REV Group Q2 2025 Earnings Report

REV Group EPS Results

• Actual EPS: $0.70
• Consensus EPS: $0.57
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: $0.39

REV Group Revenue Results

• Actual Revenue: $629.10 million
• Expected Revenue: $603.51 million
• Beat/Miss: Beat by +$25.59 million
• YoY Revenue Growth: +2.00%

REV Group Announcement Details

• Quarter: Q2 2025
• Date: 6/4/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, June 4, 2025
• Conference Call Time: 10:00AM ET

REV Group (NYSE:REVG), together with its subsidiaries, designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation. The Fire & Emergency segment provides fire apparatus equipment under the Emergency One, Kovatch Mobile Equipment, Ferrara, Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brand names; and ambulances under the American Emergency Vehicles, Horton Emergency Vehicles, Leader Emergency Vehicles, Road Rescue, and Wheeled Coach brand names. The Commercial segment offers transit buses, type A school buses, sweepers, and terminal trucks under the Collins Bus, Eldorado National (California), Magellan, Capacity, and LayMor brand names. The Recreation segment offers motorized and towable RV models under the American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs, and Lance Camper brands; and produces a range of custom molded fiberglass products. The company sells its products to municipalities, government agencies, private contractors, consumers, and industrial and commercial end users through its direct sales force or dealer network. The company was formerly known as Allied Specialty Vehicles, Inc. and changed its name to REV Group, Inc. in November 2015. REV Group, Inc. was incorporated in 2008 and is based in Brookfield, Wisconsin.

REV Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Specialty Vehicles Surge: Q2 net sales up 12.2% and adjusted EBITDA up 74% year-over-year, driven by record fire apparatus and higher-content ambulance unit throughput.
• Raised Full-Year Guidance: Consolidated revenue outlook increased by $50 million to $2.35–2.45 billion and adjusted EBITDA guidance lifted to $200–220 million.
• Tariff Headwinds: Anticipated $10 million tariff impact in Specialty Vehicles and $5 million in Recreational Vehicles during H2, reducing incremental margins from 30–40% to 20–25%.
• Share Repurchase: Repurchased 2.9 million shares for $88 million in Q2 under existing authorization, reflecting confidence in cash generation and return of capital strategy.
• Portfolio Exit & RV Softness: Announced sale of Lance Camper with a $30 million non-cash loss and noted Recreational Vehicle segment sales expected flat in H2 amid soft end-market demand.

Presentation

[Operator]

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Drew Conop, Vice President, Investor Relations. Thank you. You may begin.

[Drew Konop, VP, IR and Corporate Development at REV Group]

Good morning, and thanks for joining us. Earlier today, we issued our second quarter fiscal twenty twenty five results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast and a slide presentation as well as reconciliations from non GAAP to GAAP financial measures is available on the Investors section of our website. Please refer now to Slide two of that presentation.

[Drew Konop, VP, IR and Corporate Development at REV Group]

Our remarks and answers will include forward looking statements, which are subject to risks that could cause actual results to differ from those expressed or implied by such forward looking statements. These risks include, among others, matters that we've described in our Form eight ks filed with the SEC earlier today and other filings we make with the SEC. We disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call, if at all. All references on this call to a quarter or a year are our fiscal quarter or fiscal year, unless otherwise stated. Joining me on the call today is our President and CEO, Mark Skanechnie as well as our CFO, Amy Campbell.

[Drew Konop, VP, IR and Corporate Development at REV Group]

Please turn to Slide three and I'll turn the call over to Mark.

[Mark Skonieczny, President , CEO & Director at REV Group]

Thank you, Drew, and good morning to everyone joining us on today's call. Today, I'll provide an overview of the operating, commercial and financial highlights achieved within the quarter, then move to the quarter's consolidated financial performance. We are pleased to report strong second quarter performance that reflects the strength and resilience of our operations. The standout this quarter was the sustained year over year increase in manufacturing throughput at the majority of our fire plants, which played a pivotal role in driving our top line growth. As many of you know, the fire business has been a central focus of our operational transformation efforts over the past several years.

[Mark Skonieczny, President , CEO & Director at REV Group]

Throughout fiscal twenty twenty three and 2024, we increased fire and emergency vehicle production by nearly 30% from their respective 2022 run rates. The Specialty Vehicles segment outlook provided in December for low single digit volume growth, reflecting a more normalized production ramp environment as well as a heavier mix of more complex ambulance units that require more hours to complete. However, thanks to continued momentum in our manufacturing efficiency programs ranging from equipment upgrades and process optimization to workforce training and lean initiatives, the Fire Group second quarter shipments continue to accelerate. Over the past year, I commented that the Fire Group has been catching up to the ambulance group in terms of productivity gains and plant efficiency. And I'm proud to report that they achieved this alignment during the second quarter.

