REV GROUP, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)


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.

Insight

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 third quarter of fiscal year 2022
came from products where we believe we hold such share position.

segments

We serve a diversified clientele mainly in 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 LayMor 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

Key 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 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.

Results of Operations

                                         Three Months Ended              Nine Months Ended
                                              July 31,                        July 31,
($ in millions)                        2022             2021            2022           2021
Net sales                           $     594.8      $     593.3     $  1,708.1     $   1,790.9
Gross profit                               67.8             76.6          180.7           225.7
Selling, general and
administrative                             46.1             45.2          144.2           141.0
Restructuring                               2.3                -            8.9             1.0
Loss on early extinguishment of
debt                                          -                -              -             1.4
(Gain) loss on sale of business
or business held for sale                     -             (1.0 )          0.1             2.8
Loss on acquisition of business               -                -              -             0.4
Provision for income taxes                  3.4              2.4            1.2             9.6
Net income                                  9.5             23.7            6.5            44.4

Net income per common share
Basic                               $      0.16      $      0.37     $     0.11     $      0.70
Diluted                             $      0.16      $      0.36     $     0.10     $      0.68
Dividends declared per common
share                               $      0.05      $      0.05     $     0.15     $      0.05

Adjusted EBITDA                     $      29.5      $      41.6     $     71.6     $     110.4
Adjusted Net Income                 $      14.3      $      24.5     $     32.9     $      59.0



                                       20
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Net Sales                   Three Months Ended                        Nine Months Ended
                   July 31,                    July 31,      July 31,                  July 31,
($ in millions)      2022         Change         2021          2022        Change        2021
Net sales         $    594.8          0.3 %   $    593.3     $ 1,708.1        -4.6 %   $ 1,790.9



Net Sales: Consolidated net sales increased $1.5 million for the three months
ended July 31, 2022 compared to the prior year quarter, primarily due to an
increase in net sales within the Recreation segment, partially offset by a
decrease in net sales within the F&E and Commercial segments. 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. 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 disruptions and labor constraints, partially
offset by price realization. The decrease in net sales in the Commercial segment
was primarily due to decreased shipments of school buses and municipal transit
buses, partially offset by increased shipments of terminal trucks and street
sweepers, and price realization.

Consolidated net sales decreased $82.8 million for the nine months ended July
31, 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 disruptions and labor constraints,
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                         Nine 

Months ended

                   July 31,                   July 31,       July 31,                   July 31,
($ in millions)      2022        Change         2021           2022        Change         2021
Gross profit      $     67.8       -11.5 %   $     76.6     $    180.7       -19.9 %   $    225.7
% of net sales          11.4 %                     12.9 %         10.6 %                     12.6 %


Gross Profit: Consolidated gross profit decreased $8.8 million for the three
months ended July 31, 2022 compared to the prior year quarter. The decrease in
gross profit was primarily attributable to lower net sales within the F&E
segment, inefficiencies related to supply chain disruptions, labor constraints,
and inflationary pressures, partially offset by price realization and a
favorable mix in the Recreation segment.

Consolidated gross profit decreased $45.0 million for the nine months ended July
31, 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 disruptions, labor constraints, and inflationary
pressures, partially offset by price realization and a favorable mix in the
Recreation segment.

Selling, General and Administrative             Three Months Ended                           Nine Months Ended
                                       July 31,                     July 31,       July 31,                     July 31,
($ in millions)                          2022         Change          2021           2022         Change          2021
Selling, general and administrative   $     46.1           2.0 %   $     45.2     $    144.2           2.3 %   $    141.0


Selling, General and Administrative: Consolidated selling, general and
administrative ("SG&A") costs increased $0.9 million for the three months ended
July 31, 2022 compared to the prior year quarter. The increase in SG&A costs for
the three months ended July 31, 2022 was primarily due to an increase in travel
and professional fees, partially offset by lower management incentive
compensation.

