- Net sales of $196.5 million, up 28.8% compared to second quarter 2007
- Net earnings of $0.32 per diluted share, up 60.0% year-over-year
- Return on invested capital of 27.7%, up 23.1% year-over-year
- Gross margin of 17.2%, up 9.6% year-over-year
- Consolidated backlog of $320.2 million; up 10.3% year-over-year
CHARLOTTE, Mich., July 24 /PRNewswire-FirstCall/ — Spartan Motors, Inc.
(Nasdaq: SPAR) reported its best second quarter in company history with a 28.8
percent year-over-year increase in revenues and a 59.8 percent year-over-year
increase in net earnings, overcoming challenges in several of its end markets.
Second Quarter Results
Spartan reported net earnings of $10.4 million, or $0.32 per diluted
share, on net sales of $196.5 million for the second quarter ended June 30,
2008, compared with net earnings of $6.5 million, or $0.20 per diluted share,
on net sales of $152.6 million in the same quarter of 2007.
“The company posted a solid second quarter, particularly given a shift in
military business from the second quarter to the third quarter, and the sharp
decline in the RV market,” said John Sztykiel, president and CEO of Spartan
Motors. “Despite these challenges, Spartan improved its earnings nearly 60
percent year-over-year, and our earnings for the first six months of 2008 have
surpassed our earnings for the whole of 2007.
“This quarter is another illustration of how our market diversification
and flexible manufacturing model has enabled us to grow sales, while
controlling our cost structure in tough economic times. Our multiple markets
— emergency-rescue, RV and specialty vehicles, as well as our service, parts
and accessories business — are providing us with growth and enabling us to
better manage risk.”
Spartan said supply chain issues relative to a production ramp-up, as well
as parts, shifted part of the production schedule of a significant military
vehicle order from the second quarter to the second half of 2008, with a
significant portion of this order remaining in the backlog as of the end of
the quarter.
“As in past quarters, military vehicle production can be difficult to
forecast month-to-month, as there are strategic supply ramp-up issues to
overcome with each vehicle redesign,” said Sztykiel. “At the same time, the
company experienced softer than expected conditions in the motorhome chassis
market, with industry wholesale shipments of Class A motorhomes down 39.5
percent year-over-year through May, according to the latest data from the
Recreational Vehicle Industry Association (RVIA).”
Spartan Motors’ consolidated backlog increased 10.3 percent
year-over-year, to approximately $320.2 million as of June 30, 2008. Spartan
Motors anticipates fulfilling its current backlog orders by May 2009.
Spartan reported gross margin of 17.2 percent in the second quarter of
2008, an increase over a gross margin of 15.7 percent in the same period in
2007. Spartan attributed the year-over-year increase in gross profit to
increased sales, product mix, higher absorption of overhead and more favorable
warranty costs.
Through the first six months of 2008, Spartan’s sales increased 55.9
percent compared with the same period of last year, while net earnings
increased 83.6 percent compared to the six-month period in 2007. The company
reported net earnings per diluted share of $0.77 per share for the first six
months of 2007, compared with net earnings per diluted share of $0.42 per
share in the same period of 2007.
Spartan Chassis
Sales at Spartan Chassis, the company’s largest subsidiary and operating
unit, increased 31.6 percent year-over year to $180.8 million for the current
quarter. Spartan Chassis represented 92 percent of Spartan Motors’ total
consolidated sales in the 2008 second quarter. Second quarter earnings at
Spartan Chassis improved 53.9 percent year-over-year, and the unit’s backlog
as of June 30, 2008 increased 21.7 percent year-over-year.
Spartan’s chassis sales to the Class A diesel motorhome market decreased
50.0 percent year-over-year in the quarter. Spartan’s backlog for RV chassis
decreased 47.3 percent year-over-year to $12.5 million as of June 30, 2008.
Sales of fire truck chassis in the quarter decreased 11.2 percent compared to
the same period of last year, though this segment reported significant
improvement in gross margin. Backlog for fire truck chassis at the end of the
2008 second quarter was $75.9 million, a 5.3 percent increase compared to the
prior year.
Other Product sales, including specialty chassis for MRAP military
vehicles, and Spartan Chassis’ growing service, parts and accessories (SPA)
business, increased 159.5 percent year-over-year in the second quarter of
2008. Backlog for Other Products increased 43.1 percent year-over-year to
$188.7 million as of June 30, 2008. The backlog for Other Products includes a
significant order for military vehicles that Spartan expects to produce in the
second half of 2008.
Emergency Vehicle Team (EVTeam)
Spartan’s EVTeam operating unit, consisting of its Crimson Fire, Crimson
Fire Aerials and Road Rescue subsidiaries, reported a 6.0 percent
year-over-year increase in sales for the 2008 second quarter, and represented
8 percent of total company-wide sales in the quarter. Though the unit posted
a net loss for the quarter, the EVTeam reported a 25.2 percent improvement in
segment bottom-line compared to the second quarter of 2007.
“While our goal remains for each unit to be profitable on a stand-alone
basis, without any preferential treatment or pricing, the pull-through of
Spartan Chassis from the EVTeam continues to have a positive impact on Spartan
Motors’ bottom line,” said Sztykiel.
