Q4 2020 Shyft Group Inc Earnings Call
Good morning, and welcome to the shift group fourth quarter and full year 2020 earnings conference call.
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Please note. This event is being recorded I would now like to turn the conference over to Juris pay grabs.
Group, the treasurer and head of Investor Relations. Please go ahead.
Thank you Andrew and good morning, everyone and welcome to the shift group's fourth quarter and full year 2020 earnings call.
Joining me on the call today are Daryl Adams, our President and Chief Executive Officer, and John Dooley, 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 the shift group dotcom.
May download the deck from the Investor Relations section of the website to follow along with our presentation during the call.
Before we start todays call. Please turn to slide two of the presentation for our Safe Harbor statement.
Should be aware of that certain statements made during todays conference call, which may include managements 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 predictions or projections. There are number of factors that could cause of the ship groups actual results to differ materially from our 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 the call today, we will provide a business update before moving onto a more detailed review of the results and our outlook for 2021, we will then open the line for Q&A.
I would like to remind everyone debt with the divestiture of the emergency response business on February 1st this past year, the revenues and expenses associated with the <unk> business as well as the assets and liabilities have been reclassified as discontinued operations for all periods presented.
With this reclassification of the air business. The results discussed today will refer to continuing operations unless otherwise noted.
At this time of please turn the call over to Daryl for his comments beginning on slide three.
Thank you Juris good morning, everyone. Thank you for joining us to discuss our fourth quarter and full year 2020 results.
While 2020 has been categorized by many is unprecedented and challenging.
For the shift group it was historic and transformational.
As we strategically align our product portfolio or more profitable growth markets.
Starting with the sale of our ER business.
The shift team showed immense resilience.
Cannot be more proud of their hard work and tremendous effort as the executed on our strategy and delivered a remarkable year.
We invested the innovation with the launch of velocity our purpose built walk in van.
The delivery van vehicle.
And the supporting our customers' growing interest in transitioning to EV technology.
We continued with our M&A initiatives.
<unk> are key acquisition in 2020 of that expanded our product offerings and the service truck body market.
We strengthened our leadership team and added key positions throughout the organization to support our growth.
As well as adding several highly qualified directors to our board.
As we continue to evolve.
We are optimistic as we enter 2021 and are more prepared than ever to proactively address opportunities prioritizing the needs of all of our stakeholders in a way that reflects our goal to be nimble aggressive and positioned to win we have emerged from 2020 in a stronger position and are well equipped to drive growth across.
Our businesses for years to come.
Please turn to slide for well discuss the current environment.
Consumers continue to embrace e-commerce at accelerated rates driving increased demand and parcel delivery and establishing a new normal for delivery capacity.
This demand has required of customers to increase their delivery vehicles fleet size, which is reflected in our backlog as we ended 2020 with nearly $500 million.
Up 40%, which provides us with good visibility as we head into 2020 what.
The help our customers meet this growing demand during the fourth quarter, we began taking orders for the velocity of to.
The purpose built walk in van design for the for transit class II chassis.
This innovative new vehicle is an ideal solution, where parts of the delivery fleet operators that want to expand their fleet and delivery capacity quickly and complement the velocity of three and three vehicles, providing our customers alternative solutions to meet their needs.
And in January we announced philosophy of two orders totaling 3000 units from several customers for delivery. This year. We are scheduled to begin delivering on these orders later this month from our newly upgraded flexible manufacturing facility located in Charlotte, Michigan.
The adoption of this vehicle is a great example of our work driven design methodology, where we listen to our customers needs design engineer and implement our solution. In this instance, our engineers in the out of the park.
As we fulfilled our customers' demand for a more versatile and efficient delivery vehicles.
Continuing to make investments in support of our flexible manufacturing strategy, which allows us to expand product offerings geographically.
And to rebalance our infrastructure to support higher levels of growth over the long run.
We are introducing truck body manufacturing in Kansas City, and service body capabilities at our Florida, and Michigan locations, which includes the addition of a new chassis pool.
