The Shyft Group, Inc. (SHYF) 22 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to the Shyft Group's Fourth Quarter and Full Year 2023 Conference Call and Webcast. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to introduce Randy Wilson, Vice President, Investor Relations and Treasury of the Shyft Group. Please go ahead.

you us. thank and morning, for joining Good I'm Officer; Officer. and John Dunn, Chief Executive President and John joined by Douyard, Chief Financial prepared followed be remarks question-and-answer Their session. by a will

our in please affect be implied. Today's XX-Q non-GAAP in website. conference which from materials be identified materially can operating contains the believes results begin, Before risks with information filed X subject found which measures materially Primary are those call non-GAAP management company's believe to actual that be measures, call and could posted are performance. safe in statement. our different XX-K on Forms could forward-looking of cause our we risks harbor these that presentation conference turn Reconciliations are for performance the or our useful to discussing statements, expressed SEC. We'll the we for Slide to evaluating and the results

with the as start our will XXXX opening performance outlook. John well our to CEO, a of for over We Douyard XXXX call before review from turning as comments Dunn, John

the for We open line then Q&A. will

Please and will John turn prepared today's to Slide begin X, remarks. Dunn

and Randy, to everyone. good morning you, Thank

on fantastic excited October, back call be leading to this As in noted company. I our I'm

Together financial for auto million building my grown one focusing experience past in vehicles Over demonstrating and annual by launching vehicle to maintain grew leader having markets, leadership and Motors with and teams roles, $XX the the partner growth to I Tier while suppliers, I've from ambitious automotive the for on ability Shyft last stability. In driving to commercial X Shyft, the first forward XX with just months drive America. in with years, and an has customers which sector last year which excellence. and look sustainable be roles consistently at national career delivered a as many specialty industry-leading to of going solid to by CEO, to level sales shareholders a team, defined innovate, leveraging operational legacy the great will General spent senior our impressed and building North leadership framework, the the the including team's my for full in serve performance. Having completed foundation forward. as billion financial $X.X my Shyft's growth I deliver we capabilities. continue on value deliver experience have products higher to I of and X operating

foster of high-quality while improving keeping all approach operational Our a building products collaboration and relentless the by impacted from delivering in includes: our we are high-performing center acting to design bringing everything do end recent enable customers' our we drive to innovative efficiency Shyft's customers. to business return focus business to the of to excellence, results; historical urgency at on And with to the softness, performance we profitability. success. are teams market and here delivery, has aspects demand to sales customers and been

within that proven already SV our drive team, and improvements necessary to are strengthen production drive We performance and into alignment through past the roles, promoted President focus his SV leader, experience transition we on and have this It to confident build our walk the to will the led financial across we I operational immediate which taken key He over immediate role. we FVS operating Slide in top-graded all starts team framework. reflect the you rigor X he FVS and previously Jacob strength. growth. to sales and As and actions continue We business. to including months, X, coordination will leadership improve bench Jacob company. Farmer a with utilize our was underway is the

tools to better We and had appropriate that ensure be the businesses successful. to ways they to our enable for support look needed

and rhythms is effectiveness push which into reporting and as internal An our reports down in businesses functional of this now most. it marketing our identified simplified and sales the satisfaction. understand importance excellence. well into efficiency example quality the is process product directly of overall as have support opportunities needed operational segments. Transitioning to We function, where customer to We our force

for focused on We and the are these team areas. In improvements all of identified We in product pulled sales from first across training together time, we cross-selling December, company. the our held customers opportunities. and summit, our team all our brands. sales Shyft targets to for business with we Coming sales adjusted compensation of sales to to the out sell structure incentivize establish new

cross-company selling we have will more our are them need sure customer reach we've on footprint. to expand deeper broadly a on optimize industry-leading including synergies identified market. our Operationally, output make portfolio you procurement to and taking ways of to opportunities, the I and updating initiatives and our calls. look and our products the to we forward upcoming By a We of these approach, comprehensive diversify base.

had the as plan fleet I'm excitement the its our been in spent program. and I to assessing the the Arc vehicle progress given and and their of their assessing the reviewing of impressed focus team validating efficient interest, depth to After project has with design what in the X manufacturing X prioritize able who Shyft team and to importance Another I've getting our strategy. has quality robustness conversations strategic the been Arc Arc van customers most the our for market Blue product, to walk-in opportunity, market. we the customers path to and with the direct communicated key Blue the Blue EV time Class role area its by overall accomplish. our of capability.

