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The Shyft Group Reports Fourth Quarter and Full-Year 2022 Results

  • Reports Q4 sales of $302 million, growth of 9% versus prior year; Achieved record full year sales of $1.0 billion
  • Remain on target for Blue Arc Electric Vehicle (EV) production in the second half of 2023
  • Introduce 2023 outlook with sales of $1.0 to $1.2 billion; Adjusted EBITDA of $70 to $100 million, up 20% year-over-year at the midpoint

NOVI, Mich., Feb. 23, 2023 (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, 2022.

Fourth Quarter 2022 Financial Highlights1        
For the fourth quarter of 2022 compared to the fourth quarter of 2021:

  • Sales of $302.0 million, an increase of $24.7 million, or 8.9%, from $277.3 million
  • Income from continuing operations of $17.8 million, or $0.50 per share, compared to $20.5 million, or $0.56 per share
  • Adjusted EBITDA of $30.7 million, or 10.2% of sales, an increase of $4.1 million, from $26.6 million, or 9.6% of sales; Results include $7.6 million of EV development costs versus $4.0 million in the prior year
  • Adjusted net income of $20.5 million, or $0.58 per share, compared to adjusted net income of $20.2 million, or $0.56 per share in the fourth quarter of 2021
  • Consolidated backlog of $832.7 million as of December 31, 2022, down $130.9 million, or 13.6%, compared to $963.6 million as of December 31, 2021

Full-Year 2022 Financial Highlights1
For the full-year 2022 compared to the full-year 2021:

  • Sales of $1.0 billion, an increase of $35.4 million, or 3.6%, from $991.8 million
  • Income from continuing operations of $36.6 million, or $1.03 per share, compared to $70.0 million, or $1.91 per share; The current year reflects an effective income tax rate of 16.8%
  • Adjusted EBITDA of $70.8 million, or 6.9% of sales, a decrease of $37.3 million, from $108.1 million, or 10.9% of sales; Results include $26.9 million of EV development costs versus $6.4 million in the prior year
  • Adjusted net income of $44.5 million, or $1.25 per share, compared to adjusted net income of $75.0 million, or $2.08 per share in 2021  
  • Net leverage ratio of 0.93x times adjusted EBITDA as of December 31, 2022

“I am proud of the Shyft Group team’s ability to execute and close out the year strong, with solid growth in sales and adjusted EBITDA for the fourth quarter. We overcame dynamic challenges in our supply chain and inflationary pressures, remaining nimble and responsive to the needs of our customers while taking advantage of opportunities to invest in future growth,” said Daryl Adams, President and CEO.

Fourth Quarter 2022 Business Segment Financial Highlights

Fleet Vehicles and Services (FVS)

  • Sales were $212.9 million for the fourth quarter of 2022, up 16.6% or $30.3 million year over year
  • Adjusted EBITDA for the fourth quarter of 2022 increased 5.6% to $27.7 million, or 13.0% of sales, compared to $26.2 million, or 14.4% of sales, a year ago
  • Segment backlog was $736.7 million as of December 31, 2022, down 14.3% compared to $859.4 million as of December 31, 2021

Specialty Vehicles (SV)

  • Sales were $93.2 million for the fourth quarter of 2022, a decrease of $1.5 million, or 1.5%, from $94.7 million a year ago
  • Adjusted EBITDA for the fourth quarter of 2022 was $15.9 million, or 17.1% of sales, an increase of $5.6 million, or 55.2%, from $10.3 million, or 10.8% of sales, a year ago
  • Segment backlog was $96.0 million as of December 31, 2022, down 7.8% compared to $104.1 million as of December 31, 2021

2023 Financial Outlook
“We are focused on delivering improved profitability in 2023. Current uncertainty surrounding broader macroeconomic conditions has led us to take a cautious approach to our outlook,” said Jon Douyard, Chief Financial Officer. “Our balance sheet strength and ample liquidity provide financial flexibility to fund operations and growth investments.”

