REV Group, Inc. (NYSE: REVG) SunTrust 2017 Midwest Industrial Conference June 22,2017 Vehicles for Life
Cautionary Statements & Non-GAAP Measures Forward-Looking Statements This presentation includes statements that the Company believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This presentation includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, strives, goal, seeks, projects, intends, forecasts, plans, may, will or should or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this presentation and include statements regarding our intentions, beliefs, goals or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. Our forward-looking statements are subject to risks and uncertainties, including those highlighted under Risk Factors and Cautionary Statement on Forward-Looking Statements in our most recent prospectus and other risk factors described from time to time in subsequent annual and quarterly reports on Forms 10-K and 10-Q, which may cause actual results to differ materially from those projected or implied by the forward-looking statement. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which only speak as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, expect as required by applicable law. Note Regarding Non-GAAP Measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles ( GAAP ). However, management believes that the evaluation of the Company s ongoing operating results may be enhanced by a presentation of Adjusted EBITDA and Adjusted Net Income, which are non-gaap financial measures. Adjusted EBITDA represents net income before interest expense, income taxes, depreciation and amortization as adjusted for certain non-recurring, one-time and other adjustments which the Company believes are not indicative of our underlying operating performance. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by total net sales. Adjusted Net Income represents net income as adjusted for certain after-tax, non-recurring, one-time and other adjustments which the Company believes are not indicative of our underlying operating performance as well as for the add-back of certain non-cash intangible amortization and stock-based compensation. The Company believes that the use of Adjusted EBITDA and Adjusted Net Income provide additional meaningful methods of evaluating certain aspects of its operating performance from period to period on a basis that may not be otherwise apparent under GAAP when used in addition to, and not in lieu of, GAAP measures. A reconciliation of Adjusted EBITDA and Adjusted Net Income to the most closely comparable financial measures calculated in accordance with GAAP is included in the Appendix to this presentation. 2
Today s Presenters Tim Sullivan Chief Executive Officer Dean Nolden Chief Financial Officer 35 years industry experience (11 years public company experience) Joined REV as CEO in August 2014 Former CEO of Bucyrus International, Inc. (NASDAQ:BUCY) and Gardner Denver, Inc. At Bucyrus, grew revenue and Adj. EBITDA from $280mm and $9.6mm, respectively, in 2000 to $3.7bn and $720mm, respectively, in 2010, prior to its sale to Caterpillar Held numerous leadership positions for over 20 years at Bucyrus 20 years industry experience (20 years public company experience) Joined REV as CFO in January 2016 Former CFO of The Manitowoc Company s (NYSE:MTW) Foodservice Business Also served as Executive Vice President of Finance for Manitowoc s Crane segment and served as Treasurer Prior to Manitowoc, spent 8 years in public accounting in the audit practice of PwC 3
Investment Highlights 1 A Market Leader with Iconic Brands and One of the Largest Installed Bases of Vehicles 2 Serves Attractive, Diverse & Growing End-Markets with Strong Macro Tailwinds & Significant Pent-Up Demand 3 Multiple Controllable Growth & Synergies Levers to Drive Significant Earnings Growth and a 10% EBITDA Margin by 2019 4 Opportunity to Leverage Proven Track Record of Successful Acquisitions to Realize Incremental Upside from M&A 5 Unique and Attractive Financial Profile 6 Proven, Experienced and Aligned Management Team 4
REV Group Specialty Vehicle Provider of Choice for Municipalities, Private Contractors, Commercial, and Industrial Customers Customers purchase REV products because of our reputation for quality, value, and reliability Fire & Emergency Commercial Recreation #1 manufacturer of ambulances and #2 in fire apparatus 1,2 #1 manufacturer of Small & Fast growing market share in 2016 Medium Size commercial buses 3 in Class A Diesel & Gas Motorized RVs 4 1 National Truck Equipment Association ( NTEA ) Ambulance Manufacturers Division ( AMD ) industry unit volumes. 2 Fire Apparatus Manufacturers' Association ( FAMA ) unit volume data; custom chassis only. 3 Management estimate. 4 Market share based on year to date October 2016 data from Statistical Surveys, Inc. 5
