SHYF - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to The Shyft Group's Third Quarter 2020 Conference Call and Webcast. All participants will be in a listen-only mode until the question-and-answer session of the conference call. This call is being recorded at the request of the Shyft Group. If anyone has any objections, you may disconnect at this time. I would now like to introduce Juris Pagrabs, Group Treasurer and Head of Investor Relations for the Shyft Group. Mr. begin. may you Pagrabs

Juris Pagrabs

morning, XXXX welcome Earnings Good Group's the Third Quarter Call. everyone, Elissa. to and Shyft Thanks,

Joining me Douyard, on our Officer. President the call today Chief Officer; are Executive and Jon our Financial and Chief Daryl Adams,

today's filed the our be website For which shyftgroup.com. available is with we've presentation SEC included deck call, will also at and on a

presentation may to follow website download of section our the You with deck during our Relations call. from the Investor the along

the of for please turn to Harbor we our Before today's statement. X Safe start call, slide presentation

should materially aware any as known projection or Act could from the XX-Q conference forward-looking considered Shyft projections its of management's XXXX. of viewpoint, are differ You forms be SEC. made and that XX-K that during you actual Reform number be and risks call, current statements I filed certain projections. identified management caution the today's under cause and with predictions a materially regarding statements Group prediction with may the to include the could results the results are Shyft which affect Group's in All our Private that may operations factors that there Litigation believes outlook, Securities

we However, there be cannot other anticipate. that may risks

before the review provide more our and remainder move On on a of highlights third the including -- the for our as to a the COVID-XX the year. before on detailed operations we we of call the quarter today, will outlook quarter third pandemic update moving business ongoing impact of as the results well

pleased reclassified February time, operations, otherwise results XXXX, as X. business the all to with everyone At associated for expenses for Response comments Daryl slide like opening the to been We this operations With Emergency business over revenues call today unless as the liabilities Q&A. continuing ER remind X, presented. for and on turn ER noted. of divestiture the be I'd the will have and well to discussed operations to will to the then I'm business the assets reclassification his as that the periods this line on of with discontinued refer beginning discontinued also

Daryl Adams

Juris. you, quarter discuss results. us and to Good thank Thank morning, third you XXXX joining our for everyone,

by truly could the not be the tremendous amazing start effort finishing that hard record of our as during saying work let's results, the Now we performance proud I by some achieved more quarter the team quarter company. across with and

as put that acknowledge year affecting aspect virtually team to pandemic working been XXXX months. eight we face lives really personal has our in that need also to every of company We the the a COVID-XX task has our past for and

cases supply expectations, while many our emphasizing company's prior history. We our work on health outlook our constraints, we in and most members. quarter We resulting continue safety rose hard, to managing in the of our to the overdelivered the challenge, own profitable team exceeded in

We focused on discuss acquisition finalizing of Manufacturing, the remain will complementary recently also a body later. I by service FX opportunity, which M&A opportunities announced

the of to quarterly needs stretch markets call, the turn address to are made the to the way environment discussed that the last any our earnings crisis. growing we've slide discuss reflects address onset accelerated we of goal to actions As pandemic. in address and that of we health current the aggressive progress our to XXXX, the Please we nimble, initial from continue opportunities our at positioned all the we'll into the since proactively home we prioritizing in win and stakeholders pace pandemic. On to took head X, a be merge

we and on aligned what can. engaged Our leadership team remains fully controlling

for our requested, Christmas teams continues consumers our has labor be shortage year, drive such constraints holiday that customer already meet and Carriers growth as to indicated deploying pulling solutions customers' as demands Street our near booked from for to clear higher perspective, full now to shipping with delivery when our our year. once shopped companies flexibility forward home, second Parcel have as address school-age From a delivery already provide the a shift rest innovative a stores is return quarter, supply -- article, trajectory, to continued as incredible capacity allow production, and delivery rate. online. capacity visibility Journal have up children. their and shipping recent supply through this earlier the parcel a perspective, we we care conditions orders a usual. As XX%. adapted have through a at months to interviews the Thanksgiving capacity improved of employees for to sorry the embrace throughout total avoided is been consumers than driven expected And its upcoming operating In stayed accelerated Between e-commerce vehicles. have much Wall and that the

about We excited are trends. these

them are asking fill jumped backlog in urgency. orders October customer million to million have $XXX been customers and Our has ramping month of us alone. with to FVS $XX parcel the delivery

