REV Group, Inc. Price & Performance (REVG)

Good morning, and thanks for joining us. Earlier today, we issued our first 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 REV 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. 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 or 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 year are to our fiscal quarter or fiscal year unless otherwise stated. Joining me on the call today is our President and CEO, Mark Sknechnechne as well as our CFO, Amy Campbell. Please turn now to Slide three, and I'll turn the call over to Mark.

Thank you, Drew, and good morning to everyone joining us on today's call. Before we dive into the details of our quarterly performance, I want to take a moment to reflect on an important event that occurred within the past quarter our Investor Day, which we hosted in connection with our earnings call in December. The event gave us an opportunity to share our strategic vision and unveil new intermediate financial targets which outline a clear and disciplined path towards significant earnings growth. Importantly, these targets are built on a foundation of operational improvements within our four walls and we have a plan and team in place to achieve success. During the event, we described how Rev Group present a compelling investment opportunity due to a well diversified portfolio of products aligned with favorable macroeconomic trends. We are positioned to benefit from population growth, and aging demographic and expanding urban sprawl and we are uniquely suited to meet the strong demand for mission critical emergency vehicles related to essential services as well as recreational vehicles that provide consumers the freedom to explore the outdoors and comfort. With a strong balance sheet and a disciplined approach to capital allocation that was presented during the Investor Day, we are well positioned to continue to provide attractive returns to shareholders a combination of organic growth, share repurchases dividends and a strategic and selective approach to acquisitions.

If you have not already seen it, our Investor Day presentation is available our website. I'm pleased to report that we've had an exceptionally strong start to the year with record first quarter adjusted EBITDA and cash efficient organic basis that adjust for the results of the two bus manufacturing businesses that were exited in fiscal twenty twenty four. This performance not only reflects the strength and resilience of our business model, but also positions us well to continue delivering on our long term strategy for value creation. The first quarter success serves as a solid foundation for the achievement of our full year's guidance. As we continue to execute on our productivity and throughput initiatives, we remain confident in our ability to meet the targets that we've set providing an opportunity for sustained value for our shareholders. We're excited about the path ahead and are committed to maintaining this momentum. Exiting the first fiscal quarter, our backlog remains strong at 4,500,000,000.0 providing two to two point five years of demand visibility within the specialty vehicle segment. This level of backlog also provides confidence in our ability to achieve our financial targets as we continue to drive profitability through increased manufacturing plan a detailed truck by truck production schedule order materials more efficiently, optimize resources, and continue to drive margin through continuous improvement initiatives and a pipeline of lean projects.

Now I would like to address the recently enacted tariffs I'll remind you that the majority of our operations are assembly in nature and therefore our exposure is primarily indirect from the sub assemblies we purchase through our supply base. In regards to direct import exposure to tariffs, approximately 2% of our direct material purchases come from China, Mexico and Canada and our raw material spend on steel and alumina make up only about 5% of our total material costs. As it relates to indirect tariff impacts, our ability to navigate potential supply chain disruptions has been greatly improved since the initial rounds of tariffs in 2018. Over the past several years, we have implemented multi sourcing strategy for key components, reducing the risk of sole source exposures. We continue to pursue alternative sourcing options across our direct material spend that may also provide cost improvement or tariff mitigation opportunities. Our supply chain team has been in active discussions with our supply base to understand the potential exposure based on their supply origins. However, quantification of risk is difficult to calculate given the broader uncertainty in application of tariffs to products and raw materials within their value chain and alternatives available as specific tariffs are enacted.

Our supply chain team will continue to monitor areas of exposure and implement proactive mitigation strategies. On the sales side, approximately 5% of our net sales are outside of The United States.

Overall, our strong backlog, disciplined commercial activities, and a fortified supply chain position us well for continued margin momentum and long term growth.

