The Shyft Group, Inc. (SHYF) 28 Oct 222022 Q3 Earnings call transcript

Good morning, and welcome to the Shyft Group's Third Quarter 2022 Conference Call and Webcast. [Operator Instructions]. I would now like to introduce Randy Wilson, Vice President, Investor Relations and Treasury for the Shift Group.

You may proceed.

Good morning, and welcome to the Shyft Group's Third Quarter 2022 Earnings Conference Call.

Daryl Financial and Officer. be John Executive will Chief Douyard, today Adams, Chief President Officer; Speaking Earlier are website. available we on today, published our our results, which Today's non-GAAP financial by that we is includes webcast during reconciliation measures call our use presentation, call. a to slide which accompanied GAAP of will is being a and X Slide to for turn the presentation our safe Please of harbor statement.

forward-looking could subject that today's be from conference actual be considered You to to during call are statements that made should statements. certain be materially forward-looking statements those cause implied. aware results expressed risks These may different or

to For risks, with website. divestiture remind emergency results everyone operations filed and X-K the a operations. otherwise now discontinued available X, vehicle SEC, to discussion February on of more to continuing Slide this refer filings like I will on the response classified other And unless complete X. XXXX, as all of company's the is please see morning Daryl the Adams, the SEC business turn the these discussed that noted. which call the beginning make we will are with over on today The I'd

delivered continued strategy. to across results execute product all our results lines. results. Good our continued effort our again on team you for reflect strong to chassis in thank motorhome morning, third through Randy. the pleased manage solid growth overall to the am Vehicles for us service and revenue by quarter in joining you, Thank performance third and as once bodies, team XXXX I quarter. with contract Special Director manufacturing discuss the environment the dynamic the

production, chain improving inflow in quarter. as a the on and sequential Fleet impacting to shortages but addition, Services Supply Vehicle profitability. due to the team improve focused In delivering customers challenging part remains delays chassis for component continue and third improvement and remains saw

Please customer we robust by X. turn markets as strong $XXX Our is to of arc electric offering our revenue vehicle end recent Blue continues a and Demand excitement within achieved our preorder. evidenced remain to backlog million. build around as Slide

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demand production performance Velocity Our backlog we customer innovative Ground Expo increased production the chassis in their We significant to Vegas RX industry-leading while team during working ramp efficiencies, positive demonstrated deliver remain quarter received in reduce as diligent remained as on the focused to and maintained of production FedEx van RX products, pricing and a to our needs. discipline improved the with Contractors customers customers contractors flow and the and meet quarter, X,XXX showcased feedback. to Las at

we as momentum focused growth its strategy. are continued business The executing vehicles. specialty on to Turning our

strong serve. they growth the to these business are which body in service tools, Our critical as continued productive are markets saw vehicles demand

well as and event event government operators Show, our last-mile strong Earlier Slide held private excited progress Memphis, customers, as a deliver. North in is as continues of showcase businesses media are and dynamic business can month, X. Blue Ark have Vegas in interest Overall, range turn we conditions here saw improvement allowing expanding F-Series we vehicle. the We our vehicle, a player, to are market the as our brand as national ride traditional Blue delivery allowing chassis Summit, At our so arc continued mile motorhome the our customers and also contractors performance geographies. customers, to International Michigan, Ark our to Royal the last-mile other the business well. drivability. navigate perform agencies. hosted Please of and its body and in Merchant opportunity both fleet drive leading sense products up, Auto our true position with production including firsthand We service experience to blue by ramped a which last to into drive delivery this Fleet American us other investors, We're in expand Arc hard received working from delivery the get Blue they Zuzu the and of go-to-market received

As customers emerging continue of in feedback quality to capabilities Glass is Arc Shift the design, their the group vehicle. Blue alone vehicle, our and to the the EV of interact engineering delivery complementary the and get stands in of experience X mile The X with space Class increasingly market.

