The Shyft Group, Inc.

Good morning and welcome to the SHIFT Group's fourth quarter and full year 2022 conference call and webcast. All participants will be in a listen-only mode until the question and answer session of the conference call. As a reminder, this call is being recorded at the request of the SHIFT Group, and if anyone has any objections, you may disconnect at this time. I would now like to introduce Randy Wilson, Vice President of Investor Relations and Treasury of the SHIFT Group. Mr. Wilson, you may proceed.

Good morning and welcome to the SHIFT Group's fourth quarter and full year 2022 earnings conference call. Joining me on the call today are Daryl Adams, President and Chief Executive Officer, and John Duyard, Chief Financial Officer. Their prepared remarks will be followed by a question and answer session. For today's call, we've included a presentation deck that's been filed with the SEC and is also available on our website. Before we start, please turn to slide two of the presentation for our Safe Harbor Statement. Today's conference call contains forward-looking statements, which are subject to risks that could cause actual results to be materially different from those expressed or implied. All known risks that management believes could materially affect our results are identified in our Forms 10-K N10Q, which are filed with the SEC. We will be discussing non-GAAP information and performance measures we believe are useful in evaluating the company's operating performance. In addition, the results discussed today will refer to continuing operations unless otherwise noted. During today's call, we will provide a business update before moving on to a more detailed review of the results and our 2023 outlook. We will then open the line for Q&A. Please turn to slide three and I'll turn it over to Daryl Adams.

Thank you, Randy. Good morning and thank you for joining us to review our fourth quarter and full year 2022 results. This past year presented numerous challenges in our supply chain that impacted our operations, but I'm proud of the team's ability to execute and close out the year on a high note with solid year-over-year growth in both sales and adjusted EBITDA in the fourth quarter. We've built agility and nimbleness in our approach to operations. Last year, we saw the benefit of this approach as our team effectively navigated in rapidly evolving operating environment to deliver value to our customers. Turning to slide four, I'll update you on our financial summary. The team generated a record $1 billion of sales in the year, up 4%. led by growth across our specialty vehicle portfolio. After a challenging first half, chassis supply stabilized and we saw significant sequential improvement in profitability as our teams were able to improve output. For the full year, profits declined as we made strategic investments in Blue Arc EV and managed through supply chain shortages that impacted operational efficiency. Overall, we achieved adjusted EBITDA of $71 million which included $27 million of EV-related expenses. Turning to slide five, I'm excited about our Blue Arc EV program. The team continues to make good progress and remains on track to our original development timeline. We continue to receive favorable customer feedback and positive results from our developmental testing, which gives us confidence that Blue Arc will help lead the evolution of commercial fleets toward zero-emission vehicles in the coming years. Let me update you on recent results of the Blue Arc team's efforts as we prepare to commence production in the second half of 2023. In January, we completed the acquisition of XL Fleet, which enhances our capabilities to accelerate further innovation at Blue Arc with the addition of a highly talented group of engineers and technical experts. We recently announced the selection of Charlotte, Michigan for the initial Blue Arc production site, which includes a planned investment of $12 million for Blue Arc production and $4 million for other campus enhancements to support future growth. We have received EP certifications and completed Air Resource Board or ARB testing with positive results and are awaiting final approval. We expect the final test results will demonstrate vehicle performance that exceeds the requirements of our customers and differentiates us from our competition. In the coming months, we expect to formally receive ARB certification, qualifying BlueArc for zero emission vehicle incentives. Continue to demonstrate, sorry, continue demonstrations of the BlueArc vehicle with key customers and deliver field testing vehicles to validate performance. Expand our national dealer and service network as we continue to have meaningful discussions with key partners as we look to support our fleet customers. And begin initial pilot and production builds. While the initial development efforts have focused on Class III, due to the enthusiasm around our vehicle, we have accelerated our product roadmap. As a result, we have made significant progress on developing a Class V cab chassis with flexible body options. The Class 5 cab chassis will be on display at the NTA Work Truck Week in March, and the Blue Arc team looks forward to showcasing this important product with you. Please turn to slide six. Remain confident in how we have strategically positioned the company in terms of the end markets that we serve. Given the dynamic operating environment, I wanted to provide additional perspective on how we are viewing these markets for each of our business segments. Starting with fleet vehicle and services business, long-term favorable demand trends for North America parcel remain intact as the secular shift to e-commerce continues. According to industry estimates, domestic parcel volumes will continue to drive demand for our delivery vans. As we sit here today, we are cautious in the near-term outlook as customer feedback and external announcements have been mixed given macroeconomic conditions, which may create uncertainty with fleet operators and influence their near-term capital spending plans. Over time, our expectations are aligned with broader industry reports that there is an increased level of long-term demand for last mile delivery vehicles, and we like how we are positioned. Entering 2023, our backlog provides good near-term visibility We are working through orders to reduce lead times toward more sustainable levels, and we will continue to flex our operations as appropriate. Turning to our specialty vehicle business, our strategy to invest in infrastructure related businesses continues to pay off as service body and contract manufacturing are performing well. As new construction projects get underway, contractors and service providers invest in their fleets to meet the demand of these projects. The success of our infrastructure strategy is evidenced by their strong 22 performance and improved backlog position entering 2023. Turning to our motorhome chassis business, the retail demand in Class A luxury motor coach space that we serve remains more stable than the broader RV market. But unfortunately, after years of robust retail growth, the broader RV industry slowed in 2022. This softening has resulted in elevated dealer inventory levels of smaller motorized and towable units, which has limited the ability of dealers to stock more expensive Class A luxury motor coaches. As a result, our motorhome chassis backlog has declined year over year. We remain excited about our competitive position as our market share increased again in 2022 to 33% in the greater than 400 horsepower diesel class, up two points year over year. This progress has been driven by continued investment in innovation and aftermarket parts and services, and has helped offset the slower industry market conditions. Overall, we have industry-leading brands that are positioned to win in the markets we serve. We remain confident in our team's ability to manage through uncertainty, but continue to remain cautious about the dynamic macro environment With that, I'll turn it over to John to discuss our financial results beginning on slide seven.