CHARLOTTE, Mich., Feb. 17 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today announced a 31.5 percent increase in fourth quarter net
sales, but lower net earnings due to higher material costs and strategic
investments at its emergency vehicle subsidiaries.
The Charlotte, Mich.-based manufacturer of custom motorhome chassis, fire
truck chassis and emergency-rescue vehicles reported net earnings of $395,000,
or $0.03 per diluted share, on net sales of $80.3 million for the fourth
quarter of 2004, versus net earnings of $1.3 million, or $0.10 per diluted
share, on net sales of $61.1 million for the same quarter of last year.
Spartan said its quarterly sales were driven by market share gains at its
Spartan Chassis subsidiary, which makes motorhome and fire truck chassis.
However, higher sales in the quarter were offset by increased material costs
at Spartan Chassis and continued production inefficiencies at its Emergency
Vehicle Team (EVTeam) companies — Crimson Fire and Road Rescue. Spartan said
its transition of production at Crimson Fire from its Alabama facility to its
South Dakota headquarters, coupled with a move into a new building, as well as
increased production costs at Road Rescue due to the need to outsource some
manufacturing to meet customer delivery schedules, led to the net earnings
decline in the fourth quarter.
For the year ended December 31, 2004, Spartan reported earnings from
continuing operations grew 32.5 percent to $5.9 million, or $0.46 per diluted
share, on net sales of $312.3 million, versus earnings from continuing
operations of $4.4 million, or $0.36 per diluted share, on net sales of
$237.4 million in 2003. Including the one-time gain in 2003 from its
discontinued Carpenter school bus unit, Spartan posted net earnings of
$6.0 million, or $0.49 per diluted share, in 2003.
“Looking at last year, we are pleased with our top-line growth, but
clearly disappointed in our earnings performance as our strategic investments,
while critical to our future, were more costly than expected,” said John
Sztykiel, president and CEO of Spartan Motors. “I am, though, pleased with
the platform we’ve created, as shown by our record backlog of $117.6 million.
We now have a full-line fire truck company with the addition of Crimson Fire
Aerials, and the capacity for growth thanks to our new Crimson Fire facility.
We have Road Rescue moving in the right direction from both a leadership and
operations perspective, and we see the true potential of Spartan in our most
mature business, Spartan Chassis, where our product development efforts led to
strong sales growth and market share gains.”
Sztykiel added: “While our fourth quarter mirrored our year in terms of
production challenges overshadowing our positive sales momentum, we were
intent on completing all the transition moves and related one-time costs in
the quarter with a look toward 2005 as our breakout year.”
Fourth Quarter 2004 Results
Spartan reported that consolidated gross margin declined from the prior
year period, driven by the continued higher cost of steel as well as
production constraints at Crimson Fire and Road Rescue. Gross margin was 11.9
percent in the 2004 fourth quarter, compared to 14.9 percent for the same
period in 2003 and 12.2 percent in the third quarter of 2004. Spartan said
steel surcharges accounted for a reduction in pre-tax earnings of more than
$900,000, or $0.07 pre-tax per share, during the 2004 fourth quarter and $2.8
million, or $0.22 per share, of pre-tax earnings for 2004.
“We have been able to pass some of our material cost increases on to
customers and have worked successfully with several of our suppliers during
the fourth quarter to reduce the steel price impact,” said Chief Financial
Officer Jim Knapp. “Based on our model year pricing in the RV chassis
business as well as our long lead times in fire trucks and emergency vehicles,
we expect to recapture more of the steel price surcharges during the first
quarter in emergency vehicles and in the third quarter of 2005 in RVs.”
Total operating expenses increased on a dollar basis, but declined as a
percentage of sales from 11.9 percent in 2003 to 10.8 percent in the 2004
fourth quarter. SG&A (selling, general and administrative) expense as a
percentage of sales declined to 8.1 percent in the period versus 9.2 percent
last year.
Spartan Chassis
Sales at Spartan Chassis grew by 36.1 percent in the fourth quarter,
driven by a 56.0 percent increase in RV chassis sales. Spartan said market
share gains, coupled with overall growth in Class A diesel-powered RVs as a
percentage of total motorhome sales, helped it far outpace moderate growth in
the market segment during the fourth quarter. Spartan posted its best-ever
year of RV chassis sales, recording a 52.2 percent increase in 2004 over the
prior year.
“We had a banner fourth quarter and full year in RV chassis sales, as our
combination of innovation and quality helped us toward our goal of becoming
the most desired brand among OEMs and RV consumers,” said Sztykiel. “Looking
ahead, we expect continued, though less aggressive, growth buoyed by a solid
RV market and our ability to win market share with new and existing customers.
