Shares of REV Group Inc. rallied Monday, after the maker of electric- and hydrogen-powered commercial vehicles said it will pay out a special dividend with the cash generated by strategic actions, including winding down its ElDorado National-California (ENB) transit bus manufacturing business.
rallied 1.9% in premarket trading, which puts it on track to turn positive year to date for the first time.
The company said the winding down of ENC, which makes hydrogen-powered and battery-electric — as well as diesel and compressed-natural-gas-powered transit buses — will be mostly completed by the end of fiscal 2024, which runs through October.
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“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 Chief Executive Mark Skonieczny.
In addition, the company said it completed the sale of its school-bus business, Collins Bus Corp., for $303 million in cash to Forest River Bus LLC.
REV said it expects to generate at least $250 million in net cash from its strategic actions. The company will use about $180 million of those proceeds to pay out a special cash dividend of $3.00 per share on Feb. 16, to shareholders of record on Feb. 9.
Based on Friday’s stock closing price of $18.03, and including the regular annual dividend payment of 20 cents a share and the special dividend, the implied dividend yield on the stock would be 17.75%.
Separately, the company said it will be reorganized into two reporting business segments, starting when it reports fiscal first-quarter results, which are projected to be released in early March.
The commercial business, of which Collins and ENC were a part, will be combined with the fire and emergency businesses, and called Specialty Vehicles. The recreation business, which includes the Holiday Rambler, Fleetwood RV and American Coach brands, will be renamed Recreational Vehicles.