CHARLOTTE, Mich., Oct 28, 2004 /PRNewswire-FirstCall via COMTEX/ — Spartan Motors, Inc.
(Nasdaq: SPAR) today announced that increased sales of RV and fire truck
chassis resulted in the Company’s strongest quarterly sales ever and a 29.5
percent increase in net earnings in the third quarter of 2004 compared to the
prior year.
The Charlotte, Mich.-based manufacturer of custom chassis and emergency-
rescue vehicles reported net sales of $91.7 million in the 2004 third quarter,
up 50.8 percent versus net sales of $60.8 million in the same period in 2003.
Spartan posted net earnings of $1.9 million, or $0.15 per diluted share, for
the current third quarter, versus net earnings of $1.5 million, or $0.12 per
diluted share, for the third quarter of 2003.
The increase in earnings reflects strong sales growth at Spartan Chassis,
led by a 78.7 percent increase in RV chassis sales. Spartan reported sales at
its Emergency Vehicle Team (EVTeam) companies — Crimson Fire, Crimson Fire
Aerials and Road Rescue — were flat primarily due to production constraints
at Crimson Fire which offset gains at Road Rescue.
“Our solid gains in the third quarter and year-to-date reflect growth in
the markets we serve as well as our ability to win market share in the RV
chassis business,” said John Sztykiel, president and CEO of Spartan Motors.
“During the third quarter, we began production for several new motorhome
models and expect this run rate to continue.
“While we work to sustain the sales growth and profit gains at Spartan
Chassis, we are also making headway in addressing the losses at Crimson Fire
and Road Rescue. Crimson Fire’s results were impacted by a shift in
production from Alabama to the more efficient South Dakota facility. The move
into the just-completed facility in South Dakota will provide the needed
capacity in the fourth quarter. Likewise, we grew sales and build rates at
Road Rescue, and now we must improve production efficiency.”
Third Quarter 2004 Highlights
Spartan reported that consolidated gross margin declined from the second
quarter 2004 and versus the prior year period, driven significantly by the
higher cost of steel. Gross margin was 12.2 percent in the 2004 third
quarter, compared to 15.1 percent for the same period in 2003 and 14.6 percent
in the second quarter of 2004.
Spartan said its steel costs more than doubled from the second quarter to
the third quarter 2004 and are up more than $1.6 million year-to-date. The
Company has been able to pass a portion of the increases through to its
customers via surcharges and price increases on some products. However, steel
price increases cost Spartan almost $1.1 million or $0.09 per share pre-tax in
the current quarter.
“We’re working with our steel suppliers as well as our customers to share
the burden of the steel price run-up, but it was clearly a significant line
item in the quarter,” said Chief Financial Officer Jim Knapp. “We are
forecasting our steel price impact to lessen somewhat in the fourth quarter
and first quarter of 2005 as we offset more of the impact through surcharges
and pricing, but it remains a significant added cost to our operations.”
Total operating expenses increased on a dollar basis, but dropped as a
percentage of sales from 11.6 in 2003 to 9.1 percent in the 2004 quarter.
SG&A (selling, general and administrative) expense as a percentage of sales
dropped to 6.8 percent in the period versus 8.6 percent last year. Spartan
said the reductions are evidence of management’s focus on controlling
operating expenses and better leveraging its sales and support infrastructure
on higher sales and income despite increased corporate expenses related to
reporting requirements under the Sarbanes-Oxley Act.
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 10.7 percent in the third quarter of 2004 compared with ROIC of 9.4
percent in the same period in 2003. (Spartan defines return on invested
capital by calculating operating income, less taxes, on an annualized basis,
divided by total shareholders’ equity.) Consolidated backlog was $106.5
million as of Sept. 30, 2004, compared with backlog of $83.8 million at the
same time last year.
“Looking ahead, we expect similar earnings performance in the fourth
quarter followed by bottom line growth in 2005 as our EVTeam companies hit
their stride and the market share gains we’ve achieved in the RV business
address the inevitable cycles in this market,” Sztykiel added.
