SHYF - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to The Shyft Group's Second Quarter 2024 Conference Call and webcast. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce Randy Wilson, Vice President of Investor Relations and Treasury for The Shyft Group. Please go ahead.

Randy Wilson

Good morning, and thank you for joining us. Today, you will hear from John Dunn, President and Chief Executive Officer; and Jon Douyard, Chief Financial Officer. be a will session. remarks prepared followed question-and-answer by Their

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

We believe discussing these materials. in non-GAAP performance. the which will found information be call for and are company's measures, performance non-GAAP Reconciliations evaluating be conference we measures can useful in the operating

review business from our Dunn, with and CEO, begin XXXX outlook. a will We overview second-quarter of performance Jon our Douyard's John followed by

then open Dunn, to over Slide for turn Q&A. Please today's remarks. line John I'll and the prepared turn X, We to it who begin will will

John Dunn

morning. discuss Truck made with Randy regarding strategy. welcome unique you, announcement growth we acquisition to this and performance good that aligns the business strategic a our I as Independent of second-quarter well our the would like exciting Thank we Upfitters, morning as well everyone as

the pleased business, we with performance delivered margin increasing focus FVS with we the high environment of given quarter. adjusted in as million $XX.X For quarter, operational efficiency. the improvement significant saw our in were our from we benefits our on Overall, EBITDA single-digits with to

order cash organizational team we end milestones team focus emphasize we XXX trucks Slide customers flow. Please to will a Back as that commercial Blue transition year. earlier across on activity, Arc made I to the to announced the Arc financial from with changes also key corporate the achieved in operational as project and expand our I businesses, for efficiency as growth. in This we the by the progress. have February, We long-time drive and the following deliver to with will the framework growth. results is FedEx, Shyft excellence, quarter, in as to performing customer office production by well profitability on at financial to of X, continue trucks. in company. We introduced framework The partner, drive and pillars; high members teams, an drive improved sustainable acting Overall, turn operating and are centricity I want urgency to Blue anchored

We that quality for in position which make us both recently all customers, the the business progress continue our to and from We in additional well across we saw future. scoring benefits pillars. performance operational have margin received

Zero. holding A years. the past ensure a fundamental to working Team our safety safe we work work. at Shyft the place member great couple for have we and quarter, each accountable to great efficiently deliver environment Mission other is were strides have over to here provide proud can consistently In are initiative, to I said, recent actions. that progress We they on Overall, also that growth more want with I value grow are additional into meet high-performing business. With our opportunities ultimately detail team and and where and increased appreciate the teams supportive Shyft's the customer share When our I to are of engagement. partnership and customers, go exploring today of hear our collaborating, is of new launch safety we share made not and we customers. that

day. incidents, is job, X injuries, every mission safety X straightforward, every Our

operations the current leadership to roles in we talent. at We reflect environment. our have made flexing corporate structure, recruiting In our in leadership addition, great while the and the FVS also and SV consolidated office streamlining and teams empowering businesses, top strides our

in on focus continue efficiency will and areas forward. to these flexibility We moving

significantly which thrilled growth. financial we our enhance Upfitters, body ITU, Independent service of and or the will acquisition I'm Truck capabilities. upfit morning, discuss to to announced Turning this

have national additional as a will acquisition performed Slide to leader. we've We well strategic transaction fit our closely become This executed discussed details vehicles, how on the strategy has I strategy, specialty market provide and business on and our body aligns X. service consistently with that

an ITU With relationships adds locations, Shyft key sheet as their us, we team, more Shyft. ITU perspective, sell upfitting this opportunities and enhances acquisition while our the larger we leveraging as Overall, management combination view and updating through flexibility in of they capabilities powerful a ITU, strong and as products unique capabilities DuraMag upfitting thresholds acquisition, is for and meeting has commercial return Shyft vehicles financial historically. combination across the three Royal, while can The we where a move provides and balance service attractive Utilimaster strategically. From also body and complex well-aligned specialize cross-selling maintaining Shyft our forward. than

We ITU We the are transaction will our excellent believe integrate look the continue working to that we creation strategic shareholders. business customers, significant drive we and Shyft, this one opportunity members business. benefits team confident team and to grow is with an forward financial for as and deliver to infrastructure-related value for

X, the provide Slide Arc the an Blue to and around I program. turn will let's update Now status of

inflection great launching Blue Arc sitting point in progress since back say, to made in today, are here I'm we happy have the at XXXX. We And an program.

