Spartan Motors Highlights Quarterly Results
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CHARLOTTE, Mich., April 24 /PRNewswire-FirstCall/ — Spartan Motors, Inc. reported its best quarter in company history with a 84.8 percent year-over-year increase in revenues and a 105.1 percent year-over-year increase in net earnings.
First Quarter Results
Spartan reported net earnings of $14.8 million, or $0.45 per diluted share, on net sales of $264.1 million in the first quarter ended March 31, 2008, compared with net earnings of $7.2 million, or $0.22 per diluted share, on net sales of $142.9 million in same quarter of 2007.
“The first quarter was an illustration of our flexible manufacturing model, which enabled us to take advantage of our multiple market strategy,” said John Sztykiel, president and CEO of Spartan Motors. “As we experienced lower demand for motorhome chassis, we emphasized our operational focus on products for our military and emergency-rescue customers. We rescaled our motorhome chassis operations to accommodate the expected decrease in industry demand. The result was increased sales and improved efficiencies.”
Spartan Motors’ consolidated backlog decreased 5.1 percent year-over-year to approximately $237.3 million as of March 31, 2008. Spartan Motors anticipates fulfilling its current backlog orders by January 2009. The current backlog does not include the $45 million order from General Dynamics Land Systems and Force Protection announced in April 2008.
Spartan reported gross margin of 15.4 percent in the first quarter of 2008, a decrease compared with gross margin of 17.3 percent in the same period in 2007, but a 21.3 percent improvement over gross margin of 12.7 percent for the 2007 fourth quarter. Spartan attributed the year-over-year decrease in gross margin to product mix and volume pricing pressures from its military customers. Spartan reported the increase in gross margin compared to the 2007 fourth quarter was due to improved operational efficiencies.
Spartan Chassis
Sales at Spartan Chassis, the company’s largest subsidiary and operating unit, increased 91.6 percent year-over year to $245.3 million for the 2008 first quarter. Sales from Spartan Chassis were 92.9 percent of Spartan Motors’ total consolidated sales in the 2008 first quarter. First quarter net earnings at Spartan Chassis improved 99.1 percent year-over-year, and the unit’s backlog as of March 31, 2008 increased 6.9 percent year-over-year.
Spartan’s chassis sales to the Class A diesel motorhome market decreased 32.1 percent year-over-year in the 2008 first quarter, a favorable comparison to the 33.3 percent year-over-year decrease in industry wholesale shipments for the first two months of 2008, the latest data available from the Recreational vehicle Industry Association (RVIA). Spartan’s backlog for RV chassis decreased 53.6 percent year-over-year to $17.5 million as of March 31, 2008.
Sales of fire truck chassis decreased 2.9 percent in the first quarter of 2008 compared to the same period of last year. Backlog for fire truck chassis at the end of the 2008 first quarter was $70.7 million, a 16.2 percent decrease compared to the 2007 first quarter. Compared to the fourth quarter 2007, backlog for fire truck chassis increased 17.1 percent as Spartan’s OEM customers improved production in response to better competitive conditions.
Other product sales, including specialty chassis for MRAP military vehicles, and Spartan Chassis’ growing service, parts and accessories (SPA) business, increased 330.2 percent year-over-year in the first quarter of 2007. Backlog for other products increased 86.5 percent year-over-year to $99.2 million as of March 31, 2008.
Emergency vehicle Team (EVTeam)
Spartan’s EVTeam operating unit, consisting of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 13.3 percent year-over-year increase in sales for the 2008 first quarter. Though the unit posted a net loss for the quarter, the EVTeam reported a 39.6 percent improvement in segment bottom-line compared to the first quarter of 2007, and a 75.5 percent improvement compared to the fourth quarter of 2007.
Financial Position
Spartan reported an operating cash flow decrease in the 2008 first quarter of $26.6 million compared to a decrease of $6.6 million in the same quarter of 2007, driven largely by increased working capital needs required by the 84.8 percent year-over-year increase in sales in the 2008 first quarter.
On a consolidated basis, Spartan posted a return on invested capital (ROIC) of 42.6 percent in the first quarter of 2008, compared to ROIC of 25.7 percent for the same quarter in 2007. Spartan defines return on invested capital as operating income less taxes, on an annualized basis, divided by total shareholders’ equity.
The company ended the quarter with $84.6 million in long-term debt, which includes financing for Spartan Chassis’ new facilities, as well as growth in working capital to support the sales increase. Spartan reported $5.3 million in cash and cash equivalents at the end of the 2008 first quarter.
Future Outlook
“We believe our improved production efficiencies, along with our strong consolidated backlog, will help generate significant cash flow in the second half of 2008, which will be utilized to grow the business and reduce debt,” said Sztykiel. “Based on key indicators such as increased emergency-rescue orders in the first quarter, a slight improvement in motorhome chassis orders in March, and the recent new orders from two of our military customers, we are optimistic about 2008, yet we remain mindful of the difficult economic conditions affecting one of our core markets.
“Looking ahead to the future, we remain a strategic supplier to the hardened vehicle market for the U.S. and allied foreign militaries for MRAP and similar programs. We are promoting six new products in 2008 that will drive sales starting in 2009. At Spartan Chassis, we are entering the commercial part of the fire truck chassis and the First Response All Call (FRAC) market through the Furion chassis. We are also adding more body up-fit work to our motorhome chassis.
“At Crimson Fire, we are promoting the Boomer, entering the Government Services Administration/Wildfire (GSA) market and showing a FRAC product developed jointly with Road Rescue. At Road Rescue, we are adding a new handicap accessible transport ambulance in addition to the joint FRAC product with Crimson Fire. Between these new market opportunities and our growing service, parts and accessories business, we like our prospects for 2009 and beyond.”
