2021 Annual Report

FINANCIALS

We have always believed in customer-centric operations, built from long-standing commitments to quality, execution, innovation, and operational excellence. Our record results in 2021 reflect this and reinforce the strength of our long-term growth strategy.

For the year, the company delivered record net revenue of $992 million, which resulted in $108 million of adjusted EBITDA, up 41% from 2020. Adjusted net income from continuing operations was a record $75.0 million, up 36% year over year. We continue to see strong demand for our products, resulting in increased order intake and record backlogs approaching $1 billion.

GROWTH

Throughout 2021, we launched new products, actively pursued new markets, and looked to grow opportunities with our current customers.

In 2020, consumers were forced to adopt a new way of receiving goods and services. This past year confirmed that e-commerce is not only here to stay but growing rapidly. This had our customers eager for solutions that scale their delivery fleets quickly, without sacrificing load capacity or efficiency. Our team listened and answered with an entirely new category solution: our Velocity F2 walk-in van, a purpose-built Class 2 walkin van, which began delivering packages around the country in 2021 and was a key driver of our growth.

We’ve also made significant strides in serving new markets, including food and beverage. As a business, the U.S. online grocery market is forecasted to reach 187.7 billion U.S. dollars by 2024, offering significant growth potential1. Last year, we announced orders of more than 500 refrigerated delivery vehicles from several grocery chains. We continue to work with grocers as they develop the solutions needed to optimize their home delivery strategies.

INNOVATION & RESEARCH AND DEVELOPMENT

When we look at our long-term growth strategy, we know innovation – and electrification – is key. In 2021, our teams filed 14 new patents and opened a new R&D center in Plymouth, Michigan. This facility is focused on developing Shyft’s latest innovation – an all-new electric delivery vehicle on our proprietary, purpose-built Class 3 EV chassis, specifically designed to answer the biggest evolving need from our last-mile delivery customers: an innovative and efficient way to deliver their products and reduce carbon emissions.

Our goal is to be the last word in last-mile delivery. Combining our infrastructure that supports our coast-to-coast manufacturing, our service footprint, and our 50-year heritage building specialty vehicles, we’re poised to produce at scale to support the sharply rising demand for last-mile delivery vehicles as well as our customers’ carbonneutral goals. This innovation provides us with unprecedented growth potential for an energized future powered by electric capabilities.

OPERATIONS

This past year’s challenges were felt most significantly in operations, but our continued focus on operational excellence was rewarded. We benefitted from our investment in automation, which helped us expand our output and partially offset supply chain challenges, as well as our 5S and visual control policies, and our factory lean initiative.

Further, we will continue leveraging our flexible manufacturing strategy with our new business opportunities.

PEOPLE

Investing in our teams has never been more important. The Shyft Group is dedicated to growing our people through professional and personal development opportunities, which includes a focused approach to diversity, equity, and inclusion (DEI) initiatives.

Beginning last year, we engaged with the Center for Automotive Diversity, Inclusion, and Advancement (CADIA) to establish our 5-year DEI roadmap with the goal of fostering an even more inclusive culture within all areas of the Shyft Group, a highly equitable work environment, and an increased awareness and appreciation of diversity. Although a formalized DEI effort is new to our organization, the Shyft culture has always focused on its people across the country from all walks of life as the core to our success.

ENVIRONMENTAL, SOCIAL, & GOVERNANCE

Creating a better, more sustainable and inclusive future is a fundamental value of the Shyft Group. We have refined our approach to sustainability through our recent Environmental, Social, and Governance (ESG) initiatives and consistently seek to do what’s right for our team members, our communities, our shareholders, and our planet. Our purpose-built vehicles and upfit designs are both responsive to our customers’ needs and sourced and manufactured with the same sustainability principles as our guide.

Taking actionable steps toward this future, the Shyft Group continues to make capital investments in sustainability initiatives. Other actions include fostering leadership and employee involvement as well as education in ESG practices and establishing, promoting, and driving toward performance goals to ensure continuous safety and environmental improvements across our operational footprint.

As we move forward in 2022, we are dedicated to further reducing our impact on the environment while simultaneously making meaningful impacts in all areas in which we do business.

SHAREHOLDER RETURNS

Our strong shareholder returns and improvements in return on invested capital (ROIC) reflect the power of our transformational growth strategy. Through operational excellence and diligent management of working capital throughout the year, we generated $74 million in cash from operations and increased our ROIC nearly two-fold to 28%.

This strong underlying performance is key to funding our future growth and our commitment to delivering strong shareholder value through investments in new innovative products and value-add strategic acquisitions while remaining flexible on our share repurchase program and committed to our quarterly cash dividend, which we recently doubled.

STRATEGIC FOCUS

Throughout 2021, we focused on four strategic objectives to drive our results and shareholder value: organic growth, operational excellence, strategic acquisition, and product innovations. At the center has always been– and will always be – our focus on the customer.

This proven recipe for success is built from 50 years of industry expertise, yielding a unique business acumen that drives our strategic vision of leading in last-mile delivery and infrastructure solutions while always remaining vigilant for new vocations and opportunities. This vision, combined with our exceptional team members and our focused ESG and DEI efforts, provides endless opportunities for future growth and success.