(Nasdaq: SPAR) reported record quarterly results, including a 37.8 percent
year-over-year increase in net sales and a 60.8 percent year-over-year
increase in net earnings for the first quarter ended March 31, 2007.
Spartan, a leading manufacturer of custom vehicle chassis and emergency-
rescue vehicles, said net earnings grew to a record $7.2 million, or $0.33 per
diluted share, on net sales of $142.9 million in the 2007 first quarter,
compared with net earnings of $4.5 million, or $0.23 per diluted share, on net
sales of $103.7 million in the first quarter of 2006.
Spartan attributed its strong profitability to improved execution of its
strategic plan within its various markets. All financial information includes
the adjustment for the Company’s 3-for-2 stock split in Dec. 2006.
“We have begun 2007 in an excellent position, encouraged by our best-ever
quarterly results on both the top and bottom line and thankful for our
success,” said John Sztykiel, president and CEO of Spartan Motors. “In
addition, we are in the process of adding three manufacturing facilities to
our Spartan Chassis operations, expanding our production capacity to allow us
to capitalize on our growing backlog and become more effective and efficient
in our execution.
“Though the RV industry is currently doing well and our sales and backlog
for motorhome chassis increased in the first quarter of 2007 compared to the
fourth quarter of 2006, we do have some concerns about the future impact of
rising fuel prices on the overall RV market.”
Spartan’s gross margin improved to 17.3 percent in the first quarter of
2007, compared with 16.2 percent for the same period in 2006 and 16.8 percent
in the fourth quarter of 2006, reflecting higher sales and improved product
mix, overhead utilization and labor efficiencies. Operating margin also
improved to 8.0 percent in the first quarter of 2007, compared with 6.6
percent in the same quarter of 2006.
Spartan Motors’ consolidated backlog increased 37.6 percent over the same
period of last year to approximately $250.1 million as of March 31, 2007, the
largest backlog in company history. Spartan Motors anticipates filling its
current backlog orders by the end of 2007.
“We are confident that our innovation, speed to market and current
momentum in each business unit will help us grow market share in our existing
products and support our new product initiatives during the remainder of
2007,” Sztykiel said.
“We are expanding on a company-wide basis, but also have the market trend-
winds at our backs. The aging U.S. population, with 11,000 Americans turning
50 each day, remains an opportunity for the RV and ambulance markets. More
than 70 percent of U.S. casualties in Iraq are from improvised explosive
devices (IEDs) and mine-resistant ambush-protected vehicles are protecting our
troops from IEDs on the battlefield. Every 32 seconds there is an ‘all-
hazards, first-response call’ to a U.S. fire department and this level is
increasing, expanding the market for our emergency-rescue products.”
On a consolidated basis, Spartan posted its best-ever quarterly return on
invested capital (ROIC) of 25.7 percent in the first quarter of 2007, a 17.9
percent increase compared to ROIC of 21.8 percent for the same quarter in
2006. (Spartan defines return on invested capital as operating income less
taxes, on an annualized basis, divided by total shareholders’ equity.) ROIC
for 2006 was 15.7 percent compared to ROIC of 10.4 percent in 2005.
The Company ended the quarter with $21.1 million in long-term debt, which
includes financing for Spartan Chassis’ new and renovated facilities and
growth in working capital to support its increased sales. Spartan reported
$1.3 million in cash and cash equivalents at the end of the first quarter of
2007.
“I want to thank of all of our team members at Spartan Chassis, Crimson
Fire, Crimson Fire Aerials and Road Rescue for their focus on becoming
efficient and effective,” Sztykiel said.
Spartan Chassis
Sales at Spartan Chassis, the company’s largest operating unit, increased
44.5 percent to $128.0 million, or 86.0 percent of Spartan Motors’ total
sales. Earnings at Spartan Chassis improved 50.0 percent in the current first
quarter compared to the same quarter of last year, and the unit’s backlog as
of March 31, 2007 increased 52.4 percent compared to last year.
Sales of fire truck chassis increased 37.5 percent in the first quarter of
2007 compared to last year. Backlog for fire truck chassis at the end of the
first quarter was $84.4 million, a 22.3 percent increase compared with last
year. Other product sales, including specialty vehicle chassis and Spartan’s
subcontracts for military vehicle customers, increased 251.6 percent in the
first quarter of 2007, and backlog for specialty vehicles increased 625.6
percent to $53.2 million as of March 31, 2007.
Spartan’s RV chassis sales increased 2.9 percent in the first quarter,
driven in part by an 8.0 percent increase in industry wholesale shipments for
Class A motorhomes in the first two months of 2007, the latest industry data
available from the Recreational Vehicle Industry Association (RVIA). Backlog
for RV chassis decreased 2.5 percent year-over-year to $37.7 million as of
March 31, 2007, though it increased 33.6 percent compared to RV chassis
backlog at the end of the fourth quarter of 2006.
“Spartan Chassis as a whole continues to execute, as evidenced by its
increasing profitability, while also growing market share, as seen in our
record backlog,” said Sztykiel. “Industry shipments for motorhomes increased
in early 2007. This momentum may offset the possibility of higher fuel prices
as we move into early summer. As we continue to pursue market share in RV, we
expect to continue to see increased sales as more OEMs adopt a Spartan chassis
as their platform.”
Sztykiel continued: “Spartan Chassis unveiled a new product system at FDIC
2007 allowing fire truck customers to customize every chassis from two base
models of chassis. This platform concept is a first for the industry, and we
believe it will eventually become an industry standard, as it provides the
customer with exactly what they want at greater operational efficiency.
