Speciality vehicle provider REV (NYSE: REVG) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 11.3% year on year to $644.9 million. The company’s full-year revenue guidance of $2.43 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $0.79 per share was 24.7% above analysts’ consensus estimates.

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StockStory’s Take

REV Group delivered a positive Q2, with management attributing outperformance to operational improvements, higher fire and ambulance unit shipments, and sustained efficiency gains across its manufacturing footprint. CEO Mark Skonieczny credited “sustained gains in manufacturing throughput, quality, and efficiency” as key drivers, while noting that targeted facility investments have enhanced the company’s ability to meet customer demand. The specialty vehicle segment, in particular, benefited from increased production and a favorable mix, which were supported by ongoing lean manufacturing and workforce training initiatives.

Looking ahead, REV Group’s updated full-year outlook is shaped by continued investments in production capacity, supply chain management to offset tariff impacts, and ongoing efforts to shorten delivery times. Management emphasized the planned expansion of the Spartan Emergency Response facility as a major step toward meeting elevated demand. CFO Amy Campbell stated, “we are continually looking at prices and taking targeted and focused price increases where appropriate,” while highlighting that mitigating tariff-related costs and aligning production with consumer preferences will be critical for sustaining profitability in the face of macroeconomic uncertainty.

Key Insights from Management’s Remarks

Management cited production scalability, workforce training, and targeted facility investments as the foundation behind improved results and enhanced guidance.

• Manufacturing throughput gains: Fire and ambulance businesses increased unit shipments by 11% and 7% year-over-year, reflecting operational discipline and streamlined processes that improved delivery performance and reduced lead times.

• Spartan facility expansion: The company broke ground on a major expansion at Spartan Emergency Response in South Dakota, aiming to increase fire apparatus production capacity by 40%. This $20 million project will nearly double the site’s manufacturing footprint and is expected to help reduce delivery times for both fully custom and semi-custom vehicles.

• Divestiture of Lance Camper: REV Group completed the sale of its Lance Camper business, narrowing its RV portfolio to focus exclusively on motorized vehicles. Management believes this streamlining will enhance operational resilience and better align the RV segment with core competencies.

• Tariff management actions: Management detailed efforts to mitigate tariff-related cost pressures by leveraging inventory, supply chain adjustments, and selective price increases. The company expects $5–$7 million in tariff headwinds in the specialty vehicles segment for the next quarter but is confident in its ability to manage costs through internal productivity improvements.

• Strong cash generation: Improved operating performance led to robust cash flow and a strengthened balance sheet, giving REV Group flexibility to invest further in capacity, efficiency, and potential M&A, while maintaining regular dividends.

Drivers of Future Performance

REV Group’s outlook is driven by continued capacity investments, supply chain adaptation to tariffs, and targeted cost management.

• Facility expansion impact: Management expects the Spartan facility expansion to significantly boost fire apparatus capacity, supporting higher throughput and helping to maintain competitive delivery times as the backlog normalizes over the next two years.

• Tariff and cost pressures: Tariffs on imported components and luxury vans remain a headwind, with management working to limit their impact through supplier negotiations, onshoring, and select price increases. The company anticipates ongoing cost pressures but sees internal productivity and cost control as key levers for margin preservation.

• RV market and backlog normalization: The RV segment faces soft industry demand and dealer destocking, but management is focused on aligning production with end-market demand and using upcoming industry events to gauge 2026 retail trends. The specialty vehicles backlog remains elevated, but as delivery times decrease, management expects a gradual return to more typical order-to-shipment cycles.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the ramp-up and operational impact of the Spartan facility expansion, (2) how effectively REV Group manages tariff-related cost pressures in both specialty vehicles and RV segments, and (3) trends in backlog normalization and delivery lead times. Additional focus will be on the RV segment’s response to industry events and evolving consumer demand.

REV Group currently trades at $59.39, up from $51.81 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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