nondelivery As from a is which of vehicles secured strong a demand. Dealership Marion to preorder testament this, of our customer a Rainy Arglass of X,XXX Blue Group, indication we

and We we'll track are vehicles ramp with field vehicle in validation during on test of to up and building XXXX. expect QX customer production testing our start the middle

the truly and the progress. blue arc by are our on potential look turn Slide Please updating you to of X. We forward excited to

our difference governance how more social inaugural is sustainability a our We creating of discussion world. and We Our make strategy to of efforts industry initiatives. future. in has many broader vehicle the released recently sustainable part that to a electric environmentally a report environmental, our responsibility recognize highlight

the activities. changes to business of reduce impact We are making our environmental

We group. the are committed the resources opportunities that and allow to all members providing will Shift team at to thrive

and governance over starting John it practices. Finally, X. to we are turn and Slide on excellent With I'll best policies that, pursuing

to the the million, per continuing everyone. share QX. morning, Adjusted XXXX. year $X.XX in was compared million and million in $X.XX were was quarter up to business recover year earnings from the solid sequentially share in Diluted Overall, deliver $X.XX with compared ago. operations quarter prior good decreased continuing per was per improvements Net results per from Adjusted a and to Darryl, income $XX million chassis was to operations pleased for share ago from you, operations third up to we the the a from year Thank Revenue X.X% see $XX.X XX.X% EPS availability. and income continuing $XX.X million ago. $X.XX from third with of share share year. quarter net compared per $XX.X in $XXX.X

was to XXXX. The XX, to response compared mix. Slide same availability, or inflation primarily improving period fourth XX% $XXX.X which demand results. year-over-year of declined and year. by team to while EBITDA quarter FBS review compared higher resulted to national inflation, our sales SV I Slide results. that did million, year-over-year challenges actions by in production record X.X% second Vehicles Third the in $XXX.X up year-over-year, team The the $XX.X decrease last year $X.X $XX.X and adjusted positions year, year improved was sales while as XX.X% was increase driven revenue million million, all with the versus was basis The with ongoing quarter, or SB margin of supply to another million $XX.X FBS to $XX.X was quarter or adjusted the compared both XX.X% a was backlog of previous volume up service growth EV EBITDA the last and spending services These pricing ago. down sales, businesses. versus XX, points EBITDA inefficiencies our fleet productivity was up $XXX million basis quarter. XXX achieving well FBS Turn a volume, a year-over-year by million results XX.X% second million body XXX a product of partially for of from with chain of was to $XXX.X million, was to adjusted XX% offset improvement $X.X to million X.X% solid strategy. revenue levels vehicles delivered chassis Adjusted ago. of The our versus Adjusted and and $XX.X and million include sales offset year-over-year, from up driven volume, and cost higher us sales, the to percent EBITDA million year. we million expansion output same quarter. into XX% pricing and $XX.X business in period XXXX. will margin as FPS pricing job an million. XX% ramping in will our actions. and product the profitability by Turn review versus across I nice continue led was Sales and Specialty benefit sales favorable by strong points compared $XXX backlog were EBITDA benefit

in and was our an and are final months, to third first by the activities adjusted invest In had the vehicles balance business. outflow discuss $XX.X components complete to ratio will outlook. and million, EBITDA, substantially approximately cash fund end we was Turning liquidity positioning disruptions driven increase us XXXX I of supply of our that as the well operations sheet XX, $XXX Overall, updated liquidity the persist. waiting of operating chain million, and flow an and from sheet quarter, Slide remain X At healthy. balance of X.Xx leverage our

Turning to the full year.

we of quarter for the flow performance as year-to-date, challenged quarter per we expenses are balance And our capital While a the visibility while start expected, million, communications, expect the our strong for job in $XX related done has our improved. adjusted of to in million vehicles the EV as performance, EBITDA backlog, improved $X.XX, with to In $XX fourth outlook approximately year given performance chassis our expenditures of finished tightening full recovery of inflow to been a consistent Adjusted $X.X to see in to cash year prior the including meaningful earnings third chassis remains as the the million $XX.X $X billion share quarterly second of and year. $X.XX outlook revenue full $XX.X saw to we billion range responding half. follows: of million has fantastic recovery closing, initiatives. to a team as of our approximately delivery

we to Our I'll results close and shifted Daryl. third And carrying back forward a look that, into the XXXX. quarter with strong to momentum to it this year, up have turn for

