The Shyft (US:SHYF)2024-02-22 16:31Financial Data and Key Metrics Changes - For the full year 2023, the company reported revenue of $872 million and adjusted EBITDA of $40 million, which was in line with expectations. Excluding EV expenses, adjusted EBITDA was $73 million, or 8.3% of sales [11][12] - In Q4 2023, revenue was $202.3 million, down 33% from $302 million in the prior year. The net loss was $4.4 million, or a loss of $0.13 per share, compared to net income of $17.8 million, or $0.50 per share, in the previous year [61][12] - Adjusted EBITDA for Q4 was $2.3 million, or 1.1% of sales, down from $30.7 million, or 10.2% of sales in Q4 2022 [12][11] Business Line Data and Key Metrics Changes - Specialty Vehicles (SV) achieved a strong year with a 20% adjusted EBITDA margin, reflecting solid growth and operational improvements despite market weakness in motorhome chassis [13][95] - Fleet Vehicles and Services (FVS) reported sales of $119 million in Q4, down 44.1% from $212.9 million a year ago, impacted by softness in last-mile delivery markets [96] - The FVS backlog was $325 million at the end of the year, down 15% from the prior quarter [76] Market Data and Key Metrics Changes - The company anticipates continued softness in demand for both parcel and motorhome volume through mid-2024, reflecting ongoing challenges in the operating environment [57][88] - The company noted that order activity improved in the second half of 2023 but remains relatively soft, particularly in the FES side of the business [18][19] Company Strategy and Development Direction - The company is focusing on operational rigor and financial growth, with an emphasis on team alignment and cross-selling opportunities [68][70] - The Blue Arc EV program is a strategic priority, with plans for production to start in late 2024 after resolving battery quality issues [92][91] - The company is exploring M&A opportunities to expand its scale while maintaining focus on core business performance [132][133] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious view on near-term demand, expecting softness to persist through mid-2024, while emphasizing the importance of cash generation and working capital management [57][88] - The company is committed to improving performance and leveraging internal strengths to navigate the current challenges [36][88] Other Important Information - The company generated approximately $100 million of free cash flow over the last four years, despite challenging market conditions [35] - The adjusted EPS for Q1 is expected to be in the range of $0.28 to $0.51 per share, with free cash flow projected at $25 million to $35 million [98] Q&A Session Summary Question: What is the outlook for demand in the first half of the year? - Management expects demand softness to continue through the first half of the year, consistent with previous discussions [18] Question: Can you provide an update on chassis supply for vocational and specialty vehicles? - Chassis supply is improving, and the company is monitoring customer engagement closely [23][42] Question: Is there a desire to expand through M&A given the strong free cash flow and low debt? - The company is considering M&A opportunities but emphasizes the need to focus on core business performance first [24][132] Question: What are the expectations for adjusted EBITDA in Q1 and the full year? - Adjusted EBITDA for Q1 is anticipated to be approximately breakeven, with a step-up expected in Q2 and improved performance in the second half of the year [102][51] Question: What challenges are being faced with the Blue Arc program? - The primary challenge has been battery quality issues, but there is enthusiasm for the vehicle's potential once these issues are resolved [111][112]