Consolidated Backlog Up 35.1 Percent; Return on Invested Capital Improves 94.6
Percent
CHARLOTTE, Mich., April 27 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today reported its best-ever quarterly results, highlighted by
a 119 percent increase in net earnings on a 16.6 percent increase in net sales
for the first quarter ended March 31, 2006.
Spartan Motors, a leading manufacturer of custom motorhome chassis, fire
truck chassis and emergency-rescue vehicles, reported earnings of $4.5
million, or $0.35 per diluted share, on net sales of $103.7 million for the
first quarter of 2006, compared with net earnings of $2.0 million, or $0.16
per diluted share, on net sales of $88.9 million for the first quarter of
2005. The company attributed its fifth consecutive quarter of increasing
earnings to improved product mix, labor efficiencies and leverage of the
overhead due to higher volume.
Sales of fire truck chassis, fire trucks and ambulances all increased
compared to the first quarter of 2005. During the quarter, Spartan also
benefited from sales of its Cougar military vehicle chassis, which were not
produced in the first quarter of 2005.
“We are pleased with our results for the quarter, as our growing sales and
operational improvements drove record results, created a record backlog and
improved return on invested capital,” said John Sztykiel, president and CEO of
Spartan Motors. “We do not see the military business contributing as much in
the second half of 2006 as it did in the first half of the year. As the EVTeam
improves and Spartan Chassis grows, we are optimistic that the earnings
achieved in the first quarter is a glimpse of what we expect to achieve in the
future.”
“One of the major strengths of our business model is market diversity and
customization, with a growing foundation in emergency rescue. What happens in
the geo-political world affects the recreational vehicle market more directly
than it affects the emergency rescue market, and it is in emergency rescue
where we see additional growth in the future, as evidenced by our growing
backlog.”
Spartan’s consolidated backlog was $181.7 million as of March 31, 2006,
compared with backlog of $167.8 million at the end of the fourth quarter of
2005 and $134.5 million at the end of the prior year’s first quarter, a 35.1
percent increase year-over-year and the highest backlog in Spartan’s history.
Spartan Motors anticipates filling all its current backlog orders by December
31, 2006.
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 21.8 percent in the first quarter of 2006, a 94.6 percent increase
compared to ROIC of 11.2 percent for the same quarter in 2005. (Spartan
defines return on invested capital as operating income, less taxes, on an
annualized basis, divided by total shareholders’ equity.) Spartan’s balance
sheet remains strong, and the company ended the quarter with $11.0 million in
cash, cash equivalents and investment securities.
“Spartan Chassis continues to grow market share for fire truck chassis,”
Sztykiel said. “They will also gain revenue and profits from the Cougar
military vehicle contract in the second quarter of 2006. Our motorhome
chassis sales decreased in the quarter by only 9.8 percent compared to the
prior year, while the Class A motorhome market as a whole decreased 20
percent, though our sales improved compared to the fourth quarter of 2005.
“We are gaining market share for both our motorhome and fire truck chassis
business, and we are also optimistic that the RV market is on the road to
recovery. At the same time, the EVTeam continues to move towards profitability
as we improve operations and as more higher-priced units move from the backlog
to the top line.”
Spartan reported its gross margin improved to 16.2 percent in the first
quarter of 2006, compared with 13.2 percent for the same period in 2005,
reflecting better overhead utilization, pricing, product mix and improved
labor efficiencies. Operating margin also improved to 6.6 percent in the first
quarter of 2006, compared with 3.6 percent in the same quarter of 2005.
Spartan Chassis
Net earnings at Spartan Chassis, the company’s largest operating
subsidiary, improved 63.3 percent in the quarter compared to the same period
of the prior year on a net sales increase of 12.8 percent. Sales of RV chassis
in the quarter decreased 8.1 percent compared to the first quarter of 2005;
though RV chassis sales increased 51.9 percent compared to the fourth quarter
of 2005, outpacing the overall Class A market.
Sales of fire truck chassis increased 33.5 percent in the first quarter of
2006 compared to the same quarter of the prior year. Spartan Chassis also
reported record orders for the quarter, as it continues to build its
reputation as the custom fire truck chassis of choice for America’s fire
departments.
“Though motorhome chassis revenue decreased compared to last year’s first
quarter, it is up substantially compared to the fourth quarter of 2005. While
it will be a difficult challenge in light of the geopolitical events, we
remain optimistic that we will build more motorhome chassis in 2006 than in
2005. Our optimism is based upon an increase in the number of motorhome
models on a Spartan Chassis, which increased by more than 50 percent over the
last year, and the rising consumer confidence index, which hit a four-year
high in April.