Consolidated SG&A costs increased $3.2 million for the nine months ended July
31, 2022 compared to the prior year period. The increase in SG&A costs for the
nine months ended July 31, 2022, was primarily due to an increase in travel,
marketing related costs, and legal matters, partially offset by lower management
incentive compensation.
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Restructuring             Three Months Ended                      Nine Months Ended
                   July 31,                July 31,      July 31,                  July 31,
($ in millions)      2022         Change     2021          2022        Change        2021
Restructuring     $      2.3         n/m   $       -     $     8.9       790.0 %   $     1.0


Restructuring: Consolidated restructuring costs increased $2.3 million for the
three months ended July 31, 2022 compared to the prior year quarter.
Restructuring costs for the three months ended July 31, 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 $7.9 million for the nine months
ended July 31, 2022 compared to the prior year. Restructuring costs for the nine
months ended July 31, 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                          Nine Months Ended
                                        July 31,                     July 31,       July 31,                   July 31,
($ in millions)                           2022           Change        2021           2022         Change        2021
Loss on early extinguishment of debt   $        -             n/m   $       

– $ – -100.0% $1.4

Loss on early extinguishment of debt: reflects losses recorded on the extinguishment of our 2017 ABL facility and term loan. The loss is entirely comprised of unamortized debt issuance costs that have been written off in connection with this termination.

(Gain) Loss on Sale of Business
or Business Held for Sale                   Three Months Ended              

Nine month period ended

                                   July 31,                    July 31,      July 31,                  July 31,
($ in millions)                      2022         Change         2021          2022        Change        2021
(Gain) loss on sale of business
or business held for sale         $        -       -100.0 %   $     (1.0 )  

$0.1 -96.4% $2.8


(Gain) Loss on Sale of Business or Business Held for Sale: The consolidated gain
on sale of business or business held for sale of $1.0 million that was
recognized during the three months ended July 31, 2021 decreased the cumulative
loss on the sale of REV Brazil. Refer to Note 7, Divestiture Activities, of the
Notes to Condensed Unaudited Consolidated Financial Statements for further
details.

Consolidated losses on sale of business or business held for sale decreased by
$2.7 million for the nine months ended July 31, 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 $2.8 million was recorded during the nine
months ended July 31, 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                          Nine Months Ended
                                   July 31,                     July 31,       July 31,                   July 31,
($ in millions)                      2022           Change        2021           2022         Change        2021
Loss on acquisition of business   $        -             n/m   $        -   

$ – -100.0% $0.4

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

                                       22
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Provision for Income Taxes                  Three Months Ended              

Nine month period ended

                                   July 31,                    July 31,      July 31,                  July 31,
($ in millions)                      2022         Change         2021          2022        Change        2021
Provision for income taxes        $      3.4          41.7 %   $     2.4    

$1.2 -87.5% $9.6


Provision for Income Taxes: Consolidated income tax expense was $3.4 million for
the three months ended July 31, 2022, or 26.4% of pre-tax income, compared to
$2.4 million of expense, or 9.2% of pretax income, for the three months ended
July 31, 2021. Results for the three months ended July 31, 2022 were unfavorably
impacted by $0.2 million of net discrete tax expense related to stock-based
compensation. Results for the three months ended July 31, 2021 were favorably
impacted by $4.0 million of net discrete tax benefits primarily related to net
operating loss carrybacks allowable under the CARES Act.

Consolidated income tax expense was $1.2 million for the nine months ended July
31, 2022, or 15.6% of pre-tax income, compared to $9.6 million of tax expense,
or 17.8% of pre-tax income, for the nine months ended July 31, 2021. Results for
the nine months ended July 31, 2022 were favorably impacted by $0.8 million of
net discrete tax benefit primarily related to the stock-based compensation tax
deductions. Results for the nine months ended July 31, 2021 were favorably
impacted by $5.2 million of net discrete tax benefit primarily related to net
operating loss carrybacks allowable under the CARES Act and recognition of
deferred taxes on assets classified as held for sale.

Net income                 Three Months Ended                       Nine Months Ended
                  July 31,                   July 31,      July 31,                   July 31,
($ in millions)     2022        Change         2021          2022        Change         2021
Net income        $     9.5       -59.9 %   $     23.7     $     6.5       -85.4 %   $     44.4

Net income: Consolidated net income decreased $14.2 million for the three months ended July 31, 2022 compared to the prior year quarter primarily due to the factors detailed above.

Consolidated net income decreased $37.9 million for the nine months ended July
31, 2022 compared to the prior year period primarily due to the factors detailed
above.

