CHARLOTTE, Mich., April 28 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today announced results for the first quarter 2004, highlighted
by double-digit sales growth in RV chassis and the completion of several
operating improvements.
The Charlotte, Mich.-based manufacturer of custom chassis and emergency-
rescue vehicles reported net earnings of $1.3 million, or $0.11 per diluted
share, on net sales of $62.1 million for the first quarter of 2004, versus net
earnings of $2.6 million, or $0.21 per diluted share, on net sales of $60.4
million for the same quarter last year. The decline in earnings reflects a
net loss at Spartan’s EVTeam companies, Crimson Fire, Crimson Fire Aerials and
Road Rescue. Start-up costs related to Crimson Fire Aerial’s new facility and
product launch, coupled with Road Rescue’s continuing production ramp-up
following its move from St. Paul, Minn. to Marion, S.C., hurt profitability as
expected.
“Spartan’s trend lines are moving in the right direction with improving
sales, production and backlog at Spartan Chassis, Crimson Fire and Road
Rescue,” said John Sztykiel, chief executive officer of Spartan Motors.
“While we are far from satisfied with our earnings performance, we are
progressing in the right direction relative to the completion of our operating
investments.
“In the first quarter, Crimson Fire fell short on completing several
units, and while Road Rescue unit sales were up 48 percent over the fourth
quarter, it still hasn’t reached our desired run rate and a significant amount
of overtime was expensed to achieve that number. Thus, gross margins did not
improve as much as expected. Order intake at Road Rescue continues to be
strong, which reflects the strength of Road Rescue’s brand name, and the
quality of the vehicles being produced today.”
First Quarter Operating Highlights
* Crimson Fire’s backlog grew 54.1 percent versus the end of the first
quarter of 2003, and announced its plant expansion in Brandon, S.D.
* Crimson Fire Aerials opened a new aerial manufacturing facility in
Lancaster, Penn.
* Road Rescue improved its production rate by 48.1 percent versus the
fourth quarter and reported backlog is up 117.1 percent versus the end of the
first quarter of 2003.
* RV chassis sales were up 16.4 percent in the quarter versus the prior
year
* Fire truck chassis order backlog grew 25.7 percent over the backlog at
the end of the first quarter of 2003
“New product initiatives in 2003 are starting to create momentum. Crimson
Fire’s tubular stainless steel body design now accounts for 80 percent of
their orders. Gladiator Evolution chassis models now account for 58 percent
of Spartan Chassis order intake. Throughout 2004 and 2005, you will see a
growing number of product innovations brought to the marketplace by Crimson
Fire, Crimson Fire Aerials, Road Rescue and Spartan Chassis. With moves and
consolidations behind us, the focus is on operational excellence to become the
most desired brands and the lowest total-cost producer in our niches,” said
Sztykiel.
During the first quarter, consolidated net sales increased 2.8 percent
compared with the first quarter of 2003. Spartan said increased sales of RV
chassis and ambulances were offset by modest declines in fire truck and fire
truck chassis sales, primarily due to the production timing of several orders.
Consolidated gross margin decreased to 14.9 percent in the first quarter
of 2004, compared to 15.9 percent for the same period in 2003. Absent Crimson
Fire Aerials, operating expense levels during the first quarter of 2004
remained flat compared to the same period last year.
“The economy and consumer confidence are improving and our strong order
rates — at both Spartan Chassis and our EVTeam — reflect this trend. We
expect that our first quarter earnings will be our lightest this year, and we
remain comfortable with our previous earnings guidance in the low to mid 70
cent range for 2004,” said Sztykiel. “We have the sales orders and economic
and market conditions in our favor, which puts us in position to accelerate
profits, particularly in the second half of 2004.”
Spartan Chassis
Sales of Spartan’s motorhome chassis increased for the fourth consecutive
quarter, growing 3.2 percent from the fourth quarter of 2003, and 16.4 percent
compared to the first quarter of 2003. Industry-wide retail sales of Class A
RVs increased 24 percent in January and February and projections are for
continued growth in 2004 spurred by improving consumer confidence and economic
conditions, coupled with the growing number of Baby Boomers entering
retirement.
“Going into the second quarter, we are pleased to have a strong backlog
for RV chassis,” said Sztykiel. “We anticipate higher second quarter RV
chassis sales compared to the first quarter. The last time we accomplished
this achievement was over a decade ago. We have picked up new motorhome
platforms and are growing with our current OEM customers. At the same time,
new products should drive second-half momentum.”
Spartan fire truck chassis sales were essentially flat in the quarter
compared with the first quarter of 2003, which included a higher unit count,
but a larger mix of more entry-level chassis. Spartan forecasts a record year
in fire truck chassis sales based on its current backlog, bid activity and an
increase in orders of higher-end fire truck chassis.
Emergency Vehicle Team (EVTeam)
For the first quarter, Spartan Motors said sales in its EVTeam segment,
comprised of Crimson Fire, Crimson Fire Aerials and Road Rescue, declined 8.0
percent versus the first quarter of 2003. Increased sales at Road Rescue were
offset by a decrease in sales at Crimson Fire due to the production timing of
several orders. Both companies saw their backlogs grow to record levels,
including a 54.1 percent increase at Crimson Fire versus the prior year first
quarter.
Crimson Fire Aerials began building its first units in its new Lancaster,
Penn. facility during the quarter and Crimson Fire announced the planned
expansion of its operations in South Dakota to accommodate current and future
growth. The Crimson Fire Aerials product is debuting this week at the Fire
Department Instructors Conference (FDIC) and will round out the full line of
fire apparatus products offered by its sister company, Crimson Fire.