side, of emerging chassis pandemic. the from the RV the operations the our luxury from motor industry special coach vehicle benefited On ongoing resurgence

rebound the in quarter. the increased With daily our levels demand, production line chassis motorhome throughout

finished a million and chassis. rebounded our and year-over-year the reflected chassis summarize our on SV recent coach $XX in is road the results X. quarter that, slide due On availability take in includes These body me to significantly truck year-to-date body which With service XX% the back-to-back up side, are strong. backlog, trends truck for quarterly moment records motor to let to the increase

as transformation we overall Please chassis the slide transformation parcel Ford especially Velocity for market recent traditional even chassis, delivery. driven COVID-XX cargo growth week our Velocity shutdowns can favorable, face walk-in first an offers acquisition, and turn in lower Transit encountered delivery in provide our launch very achieved customers in the our and been year-to-date adjusted all matches we continued Once consistent when part we in walk-in a and again, growing through quarter. and update X% manufacturer, points their our accessory nimbleness, built to the and previously offering to some Velocity ownership. van nearly X for product the for XXXX, on nine within and as business to a business leading million, labor second update. For XXXX the of an Utilimaster's The in ideal delivery $XX in Adjusted on XXX shift by mix to geographic results I'll of months turn improvements success posted operators based and well business. the parcel combined slide want the X of acquisition higher-margin XX% of the demonstrate basis of strategy, for chassis, within margins lineup and of quickly, resulting seen first effectiveness last-mile FX the aluminum EBITDA headwinds our on product the share improvement innovative FVS or have first cost results, months product will body built as load margins the fleet Transit EBITDA expanding Velocity an to FX Sprinter similar is Maine-based margin Utilimaster delivery space, pandemic-related On solid be that period of is improve by a months Please announced offering fleet Adjusted October months focused our strategy. our offerings $XXX on $XX FX, improved Class achieved our entirely USPS results increased the million efficiency, manufacturer. or markets, FX the our the meet our we efficiencies a a customer expands business vehicle Last FX headwinds capacity Initial from Revenues growing primarily considerable safety which with considering increase a first the capacity the EBITDA on announced core as from constraints most productivity seven of operations. solution implementation and that an new with million. million nine as footprint purpose-built loading we MX Ford the comfort the strategy FX $XX fleet our order. clearly service which of in to production. limited to reviews to the Velocity X, demand and total XX% which delivery. excluding increased supply $XX is nine from new vans. for vehicle to and SV complements the increased of million which fuel solutions and be This innovative access efficiency process expand final e-commerce our Mercedes nine announced

core its refer after Going the to five DuraMag, will of business one brands. as forward, we

are We DuraMag family. to excited Shyft to all Group the welcome

sales privately call of coast advantage, lines DuraMag been The on complementary enhanced outlook, been companies to has held We growing to well revenues Jon as expanding both products bodies also quarter slide as list to has approximately range coast. body wide and detail, at and in accretive as growth our as footprint included X XXXX segment growing the for efficiency, CAGR financial and DuraMag be a acquisition more the lighter to aluminum product from an closed are a beginning fastest-growing October also on update Shyft, provide With Inc.'s service to the The better looking headache has from a grew the of of will rate brands it expect for light-duty in and The XXXX production and in fuel to products that, Magazine brings XXXX two market aluminum annual FX in well to are leading which rates. discuss over provide America's million above on weight, in service industry-recognized XX% in the XXXX. forward $XX primarily accessory, our X,XXX eight. Magnum turn generated racks. company DuraMag and I we to Shyft's complementary their distribution Aluminum XXXX. corrosion as third in results XXXX. protection. XXXX

Jon Douyard

Thank the of and good third quarter. to an you, results Please slide Daryl, provide overview financial turn and for our nine morning, everyone. I'll

$XX quarter to up the excluding year from revenues. Earnings the slightly operations continuing $X.XX a million, compared was share, from XXXX. share pass-through increased from Daryl ago $XXX.X And million for of alleviating ago. case, million quarter $XX.X the record were third per a through in resulted year chain sequentially quarter, the third operations earlier, share to alluded a million of variety conditions the pandemic, we lingering profit worked constraints. the COVID-XX each As supply We Revenues expectations, of that terrific a through ongoing saw exceeded record-breaking to month. that of improve initiatives, labor impacts the a each in quarter. pressures and despite per quarter, one $XX.X USPS continuing per had up from $X.XX Income in

to adjusted million, EBITDA of XX. Turning increased points from to from QX increases will detail to continuing continuing XXX increased from sales, segment while discussions. as year. percent of more XX% $XX cover compared I we adjusted the operations get to sales, last XX% when basis slide period operations million to EBITDA in same X.X% $XX.X in sales these of a the