We continue to expand our EV capabilities and continue to invest in this area to proactively address our customers' mandate to advance adoption of green vehicles, and the last mile delivery segment.
To that end, we are excited about the progress of the Oems have made in particular, the Ford transit the EV coming out later this year.
Now, let's take a moment to address what we are seeing with respect to the availability of semiconductor chips used in vehicle manufacturing, which has been heavily publicized recently to date we.
We have seen very little impact on our operations. However, it may be a bit too early to assess the full impact of the shortages and we will continue to monitor and keep you apprised of changes.
Our luxury motor coach business continues to perform well benefiting from the resurgence of the RV industry as did our service body business, resulting from the Royal truck body and domain acquisitions ramping up nicely since the peak of the pandemic.
The team of <unk>, which we acquired last October.
Hit the ground running and our integration efforts are well underway, we quickly partnered with their management team to make improvements in production flow.
Has resulted in additional output and cost reductions together with Royal truck body. We continue to be excited about the value creation opportunities. These companies provide with that let me take a moment to summarize our full year results on slide five.
For 2020, we posted solid results despite the significant impact of the pandemic.
Once again, our results demonstrate the success and the effectiveness of our business transformation strategy, which encompasses growth and higher margin product offerings.
Within our core markets.
Increasing market share within our expanding geographic footprint and ongoing productivity improvements within our operations Red.
Revenues for 2020 increased $10.9 million or 2% to $676 million, excluding the EPS order.
EBITDA for the year increased $12 3 million or 19% to $76 million on our adjusted EBITDA margin.
And our adjusted EBIT margin improved 280 basis points to a record 11, three clearly reflecting the power of our business transformation efforts with that I will turn the call over to John to discuss shifts financial results for the fourth quarter in more detail as well as provide our 2020 outlook beginning on slide six.
<unk>.
Thank you Daryl and good morning, everyone.
Please turn to slide seven and I'll provide an overview of our financial results for the fourth quarter.
As Daryl indicated 2020 was a fantastic year for the shift group, while our fourth quarter financials declined year over year, our performance exceeded our expectations, we generated significant cash flow from operations and saw an increase in orders that resulted in a sizable year over year backlog increase positioning us well as we enter 2021.
Revenue for the fourth quarter was $171 $6 million down slightly from the year ago quarter.
Income from continuing operations was $8 $3 million compared to $14 3 million a year ago.
Earnings per share from continuing operations was 22 per share compared to <unk> 40 per share in the fourth quarter of 2019.
Turning to slide eight Q4 adjusted EBITDA.
From continuing operations decreased to $16 million from $23 $6 million, while as a percentage of sales adjusted EBITDA from continuing operations declined to nine 3% of sales compared to 13, one percentage of sales in the same period last year.
For the fourth quarter adjusted net income from continuing operations was $10 $1 million of $6 $4 million decrease from $16 5 million a year ago and adjusted EPS from continuing operations was 27 per share compared to <unk> 47 per share at this time last year.
Next we will jump into results by operating segment.
Let's begin with fleet vehicles and services on slide nine.
Our SCS business posted solid results for the quarter and full year, while working closely with customers in a dynamic environment that ultimately resulted in significant order activity.
The S generated total revenue of $112 $4 million compared to $132 5 million a year ago.
The decline was primarily due to lower cargo van up fit volume.
Truck body revenue was also down versus the year ago, but improved sequentially as expected following pandemic headwinds in the second and third quarters.
In addition, it's important to note the fourth quarter revenues were also impacted by the acceleration of vehicles into Q3, as we supported our customer demand.
Which we discussed in the prior call.
<unk> adjusted EBITDA declined to $16 $6 million from $21 1 million a year ago.
On a percentage basis, adjusted EBITDA margin decreased 110 basis points for.
The 14, 8% of sales driven by lower volumes and product mix as well as investments required to support the increase in volume expected in 2021.
Our backlog position was incredibly strong as we closed out the year the pickup in order activity that we noted on our Q3 earnings call continued throughout the quarter, resulting in a record backlog of $427 million, which was up 40% versus prior year.
