REVG Q1 Earnings Call: Operational Gains and Revenue Beat, Tariff Headwinds in Focus

Speciality vehicle provider REV (NYSE: REVG) exceeded the market’s revenue expectations in Q1 CY2025 as sales rose 2% year on year to $629.1 million. Its non-GAAP EPS of $0.70 per share was 22.8% above analysts’ consensus estimates.

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StockStory’s Take

REV Group’s first quarter results were shaped by continued operational improvements in its fire and ambulance manufacturing operations. CEO Mark Skonieczny highlighted the alignment in productivity gains between the fire and ambulance groups, driven by investments in equipment upgrades, process optimization, and workforce training. The company’s decision to focus on lean manufacturing principles enabled faster production cycles and higher throughput, which contributed to earnings growth despite only modest sales gains. Additionally, the exit from the non-motorized travel trailer and truck camper business was discussed as a step toward refocusing on scalable, higher-margin segments. Management acknowledged persistent softness in the recreational vehicle market, with CFO Amy Campbell noting that REV brands’ retail sales outperformed broader industry trends even as unit volumes declined.

Looking forward, management is focused on sustaining momentum in the specialty vehicle segment, while navigating tariff-related cost pressures and uncertainty in consumer demand. CFO Amy Campbell outlined expectations for a continued tariff impact, particularly within the specialty vehicle and recreational vehicle segments, but emphasized ongoing efforts to offset these headwinds through greater production efficiency and selective pricing actions. Management also discussed incremental investments—including a $20 million expansion in the Brandon, South Dakota facility—to accelerate output of popular models like the S-180 modular fire apparatus. Campbell cautioned that while the company expects stable demand for fire and ambulance products, consumer confidence and potential changes in interest rates could weigh on recreational vehicle sales in the second half of the year.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to increased manufacturing throughput in fire and ambulance operations, a refined product mix, and ongoing cost discipline, while flagging new tariff headwinds and adjustments to the company’s product portfolio.

• Fire and ambulance throughput gains: The fire group achieved productivity levels on par with the ambulance segment, thanks to equipment upgrades and process improvements, enabling higher shipments and efficiency across both businesses.
• Product mix shift benefits earnings: The ambulance group saw a faster-than-expected mix shift toward higher-content modular units, which generally command better margins and contributed positively to earnings for the quarter.
• Tariff exposure and mitigation: Management reported limited immediate impact from new tariffs due to existing inventory levels, but expects $5 million in costs to impact the recreational vehicle segment and $10 million in material costs for specialty vehicles in the second half. Plans to transition chassis sourcing to domestic suppliers are underway to reduce future exposure.
• Portfolio optimization: The company is exiting its non-motorized travel trailer and truck camper categories through the planned sale of the Lance Camper business. Leadership cited the segment’s operational challenges and lack of alignment with core business priorities as primary drivers for this decision.
• Investment in production capacity: REV Group announced a $20 million investment to expand production at its Brandon, South Dakota facility, aimed at increasing output for the S-180 modular fire apparatus and enhancing fabrication and paint processes across multiple plants.

Drivers of Future Performance

REV Group’s outlook is driven by investments in production capacity, ongoing demand for emergency vehicles, and the ability to manage cost headwinds related to tariffs and consumer uncertainty.

• Production investments to boost output: Management plans to increase capital expenditures, notably at the Brandon facility, to shorten delivery times and support higher production volumes, particularly for the S-180 modular apparatus program. This is expected to help offset margin pressure from tariffs.
• Tariff and cost headwinds: The company anticipates continued tariff-related material cost increases, primarily impacting specialty and recreational vehicles. While some costs will be passed through, management expects a temporary impact on margins until sourcing transitions are complete.
• Recreational segment uncertainty: REV Group expects recreational vehicle demand to remain soft, with consumer confidence and interest rates cited as key risks. Management indicated that further dealer incentives may be required for certain product categories, potentially impacting profitability in the second half of the year.

Catalysts in Upcoming Quarters

In the coming quarters, our team will monitor (1) the pace and effectiveness of production investments, particularly at the Brandon facility; (2) the company’s progress in offsetting tariff-related material costs through operational efficiencies and sourcing changes; and (3) trends in recreational vehicle demand as dealer inventory levels normalize and consumer sentiment evolves. Execution on these fronts will be key to sustaining earnings momentum.

REV Group currently trades at a forward P/E ratio of 13.3×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).

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