Rev Group ($REVG) is a fucking joke. They should be trading at HALF of what their current stock price is, at best. I have been following them for years, I’ve been right about their whole scheme quarter after quarter. I was right about their earnings yesterday and they fucked me. I’m so mad and broke that I sat here all night and typed out most of the DD I have learned over years of analyzing this shithole
- Let’s start with the numbers. They’re shit.
Rev IPO’d in 2017. They’ve been losing bottom line every year since they started. This year they actually ran at a loss. Macrotrends is the best visual tool for this, so I’m just going to link you to them and rip off a few of their charts. Keep in mind these don’t even include this last 10k. So revisit this in a few days when it’s updated because it’ll be much worse.
This company has been losing more and more money, even after selling off one of an under performing subsidiary. Go through that website and see the ratios this company is trading on. Debt to Equity, Price to book, ROI, it’s all a fucking joke.
Let’s see what CEO Timmy Sullivan has to say. Spot any patterns you see kids:
- FY 2018 : Predicted Net Income = $85 – $100 million. Actual = $13 million. “To say that fiscal 2018 was a challenge would be an understatement, quite frankly anything that could go wrong, did go wrong and then some.” “[W]hile fiscal 2018 was challenging…we have many reasons to believe that we have entered fiscal 2019 poised for improved revenue growth and margins”
- FY 2019: Predicted Net Income = $43 – $63 million. Actual = (-)$12.3 million (loss). “Clearly, 2019 was a difficult and disappointing year, but I am pleased with how we are positioned for 2020.”
- FY 2020: : Predicted Net Income = $32 – $50 million. Actual = Lol
Most importantly to this whole thing, the stock price has completely diverged from reality.
So they have some unique problems which I found in public court documents and no one else seems to have covered. These are all ALLEGATIONS only. They are not even my allegations. I will be linking to and quoting directly from court documents. Rev Group is totally innocent until proven guilty. They are still assholes tho.
- In a case Lemanski v Rev Group (anonfile.com/PfSecbH1n1/Lemanski_V_Rev_Group_pdf) a former employee alleges that he was in a meeting in November 2018 in which “(Chief Operating Officer) Tom Philips stated Rev Group, Inc. ‘made up’ the $19,000,000 reported tariff Cost Increase impact” because “Rev Group, Inc. ‘needed something to tell the investors’ as a partial reason as to why Rev Group, Inc was not achieving their forecasted performance results” Lemanski “intended to report his concerns to the FTC”. He was then told by a supervisor that “If it were me, I would just focus on my commodity and move on”Rev group then allegedly fucked with his disability leave time and he was allegedly “illegally terminated”. Allegedly. Maybe.
- In another case Rev Group is suing their former VP of Bus Sales (anonfile.com/p6T7ceHcn7/Rev_Group_v_Scheuler_pdf) Mr. Scheuler, where they allege that he sent an email and resigned immediately. He then got a job at Rev Group’s competitor Forest River in the same position that he was at Rev. They allege that he took his Rev electronic devices with him, and that he “downloaded a minimum of 1700 Rev Group Company files”. Rev alleges that Mr. Scheuler “intends to provide this misappropriated information to Forest River to enable them to unlawfully compete in their shared marketplace”. Rev’s bus dealerships are also “expressing concerns (that Scheuler) will turn over their confidential information to Forest River.” Allegedly. Maybe.
Don’t forget the MULTIPLE class action lawsuits regarding their IPO claims vs. what a clusterfuck the company has turned out to be. Sign up for Pacer and see for yourself.
Let’s check Glassdoor to see what it’s like to work at Rev. I read every review of Rev on Glassdoor, and you should too. I found common themes throughout the years. Basically, everyone is saying that it’s running as well as a monkey fucking a football. They keep saying that management have no idea what they’re doing and don’t listen to the guys on the floor who have actually worked in this field for years. They say that HR is a clusterfuck and fires people all the time for no reason. They are short staffed with constant turn over, and pushing exhausted and undertrained employees to work overtime to try and get shit off the line. They claim that the products are made shitty-ly with shitty parts. They say that the company only cares about stock price.
