SHYF - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to The Shyft Group Third Quarter 2024 Conference Call and Webcast. [Operator Instructions] As a reminder, this call is being recorded. I would like now 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. from Douyard, President Chief hear Officer; Chief will Jon and Financial you John and Dunn, Executive Today, Officer.

Their by prepared a followed question-and-answer session. remarks will be

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

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

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

We will line the Q&A. for then open

turn remarks. X, Please John prepared today's I'll turn Dunn, Slide begin it to over will to and who

John Dunn

morning. Thank we Shyft you, Randy, and Group. in Welcome to your interest appreciate earnings The and call, our good

for to and The with operational and performance we like third I quarter continue our commitment their efficiency to by dedication delivering are pleased improved would improvements We to margin team our drive Shyft and encouraged flexibility. as recognize results.

adjusted the increased prior EBITDA, spending. year EBITDA versus we've by XX% adjusted Overall, EV and achieved excluding XX.X%

sales, sequential market, Vehicles consistent, Services margins & of year. soft X.X% business of Fleet a our expanded despite since demonstrating the the Additionally, to improvement start has

the Independent Upfitters, truck capabilities. generated of evidenced the accelerate vocational growth strength our of products solid balance and Truck by to have cash our leverage our and We sheet as expanding year-to-date flow acquisition

additional in and stages already realizing is are seeing we of ITU integration, opportunities. initial synergies the commercial Although

execute third quarter, improvements. to further we and Overall, engaged in achieved team results is the better the

to turn X. Slide Please

my journey me take highlight progress to as over a expand moment our year first Shyft's on and Let CEO.

our that will efficiently foundation efficiency people, focus This driving operations, a deliver key one operational successes the team, includes our capital enhancing of in resources would customer reinforce to those on shareholder year, as our our creating our of working and framework, quality deploy been and accomplishments. improving focus. and like focused we As subset in the the together value. Throughout I highlighted we've within to a investing products Shyft,

place We focused a is ensuring on safety training center by our the and making do. leadership front Shyft talent, work great improving strengthening to everything at we of and

results. Mission Zero is showing Our safety initiative

injuries as a progress We and are risks we eliminating to reducing injury workplace. X

factories, process manufacturing in lean reduced have resulting improved costs quality. our in on We focused and improvements and

progress positive margins Our on is feedback as as year-over-year evidenced our by expanding product FVS quality. well customer

is have greatly force relationships ensure customer processes tools our expanded at great sales of steps levels implementing the effective. taken We our Shyft to senior have particularly and and in highly

strategic on us we've accelerate from And transitioned And a including has allow initiatives, strategically which and Blue to focused expanding solid progress development future production. M&A made funnel Class program, our capital growth. X key deploy to Arc into

performance. across improved fostering on we're the company decision-making, accelerate customers collaboration focus summary, to In and

recover. company the as success and strengthening are positioning actions we're for prepared well strategic Our markets us ensuring

focused job great Now excited I The and a say to delivering let's Arc Arc to turn X, their accomplishments want milestone, a getting Blue provide done initial by production and recognize us year. team the to the has and is to of team to end incredible customers this vehicle. an now Blue in EV update. that our Slide I'll is vehicles I'm delivering underway, high-quality on

the work a States. dealer announce From of truck we can a commercial perspective, covering Northeast addition expansion the Trucks, leading with Blue of further Arc network the now United dealer commercial Allegiance

nationwide We this And addition, has robust network. Arc Blue a dealer with well. Arc now Blue Allegiance are confident and will represent service

in Canadian Canada. demonstrations and totaling intent report vehicle We're a also discussed letter trials XX pleased key order in and of U.S. those from a customer a In to July, dealer Blue resulted the we vehicles. Arc

Our in favorable York New with as vehicle West area feedback as the Coast well currently with large a the and on Metro is parcel in customer pilot performance.

