REV Group, Inc., maker of specialty vehicles, has sold its school bus business – Collins Bus – to Forest River Bus for $303 million in cash.
The Collins sale marks REV Group’s exit from school bus manufacturing. REV Group also is winding down operations at ElDorado National-California (ENC), which makes transit buses.
“We have a long and successful history with Collins that dates back to the initial acquisition that started REV Group,” said Mark Skonieczny, president and CEO of REV Group. “We are pleased that the Collins team has a strategic new home with Forest River. I would like to thank the Collins team members for their contributions to REV Group and wish them continued success.”
The ENC closure is expected at the end of fiscal year 2024 after existing customer orders are completed and delivered.
“Delays in the supply of critical components and the build out of infrastructure to support EV adoption, as well as the financial health of key suppliers, has created a competitive bidding environment for diesel and (compressed natural gas) buses that has made it difficult for ENC to compete profitably versus peers of greater scale,” said Skonieczny. “The decision to wind down operations was not made lightly; however, based on the options available to us, we believe this is the best path forward for our business. I would like to thank our ENC employees, dealers, and customers for their commitment to ENC over the years.”
REV Group anticipates at least $250 million in net cash proceeds by taking these strategic actions, with the goal of returning about $180 million to shareholders. The company is reorganizing into two reporting segments starting with first quarter 2024 results. The commercial segment business will be combined with fire and emergency businesses for a Specialty Vehicles segment. The recreation segment will be renamed Recreational Vehicles.
“Today’s announcement creates a more focused operating structure that provides opportunities for growth, consistent cash generation, and improved margin performance,” stated Skonieczny. “The net cash proceeds generated from these actions and strength of our balance sheet allow us to return cash to shareholders in the form of a special cash dividend while retaining ample liquidity and flexibility to continue to pursue our strategic agenda.”