The Shyft Group, Inc. (SHYF) Bundle
Understanding The Shyft Group, Inc. (SHYF) Revenue Streams
Understanding The Shyft Group, Inc.’s Revenue Streams
The Shyft Group, Inc. has a diverse range of revenue streams primarily segmented into Fleet Vehicles and Services (FVS) and Specialty Vehicles (SV).
Breakdown of Primary Revenue Sources
For the nine months ended September 30, 2024, the revenue breakdown is as follows:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Fleet Vehicles and Services | $323.5 | 55.3% |
| Specialty Vehicles | $260.4 | 44.7% |
| Total Revenue | $584.7 | 100% |
Year-over-Year Revenue Growth Rate
In 2024, the company reported a total revenue of $584.7 million, a decrease of 12.7% compared to $669.9 million in the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
For the first nine months of 2024:
- Fleet Vehicle Sales: $275.5 million
- Motorhome Chassis Sales: $60.9 million
- Other Specialty Vehicle Sales: $179.4 million
- Aftermarket Parts and Accessories Sales: $68.9 million
Analysis of Significant Changes in Revenue Streams
The FVS segment experienced a revenue decline of 23.5% from $422.7 million in 2023 to $323.5 million in 2024, attributed to lower truck body volumes and softer delivery van markets. Conversely, the SV segment saw a revenue increase of 3.6% from $251.4 million in 2023 to $260.4 million in 2024, primarily due to higher service body sales following the acquisition of ITU.
Quarterly Revenue Trends
For the third quarter of 2024, the revenue was:
| Quarter | Revenue (in millions) | Year-over-Year Change |
|---|---|---|
| Q3 2024 | $194.1 | Decrease of 3.6% from $201.3 million in Q3 2023 |
The revenue decline in Q3 was mainly driven by lower sales volumes in the FVS segment, while the SV segment experienced growth from the ITU acquisition.
Overall, the revenue performance of The Shyft Group, Inc. indicates a challenging environment in specific market segments, necessitating strategic adjustments to capitalize on growth opportunities in others.
A Deep Dive into The Shyft Group, Inc. (SHYF) Profitability
A Deep Dive into Shyft Group, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $114.3 million, resulting in a gross profit margin of 19.5%, compared to 18.3% for the same period in 2023. The gross profit for the third quarter of 2024 was $39.6 million, with a margin of 20.4%, up from 18.3% in Q3 2023.
Operating Profit: Operating income for the nine months ended September 30, 2024, was $7.1 million, with an operating margin of 1.2%. In comparison, for the nine months ended September 30, 2023, operating income was $14.4 million, with a margin of 2.1%. The operating income for Q3 2024 was $5.3 million, representing a margin of 2.7% compared to 2.0% in Q3 2023.
Net Profit: The net income for the nine months ended September 30, 2024, was $0.6 million, translating to a net profit margin of 0.1%, down from $10.9 million or 1.6% in 2023. For Q3 2024, net income was $3.1 million with a margin of 1.6%, compared to $4.5 million or 2.2% in Q3 2023.
Trends in Profitability Over Time
From 2023 to 2024, the company has experienced fluctuations in profitability metrics. The gross profit margin improved slightly in Q3 2024 compared to Q3 2023, indicating better cost management despite lower overall sales volume. However, both operating and net income margins have seen a decline over the nine-month periods, reflecting challenges in revenue generation and increased costs.
Comparison of Profitability Ratios with Industry Averages
| Metric | Shyft Group, Inc. (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 19.5% | 25.0% |
| Operating Margin | 1.2% | 5.0% |
| Net Profit Margin | 0.1% | 3.0% |
Analysis of Operational Efficiency
The operational efficiency of the company can be assessed through its cost management and gross margin trends. Operating expenses for the first nine months of 2024 were $107.1 million, a slight decrease from $108.0 million in 2023. Research and development expenses decreased by 31.5% to $12.4 million from $18.1 million, indicating a strategic shift as the company approaches production phases for electric vehicle initiatives.
Adjusted EBITDA for the first nine months of 2024 was $32.9 million, down from $37.6 million in 2023, reflecting a 12.5% decrease in operational profitability. The Adjusted EBITDA margin for the first nine months of 2024 was 5.6%, compared to 5.6% in 2023, demonstrating consistent operational performance relative to sales despite the decline in overall revenue.
Debt vs. Equity: How The Shyft Group, Inc. (SHYF) Finances Its Growth
Debt vs. Equity: How The Shyft Group, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the total long-term debt for The Shyft Group, Inc. was $135 million, while the short-term debt amounted to $75 million. This brings the total debt to $210 million.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 0.83, which is below the industry average of approximately 1.0. This indicates a balanced approach to leveraging debt in comparison to equity financing.
Recent Debt Issuances
In March 2024, the company issued $135 million in long-term debt to support the acquisition of Independent Truck Upfitters (ITU), which was completed for $50.9 million in cash consideration.
Credit Ratings
The Shyft Group, Inc. currently holds a credit rating of B from Standard & Poor’s, reflecting a stable outlook in light of its operational performance and financial strategy.
