Earnings call transcript Q1 2023

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Operator

Good morning, everyone. Welcome to the Shyft Group's First Quarter and Full-Year 2022 Conference Call and Webcast. All participants will be in a listen-only mode until the question-and-answer session of the conference call. [Operator instructions]

I'd now like to introduce Randy Wilson, Vice President, Investor Relations and Treasury of the Shyft Group. Mr. proceed. may you Wilson,

Randy Wilson

by joining and call. Jon Chief Their be Financial for Daryl Douyard, joined Adams, Officer. followed will remarks President Executive prepared question-and-answer this you session. I'm morning's by Chief a Thank Officer; and

a call, on been available filed deck today's website. SEC, For presentation is the and that's included we've also our with

SEC. that call implied. the results Forms XX-K could our those subject Safe Harbor a filed we please begin, for are to results the turn XX-Q Before actual that affect in expressed and which Today's cause to believes contains conference be presentation to from our statements, Slide materially identified could risks Primary X of different management forward-looking statement. are materially risks or with

and We we the non-GAAP measures evaluating in be believe operating useful discussing performance. company's information performance are will

business During before of results provide and update our detailed moving on today's will outlook. review call, a more the we XXXX a to

Slide Please open then will We Daryl Adams. over to the I'll for Q&A. turn it to turn X, line and

Daryl Adams

growth Randy, to Thank start Shyft had our the Group morning, deliver performance, and Overall, continuing everyone. solid on strategy long-term good improved to year, a while delivered the and financial initiatives. you,

another achieved body quarter XX% team Fleet led by sales and growth our Services. Our service improved and in record business Vehicles in performance

the to ability of quarter first last versus by increase year. million Our output $XX enabled profitability us improve over to

quarter which nearly and capital. In addition, allowed deploy in the efficiently prior operating we to brought in positive million flow us more delivered $XX cash than year,

did and needs. What EV quarter. with We than can city X, announce pleased to for and vehicle XXX Arc progress XXX in We a that that comfortably our and vehicle daily Class we we delivery our the X than range, city X electric X performance EPA CARB which customers' to make more Class route. certification mile our highway CARB a Blue vehicles. very achieve our great mile included fleet delivery combined a did more results The continue not only on test were range for exceeds so over program handle

highlight company Vehicles I take Shyft the made a impact as would also fantastic in our moment joined Group development to manufacturing addition Services product employees, and the customers January proven John has as President. Dunn He immediate and and Fleet a a relations to in & leader customer an with our is and suppliers. like to

X. Slide Turning to

over term. positioned markets long remain will segment starting Consistent strategically and and February, the how I the take with Vehicles in commentary through Over these in the mile dynamic. & end we macroeconomic have confident last that for market looks you with past five environment Fleet remains Services. and company by vehicles. specialty the the the moved how our company years, We delivery infrastructure-focused is win to

pandemic continue an We announcements to range analyze industry the single-digit surveys, by be market, published COVID industry to and subsequent driven After independent by the clear. acceleration, the the parcel reports. customer growth for e-commerce monitoring is to secular and rate expected future, consensus the is high pause including mid- e-commerce. to in The the foreseeable penetration, in market shift driven performing reviewing

from this As to a are this positioned in we leader well space, benefit growth.

and As from suppliers. feedback term, the fleet unfolds hear operating our environment mixed near to the continue we in dealers operators,

While COVID, vehicles deploy working others during are certain accelerate made efficiency from actions given to fleet economic still operators replacement, uncertainties. are working purchases through to fleet or looking

to we'll efficiency their cost during flexible support fleet to balance but actions appropriate take our and customers cautious the these our needs to this close given required remain in time, remain and market signals. remain We We operations, growth. the

the that still the backlog pre-COVID have communicated, we which with in improvement the is rates levels $XXX normalize production quarter compared to of levels. ended chain. the driven higher a FVS by FVS continues we from elevated supply million, to and COVID, in backlog previously saw As during

Specialty to Moving Vehicles.

