shyf20210804_8k.htm
false 0000743238 0000743238 2021-08-05 2021-08-05
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported): August 5, 2021
 
THE SHYFT GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
 
Michigan
(State or Other Jurisdiction
of Incorporation)
001-33582
(Commission File No.)
38-2078923
(IRS Employer
Identification No.)
     
 
41280 Bridge Street, Novi, Michigan
(Address of Principal Executive Offices)
48375
(Zip Code)
 
517-543-6400
(Registrant's Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Section Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
SHYF
NASDAQ Global Select Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
Item 2.02     Results of Operations and Financial Condition
 
On August 5, 2021, The Shyft Group, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2021, along with an accompanying investor presentation. Copies of the press release and investor presentation are attached to this Current Report as Exhibits 99.1 and 99.2.
 
The information in this Item 2.02 and the attached Exhibits 99.1 and 99.2 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01     Financial Statements and Exhibits
 
(d) Exhibits
 
99.1
 
99.2
 
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
THE SHYFT GROUP, INC.
 
       
       
Dated: August 5, 2021
By:
/s/ Jonathan C. Douyard
 
   
Jonathan C. Douyard
 
   
Chief Financial Officer
 
 
 
 
 
ex_271892.htm

 

Exhibit 99.1

 

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The Shyft Group Reports Second Quarter Results

 

Achieves record sales of $244 million and doubling of backlog to all-time high of $751 million; Reports EPS of $0.44 and adjusted EPS of $0.53

 

NOVI, Mich., August 5, 2021 The Shyft Group, Inc. (NASDAQ: SHYF) (“Shyft” or the “Company”), the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, today reported operating results for the second quarter ending June 30, 2021.

 

Second Quarter 2021 Highlights from Continuing Operations1

 

For the second quarter of 2021 compared to the second quarter of 2020:

 

Sales of $244.0 million, an increase of $120.0 million, or 96.8%, from $124.0 million, reflecting increased sales in all product categories.  

 

Gross profit margin of 21.3% of sales, a 190 basis point improvement from 19.4% of sales, driven by sales volume and actions taken to improve overall operating efficiency.

 

Income from continuing operations of $17.0 million, or $0.44 per share, compared to a loss of ($1.1) million, or ($0.03) per share.

 

Adjusted EBITDA of $28.6 million, or 11.7% of sales, an increase of $19.2 million, or 205.6%, from $9.4 million, or 7.5% of sales.

 

Adjusted net income of $19.0 million, or $0.53 per share, an increase of $14.4 million, or 316.1%, from $4.6 million, or $0.13 per share.

 

Consolidated backlog at June 30, 2021, was a record $751.4 million, up $413.9 million, or 122.6%, compared to $337.5 million at June 30, 2020.

 

“The Shyft Group’s momentum continued to build in the second quarter, producing results that exceeded our expectations, including doubling our sales and tripling adjusted EBITDA over the prior year,” said Daryl Adams, President and Chief Executive Officer. “Our strength in quality, innovation, and customer-driven product development, combined with rising demand in our markets, led to record backlog across all segments. While the environment remains challenging, our team continues to outperform and delivered our highest quarterly sales on record. We continue to see strong demand in parcel delivery and luxury motor coach, as well as accelerating demand in service bodies, which further cement our plans toward continued growth in the second half of the year.”

 

 

 


1 The Company divested its Emergency Response (ER) business effective February 1, 2020.  Accordingly, the financial results of ER have been classified as discontinued operations for all periods presented. Unless otherwise noted, financial results presented are based on continuing operations

 

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Fleet Vehicles and Services (FVS)

 

FVS segment sales were $168.3 million, an increase of 73.1% from $97.2 million, mainly due to strong sales across all product categories, including strong demand for last-mile delivery vehicles and growth in the recently introduced Velocity™ product line.

 

Adjusted EBITDA increased $14.6 million to $28.3 million, or 16.8% of sales, from $13.7 million, or 14.0% of sales, a year ago. The increase was primarily due to higher volume and productivity driven by capital investments.

 

The segment backlog at June 30, 2021, totaled a record $660.9 million, up 130.3%, compared to $287.0 million at June 30, 2020. On a sequential basis, backlog increased $71.3 million, or 12.1% from $589.6 million in the first quarter of 2021. This increase reflects strong demand for delivery vehicles, including the Velocity product line.

