The Shyft Group Reports Second Quarter 2022 Results
07/28/2022 - 07:30 AM
Delivered $0.15 of EPS; Raised mid-point of outlook as chassis flow improved; Backlog remains strong; Continued progress on Blue Arc EV initiative
NOVI, Mich., July 28, 2022 (GLOBE NEWSWIRE) -- The Shyft Group, Inc. (NASDAQ: SHYF) (“Shyft” or the “Company”), the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reported operating results for the second quarter ending June 30, 2022.
Second Quarter 2022 Financial Highlights from Continuing Operations 1
For the second quarter of 2022 compared to the second quarter of 2021:
Sales of $232.2 million , a decrease of $11.8 million , or 4.8% , from $244.0 million . Income from continuing operations of $5.3 million , or $0.15 per share, compared to income from continuing operations of $17.0 million , or $0.44 per share. Adjusted EBITDA of $13.7 million , or 5.9% of sales, a decrease of $14.9 million , from $28.6 million , or 11.7% of sales. Results include $7.0 million of EV development costs. Adjusted net income of $7.5 million , or $0.21 per share, compared to adjusted net income of $19.0 million , or $0.53 per share in the second quarter of 2021. Consolidated backlog at June 30, 2022, totaled $1.1 billion , up $383.8 million , or 51.1% , compared to $751.4 million at June 30, 2021, reflecting continued strong demand across all business units. “The Shyft Group continued to manage supply chain disruptions in the second quarter with results in line with our expectations. The Specialty Vehicles team executed well and produced solid results, while we also saw chassis deliveries in our Fleet Vehicle Services business improve steadily as the quarter progressed,” said Daryl Adams, President and Chief Executive Officer. “We also continued to hit key development milestones with our electrification products and remain on track for production in mid-2023.”
Fleet Vehicles and Services (FVS)
FVS segment sales were $136.9 million , a decrease of $24.7 million , or 15.3% , from $161.6 million due to decreased volume related in large part to reduced OEM chassis availability, partially offset by pricing actions.
Adjusted EBITDA was $14.5 million , or 10.6% of sales, compared to $28.1 million , or 17.4% of sales, a year ago. The decrease was primarily driven by lower volume and productivity inefficiencies as a result of intermittent chassis supply, material and labor cost inflation, partially offset by pricing actions and mix.
The segment backlog at June 30, 2022, totaled $1.0 billion and was up 53.2% compared to $652.6 million at June 30, 2021.
1 T he Company divested its Emergency Response Vehicles (ER V ) business effective February 1, 2020. Accordingly, the financial results of ER V have been classified as discontinued operations for all periods presented. Unless otherwise noted, financial results presented are based on continuing operations.
Specialty Vehicles (SV)
SV segment sales were $95.3 million , an increase of $12.9 million , or 15.7% , from $82.4 million a year ago. This was due to continued strong performance in luxury motorhome chassis and service body sales as well as the impact of pricing actions.
Adjusted EBITDA was $12.9 million , or 13.5% of sales, an increase of $4.1 million , or 46.0% , from $8.8 million , or 10.7% of sales, a year ago. The increase was primarily due to higher sales volume, pricing actions and improved product mix, partially offset by material and labor cost inflation.
The segment backlog as of June 30, 2022, totaled $135.2 million and was up 36.8% compared to $98.8 million at June 30, 2021.
2022 Outlook
“As anticipated, our second quarter started off slow, but progressively improved as OEM chassis deliveries increased throughout the quarter,” said Jon Douyard, Chief Financial Officer. “Given our second quarter performance, along with increased visibility into chassis supply, strong customer demand, and a healthy balance sheet, we believe that we are on track to deliver our improved full year guidance.”
Guidance for full-year 2022, notwithstanding further chassis and supply chain related issues, is as follows:
Revenue to be in the range of $925 million to $1.1 billion Adjusted EBITDA of $55 t o $80 million , including $30 million of expenses related to EV development Income from continuing operations of $21 t o $41 million Earnings per share of $0.59 t o $1.15 Adjusted earnings per share of $0.85 t o $1.41 Adams concluded, “We remain excited about our long-term business prospects, our capabilities, and our team. Our financial strength positions us well to invest in innovation and meet the evolving needs of our customers despite the current industry wide challenges. The team is laser focused on executing our growth strategy and driving long-term value for customers, employees, and shareholders.”
