CHARLOTTE, Mich., April 28 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today announced net earnings increased 54.3 percent and net
sales increased 43.1 percent for the first quarter ended March 31, 2005 versus
the first quarter of 2004.
The Charlotte, Mich.-based manufacturer of custom motorhome chassis, fire
truck chassis and emergency-rescue vehicles reported net earnings of $2.0
million, or $0.16 per diluted share, on record net sales of $88.9 million for
the first quarter of 2005, versus net earnings of $1.3 million, or $0.11 per
diluted share, on net sales of $62.1 million for the same quarter of last
year.
Spartan said the increased earnings for the quarter were driven by
improved operating performance by all four of the Company’s subsidiary
companies — Spartan Chassis, Crimson Fire, Crimson Fire Aerials and Road
Rescue. Spartan reported top line growth was driven by sales gains at Spartan
Chassis and Road Rescue.
“Spartan Chassis continues to grow market share in both the RV and
emergency rescue markets, which translated to higher sales and earnings for
the Company,” said John Sztykiel, president and CEO of Spartan Motors. “The
EVTeam’s performance continues to move forward one step at a time. Our focus
on lean manufacturing is starting to take effect, we cut our loss for the
EVTeam by 50 percent compared to the loss in the fourth quarter of 2004, and
we remain on pace to return the EVTeam back to profitability in the second
half of the year.
“In each of our subsidiaries we are focused on a strategy of product and
technology innovation, aimed at introducing new vehicles and products several
times per year. All of these technological and product innovations are
designed to meet the most important expectations of the customer. Seven new
products and innovations were introduced by the four subsidiary companies at
the most recent Fire Department Instructors Conference (FDIC) trade show.
“On the whole, we are pleased, but not satisfied, with improved sales and
earnings. However, we are very encouraged about our record $134.5 million
backlog, a more than 14 percent increase over the fourth quarter of 2004, and
what this represents for the remainder of 2005.”
First Quarter 2005 Results
Spartan reported the continued higher cost of steel, competitive pricing
and production constraints at Crimson Fire and Road Rescue led to a decline in
consolidated gross margin versus last year’s first quarter, though gross
margin did improve over the fourth quarter of 2004. Gross margin was 13.2
percent in the first quarter of 2005, compared with 14.9 percent for the same
period in 2004 and 11.9 percent in the fourth quarter of 2004. Spartan said
steel surcharges in the quarter, net of price increases, accounted for a
reduction in pre-tax earnings of approximately $700,000.
“Due to the timing of our order cycle and price increases, we are just now
beginning to recapture through pricing the majority of higher steel costs,”
said Chief Financial Officer Jim Knapp. “Thanks to our efforts to pass on
material cost increases to the marketplace and the abatement in the rise in
steel costs, the price of steel was less a factor this quarter than in prior
quarters. We expect to recapture more of these costs during the next two
quarters as the higher-priced units move through the backlog.”
SG&A (selling, general and administrative) expense declined as a
percentage of sales to 7.1 percent in the period versus 9.1 percent for the
same period last year, reflecting Spartan’s efforts to control costs and
better leverage systems across all of its subsidiaries. As with most public
companies, Spartan was impacted in the quarter by greater costs associated
with Sarbanes-Oxley Section 404 compliance. Total operating expenses declined
as a percentage of sales to 9.6 percent in the first quarter of 2005, compared
with 12.0 percent in the same quarter of 2004.
Spartan Chassis
Sales at Spartan Chassis grew by 43.4 percent in the first quarter, driven
by a 65.7 percent increase in RV chassis sales. Spartan said increased orders
from its top two customers, coupled with overall growth in Class A diesel-
powered RVs as a percentage of total motorhome sales, drove the improvement.
Fire truck chassis sales were slightly less than the same period last year,
though Spartan anticipates 2005 to be this segment’s strongest year based on
order activity.
“We had a record 217 orders for custom fire truck chassis in the first
quarter of 2005, and we continue to see momentum in orders and bid activity
moving into the second quarter, which will translate into future sales,” said
Sztykiel. “Spartan cabs and chassis were on display on 25 different fire
trucks produced by a variety of OEMs at the recent FDIC trade show, a clear
indication of the momentum of Spartan Chassis in the market created by our
continued product and service excellence. We expect the momentum to build for
our emergency rescue chassis segment.
“On the RV side of the business, the announced reduction in production for
one of our accounts, which is currently 10 percent of production at Spartan
Chassis, did not affect us this quarter and we do not expect to see this
reduction until the third quarter. Even with this reduction, we expect
Spartan Chassis to produce more RV chassis in 2005 than the year before.
“The long-term growth prospects for RVs remain strong. In 2010, there
will be 32 percent more people in their 50s — the key buying age for RVs —
than there were in 2000. The continuing trend toward diesel-powered chassis
is also driving growth as Spartan has the broadest and best selection in the
diesel market and we are working hard to add new models into this space while
capturing new OEM customers.”
Emergency Vehicle Team (EVTeam)
Spartan said its EVTeam segment reported a 13.7 percent increase in net
sales for the first quarter of 2005 compared to the first quarter of last
year. Although the group had a loss in the first quarter, it made substantial
operational improvement over the fourth quarter of 2004. Sales and margins
for the EVTeam are expected to improve sequentially in the second quarter over
the first quarter based on product mix and improved efficiencies.
