Financial Data and Key Metrics Changes - For the full year 2023, the company reported revenue of $872 million and adjusted EBITDA of $40 million, which was in line with expectations. Excluding EV expenses, adjusted EBITDA was $73 million, or 8.3% of sales [11][12] - In Q4 2023, revenue was $202.3 million, down 33% from $302 million in the prior year. The net loss was $4.4 million, or a loss of $0.13 per share, compared to net income of $17.8 million, or $0.50 per share, in the previous year [61][12] - Adjusted EBITDA for Q4 was $2.3 million, or 1.1% of sales, down from $30.7 million, or 10.2% of sales in Q4 2022 [12][11] Business Line Data and Key Metrics Changes - Specialty Vehicles (SV) achieved a strong year with a 20% adjusted EBITDA margin, reflecting solid growth and operational improvements despite market weakness in motorhome chassis [13][95] - Fleet Vehicles and Services (FVS) reported sales of $119 million in Q4, down 44.1% from $212.9 million a year ago, impacted by softness in last-mile delivery markets [96] - The FVS backlog was $325 million at the end of the year, down 15% from the prior quarter [76] Market Data and Key Metrics Changes - The company anticipates continued softness in demand for both parcel and motorhome volume through mid-2024, reflecting ongoing challenges in the operating environment [57][88] - The company noted that order activity improved in the second half of 2023 but remains relatively soft, particularly in the FES side of the business [18][19] Company Strategy and Development Direction - The company is focusing on operational rigor and financial growth, with an emphasis on team alignment and cross-selling opportunities [68][70] - The Blue Arc EV program is a strategic priority, with plans for production to start in late 2024 after resolving battery quality issues [92][91] - The company is exploring M&A opportunities to expand its scale while maintaining focus on core business performance [132][133] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious view on near-term demand, expecting softness to persist through mid-2024, while emphasizing the importance of cash generation and working capital management [57][88] - The company is committed to improving performance and leveraging internal strengths to navigate the current challenges [36][88] Other Important Information - The company generated approximately $100 million of free cash flow over the last four years, despite challenging market conditions [35] - The adjusted EPS for Q1 is expected to be in the range of $0.28 to $0.51 per share, with free cash flow projected at $25 million to $35 million [98] Q&A Session Summary Question: What is the outlook for demand in the first half of the year? - Management expects demand softness to continue through the first half of the year, consistent with previous discussions [18] Question: Can you provide an update on chassis supply for vocational and specialty vehicles? - Chassis supply is improving, and the company is monitoring customer engagement closely [23][42] Question: Is there a desire to expand through M&A given the strong free cash flow and low debt? - The company is considering M&A opportunities but emphasizes the need to focus on core business performance first [24][132] Question: What are the expectations for adjusted EBITDA in Q1 and the full year? - Adjusted EBITDA for Q1 is anticipated to be approximately breakeven, with a step-up expected in Q2 and improved performance in the second half of the year [102][51] Question: What challenges are being faced with the Blue Arc program? - The primary challenge has been battery quality issues, but there is enthusiasm for the vehicle's potential once these issues are resolved [111][112]

© THE SHYFT GROUP, INC. | Proprietary & Confidential This presentation contains information, including our sales and earnings guidance, all other information provided with respect to our outlook for 2024 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 A ...