ensuring production the that vehicles commercial the cusp our vehicle only road. focus on of we put high-quality on are is We and starting

a ramp, we we vehicle support rigorous processes have to well-disciplined launch. As

first we excited in we As we FedEx the the are earlier development the increased vehicles, process. order approach their to partnership and customer We're quarter, announce seeing through delivery the appreciate interest. of our

we Blue the market's quality experience the give We right have and opportunity us of confidence demos, vehicle for completed additional have needs. continues recently the Customer providing the that to [indiscernible] the feedback Arc vehicle. to performance

of the validated is Turning a and the vehicle key Michigan vehicle milestone celebrated Charlotte, development. production completed. successfully production and production our that validation product recently on Testing built to We quality now our pilot first line, processes.

with our ramp-up expectations. to XXXX. in the we Overall, it of for confident turn later over months. I will incredible has pleased am in forward at our I that team detailed to Jon vehicle XXXX pleased perform by financial this I from report supplier performance review are our further progress deliveries look We the the updates outlook. battery are and a results will to year to continues made, now and our providing begin coming his

Jonathan Douyard

the to X. down for or turn program Net focused Overall, quarter, team share of $XX.X Please expectations the previous efficiency or down adjusted results to million year or down results John. of across income of $XX.X from million $XXX.X in $X.X $XXX.X were the remain per spend million, was in second prior XX% X% sales, of quarter $X.X Thanks, was financial second million from driving delivered $X.X Slide on of million Sales sales net million, quarter quarter. share include income the compared $X.XX year. we our above $X.XX the our or X.X% organization. EBITDA per from million in prior as the These million $X.X year. In second XXXX. EV in the

versus sales. the I'll versus quarter, of Excluding a our these expenses, the XX% $X.X on per million, million, EBITDA $X.X for was was income Adjusted was quarter provide was the Adjusted FVS of segment from Slide $X.XX EPS while net FVS adjusted significant X% an share. Please the million down margin $XX.X $XXX.X achieved X.X% was with Adjusted year FVS ago. second EBITDA made second X.X% adjusted In quarter sales X, and update quarter performance. to versus to for turn $XXX million year year. Sequentially, million, Quarter-end primarily the year. EBITDA in the last of ago, was by for X% XXX sales down up quarter operational by team margins a driven lower the improvements. EBITDA of basis progress the compared first points volume. driven end backlog

are the package recent on volume While order was positive customer at not increases in market dealer activity we inventory parcel towards seen yet a levels levels. well declined as soft indications large has have healthier have trending These year-over-year signals. walk-in and van as that include reports parcel and recovered,

Turning compared delivered EBITDA XX.X% strong of solid body XXXX our sales service XX to motorhome same motorhome full last compared our year with backlog another strength Adjusted on were businesses, $XX.X margin demand. Please million partially sales to or of last in SV softness. SV. a million year for Slide XX% vocational to was was turn XX.X% period down in of due outlook. to X% of $XX.X discussion lower business versus $XX.X or of performance. end million $XX.X to Sales million the quarter offsetting down The year. with the

million period the approximately will XX% are supported acquisition gain current to adjusted deliver We strength $XX flow by million softness. ongoing outlook to ITU it the first expected to to range. million the At sales on our versus our to into year. million We now our included $XX and $X in EPS profit be stated million $XX midpoint free year. Overall, track to half. In focused investing over the the ITU $XXX back half we to million our $XX $X outlook. that, improved the our our increasing prior sales The XXXX on the and the profit deliver closing, expect to end offsetting to year, will for December on outlook, previously conversion, outlook on and commitments of second this through ITU of turn is $XXX contribute heading higher acquisition, million, EBITDA and to of expect EBITDA impact Updated XXXX market of be range million $XX of of our in in financial cash growth I EBITDA remains sequential of Dunn. this August we financial remain improvement growth approximately expected of our of current is for of adjusted team delivering end adjusted maintaining I have XXXX. With we impact momentum John million minimal on as

John Dunn

Jon. you, Thank

summary, focuses performance In to business. operating integrate improved on drive ITU Group we into profit to Shyft XX. our financial Slide team improved second positioned the XXXX eager We for to delivered The the our year. results increased value welcome the team and quickly outlook is Turning and are as as framework. next family we heading quarter

exciting production to company, Shyft Our confident long-term to that a and is customer drive and and the moving Overall, I'm Blue for momentum continues right is our truck steps build. is taking team it shareholder Arc into the value. very enhance time growth

your We open ready please now the Operator, line. take questions. to are

Operator

question first Roth Matt Our Capital. Koranda Instructions] [Operator from of comes

Matt Koranda

more acquisition just in I to ITU wanted bit the little a detail. cover

multiple benefits. EBITDA tax the of is Xx and terms post-synergies mentioned you in Just

Just any and benefits go tax you out help get those the the the then in you to synergies language way expect acquisition? us How from embedded take long and can that the quantify there?