will have other and discussed we lower spending XXXX. our versus sizes focus which refined drive vocations class historically, in we XXXX, While

and to Arc turn status X, the Slide detail Blue around our Now give you let's I'll program. more of

our with solid discussed Next to purchase accelerated vehicle supplier, we battery X supplier, integration miles. testing Proterra our the recently on the impacting quality pleased recent vehicle previously to XXX We overall of new We results exploring and over the with are progress Our Michigan production. a testing. From worked confirm Energy. completed the we by finalized until Our meet team go to to issues Volvo. In are and performance vehicle Volvo. commercial been parallel, standpoint, with development, our are These customer range vehicle the issues prior battery continues with battery manufactured is the Class tank We we the X requirements in vehicle solve have have and make to Currently, Proterra, agreement our Charlotte, performance. units consistent design a production battery including in and our ability first into facility.

final months conclusion, coming production built start revised in complete vehicle. to With the the XXXX. In testing we late program time and team expect has our in outstanding line, an

driver do, there While for work will more to Shyft. is am be a confident growth this I

We discuss to provide discusses results. Arc our Blue John financial it him additional in the will turn Douyard outlook our around I'll to as presentation. With over detail later that,

recent Slide was $XX to year, and year revenue turn in expectations. in our with our Please Overall, motorhome full results John. of million the EBITDA, was financial which we as Thanks, parcel of a performance. X, for line and start and deterioration challenging year million adjusted delivered XXXX highlights. Shyft markets with I'll the In $XXX overall XXXX and impacted

beginning business or generation, year, operations, EBITDA We the full of decreased capital, for to headcount and Blue production us pressure, up team performance million needed between cash sites by with Excluding free the growth of cash adjusted flow the of of the year, our count head our ] reduced response strong working key we from sales. Despite and X.X% delivered driving EV as cash prior the fund Specialty margin impact in adjusting Arc. Throughout the business sales sales XX% versus year. tremendous focused in XX% $XX adjusted in drove of we initiatives, $XX delivered Vehicles reducing the resulting $XX million, the EBITDA expenses, on year. including and flexed million Overall, allowing core our [ we moving to volume. our flow volume approximately

tax quarter of million. EBITDA benefit results. loss quarter, XX% or X. sales, of million of $X.XX of was of X.X% fourth loss down fourth quarter included results of a 'XX. in million, in the sales $X.X in of per Slide million were $X.XX $XX.X $X.X a the income an the adjusted In $X.X prior $X.X net million from from the $XXX of previous per XXXX quarter million program XX.X% overview up share or prior the spend fourth These or million year. $XXX.X EV compared our to Turning results now $X.X will Fourth to in Sales million $XX.X Net include year. share year. million, I financial provide from of down or

Fleet Services per Slide million, the share. I'll XX.X% while truck was achieved reflecting results these of X.X% Excluding softness body the markets. to by the revenue to million loss $XXX.X USPS X. These quarter, was loss of walk a segment delivery in pass-through adjusted results related $X.XX decreased & end last-mile Vehicles sales. on through EBITDA a quarter you EPS In to operating adjusted compared $X.X program. down our of $XX million, for Adjusted include now expenses, sales million of year $XXX chassis the ago, net

the $XX.X of year. million impact businesses chassis. as loss the in negative strong sales income closed ongoing lower pass-through and record weakness margin end another to product volume FVS profitability, the to out versus backlog Adjusted fourth Vehicles, was last Adjusted the vocational quarter. In at market continued quarter our ago sales XX% profitability was of negative of EBITDA driven mix, by the quarter of deliver versus prior quarter for the Specialty a in million of the which truck year $X.X with compared improvements, year solid team XX% USPS growth down includes EBITDA million sales. $XXX a motorhome infrastructure-focused and operational was X.X% year, offsetting our of a with

were million for period XX.X% XX.X% XXXX $XX.X EBITDA to up decrease was the XX.X% compared Adjusted versus million, our X% $XX.X or was million year. million $XX.X year, sales at end Slide in in the last $XX same sales quarter year. the of Fourth $XX.X to turn prior of prior of sales million from backlog a outlook. the SV quarter. Please or XX

to long-term the continue excited growth about We of the prospects be company.

