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theshyftgroup.com

The Shyft Group Reports First Quarter 2024 Results

  • First quarter sales of $198 million; Quarter end consolidated backlog of $439 million with FVS backlog up 10% sequentially
  • Maintains 2024 outlook with sales of $850 to $900 million and adjusted EBITDA of $40 to $50 million

NOVI, Mich., April 25, 2024 /PRNewswire/ — The Shyft Group, Inc. (NASDAQ: SHYF) (“Shyft” or the “Company”), the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reported operating results for the first quarter ending March 31, 2024.

First Quarter 2024 Financial Highlights 
For the first quarter of 2024 compared to the first quarter of 2023: 

  • Sales of $197.9 million, a decrease of $45.5 million, or 18.7%, from $243.4 million
  • Net loss of $4.7 million, or ($0.14) per share, compared to net income of $1.7 million, or $0.05 per share
  • Adjusted EBITDA of $6.1 million, or 3.1% of sales, a decrease of $4.7 million, from $10.8 million, or 4.4% of sales; Results include $5.5 million of EV program related costs versus $8.5 million in the prior year
  • Adjusted net loss of $1.4 million, or ($0.04) per share, compared to adjusted net income of $4.3 million, or $0.12 per share in the first quarter of 2023
  • Consolidated backlog of $439.4 million as of March 31, 2024, down $228.0 million, or 34.2%, compared to $667.4 million as of March 31, 2023; On a sequential quarter basis, consolidated backlog was up 7.4%

“We made progress implementing our operating framework, which includes high performing teams, operational excellence, and customer centricity,” said John Dunn, President and CEO. “Our sales team drove improved commercial activity in the quarter, which enabled a sequential improvement in order backlog. Our SV business continues to execute well and delivered solid results in the quarter.”

First Quarter 2024 Business Segment Financial Highlights
For the first quarter of 2024 compared to the first quarter of 2023: 

Fleet Vehicles and Services (FVS)

  • Sales were $107.8 million for the first quarter of 2024, down 32.4%, or $51.6 million year over year
  • Adjusted EBITDA for the first quarter of 2024 was $0.9 million, or 0.9% of sales, a decrease of $11.6 million, from $12.5 million, or 7.8% of sales, a year ago
  • Segment backlog was $356.1 million as of March 31, 2024, down 39.1% compared to $584.9 million as of March 31, 2023

Specialty Vehicles (SV)

  • Sales were $90.1 million for the first quarter of 2024, up 3.4%, or $2.9 million year over year
  • Adjusted EBITDA for the first quarter of 2024 was $17.0 million, or 18.8% of sales, an increase of $3.1 million, from $13.9 million, or 15.9% of sales, a year ago
  • Segment backlog was $83.3 million as of March 31, 2024, up 1.0% compared to $82.5 million as of March 31, 2023

2024 Financial Outlook
“We are pleased with our start to the year considering the challenging end-markets,” said Jon Douyard, Chief Financial Officer. “While there was improvement in FVS order activity to start the year, the parcel market remains soft, and we remain cautious on near-term demand. Overall, our team is focused on driving operational efficiency and commercial growth initiatives, positioning us to affirm our prior outlook.”

Guidance for full-year 2024, notwithstanding further changes in the operating environment, is as follows:

  • Sales to be in the range of $850 million to $900 million; Assumes no Blue Arc EV revenue
  • Adjusted EBITDA of $40 to $50 million, including EV spending of $20 to $25 million
  • Net income of $2.5 to $10.5 million, with an income tax rate of approximately 20%
  • Earnings per share of $0.07 to $0.30
  • Adjusted earnings per share of $0.28 to $0.51
  • Capital expenditures of approximately $20 to $25 million
  • Free cash flow of $25 to $35 million

Dunn concluded, “Shyft has industry leading products and a highly engaged team, who are identifying opportunities to drive companywide synergies. Recently launched initiatives to enhance sales and procurement are beginning to deliver positive results. The Blue Arc team is making progress as production is targeted for late 2024. We remain confident in our team’s ability to manage through current market conditions and deliver for shareholders over the long term.”