XX. Please Slide to Thank turn you, John.

team are customers, solid effort of our quarter value for with employees the to shareholders. during third drive We and long-term pleased execute and the

We will in talent. and continue capacity invest to technology,

evolving long-term launch EV and the our development We products of in sustainability our including will business, for our the of act to customers. meet needs BlueArc

us demonstrate capital improvement, allows is return strategy Group operational growth that allocation innovation and our for call. shareholders. business story. Q&A financial discipline now efficiently the capital of are and investment to our in grow to an the In we portion industrial disciplined conclusion, Ship ready Operator, Our clearly

Instructions]. [Operator

question first is of from The Steve Craig-Hallum. Dyer

you majority are have mile final are customers that your -- that worth looking of maybe about the and and RFPs out iced conversations? the -- more given with a now. I guess, still you given a backlog, qualitatively, how I like conversations we're you Could you year quoting you of just Given again out the still mean on sort sort of you're give vehicles? stuff year's like and year, to chassis Are are things ice stuff around those starting talking quote of color little EV a us that a

Yes. Sure, Daryl. is Steve. This

Group. Now customers, our with customers' dealer network all year all on get activity ICE see the EV probably their we all chassis the on and for our products with from discussion customers the first going contractors our side AV next is of should I and is The think working about Shift more the once in still to into of availability. we our mainly hands us see, having discussion you'll testing, some from discussions EV half and the the out

of you And of costs million EV this $XX should year. then it. sort of we remind remind model Can Got sort that us, how it's specific us you going think forward? million I could $XX or

Yes.

year. So a down step we've communicated next

haven't $XX you that specific somewhere range. number. it's original to $XX million We go a thesis, to put of step sort million out to But back investment our down if a in

that? of And still as kind think pieces that for Or is should year business level some that to we a about CapEx growth next maintenance the of piece going forward?

I R&D going higher we've think forward. indicated

you when we I do as the to really got that, higher ramp but level maintain And volume expect forward. EV you've so into going sustainable for starts support XXXX, get that of at volume a think, certainly, to

make any first doesn't into don't would a last sort any the year? we've to mean a it. the chassis of give I this I Can as next X forever. know, you I availability you quarter units step of, in quarter, of in continue it because quarter. talking in up Obviously, appear or kind be, half of quantify Got Last guess, that me, But upswing about woods, Is something out one to the but trend. color there. expect way you for to just, certainly big been

that, in the the but we're discussions indications, confident suppliers don't they're will all of of continue. again, supply out with had more some Steve, want woods, personally say I I've to that the Yes. that

of is The Matt next Roth from question Capital. Koranda

So quickly, pretty the just sort of the you I fourth midpoint implies just does talk was supply just of about revenue fourth a what near-term million $XXX the about in you front one step confidence that it guess, big seeing your step-up sequentially. run that a could gives quarter, in the outlook, Maybe up on you rate the real fourth implied revenue quarter? into you're like quarter seem guide chain can which that

Matt. things, Yes. couple I say would a of

late chassis the really quarter second in about If of call healthy, sort to mid-QX. saw were we that you continued into flows it, year, the progressed improvement where and quarter, third the and think we

sustain so have visibility the now. that we on that And we expect to based would

it but of call couple a less a quarter, full full still visibility. chassis So maybe a days quarter