the of build actively we the by encouraged Blue we're long-term pipeline. commercial Overall, and and customers prospects continuing with Arc engaged to are out

we customer term. of are rate remain the However, as plans in near cautious adoption on EV the purchasing measured

breakeven in in We last continue and we striving for as the are program, manage we the XXXX. discussed to efficiently call, financial

year, To a accomplished. sum lot has this been it up,

future. be We X, have spending, Class transitioned production Blue in the the lowered overall focused self-sustaining to program into positioned Arc on and

it review turn financial results over detailed and Now for to of outlook. our a Jon I'll XXXX

Jonathan Douyard

to turn delivered third team softness. X. the Overall, solid market quarter results Please operational John. I and in ongoing despite improved our Thanks, Slide performance

third million, from were the and million the $XXX.X prior $XXX.X in quarter. for down Sales year quarter X%

a Net primarily favorable million $X million income $X.X R&D onetime $X.XX tax of the of was benefit $X.XX credits. share to per included or results tax $X.X related previous year share million compared income net year. Prior or to per in

In million EV in X.X% the These sales million the results spend of from program quarter, $X.X EBITDA $X.X third prior year. grew $XX.X of X.X% from quarter sales, the third of to $XX or million include in up million, adjusted XXXX. down or of

XX.X% was these Excluding expenses, sales. EBITDA of adjusted

for was net million, EPS per Adjusted while income $X.XX adjusted $X.X was share. the quarter

performance. remained million, & Slide I'll Vehicles vehicle to Fleet purchases slow. our on provide from sales as third customer achieved XX% update ago down year segment Services the a quarter, of and X, In Please an turn $XXX.X

Adjusted million ago million EBITDA grew the volume. quarter despite year $X.X to a lower sales for versus the $X

year third improvements X.X facilities. to our drive production EBITDA points operational adjusted the quarter of efforts sales, Importantly, in margin was team's up last reflecting our X.X% versus

the for XXXX. $XXX XX% FVS backlog end million, was of Quarter-end versus down

another strong July. of Turning at results positive the acquisition, quarter end SV ITU Vehicles. which adjusted teens include business the of delivered Specialty margins. from The contributions to EBITDA high the also closed

motorhome up in weakness. Sales offsetting the of last ITU were including strength compared of XX% $XX.X million products, with to year vocational addition

sales XX.X% was Adjusted to same sales $XX.X in of year. compared period last XX.X% or EBITDA million million the $XX of or

of backlog million down the across orders end was business. of X% as versus XXXX $XX.X were softer the SV

we on communicated is million. sales discussion adjusted million of to Slide of approximately full range are $XX on Please $XXX X to expected which Overall, previously the outlook. our year a million $XX be outlook, EBITDA in our turn for maintaining to

At the will EBITDA midpoint, adjusted we deliver year. XX% of prior growth the versus

We ended better communicated. leverage previously net with the quarter third we of than X.Xx,

million. approximately We outlook free remain on $XX flow our track cash to deliver of

company In quarter, closing, we in strengthening we we of our balance anticipate financial XXXX out the were and invest the and close sheet performance with in grow positioning our and the to beyond. year, further as pleased

John. it to turn With that, I'll back over

John Dunn

Jon. you, Thank

XX. improved and and our operational by one results delivered aligning summary, our team to In mindset. financial we with Shyft Slide Turning operating framework

business are profit markets to more We profitable laser-focused when and the positioning be outlook XXXX delivering the efficient and recover. on our

The delivering forward highly in year. Blue end the the pipeline, team is trucks engaged and to by customers of the ITU improving commercial Arc integration driving the

it's drive exciting company, value. is growth Overall, team and long-term steps and taking The right our enhance very time a shareholder that to for the I'm confident Shyft

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

Operator

first ROTH question Capital. comes Instructions] [Operator Matt Koranda from of The