Guidance for full-year 2023, notwithstanding further changes in the operating environment, is as follows:

  • Sales to be in the range of $1.0 billion to $1.2 billion
  • Adjusted EBITDA of $70 to $100 million
  • Net income of $28 to $50 million, with an income tax rate of approximately 25%
  • Earnings per share of $0.77 to $1.38
  • Adjusted earnings per share of $0.97 to $1.59
  • Capital expenditures of approximately $35 million
  • Free cash flow conversion ratio as a percent of net income greater than 100%

Adams concluded, “Our Blue Arc EV timeline remains on track with vehicle production planned for the second half of the year. We are differentiating the Shyft Group by investing in transformative initiatives that will deliver meaningful long-term growth and value for our customers 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.the shyftgroup.com/webcasts
Conference Call: 1-844-868-8845 (domestic) or 412-317-6591 (international); passcode: 10174805

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 include Blue Arc™ EV Solutions, Utilimaster®, 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 4,200 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 $1.0 billion in 2022. Learn more about The Shyft Group at TheShyftGroup.com.

This release contains information, including our sales and earnings guidance, all other information provided with respect to our outlook for 2023 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, 2022, 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.

Contact
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,
  2022  2021
ASSETS   
Current assets:   
Cash and cash equivalents$11,548 $37,158
Accounts receivable, less allowance of $246 and $187 115,742  87,262
Contract assets 86,993  21,483
Inventories 100,161  67,184
Other receivables - chassis pool agreements 19,544  9,926
Other current assets 11,779  10,813
Total current assets 345,767  233,826
    
Property, plant and equipment, net 70,753  61,057
Right of use assets – operating leases 53,386  43,316
Goodwill 48,880  48,880
Intangible assets, net 49,078  52,981
Net deferred tax asset 10,390  4,880
Other assets 2,227  2,927
TOTAL ASSETS$ 580,481 $ 447,867
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$124,309 $82,442
Accrued warranty 7,161  5,975
Accrued compensation and related taxes 14,434  19,064
Contract liabilities 5,255  988
Operating lease liability 10,888  7,934
Other current liabilities and accrued expenses 19,452  9,256
Short-term debt - chassis pool agreements 19,544  9,926
Current portion of long-term debt 189  252
Total current liabilities 201,232  135,837
    
Other non-current liabilities 10,033  8,108
Long-term operating lease liability 44,256  36,329
Long-term debt, less current portion 56,266  738
Total liabilities 311,787  181,012
Shareholders' equity:   
Preferred stock, no par value: 2,000 shares authorized (none issued) -  -
Common stock, no par value : 80,000 shares authorized; 35,066 and 35,416 outstanding 92,982  95,375
Retained earnings 175,611  171,379
Total The Shyft Group, Inc. shareholders' equity 268,593  266,754
Non-controlling interest 101  101
Total shareholders' equity 268,694  266,855
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 580,481  $ 447,867



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

    Three Months Ended Twelve Months Ended
   December 31,    December 31,  
   2022  2021  2022  2021 
 Sales$302,011 $277,300 $1,027,164 $991,792
 Cost of products sold 243,723  225,985  846,731  792,527
 Gross profit 58,288  51,315  180,433  199,265
              
Operating expenses:            
   Research and development 5,783  4,237  25,324  8,541
   Selling, general and administrative 29,155  28,027  107,600  106,672
   Total operating expenses 34,938  32,264  132,924  115,213
              
 Operating income 23,350  19,051   47,509  84,052
              
Other income (expense):            
   Interest expense (1,079) (104) (2,833) (414)
   Other income (expense) (408) 99  (750) 842
   Total other income (expense) (1,487) (5) (3,583) 428
 Income from continuing operations before income taxes 21,863  19,046  43,926  84,480
              
Income tax expense (benefit) 4,022  (1,446) 7,368  14,506
              
Income from continuing operations 17,841  20,492   36,558  69,974
              
Income from discontinued operations, net of income taxes -  100  -  181
              
Net income 17,841  20,592  36,558  70,155
              
Less: net income attributable to non-controlling interest -  128  -  1,230
              
Net income attributable to The Shyft Group, Inc.$17,841 $20,464 $ 36,558 $68,925
              
Basic earnings per share            
   Continuing operations$0.51 $0.58 $                1.04 $1.94
   Discontinued operations -  -  -  0.01
   Basic earnings per share$0.51 $0.58 $1.04 $1.95
              