Fire truck chassis sales declined modestly in the fourth quarter
reflecting a slower bid season in the summer of 2004, the time when Spartan
secures orders for fourth quarter production. Despite the decline, Spartan’s
fire truck chassis business grew 15.5 percent for the year on the strength of
new products such as its Gladiator Evolution and Big Easy and growing brand
preference among end-user fire departments.
“We saw the slow summer bid season of 2004 result in lower fourth quarter
sales, but we are pleased by our better-than-market growth for the year,” said
Sztykiel. “In 2005, we expect more growth in our fire truck business,
particularly in the second half of the year based on current bid activity and
our best-ever quarter of orders in the fourth quarter.”
Emergency Vehicle Team (EVTeam)
Spartan said its EVTeam segment reported a loss for the quarter despite a
20.0 percent increase in net sales, due to continuing operational and
transition issues. Crimson Fire reported flat sales compared with the prior
year quarter as production transitioned from its Alabama facility into its
main South Dakota plant and the start-up of its new facility resulted in fewer
trucks produced during the fourth quarter. Crimson Fire Aerials, which was
launched in 2003, continued to increase sales in the fourth quarter 2004 and
remains on track for growth in 2005 based on current orders and bid activity.
Road Rescue’s sales increased over last year’s fourth quarter. Margins
during the fourth quarter of 2004 were negatively impacted by lower than
planned production volume, and a temporary increase in costs driven by the
need to meet customer delivery dates. During the fourth quarter, Spartan also
named Randy Knors as president of Road Rescue, Inc. Knors was previously vice
president of operations at Spartan Chassis, the largest and most profitable
subsidiary of Spartan Motors, and is working closely with the operations team
at Road Rescue to return this subsidiary to profitability.
“Steel surcharges and the continuing production challenges at Road Rescue
were complicated by our facility moves at Crimson Fire and contributed to a
dismal fourth quarter for the EVTeam,” said Sztykiel. “Crimson Fire’s poor
performance in the first half of 2004 necessitated changes which increased
costs to meet second half deliveries. However, our new production facility
went into operation during the fourth quarter as planned, and we are seeing
signs of an improvement in the first quarter.
“We are also greatly encouraged by the ramp-up of Crimson Fire Aerials and
what our status as a full-line fire truck maker is allowing us to do in terms
of bid activity, attracting three new large and influential dealers, and the
overall improved market perception of Crimson Fire.”
Key Metrics
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 1.8 percent in the fourth quarter of 2004 compared with ROIC of 10.8
percent in the same period in 2003. (Spartan defines return on invested
capital by calculating operating income, less taxes, on an annualized basis,
divided by total shareholders’ equity.) Spartan said ROIC was 8.4 percent for
the full year 2004, up from 8.0 percent from the prior year. Consolidated
backlog grew to a record $117.6 million as of December 31, 2004, compared with
backlog of $95.4 million at year-end 2003 and backlog of $106.5 million at the
end of the third quarter 2004.
“Our below-target ROIC performance reflects the investments we made in
plant consolidations and operating improvements at our EVTeam and masks the
better than 25 percent ROIC we achieved at Spartan Chassis,” said Knapp. “We
believe we can return to our 15-20 percent ROIC goal in 2005 based on the
operational team and structure we have in place as well as our strong new
business wins emphasized in our record backlog in the fourth quarter.”
During the 2004 fourth quarter, Spartan generated $0.8 million in
operating cash flows. Spartan has no debt and ended the year with $12.0
million in cash and marketable securities.
“We are continuing to aggressively manage operating expenses, yet remain
steadfast in our commitment to invest in product development opportunities
which will provide future growth and profit,” said Sztykiel. “We remain on
strong footing financially and our balance sheet is more than sufficient to
support current and future growth initiatives.
“Looking ahead to 2005, we expect to see a return to better production
flow for our EVTeam, with margin improvement from price increases kicking in
during the second quarter and a return to profitability in the second half of
the year. We also expect our focus on customer partnerships, innovation and
premium products to continue to pay off in strong sales and continued market
share advances company-wide over the course of 2005.”
Fourth Quarter and 2004 Conference Call & Webcast
Spartan Motors will host a conference call at 10 a.m. Eastern today to
discuss these results and current business trends. To listen to the call,
please go to https://theshyftgroup.com/webcasts.asp .
About Spartan Motors
Spartan Motors, Inc. (https://theshyftgroup.com ) designs, engineers
and manufactures custom chassis and vehicles for the recreational vehicle,
fire truck, ambulance and emergency-rescue markets. The Company’s brand names
— Spartan(TM), Crimson Fire(TM), Crimson Fire Aerials(TM), and Road
Rescue(TM) — are known in their market niches for quality, value, service and
being the first to market with innovative products. The Company employs
approximately 900 at facilities in Michigan, Alabama, Pennsylvania, South
Carolina, and South Dakota. Spartan Motors is publicly traded on The Nasdaq
Stock Market under the ticker symbol SPAR.