Speaking of only caring about stock price, despite their shrinking margins and disaster of a balance sheet, Rev Group has continued to buyback assloads of shares and issue fat divvys, instead of reinvesting that money back into this shit business.
- Since March of 2018, Rev has repurchased around $61,600,000 mm worth of shares. (FY 2018 = $53.3 million @ average of $16.47. FY 2019 = $8.3 million @ average of $11.62)
- The past 3 fiscal years, they issued over $31,700,000 mm worth of dividends.
They have issued as much money in dividends alone in the past 3 years as the company has made in net income in the past 3 years. JFC.
They have a absolute fuckload of debt. They have a loan and a line of credit. They’ve been robbing Peter to pay Paul for years.
- As of this last 10k, they have $175,000,000 mm due on their loan by April, 2022. On October 18, 2019, they amended the Term Loan Agreement to raise the maximum leverage ratio to 4.00 to 1.00 from 3.50 to 1.00. Cause they need more leverage. Oh goody.
- They also owe just under $125,000,000 mm on their credit. And they have an additional $77,000,000 mm of long term debt.
So the company, whose net income for the past 3 years has totaled $32 million dollars (and LOST MONEY this FY) is going to pay off that $175 million dollar loan in the next 2.5 years. Yeah, No. They’re going to have to borrow more money to pay off the money that they borrowed, all while barely turning a profit, if even at all. Rev needs Dave Ramsey
Don’t take my word for it, let’s see what the chucklefucks on Wall Street have to say. December 10: ValuEngine cut shares of Rev Group from buy to hold. December 15: Goldman Sachs downgraded REV Group to “Sell”. December 16: Morgan Stanley Downgrades to “Underweight”. December 18: Zacks Downgrades Rev to a “Sell”. The company has a consensus rating of “Hold” and an average target price of $10.44.
54% of Rev shares are owned by American Industrial Partners, AIP. They have them by the balls and are probably the ones playing fucky doody with the share price. They haven’t sold any shares since it’s IPO. It’s in their interest alone that REV keeps paying out money to shareholders via fat divvy’s and stonks buybacks, and don’t reinvest the money into the business or have any plan to pay their mountain of debt. Members of this investment group reportedly did this fuckery with an industrial mining company they ran into the ground in the early 2000’s by just boosting stock value and letting the underlying company implode. Allegedly. Maybe.
There’s also two blurbs in their 10k which I want to point out:
- “During fiscal years 2019, 2018 and 2017, (Rev) reimbursed its primary equity holder (AIP) for out of pocket expenses in the amount of $1.4 million, $0.9 million and $0.6 million, respectively.” I don’t understand why they reimburse AIP for expenses when they don’t reimburse any other shareholders. Also, what expenses? This is probably 100% normal and cool and I’m just a pleb.
- “Certain production facilities and offices for two of (REV’s) subsidiaries are *leased from related parties owned by certain members of management*. Rent expense under these arrangements during fiscal years 2019, 2018 and 2017 totaled $1.9 million, $1.5 million and $0.3 million, respectively.” I don’t know what a kickback is. I’m not calling this a kickback. This isn’t a kickback. I don’t understand this at all. I’m sure it’s 100% legal and normal.
I’ve look deeply at all their competitors in this space ($WGO, $THO, etc). None of them are even remotely as fucked up as REV, including their debt ratios, share buybacks, actually making fucking money, employment practices, etc.
With all that in mind. I’m tired. There’s more if you go look for yourself. I’ll leave you with these words of wisdom:
- “My entire career has always been about making money, which in turn directly impacts shareholder value. Revenue is a nice metric, but there are a lot of different ways to make money other than just growing the top line. You should know that at REV, it’s all about making money” – CEO Timmy Sullivan
Disclaimer: Everything here is just my opinion, man. Don’t believe a word I say. I’m angry and dumb. My numbers might be off, who knows. Do the fucking research for yourself. Don’t trade on this since fundamentals don’t matter anymore at this fucking company. If anyone wants to rip any of this off an claim it as their own, be my guest. Go post it on a legitimate financial site rather than this haven for gamblers and autists
TL:DR – Kate Rooney is a smoke show.
Disclaimer: This content does not necessarily represent the views of IWB.