Earnings call transcript: Shyft Group Q1 2025 earnings beat forecasts

Shyft Group Inc. reported better-than-expected earnings for the first quarter of 2025, with an adjusted earnings per share (EPS) of $0.07, surpassing the forecasted loss of $0.10 per share. The company also posted a revenue of $204.6 million, exceeding the anticipated $198.96 million. Following the announcement, Shyft’s stock rose 9.04% in pre-market trading, reflecting investor optimism. According to InvestingPro data, the stock has experienced significant volatility, trading near its 52-week low of $6.82, with analysts maintaining a consensus buy recommendation and a target suggesting potential upside.

Key Takeaways

• Shyft Group’s Q1 2025 EPS of $0.07 beat the forecast by $0.17.
• Revenue increased 3% year-over-year to $204.6 million.
• The stock surged 9.04% in pre-market trading following the earnings report.
• The company unveiled two new vehicle models, focusing on electric and service trucks.
• Shyft is mitigating tariff risks through supply chain strategies.

Company Performance

Shyft Group demonstrated solid performance in Q1 2025, with a 3% year-over-year increase in sales, reaching $204.6 million. Despite a GAAP net loss of $1.4 million, the company achieved an adjusted net income of $2.4 million. The adjusted EBITDA doubled from the previous year to $12.3 million, representing 6% of sales. Shyft’s strategic focus on expanding its electric vehicle and service truck portfolio contributed to its improved financial results. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 1.63, and has impressively maintained dividend payments for 38 consecutive years. Get access to 10+ additional ProTips and comprehensive financial metrics with InvestingPro.

Financial Highlights

• Revenue: $204.6 million, up 3% year-over-year
• Adjusted EPS: $0.07, compared to a forecast of -$0.10
• Adjusted EBITDA: $12.3 million, doubled from the previous year
• GAAP net loss: $1.4 million, or -$0.04 per share

Earnings vs. Forecast

Shyft Group’s Q1 2025 results exceeded expectations, with an EPS of $0.07 compared to the forecasted loss of $0.10 per share. The revenue of $204.6 million also surpassed the projected $198.96 million. This earnings surprise reflects a significant turnaround from previous quarters, highlighting the company’s operational improvements and strategic initiatives.

Market Reaction

Following the earnings announcement, Shyft Group’s stock price increased by 9.04% in pre-market trading, reaching $7.96. This rise reflects positive investor sentiment driven by the company’s earnings beat and optimistic outlook. The stock remains within its 52-week range, with a high of $17.56 and a low of $6.82. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels, despite experiencing a 37% decline year-to-date. The company’s beta of 1.83 indicates higher volatility compared to the broader market.

Outlook & Guidance

Shyft Group reaffirmed its 2025 sales outlook of $870-$970 million and adjusted EBITDA guidance of $62-$72 million. The company expects approximately 70% of its EBITDA to materialize in the second half of the year. Additionally, Shyft is projecting free cash flow of $25-$30 million for 2025. The proposed merger with Abbe Schmidt aims to enhance Shyft’s global presence in the specialty vehicle market.

Executive Commentary

"We had a strong start to the year delivering improved financial performance," said John Dunn, CEO of Shyft Group. He emphasized the company’s commitment to building on its 50-year legacy of engineering excellence. CFO Scott Ohalek added, "We remain committed to delivering our financial outlook for the year," underscoring confidence in meeting the company’s targets.

Risks and Challenges

• Supply chain disruptions: Shyft is actively managing tariff risks through pricing strategies and sourcing alternatives.
• Market softness: Continued weakness in the parcel and motorhome markets may impact future sales.
• Economic conditions: Broader macroeconomic pressures could affect demand for Shyft’s products.

Q&A

During the Q&A session, analysts inquired about the completion of the FedEx order, to which Shyft confirmed it would be fulfilled in Q2. Questions also focused on tariff mitigation strategies and the anticipated recovery in the parcel market, with Shyft noting increased quoting activity and expected improvements in Q3-Q4.

Full transcript - Shyft Group Inc (SHYF) Q1 2025:

Conference Operator: Good morning and welcome to the Shift Group First Quarter twenty twenty five Conference Call and Webcast. All participants will be in a listen only mode until the question and answer session of the conference call. As a reminder, this call is being recorded. I would now like to introduce Randy Wilson, Vice President of Investor Relations and Treasury for The Shift Group. Please go ahead.