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business.) Shyft Group manufactures specialty vehicles, seeing sales growth but declining income and a reduced order backlog [General and Performance Overview](index=4&type=section&id=General%20and%20Performance%20Overview) - The Shyft Group is a niche market leader in manufacturing and assembling specialty vehicles for commercial (last-mile delivery, specialty service) and recreational vehicle industries[16](index=16&type=chunk) Five-Year Performance Overview (Continuing Operations) | Metric | Change (in millions) | CAGR | | :--- | :--- | :--- | | Sales | +$115.7 | 3.6% | | Income from Continuing Operations | -$30.3 | (35.2)% | | Adjusted EBITDA | -$24.0 | (11.1)% | [Our Segments](index=5&type=section&id=Our%20Segments) - The company's two reportable segments are Fleet Vehicles and Services (FVS) and Specialty Vehicles (SV)[20](index=20&type=chunk) - The FVS segment, marketed under the Utilimaster brand, manufactures commercial vehicles for e-commerce, parcel delivery, and various trades. It employed approximately **1,500 employees and 300 contractors** as of December 31, 2023[20](index=20&type=chunk) - The SV segment provides service bodies, RV chassis (Spartan RV Chassis), and contract manufacturing. It employed approximately **1,000 employees and less than 100 contractors** as of December 31, 2023[32](index=32&type=chunk) [Competition](index=8&type=section&id=Competition) - The company competes based on custom design capability, product quality, customer service, and quick delivery. Competitors range from large diversified organizations to smaller manufacturers and new market entrants, including technology companies[41](index=41&type=chunk) [Suppliers](index=9&type=section&id=Suppliers) - The single largest commodity used in production is aluminum. The company is also dependent on suppliers for lumber, fiberglass, and steel. While most raw materials have several sources, the company relies on a few single-source vendors for specific component parts[43](index=43&type=chunk) - For certain vehicles, the company uses chassis supplied by third parties and typically does not hold them in inventory, instead installing its specialized bodies on chassis owned by dealers or end-users[44](index=44&type=chunk) [Research and Development](index=9&type=section&id=Research%20and%20Development) R&D Spending (in millions) | Year | Amount (in millions) | | :--- | :--- | | 2023 | $25.2 | | 2022 | $25.3 | | 2021 | $8.5 | - A key R&D initiative is Shyft's Blue Arc™ EV Solutions, which introduced an all-electric, purpose-built chassis platform for Class 3, 4, and 5 medium-duty trucks[46](index=46&type=chunk) [Human Capital Management](index=10&type=section&id=Human%20Capital%20Management) - As of December 31, 2023, the company employed approximately **3,000 employees and contractors**. About **11% of the workforce** consists of contractors[51](index=51&type=chunk) [Customer Base](index=11&type=section&id=Customer%20Base) - In 2023, sales to the top 10 customers accounted for **54.3% of total sales**, with no single customer exceeding 10%[57](index=57&type=chunk) Customers Exceeding 10% of Consolidated Sales | Year | Customer | Sales (in millions) | % of Consolidated Sales | Segment | | :--- | :--- | :--- | :--- | :--- | | 2022 | Amazon | $153.6 | 15.0% | FVS | | 2022 | Newmar | $107.7 | 10.5% | SV | | 2021 | Amazon | $248.6 | 25.1% | FVS | [Order Backlog](index=11&type=section&id=Order%20Backlog) Consolidated Order Backlog (in thousands) | Segment | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Decrease (in thousands) | | :--- | :--- | :--- | :--- | | FVS | $325,003 | $736,690 | $(411,687) | | SV | $84,269 | $96,023 | $(11,754) | | **Total** | **$409,272** | **$832,713** | **$(423,441)** | - The total order backlog decreased by **$423.4 million**, primarily driven by a **55.9% decrease** in the FVS segment backlog[61](index=61&type=chunk) [Non-GAAP Financial Measure](index=11&type=section&id=Non-GAAP%20Financial%20Measure) Reconciliation of Income from Continuing Operations to Adjusted EBITDA (in thousands) | | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | :--- | | Income from continuing operations | $6,464 | $36,558 | $69,974 | | Adjustments | $33,504 | $34,235 | $38,092 | | **Adjusted EBITDA** | **$39,968** | **$70,793** | **$108,066** | [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors.) The company faces global economic, supply chain, customer, EV market, and operational risks - **Global Risks:** The company is exposed to risks from uncertain global macro-economic and political conditions, including inflation, supply chain disruptions, and military conflicts, which can increase costs and soften demand[71](index=71&type=chunk)[72](index=72&type=chunk) - **Customer Concentration:** Failure to maintain relationships with major customers could adversely affect revenues. In 2023, the top 10 customers accounted for **54.3% of sales**[74](index=74&type=chunk) - **Competition and Market Changes:** The company faces