is Our focus off infrastructure-related businesses as into performance. strength reflected paying investment and the of SV's in

for been last-mile soft recently, maintain While business continue leading growth industry. the a long-term delivery parcel and has intact to we position projections remain the the

customer earlier, both through to and our Arc. discussed Blue a our as half take parcel a both likely on enter taking persist cautious of XXXX, Dunn motorhome the expect midyear. In to actions As urgent in continue the near-term response, identifying diversifying XXXX cross-selling approach base on team focused we we by John we and experienced and for demand volume. softness view synergies is including And spending, commercially to we second

to be notwithstanding are Given the $XXX introducing we operating XXXX further as range factors sales of environment, in million. the $XXX these and changes follows: to our outlook million in

million, for of time. Arc this we million production to Arc not revenue estimate in Blue $XX to of Adjusted While included at $XX plan million to or EBITDA $XX be including any Blue later year, this forecast million spending. $XX we've

will Given to EBITDA anticipate is Adjusted the range expected that first in year, be free $X.XX the to flow adjusted to per approximately million quarter be and the breakeven. start share $XX of to $XX we million. slow $X.XX cash expected of EPS

out close to like this reinforce ability our would I core section, cash. generate Before to business's I

last a shareholders. million initiative of cash capital generated while returning and years, we $XXX to cycle, X Over through challenging self-funding flow approximately the a EV have transformational free

to believe as that, for remarks. and turn over to we end markets to we I cash capital, back our flow in will generate focus with and our closing invest on positioned future. With recover, forward, Going are continue it Dunn well continued confidently John working

Thank you, Jon.

XX. Slide to Turning

customers day. on businesses excellent our We rely market well-recognized positions, every core leading with us brands have and

deliver We solutions acting preparing our and urgency Arc offer future are utmost to the improved our results. The for to with team to EV XXXX innovative truck customers. Blue with continue is

are on strengths. efficiency our execution, and leveraging internal laser-focused We

Jon As businesses cycle. core earlier, at the discussed cash are generating Douyard our through excellent

established a Looking and drive to ahead, framework Shyft. we've improved performance

to years and with is the Shyft's creating customers shareholders. portion look now very Thank for to that, and of committed experienced to value highly for Our excited our ready engaged and about come. forward I'm are you. And operator, the we call. Q&A future the team

[Operator And first comes from the question Matt with Instructions]. Koranda ROTH MKM.

Maybe some speak Maybe just into the guide. Matt. that. Zabran like sounds Mike to have year. signaling for on a second weighted the It we're on of visibility just half starting we It's

Yes.

year, what particularly consistent as think demand with which half the which previously. we've softness about got expect the talked first that through that the I saw second to is in talked we've the we we continue, -- QX, is we half we of about of as the year, into

the improvement in but of activity business, versus the the order I soft. second the at 'XX see the still year side first of particularly look business, in you on when think relatively I of half we FVS the think the remains did half,

January, positive, is We that up this we're did point. in a at month where at see yet not a is strong point which opening orders but the a or saying we're market turning

I But we QX well. through here you cautious the ] We'll and to want I the this cost performance as see to so the be be indicated from And the as first in think a up. year at be see second expect half. roughly on QX, quickly would [ in And look that, will improved year we'll perspective as of opens the with a market breakeven. continue half cautious step-up we how think

Got sense. it. Makes bookings. moving to Maybe

speak tepid from are to in of terms still just though year-over-year, to this better fleets years. prior expansion FVS year? bit what demand a looks bookings refresh hearing Maybe relatively we So compared and

-- previously the of dynamics are in that our about of customers, with talked I play. still I think think, mean some major we've some I

got reorganization Amazon got You've the We've perspective. an from with going EV an on transition FedEx.

continue say, those but base, And impacting patterns. so across our are to customer ordering have, healthy we dialogues short-term I'd

nice the of look as I parcel orders is recent some is much at has part as that historically. there think the there we in been isn't there

It's there parcel the dialogue when there increase we to will we and I on hard is that months. our in diversifying when business, coming be think with customers we're the talk having opportunity But pinpoint that will just so here there. And interactions expect, in be. exactly the an activity about an based

to in new in guide? Any year we about Okay. this think bookings SV and Makes how way hit sense. much need next FVS the to

couple business, look the it ending an down you in when $XXX FVS at we're sequentially been of for $XXX backlog a say at the We'll think has quarters got year of guide. a overall, million backlog. million row. I We've

of is Some also that extending a bit.

-- push will that likely some of likely So that will backlog FVS into 'XX.

an there backlog that got take of if is so just number our And but in we've there, to million million $XXX conversion guidance. element $XXX sales you

That's be for continuity? the Shyft make last leadership? plan some relative could maybe you the weaknesses what where Makes one to sense. hone John see maybe. just and Jon. might me, Maybe And discuss platform. in John, strengths if for of prior to And Dunn, changes you on helpful, maybe then you on do there

Mike, slide going hasn't believe company. changed, So we started mission saying in that business and with core that first with where the we're and our -- taking thank the the you, we're the forward. We It's model, stable.

locations A procurement, spend really one pricing. mentioned leverage we of spend our Some to opportunities strengths saw to we as is better area areas. clear with total in in there great discussion strengths, is and from around into different leverage one-shift the I was example with and market the the products, expertise a other went more together our that bring and great get we bringing relationships organization Where that as is do interacted customers. have our

question Shlisky with Davidson. Mike comes from the next D.A. And

up Shyft ] need go restructuring it last question make the around to feel you company your to answer and the or that work or you've John, do Following forward? John should Do volumes for capacity think on at that the meet current Or Dunn. headcount kind and there's you Group enough any [ kind work the got going footprint folks is of there, we to of cost who the -- of -- enough to last all currently?