[Mark Skonieczny, President , CEO & Director at REV Group]

The businesses have made great progress in that time and delivered impressive year over year performance. Within the Ambulance Group, the mix shift from vans to higher content modular units also progressed more rapidly than anticipated. Utilization of lean principles for the daily management of operations drove higher efficiency and reduced production cycle times, ultimately enabling us to deliver more quickly. The improved throughput translated directly into higher volumes, which in turn contributed to meaningful earnings growth versus the prior year. Looking ahead, we believe the structural improvements we are making across the enterprise will continue to pay dividends, not just in terms of output, but also in quality and cost discipline.

[Mark Skonieczny, President , CEO & Director at REV Group]

The trajectory we've established has provided us with a solid foundation for sustainable growth and we remain confident in our ability to continue to scale efficiently and leverage centers of excellence across our diverse footprint as demand continues to evolve. We will continue to focus on investing in people and equipment, operational excellence programs and product innovation across all our businesses to further the company's success. Now I would like to provide a further update on tariffs, which were initially announced just prior to our first quarter earnings call. In general and has been widely reported by other industrial companies, the supply chain environment remains dynamic as companies deal with the uncertainty regarding the amount and duration of tariffs. Specific to REV Group, as we noted in our last earnings call, we had approximately one hundred and twenty days of inventory on hand entering our second quarter and as a result experienced minimal impacts related to tariff increases within the quarter.

[Mark Skonieczny, President , CEO & Director at REV Group]

As reminder, all of our manufacturing facilities are located in The United States. Most of our sales are in The U. S. And our raw materials and other inputs are in large part sourced in The U. S.

[Mark Skonieczny, President , CEO & Director at REV Group]

We therefore have limited direct import exposure. Throughout the quarter, the supply chain team worked diligently with our suppliers to gain a greater understanding of the indirect exposure to tariffs and the potential financial impact. We expect a $5,000,000 impact within the recreational vehicle segment in the second half of the year related to Class B luxury van chassis that are imported from Europe. The tariff impact is related to purchases and commitments already in place and is limited to a select number of units. We have transitioned our future purchases of these chassis to U.

[Mark Skonieczny, President , CEO & Director at REV Group]

S. Domestic plants to mitigate exposure once all imported units have been consumed. In addition to this item, we have estimated embedded within today's updated guidance an approximate $10,000,000 second half impact of tariffs on our material spend largely within the Specialty Vehicles segment. We cannot predict what the tariff landscape will look like in the future, but close collaboration with vendors, continued operational discipline and strategic sourcing position us well to navigate future uncertainty and deliver sustainable value to our shareholders. Thanks to the combined efforts of these actions, we remain confident in our ability to contain the impacts from the tariffs that are currently in place and meet our updated full year financial guidance that Amy will be covering shortly.

[Mark Skonieczny, President , CEO & Director at REV Group]

Moving on, this year marked a significant milestone for the ambulance group as we celebrate fifty years of delivering industry leading ambulance to first responders from our REV Orlando facility. Since being formed in Downtown Orlando in 1975, Wheel Coach has remained committed to innovation, quality and performance values that have defined the vehicles they bring to the market. Over the past five decades, Wheel Coach has grown from a team of five employees manufacturing mobility vans and type two ambulances into a nationally recognized leader known for setting new standards in safety, durability and design. Today, company employs over 700 employees and has built and delivered over 50,000 ambulances to large and small municipalities and commercial fleets across the globe in addition to being an approved ambulance supplier for the U. S.

[Mark Skonieczny, President , CEO & Director at REV Group]

General Services Administration or GSA. As an advocate of passenger and patient safety, Wheel Coach was the first in the emergency vehicle industry to conduct IIHS side impact crash and rollover testing, the first to engineer internal emergency door releases and the first to receive the ISO certified ambulance manufacturer accreditation. It also has a long history of production innovation, pioneering CNC machine cutout doors for repeatable accuracy as well as introducing the patented cool bar for improved airflow, greater accessibility to compressor and enhanced exterior lighting. This anniversary is not just a celebration of their history, but a testament to the trust that customers, dealers and employees have placed in them and a moment to look forward to even more dynamic future. As a leading fire apparatus manufacturer, we are proud to sponsor and exhibit FDIC International, the premier event for fire and rescue professionals held annually in Indianapolis.

[Mark Skonieczny, President , CEO & Director at REV Group]

Known for delivering world class training, education and innovation, FDIC is more than just a trade show. It's a cornerstone of firefighter and EMT preparedness and safety. Our presence at the conference underscores our longstanding commitment to supporting the men and women who work valiantly to serve and protect our communities every day. By showcasing several of our latest fire trucks, we aim to highlight cutting edge advancements in safety, performance and quality that continue to set our apparatus apart in the industry. From our high performance pumpers and aerials to specialized rescue vehicles, our display emphasize reliability, ergonomic function and innovations that align directly with the real world demands that our first responders contend with in the field.