Please turn to slide 10 for the specialty vehicles segment overview.
Specialty vehicles had a good finish to the year as well with the second consecutive quarter of strong double digit growth in motor home and the completion of the <unk> acquisition.
Similar to our FBS business, we saw favorable commercial demand of positions us well entering 2021.
Sales of $59 $2 million, an increase of $11 $8 million or 25% was primarily driven by 30% increase in luxury motor coach chassis volume as well as the addition of revenue from the <unk> acquisition.
Partially offset by lower contract manufacturing volume and lower Royal truck body revenue due to the impacts of Covid.
Organically the business grew 8% in the quarter.
Adjusted EBITDA was $6 $9 million or 11, 6% of sales compared to $6 9 million or $13 9 million or 13, 9% of sales in the same period last year as cost productivity was offset by the unfavorable mix impact of higher motor coach volume integration related expenses and lower efficiency.
Due to Covid.
As the backlog was up 67% to $51 million, which included strong growth in motor home chassis backlog as well as the backlog from our service body acquisitions.
Please turn to the liquidity and outlook update on slide 11.
Throughout the year the team did a fantastic job managing cash flow and investing in our future.
We generated $66 million of cash from operating activities ending the year with $21 million of cash on hand and of $147 million in total liquidity.
We paid down we paid down $65 million.
On a revolving credit facility.
Our current leverage ratio stands at four times, adjusted EBITDA, which positions us well to fund our operations and to continue to invest in our growth strategy.
We also returned $11 million in cash to our shareholders in 2020 in the form of a regular dividend and the repurchase of 300000 shares. We have subsequently purchased an additional 100000 shares in Q1, taking our total purchases to 400000 shares over the last for months at an average price of $27 per share.
We are extremely proud of our overall performance given the significant challenges we faced this year.
As we enter 2021 or.
Our backlog of solid and we're increasingly optimistic regarding the underlying strength of our end markets.
Given these factors we are excited to introduce our 2021 guidance.
We expect to see significant growth with both revenue and profit is up approximately 30% year over year with revenue in the range of $850 to $900 million.
Adjusted EBITDA of $95 million to $105 million.
And adjusted EPS of $1 65 to $1 85 per share.
To support this growth and our future production needs.
We expect Capex for 2021 to be in the range of $20 million to $25 million as we plan to make additional investments for velocity vehicle production and to support other growth initiatives.
Now I'll turn the call back to Daryl for closing remarks.
Thank you John <unk>.
Despite the many very challenges 2020 brought we had an incredibly successful year I want to reemphasize, how proud I am of the hard work dedication and commitment to excellence demonstrated by our team throughout this unusual year, when we faced an adverse economy within an environment characterized by fear and uncertainty.
Our team rose to the occasion this week with the in recognition of their hard work and relentless commitment to the business and our customers. We awarded all of our employees a special of $500 bonus.
As we move into 2021, we're excited by the power and earnings potential of our newly transformed and evolving company.
We will continue to invest in new products in markets with increased focus on EV.
In response to our customers' request and the last mile delivery space.
And we will make prudent choices on M&A opportunities that will deliver shareholder value for years to come.
With that operator.
We are ready to take the Q&A portion of the call.
Okay.
We will now begin the question and answer session to ask the question you May Press Star then one on your telephone keypad.
If you are using a speakerphone. Please pick up your handset before pressing the keys is that any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Mike Schilsky of Colliers Securities. Please go ahead.
Okay. Good morning, guys.
Good morning.
So I just wanted to get a little color on the very near term outlook here in the in the first quarter.
Largely on the margin side actually.
Both of the revenue on the margin side.
Are there any concerns we should be thinking about as far as the price of steel in the near term availability of chassis for many of the Oems and the.
The kind of near term what do you think this will be somewhat normal seasonality of for you. This year.
Yes, I think this is John.
I think as we start off of the year.
I would expect.
Normal seasonality I think.
The Q1 will look somewhat similar to Q1 of last year.
