REVG - NYSE

Greetings and welcome to the REV Group First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Drew Konop - Vice President, Investor Relations. Thank you, sir. You may begin.

Good morning and thanks for joining us. Earlier today we issued our first quarter fiscal 2025 results. A copy of the release is available on our website at investors.revgroup.com. Today's call is being webcast in the slide presentation, as well as reconciliations from non-GAAP to GAAP financial measures is available on the investor section of our website. Please refer now to Slide 2 of that presentation. Our remarks and answers will include forward-looking statements, which are subject to risk 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 8-K 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 Skonieczny, as well as our CFO Amy Campbell. Please turn now to Slide 3, 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 and enhanced execution. We believe significant value lies within our four walls, and we have a plan and team in place to achieve success. During the event, we described how REV Group presents 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 in 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 through 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 on 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 efficiency that exceeded typical seasonality. The results are even more impressive on our organic basis that adjusts for the results of the 2 bus manufacturing businesses that were exited in fiscal 2024. 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’s 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 4.5 billion, providing 2 to 2.5 years of demand visibility within the specialty vehicles 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 discipline. With orders already in place, we have the ability to plan a detailed truck-by-truck production schedule, order materials more efficiently, optimize resources, and continue to drive margins through continuous improvement initiatives in a pipeline of lean projects. Now, I would like to address the recently enacted tariffs. I will remind you that the majority of our operations are assembly in nature and therefore our exposure is primarily indirect from the subassemblies 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 aluminum 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 a 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 and 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 40th Annual Florida RV SuperShow proved to be a strong event for REV Group's recreational vehicle segment. Despite a decline in overall show attendance, the consumers' appreciation for our portfolio products was apparent, with notable increases in retail sales across multiple brands. Fleetwood RV, Holly Rambler, and American Coach Class A Motorhome saw 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 Motorhomes built on various platform sizes. Midwest Automotive Designs, Classic B vans, including new Heritage line, performed well with sales rising compared to the previous year. Meanwhile, Lance Camper's new Squire travel trailers and truck campers contributed to a boost in overall sales. While 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 representing our products. 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 commence share repurchases on our recent $250 million authorization, returning $19.2 million to our shareholders by 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 to the first quarter and through Friday, February 28th, have purchased an additional 425,000 shares totaling 13.8 million. With these purchases, approximately 217 million remains on our share repurchase program, which allows management to continued flexibility, 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 2025 outlook. We believe the momentum we are building positions us for both short-term and long-term success. Turning to Slide 4, first quarter sales were 525 million, a decrease of 61 million from the prior year. As a reminder, we exited the bus manufacturing business in fiscal 2024 with the divestiture of Collins Bus in January and wind down the sale of ENC in October. The prior year’s quarter included 76.6 million of net sales attributed to these bus businesses. Excluding the impact of divested bus businesses, net sales increased 15.7 million, or 3.1% compared to prior year quarter. Year-over-year revenue growth in the specialty vehicle 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 and continue to demonstrate the success of various throughput initiatives that have been enacted over the past 2 years. Record first quarter consolidated adjusted EBITDA of 36.8 million, increased 6.3 million, excluding the impact of divested bus businesses which generated 9.9 million in the prior year quarter, adjusted EBITDA increased 16.2 million, or 79%. Year-over-year earnings growth was driven by the specialty vehicle segment partially offset by lower earnings in the recreational vehicle segment. Over the past year, I have commented that the fire group is catching up to the ambulance group in terms of productivity gains and plant efficiency. Over the past 3 quarters, fire has made great progress resulting in impressive year-over-year performance. I continue to believe that exiting the second quarter this year, fire and ambulance will be on equal footing operating at plant efficiencies, which provide a solid foundation with stability to implement additional lien activities. With that, please turn to Slide 5, and I'll turn the call over to Amy for detailed segment financials.

