REV Group Inc. announced it will be exiting transit bus manufacturing by winding down operations at its ElDorado National-California (ENC) business, which is expected to be substantially completed by the end of fiscal year 2024, once existing customer orders are completed and delivered.
“Delays in the supply of critical components and the build out of infrastructure to support EV adoption, as well as the financial health of key suppliers, has created a competitive bidding environment for diesel and CNG buses that has made it difficult for ENC to compete profitably versus peers of greater scale,” said Mark Skonieczny, president and CEO of REV Group. “The decision to wind down operations was not made lightly; however, based on the options available to us, we believe this is the best path forward for our business. I would like to thank our ENC employees, dealers, and customers for their commitment to ENC over the years.”
REV's Next Steps
The ENC announcement was made in tandem with REV’s decision to sell Collins Bus Corp. to Forest River Bus LLC for a purchase price of $303 million in cash, subject to certain customary adjustments.
REV Group expects to generate at least $250 million in net cash proceeds from these strategic actions. The net proceeds will be used to return approximately $180 million of cash to shareholders in the form of a special cash dividend in the amount of $3 per share of common stock, payable on February 16, to shareholders of record on February 9, 2024, with the remainder used to pay down debt under its ABL credit facility.
REV Group will be reorganized into two reporting segments beginning with its first quarter fiscal 2024 results. The remaining Commercial segment business will be combined with the Fire & Emergency businesses in a new segment named Specialty Vehicles, led by Mike Virnig, the current fire group president.
The Recreation segment will be renamed Recreational Vehicles and will continue to be led by its current president, Mike Lanciotti. The company expects to provide updated fiscal 2024 guidance, including the impacts of these strategic actions, with its first quarter fiscal 2024 earnings release.
“Today’s announcement creates a more focused operating structure that provides opportunities for growth, consistent cash generation, and improved margin performance,” stated Skonieczny. “The net cash proceeds generated from these actions and strength of our balance sheet allow us to return cash to shareholders in the form of a special cash dividend while retaining ample liquidity and flexibility to continue to pursue our strategic agenda.”
ENC's History
Founded in 1975 as National Coach Corp. by William Feldhorn and Tom Hollenbeck, the company would eventually be purchased by Thor Industries in 1991, which combined it with its other Kansas-based bus building business ElDorado Motor Corp.
Combined, ElDorado National-California and ElDorado National-Kansas supplied light-duty and mid-size buses for the airport/hotel/rental car shuttle bus markets and local transit operators with smaller fleets, before the California plant diversified into the heavy-duty transit market in the early 2000s, introducing the EZ Rider and Axess buses and landing a sizeable contract with LA Metro along the way.
In 2013, Thor sold ElDorado National, along with Champion Bus, General Coach America, Goshen Coach, and others, to Allied Specialty Vehicles, which rebranded as REV Group in 2015.
In 2016, the Kansas-based operation rebranded as ElDorado, before it was sold by the REV Group to Forest River in May 2020.
Also in 2016, ElDorado National-California rebranded to ENC and stayed under in the REV umbrella along with Collins Bus.
After a 34-year career at the company, Tony Wayne retired as VP/GM in 2021 and was succeeded by Jason Moore.
Just last July, REV Group Inc. announced Hector Flores as its new VP/GM for ENC.