$X.X per income quarter, the $XX.X net share continuing was compared time a same EPS year the share, from million year. increase a last adjusted per to million to For operations $X.XX operations $X.XX rose from while adjusted from continuing XX% third at $XX.X ago, million,

in operating segment. jump we'll results the by Next,

Fleet slide Let's Services segment begin Vehicles XX. and with on the

of while quarter, Our challenges. third FVS results business remarkable managing number through the delivered a in

Our business portion of and shut experienced declines, the order a truck good for down due softness factory with year-over-year chassis to quarter body significant volume timing. our

$XXX.X On QX, our for were teams Bristol that the quickly and body for drove XX% FVS the total to $XXX.X favorable to down respond third million, deliveries volume able which and in of quarter. and side, demand upfit FVS quarter customer to accelerate the which offset truck the Overall, million planned mix productivity revenues and was generated of XXXX. were in flip compared declines

pass-through of As a XXXX USPS $XX million included revenue. quarter third reminder,

$XX had also of due million $XX.X the to mix decreased revenues earlier, improved since all delivering totaled year-over-year FVS quarter, while million, the as $X.X volume sales compared Royal motor to million XXXX. as X% and million, sales increase component the well of great coach we healthcare the addition with X%. was $XX.X driven efficiencies record as of Body from Royal or decreased backlog the improved slide or to million, points XX.X% million, And to quarter or motor to motorhome in end So addition Despite $X costs from and sales XX%, on September XX.X% that segment order $XX.X of $XXX as in backlog has sales primarily basis quarter motor third the and by well million, $XX.X year, the that benefits higher period of of expenses. the primarily year been $XX.X luxury update coach sales quarter last Truck adjusted product X% QX and the Please of XXXX, XX. in the Truck million productivity also Specialty or ago, of the volume to That Daryl XX.X% Vehicles coach same which to due record a business. in at sales orders EBITDA approximately backlog, in to a third as earlier, well FVS mentioned year. favorable an sales, noted liquidity FVS of the acquisition. of to $X.X of lower volume, EBITDA set increased was SV order impact, chassis, the revenue, million included million first XX%, sales EBITDA this million. realizing FVS' experienced of growth robust Specialty turn from Vehicles third last volume and experienced $XX as XX% the margin $XXX October up said, XXX excluding $XXX the current SV million Body turn year. Royal of material last for demand orders the Please year. we up recently, with of of -- had exceeding resulting also compared higher of the the we quarter, in exceeding production slide made in acquisition million XX, all backlog of overview. Adjusted as breaking outlook adjusted or a a

earnings to steps we As we our took enhance noted pandemic. QX to of in previous call, the number our a confront liquidity

of in support QX, We and hand to the strategy total plan generated and continue activities on of as $XXX cash of to with to cash from exercise discipline We arise. in $XX cash liquidity. million opportunities growth our M&A continue million use $XX operating ending million of our quarter

and the a of $XX October, As cash million $XXX total used began liquidity. we of of we portion hand million on

the As ER net working related million make business. DuraMag used we finalize portion $XX sale as cash a well as of to began the acquisition, payment October, we a of adjustment, the to hand the to the on fund of capital

QX. million As and in during we conditions payment paid improved -- down million $XX downs QX, of debt August recently in of made pay $XX

As at X.X operations us our a leverage stands result, which our growth pursue current strategy. adjusted to and our approximately EBITDA, well to times fund ratio positions

actions coupled illustrate year. given and earlier this We transformational are earnings performance, Shyft's our execution overall significant proud the with The of the level high growth power extremely we of faced at FVS, challenges year, the potential. we of in made the

sizable now which vehicle e-commerce is October, decisions increases buying positive customers as end saw we are indication increasingly are making underlying order XXXX delivery. in for initial In support a in strength We orders our to of confident the parcel markets. volume,

we excited at reinstate factors these that and our the industry-wide Given high impacted business despite March end the of full headwinds guidance are the XXXX to year initial range. profit our

