Unaudited Pro Forma Condensed Consolidated Financial Statements

Exhibit 99.2

Unaudited Pro Forma Condensed Consolidated Financial Statements

On January 26, 2024, REV Group, Inc. (the “Company”) entered into a Stock Purchase Agreement by and among the Company, ▇▇▇▇▇▇▇ Industries, Inc. an indirect wholly-owned subsidiary of the Company (“▇▇▇▇▇▇▇ Industries”), ▇▇▇▇▇▇▇ Bus Corporation, a wholly-owned subsidiary of ▇▇▇▇▇▇▇ Industries (“▇▇▇▇▇▇▇”), Forest River, Inc. and Forest River Bus, LLC (the “Buyer”), pursuant to which ▇▇▇▇▇▇▇ Industries agreed to sell all of the issued and outstanding shares of capital stock of ▇▇▇▇▇▇▇ to the Buyer for approximately $303 million in cash, subject to customary adjustments for net working capital, cash and indebtedness, as per the terms of the Stock Purchase Agreement. ▇▇▇▇▇▇▇ manufactures, markets and distributes school buses, normally referred to as Type A school buses. The transactions under this agreement closed on January 26, 2024.

 

In connection with the sale of ▇▇▇▇▇▇▇, the Company’s Board of Directors declared a special cash dividend (the “Special Dividend”) equal to $3.00 per share of common stock, payable on February 16, 2024 to shareholders of record at the close of business on February 9, 2024.

On January 25, 2024 the Board of Directors of the Company authorized a plan (the “Plan”) to discontinue manufacturing operations at the Company’s ElDorado National (California) (“ENC”) facility in Riverside, California. ENC manufactures, markets, and distributes transit buses for on-campus transportation, in-city transit, and airport shuttle services. The Plan will create a more focused portfolio for the Company that provides opportunities for growth, consistent cash generation and improved margin performance. The Plan will commence immediately and is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered. Certain charges currently expected to be incurred in connection with the Plan, including employee severance, retention and related benefits, impairments of intangible and fixed assets, and inventory write offs have not been reflected in the pro forma condensed consolidated statement of income as they are nonrecurring in nature.

The following unaudited pro forma condensed consolidated financial statements (“Unaudited Pro Forma Statements”) and explanatory notes are based on the Company’s historical consolidated financial statements adjusted to give effect to the sale of ▇▇▇▇▇▇▇, the Plan and the Special Dividend, and certain other pro forma adjustments (collectively, the “Transactions”). The unaudited pro forma condensed consolidated statement of income for the fiscal year ended October 31, 2023 has been prepared with the assumption that the Transactions occurred as of November 1, 2022; however, aspects of the Transactions that are considered nonrecurring in nature have not been reflected in the unaudited pro forma consolidated statement of income. The unaudited pro forma condensed consolidated balance sheet as of October 31, 2023 has been prepared with the assumption that the Transactions were completed as of the balance sheet date. The Unaudited Pro Forma Statements have been prepared by the Company based on assumptions deemed appropriate by the Company’s management. An explanation of pro forma adjustments is set forth under the notes hereto.

The Unaudited Pro Forma Statements are presented for illustrative purposes only and do not necessarily reflect what the Company’s financial condition or results of operations would have been had the Transactions occurred on the dates indicated. Additionally, the Unaudited Pro Forma Statements do not purport to project the future financial condition or results of operations of the Company.

The Unaudited Pro Forma Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2023.

 

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

As of October 31, 2023

 

(dollars in millions, except share and per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical REV Group, Inc. (a)

 

 

Disposition of ▇▇▇▇▇▇▇
Business (b)

 

 

Discontinuation of ENC Business (f)

 

 

Bus Manufacturing Businesses (g)

 

 

Pro Forma Adjustments

 

 

Pro Forma REV Group, Inc.

