The Shyft Group, the North American leader in specialty vehicle manufacturing, assembly and upfit for the commercial, retail and service specialty vehicle markets, reported operating results for the second quarter ending June 30.
Second Quarter 2024 Financial Highlights (For the second quarter of 2024 compared to the second quarter of 2023):
- Sales of $192.8 million, a decrease of $32.3 million, or 14.4%, from $225.1 million
- Net income of $2.2 million, or $0.06 per share, compared to $4.7 million, or $0.13 per share
- Adjusted EBITDA of $12.5 million, or 6.5% of sales, a decrease of $3.4 million, from $15.9 million, or 7.0% of sales; Results include $5.9 million of EV program related costs versus $7.4 million in the prior year
- Adjusted net income of $5.3 million, or $0.16 per share, compared to $8.7 million, or $0.25 per share in the second quarter of 2023
- Consolidated backlog of $354.4 million as of June 30, down $155.8 million, or 30.5%, compared to $510.2 million as of June 30, 2023.
“We continued to drive our Shyft operating strategy and saw progress in the quarter despite ongoing market softness. The SV team delivered another strong financial quarter, FVS generated sequential margin improvement, and Blue Arc achieved milestones that position us for vehicle delivery later this year,” said John Dunn, president and CEO.
M&A Transaction Update
The Shyft Group acquired Independent Truck Upfitters (ITU), a Midwest-based provider of vocational service body upfit for commercial fleets and government service vehicles, on July 24. ITU sales were approximately $55 million in 2023 with three locations in Iowa, Michigan and Missouri.
The ITU acquisition aligns with Shyft’s specialty vehicles segment growth strategy by expanding its service body product offerings and upfit capabilities. This transaction provides synergies and cross-selling opportunities with current products, adds chassis pools and increases ship-thru capability to support future growth, the company said.
Relevant transaction details include:
- Initial cash consideration of $46 million, subject to customary adjustments, with an $8 million earnout subject to annual business performance over the next two years
- Expected EBITDA multiple less than 6.0x adjusted for tax benefits and synergies; Acquisition is expected to be accretive to EPS in 2025
- Forecasted to deliver ROIC greater than 15% by Year 3 of the transaction
- Funded with cash on hand and borrowings under existing credit facility; Expected net leverage ratio of approximately 2.75x in the third quarter of 2024 and decreasing by year end 2024.
2024 Financial Outlook
“Our team remains focused on delivering our financial commitments for the year while we position the company for future growth. Our balance sheet remains solid, provides flexibility and gives us the confidence to invest in growth initiatives,” said Jon Douyard, chief financial officer.
Full-year 2024 outlook, notwithstanding further changes in the operating environment, is as follows:
- Sales to be in the range of $800 million to $850 million; Assumes no Blue Arc EV revenue
- Adjusted EBITDA of $45 to $50 million, including EV spending of $20 to $25 million
- Net income of $2.6 to $6.9 million, with an income tax rate of approximately 20%
- Earnings per share of $0.07 to $0.20
- Adjusted earnings per share of $0.35 to $0.50
- Capital expenditures of approximately $20 to $25 million
- Free cash flow of $25 to $35 million
Dunn concluded, “Our recently announced strategic actions, including organizational streamlining and the ITU acquisition, have positioned us well for sustainable growth. In addition, we are actively preparing for Blue Arc production in late 2024 and building the commercial pipeline across the business. We believe these catalysts will enable us to deliver meaningful financial improvement in 2025.”