intense competition from established OEMs and new entrants, particularly in the electric vehicle (EV) market. Failure to remain competitive could adversely affect business[75](index=75&type=chunk) - **EV Development Risks:** The development of EVs involves complex software and hardware, reliance on third-party suppliers for emerging technologies like batteries, and risks associated with lithium-ion battery safety[89](index=89&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - **Supply Chain and Costs:** The business is subject to risks from increased costs of raw materials (steel, aluminum), component parts, and labor, as well as disruptions in the supply chain and reliance on a small group of suppliers for some components[87](index=87&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - **Backlog Uncertainty:** The order backlog is subject to modification, cancellation, or rescheduling by customers and is not a guaranteed indicator of future revenue[76](index=76&type=chunk) [Item 1C. Cybersecurity](index=22&type=section&id=Item%201C.%20Cybersecurity.) Cybersecurity risk management is overseen by the Audit Committee and CIO, with no material incidents to date - The Board of Directors, through its Audit Committee, is responsible for overseeing the company's cybersecurity risk management strategy[128](index=128&type=chunk) - The cybersecurity program is overseen by the Chief Information Officer (CIO), who has over **20 years of experience** and reports to the CEO. The Security Manager, with over **15 years of experience**, reports to the CIO[129](index=129&type=chunk)[130](index=130&type=chunk) - To date, no cybersecurity incidents have materially affected the company's business strategy, results of operations, or financial position[127](index=127&type=chunk) [Item 2. Properties](index=23&type=section&id=Item%202.%20Properties.) The company operates 18 facilities across the U.S. and Mexico, with corporate headquarters in Novi, Michigan - The company operates from **18 locations**, including **17 in the U.S.** and one in Saltillo, Mexico, as part of its strategy for coast-to-coast manufacturing and distribution[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 3. Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings.) The company is involved in various legal proceedings, but management expects no material financial impact - The company is party to a number of lawsuits and claims arising from normal business conduct, but management does not currently expect a material impact from their outcomes[136](index=136&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) SHYF stock trades on NASDAQ, paid dividends, and repurchased shares under a $250 million program - The company's common stock is traded on the NASDAQ Global Select Market under the symbol "**SHYF**"[140](index=140&type=chunk) 2023 Dividend Payments | Declaration Date | Payment Date | Dividend per Share | | :--- | :--- | :--- | | Oct. 31, 2023 | Dec. 15, 2023 | $0.05 | | Aug. 2, 2023 | Sep. 18, 2023 | $0.05 | | May 2, 2023 | Jun. 20, 2023 | $0.05 | | Jan. 31, 2023 | Mar. 17, 2023 | $0.05 | - In 2023, the company repurchased **1,022,449 shares** for **$19.1 million** under its **$250.0 million** share repurchase authorization[147](index=147&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) 2023 saw a 15.1% sales decrease, sharp drop in operating income, but improved operating cash flow [Executive Overview](index=27&type=section&id=Executive%20Overview) 2023 Financial Highlights vs. 2022 | Metric | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Sales | $872.2 | $1,027.2 | | Gross Margin | 17.2% | 17.6% | | Operating Income | $6.8 | $47.5 | | Income from Continuing Operations | $6.5 | $36.6 | | Diluted EPS from Continuing Ops | $0.19 | $1.03 | | Operating Cash Flow | $56.2 | $(18.8) | | Order Backlog (Year-End) | $409.3 | $832.7 | - Recent innovations include the Blue Arc™ EV Solutions brand with a purpose-built EV chassis and all-electric delivery van, the Velocity lineup of last-mile delivery vehicles, and Royal Truck Body's new Severe Duty body[159](index=159&type=chunk) [Results of Operations (2023 vs 2022)](index=29&type=section&id=Results%20of%20Operations%20(2023%20vs%202022)) 2023 consolidated sales decreased 15.1% due to lower volumes, leading to a sharp 82.3% drop in income - Consolidated sales decreased by **$155.0 million (15.1%)** in 2023, driven by lower sales volumes in both FVS (walk-in vans) and SV (motorhome chassis) segments[162](index=162&type=chunk) - Gross profit decreased by **$30.0 million (16.7%)**, with gross margin declining to **17.2%** from 17.6% in 2022, due to lower volume and higher costs, partially offset by productivity gains[164](index=164&type=chunk) - Operating expenses increased by **$10.7 million (8.0%)**, primarily due to a **$10.8 million** rise in SG&A from CEO transition costs (**$2.6M**), severance (**$1.0M**), and EV program management costs (**$3.2M**)[165](index=165&type=chunk) - Income from continuing operations decreased by **$30.1 million (82.3%)** to **$6.5 million**, or **$0.19 per diluted share**, down from $1.03 per share in 2022[168](index=168&type=chunk) [Segment Analysis](index=30&type=section&id=Segment%20Analysis) FVS sales and EBITDA declined, while SV sales decreased but Adjusted EBITDA increased due to favorable pricing Fleet Vehicles and Services (FVS) Segment Performance (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Sales | $541,638 | $647,003 | (16.3)% | | Adjusted EBITDA | $30,326 | $65,719 | (53.9)% | | Adj. EBITDA Margin | 5.6% | 10.2% | (4.6) pps | - The FVS order backlog decreased by **55.9%** to **$325.0 million** at the end of 2023, primarily due to softer parcel delivery vehicle demand[181](index=181&type=chunk) Specialty Vehicles (SV) Segment Performance (in thousands) | Metric | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Sales | $334,743 | $386,644 | (13.4)% | | Adjusted EBITDA | $66,186 | $54,413 | 21.7% | | Adj. EBITDA Margin | 19.8% | 14.1% | 5.7 pps | - The SV order backlog decreased by **12.2%** to **$84.3 million**, reflecting lower motorhome orders partially offset by strong demand for service bodies[186](index=186&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased slightly, but operating cash flow improved significantly, with $83.2 million available credit Summary of Cash Flows (in thousands) | Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Cash from Operating Activities | $56,244 | $(18,843) | | Cash used in Investing Activities | $(21,114) | $(20,416) | | Cash (used in) from Financing Activities | $(36,721) | $13,649 | | **Net Decrease in Cash** | **$(1,591)** | **$(25,610)** | - The improvement in operating cash flow was primarily driven by a **$72.9 million** inflow from decreased receivables and contract assets[188](index=188&type=chunk) - As of December 31, 2023, the company had **$83.2 million** in available borrowings under its credit agreement and was in compliance with all covenants[198](index=198&type=chunk) Material Cash Requirements (in thousands) | Obligation | Total (in thousands) | Less than 1 Year (in thousands) | 1-3 Years (in thousands) | 4-5 Years (in thousands) | More than 5 Years (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt | $59,675 | $3,225 | $56,450 | - | - | | Operating lease obligations | $52,198 | $10,475 | $17,824 | $9,532 | $14,367 | | Purchase obligations | $2,300 | $2,300 | - | - | - | | **Total** | **$114,173** | **$16,000** | **$74,274** | **$9,532** | **$14,367** | [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment in revenue, goodwill, warranties, and income taxes - **Revenue Recognition:** Revenue is recognized over time for services like upfits and for vehicles built on customer-owned chassis, and at a point in time (generally shipment) for vehicles where the company owns the chassis[207](index=207&type=chunk)[209](index=209&type=chunk) - **Goodwill Impairment:** Goodwill is tested for impairment annually as of October 1. For the 2023 assessment, the company performed a qualitative assessment for both its Fleet Vehicles and Services and Specialty Vehicles reporting units and found no indicators of impairment[213](index=213&type=chunk)[214](index=214&type=chunk) - **Warranties:** The company records a provision for estimated warranty costs at the time of sale, based on historical experience and projections of future costs[219](index=219&type=chunk) - **Income Taxes:** The company recognizes deferred tax assets and liabilities and assesses the need for a valuation allowance based on forecasts of future taxable income. Uncertain tax positions are recognized only if it is more likely than not that they will be sustained[220](index=220&type=chunk)[222](index=222&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company faces interest rate risk on variable debt and commodity price risk for raw materials - The company is exposed to interest rate risk on its variable rate debt. A hypothetical **100 basis point increase** in interest rates would add approximately **$0.5 million** to annualized interest expense[227](index=227&type=chunk) - The company faces commodity risk from price changes in raw materials, particularly steel and aluminum. It does not generally use derivative instruments to manage this exposure[229](index=229&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents audited financial statements and notes, with an unqualified opinion from Deloitte & Touche LLP [Report of Independent Registered Public Accounting Firm](index=39&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Deloitte & Touche LLP issued an unqualified opinion, stating that the financial statements present fairly, in all material respects, the financial position of the company and that the company maintained effective internal control over financial reporting as of December 31, 2023[235](index=235&type=chunk) - The critical audit matter identified was the qualitative assessment of goodwill impairment due to the significant judgments and assumptions involved, particularly regarding macroeconomic conditions and