 

Specialty Vehicles (SV)

 

SV segment sales were $75.7 million, an increase of 183.2% from $26.7 million, led by luxury motor coach chassis sales and accelerating growth in service bodies.

 

Adjusted EBITDA increased $7.4 million to $8.6 million, or 11.4% of sales, from $1.2 million, or 4.6% of sales, a year ago. The increase was primarily due to higher sales volume.

 

The segment backlog at June 30, 2021, totaled $90.5 million, up 79.1% compared to $50.5 million at June 30, 2020. On a sequential basis, backlog increased $13.6 million, or 17.7%, from $76.9 million in the first quarter of 2021. The increase reflects increased orders across all product lines.

 

Update 2021 Outlook

 

“In addition to our strong financial performance during the quarter, we continued to make investments that will drive productivity improvements and position us for future growth,” said Jon Douyard, Chief Financial Officer. “Our current liquidity position remains healthy at $120.0 million, and our leverage ratio stands at just 0.4 times adjusted EBITDA, leaving ample room for further strategic investments. While our strong order intake resulted in record backlog, we continue to manage through a challenging supply environment. Despite this headwind, we are confident raising our guidance for the year to reflect the strong first half performance and our team’s ability to meet customer needs through the second half.”

 

The Company expects full-year 2021 results from continuing operations to be as follows:

 

Revenue to be in the range of $900 to $950 million

Net income of $55 to $62 million

Adjusted EBITDA of $100 to $110 million

Effective tax rate of approximately 26%

Earnings per share of $1.52 - $1.72

Adjusted earnings per share of $1.75 - $1.95

 

“Our achievements during the first half of the year highlight our proven business strategy and our team’s capacity to execute.  This exceptional team continues to bring aptitude and energy to the organization and operate at the highest level, both from a day-to-day production and support standpoint, as well as in the areas of product research and development.  With the strength of demand in our core markets and the tremendous opportunities inherent in our new products coming to market – such as the Velocity and our recently announced all-electric battery powered EV chassis – we have never been more excited about the future of our Company,” concluded Adams.

 

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Conference Call, Webcast, Investor Presentation and Investor Information

The Shyft Group will host a conference call for analysts and portfolio managers at 10 a.m. EDT today to discuss these results and current business trends. The conference call and webcast will be available via:

 

Webcast: www.TheShyftGroup.com/investor-relations/webcasts

Conference Call: 1-877-317-6789 (domestic) or 412-317-6789 (international); passcode: 10155593

 

For more information about The Shyft Group, please visit www.TheShyftGroup.com.

 

About The Shyft Group

The Shyft Group is the North American leader in specialty vehicle manufacturing, assembly, and upfit for the commercial, retail, and service specialty vehicle markets. Our customers include first-to-last mile delivery companies across vocations, federal, state, and local government entities; the trades; and utility and infrastructure segments. The Shyft Group is organized into two core business units: Shyft Fleet Vehicles & Services™ and Shyft Specialty Vehicles™. Today, its family of brands include Utilimaster®, Royal Truck Body™, DuraMag® and Magnum®, Strobes-R-Us™, Spartan RV Chassis™, Builtmore Contract Manufacturing™, and corresponding aftermarket provisions. The Shyft Group and its go-to-market brands are well known in their respective industries for quality, durability, and first-to-market innovation. The Company employs approximately 2,900 associates across campuses, and operates facilities in Michigan, Indiana, Maine, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. The Company reported sales from continuing operations of $676 million in 2020. Learn more about The Shyft Group at www.TheShyftGroup.com.

 

This release contains several forward-looking statements that are not historical facts, including statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations. These statements can be identified by words such as "believe," "expect," "intend," "potential," "future," "may," "will," "should," and similar expressions regarding future expectations. Furthermore, statements contained in this document relating to the global outbreak of the novel coronavirus disease (COVID-19), the impact of which remains inherently uncertain on our financial results, are forward-looking statements. These forward-looking statements involve various known and unknown risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, and likelihood. Therefore, actual performance and results may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could contribute to these differences include future developments relating to the COVID-19 pandemic, including governmental responses, supply chain shortages, and potential labor issues; operational and other complications that may arise affecting the implementation of our plans and business objectives; continued pressures caused by economic conditions including weaknesses resulting from the COVID-19 pandemic; challenges that may arise in connection with the integration of new businesses or assets we acquire or the disposition of assets; restructuring of our operations, and/or our expansion into new geographic markets; issues unique to government contracting, such as competitive bidding processes, qualification requirements, and delays or changes in funding; disruptions within our dealer network; changes in our relationships with major customers, suppliers, or other business partners; changes in the demand or supply of products within our markets or raw materials needed to manufacture those products; and changes in laws and regulations affecting our business. Other factors that could affect outcomes are set forth in our Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website. All forward-looking statements in this release are qualified by this paragraph. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.