Matt Koranda

Arc. start to just wanted the Maybe Blue with

And capacity when So could then clarify program? exactly about the production as you ramp you unit do into how think officially? production went we in just we

then that unit kind guys units? breakeven require of EBITDA pencil for just of you means we breakeven? the Is And does if rough gross but next said in for what that goal in financial unpack is margin exactly? could terms year kind 'XX, the sort some that then what of deliveries And of you for

Jonathan Douyard

Yes, Matt.

at was we of terms into when in really it went think the production, of September. I end

worked So some through early units. the of

team's said that units in I production early think John he days the has the out our so getting what really in the of on that's here. focus been -- road, been getting is very consistent and on focus high-quality

for you a EBITDA. striving look on comment breakeven As adjusted towards XXXX, is

$XX we spending gross in remaining million million look year, sales so And a perspective, expect the will to of then volume $XX and be that brings in to which business. we offset as and we that's this the margin the from down, spending from expect come spend vehicles the at the to

tweaks no we're things, Certainly, The a development of not anymore. and sort we're developing is engineering from be developed. longer of made support and vehicle. will but those need be some And really standpoint vehicle in that and that's things a types sustaining because there to

so see we reduction as can relates an we'll expense -- And it to that.

sort measured In having terms overall about John's of really, of and based capacity, that. for a it pacing from prepared talked more us, and adequate perspective being really before we've capacity, talked on about demand remarks

self-sustain of next we for in that hundreds or to at communicated us We this is forward. units year. as need we're and so move so XXX than order previously contribute thousands least be units this talking less we breakeven financially don't to And for

the look we at of And the gating really so demand with year, as the things side in hundreds we're next really customers.

Matt Koranda

next just around Jon. helpful, those it sounds I of hit long currently? are give fleets. then context unit already for ago you've Are some agreement that would And orders sort the from that have some that in units visibility Okay. gotten on Maybe a the Marion to maybe orders mark 'XX. us we additional trial between that just the into time for announced terms year, super Randy sort the guys incremental That's of and of you like assume what require you in units? we of into visibility counting from breakeven fleets the

Jonathan Douyard

Yes.

XXX building blocks units. announced the there, you order as the I think FedEx of look we at

referred I that and seen the demonstrations the earlier that we've positivity the in we're leading now trials executed this that to and John the think we've year of the of that out coming LOI to. process

You've got the FedEx XXX-plus order. units in

We've what about. from XX-plus got pipeline. got others John You've a of the talked number in

break-even the And get we to those there are blocks like levels. so building feel to

Matt Koranda

just unpack a the Fair is margins experiencing. looks to the unpack FVS, FVS headwinds quarter you touched that from is. I then despite to the you good but maybe you're sustainable there. just It enough. underneath prepared little on if seeing doing like in the remarks, you're work it margin see some if on pieces revenue you wanted you're sort and the moving And pretty could could just Okay. what's of the margin within margin going third EBITDA know of the improvement how And improve on in sort surface, bit rate maybe

John Dunn

Sure.

to driven Matt, has of as operational team we've leaned with, A of our proud Let's in what really the start we're drive really improvements done. off plants efficiency. have nice couple

results so There We also can period better different multiple and that really plants. products up, performance seeing was yielding and run we we're to ramp a that flexible more overall. in became

So them flex we've flexible, improvement. of we've And taken more plants products made of way more efficiently. much We so accordingly. plants. the And out that that's driving costs the we run can

Jonathan Douyard

necessarily. to overnight I that And happened not think something John's point, that's

that. a of look as to bit able margins happy throughout the sequential the there the from journey, this you given forward. on any I see push perspective digits north and we be we'll business progress as volatile were be I but some fully that business a see naturally XX% double you'll to dynamics. think move may sort mean, approach But at again expect of be be can we was it to and to quarter mix we year, so continue the a of

