The Shyft (SHYF) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported fourth quarter sales of $201.4 million, slightly down from$ 202.3 million in the prior year [17] - GAAP net loss was $3.4 million or$ 0.10 per share, compared to a net loss of $4.4 million or$ 0.13 per share in the previous year [17] - Adjusted EBITDA for the quarter was $15.9 million or 7.9% of sales, up from$ 2.3 million or 1.1% of sales in the fourth quarter of 2023 [18] - Adjusted net income for the quarter was $5 million, with adjusted EPS increasing to$ 0.15 per share compared to a loss of $900,000 or a negative$ 0.03 per share in the fourth quarter of 2023 [19] Business Line Data and Key Metrics Changes - Fleet Vehicles & Services segment achieved sales of $110.7 million, down 7% compared to$ 119 million a year ago, with adjusted EBITDA improving to $12.1 million from a loss of$ 2.6 million a year ago [19][20] - Specialty Vehicles segment reported fourth quarter sales of $87.5 million, a 5% increase from$ 83.4 million in the prior year, with adjusted EBITDA at $16.6 million or 19% of sales [21][22] Market Data and Key Metrics Changes - Fleet Vehicles & Services backlog was$ 244.8 million at year-end, down 24.7% versus 2023, reflecting continued softness in the parcel market [20] - Specialty Vehicles backlog was $68.5 million at the end of the year, down 18.8% versus 2023, primarily due to a decrease in motorhome orders [22] Company Strategy and Development Direction - The company announced a proposed merger with Aebi Schmidt, aiming to create a competitive leader in the specialty vehicles market with enhanced scale and capabilities [8][28] - The focus remains on driving growth and profitability improvement, with expectations of a modest recovery in parcel and motorhome markets in the second half of 2025 [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term demand for parcel and motorhome vehicles, expecting softness to persist through midyear [24] - The company anticipates year-over-year growth as Blue Arc production is underway, aiming for near breakeven profitability for the full year [25] Other Important Information - The company achieved a solid balance sheet with net leverage less than 2x, allowing flexibility to invest in strategic initiatives [11] - The company successfully shifted EV trucks to FedEx, marking a significant milestone in its commitment to sustainable fleet operations [12] Q&A Session Summary Question: Update on Blue Arc orders and delivery cadence - Management confirmed they are in production for FedEx orders and have vehicles performing well in the field, but additional orders are needed to fulfill the$ 50 million sales target [40][46] Question: Outlook for Fleet Vehicle segment and parcel demand recovery - Management is in close contact with key parcel customers and expects a replacement cycle to kick in, guiding for recovery in the second half of the year [51] Question: Specialty Vehicle order flow and motorhome market weakness - Weakness in the motorhome market is noted, but strong orders are expected in the work truck segment, with anticipation of order increases in the second half of the year [55] Question: Infrastructure growth expectations post-merger - The merger with Aebi Schmidt is expected to accelerate growth, particularly in the infrastructure segment, although specific details on Aebi Schmidt's current performance were not disclosed [66] Question: Sustainability of Fleet Vehicles segment margins - Management indicated that operational efficiencies have driven margin improvements, and they expect to maintain low double-digit margins moving forward [69] Question: Impact of tariffs on pricing and supply chain - The company is actively evaluating tariff scenarios and has implemented strategies to mitigate risks, including potential price increases where necessary [76]