The Shyft (SHYF) - 2023 Q4 - Annual Results

Overview of Q4 and Full-Year 2023 Performance 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 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] - 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] Business Segment Performance 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) 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][25] Specialty Vehicles (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][25] Backlog Analysis 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 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 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] - The Adjusted EBITDA guidance includes planned EV spending of $20 million to $25 million[5] - Management expects the challenging demand environment for parcel and motorhome vehicles to continue in the first half of 2024[4] Consolidated Financial Statements 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 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 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 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] Non-GAAP Financial Measures 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 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 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 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 |