The Shyft Group Reports Third Quarter 2024 Results
-- Expanded gross margin to 20.4%, up 210 basis points year-over-year
-- Blue Arc Class 4 vehicle now in production with first customer
deliveries expected in the fourth quarter
-- Maintained full year 2024 adjusted EBITDA outlook of $45 to $50 million;
positioned for significant profit growth in 2025
NOVI, Mich., Oct. 24, 2024 /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, 2024.
Third Quarter 2024 Financial Highlights
For the third quarter of 2024 compared to the third quarter of 2023:
-- Sales of $194.1 million, a decrease of $7.2 million, or 3.6%, from
$201.3 million
-- Net income of $3.1 million, or $0.09 per share, compared to $4.5
million, or $0.13 per share; third quarter 2023 net income included a
tax benefit of $2.0 million, primarily due to favorable adjustments for
R&D tax credits
-- Adjusted EBITDA of $14.3 million, or 7.4% of sales, an increase of $3.3
million, from $11.0 million, or 5.5% of sales; results include $6.1
million of EV program related costs versus $7.6 million in the prior
year
-- Adjusted net income of $6.1 million, or $0.18 per share, compared to
$6.7 million, or $0.19 per share in the third quarter of 2023
-- Consolidated backlog(1) of $345.4 million as of September 30, 2024, down
$119.0 million, or 25.6%, compared to $464.4 million as of September 30,
2023
"We are improving performance by the execution of our operational framework as we achieved adjusted EBITDA growth of 31% year-over-year. The Shyft team is highly engaged in driving operational and commercial improvements and we are seeing it in our results," said John Dunn, President and CEO.
2024 Financial Outlook
"In the quarter, Shyft delivered improved financial results while progressing key strategic initiatives, including the acquisition and initial integration of Independent Truck Upfitters. Our balance sheet remains solid as we achieved net leverage of 2.2x, which was meaningfully below our expectations for the third quarter. Based on our expected fourth quarter performance, we anticipate further improvement of our balance sheet and liquidity as we enter 2025, providing flexibility to invest capital going forward," said Jon Douyard, Chief Financial Officer.
Full-year 2024 outlook, notwithstanding further changes in the operating environment, is as follows:
-- Sales of approximately $800 million; Assumes no Blue Arc EV revenue
-- Adjusted EBITDA of $45 to $50 million, including EV spending of $20 to
$25 million
-- Net income of $2.6 to $6.9 million, with an income tax rate of
approximately 20%
-- Earnings per share of $0.07 to $0.20
-- Adjusted earnings per share of $0.35 to $0.50
-- Capital expenditures of $15 to $20 million
-- Free cash flow of approximately $30 million
Dunn concluded, "Our team is committed to meeting our financial goals for the year and maintaining financial strength heading into 2025. As we integrate ITU and start Blue Arc production, the team is energized by Shyft's future growth prospects and opportunities to deliver value through a one Shyft mindset. Overall, while the operating environment is highly dynamic, Shyft is well positioned to grow profitably as end-markets turn more positive."
Footnote:
1.)
