Shyft Group Q2 Shows Sales Off 3.1%, EBITDA Up Slightly

NOVI, Mich., July 27, 2023 (GLOBE NEWSWIRE) — The Shyft Group Inc. (NASDAQ: SHYF), the North American leader in specialty vehicle manufacturing, reported today (July 27) operating results for the second quarter ending June 30, 2023.

• Second quarter results in line with management expectations
• Solid operating cash flow performance in the quarter
• Revised full-year 2023 outlook primarily driven by softness in last-mile delivery and motorhome end markets

Second Quarter 2023 Highlights
For the second quarter of 2023 compared to the second quarter of 2022:

• Sales of $225.1 million, a decrease of $7.1 million, or 3.1%, from $232.2 million
• Net income of $4.7 million, or $0.13 per share, compared to $5.3 million, or $0.15 per share
• Adjusted EBITDA of $15.9 million, or 7.0% of sales, an increase of $2.2 million, from $13.7 million, or 5.9% of sales; results include $7.4 million of EV program costs versus $7.3 million in the prior year
• Adjusted net income of $8.7 million, or $0.25 per share, compared to $7.5 million, or $0.21 per share in the prior year
• Consolidated backlog of $510.2 million as of June 30, 2023, down 55.1%, compared to $1.1 billion as of June 30, 2022
• Operating cash flow of $29.7 million, up $38.6 million, compared to an outflow of $8.9 million in the prior year

“We delivered second quarter results in line with our expectations led by strong Specialty Vehicles performance while also driving robust cash generation,” said Daryl Adams, President and Chief Executive Officer. “We experienced challenges in the Fleet Vehicles and Services business as market conditions deteriorated and operational inefficiencies remain. We continue to flex our operations while implementing additional cost reductions to reflect lower short-term demand.”

Second Quarter 2023 Business Segment Highlights
For the second quarter of 2023 compared to the second quarter of 2022:

Fleet Vehicles and Services (FVS)

• Sales of $139.0 million, an increase of $2.1 million, or up 1.5%, from $136.9 million
• Adjusted EBITDA of $12.5 million, or 9.0% of sales, a decrease of $2.0 million, from $14.5 million, or 10.6% of sales
• Segment quarter-end backlog of $437.8 million, down 56.2% compared to $1.0 billion in the prior year

Specialty Vehicles (SV)

• Sales of $87.6 million, a decrease of $7.7 million, or 8.1%, from $95.3 million
• Adjusted EBITDA of $17.4 million, or 19.8% of sales, an increase of $4.5 million, from $12.9 million, or 13.5% of sales
• Segment quarter-end backlog of $72.4 million as of June 30, 2023, down 46.4% compared to $135.2 million as of June 30, 2022
• Achieved significant milestone with the 100,000^th Isuzu N-Series gas-powered truck produced at Builtmore

Disciplined Capital Allocation
“Our balance sheet continues to be a strength and differentiator for the company. We are confident in our long-term growth story and ability to generate cash, giving us the flexibility to efficiently deploy capital to maximize shareholder value,” said Jon Douyard, Chief Financial Officer.

The company deployed $8.3 million of capital in the quarter with the following actions:

• Funded $6.5 million of capital expenditures, including investment in Blue Arc
• Paid regular dividends of $1.8 million reflecting a dividend of $0.05 per share
• $233 million remaining under our existing share repurchase authorization

2023 Financial Outlook
Douyard continued, “Our prior concerns surrounding a tougher demand environment materialized late in the quarter. As softness in the parcel market continued and dealer inventories remained high, last-mile customers deferred and cancelled orders leading to lower OEM chassis production. In addition, consistent with broader recreational vehicle markets, we are experiencing incremental weakness in our motorhome chassis business. These headwinds have negatively impacted our full-year outlook.”

Our revised full-year 2023 outlook, notwithstanding further changes in the operating environment, is as follows:

• Sales to be in the range of $850 million to $950 million compared to the previous outlook of $1.0 to $1.2 billion
• Adjusted EBITDA of $40 to $60 million compared to the previous outlook of $70 to $100 million
• Net Income of $1 to $16 million compared to the previous outlook of $28 to $50 million
• Earnings per share of $0.03 to $0.46 compared to the previous outlook of $0.77 to $1.39
• Adjusted earnings per share of $0.33 to $0.76 compared to the previous outlook of $0.98 to $1.60
• Blue Arc EV second half production remains on track; expect approximately 50 vehicles to be delivered in the fourth quarter

Adams concluded, “We remain confident in the long-term growth profile of the company. Despite market and economic uncertainty, we expect earnings growth in 2024 as we drive operational improvements and ramp Blue Arc production.”

Conference Call and Webcast
The Shyft Group will host a conference call and webcast at 8:30 a.m. ET today.

The U.S. toll-free dial-in for the conference call is 1-844-868-8845, and the international dial-in number is 412-317-6591. The conference passcode is 10176862.

A live webcast of the conference will also be available on the investor relations page of the company’s website at www.the shyftgroup.com/webcasts.