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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37999

REV Group, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware | 26-3013415
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
245 South Executive Drive, Suite 100 Brookfield, WI | 53005
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code: (414) 290-0190

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol | Name of each exchange on which registered
Common Stock ($0.001 Par Value) | REVG | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☒
Non-accelerated filer | ☐ | Small reporting company | ☐
Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 3, 2022, the registrant had 60,973,366 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

|  |  | Page
Cautionary Statement About Forward-Looking Statements |  | 2
Website and Social Media Disclosure |  | 2
PART I. | FINANCIAL INFORMATION |  | 3
Item 1. | Financial Statements |  | 3
| Condensed Unaudited Consolidated Balance Sheets |  | 3
| Condensed Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income |  | 4
| Condensed Unaudited Consolidated Statements of Cash Flows |  | 5
| Condensed Unaudited Consolidated Statements of Shareholders’ Equity |  | 6
| Notes to Condensed Unaudited Consolidated Financial Statements |  | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 19
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |  | 32
Item 4. | Controls and Procedures |  | 32
PART II. | OTHER INFORMATION |  | 32
Item 1. | Legal Proceedings |  | 32
Item 1A. | Risk Factors |  | 32
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |  | 33
Item 5. | Other Information |  | 33
Item 6. | Exhibits |  | 34
Signatures |  | 35

Cautionary Statement About Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “aim” and other similar expressions, and include our segment net sales and other expectations described under “Overview” below, although not all forward-looking statements contain these identifying words. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to increases in interest rates, availability of credit, low consumer confidence, availability of labor, significant increases in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a slowdown in the economy, increased material and component costs, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, integration of operations relating to mergers and acquisitions activities and the overall impact of the novel coronavirus, known as "COVID-19", pandemic on the Company’s business, results of operations and financial condition. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the “Risk Factors” section in our filings with the U.S. Securities and Exchange Commission (“SEC”). We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this Form 10-Q or to reflect any changes in expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.

Website and Social Media Disclosure

We use our website (www.revgroup.com) and corporate Twitter account (@revgroupinc) as routine channels of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under SEC Regulation FD. Accordingly, investors should monitor our website and our corporate Twitter account in addition to following press releases, SEC filings and public conference calls and webcasts. Additionally, we provide notifications of news or announcements as part of our investor relations website (investors.revgroup.com). Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

None of the information provided on our website, in our press releases, public conference calls and webcasts, or through social media channels is incorporated into, or deemed to be a part of, this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our website or our social media channels are intended to be inactive textual references only.

2

PART I—FINANCI AL INFORMATION

Item 1. Financi al Statements.

REV Group, Inc. and Subsidiaries

Condensed Unaudited Cons olidated Balance Sheets

(Dollars in millions, except share amounts)

|  |  |  |  | (Audited) |
|  | April 30, 2022 |  |  | October 31, 2021 |
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 5.9 |  |  | $ | 13.3 |
Accounts receivable, net |  |  | 222.2 |  |  |  | 213.3 |
Inventories, net |  |  | 562.9 |  |  |  | 481.7 |
Other current assets |  |  | 27.9 |  |  |  | 52.7 |
Assets held for sale |  |  | 5.7 |  |  |  | — |
Total current assets |  |  | 824.6 |  |  |  | 761.0 |
Property, plant and equipment, net |  |  | 144.4 |  |  |  | 157.6 |
Goodwill |  |  | 157.3 |  |  |  | 157.3 |
Intangible assets, net |  |  | 121.9 |  |  |  | 126.3 |
Right of use assets |  |  | 22.6 |  |  |  | 19.1 |
Other long-term assets |  |  | 15.0 |  |  |  | 17.0 |
Total assets |  | $ | 1,285.8 |  |  | $ | 1,238.3 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 144.7 |  |  | $ | 116.2 |
Customer advances |  |  | 275.3 |  |  |  | 210.6 |
Accrued warranty |  |  | 21.2 |  |  |  | 22.3 |
Short-term lease obligations |  |  | 7.7 |  |  |  | 7.1 |
Other current liabilities |  |  | 68.3 |  |  |  | 80.8 |
Total current liabilities |  |  | 517.2 |  |  |  | 437.0 |
Long-term debt |  |  | 243.0 |  |  |  | 215.0 |
Deferred income taxes |  |  | 23.4 |  |  |  | 21.4 |
Long-term lease obligations |  |  | 15.7 |  |  |  | 12.8 |
Other long-term liabilities |  |  | 23.0 |  |  |  | 33.3 |
Total liabilities |  |  | 822.3 |  |  |  | 719.5 |
Commitments and contingencies |  |  |  |  |  |
Shareholders' Equity: |  |  |  |  |  |
Preferred stock ($.001 par value, 95,000,000 shares authorized; none issued or outstanding) |  |  | — |  |  |  | — |
Common stock ($.001 par value, 605,000,000 shares authorized; 61,447,894 and 64,584,291 shares issued and outstanding, respectively) |  |  | 0.1 |  |  |  | 0.1 |
Additional paid-in capital |  |  | 456.0 |  |  |  | 502.1 |
Retained earnings |  |  | 7.3 |  |  |  | 16.7 |
Accumulated other comprehensive income (loss) |  |  | 0.1 |  |  |  | (0.1 | )
Total shareholders' equity |  |  | 463.5 |  |  |  | 518.8 |
Total liabilities and shareholders' equity |  | $ | 1,285.8 |  |  | $ | 1,238.3 |

See Notes to Condensed Unaudited Consolidated Financial Statements.

3

REV Group, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements o f Operations and Comprehensive (Loss) Income

(Dollars in millions, except per share amounts)

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net sales |  | $ | 576.3 |  |  | $ | 643.6 |  |  | $ | 1,113.3 |  |  | $ | 1,197.6 |
Cost of sales |  |  | 519.2 |  |  |  | 556.2 |  |  |  | 1,000.4 |  |  |  | 1,048.5 |
Gross profit |  |  | 57.1 |  |  |  | 87.4 |  |  |  | 112.9 |  |  |  | 149.1 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  |  | 50.5 |  |  |  | 48.7 |  |  |  | 98.1 |  |  |  | 95.8 |
Research and development costs |  |  | 0.8 |  |  |  | 1.5 |  |  |  | 2.0 |  |  |  | 2.8 |
Amortization of intangible assets |  |  | 2.0 |  |  |  | 2.5 |  |  |  | 4.4 |  |  |  | 5.1 |
Restructuring |  |  | 2.9 |  |  |  | — |  |  |  | 6.6 |  |  |  | 1.0 |
Total operating expenses |  |  | 56.2 |  |  |  | 52.7 |  |  |  | 111.1 |  |  |  | 104.7 |
Operating income |  |  | 0.9 |  |  |  | 34.7 |  |  |  | 1.8 |  |  |  | 44.4 |
Interest expense, net |  |  | 3.5 |  |  |  | 5.5 |  |  |  | 6.9 |  |  |  | 11.0 |
Loss on early extinguishment of debt |  |  | — |  |  |  | 1.4 |  |  |  | — |  |  |  | 1.4 |
Loss on sale of business or business held for sale |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | 3.8 |
Loss on acquisition of business |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.4 |
(Loss) income before (benefit) provision for income taxes |  |  | (2.7 | ) |  |  | 27.8 |  |  |  | (5.2 | ) |  |  | 27.8 |
(Benefit) provision for income taxes |  |  | (0.4 | ) |  |  | 7.2 |  |  |  | (2.2 | ) |  |  | 7.2 |
Net (loss) income |  | $ | (2.3 | ) |  | $ | 20.6 |  |  | $ | (3.0 | ) |  | $ | 20.6 |
Other comprehensive income (loss), net of tax |  |  | 0.1 |  |  |  | (0.2 | ) |  |  | — |  |  |  | (0.2 | )
Comprehensive (loss) income |  | $ | (2.2 | ) |  | $ | 20.4 |  |  | $ | (3.0 | ) |  | $ | 20.4 |
Net (loss) income per common share: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.04 | ) |  | $ | 0.32 |  |  | $ | (0.05 | ) |  | $ | 0.32 |
Diluted |  | $ | (0.04 | ) |  | $ | 0.31 |  |  | $ | (0.05 | ) |  | $ | 0.32 |
Dividends declared per common share |  | $ | 0.05 |  |  | $ | — |  |  | $ | 0.10 |  |  | $ | — |

See Notes to Condensed Unaudited Consolidated Financial Statements.

4

REV Group, Inc. and Subsidiaries

Condensed Unaudited Consolida ted Statements of Cash Flows

(Dollars in millions)

|  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |
Cash flows from operating activities: |  |  |  |  |  |
Net (loss) income |  | $ | (3.0 | ) |  | $ | 20.6 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 18.3 |  |  |  | 16.7 |
Amortization of debt issuance costs |  |  | 0.8 |  |  |  | 1.2 |
Stock-based compensation expense |  |  | 4.5 |  |  |  | 3.4 |
Deferred income taxes |  |  | 2.0 |  |  |  | 1.3 |
Loss on early extinguishment of debt |  |  | — |  |  |  | 1.4 |
Gain on sale of assets |  |  | (0.3 | ) |  |  | (1.7 | )
Loss on sale of business or business held for sale |  |  | 0.1 |  |  |  | 3.8 |
Loss on acquisition of business |  |  | — |  |  |  | 0.4 |
Changes in operating assets and liabilities, net |  |  | 5.0 |  |  |  | (10.0 | )
Net cash provided by operating activities |  |  | 27.4 |  |  |  | 37.1 |
Cash flows from investing activities: |  |  |  |  |  |
Purchase of property, plant and equipment |  |  | (8.5 | ) |  |  | (8.6 | )
Proceeds from sale of assets |  |  | 2.6 |  |  |  | 11.9 |
Net cash (used in) provided by investing activities |  |  | (5.9 | ) |  |  | 3.3 |
Cash flows from financing activities: |  |  |  |  |  |
Net proceeds from borrowings on revolving credit facility |  |  | 28.0 |  |  |  | 266.0 |
Repayment of long-term debt |  |  | — |  |  |  | (303.4 | )
Payment of dividends |  |  | (6.4 | ) |  |  | — |
Payment of debt issuance costs |  |  | — |  |  |  | (7.0 | )
Repurchase and retirement of common stock |  |  | (45.9 | ) |  |  | — |
Other financing activities |  |  | (4.6 | ) |  |  | 0.3 |
Net cash used in financing activities |  |  | (28.9 | ) |  |  | (44.1 | )
Net decrease in cash and cash equivalents |  |  | (7.4 | ) |  |  | (3.7 | )
Cash and cash equivalents, beginning of period |  |  | 13.3 |  |  |  | 11.4 |
Cash and cash equivalents, end of period |  | $ | 5.9 |  |  | $ | 7.7 |
Supplemental disclosures of cash flow information: |  |  |  |  |  |
Cash paid (received) for: |  |  |  |  |  |
Interest |  | $ | 5.6 |  |  | $ | 9.5 |
Income taxes, net of refunds |  | $ | (15.5 | ) |  | $ | (6.9 | )

See Notes to Condensed Unaudited Consolidated Financial Statements.