“We also received several large orders from our military vehicle strategic
partners in the last several months, including those for the important Mine
Resistant Ambush Protected (MRAP) program, and we remain optimistic about our
prospects as a supplier to this new market.”
Emergency Vehicle Team (EVTeam)
Spartan’s EVTeam operating unit, consisting of its Crimson Fire, Crimson
Fire Aerials and Road Rescue subsidiaries, reported a sales increase of 8.6
percent in the 2007 first quarter, as compared to the same quarter of 2006.
The EVTeam reported backlog of $74.8 million at the end of the quarter, a 12.1
percent increase compared to the unit’s backlog in the first quarter of 2006.
“The first quarter was another step in the right direction for the
EVTeam,” Sztykiel said. “Our chassis production constraint affecting Crimson
Fire and Crimson Fire Aerials will be solved by our new Spartan cab and
chassis plant opening in the next month. All three EVTeam companies had
several new products on display at FDIC 2007, including Crimson Fire Aerial’s
new, cost-effective Boomer, which is targeted to the 25,000 fire departments
in the U.S. that do not have an aerial or waterway device due to cost.”
Conference Call, Webcast and Presentation
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
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, 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 1,100 at facilities in Michigan, Pennsylvania, South Carolina,
and South Dakota. Spartan reported sales of $445 million in 2006 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. 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 http://www.sec.gov). 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 Balance Sheets
March 31, 2007 December 31, 2006
$-000- $-000-
ASSETS
Current assets:
Cash and cash equivalents $1,291 $13,835
Accounts receivable, net 79,243 62,620
Inventories 72,793 64,173
Deferred income tax assets 4,371 4,567
Deposits on engines 4,742 10,900
Other current assets 1,706 1,882
Total current assets 164,146 157,977
Property, plant and equipment, net 35,874 29,659
Goodwill 2,457 2,457
Other assets 521 555
Total assets $202,998 $190,648
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $36,324 $30,704
Accrued warranty 8,192 6,381
Accrued compensation and related
taxes 4,760 7,712
Accrued vacation 1,689 1,483
Accrued customer rebates 2,386 3,471
Deposits from customers 7,139 7,465
Taxes on income 2,106 1,566
Other current liabilities and
accrued expenses 3,796 2,591
Current portion of long-term debt 521 521
Total current liabilities 66,913 61,894
Long-term debt, less current portion 21,126 25,218
Other non-current liabilities 972 -
Deferred income tax liabilities 89 355
Shareholders' equity:
Common stock 215 211
Additional paid in capital 58,177 54,339
Retained earnings 55,506 48,631
Accumulated other comprehensive
loss -
Total shareholders' equity 113,898 103,181
Total liabilities and shareholders'
equity $202,998 $190,648
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2007 and 2006
March 31, 2007 March 31, 2006
$-000- % $-000- %
Sales 142,882 103,666
Cost of Products Sold 118,190 86,898
Gross Profit 24,692 17.3 16,768 16.2
Operating Expenses:
Research and Development 3,790 2.7 2,845 2.8
Selling, General and
Administrative 9,482 6.6 7,056 6.8
Total Operating Expenses 13,272 9.3 9,901 9.6
Operating Income 11,420 8.0 6,867 6.6
Other Income (Expense):
Interest Expense (246) (0.2) (56) (0.1)
Interest and Other Income 137 0.1 304 0.3
Total Other Income (Expense) (109) (0.1) 248 0.2
Earnings before Taxes on Income 11,311 7.9 7,115 6.8
Taxes on Income 4,104 2.9 2,634 2.5
Net Earnings 7,207 5.0 4,481 4.3
Basic Net Earnings per Share 0.34 0.24
Diluted Net Earnings per Share 0.33 0.23
Basic Weighted Average Common Shares
Outstanding 21,103 18,924
Diluted Weighted Average Common
Shares Outstanding 21,740 19,178
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Quarter Ended March 31, 2007
Three Months Ended March 31, 2007 (amounts in thousands)
Business Segments
Chassis EVTeam Other Consolidated
Motorhome Chassis Sales 56,154 56,154
Fire Truck Chassis Sales 30,624 (6,531) 24,093
EVTeam Product Sales 21,400 21,400
Other Product Sales 41,235 41,235
Total Net Sales 128,013 21,400 (6,531) 142,882
Interest Expense (Income) 308 (62) 246
Depreciation Expense 385 309 130 824
Segment Net Earnings (Loss) 8,360 (722) (431) 7,207
Three Months Ended March 31, 2006 (amounts in thousands)
Business Segments
Chassis EVTeam Other Consolidated
Motorhome Chassis Sales 54,570 54,570
Fire Truck Chassis Sales 22,277 (4,608) 17,669
EVTeam Product Sales 19,698 19,698
Other Product Sales 11,729 11,729
Total Net Sales 88,576 19,698 (4,608) 103,666
Interest Expense (Income) 1 158 (103) 56
Depreciation Expense 229 305 109 643
Segment Net Earnings (Loss) 5,572 (832) (259) 4,481
Period End Backlog (amounts in thousands)
March 31, June 30, September December March 31,
2006 2006 30, 2006 31, 2006 2007
Motorhome Chassis * 38,640 29,141 27,416 28,198 37,679
Fire Truck Chassis * 69,008 112,874 81,889 84,445 84,416
Other Product * 7,329 31,636 56,175 49,729 53,178
Total Chassis 114,977 173,651 165,480 162,372 175,273
EVTeam Product * 66,741 68,176 65,387 69,715 74,843
Total Backlog 181,718 241,827 230,867 232,087 250,116
* 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
SOURCE Spartan Motors, Inc.
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], for Spartan Motors, Inc.
https://theshyftgroup.com