Crimson Fire and Crimson Fire Aerials continued to make definitive
operational improvements in the first quarter 2005 versus the fourth quarter
2004. Crimson Fire Aerials remains ahead of plan based on current orders,
production and bid activity. Order intake for the Crimson Fire Aerials is
already at five percent market share and the company is slated for production
of two vehicles per month for later in the second quarter of 2005. Crimson
Fire reported strong order intake and positive order momentum heading into the
second quarter.
Road Rescue’s ambulance sales increased 34.2 percent over the first
quarter of last year and 22.8 percent over the fourth quarter of 2004. Road
Rescue’s gross margin improved in the first quarter of 2005 compared with the
fourth quarter of 2004 due to improvements to labor efficiencies, control of
material costs and a lean manufacturing focus.
“In addition to expanding the RV market, the increase in population of
people in their 50s is also growing the ambulance market,” said Sztykiel. “On
a macro level, we are seeing more federal Homeland Security funding in the
emergency rescue space. More than 30 fire truck chassis this year have been
produced by Spartan Chassis due to spending by the federal government. We
expect this increase in funding to also positively impact the EVTeam. Looking
at the EVTeam performance over the quarter, we made substantial progress and
remain focused on the steps to bring the EVTeam back to profitability.”
Key Metrics
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 11.2 percent in the first quarter of 2005, compared with ROIC of 8.4
percent in the same period in 2004. (Spartan defines return on invested
capital by calculating operating income, less taxes, on an annualized basis,
divided by total shareholders’ equity.) Consolidated backlog grew to a record
$134.5 million as of March 31, 2005, compared with backlog of $102.4 million
at the end of the first quarter of 2004 and $117.6 million at the end of the
fourth quarter 2004.
Spartan has virtually no debt and ended the quarter with $9.9 million in
cash and marketable securities.
“During the quarter, we received strong investor interest in Spartan and
its markets at the recent second annual KeyBanc Emergency Rescue Conference,”
said Sztykiel. “Kicking off 2005, we remain on strong financial footing and
our balance sheet is more than sufficient to support current and future growth
initiatives. Our sales growth is evidence of our market share gains, product
and technology leadership, manufacturing excellence and growing customer
satisfaction with Spartan products and services.”
“Looking ahead to the next several quarters of 2005, we expect to see a
return to better production flow for our EVTeam, leading to profitability from
the division in the second half of the year. We also expect our focus on
product and brand differentiation, coupled with the positive market trends
such as increased federal funding and safety initiatives in fire and rescue
and the powerful demographic trends in RVs, to fuel our growth over the course
of 2005.”
First Quarter 2005 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 Income Statements
Three Months Ended March 31, 2005 and 2004
March 31, 2005 March 31, 2004
$-000- % $-000- %
Sales 88,901 62,105
Cost of Sales 77,167 52,846
Gross Profit 11,734 13.2 9,259 14.9
Operating Expenses:
Research and Development 2,254 2.5 1,789 2.9
Selling, General and
Administrative 6,320 7.1 5,665 9.1
Total Operating Expenses 8,574 9.6 7,454 12.0
Operating Income 3,160 3.6 1,805 2.9
Other Income (Expense):
Interest Expense (46) (0.1) (103) (0.2)
Interest and Other Income 162 0.2 106 0.2
Total Other Income (Expense) 116 0.1 3 0.0
Earnings before Taxes 3,276 3.7 1,808 2.9
Taxes 1,230 1.4 482 0.8
Net Earnings 2,046 2.3 1,326 2.1
Basic Net Earnings per Share 0.16 0.11
Diluted Net Earnings per Share 0.16 0.11
Basic Weighted Average Common Shares
Outstanding 12,497 12,228
Diluted Weighted Average Common
Shares Outstanding 12,784 12,563
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 2005 Dec 31, 2004
$-000 $-000
ASSETS
Current assets:
Cash and cash equivalents $8,387 $10,463
Marketable securities 1,491 1,507
Accounts receivable, net 37,036 32,359
Inventories 36,637 32,442
Taxes receivable 706 1,957
Other current assets 4,195 4,488
Total current assets 88,452 83,216
Property, plant and equipment, net 18,389 18,239
Goodwill, net 4,543 4,543
Other assets 915 915
Total assets $112,299 $106,913
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $22,124 $19,248
Other current liabilities and
accrued expenses 4,029 3,397
Accrued warranty 3,959 3,671
Taxes on income - -
Accrued vacation, compensation
and related taxes 3,692 4,352
Deposits from customers 9,615 8,588
Current portion of long-term debt 6 6
Total current liabilities 43,425 39,262
Long-term debt, less current portion 139 140
Shareholders' equity:
Preferred stock - -
Common stock 125 125
Additional paid in capital 36,163 36,211
Retained earnings 32,469 31,182
Accumulated other comprehensive loss (22) (7)
Total shareholders' equity 68,735 67,511
Total liabilities and shareholders'
equity $112,299 $106,913
SOURCE: Spartan Motors, Inc.
CONTACT: John Sztykiel, CEO, or Jim Knapp, CFO, of Spartan Motors, Inc.,
+1-517-543-6400; or Jeff Lambert or Ryan McGrath of Lambert, Edwards &
Associates, Inc., +1-616-233-0500, or [email protected] , for Spartan
Motors, Inc.