In terms of aluminum and steel pricing and commodity pricing in general.
We certainly are monitoring this on a regular basis.
We have I think the discussed in the past talked about inflation.
The labor side of things as well, which will be a bit of a headwind for us this year.
But on the aluminum.
In particular, we feel like we're in good shape here certainly through the first half of the year.
And that the second half of the year I think from of chassis perspective, we've seen little impact I think as Daryl noted.
Continue to stay close to it with our customers, but we don't see any short term impact here in the first quarter probably in the first half.
Great.
Thanks for that.
Can we switch over sort of the.
The some commentary on the on the EV market I'm, just kind of curious.
Right at this point of your offering both in certain models at least I'm kind of curious what else what else some customers telling you about their desire to adopt Tvs in 2021 in general.
Do you think that we're out of any kind of a tipping point of change of a point over the next couple of quarters.
Yes, Mike This is Daryl I'll take this I think.
We're going to stay consistent with what we've talked about in the past.
We believe EV has come in.
I think there's been some recent changes by some of the Oems.
And how that will allow.
Conversion of the ice vehicles to EV that I think is going to.
Have a little bit of a problem for some of the EV startups.
But.
We're still in a good position we continue to.
Had requests from our customers.
Alright, and they continue to get stronger.
For us to play a bigger role in EV on their vehicles, because theyre not seen.
They're not having anyone meet their needs in the market today.
So I think over the next.
Probably three quarters of so maybe by the end of the year.
We've seen what are the customers end.
Understand their needs.
The more closely.
And I understand what youre not seeing we have a good idea, but we're looking for some type of a partnership with them.
If they wanted to get serious about it with us.
Other than that we're still offering all of the products. We have we're excited about the Ford transit the EV.
And I think it's playing out as we expected.
Okay, and then just switching over to the philosophy of too.
Just wanted to get a feel for it.
<unk> got some orders for it now are there of orders that youre not going on a different product or is this more of a white space for you.
And then just kind of curious also.
What's the capacity of that vehicles compared to.
You have to be of other or other categories that you currently offer credit credit pull from your from your primary of cargo van business with debt for transit.
Yeah, I think Mike the.
We're excited about the orders were excited about continue to be excited about.
The conversations we're having.
The the vehicle is not cannibalizing any other volume we have.
Debt, we've seen and I think you can see that in our backlog right.
It is additive.
In all respects.
And the capacity in that facility.
We have another ship, we can add on if needed.
And then if it continues to accelerate from there.
Whether it's the velocity, whether it's our walk in van or it's the update we do.
I think the team is proven.
The last three years that we are flexible we can adjust with our.
Customers' needs.
And we can do that better than anybody in our space and we've proven it.
So we will if we need additional volume we have locations we've talked about some of the things we're doing moving service body of Donlin.
Two.
Florida, and then moving truck body in the Kansas City, right, which is all based on our backlog and the increase we're seeing so.
Our move years ago, probably three or four years ago to start building flexible manufacturing facilities is starting to the.
<unk> benefits right now.
Great John Thanks, So much I'll pass it along.
Thanks, Mike.
The next question.
<unk> from Steve Dyer with Craig Hallum. Please go ahead.
Thanks, Good morning, guys.
FBS backlog was up pretty significantly sequentially.
Is there any sort of large customer or overwhelmingly large order of their visit.
Fairly well spread out.
Yes, I think the.
Probably won't get specifically in the customers, but I think of.
Big driver of that.
Whereas the velocity order, which was in the backlog at the end of the year.
And to Daryl point, we saw the incremental volume from that.
And.
It's reflected in that number.
Yes, Steve I would also say that.
I think.
We've talked about it there's a lot of questions due to COVID-19 into Q2.
In Q3, and I think some of our investors who are frustrated.
By Us, saying, Hey, we're meeting with them, they're going to come.
The backlog is showing.
What we were talking about it's common.
And I think there is.
As they continue to understand.
The.
The market and how people are going to continue to buy.
Online.
I don't know about you, but I.
I saw more.
