The Shyft Group Reports Fourth Quarter and Full-Year 2023 Results

Generated free cash flow of $36 million in the year; improvement of $75 million year-over-year
Delivered record profitability in Specialty Vehicles business
Introduces 2024 outlook with sales of $850 to $900 million and adjusted EBITDA of $40 to $50 million

NOVI, Mich., Feb. 22, 2024 (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, 2023.

Fourth Quarter 2023 Financial Highlights        
For the fourth quarter of 2023 compared to the fourth quarter of 2022:

Sales of $202.3 million, a decrease of $99.7 million, or 33.0%, from $302.0 million
Net loss of $4.4 million, or ($0.13) per share, compared to net income of $17.8 million, or $0.50 per share
Adjusted EBITDA of $2.3 million, or 1.1% of sales, a decrease of $28.4 million, from $30.7 million, or 10.2% of sales; Results include $9.3 million of EV program related costs versus $7.6 million in the prior year
Adjusted net loss of $0.9 million, or ($0.03) per share, compared to adjusted net income of $20.5 million, or $0.58 per share in the fourth quarter of 2022
Consolidated backlog of $409.3 million as of December 31, 2023, down $423.4 million, or 50.9%, compared to $832.7 million as of December 31, 2022

Full-Year 2023 Financial Highlights
For the full-year 2023 compared to the full-year 2022:

Sales of $872.2 million, a decrease of $155.0 million, or 15.1%, from $1.0 billion
Net income of $6.5 million, or $0.19 per share, compared to $36.6 million, or $1.03 per share; Current year reflects an effective income tax benefit of $5.8 million
Adjusted EBITDA of $40.0 million, or 4.6% of sales, a decrease of $30.8 million, from $70.8 million, or 6.9% of sales; Results include $32.6 million of EV program related costs versus $26.9 million in the prior year
Adjusted net income of $18.7 million, or $0.54 per share, compared to adjusted net income of $44.5 million, or $1.25 per share in 2022

“We drove positive cash generation by remaining focused on the operational levers within our control,” said John Dunn, President and CEO. “Our Specialty Vehicles business delivered strong overall profitability driven by robust demand for our vocational work trucks. While Fleet Vehicles and Services performance was underwhelming due to lower customer demand, the leadership team is responding with decisive commercial and operational actions to improve profitability.”

Fourth Quarter 2023 Business Segment Financial Highlights

Fleet Vehicles and Services (FVS)

Sales were $119.0 million for the fourth quarter of 2023, down 44.1%, or $94.0 million year over year
Adjusted EBITDA for the fourth quarter of 2023 of ($2.6) million, or (2.2)% of sales, a decrease of $30.3 million, from $27.7 million, or 13.0% of sales, a year ago
Segment backlog was $325.0 million as of December 31, 2023, down 55.9% compared to $736.7 million as of December 31, 2022

Specialty Vehicles (SV)

Sales were $83.4 million for the fourth quarter of 2023, a decrease of $9.8 million, or 10.6%, from $93.2 million a year ago
Adjusted EBITDA for the fourth quarter of 2023 was $19.0 million, or 22.8% of sales, an increase of $3.1 million, or 19.3%, from $15.9 million, or 17.1% of sales, a year ago
Segment backlog was $84.3 million as of December 31, 2023, down 12.2% compared to $96.0 million as of December 31, 2022

2024 Financial Outlook
“Looking ahead, the challenging demand environment for parcel and motorhome is expected to continue in the first half of 2024,” said Jon Douyard, Chief Financial Officer. “Our team remains focused on delivering improved financial performance and generating cash flow, while maintaining investment for future growth initiatives, including our Blue Arc EV program.”

Guidance for full-year 2024, notwithstanding further changes in the operating environment, is as follows:

Sales to be in the range of $850 million to $900 million; Assumes no Blue Arc EV revenue
Adjusted EBITDA of $40 to $50 million, including EV spending of $20 to $25 million
Net income of $2.5 to $10.5 million, with an income tax rate of approximately 20%
Earnings per share of $0.07 to $0.30
Adjusted earnings per share of $0.28 to $0.51
Capital expenditures of approximately $20 to 25 million
Free cash flow of $25 to $35 million

“We will actively manage and navigate a highly dynamic demand environment in 2024, while getting Blue Arc into production later this year,” said Dunn. “Shyft has a strong core business, and the team is implementing the framework to return the company to historic profitability levels. We are strengthening the leadership team, driving operational execution, and deepening our commercial capabilities to deliver long-term shareholder value.”

