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REV Group, Inc. (REVG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered strong top-line and margin expansion: net sales $644.9M (+11% YoY; +2.5% QoQ), Adjusted EBITDA $64.1M (9.9% margin), GAAP diluted EPS $0.59 and Adjusted diluted EPS $0.79 .
  • Across the board beats versus S&P Global consensus: revenue $644.9M vs $616.2M*, Adjusted EPS $0.79 vs $0.63*, and Adjusted EBITDA $64.1M vs $52.3M*; strength was driven by Specialty Vehicles throughput and price realization. Values retrieved from S&P Global.
  • Management raised FY2025 guidance: net sales $2.40–$2.45B, Adjusted EBITDA $220–$230M, Adjusted Net Income $127–$138M, and Free Cash Flow $140–$150M; capex maintained at $45–$50M, interest $24–$26M, tax rate guided to 25–27% .
  • Cash generation and balance sheet improved: YTD operating cash flow $164.2M, net debt down to $54.0M, ABL availability $247.2M; dividend maintained at $0.06/share .
  • Key catalyst: upgraded FY25 outlook plus a 40% capacity expansion at Spartan (Brandon, SD) underway to shorten lead times and scale semi-custom S-180 fire apparatus program .

What Went Well and What Went Wrong

What Went Well

  • Specialty Vehicles drove growth: net sales $483.3M (+11.8% YoY; +24.6% ex-bus) and Adjusted EBITDA $64.6M (+45.8% YoY; +71.4% ex-bus) on higher shipments, favorable mix and pricing .
  • Throughput gains: fire shipments +11% YoY and ambulance shipments +7% YoY; CEO highlighted “continued improvement of our manufacturing capabilities… and operational resilience” .
  • Cash flow strength: $60.3M operating cash in Q3 and $164.2M YTD; trade working capital reduced to $191.6M from $248.2M FY24-end .

What Went Wrong

  • Recreational Vehicles faced headwinds: Adjusted EBITDA $8.1M (-13.8% YoY) due to tariffs on imported luxury vans and increased dealer assistance, despite higher unit shipments and pricing .
  • Tariffs expected to weigh on Q4 conversion: Specialty Vehicles incremental margins guided to 20–25% (vs 30–40% seen previously) with $5–7M tariff headwind in Q4; CFO expects tariff effects to carry into 1H FY2026 .
  • RV backlog declined: $224.3M (-7% YoY), reflecting softer order intake in certain categories and ongoing dealer caution .

Financial Results

Consolidated Results (Q1 → Q2 → Q3 FY2025)

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$525.1 $629.1 $644.9
GAAP Diluted EPS ($)$0.40 $0.38 $0.59
Adjusted Diluted EPS ($)$0.40 $0.70 $0.79
Adjusted EBITDA ($USD Millions)$36.8 $58.9 $64.1
Adjusted EBITDA Margin (%)7.0% 9.4% 9.9%

Segment Breakdown (Q1 → Q2 → Q3 FY2025)

Segment MetricQ1 2025Q2 2025Q3 2025
Specialty Vehicles Net Sales ($M)$370.2 $453.9 $483.3
Specialty Vehicles Adjusted EBITDA ($M)$35.2 $56.3 $64.6
Recreational Vehicles Net Sales ($M)$155.0 $175.3 $161.7
Recreational Vehicles Adjusted EBITDA ($M)$9.2 $10.9 $8.1
Corporate & Other Adjusted EBITDA ($M)$(7.6) $(8.3) $(8.6)

KPIs and Balance Sheet (Q1 → Q2 → Q3 FY2025)

KPIQ1 2025Q2 2025Q3 2025
Total Period-End Backlog ($M)$4,490.6 $4,549.9 $4,499.8
Specialty Vehicles Backlog ($M)$4,226.1 $4,282.0 $4,275.5
Recreational Vehicles Backlog ($M)$264.5 $267.9 $224.3
Net Debt ($M)$108.4 $101.2 $54.0
ABL Availability ($M)$262.9 $263.2 $247.2
Trade Working Capital ($M)$290.2 $207.3 $191.6
YTD Cash from Operations ($M)$(13.1) $103.9 $164.2
Capital Expenditures ($M)$4.9 $11.4 $11.6
Dividend per Share ($)$0.06 $0.06 $0.06

Results vs S&P Global Consensus (Q1 → Q2 → Q3 FY2025)

Values retrieved from S&P Global.

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($M)$492.8*$603.5*$616.2*
Reported Revenue ($M)$525.1 $629.1 $644.9
Primary EPS Consensus Mean ($)$0.27*$0.57*$0.63*
Reported Adjusted Diluted EPS ($)$0.40 $0.70 $0.79
EBITDA Consensus Mean ($M)$27.8*$52.2*$52.3*
Reported Adjusted EBITDA ($M)$36.8 $58.9 $64.1

