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What changed in REV Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of REV Group, Inc.'s 2022 and 2023 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 2023 report.

+351 added−437 removedSource: 10-K (2023-12-13) vs 10-K (2022-12-14)

Top changes in REV Group, Inc.'s 2023 10-K

351 paragraphs added · 437 removed · 308 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

100 edited+10 added−26 removed69 unchanged
Biggest changeGrowth 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 —Improving housing prices, improving economies and new housing starts all create an increasing tax base and greater demand for essential services provided by governmental agencies. • Replacement demand for emergency vehicles — From 2018 through 2020, the annual volume of ambulance sale units had been at a level that we believe was normalized replacement demand within the United States.
Biggest changeGrowth 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.
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 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 the newly acquired businesses to drive profitable growth.
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 commercial truck or van 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 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.
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 private contractor market (privately owned fleets that provide transportation services), the consumer market (vehicles for transportation and leisure needs) and the industrial/commercial markets (vehicles for transportation, construction projects and global port and intermodal transportation applications).
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).
The LayMor brand is principally marketed in both commercial and rental markets through the manufacturer’s representatives and distributors who are supported by our internal sales efforts with key customers, such as national equipment rental companies and government agencies.
The LayMor brand is principally marketed in both commercial and rental markets through manufacturer’s representatives and distributors who are supported by our internal sales efforts with key customers, such as national equipment rental companies and government agencies.
The system is guided by an executive committee that provides focus and priority to compliance and industry best practices that protect our employees while performing work within our operations. Each business unit is responsible for evaluating their unique operations and applying the defined controls to engage employees and manage injury risk.
The system is guided by an executive committee that provides focus and priority to compliance and industry best practices that protect our employees while performing work within our operations. Each business unit is responsible for evaluating their unique operations and applying defined controls to engage employees and manage injury risk.
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 motorized RVs make use of a standard van or 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.
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.
Distinct from motor coaches used for longer-distance journeys and smaller minibuses • Operated by publicly-run transit authorities or municipal bus companies, as well as private transport companies on a public contract or on a fully independent basis • Often built to operator specifications for specific transport applications • First type of bus to benefit from low-floor technology in response to demand for equal access public service Type A School Bus • Transports students, typically children, to and from school, home and school events • Typically transports smaller numbers of passengers compared to the larger “Type C” or “Type D” school buses and is more economical in certain types of applications • Purpose-built vehicle distinguished from other types of buses by significant safety and design features mandated by federal and state regulations • Passenger compartment mounted on a cut-away van chassis 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 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 7 Table of Contents 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.
Distinct from motor coaches used for longer-distance journeys and smaller minibuses • Operated by publicly-run transit authorities or municipal bus companies, as well as private transport companies on a public contract or on a fully independent basis • Often built to operator specifications for specific transport applications • First type of bus to benefit from low-floor technology in response to demand for equal access public service Type A School Bus • Transports students, typically children, to and from school, home and school events • Typically transports smaller numbers of passengers compared to the larger “Type C” or “Type D” school buses and is more economical in certain types of applications • Purpose-built vehicle distinguished from other types of buses by significant safety and design features mandated by federal and state regulations • Passenger compartment mounted on a cut-away van chassis 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 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 6 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.
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 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. 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.
Our business consists primarily of design, engineering, technology application, integration, and assembly activities, which require relatively low levels of 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 ability to grow through acquisitions.
We believe that we have a clear acquisition strategy in place, targeting acquisitions with significant synergies to drive long-term value creation for shareholders. We will seek acquisitions of companies with strong brands and complementary products and distribution networks that align well with our aftermarket strategies and provide strong synergies with our existing business.
We believe that we have a clear acquisition strategy in place, targeting acquisitions with significant synergies to drive long-term value creation for shareholders. We will seek acquisitions of companies with strong brands and complementary products and distribution networks that align well with our strategies and provide strong synergies with our existing business.
In any given year, the macro demand drivers of an aging population and popularity of travel will be impacted by the shorter-term cyclical demand swings for RVs that are caused by changes in consumer sentiment due to factors that include consumer wealth, confidence and the availability of financing.
In any given year, the macro demand drivers of an aging population and popularity of travel will be impacted by the shorter-term cyclical demand swings for RVs that are caused by changes in consumer sentiment due to factors that include consumer wealth, confidence and the cost and availability of financing.
While we consider our patents and trademarks 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. We nevertheless face intellectual property-related risks.
We are also a leader in high-end Class B and Super C RVs under the Midwest Automotive Designs and Renegade RV brands. We also believe we have one of the highest quality travel trailer and truck camper product lines under the Lance brand name.
We are also a leader in high-end Class B and Super C RVs under the Midwest Automotive Designs and Renegade RV brands, respectively. We also believe we have one of the highest quality travel trailer and truck camper product lines under the Lance brand name.
We also believe our Commercial segment is the #1 producer of Type A school buses in the United States and a leading producer of transit buses, terminal trucks and sweepers. Within our Recreation segment, we are one of the top producers of Class A diesel and gas motorized RVs.
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 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 other 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.
Our business model makes us more desirable to our distribution channel partners as we are able to 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.
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.
As a result, most of our dealers have sold our products for over a decade and are serving a well-established installed base of end customers, creating cost advantages and entrenched positions due to customer loyalty. We also periodically assist our dealers in composing bid packages for larger opportunities that involve our product lines.
As a result, most of our dealers have sold our products for over a decade and are serving a well-established installed base of end customers, creating cost advantages and strong positions due to customer loyalty. We also periodically assist our dealers in composing bid packages for larger opportunities that involve our product lines.
The CHRO and the Chief Executive Officer ("CEO") regularly update our board of directors on the operation and status of these human capital activities. Key areas of focus include: • Training & Development – We are committed to the continued development of our people. Strategic talent reviews occur annually across all operational business units and corporate functions.
The CHRO and the Chief Executive Officer (“CEO”) regularly update our board of directors on the operation and status of these human capital activities. Key areas of focus include: • Training & Development – We are committed to the continued development of our people. Strategic talent reviews occur annually across all operational business units and corporate functions.
We believe our brand portfolio contains some of the longest standing, most recognized brands in the RV industry. Under these brands, REV provides a variety of highly recognized motorized and towable RV models such as: American Eagle, Bounder, Pace Arrow, Discovery LXE, Renegade Verona, Renegade XL, among others.
We believe our brand portfolio contains some of the longest standing, most recognized brands in the RV industry. Under these brands, REV provides a variety of highly recognized motorized and towable RV models such as: American Eagle, Bounder, Discovery LXE, Renegade Verona, Renegade XL, among others.
Motorized RVs are self-contained units built on motor vehicle chassis with their own lighting, plumbing, heating, cooking, refrigeration, sewage holding and water storage facilities. Class A RVs are generally constructed on purpose-built chassis for reaction travel complete with engine and drivetrain components.
Motorized RVs are self-contained units built on motor vehicle chassis with their own lighting, plumbing, heating, cooking, refrigeration, sewage holding and water storage facilities. Class A RVs are generally constructed on purpose-built chassis for recreation travel complete with engine and drivetrain components.
Our RTCs complement our dealer network to provide our end users with the parts and service that they need to keep their fleets operating and to meet the demand of their customers. The services that we provide at our RTC locations include normal maintenance and service activities, damage repair and rebuilding services.
Our RTCs complement our dealer network to provide our end users with the parts and service that they need to keep their fleets operating and to meet the demands of their customers. The services that we provide at our RTC locations include normal maintenance and service activities, damage repair and rebuilding services.
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.
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.
Risk Factors—Risks Relating to Our Business—Intellectual property risks or failure to maintain the strength and value of our brands may adversely affect our business and may dilute our competitive advantage.” 16 Table of Contents Environmental, Health and Safety Laws and Regulations Our ongoing global operations are subject to a wide range of federal, state, local and foreign environmental, health and safety laws and regulations.
Risk Factors—Risks Relating to Our Business—Intellectual property risks or failure to maintain the strength and value of our brands may adversely affect our business and may dilute our competitive advantage.” Environmental, Health and Safety Laws and Regulations Our ongoing global operations are subject to a wide range of federal, state, local and foreign environmental, health and safety laws and regulations.
Fire & 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 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 5 Table of Contents 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 the industry’s #1 advanced safety system • 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 primarily for advanced life support and rescue work • 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 transfer of patients that require 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 6 Table of Contents Our Commercial segment is a leading producer of small Type A school buses, transit buses, terminal trucks and sweepers in the United States.
Fire & 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.
We estimate that the replacement value of our installed base of approximately 205,000 vehicles across our segments is approximately $43.6 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 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 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.
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.
Our companywide Code of Conduct supports this objective and in 2022 we trained all employees on Anti-Harassment/Anti-Discrimination and supervisors on Appreciating Differences as part of their leadership skills training.
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.
Fire and Emergency Markets Fire and emergency products are used by municipalities and private contractors to provide essential services such as fire suppression, emergency/rescue response, disaster relief, wildland, aircraft rescue and firefighting and patient transport.
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.
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 our competition.
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.
We conduct these services in two locations, Grove City, Ohio and Jefferson, NC. Commercial Markets REV’s Commercial segment addresses a broad variety of products and end markets. The transit bus markets include applications such as airport car rental, airport shuttle, college and university transit, city transit and numerous other applications.
We conduct these services in two locations, Grove City, Ohio and Jefferson, North Carolina. Commercial Markets REV’s Commercial segment addresses a broad variety of products and end markets. The transit bus markets include applications such as airport car rental, airport shuttle, college and university transit, city transit and numerous other applications.
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, are typically built on an automotive van chassis or panel-truck shells, and are built on several different gas or diesel chassis depending on the motorhome • 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 motorized RVs 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 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.
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 portion of our competition and makes us more relevant compared to our larger competitors.
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.
The RV lifestyle and demand for our vehicles is supported by the continued growth in the consumer base which includes increased industry penetration of the baby boomer generation, as well as Generation X, the fastest growing RV owner group as estimated by RVIA.
The RV lifestyle and demand for our vehicles is supported by the continued growth in the consumer base which includes increased industry penetration of Millennials, as well as Generation X, the fastest growing RV owner group as estimated by RVIA.
We serve municipal segments through the Collins Bus, Magellan and Eldorado National (California) (ENC) brands. We serve the terminal truck market through the Capacity brand and the sweeper market through the LayMor brand.
We serve municipal segments through the Collins Bus, Magellan and Eldorado National (California) (“ENC”) brands. We serve the terminal truck market through the Capacity brand and the sweeper market through the LayMor brand.
We believe our dealers hold the leading position in their assigned territories, providing us with a significant competitive advantage. In addition, we participate in GSA Schedules Program and we export to most of the international markets that participate in this program. These include countries in the Middle East, Latin America and the Caribbean basin.