Continued funding across and and needs. including investment enhancements power bolstering grid in infrastructure end-markets supported with infrastructure Work demand Trucks government other critical transportation, spending by federal is for

are As projects Work demand. investing in fleet demand. products market begin, our up their contractors year-over-year, meet Truck demonstrating of strong delivering customer above fleet Sales operators to were and XX% growth

Motorhome market. previously have many in Chassis RV Turning others to our the overall business. softness like communicated We

as Class the is we less well. A While declines cyclical, have diesel segment experienced

are we and win Our that demonstrating execute trending and financial of product been some targets. serve. markets have Shyft favorably our and positioned continues industry-leading our share Overall, market to long-term and to times, strong I We customers share our businesses. dynamic these the continues for exciting innovations remain confident to in has Group to the quality. ability well now remain brands value in in FVS underway achieve developments in deliver will SV our our team's the

Please X. to with turn FVS highlights. the Slide Starting

certain customers in investment fleet delivery replenishment. seen As discussed have accelerate earlier, we

awarded for between have shelf excited Promaster. XX,XXX We split been E-Transit over update, commercial to Ram van and a cargo the are contract off Ford

mid-XXXX trusted reflects deliveries ability to deliver our to partner demonstrates XXXX. our highly a industry begin high in This product position and and win We volumes. quality into expect as at a

which Magnum chassis the accelerate access and of Royal, to to location additional -- confirming already of in This in will service recently strategy and expansion our strategy, execute Consistent provider. Moving to the products. body an a our strong DuraMag, of business. SV We've the hub provides our Tennessee one we Strobes as which our help national successful to opening and us growing direct highlights. geographic regions country enabled the been growth fastest being a will OEM opening leading course, serve new this location, for our announced with in continue secure

other on with and Truck partners. Show the Turning March, development to in provide saw in track customers, interest Work Slide X, starting in a progress the NTA on dealers made has vehicle the year. production helped first which EV second significant original It of great quarter half development the Arc we industry update and an I'll we're At our our timeline, Blue from program.

drive. also our electric as design future their differentiated for industry, positive We ride emphasizes the numerous Blue vehicle both commercial our This are response and performance. Arc of the within and EVs hosted that successfully customers part

In positions -- The CARB excited remains we the previously the quarter, Randy achieved that team commitment. first pre-order our approval to progress. disclosed firm the with discussed fact Marion a about

work with We finalizing first continue their deliveries. to them specifications for on

readiness. production with We also facility on for our made track manufacturing solid remain and progress

of continue our and to We to commencement deliver of key network customers, have operationally service test first months, In commercially. including coming dealer and both expect and vehicle and pilot builds. momentum, key milestones, the positive to our units delivery of national production expansion we on

to we providing are made have We on proud this look efficiently we of have the and calls. future program updates and progress executed forward

I call over will turn to that, results. now to discuss John quarter With our the first financial

Jon Douyard

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

As in our anticipated, after we year. solid dynamic start profitability a team delivering growth product performed performance first last significant this and strong from in in improvement year-over-year walk-in environment, body supply XX.X% improvement the reflects Sales service challenging sales up million, ago and and were quarter. improved our line. and quarter the chassis upfit well body van year truck The $XXX.X for

prior $X.X million year. million EBITDA in loss We the or million income was $XX.X per share compared from or $X.X up to previous $X.X negative $X.X sales, Net of the year. million million, first of spend $X.XX per of the to results of a adjusted in quarter EV improved or $X.XX million from include or up sales X.X% These loss $X.X share a XXXX. of of X.X% net

the ago sales, from EPS of year-over-year. X.X% of to points was in grew while Adjusted adjusted to EBITDA loss compared $X.X up million adjusted $X.XX a spend, loss million XXX per income EV quarter, year. last share improved per of share net Excluding $X.XX basis a to $X.X year

operating quarter segment, truck Slide walk Services expansion year-over-year now higher Vehicles delivered with year as as the The beginning prior saw & production by through chassis X. benefits efforts our well on driven from healthier I'll performance body supply. Fleet as first improved by output, team we results

to versus compared inefficiencies of $XXX.X a do improve year we impact as significantly achieved work XX.X% ago. was $X.X EBITDA a ago. year-over-year, of to loss FVS compared million, challenges. chain to in we While sales margin sales a margins last million adjusted million the supply first of quarter Adjusted million was loss $XX.X the through year. sales continue did of $XXX.X a year up X.X% FVS' EBITDA of X.X% experience of

