Record Backlog, Return to Profitability for Crimson Fire Highlight Quarter
CHARLOTTE, Mich., July 28 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today announced its highest ever second quarter sales and a
12.8 percent improvement in net earnings for the second quarter ended June 30,
2005, compared to the same period of last year.
The Charlotte, Mich.-based manufacturer of custom motorhome chassis, fire
truck chassis and emergency-rescue vehicles reported net earnings of $2.6
million, or $0.20 per diluted share, on net sales of $89.3 million for the
second quarter of 2005, versus net earnings of $2.3 million, or $0.18 per
diluted share, on net sales of $78.2 million for the same quarter of last
year.
The Company’s Spartan Chassis unit reported increased sales and
profitability for the second quarter. Its Emergency Vehicle Team (EVTeam),
consisting of its Crimson Fire, Crimson Fire Aerials and Road Rescue
subsidiaries, reported higher sales for the quarter versus last year’s second
quarter and a reduction in its loss compared to the first quarter of 2005.
Spartan also reported a record backlog of $156.3 million driven by continued
order growth, as its focus on becoming the most-desired brand continues to
produce results.
“The results of the quarter are another step in the right direction, and
we are focused on continuing our operational improvements,” said John
Sztykiel, president and CEO of Spartan Motors. “We are optimistic about the
second half of 2005 based on our projected sales growth for RV and fire truck
chassis, military orders, lower steel costs, added revenue from our price
increases and the expected operational improvements from the EVTeam.”
For the six months ended June 30, 2005, Spartan reported net earnings grew
28.1 percent to $4.6 million, or $0.36 per diluted share, compared to net
earnings of $3.6 million, or $0.28 per diluted share, for the same period of
last year. Net sales grew 27.0 percent to a record $178.2 million, compared
to net sales of $140.3 million for the first six months of 2004.
Second Quarter 2005 Results
Spartan reported steel costs and production constraints at Crimson Fire
and Road Rescue led to a decline in consolidated gross margin versus last
year’s second quarter. Gross margin was 13.8 percent in the second quarter of
2005, compared with 14.6 percent for the same period in 2004.
“Steel costs were higher than the second quarter a year ago, but less than
the first quarter of 2005, and we expect the costs to continue to decline,”
said Chief Financial Officer Jim Knapp. “Our gross margin this quarter did
improve over the first quarter of 2005.”
Consolidated SG&A (selling, general and administrative) expense for the
period declined to 7.1 percent of sales versus 7.7 percent for the same period
last year. Total operating expenses in the second quarter of 2005 declined as
a percentage of sales to 9.6 percent, compared with 10.1 percent in the same
quarter of 2004.
Spartan Chassis
Sales at Spartan Chassis grew by 10.1 percent in the second quarter,
including a 12.2 percent increase in RV chassis sales, while profitability for
the unit increased by 7.1 percent. Sales for fire truck chassis were slightly
better than in the second quarter of last year and Spartan continues to
project, based on current order activity, a record year of sales for its fire
truck chassis.
“This was another solid quarter for RV chassis sales at Spartan Chassis,”
said Sztykiel. “While there is some uncertainty in the market, we are picking
up profitable market share and are on track to build more RV chassis in 2005
versus last year. The Spartan brand continues to grow in strength.”
“In addition, we remain on target toward making this our best year ever
for sales of fire truck chassis. We also generated revenue from a small
volume of military units from Force Protection, Inc., the primary contractor
for the Cougar armored vehicle, in the second quarter and expect this revenue
to increase substantially in both the third and fourth quarters of 2005.
Richard Schalter, president of Spartan Chassis, and his team have done a great
job and are poised for a very good year in 2005.”
Emergency Vehicle Team (EVTeam)
Spartan said its EVTeam unit reported a 32.4 percent increase in net sales
for the second quarter of 2005 compared to the second quarter of last year,
and narrowed its loss by 21.9 percent versus the first quarter of 2005.
Crimson Fire reported a return to profitability and a 13.1 percent
increase in sales over last year’s second quarter. Crimson Fire Aerials
remains on plan with a strong order book and accelerating production rates.
“Crimson Fire is not only improving its efficiency, it also closed the
quarter with a record backlog,” said Sztykiel. “This is a result of the
growth of the Crimson Fire brand, the enhanced value brought by the Aerials
group and the addition of high quality dealers. The Crimson Fire strategic
plan is coming together.”
Road Rescue’s ambulance sales increased 77.8 percent over the second
quarter of last year and 27.9 percent over the first quarter of 2005 as it
worked aggressively through its large backlog. Road Rescue reported a loss
for the quarter driven by significant overtime labor costs and increased
material costs not covered in the recent price increases.
“The EVTeam is making progress toward returning to profitability as a
unit, though we still have work ahead in improving our production efficiency
and meeting the strong demand for our products,” said Sztykiel. “The long-
term growth prospects for the $3 billion emergency-rescue market remain
favorable from both a need and government funding perspective. Fire related
property damage is costing our nation over $23 million per day and is
increasing 5.7 percent annually.
