The Shyft Group, Inc.

Good morning and welcome to the SHIFT Group's third quarter 2020 conference call and webcast. All participants will be in listen-only mode until the question and answer session of the conference call. This call is being recorded at the request of the SHIFT Group. If anyone has any objections, you may disconnect at this time. I would now like to introduce Juris Paygrop, Group Treasurer and Head of Investor Relations for the SHIFT Group. Mr. Paygrop, you may begin.

Thanks, Alyssa. Good morning, everyone, and welcome to the SHIFT Group's third quarter 2020 earnings call. Joining me in the call today are Daryl Adams, our president and chief executive officer, and John Dewyard, our chief financial officer. For today's call, we've included a presentation deck, which will be filed with the SEC and is also available on our website at theshiftgroup.com. You may download the deck from the investor relations section of our website to follow along with our presentation during the call. Before we start today's call, please turn to slide two of the presentation for our Safe Harbor Statement. You should be aware that certain statements made during today's conference call, which may include management's current outlook, viewpoint, predictions, and projections regarding the SHIFT Group and its operations, may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. I caution you that As with any prediction or projection, there are a number of factors that could cause the shift group's actual results to differ materially from projections. All known risks that management believes could materially affect the results are identified in our Forms 10-K and 10-Q filed with the SEC. However, there may be other risks that we cannot anticipate. On the call today, we will provide a business update, including the ongoing impact of the COVID-19 pandemic on our operations, as well as the third quarter highlights before moving on to a more detailed review of the third quarter results and our outlook for the remainder of the year. We will then be opening the line for Q&A. I'd like to also remind everyone that with the divestiture of emergency response business on February 1, 2020, the revenues and expenses associated with the ER business, as well as the assets and liabilities, have been reclassified as discontinued operations for all periods presented. With this reclassification of the ER business to discontinued operations, the results discussed today will refer to continuing operations unless otherwise noted. At this time, I'm pleased to turn the call over to Daryl for his comments beginning on slide three.