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); passcode: 10179224

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™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Blue Arc™ EV Solutions, 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 3,000 employees and contractors across campuses, and operates facilities in Arizona, California, Florida, Indiana, 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. 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, 2023, 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.

CONTACTS

MEDIA
Sydney Lepora
Director, Corporate Communications
Sydney.Lepora@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)

 

 
December 31,
 
 
December 31,
 

 
2023
 
 
2022
 

ASSETS
 
 
 
 
 
 
 

Current assets:
 
 
 
 
 
 
 

Cash and cash equivalents
$
9,957
 
 
$
11,548
 

Accounts receivable, less allowance of $276 and $246
 
79,573
 
 
 
115,742
 

Contract assets
 
50,305
 
 
 
86,993
 

Inventories
 
105,135
 
 
 
100,161
 

Other receivables – chassis pool agreements
 
34,496
 
 
 
19,544
 

Other current assets
 
7,462
 
 
 
11,779
 

Total current assets
 
286,928
 
 
 
345,767
 

Property, plant and equipment, net
 
83,437
 
 
 
70,753
 

Right of use assets–operating leases
 
45,827
 
 
 
53,386
 

Goodwill
 
48,880
 
 
 
48,880
 

Intangible assets, net
 
45,268
 
 
 
49,078
 

Net deferred tax assets
 
17,300
 
 
 
10,390
 

Other assets
 
2,409
 
 
 
2,227
 

TOTAL ASSETS
$
530,049
 
 
$
580,481
 

 
 
 
 
 
 
 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 

Current liabilities:
 
 
 
 
 
 
 

Accounts payable
$
99,855
 
 
$
124,309
 

Accrued warranty
 
7,231
 
 
 
7,161
 

Accrued compensation and related taxes
 
13,526
 
 
 
14,434
 

Contract liabilities
 
4,756
 
 
 
5,255
 

Operating lease liability
 
10,817
 
 
 
10,888
 

Other current liabilities and accrued expenses
 
11,965
 
 
 
19,452
 

Short-term debt – chassis pool agreements
 
34,496
 
 
 
19,544
 

Current portion of long-term debt
 
185
 
 
 
189
 

Total current liabilities
 
182,831
 
 
 
201,232
 

Other non-current liabilities
 
8,184
 
 
 
10,033
 

Long-term operating lease liability
 
36,724
 
 
 
44,256
 

Long-term debt, less current portion
 
50,144
 
 
 
56,266
 

Total liabilities
 
277,883
 
 
 
311,787
 

Commitments and contingent liabilities
 
 
 
 
 
 
 

Shareholders’ equity:
 
 
 
 
 
 
 

Preferred stock, no par value: 2,000 shares authorized (none issued)
 
–
 
 
 
–
 

Common stock, no par value: 80,000 shares authorized; 34,303 and 35,066 outstanding
 
93,705
 
 
 
92,982
 

Retained earnings
 
158,461
 
 
 
175,611
 

Total Shyft Group, Inc. shareholders‘equity
 
252,166
 
 
 
268,593
 

Non-controlling interest
 
–
 
 
 
101
 

Total shareholders’ equity
 
252,166
 
 
 
268,694
 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
530,049
 
 
$
580,481
 

The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 
Three Months Ended
December 31,
 
 
Twelve Months Ended
December 31,
 

 
2023
 
 
2022
 
 
2023
 
 
2022
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Sales
$
202,333
 
 
$
302,011
 
 
$
872,198
 
 
$
1,027,164
 

Cost of products sold
 
174,421
 
 
 
243,723
 
 
 
721,840
 
 
 
846,731
 

Gross profit
 
27,912
 
 
 
58,288
 
 
 
150,358
 
 
 
180,433
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Research and development
 
7,121
 
 
 
5,783
 
 
 
25,185
 
 
 
25,324
 

Selling, general and administrative
 
28,442
 
 
 
29,155
 
 
 
118,420
 
 
 
