When REV Group (NYSE: REVG) held its IPO last month, there was no question what the company does. Lined up in front of the exchange were the fire trucks, ambulances and high-end recreational vehicles the company manufactures.
“We make things that are big, fast, with flashing lights,” says REV Group CEO Tim Sullivan.
With 27 specialty vehicle brands and more than 240,000 vehicles on the road, REV’s offerings also include buses, street sweepers and handicapped-accessible vehicles.
The company got off the ground in 2006 when American Industrial Partners purchased Collins Industries. At the time, even before the recession, there were a number of specialty vehicle manufacturers that were open to acquisition, Sullivan explains. And the company took advantage of that environment to go on a buying spree, creating an industrial juggernaut focused on heavy-duty specialty vehicles.
After acquiring those companies, REV began a consolidation process that allows it do more than its constituent companies could have ever achieved on their own.
“We have 16 manufacturing facilities now around the countryside, but it's one commercial entity to manage,” says Sullivan. “We get all the synergies, all the efficiencies of pulling everything under one umbrella, whether it be the back office, the purchasing, the engineering, the parts and aftermarket, as well as the IT.”
As one company manufacturing and selling so many different products, the company began to look for a new name, choosing REV Group in November of 2015.
“We looked at the product portfolio, and asked some very young marketing people for something that's connotes what we want to be as a company. The name ‘REV’ has a double meaning. It explains what we do, but it also shows a company that's going to move forward,” he says.
Although a fire truck a street sweeper and an RV may look very different and serve very different purposes, after 40 years in manufacturing, Sullivan sees the similarities. The actual manufacturing processes and best practices that the company employs tend to translate across the entire portfolio of vehicles.
“We source a lot of the same components, we use the same type of assembly methods, depending on what we do make in the various plants that we have,” Sullivan says. That creates the economies of scale that make all the difference in large-scale manufacturing.
It seems that REV consolidated its operations at just the right time. Thanks to the economic recovery, states and municipalities have more money to invest in emergency vehicles. And after foregoing those purchases for years, there’s a great deal of pent-up demand. REV’s fire business, for example, has a 12-month backlog, notes Sullivan. Meanwhile, at the federal level, the Trump administration is likely to continue a robust investment in infrastructure, which also bodes well for REV’s vehicles.
At the same time, the company has created a new REV Financing arm to help smooth out the ebb-and-flow that has historically characterized the way states and municipalities to invest in emergency vehicles. The new department’s purpose is to allow REV’s customers to purchase the vehicles in regular installments, or even to lease them.
“We really were listening to a lot of the customers that buy our vehicles, and they were looking for different payment methods. Kind of like going in and either buying a car or leasing a car,” says Sullivan. “Those are the options that we wanted to give to our customer base. In fire and emergency, in the smaller cities that don't float bonds, where they don't have that kind of support, we can provide the financing.”
By offering its own lines of credit, REV Financing allows its states and municipalities to better manage their cash flows, and to reserve their lines of credit for other projects. The company’s ability to offer financing, especially no-down-payment options, is an innovation that’s unique in the specialty-vehicles field.
Those new features include GPS to help ambulances and fire engines reach an accident or fire more quickly. And given how crucial performance is for these vehicles, telemetry can help the people using and maintaining the equipment understand how the vehicle is actually working, anticipate failures in particular components, and ensure it is performing to the required standards.
While government budgets are opening up new opportunities for its emergency-services and other specialty vehicles, REV is also expanding to meet the demands of the 75 million Baby Boomers who have begun to retire, and want to spend their retirement on the open road.
“We're seeing a pretty clear line of sight to 2020 for more and more baby boomers to enter the retirement market, and they love recreational vehicles,” says Sullivan, referring to the company’s five separate RV brands.
With its acquisitions folded efficiently into one operating company, encouraging prospects in its main business lines, the time seemed right for an IPO. And, Sullivan adds, that given the opportunities in so many of REV Group’s key areas, listing on the NYSE was a logical next step in the company’s growth.