5

REV Group, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Shareholders’ Equity

(Dollars in millions, except share amounts)

|  | Common Stock |  |  | Additional Paid-in |  |  | Retained |  |  | Accumulated Other Comprehensive |  |  | Total Shareholders' |
|  | Amount |  | # Shares |  |  | Capital |  |  | Earnings |  |  | (Loss) Income |  |  | Equity |
Balance, October 31, 2021 |  | $ | 0.1 |  |  | 64,584,291 Sh. |  |  | $ | 502.1 |  |  | $ | 16.7 |  |  | $ | (0.1 | ) |  | $ | 518.8 |
Net loss |  |  |  |  |  |  |  |  |  |  | (0.7 | ) |  |  |  |  |  | (0.7 | )
Stock-based compensation expense |  |  |  |  |  |  |  | 2.3 |  |  |  |  |  |  |  |  |  | 2.3 |
Exercise of common stock options |  |  | — |  |  | 2,400 Sh. |  |  |  | — |  |  |  |  |  |  |  |  |  | — |
Vesting of restricted and performance stock units, net of forfeitures and employee tax withholdings |  |  | — |  |  | 274,485 Sh. |  |  |  | (2.1 | ) |  |  |  |  |  |  |  |  | (2.1 | )
Issuance of restricted stock awards, net of forfeitures and employee tax withholdings on vested awards |  |  |  |  | 242,999 Sh. |  |  |  | (2.6 | ) |  |  |  |  |  |  |  |  | (2.6 | )
Other comprehensive income, net of tax |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.1 |  |  |  | 0.1 |
Repurchase and retirement of common stock |  |  | — |  |  | (1,980,159 Sh.) |  |  |  | (24.4 | ) |  |  |  |  |  |  |  |  | (24.4 | )
Dividends declared on common stock |  |  |  |  |  |  |  |  |  |  | (3.3 | ) |  |  |  |  |  | (3.3 | )
Balance, January 31, 2022 |  | $ | 0.1 |  |  | 63,124,016 Sh. |  |  | $ | 475.3 |  |  | $ | 12.7 |  |  | $ | — |  |  | $ | 488.1 |
Net loss |  |  |  |  |  |  |  |  |  |  | (2.3 | ) |  |  |  |  |  | (2.3 | )
Stock-based compensation expense |  |  |  |  |  |  |  | 2.2 |  |  |  |  |  |  |  |  |  | 2.2 |
Other comprehensive income, net of tax |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.1 |  |  |  | 0.1 |
Repurchase and retirement of common stock |  |  | — |  |  | (1,676,122 Sh.) |  |  |  | (21.5 | ) |  |  |  |  |  |  |  |  | (21.5 | )
Dividends declared on common stock |  |  |  |  |  |  |  |  |  |  | (3.1 | ) |  |  |  |  |  | (3.1 | )
Balance, April 30, 2022 |  | $ | 0.1 |  |  | 61,447,894 Sh. |  |  | $ | 456.0 |  |  | $ | 7.3 |  |  | $ | 0.1 |  |  | $ | 463.5 |
|  | Common Stock |  |  | Additional Paid-in |  |  | Retained |  |  | Accumulated Other Comprehensive |  |  | Total Shareholders' |
|  | Amount |  | # Shares |  |  | Capital |  |  | Deficit |  |  | Loss |  |  | Equity |
Balance, October 31, 2020 |  | $ | 0.1 |  |  | 63,403,326 Sh. |  |  | $ | 496.1 |  |  | $ | (21.1 | ) |  | $ | (2.8 | ) |  | $ | 472.3 |
Net income (loss) |  |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  | — |
Stock-based compensation expense |  |  |  |  |  |  |  | 1.9 |  |  |  |  |  |  |  |  |  | 1.9 |
Exercise of common stock options |  |  | — |  |  | 6,000 Sh. |  |  |  | 0.2 |  |  |  |  |  |  |  |  |  | 0.2 |
Vesting and issuance of restricted stock units and awards, net of forfeitures and employee tax withholdings |  |  | — |  |  | 901,313 Sh. |  |  |  | (1.1 | ) |  |  |  |  |  |  |  |  | (1.1 | )
Settlement of liability classified award |  |  | — |  |  | 169,142 Sh. |  |  |  | 2.0 |  |  |  |  |  |  |  |  |  | 2.0 |
Balance, January 31, 2021 |  | $ | 0.1 |  |  | 64,479,781 Sh. |  |  | $ | 499.1 |  |  | $ | (21.1 | ) |  | $ | (2.8 | ) |  | $ | 475.3 |
Net income |  |  |  |  |  |  |  |  |  |  | 20.6 |  |  |  |  |  |  | 20.6 |
Other comprehensive loss, net of tax |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.2 | ) |  |  | (0.2 | )
Stock-based compensation expense |  |  |  |  |  |  |  | 1.6 |  |  |  |  |  |  |  |  |  | 1.6 |
Exercise of common stock options |  |  | — |  |  | 191,000 Sh. |  |  |  | 1.5 |  |  |  |  |  |  |  |  |  | 1.5 |
Issuance of restricted stock awards |  |  | — |  |  | 63,615 Sh. |  |  |  | — |  |  |  |  |  |  |  |  |  | — |
Balance, April 30, 2021 |  | $ | 0.1 |  |  | 64,734,396 Sh. |  |  | $ | 502.2 |  |  | $ | (0.5 | ) |  | $ | (3.0 | ) |  | $ | 498.8 |

See Notes to Condensed Unaudited Consolidated Financial Statements.

6

REV Group, Inc. and Subsidiaries

Notes to the Condensed Unaudited Consolidated Financial Statements

(All tabular amounts presented in millions, except share and per share amounts)

Note 1. Basis of Presentation

The unaudited Condensed Consolidated Financial Statements include the accounts of REV Group, Inc. (“REV” or “the Company”) and all its subsidiaries. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments, unless otherwise noted) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K of the Company for the year ended October 31, 2021. The interim results are not necessarily indicative of results for the full year.

Equity Sponsor: The Company’s primary equity holders are funds and an investment vehicle associated with AIP CF IV, LLC, which the Company collectively refers to as “American Industrial Partners,” “AIP” or “Sponsor” and which indirectly own approximately 44.9% of REV Group’s voting equity as of April 30, 2022. AIP is an operations and engineering-focused private equity firm headquartered in New York, New York.

Related Party Transactions: During the three months ended April 30, 2022 and April 30, 2021, the Company did no t incur expenses associated with its primary equity holder. During the six months ended April 30, 2022 and April 30, 2021, the Company reimbursed expenses of its primary equity holder of $0.1 million and $0.2 million, respectively. These expenses are included in selling, general and administrative expenses in the Company’s Condensed Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income.

Recent Accounting Pronouncements

Accounting Pronouncement Recently Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), “Simplifying the Accounting for Income Taxes”. The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 such as recognizing deferred taxes for equity investments, the incremental approach to performing intra-period tax allocation and calculating income taxes in interim periods. The standard also simplifies accounting for income taxes under U.S. GAAP by clarifying and amending existing guidance, including the recognition of deferred taxes for goodwill, the allocation of taxes to members of a consolidated group and requiring that an entity reflect the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted ASU 2019-12 as of November 1, 2021. The adoption did not have a material impact on the Company’s consolidated financial statements.

Note 2. Revenue Recognition

Substantially all of the Company’s revenue is recognized from contracts with customers with product shipment destinations in the United States and Canada. The Company accounts for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. The Company determines the transaction price for each contract at inception based on the consideration that it expects to receive for the goods and services promised under the contract. The transaction price excludes sales and usage-based taxes and certain “pass-through” amounts collected on behalf of third parties. The Company has elected to expense incremental costs to obtain a contract when the amortization period of the related asset is expected to be less than one year.

7

The Company’s primary source of revenue is generated from the manufacture and sale of specialty vehicles through its direct sales force or dealer network. The Company also generates revenue through separate contracts that relate to the sale of aftermarket parts and services. Revenue is typically recognized at a point-in-time, when control is transferred, which generally occurs when the product has been shipped to the customer or when it has been picked-up from the Company’s manufacturing facilities. Shipping and handling costs that occur after the transfer of control are fulfillment costs that are recorded in “Cost of Sales” in the Condensed Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income when incurred or when the related product revenue is recognized, whichever is earlier. Periodically, certain customers request bill and hold transactions. In such cases, revenue is not recognized until after control has transferred which is generally when the customer has requested such transaction and has been notified that the product (i) has been completed according to customer specifications, (ii) has passed our quality control inspections, and (iii) has been separated from our inventory and is ready for physical transfer to the customer. Warranty obligations associated with the sale of a unit are assurance-type warranties that are a guarantee of the unit’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract.

Contract Assets and Contract Liabilities

The Company is generally entitled to bill its customers upon satisfaction of its performance obligations, and payment is usually received shortly after billing. Payments for certain contracts are received in advance of satisfying the related performance obligations. Such payments are recorded as customer advances in the Company’s Condensed Unaudited Consolidated Balance Sheets when received. The corresponding performance obligations are generally satisfied within one year of the contract inception. During the three months ended April 30, 2022 and April 30, 2021, the Company recognized $26.7 million and $33.7 million, respectively, of revenue that was included in the customer advance balances of $210.6 million and $170.1 million as of October 31, 2021 and October 31, 2020, respectively. During the six months ended April 30, 2022 and April 30, 2021, the Company recognized $57.8 million and $85.1 million, respectively, of revenue that was included in the customer advance balances of $210.6 million and $170.1 million as of October 31, 2021 and October 31, 2020, respectively. The Company’s payment terms do not include a significant financing component and the Company does not have significant contract assets.

Note 3. Leases

The Company leases certain administrative and production facilities and equipment under long-term, non-cancelable operating lease agreements. The Company determines if an arrangement is or contains a lease at contract inception and recognizes a ROU asset and a lease liability based on the present value of fixed, and certain index-based lease payments at the lease commencement date. Variable payments are excluded from the present value of lease payments and are recognized in the period in which the payment is made. Lease agreements may include options to extend or terminate the lease or purchase the underlying asset. In situations where the Company is reasonably certain to exercise such options, they are considered in determining the lease term and the associated option payments, or exercise price in the case of an option to purchase, are included in the measurement of the lease liabilities and ROU assets. The Company’s leases generally do not include restrictive financial or other covenants, or residual value guarantees. The Company generally uses its incremental borrowing rate as the discount rate for measuring its lease liabilities, as the Company cannot determine the interest rate implicit in the lease because it does not have access to certain lessor specific information. Lease expense is recognized on a straight-line basis over the lease term. The Company does not have significant finance leases.

During the three and six months ended April 30, 2022, the Company recognized total operating lease costs of $2.2 million and $4.2 million, respectively, and paid cash of $2.5 million and $4.8 million, respectively, for amounts included in the measurement of lease liabilities. During the three and six months ended April 30, 2021, the Company recognized total operating lease costs of $2.4 million and $4.7 million, respectively, and paid cash of $2.4 million and $4.8 million, respectively, for amounts included in the measurement of lease liabilities.

At April 30, 2022, future minimum operating lease payments due under ASC 842 are summarized by fiscal year in the table below:

Remaining six months of fiscal year 2022 |  | $ | 4.8 |
2023 |  |  | 6.5 |
2024 |  |  | 4.4 |
2025 |  |  | 2.9 |
2026 |  |  | 1.6 |
Thereafter |  |  | 6.9 |
Total undiscounted lease payments |  |  | 27.1 |
Less: imputed interest |  |  | (3.7 | )
Total lease liabilities |  | $ | 23.4 |

8

As of April 30, 2022, the weighted average remaining lease term and the weighted average discount rate for operating leases was 5.6 years and 5.1%, respectively.

As of April 30, 2021, the weighted average remaining lease term and the weighted average discount rate for operating leases was 4.3 years and 5.0%, respectively.

Note 4. Inventories

Inventories consisted of the following:

|  | April 30, 2022 |  |  | October 31, 2021 |
Chassis |  | $ | 46.3 |  |  | $ | 33.5 |
Raw materials & parts |  |  | 215.4 |  |  |  | 188.0 |
Work in process |  |  | 282.9 |  |  |  | 231.0 |
Finished products |  |  | 29.7 |  |  |  | 39.4 |
|  |  | 574.3 |  |  |  | 491.9 |
Less: reserves |  |  | (11.4 | ) |  |  | (10.2 | )
Total inventories, net |  | $ | 562.9 |  |  | $ | 481.7 |

Note 5. Property, Plant and Equipment

Property, plant and equipment consisted of the following:

|  | April 30, 2022 |  |  | October 31, 2021 |
Land & land improvements |  | $ | 18.5 |  |  | $ | 19.1 |
Buildings & improvements |  |  | 99.0 |  |  |  | 107.5 |
Machinery & equipment |  |  | 88.7 |  |  |  | 88.6 |
Rental & used vehicles |  |  | 2.1 |  |  |  | 2.5 |
Computer hardware & software |  |  | 58.7 |  |  |  | 58.9 |
Office furniture & fixtures |  |  | 3.9 |  |  |  | 4.3 |
Construction in process |  |  | 8.5 |  |  |  | 7.8 |
|  |  | 279.4 |  |  |  | 288.7 |
Less: accumulated depreciation |  |  | (135.0 | ) |  |  | (131.1 | )
Total property, plant and equipment, net |  | $ | 144.4 |  |  | $ | 157.6 |

Depreciation expense was $6.7 million and $5.5 million for the three months ended April 30, 2022, and April 30, 2021, respectively, and $13.9 million and $11.6 million for the six months ended April 30, 2022, and April 30, 2021, respectively.