Diluted net earnings per share            
   Continuing operations$0.50 $0.56 $                1.03 $1.91
   Discontinued operations -  -  -  -
   Diluted earnings per share$0.50 $0.56 $1.03 $1.91
              
Basic weighted average common shares outstanding 35,067  35,341  35,073  35,333
              
Diluted weighted average common shares outstanding 35,443  36,185              35,494  36,097



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

(Unaudited)

  Year Ended December 31,
  2022  2021 
Cash flows from operating activities:      
Net income$36,558 $70,155 
Adjustments to reconcile net income to net cash used in operating activities      
Depreciation and amortization 14,774  11,536 
Non-cash stock based compensation expense 7,619  8,745 
Deferred income taxes (5,510) 880 
Loss (gain) on disposal of assets 826  (110)
Changes in accounts receivable and contract assets (93,989) (34,522)
Changes in inventories (32,977) (20,756)
Changes in accounts payable 41,302  34,954 
Changes in accrued compensation and related taxes (4,630) 1,930 
Changes in accrued warranty 1,186  53 
Changes in other assets and liabilities 15,998  1,324 
Net cash provided by (used in) operating activities (18,843)  74,009 
       
Cash flows from investing activities:      
Purchases of property, plant and equipment (20,564) (23,002)
Proceeds from sale of property, plant and equipment 148  22 
Acquisition of business, net of cash acquired -  904 
Net cash used in investing activities (20,416) (22,076)
       
Cash flows from financing activities:      
Proceeds from long-term debt 145,000  45,000 
Payments on long-term debt (89,000) (67,400)
Payments of debt issuance costs -  (1,360)
Payments of dividends (7,148) (3,551)
Purchase and retirement of common stock (26,789) (3,348)
Issuance and vesting of stock incentive awards (8,414) (2,949)
Purchase of non-controlling interest -  (2,162)
Net cash provided by (used in) financing activities  13,649  (35,770)
       
Net increase (decrease) in cash and cash equivalents (25,610) 16,163 
Cash and cash equivalents at beginning of year 37,158  20,995 
Cash and cash equivalents at end of year$11,548 $37,158 



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)


 Quarter Ended December 31, 2021 (in thousands of dollars)               
                 
        Business Segments        
    Fleet Vehicles  Specialty  Eliminations &     
    & Services   Vehicles   Other  Consolidated  
 Fleet vehicle sales$172,240$$- $172,240 
 Motorhome chassis sales    49,500  -  49,500 
 Other specialty vehicles sales    40,562  -  40,562 
 Aftermarket parts and accessories sales  10,364  4,634  -  14,998 
       Total Sales $182,604 $94,696 $- $277,300 
            
 Adjusted EBITDA$26,246$10,251$(9,912)$26,585 



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)


 Year Ended December 31, 2021 (in thousands of dollars)               
                 
        Business Segments        
    Fleet Vehicles  Specialty  Eliminations &     
    & Services   Vehicles   Other  Consolidated  
 Fleet vehicle sales$624,874$$- $624,874 
 Motorhome chassis sales    168,166  -  168,166 
 Other specialty vehicles sales    145,134  -  145,134 
 Aftermarket parts and accessories sales  34,558  19,060  -  53,618 
   Total Sales$659,432$332,360$- $991,792 
            
 Adjusted EBITDA$108,621$32,668$(33,223)$108,066 



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, 2022  Sept. 30, 2022  Jun. 30, 2022  Mar. 31, 2022  Dec. 31, 2021
 Fleet Vehicles and Services $736,690 $915,135 $1,000,021 $1,148,700 $859,442
  Motorhome Chassis  35,471  49,769   62,811  61,297   54,583
  Other Specialty Vehicles  60,417  78,794   72,058  62,406   49,407
  Aftermarket Parts and Accessories  135  206   293  296   127
   Total Specialty Vehicles  96,023  128,769   135,162  123,999   104,117
                