[Mark Skonieczny, President , CEO & Director at REV Group]

Participating in FDIC International is not only an opportunity to demonstrate leadership and apparatus design, but also a chance to support the continued growth and safety of fire services overall. We remain committed to listening, learning and evolving alongside the brave professionals we serve. By collaborating with the fire community at FDIC, we gain invaluable insights that inform our future innovations and strengthen our role as a trusted partner in fire and rescue. As part of our ongoing portfolio review focused on scale and profitability, we have made the strategic decision to exit the non motorized travel trailer and truck camper product categories through a sale of the Lance Camper business. Exiting Lance Camper aligns with our broader objective of concentrating on scalable operations with stronger competitive positioning and margin potential and we have begun active discussions with prospective buyers of the business.

[Mark Skonieczny, President , CEO & Director at REV Group]

Despite efforts to improve operational efficiency, this business has underperformed our targets due in scale and various other factors. There is a significant geographic distance between this operation located in Southern California and our core RV business units in Indiana presenting logistical and operational challenges that impact our ability to effectively optimize and manage it within our overall RV portfolio. As our only non motorized business over time it has become a less significant part of our overall strategic focus with scale that no longer aligns with the broader direction of our portfolio. We felt that maintaining a presence in these product categories and its manufacturing location would divert resources from higher performing assets and growth opportunities. In addition to recreation portfolio optimization, I'm pleased to announce that Gary Guenter has been named President of the Recreational Vehicle segment.

[Mark Skonieczny, President , CEO & Director at REV Group]

Gary has been a member of the REV Group team since 2011 when he joined as Division Controller and most recently served as the Vice President, General Manager of the REV Recreation Group business encompassing Fleetwood RV, Holley Rambler and American Coach and Gold Shield fiberglass manufacturing facilities. Gary will work closely with Mike Lanciotti, who has announced his planned retirement later this year. Mike began his tenure with REV Group in 2008 when he joined Renegade RV. Over thirteen years with the company, he played a pivotal role in transforming Renegade into one of REV Group's top performing recreational vehicle brands establishing its reputation as a best in class Super C manufacturer and a premier producer across the broader Class C category. In recognition of his leadership, he was promoted to President of the RV segment in 2021.

[Mark Skonieczny, President , CEO & Director at REV Group]

Mike will serve as Executive Advisor of the Recreational Vehicles segment while he transitions his roles and responsibilities to Gary over the coming months. I would like to extend our sincere thanks to Mike for his years of dedicated service to Renegade RV and to all the brands within the Recreational Vehicle segment. Next, our cash flow profile historically been impacted by several seasonal factors often resulting in limited cash generation or even the use of cash throughout the first half of our fiscal year. However, in the second quarter, we generated a strong cash flow driven by our solid earnings performance, disciplined trade working capital management and customer advances tied to a higher than expected level of orders in the Specialty Vehicles segment. Significant year to date cash generation reflects consistent execution and financial discipline across the enterprise.

[Mark Skonieczny, President , CEO & Director at REV Group]

Given the level of performance, we made the decision to repurchase approximately 2,900,000.0 shares of our common stock for $88,000,000 within the quarter under our $250,000,000 share repurchase authorization. We hold a balanced and long term view towards capital allocation and view this as a compelling opportunity to return value to our shareholders while continuing to invest in our businesses and maintain a strong balance sheet. We believe this was a sound use of capital in line with our strategy to create sustained shareholder value through thoughtful and opportunistic actions. Finally, today we are updating our fiscal twenty twenty five guidance to reflect the strong year to date performance as well as our expectation that we will continue to manage the impact of tariffs throughout the remainder of the year. Amy will provide details shortly.

[Mark Skonieczny, President , CEO & Director at REV Group]

We are also increasing our capital expenditure plan to reflect additional investments in our businesses. Over the past several years, we have invested in our businesses beyond our maintenance CapEx requirements to achieve improved throughput, efficiency, quality and safety. Today's top and bottom line results reflect successful deployment of those investments by businesses. Having demonstrated sustained production capability, we are confident that further investment will continue to drive increased production levels and product development. A prime example of organic investment bringing market driven solutions to life is the development and expansion of the S-one 80 program, a modular pre engineered fire apparatus, which provides the feel and functionality of a custom truck with the delivery time of under one year significantly lower than that of fully customized vehicles.