Matt Koranda

one. Maybe Got Okay. just it. last

given the detail just implied seeing a In just order in, flow looked just of of in in full just the maybe stages come demand really about Any with would we're discussions signs of the environment I what terms life front little you in terms book and Maybe on more fleet FVS of could some in parcel preliminary but yet, trends of and you're force parcel maybe has early fleet if not seeing bit reasonably here. sort the FVS. customers. about assume back order talk healthy, you're

John Dunn

at with with senior me, that I the customers. the level, we're there key start off out fact engaging including those

in building So measured we will when very are parcel come. recovery with network to now area. It's them the that really the been understand tight right

What is for proud is just out there our not sales orders of we've a been finding waiting and market other team recovery.

there and we've on to much grabbing And growing finding total sell our new ordering, out sales that more so customers product the business seeing that's portfolio. organization are the you're been customers activity is aligned that's They've going what the there. aggressive

Jonathan Douyard

in I has a the And Yes. point, to pipeline is of think the year, quarter incredibly Matt, activity. improvement quarter, the sequential still of team in active, think this not nice we were developed your first but I where

help As outside even parcel will that of the we support and XXXX customers. that go beyond, core business to

is perspective order actually seen we've an October What even good from flow. pretty some

So was good of about there are from one customers print increasing this large year-over-year signs a the of improvement. morning, parcel pretty There significantly. volume talking

to signs think them. back see we some -- of those so continue in alluded And July, we I to

We continue in to point need at look hear recovery forward from XXXX. customers vehicles. And we they some that to

Operator

with D.A. Mike question is from next Davidson. The Shlisky

Michael Shlisky

Maybe I just orders go was SV going little if were over up surprised, a to to be the actually on to that a who little prior down heard question, be production. over no follow The correctly, the and production, aren't Matt's them. for I side. issue cutting chain make year. bit the certainly highs supply people They seems to an all-time longer chassis for to were

So think that a little so can maybe there's runway chassis, lot many the I'm feel comment surprised or just into orders to chassis. vocational. bodies the I if there's they're going for business, for to make on match a to get October not maybe service those orders whether good XXXX a you that for you of and wanted for a

John Dunn

could service time, It just don't it But the see we industry demands we be on softening slight as well. slight as a a talk softening make. we we so are some the us. it's that is and seeing not we're trend OEMs to It just of overall yet. experiencing key to be seems those period What bodies when

Jonathan Douyard

slightly point, Yes. -- necessarily think levels, And I but at alarming. elevated dealer that's nothing this I inventory think, when

say I necessarily point, trend a here. there's we think to wouldn't John's

confident you got and there into acquisition position. in The got at think We've into We've I well. other plans geographies. expand We've very as Nashville. to look business, great we're XXXX, as a that ITU expanded beyond. helps XXXX

out in being able like business. a continue like that commercial we'll be We we share to from where So to gain we've positioned. proactive we're And the been perspective. that

Michael Shlisky

feel Okay. 'XX you want had And -- to I about hundred mentioned for early, of positive 'XX to Blue don't talk Arc wanted know you ahead few you want all as -- got too ask a just to just I of myself, then get EBITDA like for well. but break in Blue do even. you've you a 'XX. I it's need to That's so expectation to Arc? kind look as

John Dunn

to stay this make aspects needs, to as customers one is as close we try transition. certainly, well. the As understand And infrastructure their charging installed really lot dynamics a of and of the and the there's getting stations gating they

we And as they measured the it. grow forward. we our trucks able it's to truck, whole more think buying news And that's leaning I see the up like great it's and So to that then is to be place, system infrastructure continue their going they're And in pieces setting and those why get think in potential support now. they to business.