We believe our dealers hold strong positions in their assigned territories, providing us with a significant competitive advantage. In addition, we participate in GSA Schedules Program and we export to most of the international markets that participate in this program. These include countries in the Middle East, Latin America and the Caribbean basin.
As a result, we continually evaluate potential dealer relationships to determine if the addition of a dealer in a given region would be advantageous to net sales and our market share. In addition to our dealer network, we also utilize direct national accounts, such as transit agencies, school transportation contractors and rental car companies.
As a result, we continually evaluate potential dealer relationships to determine if the addition of a dealer in a given region would be advantageous to net sales and our market share. In addition to our dealer network, we also sell directly to national accounts, such as transit agencies, school transportation contractors and rental car companies.
Experienced Consolidator with Proven Ability to Integrate Acquisitions—W e 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.
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.
We believe our manufacturing and service network, consisting of 18 manufacturing facilities, 6 Regional Technical Centers (“RTCs”) and 2 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 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 have a diverse customer base with our top 10 customers representing approximately 18% of our net sales in fiscal year 2022, 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 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 believe our diverse end markets are favorably exposed to multiple secular growth drivers such as: rising municipal spending, a growing aged population, growing urbanization, growing student populations, the increasing popularity of outdoor and active lifestyles and the replacement of existing in-service vehicles including legislated replacements. Our business model utilizes our unique scale to drive profitable organic and acquisitive 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.
For fiscal year 2022, our net sales to international markets (including Canada) amounted to $117 million, representing 5% of our overall net sales for fiscal year 2022. We sell internationally through dealers and agents to end markets that utilize U.S.-style chassis and product configurations.
For fiscal year 2023, our net sales to international markets (including Canada) amounted to approximately $120 million, representing approximately 5% of our overall net sales for fiscal year 2023. We sell internationally through dealers and agents to end markets that utilize U.S.-style chassis and product configurations.
Finally, certain of our businesses carry a relatively long-duration backlog which enables strong visibility into future net sales which can range from nine to eighteen months depending on the product and market. Where this backlog visibility exists, we are able to more effectively plan and predict our sales and production activity.
Finally, certain of our businesses carry a relatively long-duration backlog which enables strong visibility into future net sales which generally range from six to twenty-four months depending on the product and market. Where this backlog visibility exists, we are able to more effectively plan and predict our sales and production activity.
We own a portfolio of intellectual property, including approximately 50 patents, 12 pending patent applications, confidential technical information and technological expertise in manufacturing specialty vehicles. We also own approximately 189 registered trademarks in the United States for certain trade names and important products.
We own a portfolio of intellectual property, including approximately 54 patents, 7 pending patent applications, confidential technical information and technological expertise in manufacturing specialty vehicles. We also own approximately 187 registered trademarks in the United States for certain trade names and important products.
We have expended resources, both financial and managerial, to comply with environmental laws and worker safety laws and maintain procedures designed to foster and ensure compliance, and we are committed to protecting our employees and the environment against the risks associated with these substances.
We have expended resources, both financial and managerial, to comply with environmental laws and worker safety laws and maintain procedures designed to foster and ensure compliance, and we are committed to protecting our employees and the environment.
We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports available through our website, as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. Our website address is www.revgroup.com.
Our telephone number at that address is (414) 290-0190. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports available through our website, as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. Our website address is www.revgroup.com.
We also believe our RV segment is poised for long-term industry growth driven by increased interest in camping among older and younger generations and market unit recoveries to historical average levels for certain product categories. Additionally, we believe the current U.S. camper base of 48 million households represents an opportunity to expand the RV customer base.
We also believe our RV segment is poised for long-term industry growth driven by increased interest in camping among older and younger generations. Additionally, we believe the current U.S. camper base of 48 million households represents an opportunity to expand the RV customer base.
We continue to focus on initiatives to accelerate growth and improve our profitability. These initiatives include: reviewing the 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 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.
Our Fire & Emergency segment sells fire apparatus equipment under the E-ONE, Kovatch Mobile Equipment (“KME”), Ferrara and Spartan Emergency Response which consists of Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brands, and ambulances under the American Emergency Vehicles (“AEV”), Horton Emergency Vehicles (“Horton”), Leader Emergency Vehicles (“Leader”), Road Rescue and Wheeled Coach brands.
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.
AIP is an operations and engineering-focused private equity firm headquartered in New York, New York. Distribution We distribute either through our direct sales force or our well-established dealer network, consisting of approximately 530 dealers. Substantially all of our dealers are independently owned.
American Industrial Partners is an operations and engineering-focused private equity firm headquartered in New York, New York. Distribution We distribute either through our direct sales force or our well-established dealer network, consisting of approximately 530 dealers, some of which have multiple locations. Substantially all of our dealers are independently owned.
We believe there are significant opportunities to grow our dealer footprint to serve these markets. Our new product and expanding dealer network in this area will continue to capture additional market share going forward. We sell our ambulances through internal direct sales personnel as well as a select group of independent dealers in the United States.
Our new product and expanding dealer network in this area will continue to capture additional market share going forward. We sell our ambulances through internal direct sales personnel as well as a select group of independent dealers in the United States.
Demand is driven primarily by the replacement of in-service fleets, as well as by factors such as a growing aged population and a growing overall population (driving increased patient transportation and emergency response needs), new real estate developments, taller buildings (requiring more aerial vehicles), international airport growth (requiring Federal Aviation Administration-specified ARFF vehicles), and municipal funding levels.
Demand is driven primarily by the replacement of in-service fleets, as well as by factors such as a growing aged population and a growing overall population with longer life expectancy (driving increased patient transportation and emergency response needs), new real estate developments, urbanization and taller buildings (requiring more aerial vehicles), international airport growth (requiring Federal Aviation Administration-specified ARFF vehicles), rising municipal funding levels, and the increasing use of emergency vehicles for non-critical care transport.
The specialty vehicle market is highly fragmented with a large number of smaller producers, within our existing markets as well as in new markets where we believe there would be synergies with REV.
The specialty vehicle market is highly fragmented with a large number of smaller producers, within our existing markets as well as in new markets where we believe there would be synergies with REV. We believe all these attributes position REV as an acquirer of choice in the specialty vehicles market.
The buying process normally starts with online searches, followed by show visits and eventually a dealership visit for the purchase. 14 Table of Contents Manufacturing and Service Capabilities We currently operate 18 manufacturing facilities, 6 RTCs and 2 aftermarket parts warehouses across the United States with approximately 5.0 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 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.
Our Strengths We believe we have the following competitive strengths: Market Leader Across All Segments with a Large Installed Base— We believe we are a market leader in each of the fire and emergency, commercial and recreation vehicle markets.
Our Strengths We believe we have the following competitive strengths: A Market Leader Across All Segments with a Large Installed Base— We believe we are a market leader in each of the fire and emergency, commercial and recreation vehicle markets. We believe we are the largest manufacturer by unit volume of fire and emergency vehicles in the United States.
We believe that the growing aged population in the United States will increase demand for products across all of our 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 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.
Unique Scale and Business Model— As the only manufacturer of specialty vehicles across all three of our product segments and one of the largest participants in our markets by net sales, we enjoy a unique position relative to many of our competitors that we believe provides a competitive advantage and an enhanced growth profile.
Only approximately 5% of our net sales in fiscal year 2023 were from sales to customers outside the United States. 10 Unique Scale and Business Model— As the only manufacturer of specialty vehicles across all three of our product segments and one of the largest participants in our markets by net sales, we enjoy a unique position relative to many of our competitors that we believe provides a competitive advantage and an enhanced growth profile.
They are typically used for shorter overnight trips, older couples no longer wanting to drive a large coach, families involved in sports, tailgating, and even larger families in need of space for a primary driving vehicle 8 Table of Contents 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 2022.
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.
We anticipate ongoing growth in global trade will result in higher future intermodal freight traffic growth. 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. Sweepers are used in various applications within the construction and road and highway infrastructure markets.
We anticipate ongoing growth in global trade will result in higher future intermodal freight traffic growth. 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.
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 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.
We then build the vehicle body, and design, fabricate and install the living area and driver’s compartment of these motorized RVs. Class B RVs are built on a consumer van chassis with the entire living area contained within the existing van frame.
We then build the vehicle body, and design, fabricate and install the living area and driver’s compartment of these motorized RVs. Class B RVs are built on a consumer van chassis with the entire living area contained within the van frame. Class C RVs are built on standard van chassis which include an engine, drivetrain and a finished cab section.
Roundtables are held at least quarterly at all business units and monthly at some locations. • Commitment to Diversity and Inclusion - Women make up 21% of our workforce (approximately 1,340) and ethnic/racial minorities make up 36% of our workforce (approximately 2,400) who have chosen to identify their ethnicity / race.
Roundtables are held at least quarterly at all business units and monthly at some locations. • Commitment to Diversity and Inclusion – Women make up approximately 21% of our workforce. People who have chosen to identify as ethnic/racial minorities make up approximately 37% of our workforce.
We expect our newly created companywide intranet to become a mechanism for growing diversity awareness in our workforce as well, including spotlights on diverse group recognition months (e.g., African American, Hispanic Heritage, etc.) • 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 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 believe all these attributes position REV as an acquirer of choice in the specialty vehicles market. 12 Table of Contents 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, free cash flow, Adjusted Net Income and Adjusted EBITDA over the long term.
Therefore, we are reliant on a consistent supply of chassis and the maintenance of our status as “approved converters” in order to maintain our sales. 15 Table of Contents 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 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.
In our RV business specifically, our new model design cycle follows similar timelines as the automotive industry, whereby new models and configurations are introduced or upgraded annually. 4 Table of Contents Our management team has significant experience in highly specialized industrial manufacturing and aftermarket parts and services businesses.
In our RV business specifically, our new model design cycle follows similar timelines as the automotive industry, whereby new models and configurations are introduced or upgraded annually. 3 Our management team has significant experience in highly specialized industrial manufacturing and aftermarket parts and services businesses. We continue to focus on initiatives to accelerate growth and improve our profitability.
We believe the commercial bus markets we serve will sustain positive long-term growth supported by growing levels of urbanization which will require increasing commercial bus usage, increased government transportation spending, a necessary replacement cycle of public and private bus customers and the introduction of new bus products. 9 Table of Contents The demand for school buses is driven by the need for student transportation primarily in the United States and Canada.
We believe the commercial bus markets we serve will sustain positive long-term growth supported by growing levels of urbanization which will require increasing commercial bus usage, increased government transportation spending, a necessary replacement cycle of public and private bus customers and the introduction of new bus products.
We and our predecessor and acquired companies have operated in our businesses for many years, and many of our brands have been trusted names in the marketplace for decades.