Rental vehicles being used.
Our Fedex.
Fedex EPS, Amazon and others, the deliver vehicles this year than ever before.
And we've heard that from them as well so the order the backlog is dispersed I think we're seeing it from.
At least two of the bigger.
The delivery customers.
And whereas some talks with the third on some thanks for this year.
Got it and then any update I know you have I think been piloting some things around food delivery with the refrigeration unit on them et cetera, anything sort of new to report on the on the food delivery piece of things.
We continue to refine our product based on customer feedback.
Working with different companies to try to.
Give them the most economical and efficient.
Efficient group.
<unk> unit, they can get with.
To the respect and I think.
I talked before this is the new space.
I was just going to take a little bit longer to understand exactly how they're going to use the vehicles.
So we're continuing to have dialogue and supply different Rev levels of vehicles, the <unk> test.
Okay.
And you touched on the flexible manufacturing just kind of curious as you look at your capacity both in terms of raw amount of capacity and what you have and where in the country of how are.
Are you still looking to sort of add there I know you've kind of put a ring around the country in the last two three years, but where are you as it relates to additional.
Additional capacity GR geographically.
I think.
Go back and look we've added capacity in Florida. Another facility, we've added capacity in Kansas City.
We made the acquisition.
The main without three.
We.
Move some things around and share a lot to give us some space for the last day, So I think.
It's a very good question because right now I think we are.
Pretty much out of space. So the next move would have to be some type of the additional facility and that's some of the capital that we're expecting to have this year as volume continues to grow.
And then just lastly for me and I'll hand, it over as it relates to acquisitions, you still sort of heavier eye out for the right strategic fit or any color. There would be helpful is to sort of your appetite.
Yes.
Yes.
And I think everybody understands last year was a little slow and this year, we're starting to see.
More activity.
We're still looking for the <unk>.
Third leg, if you will larger acquisition.
But there are a number of ones that were actually just actually were close to one and then decided that the.
It wasn't the right fit right now.
No.
We moved away, but theres plenty on the table that we're looking at and.
Look forward to some some more activity before the end of the year.
Alright got it congratulations guys. Thanks.
Thank you.
The next question comes from Felix session of Raymond James. Please go ahead.
Hey, good morning, everybody.
Good morning.
Hey, I was just hoping to start with the click point of clarification, the backlog number and fleet vehicles was obviously very very strong.
Just to clarify was the full 3000 velocity order included in that backlog number as of as of $14 20.
That's correct.
Got it Okay and then maybe just one last question on the velocity Daryl.
From a bigger picture standpoint.
Can you just talk to us a little bit about the shift toward lower vehicles side of the specifically in the parcel market I think it's been happening for a while but it seems like that should be of big tailwind for the velocity. Just curious if you could update us on how customer conversations of tracked kind of over the first three months of the year here.
Yes.
<unk>.
Good question of Felix has actually started right. After we rolled this out.
Helping them understand the benefits.
Yes.
Excuse me, we we've talked before that the.
Fuel efficiency is double the typical class for walk in vans.
And in the the.
Payload is very similar.
And the size so.
Really nice fit in the class III space debt.
The class III space versus the cargo ban.
Has the limited.
Face capacity for payload and cargo volume.
And that was the feedback we received.
From our customers early on when we were developing this which you know the engineers honestly they did hit it out of the park with this.
Great great dial in the the vehicles flexible we've actually had some request too.
Lower the heights of the vehicle inside and it's a simple change for us.
Low with the roof of little bit to get some more aerodynamics and maybe moving to some vehicle.
Tightness that they might have been an area of the country and it was a quick change for us.
Look again, the engineers that are really nice job designing initiatives. It is maybe I should say flexible.
Wherein the suggestible, where it needed to be so it's exciting new vehicle for us.
Got it that's helpful. And then maybe switching to the margin side, a little bit as we think about the 'twenty one outlook.
I know, there's quite a few moving pieces in the P&L and you talked about very little impact on the chip side, so far but John curious if you're baking in any sort of supply chain drags into the guide and then if you could maybe help us out a little bit on temporary cost cuts of how much you can kind of anticipate rolling back into the P&L of this year as maybe we see.