The statements contained in this news release include certain predictions
and projections that may be considered “forward-looking statements” under the
securities laws. These forward-looking statements are identifiable by words
or phrases indicating that the Company or management “expects,” “believes” or
is “confident” that a particular result “may” or “should” occur, that a
particular item “bodes well,” that the Company “looks forward” to a particular
result, or similar statements. These statements involve many risks and
uncertainties that could cause actual results to differ materially, including
but not limited to economic, competitive, governmental and technological
factors affecting the Company’s operations, markets, products, services and
prices. Accounting estimates are inherently forward-looking. Additional
information about these and other factors that may adversely affect these
forward-looking statements are contained in the Company’s reports and filings
with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect
developments or information obtained after the date of this news release.
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended December 31, 2004 and 2003
December 31, 2004 December 31, 2003
$-000- % $-000- %
Sales 80,291 61,057
Cost of Sales 70,744 51,973
Gross Profit 9,547 11.9 9,084 14.9
Operating Expenses:
Research and
Development 2,189 2.7 1,667 2.7
Selling, General and
Administrative 6,514 8.1 5,568 9.2
Total Operating Expenses 8,703 10.8 7,235 11.9
Operating Income 844 1.1 1,849 3.0
Other Income (Expense):
Interest Expense (60) (0.1) (99) (0.2)
Interest and Other
Income 152 0.2 (436) (0.6)
Total Other Income (Expense) 92 0.1 (535) (0.8)
Earnings before Equity
Investment and Taxes 936 1.2 1,314 2.2
Taxes 541 0.7 205 0.4
Net Earnings from
Continuing Ops. 395 0.5 1,109 1.8
Discontinued Operations:
Gain on Disposal of
Carpenter - 0.0 144 0.3
Net Earnings 395 0.5 1,253 2.1
Basic Net Earnings per Share:
Net Earnings from
Continuing Operations 0.03 0.09
Discontinued Operations:
Gain on Disposal of
Carpenter - 0.01
Basic Net Earnings per
Share 0.03 0.10
Diluted Net Earnings per Share:
Net Earnings from
Continuing Operations 0.03 0.09
Gain from Discontinued
Operations:
Gain on Disposal of
Carpenter - 0.01
Diluted Net Earnings per
Share 0.03 0.10
Basic Weighted Average
Common Shares
Outstanding 12,511 12,171
Diluted Weighted Average
Common Shares
Outstanding 12,884 12,461
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Year Ended December 31, 2004 and 2003
December 31, 2004 December 31, 2003
$-000- % $-000- %
Sales 312,270 237,372
Cost of Sales 270,891 202,524
Gross Profit 41,379 13.3 34,848 14.7
Operating Expenses:
Research and
Development 7,944 2.5 7,070 3.0
Selling, General and
Administrative 24,450 7.9 21,604 9.1
Total Operating Expenses 32,394 10.4 28,674 12.1
Operating Income 8,985 2.9 6,174 2.6
Other Income (Expense):
Interest Expense (366) (0.1) (330) (0.1)
Interest and Other
Income 575 0.1 (99) (0.1)
Total Other Income (Expense) 209 0.0 (429) (0.2)
Earnings before Equity
Investment and Taxes 9,194 2.9 5,745 2.4
Taxes 3,312 1.0 1,305 0.5
Net Earnings from
Continuing Ops. 5,882 1.9 4,440 1.9
Discontinued Operations:
Gain on Disposal of
Carpenter - 0.0 1,609 0.6
Net Earnings 5,882 1.9 6,049 2.5
Basic Net Earnings per Share:
Net Earnings from
Continuing Operations 0.48 0.37
Discontinued Operations:
Gain on Disposal of
Carpenter - 0.13
Basic Net Earnings per
Share 0.48 0.50
Diluted Net Earnings per Share:
Net Earnings from
Continuing Operations 0.46 0.36
Gain from Discontinued
Operations:
Gain on Disposal of
Carpenter - 0.13
Diluted Net Earnings per
Share 0.46 0.49
Basic Weighted Average
Common Shares
Outstanding 12,351 12,123
Diluted Weighted Average
Common Shares
Outstanding 12,743 12,434
SOURCE: Spartan Motors, Inc.
CONTACT: John Sztykiel, CEO, or Jim Knapp, CFO, of Spartan Motors, Inc.,
+1-517-543-6400; Jeff Lambert or Ryan McGrath of Lambert, Edwards &
Associates, Inc., +1-616-233-0500, [email protected]
Web site: https://theshyftgroup.com
https://theshyftgroup.com/webcasts.asp