EPS adjusted to million. million adjusted deliver expect the pandemic-related million $XX to additional $X.XX per to $XX range of any to of of and year in million, baring We EBITDA share revenues $XXX $XXX impacts. full $X.XX

turn Daryl Now, closing to call the I'll for remarks. back

Daryl Adams

Shyft our the need the I our incredible turn through. ensure commitment XX. and to vehicles, saw to certainly customers at our could and this When team an how time. am challenging up often to to work, It's We throughout hard excellence of successful demonstrated and I demanded incredibly you, reemphasize, Group to in Thank said that unusual manufacture that we people in Group XXXX. by best Jon. Please Shyft had the came the ship times demonstrated quarter. want employees slide out we step bring proud dedication

pace. Over in growing our year-to-date believe decisions, company. reflects we transformed I Shyft positioned an are key earnings a power Group strategic of markets win the the that of last the the have number that few at accelerated performance years, to made

customers continue great team XXXX. for are optimism now have call. their is conversations share excited as the Operator, for of continued we who Our the entire in our growth we to Q&A trends with ready portion

Operator

Thank you.

now the question We will The begin [Operator Please of question-and-answer first Shlisky Mike session. Collier from Instructions] Securities. today ahead. comes go

Mike Shlisky

guys. morning Good

have outlook. the the years, than QX I QX better In So, the margins been maybe wanted QX the margins. talk two first about to last

Looking looks record from in lower at had just be bit will like all-time the mentioned what QX. you've the a margins we today, it

of you've also. any it curious, seems kind since probably those only through going only issues, are I'm like you've So, operational you've -- -- worked away

trying QX QX? out or I'm So, compared be in down how margins figure to to why might

Jon Douyard

things. Jon. a I'd is this couple Mike, say of

mix. activity negative As volume was lower with in lower we will business, motorhome at volume walk-in like accelerate perspective, heavy had from of also and and an compared body of attributable in that in had. we higher that's and growth van which van QX, see to the mix we the contribution And looks to truck upfit is will look see the some QX the be what upfit that strong There pull-in impact. we but again QX. third the certainly year-over-year walk-in We'll it some which some strong in also partially quarter

perspective to expect we that declines. to talked do get be the volume -- And through, about. you so, to then, with we some contribution the sequential see going productivity same -- just fall we're able not And the a volume of from have do

given in. uncertainty environment still the the the as operating think, at we're there's I we look quarter, -- that

what and a of there uncertainty given case view the of a with country playing we've increases could it particularly across And last is of think that lot be. so, here the variability seen couple good in we're But we the as I've to taken weeks. some still

Mike Shlisky

Okay.

to the you curious, that? follow-up I put wait And for orders. and line other to the cannot it customers their folks wanted in to line there, be for And have at QX, just put also segment, other of was charge the simply in any to QX, in FVS front longer Okay. a then be there want the orders, some is like are here? who front sounds

Daryl Adams

don't. customers we our Daryl. one. Yes is at to partners look Mike, demand. I'll meet struggling and this the No, this take We they're as

we do that. So, make we that, sure could to wanted

got we few different a did So creative, things.

it I the gets in the Shyft name out be in some off them that help that to to according able think that were as strategy, think, out going just as to orders our continue Group at really forward. orders customers shows we there and flexible. nimble We future agile, an asset. those of to more QX we look pay it's And pull

Mike Shlisky

to ask want Got Okay. about Also, parcel the some of delivery it. companies. I big

vehicle I week want know over to I do think company including what them if parcel other this of has folks don't you know that will last in other that their But the one might or you the offset indicated be increasing those part there, you the cutting? that to talked if be the XXXX. the one recently. folks of CapEx? actually And two they be think out cut might companies do to that CapEx

Daryl Adams

CapEx products think, in their buying big they're and lot companies you out of that. delivery when budget. other the I we Mike, did there, airplanes Yes, at look hear And a

customers number parcel year. we have in some great having that other we to that a actually reduction. of end that seeing the increases directly come of the heard be here not will our going fruition with delivery, We're products part to our conversations ones of think So, before are

optimistic on XXXX. we're and bullish So, actually

Mike Shlisky

to discussion chassis you manufacturer had another until available, Mercedes if Ford here, one And Will choose product Velocity use earlier, or of that's can just And will Velocity electrify you it Excellent. be be FX? and in to wait squeeze an on lineup? more have the FX. electrified? do eventually And you EV you FX that the chassis, has or do if family I the the either, product

Daryl Adams

move have there three FX, that's a come Yes, the with a to use was in be OEMs And the we're it something can last MX. bit, out that that so will XXXX. of about for -- probably have we me question, be let can think not going We third-party but them. So us you're the getting to questions -- to to talking answer that's wait into we we product. I electrify, the forward we electrify their to ahead don't FX little more And probably try those. as -- and

Mike Shlisky

Okay. it. much. Appreciate I’ll it Thanks very there. leave

Daryl Adams

Thanks, Mike.