 

CONTACT:

 

Juris Pagrabs

Group Treasurer

The Shyft Group

 (517) 997-3862

 

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The Shyft Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

   

June 30,

   

December 31,

 
   

2021

   

2020

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 4,178     $ 20,995  

Accounts receivable, less allowance of $136 and $116

    101,879       64,695  

Contract assets

    15,370       9,414  

Inventories, net

    68,420       46,428  

Other receivables - chassis pool agreements

    13,983       6,503  

Other current assets

    8,859       8,172  

Total current assets

    212,689       156,207  
                 

Property, plant and equipment, net

    54,335       45,734  

Right of use assets operating leases

    41,905       43,430  

Goodwill

    48,677       49,481  

Intangible assets, net

    54,684       56,386  

Other assets

    1,162       2,052  

Net deferred tax asset

    5,625       5,759  

TOTAL ASSETS

  $ 419,077     $ 359,049  

LIABILITIES AND SHAREHOLDERS' EQUITY

               

Current liabilities:

               

Accounts payable

  $ 74,749     $ 47,487  

Accrued warranty

    6,623       5,633  

Accrued compensation and related taxes

    17,799       17,134  

Deposits from customers

    377       756  

Operating lease liability

    7,495       7,508  

Other current liabilities and accrued expenses

    9,774       8,121  

Short-term debt - chassis pool agreements

    13,983       6,503  

Current portion of long-term debt

    253       221  

Total current liabilities

    131,053       93,363  
                 

Other non-current liabilities

    4,628       5,447  

Long-term operating lease liability

    35,182       36,662  

Long-term debt, less current portion

    23,198       23,418  

Total liabilities

    194,061       158,890  

Shareholders' equity:

               

Preferred stock; 2,000 shares authorized (none issued)

    -       -  

Common stock; 80,000 shares authorized; 35,346 and 35,344 outstanding

    92,309       91,044  

Retained earnings

    131,853       109,286  

Total The Shyft Group, Inc. shareholders' equity

    224,162       200,330  

Non-controlling interest

    854       (171 )

Total shareholders' equity

    225,016       200,159  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

  $ 419,077     $ 359,049  

 

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The Shyft Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2021

   

2020

   

2021

   

2020

 
                                 

Sales

  $ 243,982     $ 123,970     $ 441,870     $ 300,918  

Cost of products sold

    192,076       99,965       349,978       240,612  

Gross profit

    51,906       24,005       91,892       60,306  
                                 

Operating expenses:

                               

Research and development

    940       1,130       1,722       2,672  

Selling, general and administrative

    28,740       24,610       53,277       46,009  

Total operating expenses

    29,680       25,740       54,999       48,681  
                                 

Operating income (loss)

    22,226       (1,735

)

    36,893       11,625  
                                 

Other income (expense):

                               

Interest expense

    (227

)

    (460

)

    (57

)

    (1,191

)

Interest and other income

    506       515       689       5  

Total other income (expense)

    279       55       632       (1,186

)

                                 

Income (loss) from continuing operations before income taxes

    22,505       (1,680

)

    37,525       10,439  

Income tax expense (benefit)

    5,552       (546

)

    9,042       (169

)

Income (loss) from continuing operations

    16,953       (1,134

)

    28,483       10,608  

Income (loss) from discontinued operations, net of income taxes

    -       (157

)

    81       (4,021

)

Net income (loss)

    16,953       (1,291

)

    28,564       6,587  

Less: net income attributable to non-controlling interest

    990       70       1,025       137  
                                 

Net income (loss) attributable to The Shyft Group Inc.