Guidance Changes

MetricPeriodPrevious Guidance (Q2 FY2025)Current Guidance (Q3 FY2025)Change
Net Sales ($B)FY2025$2.35–$2.45 $2.40–$2.45 Raised (low end)
Net Income ($M)FY2025$88–$107 $95–$108 Raised (low end)
Adjusted EBITDA ($M)FY2025$200–$220 $220–$230 Raised
Adjusted Net Income ($M)FY2025$112–$130 $127–$138 Raised
Free Cash Flow ($M)FY2025$100–$120 $140–$150 Raised
Capital Expenditures ($M)FY2025$45–$50 $45–$50 Maintained
Net Interest Expense ($M)FY2025$24–$26 $24–$26 Maintained
Effective Tax Rate (%)FY2025N/A25–27 New disclosure
Quarterly Dividend ($/sh)Q3 FY2025$0.06 $0.06 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Throughput & EfficiencyQ1: record Adjusted EBITDA; SV margin up on price realization and lean; fire catching up to ambulance in productivity . Q2: sustained throughput gains in fire plants; ambulances shifting to higher-content modular units; SV EBITDA up 66.6% YoY .Continued momentum: fire shipments +11%, ambulance +7%; incremental margin 28% YoY; Q4 incrementals guided 20–25% due to tariffs .Improving, moderated by tariff headwinds
Tariffs/MacroQ1: limited direct import exposure; multi-sourcing; passing through chassis inflation where possible . Q2: ~$10M H2 tariff impact (SV); $5M RV Class B van tariff; mitigation via domestic sourcing .Q3: $5–7M Q4 specialty headwind; annualized ~$20M manageable via resourcing/onshoring; no broad price hike solely for tariffs .Known headwind near-term, manageable
S-180 program & Capacity ExpansionQ2: $20M Brandon, SD investment to expand S-180/custom apparatus; focus on reducing lead times .Groundbreaking executed; capacity +40% targeted; phased benefits start late FY2026, full run rate FY2027 .Positive structural growth driver
Backlog & Lead TimesQ1: SV backlog ~2–2.5 years; plan to shorten delivery times . Q2: Book-to-bill ~1.1; working to reduce backlog duration .Q3: SV backlog $4.28B; unit backlog duration reduced ~2 months; aim for industry-leading lead times .Normalizing backlog duration
RV End-Market & Dealer DynamicsQ1: RV retail outperformed categories; cautious full-year stance . Q2: RV revenue flat expected; dealer assistance elevated; Class B inventories heavier .Q3: RV EBITDA down on tariffs and assistance; backlog -7% YoY; expecting flat Q4 vs Q3 .Mixed; tariffs/assistance weigh
Capital Allocation & FCFQ2: $88.4M buyback; balanced allocation including capex and dividends .Q3: Strong cash generation; net debt near zero; evaluate organic investments, opportunistic M&A; dividend maintained .Strong FCF; optionality preserved

Management Commentary

  • CEO: “We are pleased with our continued momentum this quarter, highlighted by robust growth in shipments and earnings across the Specialty Vehicles segment… This financial strength gives us the flexibility to continue investing in our business and expanding production capacity” .
  • CEO on Spartan expansion: groundbreaking in August to increase custom/semi-custom fire apparatus capacity and reduce delivery times; expansion adds 56,000 sq ft and supports sub-1-year S-180 deliveries .
  • CFO: Specialty Vehicles adjusted EBITDA margin reached 13.4%; Q4 incremental conversion guided at 20–25% due to $5–7M tariff headwind; RV guidance unchanged, expecting $625–$650M revenue and $30–$35M Adjusted EBITDA .
  • Working capital discipline: trade working capital down to $191.6M; operating cash flow $60.3M in Q3; net debt $54.0M; ABL availability $247.2M .

Q&A Highlights

  • Margin trajectory: Management remains on pace for mid-term targets (10–12% EBITDA margin by FY2027), with throughput ahead of schedule; Q4 incrementals tempered by tariffs .
  • Tariffs detail: ~$5–7M Q4 non-chassis impact expected; annualized ~$20M manageable via resourcing/onshoring; limited raw steel/aluminum direct exposure, focus on component side .
  • Capacity ramp timing: Brandon, SD expansion phased—benefit starts late FY2026, full materialization FY2027; broadening S-180 across brands .
  • Backlog/price dynamics: Backlog dollars largely flat sequentially; unit backlog duration down ~4% seq and ~6% YoY; pricing actions are targeted and prospective, limited ability to reprice fixed contracts .
  • Capital deployment: With net debt near zero and robust FCF, priority remains organic investments, sustainable dividend and opportunistic M&A; buybacks paused in Q3 but used in H1 .

Estimates Context

  • Q3 FY2025 beats: revenue $644.9M vs $616.2M*, Adjusted EPS $0.79 vs $0.63*, Adjusted EBITDA $64.1M vs $52.3M*. Values retrieved from S&P Global.
  • Estimate breadth: Q3 Primary EPS had ~3 estimates*, revenue ~2*, target price consensus $62.8 across ~5 estimates*; suggests limited but supportive sell-side coverage. Values retrieved from S&P Global.
  • Implications: Street models likely move higher for FY2025 EBITDA, Adjusted EPS and FCF given raised guidance and stronger SV incrementals; near-term Q4 margin assumptions should incorporate $5–7M tariff headwind in Specialty Vehicles .

Key Takeaways for Investors

  • Specialty Vehicles execution is the core driver: strong throughput, favorable mix, and price realization continue to expand margins; backlog supports multi-quarter visibility .
  • Guidance raise is a meaningful positive: higher ranges for revenue, Adjusted EBITDA, Adjusted Net Income, and FCF—key catalysts for estimate revisions and potential re-rating .
  • Tariff headwinds are real but manageable: quantified Q4 specialty impact ($5–7M) and RV Class B van tariffs are limited in duration; mitigation underway via domestic sourcing/resourcing .
  • Capacity expansion underpins medium-term growth: Brandon, SD adds 40% capacity to custom and semi-custom fire apparatus; shorter lead times are a competitive advantage .
  • Balance sheet and FCF optionality: net debt near de minimis, strong YTD operating cash flow; room for organic investments, sustainable dividend, and selective M&A .
  • RV segment is mixed near-term: tariffs and dealer assistance pressure EBITDA, but product events (Hershey/Elkhart) show engagement; guidance assumes flat near-term trajectory .
  • Trading lens: beat-and-raise quarter with clear strategy to offset tariffs and expand capacity—watch Q4 tariff impact cadence, SV throughput, and RV show/order trends for incremental catalysts .

Values retrieved from S&P Global.