The Shyft Group Reports Third Quarter 2022 Results

Sales up 5%; Backlog remains strong at $1 billion
Tightened full-year 2022 EPS outlook

NOVI, Mich., Oct. 27, 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 third quarter ending September 30, 2022.

Third Quarter 2022 Financial Highlights¹

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

• Sales of $286.1 million, an increase of $13.5 million, or 4.9%, from $272.6 million.
• Earnings of $17.3 million, or $0.49 per share, compared to $21.0 million, or $0.58 per share.
• Adjusted EBITDA of $27.1 million, or 9.5% of sales, a decrease of $6.6 million, from $33.7 million, or 12.4% of sales. Results include $7.7 million of EV development costs.
• Adjusted net income of $18.6 million, or $0.53 per share, compared to adjusted net income of $22.9 million, or $0.63 per share in the third quarter of 2021.
• Consolidated backlog at September 30, 2022, totaled $1.0 billion, up $191.3 million, or 22.4%, compared to $852.6 million at September 30, 2021, reflecting continued strong demand across all business units.
• Secured initial pre-order for Blue Arc™ Electric Delivery Walk-In Vans from Randy Marion Dealer Group of 2,000-units.

“I am incredibly proud of the Shyft Group team as we delivered positive operating results, with strong execution in an environment that remains highly dynamic and challenging. The Specialty Vehicles business produced record profitability while Fleet Vehicles and Services improved sequentially as chassis availability returned to more healthy levels,” said Daryl Adams, President and Chief Executive Officer. “The excitement around our Blue Arc Solutions remains extremely high as demonstrated by our initial pre-order and positive customer feedback. We are pleased with our progress to date and believe we are on-track for mid-2023 production.”

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¹ Results reflected are for Continuing Operations; 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.

Fleet Vehicles and Services (FVS)

FVS segment sales were $184.5 million, a decrease of $6.9 million, or 3.6%, from $191.4 million due to lower volume.

Adjusted EBITDA was $24.4 million, or 13.2% of sales, compared to $36.4 million, or 19.0% of sales, a year ago. The decrease was primarily driven by lower volume and production inefficiencies due to supply chain challenges along with material and labor cost inflation, partially offset by pricing actions and mix.

The segment backlog at September 30, 2022, totaled $915.1 million and was up 22.1% compared to $749.7 million at September 30, 2021.

Specialty Vehicles (SV)

SV segment sales were $103.9 million, an increase of $22.7 million, or 27.9%, from $81.2 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 $15.6 million, or 15.0% of sales, an increase of $9.3 million, or 148.9%, from $6.2 million, or 7.7% 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 September 30, 2022, totaled $128.8 million and was up 25.2% compared to $102.9 million at September 30, 2021.

2022 Outlook

“Given our third quarter performance, chassis visibility for the balance of the year, and our strong backlog, we are tightening our full year guidance,” said Jon Douyard, Chief Financial Officer. “Our balance sheet and liquidity remain strong, and while free cash flow performance has been challenging year-to-date, we expect to see recovery in the fourth quarter as completion and delivery of vehicles improves.”

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

• Revenue to be in the range of $1.0 billion to $1.1 billion
• Adjusted EBITDA of $62.5 to $72.5 million, including approximately $30 million of expenses related to EV development
• Income from continuing operations of $29.7 to $37.6 million
• Earnings per share of $0.83 to $1.05
• Adjusted earnings per share of $1.02 to $1.24
  

Adams concluded, “Our team is working hard to maintain our positive momentum and close out the year strong, while executing our long-term growth strategy. We believe the strength of our portfolio, talented team, and operations provides a strong foundation to continue delivering meaningful shareholder value through 2022 and beyond."

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: 10163195

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 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.

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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.

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