The Shyft Group, Inc. (NASDAQ:SHYF) Q4 2023 Earnings Call Transcript

Mike Shlisky: Okay. Thanks for that. And then I guess, I’d be curious to talk about chassis supply. It sounds like when you’ve got walk-in van works. You’ve got chassis that you can get to put on it, but I’m more curious about vocational in specialties. You have at this point a much better feel for the allocations and the timing of deliveries to get those chassis maybe this time versus maybe this time last year? Any kind of update you can give us there would be appreciated.

John Dunn: We start with the FPS side, we’re seeing the chassis coming through. So we don’t have that significant issue we had about a year ago. It’s getting the customers to really reengage and as John mentioned, especially on parcel, it’s been lighter than we had hoped and we monitor that closely. So that to be very clear the limiting factor is in chassis availability. It’s really getting the customers to get reengaged. From the other side of the business, we have the FC side, the chassis are flowing and we’re doing our work on materials to dealers, but it’s also not an issue right now with chassis at a significant level.

Mike Shlisky: Fantastic. Maybe one last one for me on. Given the relatively strong free cash we’ve got that’s going to continue here in 2024 and pretty much no debt. Do you have any feel for John’s on the ability of shifts or the desire to expand through M&A on to get some more scale in some of these businesses or expand into some new product from the trough by size, and you feel you can get for us for M&A given your relative strength versus some other folks might be a little bit more subscale? We appreciate it.

John Dunn: And the answer to the first step is we really want to drive the performance of our core business. And that’s the real focus right now to get that operating at the highest level, you need to get Blue Arc launched. And that’s why we’ve narrowed the scope to make sure we get that to market as soon as possible and deliver that to customers. In parallel, we do see opportunities where we can do acquisitions, M&A and we are looking at a couple of opportunities there, but really don’t want to lose focus on what we need to do and the urgency around making sure that core business is running at the right level.

Mike Shlisky: Follow-up there, John. When you just work on the Class 3, 4 Blue Arc, any feel for how that might affect your 2025 projections for Blue Arc. The previous your previous question is that in 2022 had $500 million plus per sales for that for the overall line. What it I do think with just the Class 3, 4 and the current trajectory of the program where might that be in 2025 now?

John Dunn: What we’re seeing is we want to get this vehicle to market and really gauge the interest. I think there’s been a lot of publications out there about the acceptance rate and the speed of the acceptance rate. So we know we’re going to have that strong demand eventually, will that timing happen in 2025 like we originally thought, we’re watching that closely, but that may be a year two out beyond that. So we’re being cautious. And I think that’s why you see us narrowing the focus to get a product out in the market, understand its reception and not over commit the Company in the CV space. Also going back to your other question does make cash available to do acquisitions and strengthen our core business as well. So we want to make sure we stay balanced as we go through go forward in the coming years.

Jon Douyard: But I think Mike just to add to that, I think we always we look at sort of the production ramp-up and the time line, we’re probably out a year, right? I mean it just a year ago we were talking about second half production 2023 battery issues. We’re talking about later 2024. And so as we look at it the program is essentially pushed a year from that perspective, our plans to do two a couple of hundred units this year and then we’ll start to see that ramp. And I would expect some of the financial milestones that you talked about to push out a year as well. But it gets back to John’s point on adoption and acceptance from a customer perspective. You hit on it in his prepared remarks, but there is still a lot of enthusiasm about what this product can do, and how it stacks up from a competitive standpoint. And so we feel very good about it, and we want to make sure that we get that the right vehicle on the road.

Mike Shlisky : Great. Thanks so much. I appreciate the discussion.

John Dunn : Thanks, Mike.

Jon Douyard : Thanks, Mike. Operator?

Operator: Yes. Thank you. And the next question comes from Steve Dyer with Craig-Hallum.

Steve Dyer : Thanks. Good morning. Most of mine have been answered at this point. I’m just as it relates to Blue Arc a little bit more on how much of the delay do you feel like is attributable just to supply chain and battery issues and things like that. And then how much would you sort of associate with just sort of a little bit softer demand in overall parcel and people sort of moderating there their chatter on that in the last six or nine months?