REV Group's Q4 2025: Contradictions Emerge on Price Increases, Specialty Vehicle Backlog, Tariff Impacts, RV Demand, and Pricing Strategy

Date of Call: December 10, 2025

Financials Results

• Revenue: $664.4M Q4 sales; Full year net sales $2.46B, up $83M or 3.5% YOY (adjusted +11.1% YOY excluding $164M bus exit); Q4 net sales increased $76.3M or 13% ex-bus exit.

Business Commentary:

* Strong Financial Performance and Operational Efficiency: - REV Group reported consolidated adjusted EBITDA margin of 10.5% in the fourth quarter, surpassing the low end of the fiscal 2027 target range. - The growth was driven by higher throughput, greater operating leverage, focused supply chain management, and improved execution efficiency.

• Specialty Vehicles Segment Growth:
• Specialty Vehicles segment sales were $507.4 million in the fourth quarter, an increase of 18% compared to the prior year.

• The growth was due to increased unit shipments, a favorable mix of higher content fire apparatus, price realization, and operational efficiencies.

• Recreational Vehicles Segment Challenges and Stability:

• Recreational Vehicles segment sales were approximately flat at $157 million in the fourth quarter.

• The stabilization was attributed to actions taken to better align fixed and variable costs with end market demand and a favorable category mix, offsetting increased retail assistance and inflationary pressures.

• Successful Merger Planning with Terex:

• The strategic merger with Terex Corporation is on track to close in the first half of calendar 2026.

• This is due to careful operational diligence, collaboration, and integration planning to capture operational synergies and optimize organizational design.

• Improved Cash Conversion and Financial Health:

• REV Group reported a record free cash flow of $190 million, reflecting strong cash conversion and free cash flow delivered in fiscal 2025.
• This was a result of strong execution by teams across the organization, including improvements in working capital management with tighter inventory control and faster receivables collection.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted operational improvements and margin expansion: "fourth quarter consolidated adjusted EBITDA margin of 10.5%"; full year adjusted EBITDA of $229.5M (up 41% YOY); "record" free cash flow of $190M; returning ~$121M to shareholders; and described the Terex merger as a value-creating opportunity.

Q&A:

• Question from Oliver Chang (Morgan Stanley): Can you unpack Specialty orders (timing/pricing/volume) and how backlog pricing flows into 2026/2027?
  Response: Management declined to provide modeling specifics, stating they are encouraged by order rates and noting full-year book-to-bill was just over 1.0–1.1x, with lumpiness in the order book.

• Question from Oliver Chang (Morgan Stanley): Have tariffs shifted customer behavior or your market share?
  Response: Management said most competitors are North American with similar cost structures and that tariffs have not created a material competitive advantage or materially shifted share.

• Question from Joe Grabowski (Baird): What "inning" are you in on efficiency gains in fire and ambulance—how much more improvement remains?
  Response: Management described being in the "middle innings" (approaching 6–7), with additional efficiency gains available via continued simplification, standardization and other operational initiatives.

• Question from Joe Grabowski (Baird): At RV shows, how does demand break down by Class (A/B/C)?
  Response: Management said Class C demand is strong, Class A remains lumpy/mixed, and Class B continues to be challenged.

• Question from Gregory Burns (Sidoti & Company, LLC): Where are you investing to raise throughput and which facilities/opportunities remain?
  Response: Management is making targeted investments in automation and capacity—citing S-180 expansion and aerial facility (E1) work, selective robotics and replacing failure-prone equipment to boost efficiency and throughput.

• Question from Gregory Burns (Sidoti & Company, LLC): Why is Specialty Vehicles demand holding up and when might it normalize?
  Response: Management pointed to strong secular tailwinds and healthy municipal tax receipts underpinning demand; they believe normalization began in FY2025 but would not commit to a specific timing.

Contradiction Point 1

Price Increases and Tariffs

It involves the company's approach to pricing and tariffs, which directly impact profitability and competitive positioning.