“Likewise, funding at both the local and federal level is continuing to
support the upgrade of America’s aging fire truck fleet. We expect to see
growth from both market expansion and capturing market share in the emergency-
rescue market.”
Key Metrics
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 13.7 percent in the second quarter of 2005, compared with ROIC of
13.8 percent in the same quarter 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 $156.3 million as of June 30, 2005,
compared with backlog of $134.5 million at the end of the first quarter of
2005 and $110.3 million at the end of last year’s second quarter. Spartan
continues to have virtually no debt and generated $9.3 million in operating
cash flow in the second quarter of 2005, ending the quarter with $17.8 million
in cash and marketable securities.
“We are in a solid position of showing top and bottom line growth,
dividend growth and strong cash flow creation, and believe our efforts to
increase our exposure and brand awareness both in our markets and in the
investment community will continue to be rewarded,” said Sztykiel.
“During the quarter we hit the road with our first-ever ‘real road show,’
driving a 41-foot, one-of-a-kind mid-engine RV to New York, Boston, Cleveland
and Chicago to meet with media, analysts and portfolio managers, resulting in
national media coverage and, along with our listing in the new Russell
Microcap Index, renewed interest in our stock at an institutional level.
“The long-term growth prospects for all of our markets remain strong, and
we expect the improved performance of the EVTeam, along with increased revenue
from fire trucks and military orders at Spartan Chassis, to lead to an even
better second half of 2005.”
Second 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 Statements of Operations
Three Months Ended June 30, 2005 and 2004
June 30, 2005 June 30, 2004
$-000- % $-000- %
Sales 89,341 78,206
Cost of Sales 76,969 66,793
Gross Profit 12,372 13.8 11,413 14.6
Operating Expenses:
Research and Development 2,212 2.5 1,840 2.4
Selling, General and
Administrative 6,398 7.1 6,039 7.7
Total Operating Expenses 8,610 9.6 7,879 10.1
Operating Income 3,762 4.2 3,534 4.5
Other Income (Expense):
Interest Expense (31) 0.0 (103) (0.1)
Interest and Other Income 178 0.2 158 0.2
Total Other Income (Expense) 147 0.2 55 0.1
Earnings before Taxes 3,909 4.4 3,589 4.6
Taxes 1,352 1.5 1,322 1.7
Net Earnings 2,557 2.9 2,267 2.9
Basic Net Earnings per Share 0.20 0.18
Diluted Net Earnings per Share 0.20 0.18
Basic Weighted Average Common
Shares Outstanding 12,492 12,268
Diluted Weighted Average Common
Shares Outstanding 12,737 12,665
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Six Months Ended June 30, 2005 and 2004
June 30, 2005 June 30, 2004
$-000- % $-000- %
Sales 178,242 140,311
Cost of Sales 154,136 119,639
Gross Profit 24,106 13.5 20,672 14.7
Operating Expenses:
Research and Development 4,466 2.5 3,629 2.6
Selling, General and
Administrative 12,718 7.1 11,704 8.3
Total Operating Expenses 17,184 9.6 15,333 10.9
Operating Income 6,922 3.9 5,339 3.8
Other Income (Expense):
Interest Expense (77) 0.0 (206) (0.1)
Interest and Other Income 340 0.1 264 0.2
Total Other Income (Expense) 263 0.1 58 0.1
Earnings before Taxes 7,185 4.0 5,397 3.9
Taxes 2,582 1.4 1,804 1.3
Net Earnings 4,603 2.6 3,593 2.6
Basic Net Earnings per Share 0.37 0.29
Diluted Net Earnings per Share 0.36 0.28
Basic Weighted Average Common
Shares Outstanding 12,506 12,245
Diluted Weighted Average Common
Shares Outstanding 12,760 12,614
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, 2005 Dec 31, 2004
$-000 $-000
ASSETS
Current assets:
Cash and cash equivalents $17,833 $11,970
Accounts receivable, net 38,051 32,359
Inventories 36,362 32,442
Taxes receivable 1,286 1,957
Other current assets 4,001 4,488
Total current assets 97,533 83,216
Property, plant and equipment, net 18,257 18,239
Goodwill, net 4,543 4,543
Other assets 1,005 915
Total assets $121,338 $106,913
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $24,364 $19,248
Other current liabilities and
accrued expenses 4,486 3,397
Accrued warranty 4,235 3,671
Taxes on income - -
Accrued vacation, compensation
and related taxes 4,038 4,352
Deposits from customers 13,566 8,588
Current portion of long-term debt 6 6
Total current liabilities 50,695 39,262
Long-term debt, less current portion 137 140
Shareholders' equity:
Preferred stock - -
Common stock 125 125
Additional paid in capital 36,738 36,211
Retained earnings 33,654 31,182
Accumulated other comprehensive loss (11) (7)
Total shareholders' equity 70,506 67,511
Total liabilities and shareholders'
equity $121,338 $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]