In we they our singularly really plants we're that making the agile, different we were is and that so very can past, better focused. run seeing footprint. are products we're sure leverage What

facility. to built see fluctuate, an be kind one market of in we facilities So products one brand opportunity installed into And other our capacity. the flex utilize as and there's fully would really

we'll continue Bristol, traditional needed. make was We adjustments in But a and to is great monitor demand walk-in the plant. example as van which those our

body of and we're production down, plant go sharing more up flex And forward. walk-in going have we the do that successfully. footprint of looking ramped to we demand van saw truck that As into that

talk I'd chassis I'm to have, curious It you about on like be can feel a maybe allocations about to And any chassis time be Do point, those can much get update the more van you've in vocational specialty. there this you and this you've Chuck timing when got put better at supply. get sounds appreciated. But walk-in got then versus that to your work, curious Okay. Or deliveries maybe us this for year? of time of would kind give last you it.

To side, chassis seeing the FVS the start with coming through. we're

to Jon ago. we significant getting been had that have we it's monitor customers hoped, really in lighter year had It's about closely. as parcel, especially issue we reengage. don't we that the So And than mentioned, a and

the side the really on to availability. It's be a dealers. significant work From we chassis So -- get to factor our flowing, of It's we're the now doing are side, and limiting have in business, into chassis issue level. also with chassis getting them is the clear, reengaged. getting customers SV the at and an very other not the the right

Fantastic. last one for Maybe me. one

Given strength cash you might do bit truck feel for much some or of first to to for the be versus relatively got given expand other the these little desire Shyft who a some Jon, in have scale of would to M&A going get buyer strong some new and relative to side? more products in businesses expanding free pretty here on debt, appreciated. that's be Any folks 'XX to any subscale feel on can of no through the ability the your more M&A continue you you've flow get

want our highest right performance now that really we is that's the to step get of first at the to business. And it, focus level. answer operating the core drive of real kind To the

why and Blue we the acquisitions, parallel, couple around to sure soon at of where M&A, focus the and running scope at narrowed Arc we right there, the and possible get In see that's level. and we is we deliver business a do do we launched, that the to to opportunities need need market urgency on what as don't can to but making get want we lose do looking are opportunities really that that to sure customers. make as to core You

The the projections when on that XXXX X your Class XX the how feel might $XXX Arc, John, Arc? X, had work any just sessions line, affect you million the Blue do X back with what for X, Blue think for that might for sales in for previous current in -- the overall for program, of be you and what plus that XXXX now? just Class the trajectory

we is, vehicle the market seeing want get we're to What to really this gauge and interest.

a publications about there the there's think of out I rate of been acceptance lot acceptance the speed and rate. the

know We're that or out X have in So going Will timing we're XXXX that that strong be thought? like closely, watching that. year we beyond we a to eventually. demand originally happen that but may

think So the space. EV in business company get we're cash as its do being focus, in and product strengthen out cautious. going us the see And the to to and market, available overcommit Also, a this why that's make core you our question, acquisitions narrowing other your not well. reception understand does I back

as we go in want to we the go So balanced through years. make stay forward -- coming sure we

a of of out and probably the And I talking production battery later year, line, at ramp-up mean Mike, issues about time were as talking second the to 'XX. we ago, to year we production I just sort kind and a I we're add look think, about think just the 'XX half we're that, right?

year pushed as is that the look essentially perspective. so program we at And it, a from

would we'll on ramp. couple start of well, and financial of Our and gets I to a the see plans acceptance. but as adoption milestones year some hundred do year, expect this to back And units point you to that that it then to John's

what From and competitive product it prepared a perspective, of in is can do from this stacks a standpoint. up a customer still how his enthusiasm he there on hit lot but about it remarks,

vehicle feel we make -- that so sure road. want about get to And good the We right on it. we the very that

Craig-Hallum. question And the Dyer comes next from with Steve

have mine answered this point. at of Most been

with as of And how battery chain to you little relates Arc and Just issues Blue demand more, that things do it and bit like just X in -- softer sort how sort much you their or attributable a then to that? on just would a associate people the months. of supply parcel last delay bit is in feel moderating of the of X much little chatter sort like overall and

Really, with the the When That around Proterra the was vehicle the us the Volvo, issues bought had driver the drew road, Proterra use and vehicle we it, lot the The as to a vehicle. curve of a well, technical delay the being related of we fantastic. candidly get on all battery. enthusiasm with by customers is battery.