[Mark Skonieczny, President , CEO & Director at REV Group]

The recent extension of this program from its original Spartan brand to other fire brands represents not only a major step forward in our product strategy, but also as a testament to the collaboration execution of our teams across engineering, operations, marketing and sales. What began with early adopters within Spartan dealer network has now expanded into a broader set of geographies and brands. Positive customer feedback on units and service and the strong quoting activity underscores the product's growing popularity and the value it delivers across diverse customer needs. Today's increase in our capital expenditure guidance will in part be directed toward a $20,000,000 investment at our Brandon, South Dakota facility to expand production of both the 180 and fully custom Spartan apparatus as well as the advancement of painting and fabrication processes across the campus. Organic investment remains our top capital allocation priority and all businesses are investing in people, process and equipment to drive growth, improve quality and deliver innovation.

[Mark Skonieczny, President , CEO & Director at REV Group]

Turning to Slide four, I will provide our consolidated second quarter financial results. Consolidated net sales in the second quarter twenty twenty five were six and twenty nine point one million dollars compared to $616,900,000 in the second quarter of twenty twenty four. Net sales for the second quarter twenty twenty four included $32,900,000 attributable to the E and C transit bus business that was exited within fiscal twenty twenty four. Excluding this impact, net sales increased $45,100,000 or 7.7% compared to the prior year quarter. The increase excluding the impact of the bus business was primarily due to higher net sales in the Specialty Vehicles segment, partially offset by lower net sales in the Recreational Vehicles segment.

[Mark Skonieczny, President , CEO & Director at REV Group]

We are pleased that the second quarter's performance continue to build upon our recent achievements. As I noted earlier, the standout this quarter was a sustained year over year increase in manufacturing throughput within the Fire Group, which played a pivotal role in driving our top and bottom line growth. Consolidated adjusted EBITDA was $58,900,000 compared to $37,500,000 in the second quarter twenty twenty four. Excluding the $1,500,000 impact of the E and C bus business the prior year quarter, adjusted EBITDA increased $22,900,000 or 63.6% year over year. I am also pleased that the recreational vehicle segment continued to navigate and execute well within a backdrop of soft industry demand and maintain a 6.2% segment adjusted EBITDA margin.

[Mark Skonieczny, President , CEO & Director at REV Group]

Please turn to Slide five and I will now turn it over to Amy for the detailed segment financials.

[Amy Campbell, Chief Financial Officer at REV Group]

Thank you, Mark. Second quarter Specialty Vehicles segment sales were $453,900,000 an increase of $16,500,000 compared to the prior year. The prior year's quarter included $32,900,000 of net sales attributable to the municipal transit bus business that was divested within fiscal twenty twenty four. Excluding the impact of the divested business, segment net sales increased $49,400,000 or 12.2% when compared to last year. The increase in revenue was primarily due to the higher unit production of fire apparatus units, a favorable mix of higher content ambulance units and price realization, partially offset by an unfavorable mix of fire apparatus in certain businesses.

[Amy Campbell, Chief Financial Officer at REV Group]

The Spartan emergency response business continued to drive meaningful throughput gains and revenue growth within the second quarter, setting new highs as you're both in unit shipments and net sales since its acquisition in 2020. Specialty Vehicles adjusted EBITDA of $56,300,000 increased by twenty two point five million dollars The prior year's quarter included $1,500,000 of adjusted EBITDA attributable to the divested Transit bus business. Excluding the prior year contribution from bus, Specialty Vehicles adjusted EBITDA increased $24,000,000 or 74.3% versus the prior year. The increase was primarily the result of increased sales driven by initiatives to increase manufacturing efficiencies, by investments to upgrade equipment and reduce downtime and investments in technical training for our team. These in combination with favorable price realization drove higher sales and adjusted EBITDA in the quarter.

[Amy Campbell, Chief Financial Officer at REV Group]

The increase in total units shipped across the fire business and improved efficiencies in the ambulance business, which allowed us to complete a more complex mix of modular units is a direct reflection of the operational success we are achieving by focusing on lean principles and driving efficiencies across the businesses. Specialty Vehicles segment backlog exiting the quarter was $4,300,000,000 The increase versus last year was related to the continued strong demand for fire apparatus as well as pricing actions with a book to bill ratio of 1.1 in the second quarter. We continue to make steady progress on increasing production against the segment's backlog with the goal of reducing the backlog's duration and shortening delivery times. Measured on a unit basis, we have been successful in drawing down our fire and emergency backlog year to date versus fiscal twenty twenty four year end. Additional acceleration of shipments remains a primary focus for the teams as we continue to strive to reduce delivery times.

