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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
Sydney.Lepora@theshyftgroup.com
586.413.4112

INVESTORS
Randy Wilson 
Vice President, Investor Relations and Treasury 
Randy.Wilson@theshyftgroup.com
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 



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 

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