The Shyft Group Reports Second Quarter 2022 Results

Delivered $0.15 of EPS; Raised mid-point of outlook as chassis flow improved; Backlog remains strong; Continued progress on Blue Arc EV initiative


NOVI, Mich., July 28, 2022 (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 second quarter ending June 30, 2022.

Second Quarter 2022 Financial Highlights from Continuing Operations1

For the second quarter of 2022 compared to the second quarter of 2021:

  • Sales of $232.2 million, a decrease of $11.8 million, or 4.8%, from $244.0 million.
  • Income from continuing operations of $5.3 million, or $0.15 per share, compared to income from continuing operations of $17.0 million, or $0.44 per share.
  • Adjusted EBITDA of $13.7 million, or 5.9% of sales, a decrease of $14.9 million, from $28.6 million, or 11.7% of sales. Results include $7.0 million of EV development costs.
  • Adjusted net income of $7.5 million, or $0.21 per share, compared to adjusted net income of $19.0 million, or $0.53 per share in the second quarter of 2021.
  • Consolidated backlog at June 30, 2022, totaled $1.1 billion, up $383.8 million, or 51.1%, compared to $751.4 million at June 30, 2021, reflecting continued strong demand across all business units.

“The Shyft Group continued to manage supply chain disruptions in the second quarter with results in line with our expectations. The Specialty Vehicles team executed well and produced solid results, while we also saw chassis deliveries in our Fleet Vehicle Services business improve steadily as the quarter progressed,” said Daryl Adams, President and Chief Executive Officer.   “We also continued to hit key development milestones with our electrification products and remain on track for production in mid-2023.”

Fleet Vehicles and Services (FVS)

FVS segment sales were $136.9 million, a decrease of $24.7 million, or 15.3%, from $161.6 million due to decreased volume related in large part to reduced OEM chassis availability, partially offset by pricing actions.

Adjusted EBITDA was $14.5 million, or 10.6% of sales, compared to $28.1 million, or 17.4% of sales, a year ago. The decrease was primarily driven by lower volume and productivity inefficiencies as a result of intermittent chassis supply, material and labor cost inflation, partially offset by pricing actions and mix.  

The segment backlog at June 30, 2022, totaled $1.0 billion and was up 53.2% compared to $652.6 million at June 30, 2021.

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

Specialty Vehicles (SV)

SV segment sales were $95.3 million, an increase of $12.9 million, or 15.7%, from $82.4 million a year ago. This was due to continued strong performance in luxury motorhome chassis and service body sales as well as the impact of pricing actions.

Adjusted EBITDA was $12.9 million, or 13.5% of sales, an increase of $4.1 million, or 46.0%, from $8.8 million, or 10.7% of sales, a year ago. The increase was primarily due to higher sales volume, pricing actions and improved product mix, partially offset by material and labor cost inflation.

The segment backlog as of June 30, 2022, totaled $135.2 million and was up 36.8% compared to $98.8 million at June 30, 2021.

2022 Outlook

“As anticipated, our second quarter started off slow, but progressively improved as OEM chassis deliveries increased throughout the quarter,” said Jon Douyard, Chief Financial Officer. “Given our second quarter performance, along with increased visibility into chassis supply, strong customer demand, and a healthy balance sheet, we believe that we are on track to deliver our improved full year guidance.”

Guidance for full-year 2022, notwithstanding further chassis and supply chain related issues, is as follows:

  • Revenue to be in the range of $925 million to $1.1 billion
  • Adjusted EBITDA of $55 to $80 million, including $30 million of expenses related to EV development
  • Income from continuing operations of $21 to $41 million
  • Earnings per share of $0.59 to $1.15
  • Adjusted earnings per share of $0.85 to $1.41

Adams concluded, “We remain excited about our long-term business prospects, our capabilities, and our team. Our financial strength positions us well to invest in innovation and meet the evolving needs of our customers despite the current industry wide challenges. The team is laser focused on executing our growth strategy and driving long-term value for customers, employees, and shareholders.”

Conference Call and Webcast Information

The Shyft Group will host a conference call at 10 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:

Webcast: www.theshyftgroup.com/webcasts 
Conference Call: 1-844-868-8845 (domestic) or 412-317-6591 (international); passcode: 10163194

For more information about Shyft, 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 includes Blue Arc™ EV Solutions, 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 3,800 employees and contractors across campuses, and operates facilities in Michigan, Indiana, Maine, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. The Company reported sales of $992 million in 2021. Learn more about The Shyft Group at TheShyftGroup.com.

This release contains information, including our revenue and earnings guidance, all other information provided with respect to our outlook for 2022 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, anticipated disruptions to our operations and industry due to the COVID-19 pandemic, 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, 2021, 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.