[Amy Campbell, Chief Financial Officer at REV Group]

And the acceleration of shipments is the primary driver of the incremental CapEx spending, including the investment in our Brandon South Dakota plant that we announced today. The top line outlook for the Specialty Vehicles segment is for continued growth with sequential low single digit revenue increases in the third and fourth quarters. Year over year, this is expected to result in mid teens revenue growth for the second half versus last year's pro form a base. As a reminder and for modeling purposes, divested Transit bus business contributed $54,000,000 of revenue and $6,300,000 of adjusted EBITDA to the segment in the second half of fiscal twenty twenty four, with approximately 80% of those net sales and substantially all the earnings occurring within the third quarter. As Mark mentioned, we now expect approximately $10,000,000 of adjusted EBITDA impact primarily in Specialty Vehicles from non chassis related tariffs that have been enacted, resulting in the second half year over year revenue gains converting at a 20% to 25% incremental margin.

[Amy Campbell, Chief Financial Officer at REV Group]

This is lower than the previous range of 30% to 40% and reflects the headwinds to margins from tariffs that are currently in place, but does not contemplate any additional changes to tariffs from those in effect as of today. Turning to Slide six. Recreational Vehicle segment sales of $175,300,000 decreased $4,400,000 or 2.4% versus last year's second quarter. Lower sales were primarily the result of fewer unit shipments related to continued soft end market demand. Decreased shipments in the Class A, Class B and Class C categories were partially offset by an improved mix within the Class A and Class C categories, including more diesel and higher content units.

[Amy Campbell, Chief Financial Officer at REV Group]

While the end market remains challenged, our products continue to be well received, and we are pleased that our brands have once again outperformed the broader industry with REV brand retail sales down 10% year over year versus the industry's 13% decline over the trailing twelve month period ended March 31. This is according to data from the STAT survey. Recreation segment adjusted EBITDA of $10,900,000 decreased $1,200,000 or 9.9% versus the prior year. The decrease was primarily the result of lower unit volume, increased dealer assistance on certain models and inflationary pressures, partially offset by actions taken to better align fixed and variable cost with end market demand. Under a challenging end market backdrop, the segment continues to execute well and maintained a 6.2% adjusted EBITDA margin for the quarter.

[Amy Campbell, Chief Financial Officer at REV Group]

As Mark noted, we made the strategic decision to exit our non motorized travel trailer and trunk camper manufacturing business, which encompasses Lance Camper. We determined as of 04/30/2025, that the assets and liabilities of Lance Camper met the criteria to be classified as held for sale. We also determined that the carrying value of the net assets held for sale was greater than their fair value, less expected cost to sell, resulting in a non cash loss of $30,000,000 which is partially offset by a $16,600,000 income tax benefit. The impact of this loss and resulting income tax benefit are included in our financial statements for the three six months ended 04/30/2025 as well as our updated guidance. Note, Lance's results were included as a part of the Recreational Vehicles segment operating results in the fiscal second quarter.

[Amy Campbell, Chief Financial Officer at REV Group]

Segment backlog of $268,000,000 declined 2% versus the prior year. The decrease is primarily related to soft end market and dealer caution to replace retail sales with new orders. While the industry's destocking has created a headwind to new orders, we believe the overall dealer inventory profile is much healthier than it had been. Specific to REV Brands, as of March 31, the number of units on dealers lots decreased 13% versus the prior year. We are pleased that 77% of the units remaining are for model years 2025 and 2026.

[Amy Campbell, Chief Financial Officer at REV Group]

The second quarter's book to bill of one times was also encouraging and supportive of our updated second half revenue guidance to be approximately flat year over year. This is slightly lower than previous expectations for this segment and reflects potential consumer uncertainty that could weigh on demand. In addition, the second half adjusted EBITDA and margin for the Recreational Vehicles segment is expected to be negatively impacted by an estimated $5,000,000 tariff impact related to the import of luxury Class B vans, which as Mark noted is limited in duration and will end once all imported vans on order have been consumed with future purchases transitioning to U. S. Domestic plants.

[Amy Campbell, Chief Financial Officer at REV Group]

The combined result is an outlook for the full year recreational vehicles revenue to be in the range of $625,000,000 to $650,000,000 and adjusted EBITDA in the range of $30,000,000 to $35,000,000 That said, we will continue to focus on the things that we can control, award winning product offerings, cost management and dealer relationships. Turning to Slide seven. Trade working capital on 04/30/2025 was $207,300,000 a decrease of $40,900,000 compared to the $248,200,000 at the end of fiscal twenty twenty four. The decrease was primarily related to lower inventory balances, increased customer advances and the timing of accounts payable, partially offset by the timing of accounts receivable. The reduction in inventory was a result of focused efforts to reduce the days on hand balances of chassis and raw materials across both segments, along with the reduction of finished goods in the Recreation segment.