Please Vehicles for turn the quarter Slide results. to Specialty first XX

Chassis despite in softness EBITDA businesses. the continues Specialty Motorhome third the our our The more in of by Vehicles commercial strong Truck adjusted consecutive Our operating team driven business. than and XX%, quarter margin delivered perform of to performance Work well, business

year. last prior reflecting quarter million to XXXX a outlook. or sales X.X% to mix. First $XX.X XX.X% sales of for were Adjusted or was impact turn Slide million price XX $XX.X year, operational the million, XX.X% million the decrease compared the in in EBITDA our from and Please of same improved and period performance $XX.X of $XX.X strong sales

expectations. of actions and broader on start our with despite cautious we remain cost balance demand efficiency full-year to We look and uncertain the to appropriate on focused in year, reaffirming and as year to operating first are the our remain overall an the the are We taking guidance. we the in was economy pleased both our performance line with that And quarter in business delivered We're underlying environment. our performance growth.

is per given XX% in $X.XX million includes approximately range reduction EBITDA Our $XX EPS XXXX with the be the to repurchases. to Sales of of the share as $XXX follows. shares $X.X stock million, of to growth $X.XX at $X million, outstanding outlook billion, in of adjusted midpoint, to recent shares $XX.X share adjusted which per billion representing

cash times, while progress million expected to business our a the demonstrating an to on significant delivering the sheet down were net than to we X.X focus we quarter XXXX, in leverage cash on a of investing generation maintain $X.X cash Please Slide shareholders area in After working XX. quarter. capital generated able returning remains improvement. greater ratio to strong net capital. balance reducing we remains key percentage the strong flow Further drive conversion to Company. overall operating first Overall, in of working finally, flow and And turn end income the for free capital be XXX%, year-over-year allocation as as the capital of and slide

in the launch development investment of a organic Blue priority EV. ARC is Shyft's

deployment, up while evidenced in ARC we the M&A, deliver contributor appropriate, when production ramp and other favorable capital continue we remain Blue by capital the as significant dividends. a to levels our shareholders and We focused $XX.X first also is we're quarter evaluate through flexible repurchases to returning the returns. million coming on deployed be in expected As to earnings and and years,

growth future and committed In returns closing, a robust and we are to to cash shareholders. sheet efficient flow investments, maintaining support to generating balance strategic

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

Daryl Adams

Thank turn Slide to you, Please Jon. XX.

created Group, the As Company. Shyft we have industrial growth a compelling

the driving starts a Our ahead focus and across financial innovation. us of priority allows culture operational We're Company. returns to invest strength, peers. our in And long-term with deliver our customer of growth excellence

have of value processes as am I of in they our strategy. delivering focused right our members and for We and our team place customers dedication on agility the to execute people shareholders. proud the remain and

call announcing operational today's the our XXXX, on conclude Group been his working joining intent and laying has Todd mid-year, the COO, foundation recently Todd we're in company. to by the Shyft Shyft in like has progressing Since orderly who transition. across ago, joined to an four Heavin, lean retire and excellence communicated instrumental that and years I'd

like the our him continuous last Todd's businesses, forward. well leaders retirement. experience built I our and to value we insight the operational in Over out these journey will of to across to our look we improvement going we'd years depth several wish and drive have

we're now of the Q&A portion for ready Operator, call. the

Operator

with the at Please Our today Felix question-and-answer James. time, question. Boeschen from this [Operator first ahead of we'll And your begin comes session. Raymond question Instructions] go

Felix Boeschen

morning everybody. good Hey,

Daryl Adams

morning, Felix. Good

Felix Boeschen

of first contract. I'm that. all, on about Hey, could upfit if congrats the you talk curious

curious comment up the if units. you I also could wrapped start. timing by Just revenue going on mid-XXXX on comment -- end you if XX,XXX the of -- of be all could if I'm curious And to it's maybe know the impact if XXXX? just the aggregate