Jon Douyard

you. Thank

Operator

The next question comes ahead. of ROTH Matt from Koranda go Please Capital.

Matt Koranda

approaching fleet your million. Thanks. have commentary that I on $XXX you increase in had backlog the guys. guess, sequential Hi, in order implied suggests vehicles may flow

So speak are in just of And if that assume would order which guys well? you accurate. as is being like on alluding maybe was mostly order mostly inclusion composition whether I Velocity wondering any parcel product then of flow that fleet, the also that's to October I walk-in flow could you van. But sounds to it

Jon Douyard

Yeah, is also little probably parcel the is mostly van what your say the math a less certainly close Jon. I the of you stated. side than on bit the -- saw mostly is walk-in side we business. on number This And would

to good related think very have And Velocity. have here in with we But that there's shortly. hopefully related nothing in that continue to discussions to I we'll backlog something October backlog on increase. increase, increase as customers sorry, the Velocity

Matt Koranda

I balanced I tends normal the your to usually, towards mean, order just flow then And the spring. helpful. Very parcel to Okay. more believe fleets seasonality be

early XXXX so here, or orders? And end toward we the the head course as get you of just get the when how normally normal wondering expectations your orders impact year I'm does your as that into view you

Daryl Adams

is morning. Yeah, Matt Daryl. Good this

So And discussed to mean QX restrictions and think is factor right? going XXXX, currently does through of chassis right with if even back And unable a other in wait Velocity again. the now that of the not I discussed to late in delayed put go X I check, some we're if time that as that and of the additional think I that some in you situation XXXX due in seeing reasons. we're COVID number now. develop Class we the what that will that XXXX, come we ordering we right back various chassis to go had at to some we're

as think an it's CAGR timely very I a COVID that that e-commerce to into rate. as you continue So accelerate nice then inflection point have have trajectory. And

we're traditional think like with especially walk-in or I the to four chassis the suppliers DCP going vans or good in have numbers. struggle Freightliner motorhome continuing to accelerate

So than and Class be chassis not Sprinter with the be But Dodge Mercedes probably from going supply, hour units which us a much out higher bringing they're bit give to out running to less. XX we bring is the And which options the probably RX, But we're an three is the of get. probably faster, Freightliner FX, customer to them DCP out the then least pick that gives City. MX, the cutaways transit volume going QX family. run Sprinter, the also FX Ram the Kansas X, to right? at little more would the that in looking at is maybe Velocity unlimited

give these And are to to able be vans. So buy four chassis more walk-in we'll on. actually purpose-built them

and van around traditional a of double from efficiency city. Shape the very and the van get So easier walk-in to similar to walk-in smaller a it's fuel it's except

level and this since the at they're fill March to season trend may of and that a future basically going So the COVID customers need we peak their the see holiday to running out fleet. that be at with this and delivery

about year orders So here we're into XXXX. and the and end of the excited coming

Matt Koranda

may to it large ask guys chassis to mix FVS could availability, like if you backlog factor on from Velocity speak Very least I the some And but helpful, strong has were chassis no what I was longer you Daryl. the to maybe constraint get the to is platform ability your from to ability XXXX. backlog. gating a the in which for like well at your think be fulfill sounds you historically going that's next, Obviously been fulfill with typically that

capacity And through of, could the quickly so and sort just to parcel year, next curious you how guys backlog see, maybe so we if from bit if speak we And that there? a to then as fleet fulfill maybe of to can order flows speak do next of year? a utilization

Daryl Adams

it I'll take again Matt. Yeah.

history we which if again was we in footprint think I and have So talk our if a little out to you and plant the have bit a strategy, will. go build model back about

So in I'm the building going the truck isn't Michigan California. but baked tell you our we're to So model have situated. -- now that's right ability nicely now right we not is right? fully footprint Pennsylvania, And and plant bodies

South We currently have move at build to that space up in additional Mercedes that in there help the some build the we opportunities Michigan looking Velocity have City plant the chassis. and move Carolina us We're Kansas open down And in of we that ability to build space truck out right? can transit. body velocity, on will then around order to

in have trigger pull well build move. flexibility Velocity, that sometime move space a to to up products down around to other some and QX probably to start here and the we path pretty ready So the open we're which

Matt Koranda

you Okay. Jon. helpful, Thanks. Thank Very guys. Daryl,

Daryl Adams

Matt. Thanks,

Jon Douyard

Thanks.

