Business Overview and Financials Founded in 1975 and headquartered in Novi, Michigan, The Shyft Group has evolved from its humble beginnings as a regional manufacturer to a diversified powerhouse in the specialty vehicle industry. The company operates through two reportable segments: Fleet Vehicles and Services (FVS) and Specialty Vehicles (SV).
The FVS segment focuses on designing and manufacturing walk-in vans for the parcel delivery, mobile retail, and trades and construction industries, as well as producing commercial truck bodies and providing upfit services. In 2024, the FVS segment generated revenue of $434.2 million, accounting for 55.3% of the company's total sales. Adjusted EBITDA for this segment was $31.2 million, or 7.2% of FVS segment sales.
The SV segment consists of service bodies and upfit operations, motorhome chassis engineering and manufacturing, and the distribution of related aftermarket parts and assemblies. This segment also provides vocation-specific equipment upfit services under the Strobes-R-Us brand. In 2024, the SV segment generated $347.9 million in revenue, representing 44.3% of total sales. Adjusted EBITDA for the SV segment was $67.3 million, or 19.3% of SV segment sales.
Over the years, The Shyft Group has expanded its product offerings to include truck bodies, cargo van and pick-up truck upfits designed for e-commerce and parcel delivery, as well as upfit equipment tailored for the mobile retail and utility trades. The company also supplies replacement parts and offers repair, maintenance, field service, and refurbishment services for the vehicles it produces.
The Shyft Group operates facilities strategically located across North America, including locations in Michigan, Indiana, Maine, Pennsylvania, Florida, Missouri, California, Arizona, Texas, Tennessee, and Iowa, as well as a facility in Saltillo, Mexico. This extensive network allows the company to efficiently serve its diverse customer base and maintain its position as a niche market leader.
Throughout its history, The Shyft Group has faced various challenges, including intense competition from companies with significantly greater financial, technical, manufacturing, marketing, and other resources. The company has also had to navigate changes in the regulatory environment, volatility in commodity prices, and supply chain disruptions. Despite these challenges, The Shyft Group has maintained its position by focusing on innovation, customer relationships, and operational efficiency.
Financials In the fiscal year 2024, The Shyft Group reported total revenue of $786.2 million, a decrease of 9.9% compared to the prior year. The company's net loss for the year was $2.8 million, or $0.08 per diluted share. However, the company's adjusted EBITDA, a non-GAAP metric, increased to $48.9 million, up from $40.0 million in the previous year.
For the fourth quarter of 2024, The Shyft Group reported revenue of $201.4 million, which was flat year-over-year. The company's net loss for the quarter was $3.4 million, an improvement from a loss of $4.4 million in Q4 2023. It's worth noting that the quarterly net loss was negatively impacted by $8.5 million of transaction costs related to the pending merger with Aebi Schmidt.
In terms of geographic markets, 93.8% of The Shyft Group's revenue in 2024 was generated in the United States, with the remaining 6.2% coming from international markets.
Liquidity The Shyft Group's financial position remains robust, with a strong balance sheet and healthy liquidity. As of December 31, 2024, the company had $15.8 million in cash and cash equivalents, and total debt of $175.3 million, resulting in a net debt position of $116.7 million. The company's current ratio stood at 1.63, indicating a solid ability to meet short-term obligations. The quick ratio was 1.03, further underlining the company's liquidity strength.
The Shyft Group has a $300 million revolving credit facility, of which $78 million was available as of the end of 2024. This credit facility matures in 2026 and has an interest rate of 6.2% or one-month SOFR plus 1.75%. The company's debt-to-equity ratio was 0.322, reflecting a conservative capital structure.
Operational Improvements and Strategic Initiatives Throughout 2024, The Shyft Group has been focused on implementing operational and commercial improvements across its business. The company has streamlined its corporate structure, managed costs, and adopted a "one Shyft" mindset to drive margin expansion. These efforts have resulted in meaningful adjusted EBITDA growth, with the FVS segment expanding its margins to 7.2%, up 160 basis points year-over-year.