financial performance forecasts[242](index=242&type=chunk)[244](index=244&type=chunk) [Consolidated Financial Statements](index=41&type=section&id=Consolidated%20Financial%20Statements) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $286,928 | $345,767 | | Total Assets | $530,049 | $580,481 | | Total Current Liabilities | $182,831 | $201,232 | | Total Liabilities | $277,883 | $311,787 | | Total Shareholders' Equity | $252,166 | $268,694 | Consolidated Statement of Operations Highlights (in thousands) | | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | :--- | | Sales | $872,198 | $1,027,164 | $991,792 | | Gross Profit | $150,358 | $180,433 | $199,265 | | Operating Income | $6,753 | $47,509 | $84,052 | | Net Income Attributable to Shyft | $6,496 | $36,558 | $68,925 | | Diluted EPS | $0.19 | $1.03 | $1.91 | [Notes to Consolidated Financial Statements](index=45&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - **Note 2 (Revenue):** The aggregate transaction price allocated to remaining performance obligations is **$325.0 million** for the FVS segment and **$84.3 million** for the SV segment as of December 31, 2023[312](index=312&type=chunk) - **Note 4 (Goodwill):** The annual goodwill impairment test as of October 1, 2023, was a qualitative assessment for both the FVS and SV reporting units, which found no indicators of impairment. The total goodwill balance remains **$48.9 million**[321](index=321&type=chunk)[322](index=322&type=chunk) - **Note 9 (Contingent Liabilities):** The company received a Notice of Violation from the EPA in April 2022 regarding vehicle certifications. The company is investigating the matter, and a potential penalty cannot be estimated at this time[349](index=349&type=chunk) - **Note 11 (Debt):** The company has a **$400 million** revolving credit facility maturing in 2026. As of December 31, 2023, **$50.0 million** was outstanding, and the company was in compliance with all covenants[359](index=359&type=chunk)[360](index=360&type=chunk) - **Note 12 (Stock Based Compensation):** The company grants restricted stock, performance stock units (PSUs), and restricted stock units (RSUs) to employees and directors. As of December 31, 2023, there was **$10.6 million** of total remaining unrecognized compensation cost related to these awards[366](index=366&type=chunk)[376](index=376&type=chunk)[380](index=380&type=chunk) [Item 9A. Controls and Procedures](index=68&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management and auditors concluded that disclosure controls and internal control over financial reporting were effective - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[403](index=403&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, a conclusion audited and affirmed by Deloitte & Touche LLP[405](index=405&type=chunk)[406](index=406&type=chunk) Part III [Item 10. Directors, Executive Officers, and Corporate Governance](index=70&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Shareholders[416](index=416&type=chunk) [Item 11. Executive Compensation](index=70&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2024 Annual Meeting of Shareholders proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Shareholders[417](index=417&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=70&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Equity compensation plan details and security ownership information are incorporated by reference from the proxy statement Equity Compensation Plan Information as of December 31, 2023 | Plan Category | Securities to be Issued (a) | Weighted Avg. Exercise Price | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Approved by security holders | 828,179 | N/A | 1,592,067 | | Not approved by security holders | - | N/A | 51,318 | | **Total** | **828,179** | **N/A** | **1,643,385** | Part IV [Item 15. Exhibits, Financial Statement Schedules](index=72&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules.) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K report - This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including the consent of the independent registered public accounting firm and certifications by the CEO and CFO[427](index=427&type=chunk)[429](index=429&type=chunk)

[Overview of Q4 and Full-Year 2023 Performance](index=1&type=section&id=Overview%20of%20Q4%20and%20Full-Year%202023%20Performance) The Shyft Group's Q4 and full-year 2023 performance saw significant declines in sales, net income, and adjusted EBITDA, despite improved free cash flow [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The Shyft Group reported a significant decline in financial performance for both the fourth quarter and the full year of 2023 compared to the prior year Q4 2023 vs Q4 2022 Financial Results (in million USD) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Sales | $202.3 | $302.0 | -33.0% | | Net (Loss)/Income | ($4.4) | $17.8 | - | | Adjusted EBITDA | $2.3 | $30.7 | -92.5% | | Adjusted Net (Loss)/Income per Share | ($0.03) | $0.58 | - | Full-Year 2023 vs Full-Year 2022 