We remain focused on delivering on our commitments while navigating the broader macroeconomic environment with confidence. In January, the fortieth Annual Florida RV Super Show proved to be a strong event for REV Group's Recreational Vehicles segment. Despite a decline in overall show attendance, the consumers appreciation for our portfolio of products was apparent with notable increases in retail sales across multiple brands. Fleetwood RV, Holiday Rambler, American Coach Class A motorhome saw a significant increase in show sales driven by strong interest in new models including the award winning Palisade. Renegade RV also experienced higher sales showcasing its diverse lineup of Class C and Super C motor homes built on various platform sizes. Midwest Automotive designs Class B vans including a new heritage line performed well with sales rising compared to the previous year. Meanwhile, Lance Kemper's new Squire travel trailers and truck campers contributed to a boost in overall sales. The RV market remains challenged, the positive customer response and increased retail activity for our products reinforced confidence in the segment's product strategy and market positioning. We also attribute our success at the show to the great dealers we had Despite continued external challenges, the company remains focused on innovation and dealer partnerships to drive growth.

We believe a balanced approach to capital allocation underscores our commitment to delivering value to shareholders while maintaining flexibility to invest in future growth. Within the quarter, we commenced share repurchases on our recent $50,000,000 authorization, returning repurchasing approximately 579,000 shares or just over 1% of common shares outstanding. We believe the repurchases were an attractive use of capital given the stock's valuation within the quarter and they demonstrate the confidence we have in our long term strategy financial strength and ability to generate sustainable returns. We continue to purchase shares subsequent in the first quarter and through Friday, February 28, purchased an additional 425,000 shares totaling 13,800,000.0. With these purchases, approximately $217,000,000 remains on our share repurchase program, which allows management the continued flexibility to deploy capital opportunistically. Finally, we remain focused on driving efficiency improving margins and optimizing our existing backlog. We are executing with discipline against our booked orders and backlog ensuring that we maximize returns while delivering high quality products that meet customer expectations. Our teams have made meaningful progress in streamlining operations, identifying cost efficiencies and enhancing supply chain resilience all of which are contributing to improved financial performance. This disciplined approach reinforces our confidence in achieving sustainable growth.

While market conditions remain dynamic across our operating segments, today we are reaffirming our fiscal twenty twenty five outlook. We believe the momentum we are building positions us for both short term and long term success. Turning to Slide four, First quarter sales were $525,000,000 a decrease of $61,000,000 from the prior year. As a reminder, we exited the Bus Manufacturing business in fiscal twenty twenty four with the divestiture of Collins Bus in January and the wind down and sale of E and C in The prior year's quarter included $76,600,000 of net sales attributed to these bus businesses. Excluding the impact of divested bus businesses, net sales increased $15,700,000 or 3.1% compared to prior year quarter. Year over year revenue growth in the Specialty Vehicles segment was partially offset by lower sales in the Recreational Vehicle segment. The sales growth in Specialty Vehicles was driven by revenue increases in both the fire and ambulance groups. I am pleased that these teams exceeded our expectations within the quarter continue to demonstrate the success of various throughput initiatives that have been enacted over the past two years. Record first quarter consolidated adjusted EBITDA of $36,800,000 increased $6,300,000 Excluding the impact of divested bus businesses, which generated $9,900,000 in the prior year quarter, adjusted EBITDA increased $16,200,000 or 79%.

Year over year earnings growth was driven by the Specialty Vehicles segment partially offset by lower earnings in the Restorational Vehicle segment. Over the past year, I've commented that the fire group is catching up to the ambulance group in terms of productivity gains and plant efficiency. Over the past three quarters, Fire has made great progress resulting in impressive year over year performance. Continue to believe that exiting the second quarter of this year, Fire and Ambulance will be on equal footing operating at plant efficiencies, which provide a solid foundation with stability to implement additional lean activities. With that, please turn to Slide five, and I'll turn the call over to Amy for detailed segment financials.

Thank you, Mark. First quarter Specialty Vehicles segment sales were $370,200,000 a decrease of $47,000,000 compared to the prior year. As Mark mentioned, the prior year's quarter included 76,600,000.0 of net sales attributable to the bus manufacturing businesses that were divested within fiscal twenty twenty four. Excluding the impact of the divested businesses, segment net sales increased 29,600,000.0 or 8.7% when compared to the prior year quarter.

The increase in net sales was primarily due to increased sales of Fire Apparatus and an increased mix of modular ambulance units which carry a higher average selling price than type two vans.

