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theshyftgroup.com

The Shyft Group Reports Record Third Quarter Results

Achieves EPS of $0.58 and adjusted EPS of $0.63, on sales of $273 million

Raises Full Year Guidance

NOVI, Mich., Nov. 4, 2021 /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 third quarter, ending September 30, 2021. 

Third Quarter 2021 Highlights from Continuing Operations1

For the third quarter of 2021 compared to the third quarter of 2020:

  • Sales of $272.6 million, an increase of $69.1 million, or 34.0%, from $203.5 million, reflecting increased sales in all product categories.
  • Gross profit margin of 20.6% of sales compared to 24.9% of sales, reflecting unfavorable product mix and higher material and labor costs.
  • Income from continuing operations of $21.0 million, or $0.58 per share, compared to $19.4 million, or $0.54 per share.
  • Adjusted EBITDA of $33.7 million, or 12.4% of sales, an increase of $1.1 million, or 3.5%, from $32.6 million, or 16.0% of sales.
  • Adjusted net income of $22.9 million, or $0.63 per share, an increase of $0.8 million, or 3.2%, from $22.1 million, or $0.62 per share.
  • Generated $39.1 million of cash provided from operating activities, an increase of $6.4 million, or 19.5% from $32.7 million.
  • Consolidated backlog at September 30, 2021, was a record $852.6 million, up $572.0 million, or 203.8%, compared to $280.6 million at September 30, 2020.
  • Opened Shyft Innovations Research and Development Center, a 40,000 square-foot facility, focused on driving advancements in both mobility and alternative propulsion, including an all-electric chassis platform currently under development.

________________________________

1 The Company divested its Emergency Response (ER) business effective February 1, 2020.  Accordingly, the financial results of ER have been classified as discontinued operations for all periods presented. Unless otherwise noted, financial results presented are based on continuing operations.  

“Our record financial performance in the third quarter marked a continuation of what we have been achieving since the beginning of the year,” said Daryl Adams, President and Chief Executive Officer.  “Our team’s resourcefulness and relentless focus on execution and the customer, despite industry-wide supply chain challenges, enabled our growth momentum to continue, while also positioning us for a remarkable year.”     

Fleet Vehicles and Services (FVS)

FVS segment sales totaled $198.5 million, an increase of 36.7% from $145.2 million, reflecting strong sales across all product categories.

Adjusted EBITDA increased $3.6 million to $36.8 million, or 18.5% of sales, from $33.2 million, or 22.9% of sales, a year ago.  The increase was primarily due to higher volume, while year-over-year margins were impacted by product mix and higher material and labor costs.

The segment backlog at September 30, 2021, totaled a record $758.5 million, up 231.4%, compared to $228.9 million at September 30, 2020.  On a sequential basis, backlog increased $97.6 million, or 14.8% from $660.9 million in the second quarter of 2021.  This increase reflects strong demand for delivery vehicles, including the recently announced USPS order.

Specialty Vehicles (SV)

SV segment sales were $74.1 million, an increase of 27.1% from $58.3 million, led by strong growth in luxury motor coach chassis sales and service bodies. 

Adjusted EBITDA was $5.8 million, or 7.9% of sales, compared to $7.2 million, or 12.3% of sales, a year ago.  The decrease was due to higher material and labor costs.

The segment backlog at September 30, 2021, totaled $94.0 million, up 81.7% compared to $51.8 million at September 30, 2020.  On a sequential basis, backlog increased $3.5 million, or 3.9% from $90.5 million in the second quarter of 2021. 

Outlook for Remainder of 2021

“Our excellent performance during the quarter, including strong cash generation, has enabled us to pay down our debt entirely and raise 2021 guidance,” said Jon Douyard, Chief Financial Officer. “Our strong balance sheet coupled with a growing backlog, will further support our continued growth.”

The Company’s guidance for the 2021 full year is as follows:

  • Revenue to be in the range of $930.0 to $970.0 million
  • Income from continuing operations of $59.9 to $61.3 million
  • Adjusted EBITDA of $108.0 to $110.0 million
  • Effective tax rate of approximately 26%
  • Earnings per share of $1.66 – $1.70
  • Adjusted earnings per share of $1.97 – $2.01

“Our year-to-date results really speak to our stability, nimbleness and the resulting momentum that will serve us well to finish the year strong,” said Adams.  “We continue to invest in new products and technologies and we are making significant progress on our custom EV chassis, which will further differentiate our company and boost our competitive position, while delivering a much-needed product to our customers.”