Jon Douyard

Yes, Felix, John. this is

relationship mid-single I exciting is that of we at for had think customer revenues, there. carry -- on -- you're that talking about long an thousands as north an continue perspective, digit is when the million of we from contract, and that we've $XX think win the support uplift look which team to us the for that

begin a I timing, sort the to are it's look bit we will does that expect but well the we we XXXX mentioned opportunity. think extremely but mid-year. the a of portion of at perspective, into platforms, about that -- the excited production a RAM that There as there's from two E-Transit across of sequence wind timing and we be both ProMaster. as though, will Those be as different extend

secure job did fantastic team Our a being that. able to

Felix Boeschen

Okay. down curious Got it. any clarify the -- it on if bit. of you're backlog, I just not here. order I and know EV anticipated But bigger helpful Arc Blue that's thinking those does you then about the production just That's given how just preorders. then And include talk yet picture, start just to about wanted book, opening could just a the

Jon Douyard

Yes.

base. I I see demand comments think, demand high level talked Arc from the the interest to mean, we about of as perspective, in continue a Blue from and customer Daryl his

customers out we second to vehicles and work We building quarter. through as with the in hands continue here, which the as well network key do their in expect getting dealer to working

look the order we from not Randy it we secured previously the committed you discussed. -- your When to have the include backlog does Marion that from at point, order that

talk here because it's vehicle is perspective. piece that intent we Arc, at But time to Our our as legacy really really commitments, levels. Blue about look to overall to a tied our this and backlog report is business from of production at continue really

so, the And we've X,XXX previously here units XXXX. talked about ramping by

perspective, order backlog want putting a and we order. representation look that's a will actually from dollar multiyear of inflate an a is sales think necessarily like better production so, or in need And future to versus we multi-years what there artificially the don't

commitments we'll to business. our -- then legacy talk talk continue vehicle and vehicle in again, backlog So

Felix Boeschen

pass Got I'll it. on. it Understood. I the time. appreciate

Jon Douyard

you. Thank

Daryl Adams

Thank you.

Operator

Our next of D.A. from Please Davidson. question Shlisky comes ahead your with Mike question. go

Michael Shlisky

order, a on that off so Is and you the on sheet or order the for of ownership to is your follow-up with on able if Or the start call. top chassis does take just it morning that existing build about thanks talking the far Good typical or hit previous where orders off large question. been balance taking of we've you investment where to my Wanted in [indiscernible] upfit the that type? this quick your had at an of P&L? kind you shelf

Daryl Adams

traditional possession This going a uptick content good, taking Good great Mike. question, just where morning. chassis. the labor Again, into that's our and is contract of we're It's vehicles. not these

Michael Shlisky

Outstanding. Great.

other you mid single-digit go industry Is to initiatives? the perhaps you to or share here? over of any in kind oil here? in rate Blue business Daryl what the business period comments market a rate or roughly expect time Your can farm that Arc, long FVS being FVS growth of on other ways future. a that Or the do that you outgrow of Or high growth have kind actual foreseeable underperform line

Daryl Adams

Mike. question, good Yeah,

high the in with yeah, to delivery number. So, parcel comfortable space, the we're mid single-digit

couple into excited come years as of accelerate jump the be that in our orders intake to would what customers of body we truck can on about think seeing good a we and products. And see back order nice something and that's I growth FVS business the that. continue ago

I the it it percentage add or is the up little term, longer in to so. driver, the know, delivery. as two a to a main that mature parcel is you might FVS, bump more But So, business bit think

Michael Shlisky

just some give volumes improvements supply strong or environment you Thanks segment? one given the there Can looking drivers for it. can point do to on that. expect of Vehicles just for that the well foreseeable at real continue you Got the there? chain -- quick, that for some on do margins to then good future, Specialty have the as Is you you demand? And

Daryl Adams

Yeah.

remarks, of in XX%. a in we As row about fantastic prepared north three we've seen delivering quarters on the talked

we side nice a that the as has think, business the work like as factories. really particularly and done well the as the bodies the in look efficiencies forward, team job, I on service price at truck of business, driving

perspective. said, a demand, continue forward. from momentum operationally to -- continue commercially we to and and so business strong job to the see like team done And see great can think, move continue to that expect both has I that position and certainly we And