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

21.3

 

 

$

298.0

 

(c)

$

—

 

 

$

298.0

 

 

$

(298.0

)

(h)

$

21.3

 

Accounts receivable, net

 

 

226.5

 

 

 

(9.4

)

 

 

(2.5

)

 

 

(11.9

)

 

 

—

 

 

 

214.6

 

Inventories, net

 

 

657.7

 

 

 

(20.1

)

 

 

(49.0

)

 

 

(69.1

)

 

 

—

 

 

 

588.6

 

Other current assets

 

 

27.7

 

 

 

(0.1

)

 

 

(5.6

)

 

 

(5.7

)

 

 

—

 

 

 

22.0

 

Total current assets

 

 

933.2

 

 

 

268.4

 

 

 

(57.1

)

 

 

211.3

 

 

 

(298.0

)

 

 

846.5

 

Property, plant and equipment, net

 

 

159.5

 

 

 

(6.6

)

 

 

(22.4

)

 

 

(29.0

)

 

 

—

 

 

 

130.5

 

Goodwill

 

 

157.3

 

 

 

(18.6

)

 

 

—

 

 

 

(18.6

)

 

 

—

 

 

 

138.7

 

Intangible assets, net

 

 

115.7

 

 

 

(8.9

)

 

 

(7.2

)

 

 

(16.1

)

 

 

—

 

 

 

99.6

 

Right of use assets

 

 

37.0

 

 

 

—

 

 

 

(0.1

)

 

 

(0.1

)

 

 

—

 

 

 

36.9

 

Other long-term assets

 

 

7.7

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7.7

 

Total assets

 

$

1,410.4

 

 

$

234.3

 

 

$

(86.8

)

 

$

147.5

 

 

$

(298.0

)

 

$

1,259.9

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

208.3

 

 

$

(14.0

)

 

$

(10.8

)

 

$

(24.8

)

 

$

—

 

 

$

183.5

 

Short-term customer advances

 

 

214.5

 

 

 

—

 

 

 

(1.6

)

 

 

(1.6

)

 

 

—

 

 

 

212.9

 

Short-term accrued warranty

 

 

23.4

 

 

 

(1.1

)

 

 

(2.7

)

 

 

(3.8

)

 

 

—

 

 

 

19.6

 

Short-term lease obligations

 

 

7.4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7.4

 

Other current liabilities

 

 

103.6

 

 

 

68.5

 

(d)

 

(4.8

)

 

 

63.7

 

 

 

—

 

 

 

167.3

 

Total current liabilities

 

 

557.2

 

 

 

53.4

 

 

 

(19.9

)

 

 

33.5

 

 

 

—

 

 

 

590.7

 

Long-term debt

 

 

150.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(119.5

)

(h)

 

30.5

 

Long-term customer advances

 

 

142.9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

142.9

 

Deferred income taxes

 

 

8.2

 

 

 

(2.3

)

 

 

(2.2

)

 

 

(4.5

)

 

 

—

 

 

 

3.7

 

Long-term lease obligations

 

 

30.0

 

 

 

—

 

 

 

(0.1

)

 

 

(0.1

)

 

 

—

 

 

 

29.9

 

Other long-term liabilities

 

 

24.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

24.1

 

Total liabilities

 

 

912.4

 

 

 

51.1

 

 

 

(22.2

)

 

 

28.9

 

 

 

(119.5

)

 

 

821.8

 

Total shareholders’ equity

 

 

498.0

 

 

 

183.2

 

(e)

 

(64.6

)

 

 

118.6

 

 

 

(178.5

)

(h)

 

438.1

 

Total liabilities and shareholders’ equity

 

$

1,410.4

 

 

$

234.3

 

 

$

(86.8

)

 

$

147.5

 

 

$

(298.0

)

 

$

1,259.9

 

 

 

 

 

Unaudited Pro Forma Condensed Consolidated Statement Income

 

For the year ended October 31, 2023

 

(In millions, except share and per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical REV Group, Inc. (a)

 

 

Disposition of ▇▇▇▇▇▇▇ Business (b)

 

 

Discontinuation of ENC Business (d)

 

 

Bus Manufacturing Businesses (e)

 

 

Pro Forma Adjustments

 

 

Pro Forma REV Group, Inc.