We and our predecessor and acquired companies have operated in our businesses for many years, and many of our brands have been trusted names in the marketplace for decades. As a result, we benefit from many long-term customer relationships.
We compete with both divisions of large, diversified companies as well as private and public companies. Several of our competitors may have more financial resources than us but we have also been increasing the scope and scale of the products we produce and the markets we serve.
Several of our competitors may have more financial resources than us, but we have also been increasing the scope and scale of the products we produce and the markets we serve.
We strive to maintain strong and collaborative relationships with our suppliers and believe that the sources for these inputs are well-established, generally available on world markets and are in sufficient quantity, other than chassis, wire harnesses and micro-chips, such that we would expect to avoid disruption to our businesses if we encountered an interruption from one of our key suppliers.
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 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 approximately 6,695 employees, excluding temporary workers and contractors, approximately 80% of whom work in production roles.
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.
Suppliers and Materials In fiscal year 2022, we purchased $1.62 billion of chassis, direct materials and other components from outside suppliers. The largest component of these purchases was for vehicle chassis, representing approximately 25% 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”).
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”).
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, 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.
RVs are a consumer leisure purchase and therefore factors that drive demand include: consumer wealth (including the value of primary housing residences and the stock market level), consumer confidence, availability of financing and levels of disposable income.
These products require the RV owner to utilize a motor vehicle to pull or carry them between destinations. RVs are a consumer leisure purchase and therefore factors that drive demand include: consumer wealth (including the value of primary housing residences and the stock market level), consumer confidence, cost and availability of financing and levels of disposable income.
In the Fire & Emergency segment, the Company has developed an electric fire apparatus and type II ambulance. In the Commercial segment, the Company has developed an electric Type A Bus, and an electric municipal transit bus, a compressed natural gas municipal transit bus, a hydrogen municipal transit bus and an electric and hydrogen fuel cell terminal truck.
In the Fire & Emergency segment, the Company has developed an electric fire apparatus and type II ambulance. In the Commercial segment, the Company, along with third-party vendors, has developed an electric Type A Bus, a variety of alternative fuel transit buses, and an electric and hydrogen fuel cell terminal truck.
Super Class C RVs are heavy duty Class C motorhomes built on a commercial truck chassis that can be used in conjunction with other outdoor or sporting activities because of a larger towing capacity. We also design and manufacture a portfolio of towable travel trailers and truck campers.
In Class Cs we design, fabricate, and install the living area to connect to the driver’s compartment and the cab section. Super Class C RVs are heavy duty Class C motorhomes built on a commercial truck chassis that can be used in conjunction with other outdoor or sporting activities because of a larger towing capacity.
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 (diesel and gas), Class B, Class C motorized RVs and towable campers.
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.
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.
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.
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 Recreation segment also includes Goldshield Fiberglass, which produces a wide range of custom molded fiberglass products for the RV and broader industrial markets. Within our Recreation segment, we have some of the most well-recognized Class A diesel and gas motorized RV brands in the market.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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.
If we are unable to renew a contract with one or more of our significant dealers or re-negotiate an agreement under more 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 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.
A recurrence of either of these events or another similar development could lead to difficulties in meeting our customers’ demands and reduce our overall sales volume. Further, any changes in quality or design, capacity limitations, shortages of raw materials or other problems could result in shortages or delays in the supply of vehicle chassis or components to us.
A recurrence of any of these events or another similar development could lead to difficulties in meeting our customers’ demands and reduce our overall sales volume. Further, any changes in quality or design, capacity limitations, shortages of raw materials or other problems could result in shortages or delays in the supply of vehicle chassis or components to us.
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 those 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.
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.
If we incur additional debt, the agreements governing that debt may contain significant financial and other covenants that may materially restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. We have meaningful contingent obligations, which could negatively impact our results of operations.
If we incur additional debt, the agreements governing that debt may contain significant financial and other covenants that may materially restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. 26 We have meaningful contingent obligations, which could negatively impact our results of operations.
We typically have backlog due to the nature of our production and sales process, and our financial results are affected if any backlog 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 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.
Federal 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 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 of our Commercial and Fire & Emergency products. These expenditures have not remained constant over time.
While we believe that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition and operating results. We may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions.
While we believe that strategic acquisitions can improve our competitiveness and profitability, these activities could have a material adverse effect on our business, financial condition and operating results. 25 We may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions.
A significant decline in overall government spending or a shift in expenditures away from agencies or programs that we support could cause a material decline in our sales and harm our financial results. Fuel shortages, or high prices for fuel, could have a negative effect on sales of our products.
A significant decline in overall government spending or a shift in expenditures away from agencies or programs that we support could cause a material decline in our sales and harm our financial results. 23 Fuel shortages, or high prices for fuel, could have a negative effect on sales of our products.
See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence” for more detail. Lastly, AIP’s interests as an equity holder may not be aligned in all cases with those of other equity investors, or of our lenders as creditors.
See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence” for more detail. 31 Lastly, AIP’s interests as an equity holder may not be aligned in all cases with those of other equity investors, or of our lenders as creditors.
These information technology systems could be damaged or cease to function properly due to the poor performance or failure of third-party service providers, catastrophic events, power outages, network outages, failed upgrades or other similar events.
Additionally, these information technology systems could be damaged or cease to function properly due to the poor performance or failure of third-party service providers, catastrophic events, power outages, network outages, failed upgrades or other similar events.
A significant portion of our sales are subject to risks specific to doing business with the U.S. government and municipalities, including, but not limited to: • budgetary constraints or fluctuations affecting government spending generally, or specific departments or agencies in particular, and changes in fiscal policies or a reduction of available funding; • changes in government programs or requirements; • realignment of funds to government priorities that we do not serve; • government shutdowns (such as those which occurred in 1995-1996, in 2013 and in late 2018 through early 2019, and related to the COVID-19 pandemic) and other potential delays in government appropriations processes; 25 Table of Contents • delays in the payment of our invoices by government authorities; • adoption of new laws or regulations and our ability to meet specified performance thresholds; and • general economic conditions.
A significant portion of our sales are subject to risks specific to doing business with the U.S. government and municipalities, including, but not limited to: • budgetary constraints or fluctuations affecting government spending generally, or specific departments or agencies in particular, and changes in fiscal policies or a reduction of available funding; • changes in government programs or requirements; • realignment of funds to government priorities that we do not serve; • government shutdowns (such as those which occurred in 1995-1996, in 2013 and in late 2018 through early 2019, and related to the COVID-19 pandemic) and other potential delays in government appropriations processes; • delays in the payment of our invoices by government authorities; • adoption of new laws or regulations and our ability to meet specified performance thresholds; and • general economic conditions.
In addition, the U.S. government has reported that U.S. sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks (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.
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.
For example, our RV products are powered by gasoline and diesel engines or are required to be towed by gasoline or diesel-powered vehicles.
For example, our RV products are powered by gasoline and diesel engines or are required to be towed or carried by gasoline or diesel-powered vehicles.
For example, the EPA began to enforce limits on diesel exhaust emissions from nonroad diesel engines in 1996 and stationary diesel-engine generator sets in 2006. Implemented in a series of steps called Tier levels, these regulations, over time, have introduced successively more stringent limitations on nitrogen oxides (NOx), carbon monoxide (CO), particulate matter (PM) and non-methane hydrocarbons (NMHC).
For example, the EPA began to enforce limits on diesel exhaust emissions, initially restricted to nonroad diesel engines in 1996, and stationary diesel-engine generator sets in 2006. Implemented in a series of steps called Tier levels, these regulations, over time, have introduced successively more stringent limitations on nitrogen oxides (NOx), carbon monoxide (CO), particulate matter (PM) and non-methane hydrocarbons (NMHC).
Although we at times purchase steel, aluminum and other raw materials up to 24 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 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.
Because third-party financiers serve as an additional 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 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.
GAAP”), and that we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits and any related litigation, could be materially different from our historical income tax provisions and accruals.
GAAP, and that we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits and any related litigation, could be materially different from our historical income tax provisions and accruals.
No dealer or customer represented more than 5% of our annual revenue for fiscal year 2022, 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 2023, but there may continue to be consolidation and changes in the dealership landscape over time.
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. 21 Table of Contents 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.
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.
For example, reduced municipal tax revenues resulting from the 2008 recession 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 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 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.
Organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to ESG. Unfavorable ESG ratings may lead to negative investor sentiment which could have a negative impact on our stock price.
Organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to ESG. Unfavorable ESG ratings and related reporting requirements may lead to negative investor sentiment which could have a negative impact on our stock price.
During 2018 and 2019, many of our vehicle manufacturers encountered production issues and delivery delays due to factors which included a vendor factory fire, new plant location inefficiencies, unplanned work stoppages and indirect impacts from the implementation of tariffs.
During 2018 and 2019, many of our suppliers encountered production issues and delivery delays due to factors which included a vendor factory fire, new plant location inefficiencies, unplanned work stoppages and indirect impacts from the implementation of tariffs.
It is not possible to predict the short- or long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rates and energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets.
It is not possible to predict the short- or long-term implications of these conflicts, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rates and energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets.
Further, if a location does experience organizing activity, our management and other personnel need to divert attention from operational and other business matters to devote substantial time to managing such activity. We may discover defects in our vehicles potentially resulting in delaying new model launches, recall campaigns or increased warranty costs.
Further, if a location does experience organizing activity, our management and other personnel need to divert attention from operational and other business matters to devote substantial time to address such activity. 21 We may discover defects in our vehicles, potentially resulting in delaying new model launches, recall campaigns, increased warranty costs, liability or other costs.
Furthermore, AIP may in the future own businesses that directly or indirectly compete with us. AIP may also pursue acquisition opportunities that may be complementary to our business separately from us and, as a result, those acquisition opportunities may not be available to us. 34 Table of Contents Item 1B. Unresolved Staff Comments. None.
Furthermore, AIP may in the future own businesses that directly or indirectly compete with us. AIP may also pursue acquisition opportunities that may be complementary to our business separately from us and, as a result, those acquisition opportunities may not be available to us. Item 1B. Unresolved Staff Comments. None.
At various times, we may carry increased inventory to protect against these concerns, which may negatively impact our results of operations. 20 Table of Contents We purchase a significant number of components from domestic suppliers.
At various times, we may carry increased inventory to protect against these concerns, which may negatively impact our results of operations. We purchase a significant number of components from domestic suppliers.
We are subject to litigation in the ordinary course of business, and uninsured judgments or a rise in insurance premiums may adversely impact our results of operations. In the ordinary course of business, we are subject to various claims and litigation.
