The REV Group manufactures and markets fire and emergency vehicles, transit buses for transportation organizations., and recreational vehicles for commercial or government use. The Company also produces aftermarket parts for its vehicle models. The Company reported $2.6 billion in total sales in the twelve months ending April 2024, providing $87.3 million in operating income. Interestingly, operating cash flow in the same twelve months was $87.3 million, representing a sales-to-cash conversion rate of 3.44%.
The Company uses some leverage to accelerate returns on investment. The debt-to-equity ratio was 2.07 at the end of April 2024. Management has done well in our view with the added capital from debt. The return on invested capital at the time was 29.91% compared to an estimated cost of capital at 10.25%. The excess return near 20% is quite compelling in our view.
Despite the strong financial report for the April 2024 quarter, management trimmed guidance for sales and earnings in the full year 2024. Sales are now expected fall within a range of $2.4 billion to $2.5 billion, providing net income in a range of $230 million to $245 million. Thus the topline expectations was trimmed by $50 million, but the lower end of the earnings guidance was increased by $6.0 million. Likewise expectations for cash earnings and free cash flow are now more bullish by mid, single digits.
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