Consolidated backlog does not reflect Blue Arc order activity
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)
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(TM) and Shyft Specialty Vehicles(TM). Today, its family of brands include Utilimaster®, Blue Arc(TM) EV Solutions, Royal® Truck Body, DuraMag® and Magnum®, Strobes-R-Us, Spartan® RV Chassis, Red Diamond(TM) Aftermarket Solutions, Builtmore Contract Manufacturing(TM), and Independent Truck Upfitters. 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, Iowa, 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. More information about factors that potentially could affect our financial results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent Annual Report on Form 10-K and subsequent filings, 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 Machesky
Director, Corporate Communications
Sydney.Machesky@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)
September 30, December 31,
2024 2023
ASSETS
Current assets:
Cash and cash equivalents $21,440 $9,957
Accounts receivable, less allowance of $496 and $276 99,255 79,573
Contract assets 32,237 50,305
Inventories 108,931 105,135
Other receivables - chassis pool agreements 31,592 34,496
Other current assets 6,364 7,462
Total current assets 299,819 286,928
Property, plant and equipment, net 83,773 83,437
Right of use assets - operating leases 40,524 45,827
Goodwill 64,902 48,880
Intangible assets, net 60,724 45,268
Net deferred tax asset 17,310 17,300
Other assets 2,382 2,409
TOTAL ASSETS $569,434 $530,049
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $80,697 $99,855
Accrued warranty 8,827 7,231
Accrued compensation and related taxes 17,204 13,526
Contract liabilities 6,024 4,756
Operating lease liability 9,881 10,817
Other current liabilities and accrued expenses 10,659 11,965
Short-term debt - chassis pool agreements 31,592 34,496
Current portion of long-term debt 248 185
Total current liabilities 165,132 182,831
Other non-current liabilities 9,028 8,184
Long-term operating lease liability 32,377 36,724
Long-term debt, less current portion 110,234 50,144
Total liabilities 316,771 277,883
Shareholders' equity:
Preferred stock, no par value: 2,000 shares authorized (none issued) -
Common stock, no par value : 80,000 shares authorized; 34,482 and 98,888 93,705
34,303 outstanding
Retained earnings 153,775 158,461
Total shareholders' equity 252,663 252,166
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $569,434 $530,049
The Shyft Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
Sales $
194,075 $
201,325 $
584,744 $
669,865
Cost of products sold 154,468 164,557 470,488 547,419
Gross profit 39,607 36,768 114,256 122,446
Operating expenses:
Research and development 4,200 5,225 12,425 18,064
Selling, general and administrative 30,078 27,419 94,704 89,978
Total operating expenses 34,278 32,644 107,129 108,042
Operating income 5,329 4,124 7,127 14,404
Other income (expense)
Interest expense (2,392) (1,572) (6,198) (4,697)
Other income 138 15 315 209
Total other expense (2,254) (1,557) (5,883) (4,488)
Income before income taxes 3,075 2,567 1,244 9,916
Income tax expense (benefit) (48) (1,951) 626 (965)
Net income 3,123 4,518 618 10,881
Less: net loss attributable to non-controlling interest 32
Net income attributable to The Shyft Group Inc. $
3,123 $
4,518 $
618 $
10,913
Basic earnings per share $
0.09 $
0.13 $
0.02 $
0.31
Diluted earnings per share $
0.09 $
0.13 $
0.02 $
0.31
Basic weighted average common shares outstanding 34,474 34,604 34,399 34,863
Diluted weighted average common shares outstanding 34,651 34,637 34,527 34,985
The Shyft Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
2024 2023
Cash flows from operating activities:
Net income $
618 $
10,881
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 14,488 12,360
Non-cash stock-based compensation expense 5,672 5,187
Loss on disposal of assets 167 132
Deferred income taxes (9) (614)
Changes in accounts receivable and contract assets 7,454 62,730
Changes in inventories 6,949 (15,039)
Changes in accounts payable (21,509) (25,194)
Changes in accrued compensation and related taxes 3,678 1,693
Changes in accrued warranty 1,596 (844)
Changes in other assets and liabilities (1,888) (6,474)
Net cash provided by operating activities 17,216 44,818
Cash flows from investing activities:
Purchases of property, plant and equipment (11,482) (16,143)
