October 17, 2021

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Travel Finishes First

REV : Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

29 min read
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 January 7, 2021.

Overview

REV Group companies are leading designers and manufacturers of specialty
vehicles and related aftermarket parts and services. We serve a diversified
customer base, primarily in the United States, through three segments: Fire &
Emergency, 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 88% of our net sales
during the third quarter of fiscal year 2021 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 Fire & Emergency segment sells fire apparatus equipment
under the Emergency One ("E-ONE"), Kovatch Mobile Equipment ("KME"), Ferrara,
Spartan, 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 Fire & Emergency
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 Fire &
Emergency and the Commercial segments 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
due to fewer working days and the purchasing seasons for vehicles such as school
buses, RVs and sweepers. Sales of such vehicles are typically the lowest in the
first fiscal quarter due to the colder weather and the relatively long time
until the summer vacation season, and the fact that the school year is underway
with municipalities and school bus contractors utilizing their existing fleets
to transport student populations. 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 more working days, better weather,
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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On-Going 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 impact of
COVID-19, and related mutations, continues to be present throughout the world,
including in all global and regional markets served by us, and our manufacturing
facilities are located in areas that continue to be affected by the pandemic. As
a result of the spread of COVID-19, we have experienced labor disruptions,
disruption and delays in our supply chain, customer demand changes, and
logistics challenges, including our customers' ability to inspect and take
delivery of vehicles.

Many of the vehicles and parts we supply are vital to serving communities across
our nation. The Cybersecurity and Infrastructure Security Agency (CISA), which
implements the Secretary of Homeland Security's responsibilities, has designated
our fire trucks, ambulances, transit and school buses and terminal trucks as
essential to the nation's health and safety, and are critical to the emergency
service and transportation infrastructure.

When necessary, we have taken a number of precautionary steps to safeguard our
employees and our business from the effects of the outbreak of COVID-19,
including closing Recreation vehicle manufacturing locations for 3-6 weeks and
shuttle bus manufacturing locations for 2 weeks (during the second quarter of
fiscal year 2020), substantially limiting the presence of personnel in our
offices and manufacturing locations, implementing travel restrictions and
withdrawing from various industry events. We have requested that office
employees work from home from time to time, and implemented business continuity
plans in an effort to minimize further business disruption and to protect our
employees and operations. At times, we have limited discretionary spending,
furloughed salaried employees, deferred capital investments and temporarily
lowered the salaries of our leadership team.

Our Recreation vehicles dealer network was significantly impacted by the
pandemic and many of them suspended normal production activity temporarily
before reopening in the third quarter of fiscal year 2020 when consumer demand
for recreation vehicles began to accelerate due to an increase in consumer
preference to vacation in a safe and socially distant manner. As of July 31,
2021, Recreation segment backlog was significantly higher than the same period
in the prior year.

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 third quarter of fiscal year 2021
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. However, the impact of possible
disruption remains largely out of our control and the risk of unfavorable impact
on production at our facilities will likely continue throughout fiscal year
2021.

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.

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Results of Operations



                                           Three Months Ended           Nine Months Ended
                                                July 31,                    July 31,
($ in millions)                             2021          2020         2021          2020
Net sales                                $    593.3      $ 582.2     $ 1,790.9     $ 1,661.3
Gross profit                                   76.6         66.5         225.7         166.3
Selling, general and administrative            45.2         53.5         141.0         157.6
Restructuring                                     -          2.5           1.0           6.0
Loss on early extinguishment of debt              -            -           1.4             -

(Gain) loss on business held for sale (1.0 ) – 2.8

             -
Loss on sale of business                          -          0.5             -           9.3
Loss (gain) on acquisition of business            -            -           0.4         (11.9 )
Provision (benefit) for income taxes            2.4         (0.5 )         9.6         (13.2 )
Net income (loss)                              23.7         (3.6 )        

44.4 (20.3 )

Net income (loss) per common share
Basic                                    $     0.37      $ (0.06 )   $    0.70     $   (0.32 )
Diluted                                  $     0.36      $ (0.06 )   $    0.68     $   (0.32 )
Dividends declared per common share      $     0.05            -     $    