  $ 15,963     $ (1,361

)

  $ 27,539     $ 6,450  
                                 

Basic earnings (loss) per share

                               

Continuing operations

  $ 0.45     $ (0.03

)

  $ 0.78     $ 0.29  

Discontinued operations

    -       (0.01

)

    -       (0.11

)

Basic earnings (loss) per share

  $ 0.45     $ (0.04

)

  $ 0.78     $ 0.18  
                                 

Diluted earnings (loss) per share

                               

Continuing operations

  $ 0.44     $ (0.03

)

  $ 0.76     $ 0.29  

Discontinued operations

    -       (0.01

)

    -       (0.11

)

Diluted earnings (loss) per share

  $ 0.44     $ (0.04

)

  $ 0.76     $ 0.18  
                                 

Basic weighted average common shares outstanding

    35,333       35,512       35,322       35,456  

Diluted weighted average common shares outstanding

    36,190       35,512       36,191       35,693  

 

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The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)

 

Three Months Ended June 30, 2021 (in thousands of dollars)

 
                                 
   

Business Segments       

         
   

Fleet Vehicles &

Services

   

Specialty

Vehicles

   

Other

   

Consolidated

 

Fleet vehicle sales

  $ 159,826     $ -     $ -     $ 159,826  

Motorhome chassis sales

    -       40,891       -       40,891  

Other specialty chassis and vehicles

    -       29,415       -       29,415  

Aftermarket parts and assemblies

    8,447       5,403       -       13,850  

Total Sales

  $ 168,273     $ 75,709     $ -     $ 243,982  
                                 

Adjusted EBITDA

  $ 28,287     $ 8,637     $ (8,354 )   $ 28,570  

 

 

 

The Shyft Group, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

(Unaudited)

 

Three Months Ended June 30, 2020 (in thousands of dollars)

 
                                 
   

Business Segments

         
   

Fleet Vehicles &

Services

   

Specialty

Vehicles

   

Other

   

Consolidated

 

Fleet vehicle sales

  $ 90,762     $ -     $ -     $ 90,762  

Motorhome chassis sales

    -       14,048       -       14,048  

Other specialty chassis and vehicles

    -       10,929       -       10,929  

Aftermarket parts and assemblies

    6,476       1,755       -       8,231  

Total Sales

  $ 97,238     $ 26,732     $ -     $ 123,970  
                                 

Adjusted EBITDA

  $ 13,652     $ 1,219     $ (5,521 )   $ 9,350  

 

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Sales and Other Financial Information by Business Segment

(Unaudited)

 

Period End Backlog (amounts in thousands of dollars)

 
   

Jun. 30, 2021

   

Mar. 31, 2021

   

Dec. 31, 2020

   

Sept. 30, 2020

   

Jun. 30, 2020

 

Fleet Vehicles and Services*

  $ 660,908     $ 589,604     $ 427,338     $ 228,870     $ 286,955  

Motorhome Chassis*

    56,294       42,742       31,580       40,387       38,804  

Other Vehicles

    33,840       33,716       19,431       11,036       11,621  

Aftermarket Parts and Accessories

    382       438       302       333       115  

Total Specialty Vehicles

    90,516       76,896       51,313       51,756       50,540  
                                         

Total Backlog

  $ 751,424     $ 666,500     $ 478,651     $ 280,626     $ 337,495  

 

* Anticipated time to fill backlog orders at June 30, 2021; five - twelve months for Fleet Vehicles and Services; less than three months for Specialty Vehicles.

 

Reconciliation of Non-GAAP Financial Measures

This release presents Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted net income, and adjusted earnings per share, each of which is a non-GAAP financial measure. These non-GAAP measures are calculated by excluding items that we believe to be infrequent or not indicative of our underlying operating performance, as well as certain non-cash expenses. We define Adjusted EBITDA as income from continuing operations before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments, non-cash stock-based compensation expenses, and other gains and losses not reflective of our ongoing operations.

 

We present the non-GAAP measure Adjusted EBITDA because we consider it to be an important supplemental measure of our performance. The presentation of Adjusted EBITDA enables investors to better understand our operations by removing items that we believe are not representative of our continuing operations and may distort our longer-term operating trends. We believe this measure to be useful to improve the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not indicative of our continuing operating performance. We believe that presenting this non-GAAP measure is useful to investors because it permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our historical performance. We believe that the presentation of this non-GAAP measure, when considered together with the corresponding GAAP financial measures and the reconciliations to that measure, provides investors with additional understanding of the factors and trends affecting our business than could be obtained in the absence of this disclosure.