Randy Wilson, Vice President of Investor Relations and Treasury, Shift Group: Good morning and thank you for joining us. Today, you will hear from John Dunn, President and Chief Executive Officer and Scott Ohalek, Interim Chief Financial Officer. Their prepared remarks will be followed by a question and answer session. Before we begin, please turn to Slide two and three of the presentation for our Safe Harbor statement. Today’s conference call contains forward looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied.

Primary risks that management believes could materially affect our results are identified in our Forms 10 ks and 10 Q filed with the SEC. We will be discussing non GAAP information and performance measures, which we believe are useful in evaluating the company’s operating performance. Reconciliations for these non GAAP measures can be found in the conference call materials. We’ll begin with a business overview from John, followed by Scott’s review of first quarter financial results and our 2025 outlook. John will then provide an update on our proposed merger with Abbe Schmidt.

We’ll then open the line for Q and A. Please turn to Slide four and I’ll turn it over to John who will begin today’s prepared remarks.

John Dunn, President and Chief Executive Officer, Shift Group: Thank you, Randy and good morning. Welcome to our Q1 twenty twenty five earnings call. We appreciate your interest in The Shift Group and this opportunity to share our progress and outlook with you today. We had a strong start to the year delivering improved financial performance while continuing to execute our strategy and growth initiatives. We delivered meaningful adjusted EBITDA growth for the company with margins of 6% which doubled year over year.

I would like to personally thank Shift’s team members for these results which exceeded expectations. We are very excited to update you on BlueArk where we have completed a majority of our first contract for FedEx in the quarter and feedback has been positive with trucks actively deployed on the road. We are working to secure several opportunities for BlueArk trucks across end markets and geographies. BlueArk is an important part of our product portfolio as customers continue to adopt EVs. Fleet vehicles and services expanded margins up two ninety basis points year over year by improving operational efficiency.

The FES team’s dedication to quality, product innovation and customer centricity positions us well to gain market share as demand increases. We have seen increased walk in van quoting activity which is consistent with our expectations for recovery in the second half of the year. Specialty vehicles continued to perform well with another solid quarter that resulted in high teens margin. Service truck order intake in the quarter was robust and the sales team is aggressively pursuing new leads to solidify our leading industry position. At the recent NTA Work Truck Show, our service truck portfolio displayed the full range of offerings and capabilities across our leading brands.

Our sales team demonstrated our bodybuilding capabilities from Duramax and Royal to our upfit capabilities with ITU highlighting our position as a vertically integrated partner capable of meeting diverse and evolving industry needs. We are excited about our future growth opportunities with the service truck business as we continue to expand our portfolio of offerings. Finally, we continue to maintain a solid balance sheet with a net leverage ratio less than two times allowing us the flexibility to invest in strategic initiatives that support our growth and drive long term success. Overall, we remain confident in our team’s ability to execute in these dynamic times, deliver for our customers and achieve our financial targets. Turning to Slide five, our operating framework is designed to drive sustainable financial growth and deliver long term shareholder value.

A key element to that framework is our customer centric approach, innovating with purpose to solve real world challenges and help our customers succeed. That approach has brought to life at NTA Work Truck Week, where we saw increased customer engagement, unveiled new product innovations and marked a major milestone, the fiftieth anniversary of the Shift Group. Since 1975, we have evolved alongside our customers delivering purpose built solutions that perform in the most demanding environments and reinforcing the trust that drives our business forward. Our booth saw record engagement and we received strong customer feedback. At the show, we unveiled two new purpose built vehicles shaped by our work driven design approach developed in close partnership with fleet operators.

The Utilimaster, TradeMaster service body, a reimagined version of a trusted platform which delivers enhanced durability, smart storage and integrated safety features. Designed to enhance productivity in the field, it offers reinforced construction for long term strength, spacious cargo areas and easily accessible exterior compartments for efficient tool and equipment storage. A wide rear door improves material handling while integrated lighting supports visibility across varied working conditions. Production is scheduled to begin later this year with multiple configurations tailored to meet the needs of today’s diversified fleet operations. The marketplace drive freight truck, a brand new addition to our lineup was engineered to maximize payload capacity.