0.05 $ 0.10

Adjusted EBITDA                          $     41.6      $  21.4     $   110.4     $    39.6
Adjusted Net Income (Loss)               $     24.5      $   6.3     $    59.0     $    (2.5 )






Net Sales                   Three Months Ended                        Nine Months Ended
                   July 31,                    July 31,      July 31,                   July 31,
($ in millions)      2021         Change         2020          2021         Change        2020
Net sales         $    593.3          1.9 %   $    582.2     $ 1,790.9          7.8 %   $ 1,661.3




Net Sales: Consolidated net sales increased $11.1 million for the three months
ended July 31, 2021 compared to the prior year quarter, primarily due to
increased net sales within the Commercial and Recreation segments, partially
offset by a decrease in net sales within the Fire and Emergency ("F&E") segment.
The increase in sales volume in the Commercial segment was primarily the result
of increased shipments of municipal transit buses, terminal trucks and street
sweepers compared to the prior year quarter. The increase in sales volume in the
Recreation segment was primarily the result of increased unit shipments driven
by retail demand for RVs, and lower discounts and allowances compared to the
prior year quarter. The decrease in sales volume 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.

Consolidated net sales increased $129.6 million for the nine months ended July
31, 2021 compared to the prior year period. Net sales for the prior year period
included $96.7 million of revenue attributable to the shuttle bus businesses and
$137.1 million of revenue attributable to Spartan ER. Excluding the impact of
the shuttle bus divestiture and Spartan ER acquisition, organic net sales
increased by $167.2 million for the nine months ended July 31, 2021 compared to
the prior year period. The increase in organic net sales was primarily due to
increased sales within the Recreation segment, partially offset by a decrease in
the F&E and Commercial segments.

Gross Profit               Three Months Ended                         Nine 

Months Ended

                   July 31,                   July 31,       July 31,                   July 31,
($ in millions)      2021        Change         2020           2021        Change         2020
Gross profit      $     76.6        15.2 %   $     66.5     $    225.7        35.7 %   $    166.3
% of net sales          12.9 %                     11.4 %         12.6 %                     10.0 %


Gross Profit: Consolidated gross profit increased $10.1 million for the three
months ended July 31, 2021 compared to the prior year quarter. Consolidated
gross profit, as a percentage of consolidated net sales, was 12.9% for the three
months ended July 31, 2021, an increase compared to 11.4% for the three months
ended July 31, 2020. The increase in gross profit was primarily attributable to
greater price realization, lower discounting and allowances and improved
operating leverage resulting from higher sales volumes and productivity
initiatives.

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Consolidated gross profit increased $59.4 million for the nine months ended July
31, 2021 compared to the prior year period. Consolidated gross profit, as a
percentage of consolidated net sales, was 12.6% for the nine months ended July
31, 2021, an increase compared to 10.0% for the nine months ended July 31, 2020.
The increase in gross profit was primarily attributable to greater price
realization, lower discounting and allowances and improved operating leverage
resulting from higher sales volumes and productivity initiatives.



Selling, General and Administrative            Three Months Ended                         Nine Months Ended
                                       July 31,                   July 31,       July 31,                   July 31,
($ in millions)                          2021        Change         2020           2021        Change         2020
Selling, general and administrative   $     45.2       -15.5 %   $     53.5 

$ 141.0 -10.5 % $ 157.6


Selling, General and Administrative: Consolidated selling, general and
administrative ("SG&A") costs decreased $8.3 million for the three months ended
July 31, 2021 compared to the prior year quarter. The decrease in SG&A costs for
the three months ended July 31, 2021 was primarily due to reduced restructuring
related charges, headcount reduction, travel and marketing costs as well as
lower depreciation expense.

Consolidated SG&A costs decreased $16.6 million for the nine months ended July
31, 2021 compared to the prior year period. The decrease in SG&A costs for the
nine months ended July 31, 2021, was primarily due to reduced restructuring
related charges, travel and marketing costs as well as lower depreciation
expense.

Restructuring              Three Months Ended                        Nine Months Ended
                   July 31,                   July 31,      July 31,                  July 31,
($ in millions)      2021         Change        2020          2021        Change        2020
Restructuring     $        -       -100.0 %   $     2.5     $     1.0       -83.3 %   $     6.0


Restructuring: Consolidated restructuring costs decreased $2.5 million for the
three months ended July 31, 2021 compared to the prior year quarter. The
restructuring costs for the three months ended July 31, 2020, were primarily
related to headcount reductions in Corporate and the Fire division.