Spartan Chassis
Sales of Spartan’s motorhome chassis increased for the fifth consecutive
quarter, growing 78.7 percent compared to the third quarter of 2003. The
addition of several new motorhome models featuring Spartan chassis and growing
penetration of diesel chassis as a percentage of total Class A RVs sold, drove
the increase in sales. Spartan said it is seeing some softening in the RV
retail market, which could slow its RV chassis growth in the fourth quarter.
Spartan fire truck chassis sales were up 34.8 percent in the current
quarter compared to the prior year on the strength of increased sales of
higher end Gladiator product, as well as the continued growth of the emergency
rescue market from added Homeland Security funding and the replacement needs
of municipal fire departments.
“Our focus on product innovation and differentiation — on being the most
desired brand — is paying off with more and more customers specifying RVs and
fire trucks on a Spartan chassis,” said Sztykiel. “In RVs, we are benefiting
from new OEM additions and further penetration in some of our existing
partners, plus the continuing trend toward diesel chassis, where Spartan has
the broadest and best selection on the market.
“Likewise, in fire trucks, our investments in research and development and
building vehicles that meet the customized needs of firefighters in the field
is fueling sales growth, and we remain on pace for a record year in Spartan
fire truck chassis.”
Emergency Vehicle Team (EVTeam)
Spartan said sales in its EVTeam segment were flat versus the same period
last year as increased sales at Spartan’s ambulance unit Road Rescue were
offset by lower sales at fire truck maker Crimson Fire. Crimson Fire’s sales
and profitability were temporarily affected by its decision to move production
of its E-Series product from its Alabama facility to South Dakota and the
construction and set-up of its new, state-of-the-art plant in South Dakota.
The 32,000-square-foot facility adds capacity for the engineering and
production of Crimson Fire’s E-Series and Star Series(TM) fire trucks,
doubling Crimson’s manufacturing capacity in South Dakota.
The EVTeam posted a loss in the third quarter of 2004, due to the
production changes at Crimson Fire, severance costs related to production and
office staff changes at Road Rescue, and the investment in the ramp up of
Crimson Fire Aerials. Crimson Fire Aerials had several units in engineering
and production, but delivered only one unit during the quarter. Road Rescue
posted higher sales on a year-over-year basis and also raised its production
levels 25 percent in the third quarter versus the second quarter of 2004.
Spartan said it is continuing its search for a new president for Road Rescue
and expects to fill the position during the fourth quarter or early 2005.
“The EVTeam’s progress in the third quarter is masked by the operational
changes and resulting costs that we incurred,” said Sztykiel. “Crimson Fire’s
just-completed facility is up and running as of this week, Crimson Fire
Aerials delivered their first product, and at Road Rescue, we increased
production for the fourth consecutive quarter and narrowed our net loss
significantly in September versus the prior two months of the quarter.
“We continue to focus on reducing our break-even point, raising our
production levels, keeping the order pipeline full, and making sure we have
the right people on the team who are able to execute.”
Balance Sheet/Cash Flow
During the 2004 third quarter, Spartan utilized $11.4 million in cash
flows from operations for working capital to support the growth in the RV
business. Spartan also utilized $2.8 million in cash in the second and third
quarters of 2004 to construct the new Crimson Fire facility in South Dakota.
Spartan ended the quarter with $13.5 million in cash and cash equivalents.
“Our consolidated earnings were up significantly from the prior year, and
our balance sheet and cash position remain strong,” said Knapp. “Our
immediate challenge is to unlock the value in our EVTeam companies and move
them to profitability, while improving margins at Spartan Chassis. This will
be our focus in the fourth quarter, and we are looking toward 2005 to begin to
realize the full potential of all of our operations.”
Second 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 .