It weighs 900 pounds less than comparable models, improving efficiency without sacrificing durability or functionality. Features include a seamless roll up rear door for streamlined loading and unloading, an optimized cargo layout and a heavy duty liftgate designed for last mile and logistics applications. It is a strong offering for both ICE and electrified fleets. Both products reinforce our commitment to customer led innovation, ensuring our solutions are designed to solve real world challenges across service and delivery applications. These launches combined with the momentum we saw at NTA highlight how we are executing our strategy, strengthening customer relationships, expanding our portfolio and reinforcing our position in the market.

We are building on fifty years of engineering excellence with a clear focus on where our customers are headed and we are delivering the solutions to help them get there. With that, I’ll turn it over to Scott for a detailed review of our financial results and 2025 outlook. Thank you, John. Please turn to Slide seven and I will start with an overview of our first quarter financial results.

Scott Ohalek, Interim Chief Financial Officer, Shift Group: Overall, we delivered financial results for the quarter that exceeded our prior expectations. We saw sustained operational improvements, benefits from overall cost management and incremental sales that were originally planned for the second quarter. Sales for the quarter were $204,600,000 up 3% from $197,900,000 in the prior year. BlueArc delivered $26,300,000 of sales in the quarter as we executed on the FedEx order for 150 vehicles. Our GAAP net loss was $1,400,000 or negative zero four dollars per share compared to a net loss of $4,700,000 or negative $0.14 per share in the previous year.

Our Q1 twenty twenty five results include $2,200,000 of transaction costs related to the proposed merger with Abby Schmidt. On an adjusted basis, EBITDA was $12,300,000 for the quarter or 6% of sales, up from $6,100,000 or 3.1% of sales in the first quarter of twenty twenty four. Adjusted net income for the quarter was $2,400,000 and adjusted EPS increased to $07 per share compared to a loss of $1,400,000 or negative $04 per share in the first quarter of twenty twenty four. Please turn to Slide eight and I will walk you through our results by segment. In the first quarter, our Fleet Vehicles and Services segment achieved sales of $96,100,000 down 11% compared to $107,800,000 a year ago, reflecting continued softness in parcel end markets, partially offset by growth in our upfit and aftermarket businesses.

Adjusted EBITDA for the quarter improved to $3,600,000 or 3.8% of sales compared to $900,000 or 9.9% a year ago. As sustained higher productivity and favorable mix more than offset the lower sales volume. FES backlog was 2 and $45,300,000 at quarter end, down 31% versus prior year and flat versus year end 2024. Turning to Specialty Vehicles segment, the business delivered another solid quarter with adjusted EBITDA margins remaining in the high teens. First quarter sales were $82,200,000 a 9% decrease from $90,100,000 in the prior year.

Our Motorhome sales were down year over year, while our infrastructure focused service truck body business continued to deliver solid results. Adjusted EBITDA was 14,300,000 or 17.3% of sales compared to $17,000,000 or 18.8% of sales in the same period last year. SV backlog was $90,000,000 at quarter end, up 8% versus the prior year and up 31% versus year end, driven primarily by high content service truck bodies. Please turn to Slide nine for a discussion on our 2025 outlook. Macroeconomic uncertainty and the ever changing landscape of tariffs continue to challenge our business.

We have been evaluating various scenarios relating to the tariffs that have been put into place and those that have been proposed. We implemented a supply chain strategy over the last couple of years to help mitigate risk including U. S.-based supply alternatives. We have plans in place to help mitigate the impact through partnerships with our suppliers and we have and will continue to adjust prices where appropriate. While we will continue to monitor the macroeconomic environment and potential impact to demand, we are affirming our 2025 outlook with sales of $870,000,000 to $970,000,000 and adjusted EBITDA of $62,000,000 to $72,000,000 We delivered first quarter profitability ahead of our initial expectations.

However, we remain cautious on the timing of the recovery of the parcel and motorhome markets. Consistent with our messaging in February, we continue to expect approximately 70% of our full year adjusted EBITDA to be delivered in the second half of the year. We remain on track to deliver our free cash flow guidance of 25,000,000 to $30,000,000 as we expect improvement as the year progresses. In closing, we are pleased with our start to the year. We remain committed to delivering our financial outlook for the year and making further improvements in our financial performance as our end markets recover.

With that, I will turn it back over to John to provide an update on the proposed merger with Abbe Schmidt.

John Dunn, President and Chief Executive Officer, Shift Group: Thanks, Scott. Turning to Slide 11, I would like to reiterate why this proposed merger is such a compelling opportunity for our organization and shareholders. By combining our businesses, we will become a leading global force in the specialty vehicles industry. The strategic move will help us drive outsized growth in high margin markets like commercial infrastructure. Our customers will benefit from a wider range of new and innovative technologies and a broader geographical footprint for the deployment of products and services.