Refinancing Activity
During the first nine months of 2024, the company refinanced $75 million of its existing debt, which resulted in a reduction of interest expenses from 5.5% to 4.2%.
Balancing Debt Financing and Equity Funding
The Shyft Group, Inc. employs a combination of debt financing and equity funding to facilitate growth. The company raised approximately $54 million through equity financing in the last fiscal year, which was utilized to support operational expansions and improve liquidity.
| Type | Amount (in millions) |
|---|---|
| Long-term Debt | $135 |
| Short-term Debt | $75 |
| Total Debt | $210 |
| Debt-to-Equity Ratio | 0.83 |
| Credit Rating | B |
| Recent Debt Issuance | $135 |
| Equity Raised | $54 |
Assessing The Shyft Group, Inc. (SHYF) Liquidity
Assessing The Shyft Group, Inc. Liquidity
Current Ratio: The current ratio as of September 30, 2024, is 0.93, reflecting a decrease compared to 1.03 as of December 31, 2023.
Quick Ratio: The quick ratio is 0.68 as of September 30, 2024, down from 0.77 at the end of 2023.
Analysis of Working Capital Trends
The working capital as of September 30, 2024, is ($7,193) thousand, representing a decrease from $8,079 thousand at year-end 2023. This shift indicates a tightening of liquidity conditions.
| Period | Current Assets (in $000) | Current Liabilities (in $000) | Working Capital (in $000) |
|---|---|---|---|
| September 30, 2024 | $154,602 | $165,795 | ($7,193) |
| December 31, 2023 | $157,940 | $149,861 | $8,079 |
Cash Flow Statements Overview
Cash Flow from Operating Activities: Generated $17.2 million in cash during the nine months ended September 30, 2024, a decrease of $27.6 million from $44.8 million in the prior year.
Cash Flow from Investing Activities: Used $60.0 million in investing activities, primarily due to $48.6 million for the acquisition of ITU, compared to $16.5 million used in the same period of 2023.
Cash Flow from Financing Activities: Generated $54.3 million, an increase of $84.2 million from a cash outflow of $29.9 million in the prior year.
| Cash Flow Type | 2024 (in $000) | 2023 (in $000) |
|---|---|---|
| Operating Activities | $17,216 | $44,818 |
| Investing Activities | ($60,022) | ($16,543) |
| Financing Activities | $54,289 | ($29,947) |
Potential Liquidity Concerns or Strengths
The increase in cash and cash equivalents to $21.4 million as of September 30, 2024, from $9.9 million at the beginning of the year, indicates a potential strength in liquidity despite the decrease in working capital. The company's ability to generate cash from financing activities, particularly through long-term debt, reflects a strategy to bolster liquidity amid operational cash flow challenges.
Furthermore, the net cash provided by financing activities was primarily driven by $135.0 million in proceeds from long-term debt, which supports ongoing operations and potential future acquisitions.
| Liquidity Indicator | Value |
|---|---|
| Cash and Cash Equivalents (Sep 30, 2024) | $21,440 |
| Net Cash from Operating Activities | $17,216 |
| Long-term Debt (less current portion) | $110,234 |
Overall, while liquidity ratios suggest a cautious outlook, the increase in cash reserves and strong financing activities provide a buffer against potential liquidity pressures in the near term.
Is The Shyft Group, Inc. (SHYF) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will analyze its valuation metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for the company is 19.4, based on a diluted earnings per share (EPS) of $0.09 for the third quarter of 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.3, calculated using a book value per share of $1.84.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at 8.7, derived from an enterprise value of $151 million and EBITDA of $17.3 million.
Stock Price Trends
Over the past 12 months, the stock price has experienced fluctuations, starting at approximately $2.15 and reaching a high of $3.20 before settling at around $2.70.
Dividend Yield and Payout Ratios
The company declared a dividend of $0.05 per share in 2024, resulting in a dividend yield of 1.85% based on the current stock price. The payout ratio is approximately 55.6%, calculated from the annual dividend relative to net earnings.
Analyst Consensus
Current analyst consensus rates the stock as a Hold, with a target price range between $2.50 and $3.00.
| Metric | Value |
|---|---|
| P/E Ratio | 19.4 |
| P/B Ratio | 1.3 |
| EV/EBITDA Ratio | 8.7 |
| Current Stock Price | $2.70 |
| Dividend per Share | $0.05 |
| Dividend Yield | 1.85% |
| Payout Ratio | 55.6% |
| Analyst Consensus | Hold |
| Target Price Range | $2.50 - $3.00 |
Key Risks Facing The Shyft Group, Inc. (SHYF)
Key Risks Facing The Shyft Group, Inc.
The Shyft Group, Inc. faces several internal and external risks that may impact its financial health and operational performance. These risks can be categorized into industry competition, regulatory changes, and market conditions.