Note 6. Goodwill and Intangible Assets

The table below represents goodwill by segment:

|  | April 30, 2022 |  |  | October 31, 2021 |
Fire & Emergency |  | $ | 88.6 |  |  | $ | 88.6 |
Commercial |  |  | 26.2 |  |  |  | 26.2 |
Recreation |  |  | 42.5 |  |  |  | 42.5 |
Total goodwill |  | $ | 157.3 |  |  | $ | 157.3 |

9

There was no change in the net carrying value of goodwill for the three and six months ended April 30, 2022 and April 30, 2021.

Intangible assets (excluding goodwill) consisted of the following:

|  | April 30, 2022 |
|  | Weighted- Average Life |  |  | Gross |  |  | Accumulated Amortization |  |  | Net |
Finite-lived customer relationships |  |  | 8.0 |  |  | $ | 43.7 |  |  | $ | (29.2 | ) |  | $ | 14.5 |
Indefinite-lived trade names |  |  |  |  |  | 107.4 |  |  |  | — |  |  |  | 107.4 |
Total intangible assets, net |  |  |  |  | $ | 151.1 |  |  | $ | (29.2 | ) |  | $ | 121.9 |

|  | October 31, 2021 |
|  | Weighted- Average Life |  |  | Gross |  |  | Accumulated Amortization |  |  | Net |
Finite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  |  | 8.0 |  |  | $ | 66.2 |  |  | $ | (47.3 | ) |  | $ | 18.9 |
Non-compete agreements |  |  | 5.0 |  |  |  | 2.0 |  |  |  | (2.0 | ) |  |  | — |
|  |  |  |  |  | 68.2 |  |  |  | (49.3 | ) |  |  | 18.9 |
Indefinite-lived trade names |  |  |  |  |  | 107.4 |  |  |  | — |  |  |  | 107.4 |
Total intangible assets, net |  |  |  |  | $ | 175.6 |  |  | $ | (49.3 | ) |  | $ | 126.3 |

Amortization expense was $2.0 million and $2.5 million for the three months ended April 30, 2022, and April 30, 2021, respectively, and $4.4 million and $5.1 million for the six months ended April 30, 2022 and April 30, 2021, respectively. As of April 30, 2022 and April 30, 2021, fully amortized intangible assets and the related accumulated amortization related to customer relationships and non-compete agreements and trade names, were written off, respectively.

Note 7. Divestiture Activities

In the first quarter of fiscal year 2021, in connection with a strategic review of the product portfolio, the Company made the decision to divest of its REV Brazil business. The assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of April 30, 2021. The carrying value of the net assets held for sale, inclusive of the cumulative translation adjustment balance attributable to this business, was greater than their fair value, less costs to sell, resulting in a loss of $3.8 million, which is included in the Condensed Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the six months ended April 30, 2021. The REV Brazil business is reported as part of the Fire & Emergency segment.

The Company previously made an initial investment in its China joint venture, Anhui Chery REV Specialty Vehicle Technology Co., Ltd (“China JV”), in exchange for 10% equity interest in its China JV. The Company recorded this investment under the equity method of accounting. The Company’s investment in the China JV also includes an interest-bearing loan.

During the fourth quarter of fiscal year 2021, the Company made the strategic decision to exit its interests in the China JV and began soliciting offers to sell the investment and settle the loan. In connection with this decision, the Company recorded a loss of $6.2 million, which represents the difference between the carrying value of the investment and loan and the estimated proceeds to be received upon sale and settlement, respectively. This amount was recorded as a non-operating loss within our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended October 31, 2021.

10

Note 8. Restructuring and Other Related Charges

In September 2021, the Company announced that it would close its Kovatch Mobile Equipment (“KME”) production facilities located in Nesquehoning, PA and Roanoke, VA and relocate the production to other existing Fire and Emergency (“F&E”) segment facilities within the United States. The production facilities are being closed to better align our manufacturing footprint, to access our broad operational expertise and resources, enhance quality and improve delivery times by leveraging the advanced manufacturing capabilities that we have throughout the F&E segment.

The Company incurred certain restructuring and other related charges in connection with the decision to relocate its existing KME production facilities. For the three months ended April 30, 2022, the Company recorded restructuring charges of $2.9 million and additional charges of $5.3 million consisting of $3.2 million of production inefficiencies, $0.9 million of accelerated depreciation and $1.2 million of other costs. For the six months ended April 30, 2022, the Company recorded restructuring charges of $6.6 million and additional charges of $7.4 million consisting of $3.9 million of production inefficiencies, $2.3 million of accelerated depreciation and $1.2 million of other costs.

The Company expects to incur additional restructuring costs between $1.0 to $2.0 million and restructuring related and other charges of $0.5 million and $1.0 million related to this activity.

Pre-tax restructuring charges were as follows:

|  | Employee Severance and Termination Benefits |  |  | Contract termination and other costs |  |  | Asset Impairments |  |  | Three Months Ended April 30, 2022 |
Fire & Emergency |  | $ | 1.3 |  |  | $ | 1.6 |  |  | $ | — |  |  | $ | 2.9 |

|  | Employee Severance and Termination Benefits |  |  | Contract termination and other costs |  |  | Asset Impairments |  |  | Six Months Ended April 30, 2022 |
Fire & Emergency |  | $ | 4.1 |  |  | $ | 2.5 |  |  | $ | — |  |  | $ | 6.6 |

Changes in the Company’s restructuring reserves related to the initiatives announced during fiscal year 2021 were as follows:

|  | Employee Severance and Termination Benefits |  |  | Contract termination and other costs |  |  | Asset Impairment |  |  | Total |
Balance at beginning of the period |  | $ | 1.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 1.0 |
Restructuring provision |  |  | 4.1 |  |  |  | 2.5 |  |  |  | — |  |  |  | 6.6 |
Utilized - cash |  |  | (2.2 | ) |  |  | (2.0 | ) |  |  | — |  |  |  | (4.2 | )
Utilized - noncash |  |  |  |  |  | (0.5 | ) |  |  | — |  |  |  | (0.5 | )
Balance at end of the period |  | $ | 2.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.9 |

As of April 30, 2022 the Company had ceased production activities at the Nesquehoning, PA and Roanoke, VA locations. During the three months ended, April 30, 2022, the Company sold certain properties, machinery and equipment previously used at the Nesquehoning, PA location. The net proceeds received from this sale was $2.0 million, which has been included as a cash inflow from investing activities under the "Proceeds from sale of assets" caption within the Condensed Unaudited Consolidated Statement of Cash flow for the six months ended April 30, 2022. No gain or loss was recorded in connection with this sale.

Additional assets to be disposed of in connection with this relocation met the held for sale criteria as of April 30, 2022. The carrying value of the net assets held for sale, was equal to their fair value less cost to sell. As of April 30, 2022, these assets consisted of: Property, plant and equipment, net—$5.2 million, Inventories, net—$0.4 million and Other Assets —$0.1 million.

11

Note 9. Long-Term Debt

The Company was obligated under the following debt instrument:

|  | April 30, 2022 |  |  | October 31, 2021 |
2021 ABL facility |  | $ | 243.0 |  |  | $ | 215.0 |

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. The 2021 ABL Facility provides for revolving loans and letters of credit in an aggregate amount of up to $550.0 million. The total credit facility is subject to a $30.0 million sublimit for swing line loans and a $35.0 million sublimit for letters of credit (plus up to an additional $20.0 million of letters of credit at issuing bank’s discretion), along with certain borrowing base and other customary restrictions as defined in the 2021 ABL Agreement. The 2021 ABL Agreement allows for incremental facilities in an aggregate amount of up to $100.0 million, plus the excess, if any, of the borrowing base then in effect over total commitments then in effect. Any such incremental facilities are subject to receiving additional commitments from lenders and certain other customary conditions. 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 Condensed Unaudited 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.

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. 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. 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 2.06% as of April 30, 2022. 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 2021 ABL Facility’s borrowing base is comprised of eligible receivables and eligible inventory, plus a fixed asset sublimit of certain eligible real property and eligible equipment, which fixed asset sublimit reduces by quarterly amortization as specified in the 2021 ABL Agreement.

The 2021 ABL Agreement contains customary representations and warranties, affirmative and negative covenants, subject in certain cases to customary limitations, exceptions and exclusions. The 2021 ABL Agreement also contains certain customary events of default. The occurrence of an event of default under the 2021 ABL Agreement could result in the termination of the commitments under the 2021 ABL Facility and the acceleration of all outstanding borrowings under it. 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 April 30, 2022. As of April 30, 2022, the Company’s availability under the 2021 ABL Facility was $293.6 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 April 30, 2022 and October 31, 2021.

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Note 10. Warranties

The Company’s products generally carry explicit warranties that extend from several months to several years, based on terms that are generally accepted in the marketplace. Selected components (such as engines, transmissions, tires, etc.) included in the Company’s end products may include warranties from original equipment manufacturers (“OEM”). These OEM warranties are passed on to the end customer of the Company’s products, and the customer deals directly with the applicable OEM for any issues encountered on those components.

Changes in the Company’s warranty liability consisted of the following:

|  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |
Balance at beginning of period |  | $ | 37.6 |  |  | $ | 37.0 |
Warranty provisions |  |  | 12.5 |  |  |  | 16.7 |
Settlements made |  |  | (14.9 | ) |  |  | (16.7 | )
Warranties for prior year acquisition |  |  | — |  |  |  | 1.2 |
Balance at end of period |  | $ | 35.2 |  |  | $ | 38.2 |

Accrued warranty is classified in the Company’s consolidated balance sheets as follows:

|  | April 30, 2022 |  |  | October 31, 2021 |
Current liabilities |  | $ | 21.2 |  |  | $ | 22.3 |
Other long-term liabilities |  |  | 14.0 |  |  |  | 15.3 |
Total warranty liability |  | $ | 35.2 |  |  | $ | 37.6 |

Note 11. Earnings Per Share

Basic earnings per common share (“EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted EPS is computed by dividing net income, if applicable, by the weighted-average number of common shares outstanding assuming dilution. The difference between basic EPS and diluted EPS is the result of the dilutive effect of outstanding stock options, performance stock units and restricted stock units and awards. The reconciliation of basic weighted-average shares outstanding to diluted weighted-average shares outstanding was as follows:

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Basic weighted-average common shares outstanding |  |  | 61,667,009 |  |  |  | 64,024,379 |  |  |  | 62,244,817 |  |  |  | 63,730,382 |
Dilutive stock options |  |  | — |  |  |  | 89,993 |  |  |  | — |  |  |  | 89,115 |
Dilutive restricted stock awards |  |  | — |  |  |  | 587,750 |  |  |  | — |  |  |  | 347,630 |
Dilutive restricted stock units |  |  | — |  |  |  | 509,398 |  |  |  | — |  |  |  | 455,164 |
Dilutive performance stock units |  |  | — |  |  |  | 506,633 |  |  |  | — |  |  |  | 373,900 |
Diluted weighted-average common shares outstanding |  |  | 61,667,009 |  |  |  | 65,718,153 |  |  |  | 62,244,817 |  |  |  | 64,996,191 |

The table below represents exclusions from the calculation of diluted weighted-average shares outstanding because they would have been anti-dilutive:

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Anti-dilutive stock options |  |  | 48,500 |  |  |  | — |  |  |  | 48,500 |  |  |  | — |
Anti-dilutive restricted stock awards |  |  | 1,195,144 |  |  |  | 63,615 |  |  |  | 1,195,144 |  |  |  | 63,615 |
Anti-dilutive restricted stock units |  |  | 819,202 |  |  |  | 14,044 |  |  |  | 819,202 |  |  |  | 211,536 |
Anti-dilutive performance stock units |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Anti-dilutive common stock equivalents |  |  | 2,062,846 |  |  |  | 77,659 |  |  |  | 2,062,846 |  |  |  | 275,151 |

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Note 12. Income Taxes

For interim financial reporting, the Company estimates its annual effective tax rate based on the projected income for its entire fiscal year and records a provision (benefit) for income taxes on a quarterly basis based on the estimated annual effective income tax rate, adjusted for any discrete tax items.