Our highly experienced and talented management team is working together to deliver the strategic vision and create long term value for our shareholders. Please turn to Slide 12 where I will provide an update on the integration activities underway. The combined company will be named Abi Schmidt Group and will trade on the NASDAQ under the new ticker AEBI. We have successfully syndicated a $600,000,000 credit facility with strong support from a global group of banks, which reinforces the strategic rationale of this transaction. On 04/04/2025, Abbe Schmidt Group filed the preliminary S-four filing with the SEC for review, marking a significant milestone for the proposed merger.

We anticipate a special meeting of the Ship Group shareholders in mid-twenty twenty five to approve the merger. In conclusion, we remain confident in the value this combination will deliver by aligning complementary capabilities, expanding our global footprint and bringing together deep expertise across platforms, the Shift Group and Abby Schmidt Group are positioned to lead the specialty vehicle market forward. We are not only building a stronger and more innovative organization, we are becoming stronger together and better equipped than ever to deliver long term success for our customers, employees and shareholders. We are now ready to take your questions. Operator, please open the line.

Conference Operator: Thank you. We will now begin the question and answer session.

Scott Ohalek, Interim Chief Financial Officer, Shift Group: You.

Conference Operator: Our first question comes from Matt Koranda from ROTH Capital. Please go ahead.

Matt Koranda, Analyst, ROTH Capital: Hey guys, good morning. Just to start off on the BlueArc side of things.

Randy Wilson, Vice President of Investor Relations and Treasury, Shift Group: I guess it was a bit

Matt Koranda, Analyst, ROTH Capital: of a surprise to see you guys deliver and book all 150 vehicles in the first quarter. So maybe just talk about the dynamic that’s at play there what that means for BlueArc revenue for the remainder of the year. And then just could you clarify, it looks like the gross profit dollars from BlueArc probably offset some of the corporate expense that you usually have in terms of the eliminations. But maybe just put a finer point on that one for us, please.

John Dunn, President and Chief Executive Officer, Shift Group: Sure. Thanks for the question, Matt. This is John. And to start off with, on the BlueArk, we’re not completely done with that order. We’re in process of building those 150.

So as you can see from the revenue there, we’re well on our way to deliver all of them, but there will be some carryover in the second quarter of revenue coming in.

Scott Ohalek, Interim Chief Financial Officer, Shift Group: Yes, Matt, this is Scott. From a profitability perspective on that question, yes, we incurred $5,500,000 in expenses in Q1 of twenty twenty four, and we have completely offset that. And BlueArc is contributing here in the first quarter.

Matt Koranda, Analyst, ROTH Capital: Okay. Got it. And then maybe just wanted to get a better understanding if you could unpack the guide and how any incremental tariffs have been incorporated into the guidance for this year. I noticed really there’s no change to the outlook for you guys, but maybe just could you talk about how you thought about any incremental tariffs that might be impacting the year and how those have been incorporated into the guidance? And then on top of that, maybe just if you could take a crack at what are the implications when you’re combined with A.

B. Schmidt? Are there any incremental tariffs that we should be kind of taking into account here?

Scott Ohalek, Interim Chief Financial Officer, Shift Group: Matt, this is Scott. Yes. So from a tariff perspective, so obviously this is ever changing. Every day something new is coming up. So we’re monitoring it very closely.

For what has been put into place, we have taken some action already from a pricing perspective, and we continue to have and see flexibility as we move forward. But certainly, we’re also working very closely with our supply base, partnering with them, looking for opportunities. And certainly, like I said, over the past couple of years, we’ve been identifying suppliers in The U. S. That will additionally help us.

So when you think about our guidance and why really we haven’t come off from a tariff perspective, it’s really twofold. One, we are taking actions to help mitigate it. And two, we’re still just monitoring and watching where things will fall out here. Okay. And if I could

Matt Koranda, Analyst, ROTH Capital: ask one on the A. B. Schmidt merger and maybe specifically on A. B. Schmidt.

Any update on the trends in their business year to date, especially interested in first quarter, how they tracked relative to your expectations? Any update on sort of some of the pro form a metrics that were given out around the merger in terms of A. B. Schmidt twenty twenty five revenues, EBITDA, any incremental data points there would be appreciated.