    Total Backlog $832,713 $1,043,904 $ 1,135,183 $          1,272,699 $
963,559


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 December 31, Twelve Months Ended December 31,
The Shyft Group, Inc. 2022 % of sales  2021 % of sales  2022 % of sales  2021 % of sales
Income from continuing operations$17,841 5.9% $20,492 7.4% $36,558 3.6% $69,974 7.0%
Net (income) attributable to non-controlling interest 

-
    

(128


)
   

-
    

(1,230


)
 
Add (subtract):           
Restructuring and other related charges             243    -    757    505  
Acquisition related expenses and adjustments 84    777    884    1,585  
Non-cash stock-based compensation expense 2,697    2,174    7,619    8,745  
Non-recurring professional fees -    1,568    -    1,568  
Loss from liquidation of JV -    -    -    643  
Non-recurring tax benefits -    (4,392)   -    (4,392) 
Tax effect of adjustments (371)   (266)   (1,348)   (2,429) 
Adjusted net income$ 20,494  6.8% $ 20,225  7.3% $ 44,470  4.3% $ 74,969  7.6%
            
Income from continuing operations$17,841 5.9% $20,492 7.4% $36,558 3.6% $69,974 7.1%
Net (income) attributable to non-controlling interest 

-
    

(128


)
   

-
    

(1,230


)
 
Add (subtract):           
Depreciation and amortization 4,719    3,044    14,774    11,356  
Taxes on income 4,022    (1,446)   7,368    14,506  
Interest expense 1,079    104    2,833    414  
EBITDA$27,661    9.2% $22,066 8.0% $61,533 6.0% $95,020 9.6%
            
Add (subtract):           
Restructuring and other related charges 243    -    757    505          
Acquisition related expenses and adjustments 84    777    884    1,585  
Non-cash stock-based compensation expense 2,697    2,174    7,619    8,745  
Non-recurring professional fees -    1,568    -    1,568  
Loss from liquidation of JV -    -    -    643  
Adjusted EBITDA$ 30,685 10.2% $ 26,585 9.6% $ 70,793 6.9% $ 108,066 10.9%
            
Diluted net earnings per share$0.50   $   0.56   $        1.03   $1.91  
Add (subtract):           
Restructuring and other related charges 0.01    -    0.02    0.01  
Acquisition related expenses and adjustments -    0.02    0.02    0.04  
Non-cash stock-based compensation expense 0.08    0.07    0.21    0.24  
Non-recurring professional fees -    0.04    -    0.04  
Loss from liquidation of JV -    -    -    0.02  
Non-recurring tax benefits -    (0.12)   -    (0.12) 
Tax effect of adjustments (0.01)   (0.01)   (0.03)   (0.06) 
Adjusted diluted net earnings per share $0.58   $0.56   $1.25   $2.08  



The Shyft Group, Inc. and Subsidiaries
Consolidated Financial Summary (Non-GAAP)
(In thousands, except per share data)

(Unaudited)

   Outlook
   Twelve Months Ended December 31, 2023
The Shyft Group, Inc.  Low Mid High
Income from continuing operations  $27,562  $38,681  $49,800 
Add:       
Depreciation and amortization                  19,250                  19,925                  20,600 
Interest expense                    4,000                    3,500                    3,000 
Taxes                    9,188                  12,894                  16,600 
EBITDA  $60,000  $75,000  $90,000 
Add:       
Non-cash stock-based compensation and other charges                 10,000                  10,000                  10,000 
Adjusted EBITDA  $70,000  $85,000  $100,000 
        
Earnings per share  $0.77  $1.07  $1.38 
Add:       
Non-cash stock-based compensation and other charges  0.28   0.28   0.28 
Less tax effect of adjustments   (0.07)  (0.07)  (0.07)
Adjusted earnings per share  $0.97  $1.28  $1.59 

*Total amounts may not add due to rounding.

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.


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