Operator

Craig-Hallum. question Steve go next The Dyer Please today from comes ahead. of

Steve Dyer

Thanks guys. of congratulations. Heck a quarter,

the QX As perspective. from it against I shift relates to some implied margin and and working that mix a guidance, like things understand you holidays

usually a just is? to gauge, much typically volumes? that is severe implies it sort but from see. think if commentary than else It revenue how it trying I'm trademark bit know seems of perspective for of anything and your it And I what -- than more Just or I opportunity because revenue some labor there. maybe constrained conservatism you're Thanks. should don't may you versus better a upfit be generally

Jon Douyard

on able they were volume were to even, able and business. revenue think we were within you and particularly the that I fleet QX I A get customers, out, the fantastic from demand, the Yeah. things able they we respond FVS think pull had of all get, the to to the of volume. part was about on and that things, leverage And where in was mean, side hitting in -- think, cylinders were mix perspective. to if a I quarter, products on deliver sort of

And into builds sort more sort QX, going of are so down in the season as able and and ahead the shift things we of of line, which again, and a impacting where QX, customer and of differences QX spec have demand change varied of little customer we lines consistent trucks to change and the those so bit that, here. volume satisfy being some between types peak to brought holiday output backlog

Steve Dyer

Okay.

incremental kind boost the was -- big big it there? of Any concentrated of saw in that? October, color curious customers? maybe it In that you if composition of or was Was terms of the that, the out? couple How backlog, a sort of fairly just

Daryl Adams

Steve, say We I delivery smaller saw it. from Yeah it take of couple the out say, a the parcel four. the maybe of companies, would I'll top

So the we're with having ones. we're two -- again the bigger conversations

we're to about of the And out guys. the looking have think those So both end something them. of excited we're I as year, said before, I before of

mainly right think lock volume big of they're which race who up what So, their you're and can XXXX. grabbing we as it's to get, see, that's seeing was So much now, guys, going chassis it none the ones, into smaller the I was a it as right? could

going a on. there's race there's think a of little trading. horse I So bit And some

the with delivery. to negotiations big the manufacturers, players on big and chassis that all are and some talking And parcel the OEM

Steve Dyer

this of so hiring of to of know, you're kind saying, your you lot going Thanks. were or results a very the all? -- over workforce a question is would you've of That's I forward, there? that suggest of doing and you success? just just good like in all and your in on it. something add constraint and recently success that QX at you forth, so, to want a fairs being labor, Daryl. I at been -- anticipation that your mean XX% you But next are had demand. anticipate sort of fine having quoted is year constraint Got Is sort or A that having helpful,

Daryl Adams

No.

that success I as in was down about mentioned and we've good at think I the shown you talked Steve, company-wide. QX, Bristol increase

humming due going motorhome Bristol we've shift, for QX, it's bit good. headcount location, we Bristol. South not Bristol. feel, about where started along ability not locations In a the the the imagine, we probably But successful, and is been Carolina. product of we able probably business getting be both going to at out in probably have to down the to can constraint hiring you So The – be we is, That's again, to I as being, the pretty need. we talked have move the that those second in the but to little hire Michigan real at and

Steve Dyer

Okay. Got it.

you to it, Lastly for in stock, cheap put down of you're two-part lot you capital to can just I whether a options for acquisitions, view debt. it guess of a a have And allocation, me, a the it's, you of stock, question. make back could relates places kind buy could and ton cash my generating pay you

color been the how sort it's DuraMag and of capacity. And that acquisitions, then for guess sort Royal. All other And capital or what has has That's whether But you that going capacity call, of the kind or on it. think you've of you acquisition about capital greatest allocation how I relates return? of opportunities acquisitions think country or to I the of types Any horizontal around of been of forward? as allocation buying expanding done, sort One it things. would those Strobes do two-pronged. Thanks. about of sort

Jon Douyard

can I'll Yeah. off comments. start And here. add Daryl some maybe

allocation in your year. We the the solid cash in standpoint. flow I of half our certainly capital we're -- think up a to a from here, picked point, position, second

expect continue drive that. returns continue. pipeline, are opportunities we solid similar. a And accretive have we from there's I I equation. that like And And into out investments. fits be M&A perspective. that, to will then feel other think, to to pretty that there an there internally opportunities We've feel think discuss through we We squarely continue that to And we growth

opportunities, a like think point we -- footprint launch, organic to a a a to from accelerate opportunity but feel there's the well Daryl's other perspective both, expansion Velocity footprint we Velocity product technology growth and we potentially launch a As perspective. about from also perspective or execute of perspective sort as as as

under list. available, to -- on And specifically And buyback got certainly the perspective the then, a are so XXX,XXX authorization. your question, those And shares from your we've understand to certainly that. high current we

on side? anything the you'd acquisition So

Daryl Adams

No.

