REV Group's Q1 2025: Navigating Tariff Challenges, Efficiency Goals, and Fire & Emergency Order Trends

These are the key contradictions discussed in REV Group's latest 2025 Q1 earnings call, specifically including: Tariff Impact and Pricing Strategies, Operational Efficiency Improvements, and Order Trends in Fire & Emergency:



Strong Financial Performance in Specialty Vehicles:
- The Specialty Vehicle segment reported record adjusted EBITDA of $35.2 million, with an 116% year-over-year increase, excluding impacts from divested bus businesses. The segment's sales increased by 8.7% compared to the prior year.
- This performance was driven by increased sales of fire apparatus and a favorable mix of ambulance units with higher average selling prices, alongside price realization and cost control measures.

Tariff Exposure and Supply Chain Resilience:
- REV Group's direct material purchases from China, Mexico, and Canada account for only 2% of its total costs, while steel and aluminum expenses make up 5%.
- The company's supply chain team has implemented a multi-sourcing strategy, reducing direct exposure risks and enhancing proactive mitigation strategies against potential tariff impacts. However, quantification of risk remains challenging due to broader uncertainties.

Recreational Vehicle Segment Challenges:
- The Recreational Vehicle segment's sales decreased by 8.5%, with a decline in unit volumes attributed to soft end-market demand.
- Despite lower sales, the segment's performance exceeded expectations, driven by greater-than-expected wholesale and retail demand in certain product categories and lower-than-expected dealer assistance.

Record Backlog and Future Visibility:
- The Specialty Vehicle segment maintained a record backlog of $4.2 billion, providing two to 2.5 years of demand visibility.
- The strong backlog is attributed to solid industry demand for fire apparatus and ambulances, as well as pricing actions that include the pass-through of inflationary pressures on components like chassis.

Capital Allocation and Shareholder Returns:
- REV Group commenced and continued share repurchase programs, returning $19.2 million in the first quarter and an additional $13.8 million in February.
- The company remains committed to returning capital to shareholders through share repurchases and dividends, indicating confidence in its long-term strategic direction and financial strength.