The Shyft Group Reports Fourth Quarter and Full-Year 2023 Results

  • Generated free cash flow of $36 million in the year; improvement of $75 million year-over-year
  • Delivered record profitability in Specialty Vehicles business
  • Introduces 2024 outlook with sales of $850 to $900 million and adjusted EBITDA of $40 to $50 million

NOVI, Mich., Feb. 22, 2024 (GLOBE NEWSWIRE) — 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 fourth quarter and full-year ending December 31, 2023.

Fourth Quarter 2023 Financial Highlights        
For the fourth quarter of 2023 compared to the fourth quarter of 2022:

  • Sales of $202.3 million, a decrease of $99.7 million, or 33.0%, from $302.0 million
  • Net loss of $4.4 million, or ($0.13) per share, compared to net income of $17.8 million, or $0.50 per share
  • Adjusted EBITDA of $2.3 million, or 1.1% of sales, a decrease of $28.4 million, from $30.7 million, or 10.2% of sales; Results include $9.3 million of EV program related costs versus $7.6 million in the prior year
  • Adjusted net loss of $0.9 million, or ($0.03) per share, compared to adjusted net income of $20.5 million, or $0.58 per share in the fourth quarter of 2022
  • Consolidated backlog of $409.3 million as of December 31, 2023, down $423.4 million, or 50.9%, compared to $832.7 million as of December 31, 2022

Full-Year 2023 Financial Highlights
For the full-year 2023 compared to the full-year 2022:

  • Sales of $872.2 million, a decrease of $155.0 million, or 15.1%, from $1.0 billion
  • Net income of $6.5 million, or $0.19 per share, compared to $36.6 million, or $1.03 per share; Current year reflects an effective income tax benefit of $5.8 million
  • Adjusted EBITDA of $40.0 million, or 4.6% of sales, a decrease of $30.8 million, from $70.8 million, or 6.9% of sales; Results include $32.6 million of EV program related costs versus $26.9 million in the prior year
  • Adjusted net income of $18.7 million, or $0.54 per share, compared to adjusted net income of $44.5 million, or $1.25 per share in 2022

“We drove positive cash generation by remaining focused on the operational levers within our control,” said John Dunn, President and CEO. “Our Specialty Vehicles business delivered strong overall profitability driven by robust demand for our vocational work trucks. While Fleet Vehicles and Services performance was underwhelming due to lower customer demand, the leadership team is responding with decisive commercial and operational actions to improve profitability.”

Fourth Quarter 2023 Business Segment Financial Highlights

Fleet Vehicles and Services (FVS)

  • Sales were $119.0 million for the fourth quarter of 2023, down 44.1%, or $94.0 million year over year
  • Adjusted EBITDA for the fourth quarter of 2023 of ($2.6) million, or (2.2)% of sales, a decrease of $30.3 million, from $27.7 million, or 13.0% of sales, a year ago
  • Segment backlog was $325.0 million as of December 31, 2023, down 55.9% compared to $736.7 million as of December 31, 2022

Specialty Vehicles (SV)

  • Sales were $83.4 million for the fourth quarter of 2023, a decrease of $9.8 million, or 10.6%, from $93.2 million a year ago
  • Adjusted EBITDA for the fourth quarter of 2023 was $19.0 million, or 22.8% of sales, an increase of $3.1 million, or 19.3%, from $15.9 million, or 17.1% of sales, a year ago
  • Segment backlog was $84.3 million as of December 31, 2023, down 12.2% compared to $96.0 million as of December 31, 2022

2024 Financial Outlook
“Looking ahead, the challenging demand environment for parcel and motorhome is expected to continue in the first half of 2024,” said Jon Douyard, Chief Financial Officer. “Our team remains focused on delivering improved financial performance and generating cash flow, while maintaining investment for future growth initiatives, including our Blue Arc EV program.”

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

“We will actively manage and navigate a highly dynamic demand environment in 2024, while getting Blue Arc into production later this year,” said Dunn. “Shyft has a strong core business, and the team is implementing the framework to return the company to historic profitability levels. We are strengthening the leadership team, driving operational execution, and deepening our commercial capabilities to deliver long-term shareholder value.”

