• Revenue: $525 million, a decrease of $61 million from the prior year.
• Adjusted EBITDA: Record first-quarter adjusted EBITDA of $36.8 million, an increase of $6.3 million.
• Specialty Vehicle Segment Sales: $370.2 million, a decrease of $47 million compared to the prior year.
• Specialty Vehicle Segment Adjusted EBITDA: $35.2 million, a segment first-quarter record, increasing by $9 million versus the prior year.
• Recreational Vehicle Segment Sales: $155 million, a decrease of $14.4 million, or 8.5%, versus last year's first quarter.
• Recreational Vehicle Segment Adjusted EBITDA: $9.2 million, a decrease of $2.4 million, or 21%, versus the prior year.
• Backlog: $4.5 billion, providing 2 to 2.5 years of demand visibility within the specialty vehicles segment.
• Net Debt: $108.4 million, including $31.6 million of cash on hand.
• Share Repurchases: $19.2 million used to repurchase 579,000 common shares.
• Cash from Operating Activities: Outflow of $13.1 million.
• Capital Expenditures: $4.9 million within the first quarter.
• Dividend: Quarterly cash dividend of $0.06 per common share declared.

• Warning! GuruFocus has detected 3 Warning Sign with FNLIF.

Release Date: March 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• REV Group Inc (NYSE:REVG) reported record first-quarter adjusted EBITDA and cash efficiency, exceeding typical seasonality.
• The company has a strong backlog of $4.5 billion, providing 2 to 2.5 years of demand visibility within the specialty vehicles segment.
• The specialty vehicle segment achieved a first-quarter record adjusted EBITDA margin of 9.5%, driven by price realization and improved operations.
• REV Group Inc (NYSE:REVG) commenced share repurchases, returning $19.2 million to shareholders, demonstrating confidence in their long-term strategy.
• The company has implemented a multi-sourcing strategy for key components, reducing the risk of sole-source exposures and improving supply chain resilience.

Negative Points

• First-quarter sales decreased by $61 million compared to the prior year, primarily due to the exit from the bus manufacturing business.
• The recreational vehicle segment experienced an 8.5% decrease in sales due to a decline in unit volumes related to soft in-market demand.
• The segment backlog for recreational vehicles declined by 30% versus the prior year, reflecting soft end-market demand and dealer destocking.
• There is uncertainty regarding the impact of recently enacted tariffs, with potential indirect effects on the supply chain.
• Despite a strong start to the year, the company did not raise its full-year guidance, citing known and unknown risks around inflation and tariffs.

Q & A Highlights

Q: Can you clarify the potential impact of tariffs on your operations, given that most of your components are assembled in the U.S.? A: Mark Skonieczny, President and CEO, explained that direct exposure to tariffs is minimal, with only 2% of direct material purchases from Canada and Mexico, and 5% from steel and aluminum. The company has strengthened its supply chain with a multi-sourcing strategy, reducing risks. The impact of tariffs will be clearer in the coming quarters.

Q: Regarding the RV segment, despite positive results at the Tampa show, why are you cautious about increasing your outlook for 2025? A: Mark Skonieczny noted that while retail sales have been strong, they want to see a one-to-one relationship between wholesale and retail sales before adjusting guidance. They are waiting for Q3 and Q4 orders to confirm sustained demand.

Q: How are you managing pricing in the fire and emergency segments, especially with potential tariff impacts? A: Amy Campbell, CFO, stated that they expect mid-single-digit price increases for specialty vehicles. While some contracts are fixed, they have strategically priced to account for unknown inflationary pressures. There is limited ability to reprice fixed contracts, but they have allowed for some inflation in their pricing strategy.

Q: With a significant backlog in specialty vehicles, how are you managing the risk of inflation affecting your margins? A: Amy Campbell explained that while direct exposure to tariffs is limited, they are actively assessing inflation risks and adjusting pricing strategies accordingly. They continue to take new orders while evaluating annual price increases to mitigate potential inflation impacts.

Q: Given the strong start to the year, why hasn't the full-year guidance been raised? A: Amy Campbell mentioned that while Q1 exceeded expectations, they are maintaining guidance due to uncertainties around inflation and tariffs. They believe the current range accounts for known and unknown risks, and they will reassess in the second quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.