Thank you, Mark. First quarter specialty vehicle segment sales were $370.2 million, a decrease of $47 million compared to the prior year. As Mark mentioned, the prior year's quarter included 76.6 million of net sales attributable to the bus manufacturing businesses that were divested within fiscal 2024. Excluding the impact of the divested businesses, segment net sales increased 29.6 million, 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 2 vans, along with favorable price realization. These were partially offset by lower sales of terminal trucks and industrial sweepers. Adjusted EBITDA of $35.2 million was a segment first quarter record, increasing by $9 million versus the prior year. Making this even more impressive, the prior year's quarter included $9.9 million of adjusted EBITDA attributable to the divested bus businesses. Excluding the prior year contribution from bus, specialty vehicles adjusted EBITDA increased 18.9 million, or 116%. The increase in earnings was primarily due to initiatives put in place that resulted in increased sales of fire apparatus, a favorable mix of ambulance units, and favorable price realization partially offset by lower sales of terminal trucks and industrial sweepers 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 470 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 vehicle segments backlog of 4.2 billion is also a record. Adjusting for $84 million of ENC 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. 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 vehicle segment is for continued year-over-year growth and high single to low double-digit range from a pro forma fiscal 2024 base that has been adjusted for the removal of bus sales. Just as a reminder, the total bus performance in fiscal 2024 was 163.6 million of net sales and 17.6 million 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 6, recreational vehicles segment sales of $155 million decreased $14.4 million or 8.5% versus last year's first quarter. Lower sales were primarily the result of a decline in unit volumes related to soft and market demand. Fewer shipments in the Class A, Class B, and Class C units were partially upset 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, have outperformed their respective product categories over the most recent trailing 12-month period. While the market remains challenged, net sales for recreation did exceed our expectations 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 SuperShow. Adjusted EBITDA of $9.2 million was a decrease of $2.4 million 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 costs within market demand. 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 of $265 million declined 30% versus the prior year. The decrease is primarily related to soft and 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’s products attracted consumer attention and performed well at this year's Tampa SuperShow, resulting in increased retail sales for our dealers as compared to 2024. 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 2024. Turning to Slide 7, trade working capital on January 31, 2025 was $290.2 million, an increase of $42 million compared to $248.2 million at the end of fiscal 2024. 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 with an outflow of $13.1 million, which included almost $12 million of management incentive payments made during the period. In addition, we spent 4.9 million on capital expenditures within the first quarter. Net debt as of January 31st, was $108.4 million including 31.6 million of cash on hand. This includes $19.2 million 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 3.9 million bringing the total of cash return to shareholders in the first quarter to $23.1 million. In addition, we declared a quarterly cash dividend of $0.06 per common share payable on April 11th to shareholders of record on March 28th. At quarter's end, the company maintained ample liquidity for our strategic initiatives with approximately $262.9 million available on our ABL revolving credit facility. Last month, we refinanced the ABL credit facility, extending its maturity to 2030, and details can be found in the 8K filed with the SEC on February 24th of this year. As previously mentioned, today we reaffirm our fiscal full year 2025 guidance that was provided on our fourth quarter 2024 earnings call. We continue to expect high single to low double digit revenue growth in the specialty vehicle segment versus a 2024 pro forma revenue base of $1.56 billion, which excludes sales from the divested bus businesses. Net sales on the recreational vehicle segment are expected to be roughly flat year-over-year. Consolidated top-line guidance is in the range of $2.3 billion to $2.4 billion or mid single digit growth at the midpoint, versus fiscal 2025 pro forma of $2.2 billion in net sales. Adjusted EBITDA guidance remains $190 million to $220 million, an increase of 48% at the midpoint versus 2025's pro forma $145.2 million of adjusted EBITDA. As Mark said, this was an exceptional first quarter with a record start as we begin fiscal 2025. We are pleased with the momentum demonstrated by the specialty vehicle 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 and open it up for questions. Thank you.

[Operator Instructions] Our first question comes from the line of Mike Shlisky with D.A. Davidson. Please proceed with your question.

Hi, good morning. Thanks for taking my question. 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 and Mexico are just 2% of cost, and most of what you do is assembled within the United States; but you still can't say whether the tariffs will be a big issue for that group going forward. I'm not sure I understood why tariffs, how it could be an issue for you, I suppose, other than like very broad macro, you just -- just give 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 in prepared remarks, 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%. So when we look at the majority of our purchases, our subassemblies 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 2 to 3 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 how we've expanded our supply base 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, and we've only strengthened our supply base then -- from there. Also, I think I talked about during COVID when I was CFO, the longer cycle -- built cycles where we have the fixed contracts like in fire, we actually have 3 to 4 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 that everything went pretty well, sounds like at the Tampa show. There are some more shows I think coming up on the calendar, but one of the bigger ones here in Tampa did go okay. You mentioned that you wanted to see actual retail sales get better before you think about increasing your outlook for 2025 in that group. I'm surprised, I mean, I guess when you wanted to see wholesale sales get better? Would that be enough to increase the guidance [indiscernible] it is basically a built order business anyway? I'm just trying to figure out like what is still missing to feel better about what's going on in that group [indiscernible].

[indiscernible] had some destocking events, but we do want to still see that the wholesale of retail get back to one-to-one relationship, right, because retails have been outpacing historic over the few last quarters. So I think that's really what I see when you look at the original guidance. It was heavily weighted towards the back end of the year, so we feel good exiting Q1, entering Q2, what our orders 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 2026 model year. We'll see those orders start getting placed here in the March and April frame as we always talk about. So that's really an indication of when people start placing the model year 2026 unit. We'll get a better view on Q3 and Q4, and then obviously the sell-through on the 2024 and 2025 [indiscernible] product that are sitting in our dealer inventories.