Along with favorable price realization. These were partially offset by lower sales of terminal trucks and industrial sweepers. Adjusted EBITDA of $35,200,000 was a segment first quarter record increasing by $9,000,000 versus the prior year. Making this even more impressive the prior year's quarter included $9,900,000 of adjusted EBITDA attributable to the divested bus businesses.

Excluding the prior year contribution from bus, specialty vehicles adjusted EBITDA increased $18,900,000 or 116%. The increase in earnings was primarily due to initiatives put in place that resulted in increased sales of FHIR apparatus, a favorable mix of ambulance units and favorable price realization partially offset along with inflationary pressures. Specialty Vehicles adjusted EBITDA margin of 9.5% is also a record for the first quarter segment performance. Excluding the impact of the bus businesses, segment margin improved four seventy basis points year over year driven primarily by price realization and improved operations that have increased throughput. Over the past several quarters, enhancements to production processes, focus on supply chain management and improved workforce productivity contributed to higher output better cost controls and improved profitability. These initiatives along with targeted capital investments lean manufacturing principles and data driven decision making have contributed to optimizing resources while delivering high quality units. Specialty Vehicles segment's backlog of $4,200,000,000 is also a record, Adjusting for $84,000,000 of E and C bus backlog, that was included in the prior year's total, backlog grew 12% versus the prior year. The increase was related to solid industry demand for fire apparatus and ambulances, along with pricing actions, that include the pass through of inflationary pressures of components such as chassis. [indiscernible] These were partially offset by increased production against the backlog and lower demand for terminal trucks and street sweepers.

The top line outlook for Specialty Vehicles segment is for continued year over year growth in high single to low double digit range from a pro form a fiscal twenty twenty four base that has been adjusted for the removal of bus sales. Just as a reminder, the total bus performance in fiscal twenty twenty four was $163,600,000 of net sales and $17,600,000 of adjusted EBITDA. The expected revenue increases in 2025 organic net sales are expected to convert at an incremental margin of approximately 40% on a full year basis. And for modeling purposes, we expect approximately 40% to 45% of segment adjusted EBITDA to be in the first half of the year and 55% to 60% in the second half. In line with our typical seasonality. Turning to Slide six, Recreational Vehicle segment sales of $155,000,000 decreased $14,400,000 or 8.5% versus last year's first quarter.

Lower sales were primarily the result of a decline in unit volumes, related to soft end market demand. Fewer shipments in the Class A Class B and Class C units were partially offset by increased shipments of Towable and Camper units. Despite a decline in shipments, stat survey data indicates that retail registrations for our Class A and Class C motorized products along with our Lance Camper brand outperformed their respective product categories over the most recent trailing twelve month period.

While the market remains challenged, net sales for recreation did exceed our for the quarter, driven primarily by greater than expected wholesale and retail demand in the Class A category and lower than expected dealer assistance. Wholesale shipments in the quarter also benefited from activity leading up to the Tampa RV Super Show. Adjusted EBITDA of $9,200,000 was a decrease of $2,400,000 or 21% versus the prior year. The decrease was primarily a result of lower unit volume, increased dealer assistance versus the prior year and inflationary pressures partially offset by actions taken to better align fixed and variable cost We are pleased that the segment has continued to execute with discipline and achieved a decremental margin of 16% year over year while maintaining a 5.9% adjusted EBITDA margin for the quarter. Segment backlog $265,000,000 declined 30% versus the prior year. The decrease was primarily related to soft end market demand and dealer destocking that resulted in lower wholesale shipments over the past year. Over the same period, segment retail sales outpaced wholesale shipments. Reducing the number of units on dealer lots and improving the overall age and health of dealer inventories. As Mark mentioned, REV products and performed well at this year's Tampa Super Show.

Resulting in increased retail sales for our dealers as compared to 2024. [indiscernible] While this may present an opportunity for dealer restocking, into the upcoming selling season, we continue our tempered approach to full year expectations for the Recreation segment until we witness sustained retail sales improvement. Therefore, today, we reaffirm the original guidance provided in December with full year recreational vehicle segment revenue and adjusted EBITDA to be approximately flat versus fiscal twenty twenty four. Turning to Slide REV, trade working capital on 01/31/2025 was $290,200,000 an increase of $42,000,000 compared to $248,200,000 at the end of fiscal twenty twenty four. [indiscernible] The increase was primarily timing related driven by an increase in accounts receivable and lower accounts payable.