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: 10179224

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)
 
  December 31,     December 31,  
  2023     2022  
ASSETS              
Current assets:              
Cash and cash equivalents $ 9,957     $ 11,548  
Accounts receivable, less allowance of $276 and $246   79,573       115,742  
Contract assets   50,305       86,993  
Inventories   105,135       100,161  
Other receivables – chassis pool agreements   34,496       19,544  
Other current assets   7,462       11,779  
Total current assets   286,928       345,767  
Property, plant and equipment, net   83,437       70,753  
Right of use assetsoperating leases   45,827       53,386  
Goodwill   48,880       48,880  
Intangible assets, net   45,268       49,078  
Net deferred tax assets   17,300       10,390  
Other assets   2,409       2,227  
TOTAL ASSETS $ 530,049     $ 580,481  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY              
Current liabilities:              
Accounts payable $ 99,855     $ 124,309  
Accrued warranty   7,231       7,161  
Accrued compensation and related taxes   13,526       14,434  
Contract liabilities   4,756       5,255  
Operating lease liability   10,817       10,888  
Other current liabilities and accrued expenses   11,965       19,452  
Short-term debt – chassis pool agreements   34,496       19,544  
Current portion of long-term debt   185       189  
Total current liabilities   182,831       201,232  
Other non-current liabilities   8,184       10,033  
Long-term operating lease liability   36,724       44,256  
Long-term debt, less current portion   50,144       56,266  
Total liabilities   277,883       311,787  
Commitments and contingent liabilities              
Shareholders’ equity:              
Preferred stock, no par value: 2,000 shares authorized (none issued)          
Common stock, no par value: 80,000 shares authorized; 34,303 and 35,066 outstanding   93,705       92,982  
Retained earnings   158,461       175,611  
Total Shyft Group, Inc. shareholdersequity   252,166       268,593  
Non-controlling interest         101  
Total shareholders’ equity   252,166       268,694  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 530,049     $ 580,481  

The Shyft Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
  Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
  2023     2022     2023     2022  
                               
Sales $ 202,333     $ 302,011     $ 872,198     $ 1,027,164  
Cost of products sold   174,421       243,723       721,840       846,731  
Gross profit   27,912       58,288       150,358       180,433  
                               
Operating expenses:                              
Research and development   7,121       5,783       25,185       25,324  
Selling, general and administrative   28,442       29,155       118,420       107,600  
Total operating expenses   35,563       34,938       143,605       132,924  
                               
Operating income (loss)   (7,651 )     23,350       6,753       47,509  
                               
Other income (expense)                              
Interest expense   (1,830 )     (1,079 )     (6,527 )     (2,833 )
Other income (expense)   261       (408 )     470       (750 )
Total other expense   (1,569 )     (1,487 )     (6,057 )     (3,583 )
                               
Income before income taxes   (9,220 )     21,863       696       43,926  
Income tax expense (benefit)   (4,803 )     4,022       (5,768 )     7,368  
Net income (loss)   (4,417 )     17,841       6,464       36,558  
Less: net (loss) attributable to non-controlling interest               (32 )      
                               
Net income (loss) attributable to The Shyft Group Inc. $ (4,417 )   $ 17,841     $ 6,496     $ 36,558  
                               
Basic earnings (loss) per share $ (0.13 )   $ 0.51     $ 0.19     $ 1.04  
Diluted earnings (loss) per share $ (0.13 )   $ 0.50     $ 0.19     $ 1.03  
                               
Basic weighted average common shares outstanding   34,298       35,067       34,721       35,073  
Diluted weighted average common shares outstanding   34,298       35,443       34,861       35,494  

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The Shyft Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands, except par value)
(Unaudited)
 