Adjusted EBITDA            Three Months Ended                         Nine Months Ended
                   July 31,                   July 31,       July 31,                   July 31,
($ in millions)      2022        Change         2021           2022        Change         2021
Adjusted EBITDA   $     29.5       -29.1 %   $     41.6     $     71.6       -35.1 %   $    110.4


Consolidated Adjusted EBITDA decreased $12.1 million for the three months ended
July 31, 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 $38.8 million for the nine months ended
July 31, 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 the 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 income to Adjusted EBITDA and Adjusted Net Income.

                                       23
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Adjusted Net Income            Three Months Ended                         

Nine month period ended

                       July 31,                   July 31,       July 31,                   July 31,
($ in millions)          2022        Change         2021           2022        Change         2021
Adjusted Net Income   $     14.3       -41.6 %   $     24.5     $     32.9       -44.2 %   $     59.0

Refer to the 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 income to Adjusted EBITDA and Adjusted Net Income.

Fire & Emergency Segment


                                          Three Months Ended                         Nine Months Ended
                                  July 31,                   July 31,       July 31,                   July 31,
($ in millions)                     2022        Change         2021           2022        Change         2021
Net sales                        $    230.1       -14.6 %   $    269.5     $    712.5       -16.9 %   $    857.7
Adjusted EBITDA                         1.0       -93.7 %         15.8            0.6       -98.7 %         47.6
Adjusted EBITDA % of net sales          0.4 %                      5.9 %          0.1 %                      5.5 %




F&E segment net sales decreased $39.4 million for the three months ended July
31, 2022 compared to the prior year quarter. The decrease in net sales was
primarily due to decreased shipments of fire apparatus and ambulance units
related to supply chain disruptions and labor constraints, partially offset by
price realization.

F&E segment net sales decreased $145.2 million for the nine months ended July
31, 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 disruptions and labor constraints, partially offset
by price realization.

F&E segment Adjusted EBITDA decreased $14.8 million for the three months ended
July 31, 2022 compared to the prior year quarter. The decrease was primarily due
to lower sales volume, inefficiencies related to supply chain disruptions,
inflationary pressures, partially offset by price realization.

F&E segment Adjusted EBITDA decreased $47.0 million for the nine months ended
July 31, 2022 compared to the prior year period. The decrease was primarily due
to lower sales volume, inefficiencies related to supply chain disruption, labor
constraints, inflationary pressures, partially offset by price realization.

Commercial Segment

                                           Three Months Ended                         Nine Months Ended
                                   July 31,                   July 31,       July 31,                   July 31,
($ in millions)                      2022        Change         2021           2022        Change         2021
Net sales                         $    111.0        -0.3 %   $    111.3     $    299.2         2.2 %   $    292.8
Adjusted EBITDA                          6.8       -29.9 %          9.7           19.0       -24.3 %         25.1
Adjusted EBITDA % of net sales           6.1 %                      8.7 %          6.4 %                      8.6 %



Commercial segment net sales decreased $0.3 million for the three months ended
July 31, 2022 compared to the prior year quarter. The decrease in net sales was
primarily due to decreased shipments of school buses and municipal transit buses
due to labor constraints, partially offset by increased shipments of terminal
trucks and street sweepers, and price realization.

Commercial segment net sales increased $6.4 million for the nine months ended
July 31, 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 $2.9 million for the three months
ended July 31, 2022 compared to the prior year quarter. The decrease was
primarily due to lower shipments of school buses, lower shipments and an
unfavorable mix of municipal transit buses, inefficiencies related to labor
constraints and supply chain disruptions, and inflationary pressures, partially
offset by increased shipments and improved profitability of terminal trucks and
price realization.
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Commercial segment Adjusted EBITDA decreased $6.1 million for the nine months
ended July 31, 2022 compared to the prior year period. The decrease was
primarily due to lower shipments and an unfavorable mix of school buses and
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                         Nine Months Ended
                                   July 31,                    July 31,       July 31,                    July 31,
($ in millions)                      2022         Change         2021           2022         Change         2021
Net sales                         $    254.1         19.6 %   $    212.5     $    697.7          8.9 %   $    640.5
Adjusted EBITDA                         29.8         23.7 %         24.1           75.6         17.6 %         64.3
Adjusted EBITDA % of net sales          11.7 %                      11.3 %         10.8 %                      10.0 %




Recreation segment net sales increased $41.6 million for the three months ended
July 31, 2022 compared to the prior year quarter. The increase was primarily due
to 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 $57.2 million for the nine months ended
July 31, 2022 compared to the prior year period. The increase was primarily due
to 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 Adjusted EBITDA increased $5.7 million for the three months
ended July 31, 2022 compared to the prior year quarter. The increase was
primarily due to 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 $11.3 million for the nine months
ended July 31, 2022 compared to the prior year period. The increase was
primarily due to price realization and favorable mix, partially offset by lower
shipment inefficiencies resulting from supply chain disruption and labor
constraints in certain businesses, and inflationary pressures.