Common Business Processes Across Product Categories Drive REV s Strategic Logic and Value Creation Paradigm REV s unique strategy is based on leveraging common process attributes for a diverse portfolio of specialty vehicles Leveraging Common Attributes the Synergy Toolset What Remains Distinct Chassis and Raw Material Procurement Brand Identities Efficient Manufacturing Processes Dealer Network Management New Product Development Processes Core Product Attributes Driving Customer Purchase Decisions Product Conception Processes Distribution Strategies Tied to Customer Base Commercial Strategies and Pricing Paradigms Service and Parts Aftermarkets Information Systems Sales and Product Management 6
REV at a Glance A leading diversified producer of specialty vehicles in the U.S. Company Overview REV Group, Inc. ( REV ) is a leading North American designer, manufacturer, and distributor of specialty vehicles and related aftermarket parts and services Leading market share across 3 segments: Fire & Emergency, Commercial, and Recreation 29 iconic brands, several of which pioneered their categories 18 manufacturing and 11 aftermarket service locations across the country Macro tailwinds driving growth including rising municipal spending, a growing aged population, increasing urbanization and pent-up demand Diversified customer base - no customer accounts for greater than 6% of total sales in FY2016 Nationwide distribution network including dealerships and direct sales Ideal platform to continue consolidating fragmented specialty vehicle industry Sales Mix¹ By Segment By Vehicle Type By Geography Recreation 25% Commercial 35% Fire & Emergency 40% By Customer Type Industrial / Commercial Private 8% Contractor 13% Consumer 25% Govt. / Muni. 54% Specialty 6% Transit Bus 7% Motorized RV 25% Ambulance 24% Commercial Bus 16% By Vehicles / Aftermarket Most vehicle sales represent replacement of existing products Aftermarket Parts / Service 4% Vehicles 96% International 3% Fire Apparatus 16% Type A School Bus 7% Aftermarket sales represent a growing portion of revenue Direct 19% U.S. 97% By Channel Dealer 81% ¹ Represents FY2016 period ending Oct. 29, 2016; management estimates. 2 Proforma trailing twelve month net sales to include full year impact of Renegade, Midwest and Ferrara acquisitions. 7 Proforma TTM Sales (2Q 2017): $2.1 billion 2
Large Installed Base Drives Significant Recurring Replacement Sales Replacement demand for the aging fleet of REV s products represents a significant revenue growth opportunity Replacement Value of REV s Installed Base Average Life Cycle & Selling Price Why Customers Choose REV for Replacement Fire Pumper trucks: 10-12 years ($160k - $650k) Aerial Fire trucks: 20-30 years ($475k - $1.2mm) Repeat purchase to match inservice fleets ~$32 billion Replacement value of REV s in-service fleet 1 Ambulance Bus Specialty RV Ambulance: 5-7 years ($65k - $350k) Shuttle bus: 5-10 years ($40k - $190k) Transit bus: 12 years ($100k- $500k) Specialty vehicles: 5-7 years ($25k - $165k) School bus: 8-10 years ($35k - $55k) Brand loyalty and reputation for value, quality, and reliability Long-standing customer relationships Broad, customizable vehicle platform Superior product quality and safety Recreation vehicles: 8-15 years ($65k - $600k) Network of aftermarket parts and service centers Source: Management estimate Note: Replacement sales opportunity is calculated as the average number of annual units sold multiplied by the average useful life multiplied by the average selling price. 1 Excludes installed fleet of FY2017 acquired businesses 8
Growing End-Markets Benefit from Significant Incremental Pent-up Demand REV s end-markets have positive tailwinds across each segment as unit sales continue to trend toward pre-recession levels Key Facts & Commentary End-Market Growth Fire & Emergency 40% of Total Sales (PF 2 44%) Aging population and urbanization drives demand Fire and Ambulance demand rising since 2011 Pent-up demand of 15,000 units for fire apparatus & ambulances since 2008 recession 12,000 10,000 8,000 6,000 4,000 2,000 0 Fire Apparatus Unit Sales Cumulative Pent-up Demand of 11,000 units '01 '03 '05 '07 '09 '11 '13 '15 Pre-2008 Average Actual Cumulative Pent-up Demand 12,000 10,000 8,000 6,000 4,000 2,000 0 Ambulance Unit Sales '01 '03 '05 '07 '09 '11 '13 '15 Pre-2008 Average Actual Cumulative Pent-up Demand of 4,000 units Cumulative Pent-up Demand Commercial Shuttle Bus Unit Sales (000s) U.S. School Bus Sales (000s) Urbanization increasing demand for buses Outsourcing of transportation services 13.1 13.3 12.3 14.7 14.9 Growth expected to continue Com 45.2 32.6 28.2 35.5 36.2 Unit Sales below 2006 peak 35% of Total Sales (PF 2 29%) Legislated replacement requirements 2006 2009 2012 2015 2016 2006 2009 2012 2015 2016 Recreation Poised for long-term growth with industry recovery Increasing participation rates demonstrate long-term trend toward RV ownership Recreation sales below pre-recession average 57.2 55.9 Pre-Rec. Avg. Source: FAMA, NTEA AMD, RVIA, Mid-Size Bus Manufacturers Association ( MSBMA ), Management Estimate ¹ Pre-recession average reflects the average from 1989 to 2007. 