The Shyft Group has also made significant strides in its electrification efforts, successfully shifting its Blue Arc™ Class 4 electric vehicles to FedEx. This achievement underscores the company's commitment to meeting the evolving needs of its fleet partners and serving as a partner of choice in the transition to more sustainable transportation solutions.
In addition to its organic growth initiatives, The Shyft Group has been actively pursuing strategic acquisitions to expand its capabilities and market reach. In July 2024, the company acquired 100% of the outstanding membership interests of ITU Holdings, Inc. and its subsidiary Independent Truck Upfitters, LLC (ITU), a Midwest-based provider of vocational service body upfit for commercial fleets and government service vehicles. This acquisition aligns with Shyft's growth strategy by expanding its service body product offerings and upfit capabilities, while also providing synergies and cross-selling opportunities.
Merger with Aebi Schmidt: A Transformative Move In December 2024, The Shyft Group announced a transformative merger with Aebi Schmidt Group, a leading global specialty vehicles company. This strategic combination will create a highly competitive specialty vehicles leader with enhanced scale, capabilities, and expertise, as well as deeper customer relationships.
The proposed merger is expected to close by mid-2025, subject to regulatory approvals and other customary closing conditions. The combined company will have a stronger financial profile, with projected 2028 pro forma revenue of $2.7 billion and adjusted EBITDA of $315 million, representing a 12% adjusted EBITDA margin.
Risks and Challenges While The Shyft Group has demonstrated its resilience and adaptability, the company is not without its risks and challenges. The company operates in a highly competitive industry, and it faces the ongoing challenge of navigating supply chain disruptions, commodity price volatility, and labor shortages.
Additionally, the company's reliance on a limited number of large customers, such as FedEx, Amazon, and Newmar, exposes it to concentration risk. The loss of a significant customer or a change in their purchasing patterns could have a material adverse impact on the company's financial performance.
The Shyft Group's transition to electric vehicles also presents both opportunities and risks. While the company's Blue Arc™ platform has gained traction, the EV market is highly competitive, and the company's ability to maintain its competitive edge will be crucial to its long-term success.
Outlook and Conclusion Despite the challenges, The Shyft Group remains well-positioned for growth. The company's proposed merger with Aebi Schmidt is expected to unlock significant synergies and enhance its competitive position in the specialty vehicle market. Additionally, the company's focus on operational improvements, strategic acquisitions, and innovative product development positions it well to capitalize on evolving industry trends.
For the full year 2025, The Shyft Group is guiding for revenue in the range of $870 million to $970 million, representing year-over-year growth of up to 23% at the midpoint. This guidance includes approximately $50 million related to their Blue Arc EV business. The company also expects adjusted EBITDA in the range of $62 million to $72 million, reflecting its commitment to driving profitability and shareholder value. Adjusted EPS is expected to be in the range of $0.69 to $0.92 per share, and free cash flow is projected to be between $25 million and $30 million, up meaningfully year-over-year.
It's worth noting that The Shyft Group expects a slow start to 2025, with Q1 adjusted EBITDA in the low single digits. However, the company anticipates around 70% of the full year adjusted EBITDA to be delivered in the second half as markets recover.
The specialty vehicles industry, which includes segments like last-mile delivery, service bodies, and motorhome chassis that The Shyft Group operates in, is expected to see a compound annual growth rate of around 4-6% over the next 5 years. This growth is driven by factors such as the expansion of e-commerce and increased infrastructure investment.
In conclusion, The Shyft Group's long-standing history, diversified product portfolio, and strategic initiatives make it a compelling investment opportunity in the specialty vehicle manufacturing industry. As the company continues to navigate the evolving landscape, its ability to adapt, innovate, and capitalize on emerging trends will be crucial to its future success. With a strong balance sheet, improving operational efficiency, and a clear growth strategy, The Shyft Group is well-positioned to deliver value to its shareholders in the coming years.