Partially offset by increased customer advances. Year to date, cash from operating activities was an out flow of $13,100,000 which included almost $12,000,000 of management incentive payments made during the period. In addition, we spent $4,900,000 on capital expenditures within the first quarter. Net debt as of January 31 was $108,400,000 including 31,600,000.0 of cash on hand. [indiscernible] This includes $19,200,000 used within the first quarter to repurchase 579,000 common shares at an average price of $33.09 In the quarter, we also paid cash dividends totaling $3,900,000 bringing the total of cash returned to shareholders in the first quarter to $23,100,000 In addition, we declared a quarterly cash dividend of $0.06 per common share payable on April 11, to shareholders of record on March 28. At quarter's end, the company maintained ample liquidity for our strategic initiatives, approximately $262,900,000 available on our ABL revolving credit facility. Last month, we refinanced the ABL credit facility extending its maturity to 2,030 and details can be found in the eight ks filed with the SEC on February twenty four of this year. As previously mentioned, today we reaffirm our fiscal full year 2025 guidance that was provided on our fourth quarter twenty twenty four earnings call.

We continue to expect high single to low double digit revenue growth the Specialty Vehicles segment versus a 2024 pro form a revenue base of $1,560,000,000 which excludes sales from the divested bus businesses. Net sales in the Recreational Vehicle segment are expected to be roughly flat year over year. Consolidated top line guidance is in the range of $2,300,000,000 to $2,400,000,000 or mid single digit growth at the midpoint versus fiscal twenty twenty five's pro form a of $2,200,000,000 in net sales. Adjusted EBITDA guidance remains $190,000,000 to $220,000,000 an increase of 48% at the midpoint versus twenty twenty five's pro form a $145,200,000 of adjusted EBITDA. As Mark said, this was an exceptional first quarter with a record start as we begin fiscal twenty twenty five. We are pleased with the momentum demonstrated by the Specialty Vehicles segment and continued cost containment and commercial discipline within recreational vehicles. We expect to deliver healthy earnings growth and stronger free cash flow throughout the remainder of the year I want to close by thanking our team for their dedication and strong performance. With that, I would now like to turn it back to the operator Thank you. And answer session.

Thank you. Our first question comes from the line of Mike Schliske with D. A. Davidson. Please proceed with your question.

Hi, good morning. Thanks for taking my questions. [indiscernible] So first, Mark, I want to make sure I understood some of your tariff discussion during your prepared remarks there.

You said the components that you get from Canada Mexico are just 2% of costs. And most of what you do is assemble within The United States. But you still can't say whether tariffs will be a big issue for Yevgen Group going forward? I'm not sure I understood why tariffs how it could be an issue for you as opposed to other than like very broad macro Maybe just maybe just give us a little more detail as to what the possible tariff impacts are as you see them today?

I think, Mike, that's why I said I've Paragon, Mark. And obviously, it's a fluid situation. So again, our direct exposure is, as I said, 2% across those geographies and then our direct aluminum and steel is only 5%. We look at the majority of our purchases, our sub assemblies that we then assemble all in The United States, And the majority of our purchases from suppliers are domestically sourced. But again, I'd like to reiterate, going through COVID, and then all the initiatives we've done over the last two to three years to strengthen our supply base, we feel a lot better about where we are now. We've highlighted in the past our multi sourcing strategy and that we've expanded our supply base and ability to mitigate tariffs. I do want to remind you that even during COVID, which saw a bigger spike, we were actually price cost positive during that period. So, and we've only strengthened our supply base then. From there. Also, and I think I talked about during COVID when I was the CFO is these longer cycle build cycles where we have the fixed contracts like in fire, we actually have three to four months of inventory sitting there So it's really something that really is going to develop over the second quarter.