2 Proforma for FY2017 acquisitions using TTM sales through April FY2017. 9 25% of Total Sales (PF 2 27%) Motorized RV Unit Sales (000s) 13.2 28.2 47.3 54.9 2006 2009 2012 2015 2016 Pre-Recession Avg.¹ (000s) Class A Motorized RV Unit Sales (000s) 36.3 32.7 Pre-Rec. Avg. 5.9 14.5 21.9 22.4 2006 2009 2012 2015 2016 Pre-Recession Avg.¹
Multiple Controllable Growth Levers Many Achievable Paths to Significant EBITDA Growth Well-defined roadmap to drive EBITDA growth over the long-term with additional upside through M&A, further end market recovery, and entry into new adjacent market segments ~6% Adj. EBITDA Margin $127 1 A B C D E ~10% EBITDA Margin F Upside vs. Plan G 2016 Adj. EBITDA Cost & Efficiency A Cost & Efficiency Continued facility consolidation and optimization Cost of quality / warranty reduction Procurement optimization F&E: Municipal spending and pent-up demand Commercial: Urbanization, aging population, municipal spending Recreation: Continued recovery in volumes to pre-recession levels Aftermarket Growth B Market Share Growth Aftermarket Growth ~$800mm annual sales opportunity ~$32 billion installed base Higher margin opportunity New Products and Initiatives E F G Conservative Market Growth M&A Upside Highly fragmented market Large number of bolt-on opportunities Potential for transformative M&A Conservative Market Growth C Long-term EBITDA Margin Target Market Share Growth Continue broadening dealer coverage Entrance into previously underaddressed end-markets RV re-entry into Class C category and improved Class A share Market Recovery Upside Many end-markets are still below historical averages Significant upside if end-markets continue to recover to prerecession levels M&A Upside Market Recovery Upside Ambulance remounts EBITDA with Upside Opportunity New Products and Initiatives Continued product innovation expands addressable market At least 11 new products to launch in 2017 Controllable Factors Incremental Upside Note: These targets are forward-looking, are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and these variations may be material. For discussion of some of the important factors that could cause these variations, please consult the "Risk Factors" section of the prospectus. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update its goals. ¹ FY2016 Adj. EBITDA of $127mm, including the $4mm Adj. EBITDA adjustment for KME operations prior to acquisition. D 10
Multiple Controllable Growth Levers Large Aftermarket Parts Growth Opportunity REV believes the aftermarket parts opportunity for its vehicles in service is ~$800 million annually REV Aftermarket Opportunity & Capabilities ~$800 million Total annual value of REV aftermarket parts opportunity 11 RTC Facilities ~240,000 Unit Installed Base 1 ~$27 million Investment in FY2015-2016 Online Technology Platform REV announced the start of a new service partnership with Ryder System, Inc. during the quarter to enhance service for our bus dealers and customers 1 Installed base based on management estimates and does not include businesses acquired in FY2017. 2 Market share based on FY 2016 results. REV Market Share of ~$800 million Parts Opportunity Current Market Share 2 REV 9% Upside Opportunity Expand market share in high margin aftermarket parts and service Dedicated management team to oversee aftermarket business executing comprehensive aftermarket strategy Investing in building out capabilities Centralizing aftermarket parts and services business to broaden market coverage Establishing a web-based platform to provide customers with real time data on parts availability Establishing new partnerships to enhance capabilities and availability of parts in efficient manner 11