The T&D and travel come back online.
Yes, so as we I mean, as we look at sort of year over year headwinds from that perspective.
Did take out about $2 $5 million of short term.
Countermeasures in in the second quarter.
As you think about how that flows into 2021, that's really offset by some of the restructuring benefits that we did.
I think on top of that we saw health care expenses.
The decline in 2020 and so.
There will be we're estimating about $4 million of headwind related to healthcare expenses. We've also.
We've also got.
Increased some of the wage inflation and the increases in the hourly labor rate, particularly as we are trying to ramp.
Pretty significantly in a number of our facilities as you've probably seen from.
Some of the press releases and social media activity that we've had.
And so those are headwinds as well as getting.
Essentially of business off the ground with velocity.
We started investing in that in Q4.
And we will continue to invest in that here in the first one first part of the year to be able to hit the volume levels that we anticipate going forward and so.
As you look at those items.
We are if you look at the midpoint of the guidance, we're showing some slight margin expansion there.
Year over year.
But there certainly are cost headwinds from that perspective as well.
Okay that was Super helpful. And then just just for my last one you briefly touched on it.
But in your presentation, you guys talk about a little bit of expanding the network from the facility footprint could you talk about the other point of the side of capacity specifically on labor.
How is that sort of track and has it been of constrained the production I guess, that's my bigger question.
Yes. This is Daryl Felix.
It has not been of constraint to production.
The HR teams at locations.
That are hiring or are still pushing job fairs and having.
Good attendance to them.
So right now we don't see it hindering us at all.
As we move through the ramp and the volume increases will continue to monitor of right now were the HR teams are doing a great job along.
The along with the ops teams interviewing training and getting new people on the floor.
Got it I appreciate it I'll leave it there.
Thank you.
For.
Good.
The the housekeeping question the <unk>.
Next question comes from Steve O'hara of Sidoti <unk> Company. Please go ahead.
Hi, good morning, Thanks for taking the question.
Good morning, Steve.
Good morning, just maybe on the Capex.
I mean, it seems like a pretty big increase for 2021.
But I'm just kind of curious how you think about it maybe going forward I mean is this something kind of.
For your building out facilities that can be used longer term in the capex drops back or as Capex kind of are you.
The step function change.
No I think it's.
I'd say its of Europe of investment to meet the.
And increasingly applying here.
Certainly the velocity is the largest piece of that.
<unk>.
As Daryl talked about basically launching of new facility designed specifically for that line too.
Dominate the volume levels.
We're also.
We talked about Kansas City expansion.
The truck body markets until there'll be some investment associated with that.
There is.
I'd say two or three larger investments that we need this year in order to support the volume increase and we should see the benefits of that.
Debt capacity as we move forward into <unk> into 'twenty, two and beyond.
Steve.
Ed.
A little bit more internally, we're adding.
We're buying lasers.
At a number of facilities along with some fabrication equipment in order to continue.
Continue to optimize the purchase parts and make buy.
And the teams are doing a really nice job with getting these launch and we're seeing the payback.
Less than a year. So that's some of the additional capital the besides of the facility as part of the John was talking about.
Okay. That's helpful and then.
I guess, if you think about the.
The fleets that are on the road today.
It would seem like utilization was very high in 2020.
I mean is that does that shorten the sales.
Lifespan does that.
The pace of the replacement cycle.
How do you think that plays out or maybe even takes.
Part of that.
It's factored in.
Can you talk about maybe the replacement cycle down the road if theres been you think theres been any change there in terms of.
The utilization was in 2020.
Yeah, absolutely 100%.
We are seeing.
Having dialogue with customers.
For instance, the typical.
Last for walk in vans in the past has been labeled as the 15 year life.
We're seeing that through conversations and some of the dialogue, it's coming in somewhere maybe around 12 or so.
And we're seeing the the cargo vans and there's a lot of the class twos.
Expectations for the customers were.
