President and Chief Executive Officer
The Shyft Group
This past year was another challenging year for our team at The Shyft Group. Resiliency became the true test for winning in this environment, contributing to a remarkable year for the Shyft Group.
The impact of COVID-19 continued to challenge our resources and supply chain while simultaneously driving immense demand for our products in last-mile delivery and infrastructure. Our team proactively managed through it all with resourcefulness and relentless focus on execution for our customers to deliver consistent, industry-leading results quarter after quarter. In fact, it was a year of records for us – delivering $108M of adjusted EBITDA on 47% revenue growth. We generated significant cash and took our debt down to zero while nearly doubling our investment in R&D to position us for our next stage of growth.
Capping off a record year, the Shyft Group was honored as one of Fortune’s 100 Fastest-Growing Companies. We were excited to be recognized in this way as we continue executing our strategy and focusing on high-value, high-growth markets – a journey that began in 2015.
Our leadership emphasizes we must be agile, nimble, flexible, proactive, and solution-based in everything we do. Last year was both humbling and rewarding, seeing that approach in action – and a great reminder of what is truly possible with the right strategy and the right team.
A primary example is our Velocity® F2 walk-in van, which made its debut delivering packages around the country in 2021. The team listened to our customers’ need for a new product that would help meet their rapidly growing e-commerce and delivery demand and answered by creating an entirely new category of purpose-built Class 2 walk-in delivery vehicles. This customer-driven, solution-focused innovation exemplifies the Shyft Group DNA and is key to our ongoing success.
We continued to invest and strengthen our core to meet evolving trends, such as electrification. We announced a plan to build our own EV chassis and last-mile electric delivery vehicle last June in support of a more environmentally sustainable future for all. By leveraging our 50-year heritage in chassis manufacturing for specialty vehicles and body building for last-mile delivery with exceptional engineering talent, we unveiled a prototype at NTEA Work Truck Week in March of 2022, receiving an extremely positive response from our customers. I’m proud to say we are undoubtedly wellpositioned in the EV space.
The Shyft Group is energized for the future – not only for the business opportunities that lie ahead with new customers, acquisitions, and innovations, but to continue focusing on our people. Ultimately, having an inclusive, diverse culture that harnesses employees’ individual and unique talents, experience, spirit, and passion is what allows the Shyft team to continually outperform the market and drive our strategy forward.
We are very focused on our future and look forward to continued success and driving shareholder value.
Last year, our industry once again felt the ongoing impact of the COVID-19 pandemic, culminating in supply constraints, inflation, and labor shortages. Yet even when faced with these unprecedented challenges, our teams demonstrated an unparalleled resilience that energized the organization.
This resilience, fortified with innovative, purpose-built solutions, and a neverending focus on the customer, accelerated our growth momentum, delivering the Shyft Group another historic year. This record success is a testament to our team’s relentless commitment to excellence and true embodiment of our vision, mission, and values.
When the world shifts, so do we — and we’re confident that this positive momentum, driven by our strong, focused leadership and dedicated workforce, will continue to propel us forward — energized for the future.
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.
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.
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.
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.
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.
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.
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.
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.
1541 Reynolds Rd
Charlotte, MI 48813
41280 Bridge St
Novi, MI 48375
1650 Commerce Dr
Bristol, IN 46507
603 Earthway Blvd
Bristol, In 46507
1549 Mikesell St.
Charlotte, MI 48813
601 Stony Battery Rd
Landisville, PA 17538
Servidumbre de Paso No. 851-C-2 Lote: C-2
Col: Parque Industrial Santa Mónica
Saltillo, Coahuila de Zaragoza, México, CP 25300
Phone (US): 574-848-2090
Phone (MX): 844-454-8690
1130 S. Vail Ave.
Montebello, CA 90640-6021
6555 Fain Street
North Charleston, SC 29406
9701 NE Parvin Rd. Suite 100
Kansas City, MO 64161
24200 S. Main St.
Carson, CA 90745
4242 Forcum Ave. Bldg. B-640 Ste. 400
McClellan Park, CA 95652
900 W. 1st Ave.
Mesa, AZ 85210
3000 W. Commerce, Ste. 110
Dallas, TX 75212
126 Bennett Hills Dr.
Weatherford, TX 76088
2681 Hammondville Rd
Pompano Beach, FL 33069
15335 Park of Commerce Blvd
Jupiter, FL 33478
1000 Reynolds Rd.
Charlotte, MI 48813
1111 Mikesell St.
Charlotte, MI 48813
1023 Reynolds Rd.
Charlotte, MI 48813
1055 Mikesell St.
Charlotte, MI 48813
1065 Mikesell St.
Charlotte, MI 48813
977 W. River Road, #3
Waterville, ME 04901
Fleet Vehicles and Services includes delivery vehicles, specialty service trucks, truck bodies, upfits, field services, and aftermarket parts, and goes to market under Utilimaster®, not only met growing demand in last-mile delivery from existing customers, but continues to make efforts to diversify our business opportunities to capitalize on growing trends in last-mile delivery, such as grocery – all while navigating the macroeconomic challenges of a global pandemic.
Segment sales for the year totaled $659.4 million, an outstanding increase of 42.3% from $463.5 million, reflecting strong sales across all product categories. The increase was driven by robust last-mile delivery demand, including Velocity and truck body sales.