“We are also encouraged by the increase of our RV shipments in the first
quarter of 2006 as compared to the fourth quarter of 2005, and with a recent
industry study indicating 67 percent of RV owners plan on driving their RVs
more miles this summer than last, despite higher fuel prices. Longer term, we
are very optimistic based on the fact that 11,000 Americans turn the age of 50
every day, the prime buying age for RVs according to industry data.”
“During the quarter, we also gained revenue from our military contract.
Though we anticipate completing the Cougar military contract for Force
Protection during the second quarter, we are guardedly optimistic about the
potential for additional military business.”
Emergency Vehicle Team (EVTeam)
Spartan’s EVTeam, which consists of its Crimson Fire, Crimson Fire Aerials
and Road Rescue subsidiaries, posted a loss for the first quarter of 2006.
The EVTeam’s net sales increased 43.5 percent compared to the prior year’s
first quarter, while the number of units produced increased 28.6 percent.
Better pricing and a more disciplined cost structure helped the EVTeam narrow
its net loss by 21.4 percent compared to the first quarter of 2005 and 41.7
percent compared to the fourth quarter of 2005.
“We saw improvement at all three EVTeam companies in the first quarter and
the group continues to make improvements operationally,” Sztykiel said. “At
the end of the first quarter of 2006, we still had some units in our backlog
with 2004 pricing. All three subsidiaries are growing sales and improving
operations. As higher priced units roll out of the backlog, the EVTeam’s
margins will continue to improve. At the same time, as the EVTeam’s sales
continue to improve, the pull-through of Spartan chassis also improves.”
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 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, 2006 and 2005
March 31, 2006 March 31, 2005
$-000- % $-000- %
Sales 103,666 88,901
Cost of Sales 86,898 77,167
Gross Profit 16,768 16.2 11,734 13.2
Operating Expenses:
Research and Development 2,845 2.7 2,254 2.5
Selling, General and
Administrative 7,056 6.8 6,320 7.1
Total Operating Expenses 9,901 9.5 8,574 9.6
Operating Income 6,867 6.7 3,160 3.6
Other Income (Expense):
Interest Expense (56) (0.1) (46) (0.1)
Interest and Other Income 304 0.3 162 0.2
Total Other Income (Expense) 248 0.2 116 0.1
Earnings before Taxes 7,115 6.9 3,276 3.7
Taxes 2,634 2.5 1,230 1.4
Net Earnings 4,481 4.4 2,046 2.3
Basic Net Earnings per Share 0.35 0.16
Diluted Net Earnings per Share 0.35 0.16
Basic Weighted Average
Common Shares Outstanding 12,660 12,497
Diluted Weighted Average
Common Shares Outstanding 12,828 12,784
Spartan Motors, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
March 31, 2006 Dec 31, 2005
$-000 $-000
ASSETS
Current assets:
Cash and cash equivalents $9,005 $9,702
Marketable securities 1,985 1,988
Accounts receivable, net 48,944 37,017
Inventories 48,753 44,265
Taxes receivable 48 990
Other current assets 1,589 1,949
Total current assets 110,324 95,911
Property, plant and equipment, net 18,623 18,478
Goodwill, net 4,543 4,543
Deferred tax assets 3,745 3,745
Other assets 570 531
Total assets $137,805 $123,208
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $29,640 $20,746
Other current liabilities and
accrued expenses 6,847 4,608
Accrued warranty 4,781 4,503
Accrued vacation, compensation
and related taxes 4,838 5,430
Deposits from customers 12,462 13,640
Current portion of long-term debt 53 53
Total current liabilities 58,621 48,980
Long-term debt, less current portion 1,303 1,317
Deferred tax liabilities 309 309
Shareholders' equity:
Preferred stock -- --
Common stock 127 126
Additional paid in capital 37,531 37,886
Retained earnings 39,929 35,448
Unearned compensation -- (846)
Accumulated other comprehensive loss (15) (12)
Total shareholders' equity 77,572 72,602
Total liabilities and
shareholders' equity $137,805 $123,208
SOURCE: Spartan Motors, Inc.
CONTACT: John Sztykiel, CEO, or Jim Knapp, CFO, both of Spartan Motors,
Inc., +1-517-543-6400, or Ryan McGrath, [email protected], or Jeff
Lambert, both of Lambert, Edwards & Associates, Inc., +1-616-233-0500, both
for Spartan Motors, Inc.