107,600
 

Total operating expenses
 
35,563
 
 
 
34,938
 
 
 
143,605
 
 
 
132,924
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Operating income (loss)
 
(7,651
)
 
 
23,350
 
 
 
6,753
 
 
 
47,509
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest expense
 
(1,830
)
 
 
(1,079
)
 
 
(6,527
)
 
 
(2,833
)

Other income (expense)
 
261
 
 
 
(408
)
 
 
470
 
 
 
(750
)

Total other expense
 
(1,569
)
 
 
(1,487
)
 
 
(6,057
)
 
 
(3,583
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Income before income taxes
 
(9,220
)
 
 
21,863
 
 
 
696
 
 
 
43,926
 

Income tax expense (benefit)
 
(4,803
)
 
 
4,022
 
 
 
(5,768
)
 
 
7,368
 

Net income (loss)
 
(4,417
)
 
 
17,841
 
 
 
6,464
 
 
 
36,558
 

Less: net (loss) attributable to non-controlling interest
 
–
 
 
 
–
 
 
 
(32
)
 
 
–
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net income (loss) attributable to The Shyft Group Inc.
$
(4,417
)
 
$
17,841
 
 
$
6,496
 
 
$
36,558
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Basic earnings (loss) per share
$
(0.13
)
 
$
0.51
 
 
$
0.19
 
 
$
1.04
 

Diluted earnings (loss) per share
$
(0.13
)
 
$
0.50
 
 
$
0.19
 
 
$
1.03
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Basic weighted average common shares outstanding
 
34,298
 
 
 
35,067
 
 
 
34,721
 
 
 
35,073
 

Diluted weighted average common shares outstanding
 
34,298
 
 
 
35,443
 
 
 
34,861
 
 
 
35,494
 

The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands, except par value)

(Unaudited)

 

 
Year Ended December 31,

 
 
2023
 
 
 
2022
 

Cash flows from operating activities:
 
 
 
 
 
 
 

Net income
$
6,464
 
 
$
36,558
 

Adjustments to reconcile net income to net cash provided by (used in) operating activities
 
 
 
 
 
 
 

Depreciation and amortization
 
16,953
 
 
 
14,774
 

Non-cash stock based compensation expense
 
7,834
 
 
 
7,619
 

Deferred income taxes
 
(6,911
)
 
 
(5,510
)

Loss on disposal of assets
 
389
 
 
 
826
 

Changes in accounts receivable and contract assets
 
72,857
 
 
 
(93,989
)

Changes in inventories
 
(4,975
)
 
 
(32,977
)

Changes in accounts payable
 
(27,963
)
 
 
41,302
 

Changes in accrued compensation and related taxes
 
(908
)
 
 
(4,630
)

Changes in accrued warranty
 
70
 
 
 
1,186
 

Changes in other assets and liabilities
 
(7,566
)
 
 
15,998
 

Net cash provided by (used in) operating activities
 
56,244
 
 
 
(18,843
)

 
 
 
 
 
 
 
 

Cash flows from investing activities:
 
 
 
 
 
 
 

Purchases of property, plant and equipment
 
(20,733
)
 
 
(20,564
)

Proceeds from sale of property, plant and equipment
 
119
 
 
 
148
 

Acquisition of business, net of cash acquired
 
(500
)
 
 
–
 

Net cash used in investing activities
 
(21,114
)
 
 
(20,416
)

 
 
 
 
 
 
 
 

Cash flows from financing activities:
 
 
 
 
 
 
 

Proceeds from long-term debt
 
132,500
 
 
 
145,000
 

Payments on long-term debt
 
(138,500
)
 
 
(89,000
)

Payments of dividends
 
(7,109
)
 
 
(7,148
)

Purchase and retirement of common stock
 
(19,083
)
 
 
(26,789
)

Exercise and vesting of stock incentive awards
 
(4,460
)
 
 
(8,414
)

Distribution to non-controlling interest owner
 
(69
)
 
 
–
 

Net cash provided by (used in) financing activities
 
(36,721
)
 
 
13,649
 

 
 
 
 
 
 
 
 

Net decrease in cash and cash equivalents
 
(1,591
)
 
 
(25,610
)

Cash and cash equivalents at beginning of period
 
11,548
 
 
 

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