Have you noticed customer behavior changes or gained market share due to tariffs? - Oliver Chang(Morgan Stanley)

2025Q4: Our competitors primarily have similar cost structures given they are primarily North American based. No material competitive advantage is being created or lost due to tariffs. - Amy Campbell(CFO)

Are you seeing price increases from these tariffs, or should we view it as an incremental cost now incorporated into the cost base? - Mircea Dobre(Baird)

2025Q3: We have opportunities to offset costs through productivity improvements and simplification. We're looking at levers including pricing to offset some of those costs. - Mark Skonieczny(CEO)

Contradiction Point 2

Specialty Vehicle Backlog Stability

It concerns the stability of the backlog in the Specialty Vehicles segment, which is crucial for future revenue projections and operational planning.

How are pricing and volume trends in Specialty orders? How will pricing for backlog units impact 2024 and 2027? - Oliver Chang(Morgan Stanley)

2025Q4: We remain encouraged by the order rates, with full year being at over 1x to 1.1x for the year. - Mark Skonieczny(CEO)

Did you achieve record EBITDA margins in Q3, and is the company ahead of schedule to meet the 10%-12% 2027 goal? - Michael Shlisky(D.A. Davidson)

2025Q3: We have not taken a price increase in response to tariffs, but we are focused on targeted and focused price increases where it is appropriate. - Amy Campbell(CFO)

Contradiction Point 3

Tariff Impact on Specialty Vehicles

It involves the financial impact of tariffs on the Specialty Vehicles segment, which could affect the company's financial performance and investor expectations.

Have you noticed any changes in customer behavior or are you taking market share due to tariffs? - Oliver Chang(Morgan Stanley)

2025Q4: Our competitors primarily have similar cost structures given they are primarily North American based. No material competitive advantage is being created or lost due to tariffs. - Amy Campbell(CFO)

Can you elaborate on the tariff headwinds and when they might be resolved? - Michael Shlisky(D.A. Davidson)

2025Q2: For Specialty Vehicles, a $10 million impact is expected in the back half, largely offset by increased throughput. This will result in an ongoing 2.5% headwind in non-chassis material costs for 2026's first half, then normalize. - Amy Campbell(CFO)

Contradiction Point 4

Recreational Vehicle Demand and Market Conditions

It reflects differing perspectives on the demand and market conditions for Recreational Vehicles, which are crucial for understanding the company's growth prospects.

Can you break down RV demand by class and clarify if demand is improving in Class Bs and Cs compared to Class As? - Joe Grabowski(Baird)

2025Q4: Class A market is still lumpy and up and down, but there's some encouraging momentum. Class C has been doing very well, particularly the Renegade brand. Class B remains challenging, reflecting broader market conditions. - Mark Skonieczny(CEO)

Any updates on wholesale and retail demand for recreational vehicles? - Unidentified Analyst(Morgan Stanley)

2025Q2: Retail shipments saw a month-over-month increase in April, the first positive change in 28 months. Retail has shown early positive signs. Wholesale shipments are healthier with improved dealer inventory. - Amy Campbell(CFO)

Contradiction Point 5

Tariff Exposure and Pricing Strategy

It concerns the company's exposure to tariffs and its pricing strategy, which are critical for financial planning and investor expectations.

Have you noticed shifts in customer behavior or is the company gaining market share due to tariffs? - Oliver Chang(Morgan Stanley)

2025Q4: Our competitors primarily have similar cost structures given they are primarily North American based. No material competitive advantage is being created or lost due to tariffs. - Amy Campbell(CFO)

Why could tariffs still be an issue for REV Group despite only 2% of direct material purchases from China, Mexico, and Canada and steel/aluminum accounting for 5% of total material costs? - Michael Shlisky(D.A. Davidson)

2025Q1: While direct exposure is low, the majority of our purchases are subassemblies that we assemble in the United States. We've strengthened our supply base and implemented a multi-sourcing strategy. Even during COVID, we were price/cost positive. The situation is still fluid, and we'll have a better understanding of exposure exiting Q2. - Mark Skonieczny(CEO)