Conference Call and Webcast Information
The Shyft Group will host a conference call at 10 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:
Webcast: www.theshyftgroup.com/webcasts
For more information about Shyft, please visit www.theshyftgroup.com
About The Shyft Group
The Shyft Group is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets. Our customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The Shyft Group is organized into two core business units: Shyft Fleet Vehicles & Services™ and Shyft Specialty Vehicles™. Today, its family of brands includes Blue Arc™ EV Solutions, Utilimaster®, Royal Truck Body™, DuraMag® and Magnum®, Strobes-R-Us™, Spartan RV Chassis™, Builtmore Contract Manufacturing™, and corresponding aftermarket provisions. The Shyft Group and its go-to-market brands are well known in their respective industries for quality, durability, and first-to-market innovation. The Company employs approximately 3,800 employees and contractors across campuses, and operates facilities in Michigan, Indiana, Maine, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. The Company reported sales of $992 million in 2021. Learn more about The Shyft Group at TheShyftGroup.com.
This release contains information, including our revenue and earnings guidance, all other information provided with respect to our outlook for 2022 and future periods, and other statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using words such as “believe,” “expect,” “intend,” “potential,” “future,” “may,” “will,” “should,” and similar expressions or by using future dates in connection with any discussion of, among other things, the construction or operation of new or existing facilities, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume changes, share of sales and earnings per share changes, anticipated cost savings, potential capital and operational cash improvements, anticipated disruptions to our operations and industry due to the COVID-19 pandemic, changes in supply and demand conditions and prices for our products, trade duties and other aspects of trade policy, statements regarding our future strategies, products and innovations, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to the risks and uncertainties described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website. All forward-looking statements in this release are qualified by this paragraph. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.
The Shyft Group, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands) (Unaudited) June 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 6,607 $ 37,158 Accounts receivable, less allowance of $162 and $187 79,241 87,262 Contract assets 42,368 21,483 Inventories, net 102,010 67,184 Other receivables - chassis pool agreements 23,636 9,926 Other current assets 13,698 10,813 Total current assets 267,560 233,826 Property, plant and equipment, net 66,169 61,057 Right of use assets – operating leases 54,426 43,316 Goodwill 48,880 48,880 Intangible assets, net 51,029 52,981 Net deferred tax asset 5,312 4,880 Other assets 1,637 2,927 TOTAL ASSETS $ 495,013 $ 447,867 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 90,259 $ 82,442 Accrued warranty 5,596 5,975 Accrued compensation and related taxes 12,918 19,064 Contract liabilities 1,359 988 Operating lease liability 9,706 7,934 Other current liabilities and accrued expenses 9,856 9,256 Short-term debt - chassis pool agreements 23,636 9,926 Current portion of long-term debt 192 252 Total current liabilities 153,522 135,837 Other non-current liabilities 7,004 8,108 Long-term operating lease liability 46,188 36,329 Long-term debt, less current portion 55,263 738 Total liabilities 261,977 181,012 Shareholders' equity: Preferred stock, no par value: 2,000 shares authorized (none issued) - - Common stock, no par value : 80,000 shares authorized; 35,063 and 35,416 outstanding 88,894 95,375 Retained earnings 144,041 171,379 Total The Shyft Group, Inc. shareholders' equity 232,935 266,754 Non-controlling interest 101 101 Total shareholders' equity 233,036 266,855 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 495,013 $ 447,867