Conference Call, Webcast, Investor Presentation and Investor Information
The Shyft Group will host a conference call for analysts and portfolio managers at 10 a.m. EDT today to discuss these results and current business trends.  The conference call and webcast will be available via:

Webcast: www.TheShyftGroup.com/investor-relations/webcasts  

Conference Call: 1-877-317-6789 (domestic) or 412-317-6789 (international); passcode: 10155595

For more information about The Shyft Group, please visit www.TheShyftGroup.com

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 & Services™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Royal Truck Body™, DuraMag® and Magnum®, Strobes-R-Us™, Spartan RV Chassis™, Builtmore Contract Manufacturing™, and corresponding aftermarket provisions. 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 associates across campuses, and operates facilities in Michigan, Indiana, Maine, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. The Company reported sales from continuing operations of $676 million in 2020. Learn more about The Shyft Group at www.TheShyftGroup.com.

This release contains several forward-looking statements that are not historical facts, including statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations.  These statements can be identified by words such as “believe,” “expect,” “intend,” “potential,” “future,” “may,” “will,” “should,” and similar expressions regarding future expectations.  Furthermore, statements contained in this document relating to the global outbreak of the novel coronavirus disease (COVID-19), the impact of which remains inherently uncertain on our financial results, are forward-looking statements.  These forward-looking statements involve various known and unknown risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, and likelihood.  Therefore, actual performance and results may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could contribute to these differences include future developments relating to the COVID-19 pandemic, including governmental responses, supply chain shortages, and potential labor issues; operational and other complications that may arise affecting the implementation of our plans and business objectives; continued pressures caused by economic conditions including weaknesses resulting from the COVID-19 pandemic; challenges that may arise in connection with the integration of new businesses or assets we acquire or the disposition of assets; restructuring of our operations, and/or our expansion into new geographic markets; issues unique to government contracting, such as competitive bidding processes, qualification requirements, and delays or changes in funding; disruptions within our dealer network; changes in our relationships with major customers, suppliers, or other business partners; changes in the demand or supply of products within our markets or raw materials needed to manufacture those products; and changes in laws and regulations affecting our business.  Other factors that could affect outcomes are set forth in our Annual Report on Form 10-K and other filings we make 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.

CONTACT: 

Juris Pagrabs
Group Treasurer
The Shyft Group
(517) 997-3862

 

The Shyft Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

September 30,

 

December 31,

 
 

2021

 

2020

 

ASSETS

       

Current assets:

       

Cash and cash equivalents

$          14,549

 

$          20,995

 

Accounts receivable, less allowance of $145 and $116

67,607

 

64,695

 

Contract assets

42,459

 

9,414

 

Inventories, net

81,901

 

46,428

 

Other receivables – chassis pool agreements

3,995

 

6,503

 

Other current assets

8,569

 

8,172

 

Total current assets

219,080

 

156,207

 
         

Property, plant and equipment, net

57,374

 

45,734

 

Right of use assets – operating leases

44,303

 

43,430

 

Goodwill

48,881

 

49,481

 

Intangible assets, net

53,832

 

56,386

 

Other assets

1,180

 

2,052

 

Net deferred tax asset

5,625

 

5,759

 

TOTAL ASSETS

$        430,275

 

$       359,049

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

       

Current liabilities:

       

Accounts payable

$          89,601

 

$          47,487

 

Accrued warranty

7,548

 

5,633

 

Accrued compensation and related taxes

18,045

 

17,134

 

Deposits from customers

2,148

 

756

 

Operating lease liability

7,632

 

7,508

 

Other current liabilities and accrued expenses

10,631

 

8,121

 

Short-term debt – chassis pool agreements

3,995

 

6,503

 

Current portion of long-term debt

238

 

221

 

Total current liabilities

139,838

 

93,363

 
         

Other non-current liabilities

5,095

 

5,447

 

Long-term operating lease liability

37,532

 

36,662

 

Long-term debt, less current portion

694

 

23,418

 

Total liabilities

183,159

 

158,890

 

Shareholders’ equity:

       

Preferred stock; 2,000 shares authorized (none issued)

 

 

Common stock; 80,000 shares authorized; 35,342 and 35,344 outstanding

94,312

 

91,044

 

Retained earnings

151,873

 

109,286

 

Total The Shyft Group, Inc. shareholders’ equity

246,185

 

200,330

 

Non-controlling interest

931

 

(171)

 

Total shareholders’ equity

247,116

 

200,159

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$        430,275

 

$       359,049

 
             

 

The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

                                 
   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2021

   