Scott Ohalek, Interim Chief Financial Officer, Shift Group: Yes, Matt. The S-four was just recently filed with the Eby Schmidt U. S. GAAP financial statements that’s still with the SEC. So we don’t really want to comment on anything as it relates to Eby Schmidt within this call, given that that’s outstanding.

Matt Koranda, Analyst, ROTH Capital: Okay, fair enough. I’ll leave it there guys.

Randy Wilson, Vice President of Investor Relations and Treasury, Shift Group: Thanks, Matt.

Conference Operator: Thank you. The next question comes from Mike Slischke from D. A. Davidson. Please go ahead.

Mike Slischke, Analyst, D.A. Davidson: Good morning. Thanks for taking my questions here. First, I wanted to kind of say on the tariff theme. Did concerns on tariffs at the customer level, did they affect anyone’s order or delivery timing in the quarter? In other words, did anyone pull forward their plans or their deliveries to try to get ahead of the quarter?

Was that any kind of driver of the EBITDA strength here?

John Dunn, President and Chief Executive Officer, Shift Group: This is John. From an order standpoint or pulling ahead orders, we didn’t see a lot of activity around that specifically cited around tariffs. We’re very close with the customers, understanding their needs, but we haven’t seen a strong reaction one way or another in the ordering from the customers primarily due to the tariffs that they’ve highlighted to us.

Mike Slischke, Analyst, D.A. Davidson: Got it. Thanks. And then the follow-up question would be on parcel and final mile vehicles. You had commented that you’re still looking at a potentially better second half year. Could you maybe just share with us some of the details?

Is that based on just the fact that comps were so easy given the past couple of years post pandemic? Or are you having conversations with customers that have been very promising that do suggest some deliveries happening in the back half of the year?

John Dunn, President and Chief Executive Officer, Shift Group: From that standpoint, we are seeing a pickup in general quoting activity from the parcel customers over the last couple of months. So that’s given us an indication that the second half of the year could come in much better.

Mike Slischke, Analyst, D.A. Davidson: And the quotes include timing from the customers to the purchase price, but you’re asking about when do you

John Dunn, President and Chief Executive Officer, Shift Group: are including the timing as well.

Mike Slischke, Analyst, D.A. Davidson: Great. Outstanding. I’ll pass it along. Thank you.

Tyler DiMaggio, Analyst, BTIG: Thank you.

Conference Operator: Your next question comes from Tyler DiMaggio from BTIG. Please go ahead.

Tyler DiMaggio, Analyst, BTIG: Good morning. Thanks for taking the question. I wanted to follow-up on BlueArc here. I guess, John, do you expect the incremental orders here, do you for the 150, do you expect that to be fully realized by 2Q? And then beyond that, I guess, do you think about the pipeline of potential customer orders here and kind of getting incremental orders through the remainder of the year?

John Dunn, President and Chief Executive Officer, Shift Group: So we will finish up thanks, Tyler, for the question. We will finish up in Q2 that 150 unit order for FedEx and wrap that up. We have a number of additional orders in the pipeline that we’re working to close. In addition to that, we have trials with a number of key customers where they’re using the vehicles, giving us some positive feedback. Often that leads into orders as well.

So we’re still optimistic but cautious on additional orders. Okay.

Tyler DiMaggio, Analyst, BTIG: And then my follow-up here, I wanted to ask about maybe battery supply and kind of just get a general update in terms of how you guys are thinking about the battery supply chain. Know we had the agreement with RNX Energy before. Just kind of any broad updates on battery supply, how you’re thinking about it, capacity, etcetera?

John Dunn, President and Chief Executive Officer, Shift Group: We continue to be very pleased with the performance of the one battery. We’re having regular meetings with their leadership to stay very close because that is a dynamic field. But right now, we’re feeling very confident on the continued delivery of those batteries. So we don’t foresee an issue there. And again, the performance is meeting all expectations.

We’re not having issues in the field.

Tyler DiMaggio, Analyst, BTIG: Okay. Got it. Sounds good. Thank you, guys. I appreciate it.

I’ll turn it back to the queue. Thank you.

Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Randy Wilson for closing remarks.

Randy Wilson, Vice President of Investor Relations and Treasury, Shift Group: Thank you, operator. I like to thank everyone for joining today’s call and your interest in the Ship Group. And as always, please reach out to me if you have any follow-up questions. With that, please disconnect the call.

Conference Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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