Conference Call & Webcast
Spartan Motors will host a conference call for analysts and portfolio managers at 10 a.m. ET today to discuss these results and current business trends. To listen to a live webcast of the call, please visit , click on “Shareholders,” and then on “Webcasts.”
About Spartan Motors
Spartan Motors, Inc. ( ) designs, engineers and manufactures custom chassis and vehicles for the recreational vehicle, fire truck, ambulance, emergency-rescue and specialty vehicle markets. The Company’s brand names — Spartan(TM), Crimson Fire(TM), Crimson Fire Aerials(TM), and Road Rescue(TM) — are known for quality, value, service and being the first to market with innovative products. The Company employs approximately 1,300 at facilities in Michigan, Pennsylvania, South Carolina, and South Dakota. Spartan reported sales of $681.9 million in 2007 and is focused on becoming the premier manufacturer of specialty vehicles and chassis in North America.
This release contains forward-looking statements, including, without limitation, statements concerning our business, future plans and objectives and the performance of our products. Forward looking statements are identifiable by words such as “believe,”"anticipate,”"will,”"sustain,” and “continue.” These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Technical complications may arise that could prevent the prompt implementation of the plans outlined above. The company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the company’s Annual Report on Form 10-K filing and other filings with the United States Securities and Exchange Commission (available at ). Government contracts and subcontracts typically involve long payment and purchase cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification development and changes, price negotiations and milestone requirements. An announced award of a governmental contract is not equivalent to a finalized executed contract and does not assure that orders will be issued and filled. Government agencies also often retain some portion of fees payable upon completion of a project and collection of contract fees may be delayed for long periods, which can negatively impact both prime contractors and subcontractors. The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise, except as required by law.
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended March 31, 2008 and 2007
March 31, 2008 March 31, 2007
$-000- % $-000- %
Sales 264,095 142,882
Cost of Products Sold 223,465 118,190
Gross Profit 40,630 15.4 24,692 17.3
Operating Expenses:
Research and Development 4,688 1.8 3,790 2.7
Selling, General and
Administrative 12,540 4.7 9,482 6.6
Total Operating Expenses 17,228 6.5 13,272 9.3
Operating Income 23,402 8.9 11,420 8.0
Other Income (Expense):
Interest Expense (732) (0.3) (246) (0.2)
Interest and Other Income 93 0.0 137 0.1
Total Other Income (Expense) (639) (0.3) (109) (0.1)
Earnings before Taxes on Income 22,763 8.6 11,311 7.9
Taxes on Income 7,982 3.0 4,104 2.9
Net Earnings 14,781 5.6 7,207 5.0
Basic Net Earnings per Share 0.46 0.23
Diluted Net Earnings per Share 0.45 0.22
Basic Weighted Average Common
Shares Outstanding 31,954 31,655
Diluted Weighted Average Common
Shares Outstanding 32,512 32,610
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 2008 December 31, 2007
$-000- $-000-
ASSETS
Current assets:
Cash and cash equivalents $5,298 $13,527
Accounts receivable, net 171,708 132,907
Inventories 95,461 103,076
Deferred income tax assets 6,925 6,925
Other current assets 3,461 1,978
Total current assets 282,853 258,413
Property, plant and equipment, net 59,292 56,673
Goodwill 2,457 2,457
Deferred income tax assets 775 775
Other assets 261 346
Total assets $345,638 $318,664
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $71,790 $90,769
Accrued warranty 11,536 10,824
Accrued compensation and related taxes 8,748 10,431
Accrued vacation 1,951 1,758
Accrued customer rebates 1,994 1,963
Deposits from customers 6,163 5,540
Taxes on income 8,361 551
Other current liabilities and
accrued expenses 4,163 3,367
Current portion of long-term debt 523 522
Total current liabilities 115,229 125,725
Other non-current liabilities 1,025 1,025
Long-term debt, less current portion 84,564 62,695
Shareholders’ equity:
Common stock 324 324
Additional paid in capital 63,469 62,649
Retained earnings 81,027 66,246
Total shareholders’ equity 144,820 129,219
Total liabilities and shareholders’ equity $345,638 $318,664
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by
Business Segment
Quarter Ended March 31, 2008
Three Months Ended March 31, 2008 (amounts in thousands)
Business Segments
Chassis EVTeam Other Consolidated
Motorhome Chassis Sales 38,145 38,145
Fire Truck Chassis Sales 29,737 (5,449) 24,288
EVTeam Product Sales 24,252 24,252
Other Product Sales 177,410 177,410
Total Net Sales 245,292 24,252 (5,449) 264,095
Interest Expense (Income) (51) 398 385 732
Depreciation Expense 589 281 457 1,327
Segment Net Earnings
(Loss) 16,644 (436) (1,427) 14,781
Period End Backlog (amounts in thousands)
March 31, June 30, September December March 31,
2007 2007 30, 2007 31, 2007 2008
Motorhome Chassis * 37,679 23,768 26,097 27,312 17,465
Fire Truck Chassis * 84,416 72,097 67,071 60,374 70,720
Other Product * 53,178 131,801 228,803 199,362 99,153
Total Chassis 175,273 227,666 321,971 287,048 187,338
EVTeam Product * 74,843 62,691 61,178 51,316 49,975
Total Backlog 250,116 290,357 383,149 338,364 237,313
* Anticipated time to fill backlog orders; 2 months or less for
motorhome chassis and 4-10 months for fire truck chassis, other product
and EVTeam product
Spartan Motors, Inc.
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