The Company recorded an income tax benefit of $0.4 million for the three months ended April 30, 2022, or 14.8% of pre-tax loss, compared to $7.2 million of expense, or 25.8% of pretax income, for the three months ended April 30, 2021. Results for the three months ended April 30, 2022 were unfavorably impacted by $0.3 million of net discrete tax expense related to the loss of a tax attribute. Results for the three months ended April 30, 2021 were favorably impacted by $0.1 million of net discrete tax benefit primarily related to stock-based compensation tax deductions.

The Company recorded an income tax benefit of $2.2 million for the six months ended April 30, 2022, or 42.3% of pre-tax loss, compared to $7.2 million of expense, or 25.9% of pretax income, for the six months ended April 30, 2021. Results for the six months ended April 30, 2022 were favorably impacted by $0.9 million of net discrete tax benefit primarily related to stock-based compensation tax deductions. Results for the six months ended April 30, 2021 were favorably impacted by $1.2 million of net discrete tax benefit related primarily to the recognition of deferred taxes on assets classified as held for sale and stock-based compensation tax deductions. The Company periodically evaluates its valuation allowance requirements as facts and circumstances change and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s effective income tax rate.

The Company’s liability for unrecognized tax benefits, including interest and penalties, was $4.1 million as of April 30, 2022 and $4.0 million as of October 31, 2021. The unrecognized tax benefits are presented in other long-term liabilities in the Company’s Condensed Unaudited Consolidated Balance Sheets as of April 30, 2022 and the Consolidated Balance Sheets as of October 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in its Condensed Unaudited Consolidated Statement of Operations and Comprehensive (Loss) Income.

The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of April 30, 2022, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates and/or from its historical income tax provisions and income tax liabilities and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments related to income tax examinations.

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Note 13. Commitments and Contingencies

Personal Injury Actions and Other: Product and general liability claims arise against the Company from time to time in the ordinary course of business. 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. Management, however, believes that any losses will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

Market Risks: The Company is contingently liable under bid, performance and specialty bonds and has open standby letters of credit issued by the Company’s banks in favor of third parties as follows:

|  | April 30, 2022 |  |  | October 31, 2021 |
Performance, bid and specialty bonds |  | $ | 538.1 |  |  | $ | 480.0 |
Open standby letters of credit |  |  | 12.9 |  |  |  | 23.6 |
Total |  | $ | 551.0 |  |  | $ | 503.6 |

Chassis Contingent Liabilities: The Company obtains certain vehicle chassis from automobile manufacturers under converter pool agreements. These agreements generally provide that the manufacturer will supply chassis at the Company’s various production facilities under the terms and conditions set forth in the agreement. The manufacturer does not transfer the certificate of origin to the Company upon delivery. Accordingly, the chassis are not owned by the Company when delivered, therefore, are excluded from the Company’s inventory. Upon being put into production, the Company owns the inventory and becomes obligated to pay the manufacturer for the chassis. Chassis are typically placed into production within 90 to 120 days of delivery to the Company. If the chassis are not placed into production within this timeframe, the Company generally purchases the chassis and records inventory, or the Company is obligated to begin paying an interest charge on this inventory until purchased. Such agreements are customary in the industries in which the Company operates and the Company’s exposure to loss under such agreements is limited by the value of the vehicle chassis that would be resold to mitigate any losses. The Company’s contingent liability under such agreements was $6.8 million and $13.9 million as of April 30, 2022 and October 31, 2021, respectively.

Repurchase Commitments: The Company has repurchase agreements with certain lending institutions. The repurchase commitments are on an individual unit basis with a term from the date it is financed by the lending institution through payment date by the dealer or other customer, generally not exceeding two years. The Company also repurchases inventory from dealers from time to time due to state law or regulatory requirements that require manufacturers to repurchase inventory if a dealership exits the business. The Company’s maximum contingent liability under such agreements was $202.8 million and $185.8 million as of April 30, 2022, and October 31, 2021, respectively, which represents the gross value of all vehicles under repurchase agreements. Such agreements are customary in the industries in which the Company operates and the Company’s exposure to loss under such agreements is limited by the resale value of the units which is required to be repurchased. Losses incurred under such arrangements have not been significant and the Company expects this pattern to continue. The reserve for losses included in other liabilities on contracts outstanding as of April 30, 2022 and October 31, 2021 is immaterial.

Guarantee Arrangements: The Company is party to multiple agreements whereby it guarantees indebtedness of others, including losses under loss pool agreements. The Company estimated that its maximum loss exposure under these contracts was $11.7 million and $14.8 million at April 30, 2022 and October 31, 2021, respectively. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability to, among other things, take possession of the underlying collateral. While the Company does not expect to experience losses under these agreements that are materially in excess of the amounts reserved, it cannot provide any assurance that the financial condition of the third parties will not deteriorate resulting in the third party’s inability to meet their obligations. Additionally, the Company cannot guarantee that the collateral underlying the agreements will be available or sufficient to avoid losses materially in excess of the amount reserved.

Other Matters: The Company is, from time to time, party to various legal proceedings arising out of ordinary course of business. The amount of alleged liability, if any, from these proceedings cannot be determined with certainty; however, the Company believes that its ultimate liability, if any, arising from pending legal proceedings, as well as from asserted legal claims and known potential legal claims, which are probable of assertion, taking into account established accruals for estimated liabilities, should not be material to the business, financial condition or results of operations.

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A consolidated federal putative securities class action and a consolidated state putative securities class action that had been pending against the Company and certain of its officers and directors have each been settled. 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. The state action also named certain of the underwriters for the Company’s IPO or secondary offering as defendants. The federal and state courts each consolidated multiple separate actions pending before them, the first of which was filed on June 8, 2018. 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. The consolidated state action was stayed in favor of the consolidated federal action. 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 of the settlement. The settlement payment is being fully covered by the Company’s insurers. The settlement payment and the related insurance proceeds were recorded in other current liabilities and other current assets, respectively, in the Company’s Consolidated Balance Sheets as of October 31, 2021. On August 24, 2021, the court preliminarily approved the settlement. Notice was then given to the classes certified for settlement, and the court entered a final 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. As of April 30, 2022, there are no further amounts recorded in the Condensed Unaudited 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. The parties to the consolidated derivative actions reached a settlement in principle on all issues other than plaintiffs’ counsel’s attorneys’ fees on or about February 17, 2021, and an agreement with respect to plaintiffs’ counsel’s attorneys’ fees 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 motion for preliminary approval of the derivative settlement remains pending.

Note 14. Business Segment Information

The Company is organized into three reportable segments based on management’s process for making operating decisions, allocating capital and measuring performance, and based on the similarity of products, customers served, common use of facilities, and economic characteristics. The Company’s segments are as follows:

Fire & Emergency: This segment includes Emergency One (“E-ONE”), KME, Ferrara, Spartan Emergency Response (“Spartan ER”), American Emergency Vehicles, Leader Emergency Vehicles, Horton Emergency Vehicles and REV Group Orlando. These business units manufacture, market and distribute commercial and custom fire and emergency vehicles primarily for fire departments, airports, other governmental units, contractors, hospitals and other care providers in the United States and other countries.

Commercial: This segment includes Collins Bus, ENC, Capacity and Lay-Mor. Collins Bus manufactures, markets and distributes school buses, normally referred to as Type A school buses. ENC manufactures, markets and distributes municipal transit buses, primarily used for public transportation. Capacity manufactures, markets and distributes trucks used in terminal type operations, i.e., rail yards, warehouses, rail terminals and shipping terminals/ports. Lay-Mor manufactures, markets and distributes industrial sweepers for both the commercial and rental markets.

Recreation: This segment includes REV Recreation Group (“RRG”), Goldshield Fiberglass, Inc. (“Goldshield”), Renegade, Midwest and Lance, and their respective manufacturing facilities, service and parts divisions. RRG primarily manufactures, markets and distributes Class A RVs in both gas and diesel models. Renegade primarily manufacturers, markets and distributes Class C and “Super C” RVs. Midwest manufactures, markets and distributes Class B RVs and luxury vans. Lance manufactures, markets and distributes truck campers and towable campers. Goldshield manufactures, markets and distributes fiberglass reinforced molded parts to a diverse cross section of original equipment manufacturers and other commercial and industrial customers, including various components for RRG, which is one of Goldshield’s primary customers.

For purposes of measuring financial performance of its business segments, the Company does not allocate to individual business segments costs or items that are of a corporate nature. The caption “Corporate, Other & Elims” includes corporate office expenses, results of insignificant operations, intersegment eliminations and income and expense not allocated to reportable segments.

Total assets of the business segments exclude general corporate assets, which principally consist of cash and cash equivalents, certain property, plant and equipment and certain other assets pertaining to corporate and other centralized activities.

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Intersegment sales generally include amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment. All intersegment transactions have been eliminated in consolidation.

Selected financial information of the Company’s segments is as follows:

|  | Three Months Ended April 30, 2022 |
|  | Fire & Emergency |  |  | Commercial |  |  | Recreation |  |  | Corporate, Other & Elims |  |  | Consolidated |
Net sales |  | $ | 245.0 |  |  | $ | 90.7 |  |  | $ | 241.0 |  |  | $ | (0.4 | ) |  | $ | 576.3 |
Depreciation and amortization |  | $ | 4.0 |  |  | $ | 0.8 |  |  | $ | 3.4 |  |  | $ | 0.5 |  |  | $ | 8.7 |
Capital expenditures |  | $ | 1.8 |  |  | $ | 0.4 |  |  | $ | 1.6 |  |  | $ | 0.2 |  |  | $ | 4.0 |
Total assets |  | $ | 657.8 |  |  | $ | 228.8 |  |  | $ | 347.2 |  |  | $ | 52.0 |  |  | $ | 1,285.8 |
Adjusted EBITDA |  | $ | (2.2 | ) |  | $ | 4.4 |  |  | $ | 28.7 |  |  | $ | (7.1 | ) |  |  |

|  | Three Months Ended April 30, 2021 |
|  | Fire & Emergency |  |  | Commercial |  |  | Recreation |  |  | Corporate, Other & Elims |  |  | Consolidated |
Net sales |  | $ | 307.6 |  |  | $ | 98.4 |  |  | $ | 237.9 |  |  | $ | (0.3 | ) |  | $ | 643.6 |
Depreciation and amortization |  | $ | 3.0 |  |  | $ | 0.7 |  |  | $ | 3.5 |  |  | $ | 0.8 |  |  | $ | 8.0 |
Capital expenditures |  | $ | 3.6 |  |  | $ | 0.3 |  |  | $ | 0.9 |  |  | $ | 0.9 |  |  | $ | 5.7 |
Total assets |  | $ | 694.4 |  |  | $ | 208.1 |  |  | $ | 330.7 |  |  | $ | 59.7 |  |  | $ | 1,292.9 |
Adjusted EBITDA |  | $ | 21.7 |  |  | $ | 8.3 |  |  | $ | 25.1 |  |  | $ | (9.6 | ) |  |  |