Jonathan Douyard

full Yes, in presentation it in business the that do XXXX you was million roughly we year the sales expect somewhere look at synergies in at adjusted we million XXXX. in look EBITDA for forward when out low double-digit year of of include and does feel it, when of run of move XXXX, would a relatively out realize with rate of like $XX We That think margins full we $XX growth as of we noted coming the what the some I some those on we neighborhood you can expect business. the but quickly. impact

It from DuraMag locations Utilimaster bodies a brands we has our ability company feel, high. customers John to comments, perspective. his their the commercial and think through fantastic in their I through And a footprint. has mentioned Royal, pretty and reach is fantastic as put

execute so those we quickly. pretty can we And think

think to us. I perspective, we're the a you transaction may develop, side little procurement this Hopefully, time synergies more on brings think perspective this the I of need. the bit more really cost are -- It adds opportunities cost out more commercial but take really a excited things. about from that of the we're this expecting

Matt Koranda

just That the helps. then things. over vehicle of side And shifting to fleet maybe

vehicle likely that maybe timing few wanted getting van we package in fleet what of Could year You sort that vehicle that prepared sort some levels. things. potentially a just or draw got just data happen up and it larger on terms see of of at to of the dealers thinking that for points it's a side pick I healthier of we've be walk-in picture around hear mentioned side? Maybe those and you Maybe levels probably of that growth if could does order parcel more remarks latest obviously, at when in the flow and XXXX volume mean order fleet customer, we're event? of still a may us that is flow your inventory the take the in this

John Dunn

perspective, commercial volume. I incredibly at I customers, there and as we our Yes, a the -- even has driving look last of from think spent couple yes, weeks active. is team out really it Jon engaging with

be market that half It at second it recovery, I feels early think as XXXX could this it's parcel we at overall previously look point. like indicated of you this year. more

us been EBITDA about it's while I commitment our the company we positioning deliver for on XXXX perspective, from the for how do 'XX. think always in

active, to of transitioning to production. at the that, of looking business. when see got the market of to overall I new perspective, into top ITU 'XX couple so likely And profit XXXX. And we side are 'XX on end our a until got And being from that. parcel would but year-over-year, opportunities Blue acquisition on company We've for we've expect Arc recovering incredibly right? teams there recovery inside some that real, drive you are expected not from of We think have volume, look material that that benefits catalysts a then you've got incremental the are the

for in but focus execute and -- transition XXXX on us growth positioning we as so XXXX, And beyond. really

Matt Koranda

I'll leave to others. and I'd ask one it more, then

the things, order with production on Maybe there had pilot those year. way XXX what the On Maybe I the your XX% Any fleet, you bit of for there. have is expect units guess, And unit for arc this FedEx get And the does expectation XX% any about that on timing we would then guided assume program the units assume would side to perspective you've would deliveries? this into orders? Blue later just 'XX? cost Once from costs setting we in unit it's of on the ramp-up mean I go noticed FedEx. and latest we year. so has when that. a us I follow-on in calendar should development for all head I I the the helpful. to costs perspective those drop guess, that this think as Curious of be a to through.

John Dunn

be right with, off production We're we shipping will units to just I into now this that want start as the end ramping we go year. year. To production reaffirm the up of

we have to see out units there, XXXX. and progress will sold we So into that continuing

from You mentioned obviously have very FedEx. excited a customers well. we We're as other interest the FedEx, order nice from about

And interest the those We interest overall customer on that develop. the we're continue so get the right vehicle. And have announce as seeing vehicles we're think not to really in but we product. yet, road, strong ready will we to

been this X. So demos coming far, of We're vehicle the our looking on positive for. that all is are focused back really with Class they've feedback

constrained development a from in area. So spending, we're very that being

through go a to we're business of striving breakeven XXXX, the close we end to year. get by As the

Jonathan Douyard

And add the the as this announced I will orders think deliveries look -- But previously when you we think at FedEx just order as well. the to Marion think that to efficient that there? initial will a this. I be in well noted be you that, breakeven as how $XX a order get striving Matt, I perspective, initial being from be the see closer but year. plays Do out, to next job that million, has million, to the $XX we all way financial done we're nice team think for the we'll Randy I

need ramp significant units. offset even, to breakeven can than of and volume don't XXX with costs the to the we get a operating business closer it, call so And less

that the think gross gates, that And at When vehicles positive a right variable leaders. these positive not operating here breakeven here helps so for gets trying gross look closer of out as to of we're you us -- to costs I some at underlying margin -- looking again out be vehicles, We're number. fund loss us and positive margin well. which the

Operator

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

Michael Shlisky

quick a with off question. start to ITU wanted First

off to it locations bringing their onetime next with numbers? be costs in as kind one or thinking other third that the company of should any take related are times we brands and the to here quarter might As start other any month, you of month this there the place