Seven years in the coming in.
Some of the.
Or five and some maybe a little bit less dependent on the routes but.
For the two.
Your point utilization the the.
The.
The amount of volume that's going through all of the vehicles is going to shorten the life and we're having that dialogue now so we actually believe that debt will start.
A little bit maybe next year and then continue.
'twenty three and beyond.
Some of that replacement cycle, that's coming in quicker.
Okay.
And then maybe just switching to EV.
I mean, I think you know in the past you guys have talked about Steve.
Staying agnostic on that side.
I guess, you know GM kind of launched their platform and I'm just kind of curious.
Yes.
That kind of the.
Do you expect it.
Do you want to stay agnostic and continue to deal with everybody.
And then maybe what you think.
You know how how EV starts to build in terms of the next few years in terms of penetration I mean do you see it.
At 20% of deliveries five years from now 50% of just kind of curious how you see that playing out maybe.
Yes.
I think if I could.
The accurate on that estimate.
[laughter], we'd know exactly what we're doing on <unk> and so what everyone else. So.
A bit of a.
I don't know say low to question, but it's a difficult question. So what we do Steve we we actually go to.
The different outside sources.
We had it in our analyst earnings debt.
Sure.
<unk>.
By 2030.
Some of the larger.
I think it was Bloomberg actually.
So as I think by 2030 of might be 25%.
I would've loved to have seen what they predicted for 2020 of 2021 and see how accurate they were but.
So we don't try to predict ourself, we use outside sources.
And that's what everybody I think is looking at.
It is coming it's going to get I think theres going to be somewhat lower volume first.
But.
To your point of us being agnostic and I think I.
I mentioned it a couple of times in the script today.
We're getting a lot of pressure from our customers because they're actually not.
Are you receiving any vehicles that that meet their needs.
And I think their needs are evolving so that's some of of.
What might be.
And our view on it but it's going to take some more analysis since more of review but.
Now our positions of the same we are we did say we're going to bridge the gap for the Oems to come out in.
For us coming out with theirs later this year and Mercedes will have theirs. We believe next year is still on track.
We understand that the F.
The a slashed the lantus is working on one so.
Eventually right.
It will be there and I did mention that one.
One of the Oems.
Stopped letting people convert the ice engines or vehicles over to EV.
And maintain the warranty. So if you do that any more of the warranties are buoyed.
Boy did so it's going to.
That's new news, that's going to create some some havoc here I think in the EV space in the next probably quarter or two.
Okay.
And then just maybe within the.
FBS, maybe you mentioned it but.
The backlog and the growth there I mean is that primarily kind of on the.
Parcel delivery and.
It seemed like truck body was kind.
Kind of ramping up.
But maybe how you see that playing out.
Kind of first.
Kind of meet the.
Kind of acute demand on the on the.
The parcel delivery side and then they have to deal with the truck body.
When they've kind of gotten their fleets in shape again is that how you see playing out.
I would say, we've actually seen pretty strong orders across all of the product offerings.
Chuck the truck body not excluded so.
The truck bodies of up fit and.
And walk in van have seen.
Seen strength through the end of the year velocity was obviously, a big piece of that as we talked about.
And as we look here in Q1, we continued to see sort of strong order patterns.
Continue to have good discussions with our customers about their needs.
And it gets back to the the.
The the point, they're all made in the script about were operating essentially at a new normal level.
With with extremely high rental utilization in Q4, and Thats kind of normalize itself through the market and so our customer base is really building out for.
For that situation.
Okay, Alright, thanks, Tim Thanks.
Thanks for the time.
Thanks, Steve.
The next question comes from Matt Koranda of Roth capital.
Please go ahead.
Hey, guys good morning.
Just wanted to start off by maybe zooming out and discussing the guidance at a higher level. So.
Could you just help us understand the basic assumptions around the split between the us and specialty vehicle. That's in the outlook and then how much are you assuming in terms of inorganic contribution from <unk>.
Yes, so when we look at the guidance, we actually see.