In April 2004, Crimson Fire announced that construction began for its new
$3 million facility in Brandon, S.D. The company said the first phase of the
new 32,000-square foot facility will include additional manufacturing space
and corporate offices and is expected to be completed during the fourth
quarter of 2004, while the second phase, featuring a product showroom and
technology demonstration area, will be completed in 2005. The new facility
will add capacity for the engineering and production of Crimson Fire’s popular
Star Series(TM) fire truck and will double Crimson Fire’s manufacturing
capacity in South Dakota to meet growing demand for its products.
Spartan reported that the production ramp-up at Road Rescue continued,
growing from 27 units in the fourth quarter to 40 units in the first quarter,
thanks to added management depth.
“Road Rescue made great strides as production levels increased 48 percent
during the first quarter and are on pace to increase by another 50 percent
during the second quarter,” said Sztykiel. “Our focus now is to lower our
labor hours per unit and overtime, while continuing to increase production
without sacrificing quality. Fortunately, our long lead times have not
created a lag in orders thanks to our focus on exclusive innovations and
expanding the Road Rescue dealer network.”
Spartan Profit and Return (SPAR)/Backlog
On a consolidated basis, Spartan posted a return on invested capital(1)
of 8.4 percent in the first quarter of 2004. Consolidated backlog was $102.4
million as of March 31, 2004, up from a backlog of $72.5 million at the same
time last year.
Sztykiel concluded: “2004 is off to a solid start, but we are excited to
see what we can do once we get Crimson Fire and Road Rescue firing on all
cylinders and efficiently working through our ever-growing order backlog. The
RV market is breaking out once again and Spartan Chassis is under the right
models and finding more opportunities to showcase our quality and technology
leadership. Likewise, the Emergency Rescue market is more active than we have
seen in 30 years in the business, and we are focused on strategically
attacking the market to ensure we achieve sales growth, strong profitability
and a return on invested capital above 20 percent.”
First Quarter Earnings Web Cast
Spartan Motors will host a conference call at 10 a.m. Eastern Time today
to discuss these results and current business trends. To listen to the call,
please click on the following link or go to
https://theshyftgroup.com/webcasts.asp . A replay of the call will be
available through 5 p.m. Eastern Time, Wednesday, May 5, 2004.
In addition, Spartan Motors will be presenting at the McDonald Investments
Emergency Rescue Conference on April 29, 2004 in Indianapolis in conjunction
with the FDIC show. The Company’s presentation at the conference will be
posted to the Investor section of Spartan’s website (theshyftgroup.com )
tomorrow.
(1) The Company defines return on invested capital by calculating
operating income, less taxes, on an annualized basis, divided by total
shareholders’ equity.
About Spartan Motors
Spartan Motors, Inc. (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
700 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, 2004 and 2003
March 31, 2004 March 31, 2003
$-000- % $-000- %
Sales 62,105 60,418
Cost of Sales 52,846 50,834
Gross Profit 9,259 14.9 9,584 15.9
Operating Expenses:
Research and Development 1,789 2.9 1,749 2.9
Selling, General and
Administrative 5,665 9.1 5,270 8.8
Total Operating Expenses 7,454 12.0 7,019 11.7
Operating Income 1,805 2.9 2,565 4.2
Other Income (Expense):
Interest Expense (103) (0.2) (52) (0.1)
Interest and Other Income 106 0.2 133 0.3
Total Other Income (Expense) 3 0.0 81 0.2
Earnings before Equity
Investment and Taxes 1,808 2.9 2,646 4.4
Taxes 482 0.8 556 0.9
Net Earnings from
Continuing Ops. 1,326 2.1 2,090 3.5
Discontinued Operations:
Gain on
Closure-Carpenter - 0.0 510 0.8
Net Earnings 1,326 2.1 2,600 4.3
Basic Net Earnings per Share:
Net Earnings from
Continuing Operations 0.11 0.18
Gain from Discontinued
Operations:
Gain on Disposal
of Carpenter - 0.04
Basic Net Earnings per Share 0.11 0.22
Diluted Net Earnings per Share:
Net Earnings from
Continuing Operations 0.11 0.17
Gain from Discontinued Operations:
Gain on Disposal
of Carpenter - 0.04
Diluted Net Earnings per Share 0.11 0.21
Basic Weighted Average
Common Shares Outstanding 12,228 12,086
Diluted Weighted Average
Common Shares Outstanding 12,563 12,488
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 2004 December 31, 2003
$-000 $-000
ASSETS
Current assets:
Cash and cash equivalents $17,827 $18,481
Accounts receivable, net 24,594 19,604
Inventories 29,195 26,588
Other current assets 5,193 5,726
Total current assets 76,809 70,399
Property, plant and equipment, net 15,616 14,784
Goodwill, net 4,543 4,543
Other assets 1,641 1,656
Total assets $98,609 $91,382
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $17,848 $15,067
Accrued warranty 2,341 2,538
Taxes on income - -
Accrued vacation, compensation
and related taxes 3,077 3,766
Deposits from customers 10,356 6,797
Other current liabilities and
accrued expenses 1,901 2,094
Current portion of long-term debt 4 -
Total current liabilities 35,527 30,262
Long-term debt, less current portion 145 -
Shareholders' equity:
Preferred stock - -
Common stock 123 122
Additional paid in capital 32,719 32,229
Retained earnings 30,095 28,769
Total shareholders' equity 62,937 61,120
Total liabilities and
shareholders' equity $98,609 $91,382
SOURCE Spartan Motors, Inc.