The Shyft (US:SHYF)2022-10-28 00:30Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $286.1 million, up 4.9% year-over-year and up 23.2% sequentially [14] - Net income from continuing operations was $17.3 million compared to $21 million a year ago [14] - Adjusted net income was $18.6 million compared with $22.9 million in the prior year [14] - Diluted earnings per share from continuing operations was $0.49, down from $0.58 in Q3 2021 [14] - Adjusted EBITDA was $27.1 million, down from $33.7 million in the previous year, with a margin decline to 9.5% from 12.4% [14] Business Line Data and Key Metrics Changes - Fleet Vehicle and Services (FBS) revenue was $184.5 million, down from $191.4 million a year ago, with adjusted EBITDA of $24.4 million compared to $36.4 million [15] - Specialty Vehicles (SV) achieved record revenue of $103.9 million, an increase of 27.9% year-over-year, with adjusted EBITDA of $15.6 million, up 730 basis points [16] Market Data and Key Metrics Changes - Backlog was $1 billion, up 22% year-over-year but down sequentially as production improved [6] - FBS backlog was $915 million, up 22% year-over-year [15] - SV backlog increased by 25% year-over-year to $129 million [16] Company Strategy and Development Direction - The company is focused on executing its growth strategy, particularly in the electric vehicle (EV) market with the Blue Arc brand [10][19] - Continued investment in technology, capacity, and talent is emphasized for long-term sustainability [19] - The company aims to maintain pricing discipline while addressing supply chain challenges [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand in end markets, citing a robust backlog and improved chassis availability [6][14] - The company expects a recovery in cash flow performance in Q4 as delivery of finished vehicles improves [18] - Management remains cautious about supply chain challenges but is confident in the ability to meet customer needs [5][26] Other Important Information - The company reported EV spending of $7.7 million in Q3 2022 [14] - A sustainability report was released, highlighting efforts to reduce environmental impact [12] Q&A Session Summary Question: Discussions around ICE and EV vehicles - Management noted that discussions with customers are primarily focused on internal combustion engine (ICE) vehicles, with expectations for increased EV activity once products are in customers' hands [21][22] Question: EV specific costs for next year - Management indicated a step down in EV specific costs to a range of $10 million to $15 million for the following year [23][24] Question: Chassis availability and future expectations - Management expressed cautious optimism about continued improvement in chassis availability, although they do not consider the supply chain issues fully resolved [25][26] Question: Fourth quarter revenue outlook - Management expects a significant revenue increase in Q4, driven by improved chassis flows and USPS volume [27][28] Question: Working capital and cash flow expectations - Management anticipates a reversal in working capital primarily from converting finished vehicles awaiting components into cash [28][30] Question: Order flow and backlog constraints - Management acknowledged that lead times are a constraint on order flow but remains confident in demand for 2023 [33][34] Question: Outlook for the motorhome business - Management is confident in the motorhome business despite potential downturns in smaller categories, citing record revenue in Q3 [40] Question: USPS truck body contract and pass-through revenue - Management confirmed a $40 million contract for USPS, with some pass-through revenue expected in Q4 and into 2023 [44] Question: Specialty vehicle margins - Management indicated strong margins in specialty vehicles but cautioned against modeling them at 15% on a long-term basis [45] Question: Fleet vehicle mix and pricing - Management noted favorable pricing and mix within the fleet vehicle segment, with some headwinds from product mix [46]