Consolidated restructuring costs decreased $5.0 million for the nine months
ended July 31, 2021 compared to the prior year period. The restructuring costs
for the nine months ended July 31, 2021, were primarily related to reductions in
workforce in Corporate. The restructuring costs for the nine months ended July
31, 2020, were primarily related to headcount reductions in Corporate and the
Fire division, as well as lease termination costs related to the closure of a
Spartan ER facility.

Loss on Early Extinguishment of Debt             Three Months Ended                         Nine Months Ended
                                        July 31,                     July 31,       July 31,                 July 31,
($ in millions)                           2021           Change        2020           2021        Change       2020
Loss on early extinguishment of debt   $        -             n/m   $       

$ 1.4 n/m $ –

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.

(Gain) Loss on Business Held for Sale           Three Months Ended                      Nine Months Ended
                                        July 31,                 July 31,       July 31,                 July 31,
($ in millions)                           2021        Change       2020           2021        Change       2020
(Gain) loss on business held for sale   $    (1.0 )       n/m   $        -  

$ 2.8 n/m $ –


Loss on Business Held for Sale: 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 8,
Divestiture Activities, of the Notes to Condensed Unaudited Consolidated
Financial Statements for further details.

Loss on Sale of Business                     Three Months Ended                          Nine Months Ended
                                     July 31,                    July 31,       July 31,                   July 31,
($ in millions)                        2021          Change        2020           2021         Change        2020
Loss on sale of business           $          -       -100.0 %   $     0.5     $        -       -100.0 %   $     9.3


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Loss on Sale of Business: Effective May 8, 2020, we completed the sale of our
shuttle bus businesses for $48.9 million in cash. As a result, we recorded a
loss on sale of $9.3 million during the nine months ended July 31, 2020. Refer
to Note 8, Divestiture Activities, of the Notes to Condensed Unaudited
Consolidated Financial Statements for further details.

Loss (Gain) on Acquisition of
Business                                     Three Months Ended                          Nine Months Ended
                                    July 31,                     July 31,      July 31,                    July 31,
($ in millions)                       2021           Change        2020          2021         Change         2020
Loss (gain) on acquisition of
business                           $        -             n/m   $        -  

$ 0.4 -103.4 % $ (11.9 )


Loss (Gain) 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. Refer to Note 4, Acquisition, of the Notes to
Condensed Unaudited Consolidated Financial Statements for further details.

During the second quarter of fiscal year 2020, we recorded the preliminary
purchase accounting for the acquisition of Spartan ER, which resulted in a gain
on acquisition of $11.9 million. Refer to Note 4, Acquisition, of the Notes to
Condensed Unaudited Consolidated Financial Statements for further details.

Provision (Benefit) for Income Taxes            Three Months Ended                       Nine Months Ended
                                       July 31,                   July 31,      July 31,                   July 31,
($ in millions)                          2021        Change         2020    

2021 Change 2020
Provision (benefit) for income taxes $ 2.4 580.0 % $ (0.5 ) $ 9.6 172.7 % $ (13.2 )


Provision (Benefit) for Income Taxes: Consolidated income tax expense was $2.4
million for the three months ended July 31, 2021, or 9.1% of pre-tax income,
compared to $0.5 million of benefit, or 11.6% of pre-tax loss, for the three
months ended July 31, 2020. 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. Results
for the three months ended July 31, 2020 were unfavorably impacted by $0.8
million of net discrete tax expense primarily related to stock-based
compensation tax deductions.

Consolidated income tax expense was $9.6 million for the nine months ended July
31, 2021, or 17.8% of pre-tax income, compared to $13.2 million of benefit, or
39.4% of pre-tax loss, for the nine months ended July 31, 2020. Results for the
nine months ended July 31, 2021 were favorably impacted by $5.2 million of net
discrete tax benefits related primarily to net operating loss carrybacks
allowable under the CARES Act and recognition of deferred taxes on assets
classified as held for sale. Results for the nine months ended July 31, 2020
were favorably impacted by $4.6 million of net discrete tax benefits primarily
related to net operating loss carrybacks allowable under the CARES Act and the
nontaxable gain on the acquisition of Spartan ER.