We are subject to litigation in the ordinary course of business, and uninsured judgments, settlements or other costs, or a rise in insurance premiums may adversely impact our results of operations. In the ordinary course of business, we are subject to various claims and litigation.
Any recalls of our vehicles, voluntary or involuntary, could have a material adverse effect on our reputation and our business and operating results. 30 Table of Contents In addition, we face an inherent risk of exposure to product liability claims if the use of our products results, or is alleged to result, in personal injury and/or property damage.
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.
Currently, we maintain excess liability insurance aggregating $100.0 million with outside insurance carriers to minimize our risks related to catastrophic claims in excess of our self-insured positions for product liability and personal injury matters. Any material change in the aforementioned factors could have an adverse impact on our operating results.
Currently, we maintain this excess liability insurance with outside insurance carriers to minimize our risks related to catastrophic claims in excess of our self-insured positions for product liability and personal injury matters. Any material change in the aforementioned factors could have an adverse impact on our operating results.
Additionally, while we strive to create an inclusive culture and a diverse workforce where everyone feels valued and respected, a failure, or perceived failure, to properly address inclusivity and diversity matters could result in reputational harm, reduced sales or an inability to attract and retain a talented workforce.
Additionally, while we strive to create an inclusive culture and a diverse workforce, management team and board of directors where everyone feels valued and respected, a failure, or perceived failure, to properly address inclusivity and diversity matters could result in reputational harm, reduced sales or an inability to attract and retain a talented workforce.
Our previous or future acquisitions may not be successful or may not generate the financial benefits that we expected we would achieve at the time of acquisition.
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.
Our 2021 ABL Facility contains various provisions that limit our ability (subject to a number of exceptions) to, among other things: • incur additional indebtedness; • incur certain liens; • consolidate or merge with other parties; • alter the business conducted by us and our subsidiaries; • make investments, loans, advances, guarantees and acquisitions; • sell, lease or transfer assets, including capital stock of our subsidiaries; • enter into certain sale and leaseback transactions; • pay dividends on capital stock or issue, redeem, repurchase or retire capital stock; • repay any subordinated indebtedness we may issue in the future; • agree in other documents to negative pledges that limit our ability to grant liens; • amend the terms of certain unsecured or subordinated debt; • engage in transactions with affiliates; and • enter into agreements restricting our subsidiaries’ ability to pay dividends. 29 Table of Contents In addition, the restrictive covenants in our 2021 ABL Facility require us to maintain specified financial ratios and other business or financial conditions.
Our 2021 ABL Facility contains various provisions that limit our ability (subject to a number of exceptions) to, among other things: • incur additional indebtedness; • incur certain liens; • consolidate or merge with other parties; • alter the business conducted by us and our subsidiaries; • make investments, loans, advances, guarantees and acquisitions; • sell, lease or transfer assets, including capital stock of our subsidiaries; • enter into certain sale and leaseback transactions; • pay dividends on capital stock or issue, redeem, repurchase or retire capital stock; • repay any subordinated indebtedness we may issue in the future; • agree in other documents to negative pledges that limit our ability to grant liens; • amend the terms of certain unsecured or subordinated debt; • engage in transactions with affiliates; and • enter into agreements restricting our subsidiaries’ ability to pay dividends.
Our business, operating results and financial condition could suffer if our suppliers reduce output or introduce new chassis models that are unpopular with our customers or are incompatible with our current product designs or production process. 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. 18 We face intense competition in our markets, which may harm our financial performance and growth prospects.
Meeting or exceeding many government-mandated safety standards is costly and often technologically challenging, especially where one or more government-mandated standards may conflict. Government safety standards require manufacturers to remedy defects related to motor vehicle safety through safety recall campaigns, and a manufacturer is obligated to recall vehicles if it determines that they do not comply with relevant safety standards.
Meeting or exceeding many government-mandated safety standards is costly and often technologically challenging. Government safety standards require manufacturers to remedy defects related to motor vehicle safety through safety recall campaigns, and a manufacturer is obligated to recall vehicles if it determines that they do not comply with relevant safety standards.
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, and our ability to address workforce issues.
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 failure to comply with such laws, regulations, permits and approvals could subject us to increased employee healthcare and workers’ compensation costs, liabilities, fines and other penalties or compliance costs, and could have a material adverse effect on our business, financial condition and operating results.
Our failure to comply with such laws, regulations, permits and approvals could result in a negative impact on our operations, subject us to increased employee healthcare and workers’ compensation costs, liabilities, fines and other penalties or compliance costs, and could otherwise have a material adverse effect on our business, financial condition and operating results.
See Note 18 to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional discussion of these contingent liabilities. Our 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.
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 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, Chrysler, Cummins, Daimler, Ford, Freightliner, Meritor, General Motors, Navistar and Volvo, 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 OEMs, including Allison Transmission, Cummins, Daimler Truck North America, Ford, General Motors, Meritor, Mercedes-Benz, and Navistar among others.
In addition, future governmental tax revenues may be negatively impacted as a result of the COVID-19 pandemic or general economic recession and therefore may result in lower future vehicle order rates than expected or experienced in prior periods resulting in lower backlogs.
In addition, future governmental tax revenues may be negatively impacted as a result of general economic conditions and therefore may result in lower future vehicle order rates than expected or experienced in prior periods resulting in lower backlogs.
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.
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.
Dealer demand and buying patterns may also impact the timing of shipments from one quarter to another. In addition, severe weather conditions in some geographic areas may delay the timing of shipments from one quarter to another. Consequently, the results for any annual or quarterly prior period may not be indicative of results for any future annual or quarterly period.
In addition, severe weather conditions in some geographic areas may delay the timing of shipments from one quarter to another. Consequently, the results for any annual or quarterly prior period may not be indicative of results for any future annual or quarterly period.
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. In particular, in 2012 we received a request from the U.S.
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.
Bribery Act, other anti-corruption laws, export controls or economic sanctions laws may result in severe criminal or civil sanctions and penalties, and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition. 32 Table of Contents Changes to tax laws or exposure to additional tax liabilities may have a negative impact on our operating results.
Bribery Act, other anti-corruption laws, export controls or economic sanctions laws may result in severe criminal or civil sanctions and penalties, and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition.
As of October 31, 2022, AIP owned 27,562,505 shares of our common stock, which represents 46.5% of our total outstanding shares of common stock.
As of October 31, 2023, AIP owned 27,562,505 shares of our common stock, which represents approximately 46.3% of our total outstanding shares of common stock.
Further, we may not be able to maintain insurance at commercially acceptable premium levels or at all. For product liability claims, we have a self-insured retention (“SIR”) for product liability matters of $1.0 million. Amounts above the SIR, up to a certain dollar amount, are covered by our excess insurance policy.
Further, we may not be able to maintain insurance at commercially acceptable premium levels or at all. For product liability claims arising in recent policy years, we have a self-insured retention (“SIR”). Amounts above this SIR, up to a certain dollar amount, are covered by our excess insurance policy.
Although we currently assume mostly off-balance sheet financing risk 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 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.
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.
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.
The method to compute the amount of impairment incorporates quantitative data and qualitative criteria including new information and highly subjective judgments that can dramatically change the determination of the valuation of goodwill and an intangible asset in a very short period of time.
Any write-downs would have a negative effect on our results of operations. The method to compute the amount of impairment incorporates quantitative data and qualitative criteria including new information and highly subjective judgments that can dramatically change the determination of the valuation of goodwill and an intangible asset in a very short period of time.
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.
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.
The results of a tax audit or litigation could materially affect our operating results and cash flows in the periods for which that determination is made. In addition, future period net income may be adversely impacted by litigation costs, settlements, penalties and interest assessments. Finally, on August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law.
The results of a tax audit or litigation could materially affect our operating results and cash flows in the periods for which that determination is made. In addition, future period net income may be adversely impacted by litigation costs, settlements, penalties and interest assessments.
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). More stringent emissions standards have been issued by California and certain other states as well.
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).
Our independent registered public accounting firm is required to formally attest to the effectiveness of our internal controls over financial reporting. Our independent registered public accounting firm may issue a report that is adverse, in the event it is not satisfied with the level at which our controls are documented, designed or operating.
Our independent registered public accounting firm may issue a report that is adverse, in the event it is not satisfied with the level at which our controls are documented, designed or operating.
We continuously seek to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on our competitive position, reputation, results of operations, financial condition and cash flows. 26 Table of Contents Some of the markets in which we compete are cyclical, which results in fluctuations in sales and results of operations.
We continuously seek to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on our competitive position, reputation, results of operations, financial condition and cash flows.
For example, the 2008 recession caused consumers to reduce their discretionary spending, which negatively affected our sales volumes for RVs. Terminal truck sales volumes are also impacted by economic conditions, global trade, changes in supply chain management and industrial output, as these factors impact our end-market customers for these products, which include shipping ports, trucking/distribution hubs and rail terminal operators.
Terminal truck sales volumes are also impacted by economic conditions, global trade, changes in supply chain management and industrial output, as these factors impact our end-market customers for these products, which include shipping ports, trucking/distribution hubs and rail terminal operators.
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 generally accepted accounting principles in the United States (“U.S.
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.
It may also increase the amounts we pay in punitive damages, not all of which are covered by our self-insurance. 33 Table of Contents If any significant accident, judgment, claim or other event is not fully insured or indemnified against, then in either case that could have a material adverse impact on our business, financial condition and results of operations.
In addition, it is possible that we may be found liable for punitive damages, which may not be covered by our insurance. If any significant accident, judgment, claim or other event is not fully insured or indemnified against, then in either case that could have a material adverse impact on our business, financial condition and results of operations.
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.
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.
If we are required to write down goodwill or other intangible assets, our financial condition and operating results would be negatively affected. We have a substantial amount of goodwill and other finite and indefinite-lived intangible assets on our balance sheet as a result of acquisitions we have completed.
We have a substantial amount of goodwill and other finite and indefinite-lived intangible assets on our balance sheet as a result of acquisitions we have completed. If we determine goodwill and other intangible assets are impaired, we will be required to write down all or a portion of these assets.
In particular, we have historically experienced higher sales during the third quarter and fourth quarter versus the first quarter and second quarter during each fiscal year.
Additionally, our business is subject to seasonal and other fluctuations. In particular, we have historically experienced higher sales during the third quarter and fourth quarter versus the first quarter and second quarter during each fiscal year.
Failure to realize sales from our existing or future backlog would negatively impact our financial results. 24 Table of Contents From time to time, we enter into large, multi-year contracts with federal and local government bodies. Due to the size of the contracts, there are often stringent approval processes that must be completed before the contract is finalized.
From time to time, we enter into large, multi-year contracts with federal and local government bodies. Due to the size of the contracts, there are often stringent approval processes that must be completed before the contract is finalized.
Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various anti-corruption laws including the Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act. We have implemented safeguards and policies to discourage these practices by our employees, dealers and agents.
Our activities in less developed countries with potentially more corrupt business environments create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various anti-corruption laws including the Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act.
Lastly, we are subject to federal and numerous state 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 and anti-competitive conduct.
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.
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.
A disruption, termination or alteration of the supply of vehicle chassis or other critical components from third-party suppliers could materially adversely affect the sales of our products.
The potentially destabilizing effects of the global conflicts or the potential for a larger conflict could have other adverse effects on our business. A disruption, termination or alteration of the supply of vehicle chassis or other critical components from third-party suppliers could materially adversely affect the sales of our products.
However, we cannot assure you that employees, contractors, vendors or our agents will not violate such laws and regulations or our policies and procedures. 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 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.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. Risks Relating to Our Business The COVID-19 pandemic has impacted, and could in the future materially and adversely affect, our business.
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.
We believe that the introduction of new product features, designs and models will be critical to the future success of our operations as technological advancements are made and alternative fuels are developed. 27 Table of Contents To successfully execute our long-term strategy, we must continue to develop new product lines and adapt our existing product lines to consumer preferences, including product lines that have historically been outside of our core businesses, such as electric vehicles and other specialty vehicles that minimize emissions.
To successfully execute our long-term strategy, we must continue to develop new product lines and adapt our existing product lines to consumer preferences, including product lines that have historically been outside of our core businesses, such as electric vehicles and other specialty vehicles that minimize emissions.
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 both of these countries. The potentially destabilizing effects of the Russia and Ukraine conflict or the potential for a larger conflict could have other effects on our business.
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.
Maintaining, enhancing, promoting and positioning our brands, particularly in new markets where we have limited brand recognition, will depend largely on the success of our marketing and merchandising efforts and our ability to provide high-quality services, warranty plans, products and resources and a consistent, high-quality customer experience.
In addition, a claim or finding that we are infringing on the intellectual property of others could require changes to our products, negatively impact our operations, harm our reputation or otherwise have a material adverse effect on our business, financial condition or results of operations. 24 Maintaining, enhancing, promoting and positioning our brands, particularly in new markets where we have limited brand recognition, will depend largely on the success of our marketing and merchandising efforts and our ability to provide high-quality services, warranty plans, products and resources and a consistent, high-quality customer experience.
Also, a customer may choose to pursue remedies directly under its contract with us over enforcing such supplier warranties. In such a case, we may not be able to recover our losses from the supplier. Cancellations, reductions or delays in customer orders, customer breaches of purchase agreements, or reduction in expected backlog may adversely affect our results of operations.
In such a case, we may not be able to recover our losses from the supplier. Cancellations, reductions or delays in customer orders, customer breaches of purchase agreements, reduction in expected backlog, reductions in profitability of backlog due to fluctuations in product costs, or our inability to meet customer delivery schedules may adversely affect our results of operations.
Additionally, the vehicles we manufacture for sale are subject to strict contractually established specifications using complex manufacturing processes. If we fail to meet the contractual requirements for a vehicle or a part, we may be subject to warranty costs to repair or replace the part itself and additional costs related to the investigation and inspection of non-complying parts.
If we fail to meet the contractual requirements for a vehicle or a part, we may be subject to warranty costs to repair or replace the part itself and additional costs related to the investigation and inspection of non-complying parts. These potential warranty and repair and replacement costs are generally not covered by our insurance.
Our business is affected by economic factors and adverse developments in economic conditions which could have an adverse effect on the demand for our products and the results of our operations. Our business is impacted by the U.S. economic environment, employment levels, consumer confidence, changes in interest rates and instability in securities markets around the world, among other factors.
Our business is impacted by the U.S. economic environment, employment levels, consumer confidence, changes in interest rates and instability in securities markets around the world, among other factors. In particular, changes in the U.S. economic climate could result in reduced demand in key end markets.
Due to the nature of these product cost estimates and the fluctuations in input costs and availability, we may underestimate the costs of production and therefore overestimate the profitability in our backlog. As a result, the actual profitability on those sales in the future may differ materially from our initial estimates when we recorded the firm purchase order in backlog.
Due to the nature of these product cost estimates and the fluctuations in input costs and availability, we may underestimate the costs of production and therefore overestimate the profitability in our backlog.
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. 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 dealer agreements, which may make it difficult for us to optimize our dealer network.
If amounts outstanding under our 2021 ABL Facility were accelerated, our lenders could foreclose on these liens and we could lose substantially all of our assets. Any event of default under the instruments governing our indebtedness could have a material adverse effect on our business, financial condition and results of operations.
If amounts outstanding under our 2021 ABL Facility were accelerated, our lenders could foreclose on these liens and we could lose substantially all of our assets.
Our ability to meet customer delivery schedules is dependent on a number of factors including, but not limited to, access to components and raw materials, an adequate and capable workforce, assembling/engineering expertise for certain projects and sufficient manufacturing capacity. The availability of these factors may in some cases be subject to conditions outside of our control.
As a result, the actual profitability on those sales in the future may differ materially from our initial estimates when we recorded the firm purchase order in backlog. 22 Our ability to meet customer delivery schedules is dependent on a number of factors including, but not limited to, access to components and raw materials, an adequate and capable workforce, assembling/engineering expertise for certain projects and sufficient manufacturing capacity.
In addition, our employees frequently access our suppliers' and customers' systems and we may be liable if our employees are the source of any breaches in these third-party systems.
In addition, our employees frequently access our suppliers' and customers' systems and we may be liable if our employees are the source of any breaches in these third-party systems. It could also damage our reputation with customers and consumers and diminish the strength and reputation of our brands or require us to pay monetary penalties.
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. We may be exposed to liabilities under applicable anti-corruption laws and export controls and economic sanctions laws and any determination that we violated these laws could have a material adverse effect on our business.
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.
These potential warranty and repair and replacement costs are generally not covered by our insurance. We establish warranty reserves that represent our estimate of the costs we expect to incur to fulfill our warranty obligations. We base our estimate for warranty reserves on our historical experience and other related assumptions.
We establish warranty reserves that represent our estimate of the costs we expect to incur to fulfill our warranty obligations. We base our estimate for warranty reserves on our historical experience and other related assumptions. If actual results materially differ from these estimates, our results of operations could be materially affected.

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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 Jefferson, North Carolina 92,000 Aftermarket Parts Warehouse Owned Decatur, Indiana 90,000 Aftermarket Parts Warehouse Owned Decatur, Indiana 85,000 Recreation Owned Ocala, Florida 63,000 Fire & Emergency Owned Coburg, Oregon 36,000 Recreation Leased Fontana, California 15,000 Fire & Emergency Leased Fort Lauderdale, Florida 15,000 Fire & Emergency Leased Tallahassee, Florida 3,000 Fire & Emergency Leased Total 399,000 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 524,000 E-ONE Owned/Leased Snyder, Nebraska 400,000 Smeal Owned Charlotte, Michigan 283,000 Spartan Emergency Response Owned 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 194,000 Lance Camper, Avery Transportation Leased Elkhart, Indiana 189,000 Midwest Automotive Division Owned/Leased Longview, Texas 155,000 Capacity of Texas, LayMor Owned Ephrata, Pennsylvania 125,000 Ladder Tower Owned/Leased Brandon, South Dakota 96,000 Spartan Emergency Response Owned/Leased South El Monte, California 34,000 Leader Emergency Vehicles Leased Total 4,608,000 35 Table of Contents
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

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. The Company is, from time to time, party to various legal proceedings arising out of ordinary course of business.
Biggest changeItem 3. Legal Proceedings. The Company is, from time to time, party to various legal proceedings arising out of the ordinary course of business.
Removed
A consolidated federal putative securities class action and a consolidated state putative securities class action against the Company and certain of its officers and directors was settled during fiscal year 2022.
Added
Additionally, 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
Removed
These actions collectively purported to assert claims on behalf of putative classes of purchasers of the Company’s common stock in or traceable to its January 2017 IPO, purchasers in its secondary offering of common stock in October 2017, and purchasers from October 10, 2017 through June 7, 2018.
Removed
The actions alleged certain violations of the Securities Act of 1933 and, for the federal action, the Securities Exchange Act of 1934. Collectively, the actions sought certification of the putative classes asserted and compensatory damages and attorneys’ fees and costs.
Removed
On May 19, 2021, the parties to the consolidated federal and state putative securities class actions executed a stipulation of settlement for a class settlement with the court and moved for preliminary approval. The settlement payment is being fully covered by the Company's insurers.
Removed
The settlement payment and the related insurance proceeds are recorded in other current liabilities and other current assets, respectively, in the Company’s Consolidated Balance Sheets as of October 31, 2021. The court entered a judgment approving the settlement on December 9, 2021. During the first quarter of fiscal year 2022, the Company’s insurers made the final settlement payment.
Removed
As of October 31, 2022, there are no further amounts recorded in the Consolidated Balance Sheets. Two purported derivative actions, which have since been consolidated, were also filed in 2019 against the Company’s directors (with the Company as a nominal defendant), premised on allegations similar to those asserted in the consolidated federal securities litigation.
Removed
The parties to the consolidated derivative actions reached a settlement in principle on all issues on or about November 3, 2021. The plaintiffs filed a stipulation of settlement for the derivative actions with the court and moved for preliminary approval of the settlement on January 14, 2022. The court granted final approvement of the settlement on November 17, 2022.
Removed
The settlement payment is being fully covered by the Company’s insurers. The Company is also subject to certain other legal proceedings that arise in the ordinary course of business.
Removed
Although the final results of all such other matters and claims cannot be predicted with certainty, management believes that the ultimate resolution of all such matters and claims will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
Removed
Item 4. Mine Saf ety Disclosures. Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy Subject to legally available funds and the discretion of our board of directors, we may or may not pay a quarterly cash dividend in the future on our common stock. During fiscal year 2022, the Company paid cash dividends of $12.4 million. Our ability to pay dividends is dependent on our ABL loan and board of directors' approval.
Biggest changeDuring 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.
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.” Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock between October 31, 2017 and October 31, 2022, 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.
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.” 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.
As of December 12, 2022, there were approximately 99 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 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.
“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. 37 Table of Contents Equity Compensation Plan Information – see Item 12 Item 6. Reserved 38 Table of Contents
“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
This number of holders of record also does not include shareholders whose shares may be held in trust by other entities. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not make any purchases of common stock during the fourth quarter of fiscal year 2022.