And then we'll understand better what the exposure is exiting Q2 and into Q3 and Q4 as we see the fluidity or what becomes more determined from a tariff front. Okay, great. Thanks for that. Moving on to the RV group, I'm so surprised to hear everything went pretty well, it sounds like at the Tampa show. There are some more shows I think coming up on the calendar, but the big one of the bigger ones here in Tampa did go okay. You mentioned that you want to see actual retail sales get better before you think about increasing your outlook for 25% in that group. I'm surprised, I mean, I guess, when do you want to see wholesale sales get better? Would that be to to increase the guidance there or am I just missing that this basically a bill to order for us anyway? I'm just trying to figure out like what is still missing to feel better about what's going on in that group of people that have been Yes.

I still think you REV some destocking events, but we do want to still see that wholesale of retail get back to one to one relationship, right, because the retails have been outpaced historic over the few last quarters.

I think that's really one of the things. When you look at the original DynaT it was heavily weighted towards the back end of the year. So we feel good ex in Q1, entering Q2, what our order look like that are hitting the factories, but essentially we do want to see Q3 and Q4 come in or at least show through Q2 bookings that we'll be able to see that through the new '26 model year. And we'll see those orders start getting placed here in the March and April frame as we always talk about. So that's really indication of when people start placing the model year '26. Unit we'll get a better view on Q3 and Q4. And then obviously the sell through on the 2024 and 2025 model year product that are sitting in our dealer inventories.

Okay. Maybe one last one for me. If you could just update us on the pricing in [indiscernible] I guess maybe just a two part question here. I mean in the past talked about being mid to high sub digits. [indiscernible] For '25, maybe even for '26. [indiscernible] But then I just want to make sure I understand if the prices go up from some of your raw materials or some of your assembly from tariffs you have the ability to go back and tweak the pricing based on things that are kind of out of out of Russ' control. Yes.

Thanks, Mike. So certainly on and so mid single digit price increases are what we continue to expect for the next several years for specialty vehicles When you look at recreation terminal trucks, street sweepers, we can pass through inflationary cost headwinds on those products. We can also pass through cost increases on commercial chassis and all of our ambulances and some of our fire trucks And we have historically these are fixed bid contracts by and large. Some of them do have some room to go back, but we have historically honored those fixed bid contracts. With that though, I would say that we've been very disciplined strategic our commercial pricing strategy over the last couple of years. To allow some room to protect us or defend against any unknown inflationary headwinds that were unknown at the time that we were taking price increases. So So there is some limited ability to go back, very limited ability to go back and reprice those fixed contracts. But I think by and large, not knowing the full extent of what inflation we're going to have We've allowed for some unknown inflation in the years ahead when we've taken those price increases.

Thanks, Mike.

Our next question comes from the line of Mig Dobre with Baird.

Thank you. Good morning. I want to pick up on that comment there.

When you When you look at your your business here, you obviously have a sizable amount of backlog and I'm talking about specialty vehicles here. And it sounds like there's no kind of a real repricing mechanism, I guess, what's in the backlog, but you've made some provided some buffer for inflation. So I'm curious as to that buffer how you calculated it. Is it normal inflation? Is it something that's maybe more like in terms of what we've seen over the past few years? How much of a cushion do you have here? Because think this is one of the debates that that are being held out there, right, where you have a lot of backlog that's a good thing, but that may also be a bad thing if we're going to start to see yet another pulse of inflation here because of tariffs going forward. So how how comfortable can we get with the backlog? And I guess my follow-up to this is, in terms of new orders coming in, do you get to the point where you sort of say, look, I've got I've got enough risk in the backlog that I currently have, I don't really need to add more to it given that you're not really going to be shipping these incoming orders until two to three years out.

So how do you evaluate the risk on the new orders that you're taking in now?

Yes. So we're we are looking at the new orders that we're taking in now. Mig, and we certainly need to continue to take orders, right? Municipalities need fire trucks, they need ambulances. We're meeting and discussing what the annual price increase should be. We normally announce one around this time of the year and the teams are actively working on understanding what the risk for inflation is and what that price increase that we announced this year should be, so that work is is underway. And I think when you look at we can talk about that backlog, but as Mark mentioned, the direct exposure that we have to import tariff increases is really only 2% in those geographies. We source our metals domestically. We've obviously seen some increases recently in the spot prices as potential tariffs go on steel and aluminum.

