REV Group is temporarily reducing compensation for its top executives in response to the COVID-19 pandemic.
The manufacturer of RVs and other specialty vehicles is lowering its executive team and vice president base salaries between 10 percent and 40 percent, the company announced. The board of directors is reducing their cash compensation 30 percent.
REV Group has also furloughed most salaried employees within its RV segment, which suspended normal production activities during the week of March 23. Although REV Group has halted production at its RV plants, 70 percent of its facilities remain in operation producing emergency and public-transportation vehicles.
“We are implementing cost saving and operational actions to enhance liquidity and maintain financial flexibility,” REV Group President and CEO Rod Rushing said. “We continue to monitor our end-market demand and our supply chain and have developed contingency plans should future developments warrant further action.”
Additional efforts to increase liquidity include the suspension of the company’s quarterly dividend beginning fiscal second quarter 2020, sale of non-operating assets and taking advantage of all additional cash flow opportunities available from the recently enacted CARES Act. These efforts are expected to generate additional cash proceeds in the range of $30 to $35 million in fiscal year 2020.
REV Group said it currently maintains strong liquidity, with approximately $200 million of availability under its existing ABL credit facility including cash on hand. Focus on cash and expense management has resulted in cash receipts exceeding cash payments in recent weeks. The company will seek to create additional positive cash flow from continuing to reduce expenses and manage working capital for cash.
While it was necessary to suspend production within the RV segment, Rushing said, REV Group has experienced increased demand in its ambulance division, and it continues to deliver fire trucks and public-transportation vehicles.”
“I want to thank all of our employees for their commitment and resilience and recognize the support of their families as we continue to navigate through this challenging environment,” he said. “We also want to thank our customers for their support, as well as first responders and all others on the front lines of this crisis who are helping our country manage through these difficult times.”