 

Net sales

 

$

2,638.0

 

 

$

(178.6

)

 

$

(106.5

)

 

$

(285.1

)

 

$

—

 

 

$

2,352.9

 

Cost of sales

 

 

2,321.9

 

 

 

(135.5

)

 

 

(120.9

)

 

 

(256.4

)

 

 

—

 

 

 

2,065.5

 

Gross profit

 

 

316.1

 

 

 

(43.1

)

 

 

14.4

 

 

 

(28.7

)

 

 

—

 

 

 

287.4

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

224.0

 

 

 

(6.5

)

 

 

(9.9

)

 

 

(16.4

)

 

 

—

 

 

 

207.6

 

Amortization of intangible assets

 

 

3.5

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3.5

 

Total operating expenses

 

 

227.5

 

 

 

(6.5

)

 

 

(9.9

)

 

 

(16.4

)

 

 

—

 

 

 

211.1

 

Operating income

 

 

88.6

 

 

 

(36.6

)

 

 

24.3

 

 

 

(12.3

)

 

 

—

 

 

 

76.3

 

Interest expense, net

 

 

28.6

 

 

 

(1.0

)

 

 

—

 

 

 

(1.0

)

 

 

(7.6

)

(f)

 

20.0

 

Loss on sale of business

 

 

1.1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.1

 

Loss on investment in China JV

 

 

0.7

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.7

 

Income / loss before provision for income taxes

 

 

58.2

 

 

 

(35.6

)

 

 

24.3

 

 

 

(11.3

)

 

 

7.6

 

 

 

54.5

 

Provision / benefit for income taxes

 

 

12.9

 

 

 

(8.9

)

(c)

 

6.1

 

(c)

 

(2.8

)

 

 

1.9

 

(c)

 

12.0

 

Net income / loss

 

$

45.3

 

 

$

(26.7

)

 

$

18.2

 

 

$

(8.5

)

 

$

5.7

 

 

$

42.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.72

 

Diluted

 

 

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

58,641,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,641,801

 

Diluted

 

 

59,175,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59,175,230

 

 

 

 

 

 

 

 

 

 

 

 

REV GROUP, INC.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of October 31, 2023

(a)
Reflects the Company’s historical Condensed Consolidated Balance Sheet as of October 31, 2023.
(b)
These adjustments represent the elimination of assets and liabilities attributable to ▇▇▇▇▇▇▇.
(c)
This adjustment represents the receipt of cash consideration in connection with the sale of ▇▇▇▇▇▇▇, net of estimated transaction-related expenses. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Stock Purchase Agreement.
(d)
This amount includes estimated taxes due in connection with the sale of ▇▇▇▇▇▇▇, which are calculated based on the estimated tax gain and the statutory rate in effect for the period presented.
(e)
This adjustment reflects the estimated gain arising from the sale of ▇▇▇▇▇▇▇, net of estimated taxes. This estimated gain has not been reflected in the pro forma condensed consolidated statement of income as it is nonrecurring in nature.
(f)
These adjustments represent the elimination of assets and liabilities attributable to the ENC business.
(g)
The amounts included in this column represent the combined totals associated with the elimination of assets and liabilities attributable to ▇▇▇▇▇▇▇ and ENC (collectively referred to as the “Bus Manufacturing Businesses”), which are separately identified in notes (b) and (f) above, respectively.
(h)
These adjustments reflect the proceeds from the sale of ▇▇▇▇▇▇▇, net of estimated transaction-related expenses, that will be used to fund the Special Dividend and to pay down a portion of long-term debt.

 

 

Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended October 31, 2023

(a)
Reflects the Company’s historical Condensed Consolidated Statement of Income for the year ended October 31, 2023.
(b)
These adjustments reflect the elimination of revenues and expenses attributable to ▇▇▇▇▇▇▇.
(c)
These adjustments reflect the estimated income tax effect of the elimination of pre-tax income or loss associated with ▇▇▇▇▇▇▇ and ENC and the estimated income tax effect of the pro forma adjustments. The estimated income tax effect was calculated using the statutory rate in effect for the period presented.
(d)
These adjustments reflect the elimination of revenues and expenses attributable to ENC.
(e)
The amounts included in this column represent the combined totals associated with the elimination of revenue and expenses attributable to the Bus Manufacturing Businesses, which are separately identified in notes (b) and (d) above, respectively.
(f)
This adjustment reflects a decrease of interest expense associated with the Company’s long-term debt, the latter of which is to be partially paid down after the proceeds received in connection with the sale of ▇▇▇▇▇▇▇ were used to fund the Special Dividend.

 

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Filed: January 31st, 2024