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 September 30, 2004 and 2003
September 30, 2004 September 30, 2003
$-000- % $-000- %
Sales 91,668 60,780
Cost of Sales 80,508 51,629
Gross Profit 11,160 12.2 9,151 15.1
Operating Expenses:
Research and Development 2,126 2.3 1,800 3.0
Selling, General and
Administrative 6,232 6.8 5,229 8.6
Total Operating Expenses 8,358 9.1 7,029 11.6
Operating Income 2,802 3.1 2,122 3.5
Other Income (Expense):
Interest Expense (100) (0.1) (62) (0.1)
Interest and Other Income 159 0.1 75 0.1
Total Other Income (Expense) 59 0.0 13 0.0
Earnings before Taxes 2,861 3.1 2,135 3.5
Taxes 967 1.0 673 1.1
Net Earnings from Continuing
Operations 1,894 2.1 1,462 2.4
Discontinued Operations:
Loss on Disposal of Carpenter - 0.0 - 0.0
Net Earnings 1,894 2.1 1,462 2.4
Basic Net Earnings per Share:
Net Earnings from Continuing
Operations 0.15 0.12
Discontinued Operations:
Loss on Disposal of Carpenter - -
Basic Net Earnings per Share 0.15 0.12
Diluted Net Earnings per Share:
Net Earnings from Continuing
Operations 0.15 0.12
Discontinued Operations:
Loss on Disposal of Carpenter - -
Diluted Net Earnings per Share 0.15 0.12
Basic Weighted Average Common
Shares Outstanding 12,384 12,121
Diluted Weighted Average Common
Shares Outstanding 12,859 12,385
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Nine Months Ended September 30, 2004 and 2003
September 30, 2004 September 30, 2003
$-000- % $-000- %
Sales 231,979 176,315
Cost of Sales 200,147 150,551
Gross Profit 31,832 13.7 25,764 14.6
Operating Expenses:
Research and Development 5,755 2.5 5,403 3.1
Selling, General and
Administrative 17,936 7.7 16,036 9.0
Total Operating Expenses 23,691 10.2 21,439 12.1
Operating Income 8,141 3.5 4,325 2.5
Other Income (Expense):
Interest Expense (306) (0.1) (231) (0.1)
Interest and Other Income 423 0.2 337 0.1
Total Other Income (Expense) 117 0.1 106 0.0
Earnings before Taxes 8,258 3.6 4,431 2.5
Taxes 2,771 1.2 1,100 0.6
Net Earnings from Continuing
Operations 5,487 2.4 3,331 1.9
Discontinued Operations:
Gain on Disposal of Carpenter - 0.0 1,465 0.8
Net Earnings 5,487 2.4 4,796 2.7
Basic Net Earnings per Share:
Net Earnings from Continuing
Operations 0.45 0.28
Discontinued Operations:
Gain on Disposal of Carpenter - 0.12
Basic Net Earnings per Share 0.45 0.40
Diluted Net Earnings per Share:
Net Earnings from Continuing
Operations 0.43 0.27
Discontinued Operations:
Gain on Disposal of Carpenter - 0.12
Diluted Net Earnings per Share 0.43 0.39
Basic Weighted Average Common
Shares Outstanding 12,306 12,104
Diluted Weighted Average Common
Shares Outstanding 12,696 12,425
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2004 December 31, 2003
$-000 $-000
ASSETS
Current assets:
Cash and cash equivalents $13,524 $18,481
Accounts receivable, net 37,345 19,604
Inventories 34,863 26,588
Other current assets 4,784 5,726
Total current assets 90,516 70,399
Property, plant and equipment, net 17,976 14,784
Goodwill, net 4,543 4,543
Other assets 1,626 1,656
Total assets $114,661 $91,382
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $27,282 $15,067
Accrued warranty 3,453 2,538
Accrued vacation, compensation
and related taxes 4,617 3,766
Deposits from customers 7,191 6,797
Other current liabilities and
accrued expenses 3,550 2,094
Current portion of long-term debt 10 -
Total current liabilities 46,103 30,262
Long-term debt, less current portion 137 -
Shareholders' equity:
Preferred stock - -
Common stock 125 122
Additional paid in capital 35,738 32,229
Retained earnings 32,558 28,769
Total shareholders' equity 68,421 61,120
Total liabilities and shareholders'
equity $114,661 $91,382
SOURCE: Spartan Motors, Inc.
John Sztykiel, CEO, or Jim Knapp, CFO, of Spartan Motors, Inc.,
+1-517-543-6400; or Jeff Lambert or Tim Hanson of Lambert, Edwards &
Associates, Inc.,
+1-616-233-0500, [email protected] , for Spartan
Motors, Inc.