Net Income (Loss)            Three Months Ended                         

Nine Months Ended

                     July 31,                   July 31,       July 31,                   July 31,
($ in millions)        2021        Change         2020           2021        Change         2020
Net income (loss)   $     23.7       758.3 %   $     (3.6 )   $     44.4    

318.7 % $ (20.3 )


Net Income (Loss): Consolidated net income increased $27.3 million for the three
months ended July 31, 2021 compared to the prior year quarter primarily due to
the factors detailed above.

Consolidated net income increased $64.7 million for the nine months ended July
31, 2021 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)      2021        Change         2020           2021        Change         2020
Adjusted EBITDA   $     41.6        94.4 %   $     21.4     $    110.4       178.8 %   $     39.6


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Consolidated Adjusted EBITDA increased $20.2 million for the three months ended
July 31, 2021 compared to the prior year quarter, due to an increase in Adjusted
EBITDA in the Fire & Emergency and Recreation segments, partially offset by
lower Adjusted EBITDA in the Commercial segment.

Consolidated Adjusted EBITDA increased $70.8 million for the nine months ended
July 31, 2021 compared to the prior year period, due to an increase in Adjusted
EBITDA in the Fire & Emergency and Recreation segments, partially offset by
lower Adjusted EBITDA in the Commercial 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 Net Income (Loss) to Adjusted EBITDA tables and
related footnotes.

Adjusted Net Income (Loss)                  Three Months Ended                        Nine Months Ended
                                    July 31,                  July 31,       July 31,                    July 31,
($ in millions)                       2021        Change        2020           2021         Change         2020
Adjusted Net Income (Loss)         $     24.5       288.9 %   $     6.3     $     59.0       2460.0 %   $     (2.5 )

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
Income (Loss) to Adjusted EBITDA tables and related footnotes.

Fire & Emergency Segment



                                       Three Months Ended                   Nine Months Ended
                                            July 31,                            July 31,
($ in millions)                   2021       Change       2020        2021       Change       2020
Net sales                        $ 269.5       -12.1 %   $ 306.7     $ 857.7         6.9 %   $ 802.4
Adjusted EBITDA                     15.8        22.5 %      12.9        47.6        89.6 %      25.1
Adjusted EBITDA % of net sales       5.9 %                   4.2 %       5.5 %                   3.1 %




Fire & Emergency segment net sales decreased $37.2 million for the three months
ended July 31, 2021 compared to the prior year quarter primarily due to
decreased unit shipments of fire apparatus and ambulance units resulting from
labor and supply chain constraints, as well as a production mix of lower
velocity ambulance units.

Fire & Emergency segment net sales increased $55.3 million for the nine months
ended July 31, 2021 compared to the prior year period. Net sales for the current
year period included an additional quarter of revenue attributable to Spartan
ER, which was acquired on February 1, 2020. Excluding the impact of the Spartan
ER acquisition, net sales decreased for the nine months ended July 31, 2021
compared to the prior year period, which was primarily due to decreased unit
shipments of ambulance units, partially offset by increased shipments of fire
apparatus and the realization of price increases within fire businesses.

Fire & Emergency segment Adjusted EBITDA increased $2.9 million for the three
months ended July 31, 2021 compared to the prior year quarter primarily due to
stronger price realization and productivity initiatives that resulted in
improved gross margin performance and lower operating expense, partially offset
by lower unit shipments related to labor and supply chain constraints which
resulted in lower net sales.

Fire & Emergency ("F&E") segment Adjusted EBITDA increased $22.5 million for the
nine months ended July 31, 2021 compared to the prior year period primarily due
to productivity initiatives that resulted in performance improvements, including
direct labor efficiencies and lower operating expense.





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Commercial Segment



                                       Three Months Ended                  Nine Months Ended
                                            July 31,                           July 31,
($ in millions)                   2021       Change       2020       2021       Change       2020
Net sales                        $ 111.3        20.5 %   $ 92.4     $ 292.8       -25.6 %   $ 393.8
Adjusted EBITDA                      9.7        -5.8 %     10.3        25.1       -10.7 %      28.1
Adjusted EBITDA % of net sales       8.7 %                 11.1 %       8.6 %                   7.1 %




Commercial segment net sales increased $18.9 million for the three months ended
July 31, 2021 compared to the prior year quarter. The increase in net sales
compared to the prior year quarter was primarily due to increased unit shipments
of municipal transit buses, terminal trucks and street sweepers as well as lower
discounting of school buses, partially offset by decreased unit shipments of
school buses related to limited chassis availability.