This number of holders of record also does not include shareholders whose shares may be held in trust by other entities. Dividend Policy Subject to legally available funds and the discretion of our board of directors, we may or may not pay a quarterly cash dividend in the future on our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations The following table compares results for fiscal years 2022, 2021 and 2020 Fiscal Year Ended (in millions except per share data) October 31, 2022 October 31, 2021 October 31, 2020 Net sales $ 2,331.6 $ 2,380.8 $ 2,277.6 Gross profit 247.5 291.0 228.1 Selling, general and administrative 190.0 189.0 204.9 Restructuring 9.4 2.5 9.9 Impairment charges — 1.5 12.1 Loss on early extinguishment of debt — 1.4 — Loss on sale of business 0.1 2.8 11.1 Loss on investment in China JV — 6.2 — Loss (gain) on acquisition of business — 0.4 (8.6 ) Provision (benefit) for income taxes 4.6 11.3 (15.6 ) Net income (loss) 15.2 44.4 (30.5 ) Net income (loss) per common share Basic $ 0.25 $ 0.70 $ (0.48 ) Diluted $ 0.25 $ 0.69 $ (0.48 ) Dividends declared per common share $ 0.20 $ 0.10 $ 0.10 Adjusted EBITDA $ 105.1 $ 141.5 $ 67.5 Adjusted Net Income $ 49.1 $ 76.9 $ 9.5 41 Table of Contents Net Sales Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Net sales $ 2,331.6 -2.1 % $ 2,380.8 4.5 % $ 2,277.6 Net Sales : 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.
Biggest changeIn 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.
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 commercial truck or van 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 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.
The Company also paid $7.0 million of debt issuance costs and recognized a $1.4 million loss on early extinguishment of debt, the latter of which is included in the Consolidated Statement of Operations and Comprehensive Income (loss) for the fiscal year ended October 31, 2021.
The Company also paid $7.0 million of debt issuance costs and recognized a $1.4 million loss on early extinguishment of debt, the latter of which is included in the Consolidated Statement of Income and Comprehensive Income for the fiscal year ended October 31, 2021.
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.
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.
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.
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.
(m) Reflects losses recognized upon extinguishment of our 2017 ABL Facility and Term Loan. The loss is entirely comprised of unamortized debt issuance costs that were written off in connection with this extinguishment. (n) Reflects accelerated deprecation that was incurred in connection with the announced closure of certain facilities within the F&E segment.
(l) Reflects losses recognized upon extinguishment of our 2017 ABL Facility and Term Loan. The loss is entirely comprised of unamortized debt issuance costs that were written off in connection with this extinguishment. (m) Reflects accelerated deprecation that was incurred in connection with the announced closure of certain facilities within the F&E segment.
These expenses consist primarily of legal, accounting and due diligence expenses. (b) Reflects the reimbursement of expenses to the Company’s primary equity holder. (c) Restructuring costs for fiscal year 2021 and 2022 incurred in connection with the announced closure of certain facilities within the F&E segment and termination and severance costs incurred within the corporate segment.
These expenses consist primarily of legal, accounting and due diligence expenses. (b) Reflects the reimbursement of expenses to the Company’s largest equity holder. (c) Restructuring costs for fiscal year 2021 and 2022 incurred in connection with the announced closure of certain facilities within the F&E segment and termination and severance costs incurred within the corporate segment.
We believe our brand portfolio contains some of the longest standing, most recognized brands in the RV industry. Under these brands, REV provides a variety of highly recognized motorized and towable RV models such as: American Eagle, Bounder, Pace Arrow, Discovery LXE, Renegade Verona, and Renegade XL, among others.
We believe our brand portfolio contains some of the longest standing, most recognized brands in the RV industry. Under these brands, REV provides a variety of highly recognized motorized and towable RV models such as: American Eagle, Bounder, Discovery LXE, Renegade Verona, Renegade XL, among others.
The 2021 ABL Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 during certain compliance periods as specified in the 2021 ABL Agreement. The Company was in compliance with all financial covenants under the 2021 ABL Agreement as of October 31, 2022.
The 2021 ABL Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 during certain compliance periods as specified in the 2021 ABL Agreement. The Company was in compliance with all financial covenants under the 2021 ABL Agreement as of October 31, 2023.
See Note 17, Income Taxes, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for disclosures regarding uncertain income tax positions under ASC Topic 740. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business.
See Note 16, Income Taxes, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for disclosures regarding uncertain income tax positions under ASC Topic 740. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business.
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. These 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. 44 Adjusted EBITDA and Adjusted Net Income have limitations as analytical tools. They are not presentations made in accordance with U.S.
Recent Accounting Pronouncements Refer to Note 2 to our 2022 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.
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
Segments Fire & Emergency – The Fire & Emergency segment sells 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 ambulances under the American Emergency Vehicles (“AEV”), Horton Emergency Vehicles (“Horton”), Leader Emergency Vehicles (“Leader”), Road Rescue and Wheeled Coach brands.
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.
Refer to Note 8, Restructuring and Other Related Charges, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. (f) Reflects expenses associated with the vesting of equity awards and award modifications.
Refer to Note 7, Restructuring and Other Related Charges, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. (f) Reflects expenses associated with the vesting of equity awards and award modifications.
(d) Unrecognized tax benefits totaling $3.8 million as of October 31, 2022, excluding related interests and penalties, are not included in the table because the timing of their resolution cannot be estimated.
(d) Unrecognized tax benefits totaling $4.8 million as of October 31, 2023, excluding related interests and penalties, are not included in the table because the timing of their resolution cannot be estimated.
Fiscal year 2021 reflects losses related to the sale of REV Brazil of $2.8 million, and the loss recognized on the Company’s investment in its China JV of $6.2 million, offset by a $1.1 million gain related to the sale of land within the F&E segment. Fiscal year 2020 reflects losses related to the sale of our shuttle bus businesses.
Fiscal year 2021 reflects losses related to the sale of REV Brazil of $2.8 million, and the loss recognized on the Company’s investment in its China JV of $6.2 million, offset by a $1.1 million gain related to the sale of land within the F&E segment.
If we are unable to generate sufficient cash flows from operations in the future, and if availability under the current revolving credit facility is not sufficient due to the size of our borrowing base or other external factors, we may have to obtain additional financing.
If we are unable to generate sufficient cash flows from operations in the future, and if availability under the 2021 ABL Facility is not sufficient due to the size of our borrowing base or other external factors, we may have to obtain additional financing.
If the fair value of assets acquired and liabilities assumed exceeds the fair value of consideration paid, a gain on bargain purchase is recognized. The estimates of fair values are determined utilizing customary valuation procedures and techniques, which require us, among other things, to estimate future cash flows and discount rates.
If the fair value of assets acquired and liabilities assumed exceeds the fair value of consideration paid, a gain on bargain purchase is recognized. The estimates of fair values are determined utilizing customary valuation procedures and techniques, which require us, among other things, to estimate future cash flows and discount rates. Such analyses involve significant judgments and estimations.
The weighted-average interest rate on borrowings outstanding under the 2021 ABL Facility was 1.75% as of October 31, 2021. The lenders under the 2021 ABL Facility have a first priority security interest in substantially all personal property assets and certain real property assets of the Company.
The weighted-average interest rate on borrowings outstanding under the 2021 ABL Facility was 5.51% as of October 31, 2022 The lenders under the 2021 ABL Facility have a first priority security interest in substantially all personal property assets and certain real property assets of the Company.
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.
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.
A decrease in employment levels, consumer confidence or the availability of financing, or other adverse economic events, or the failure of actual demand for our products to meet our estimates, could negatively affect the demand for our products. Any decline in overall customer demand in markets in which we operate could have a material adverse effect on our operating performance.
A decrease in employment levels, consumer confidence or the cost or availability of financing, or other adverse economic events could negatively affect the demand for our products. Any decline in overall customer demand in markets in which we operate could have a material adverse effect on our operating performance.
F&E segment net sales decreased $169.7 million in fiscal year 2022, primarily due to decreased shipments of fire apparatus and ambulance units resulting primarily from chassis and supply chain disruptions and labor constraints, partially offset by price realization.
F&E segment net sales decreased $169.7 million in fiscal year 2022, primarily due to decreased shipments of fire apparatus and ambulance units resulting primarily from chassis and supply chain disruptions and labor constraints, partially offset by price realization. Adjusted EBITDA : F&E segment Adjusted EBITDA increased $50.0 million in fiscal year 2023.
GAAP requires us to make estimates, assumptions and judgments that affect amounts of assets and liabilities reported in our consolidated financial statements, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the year.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect amounts of assets and liabilities reported in our consolidated financial statements, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the year.
The Recreation segment also includes Goldshield Fiberglass, which produces a wide range of custom molded fiberglass products for the heavy-duty truck, RV and broader industrial markets. 39 Table of Contents 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.
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.
(o) Reflects the impact of net operating loss carrybacks as a result of the CARES Act. Refer to Note 17, Income Taxes, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
(n) Reflects the impact of net operating loss carrybacks as a result of the CARES Act. Refer to Note 16, Income Taxes, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
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 2022, we paid cash dividends of $12.4 million.
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.
Other than the items noted in Note 18, Commitments and Contingencies, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional discussion, we do not have any material off-balance sheet arrangements.
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.
(b) Based on interest rates in effect as of October 31, 2022. (c) Includes obligations under non-cancellable purchase orders for raw materials and chassis as of October 31, 2022.
(b) Based on interest rates in effect and outstanding principal balance as of October 31, 2023. (c) Includes obligations under non-cancellable purchase orders for raw materials and chassis as of October 31, 2023.
As of October 31, 2022, the Company’s availability under the 2021 ABL Facility was $307.7 million. As of October 31, 2021, the Company’s availability under the 2021 ABL Facility was $290.0 million. The fair value of the 2021 ABL Facility approximated book value on October 31, 2022 and October 31, 2021, respectively.
As of October 31, 2023, the Company’s availability under the 2021 ABL Facility was $384.1 million. As of October 31, 2022, the Company’s availability under the 2021 ABL Facility was $307.7 million. The fair value of the 2021 ABL Facility approximated book value on October 31, 2023 and October 31, 2022, respectively.
Such analyses involve significant judgments and estimations. 53 Table of Contents 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.
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.
