The Shyft (US:SHYF)2023-04-27 12:00Financial Performance - Sales for Q1 2023 were $243.4 million, a 17.7% increase from $206.9 million in Q1 2022[61] - Gross margin improved to 17.6% in Q1 2023, up from 12.5% in Q1 2022[61] - Operating income for Q1 2023 was $3.7 million, compared to a loss of $5.5 million in Q1 2022[61] - Net income for Q1 2023 was $1.7 million, a significant improvement from a loss of $3.9 million in Q1 2022[72] - Adjusted EBITDA for Q1 2023 was $10.8 million, compared to a loss of $0.6 million in Q1 2022, reflecting an increase of $11.4 million[73] - Sales in the Fleet Vehicles and Services (FVS) segment increased by 41.5% to $159.4 million in Q1 2023, compared to $112.7 million in Q1 2022[85] - Adjusted EBITDA for the FVS segment rose to $12.5 million in Q1 2023, compared to a loss of $0.9 million in Q1 2022, reflecting a $13.4 million improvement[86] - Sales in the Specialty Vehicles (SV) segment decreased by 7.4% to $87.2 million in Q1 2023, down from $94.2 million in Q1 2022[88] - Adjusted EBITDA for the SV segment increased by 37.2% to $13.9 million in Q1 2023, up from $10.1 million in Q1 2022[89] Order Backlog - Order backlog decreased to $667.4 million as of March 31, 2023, down 47.6% from $1,272.7 million a year earlier[75] - The Fleet Vehicles and Services backlog decreased by $563.8 million, or 49.1%, due to increased sales volume and returning demand[76] Cash Flow and Investments - Cash and cash equivalents decreased by $4.2 million to $7.4 million as of March 31, 2023, compared to the end of 2022[90] - Cash generated from operating activities was $5.9 million in Q1 2023, a $33.7 million increase from cash used in operating activities in Q1 2022[91] - The company used $4.9 million in investing activities in Q1 2023, a decrease from $5.5 million in Q1 2022[92] - The company repurchased 348,705 shares for $8.8 million in Q1 2023 as part of a $250 million stock buyback program[97] Debt and Interest Rates - The company had $65.0 million in debt outstanding under its revolving credit facility as of March 31, 2023, with an interest rate of 5.66%[101] - As of March 31, 2023, the company had $65.0 million in outstanding debt under its revolving credit facility, with a potential increase of $0.7 million in annual interest expense for a 100 basis points rise in interest rates[101] - The company believes it has sufficient financial resources to accommodate potential increases in interest rates due to market conditions[101] - The transition from LIBOR to the Secured Overnight Funding Rate (SOFR) is being managed, with no expected material increase in interest expense when LIBOR ceases to exist[102] Commodity Price Risks - The company is exposed to commodity price fluctuations, particularly in steel and aluminum, and does not typically use derivative instruments to manage these risks[103] - The company actively manages its material supply sourcing to mitigate risks associated with commodity cost fluctuations[103] Research and Development - Research and development expenses increased to $6.9 million in Q1 2023, driven by electric vehicle development initiatives[68] - The company launched Blue Arc™ Electric Vehicle Solutions, including a commercial-grade EV chassis and an all-electric delivery van[61] Internal Controls and Reporting - The company has implemented a new enterprise resource planning system in February 2023, replacing multiple internal controls with new or modified controls[108] - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2023[109] - The management evaluated the effectiveness of disclosure controls and procedures as of March 31, 2023, concluding they were effective[107] - The company acknowledges inherent limitations in its internal control system, which may not prevent all misstatements[110] - The company does not anticipate any material changes in its primary market risk exposure in the near term[104]