Michael Shlisky

I already. low the one that it's way to pretty squeeze Can here, last being answer much ready a before know want or it. one window The you wide Got guidance unchanged, to in the I middle now still pretty through if could. of through narrow I question you just year you're high that guidance, the maybe review here? range big the we're the

Daryl Adams

about the which the I year, on roughly doing talked XX% Yeah, line think just I half, mean guided call, last which first digits We we've the in in the expectations. mid-single at in is about with our first we look we delivered. you year quarter, of how talked our still when

we the it. I before understand half the make look year, as things we of we solidify of look sure like we to the think side will that to second demand want what

with filling the off the that think filling -- talked with I like upfit in the with sales the shelf that. order, in we our things earlier, about order US --

lever dynamics in think from give the perspective there's us position would guidance. that different -- narrow a I a put couple there us to a

Michael Shlisky

answers. you. it Appreciate there. leave the Thank I'll Great.

Jon Douyard

Mike. Thank

Daryl Adams

Thanks Mike.

Operator

next question ahead question. Greg from Please your from comes Our BTIG. Lewis with go

Greg Lewis

maybe squeezing out trying in about of some basically as out their efficiency. of process companies, maybe I Daryl, around everybody. taking mix some the those good Yeah. was you existing a color talk Shyft for of vehicles? legacy and of hoping the some of kind it with Thank the for of customers, some some are mean being value bit opportunity Hi. extract demand. of little touched -- my you these comments Could morning to question. for fleet you more on Thanks your the I on more

Daryl Adams

-- Yeah, I good think question, Greg.

moving I'm efficient anything their articles we have are. a think when efficiency think you fuel which gets a choose van, vehicle, same Velocity vehicles, of little But you're early which could if reading we maybe a would cargo efficiencies, to the be it's our that, mean, fuel do space put if the slightly I -- pin at more certain. way, of maybe I some typical the smaller. they maybe in rid right, I to would you and look we about to sure is think also double vehicles different getting efficiency of But a older walk-in in have a

figure early, Express it's to just they're that But option that in look one that's have articles to at new project I FedEx So you sales talk a the been about. press guys Ground of They're trying start especially -- the FedEx them right. too the still if our think out on Drive. the called out,

So that we help and understanding assured to in expect and the partners past them, more continue. with we them meetings the staying are -- And offering that sitting been close we've and become products are have it great rest in we to efficient.

Greg Lewis

we keep Okay. on backlog, of -- -- out rate about about quick be going EV Great. the how of think sorry, that then that keep there out And it backlog, of keep the run of the thinking as to to kind we're ARC real normalization we're just the we're to -- -- yeah. kind going of the is -- of we should I'm just but so normalized going

Daryl Adams

Yeah.

historically you this six-month four-month operated, look when think range. at -- in you business it's the to I when where

still XX% And have XX%. it We're next of backlog. look had in so, XX historically, as north you of XX%, revenue, call we months at that would

-- you our XXXX you extend look that. and If guidance if at

consistently, we've in and and with where on see as that couple changed. But here over to are later our comfort we QX expect, said view probably normalize that our would QX. we It's of maybe quarters. necessarily the QX so next -- hasn't And

the expect year. that so see play itself And we within to out

Greg Lewis

the Okay. Perfect. much time. you Thank for very

Daryl Adams

Greg. Thanks,

Operator

question. with Steve Dyer Craig-Hallum. from Our ahead go next from comes Please question your

Steve Dyer

missed The long anything Thanks. was a may fantastic that SV or there specific out? to margins Good time. morning have Is guys. Was within particular mix they've I there anything drove segment, really call the that? but this. just segment in been to

Jon Douyard

motorhome and Work as it's factories. our performance about from growth a I some there, just bit in both certainly efficiencies softness body the Truck think, well think in really of businesses, I perspective service We mix. just within little but as pricing a talked driving strong

Steve Dyer

that Got it. Any Is that talked quite bit a The you've give other sort just customer? it. customer? upfits, that new Is around of up? color to frame can XX,XXX you one that a about

Jon Douyard

that a customer we've Single with Yeah. been partner for decades.

for last upfit us step opportunity they to good a been provide content, of a the over as number for fleet us years. legacy in to really so, last look the replenish And doing which and we've --

of happy to talked a a a just so as ability us. that deliver And I well for with as perspective, is from volumes, Daryl really our think we at business. And quality high again. about Again that both just continuation we're think differentiator

Steve Dyer

mine The have rest guys. of Thanks Okay. been answered.

