What happened

Shares of REV Group (REVG 13.82%) stock ran straight into a pothole Thursday, falling 20% by 10:40 a.m. EST after management reported a big net loss for its fiscal fourth quarter -- and pro forma profits that, while positive, were only about half as big as what Wall Street had been forecasting.

Sales for the year's fiscal fourth quarter declined 3.5% year over year to $660 million, while GAAP profits turned negative -- a $0.35-per-share net loss.

Red stock arrow pointing down.

The trend on this one is not looking good. Image source: Getty Images.

So what

The pro forma picture wasn't much prettier. REV Group argued that if you back out "a $35.6 million impairment charge for the planned disposition and writedown of certain assets," its profit for Q4 would actually have been $0.28 per share.

Nevertheless, even judged by this more lenient standard, REV Group would have seen a 36% decline in profits -- 10 times worse than the decline in sales. Moreover, Wall Street had predicted REV Group would earn $0.52 pro forma, and the company missed that target by a mile.

Now what

CEO Tim Sullivan admitted he was "disappointed with our financial results for fiscal year 2018," explaining that "tariffs, chassis availability, material lead time extensions and temporary labor inefficiencies" prevented the company from capitalizing on "the ongoing strength of demand" for the company's specialty vehicles such as ambulances and school buses.

Sullivan promised "improvement" in the new year and issued new guidance calling for a return to profitability, predicting REV will earn about $53 million (GAAP) in fiscal 2019, and perhaps $75 million pro forma, on sales of roughly $2.5 billion.

If achieved, such results would represent about 5% sales growth and more than a 300% increase in net profits. Problem is, they would also fall short of Wall Street estimates, which currently call for $2.55 billion in sales and pro forma profits of $94 million.

Long story short: REV Group missed expectations in 2018, and it looks like it's going to miss them again in 2019.