Conference Call and Webcast Information
The Shyft Group will host a conference call at 8:30 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:
Webcast: https://theshyftgroup.com/investor-relations/webcasts/
Conference Call: 1-844-868-8845 (domestic) or 412-317-6591 (international); passcode: 10185321

About The Shyft Group
The Shyft Group is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets. Our customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The Shyft Group is organized into two core business units: Shyft Fleet Vehicles and Services™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Blue Arc™ EV Solutions, Royal® Truck Body, DuraMag® and Magnum®, Strobes-R-Us, Spartan® RV Chassis, Red Diamond™ Aftermarket Solutions, and Builtmore Contract Manufacturing™. The Shyft Group and its go-to-market brands are well known in their respective industries for quality, durability, and first-to-market innovation. The Company employs approximately 3,000 employees and contractors across campuses, and operates facilities in Arizona, California, Florida, Indiana, Maine, Michigan, Missouri, Pennsylvania, Tennessee, Texas, and Saltillo, Mexico. The Company reported sales of $872 million in 2023. Learn more at TheShyftGroup.com

This release contains information, including our sales and earnings guidance, all other information provided with respect to our outlook for 2024 and future periods, and other statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using words such as “believe,” “expect,” “intend,” “potential,” “future,” “may,” “will,” “should,” and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, changes in supply and demand conditions and prices for our products, trade duties and other aspects of trade policy, statements regarding our future strategies, products and innovations, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website. All forward-looking statements in this release are qualified by this paragraph. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.

CONTACTS:
MEDIA
Sydney Lepora 
Director, Corporate Communications
[email protected] 
586.413.4112

INVESTORS:
Randy Wilson
Vice President
Investor Relations and Treasury
[email protected] 
248.727.3755

The Shyft Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)

(Unaudited)


March 31,


December 31,


2024


2023

ASSETS




Current assets:




Cash and cash equivalents

$          13,251


$             9,957

Accounts receivable, less allowance of $277 and $276

78,820


79,573

Contract assets

52,803


50,305

Inventories

97,931


105,135

Other receivables – chassis pool agreements

18,890


34,496

Other current assets

6,700


7,462

Total current assets

268,395


286,928





Property, plant and equipment, net

80,905


83,437

Right of use assets – operating leases

45,078


45,827

Goodwill

48,880


48,880

Intangible assets, net

44,399


45,268

Net deferred tax asset

17,300


17,300

Other assets

2,724


2,409

TOTAL ASSETS

$        507,681


$       530,049

LIABILITIES AND SHAREHOLDERS’ EQUITY




Current liabilities:




Accounts payable

$          86,159


$         99,855

Accrued warranty

8,212


7,231

Accrued compensation and related taxes

11,675


13,526

Contract liabilities

3,939


4,756

Operating lease liability

10,050


10,817

Other current liabilities and accrued expenses

12,605


11,965

Short-term debt – chassis pool agreements

18,890


34,496

Current portion of long-term debt

164


185

Total current liabilities

151,694


182,831





Other non-current liabilities

7,265


8,184

Long-term operating lease liability

36,776


36,724

Long-term debt, less current portion

65,121


50,144

Total liabilities

260,856


277,883

Shareholders’ equity:




Preferred stock, no par value: 2,000 shares authorized (none issued)


Common stock, no par value : 80,000 shares authorized; 34,361 and 34,303 outstanding

94,790


93,705

Retained earnings

152,035


158,461

Total shareholders’ equity

246,825


252,166

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$         507,681


$        530,049

The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)



Three Months Ended

March 31,



2024


2023









Sales

$

197,889


$

243,439


Cost of products sold


163,827



200,515


Gross profit


34,062



42,924









Operating expenses:







    Research and development


3,719



6,949


    Selling, general and administrative


32,273



32,289


    Total operating expenses


35,992



39,238









Operating income (loss)


(1,930)



3,686









Other income (expense)







    Interest expense


(2,053)



(1,648)


    Other income


97



70


    Total other expense


(1,956)



(1,578)









Income (loss) before income taxes


(3,886)



2,108


Income tax expense


783



430


Net income (loss)


(4,669)



1,678


Less: net loss attributable to non-controlling interest




32


Net income (loss) attributable to The Shyft Group, Inc.