Significant Upside in Recreation Segment Executing on numerous initiatives to drive growth and recapture share RV Upside Opportunity in Revenue and Margin Strategy Highlights Motorized Market Share $478 Revenue Opportunity REV Brands Motorized RV Sales ($ million) ~7%¹ ~36% ~$2,000 2016 Historical² Margin Opportunity³ $2.0 billion in pre-recession motorized RV sales One of the fastest growing Class A producers from October 2015 to October 2016 (+~120 bps of share) Launch of Class C targets fast growing portion of the RV market (~22,100 units) Focus on recapturing share that REV brands held prior to 2008 Re-introduction of the Holiday Rambler and Monaco product lines Re-introduction of Class C motorhomes and entry into Super C category Entry into the Class B product category 9.3% 9.4% Long-term opportunity to improve margins in line with peers Focus on quality and parts support, and service offerings to differentiate from competitors 2.3% REV Rec - FY 2016 Source: Management estimates. Market share from Statistical Surveys, Inc. 1 As of Oct-2016. 2 Represents sales in calendar year 2005 as segments of larger public companies. 3 REV RV segment EBITDA margins reflect FY2016 and YTD April FY2017. Peers EBITDA margin represents the following LTM periods: THO (31-Oct-16), & WGO (Aug-16, pro forma for Grand Design acquisition). 3.4% REV Rec - YTD 2017 THO WGO Focus on manufacturing processes, quality and facility rationalization to improve margins New online parts ordering system Optimizing dealer network, brand, and product positioning 12
REV is a Consolidator Disrupting the Specialty Vehicle Industry One of the Industry s most active acquirers in the past decade REV has created a unique platform to drive growth REV is poised to capitalize on momentum to continue redefining the specialty vehicle industry Unique size and scale amongst specialty vehicle manufacturers As a multi-line producer, offers unique cross-selling and cost synergy opportunities Differentiated business model versus competitors Three strategic acquisitions completed in the first half of FY2017 $1.2 billion in Sales 1 ASV is formed 1960s Several brands founded their specialty vehicle segments and date back more than 50 years Tim Sullivan becomes ASV CEO $1.9 billion in Sales 2 ASV renamed and rebranded REV Group Acquisitions 2006 2008 2010 2012 2014 2016 Milestones 2015 2017 AIP Portfolio Companies Future ¹ Represents FY 2013. 2 Represents FY 2016. 13
Renegade RV Class C RVs and specialty trailers, including Super C RV niche with high towing capacity Complimentary RV products that will accelerate REV Group s expansion into the Class C RV market Product and service offerings: Super C Motor Coaches Sprinter Class C Motor Coaches Heavy-Duty Trailers Other Specialty vehicles Synergy Opportunities: RV dealer network expansion New product introductions Procurement savings Rationalize manufacturing space between all RV facilities 14
Midwest Automotive Designs Class B RVs, van-based luxury shuttle buses and high-end mobility vehicles Custom built luxury van-based vehicles in the following categories: Class B RVs Mercedes-Benz Master Upfitter of Class B RVs and Luxury Shuttle Buses Business/Executive Transport Customized Van Conversions Customized mobility vans Synergy Opportunities: RV dealer network expansion Procurement savings Production process improvements Rationalize manufacturing space between all RV facilities 15
Ferrara Fire Apparatus Full line custom and commercial fire apparatus as well as distributor of loose equipment Based in Holden, LA with 300,000 square feet of manufacturing space and more than 450 employees Custom built Fire Apparatus in the following categories: Pumpers Aerials Tankers Rescue and Wildland Vehicles Synergy Opportunities: Key customer & geographic expansion Procurement leverage with E- ONE and KME Ladder production Implementation of manufacturing best practices Loose equipment and parts sales growth 16
New Product Introductions Driving Product Leadership 6 new products and a new service offering in 2Q17 Ambulance of the Future New Chrysler Pacifica E-ONE 100 Metro Quint Aerial Krystal Luxury Sprinter Van Ford Transit Hotel Van Renegade Valencia Super C 17
Updated Full Year 2017 Outlook Double digit sales growth coupled with even greater Adjusted EBITDA growth REV Group increases it s full year 2017 Net Sales and Adjusted EBITDA guidance Updated Full Year 2017 Outlook Net Sales of $2.3 billion to $2.4 billion Adjusted EBITDA of $157 million to $162 million 1 Approximately 40% of full year Adjusted EBITDA expected in Q4 This outlook does not include potential additional future M&A ¹ Updated Full year 2017 forecasted net income is $36 to $39 million. 18
F INANCIALS