Back

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


                   July 31,      April 30,       January 31,      July 31,
($ in millions)      2022           2022            2022            2021
Fire & Emergency   $ 2,163.1     $  1,788.3     $     1,655.1     $ 1,229.5
Commercial             530.7          531.1             459.8         312.0
Recreation           1,242.9        1,302.7           1,282.6       1,157.0
Total Backlog      $ 3,936.7     $  3,622.1     $     3,397.5     $ 2,698.5

Each of our three segments has a backlog of new vehicles that typically spans nine to eighteen months.

Orders from our dealers and end customers are evidenced by a contract or a firm
purchase order. These orders are reported in our backlog at the aggregate
selling prices, net of discounts or allowances. Backlog is comprised of orders
that may be canceled, modified or otherwise changed in the future. As a result,
backlog may not be indicative of future operating results.

As of July 31, 2022, our backlog was $3,936.7 million compared to $2,698.5
million as of July 31, 2021. The increase in consolidated backlog was primarily
due to order intake within the segments, and lower throughput related to supply
chain disruptions and labor constraints in certain businesses. The increase in
F&E segment backlog was primarily the result of increased orders for fire
apparatus and ambulance units, pricing actions, and lower shipments. The
increase in Commercial segment backlog was primarily the result of increased
orders for school buses, terminal trucks and street sweepers, lower shipments of
school buses and municipal transit buses against backlog, and pricing actions,
partially offset by increased shipments of terminal trucks and street sweepers
against backlog. The increase in Recreation segment backlog was primarily the
result of order intake in several product categories, and pricing actions,
partially offset by lower line rates and unit shipments against backlog related
to supply chain disruption and labor constraints in certain businesses.
                                       25
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Cash 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.

Cash Flow

The following table shows summary cash flows for the nine months ended July 31,
2022 and July 31, 2021:

                                                         Nine Months Ended
                                                              July 31,
($ in millions)                                          2022          2021
Net cash provided by operating activities              $    59.5     $  

100.6

Net cash (used) from investing activities (11.3 ) 0.6 Net cash used in financing activities

                      (46.7 )     

(103.4 ) Net increase (decrease) in cash and cash equivalents $1.5 $(2.2)

Net cash from operating activities

Net cash provided by operating activities for the nine months ended July 31,
2022 was $59.5 million and was primarily related to net income, an increase in
customer advances and timing of payable payments, partially offset by an
increase in accounts receivable and an increase in inventories. Net cash
provided by operating activities for the nine months ended July 31, 2021 was
$100.6 million and was related to net income, collection of receivables, lower
inventory, and an increase in customer deposits, partially offset by a decrease
in accounts payable.

Net cash (Used in) Provided by investing activities

Net cash used in investing activities for the nine months ended July 31, 2022
was $11.3 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 nine months ended July
31, 2021 was $0.6 million and was related to the proceeds received from the sale
of land and other assets and the sale of REV Brazil, partially offset by cash
paid for capital expenditures.

Net cash used in fundraising activities

Net cash used in financing activities for the nine months ended July 31, 2022
was $46.7 million, which primarily consisted of share repurchases of $70.0
million, dividends paid of $9.4 million and other financing activities of $2.3
million, partially offset by net proceeds from our 2021 ABL Facility for $35.0
million. Net cash used in financing activities for the nine months ended July
31, 2021 was $103.4 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 October 14, 2022, to shareholders of record on September 30,
2022. During the third quarter of fiscal year 2022, we paid cash dividends of
$3.0 million. To date during fiscal year 2022, we have paid cash dividends of
$9.4 million.
                                       26
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Installation ABL 2021

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 ABL 2021 Facility matures on April 13, 2026. We may prepay the 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 July 31, 2022. As of July 31, 2022, the Company's availability under the
2021 ABL Facility was $287.1 million.

Refer to Note 9, Long-term debt, of the notes to the unaudited condensed consolidated financial statements for further details.