|  | Six Months Ended April 30, 2022 |
|  | Fire & Emergency |  |  | Commercial |  |  | Recreation |  |  | Corporate, Other & Elims |  |  | Consolidated |
Net sales |  | $ | 482.4 |  |  | $ | 188.3 |  |  | $ | 443.6 |  |  | $ | (1.0 | ) |  | $ | 1,113.3 |
Depreciation and amortization |  | $ | 8.4 |  |  | $ | 1.5 |  |  | $ | 7.3 |  |  | $ | 1.1 |  |  | $ | 18.3 |
Capital expenditures |  | $ | 4.2 |  |  | $ | 1.0 |  |  | $ | 2.7 |  |  | $ | 0.6 |  |  | $ | 8.5 |
Total assets |  | $ | 657.8 |  |  | $ | 228.8 |  |  | $ | 347.2 |  |  | $ | 52.0 |  |  | $ | 1,285.8 |
Adjusted EBITDA |  | $ | (0.4 | ) |  | $ | 12.2 |  |  | $ | 45.8 |  |  | $ | (15.5 | ) |  |  |

|  | Six Months Ended April 30, 2021 |
|  | Fire & Emergency |  |  | Commercial |  |  | Recreation |  |  | Corporate, Other & Elims |  |  | Consolidated |
Net sales |  | $ | 588.2 |  |  | $ | 181.5 |  |  | $ | 428.0 |  |  | $ | (0.1 | ) |  | $ | 1,197.6 |
Depreciation and amortization |  | $ | 6.1 |  |  | $ | 1.5 |  |  | $ | 7.1 |  |  | $ | 2.0 |  |  | $ | 16.7 |
Capital expenditures |  | $ | 4.9 |  |  | $ | 1.1 |  |  | $ | 1.3 |  |  | $ | 1.3 |  |  | $ | 8.6 |
Total assets |  | $ | 694.4 |  |  | $ | 208.1 |  |  | $ | 330.7 |  |  | $ | 59.7 |  |  | $ | 1,292.9 |
Adjusted EBITDA |  | $ | 31.9 |  |  | $ | 15.5 |  |  | $ | 40.2 |  |  | $ | (18.7 | ) |  |  |

In considering the financial performance of the business, the chief operating decision maker analyzes the primary financial performance measure of Adjusted EBITDA. Adjusted EBITDA is defined as net income for the relevant period before depreciation and amortization, interest expense, income taxes and loss on early extinguishment of debt, as adjusted for items management believes are not indicative of the Company’s ongoing operating performance. Adjusted EBITDA is not a measure defined by U.S. GAAP but is computed using amounts that are determined in accordance with U.S. GAAP. A reconciliation of this performance measure to net loss is included below.

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The Company believes Adjusted EBITDA is useful to investors and used by management for measuring profitability because the measure excludes the impact of certain items which management believes have less bearing on the Company’s core operating performance, and allows for a more meaningful comparison of operating fundamentals between companies within its industries by eliminating the impact of capital structure and taxation differences between the companies. Additionally, Adjusted EBITDA is used by management to measure and report the Company’s financial performance to the Company’s Board of Directors, assists in providing a meaningful analysis of the Company’s operating performance and is used as a measurement in incentive compensation for management.

Provided below is a reconciliation of segment Adjusted EBITDA to net (loss) income:

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Fire & Emergency Adjusted EBITDA |  | $ | (2.2 | ) |  | $ | 21.7 |  |  | $ | (0.4 | ) |  | $ | 31.9 |
Commercial Adjusted EBITDA |  |  | 4.4 |  |  |  | 8.3 |  |  |  | 12.2 |  |  |  | 15.5 |
Recreation Adjusted EBITDA |  |  | 28.7 |  |  |  | 25.1 |  |  |  | 45.8 |  |  |  | 40.2 |
Corporate and Other Adjusted EBITDA |  |  | (7.1 | ) |  |  | (9.6 | ) |  |  | (15.5 | ) |  |  | (18.7 | )
Depreciation and amortization |  |  | (8.7 | ) |  |  | (8.0 | ) |  |  | (18.3 | ) |  |  | (16.7 | )
Interest expense, net |  |  | (3.5 | ) |  |  | (5.5 | ) |  |  | (6.9 | ) |  |  | (11.0 | )
Benefit (provision) for income taxes |  |  | 0.4 |  |  |  | (7.2 | ) |  |  | 2.2 |  |  |  | (7.2 | )
Transaction expenses |  |  | (0.3 | ) |  |  | (0.3 | ) |  |  | (0.5 | ) |  |  | (2.7 | )
Sponsor expense reimbursement |  |  | — |  |  |  | — |  |  |  | (0.1 | ) |  |  | (0.2 | )
Restructuring costs |  |  | (2.9 | ) |  |  | — |  |  |  | (6.6 | ) |  |  | (1.0 | )
Restructuring related charges |  |  | (4.4 | ) |  |  | (0.3 | ) |  |  | (5.1 | ) |  |  | (0.3 | )
Stock-based compensation expense |  |  | (2.2 | ) |  |  | (1.7 | ) |  |  | (4.5 | ) |  |  | (3.6 | )
Legal matters |  |  | (4.4 | ) |  |  | — |  |  |  | (5.2 | ) |  |  | (0.4 | )
Loss on early extinguishment of debt |  |  | — |  |  |  | (1.4 | ) |  |  | — |  |  |  | (1.4 | )
Net loss on sale of assets and business held for sale |  |  | (0.1 | ) |  |  | — |  |  |  | (0.1 | ) |  |  | (2.7 | )
Loss on acquisition of business |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.4 | )
Losses attributable to assets held for sale |  |  | — |  |  |  | (0.5 | ) |  |  | — |  |  |  | (0.7 | )
Net (loss) income |  | $ | (2.3 | ) |  | $ | 20.6 |  |  | $ | (3.0 | ) |  | $ | 20.6 |

Note 15. Stock Repurchase Program

On September 2, 2021, the Company’s Board of Directors approved the authorization of a new share repurchase program that allowed the repurchase of up to $150.0 million of the Company’s outstanding common stock. The share repurchase authorization expires in 24 months and gives management the flexibility to determine conditions under which shares may be purchased. During the three and six months ended April 30, 2022, the Company repurchased and retired 1,676,122 and 3,656,281 shares under this repurchase program at a total cost of $21.5 million and $45.9 million and at an average price of $12.84 per share and $12.54 per share, respectively.

Note 16. Subsequent Events

Quarterly Dividend

On June 2, 2022, the Company’s Board of Directors declared a quarterly cash dividend in the amount of $0.05 per share of common stock, which equates to a rate of $0.20 per share of common stock on an annualized basis, payable on July 15, 2022 to shareholders of record on June 30, 2022.

On March 23, 2020, the board of directors granted Mr. Rodney Rushing a one-time performance stock unit award under the REV Group, Inc. 2016 Omnibus Incentive Plan. On June 2, 2022, the board of directors approved an extension of the performance period of the award by one year until October 31, 2024.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This management’s discussion and analysis should be read in conjunction with the Condensed Unaudited Consolidated Financial Statements and risk factors contained in this Form 10-Q as well as the Management’s Discussion and Analysis and Risk Factors and audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K filed on December 15, 2021.

Overview

REV Group companies are leading designers, manufacturers and distributors of specialty vehicles and related aftermarket parts and services. We serve a diversified customer base, primarily in the United States, through three segments: Fire and Emergency (“F&E”), Commercial, and Recreation. We provide customized vehicle solutions for applications, including essential needs for public services (ambulances, fire apparatus, school buses, and transit buses), commercial infrastructure (terminal trucks and industrial sweepers) and consumer leisure (recreational vehicles). Our diverse portfolio is made up of well-established principal vehicle brands, including many of the most recognizable names within their industry. Several of our brands pioneered their specialty vehicle product categories and date back more than 50 years. We believe that we hold the first, second and third market share positions, and approximately 89% of our net sales during the second quarter of fiscal year 2022 came from products where we believe we hold such share position.

Segments

We serve a diversified customer base primarily in the United States and Canada through the following segments:

Fire & Emergency – The F&E segment sells and distributes 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, 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. We believe we are the largest manufacturer by unit volume of fire and emergency vehicles in the United States and have one of the industry’s broadest portfolios of products including Type I ambulances (aluminum body mounted on a heavy truck-style chassis), Type II ambulances (van conversion ambulance), Type III ambulances (aluminum body mounted on a van-style chassis), pumpers (fire apparatus on a custom or commercial chassis with a water pump and water tank to extinguish fires), ladder trucks (fire apparatus with stainless steel or aluminum ladders), tanker trucks and rescue, aircraft rescue firefighting (“ARFF”), custom cabs & chassis and other vehicles. 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 F&E product line.

Commercial – Our Commercial segment serves the bus market through the Collins Bus and ENC brands. We serve the terminal truck market through the Capacity brand and the sweeper market through the Lay-Mor brand. Our products in the Commercial segment include transit buses (large municipal buses where we build our own chassis and body), Type A school buses (small school bus built on commercial chassis), sweepers (three- and four-wheel versions used in road construction activities), and terminal trucks (specialized vehicles which move freight in warehouses, intermodal yards, distribution and fulfillment centers and ports). 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, Midwest and Lance. 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, Verona, Weekender and Lance, among others. 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. 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.

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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. 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 (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.

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.

While less economically sensitive than the Recreation segment, the F&E segment and the Commercial segment are also impacted by the overall economic environment. 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. In addition to commercial demand, local, state and federal tax revenues can be an important source of funding for many of our bus products including Type A school buses and transit buses. Volatility in tax revenues or availability of funds via budgetary appropriation can have a negative impact on the demand for these products.

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.

Seasonality

In a typical year, our operating results are impacted by seasonality. Historically, the slowest sales volume quarter has been the first fiscal quarter when the purchasing seasons and production days for vehicles, such as school buses, RVs and sweepers are the lowest due to the colder weather and the relatively long time until the summer vacation season. Additionally, the school year is underway with municipalities and school bus contractors utilizing their existing fleets to transport student populations and the holiday plant shutdowns. Sales of our products have typically been higher in the second, third and fourth fiscal quarters (with the fourth fiscal quarter typically being the strongest) due to better weather, the vacation season, buying habits of RV dealers and end-users, timing of government/municipal customer fiscal years, and the beginning of a new school year. Our quarterly results of operations, cash flows, and liquidity are likely to be impacted by these seasonal patterns. Sales and earnings for other vehicles that we produce, such as essential emergency vehicles and commercial bus fleets, are less seasonal, but fluctuations in sales of these vehicles can also be impacted by timing surrounding the fiscal years of municipalities and commercial customers, as well as the timing and amounts of multi-unit orders.

Impact of Acquisitions

We actively evaluate opportunities to improve and expand our business through targeted acquisitions that are consistent with our strategy. We also may dispose of certain components of our business that no longer fit within our overall strategy. Historically, a significant component of our growth has been through acquisitions of businesses. 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 recognize acquired assets and liabilities at fair value. This includes the recognition of identified intangible assets and goodwill which, in the case of definite-life intangible assets, are then amortized over their expected useful lives, which typically results in an increase in amortization expense. In addition, assets acquired and liabilities assumed generally include tangible assets as well as contingent assets and liabilities.

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Impact of COVID-19

During our second quarter of fiscal year 2020, the novel coronavirus known as "COVID-19" spread throughout the world creating a global pandemic. The pandemic triggered a significant downturn in global commerce and these challenging market conditions may continue for an extended period of time. As a result of the spread of COVID-19, we have also experienced disruption and delays in our supply chain, availability of labor, customer demand changes, and logistics challenges, including our customers’ ability to inspect and take delivery of vehicles.

As the global economy continues to recover from COVID-19 related disruption, labor and significant supply chain challenges, such as shortages in semiconductors, subcomponents and increased prices of raw materials, such as steel and aluminum, have impacted operations of companies on a global scale. Such supply chain disruptions during the first and second quarters of fiscal year 2022 impacted our ability to obtain certain raw materials and purchased components that are necessary to our production processes, including the ability to obtain chassis from third party suppliers. We continue to monitor these disruptions and take measures to mitigate the associated risks.