Commercial segment net sales decreased $101.0 million for the nine months ended
July 31, 2021 compared to the prior year period. The decrease in net sales
compared to the prior year period was primarily due to net sales of our shuttle
bus businesses, which were sold on May 8, 2020. Excluding the impact of the
shuttle bus divestiture, net sales decreased by $4.3 million for the nine months
ended July 31, 2021 compared to the prior year period. The decrease in net sales
compared to the prior year period was primarily due to lower shipments of school
buses and municipal transit buses related to COVID-19 end market disruption in
the first half of the fiscal year, partially offset by increased shipments of
terminal trucks and street sweepers.

Commercial segment Adjusted EBITDA decreased $0.6 million for the three months
ended July 31, 2021 compared to the prior year quarter primarily due to a
negative mix contribution from increased sales of terminal trucks and street
sweepers and an unfavorable mix of school buses and municipal transit buses,
partially offset by increased net sales and improved profitability within the
terminal truck and street sweeper business.

Commercial segment Adjusted EBITDA decreased $3.0 million for the nine months
ended July 31, 2021 compared to the prior year period primarily due to lower
sales within the bus group, partially offset by improved profitability as a
result of increased sales volume and productivity initiatives in the terminal
truck and street sweeper businesses as well as SG&A spend reductions within the
segment.

Recreation Segment



                                       Three Months Ended                   Nine Months Ended
                                            July 31,                            July 31,
($ in millions)                   2021       Change       2020        2021       Change       2020
Net sales                        $ 212.5        16.3 %   $ 182.7     $ 640.5        38.2 %   $ 463.6
Adjusted EBITDA                     24.1        99.2 %      12.1        64.3       259.2 %      17.9
Adjusted EBITDA % of net sales      11.3 %                   6.6 %      10.0 %                   3.9 %




Recreation segment net sales increased $29.8 million for the three months ended
July 31, 2021 compared to the prior year quarter primarily due to increased unit
shipments in several product categories as well as lower discounting and sales
allowances, partially offset by supply chain and labor constraints.

Recreation segment net sales increased $176.9 million for the nine months ended
July 31, 2021 compared to the prior year period primarily due to increased unit
sales in all product categories as well as lower discounting and allowances
versus the prior year period which was impacted by COVID-19 related disruptions,
including the suspension of normal production activities at all businesses,
primarily within the second quarter of fiscal year 2020.

Recreation segment Adjusted EBITDA increased $12.0 million for the three months
ended July 31, 2021 compared to the prior year quarter primarily due to
increased sales, stronger price realizations related to lower discounting, and
benefits from strategic initiatives designed to improve profitability, partially
offset by inefficiencies resulting from supply chain disruptions and labor
constraints.

Recreation segment Adjusted EBITDA increased $46.4 million for the nine months
ended July 31, 2021 compared to the prior year period primarily due to increased
sales, stronger price realizations related to lower discounting, and benefits
from strategic initiatives designed to improve profitability, partially offset
by inefficiencies resulting from supply chain disruptions and labor constraints.

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Backlog

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)      2021           2021            2021            2020
Fire & Emergency   $ 1,229.5     $  1,099.0     $     1,017.9     $ 1,039.7
Commercial             312.0          303.1             234.0         300.5
Recreation           1,157.0          940.5             754.3         327.8
Total Backlog      $ 2,698.5     $  2,342.6     $     2,006.2     $ 1,668.0

Each of our three segments has a backlog of new vehicle orders that generally
extends out from two to twelve 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 July 31, 2021, our backlog was $2,698.5 million compared to $1,668.0
million as of July 31, 2020. The increase in total backlog was due to increases
in the Fire & Emergency ("F&E"), Commercial and Recreation segments. The
increase in F&E segment backlog was primarily the result of strong orders for
fire apparatus following COVID-19 related softness in the prior year period and
continued strength in orders for 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. The increase in
Recreation segment backlog was primarily the result of strong order intake
across all product categories.