The following table reconciles net income (loss) to Adjusted EBITDA for the periods presented: Fiscal Year Ended (in millions) October 31, 2022 October 31, 2021 October 31, 2020 Net income (loss) $ 15.2 $ 44.4 $ (30.5 ) Depreciation and amortization 32.3 32.0 40.2 Interest expense, net 16.9 17.3 25.7 Loss on early extinguishment of debt — 1.4 — Provision (benefit) for income taxes 4.6 11.3 (15.6 ) EBITDA 69.0 106.4 19.8 Transaction expenses(a) 0.7 3.2 3.3 Sponsor expense reimbursement(b) 0.1 0.4 0.5 Restructuring (c) 9.4 2.5 9.9 Restructuring related charges(d) 9.7 0.3 10.5 Impairment charges(e) — 1.5 12.1 Stock-based compensation expense(f) 8.7 7.8 7.8 Legal matters(g) 7.4 4.0 1.8 Net loss on sale of business and assets(h) 0.1 7.9 11.1 Loss (gain) on acquisition of business(i) — 0.4 (8.6 ) Other items (j) — 6.1 — Losses (earnings) attributable to assets held for sale(k) — 1.0 (0.8 ) Deferred purchase price payment(l) — — 0.1 Adjusted EBITDA $ 105.1 $ 141.5 $ 67.5 51 Table of Contents The following table reconciles Net Income (loss) to Adjusted Net Income for the periods presented: Fiscal Year Ended (in millions) October 31, 2022 October 31, 2021 October 31, 2020 Net income (loss) $ 15.2 $ 44.4 $ (30.5 ) Amortization of intangible assets 7.1 9.8 13.3 Transaction expenses(a) 0.7 3.2 3.3 Sponsor expense reimbursement(b) 0.1 0.4 0.5 Restructuring (c) 9.4 2.5 9.9 Restructuring related charges(d) 9.7 0.3 10.5 Impairment charges(e) — 1.5 12.1 Stock-based compensation expense(f) 8.7 7.8 7.8 Legal matters(g) 7.4 4.0 1.8 Net Loss on sale of business and assets(h) 0.1 7.9 11.1 Loss (gain) on acquisition of business(i) — 0.4 (8.6 ) Other Items(j) — 6.1 — Losses (earnings) attributable to assets held for sale(k) — 1.0 (0.8 ) Deferred purchase price payment(l) — — 0.1 Loss on early extinguishment of debt(m) — 1.4 — Accelerated depreciation on certain property, plant, and equipment (n) 2.3 — — Impact of tax rate change(o) — (4.2 ) (3.5 ) Income tax effect of adjustments(p) (11.6 ) (9.6 ) (17.5 ) Adjusted Net Income $ 49.1 $ 76.9 $ 9.5 (a) Reflects costs incurred in connection with business acquisitions, dispositions and capital market transactions.
The 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.
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 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.
Interest is payable quarterly for all base rate loans and is payable the last day of any interest period or every three months for all Eurodollar rate loans. The weighted-average interest rate on borrowings outstanding under the 2021 ABL Facility was 5.51% as of October 31, 2022.
Interest is payable quarterly for all base rate loans and is payable the last day of any interest period or every three months for all SOFR rate loans. The weighted-average interest rate on borrowings outstanding under the 2021 ABL Facility was 6.93% as of October 31, 2023.
Dividends Subject to legally available funds and the discretion of our board of directors, we expect to pay 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 we may not pay dividends according to our policy, or at all.
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.
Gross Profit Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Gross profit $ 247.5 -14.9 % $ 291.0 27.6 % $ 228.1 % of net sales 10.6 % 12.2 % 10.0 % Gross Profit : Consolidated gross profit decreased $43.5 million in fiscal year, 2022 compared to the prior year period.
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.
Cash Flow The following table shows summary cash flows for fiscal years 2022, 2021 and 2020: Fiscal Years Ended (in millions) October 31, 2022 October 31, 2021 October 31, 2020 Net cash provided by operating activities $ 91.6 $ 158.3 $ 55.7 Net cash (used in) provided by investing activities (14.8 ) (10.2 ) 1.7 Net cash used in financing activities (69.7 ) (146.2 ) (49.3 ) Net increase in cash and cash equivalents $ 7.1 $ 1.9 $ 8.1 47 Table of Contents Net Cash Provided by Operating Activities Net cash provided by operating activities for fiscal year 2022 was $91.6 million, compared to $158.3 million for fiscal year 2021.
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.
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.
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.
Applicable interest rate margins are initially 0.75% for all base rate loans and 1.75% for all Eurodollar rate loans (with the Eurodollar rate having a floor of 0.25%), subject to adjustment based on the Company’s fixed charge coverage ratio in accordance with the 2021 ABL Agreement.
As of October 31, 2023, the interest rate margins are 0.75% for all base rate loans and 1.75% for all SOFR rate loans (with the SOFR rate having no floor), subject to adjustment based on the Company’s fixed charge coverage ratio in accordance with the 2021 ABL Agreement.
(in millions) 2023 2024 2025 2026 2027 Thereafter Total Debt(a) $ — $ — $ — $ 230.0 $ — $ — $ 230.0 Interest(b) 12.7 12.7 12.7 6.3 — — 44.4 Operating leases 7.0 4.7 3.1 2.0 1.6 5.5 23.9 Purchasing obligations(c) 7.2 7.2 7.2 — — — 21.6 Total commitments(d) $ 26.9 $ 24.6 $ 23.0 $ 238.3 $ 1.6 $ 5.5 $ 319.9 (a) Includes estimated principal payments due under our the 2021 ABL Facility as of October 31, 2022.
(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.
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 by investing activities for fiscal year 2021 was $10.2 million, compared to $1.7 million cash provided by investing activities for fiscal year 2020.
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.
In addition, we are susceptible to supply chain disruptions resulting from the impact of tariffs and global macro-economic factors (refer to “Impact of COVID-19” section below), which can have a dramatic effect, either directly or indirectly, on the availability, lead-times and costs associated with raw materials and parts.
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.
Net cash used in financing activities for fiscal year 2021 was $146.2 million, compared to $49.3 million for fiscal year 2020.
Net cash used in financing activities for fiscal year 2022 was $69.7 million, compared to $146.2 million for fiscal year 2021.
(j) Reflects one-time costs including (i) a recall campaign announced on Spartan apparatus that were designed pre-acquisition for which the company is seeking legal indemnification of the losses incurred of $1.3 million; (ii) cumulative costs related to workers compensation liabilities of $4.2 million; (iii) other costs that management does not believe to be recurring in nature of $0.6 million.
Fiscal year 2021 reflects (i) a recall campaign announced on Spartan apparatus that were designed pre-acquisition for which the company is seeking legal indemnification of the losses incurred of $1.3 million; (ii) cumulative costs related to workers compensation liabilities of $4.2 million; (iii) other costs that management does not believe to be recurring in nature of $0.6 million. 46 (k) Adjusted EBITDA attributable to businesses that were classified as held for sale during the respective period.
Net Cash (Used in) Provided by Investing Activities 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.
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.
Refer to Note 7, Divestitures, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. 52 Table of Contents (i) Reflects gain cumulative on acquisition of Spartan ER. Refer to Note 3, Acquisitions, to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Refer to Note 6, Divestitures, to our 2023 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. (i) Reflects an adjustment to the cumulative gain on the acquisition of Spartan ER.
The inputs and assumptions used in the determination of fair value are considered Level 3 inputs within the fair value hierarchy. 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. 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 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 the fiscal year 2022, the Company performed its annual indefinite-lived trade name intangibles and did not identify any impairments.
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.
Our estimates are based on historical experience, the number of units involved and the cost per claim. A significant increase in replacement parts, labor and travel could have a material adverse impact on our operating results.
The costs of fulfilling our warranty obligations principally involve replacement parts, labor and sometimes travel for any field retrofit or recall campaigns. Our estimates are based on historical experience, the number of units involved and the cost per claim. A significant increase in replacement parts, labor and travel could have a material adverse impact on our operating results.
Recreation segment Adjusted EBITDA increased $24.9 million primarily due to price realization and favorable mix, partially offset by lower shipments and inefficiencies related to supply chain disruptions and labor constraints in certain businesses, and inflationary pressures.
Recreation segment Adjusted EBITDA increased $24.9 million in fiscal year 2022 primarily due to price realization and favorable mix, partially offset by lower shipments and inefficiencies related to supply chain disruptions and labor constraints in certain businesses, and inflationary pressures. 40 Backlog Backlog represents firm orders received from dealers or directly from end customers.
The following table presents a summary of our backlog by segment: Increase (Decrease) ($ in millions) October 31, 2022 October 31, 2021 $ % Fire & Emergency $ 2,589.4 $ 1,498.6 $ 1,090.8 72.8 % Commercial 525.6 394.7 130.9 33.2 % Recreation 1,119.8 1,234.5 (114.7 ) (9.3 )% Total Backlog $ 4,234.8 $ 3,127.8 $ 1,107.0 35.4 % Each of our three segments has a backlog of new vehicle orders that generally extends out from nine to twenty-four months in duration.
The following table presents a summary of our backlog by segment: Increase (Decrease) ($ in millions) October 31, 2023 October 31, 2022 $ % Fire & Emergency $ 3,649.8 $ 2,589.4 $ 1,060.4 41.0 % Commercial 426.9 525.6 (98.7 ) (18.8 )% Recreation 385.2 1,119.8 (734.6 ) (65.6 )% Total Backlog $ 4,461.9 $ 4,234.8 $ 227.1 5.4 % Each of our three segments has a backlog of new vehicle orders that generally extends out from six to twenty-four months in duration.
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 serves the bus market through the Collins Bus, Magellan and ENC brands.
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.
Provision (benefit) for Income Taxes Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Provision (benefit) for income taxes $ 4.6 -59.3 % $ 11.3 -172.4 % $ (15.6 ) Provision (benefit) for income taxes: Consolidated income tax provision was $4.6 million or 23.2% of pretax income and $11.3 million or 20.3% of pretax income for fiscal years 2022 and 2021, respectively.
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.
The increase in F&E segment backlog was primarily the result of increased orders for fire apparatus and ambulance units, pricing actions, and lower shipments. The increase in Commercial segment backlog was primarily the result of increased orders municipal transit buses, and pricing actions, partially offset by increased shipments of terminal trucks and street sweepers against backlog.
The decrease in Commercial segment backlog was primarily the result of increased unit production and shipment activity against backlog, and lower orders for municipal transit buses, terminal trucks, and street sweepers, partially offset by increased orders for school buses, and pricing actions.
All revolving loans under the 2021 ABL Facility bear interest at rates equal to, at the Company’s option, either a base rate plus an applicable margin, or a Eurodollar rate plus an applicable margin.
All revolving loans under the 2021 ABL Facility, as amended, bear interest at rates equal to, at the Company’s option, either a base rate plus an applicable margin, or a SOFR rate plus an applicable margin and credit spread adjustment of 0.10% for all interest periods.
Tax provision for fiscal year 2022 was favorably impacted by incentives for the U.S. research and stock-based compensation tax deductions. Tax provision was unfavorably impacted by valuation allowances on certain state tax attributes. Results for fiscal year 2021 were favorably impacted by tax benefits related to net operating loss carrybacks allowable under the CARES Act of $4.2 million.