In certain geographies there has been a resurgence of COVID-19 variant cases and governmental authorities continue to implement numerous measures in an attempt to contain and mitigate the spread of COVID-19 and its variants. While the global market impacts, closures and limitations on movement are expected to be temporary, the duration of any demand changes, production and supply chain disruptions, and related financial impacts, cannot be reliably estimated at this time.

Russia-Ukraine War

In late February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including rising inflation and global supply-chain disruption. Although we do not have direct suppliers based in Russia or Ukraine, additional supply delays and possible shortages of critical components may arise as the conflict progresses and if certain suppliers’ operations and/or subcomponent supply from affected countries are disrupted further. We will continue to monitor and assess the impacts of the Russia-Ukraine war on macroeconomic conditions, our suppliers’ ability to deliver products and cybersecurity risks. See “Risk Factors” below.

Results of Operations

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
($ in millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net sales |  | $ | 576.3 |  |  | $ | 643.6 |  |  | $ | 1,113.3 |  |  | $ | 1,197.6 |
Gross profit |  |  | 57.1 |  |  |  | 87.4 |  |  |  | 112.9 |  |  |  | 149.1 |
Selling, general and administrative |  |  | 50.5 |  |  |  | 48.7 |  |  |  | 98.1 |  |  |  | 95.8 |
Restructuring |  |  | 2.9 |  |  |  | — |  |  |  | 6.6 |  |  |  | 1.0 |
Loss on early extinguishment of debt |  |  | — |  |  |  | 1.4 |  |  |  | — |  |  |  | 1.4 |
Loss on sale of business or business held for sale |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | 3.8 |
Loss on acquisition of business |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.4 |
(Benefit) provision for income taxes |  |  | (0.4 | ) |  |  | 7.2 |  |  |  | (2.2 | ) |  |  | 7.2 |
Net (loss) income |  |  | (2.3 | ) |  |  | 20.6 |  |  |  | (3.0 | ) |  |  | 20.6 |
Net (loss) income per common share |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.04 | ) |  | $ | 0.32 |  |  | $ | (0.05 | ) |  | $ | 0.32 |
Diluted |  | $ | (0.04 | ) |  | $ | 0.31 |  |  | $ | (0.05 | ) |  | $ | 0.32 |
Dividends declared per common share |  | $ | 0.05 |  |  | $ | — |  |  | $ | 0.10 |  |  | $ | — |
Adjusted EBITDA |  | $ | 23.8 |  |  | $ | 45.5 |  |  | $ | 42.1 |  |  | $ | 68.9 |
Adjusted Net Income |  | $ | 10.6 |  |  | $ | 25.7 |  |  | $ | 18.6 |  |  | $ | 34.6 |

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Net Sales |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Net sales |  | $ | 576.3 |  |  |  | -10.5 | % |  | $ | 643.6 |  |  | $ | 1,113.3 |  |  |  | -7.0 | % |  | $ | 1,197.6 |

Net Sales: Consolidated net sales decreased $67.3 million for the three months ended April 30, 2022 compared to the prior year quarter, primarily due to a decrease in net sales within the F&E and Commercial segments, partially offset by an increase in net sales within the Recreation segment. The decrease in net sales in the F&E segment was primarily due to decreased unit shipments of fire apparatus and ambulance units resulting from supply chain constraints and an unfavorable mix of fire apparatus, partially offset by price realization. The decrease in net sales in the Commercial segment was primarily due to decreased shipments of municipal transit buses, partially offset by increased shipments of terminal trucks and street sweepers, and price realization. The increase in net sales in the Recreation segment was primarily the result of price realization and favorable mix, partially offset by lower line rates and decreased unit shipments related to supply chain disruption and labor constraints in certain businesses.

Consolidated net sales decreased $84.3 million for the six months ended April 30, 2022 compared to the prior year period, 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. The decrease in sales in the F&E segment was primarily due to decreased unit shipments of fire apparatus and ambulance units resulting from supply chain and labor constraints, and an unfavorable mix of fire apparatus, partially offset by price realization. The increase in the Commercial segment net sales compared to the prior year period was 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. The increase in Recreation segment net sales was primarily the result of price realization and favorable mix, partially offset by lower line rates and decreased unit shipments related to supply chain disruption and labor constraints in certain businesses.

Gross Profit |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Gross profit |  | $ | 57.1 |  |  |  | -34.7 | % |  | $ | 87.4 |  |  | $ | 112.9 |  |  |  | -24.3 | % |  | $ | 149.1 |
% of net sales |  |  | 9.9 | % |  |  |  |  |  | 13.6 | % |  |  | 10.1 | % |  |  |  |  |  | 12.4 | %

Gross Profit: Consolidated gross profit decreased $30.3 million for the three months ended April 30, 2022 compared to the prior year quarter. The decrease in gross profit was primarily attributable to lower net sales, inefficiencies related to supply chain constraints and costs associated with relocating production of KME branded fire apparatus to other F&E segment facilities within the F&E segment, inflationary pressures, and an unfavorable mix within the F&E and Commercial segments, partially offset by price realization and a favorable mix in the Recreation segment.

Consolidated gross profit decreased $36.2 million for the six months ended April 30, 2022 compared to the prior year period. The decrease in gross profit was primarily attributable to lower net sales within the F&E segment, inefficiencies related to supply chain, labor constraints, and relocating production of KME branded fire apparatus to other F&E segment facilities within the F&E segment, inflationary pressures, and unfavorable mix within the F&E and Commercial segments, partially offset by price realization and a favorable mix in the Recreation segment.

Selling, General and Administrative |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Selling, general and administrative |  | $ | 50.5 |  |  |  | 3.7 | % |  | $ | 48.7 |  |  | $ | 98.1 |  |  |  | 2.4 | % |  | $ | 95.8 |

Selling, General and Administrative: Consolidated selling, general and administrative (“SG&A”) costs increased $1.8 million for the three months ended April 30, 2022 compared to the prior year quarter. The increase in SG&A costs for the three months ended April 30, 2022 was primarily due to an increase in travel and legal settlement costs.

Consolidated SG&A costs increased $2.3 million for the six months ended April 30, 2022 compared to the prior year period. The increase in SG&A costs for the six months ended April 30, 2022, was primarily due to an increase in travel and legal settlement costs.

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Restructuring |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Restructuring |  | $ | 2.9 |  |  | n/m |  | $ | — |  |  | $ | 6.6 |  |  |  | 560.0 | % |  | $ | 1.0 |

Restructuring: Consolidated restructuring costs increased $2.9 million for the three months ended April 30, 2022 compared to the prior year quarter. Restructuring costs for the three months ended April 30, 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 Condensed Unaudited Consolidated Financial Statements.

Consolidated restructuring costs increased $5.6 million for the six months ended April 30, 2022 compared to the prior year. Restructuring costs for the six months ended April 30, 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 Condensed Unaudited Consolidated Financial Statements.

Loss on Early Extinguishment of Debt |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Loss on early extinguishment of debt |  | $ | — |  |  |  | -100.0 | % |  | $ | 1.4 |  |  | $ | — |  |  |  | -100.0 | % |  | $ | 1.4 |

Loss on Early Extinguishment of Debt: 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.

Loss on Sale of Business or Business Held for Sale |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Loss on sale of business or business held for sale |  | $ | 0.1 |  |  | n/m |  | $ | — |  |  | $ | 0.1 |  |  |  | -97.4 | % |  | $ | 3.8 |

Loss on Sale of Business or Business Held for Sale: Consolidated losses on sale of business or business held for sale increased by $0.1 million for the three months ended April 30, 2022 compared to the prior year quarter. This was related to the restructuring activities noted within Note 8, Restructuring and Other Related Charges.

Consolidated losses on sale of business or business held for sale decreased by $3.7 million for the six months ended April 30, 2022 compared to the prior year period. In the first quarter of fiscal year 2021, in connection with a strategic review of the product portfolio, we made the decision to divest our REV Brazil business. As a result, a loss of $3.8 million was recorded during the six months ended April 30, 2021. Refer to Note 7, Divestiture Activities, of the Notes to Condensed Unaudited Consolidated Financial Statements for further details.

Loss on Acquisition of Business |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Loss on acquisition of business |  | $ | — |  |  | n/m |  | $ | — |  |  | $ | — |  |  |  | -100.0 | % |  | $ | 0.4 |

Loss on Acquisition of Business: During the first quarter of fiscal year 2021, the preliminary purchase price allocation of the Spartan ER acquisition was updated to reflect immaterial measurement period adjustments made to inventories, warranty, and certain other assets acquired and liabilities assumed. These updates resulted in a decrease to the cumulative gain on acquisition of $0.4 million.

(Benefit) Provision for Income Taxes |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
(Benefit) provision for income taxes |  | $ | (0.4 | ) |  |  | -105.6 | % |  | $ | 7.2 |  |  | $ | (2.2 | ) |  |  | -130.6 | % |  | $ | 7.2 |

(Benefit) Provision for Income Taxes: Consolidated income tax benefit was $0.4 million for the three months ended April 30, 2022, or 14.8% of pre-tax loss, compared to $7.2 million of expense, or 25.8% of pretax income, for the three months ended April 30, 2021. Results for the three months ended April 30, 2022 were unfavorably impacted by $0.3 million of net discrete tax expense related to the loss of a tax attribute. Results for the three months ended April 30, 2021 were favorably impacted by $0.1 million of net discrete tax benefit primarily related to stock-based compensation tax deductions.

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Consolidated income tax benefit was $2.2 million for the six months ended April 30, 2022, or 42.3% of pre-tax loss, compared to $7.2 million of expense, or 25.9% of pretax income, for the six months ended April 30, 2021. Results for the six months ended April 30, 2022 were favorably impacted by $0.9 million of net discrete tax benefit primarily related to stock-based compensation tax deductions. Results for the six months ended April 30, 2021 were favorably impacted by $1.2 million of net discrete tax benefit related primarily to the recognition of deferred taxes on assets classified as held for sale and stock-based compensation tax deductions.

Net (loss) income |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Net (loss) income |  | $ | (2.3 | ) |  |  | -111.2 | % |  | $ | 20.6 |  |  | $ | (3.0 | ) |  |  | -114.6 | % |  | $ | 20.6 |

Net (Loss) Income: Consolidated net (loss) income decreased $22.9 million for the three months ended April 30, 2022 compared to the prior year quarter primarily due to the factors detailed above.

Consolidated net (loss) income decreased $23.6 million for the six months ended April 30, 2022 compared to the prior year period primarily due to the factors detailed above.

Adjusted EBITDA |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Adjusted EBITDA |  | $ | 23.8 |  |  |  | -47.7 | % |  | $ | 45.5 |  |  | $ | 42.1 |  |  |  | -38.9 | % |  | $ | 68.9 |

Consolidated Adjusted EBITDA decreased $21.7 million for the three months ended April 30, 2022 compared to the prior year quarter, 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.

Consolidated Adjusted EBITDA decreased $26.8 million for the six months ended April 30, 2022 compared to the prior year period, 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 Adjusted EBITDA and Adjusted Net Income section of “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q for a reconciliation of (Loss) Income to Adjusted EBITDA and Adjusted Net Incomes tables and related footnotes.

Adjusted Net Income |  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Adjusted Net Income |  | $ | 10.6 |  |  |  | -58.8 | % |  | $ | 25.7 |  |  | $ | 18.6 |  |  |  | -46.2 | % |  | $ | 34.6 |

Refer to Adjusted EBITDA and Adjusted Net Income section of “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q for a reconciliation of Net (Loss) Income to Adjusted EBITDA and Adjusted Net Incomes tables and related footnotes.