Thank you, Juris. Good morning, everyone. Thank you for joining us to discuss our third quarter 2020 results. Let's start by saying that I could not be more proud of the hard work and tremendous effort by our team during the quarter as we achieved some truly amazing results, finishing the quarter with record performance across the company. We also need to acknowledge that 2020 has been a year that has really put the team and our company to task. As we face the COVID-19 pandemic, affecting virtually every aspect of our personal and working lives for the past eight months, we continue to work hard managing supply constraints while emphasizing the health and safety of our team members. We rose at the challenge, we over-delivered on our prior outlook, in many cases exceeded our own expectations, resulting in the most profitable quarter in our company's history. We also remain focused on M&A opportunities by finalizing the recently announced acquisition of F3 Manufacturing, a complimentary service body opportunity, which I will discuss later. As we head into the home stretch of 2020, we continue to proactively address opportunities prioritizing the needs of all our stakeholders in a way that reflects our goal to be nimble, aggressive, and positioned to win in markets that are growing at an accelerated pace since the onset of the pandemic. Please turn to slide four to discuss the current environment and the progress we've made to address and emerge from the health crisis. On our last quarterly earnings call, we discussed the initial actions we took to address the pandemic. our leadership team remains fully engaged and aligned on controlling what we can. As we return to full production, our teams adapted with incredible and innovative solutions to meet our customers' demands, such as pulling forward customer orders when requested, drive-through interviews to address our labor constraints, and employing a second shift to allow our employees the flexibility to provide care for the school-age children. From a supply perspective, Our continued, sorry, from a supply perspective, conditions improved throughout the quarter as we now have clear visibility through the rest of the year. Parts of delivery continues its accelerated growth trajectory as consumers embrace e-commerce at a much higher rate. In a recent Wall Street Journal article, delivery companies have indicated that their upcoming holiday shipping capacity is already booked, once earlier than usual. Between Thanksgiving and Christmas this year, total shipping is expected to be up 21%. Carriers have already been operating near capacity for months as consumers have stayed home, avoided stores, and shopped online. And that has driven a capacity shortage for partial delivery vehicles. We are excited about these trends. Our partial delivery customer orders are ramping, and customers have been asking us to fill them with urgency. FES backlog has jumped $54 million to $282 million in the month of October alone. On the special vehicle side, our luxury motor coach chassis operations benefited from the ongoing resurgence of the RV industry emerging from the pandemic. With the rebound in demand, our motorhome chassis line increased daily production levels throughout the quarter. On the service truck body side, the road truck body rebounded significantly due to the increase in chassis availability, and finished the quarter strong. These recent SV trends are reflected in our backlog, which is up 30% year-over-year to 52 million, and includes back-to-back quarterly records for the motor coach chassis. With that, let me take a moment and summarize our year-to-date results on slide five. For the first nine months of 2020, we posted solid improvement in our results. especially considering the pandemic-related headwinds we encountered in the second quarter. Once again, our year-to-date results demonstrate the success and effectiveness of our business transformation strategy, which is focused on growth in higher margin product offerings within our core markets, growing market share within our expanding geographic footprint, and consistent productivity improvements in our operations. The results of our strategy can be clearly seen by the increase in our overall adjusted EBITDA margins through the first nine months as we achieved 12% margins, even in the face of headwinds from COVID-19, shutdowns, and supply constraints that limited some production. Revenues for the first nine months increased 19 million, or 4%, to 104 million, excluding the USPS order. Adjusted EBITDA for the first nine months period increased 20 million, or 49% to 60 million, which nearly matches all of our 2019 when we achieved 64 million. Adjusted even margin improved 500 basis points, driven primarily by considerable labor efficiencies, as well as a shift in product mix resulting from the continued implementation of our business transformation strategy. Please turn to slide six. I'll provide an FVS business update. Last week, Utilamaster announced the launch of the Velocity F2, a purpose-built walk-in van based on a Ford Transit Class 2 chassis to meet growing demand for e-commerce and last-mile delivery. Initial customer reviews have been very favorable as Velocity F2 combines nimbleness, comfort, and increased fuel efficiency with cargo space, load capacity, and access similar to the traditional walk-in vans. This innovative new vehicle is an ideal solution for partial delivery fleet operators that want to expand their fleet and delivery capacity quickly, as Velocity F2 offers lower total cost of ownership. Utilimaster's Velocity F2 expands our product offering and complements the previously announced Velocity F3, built on a Ford Transit chassis, and the M3, which is built on a Mercedes Sprinter chassis, offering parcel delivery fleet customers an entirely new vehicle lineup with innovative solutions to improve efficiency and safety from the loading process to the final delivery. Please turn to slide seven for an update on our most recent acquisition, which will be part of the SV business. On October 1, we announced the acquisition of Maine-based F3 Manufacturing, a leading aluminum service body and accessory manufacturer. Going forward, we will refer to the business as Duramax, after one of its core product brands. We are all excited to welcome Duramax to the Schiff Group family. We are looking forward to growing their complementary product lines and expanding our service body production and distribution footprint from coast to coast. The company has two industry-recognized brands, Duramax in the service bodies and Magnum in the light-duty aluminum accessory, primarily headache racks. Duramax also brings a wide range of complementary aluminum products to SHIFT, which are lighter weight, leading to better fuel efficiency as well as enhanced corrosion production. Aluminum products also provide a growth advantage as the segment has been growing above market rates. F3 has been included in Inc.' 's magazine annual list of America's 5,000 fastest growing privately held companies in both 2018 and 19. Sales for DERMAG grew at a 74% CAGR rate from 2015 to 19, and generated revenues of approximately $25 million in 2019. The acquisition closed on October 1, and we expect it to be accretive in 2021. With that, I will turn the call over to John to discuss SHIFT's financial results for the third quarter in more detail, as well as provide an update on our 2020 outlook, beginning on slide 8.