The Shyft (US:SHYF)2024-10-24 11:31Performance Highlights and Outlook Q3 2024 saw decreased sales but improved margins and Adjusted EBITDA, with EV production commencing and full-year outlook maintained Third Quarter 2024 Financial Highlights Q3 2024 sales fell 3.6% to $194.1 million, yet gross margin expanded by 210 bps and Adjusted EBITDA grew 30% | Financial Metric | Q3 2024 (Millions USD) | Q3 2023 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Sales | $194.1 | $201.3 | -3.6% | | Gross Margin | 20.4% | 18.3% | +210 bps | | Net Income | $3.1 | $4.5 | -31.1% | | Adjusted EBITDA | $14.3 | $11.0 | +30.0% | | Diluted EPS | $0.09 | $0.13 | -30.8% | | Adjusted EPS | $0.18 | $0.19 | -5.3% | | Consolidated Backlog | $345.4 | $464.4 | -25.6% | - The company's Blue Arc Class 4 electric vehicle is now in production, with the first customer deliveries anticipated in the fourth quarter of 20241 - Q3 2024 Adjusted EBITDA results included $6.1 million of EV program-related costs, compared to $7.6 million in the prior year's quarter2 2024 Financial Outlook The company maintained its full-year 2024 Adjusted EBITDA outlook of $45-$50 million, with sales projected at $800 million | Full-Year 2024 Outlook | Value (Millions USD) | | :--- | :--- | | Sales | ~$800 | | Adjusted EBITDA | $45 - $50 | | EV Spending (included in Adj. EBITDA) | $20 - $25 | | Net Income | $2.6 - $6.9 | | Earnings per Share (EPS) | $0.07 - $0.20 | | Adjusted EPS | $0.35 - $0.50 | | Capital Expenditures | $15 - $20 | | Free Cash Flow | ~$30 | - The company's balance sheet remains solid with a net leverage of 2.2x, which was better than expected for Q3, with further improvement anticipated in Q4, providing flexibility for future capital investments3 Consolidated Financial Statements Total assets increased to $569.4 million, with a decline in operating cash flow despite improved gross profit Consolidated Balance Sheets Total assets increased to $569.4 million, driven by higher cash and goodwill, alongside a rise in total liabilities | Balance Sheet Item | Sept 30, 2024 (Thousands USD) | Dec 31, 2023 (Thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $21,440 | $9,957 | | Total current assets | $299,819 | $286,928 | | Total assets | $569,434 | $530,049 | | Long-term debt, less current portion | $110,234 | $50,144 | | Total liabilities | $316,771 | $277,883 | | Total shareholders' equity | $252,663 | $252,166 | Consolidated Statements of Operations Q3 2024 sales decreased to $194.1 million, but gross profit improved, while net income declined to $3.1 million | Income Statement | Q3 2024 (Thousands USD) | Q3 2023 (Thousands USD) | Nine Months 2024 (Thousands USD) | Nine Months 2023 (Thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Sales | $194,075 | $201,325 | $584,744 | $669,865 | | Gross Profit | $39,607 | $36,768 | $114,256 | $122,446 | | Operating Income | $5,329 | $4,124 | $7,127 | $14,404 | | Net Income | $3,123 | $4,518 | $618 | $10,881 | | Diluted EPS | $0.09 | $0.13 | $0.02 | $0.31 | Consolidated Statements of Cash Flows Net cash from operating activities decreased to $17.2 million, while investing activities increased due to acquisitions | Cash Flow | Nine Months Ended Sept 30, 2024 (Thousands USD) | Nine Months Ended Sept 30, 2023 (Thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,216 | $44,818 | | Net cash used in investing activities | ($60,022) | ($16,543) | | Net cash provided by (used in) financing activities | $54,289 | ($29,947) | | Net increase (decrease) in cash | $11,483 | ($1,672) | | Cash and cash equivalents at end of period | $21,440 | $9,876 | Segment Performance and Backlog Q3 2024 saw mixed segment performance with declining backlog, as Fleet Vehicles sales decreased while Specialty Vehicles sales grew Sales and Adjusted EBITDA by Business Segment Fleet Vehicles sales declined but Adjusted EBITDA improved, while Specialty Vehicles sales grew with stable Adjusted EBITDA | Q3 Performance by Segment | Q3 2024 (Thousands USD) | Q3 2023 (Thousands USD) | | :--- | :--- | :--- | | Fleet Vehicles and Services | | | | Total Sales | $105,860 | $124,259 | | Adjusted EBITDA | $9,828 | $7,977 | | Specialty Vehicles | | | | Total Sales | $87,365 | $76,622 | | Adjusted EBITDA | $16,146 | $15,988 | Consolidated Backlog Total backlog decreased by 25.6% to $345.4 million as of September 30, 2024, primarily due to a decline in the Fleet Vehicles and Services segment | Period End Backlog | Sept 30, 2024 (Thousands USD) | Sept 30, 2023 (Thousands USD) | | :--- | :--- | :--- | | Fleet Vehicles and Services | $267,952 | $383,448 | | Specialty Vehicles | $77,456 | $80,983 | | Total Backlog | $345,408 | $464,431 | - The reported consolidated backlog does not include any order activity for the Blue Arc EV products4 Reconciliation of Non-GAAP Financial Measures The company reconciles non-GAAP measures like Adjusted EBITDA and free cash flow to GAAP equivalents for Q3 2024 and the full-year outlook - The company uses non-GAAP measures such as Adjusted EBITDA, adjusted net income, adjusted EPS, and free cash flow to supplement its GAAP results, believing these measures provide a better understanding of ongoing operations by excluding items not representative of continuing performance, such as restructuring charges and acquisition-related expenses1415 Q3 2024 Reconciliation Q3 2024 GAAP Net Income of $3.1 million was reconciled to an Adjusted EBITDA of $14.3 million, with key adjustments | Reconciliation to Adjusted EBITDA (Q3) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :--- | :--- | :--- | | Net income | $3,123 | $4,518 | | Depreciation and amortization | $5,278 | $4,310 | | Income tax (benefit) | ($48) | ($1,951) | | Interest expense | $2,392 | $1,572 | | EBITDA | $10,745 | $8,449 | | Non-cash stock-based compensation | $2,188 | $2,097 | | Acquisition related expenses | $1,225 | $149 | | Other adjustments | $186 | $293 | | Adjusted EBITDA | $14,344 | $10,988 | Free Cash Flow and Outlook Reconciliation Free cash flow for the first nine months of 2024 was $5.8 million, and the full-year outlook reconciles net income to Adjusted EBITDA | Free Cash Flow (Nine Months Ended) | 2024 (Thousands USD) | 2023 (Thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,216 | $44,818 | | Purchases of property, plant and equipment | ($11,482) | ($16,143) | | Proceeds from sale of property, plant and equipment | $91 | $100 | | Free cash flow | $5,825 | $28,775 | | FY 2024 Outlook Reconciliation (Midpoint) | Value (Thousands USD) | | :--- | :--- | | Income from continuing operations | $4,750 | | Depreciation and amortization | $20,450 | | Interest expense | $8,400 | | Taxes | $1,195 | | EBITDA | $34,795 | | Non-cash stock-based compensation and other | $12,705 | | Adjusted EBITDA | $47,500 |