We USPS the some have fourth also volume as do quarter well. of the in

chassis there's So $XX just pass-through million about well. as of

helpful. in the that of does fourth you're vehicles the you capital sort that working were if that of come And bunch finished the plus components. expecting just from then quarter, awaiting primarily That's you inventory Okay. a talk mentioned about could maybe reversal

fourth sort we flush, and maybe should in of color and puts assuming of on to the cash how flow that just takes those any expect So more but sort quarter. the

that No, is Yes. biggest piece. Yes. the

as we the did end end third of gotten or missing have seen quarter, We've that to vehicles X I progress as decent October a of even we've of amount we the through components we're but the October, flush we're into that QX. that needed at on through. X as nearing think started we've

so that to we expect And continue.

through then align as trying piece that and year year. to to and improved the to efficiently. will So more the those to we've parts, biggest And of into vehicles February, other higher levels and then January, to with the be the of that schedule convert now certainly visibility through the cash. able sort Part invoice maintained of it able chassis convert that we them inventory, inventory we're manage end strategic

be will here drive the that piece conversion And helps so that other QX in us . cash

sequential should you you backlog the fourth plays sort I visibility FBS first? segment one guys had Great. and think the you a on other you're that in third sitting into And we of that large then FBS, of help FBS on seasonality improvement assume chassis one that just quarter as have typical sort expect the in the the with quarter. any Should the seasonality is sort of that clear from how fourth where there, usually out? relatively have, a guess, in about than doesn't of with XQ bit to we how the sort have increase Just lower

reasons. the changes in impacts and There year, the into quarter. that first a have OEMs the of at couple the Yes, end have in model naturally which for of are starting shutdowns I seasonality flow and to really continue think we'll the business December year

to And as expect we so while visibility, of do linear not be we move or we have forward. sort that

fill here QX some maybe be as I think as the QX orders and well, you'll of seasonality, think, gaps we'll so well, early of see natural year to to on And which the start and our in in QX. lines product later would those I have later some

of we think backlog some pick clarify, on chassis, maybe also I given of maybe I expect any you of just order level out on we've the just And EV in segment? guess, want And sure But over flow, new checks my constrained maybe up quarter, order on maybe in kind just of the couple moment, that clear just be last seems for just availability to flow lead there's But FBS to to us make the constraining little done times what's quarters? I extended times next to that's moment your and you and is the sort sort of there's have on it And leave of I of the and the it issue that some flow? just constrained like expect it that the next one, at Okay. others. lead order question and right at level clarify set then don't just guess threads this bit Should catalyst, could backlog until to orders been the does third seem a order in the I'll given if the there. me? us just if it flow what's into but just to of the maybe anything FES. in we

I'll take or first, EV no the part backlog is currently. revenue no orders and -- in the the EV second which

terms think kind of in of I you timing, think I hit it.

we to continue broader times going a lead bit a a of think chassis components challenge are to but a supply here I just constraint see be improve Obviously, seen be improvement, we've perspective. that until chain from

historically, You We've linear. not in got go even lumpiness. our are orders back

we would that expect to continue. so And

And some we demand comfortable QX perspective so you orders 'XX. as from in might we're QX. see very into we where here But a into with out look and are of pockets

Thanks. it I'll there. Awesome. leave

is The D.A. Shlisky next of Davidson. from question Mike

Maybe John, follow up I want get on there. a last bit just to your granular. more little answer

what's those from what's even most As discussions your turning you of potential talk year? discussions economy downward parts in the of guess, I with some buying for the about of tone here. been CapEx recent additional some and larger vehicles around new smaller the the fleets ones, tone and been next

is Yes, Daryl. Mike, this

all they're is still had Our positive. discussions that we've

vehicles 'XX the of in their they to in they think the their 'XX, needed you vehicles more or even didn't remember, past first the because extended have than I of some 'XX. they half facilities, receive have may

So we've operate. out. bit close I are in of to as offices in catch-up there's past, shown we backlog and vehicles rental the our still discussed of distribution the to a that for the that's centers that we a them, lot see think And vehicles get at still

inflow the need a have them. and they there's about to that's quotes. vehicles, and So they normal I discussions for continue think replacement nice needs still growth, key as And or

the ark over but I spending earlier other stepping Got it. because of next that quick, And still from is John, EBITDA some just business in much be Blue going to overall case? be X? about know mentioned I real one events, to revenues your to you've we're your costs could next going want neutral. for it's down in clarify XXXX? of XX XX it from prior year. Is the going year to to Or pretty be the to answers to XX turning Or questions