seems, may money that right that we're looking for paying PE leg. to it a higher But third Steve, always be of I willing be there, lot think, there's now we'd out than into. what jump

So pipeline our every we'll continue Friday. to still have look. We meetings

here about we've we'd comes talked has nice along, interested. be leverage the something been very I X.X ratio Again currently. think, And

we'll I X.X. comfortable somewhere think be

the the do comes deal, opportunity to So we if can of table. sizable a the top

Steve Dyer

All it. Well done right. Got Thanks. guys.

Daryl Adams

you. Thank

Jon Douyard

Yeah.

Operator

from Please go next Sidoti Steve question of ahead. O'Hara comes & The Company.

Steve O'Hara

Hi, my for Yeah. taking question. morning. good Thanks

Jon Douyard

morning. Good

Daryl Adams

Steve. morning Good

Steve O'Hara

Good morning.

had had the other they expected years. that that. e-commerce you be the few and Just you a now most on had or got might medium forward mean years kind are I environment kind years that the demand kind about significant imply to that, medium waiting, I order if term? growth So with that think they to but of the leapfrogged need think noted somebody they that. the e-commerce meeting catch-up there it think, I a CAGR the pulled there's the book more that mean few in five was I previously like or of kind XX% you've out now of to can something some noted by does do method? mean term And maybe I forwarded, thought to I Goldman shift. like was or a talk what recent of or as

Daryl Adams

is we're the remain the I companies volume think I And on go what figure closing. or demand, Steve. parcel about rate delivery positive tell space parcel we talked a night last learned e-commerce even report conversations going article the on mentioned, is in call back Sachs since report at. the and all that a out we And one late having Stanley looked out you CAGR to are stores was I'll before question, think which COVID, big company the you to especially Morgan always where And brick-and-mortar I with COVID. that Good delivery after the have what with trying Goldman depending from Yes. came last to XX% XX% to the conference our you

six acceleration understand they've with now to that needed vehicles the parcels is Sachs take going increased is put up delivering. I that to be the parcel Goldman and pulled term It's COVID have which the representing rate with CAGR doing points, about on the was XX% year-over-year. delivery didn't you're for it. X.X points they years, it accelerated to replacement and we're been you two, something to we said, a one eight now think consider it trying that to more are sorry, if XX. and in – right cycle And then due that They forward. That's the

shorten walk-in well. at the delivery shorten. are the been those I with have thinking space if going seven that's in to then if as to look running And in are life So to think are that a XX-year two five and vans, vans cargo a you would Class all around going parcel maybe the the those increase

rate do on only the up. CAGR So we the going not have parcel

add come on sooner. going top of We replacement also that's have cycle that the to to

to COVID continued more I not going next the holiday shop in online. it in to read to I into But So may that longer market. a we're continue look And little does are and go coming see the this the mid-term more people season. totally if down and up go to term And growth bit, the away. stores just go it

going So is the it the to to be was believe harder COVID. muscle memory I come that longer back drags before where to out

Steve O'Hara

I as looked you And if then maybe I there? I – well characterize maybe gains No a at but or that out the on as flesh the – little that Yes. think missed you year-over-year makes pretty would just it there from think increased it that like how do RV backlog bit? Maybe side, that demand nicely more least. And share is sense.

Daryl Adams

actually about We've talked a good Yes, It's both. that. that's question. side. backlog about talk We didn't the

So XX-XX. – usually two have when some I it options of I they're say

that say our products two. increased on and split one let's is volume So is with One the between we're more customers. because demand is exclusive

We I in better in it's RV maybe or different on And hotels. natural to customers. think know air someone So wanting we're has to one increase exclusivity I people both. XX%. than then gained don't percentage think But with was have you of and versus our I a And travel the it due adding Jon else three models. stay

middle the both down split it's of those. of So

Steve O'Hara

And of still what about for democratic I Okay. a I EV thought this kind there is may good West it at Coast the term? on the the a mean you And mean opportunities then point. or election I on is the do but for undecided maybe side EV guess, the side? faster? growing like might President more But is now, you seems that little mean bad be long a that guys see

