The Shyft Group, Inc.

Good morning and welcome to the SHIFT Group's first quarter 2022 conference call and webcast. All participants will be in a 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 Jeff Treika, Investor Relations for the SHIFT Group. Mr. Treika, you may proceed.

Thank you, everyone, and welcome to the SHIFT Group's first quarter 2022 earnings call. Joining me on the call today are Daryl Adams, our President and Chief Executive Officer, and John Duyard, 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 www.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 the 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 today's call, we will provide a business update including the ongoing impact of a variety of factors to our operations, before moving on to a more detailed review of the results and our outlook for the remainder of 2022. We'll then open the line for questions. I would also like to remind everyone that with the divestiture of the 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, 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, Jeff.

Good morning, everyone, and thank you for joining us to discuss our first quarter 2022 results. As we previously communicated, conditions were challenging in the first quarter as we faced ongoing supply chain disruptions affecting the entire vehicle industry, including a deterioration of chassis supply in March. Our team remained resilient, and while our FES business started the year slowly, the value of our investments we made in our specialty vehicles business was clear as the team delivered a solid quarter. Turning to slide four, the need for our products continues to be unquestioned. As we remain confident in the long-term outlook for the company, our strategy to focus on higher growth markets resulted in record order intake of $500 million in the quarter, which also increased our backlog to a record $1.3 billion up over 90% versus prior year. We achieved revenue of $206.9 million in the quarter. with the results of pricing actions more than offsetting the decline in unit volume due to intermittent chassis supply. Profitability was consistent with our previously communicated expectations, as variability in chassis supply and OEM plant shutdowns created inefficiencies in our operations. We continue to focus on what is in our control, as evidenced by the strong performance in our specialty vehicles business. We remain diligent in managing our operations and controlling costs in this time of uncertainty as are well positioned to execute when the supply chain recovers. Please turn to slide five where I'll provide a business update. Let me start by addressing the considerable supply chain uncertainties that have affected our entire industry. It has been well over a year since we started to talk about semiconductor chip shortage that has affected the vehicle industry in particular. That shortage lingers today, and we expect these conditions to remain throughout 2022, directly impacting our production as a chassis supply that is critical to our products. During March, we saw an unexpected production disruption from a key chassis supplier that affected our ability to produce vehicles. As we look back at the month, we received approximately 10% of the chassis that had been scheduled for delivery just four weeks earlier. Overall, this chassis deficiency contributed to a slower pace of revenue growth in the quarter and will persist into the second quarter. As I mentioned earlier, the strength of our strategy and product offerings resulted in record order intake of $500 million in the first quarter, leading to a record backlog of $1.3 billion. We remain confident in these orders and the underlying demand for our products. Looking at our business segment, In fleet vehicle and services, our team managed through significant challenges in the quarter due to intermittent chassis supply that negatively affected our production. While capacity utilization decreased, we operated our plants in a strategic manner by flexing production to maintain our quality workforce while trying to minimize inefficiencies. This section, while negative to the quarter, sorry, this decision, while negative to the quarter, was an investment in our stability of our workforce to support our growth over the long term. We have maintained a similar approach in April, knowing the team will be ready to ramp up quickly once the chassis supply improves. In the first quarter, we continued to execute on the velocity growth strategy. Beginning production of the Velocity M3, built on a Mercedes Sprinter chassis in our Charlotte facility, We also formally introduced the Velocity R2 walk-in van, built on a Ram Pro Master chassis at the NTA Work Truck Week in early March, which was very well received. We expect to begin production of the Velocity R2 in the second quarter. We also commenced production at our Landisville, Pennsylvania truck body plant in the last week of February, marking the culmination of this strategic transition to a larger, more efficient facility that will support our growth. After two months in operation, we are already exceeding daily output in our new plant compared to the previous facility. We are excited by the opportunity this represents and we look to expand the business and penetrate new markets such as the consumer leasing and rental business. Turning to our specialty vehicle segment, the business performed extremely well as we continue to execute on our growth strategy. We saw a strong growth and market share improvement in our motorhome business, as well as a solid growth in our service body business despite chassis supply constraints. The team's efforts generated significant growth in sales and adjusted EBITDA to start the year. We continued to gain share in the motorhome market, which increased to 33.7%, continuing a string of sequential quarterly growth. Overall, our target segments of the RV market remains healthy, with motorhome dealer inventory at historic lows, which gives us confidence that's the remainder of the year. Across our service body business, we increased share as we continued to execute on our strategy of growing our position as a national service body player. We saw solid volume running through our GM ship through location. In the light duty pickup truck market, we saw improvement in chassis availability as the quarter progressed. which we expect to continue in the second quarter. As it relates to innovation, our DERMAG go-to-market brand recently introduced the S-Series aluminum service body at NTA with a single sheet of aluminum on the outside panel to provide a smooth OEM look combined with flush-mounted doors and internal hinges for best-in-quality fit and finish. Please turn to slide six, where I'll provide an update on our electric vehicle initiatives. Over the past nine months, we have talked about supporting our customers' transition into electric vehicles. By leveraging our half-century of experience in building purpose-built custom chassis and bodies, at NTA in early March, we introduced the Blue Arc EV Solutions go-to-market brand, creating a new EV ecosystem encompassing three new products. An industry-first commercial-grade purpose-built EV chassis, a fully reimagined all-electric Class III delivery walk-in van, and a portable remote-controlled charging station, which we call the PowerCube. We also introduced that North Carolina-based Randy Marion Dealer Group will be the first dealer in the U.S. to sell our new all-electric Class III delivery vehicle. We saw a surge in interest during and after the show from potential customers for Blue Ark products. ranging from last mile delivery fleet operators and long-lasting customers to other emerging industries. Customers were particularly impressed with the intelligent design, simplicity, and engineering. This extended to their impression on the specifications, equipment, performance, and flexibility of the chassis and body. They view the vehicle design as one that adds value and improves operator safety and efficiency. These new products offer a variety of innovations that will mark a great advance in the commercial EV space. The new chassis includes a modular design that will accommodate multiple weight ratings. This chassis will be highly adaptable and can accommodate last mile delivery, work truck, mass transit, recreational vehicles, and other emerging EV markets. The Blue Arc Delivery Van is a 100% battery powered Class III electric commercial delivery vehicle. designed for high frequency, last mile delivery fleets, and features expansive cargo space, lightweight design, and an integrated solar roof package. Lastly, the Blue Arc Power Cube will provide a portable remote charging solution for a variety of commercial vehicle needs. We believe this solution will address the lack of EV infrastructure that has been a roadblock to more widespread adoption among commercial fleet operators. March was a busy month for our EV efforts, And we are very excited for what the future holds in this area. With that, I'll turn the call over to John to discuss SHIFT's financial results for the first quarter and more detail beginning on slide seven, as well as provide an update on our 2022 outlook.