  Year Ended December 31,
    2023       2022  
Cash flows from operating activities:              
Net income $ 6,464     $ 36,558  
Adjustments to reconcile net income to net cash provided by (used in) operating activities              
Depreciation and amortization   16,953       14,774  
Non-cash stock based compensation expense   7,834       7,619  
Deferred income taxes   (6,911 )     (5,510 )
Loss on disposal of assets   389       826  
Changes in accounts receivable and contract assets   72,857       (93,989 )
Changes in inventories   (4,975 )     (32,977 )
Changes in accounts payable   (27,963 )     41,302  
Changes in accrued compensation and related taxes   (908 )     (4,630 )
Changes in accrued warranty   70       1,186  
Changes in other assets and liabilities   (7,566 )     15,998  
Net cash provided by (used in) operating activities   56,244       (18,843 )
               
Cash flows from investing activities:              
Purchases of property, plant and equipment   (20,733 )     (20,564 )
Proceeds from sale of property, plant and equipment   119       148  
Acquisition of business, net of cash acquired   (500 )      
Net cash used in investing activities   (21,114 )     (20,416 )
               
Cash flows from financing activities:              
Proceeds from long-term debt   132,500       145,000  
Payments on long-term debt   (138,500 )     (89,000 )
Payments of dividends   (7,109 )     (7,148 )
Purchase and retirement of common stock   (19,083 )     (26,789 )
Exercise and vesting of stock incentive awards   (4,460 )     (8,414 )
Distribution to non-controlling interest owner   (69 )      
Net cash provided by (used in) financing activities   (36,721 )     13,649  
               
Net decrease in cash and cash equivalents   (1,591 )     (25,610 )
Cash and cash equivalents at beginning of period   11,548       37,158  
Cash and cash equivalents at end of period $ 9,957     $ 11,548  



The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
 
Quarter Ended December 31, 2023 (in thousands of dollars)
 
  Business Segments        
    Fleet Vehicles       Specialty       Eliminations &          
    & Services       Vehicles       Other       Consolidated  
Fleet vehicle sales $ 106,011     $     $     $ 106,011  
Motorhome chassis sales         26,304             26,304  
Other specialty vehicles sales         52,528       (3 )     52,525  
Aftermarket parts and accessories sales   12,952       4,541             17,493  
Total Sales $ 118,963     $ 83,373     $ (3 )   $ 202,333  
                               
Adjusted EBITDA $ (2,592 )   $ 18,979     $ (14,062 )   $ 2,325  

The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
 
Quarter Ended December 31, 2022 (in thousands of dollars)
 
  Business Segments             
    Fleet Vehicles       Specialty       Eliminations &          
    & Services       Vehicles       Other       Consolidated  
Fleet vehicle sales $ 202,257     $     $     $ 202,257  
Motorhome chassis sales         37,030             37,030  
Other specialty vehicles sales         51,562       (4,148 )     47,414  
Aftermarket parts and accessories sales   10,658       4,652             15,310  
Total Sales $ 212,915     $ 93,244     $ (4,148 )   $ 302,011  
                               
Adjusted EBITDA $ 27,704     $ 15,905     $ (12,924 )   $ 30,685  

The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
 
Year Ended December 31, 2023 (in thousands of dollars)
 
  Business Segments          
    Fleet Vehicles       Specialty       Eliminations &          
    & Services       Vehicles       Other       Consolidated  
Fleet vehicle sales $ 487,072     $     $     $ 487,072  
Motorhome chassis sales         104,882             104,882  
Other specialty vehicles sales         209,434       (4,183 )     205,251  
Aftermarket parts and accessories sales   54,566       20,427             74,993  
Total Sales $ 541,638     $ 334,743     $ (4,183 )   $ 872,198  
                               
Adjusted EBITDA $ 30,326     $ 66,186     $ (56,544 )   $ 39,968  

The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
 
Year Ended December 31, 2022 (in thousands of dollars)
 
            Business Segments                
    Fleet Vehicles       Specialty       Eliminations &          
    & Services       Vehicles       Other       Consolidated  
Fleet vehicle sales $ 605,253     $     $     $ 605,253  
Motorhome chassis sales         175,030             175,030  
Other specialty vehicles sales         191,882       (6,483 )     185,399  
Aftermarket parts and accessories sales   41,750       19,732             61,482  
Total Sales $ 647,003     $ 386,644     $ (6,483 )   $ 1,027,164  
                               