Daryl Adams

question. Yes. Steve, good another

we think back our we strategy have where a I now. go always to national footprint

of coming different Both micro I've a times at in be in So that We product until the economy that OEMs I the it's everything. it, the to right? there's time lot If macro also product EVs said plan to we available. states. ready, for sure right? want the we've you but have gap at look bridge can't or the we on not want a think subsidies that when variables we're said lines the always we And talked about government

doing So ready that to to what miss do on well the to fair want don't investors wait to we strategy our out when for in make – sure fair their we or it's is we're I the that chassis just are whether are opportunity. and to we going say XXXX not OEMs XXXX think our have

bridged why the gap. So we that's

another what the just more like gives something case, state case, to in describing you're happens subsidies EV Just product. or in

EV tell the our we conversion do I'll And at we at can of any what. all of to in operate today you do ready we're can it So states regardless ICE is the of what we from locations. that XX

Steve O'Hara

right. Thanks the it. all Okay, a Appreciate time. lot for

Daryl Adams

Steve. Thanks,

Operator

Please from a Securities. Shlisky The follow-up Collier is question of next go Mike ahead.

Mike Shlisky

to follow-up Thanks guys. last questions the And the on taking here. Hey, I for two extra questions. want

not with mistaken. several On if the I'm I orders initial from Utilimaster, EV you you announced starting here, of are saying companies that actually parcel EVs to recall story their supply

more but going know made who kind are also the think want one. to than have inroads thus know substantial that's how is even know with I you priced EV more want from to want some of make I walk-in try of you walk-in van there facility to in ground -- if it's if to in any folks converted competitively their if any And far? broadly, guess the kind start-ups do own I And your other theirs EV space up? I So van

Daryl Adams

take Group Mike, Yes. right? make The doesn't sure clear, Shyft I'm to for anything I want just granted.

a So start-ups we due as I as gain talk them, much before are even the in Because new every set the -- building lack of a to skill inventing, we space, as right? mentioned but of time EV great player product. actually can, diligence lot lot a frankly into the comes at they some

in. we're the ones talking coming even So to that are them,

with agreements continue to with that there, to put to we're with, companies but out a number to talk product. We more a have arrangements hate of handful -- than working build

about. get all to an good see use we're we but else's, either our can that's And to not system. we we're really EV the to operating manufacturing sure lane. me, and making ICE them -- We over developing again build we're are contract So or at assembly, in that somebody today. going want into to just chassis We what don't swim talking

what if the them. EVs other, is the required in how the couple I one a we'll about put the right? that vehicles is, And for it Not start. right? we're or probably think out around from will election going that want some we of making problem getting We're If I to feedback sure think -- great to country. That ready be the product, our As still way of them. they point evaluate Steve them, EV customers that's at supply there more will goes there. And talked the changes it's be be

is California. point really stays we're order today it as same the So

So at we're if we're the answer again, it customers. X that can to get ready locations. our electrify, Class positioned X, we our ready if from at number and want And to you look we we the be any call through

Mike Shlisky

And just on there. to the tie answer a bow

to product general volumes your good compare pretty got your able out you've time wrong be you guess provide with deliver in that start-ups is other some that competitively I maybe the a and current a EV if pricing it's there? converted, folks? might ability with just to these Are across So nothing you the which good even your at to priced of facilities. Could priced

Daryl Adams

achieve may the Yes. optimistic. a that think are we've take little some I'll done And price We that I their it believe a start the products be offering to maybe people I after And price able analysis, price, of think adding Mike. price they when the have incentives certain up. account. you into

of our going vehicles, try competitive uncover we them. lower, traditional it at or So because vehicles, overhead you to as But looking as cover with the to with competitive pricing. to that's we plants our think is our we we especially and unwrap our more be current do in have can you're feel be we obviously things some when can them

Operator

Thank I session. back Juris would to the question-and-answer conference you. to for our Pagrabs any over closing conclude turn does This remarks. like

Juris Pagrabs

basis. Company. about learn progress on you joining Thanks for to and plan updated regular more everyone keep Shyft our to on a We

in Conference for them. XXth. day. thanks if Wednesday have Virtual I participating And the think participating few great and are we a to and on week, available, Next Again, Baird the want with check there's you slots a

Operator

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

now may You disconnect.

The Shyft Group, Inc. (SHYF) 8 Nov 202020 Q3 Earnings call transcript