REV Group(REVG)2025-03-05 20:26Financial Data and Key Metrics Changes - First quarter sales were $525 million, a decrease of $61 million from the prior year, primarily due to the exit from the bus manufacturing business [23][24] - Adjusted EBITDA for the first quarter reached a record $36.8 million, an increase of $6.3 million, or 79%, when excluding the impact of divested bus businesses [26][30] - The company reported a strong backlog of $4.5 billion, providing 2 to 2.5 years of demand visibility within the specialty vehicles segment [12][16] Business Line Data and Key Metrics Changes - Specialty vehicle segment sales were $370.2 million, a decrease of $47 million compared to the prior year, but increased by $29.6 million when excluding the impact of divested bus businesses [28][34] - Adjusted EBITDA for the specialty vehicle segment was $35.2 million, a record for the first quarter, increasing by $9 million versus the prior year [30][32] - Recreational vehicle segment sales decreased by $14.4 million, or 8.5%, primarily due to lower unit volumes related to soft market demand [36][40] Market Data and Key Metrics Changes - Approximately 5% of net sales are outside of the United States, indicating a strong domestic focus [16] - The recreational vehicle segment experienced a decline in backlog of $265 million, down 30% versus the prior year, attributed to soft market demand and dealer destocking [39] Company Strategy and Development Direction - The company aims to provide attractive returns to shareholders through organic growth, share repurchases, dividends, and selective acquisitions [9][20] - A disciplined approach to capital allocation is emphasized, with ongoing share repurchases totaling $19.2 million in the first quarter [20][21] - The company is focused on operational improvements and enhanced execution to achieve significant earnings growth [7][10] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed fiscal 2025 guidance, expecting high single to low double-digit revenue growth in the specialty vehicle segment [45][47] - The company remains confident in its ability to navigate the broader macroeconomic environment, despite potential tariff impacts [16][56] - Management highlighted the importance of maintaining a strong supply chain and multi-sourcing strategy to mitigate risks associated with tariffs [14][70] Other Important Information - The company has implemented a multi-sourcing strategy for key components to reduce the risk of sole source exposures [14][15] - The first quarter cash from operating activities showed an outflow of $13.1 million, influenced by management incentive payments [42] Q&A Session Summary Question: Clarification on tariff impacts - Management explained that direct exposure to tariffs is limited, with only 2% of costs related to imports from Canada and Mexico, and emphasized the strength of their supply chain [50][52] Question: RV group performance and outlook - Management indicated that while retail sales improved, they want to see sustained improvement in wholesale sales before increasing guidance for the RV segment [56][58] Question: Pricing strategy and inflation - Management confirmed that they can pass through inflationary cost increases on certain products, but fixed contracts limit their ability to adjust pricing [60][62] Question: Backlog and new orders - Management acknowledged the importance of continuing to take new orders while assessing inflation risks and pricing strategies [68][70] Question: Market share and demand trends - Management noted that industry demand for fire trucks remains above long-term trends, but they do not focus on market share metrics [90][92]