The Shyft Group (SHYF) Tops Q3 EPS by 23c, Revenues Beat; Initiates FY20 EPS Guidance Above Consensus, FY20 Revenue Outlook Below Consensus

The Shyft Group (NASDAQ: SHYF) reported Q3 EPS of $0.62, $0.23 better than the analyst estimate of $0.39. Revenue for the quarter came in at $203.5 million versus the consensus estimate of $193.3 million.

Third Quarter 2020 Highlights from Continuing Operations

For the third quarter of 2020 compared to the third quarter of 2019:

• Sales of $203.5 million, a decrease of $21.2 million, or 9.4%, from $224.7 million. Sales increased $1.8 million, or 0.9%, excluding the USPS order.
• Gross profit margin of 24.9% of sales, an 800 basis point improvement from 16.9% of sales, driven by product mix, improved material costs and actions taken to improve overall operating efficiency.
• Income from continuing operations of $19.4 million, or $0.54 per share, compared to $13.1 million, or $0.37 per share.
• Adjusted EBITDA of $32.6 million, or 16.0% of sales, an increase of $10.3 million, or 46%, from $22.3 million, or 9.9% of sales. The USPS order reduced adjusted EBITDA as a percentage of sales by approximately 110 basis points in the prior year.
• Adjusted net income of $22.1 million, or $0.62 per share, an increase of $6.2 million, or 39.7%, from $15.9 million, or $0.45 per share.
• Generated $32.4 million of cash from operating activities during the third quarter of 2020, providing $143.7 million of total liquidity
• Consolidated backlog at September 30, 2020, totaled $280.6 million, up $16.9 million, or 6.4%, compared to $263.7 million at September 30, 2019. Since September 30, 2020, consolidated backlog has increased approximately $46 million, to $326 million in October, reflecting strong demand for parcel delivery vehicles.
• Purchased F3 MFG, Inc. ("F3"), a leading aluminum service body and accessory manufacturer of the well-recognized DuraMag® and Magnum® brands, effective October 1, 2020.

"I am extremely proud of our team and of our performance this quarter, as we navigated the pandemic resulting in the most profitable quarter in our Company's history," said Daryl Adams, President and Chief Executive Officer. The strong performance reflects growing momentum from our transformative efforts to focus on higher growth and margin opportunities in parcel delivery supporting ecommerce and specialty vehicles."

GUIDANCE:

The Shyft Group sees FY2020 EPS of $1.28-$1.32, versus the consensus of $1.19. The Shyft Group sees FY2020 revenue of $660-680 million, versus the consensus of $682.36 million.

Outlook – Reinstates Initial 2020 Guidance

Based on our strong third quarter performance, our current growing backlog position and chassis visibility, notwithstanding intensifying pandemic-related issues, the Company is reinstating its previously issued March 2020 guidance, and shifting its profitability targets to the higher end as follows:

• Revenue to be in the range of $660.0 to $680.0 million
• Adjusted EBITDA of $73.0 to $75.0 million
• Adjusted earnings per share of $1.28 to $1.32

"As we approach the end of the year, I'm pleased to say that our strategy is paying off. The end markets we serve continue to be strong, fueled of course by the surge in ecommerce parcel deliveries. As we begin Q4, we are seeing the increase in demand that we expected, and we are encouraged by our interactions with our customers about future growth," said Adams. "Q3 was incredible for us, due in large part to our ability to pull ahead key builds and produce at optimal levels. I'm extremely optimistic for what the future has in store for The Shyft Group."

For earnings history and earnings-related data on The Shyft Group (SHYF) click here.

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