.7 million for fiscal year 2022.
The debt issuance costs capitalized in connection with the 2021 ABL Facility less accumulated amortization are included in other long-term assets in the Company’s Consolidated Balance Sheets. On November 1, 2022, the Company amended the ABL Facility to transition from the Eurodollar based benchmark rates to the Secured Overnight Financing Rate (“SOFR”).
The debt issuance costs capitalized in connection with the 2021 ABL Facility less accumulated amortization are included in Other long-term assets in the Company’s Consolidated Balance Sheets. The debt issuance costs are amortized over the life of the debt on a straight-line basis. The 2021 ABL Facility matures on April 13, 2026.
Consolidated net sales decreased $49.2 million in fiscal year 2022 primarily due to a decrease in net sales within the F&E segment, partially offset by an increase in net sales within the Commercial and Recreation segments.
Consolidated net sales increased $306.4 million in fiscal year 2023 compared to fiscal year 2022, primarily due to an increase in net sales in the Specialty Vehicles segment, partially offset by lower net sales in the Recreational Vehicles segment.
The increase in net cash used in investing activities was primarily due to increased capital expenditures and a reduction of proceeds from the sale of certain assets compared to fiscal year 2022. Net cash used by investing activities for fiscal year 2022 was $14.8 million, compared to $10.2 million cash used in investing activities for fiscal year 2021.
The increase in net cash provided by investing activities was related to the cash received in connection with the sale of Collins, Fire RTC, and ENC. Net cash used in investing activities for fiscal year 2023 was $29.9 million, compared to $14.8 million net cash used in investing activities for fiscal year 2022.
Restructuring Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Restructuring $ — -100.0 % $ 9.4 276.0 % $ 2.5 Restructuring : Consolidated restructuring costs for the fiscal year 2022 and fiscal year 2021 were related to the transition of KME branded fire apparatus production to other REV fire group facilities within the F&E segment.
Consolidated restructuring costs for fiscal year 2022 were associated with the transition of KME branded fire apparatus production to other facilities within the Specialty Vehicles segment.
Consolidated Adjusted EBITDA decreased $36.4 million in fiscal year 2022 primarily due to a decrease in Adjusted EBITDA in the F&E and Commercial segments, partially offset by higher Adjusted EBITDA in the Recreation segment. Refer to the “Adjusted EBITDA and Adjusted Net Income” tables and related footnotes below for a reconciliation of Net Income to Adjusted EBITDA.
Refer to the “Adjusted EBITDA and Adjusted Net Income” tables and related footnotes below for a reconciliation of Net Income to Adjusted EBITDA.
We cannot assure you that we will declare dividends or have sufficient funds to pay dividends on our common stock in the future. During the fiscal year 2023, 2022, and 2021, we paid cash dividends of $12.1 million, $12.4 million, and $6.6 million, respectively.
The dividend payment is at the discretion of our Board of Directors, and we may not pay dividends according to our policy, or at all. We cannot assure that we will declare dividends or have sufficient funds to pay dividends on our common stock in the future.
Recreation Segment Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Net sales $ 912.3 -4.8 % $ 957.8 11.6 % $ 858.5 Adjusted EBITDA 91.0 -17.9 % 110.9 29.0 % 86.0 Adjusted EBITDA % of net sales 10.0 % 11.6 % 10.0 % Net Sales : Recreation segment net sales decreased $45.5 million in fiscal year 2023 primarily due to decreased unit shipments, an unfavorable mix of motorized units, and increased discounting, partially offset by price realization.
Recreational Vehicles segment net sales decreased $45.5 million in fiscal year 2023 compared to fiscal year 2022 primarily due to decreased unit shipments, an unfavorable mix of motorized units, and increased discounting.
(g) Reflects legal fees and costs incurred to litigate and settle legal claims against us which are outside the normal course of business. Included in the current period are fees and costs to settle claims brought through the acquisition of certain assets as described in Note 17.
(f) Reflects expenses associated with the vesting and modifications of equity awards, including employer payroll taxes, net of forfeitures. (g) Reflects legal fees and costs incurred to litigate and settle legal claims against us which are outside the normal course of business.
The decrease in sales in the F&E segment was primarily due to decreased unit shipments of fire apparatus and ambulance units resulting from supply chain disruptions and labor constraints, partially offset by price realization.
The decrease within the Recreational Vehicles segment was primarily due to lower unit shipments and increased discounting. The increase within the Specialty Vehicles segment, excluding the impact of the Collins divestiture, was primarily due to price realization and increased shipments of fire apparatus and ambulance units, partially offset by lower shipments of terminal trucks.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of October 31, 2023, we had $150.0 million of principal outstanding under our 2021 ABL Facility at an average rate of 6.93% per annum. On an annualized basis, a 100-basis point increase in our floating interest rates under the 2021 ABL Facility would have increased interest expense by $1.5 million.
Biggest changeAs of October 31, 2024, we had $85.0 million of principal outstanding under our 2021 ABL Facility at an average rate of 6.84% per annum. On an annualized basis, a 100-basis point increase in our floating interest rates under the 2021 ABL Facility would have increased interest expense by $0.9 million.
We sometimes fix our prices for certain materials over an agreed upon amount of time between three months to twenty-four months through contracts with our vendors. 49
We sometimes fix our prices for certain materials over an agreed upon amount of time between three months to twenty-four months through contracts with our vendors. 47
A similar 100-basis point decrease in our floating interest rates would have decreased interest expense by $1.5 million. Commodity Price Risk We are a purchaser of certain commodities, including aluminum and raw steel. In addition, we are a purchaser of components and parts containing various commodities, including aluminum, fiberglass, copper and steel, which are integrated into our end products.
A similar 100-basis point decrease in our floating interest rates would have decreased interest expense by $0.9 million. Commodity Price Risk We are a purchaser of certain commodities, including aluminum and raw steel. In addition, we are a purchaser of components and parts containing various commodities, including aluminum, fiberglass, copper and steel, which are integrated into our end products.

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