Financial Results (in million USD) | Metric | Full-Year 2023 | Full-Year 2022 | Change | | :--- | :--- | :--- | :--- | | Sales | $872.2 | $1.0 billion | -15.1% | | Net Income | $6.5 | $36.6 | -82.2% | | Adjusted EBITDA | $40.0 | $70.8 | -43.5% | | Adjusted Net Income per Share | $0.54 | $1.25 | -56.8% | - Generated free cash flow of **$36 million** in 2023, a year-over-year improvement of **$75 million**[3](index=3&type=chunk) - Management noted that the Specialty Vehicles business delivered strong profitability, while the Fleet Vehicles and Services performance was underwhelming due to lower customer demand[2](index=2&type=chunk) [Business Segment Performance](index=1&type=section&id=Business%20Segment%20Performance) The company's two segments showed divergent performance in Q4 2023, with FVS declining sharply and SV significantly growing its Adjusted EBITDA [Fleet Vehicles and Services (FVS)](index=1&type=section&id=Fleet%20Vehicles%20and%20Services%20(FVS)) The FVS segment experienced a sharp decline in Q4 2023 sales and profitability, resulting in an Adjusted EBITDA loss and a substantial backlog decrease FVS Q4 2023 vs Q4 2022 Performance (in million USD) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Sales | $119.0 | $212.9 | -44.1% | | Adjusted EBITDA | ($2.6) | $27.7 | - | | Adjusted EBITDA Margin | (2.2%) | 13.0% | - | - The segment's backlog decreased to **$325.0 million** as of December 31, 2023, down **55.9%** from **$736.7 million** a year earlier[3](index=3&type=chunk)[25](index=25&type=chunk) [Specialty Vehicles (SV)](index=2&type=section&id=Specialty%20Vehicles%20(SV)) The SV segment demonstrated strong profitability in Q4 2023, with Adjusted EBITDA increasing by 19.3% despite a sales decrease, and an expanded profit margin SV Q4 2023 vs Q4 2022 Performance (in million USD) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Sales | $83.4 | $93.2 | -10.6% | | Adjusted EBITDA | $19.0 | $15.9 | +19.3% | | Adjusted EBITDA Margin | 22.8% | 17.1% | +570 bps | - The segment's backlog stood at **$84.3 million** as of December 31, 2023, down **12.2%** from **$96.0 million** a year prior[5](index=5&type=chunk)[25](index=25&type=chunk) [Backlog Analysis](index=1&type=section&id=Backlog%20Analysis) The company's total backlog significantly decreased by 50.9% to $409.3 million at year-end 2023, primarily due to the Fleet Vehicles and Services segment Backlog by Segment (in million USD) | Segment | Dec 31, 2023 | Dec 31, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Fleet Vehicles and Services | $325.0 | $736.7 | -55.9% | | Specialty Vehicles | $84.3 | $96.0 | -12.2% | | **Total Backlog** | **$409.3** | **$832.7** | **-50.9%** | [2024 Financial Outlook](index=2&type=section&id=2024%20Financial%20Outlook) Shyft Group anticipates 2024 sales between $850 million and $900 million and Adjusted EBITDA of $40 million to $50 million, reflecting continued challenging demand and EV program spending [Full-Year 2024 Guidance](index=2&type=section&id=Full-Year%202024%20Guidance) The company projects full-year 2024 sales of $850-$900 million and adjusted EPS of $0.28-$0.51, incorporating EV-related spending and positive free cash flow 2024 Full-Year Guidance (in million USD, except EPS) | Metric | Guidance Range | | :--- | :--- | | Sales | $850 - $900 | | Adjusted EBITDA | $40 - $50 | | Net Income | $2.5 - $10.5 | | Earnings per Share (EPS) | $0.07 - $0.30 | | Adjusted EPS | $0.28 - $0.51 | | Capital Expenditures | $20 - $25 | | Free Cash Flow | $25 - $35 | - The sales guidance assumes no revenue from the Blue Arc EV program[5](index=5&type=chunk) - The Adjusted EBITDA guidance includes planned EV spending of **$20 million to $25 million**[5](index=5&type=chunk) - Management expects the challenging demand environment for parcel and motorhome vehicles to continue in the first half of 2024[4](index=4&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements provide a detailed overview of the company's balance sheet, income statement, and cash flows for the reporting period [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets decreased to $530.0 million, accompanied by a reduction in total liabilities and a slight decline in shareholders' equity Key Balance Sheet Items (in thousand USD) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $9,957 | $11,548 | | Total current assets | $286,928 | $345,767 | | Total Assets | $530,049 | $580,481 | | Total current liabilities | $182,831 | $201,232 | | Total Liabilities | $277,883 | $311,787 | | Total Shareholders' Equity | $252,166 | $268,694 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For 2023, sales decreased 15.1% to $872.2 million, leading to a sharp decline in operating income and net income attributable to The Shyft Group Full-Year Income Statement Highlights (in thousand USD, except per share data) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Sales | $872,198 | $1,027,164 | | Gross Profit | $150,358 | $180,433 | | Operating Income | $6,753 | $47,509 | | Net Income Attributable to The Shyft Group | $6,496 | $36,558 | | Diluted Earnings Per Share | $0.19 | $1.03 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company significantly improved cash generation in 2023, with net cash from operating activities reaching $56.2 million and positive free cash flow of $35.6 million Full-Year Cash Flow Summary (in thousand USD) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $56,244 | ($18,843) | | Net cash used in investing activities | ($21,114) | ($20,416) | | Net cash (used in) provided by financing activities | ($36,721) | $13,649 | | Net decrease in cash and cash equivalents | ($1,591) | ($25,610) | - The improvement in operating cash flow was largely driven by favorable changes in accounts receivable and contract assets, which provided **$72.9 million** in cash during 2023[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow, to their most directly comparable GAAP measures [Reconciliation of Adjusted EBITDA and Adjusted Net Income](index=11&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20and%20Adjusted%20Net%20Income) Full-year 2023 Adjusted EBITDA was $40.0 million and Adjusted Net Income was $18.7 million, both significantly lower than 2022, with key adjustments including D&A and stock-based compensation Reconciliation of Net Income to Adjusted EBITDA (Full-Year, in thousand USD) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net Income | $6,464 | $36,558 | | D&A, Taxes, Interest | $17,712 | $24,975 | | EBITDA | $24,208 | $61,533 | | Adjustments (Stock Comp, Restructuring, etc.) | $15,760 | $9,260 | | **Adjusted EBITDA** | **$39,968** | **$70,793** | Reconciliation of Net Income to Adjusted Net Income (Full-Year, in thousand USD) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net Income | $6,464 | $36,558 | | Adjustments (pre-tax) | $15,760 | $9,260 | | Tax effect of adjustments | ($3,565) | ($1,348) | | **Adjusted Net Income** | **$18,691** | **$44,470** | [Reconciliation of Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) The company reported a positive free cash flow of $35.6 million for 2023, a substantial improvement from a negative $39.3 million in 2022 Free Cash Flow Calculation (Full-Year, in thousand USD) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $56,244 | ($18,843) | | Purchases of property, plant and equipment | ($20,733) | ($20,564) | | Proceeds from sale of property, plant and equipment | $119 | $148 | | **Free Cash Flow** | **$35,630** | **($39,259)** | [Reconciliation of 2024 Outlook](index=13&type=section&id=Reconciliation%20of%202024%20Outlook) The 2024 outlook reconciles GAAP Net Income and EPS forecasts to Adjusted EBITDA and Adjusted EPS, primarily adjusting for non-cash stock-based compensation 2024 Outlook: Net Income to Adjusted EBITDA Reconciliation (Midpoint, in thousand USD) | Line Item | 2024 Midpoint | | :--- | :--- | | Net Income | $6,481 | | D&A, Interest, Taxes | $29,619 | | EBITDA | $36,100 | | Non-cash stock-based compensation and other charges | $8,900 | | **Adjusted EBITDA** | **$45,000** | 2024 Outlook: EPS to Adjusted EPS Reconciliation (Midpoint) | Line Item | 2024 Midpoint | | :--- | :--- | | Earnings per share (EPS) | $0.19 | | Non-cash stock-based compensation and other charges | $0.26 | | Tax effect of adjustments | ($0.05) | | **Adjusted EPS** | **$0.40** |

The Shyft Group, Inc. (NASDAQ:SHYF) Q3 2023 Earnings Conference Call October 26, 2023 8:30 AM ET Company Participants Randy Wilson - VP, IR and Treasury John Dunn - Incoming President and CEO Daryl Adams - Outgoing President and CEO Jon Douyard - CFO Conference Call Participants Matt Koranda - ROTH Capital Greg Lewis - BTIG Mike Shlisky - D.A. Davidson Operator Good morning and welcome to the Shyft Group's Third Quarter 2023 Conference Call and Webcast. All participants will be in a listen-only mode until t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33582 THE SHYFT GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) Michigan (State or Other Jurisdiction of Incorporat ...

SHYFTGROUP Business Segment End Market Dynamics Backlog (June 30, 2023) $438M Specialty Vehicles 2021 2022 2023 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 POC Builds Production Design Prototype Builds DV Testing Pilot Builds Production Ramp-Up Customer Deliveries COMPLETED ON TRACK Production Dealer and Service Entering final stages of agreements with additional dealers and national fleet service provider Dealers working with key customers on vehicle configurations and orders Solid year-over-year margin expansion 7 $136.9 ...

The Shyft Group, Inc. (NASDAQ:SHYF) Q2 2023 Earnings Conference Call July 28, 2023 8:30 AM ET Company Participants Randy Wilson - Vice President, Investor Relations and Treasury Daryl Adams - President & Chief Executive Officer Jon Douyard - Chief Financial Officer Conference Call Participants Ray Guiso - BTIG Mike Shlisky - D.A. Davidson Matt Koranda - Roth MKM Ryan Sigdahl - Craig-Hallum Capital Group Operator Good morning, Welcome to the Shyft Group's Second Quarter 2023 Conference Call and Webcast. All ...