2020

   

2021

   

2020

 
                                 

Sales

 

$

272,622

   

$

203,473

   

$

714,492

   

$

504,391

 

Cost of products sold

   

216,564

     

152,723

     

566,542

     

393,335

 

Gross profit

   

56,058

     

50,750

     

147,950

     

111,056

 
                                 

Operating expenses:

                               

Research and development

   

2,582

     

824

     

4,304

     

3,496

 

Selling, general and administrative

   

25,368

     

23,525

     

78,645

     

69,534

 

Total operating expenses

   

27,950

     

24,349

     

82,949

     

73,030

 
                                 

Operating income

   

28,108

     

26,401

     

65,001

     

38,026

 
                                 

Other income (expense):

                               

Interest expense

   

(253)

     

(11)

     

(310)

     

(1,202)

 

Interest and other income

   

54

     

238

     

743

     

243

 

Total other income (expense)

   

(199)

     

227

     

433

     

(959)

 
                                 

Income from continuing operations before income taxes

   

27,909

     

26,628

     

65,434

     

37,067

 

Income tax expense

   

6,910

     

7,253

     

15,952

     

7,084

 

Income from continuing operations

   

20,999

     

19,375

     

49,482

     

29,983

 

Income (loss) from discontinued operations, net of income taxes

   

     

(926)

     

81

     

(4,947)

 

Net income

   

20,999

     

18,449

     

49,563

     

25,036

 

Less: net income attributable to non-controlling interest

   

77

     

41

     

1,102

     

178

 
                                 

Net income attributable to The Shyft Group Inc.

 

$

20,922

   

$

18,408

   

$

48,461

   

$

24,858

 
                                 

Basic earnings (loss) per share

                               

Continuing operations

 

$

0.59

   

$

0.55

   

$

1.37

   

$

0.84

 

Discontinued operations

   

     

(0.03)

     

     

(0.14)

 

Basic earnings (loss) per share

 

$

0.59

   

$

0.52

   

$

1.37

   

$

0.70

 
                                 

Diluted earnings (loss) per share

                               

Continuing operations

 

$

0.58

   

$

0.54

   

$

1.34

   

$

0.83

 

Discontinued operations

   

     

(0.03)

     

     

(0.14)

 

Diluted earnings (loss) per share

 

$

0.58

   

$

0.51

   

$

1.34

   

$

0.69

 
                                 

Basic weighted average common shares outstanding

   

35,346

     

35,559

     

35,330

     

35,491

 

Diluted weighted average common shares outstanding

   

36,074

     

35,989

     

36,024

     

35,794

 

 

The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)

                     

Three Months Ended September 30, 2021 (in thousands of dollars)

           
                     
   

Business Segments

         
   

Fleet Vehicles &
Services

 

Specialty 
Vehicles

 

Other

 

Consolidated

 

Fleet vehicle sales

$     189,591

 

$               –

 

$                  –

 

$      189,591

 

Motorhome chassis sales

 

42,507

 

 

42,507

 

Other specialty chassis and vehicles

 

26,620

 

 

26,620

 

Aftermarket parts and assemblies

8,949

 

4,955

 

 

13,904

 

       Total Sales

 

$    198,540

 

$   74,082

 

$                  –

 

$      272,622

 
                   

Adjusted EBITDA

$      36,813

 

$     5,827

 

$      (8,900)

 

$        33,740

 
                     
                                           

 

The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)

                     

Three Months Ended September 30, 2020 (in thousands of dollars)

           
                     
   

Business Segments

       
   

Fleet Vehicles &
Services

 

Specialty 
Vehicles

 

Other

 

Consolidated

 

Fleet vehicle sales

$     136,382

 

$                –

 

$                 –

 

$      136,382

 

Motorhome chassis sales

 

38,190

 

 

38,190

 

Other specialty chassis and vehicles

 

17,601

 

 

17,601

 

Aftermarket parts and assemblies

8,808

 

2,492

 

 

11,300

 

       Total Sales

 

$     145,190

 

$      58,283

 

$                –

 

$      203,473

 
                   

Adjusted EBITDA

$       33,237

 

$        7,183

 

$     (7,827)

 

$        32,593

 
                     
                                   

 

Sales and Other Financial Information by Business Segment

 

(Unaudited)

 
                   

Period End Backlog (amounts in thousands of dollars) 

 
 

Sept. 30, 2021

 

Jun. 30, 2021

 

Mar. 31, 2021

 

Dec. 31, 2020

 