Yes. see year-over-year. on XXXX R&D of sort want don't Drive contribution We talk did at start it to will and some where the guiding step expect I to specifically. do We year. next event we revenue necessarily Ride about down

And consistent think we've so I previously. with that's said what

And can motorhome ask the I about thirdly, business. maybe Okay.

the is from the a What's that of of are you of smaller the widely in, outlook for downturn a category products or, in case towable larger that I home Shyft -- days? largest here. We and much smaller does play in seeing motor differ bit the guess, these seeing guys absolute some smaller categories that your the business

said happened that had, lagged certainly Yes. just the in in generally, have lines. comfortable this not if I product year. the changes and QX revenue think, actually close here We earlier that towables mean I record vehicles some certainly record, we've think we're our on with a We've in year. I to smaller-sized the of

to levels it's not those sustain -- to that to are that's going so And say going forever.

total, the not and business that we ability look Red we aftermarket some significant but Diamond from confident get as as other see we're move into see take we including launch that declines we'd probably to as you our look parts, that in increase think remain expecting negative to our revenue, at forward. I to as impact, we in did for think to 'XX, expand as perspective I well share avenues so

I'll discussion. the along. it appreciate pass I Okay.

The next Felix Boeschen is James. from of question Raymond

for you to start million at body much we just quickly size XQ. of that of us and follow-up in a John, of how remind and that comments on, your revenue hoping the truck should XXXX was this revenue the maybe pass-through sort USPS of Can I the $XX point? contract contract be chassis around of pass-through expecting

Yes.

the we've $XX pass-through the about I contracts it portion said So about million. of is think

And so that we haven't seen of yet. any

into come So of has you'll that of some see the project. through on delays OEMs then pushed chassis some that 'XX. the and in Unfortunately, schedule the from QX

super out curious long-term close I talk margins. They the to fact, little them helpful. we any about about look expect of takes and then targets that about here to And or a where you to you of of quarter? should bit That's Kind could strong, wanted specialty in your already. vehicle Okay. go think kind from super puts talk directionally coming if

probably of Yes. on customers still I I mix it necessarily is the in on to businesses basis. XX% continues Probably in mean you of confident the at naturally that where modeling profiles I businesses think see look those margin which perform is ability to expand time, then low products that of start products you sort there, we'll on as our peak sort is, as of any XX% do you're strength and the have wouldn't and but I as a it that over year-to-date a underlying well. But basis, a at we the feel given and of with increase we maybe incredibly well it quarter. year-over-year. range, when look depending the team long-term think teens great

Okay. last just And then my one.

to fleet about positive talk could just And that in if the as out release, all vehicles. I today. broadly the mix you curious pointed mix within think we earnings I'm a segment

velocity traditional to other how directional us compares of and give that walk-in products could maybe around you sort van versus If stands backlog it today? comments the and as

with in we've what combined at I that look we saw business, we you mix. when favorable think pricing I disclosed, Yes, which think

product as do think lines the I the forward, of composition like we have. we that margin look we

a I little body maybe think the lower is truck historically, than bit we've average. said

mix We some when we've there, headwind little is But for have with put you seen significant growth us. creating pricing mix. together, of performance sort mix from positive negative year-over-year which got I think a

conference question-and-answer our like to turn session. would Wilson back remarks. to I over concludes Randy closing This for the

look Baird investors meeting interest Bank Thanks, Craig We and your at analysts We with call December. in call. to your the conferences in Barclays, With November that, and participation forward disconnect operator. Shyft and the Hallum the you Deutsche in Group. thank today's and for here operator, you may

has The attending presentation. conference now concluded. you today's for Thank

You disconnect. may now