The Shyft Group, Inc. (NASDAQ:SHYF) Q2 2023 Earnings Call Transcript

Daryl Adams: I think from a cancellation perspective, I think we’re probably past probably troughed here in the second quarter. I think when you look at when the demand comes back, I think there’s a couple of variables, one being inventory, I think there needs to be some comfort in a longer and what package volume does or we need to see that start to turn as well, which may happen here in the second half of the year. I think I point back to Daryl’s comments that we continue to have good discussions with customers about the need for vehicles. And so, there’s a bit of a pause or a timing shift here that’s impacting the second half of the year. But the outlook continues to be very solid from our perspective. And so will continue to manage the business through the second half and do that in an efficient manner and be ready to return to production when it comes back.

Matt Koranda: Got it. Makes sense. That’s all from me guys. Thanks.

Operator: The next question is from Claus of Raymond James.

Unidentified Analyst: Hey, good morning, everybody. I was wondering if you have a rough number for us or a rough bogey on what percent of the FVS backlog today is not tied to parcel customers?

Jon Douyard: I would say that it is probably more balanced than what it has been in the last couple of quarters. I don’t have a precise number for you. We can certainly look into that. But we have seen a shift, particularly with the growth in the truck body sort of that mid-mile business shift away from parcel, so I’d say more balanced than what it has been historically.

Unidentified Analyst: Okay. Okay. And then I’m going to circle to Blue Arc and I’m kind of wondering 2 things. But number one, what’s sort of the next milestones that investors should be looking out for, whether that’s dealer partnerships, hard orders, more testing with customers, just maybe if you could help us understand those dynamics better. And then the 50 vehicles in 4Q, I think when you did the EV day, that number was a little bit higher. Can you maybe talk about what’s driving that difference?

Daryl Adams: Yes. Sure. It’s Daryl. I think the next milestones you’re going to see will probably be some dealer agreements and then the service provider agreement. And not sure if we’ll have a press release when we roll out the first vehicle or not, but then it’ll be getting those vehicles off the end of the line after we complete the training of the operators in the virtual and so builds. So, on the number was higher. And I think we talked about it in the past, I don’t remember exactly what form, but one of the brake suppliers that we initially went with had wasn’t going to have a component, so we needed to go to the current brake supplier in their testing was a little bit longer. They did both winter and summer. The other one was only doing 1 battery of testing.

So that pushed it out a little bit and their certification, so they once they get done with a brake testing, they need to certify it internally, and that’s the process they’re in now. So, what we don’t want to do is get the vehicles out there without having that all the certifications we need to make sure it’s a safe vehicle. So that was the main way and there was a little bit of some battery testing that went on, but that’s all behind us now. So, we just want to make sure the vehicle is safe and ready to go for the customer, and we’re not going to jeopardize any of that.

Unidentified Analyst: Okay. So, you don’t think it’s a demand-driven thing?