Adjusted EBITDA $ 65,719     $ 54,413     $ (49,339 )   $ 70,793  

The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
 
Period End Backlog (amounts in thousands of dollars)
    Dec. 31, 2023       Sept. 30, 2023     Jun. 30, 2023       Mar. 31, 2023     Dec. 31, 2022  
Fleet Vehicles and Services $ 325,003     $ 383,448     $ 437,802     $ 584,933     $ 736,690  
Specialty Vehicles   84,269       80,983       72,402       82,478       96,023  
Total Backlog $ 409,272     $ 464,431     $ 510,204     $ 667,411     $ 832,713  
 

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 and long-term incentive compensation for certain members of 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 December 31,   Twelve Months Ended December 31,
The Shyft Group, Inc.   2023     % of
sales
    2022     % of
sales
    2023     % of
sales
    2022     % of
sales
Net income (loss) $ (4,417 )     (2.2 %)   $ 17,841       5.9 %   $ 6,464       0.7 %   $ 36,558       3.6 %
Net loss attributable to non-controlling interest                       32                
Add (subtract):                      
Restructuring and other related charges   368           243           1,741           757      
Acquisition related expenses and adjustments             84           440           884      
Non-cash stock-based compensation expense   2,647           2,697           7,834           7,619      
CEO transition   107                     2,629                
Loss from write-off of assets   1,872                     1,872                
Legacy legal matters                       956                
Non-recurring professional fees   128                     288                
Tax effect of adjustments   (1,636 )         (371 )         (3,565 )         (1,348 )    
Adjusted net income (loss) $ (931 )     (0.5 %)   $ 20,494       6.8 %   $ 18,691       2.1 %   $ 44,470       4.3 %
                       
Net income (loss) $ (4,417 )     (2.2 %)   $ 17,841       5.9 %   $ 6,464       0.7 %   $ 36,558       3.6 %
Net loss attributable to non-controlling interest                       32                
Add (subtract):                      
Depreciation and amortization   4,593           4,719           16,953           14,774      
Taxes on income   (4,803 )         4,022           (5,768 )         7,368      
Interest expense   1,830           1,079           6,527           2,833      
EBITDA $ (2,797 )     (1.4 %)   $ 27,661       9.2 %   $ 24,208       2.8 %   $ 61,533       6.0 %
                       
Add (subtract):                      
Restructuring and other related charges   368           243           1,741           757      
Acquisition related expenses and adjustments             84           440           884      
Non-cash stock-based compensation expense   2,647           2,697           7,834           7,619      
CEO transition   107                     2,629                
Loss from write-off of assets   1,872                     1,872                
Legacy legal matters                       956                
Non-recurring professional fees   128                     288                
Adjusted EBITDA $ 2,325       1.1 %   $ 30,685       10.2 %   $ 39,968       4.6 %   $ 70,793       6.9 %
                       
Diluted net earnings (loss) per share $ (0.13 )       $ 0.50         $ 0.19         $ 1.03      
Add (subtract):                      
Restructuring and other related charges   0.01           0.01           0.05           0.02      
Acquisition related expenses and adjustments                       0.01           0.02      
Non-cash stock-based compensation expense   0.08           0.08           0.22           0.21      
CEO transition                       0.08                
Loss from write-off of assets   0.05                     0.05                
Legacy legal matters                       0.03                
Non-recurring professional fees                       0.01                
Tax effect of adjustments   (0.04 )         (0.01 )         (0.10 )         (0.03 )    
Adjusted diluted net earnings (loss) per share $ (0.03 )       $ 0.58         $ 0.54         $ 1.25      

The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)
(In thousands)
(Unaudited)
 
  Year Ended December 31,
The Shyft Group, Inc.   2023       2022  
Net cash provided by operating activities $ 56,244     $ (18,843 )
Purchases of property, plant and equipment   (20,733 )     (20,564 )
Proceeds from sale of property, plant and equipment   119       148  
Free cash flow $ 35,630     $ (39,259 )

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   21,000       21,000       21,000  
Interest expense   7,000       7,000       7,000  
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