Fire & Emergency Segment

|  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Net sales |  | $ | 245.0 |  |  |  | -20.4 | % |  | $ | 307.6 |  |  | $ | 482.4 |  |  |  | -18.0 | % |  | $ | 588.2 |
Adjusted EBITDA |  |  | (2.2 | ) |  |  | -110.1 | % |  |  | 21.7 |  |  |  | (0.4 | ) |  |  | -101.3 | % |  |  | 31.9 |
Adjusted EBITDA % of net sales |  |  | -0.9 | % |  |  |  |  |  | 7.1 | % |  |  | -0.1 | % |  |  |  |  |  | 5.4 | %

F&E segment net sales decreased $62.6 million for the three months ended April 30, 2022 compared to the prior year quarter. The decrease in net sales was primarily due to decreased shipments of fire apparatus and ambulance units resulting from supply chain disruptions and an unfavorable mix of fire apparatus, partially offset by price realization.

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F&E segment net sales decreased $105.8 million for the six months ended April 30, 2022 compared to the prior year period. The decrease in net sales was primarily due to decreased shipments of fire apparatus and ambulance units resulting from supply chain disruption and labor constraints and an unfavorable mix of fire apparatus, partially offset by price realization.

F&E segment Adjusted EBITDA decreased $23.9 million for the three months ended April 30, 2022 compared to the prior year quarter. The decrease was primarily due to lower sales volume, an unfavorable mix of fire apparatus, inefficiencies related to supply chain disruptions, and inflationary pressures, partially offset by price realization.

F&E segment Adjusted EBITDA decreased $32.3 million for the six months ended April 30, 2022 compared to the prior year period. The decrease was primarily due to lower sales volume, and inefficiencies related to supply chain disruption and labor constraints, partially offset by price realization.

Commercial Segment

|  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Net sales |  | $ | 90.7 |  |  |  | -7.8 | % |  | $ | 98.4 |  |  | $ | 188.3 |  |  |  | 3.7 | % |  | $ | 181.5 |
Adjusted EBITDA |  |  | 4.4 |  |  |  | -47.0 | % |  |  | 8.3 |  |  |  | 12.2 |  |  |  | -21.3 | % |  |  | 15.5 |
Adjusted EBITDA % of net sales |  |  | 4.9 | % |  |  |  |  |  | 8.4 | % |  |  | 6.5 | % |  |  |  |  |  | 8.5 | %

Commercial segment net sales decreased $7.7 million for the three months ended April 30, 2022 compared to the prior year quarter. The decrease in net sales was primarily due to decreased shipments of municipal transit buses, partially offset by increased shipments of terminal trucks and street sweepers, and price realization.

Commercial segment net sales increased $6.8 million for the six months ended April 30, 2022 compared to the prior year period. The increase in net sales was 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 Adjusted EBITDA decreased $3.9 million for the three months ended April 30, 2022 compared to the prior year quarter. The decrease was primarily due to an unfavorable mix of school buses, lower shipments and an unfavorable mix of municipal transit buses, inefficiencies related to supply chain disruptions, and inflationary pressures, partially offset by increased shipments and improved profitability of terminal trucks and price realization.

Commercial segment Adjusted EBITDA decreased $3.3 million for the six months ended April 30, 2022 compared to the prior year period. The decrease was primarily due to an unfavorable mix of school buses, lower shipments and an unfavorable mix of municipal transit buses, inefficiencies related to supply chain disruptions, and inflationary pressures, partially offset by increased shipments of street sweepers, increased shipments and improved profitability of terminal trucks, and price realization.

Recreation Segment

|  | Three Months Ended |  |  | Six Months Ended |
($ in millions) |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |  |  | April 30, 2022 |  |  | Change |  |  | April 30, 2021 |
Net sales |  | $ | 241.0 |  |  |  | 1.3 | % |  | $ | 237.9 |  |  | $ | 443.6 |  |  |  | 3.6 | % |  | $ | 428.0 |
Adjusted EBITDA |  |  | 28.7 |  |  |  | 14.3 | % |  |  | 25.1 |  |  |  | 45.8 |  |  |  | 13.9 | % |  |  | 40.2 |
Adjusted EBITDA % of net sales |  |  | 11.9 | % |  |  |  |  |  | 10.6 | % |  |  | 10.3 | % |  |  |  |  |  | 9.4 | %

Recreation segment net sales increased $3.1 million for the three months ended April 30, 2022 compared to the prior year quarter. The increase was primarily due to strong price realization and favorable mix, partially offset by lower line rates and unit shipments related to supply chain disruption and labor constraints in certain businesses.

Recreation segment net sales increased $15.6 million for the six months ended April 30, 2022 compared to the prior year period. The increase was primarily due to strong price realization and favorable mix, partially offset by lower line rates and unit shipments related to supply chain disruption and labor constraints in certain businesses.

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Recreation segment Adjusted EBITDA increased $3.6 million for the three months ended April 30, 2022 compared to the prior year quarter. The increase was primarily due to strong price realization and favorable mix, partially offset by inefficiencies resulting from supply chain disruption and labor constraints in certain businesses, and inflationary pressures.

Recreation segment Adjusted EBITDA increased $5.6 million for the six months ended April 30, 2022 compared to the prior year period. The increase was primarily due to strong price realization and favorable mix, partially offset by inefficiencies resulting from supply chain disruption and labor constraints in certain businesses, and inflationary pressures.

Backlog

Backlog represents firm orders received from dealers or directly from end customers. The following table presents a summary of our backlog by segment:

($ in millions) |  | April 30, 2022 |  |  | January 31, 2022 |  |  | April 30, 2021 |
Fire & Emergency |  | $ | 1,788.3 |  |  | $ | 1,655.1 |  |  | $ | 1,099.0 |
Commercial |  |  | 531.1 |  |  |  | 459.8 |  |  |  | 303.1 |
Recreation |  |  | 1,302.7 |  |  |  | 1,282.6 |  |  |  | 940.5 |
Total Backlog |  | $ | 3,622.1 |  |  | $ | 3,397.5 |  |  | $ | 2,342.6 |

Each of our three segments has a backlog of new vehicle orders that generally extends out from nine to eighteen months in duration.

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.

As of April 30, 2022, our backlog was $3,622.1 million compared to $2,342.6 million as of April 30, 2021. The increase in consolidated backlog was primarily due to strong order intake within the segments, and lower throughput related to supply chain and labor constraints in certain businesses. The increase in F&E segment backlog was primarily the result of strong orders for fire apparatus and ambulance units. The increase in Commercial segment backlog was primarily the result of increased orders for school buses, municipal transit buses, terminal trucks and street sweepers, partially offset by a decline in orders for municipal transit buses. The increase in Recreation segment backlog was primarily the result of strong order intake in several product categories and pricing actions.

Liquidity and Capital Resources

General

Our primary requirements for liquidity and capital are working capital, the improvement and expansion of existing manufacturing facilities, debt service payments and general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities, cash and cash equivalents and borrowings under our ABL credit facility.

We believe that our sources of liquidity and capital will be sufficient to finance our continued operations, including working capital requirements, dividends, share repurchases and growth strategy for at least twelve months. However, we cannot assure you that cash provided by operating activities and borrowings under the current ABL facility will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, and if availability under the current 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 additional capital is obtained by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain financial and other covenants that may significantly restrict our operations or may involve higher overall interest rates.

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Cash Flow

The following table shows summary cash flows for the six months ended April 30, 2022 and April 30, 2021:

|  | Six Months Ended April 30, |
($ in millions) |  | 2022 |  |  | 2021 |
Net cash provided by operating activities |  | $ | 27.4 |  |  | $ | 37.1 |
Net cash (used in) provided by investing activities |  |  | (5.9 | ) |  |  | 3.3 |
Net cash used in financing activities |  |  | (28.9 | ) |  |  | (44.1 | )
Net decrease in cash and cash equivalents |  | $ | (7.4 | ) |  | $ | (3.7 | )

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Net Cash Provided by Operating Activities

Net cash provided by operating activities for the six months ended April 30, 2022 was $27.4 million and was primarily related to the increase of customer advances and timing of payable payments, partially offset by a decrease in accounts receivable receipts, an increase in inventory, and a net loss recognized during the period. The generation of positive cash from operating activities for the six months ended April 30, 2021, was related to higher net income and a receipt of a tax refund related to the CARES Act, partially offset by decreases from the timing of payables.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities for the six months ended April 30, 2022 was $5.9 million and was related to the cash paid for capital expenditures, partially offset by cash received in connection with the sales of certain assets. Net cash provided by investing activities for the six months ended April 30, 2021 was $3.3 million and was primarily related to the proceeds from the sale of land for $8.7 million and other assets, partially offset by cash paid for capital expenditures.

Net Cash Used in Financing Activities

Net cash used in financing activities for the six months ended April 30, 2022 was $28.9 million, which primarily consisted of share repurchases of $45.9 million, dividends paid of $6.4 million and the payment of taxes on vested share based payment awards and other financing activities of $4.6 million, partially offset by net proceeds from our 2021 ABL Facility for $28.0 million. Net cash used in financing activities for the six months ended April 30, 2021 was $44.1 million, which primarily consisted of net proceeds from our 2021 ABL Facility offset by the use of those proceeds to repay the 2017 ABL Facility and Term Loan, and payments for debt issuance costs.

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. We cannot assure you that we will declare dividends or have sufficient funds to pay dividends on our common stock in the future. A quarterly cash dividend was declared in the amount of $.05 per share of common stock payable on July 15, 2022, to shareholders of record on June 30, 2022. During the second quarter of fiscal year 2022, we paid cash dividends of $3.1 million. To date during fiscal year 2022, we have paid cash dividends of $6.4 million.

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. The 2021 ABL Facility provides for revolving loans and letters of credit in an aggregate amount of up to $550.0 million. The total credit facility is subject to a $30.0 million sublimit for swing line loans and a $35.0 million sublimit for letters of credit (plus up to an additional $20.0 million of letters of credit at issuing bank’s discretion), along with certain borrowing base and other customary restrictions as defined in the 2021 ABL Agreement. The 2021 ABL Agreement allows for incremental facilities in an aggregate amount of up to $100.0 million, plus the excess, if any, of the borrowing base then in effect over total commitments then in effect. Any such incremental facilities are subject to receiving additional commitments from lenders and certain other customary conditions.

The 2021 ABL Facility matures on April 13, 2026. We may prepay principal, in whole or in part, at any time without penalty.

We were in compliance with all financial covenants under the 2021 ABL Agreement as of April 30, 2022. As of April 30, 2022, the Company’s availability under the 2021 ABL Facility was $293.6 million.

Refer to Note 9, Long-Term Debt, of the Notes to Condensed Unaudited Consolidated Financial Statements for further details.

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Adjusted EBITDA and Adjusted Net Income

In considering the financial performance of the business, management analyzes the primary financial performance measures of Adjusted EBITDA and Adjusted Net Income. Adjusted EBITDA is defined as Net Income (Loss) for the relevant period before depreciation and amortization, interest expense, income taxes and loss on early extinguishment of debt, as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance. Adjusted Net Income is defined as Net Income (Loss), as adjusted for certain items described below that we believe are not indicative of our ongoing operating performance.

We believe Adjusted EBITDA and Adjusted Net Income are useful to investors because these performance measures are used by our management and our Board of Directors for measuring and reporting our financial performance and as a measurement in incentive compensation for management. These measures exclude the impact of certain items which we believe have less bearing on our core operating performance because they are items that are not needed or available to our managers in the daily activities of their businesses. We believe that the core operations of our business are those which can be affected by our management in a particular period through their resource allocation decisions that affect the underlying performance of our operations conducted during that period. 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.

