The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Matt Koranda - ROTH Capital Partners - Analyst
: So just maybe want to start off with a more topical question. I think it was just yesterday, the Wall Street Journal reported the competitor of yours
was looking to break exclusivity with Amazon given some of the volumes that they were bringing to them.
Just curious to get your perspective on sort of what that means for the large program in general. Does it have any impact on you? What are the
puts and takes around that type of news?
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay, great. And then you recently got EPA approval for the Blue Arc Class 3. Just curious if you could kind of walk folks through the significance
of the EPA approval, what the range was on that -- the approval that you got, how that sort of vectors into fleet considerations around ordering
for the electric chassis.
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay. Great. So you've got functional vehicles, you've got EPA approval. Cars are pending. Maybe talk about the dynamics where fleets need to
get their hands on these vehicles for some testing. Talk about the duration of that period, how they put the vehicle through its paces and then
what do you expect at the end of that?
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay. Great. So it sounds like we could potentially see order flow, like firm order flow sometime late in the second quarter, early third quarter is the
right way to think about the timing of that program?
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay. And I think you guys have suggested there's probably about 200-plus units that you could do this year in the guidance. Maybe speak to sort
of the readiness to ramp production where you're producing the vehicles that were going to ramp up through the course of the second half.
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Great. Maybe, Jon, could you speak to -- I think it's a fair assumption that the ramp up is embedded in guidance and the margin guidance that you
provided for the full year. But maybe just speak to sort of how the margins progress for the Blue Arc program. How that impacts the SP segment?
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MARCH 14, 2023 / 3:30PM, SHYF.OQ - Shyft Group Inc at ROTH Conference
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay. Great. One more on Blue Arc while we have the time. I think something that folks maybe -- it doesn't hit screens at least when they see your
EBITDA and your margin guidance for this year. Maybe just speak to the OpEx investments that are embedded in the Blue Arc program. Speak to
sort of where you were last year, where you're stepping down to this year, and also the XL Fleet acquisition, the tuck-in that you did recently, that
kind of adds a little bit of expense.
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay, great. And then just the -- I think last week you guys introduced a new product at WorkTruck Week. Speak to the Class 5 electric crew cab
that you put up.
Question: Matt Koranda - ROTH Capital Partners - Analyst
: All right. Great. Very helpful. Since you only have about five minutes here, let's shift over to the FVS segment and sort of talk growth for this year.
You've got a really nice backlog that you can pull from here.
Curious how you're thinking about supply chain because chassis has been an issue in the past in terms of throttling growth back. But you've
highlighted sort of the longer-term opportunity, especially with parcel fleet growing in the high-single digits. And you guys have typically
outperformed the market and taking share there. What are the puts and takes around growth in FVS for 2023? And how do we think about supply
chain and chassis supply as it factors into growth there?
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Absolutely. Maybe just -- could we double-click on order flow really quickly just for a moment here. My understanding is that parcel delivery fleets
are pretty behind in terms of replacement cycle, right? They hadn't been able to procure enough chassis to sort of meet their replacement demands.
There's also expansion demands over the next couple of years across a number of fleets. And so how -- is there a potential that they could hold off
on ordering for a short period of time, but then they're just pushing that pain point out to 2024, 2025? Just talk about the dynamic in terms of
(multiple speakers) --
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay. Let's check in with the audience and see we have about two minutes remaining. So are there any questions in the audience? Raise your hand
if you have any questions. No questions.
All right. Well, I've got one last question, I guess, as it pertains to capital allocation. Maybe just speak to the appetite on the buyback given where
the stock is. Maybe just also M&A funnel, how are we thinking about sort of prioritizing the different buckets where you can deploy your capital,
just given that you do cash flow quite nicely and you will this year as well.
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MARCH 14, 2023 / 3:30PM, SHYF.OQ - Shyft Group Inc at ROTH Conference
Question: Matt Koranda - ROTH Capital Partners - Analyst
: Okay, excellent. With that, we're out of time. Thank you, Daryl. Thank you, Jon.
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