The Shyft Group, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Sales $ 232,195 $ 243,982 $ 439,078 $ 441,870 Cost of products sold 190,077 192,076 371,029 349,978 Gross profit 42,118 51,906 68,049 91,892 Operating expenses: Research and development 7,563 940 12,490 1,722 Selling, general and administrative 26,860 28,740 53,412 53,277 Total operating expenses 34,423 29,680 65,902 54,999 Operating income 7,695 22,226 2,147 36,893 Other income (expense): Interest expense (463 ) (227 ) (617 ) (57 ) Other income (expense) (488 ) 506 (523 ) 689 Total other income (expense) (951 ) 279 (1,140 ) 632 Income from continuing operations before income taxes 6,744 22,505 1,007 37,525 Income tax expense (benefit) 1,461 5,552 (424 ) 9,042 Income from continuing operations 5,283 16,953 1,431 28,483 Income from discontinued operations, net of income taxes - - - 81 Net income 5,283 16,953 1,431 28,564 Less: net income attributable to non-controlling interest - 990 - 1,025 Net income attributable to The Shyft Group, Inc. $ 5,283 $ 15,963 $ 1,431 $ 27,539 Basic earnings per share Continuing operations $ 0.15 $ 0.45 $ 0.04 $ 0.78 Discontinued operations - - - - Basic earnings per share $ 0.15 $ 0.45 $ 0.04 $ 0.78 Diluted net earnings per share Continuing operations $ 0.15 $ 0.44 $ 0.04 $ 0.76 Discontinued operations - - - - Diluted earnings per share $ 0.15 $ 0.44 $ 0.04 $ 0.76 Basic weighted average common shares outstanding 35,049 35,333 35,078 35,322 Diluted weighted average common shares outstanding 35,243 36,190 35,437 36,191
The Shyft Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands, except par value) (Unaudited)
Six Months Ended 2022 2021 Cash flows from operating activities: Net income $ 1,431 $ 28,564 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization 6,696 5,330 Non-cash stock based compensation expense 3,708 4,492 Deferred income taxes (432 ) 134 Loss (gain) on disposal of assets 481 (105 ) Changes in accounts receivable and contract assets (12,863 ) (42,639 ) Changes in inventories (34,826 ) (21,992 ) Changes in accounts payable 7,333 27,721 Changes in accrued compensation and related taxes (6,146 ) 665 Changes in accrued warranty (379 ) 989 Changes in other assets and liabilities (1,672 ) 69 Net cash provided by (used in) operating activities (36,669 ) 3,228 Cash flows from investing activities: Purchases of property, plant and equipment (10,010 ) (12,373 ) Proceeds from sale of property, plant and equipment 148 15 Acquisition of business, net of cash acquired - 404 Net cash used in investing activities (9,862 ) (11,954 ) Cash flows from financing activities: Proceeds from long-term debt 85,000 15,000 Payments on long-term debt (30,000 ) (15,000 ) Payments of dividends (3,640 ) (1,776 ) Purchase and retirement of common stock (26,789 ) (3,348 ) Issuance and vesting of stock incentive awards (8,591 ) (2,967 ) Net cash provided by (used in) financing activities 15,980 (8,091 ) Net decrease in cash and cash equivalents (30,551 ) (16,817 ) Cash and cash equivalents at beginning of year 37,158 20,995 Cash and cash equivalents at end of year $ 6,607 $ 4,178
The Shyft Group, Inc. and Subsidiaries Sales and Other Financial Information by Business Segment (Unaudited)
Quarter Ended June 30, 2022 (in thousands of dollars)
Business Segments Fleet Vehicles Specialty & Services Vehicles Other Consolidated Fleet vehicle sales $ 126,181 $ - $ - $ 126,181 Motorhome chassis sales - 42,710 - 42,710 Other specialty vehicles sales - 47,044 - 47,044 Aftermarket parts and accessories sales 10,716 5,544 - 16,260 Total Sales $ 136,897 $ 95,298 $ - $ 232,195 Adjusted EBITDA $ 14,525 $ 12,859 $ (13,695 ) $ 13,689
The Shyft Group, Inc. and Subsidiaries Sales and Other Financial Information by Business Segment (Unaudited)
Quarter Ended June 30, 2021 (in thousands of dollars)
Business Segments Fleet Vehicles Specialty & Services Vehicles Other Consolidated Fleet vehicle sales $ 153,171 $ - $ - $ 153,171 Motorhome chassis sales - 40,891 - 40,891 Other specialty vehicles sales - 36,070 - 36,070 Aftermarket parts and accessories sales 8,447 5,403 - 13,850 Total Sales $ 161,618 $ 82,364 $ - $ 243,982 Adjusted EBITDA $ 28,116 $ 8,808 $ (8,354 ) $ 28,570
The Shyft Group, Inc. and Subsidiaries Sales and Other Financial Information by Business Segment (Unaudited)
Period End Backlog (amounts in thousands of dollars)
Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 Jun. 30, 2021 Fleet Vehicles and Services $ 1,000,021 $ 1,148,700 $ 859,442 $ 749,731 $ 652,642 Motorhome Chassis 62,811 61,297 54,583 60,978 56,294 Other Specialty Vehicles 72,058 62,406 49,407 41,504 42,106 Aftermarket Parts and Accessories 293 296 127 347 382 Total Specialty Vehicles 135,162 123,999 104,117 102,829 98,782 Total Backlog $ 1,135,183 $ 1,272,699 $ 963,559 $ 852,560 $ 751,424
Reconciliation of Non-GAAP Financial Measures
This release presents Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted net income, and adjusted earnings per share, each of which is a non-GAAP financial measure. These non-GAAP measures are calculated by excluding items that we believe to be infrequent or not indicative of our underlying operating performance, as well as certain non-cash expenses. We define Adjusted EBITDA as income from continuing operations before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments, non-cash stock-based compensation expenses, and other gains and losses not reflective of our ongoing operations.