To determine Adjusted EBITDA, we adjust Net Income (Loss) for the following items: non-cash depreciation and amortization, interest expense, income taxes, loss on early extinguishment of debt and other items as described below. Stock-based compensation expense and sponsor expense reimbursement is excluded from both Adjusted Net Income and Adjusted EBITDA because it is an expense, which cannot be impacted by our business managers. Stock-based compensation expense also reflects a cost which may obscure trends in our underlying vehicle businesses for a given period, due to the timing and nature of the equity awards. We also adjust for exceptional items, which are determined to be those that in management’s judgment are not indicative of our ongoing operating performance and need to be disclosed by virtue of their size, nature or incidence, and include non-cash items and items settled in cash. 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 (Loss) have limitations as analytical tools. These are not presentations made in accordance with U.S. GAAP, are not measures of financial condition and should not be considered as an alternative to net income or net loss for the period determined in accordance with U.S. GAAP. The most directly comparable U.S. GAAP measure to Adjusted EBITDA and Adjusted Net Income is Net Income for the relevant period. Adjusted EBITDA and Adjusted Net Income are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider this performance measure in isolation from, or as a substitute analysis for, our results of operations as determined in accordance with U.S. GAAP. Moreover, such measures do not reflect:

•
our cash expenditures, or future requirements for capital expenditures or contractual commitments;
•
changes in, or cash requirements for, our working capital needs;
•
the cash requirements necessary to service interest or principal payments on our debt;
•
the cash requirements to pay our taxes.

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The following table reconciles Net (Loss) Income to Adjusted EBITDA for the periods presented:

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
($ in millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net (loss) income |  | $ | (2.3 | ) |  | $ | 20.6 |  |  | $ | (3.0 | ) |  | $ | 20.6 |
Depreciation and amortization |  |  | 8.7 |  |  |  | 8.0 |  |  |  | 18.3 |  |  |  | 16.7 |
Interest expense, net |  |  | 3.5 |  |  |  | 5.5 |  |  |  | 6.9 |  |  |  | 11.0 |
Loss on early extinguishment of debt |  |  | — |  |  |  | 1.4 |  |  |  | — |  |  |  | 1.4 |
(Benefit) provision for income taxes |  |  | (0.4 | ) |  |  | 7.2 |  |  |  | (2.2 | ) |  |  | 7.2 |
EBITDA |  |  | 9.5 |  |  |  | 42.7 |  |  |  | 20.0 |  |  |  | 56.9 |
Transaction expenses(a) |  |  | 0.3 |  |  |  | 0.3 |  |  |  | 0.5 |  |  |  | 2.7 |
Sponsor expense reimbursement(b) |  |  | — |  |  |  | — |  |  |  | 0.1 |  |  |  | 0.2 |
Restructuring costs(c) |  |  | 2.9 |  |  |  | — |  |  |  | 6.6 |  |  |  | 1.0 |
Restructuring related charges(d) |  |  | 4.4 |  |  |  | 0.3 |  |  |  | 5.1 |  |  |  | 0.3 |
Stock-based compensation expense(e) |  |  | 2.2 |  |  |  | 1.7 |  |  |  | 4.5 |  |  |  | 3.6 |
Legal matters(f) |  |  | 4.4 |  |  |  | — |  |  |  | 5.2 |  |  |  | 0.4 |
Net loss on sale of assets and business held for sale(g) |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | 2.7 |
Loss on acquisition of business(h) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.4 |
Losses attributable to assets held for sale(i) |  |  | — |  |  |  | 0.5 |  |  |  | — |  |  |  | 0.7 |
Adjusted EBITDA |  | $ | 23.8 |  |  | $ | 45.5 |  |  | $ | 42.1 |  |  | $ | 68.9 |

The following table reconciles Net (Loss) Income to Adjusted Net Income for the periods presented:

|  | Three Months Ended April 30, |  |  | Six Months Ended April 30, |
($ in millions) |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net (loss) income |  | $ | (2.3 | ) |  | $ | 20.6 |  |  | $ | (3.0 | ) |  | $ | 20.6 |
Amortization of intangible assets |  |  | 2.0 |  |  |  | 2.5 |  |  |  | 4.4 |  |  |  | 5.1 |
Transaction expenses(a) |  |  | 0.3 |  |  |  | 0.3 |  |  |  | 0.5 |  |  |  | 2.7 |
Sponsor expense reimbursement(b) |  |  | — |  |  |  | — |  |  |  | 0.1 |  |  |  | 0.2 |
Restructuring costs(c) |  |  | 2.9 |  |  |  | — |  |  |  | 6.6 |  |  |  | 1.0 |
Restructuring related charges(d) |  |  | 4.4 |  |  |  | 0.3 |  |  |  | 5.1 |  |  |  | 0.3 |
Stock-based compensation expense(e) |  |  | 2.2 |  |  |  | 1.7 |  |  |  | 4.5 |  |  |  | 3.6 |
Legal matters(f) |  |  | 4.4 |  |  |  | — |  |  |  | 5.2 |  |  |  | 0.4 |
Net loss on sale of assets and business held for sale(g) |  |  | 0.1 |  |  |  | — |  |  |  | 0.1 |  |  |  | 2.7 |
Loss on acquisition of business(h) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 0.4 |
Losses attributable to assets held for sale(i) |  |  | — |  |  |  | 0.5 |  |  |  | — |  |  |  | 0.7 |
Loss on early extinguishment of debt(j) |  |  | — |  |  |  | 1.4 |  |  |  | — |  |  |  | 1.4 |
Accelerated depreciation on certain property, plant, and equipment (k) |  |  | 0.9 |  |  |  | — |  |  |  | 2.3 |  |  |  | — |
Income tax effect of adjustments(l) |  |  | (4.3 | ) |  |  | (1.6 | ) |  |  | (7.2 | ) |  |  | (4.5 | )
Adjusted Net Income |  | $ | 10.6 |  |  | $ | 25.7 |  |  | $ | 18.6 |  |  | $ | 34.6 |

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(a)
Reflects costs incurred in connection with business acquisitions, dispositions, and capital market transactions. These expenses consist primarily of legal, accounting and due diligence expenses.
(b)
Reflects the reimbursement of expenses to our primary equity holder.
(c)
Restructuring costs in the current fiscal year incurred in connection with the announced closure of certain facilities within the F&E segment.

Restructuring expenses in the prior fiscal year consisted of personnel costs, including severance, vacation and other employee benefit payments associated with headcount reductions in Corporate.

(d)
Reflects costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420.
(e)
Reflects expenses associated with the vesting of equity awards including employer payroll taxes.
(f)
Reflects legal fees and costs incurred to litigate and settle legal claims against us which are outside the normal course of business. Costs include payments: (i) for fees and costs to litigate and settle non-ordinary course intellectual property and dealer disputes, (ii) for fees and costs to litigate the putative securities class actions and derivative action pending against us and certain of our directors and officers (iii) for fees to settle certain claims arising from a putative class action in the state of California (iv) fees and costs to settle indemnification liabilities and other claims arising of previously disposed of businesses.
(g)
The current fiscal year reflects a loss on the sale of a business within the F&E segment as part of the restructuring activities during the second quarter of fiscal year 2022.

In the first quarter of fiscal year 2021, in connection with a strategic review of the product portfolio, we made the decision to divest our REV Brazil business. As a result, a loss of $3.8 million was recorded during the six months ended April 30, 2021. We also recorded $1.1 million gain related to the sale of land previously included within the F&E segment.

(h)
Reflects the initial gain and subsequent adjustments on the acquisition of Spartan ER, which was completed on February 1, 2020.
(i)
Adjusted EBITDA attributable to businesses that are or were classified as held for sale, which represents REV Brazil during the first and second quarters of fiscal year 2021.
(j)
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.
(k)
Reflects accelerated deprecation that was incurred in connection with the announced closure of certain facilities within the F&E segment.
(l)
Income tax effect of adjustments using a 26.5% effective income tax rate for the three and six months ended April 30, 2022 and April 30, 2021, except for certain transaction expenses and losses attributable to assets held for sale.

Off-Balance Sheet Arrangements

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. We do not have any off-balance sheet arrangements or relationships with entities that are not consolidated into or disclosed in our consolidated financial statements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures and capital resources. In addition, we do not engage in trading activities involving non-exchange traded contracts. Refer to Note 13, Commitments and Contingencies, of the Notes to Condensed Unaudited Consolidated Financial Statements for additional discussion.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect amounts reported in the consolidated financial statements and accompanying notes. Our disclosures of critical accounting policies are reported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. In the first quarter of fiscal year 2022, we adopted ASU 2019-12 relating to Simplifying the Accounting for Income Taxes, as discussed in Note 1 of the Notes to Condensed Unaudited Consolidated Financial Statements.

Recent Accounting Pronouncements

Refer to Note 1 of the Notes to Condensed Unaudited Consolidated Financial Statements for a discussion of the impact on our financial statements of new accounting standards.

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Item 3. Quantitative and Qualitat ive Disclosures About Market Risk.

There have been no material changes in our exposure to interest rate risk, foreign exchange risk and commodity price risk from the information provided in our Annual Report on Form 10-K filed on December 15, 2021.

Item 4. Controls and Procedures.

We maintain “disclosure controls and procedures”, as such term is defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of April 30, 2022.

During the quarter ended April 30, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHE R INFORMATION

Item 1. Legal Proceedings

For a description of our legal proceedings, refer to Note 13, Commitments and Contingencies, of the Notes to Condensed Unaudited Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

Information about our risk factors is disclosed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K. Except as disclosed below, there are no other material changes in our risk factors from those disclosed in the Form 10-K.

Increased economic and political instability, including as a result of the conflict between Russia and Ukraine, may adversely affect our business, financial condition, and results of operations.

In late February 2022, Russia launched a military attack on Ukraine. In response, many countries have imposed sanctions against Russian businesses and citizens. This conflict has also resulted in significant volatility and disruptions to the global markets. 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. 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. These increased threats could pose risks to the security of our information technology systems, our network and our product offerings and/or service offerings for our products, as well as the confidentiality, availability and integrity of our data.

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. In addition, these factors could heighten many of our known risks described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K.

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Ite m 2. Unregistered Sales of Equity Securities and Use of Proceeds

Common stock repurchases

The following table sets forth information with respect to purchases of common stock made by the Company during the second quarter of fiscal year 2022 (in millions, except share and per share amounts):

Period |  | Total Number of Shares Purchased for the period |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Programs |  |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) |
February 1 - February 28, 2022 |  |  | 160,183 |  |  | $ | 12.88 |  |  |  | 2,390,342 |  |  | $ | 119.7 |
March 1 - March 31, 2022 |  |  | 280,076 |  |  | $ | 13.56 |  |  |  | 2,670,418 |  |  | $ | 115.9 |
April 1 - April 30, 2022 |  |  | 1,235,863 |  |  | $ | 12.67 |  |  |  | 3,906,281 |  |  | $ | 100.2 |
Total |  |  | 1,676,122 |  |  |  |  |  |  |  |  |  |

(1)
On September 2, 2021, the Company’s Board of Directors approved the authorization of a new share repurchase program that allows the repurchase of up to $150.0 million of the Company’s outstanding common stock. The share repurchase authorization expires in 24 months and gives management the flexibility to determine conditions under which shares may be purchased. During the second quarter of fiscal year 2022, the Company repurchased 1,676,122 shares under this repurchase program at a total cost of $21.5 million at an average price of $12.84 per share.

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. During second quarter of fiscal year 2022, the Company paid cash dividends of $3.1 million. During the six months ended April 30, 2022, the company paid cash dividends $6.4 million. Our ability to pay dividends is dependent on our ABL loan and board of directors approval. See our Annual Report on Form 10-K on “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.”

Item 5. Other Items

On March 23, 2020, the board of directors granted Mr. Rodney Rushing a one-time performance stock unit award under the REV Group, Inc. 2016 Omnibus Incentive Plan. On June 2, 2022, the board of directors approved an extension of the performance period of the award by one year until October 31, 2024.

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Item 6. E xhibits.

Exhibit Number |  | Description
10.1* |  | Amendment dated June 2, 2022 to the initial offer letter, dated March 5, 2020, between the Registrant and Rodney Rushing
31.1* |  | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* |  | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS* |  | Inline XBRL Instance Document
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted in iXBRL and contained within Exhibit 101)

* Filed herewith.

34

SIGNATU RES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| REV GROUP, INC.
Date: June 7, 2022 | By: | /s/ Rodney N. Rushing
|  | Rodney N. Rushing
|  | Chief Executive Officer
Date: June 7, 2022 | By: | /s/ Mark A. Skonieczny
|  | Mark A. Skonieczny
|  | Chief Financial Officer

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