Jon Douyard

Steve. Thanks,

Daryl Adams

Thank you.

Operator

MKM. from with Please Instructions] [Operator comes from ahead go Our question next Koranda Matt your Roth question.

Matt Koranda

good morning. more to Hey I ask just -- guys, pointed wanted

Daryl Adams

morning. Good

Matt Koranda

Good I big ask question change to morning pointed I just wanted on the No guess. you a upfit provided win. guidance, philosophy to despite guys. more around that range pretty the

Or there's incremental of Just that to can within something tone revenue a overall it is offset that curious that environment? of have you sort XXXX? caution general if the specific more you point just that

Daryl Adams

Matt, is Daryl. Yeah, this

the we actions still order. to needle. And in some I process up, are move what think earlier you going about right, lot like more But that going parts. of help latter be mentioned customers efficient uncertainty is the are to take more there still call, hear continue they're It's figure to still efficient. trying that how We're I there's excited a it's be definitely moving in out traditional to early about. the of the or brought to we to our that going

recently the customers coming even it's still one -- haven't in news. though some from So different seeing just cautious different comments in different

being that. just on cautious we're So

Matt Koranda

And FVS. margin historically piece different been upfit profile, this could. accretive anything the expect of margin of profile business, I on if particular enough. the we guess just specifically, the that with to upfit has Fair on then Should Okay. front business? I

Jon Douyard

in shorter if necessarily. upfit I general, bit of business, No, you the a cycle at look the it's I say business. not would mean

you typically if six as backlogs to -- shorter the they it's up four so on months, end of months that. And

This when in business fill assumed had some so for the guidance gave level back And year. obviously in. February, we we that of upfit

And I view as not incremental. so it's it completely -- wouldn't

I great that think for it's again, upfit a and, assumption. well. solidifies I positions opportunity think of it's But us sort us

Matt Koranda

on if like to Okay. to FVS, you should to characterize like however it, either, where backlog of normalize for curious And should your want that you does it backlog order the would over then, take Got flow? mean get curious or where characterize it. on so? normalize And in months, form FVS then, want be quarters, the near-term next quarter what

Jon Douyard

I mean, over I But here you variables. as tough of I the next given we we a because there number to it pinpoint mean, Yeah. -- like of number it valid I think, there's expect normalize couple would said, be to months. just think, a

you really so, look orders that quarters high the record I backlog. business in last think over off coming if or four we've modest that had

perspective. here continue in and near-term until expect see some from to normalizes it that then we that the activity think I

Matt Koranda

then Fair Okay. from And last one enough. Blue Arc. just me on

with to vehicles how Do get testing, that's Maybe Just of in speak update that's specific to wanted field? customer specifically an some how just sort guess progressing? on you I could going? color, the now you a have

Daryl Adams

us And certified have so this ABS, to customers through their be This still And Matt. we're safe. is that to the Daryl. will achieve not hands, give vehicles, milestone expect vehicles have testing. to that development is that we the the do we have big brake testing, quarter. when Yeah, working happen in later Customers yet which the in

Matt Koranda

guys. I'll Great. in you. Okay. Thank back jump queue,

Daryl Adams

Thank you.

Jon Douyard

Matt. Thanks

Operator

today's remarks. And back to ladies Randy that, floor and the I'd gentlemen, we'll any answer question Wilson, over and like for conclude with to closing session. turn

Randy Wilson

for Thank interest your I'd everyone in participating And to call you. the like Shyft conference and Group. today's thank

Over the investor Institutional XXth the disconnect please the weeks, With Craig-Hallum Annual Advanced Expo Conference and in one-on-one as Clean the Investor Minneapolis. will in well be that, operator, Anaheim we hosting Transportation coming call. meeting at

Operator

the Ladies for and gentlemen, thank We now concluded. joining. has you call

your now may You disconnect lines.

The Shyft Group, Inc. (SHYF) 27 Apr 232023 Q1 Earnings call transcript