REV Group(REVG) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The 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] - Adjusted EBITDA for the first quarter was a record $36.8 million, an increase of $6.3 million, or 79%, compared to the prior year quarter [26] - 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] 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, or 8.7%, when excluding the impact of divested bus businesses [28] - Recreational vehicle segment sales were $155 million, a decrease of $14.4 million, or 8.5%, primarily due to lower unit volumes related to soft market demand [36] - Specialty vehicles adjusted EBITDA margin was 9.5%, a record for the first quarter, improving by 470 basis points year-over-year [32] Market Data and Key Metrics Changes - Approximately 5% of net sales are outside of the United States, indicating a strong domestic focus [16] - The RV market remains challenged, but positive customer response at events like the Florida RV SuperShow indicates potential for future growth [19] Company Strategy and Development Direction - The company aims to provide attractive returns to shareholders through organic growth, share repurchases, dividends, and selective acquisitions [9] - A disciplined approach to capital allocation is emphasized, with a focus on maintaining flexibility for future investments [20] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving full-year guidance despite market challenges, citing strong first-quarter performance as a solid foundation [11] - The company is actively monitoring supply chain risks related to tariffs and has implemented a multi-sourcing strategy to mitigate potential impacts [14][15] Other Important Information - The company has resumed share repurchases, returning $19.2 million to shareholders in the first quarter [20] - The company declared a quarterly cash dividend of $0.06 per common share, payable on April 11 [44] Q&A Session Summary Question: Clarification on tariff impacts - Management clarified that direct exposure to tariffs is limited, with only 2% of direct material purchases coming from affected regions, and emphasized improved supply chain resilience [50][52] Question: RV group outlook - Management indicated that while retail sales have 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 retroactively [60][62] Question: Backlog and new orders - Management acknowledged the importance of maintaining order intake while being cautious about adding to backlog due to potential inflation risks [68][70] Question: Market share and demand - Management noted that while industry demand for fire trucks remains above long-term trends, they do not focus on market share metrics [90][92]