$

(4,669)


$

1,710









Basic earnings (loss) per share

$

(0.14)


$

0.05


Diluted earnings (loss) per share

$

(0.14)


$

0.05









Basic weighted average common shares outstanding


34,319



35,058









Diluted weighted average common shares outstanding


34,319



35,340









The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months 

  Ended March 31,



2024


2023


Cash flows from operating activities:







Net income (loss)

$

(4,669)


$

1,678


Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities







Depreciation and amortization


4,435



3,864


Non-cash stock based compensation expense


1,474



1,827


Loss on disposal of assets


66




Changes in accounts receivable and contract assets


(1,746)



22,500


Changes in inventories


7,204



(9,147)


Changes in accounts payable


(10,119)



(16,920)


Changes in accrued compensation and related taxes


(1,851)



419


Changes in accrued warranty


981



(978)


Changes in other assets and liabilities


268



2,644


Net cash provided by (used in) operating activities


(3,957)



5,887









Cash flows from investing activities:







Purchases of property, plant and equipment


(5,719)



(4,469)


Proceeds from sale of property, plant and equipment


75



25


Acquisition of business, net of cash acquired




(500)


Net cash used in investing activities


(5,644)



(4,944)









Cash flows from financing activities:







Proceeds from long-term debt


40,000



40,000


Payments on long-term debt


(25,000)



(31,000)


Payments of dividends


(1,716)



(1,878)


Purchase and retirement of common stock




(8,765)


Exercise and vesting of stock incentive awards


(389)



(3,470)


Net cash provided by (used in) financing activities


12,895



(5,113)









Net increase (decrease) in cash and cash equivalents


3,294



(4,170)


Cash and cash equivalents at beginning of period


9,957



11,548


Cash and cash equivalents at end of period

$

13,251


$

7,378









The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)


Quarter Ended March 31, 2024 (in thousands of dollars)





Business Segments








Fleet Vehicles


Specialty


Eliminations &







& Services


Vehicles


Other


Consolidated




Fleet vehicle sales

$

95,478


$


$


$

95,478




Motorhome chassis sales




30,771





30,771




Other specialty vehicles sales




53,405





53,405




Aftermarket parts and accessories sales


12,281



5,954





18,235




Total Sales

$

107,759


$

90,130


$


$

197,889


















Adjusted EBITDA

$

935


$

16,973


$

(11,820)


$

6,088



The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)






Quarter Ended March 31, 2023 (in thousands of dollars) 





Business Segments








Fleet Vehicles


Specialty


Eliminations &








& Services


Vehicles


Other


Consolidated




Fleet vehicle sales

$

147,279


$


$


$

147,279




Motorhome chassis sales




27,960





27,960




Other specialty vehicles sales




54,697



(3,181)



51,516




Aftermarket parts and accessories sales


12,154



4,530





16,684




Total Sales

$

159,433


$

87,187


$

(3,181)


$

243,439


















Adjusted EBITDA

$

12,473


$

13,852


$

(15,537)


$

10,788



The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)




Period End Backlog (amounts in thousands of dollars) 



Mar. 31, 2024


Dec. 31, 2023


Sept. 30, 2023


Jun. 30, 2023


Mar. 31, 2023


Fleet Vehicles and Services

$

356,089


$

325,003


$

383,448


$

437,802


$

584,933


Specialty Vehicles


83,334



84,269



80,983



72,402



82,478


Total Backlog

$

439,423


$

409,272


$

464,431


$

510,204


$

667,411


















Reconciliation of Non-GAAP Financial Measures
This release presents Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted net income, adjusted earnings per share, and free cash flow, each of which is a non-GAAP financial measure.

We define Adjusted EBITDA as income before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments, non-cash stock-based compensation expenses, and other gains and losses not reflective of our ongoing operations.

We present the non-GAAP measure Adjusted EBITDA because we consider it to be an important supplemental measure of our performance. The presentation of Adjusted EBITDA enables investors to better understand our operations by removing items that we believe are not representative of our continuing operations and may distort our longer-term operating trends. We believe this measure to be useful to improve the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not indicative of our continuing operating performance. We believe that presenting this non-GAAP measure is useful to investors because it permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our historical performance.