[Amy Campbell, Chief Financial Officer at REV Group]

While we are actively reviewing cost saving opportunities for selective pre buys in this dynamic environment, we remain confident that over the intermediate term inventory reduction opportunities remain on the balance sheet. Cash from operating activities within the quarter was $117,000,000 We spent $11,400,000 on capital expenditures within the second quarter, including investments in machinery to improve efficiency and product quality. Net debt as of April 30 was $101,200,000 including $28,800,000 of cash on hand. This includes $88,400,000 used within the second quarter to repurchase 2,900,000.0 common shares at an average price of $30.7 In the quarter, we also paid cash dividends totaling $3,100,000 bringing the total of cash returned to shareholders in the first quarter to $91,500,000 In addition, we declared a quarterly cash dividend of $06 per common share payable on July 11 to shareholders of record on June 27. At quarter's end, the company maintained ample liquidity for our strategic initiatives, approximately $263,200,000 available under our ABL revolving credit facility.

[Amy Campbell, Chief Financial Officer at REV Group]

Turning to Slide eight. As previously mentioned, today we are updating our full year fiscal twenty twenty five guidance. Given the increase of throughput and net sales realized by the Specialty Vehicles segment through the first half, we now expect full year revenue growth in the Specialty Vehicles segment to be in the low double digits versus a twenty twenty four pro form a revenue base of $1,560,000,000 which excludes sales from the divested bus businesses. Adding the updated $625,000,000 to $650,000,000 revenue expectation for the Recreational Vehicle segment results in consolidated top line guidance being raised $50,000,000 from the prior outlook to a range of $2,350,000,000 to $2,450,000,000 The updated consolidated midpoint of $2,400,000,000 is an 8% increase versus fiscal twenty twenty four's '2 point '2 billion dollars of pro form a net sales. Full year adjusted EBITDA guidance is also updated to a range of $200,000,000 to $220,000,000 from its previous range of 190,000,000 to $220,000,000 to reflect the solid performance delivered through the first half of the year and higher throughput in the Specialty Vehicles segment that is expected to largely offset tariff impacts in the second half.

[Amy Campbell, Chief Financial Officer at REV Group]

At the raised midpoint of $210,000,000 adjusted EBITDA is expected to increase 45% versus fiscal twenty twenty four's pro form a of $145,200,000 Net income guidance has been updated to also include higher interest expense and the $30,000,000 non cash loss on the Lance Camper assets held for sale net of $16,600,000 related income tax benefit, resulting in a range of 88,000,000 to $107,000,000 versus the previous range of 98,000,000 to $125,000,000 Adjusted net income is updated to be in the range of $112,000,000 to $130,000,000 from the previous range of 116,000,000 to $140,000,000 Full year capital expenditure guidance has been raised to 45,000,000 to $50,000,000 from the previous range of 30,000,000 to $35,000,000 to reflect the incremental investments aimed at increasing throughput that we discussed earlier. Interest expense has been raised to a range of 24,000,000 to $26,000,000 reflect year to date share repurchase activity as well as a greater than expected customer advance balance, with full year free cash flow in the range of $100,000,000 to $120,000,000 Lower than normal free cash conversion in the second half reflects our plan for higher CapEx spending as well as an expected headwind from the timing of accounts receivable and accounts payable activity that was a net benefit in the second quarter, but is expected to largely reverse within the third quarter of the fiscal year.

[Amy Campbell, Chief Financial Officer at REV Group]

We are pleased with the performance demonstrated by the Specialty Vehicles segment and continued cost containment within the Recreational Vehicles segment. In the first half, we capitalized on strong consolidated free cash flow by returning cash to shareholders and updating our capital plans with greater investments in our business. We look forward to continuing to pursue our strategic agenda from a position of strength with 0.5 times net debt to trailing twelve month adjusted EBITDA leverage and over $260,000,000 available on our ABL credit facility. Strong execution in the first half of the fiscal year has provided a solid foundation for continued momentum and opportunity to materially offset the impacts of tariffs, which were not anticipated when we provided our initial twenty twenty five guidance. I would now like to turn it back to the operator and then open up for questions.

[Operator]

Thank you. At this time, we'll be conducting a question and answer session. You. Our first question comes from Mike Schlischke with D. A. Davidson. Please proceed with your question.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Hi, good morning. Thanks for taking my questions here. I wanted to touch first on the headwinds you had mentioned from tariffs. I think you said $5,000,000 in the recreational and some cost impacts in specialty vehicle. Did you comment on the timeframe as to when some of these issues might kind of wash through the backlog and the output?

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Is this the fiscal twenty twenty five only issue or could we possibly see some impacts in 2026 as well?

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. So I think the way to think about that Mike is to break them out and think about them separately. So for the RV tariff impact, we largely expect to pass through any cost increases with the exception of the $5,000,000 of tariffs expected on the Class B luxury vans that are imported from Europe. We do not believe we can pass through those tariffs. And so those are limited in nature, primarily will impact the back half of twenty twenty five.