Impressive Growth and Significant Upside Opportunity REV s historical performance positions the company for strong and profitable future growth Revenue Adjusted EBITDA 1 Long-term Targets ($ millions) ($ millions) $1,721 $1,735 $1,926 $62 $90 $127 Revenue Growth CAGR of high single digits 2014 2015 2016 Adjusted Net Income³ Margin (%) 2014 2015 2016 3.6% 5.2% 6.4%² Return on Invested Capital 1,4 Targeted EBITDA margin of ~10% Long-term leverage target <2.0x EBITDA ($ millions) $14 $34 $55 9.1% 13.1% 16.4% Target NWC below 15% TTM sales Maintenance capex <1% of Sales 2014 2015 2016 Margin (%) 0.8% 2.0% 2.9% 2014 2015 2016 Note: These targets are forward-looking, are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and these variations may be material. For discussion of some of the important factors that could cause these variations, please consult the "Risk Factors" section of the prospectus. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update its goals. 1 FY2016 Adj. EBITDA of $127mm includes $4mm Adj. EBITDA adjustment for KME operations prior to acquisition. See page 33 of this presentation for a definition and reconciliation of Adj. EBITDA to Net Income. 2 FY2016 Adj. EBITDA margin assumes Adj. EBITDA of $123mm, excluding the $4mm Adj. EBITDA adjustment for KME operations prior to acquisition. 3 See page 34 of this presentation for a definition and reconciliation of Adj. Net Income to Net Income. 4 ROIC Return on Invested Capital defined as after-tax Adj. EBITDA divided by current maturities of notes payable, bank and other long-term debt plus notes payable, bank and other long-term debt, less current maturities plus total shareholders equity; assumes 36.5% effective tax rate. 20
Consolidated REVG Year-To-Date 2017 Results Adjusted EBITDA growth in excess of sales growth highlights operating leverage and cost agenda Broad based earning growth from controllable costs reduction initiatives and operating leverage Sales growth of 16% year-todate due to growth in F&E and Recreation as well as acquisitions 30 basis point improvement in EBITDA margin driven by cost reductions and pricing/discounting initiatives 24% growth in Adjusted EBITDA is in excess of sales growth due to leveraging REV business model and accelerated growth from acquisitions TTM proforma net sales and adjusted EBITDA of $2.1 billion and $156 million, respectively Sales $ (millions) $1,000 $950 $900 $850 $800 $750 $988 $853 2Q 2016 2Q 2017 Net sales Adjusted EBITDA $ (millions) $70 $60 $50 $40 $30 $20 $10 $- $47 5.6% 5.9% $59 2Q 2016 2Q 2017 Adjusted EBITDA Adjusted EBITDA margin 12% 11% 10% 9% 8% 7% 6% 5% 4% Adjusted EBITDA Margin % 21
Unique and Attractive Financial Profile Attractive characteristics including highly variable cost structure and balance sheet flexibility Highly Variable Cost Structure 85% of costs of goods sold are variable Focus on achieving ~10% long-term EBITDA margin target Scaled and synergistic platform leveraging procurement, engineering, distribution, and support functions across business Other COGS Manufacturing Overhead COGS Breakdown Labor Chassis Materials (ex. Chassis) 85% of COGS are variable Flexible balance sheet Visible and Recurring Revenue Cash and equivalents of $13.9 million with additional availability of $136.6 million under our existing credit facilities Current balance sheet leverage of 1.6x based on current debt of $268 million to trailing year proforma adjusted EBITDA of $156 million 1 Interest expense coverage ratio of 5.9x on a proforma basis 1 Primarily replacement nature of demand and, in many products, backlog provides revenue visibility Strong growth potential in recurring parts sales with highly attractive margins $ in millions $350 $300 $250 $200 $150 $100 Balance Sheet metrics as of 2Q 2017 Net Debt $304 $318 $324 $321 Q2 2016 F&E $636 Q3 2016 Q4 2016 Q1 2017 $268 Q2 2017 7.0x 5.0x 3.0x 1.0x 4.2 4.4 4.4 4.6 2.7 2.7 Backlog April FY2017 ($ million) Commercial $241 RV $113 1.9 2.3 5.9 1.7 Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017 Net Debt to Adjusted EBITDA Adjusted EBITDA to Interest Expense Total $990 Source: Company management. Note: These targets are forward-looking, are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and these variations may be material. For discussion of some of the important factors that could cause these variations, please consult the "Risk Factors" section of the prospectus. Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update its goals. 1 Proforma for FY2017 acquisitions through April FY2017. 22
Takeaways Investment Highlights 2017 YTD Update 1 Market Leader with Iconic Brands and Large Installed Base Added 3 New Brands Expanding Our Installed Base 2 Diverse and Growing End-Markets with Strong Tailwinds and Pent-up Demand Continued Strength in End-Markets with Seasonally Strong 2H Ahead 3 Controllable Growth Synergy Levers to Drive EBITDA Margins to 10% by 2019 Expanded Adjusted EBITDA Margins in All 3 Segments in 1H17 4 Opportunity to Leverage Track Record of Successful M&A Completed 3 Strategic Acquisitions Benefiting All 3 Segments 5 Unique and Attractive Financial Profile Maintaining Balance Sheet Flexibility and Strong Financial Profile 6 Experienced Management Team 23
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