So make battery our a meets challenge we to sure the all have is requirements. that really

battery our a have X. Class for We they the supplier were X, in intended partner new original

So it pulling X, van. just wasn't a walk-in new them supplier to X Class us. this into ahead It's

make work through to some and it's accelerate. helps that validation was out that customers put right when our sure level and we're long performance done, there But quality term at to going be deliver to we market, expect vehicle So the the already really a expect. which us we going

year feel sounds like is demand and it is that like still primarily again, validation year a testing you given solid and there? So this quite

I with We it of touches want customers, a final just at Meeting that don't to it. that enthusiasm around excitement want and sure the battery with there's we get their is -- personally, do. level. performance to in rush met lot the vehicle, the to that, We make customers But right and hands.

satisfied. chance one sure they're You to make get

any lines parameters of shipping? you expect announced the begin when order, And that can there and you were it you time or kind refresh sort that of when Marion Yes. around to our of then just if memory, Randy would sort

things the as I one that will customers Marion it a Yes, looks [indiscernible] order. here half be I the of announced we and demand deliver it the what multiyear our in at look first we side when production, of think Certainly, year. of second like the Randy order think it was we the

I ahead. lost we at Jon, you offline. the that there take Go but can end,

to just be that first in they'll saying the second of delivered customers the half was I we year. one the of

The give first as as it them. vehicles soon ready blended and to of vehicles, right that, they we're will they're group in give to

Got you.

Last question Okay. for housekeeping. just me,

repurchase you about guess, shares How both in repurchase the you did many also that repurchases. I in share and You -- QX have if of then talked front you? year

We Yes. didn't anything QX. in repurchase

the For repurchased... year, we

X million. About

About X million shares.

that Okay. And loaded? trying said I'm you just half to recall front what was pretty previously?

No, it's mixed between QX, QX.

And the next BTIG. question comes with from Greg Lewis

the Volvo are What around maybe know, here the just little to different supplier. last company don't John, issues a the over Volvo this the in year, -- the the than plan the a we remarks, when road? mentioned avoid guess bit thoughts some just had prepared think of you we the I around realizing dialogue about battery. potential, I finalized I ongoing of a thinking with and I'm is should chain challenges previous being B supply about mean, down then

source. across Thanks, as focused as walk What want to Proterra, right battery parallel, could maybe now looking on one -- is new now in all with have, who we're Greg. away it come working that at we the clear are don't in on from -- and just Their validation which didn't we're Volvo.

X through that their resources proceed. still battery. weeks on the to expect some to in how intention. Volvo key we're challenges, with with with and They're Proterra waiting we invest Group, X the so to And issues is we will and going be is goal to reorganization point the know of Volvo next the solve to source. the understand to there the needed we our The But dual want had more

option problem them as have solve would that and we to So be their well. an like

the then on some like Okay. that way those looking in seasonality QX Specialty that? rate? just, are it year that run EBITDA be going why under margins full EBITDA looks to Jon, with QX QX. -- obviously, at guidance to come of thinking right before for in was there Is rebounding And the kind before Is pressure great playing kind Great. and guess, QX, numbers guidance, about and I of did to

In SV or broadly? specifically

No.

specifically Specialty? Just around

SV Yes. think year. the tremendous had a I mean I business

the sequentially EBITDA margins as I as ramped is think historically that business well. really a over about which long high-teens it. of term XX% throughout year the year, We've we more for said business the think

we'll so XXXX. expecting enter what -- that is And we're we as

total a little I based in will the think at playing look be on when quarter in bit first backlog the just how you the pressured volume company, demand is out.

so there well, put declines the the on as before And we as year. will margins be through sequential QX move see return pressure volumes we which

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

management on Indianapolis Capital for Thank I'd to and Point you, Group. X, in forward Shyft Conference will Annual in as operator. and Work connecting be Shyft on everyone Institutional XX. weeks March look investor team March X Truck the call. the NTA interest X over in Investor at today's coming like We to XXth your James Orlando in Conference the ROTH on you the week joining for you thank Dana hosting March with the meetings the Raymond Thank

have you call. questions. follow-up great the disconnect always, a any And if with that, day. out reach please operator, As Have please

Thank you.

attending As for Thank mentioned, the now today's conference presentation. has you concluded.

You may disconnect now your lines.