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 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, 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 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 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 capital expenditure requirements or contractual commitments;

changes in or cash requirements for our working capital requirements;

cash requirements to service interest or principal payments on our debt;

cash needs to pay our taxes.

                                       27
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The following table reconciles Net Income to Adjusted EBITDA for the periods
presented:

                                                Three Months Ended            Nine Months Ended
                                                     July 31,                     July 31,
($ in millions)                                2022            2021          2022           2021
Net income                                   $     9.5       $    23.7     $     6.5      $   44.4
Depreciation and amortization                      6.9             7.6          25.2          24.2
Interest expense, net                              4.3             3.4          11.2          14.4
Loss on early extinguishment of debt                 -               -             -           1.4
Provision for income taxes                         3.4             2.4           1.2           9.6
EBITDA                                            24.1            37.1          44.1          94.0
Transaction expenses(a)                            0.1             0.5           0.6           3.2
Sponsor expense reimbursement(b)                     -               -           0.1           0.2
Restructuring costs(c)                             2.3               -           8.9           1.0
Restructuring related charges(d)                     -               -           5.1           0.3
Stock-based compensation expense(e)                1.8             1.9           6.3           5.5
Legal matters(f)                                   1.2             2.8           6.4           3.1
Net (gain) loss on sale of assets and
business held for sale(g)                            -            (1.0 )         0.1           1.7
Loss on acquisition of business(h)                   -               -             -           0.4
Losses attributable to assets held for
sale(i)                                              -             0.3             -           1.0
Adjusted EBITDA                              $    29.5       $    41.6     $    71.6      $  110.4


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

                                               Three Months Ended              Nine Months Ended
                                                    July 31,                        July 31,
($ in millions)                               2022             2021           2022            2021
Net income                                 $      9.5       $     23.7     $      6.5       $    44.4
Amortization of intangible assets                 1.3              2.3            5.7             7.4
Transaction expenses(a)                           0.1              0.5            0.6             3.2
Sponsor expense reimbursement(b)                    -                -            0.1             0.2
Restructuring costs(c)                            2.3                -            8.9             1.0
Restructuring related charges(d)                    -                -            5.1             0.3
Stock-based compensation expense(e)               1.8              1.9            6.3             5.5
Legal matters(f)                                  1.2              2.8            6.4             3.1
Net (gain) loss on sale of assets and
business held for sale(g)                           -             (1.0 )          0.1             1.7
Loss on acquisition of business(h)                  -                -              -             0.4
Losses attributable to assets held for
sale(i)                                             -              0.3              -             1.0
Loss on early extinguishment of debt(j)             -                -              -             1.4
Accelerated depreciation on certain
property, plant, and equipment (k)                  -                -            2.3               -
Impact of tax rate change(l)                        -             (4.2 )            -            (4.2 )
Income tax effect of adjustments(m)              (1.9 )           (1.8 )         (9.1 )          (6.4 )
Adjusted Net Income                        $     14.3       $     24.5     $     32.9       $    59.0



                                       28
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(a)

Reflects costs incurred in connection with business acquisitions, divestitures and capital market transactions. These expenses mainly consist of legal, accounting and due diligence fees.

(b)

Reflects reimbursement of expenses to our primary shareholder.

(vs)

Current year restructuring costs incurred in connection with the announced closure of certain O&M facilities.

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 stock 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 within that segment. 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. The
amount, $1.0 million gain, recognized during the three months ended July 31,
2021 represents a reduction to the cumulative loss which resulted in a net loss
of $2.8 million which was recorded during the nine months ended July 31, 2021.
We also recorded $1.1 million gain related to the sale of land previously
included within the F&E segment.

(h)

Reflects adjustments subsequent to the acquisition of Spartan ER, which was finalized on February 1, 2020.

(I)

Adjusted EBITDA attributable to businesses that are or were classified as held for sale, which represents REV Brazil in 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 amortization that was incurred in connection with the announced closure of certain O&M facilities.

(I)

Reflects the impact of net operating loss carrybacks as a result of the CARES Act

(m)

Income tax effect of adjustments using a 26.5% effective income tax rate for the
three and nine months ended July 31, 2022 and July 31, 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.

Significant 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 the Unaudited Condensed Consolidated Financial Statements for a discussion of the impact on our financial statements of the new accounting standards.

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