The Shyft Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 June 30, December 31,
 2022 2021
ASSETS   
Current assets:   
Cash and cash equivalents$6,607 $37,158
Accounts receivable, less allowance of $162 and $187 79,241  87,262
Contract assets 42,368  21,483
Inventories, net 102,010  67,184
Other receivables - chassis pool agreements 23,636  9,926
Other current assets 13,698  10,813
Total current assets 267,560  233,826
    
Property, plant and equipment, net 66,169  61,057
Right of use assets – operating leases 54,426  43,316
Goodwill 48,880  48,880
Intangible assets, net 51,029  52,981
Net deferred tax asset 5,312  4,880
Other assets 1,637  2,927
TOTAL ASSETS$495,013 $447,867
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$90,259 $82,442
Accrued warranty 5,596  5,975
Accrued compensation and related taxes 12,918  19,064
Contract liabilities 1,359  988
Operating lease liability 9,706  7,934
Other current liabilities and accrued expenses 9,856  9,256
Short-term debt - chassis pool agreements 23,636  9,926
Current portion of long-term debt 192  252
Total current liabilities 153,522  135,837
    
Other non-current liabilities 7,004  8,108
Long-term operating lease liability 46,188  36,329
Long-term debt, less current portion 55,263  738
Total liabilities 261,977  181,012
Shareholders' equity:   
Preferred stock, no par value: 2,000 shares authorized (none issued) -  -
Common stock, no par value : 80,000 shares authorized; 35,063 and 35,416 outstanding 88,894  95,375
Retained earnings 144,041  171,379
Total The Shyft Group, Inc. shareholders' equity 232,935  266,754
Non-controlling interest 101  101
Total shareholders' equity 233,036  266,855
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$495,013 $447,867
      

The Shyft Group, Inc. and Subsidiaries 
Consolidated Statements of Operations 
(In thousands, except per share data) 
(Unaudited)

   Three Months Ended
  Six Months Ended
 
   June 30,
  June 30,
 
    2022   2021   2022   2021 
 Sales $232,195  $243,982  $439,078  $441,870 
 Cost of products sold  190,077   192,076   371,029   349,978 
                  
Gross profit  42,118   51,906   68,049   91,892 
                  
Operating expenses:                
 Research and development  7,563   940   12,490   1,722 
 Selling, general and administrative  26,860   28,740   53,412   53,277 
                  
 Total operating expenses  34,423   29,680   65,902   54,999 
                  
 Operating income  7,695   22,226   2,147   36,893 
                  
Other income (expense):                
 Interest expense  (463)  (227)  (617)  (57)
 Other income (expense)  (488)  506   (523)  689 
                  
 Total other income (expense)  (951)  279   (1,140)  632 
                  
Income from continuing operations before income taxes  6,744   22,505   1,007   37,525 
                  
Income tax expense (benefit)  1,461   5,552   (424)  9,042 
                  
Income from continuing operations  5,283   16,953   1,431   28,483 
                  
Income from discontinued operations, net of income taxes  -   -   -   81 
                  
Net income  5,283   16,953   1,431   28,564 
                  
Less: net income attributable to non-controlling interest  -   990   -   1,025 
                  
Net income attributable to The Shyft Group, Inc. $5,283  $15,963  $1,431  $27,539 
                  
                  
Basic earnings per share                
 Continuing operations $0.15  $0.45  $0.04  $0.78 
 Discontinued operations  -   -   -   -     
                  
 Basic earnings per share $0.15  $0.45  $0.04  $0.78 
                  
Diluted net earnings per share                
 Continuing operations $0.15  $0.44  $0.04  $0.76 
 Discontinued operations  -   -   -   - 
                  
 Diluted earnings per share $0.15  $0.44  $0.04  $0.76 
                  
Basic weighted average common shares outstanding  35,049   35,333   35,078   35,322 
                  
                  
Diluted weighted average common shares outstanding  35,243   36,190   35,437   36,191 
                  

The Shyft Group, Inc. and Subsidiaries 
Consolidated Statements of Cash Flows 
(In thousands, except par value) 
(Unaudited)

  Six Months Ended
June 30,

 
  2022  2021 
Cash flows from operating activities:      
Net income$1,431 $28,564 
Adjustments to reconcile net income to net cash used in operating activities      
Depreciation and amortization 6,696  5,330 
Non-cash stock based compensation expense 3,708  4,492 
Deferred income taxes (432) 134 
Loss (gain) on disposal of assets 481  (105)
Changes in accounts receivable and contract assets (12,863) (42,639)
Changes in inventories (34,826) (21,992)
Changes in accounts payable 7,333  27,721 
Changes in accrued compensation and related taxes (6,146) 665 
Changes in accrued warranty (379) 989 
Changes in other assets and liabilities (1,672) 69 
Net cash provided by (used in) operating activities (36,669)  3,228 
       
Cash flows from investing activities:      
Purchases of property, plant and equipment (10,010) (12,373)
Proceeds from sale of property, plant and equipment 148  15 
Acquisition of business, net of cash acquired -  404 
       
Net cash used in investing activities (9,862) (11,954)
       
Cash flows from financing activities:      
Proceeds from long-term debt 85,000  15,000 
Payments on long-term debt (30,000) (15,000)
Payments of dividends (3,640) (1,776)
Purchase and retirement of common stock (26,789) (3,348)
Issuance and vesting of stock incentive awards (8,591) (2,967)
Net cash provided by (used in) financing activities  15,980  (8,091)
       