Financial Performance - Sales for Q2 2023 were $225.1 million, a decrease of 3.1% from $232.2 million in Q2 2022[68] - Gross margin improved to 19.0% in Q2 2023, up from 18.1% in Q2 2022[68] - Operating income for Q2 2023 was $6.6 million, down from $7.7 million in Q2 2022[68] - Net income decreased to $4.7 million in Q2 2023, compared to $5.3 million in Q2 2022[79] - For the first six months of 2023, consolidated sales were $468.5 million, an increase of 6.7% from $439.1 million in the same period of 2022[82] - Gross profit for the first six months of 2023 was $85.7 million, a 25.9% increase from $68.0 million in the first half of 2022[84] - Net income for the first six months of 2023 increased by $5.0 million to $6.4 million compared to $1.4 million for the same period in 2022, with diluted earnings per share rising from $0.04 to $0.18[88] Order Backlog - Order backlog was $510.2 million as of June 30, 2023, a decrease of 55.1% from $1,135.2 million a year earlier[68] - The consolidated order backlog as of June 30, 2023, totaled $510.2 million, a decrease of $625.0 million or 55.1% compared to $1,135.2 million at June 30, 2022[90] Operating Expenses - Operating expenses for the first six months of 2023 rose to $75.4 million, a 14.4% increase from $65.9 million in the same period of 2022[85] Adjusted EBITDA - Adjusted EBITDA for Q2 2023 increased to $15.9 million, up from $13.7 million in Q2 2022[80] - Adjusted EBITDA for the first quarter of 2023 was $26.7 million, an increase of $13.7 million from $13.0 million in the first quarter of 2022[89] - Adjusted EBITDA for the FVS segment for the first six months of 2023 was $24.9 million, an increase of $11.2 million from $13.7 million in the first six months of 2022[103] - Adjusted EBITDA for the SV segment for the first six months of 2023 was $31.2 million, an increase of $8.2 million or 36.0% from $23.0 million in the first six months of 2022[107] Cash Flow - Cash generated from operating activities during the first six months of 2023 was $35.6 million, an increase of $72.3 million from cash used in operating activities of $36.7 million during the same period in 2022[109] - Cash used in investing activities during the first six months of 2023 was $11.4 million, an increase of $1.5 million from $9.9 million used in the same period of 2022[110] - Cash and cash equivalents decreased by $3.7 million from December 31, 2022, to a balance of $7.8 million as of June 30, 2023[108] Debt and Credit Facilities - As of June 30, 2023, the Company had $45.0 million outstanding debt under the revolving credit facility, with an increase of 100 basis points in interest rates resulting in an additional $0.5 million of annual interest expense[121] - The available borrowings under the Credit Agreement were $244.3 million as of June 30, 2023, compared to $187.2 million at December 31, 2022[115] - The revolving credit facility carries an interest rate of 6.27% as of June 30, 2023, based on one-month SOFR plus a margin[114] - The Company amended the Credit Agreement on May 31, 2023, transitioning the variable interest rate from LIBOR to SOFR, with no expected material increase in interest expense[113] - The Company remains in compliance with all covenants in the Credit Agreement as of June 30, 2023[115] Stock and Dividends - The Company has authorized a stock repurchase of up to $250.0 million, with $8.8 million spent to repurchase 348,705 shares in Q1 2023[116] - Dividends of $0.05 per share were declared on May 2, 2023, and January 31, 2023, reflecting consistent dividend payments[118] Business Developments - The company launched Blue Arc™ Electric Vehicle Solutions, including a commercial-grade EV chassis and an all-electric delivery van[68] Risk Management - The Company is exposed to commodity price fluctuations, particularly in steel and aluminum, and does not typically use derivative instruments to manage these risks[123] Internal Controls - There have been no changes in internal control over financial reporting that materially affected the Company during the quarter ended June 30, 2023[128]

The Shyft Group, Inc. (NASDAQ:SHYF) Q1 2023 Earnings Conference Call April 27, 2023 10:00 AM ET Company Participants Randy Wilson - Vice President, Investor Relations and Treasury Daryl Adams - President, CEO and Director Jon Douyard - CFO Conference Call Participants Felix Boeschen - Raymond James Michael Shlisky - D.A. Davidson Greg Lewis - BTIG Steve Dyer - Craig Hallum Matt Koranda - Roth MKM Operator Good morning, everyone. Welcome to the Shyft Group's First Quarter and Full-Year 2022 Conference Call a ...