Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Profitability grew over-proportionally relative to sales, driven by production ramp-ups, operational efficiencies, and accelerated realization of acquisition synergies.
The group successfully integrated The Shyft Group operations, expanding the North American footprint and simplifying brand architecture within one year of the acquisition. North American growth was fueled by successful walk-in van backlog conversion and record service body production at Royal, which increased 20% over historical averages. European performance benefited from strong commercial execution in the airport segment and the successful launch of the new Aebi Terratrac in the agricultural business.
Management attributed temporary gross margin pressure to unexpected supply chain disruptions and material cost inflation linked to geopolitical turmoil. Strategic cross-selling initiatives, such as placing LADOG vehicles into the airport segment, are expanding the addressable market and unlocking new organic growth channels. Management confirmed the 2030 ambition to reach $3 billion in annual sales with adjusted EBITDA margins exceeding 13% through organic growth and disciplined M&A.
The synergy target for The Shyft Group acquisition was increased to over $40 million on an annual run rate, with $37 million expected by year-end 2026. Leverage targets for year-end 2026 were slightly adjusted to 2x or slightly above to accommodate temporary safety stock investments and supply chain protection. Recent sales price increases are expected to fully manifest in gross margin improvements by late 2026 and early 2027 as the current backlog is processed.
Future M&A strategy will focus on reducing winter dependency in Europe, consolidating the commercial business, and expanding the sweeper portfolio in the U.S. Supply chain safety stocks were increased to mitigate risks of material cost inflation and potential disruptions from geopolitical uncertainty. The company maintains a cautious backlog accounting policy, excluding large frame contracts until specific purchase orders are received.
Energy price volatility stemming from Middle East conflicts was cited as a primary driver of recent material cost pressure. The transition of Ford chassis production to Blue Bird is viewed as a positive stabilizer for the industry's critical chassis supply chain. Nvidia-level potential. 30M+ investors trust Moby to find it first.
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