[Amy Campbell, Chief Financial Officer at REV Group]

There could be just based on consumption of those units that are on order some of that could move into the early part of twenty twenty six, but that is contained and would not be ongoing. And then when you look at the Specialty Vehicles tariffs, we referenced what we expect to be approximately $10,000,000 tariff impact in the back half of the year that we will largely offset with increased throughput. But I think the way to think about those tariffs is that is about a half a year. And so when you look into 2026 that's a 2% to 2.5% increase in non chassis material costs from tariffs. And so we would have a headwind of about that amount, in the first half of the year and then that would roll off and there would not be a head wind in comps in the second half of the year.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Got it. Thanks for that. And then just kind of curious the investments in the facility in Brandon, and it's just an interesting way to increase probably the hotter or more important product categories in Fire just to get more throughput on the S-one 80. Do you have any kind of sense if you invest $20,000,000 what the approximate return might be? How much more EBITDA can you pump out of that business, thanks to that investment?

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

I mean, it's a tough question, but any kind of brackets you can give us around the return on that would be appreciated.

[Amy Campbell, Chief Financial Officer at REV Group]

No. I think the return on that certainly, we've done those analysis and it is good. The way to think about the investments not only in our Brandon, South Dakota facility, but we're also making investments in fabrication and paint and assembly across most of our fire and ambulance plants that are included in that CapEx raise that we announced today for the second half of the year. The primary driver of those CapEx investments is to reduce lead times, is to keep the S-one 80 lead time under a year which is what we've talked about, but also to reduce lead times across all of our fire and ambulance plants. And with that it would drive incremental throughput production and shipments beyond what we provided in our intermediate targets that would allow us to offset any headwinds that we see coming.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Got it. Maybe one last one for me. As you look at those previously published 2027 EBITDA goals, does Lance have any major impact if and when you sell it on that $310,000,000 kind of long term goal? And can you also comment more broadly just update us now, do you still feel pretty confident that you're going to get there by fiscal twenty twenty seven, particularly if there's any kind of normalization in recreational between now and then?

[Amy Campbell, Chief Financial Officer at REV Group]

So in answer to your first question, I think we've been clear that Lance is less than 10% of the total sales for recreation, and the motorized units provide almost all of the EBITDA. So there is no material impact from the sale of Lance on our twenty twenty seven intermediate targets. We're not going provide updates today, but the investments in CapEx, the ability to reduce lead times and increase production, think give us confidence that we can offset whatever headwinds, we have, over the next couple of years.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Awesome. Thanks for the color. I'll pass it along.

[Mark Skonieczny, President , CEO & Director at REV Group]

Thanks Mike.

[Operator]

Our next question comes from Dobre with Baird. Please proceed with your question.

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Hey, good morning guys. This is Pete on for Mig this morning. Thank you for taking my questions. My first question is on recreation. You mentioned higher dealer assistance this quarter.

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Will those dealer incentives continue to move higher on a year over year basis in the second half? Or is that something that we can maybe see stabilize or be pulled back at some point as inventories improve? And then along these lines is there any update you can provide on dealer inventories and where those might stand by category?

[Amy Campbell, Chief Financial Officer at REV Group]

So in terms of dealer assistance moving into the second half, we did pull down our second half guide for recreation primarily driven by two factors. One being the $5,000,000 Class B luxury van tariffs that we've talked about and the other being an expectation that as we pass I think there's some consumer confidence risk in the back half of the year where will interest rates be and then as we pass through price increases from tariffs what does that also do to consumer demand. And so I think without speaking specifically to dealer discounting and how that is year over year, We do expect a softer second half than we previously had expected and now expect that to be about flat versus last year in terms of sales. Great. And then your second question was on dealer inventory?

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Correct. Just dealer inventories if there's any color by category.

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. I think it's a fair risk. But what I would say I think dealer inventory is fairly healthy in Class A and Class C categories. Class B is the area where we have seen some incremental dealer assistance and would expect that to continue into the second half of the year given where dealer inventory levels are in that class of RVs.

[Mark Skonieczny, President , CEO & Director at REV Group]

Think overall, if you look at the overall dealer inventory across all categories like Amy said in the prepared remarks, we feel very good in the positioning as we entered the '26 model year and the age of the inventory within our dealer base. So this destocking that we referenced being 13% down overall is really the fact that the older units have been discounted and leaving our dealer lot. So we feel really across the industry that the dealer inventories have improved from a health perspective and aging perspective.

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Awesome. Thanks for that guys. My second question now moving to specialty, specifically want to focus on the S-one 80, two part question. One, is there any color you could provide on what you are seeing with orders for that S-one 80 program? And then two, is there any color on the margin impact, the tailwind from a heavier mix of standardized units?

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

I guess another way of asking the second part of that question is what the margin profile might be on an S-one 80 as compared to your average custom apparatus?