Okay, maybe one last one for me, and just a bit on the pricing and fire emergency, I guess maybe there's a two-part question here. I mean, in the past you've talked about being [indiscernible] pricing for 2025, maybe even into 2026, that the orders that you booked recently, but then I just want to make sure I understand if the prices go up on some of the raw materials or some assembly from tariffs, you have the ability to go back and tweak the pricing based on things that are kind of -- out of control.

Yes, thanks Mike. So certainly on -- so the mid single digit price increases or 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 on 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 and strategic in 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, there is some limited ability to go back, very limited ability to go back and re-price 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.

Okay, thank you so much, I'll pass it along.

Thanks, Mike.

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

Thank you. Good morning. I want to pick up on the comment there. When you look at 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 re-pricing mechanism I guess for 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 I think this is one of the debates 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 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 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 2 to 3 years out. So, how do you evaluate the risk on the new orders that you're taking in now?

Yeah, so we are looking at the new orders that we're taking in now Mig, and we're 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 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 -- to import tariff increases is really only 2% and 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 -- the 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.

We can pass through chassis.

-- ambulances are pass through Mig, just recall that, right? So the contract mechanism, that's a pass through cost.

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

Fire, we do, majority of our fire is built by us in our COE, but obviously we have some exposure with the commercial chassis, but we're obviously working, where we don't put it on 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.

The 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 the full year guidance by 5 million. You chose not to do that this time, so maybe I'm curious, how did a 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?

Yeah, so, 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 you know 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 those known and I would say unknown 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 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 for us 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 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 we've heard you guys talk in the past about order moderation at a point in time, because obviously the backlog is extended and the 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 2025 here, given what you've seen in Q1? Thank you.

I think it's too early to know the impact of demand coming out of the LA fires. We certainly have seen some inbound increases. We've seen there was a nice article about some orders that were recently placed in California for our fire trucks, our S-180 fire trucks, but it is too early. But 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. They're still meaningfully above long term trends, and I think it's too early to know. I think that they did come last year, they are still above long term trends, we continue to focus in our factories to increase throughput, work through the backlog, and provide our customers the fire trucks they need, so I think we will continue to see some normalization, but will that normalized level be higher than where it was in the past, it's just too early to tell Mig.

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.

Hi, good morning everyone. I'm wondering if we just continue the conversation that you just had with Mig. 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?

Yeah, so my comments were specifically on industry demand. We have seen industry demand come off of peaks from a few years ago, but still above, it's about 5000 fire trucks last year, we believe long term trend levels were closer to 4000 levels, so it's come off of the 6000 level we saw a few years ago, but still at 5000 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-180 program, but I think I'll leave it there.

Fair enough. Can 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 where industry levels stand and if you want to weigh in on market share on that product line directionally.

Yeah, I'd say market share on that product line has stayed 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 4 to 6 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 still above normal in that category.

Yeah, 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 if our bill of goods moves up, let's say 5 points higher, would you folks in that scenario consider passing through a surcharge and obviously pretty wide range of outcomes and what can happen in the industry, so just curious, how do you think about that potential tail risk and the company's response in that scenario?

I think there's different mechanisms we can use. Certainly one is surcharges 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 applied a 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 and 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 as the tariffs -- increases come down, then we're 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 4 or 5 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.

Yep, thank you.

[Operator Instructions] Our next question comes from the line of Angel Castillo with Morgan Stanley. Please proceed with your question.

Hi, good morning and thanks for taking my question. Just wanted to go back to maybe some of the 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, 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 and/or what are you hearing from customers in terms of that price elasticity and kind of desire to order beyond 2027, 2028?

Yeah, I mean, I think 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 customer feedback on price, what their buying patterns are going to be based 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 -- I mean we come off of peaks continues to be above long term trends and I think signs right now would suggest that that's going to be the case.

That's very helpful. Thank you. And then I wanted to switch over to maybe capital allocation. You 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 kind of anticipation of this going forward and as you've kind of started to develop your M&A pipeline or bolt-on opportunities, can you just give us an update there, any kind of, I guess pipeline opportunities moving closer to timing-wise to being done earlier, or just how should we think about the broader capital allocation dynamic here?

Yeah, 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 certainly throughout the entire first quarter as we were buying back shares and continues to be, and so that'll likely continue to be a part of our capital allocation strategy, I expect as we move forward. And in terms of M&A, we continue to look, build our pipeline, do our research, we're going to be disciplined and strategic, 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.

Alright, 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's it, but thank you everyone for joining the call today.