Proceeds from sale of property, plant and equipment 91 100
Acquisition of business, net of cash acquired (48,631) (500)
Net cash used in investing activities (60,022) (16,543)
Cash flows from financing activities:
Proceeds from long-term debt 135,000 100,000
Payments on long-term debt (75,000) (101,000)
Payments of dividends (5,222) (5,392)
Purchase and retirement of common stock (19,083)
Exercise and vesting of stock incentive awards (489) (4,472)
Net cash provided by (used in) financing activities 54,289 (29,947)
Net increase (decrease) in cash and cash equivalents 11,483 (1,672)
Cash and cash equivalents at beginning of period 9,957 11,548
Cash and cash equivalents at end of period $
21,440 $
9,876
The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Quarter Ended September 30, 2024 (in thousands of dollars)
Business Segments
Fleet
Vehicles Specialty Eliminations &
& Services Vehicles Other Consolidated
Fleet vehicle sales $
87,773
$
$ $
87,773
Motorhome chassis sales 11,194 11,194
Other specialty vehicle
sales 66,983 850 67,833
Aftermarket parts and
accessories sales 18,087 9,188 27,275
Total Sales $
105,860 $
87,365 $
850 $
194,075
Adjusted EBITDA $
9,828 $
16,146 $
(11,630) $
14,344
The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Quarter Ended September 30, 2023 (in thousands of dollars)
Business Segments
Fleet
Vehicles Specialty Eliminations &
& Services Vehicles Other Consolidated
Fleet vehicle sales $
108,491
$
$ $
108,491
Motorhome chassis sales 20,519 20,519
Other specialty vehicle
sales 50,557 444 51,001
Aftermarket parts and
accessories sales 15,768 5,546 21,314
Total Sales $
124,259 $
76,622 $
444 $
201,325
Adjusted EBITDA $
7,977 $
15,988 $
(12,977) $
10,988
The Shyft Group, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Period End Backlog (amounts in thousands of dollars)
Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30,
2024 2024 2024 2023 2023
Fleet Vehicles and Services $
267,952 $
294,586 $
356,089 $
325,003 $
383,448
Specialty Vehicles 77,456 59,856 83,334 84,269 80,983
Total Backlog $
345,408 $
354,442 $
439,423 $
409,272 $
464,431
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 September 30,
The Shyft Group, Inc. 2024 % of 2023 % of
sales sales
Net income $3,123 1.6 % $4,518 2.2 %
Add (subtract):
Restructuring and other related charges 186 58
Acquisition related expenses and adjustments 1,225 149
Non-cash stock-based compensation expense 2,188 2,097
CEO transition - 235
Tax effect of adjustments (665) (363)
Adjusted net income $6,057 3.1 % $6,694 3.3 %
Net income $3,123 1.6 % $4,518 2.2 %
Add (subtract):
Depreciation and amortization 5,278 4,310
Income tax benefit (48) (1,951)
Interest expense 2,392 1,572
EBITDA $10,745 5.5 % $8,449 4.2 %
Add:
Restructuring and other related charges 186 58
Acquisition related expenses and adjustments 1,225 149
Non-cash stock-based compensation expense 2,188 2,097
CEO transition - 235
Adjusted EBITDA $14,344 7.4 % $10,988 5.5 %
Diluted net earnings per share $0.09 $0.13
Add (subtract):
Restructuring and other related charges -
Acquisition related expenses and adjustments 0.04
Non-cash stock-based compensation expense 0.06 0.06
CEO transition - 0.01
Tax effect of adjustments (0.01) (0.01)
Adjusted diluted net earnings per share $0.18 $0.19
The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
The Shyft Group, Inc. 2024 2023
Net cash provided by operating activities $
17,216 $
44,818
Purchases of property, plant and equipment (11,482) (16,143)
Proceeds from sale of property, plant and equipment 91 100
Free cash flow $
5,825 $
28,775
The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)
(In thousands, except per share data)
(Unaudited)
Outlook
Twelve Months Ended December 31, 2024
The Shyft Group, Inc. Low Mid High
Income from continuing operations $2,600 $4,750 $6,900
Add:
Depreciation and amortization 21,000 20,450 19,900
Interest expense 8,400 8,400 8,400
Taxes 640 1,195 1,750
EBITDA $32,640 $34,795 $36,950
Add:
Non-cash stock-based compensation and other charges 12,360 12,705 13,050
Adjusted EBITDA $45,000 $47,500 $50,000
Earnings per share $0.07 $0.14 $0.20
Add:
Non-cash stock-based compensation and other charges 0.35 0.36 0.37
Less tax effect of adjustments (0.07) (0.07) (0.07)
Adjusted earnings per share $0.35 $0.43 $0.50
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SOURCE The Shyft Group, Inc.