Our management uses Adjusted EBITDA to evaluate the performance of and allocate resources to our segments. Adjusted EBITDA is also used, along with other financial and non-financial measures, for purposes of determining annual incentive compensation for our management team.

We define free cash flow as net cash provided by (used in) operating activities less purchases of property, plant and equipment and add proceeds from sale of property, plant and equipment. We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our operations.

We believe that the presentation of these non-GAAP measures, when considered together with the corresponding GAAP financial measures and the reconciliations to that measure, provides investors with additional understanding of the factors and trends affecting our business than could be obtained in the absence of this disclosure.

The Shyft Group, Inc. and Subsidiaries

Consolidated Financial Summary (Non-GAAP)

(In thousands, except per share data)

(Unaudited)



Three Months Ended March 31,

The Shyft Group, Inc.

2024

% of
sales


2023

% of
sales

Net income (loss)

$        (4,669)

(2.4 %)


$     1,678

0.7 %

Net loss attributable to non-controlling interest



32


Add (subtract): 






Restructuring and other related charges

52



62


Acquisition related expenses and adjustments



291


Non-cash stock-based compensation expense

1,474



1,827


Legacy legal matters

1,850



956


CEO transition

110




Tax effect of adjustments

(258)



(585)


Adjusted net income (loss)

$       (1,441)

(0.7 %)


$        4,261

1.8 %







Net income (loss)

$        (4,669)

(2.4 %)


$        1,678

0.7 %

Net loss attributable to non-controlling interest



32


Add (subtract): 






Depreciation and amortization

4,435



3,864


Income tax expense

783



430


Interest expense

2,053



1,648


EBITDA

$       2,602

1.3 %


$        7,652

3.1 %

Add: 






Restructuring and other related charges

52



62


Acquisition related expenses and adjustments



291


Non-cash stock-based compensation expense

1,474



1,827


Legacy legal matters

1,850



956


CEO transition

110




Adjusted EBITDA

$       6,088

3.1 %


$     10,788

4.4 %







Diluted net earnings (loss) per share

$       (0.14)



$         0.05


Add (subtract): 






Restructuring and other related charges




Acquisition related expenses and adjustments



0.01


Non-cash stock-based compensation expense

0.05



0.05


Legacy legal matters

0.05



0.03


CEO transition




Tax effect of adjustments



(0.02)


Adjusted diluted net earnings (loss) per share

$       (0.04)



$         0.12


The Shyft Group, Inc. and Subsidiaries

Consolidated Financial Summary (Non-GAAP)

(In thousands)

(Unaudited)



Three Months Ended

March 31,

The Shyft Group, Inc.

2024


2023


Net cash provided by (used in) operating activities

$

(3,957)


$

5,887


Purchases of property, plant and equipment


(5,719)



(4,469)


Proceeds from sale of property, plant and equipment


75



25


Free cash flow

$

(9,601)


$

1,443


The Shyft Group, Inc. and Subsidiaries

Consolidated Financial Summary (Non-GAAP)

(In thousands, except per share data)

(Unaudited)





 Outlook




Year Ended December 31, 2024

The Shyft Group, Inc.



Low


Mid


High

Net income



$             2,479


$              6,481


$           10,483

Add: 








Depreciation and amortization



20,500


20,500


20,500

Interest expense



7,500


7,500


7,500

Taxes



621


1,619


2,617

EBITDA



$           31,100


$           36,100


$           41,100

Add: 








Non-cash stock-based compensation and other charges


8,900


8,900


8,900

Adjusted EBITDA



$           40,000


$           45,000


$           50,000









Earnings per share



$               0.07


$               0.19


$               0.30

Add: 








Non-cash stock-based compensation and other charges


0.26


0.26


0.26

Less: tax effect of adjustments



(0.05)


(0.05)


(0.05)

Adjusted earnings per share



$               0.28


$               0.40


$               0.51

SOURCE The Shyft Group, Inc.

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SOURCE The Shyft Group, Inc.