REV Group Inc. reported a 16.2% increase in revenue for its fiscal first quarter, ended Jan. 31, boosted by sales growth in the company’s operating segments and partially driven by the impact of acquisitions.
Net sales during the period rose $514.9 million from $442.9 million in the year-ago period. The company swung to profit in the first quarter as net income jumped 171% to $9.4 million, or 14 cents per diluted share, compared to a net loss of $13.3 million, or 26 cents per share, in the first quarter of 2017.
“Fiscal year 2018 is off to a good start as we saw continued growth across most of our product categories and we remain on track to meet our full year objectives,” said REV Group CEO Tim Sullivan. “We continue to remain highly focused on the execution of our commercial, product and operating strategies to improve profitability as we work towards our long-term goal of an enterprise-wide EBITDA margin in excess of 10%.
“Additionally, we continued to execute on our disciplined capital allocation strategy with the acquisition of Lance Camper this quarter, which enables our entry into the large and fast-growing towables RV market. With a strong backlog of $1.24 billion we expect to continue to see improving operating leverage in the business and thus expect earnings growth to exceed sales growth in fiscal year 2018.”
First-quarter 2018 net income improved as a result of higher earnings from operations, the benefit of acquisitions, lower interest expense, and the favorable impact of recently enacted U.S. tax reform. Adjusted net income for the first quarter was $9.7 million, or 15 cents per diluted share, an increase of 72% percent from $5.7 million, or 11 cents per diluted share, in the first quarter of 2017.
Adjusted EBITDA in the first quarter 2018 was $21.3 million, representing growth of 0.9 percent over Adjusted EBITDA of $21.1 million in the first quarter 2017. Adjusted EBITDA performance during the quarter benefited from higher net sales and earnings from certain business segments as well as the impact of acquisitions.
Recreation Segment Results
The recreation segment grew net sales to $167.2 million in the first quarter 2018, representing an increase of $40.5 million, or 32% from the first quarter 2017. The company said growth was the result of strength in its end markets as well as sales from acquired companies. Recreation segment backlog at the end of the first quarter 2018 was $281.8 million, an increase of 94.6% from $144.8 million at the end of fiscal year 2017. This significant increase in backlog was positively impacted by the acquired backlog in the Lance Camper business.
Recreation segment adjusted EBITDA grew 194% in the first quarter 2018 to $8.2 million, compared to $2.8 million in the first quarter 2017. Adjusted EBITDA margin in the first quarter 2018 grew 270 basis points to 4.9% of net sales compared to 2.2 percent in the first quarter 2017. The expansion in profitability is attributable to higher unit volumes, stronger product mix and the continued benefit from ongoing operating initiatives in addition to the results from acquired companies.