REV Group’s Earnings Call Highlights Strong Start and Optimism

REV Group ((REVG)) has held its Q1 earnings call. Read on for the main highlights of the call.

REV Group’s recent earnings call painted a picture of optimism and resilience, highlighting a strong start to the fiscal year. The company reported record first-quarter adjusted EBITDA and maintained a robust backlog, providing long-term demand visibility. Despite challenges in the recreational vehicle segment and concerns about potential tariff impacts, the company’s performance in specialty vehicles and recent retail successes contribute to an overall positive outlook.

Record First Quarter Adjusted EBITDA

The company achieved a record first-quarter adjusted EBITDA of $36.8 million, marking an increase of $6.3 million year-over-year. When excluding divested businesses, this figure represents a significant 79% increase, underscoring the company’s strong financial performance.

Strong Backlog and Demand Visibility

REV Group’s backlog remains robust at $4.5 billion, ensuring 2 to 2.5 years of demand visibility, particularly within the specialty vehicles segment. This strong backlog is a testament to the company’s strategic positioning and market demand.

Specialty Vehicle Segment Growth

The specialty vehicle segment experienced notable growth, driven by increases in the fire and ambulance groups. The segment achieved a first-quarter record adjusted EBITDA of $35.2 million, with a segment margin of 9.5%, highlighting its strong performance.

Retail Success at Florida RV SuperShow

Despite a decline in overall show attendance, REV Group’s recreational vehicle segment saw significant increases in retail sales across multiple brands at the Florida RV SuperShow, showcasing the company’s retail strength.

Share Repurchase Program

The company repurchased approximately 579,000 shares, returning $19.2 million to shareholders. An additional 425,000 shares were purchased after the first quarter, totaling $13.8 million, reflecting the company’s commitment to returning value to shareholders.

Decline in Recreational Vehicle Segment Sales

Sales in the recreational vehicle segment decreased by $14.4 million or 8.5% year-over-year, primarily due to a decline in unit volumes related to soft market demand. This decline highlights the challenges faced in this segment.

Challenges in Terminal Trucks and Industrial Sweepers

Sales of terminal trucks and industrial sweepers were lower, partially offsetting the growth in other segments. This indicates some challenges in these specific areas of the business.

Potential Tariff Impact

Concerns were raised regarding the potential impact of recently enacted tariffs, particularly on materials sourced from China, Mexico, and Canada. These tariffs could affect the supply chain and pricing, posing a potential risk to the company’s operations.

Forward-Looking Guidance

During the earnings call, REV Group provided guidance reflecting a strong fiscal start with record first-quarter adjusted EBITDA and cash efficiency that surpassed typical seasonality. The fiscal 2025 outlook was reaffirmed with consolidated revenue expected to range between $2.3 billion to $2.4 billion, representing mid single-digit growth compared to fiscal 2024. Adjusted EBITDA is projected between $190 million to $220 million, a 48% increase at the midpoint from the previous year. The specialty vehicle segment is anticipated to achieve high single to low double-digit revenue growth, while the recreational vehicle segment is expected to remain roughly flat compared to fiscal 2024.

In conclusion, REV Group’s earnings call reflected a strong start to the fiscal year, with record financial performance and a robust backlog providing long-term demand visibility. Despite challenges in certain segments and potential tariff impacts, the company’s strategic initiatives and market positioning contribute to an optimistic outlook for the future.