The fiscal year 2021 tax provision was favorably impacted by tax benefits related to net operating loss carrybacks allowable under the CARES Act and incentives for U.S. research and was unfavorably impacted by the valuation allowances related to the loss on our China JV.
However, we cannot assure you that cash provided by operating activities and borrowings under the current revolving credit facility will be sufficient to meet our future needs.
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.
Adjusted Net Income Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Adjusted Net Income $ 49.1 -36.2 % $ 76.9 709.5 % $ 9.5 Refer to the “Adjusted EBITDA and Adjusted Net Income” section of “Item 7.
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.
(g) Reflects legal fees and costs incurred to litigate and settle legal claims against us which are outside the normal course of business.
(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.
The increase in net cash used by investing activities was primarily due to increased investment of PPE partially offset by proceeds from the sale of assets Net Cash Used in Financing Activities 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 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.
(h) The current fiscal year reflects a loss on the sale of a business within the F&E segment as part of the restructuring activities within that segment.
(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.
Orders from our dealers and end customers are evidenced by a contract, firm purchase order or reserved production slot for delivery of one or many vehicles. These orders are reported in our backlog at the aggregate selling prices, net of discounts or allowances.
Orders from our dealers and end customers are evidenced by a contract or firm purchase order. These orders are reported in our backlog at the aggregate selling prices, net of discounts or allowances. At the end of fiscal year 2023, our backlog was $4,461.9 million, compared to $4,234.8 million at the end of fiscal year 2022.
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 by eliminating the impact of capital structure and taxation differences between the companies. 50 Table of Contents 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 by eliminating the impact of capital structure and taxation differences between the companies.
Restructuring costs for the fiscal year 2022 were related to the transition of KME branded fire apparatus production to other REV fire group facilities within the F&E segment. Refer to Note 8, Restructuring and Other Related Charges, of the Notes to Consolidated Financial Statements. Consolidated restructuring costs decreased $7.4 million in fiscal year 2021.
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.
The decrease in organic net sales was primarily related to lower shipments of fire trucks and ambulance units in the second half of fiscal year 2021 related to chassis and supply chain disruptions, and labor constraints, partially offset by strong price realization and favorable mix. Adjusted EBITDA . F&E segment Adjusted EBITDA decreased $55.2 million in fiscal year 2022.
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.
Consolidated gross profit increased $62.9 million in fiscal year 2021 primarily due to increased gross profit in the F&E and Recreation segments partially offset by decreased gross profit in the Commercial segment.
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.
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, 2022. Also, each quarter we review actual warranty claims to determine if there are systemic effects that would require a field retrofit or recall campaign.
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.
We serve the terminal truck market through the Capacity brand and the sweeper market through the LayMor brand.
We serve municipal segments through the Collins Bus, Magellan and Eldorado National (California) (“ENC”) brands. We serve the terminal truck market through the Capacity brand and the sweeper market through the LayMor brand.
(d) Reflects costs that are directly attributable to restructuring activities, including charges during fiscal year 2022 and 2021 in connection with the announced closure of certain facilities within the F&E segment, fiscal year 2020 leadership changes and inventory liquidation associated with the decentralization of the Company’s aftermarket parts business, but do not meet the definition of restructuring under ASC 420.
(d) Reflects costs that are directly attributable to restructuring activities, production inefficiencies within the F&E segment, and costs associated with certain headcount reductions primarily within Corporate that do not meet the definition of restructuring under ASC 420. (e) Reflects impairment charges associated with the closing of certain facilities within the F&E segment for fiscal year 2021.
Consolidated Adjusted EBITDA increased $74.0 million in fiscal year 2021 due to higher Adjusted EBITDA in the F&E and Recreation segments, partially offset by lower Adjusted EBITDA in the Commercial segment. Refer to the “Adjusted EBITDA and Adjusted Net Income” section of “Item 7.
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.
Critical Accounting Policies and Estimates Our significant accounting policies are described in Note 2 to our 2022 audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional discussion. The preparation of consolidated financial statements in conformity with U.S.
(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.
Fire & Emergency Segment Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Net sales $ 965.4 -15.0 % $ 1,135.1 0.3 % $ 1,132.0 Adjusted EBITDA 2.5 -95.7 % 57.7 44.6 % 39.9 Adjusted EBITDA % of net sales 0.3 % 5.1 % 3.5 % Net Sales .
Fire & Emergency Segment Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Net sales $ 1,174.4 21.6 % $ 965.4 -15.0 % $ 1,135.1 Adjusted EBITDA 52.5 2000.0 % 2.5 -95.7 % 57.7 Adjusted EBITDA % of net sales 4.5 % 0.3 % 5.1 % Net Sales : F&E segment net sales increased $209.0 million in fiscal year 2023, primarily due to increased shipments of fire apparatus and ambulance units, a favorable mix of ambulance units and price realization.
Contractual Obligations Significant contractual commitments at October 31, 2022 are expected to affect our cash flows in future periods as set forth in the table below.
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.
RV purchases are discretionary in nature and therefore sensitive to the availability of financing, consumer confidence, unemployment levels, levels of disposable income and changing levels of consumer home equity, among other factors. 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.
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.
Net income (loss) Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Net income (loss) $ 15.2 -65.8 % $ 44.4 -245.6 % $ (30.5 ) Net income (loss): Consolidated net income decreased $29.2 million in fiscal year 2022 primarily due to the factors detailed above.
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.
The decrease in gross profit was primarily attributable to lower net sales within the F&E segment, inefficiencies related to supply chain disruptions, labor constraints, relocating production of KME branded fire apparatus to other F&E segment facilities within the F&E segment, and inflationary pressures, partially offset by price realization and a favorable mix in the Recreation segment.
The decrease in gross profit was primarily attributable to lower net sales within the F&E segment, inefficiencies related to supply chain disruptions, labor constraints, relocating production of KME branded fire apparatus to other F&E segment facilities within the F&E segment, and inflationary pressures, partially offset by price realization and a favorable mix in the Recreation segment. 37 Selling, General and Administrative Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Selling, general and administrative $ 224.0 15.3 % $ 194.2 0.4 % $ 193.4 Selling, General and Administrative : Consolidated selling, general and administrative costs increased $29.8 million in fiscal year 2023 primarily due to higher incentive and share-based compensation, legal and settlement expense, and severance-related costs, partially offset by structural cost reductions.
Consolidated net income increased $74.9 million in fiscal year 2021 primarily due to increased gross profit described above plus lower restructuring and restructuring related charges, lower losses related to sale of business, and lower interest expense, partially offset by higher provision for income tax and loss on investments. 44 Table of Contents Adjusted EBITDA Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Adjusted EBITDA $ 105.1 -25.7 % $ 141.5 109.6 % $ 67.5 Consolidated Adjusted EBITDA decreased $36.4 million in fiscal year 2022 due to a decrease in Adjusted EBITDA in the F&E and Commercial segments, partially offset by higher Adjusted EBITDA in the Recreation segment.
Consolidated net income decreased $29.2 million in fiscal year 2022 primarily due to the factors described above. 38 Adjusted EBITDA Fiscal Year Ended (in millions) October 31, 2023 Change October 31, 2022 Change October 31, 2021 Adjusted EBITDA $ 156.6 49.0 % $ 105.1 -25.7 % $ 141.5 Consolidated Adjusted EBITDA increased $51.5 million in fiscal year 2023 primarily due to an increase in Adjusted EBITDA in the F&E and Commercial segments, partially offset by a decrease in Adjusted EBITDA in the Recreation segment.
Recreation Segment Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Net sales $ 957.8 11.6 % $ 858.5 30.5 % $ 657.8 Adjusted EBITDA 110.9 29.0 % 86.0 124.0 % 38.4 Adjusted EBITDA % of net sales 11.6 % 10.0 % 5.8 % Net Sales .
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.
The increase in profitability was primarily related to increased efficiencies related to productivity improvement initiatives at the largest fire and largest ambulance plants, partially offset by inefficiencies related to chassis and supply chain disruptions, and labor constraints, primarily in the second half of fiscal year 2021. 45 Table of Contents Commercial Segment Fiscal Year Ended (in millions) October 31, 2022 Change October 31, 2021 Change October 31, 2020 Net sales $ 410.2 5.9 % $ 387.3 -20.1 % $ 484.8 Adjusted EBITDA 22.3 -28.1 % 31.0 -10.1 % 34.5 Adjusted EBITDA % of net sales 5.4 % 8.0 % 7.1 % Net Sales .
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 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 2021 ABL Facility matures on April 13, 2026. The Company may prepay principal, in whole or in part, at any time without penalty.
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 approximate dollar values of shares that may yet be purchased under this program is $76.2 million as of October 31, 2022. 2021 ABL Facility On April 13, 2021, the Company entered into a $550.0 million revolving credit agreement (the “2021 ABL Facility” or “2021 ABL Agreement”) with a syndicate of lenders.
During fiscal year 2023, the Company did not repurchase any shares under the 2023 Repurchase Program. 42 2021 ABL Facility On April 13, 2021, the Company entered into the 2021 ABL Facility, a $550.0 million revolving credit agreement, with a syndicate of lenders.

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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 changeCurrently, purchase contracts generally do not have an indexed price escalation formula to account for economic fluctuations between the contract date and the delivery date. Moving forward, we will be including Raw Material Index movement protocols into supplier pricing agreements where appropriate. We are typically unable to pass along increased costs due to economic fluctuations to our customers.
Biggest changeMoving forward, we may include Raw Material Index movement protocols into supplier pricing agreements where appropriate. We are typically unable to pass along increased costs due to economic fluctuations to our customers, but have implemented general price increases for our products to offset commodity price increases. We rarely use commodity financial instruments to hedge commodity prices.
As of October 31, 2022, we had $230.0 million of principal outstanding under our 2021 ABL Facility at an average rate of 5.51% 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 $2.3 million.
As 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.
We will alternatively fix our prices for certain materials over an agreed upon amount of time between three months to 24 months through contracts with our vendors. 55 Table of Contents
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
A similar 100-basis point decrease in our floating interest rates would have decreased interest expense by $2.3 million. Both scenarios are affected from rate floor provisions in our credit facility agreement. Commodity Price Risk We are a purchaser of certain commodities, including aluminum and raw steel.
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.
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. We generally buy these commodities and components based on fixed market prices that are established with the vendor as part of the purchase process.
We generally buy these commodities and components based on fixed market prices that are established with the vendor as part of the purchase process. Currently, purchase contracts generally do not have an indexed price escalation formula to account for economic fluctuations between the contract date and the delivery date.
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In fiscal year 2022, steel and aluminum raw material inflation resulted in significant increases and surcharges from our suppliers and increased lead-times associated with our raw materials. We rarely use commodity financial instruments to hedge commodity prices.

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