We present the non-GAAP measure Adjusted EBITDA because we consider it to be an important supplemental measure of our performance. The presentation of Adjusted EBITDA enables investors to better understand our operations by removing items that we believe are not representative of our continuing operations and may distort our longer-term operating trends. We believe this measure to be useful to improve the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not indicative of our continuing operating performance. We believe that presenting this non-GAAP measure is useful to investors because it permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our historical performance. We believe that the presentation of this non-GAAP measure, when considered together with the corresponding GAAP financial measures and the reconciliations to that measure, provides investors with additional understanding of the factors and trends affecting our business than could be obtained in the absence of this disclosure.
Our management uses Adjusted EBITDA to evaluate the performance of and allocate resources to our segments. Adjusted EBITDA is also used, along with other financial and non-financial measures, for purposes of determining annual incentive compensation for our management team and long-term incentive compensation for certain members of our management team.
The Shyft Group, Inc. and Subsidiaries (In thousands, except per share data)
(Unaudited)
Three Months Ended June 30, The Shyft Group, Inc. 2022 % of sales 2021 % of sales Income from continuing operations $ 5,283 2.3 % $ 16,953 6.9 % Net (income) attributable to non-controlling interest - (990 ) Add (subtract): Restructuring and other related charges 354 505 Acquisition related expenses and adjustments 341 71 Non-cash stock-based compensation expense 2,060 2,850 Loss from liquidation of JV 643 Tax effect of adjustments (496 ) (998 ) Adjusted net income $ 7,542 3.2 % $ 19,034 7.8 % Income from continuing operations $ 5,283 2.3 % $ 16,953 6.9 % Net (income) attributable to non-controlling interest - (990 ) Add (subtract): Depreciation and amortization 3,727 2,759 Income tax expense 1,461 5,552 Interest expense 463 227 EBITDA $ 10,934 4.7 % $ 24,501 10.0 % Add: Restructuring and other related charges 354 505 Acquisition related expenses and adjustments 341 71 Non-cash stock-based compensation expense 2,060 2,850 Loss from liquidation of JV - 643 Adjusted EBITDA $ 13,689 5.9 % $ 28,570 11.7 % Diluted net earnings per share $ 0.15 $ 0.44 Add (subtract): Restructuring and other related charges 0.01 - Acquisition related expenses and adjustments 0.01 - Non-cash stock-based compensation expense 0.05 0.08 Loss from liquidation of JV 0.01 Tax effect of adjustments (0.01 ) - Adjusted diluted net earnings per share $ 0.21 $ 0.53
The Shyft Group, Inc. and Subsidiaries Consolidated Financial Summary (Non-GAAP) (In thousands, except per share data) (Unaudited) Forecast Twelve Months Ended The Shyft Group, Inc. Low Mid High Income from continuing operations $ 21,097 $ 31,116 $ 41,135 Add: Depreciation and amortization 13,582 13,582 13,582 Interest expense 1,500 1,250 1,000 Taxes 6,481 9,212 11,943 EBITDA $ 42,660 $ 55,160 $ 67,660 Add: Non-cash stock-based compensation and other charges 12,340 12,340 12,340 Adjusted EBITDA $ 55,000 $ 67,500 $ 80,000 Earnings per share $ 0.59 $ 0.87 $ 1.15 Add: Non-cash stock-based compensation and other charges 0.34 0.34 0.34 Less tax effect of adjustments (0.08 ) (0.08 ) (0.08 ) Adjusted earnings per share $ 0.85 $ 1.13 $ 1.41
CONTACT: Randy.Wilson@theshyftgroup.com