Jonathan Douyard

million in I No, the $X year. to million think -- for about we the balance $X of talked

material. that look I wouldn't initial some view there I you integration as will think as at overly but it, costs, be

and So rate of I capability second the companies mean standalone it I there's think nothing that's to a business but might we and significant leverage for their really not products smooth team, be get their looking run We're the that early, sort of sort through today. there. and accelerate it's these are half, a operating value do their perspective on shift channels. in expecting and do we're our getting from how to of pretty

Michael Shlisky

Cursorily especially along? folks in example, at like, looking the size X, you you've that X the put there. products out anticipate providers, will Class some been the you the different chassis Do open that it working up you or with still to same all range that new or is for door

Jonathan Douyard

into if know vehicles. today, but get X, larger mean at we sort look in don't do range. up I doing I of do if what Class Super would you of Duty sort they we're Yes, the a we're

capabilities where you at some ITU I leveraging I base, of think capacity working a as much at the the is, us truck not we in sell across so look well that leverage larger think it in being us of terms can into they're as up things customization think open and with able sort size their -- only customer is their there. And different company does our to I design, locations. suppliers

excited quite we're where about that's so transaction. this And

Michael Shlisky

If turning XX Can going -- a here, to to that's start about business we from been numbers you to year. feel months your growth here? motorhome that to some give in when be very turn a you the briefly us last of tough sense might just industry as and

Jonathan Douyard

XXXX. similarly, a very I quarter growth. we first strong At mean, probably have in that did showed it's think out I Yes, this point,

the at a an pointed we maybe to anomaly. that time, of as think I bit

half be second the soft, was soft. year think I second of the quarter will

can that's primarily motorhome. all down you of and the is year, backlog, end versus SP see Our the

we another It's here in out business it's year. likely second efficiency on but been get not and in XXXX. half the for the that And that have that of area protecting focused expecting so to into we're where we as margins in recover recovery, preparing

Operator

The next question BTIG. comes from Tyler DiMatteo of

Tyler DiMatteo

come moving it upfitters of more just I remarks your to viewing around of assume it understand existing and near to versus then in to John, in their term, you're portfolio line, rationale prepared how bit me I components is terms there? bit the believe product said of help of to complementary independent kind channels. it is I some of mean to that that the complex. little you through a how related of back in of little here of terms Can the your was portfolio bolstering the wanted it a you some own alluded kind product comments, kind your that's products the to and point, down in you also the your cross-selling what more fair is

John Dunn

we bodies the going as mean Utilimaster Royal facilities initially through DuraMag, I their well. service highlighted and as well

take there's time should and So that lot ITU brings we is place be a cross-selling of some lot that to And a see just to in different we rather spent going be the able in. specialty to also expertise can. of that quick haven't of ramp but vehicles it just up,

our if you'll done. So the And that to we that's going be you think look variations very at old additive their haven't portfolio. the website, to just cranes, see we trucks,

Jonathan Douyard

Tyler, it, on has you I expanding think at think our as when strategy expanding been product well as offerings. geographies look I

I in company sizes there so much access doing gives sort it all a in get vehicle additional of larger we're crane about that which expansion got mean can bring us. ship to mounts on crane an for as but class -- growth areas, we're is to And locations us so what as need different doing through and given a gives underlying example, today, It excited the and they're pools mounts we us those a chassis and location. well. infrastructure we've product vehicle

Tyler DiMatteo

of And now. past little talked to talk and the I looking this we the then kind know national how we I seems the have the more my how we about guess, I into different here that? point to a could geographic to we've in Midwest about looking I expand beyond and is, about what go the talk go on know bit follow-up that little and on Can just mean take we're -- expanding it regions? expand X what bit like the we're can to wanted how I that. a that? we're this would facilities. exact It for focused footprint. X from beyond nationally mean,

kind any of other geographic Just there on component this? the color of

Jonathan Douyard

we in and Nashville, I guess to that refer more continues national back of Midwest, journey, to within locations on overall so of first continue portfolio. of located, we which presence will They expand gives our strengthens as just our step. X continue are commercial us I'll in there's done Yes, we've kind was definitely to to positive a a is products to where plants. also different just go activity. Midwest our what that the gone our it see leverage This our we've lot all And

So just where unit forward. dedicated X better they're plants we're our we're for those sharing or not business utilizing brand, going footprint

Operator

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

Randy Wilson

Thank Thank through investment call. update coming thank to for for out you if Shyft joining follow-up Shyft disconnect months, you, you And The community with we Group. the you as website everyone the the IR that, operator, questions. With attendance. conference please operator. have will team of call. looks interest and in your like I'd over please to management the our the reach forward connecting today's any Shyft always,

Operator

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

now may You disconnect.

The Shyft Group, Inc. (SHYF) 25 Jul 242024 Q2 Earnings call transcript