The Shyft Group, Inc.

Good morning, and welcome to the SHIFT Group's second quarter 2022 conference call and webcast. All participants will be in listen-only mode until the question and answer session of the conference call. This call has been recorded, and if anyone has any objections, you may disconnect at this time. I would like to introduce Randy Wilson, Vice President, Investor Relations, and Group Treasurer for the SHIFT Group. You may proceed.

Good morning. and welcome to the SHIFT Group's second quarter 2022 earnings conference call. Joining me on the call this morning are Daryl Adams, President and Chief Executive Officer, and John Doyard, Chief Financial Officer. For today's conference call, we have included a presentation which is filed with the SEC and is available on our website at www.theshiftgroup.com. You may download the presentation from the investor relations section of our website to follow along with our presentation during the 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 regarding the shift group and its operations may be considered forward-looking statements. 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. Except, as required by law, the company undertakes no obligation to update or revise its forward-looking statements. I'd like to remind everyone that our divestiture of the emergency response vehicle business on February 1, 2020, is classified as discontinued operation. The results discussed today will refer to continuing operations unless otherwise noted. With that, I'm pleased to turn the call over to Darrell Adams, beginning on slide three.

Thank you, Randy. Good morning, and thank you for joining us to discuss our second quarter 2022 results. Before I begin, I'd like to welcome Randy Wilson to the SHIFT group. We are thrilled to have him on our team, and we look forward to Randy being an excellent liaison between the company and the investment community. Turning to the quarter, we were pleased with our results as the team continued to manage through supply chain disruptions and inflationary pressures that are affecting the entire vehicle industry. Our specialty vehicle business once again delivered solid results, and we continue to see strong demand across all of our products. We saw good margin expansion in the SV business, reflecting the continued efforts by our team to drive efficiency in our operations. As we discussed on the last earnings conference call, chassis supply disruption continued to impact our fleet vehicle business. But we are pleased to report that disruptions peaked in April and availability improved steadily through May and June, which was in line with our expectations. The improvement came from the release of units that were produced but on hold at the end of the quarter, as well as increased production levels at the OEMs. While the OEMs are not yet back to full production, the improvement does give us confidence as we look out into the second half of the year. We also continue to make progress on our Blue Arc electric vehicle, which is essential for our customers' long-term vision for sustainable fleet operations. Turning to slide four, demand within our market remains strong and backlog remains robust. In the quarter, we achieved revenue of $232 million. with the results of pricing actions partially offset the decline in unit volume given the challenges with chassis supply. Profitability was consistent with our previously communicated expectations as supply chain conditions improved compared to the first quarter. Our team maintained a focused and nimble approach to our operations and remains committed to prudent cost management while also continuing to invest in automation and lean principles to drive efficiency in our operations. Backlog is 1.1 billion, up 51% versus prior year, but down sequentially 138 million, or 11%, as production outpaced new orders. Please turn to slide five, where we can discuss our business segments. We expect the fleet vehicle services to have a difficult quarter, given the chassis supply issues. That said, our team did not stand still. Throughout the quarter, We remained diligent in managing through supply chain disruptions, flexed production as needed, launched the Velocity M3 and R2 production vehicles, accelerated automation in our factories, and continued to win new business. I'd like to discuss two areas that highlight our growth efforts. In our truck body business, our backlog remains at all-time highs, and we have seen positive order trends from grocery and leasing. Also, we are continuing to make strides as we ramp production in Lantusville, which will support the growth we are seeing in the business. Second, we continue to invest in new technologies to enhance the efficiency of our operations and drive toward our goal of having more sustainable manufacturing processes. As an example, our Bristol facility installed an automated robotic painting system, which reduces material and labor costs, improves quality, and lowers emissions of volatile organic compounds. Turning to special vehicle segment, the business continued its strong performance for the first quarter as we are focused on our growth strategy. Even in the face of some supply chain challenges, our motorhome chassis business continued to perform well, and our service body business saw significant growth despite chassis supply constraints. The team's efforts generated solid growth in the sales and demonstrated the operating leverage in our model. with even better growth in adjusted EBITDA. IN Class A motorhomes, our target segment of the RV market, is healthy as dealer inventories remain at historic lows, and our share continues to be very strong. We expect these trends to continue for the balance of the year. In the quarter, we launched the Red Diamond aftermarket brand to expand our luxury motorhome parts and service business for RV chassis and other motorhome chassis. Across our service body business, we are executing on our strategy of expanding our position as a leading national service body player. We continue to make strides in our geographic expansion initiatives, and we saw continued progress in our Charlotte ship-through location with the shift to 2023 model year products. Demand remains robust, and customers spend up to replacement demand in addition to market growth. We continued healthy growth trends in our key markets. We feel confident in the continued performance of SV in the second half of the year. Please turn to slide six. Blue Arc product development progress is on track as we hit key project milestones. We began to build prototypes and continue to solidify the supply base. We have made considerable progress and remain on track to deliver these exciting new products in 2023. We remain excited about the feedback we received regarding Blue Arc EV solutions while attending the ACT show in May. And we continue to have high levels of interest from fleet operators and other vocations. Last week, I had the pleasure of joining Blue Arc team as they showcased the Blue Arc Power Cube and EV delivery vehicle in Washington, DC to members of Congress and governmental agencies. We highlighted our efforts to reduce greenhouse gas emissions and assist fleet operators in a range of industries to achieve their long-term environmental goals. We'll have customer visits, ride drives, and product showcases later this year and look forward to updating you on Blue Arc during the next earnings call. With that, I'll turn it over to John.