Shares of Rev Group Inc. (REVG), a leading manufacturer of specialty and recreational vehicles, plummeted over 27% on September 4, 2024, following the company's fiscal third-quarter 2024 earnings release and a lowered revenue outlook for the full year.
For the third quarter ended July 31, 2024, REV Group reported net sales of $579.4 million, down 14.8% compared to the same period last year. This missed analysts' expectations of $618.7 million. The decline was primarily due to lower sales in the Recreational Vehicles segment, driven by decreased unit shipments and increased discounting.
While the company's net income increased to $18.0 million, or $0.35 per diluted share, from $14.9 million, or $0.25 per diluted share, in the prior-year quarter, the results fell short of analysts' earnings per share estimate of $0.37. However, REV Group's adjusted EBITDA, a non-GAAP measure, rose 14.7% year-over-year to $45.2 million, supported by higher profitability in the Specialty Vehicles segment.
The disappointing factor that weighed heavily on the stock was REV Group's lowered full-year fiscal 2024 outlook. The company now expects net sales in the range of $2.35 billion to $2.45 billion, down from its previous guidance of $2.40 billion to $2.50 billion. This revised outlook, coupled with the weaker-than-expected third-quarter sales, led to investor concerns and a significant selloff in the stock.
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