Net decrease in cash and cash equivalents (30,551) (16,817)
Cash and cash equivalents at beginning of year 37,158  20,995 
       
Cash and cash equivalents at end of year$6,607 $4,178 
       

The Shyft Group, Inc. and Subsidiaries 
Sales and Other Financial Information by Business Segment 
(Unaudited)

Quarter Ended June 30, 2022 (in thousands of dollars) 

      Business Segments      
   Fleet Vehicles  Specialty       
   & Services  Vehicles  Other   Consolidated
 Fleet vehicle sales$126,181 $- $-  $126,181
 Motorhome chassis sales -  42,710  -   42,710
 Other specialty vehicles sales -  47,044  -   47,044
 Aftermarket parts and accessories sales 10,716  5,544  -   16,260
              
 Total Sales$136,897 $95,298 $-  $232,195
              
Adjusted EBITDA$14,525 $12,859 $(13,695) $13,689
             

The Shyft Group, Inc. and Subsidiaries 
Sales and Other Financial Information by Business Segment 
(Unaudited)

Quarter Ended June 30, 2021 (in thousands of dollars) 

   Business Segments    
   Fleet Vehicles  Specialty       
   & Services  Vehicles  Other   Consolidated
 Fleet vehicle sales$153,171 $- $-  $153,171
 Motorhome chassis sales -  40,891  -   40,891
 Other specialty vehicles sales -  36,070  -   36,070
 Aftermarket parts and accessories sales 8,447  5,403  -   13,850
              
 Total Sales$161,618 $82,364 $-  $243,982
              
Adjusted EBITDA$28,116 $8,808 $(8,354) $28,570
             

The Shyft Group, Inc. and Subsidiaries 
Sales and Other Financial Information by Business Segment 
(Unaudited)

Period End Backlog (amounts in thousands of dollars)

  Jun. 30, 2022  Mar. 31, 2022  Dec. 31, 2021  Sept. 30, 2021 Jun. 30, 2021
Fleet Vehicles and Services$1,000,021 $1,148,700 $859,442 $749,731 $652,642
Motorhome Chassis 62,811  61,297  54,583  60,978  56,294
Other Specialty Vehicles 72,058  62,406  49,407  41,504  42,106
Aftermarket Parts and Accessories 293  296  127  347  382
               
Total Specialty Vehicles 135,162  123,999  104,117  102,829  98,782
               
Total Backlog$1,135,183 $1,272,699 $963,559 $852,560 $751,424
               

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.

The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)

(In thousands, except per share data)

(Unaudited)

 Three Months Ended June 30,
The Shyft Group, Inc. 2022  % of sales  2021  % of sales
Income from continuing operations$5,283  2.3% $16,953  6.9%
Net (income) attributable to non-controlling interest -     (990)  
Add (subtract):       
Restructuring and other related charges 354     505   
Acquisition related expenses and adjustments 341     71   
Non-cash stock-based compensation expense 2,060     2,850   
Loss from liquidation of JV     643   
Tax effect of adjustments (496)    (998)  
Adjusted net income$7,542  3.2% $19,034  7.8%
        
Income from continuing operations$5,283  2.3% $16,953  6.9%
Net (income) attributable to non-controlling interest -     (990)  
Add (subtract):       
Depreciation and amortization 3,727     2,759   
Income tax expense 1,461     5,552   
Interest expense 463     227   
EBITDA$10,934  4.7% $24,501  10.0%
Add:       
Restructuring and other related charges 354     505   
Acquisition related expenses and adjustments 341     71   
Non-cash stock-based compensation expense 2,060     2,850   
Loss from liquidation of JV -     643   
Adjusted EBITDA$13,689  5.9% $28,570  11.7%
        
Diluted net earnings per share$0.15    $0.44   
Add (subtract):       
Restructuring and other related charges 0.01     -   
Acquisition related expenses and adjustments 0.01     -   
Non-cash stock-based compensation expense 0.05     0.08   
Loss from liquidation of JV     0.01   
Tax effect of adjustments (0.01)    -   
Adjusted diluted net earnings per share$0.21    $0.53   


The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)
(In thousands, except per share data)
(Unaudited)
        
   Forecast
   Twelve Months Ended
December 31, 2022
The Shyft Group, Inc.  Low Mid High
Income from continuing operations  $21,097  $31,116  $41,135 
Add:       
Depreciation and amortization   13,582   13,582   13,582 
Interest expense   1,500   1,250   1,000 
Taxes   6,481
   9,212
   11,943 
EBITDA  $42,660  $55,160  $67,660 
Add:       
Non-cash stock-based compensation and other charges  12,340   12,340   12,340 
Adjusted EBITDA  $55,000  $67,500  $80,000 
        
Earnings per share  $0.59  $0.87  $1.15 
Add:       
Non-cash stock-based compensation and other charges  0.34   0.34   0.34 
Less tax effect of adjustments   (0.08)  (0.08)  (0.08)
Adjusted earnings per share  $0.85  $1.13  $1.41 

CONTACT:
Randy Wilson
Vice President, Investor Relations and Treasury
Cell: 248.727.3755
Email: Randy.Wilson@theshyftgroup.com