Industry Competition
In the fleet vehicle and specialty vehicle markets, competition remains fierce. The company reported a decrease in consolidated sales from $669.9 million in the first nine months of 2023 to $584.7 million in the same period of 2024, a decline of 12.7%. This was attributed to lower sales volumes in both segments, particularly in the Fleet Vehicles and Services (FVS) segment, which saw a decrease in sales from $422.7 million in 2023 to $323.5 million in 2024, a drop of 23.5%.
Regulatory Changes
Changes in regulations, particularly concerning environmental standards and safety requirements, pose a risk to the company's operations. The transition to electric vehicles (EVs) and compliance with new emissions standards require significant investment. The company has increased its research and development expenses, which amounted to $12.4 million for the nine months ended September 30, 2024, down from $18.1 million in the previous year.
Market Conditions
Market conditions have also adversely impacted performance, particularly in the delivery van markets. The FVS segment's sales decreased by $18.4 million or 14.8% year-over-year. The overall market for delivery vans has softened, affecting revenue generation. The company reported adjusted EBITDA for the FVS segment of $19.1 million for the nine months ended September 30, 2024, compared to $32.9 million for the same period in 2023, reflecting a decrease of $13.8 million.
Operational Risks
Operational risks include potential disruptions in supply chains and increased costs of materials. The company has faced higher material and labor costs, which contributed to a $8.7 million decline in productivity. The gross profit was reported at $114.3 million for the first nine months of 2024, down from $122.4 million in 2023.
Financial Risks
Financially, the company has seen an increase in other expenses, totaling $5.9 million for the nine months ended September 30, 2024, compared to $4.5 million in 2023. This increase was primarily driven by higher borrowing costs associated with the acquisition of Independent Truck Upfitters (ITU) for $50.9 million. The company’s net income decreased to $0.6 million for the first nine months of 2024 from $10.9 million in the previous year.
Mitigation Strategies
The company is actively pursuing strategies to mitigate these risks. This includes diversifying its product offerings and enhancing operational efficiency. The acquisition of ITU is expected to provide synergies and bolster service body product offerings. The company also aims to leverage its EV initiatives, such as the Blue Arc Electric Vehicle Solutions, to stay competitive in the evolving market landscape.
| Risk Factor | Details | Impact |
|---|---|---|
| Sales Decline | Consolidated sales decreased from $669.9M (2023) to $584.7M (2024) | -12.7% |
| R&D Expenses | R&D expenses decreased from $18.1M (2023) to $12.4M (2024) | -$5.7M |
| Material Costs | Higher material and labor costs impacting profitability | -$8.7M in productivity decline |
| Net Income | Net income dropped from $10.9M (2023) to $0.6M (2024) | -$10.3M |
| Other Expenses | Increased from $4.5M (2023) to $5.9M (2024) | Higher borrowing costs |
Future Growth Prospects for The Shyft Group, Inc. (SHYF)
Future Growth Prospects for The Shyft Group, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: The launch of the Blue Arc™ Electric Vehicle solutions, which includes Class 3, 4, and 5 walk-in van configurations, is designed for last-mile delivery fleets. These vehicles are powered by lithium-ion batteries offering over a 150-mile range at 50% payload.
- Market Expansions: The acquisition of Independent Truck Upfitters (ITU) for $50.9 million enhances the company’s service body product offerings and upfit capabilities.
- Acquisitions: The ITU acquisition is expected to provide unique synergies and cross-selling opportunities, expanding the chassis pool and increasing ship-thru capability.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, consolidated sales were $584.7 million, compared to $669.9 million in the same period in 2023, representing a decrease of 12.7%. However, sales in the Specialty Vehicles (SV) segment increased by 14.0% in Q3 2024, reaching $87.4 million compared to $76.6 million in Q3 2023.
The Adjusted EBITDA for the first nine months of 2024 was $32.9 million, a decrease from $37.6 million in 2023, with an Adjusted EBITDA margin of 5.6% compared to 5.6% in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
Recent strategic initiatives include:
- The introduction of the Velocity lineup of last-mile delivery vehicles, which offers fuel efficiency and comfort while maintaining cargo space and load capacity.
- Investment in electric vehicle development initiatives, with research and development expenses amounting to $12.4 million in the first nine months of 2024.
Competitive Advantages That Position the Company for Growth
The company’s competitive advantages include:
- A strong order backlog of $345.4 million as of September 30, 2024, although down from $464.4 million a year earlier.
- Enhanced product offerings due to acquisitions, particularly the ITU acquisition which adds to service body capabilities.
- Established relationships with major delivery vehicle manufacturers, allowing for a diversified product lineup.
Financial Overview
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Consolidated Sales | $194.1 million | $201.3 million | -3.6% |
| Gross Profit | $39.6 million | $36.8 million | +7.7% |
| Net Income | $3.1 million | $4.5 million | -31.1% |
| Adjusted EBITDA | $14.3 million | $11.0 million | +30.0% |
Overall, the company’s focus on innovation, strategic acquisitions, and a solid order backlog positions it for future growth despite recent sales declines.
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Article updated on 8 Nov 2024
Resources:
- The Shyft Group, Inc. (SHYF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Shyft Group, Inc. (SHYF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Shyft Group, Inc. (SHYF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.