Michael Shlisky

out the just diesel last the year? you the doesn't here. or have almost flattened -- Or for at than last do just whether it volumes Okay. any still Has quarter EVs, again, share upswing recently? And have that on matter, and then FVS me it's larger Arc quarter maybe on but whether volumes really they're same maybe or gone the non-Blue still one pieces, the you upswing this E-transit last have time has the what product, one or how been side, you, if saw curious

John Dunn

around do? upfits we Is the EV it specifically

Michael Shlisky

you then was if to mix it prior quarter now I EV -- curious just same the question a the have Yes. the last year. the for same? over higher is or than And see

John Dunn

I would now. right say flat it's

year, that As people around we get of EV share upfitting for same more We're trending to customers. I we'll a Last infrastructure installed, see we increase. vehicles think market continue We're that X,XXX. hold there. number some our But in did direction.

Operator

is Greg BTIG. of next from The question Lewis

Gregory Lewis

how I was for about implied bit color the QX to But a we're revenue. hoping thinking guidance, of and can appreciate you that. get thank little around I

of growing there. FVS a sequentially. of kind way. step-up nice been look has of Obviously, other it, Just the heading it's been has kind to as of kind pointing Specialty kind at we

back -- just is that in of $XXX we into some we forward Are see up pull we're just kind there tap FVS try just of number? kind kind revenue of that to this as XQ to back million going gets

Jonathan Douyard

our at relatively it's you quarter-to-quarter. think as I Yes. I throughout mean, the year, look consistent revenue been

there based QX, I into I get know I scheduled. is don't a timing think is step backlog basically as just call I we how really it slight a and up if -- significant the there's order on would step-up, think

look where have to good think we I visibility we So at as are. today, we it

I or -- FVS in But wouldn't think particularly up, that's see step the anything business. like you will abnormal it's anything slight I a not that.

so And relatively I think consistent.

here need as think million, I we've quarter had or to we third EBITDA into to the you of look progress get at the guidance. million, $XX the second year, basically the $X throughout low end million, $XX did repeat

ahead we heroic very guidance work to of And but where do us, some sort anything Certainly from perspective. looking so confident that of not a perspective. from necessarily are with

Gregory Lewis

Great. (sic) the then [ ITU And ICT obviously, Okay. we're acquisition. integrating ]

that because financial looking where got and you of been is expanded little more there going around kind kind M&A funnel. Has what opportunities of came there? bit of just you a in mean mentioned for You of color a really people growth you're by -- what kind funnel. flywheel any like -- now doing that Or the see there and guys there there's the on

John Dunn

What is strategic able certainly there, to will mean those of that ramping significant a do And spend down expand more out our fits we that finding we're opportunities taking Arc. we're we're developing because at primarily Blue that help business. look

the capital our to Blue So it's we Arc redeploy, kind of areas. now a in other pivot achieved expand to to and business from getting market have

Gregory Lewis

Okay.

stuff, upfitting look of has than vogue bolt beyond kind like the maybe on afield So where it the just upfitting some can maybe been segment. farther -- it we seems we

John Dunn

they like -- ITU Well, our different to we doing. weren't was business, that that excellent us -- at capabilities some opportunities present come we're because addition but added traditionally core looking in are

our core ideal let's a the of bit, were the or opportunities. Those left little are business. to say, right they So

nice from ITU, which capabilities, good relationships didn't of product seeing customers can based customer all some or benefits have their same expand but expertise, they also our we pretty interaction maybe we had good And have customer not that from adding and with had we're people facilities into strength. but relationships do only with additional on they that

So we're their to this companies offer broad needs. specialty products now fleet portfolio and meet able to go these to of really

worked has benefits see So ITU in its It's we stages, the early really out there. but fantastic.

Operator

any [Operator question-and-answer over session. Wilson I for Instructions] back the to like would our concludes to Randy turn remarks. This closing conference

Randy Wilson

like operator. and to Thank investment I'd with over looks today's you, everyone team to coming connecting the forward community Shyft call, management joining The thank for the months.

your And The Group. out you for follow-up any Thank questions. Shyft interest in you reach if always, as please have

With that, operator, call. please disconnect the

Operator

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

may disconnect. You now

The Shyft Group, Inc. (SHYF) 24 Oct 242024 Q3 Earnings call transcript