But the direct exposure is pretty limited. And I think at this point, there's just too many moving pieces and too much uncertainty to quantify and understand the implications of full implications of any broader tariff increases as we go forward But you're a sophisticated buyer of chassis, You have good knowledge on that And I guess I'm trying to understand when you look And we can [indiscernible] recall that, right? So that the contract mechanism, that's a pass through cost.

But on the fly, how do we deal with that?

The fire we do majority of our fire is built by us and our COE, but obviously we have some exposure with the commercial chassis, but we're obviously working where we don't put it on a Spartan, but the majority of ours are purpose built through our COE or through our operations. So we do have some commercial chassis that we'd have exposure to. But again, the largest part is purpose built by us.

And sourced in The U. S. Those components are sourced from The U. S. Okay. I do want to ask a question about the quarter itself and guidance. Your EBITDA came in above consensus, but I'm curious if that was also the case relative to your internal budget When I'm looking at last year, for instance, similarly, you posted a somewhat similar EBITDA beat relative to where the consensus was at the time and you ended up raising full year guidance by $5,000,000 You chose not to do that this time. So maybe I'm curious, how did the quarter go relative to your expectation? And the fact that we're keeping EBITDA unchanged is that a function of factoring in some additional uncertainty or are there other elements that we need to be aware of? [indiscernible] the first quarter, Mig, did come in a little better than our expectations. We had that in the prepared comments.

We saw some nice wholesale orders for our Class A coaches in advance of the Tampa RV show. And we also saw some lower discounting and some higher sales in specialty vehicles as well. So we did outperform our expectations for the quarter.

And taking into consideration the guide in the first quarter as well, we took into consideration risks around inflation. It's early in the year We had a nice beat. We have a broad range. And when you look at those what's called known and unknown risks, the bottom half of that range, is appropriate. And I think we also see a pathway to even with known tariff risk to be able to still deliver in the top half of the range. So we took into account the beat in the quarter, the forecast that we more got a few weeks ago from our business units, the range known and unknown risks. We certainly expect some cost increases that we talked about and believe that that range was appropriate this time. And a lot of uncertainty We'll get a lot more certain about the impacts of tariffs and inflationary cost pressures in the next few months and update that range in the second quarter.

Understood. My final question, just on specialty vehicles order intake and you talked about demand being resilient on fire. So I guess [indiscernible] heard you guys talk in the past about order moderation at a point in time because obviously the backlog is extended and demand has been really strong. Are you sort of at the point where you can see demand being stronger for longer Are you seeing any benefit from maybe investment following the West Coast wildfires? How does that impact your business? And again, how should investors think about the tenure of orders for the rest of fiscal twenty twenty five here given what you've seen in Q1? Thank you.

I think it's too early to know the impact of of demand coming out of the LA fires. We certainly have seen some inbound increases. We've seen there was nice article about some orders that were recently placed in California for our fire trucks, our S-one 80 fire trucks. But it is too early. What I would say if you look at orders are lumpy, orders in the first quarter came in higher than we expected in our AOP We've long talked about normalizing orders You look back at 2024, while they've come down off of their peaks, still meaningfully above long term trends. And I think it's too early to know. I think that we [indiscernible] they did come last year. They're still above long term trends. We continue to focus in our factories to increase throughput. Work through the backlog. [indiscernible] provide our customers the fire trucks they need So I think we will continue to see some normalization, but will that normalize level be higher than where it was in the past? It's just too early to tell Nick.

All right. Best of luck. Thank you.

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

Yes.

Hi. Good morning, everyone.

I'm wondering if we could just continue the conversation that you just had with MIGA. When we look at the above trend orders, Amy, that you spoke to in fire, how would you attribute that to the company's potentially higher market share in this cycle versus just elevated industry demand? Can you just break that out for us? Where do you think your share is? On fire versus history and industry units versus history based on the metrics you track?

Yes. So my comments were specifically on industry demand. We have seen industry demand come off of peaks from a few years ago, but still still above It's about 5,000 fire trucks last year. We believe long term trend levels were closer to thousand levels. So it's come off of the 6,000 level we saw a few years ago, but still at 5,000 last year.

We really don't like to talk about market share. I think we've seen it can be lumpy. We've seen some benefits from our S-one 80 program, but I think I'll leave it there.

