Shyft Group Inc. Shows 18% Sales Growth in Q1 Report

NOVI, Mich., – The Shyft Group Inc. (NASDAQ: SHYF), a North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reports operating results for the first quarter ending March 31.

First Quarter 2023 Highlights
For the first quarter of 2023 compared to the first quarter of 2022:

• Sales of $243.4 million, an increase of $36.5 million, or 17.7%, from $206.9 million.
• Net income of $1.7 million, or $0.05 per share, compared to a loss of $3.9 million, or loss of $0.11 per share.
• Adjusted EBITDA of $10.8 million, or 4.4% of sales, an increase of $11.4 million, from a loss of $0.6 million, or 0.3% of sales; Results include $8.5 million of EV development costs versus $4.4 million in the prior year.
• Adjusted net income of $4.3 million, or $0.12 per share, compared to adjusted net loss of $2.1 million, or loss of $0.06 per share in the prior year.
• Consolidated backlog of $667.4 million as of March 31, 2023, down 47.6%, compared to $1.3 billion as of March 31, 2022 as backlog continues to return to normalized levels.
• Operating cash flow of $5.9 million, up $33.7 million, compared to an outflow of $27.8 million in the prior year.
• Blue Arc™ EV Solutions completed California Air Resources Board (CARB) and Environmental Protection Agency (EPA) testing and received certifications for its Class 3, 4 and 5 all-electric delivery vehicles.

“Our team was able to generate increased revenues and improve profitability as we accomplished strategic milestones that will drive future growth,” said Daryl Adams, President and CEO. “Blue Arc EV delivery vehicles received CARB and EPA certifications, which included our Class 3 EV achieving a 225-mile city driving range. This new benchmark exceeds the minimum requirements of our fleet customers.”

First Quarter 2023 Business Segment Highlights
For the first quarter of 2023 compared to the first quarter of 2022:

Fleet Vehicles and Services (FVS)

• Sales of $159.4 million, an increase of $46.7 million, or 41.5%, from $112.7 million primarily driven by improved chassis supply and favorable growth in truck body as a result of prior year expansion efforts.
• Adjusted EBITDA of $12.5 million, or 7.8% of sales, an increase of $13.4 million, from a loss of $0.9 million, or 0.8% of sales.
• Segment backlog of $584.9 million as of March 31, 2023, down 49.1% compared to $1.1 billion as of March 31, 2022, driven by production improvements.
• Awarded contracts to upfit 18,500 vehicles for commercial off-the-shelf (COTS) use with production beginning mid-2023.

Specialty Vehicles (SV)

• Sales of $87.2 million, a decrease of $7.0 million, or 7.4%, from $94.2 million a year ago due to softer motorhome chassis demand offset by strength in service bodies.
• Adjusted EBITDA of $13.9 million, or 15.9% of sales, an increase of $3.8 million, from $10.1 million, or 10.7% of sales.
• Segment backlog of $82.5 million as of March 31, 2023, down 33.5% compared to $124.0 million as of March 31, 2022, primarily driven by softness in motorhome chassis.
• Opened Tennessee operations for growing service body, police car upfit and accessory business, which has access to new chassis pools along with expanded dealer sales and support.

Disciplined Capital Allocation
“Our overall financial strength, coupled with positive cash generation in the quarter, allows us to continue to remain flexible with our capital allocation strategy while efficiently investing in growth. We remain committed to investing in the transformational Blue Arc™ EV development program while continuing to deploy capital to improve shareholder returns over time,” said Jon Douyard, Chief Financial Officer.

The company deployed $15.1 million of capital in the quarter with the following actions:

• Repurchased $8.8 million of stock with $233 million remaining under our existing repurchase authorization.
• Funded $4.4 million of capital expenditures.
• Paid regular dividends of $1.9 million reflecting a dividend of $0.05 per share.

2023 Financial Outlook
“We are pleased with our first quarter results and core business performance in this dynamic operating environment. We remain cautious in the short term given mixed demand signals. Our teams remain agile and flexible to help drive cost efficiency and growth across the business, which positions us to reaffirm our 2023 outlook at this time,” said Douyard.

Outlook for full-year 2023, notwithstanding further changes in the operating environment, is as follows:

• Sales to be in the range of $1.0 billion to $1.2 billion
• Adjusted EBITDA of $70 to $100 million
• Net income of $28 to $50 million, with an income tax rate of approximately 25%
• Earnings per share of $0.77 to $1.39
• Adjusted earnings per share of $0.98 to $1.60
• Capital expenditures of approximately $35 million
• Free cash flow conversion ratio as a percent of net income greater than 100%

Strategic Outlook
“We are pleased with the momentum of Blue Arc’s EV program development with production on track for the second half of the year,” said Adams. “We like our leadership position in the attractive last-mile delivery and infrastructure end-markets, which positions the company to outperform over the long term.”

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
Conference Call: 1-844-868-8845 (domestic) or 412-317-6591 (international); Passcode: 10176292