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 term loan and ABL credit facility.

We believe that our sources of liquidity and capital will be sufficient to
finance our continued operations and growth strategy. 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,
2021 and July 31, 2020:



                                                         Nine Months Ended
                                                              July 31,
($ in millions)                                           2021         2020
Net cash provided by operating activities              $    100.6     $  

25.0

Net cash provided by (used in) investing activities           0.6       (10.2 )
Net cash used in financing activities                      (103.4 )      

(0.8 )
Net (decrease) increase in cash and cash equivalents $ (2.2 ) $ 14.0

Net Cash Provided by Operating Activities

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, more effective inventory management and an increase in customer
deposits, partially offset by a decrease in accounts payable. Net cash provided
by operating activities for the nine months ended July 31, 2020 was $25.0
million and

                                       29

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related to the collection of receivables and customer deposits, partially offset
by a net loss for the period, an increase in inventory, and a decrease in
accounts payable.

Net Cash Provided by (Used in) Investing Activities

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 pending sale of REV Brazil, partially offset by
cash paid for capital expenditures. Net cash used in investing activities for
the nine months ended July 31, 2020 was $10.2 million and was primarily related
to the acquisition of Spartan ER on February 1, 2020, net of proceeds from the
sale of our shuttle bus business on May 8, 2020 and the purchase of capital
expenditures, partially offset by the sale of assets.

Net Cash Used in Financing Activities

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. Net cash used in financing
activities for the nine months ended July 31, 2020 was $0.8 million, which
primarily consisted of proceeds received from borrowings for the acquisition of
Spartan ER and to pay quarterly dividends, offset by partial repayment of the
borrowings and of long term debt.



Dividends

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. We announced the suspension of our quarterly dividend beginning the
second quarter of fiscal year 2020. In the nine months ended July 31, 2020, we
paid cash dividends of $9.5 million.

On June 3, 2021, our Board of Directors reinstated 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, and declared the initial
regular dividend for the three months ended April 30, 2021, payable on July 15,
2021, to shareholders of record on June 30, 2021. During the third quarter of
fiscal year 2021, we paid cash dividends of $3.3 million.

2021 ABL Facility

On April 13, 2021, we 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 Credit Agreement. The Credit
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 Agreement serves as refinancing of
indebtedness and terminates the Company's 2017 ABL Facility and Term Loan.

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 July 31, 2021. As of July 31, 2021, the Company's availability under the
2021 ABL Facility was $276.8 million.

Refer to Note 9, Long-Term Debt, of the Notes to Condensed Unaudited
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.

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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 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 Income (Loss) to Adjusted EBITDA for the
periods presented:



                                                 Three Months Ended            Nine Months Ended
                                                      July 31,                     July 31,
($ in millions)                                 2021            2020           2021          2020
Net income (loss)                             $    23.7       $    (3.6 )   $     44.4     $  (20.3 )
Depreciation and amortization                       7.6             9.2           24.2         30.9
Interest expense, net                               3.4             5.7           14.4         20.3
Loss on early extinguishment of debt                  -               -            1.4            -
Provision (benefit) for income taxes                2.4            (0.5 )          9.6        (13.2 )
EBITDA                                             37.1            10.8           94.0         17.7
Transaction expenses(a)                             0.5             0.6            3.2          2.6
Sponsor expense reimbursement(b)                      -             0.1            0.2          0.2
Restructuring costs(c)                                -             2.5            1.0          6.0
Restructuring related charges(d)                      -             0.7            0.3          3.9
Stock-based compensation expense(e)                 1.9             1.8            5.5          7.2
Legal matters(f)                                    2.8             0.1            3.1          1.6
Net (gain) loss on sale of assets and
business held for sale(g)                          (1.0 )             -            1.7            -
Loss on sale of business(h)                           -             0.5              -          9.3
Loss (gain) on acquisition of business(i)             -               -            0.4        (11.9 )
Impairment charges(j)                                 -             3.7              -          3.7
Losses (earnings) attributable to assets
held for sale(k)                                    0.3             0.6            1.0         (0.8 )
Deferred purchase price payment(l)                    -               -              -          0.1
Adjusted EBITDA                               $    41.6       $    21.4     $    110.4     $   39.6