 

Our management uses Adjusted EBITDA to evaluate the performance of and allocate resources to our segments. Adjusted EBITDA is also used, along with other financial and non-financial measures, for purposes of determining annual incentive compensation for our management team and long-term incentive compensation for certain members of our management team.

 

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Financial Summary

(In thousands, except per share data)

(Unaudited)

 

   

Three Months Ended June 30,

 

The Shyft Group, Inc.

 

2021

   

% of

sales

   

2020

   

% of

sales

 

Income (loss) from continuing operations

  $ 16,953       6.9 %   $ (1,134 )     (0.9% )

Net (income) loss attributable to non-controlling interest

    (990 )             (70 )        

Add (subtract):

                               

Restructuring and other related charges

    505               562          

Acquisition related expenses and adjustments

    71               179          

Non-cash stock-based compensation expense

    2,850               2,126          

Loss from write-off of construction in process

    -               2,430          

Accelerated depreciation of property, plant and equipment

    -               2,330          

Loss from liquidation of JV

    643               -          

Tax effect of adjustments

    (998 )             (1,849 )        

Adjusted net income

  $ 19,034       7.8 %   $ 4,574       3.7 %
                                 

Income (loss) from continuing operations

  $ 16,953       6.9 %   $ (1,134 )     (0.9% )

Net (income) loss attributable to non-controlling interest

    (990 )             (70 )        

Add (subtract):

                               

Depreciation and amortization

    2,759               5,343          

Taxes on income

    5,552               (546 )        

Interest expense

    227               460          

EBITDA

  $ 24,501       10.0 %   $ 4,053       3.3 %
                                 

Add (subtract):

                               

Restructuring and other related charges

    505               562          

Acquisition related expenses and adjustments

    71               179          

Non-cash stock-based compensation expense

    2,850               2,126          

Loss from liquidation of JV

    643               -          

Loss from write-off of construction in process

    -               2,430          

Adjusted EBITDA

  $ 28,570       11.7 %   $ 9,350       7.5 %
                                 

Diluted net earnings per share

  $ 0.44             $ (0.03 )        

Add (subtract):

                               

Restructuring and other related charges

    -               0.02          

Acquisition related expenses and adjustments

    -               0.01          

Non-cash stock-based compensation expense

    0.08               0.06          

Loss from liquidation of JV

    0.01               -          

Loss from write-off of construction in process

    -               0.06          

Accelerated depreciation of property, plant and equipment

    -               0.06          

Tax effect of adjustments

    -               (0.05 )        

Adjusted diluted net earnings per share

  $ 0.53             $ 0.13          

 

https://cdn.kscope.io/eb0e4c6a27bde30ae0ecd3253f705089-footer.jpg

 

 

 

Financial Summary (Non-GAAP)

Consolidated

(In thousands, except per share data)

(Unaudited)

 

   

Forecast

 
   

Twelve Months Ended December 31, 2021

 

The Shyft Group, Inc.

 

Low

   

Mid

   

High

 

Income from continuing operations

  $ 54,728     $ 58,723     $ 62,028  

Add:

                       

Depreciation and amortization

    13,462       13,462       13,462  

Interest expense

    1,295       1,295       1,295  

Taxes

    19,093       20,098       21,793  

EBITDA

  $ 88,578     $ 93,578     $ 98,578  

Add (subtract):

                       

Non-cash stock-based compensation and other charges

    11,422       11,422       11,422  

Adjusted EBITDA

  $ 100,000     $ 105,000     $ 110,000  
                         

Earnings per share

  $ 1.52     $ 1.62     $ 1.72  

Add:

                       

Non-cash stock-based compensation and other charges

    0.32       0.32       0.32  

Less tax effect of adjustments

    (0.09 )     (0.09 )     (0.09 )

Adjusted earnings per share

  $ 1.75     $ 1.85     $ 1.95  

 

https://cdn.kscope.io/eb0e4c6a27bde30ae0ecd3253f705089-footer.jpg
 

 

 
Image Exhibit

Exhibit 99.2

 

 

 

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