Adjusted EBITDA increased $25.3 million to $108.6 million, or 16.5% of sales, from $83.3 million, or 18.0% of sales, in 2020. The increase was primarily caused by a favorable mix of productivity and pricing actions, and it was offset by higher material and labor costs. Further, the segment backlog totaled a record $859.4 million, up a record 103.9%. The year-over-year increase was driven by last-mile delivery vehicles as well as the USPS truck body add-on order of $53 million.
Overall, FVS growth was driven by two key factors – traditional walk-in vans and Velocity walk-in vans. Last year, we secured an initial customer order of approximately 400 units for our Velocity M3™ last-mile delivery vehicle and dedicated resources to continuous improvement measures for our Velocity F2 walk-in van per customer requests. As the leading manufacturer of last-mile delivery vehicles, we’re energized by the potential this unique category has to offer.
A critical component of our long-term FVS strategy is to identify and evaluate ways we can expand into new locations with new customers, such as grocery delivery. We know this market has significant growth potential, as we secured business with multiple new customers last year alone. We’re excited to explore additional opportunities with these new players and others moving forward.
Truck bodies have also led to organic growth opportunities in middle mile and new vocations, two integral areas of our FVS business strategy. Securing our largest backlog in history, our truck body business remains key to our ongoing success. The additional growth has prompted a geographic expansion, culminating in a 250,000 square foot facility set to open in 2022.
To further support this growth, we strengthened our continuous improvement efforts, leveraging our flexible manufacturing approach, production automation, and insourcing practices – such as in-house fabrication – which helped drive efficiencies and cost savings as we worked through a tough supply environment. We’ve seen a significant increase in overall production capacity at our Bristol location and look forward to actioning our continuous improvement experience with our other locations.
Customer centricity is in our DNA, and so is innovation. During 2021, we worked with Ford Pro to produce two pilot vehicles on the all-electric Ford E-Transit chassis. These Class 2 pilot vehicles fit with our Velocity body, creating a walk-in van comparable to the Velocity F-Series gas-powered vehicle. These pilot vehicles are road-ready and will be in use beginning 2023.
We are confident that with our exceptional team, innovative solutions, and ability to integrate our products on multiple OEM chassis, we will continue driving organic growth with new product development and customer-focused innovation.
Specialty Vehicles includes service bodies, contract manufacturing, upfits and accessories, and Class A diesel luxury motor coach chassis going to market under Royal Truck Body, DuraMag®, Magnum®, Builtmore Contract Manufacturing™, Strobes R US, and Spartan® RV Chassis. The strength of our innovative products and underlying markets resulted in strong revenues and orders as we continued to execute our service body growth strategy by expanding production and leveraging flexible manufacturing.
SV segment sales were $332.4 million, an increase of 56.4% from $212.5 million, led by strong growth in luxury motor coach chassis sales and service bodies. Adjusted EBITDA was $32.7 million, or 9.8% of sales, compared to $20.9 million, or 9.8% of sales, a year ago. The increase was caused by mix, productivity, and pricing actions, and it was offset by higher material and labor costs.
The segment backlog totaled $104.1 million, up 82.3% compared to $57.1 million last year.
Key to our growth strategy is value creation – one way we achieve this is through geographic expansion. We are executing our strategy to become a nationwide player in service bodies, leveraging synergies from the eastern and western distribution channels of DuraMag® and Royal Truck Body to form a truly national offering with galvannealed steel and aluminum suitable for varying climates.
In our Builtmore Contract Manufacturing business, we are excited to work closely with our partner Isuzu on the launch of their latest F-Series vehicle. We are optimistic about this vehicle’s prospects and look forward to continuing to ramp up volume into 2022.
We made capital improvements to enhance productivity through automation, deployed lean manufacturing techniques throughout our operations, and executed vertical integration opportunities, bringing production of components or subassemblies in house. The strength of our operating system was further demonstrated by our Duramag production facilities, where we have offset personnel shortages and doubled capacity since the acquisition of Duramag.
Product innovation is the core competency for the SV business.
Last year, we announced our all-aluminum service body, the S-Series, with a powder coating to withstand the rigors of any job site and climate. We’ve known there’s a growing interest in lightweight aluminum, and our acquisition of Duramag reflects this.
In our motorhome business, demand for our luxury motorcoach chassis continues, resulting in increased market share. This growth reflects the strength of our product offerings and brand among luxury motorhome consumers. We continue innovating to foster this momentum, such as by creating new safety features under our Advanced Protection System®, which offers integrated collision mitigation, stability control, lane departure warnings, tire pressure monitoring, integrated trailer braking, and blind spot cameras to enhance motorhome safety.
We have a winning formula, supported by a very talented team, that we believe will result in strong top- and bottom-line growth moving forward.
This past year was momentous for our organization, from the resiliency of our team and the innovations we launched to the results we achieved. But while we enjoy the success of the past year, we cannot afford to stand still.
We will continue innovating to expand our market leadership across the industries we serve. We will maintain our client-centric focus by anticipating and responding in new, creative ways to meet their needs. We will remain nimble and creative in our approach, investing in our teams, operations, and technologies to drive our growth.
We are confident, purpose-driven, and energized for the future.