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. So on an orders, I mean we continue to see demand for those S180s. And as we mentioned in the script, it's not just for the Spark. We've also expanded that S180 program to include our Ferrara and KME brands as well. So those products are built in that Brandon South Dakota plant.

[Amy Campbell, Chief Financial Officer at REV Group]

So we continue to see demand increases there. And without giving specifics on margins, would just say that those margins are comparative with other custom trucks.

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Got it. Thanks, Amy. I guess sticking with specialty last question here. Is there any color you can provide on the fire and ambulance respective demand cycles in terms of where we're at as an industry? And then for REV specifically anything you could share on what the expectations might be for orders in the back half?

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. So when you look at where we've seen demand, I would say it's transpiring as we had expected. It is starting to come back to long term trend levels. It probably still slightly above those long term trend levels, but it has come off its peaks. And we expect I think orders to transition in the back half of the year at more normalized demand levels that reflect, let's say, a ten year trend level.

[Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co]

Awesome. Thank you, guys.

[Operator]

Our next question comes from Angel Castillo with Morgan Stanley. Please proceed with your question.

[Brendan Shea, Senior Research Associate at Morgan Stanley]

Hi, thank you. This is Brendan on for Angel. I was just curious, particularly within specialty if you could talk to what kind of pricing you've been getting on incremental orders there? And then just how we should be thinking about kind of some kind of built in inflation buffer for those new orders? Thank you.

[Amy Campbell, Chief Financial Officer at REV Group]

Yeah. I think what I would say when it comes to pricing Brendan is that one, I want to clarify that we do not reprice any trucks that are in the backlog that any pricing actions that we would take would be prospective on future orders. And so far this year, we have not taken a general price increase, on either fire trucks or ambulances.

[Brendan Shea, Senior Research Associate at Morgan Stanley]

Okay. Thank you. And then, what's the latest on the U. S. Senate investigation into the fire truck delays just at the industry level?

[Brendan Shea, Senior Research Associate at Morgan Stanley]

And then do you foresee that really impacting your ability to raise pricing going forward in your opinion?

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. I would say at this point, have no nothing to add to that question, Brendan.

[Brendan Shea, Senior Research Associate at Morgan Stanley]

Okay. And then just last one for me. Within recreational vehicles, just any update on what you're seeing in terms of wholesale versus retail demand? I mean, you made the inventory commentary earlier, but just curious more specifically wholesale versus retail. Thank you.

[Amy Campbell, Chief Financial Officer at REV Group]

Yes. I I think we talked about some positive news in the retail environment for recreation. April was the first month in twenty eight months that saw sequential increase in retail shipments, versus March. So that was the first time in twenty eight months we saw a month over month increase in shipments. So retail has seen some early signs.

[Amy Campbell, Chief Financial Officer at REV Group]

Now I think there's certainly we certainly had concern in the back half of the year as we've discussed. And wholesale shipments, we do believe dealers have really right now at a much healthier situation in terms of dealer inventory. The dealer the inventory that is on dealer hands is more is newer model years than what they had previously said. So the overall dealer inventory, which should drive better wholesale orders, think also looks positive.

[Brendan Shea, Senior Research Associate at Morgan Stanley]

Great. Thank you.

[Operator]

Our next question comes from Jerry Revich with Goldman Sachs. Please proceed with your question.

[Jatin Khanna, Analyst at Goldman Sachs]

Hi, good morning everyone. This is Jatin Khanna on behalf of Jerry Revich. How would you characterize the M and A pipeline today? And what's your level of optimism on opportunities to make a needle moving acquisition over the next twelve to eighteen months?

[Mark Skonieczny, President , CEO & Director at REV Group]

Yes. I think we always look for opportunities like we said, we will be opportunistic if the right opportunity comes up. I said in my prepared remarks, we thought buying back shares was a great return to shareholders from a value perspective. So we felt good there. But that's always something that we look at from our existing portfolio and we look inwards and outward.

[Mark Skonieczny, President , CEO & Director at REV Group]

So if there are opportunities, we're definitely looking at those. But again, our forefront opportunity, like I said in my prepared is to continue to invest organically, buyback shares and look at opportunistic M and A as it comes up.

[Jatin Khanna, Analyst at Goldman Sachs]

Got it. Thank you so much.

[Operator]

We have reached the end of the question and answer session and this concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.

Participants

Executives

• Drew Konop, VP, IR and Corporate Development
• Mark Skonieczny, President , CEO & Director
• Amy Campbell, Chief Financial Officer

Analysts

• Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson
• Peter Benedict, Managing Director - Equity Research at Robert W. Baird & Co
• Brendan Shea, Senior Research Associate at Morgan Stanley
• Jatin Khanna, Analyst at Goldman Sachs