We see strong year over year growth in both both of the segments both of them are actually growing.
Pretty much right on that target of about 30%.
And there's two different dynamics there you have got on the SBA side of the business you've got strong tailwind is coming out of the motor home business.
Where we also saw.
I would call it a softer first half and so theres some COVID-19 recovery in there.
As well as the the.
The inorganic piece to two to Derek Mac as you talked about.
On the fleet side of the business, it's really the expansion of products and the continued continued growth in the parcel delivery side of the business, but we see both.
The strong going forward I would say.
From an organic perspective.
There's probably call it three points of of.
Of that growth that's the.
The inorganic.
Or acquisition related.
Okay. That's helpful.
I'm sorry go ahead.
Yes, because they're not not a significant contributor year over year given the.
For the $200 million increase in revenue.
Yep Gotcha that makes sense.
And then I wondered if you could just talk a little bit about the order environment currently as we're heading into the spring because I know that at the us typically.
<unk>.
The seasonal order pattern.
Yeah, generally picks up kind of heading into the spring.
Just wanted to get a sense for did we get pull forward and order activity with that larger velocity order that you guys have referenced.
Or is that just additive to the normal seasonality that we should expect heading forward just talk a little bit about the current order environment, especially for EPS.
Yes, I think it's tough to describe anything as normal.
Given given the current environment for operating in.
I think that the velocity piece was was.
Certainly incremental I think the dynamics last year, where.
Where we saw a very slow ordering happening through the second late second and third quarter.
There was bit of an acceleration in pickup.
Probably not aligned with historic seasonality.
But to my comment earlier I think we continue to see.
Strong order patterns.
Here as we.
Our into Q1.
Their customers are getting smarter about for fleet sizing in the.
Capacity requirements and those types of things and we continue to stay close to them.
Being an order.
Interest on all of our products across.
Of our support motor homeland and the.
Yes.
In terms of bodies.
Great.
And then lastly, just on that the us I wondered if you guys could help us maybe just characterize.
<unk> to produce because at some point it seems like you've got of high quality problem on your how much of the backlog is so large that maybe the detours order flow.
But wanted to get a sense for how quickly can we ramp up capacity there and then I know you've referenced a lot of different sort of puts and takes around.
You know what could constrain you there, but could you just put a finer point on one of the maybe one or two kind of gating items in terms of your ability to ramp up production.
Yes.
Yeah.
The attempt to answer this one Matt.
So I mentioned some of the the.
Laser equipment, we're buying in some of the press breaks.
Those were down in Bristol kind of along with some other facilities.
Of that is helping some of the supply constraints.
We were seeing.
And obviously getting some some nice payback too.
We as I mentioned before we typically run on a shift shift in the half.
So we still have.
To fill out the second shifts and if we need to go to the third.
But the team is really doing an.
An amazing job with the kaizen events.
And put it in some some automation.
In the plant to help with the throughput.
We are in the middle of right now moving what we call our assets the vehicles.
I will show the heavy heavy.
Maybe like for the electrical companies of the power companies.
Hum.
So where companies right for the cities.
We are moving moving at two of different facility in.
Bristol moving out of the the main plant to give it more room to operate with some of the.
The orders, we're getting the only.
The only real constraint, we have is will be paint.
But we have.
Of backup for paint if the orders continue to flow and I'll get to that level, but.
Number of units away from reaching that level right now.
On a daily basis that is.
Okay.
Okay got it the very helpful. Daryl ill jump back in queue here.
Yeah of another question Matt.
Okay go ahead, sorry, Andrew.
Okay.
Apologies. This concludes our question and answer session I would like to turn the conference back over to Juris pay grabs pretty closing remarks.
Thanks, Andrew and thanks, everyone for joining us today, we have a couple of conferences that we're going to be participating in it in the next couple of weeks Roth.
Next week of Sidoti So virtual we look forward to the day when we can do this in person.
And.
With that thanks.
Thanks for joining and we look forward to keeping you updated on our progress throughout 2021. Thanks, everyone. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yeah.
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Okay.
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