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



                                               Three Months Ended              Nine Months Ended
                                                    July 31,                       July 31,
($ in millions)                               2021             2020           2021           2020
Net income (loss)                          $     23.7       $     (3.6 )   $     44.4      $   (20.3 )
Amortization of intangible assets                 2.3              3.0            7.4           10.4
Transaction expenses(a)                           0.5              0.6            3.2            2.6
Sponsor expense reimbursement(b)                    -              0.1            0.2            0.2
Restructuring costs(c)                              -              2.5            1.0            6.0
Restructuring related charges(d)                    -              0.7            0.3            3.9
Stock-based compensation expense(e)               1.9              1.8            5.5            7.2
Legal matters(f)                                  2.8              0.1            3.1            1.6
Net (gain) loss on sale of assets and
business held for sale(g)                        (1.0 )              -            1.7              -
Loss on sale of business(h)                         -              0.5              -            9.3
Loss (gain) on acquisition of
business(i)                                         -                -            0.4          (11.9 )
Impairment charges(j)                               -              3.7              -            3.7
Losses (earnings) attributable to assets
held for sale(k)                                  0.3              0.6            1.0           (0.8 )
Deferred purchase price payment(l)                  -                -              -            0.1
Loss on early extinguishment of debt(m)             -                -            1.4              -
Impact of tax rate change(n)                     (4.2 )              -           (4.2 )         (3.5 )
Income tax effect of adjustments(o)              (1.8 )           (3.7 )         (6.4 )        (11.0 )
Adjusted Net Income (Loss)                 $     24.5       $      6.3     $     59.0      $    (2.5 )


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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 expenses for the nine months ended July 31, 2021, consisted of

personnel costs, including severance, vacation and other employee benefit

payments associated with headcount reductions in Corporate.


Restructuring expenses for the three and nine months ended July 31, 2020,
consisted of personnel costs, including severance, vacation and other employee
benefit payments associated with headcount reductions in Corporate and the Fire
division, as well as lease termination costs related to the closure of a Spartan
ER facility.

(d) Reflects costs that are directly attributable to restructuring activities,

including leadership changes, 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 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 and (iii) for fees

to settle certain claims arising from a putative class action in the state of California.

(g) Reflects the initial loss and subsequent adjustment that were recorded in

connection with the decision to divest of REV Brazil. We also recorded $1.1

million gain related to the sale of land previously included within the Fire

& Emergency segment. Refer to Note 8, Divestiture Activities, of the Notes to

Condensed Unaudited Consolidated Financial Statements for further details.

(h) Reflects losses related to the sale of our shuttle bus businesses, which was

completed on May 8, 2020. Refer to Note 8, Divestiture Activities, of the

Notes to Condensed Unaudited Consolidated Financial Statements for further

details.

(i) Reflects the initial gain and subsequent adjustments on the acquisition of

    Spartan ER, which was completed on February 1, 2020. Refer to Note 4,
    Acquisition, of the Notes to Condensed Unaudited Consolidated Financial
    Statements for further details.

(j) In connection with the anticipated liquidation of all rental vehicles, the

Company recorded a $3.7 million impairment charge during the three months

ended July 31, 2020. This impairment charge represents the difference between

the carrying value of the assets and expected sale proceeds.

(k) Adjusted EBITDA attributable to businesses that are or were classified as

held for sale, which represents REV Brazil during fiscal year 2021 and REV

Coach and shuttle bus businesses during fiscal year 2020.

(l) Reflects the expense associated with the deferred purchase price payments to

the sellers of Lance.

(m) 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.

(n) Reflects the provisional impact of net operating loss carrybacks as a result

of the CARES Act. Refer to Note 12, Income Taxes, of the Notes to Condensed

Unaudited Consolidated Financial Statements for further details.

(o) Income tax effect of adjustments using a 26.5% effective income tax rate for

the three and nine months ended July 31, 2021 and July 31, 2020, except for

certain transaction expenses, impact of tax rate change 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, 2020. In the first quarter of
fiscal year 2021, we adopted ASU 2016-13 relating to measurement of credit
losses on financial instruments, as discussed in Note 1 of the Notes to
Condensed Unaudited Consolidated Financial Statements.

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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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