Sept. 30, 2020

Fleet Vehicles and Services

$  758,518

 

$  660,908

 

$  589,604

 

$  427,338

 

$  228,870

      Motorhome Chassis

60,978

 

56,294

 

42,742

 

31,580

 

40,387

      Other Vehicles

32,717

 

33,840

 

33,716

 

19,431

 

11,036

 Aftermarket Parts and Accessories

347

 

382

 

438

 

302

 

333

Total Specialty Vehicles

94,042

 

90,516

 

76,896

 

51,313

 

51,756

                   

Total Backlog*

$  852,560

 

$  751,424

 

$  666,500

 

$  478,651

 

$  280,626

             

*Backlog orders are expected to be filled within one year as of September 30, 2021.

           
                     

Reconciliation of Non-GAAP Financial Measures
This release presents Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted net income, and adjusted earnings per share, each of which is a non-GAAP financial measure. These non-GAAP measures are calculated by excluding items that we believe to be infrequent or not indicative of our underlying operating performance, as well as certain non-cash expenses. We define Adjusted EBITDA as income from continuing operations 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. We believe that the presentation of this non-GAAP measure, 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.

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 and long-term incentive compensation for certain members of our management team.

Financial Summary (Non-GAAP)

(In thousands, except per share data)

(Unaudited)

             
 

Three Months Ended September 30,

 

The Shyft Group, Inc.

2021

% of
sales

 

2020

% of
sales

 

Income from continuing operations

$     20,999

7.7%

 

$     19,375

9.5%

 

Net (income) attributable to non-controlling interest

(77)

   

(41)

   

Add (subtract): 

           

Restructuring and other related charges

   

303

   

Acquisition related expenses and adjustments

594

   

650

   

Non-cash stock-based compensation expense

2,079

   

2,064

   

Accelerated depreciation of property, plant and equipment

   

365

   

Deferred tax assets valuation allowance

   

275

   

Tax effect of adjustments

(733)

   

(842)

   

Adjusted net income

$     22,862

8.4%

 

$      22,149

10.9%

 
             

Income from continuing operations

$      20,999

7.7%

 

$      19,375

9.5%

 

Net (income) attributable to non-controlling interest

(77)

   

(41)

   

Add (subtract): 

           

Depreciation and amortization

2,982

   

2,978

   

Taxes on income

6,910

   

7,253

   

Interest expense

253

   

11

   

EBITDA

$     31,067

11.4%

 

$      29,576

14.5%

 
             

Add (subtract): 

           

Restructuring and other related charges

   

303

   

Acquisition related expenses and adjustments

594

   

650

   

Non-cash stock-based compensation expense

2,079

   

2,064

   

Adjusted EBITDA

$   33,740

12.4%

 

$     32,593

16.0%

 
             

Diluted net earnings per share

$       0.58

   

$        0.54

   

Add (subtract): 

           

Restructuring and other related charges

   

0.01

   

Acquisition related expenses and adjustments

0.01

   

0.02

   

Non-cash stock-based compensation expense

0.06

   

0.05

   

Accelerated depreciation of property, plant and equipment

   

0.01

   

Deferred tax asset valuation allowance

   

0.01

   

Tax effect of adjustments

(0.02)

   

(0.02)

   

Adjusted diluted net earnings per share

$       0.63

   

$       0.62

   
                     

 

 


 

Financial Summary (Non-GAAP)

Consolidated

(In thousands, except per share data)

(Unaudited)

               
     

 Forecast

     

Twelve Months Ended December 31, 2021

The Shyft Group, Inc.

   

Low

 

Mid

 

High

Income from continuing operations

   

$            59,886

 

$            60,576

 

$            61,266

Add: 

             

Depreciation and amortization

   

11,891

 

11,891

 

11,891

Interest expense

   

578

 

578

 

578

Taxes

   

20,906

 

21,216

 

21,526

EBITDA

   

$            93,261

 

$            94,261

 

$            95,261

Add (subtract): 

             

Non-cash stock-based compensation and other charges

   

14,739

 

14,739

 

14,739

Adjusted EBITDA

   

$         108,000

 

$         109,000

 

$         110,000

               

Earnings per share

   

$                1.66

 

$                1.68

 

$                1.70

Add: 

             

Non-cash stock-based compensation and other charges

   

0.41

 

0.41

 

0.41

Less tax effect of adjustments

   

(0.10)

 

(0.10)

 

(0.10)

Adjusted earnings per share

   

$                1.97

 

$                1.99

 

$                2.01

 

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SOURCE The Shyft Group, Inc.