Fair enough.

We have a similar conversation on ambulances? You mentioned a couple of quarters ago that orders were starting to slow towards historical levels. Can you just update us on industry levels stand and if you want to weigh in on market share on that product line directionally?

Yes.

I'd say market share on that product line is pretty consistent. And we have seen ambulance demand normalized 2024 industry levels actually won't come out for another month.

So ask me, I guess, in four to six weeks or next quarter. Jerry, we don't have the 2024 industry. Volumes for ambulance just yet.

Okay. But does that comment stand from a couple of quarters ago that you're probably seeing [indiscernible] still above normal in that category?

Yes, that would be my expectation.

Okay, super. And then just separately, just to follow-up on tariff conversation, just on the scenario that there's higher direct exposure than we think and for Bill of Goods moves up, let's say five points higher, would you folks in that scenario consider passing through a surcharge? And obviously, pretty wide range of outcomes on what can happen in the industry. So just curious how do you that potential tail risk and the company's response in that scenario?

I think there's different mechanisms we can use. Certainly, one is search charges and one that we've used, I think Amy said that earlier that in select situations we've gone back on some contracts where we could and actually apply the surcharge. So I think that's what we would do, Jerry. And I think that's how we'll probably see it like we did during COVID in our indirect exposure that we'll be able to keep that outside of the normal piece price so that we can track it specifically as we see increases that will come through surcharges and that as the tariffs or of the increases come down, they were able to take those off or shut them off quickly as well. So I think we're well equipped to manage the process, but I can't reiterate enough how much improvement we've made to the supply chain, which we've talked about for the last four years, five years now that I've been here. So I think we're well on our way to being a lot more ready for this situation than we were entering COVID when that started.

Super. Thanks, Mark. Thanks, Amy.

Yes. Thank you.

Our next question comes from the line of Angel Castillo with Morgan Stanley. Please Hi, good morning and thanks for taking my question. Wanted to go back to maybe similar discussion as you're thinking about potential kind of announcements of price increases here. What are you seeing in terms of the customer kind of price elasticity? Obviously, you mentioned you mentioned some of the normalization in volumes, but given the uncertainty and what seems to have been pretty strong orders here in the first quarter, I guess, one, do you expect that maybe there was any kind of pull forward of those orders to try to get ahead of kind of any incremental pass through of inflation.

Or what are you hearing from customers in terms of that price elasticity and kind of desire to order Yes. I mean, I think Andrew, right, this is this is a unique industry. These are municipally funded vehicles with a normal replacement cycle. That obviously can be extended, but already pretty extended lead times. It is really too early to have, I'd say any meaningful from from the customer feedback on on price their what their buying patterns are going to be, based on on potential tariffs, which the impacts of those are still pretty uncertain at this point as well. So I think what really underscores I think the investment model for Rev is this municipally funded healthy consistent replacement cycle that will keep demand strong, it's been strong. Over the last several years and while it's I mean, they come off of peaks continues to be above long term trends. And I think signs right now with suggest that that's going to be the case. That's very helpful. Thank you. And then I wanted to switch switch over to maybe capital allocation. Noted resuming your buyback, but also kind of a continuation of strong levels of kind of repurchases here and kind of fiscal 2Q to date.

Could you talk about your anticipation of this going forward? And as you've kind of started to develop your M and A pipeline or bolt on opportunities, can you just give us [indiscernible] Any kind of I guess, pipeline opportunities moving closer to timing wise to be in done earlier or just how should we think about the broader capital allocation dynamic here?

Yes. Well, I'm not going to lay out our detailed plans for share buybacks. We do firmly believe that the stock is an attractive investment. Throughout certainly throughout the entire first quarter as we were buying back shares and continue to be. And so that will will likely continue to be a part of our capital allocation strategy. I expect as we move forward, And in terms of M and A, we continue to look build our pipeline, do our research. We're going to be disciplined When is the right time and the right target for REV Group that drives real shareholder value. And I think we've been clear in the interim, we believe a good use of capital until we find that acquisition is share buyback.

Very helpful. Thank you.

Thanks, Angel.

We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.

No, I think that that's it. But thank you everyone for joining the call today.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.