Financial Position
Spartan reported an operating cash flow increase in the current quarter of
$35.3 million, driven largely by decreased working capital needs. The company
ended the quarter with $3.2 million in cash and cash equivalents and $53.4
million in long-term debt, a 14.8 percent reduction in long-term debt since
the end of 2007.
“Debt related to working capital in the second quarter decreased compared
to the 2008 first quarter to match the lower production volumes, another
indication of the flexibility of our business model,” said Jim Knapp, chief
financial officer of Spartan Motors. “We are closely monitoring material
costs to mitigate the impact on margins.”
On a consolidated basis, Spartan posted a return on invested capital
(ROIC) of 27.7 percent in the second quarter of 2008, compared to ROIC of 22.5
percent for the same quarter in 2007. Spartan defines return on invested
capital as operating income less taxes, on an annualized basis, divided by
total shareholders’ equity.
Market Outlook
“The outlook for motorhome chassis is challenging, though the RVIA is
predicting the industry will reach its bottom for shipments in 2008 or early
2009,” said Sztykiel. “With greater competitive pressures, our motorhome OEM
partners will likely need Spartan more than ever to protect their market
share. Our focus in motorhome chassis remains on expanding the number of
models riding on our chassis and increasing the Spartan content per motorhome
through more up-fit work, such as the new bridge-beam product.
“We continue to see smaller orders for mine-blast protected vehicles.
These military orders, though not large enough individually to warrant
separate announcements, are for specialty variants of existing MRAP vehicles,
or for related, lighter vehicles. This trend of smaller orders for
specialized and lighter hardened vehicles is expected to stabilize into 2009.”
“Our emergency-rescue products made good progress in the quarter, and this
progress is expected to continue into the second half of 2008. Recent product
introductions, as well as anticipated demand for fire truck chassis and fire
trucks ahead of the emissions change in 2010, are expected to drive Spartan’s
emergency-rescue business into 2009. Several large players in the
emergency-rescue market continue to struggle, creating new opportunities for
Spartan. We also expect our service, parts and accessories business to become
a greater percentage of sales.”
Sztykiel concluded: “While the rise in fuel costs are challenging, they
are also forcing a restructuring of society and its vehicles. Spartan’s model
has always been centered on specialty vehicles evolving in advance of society,
which creates new opportunities for our flexible, fast and multi-market
business model. Our customer-centric philosophy and customized products fill
growing niches within our core markets. Spartan’s strength in innovation and
track record of transforming markets from commercial to custom allows us to
create new niche markets. We remain cautiously optimistic about our prospects
in 2008 and beyond.”
Conference Call & Webcast
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 , click on “Shareholders,” and then on
“Webcasts.”
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 1,500 at facilities in Michigan, Pennsylvania, South Carolina
and South Dakota. Spartan reported sales of $681.9 million in 2007 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. Forward looking statements are
identifiable by words such as “believe,” “anticipate,” “will,” “sustain,” and
“continue.” 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
June 30, 2008 December 31, 2007
$-000- $-000-
ASSETS
Current assets:
Cash and cash equivalents $3,166 $13,527
Accounts receivable, net 102,641 132,907
Inventories 113,107 103,076
Deferred income tax assets 6,925 6,925
Taxes receivable 1,908
Other current assets 2,144 1,978
Total current assets 229,891 258,413
Property, plant and equipment, net 62,043 56,673
Goodwill 2,457 2,457
Deferred income tax assets 775 775
Other assets 209 346
Total assets $295,375 $318,664
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $50,808 $90,769
Accrued warranty 11,339 10,824
Accrued compensation and related taxes 9,650 10,431
Accrued vacation 2,055 1,758
Accrued customer rebates 2,179 1,963
Deposits from customers 5,843 5,540
Taxes on income 551
Other current liabilities and
accrued expenses 4,641 3,367
Current portion of long-term debt 524 522
Total current liabilities 87,039 125,725
Other non-current liabilities 1,108 1,025
Long-term debt, less current portion 53,433 62,696
Shareholders' equity:
Common stock 326 324
Additional paid in capital 63,644 62,648
Retained earnings 89,825 66,246
Total shareholders' equity 153,795 129,218
Total liabilities and
shareholders' equity $295,375 $318,664
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended June 30, 2008 and 2007
June 30, 2008 June 30, 2007
$-000- % $-000- %
Sales 196,520 152,583
Cost of Products Sold 162,772 128,570
Gross Profit 33,748 17.2 24,013 15.7
Operating Expenses:
Research and Development 4,743 2.4 3,696 2.4
Selling, General
and Administrative 12,886 6.6 9,670 6.3
Total Operating Expenses 17,629 9.0 13,366 8.7
Operating Income 16,119 8.2 10,647 7.0
Other Income (Expense):
Interest Expense (436) (0.2) (436) (0.3)
Interest and Other Income 199 0.1 192 0.1
Total Other Income (Expense) (237) (0.1) (244) (0.2)
Earnings before Taxes on Income 15,882 8.1 10,403 6.8
Taxes on Income 5,467 2.8 3,887 2.5
Net Earnings 10,415 5.3 6,516 4.3
Basic Net Earnings per Share 0.33 0.20
Diluted Net Earnings per Share 0.32 0.20
Basic Weighted Average Common
Shares Outstanding 32,001 32,073
Diluted Weighted Average Common
Shares Outstanding 32,705 32,947
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Six Months Ended June 30, 2008 and 2007
June 30, 2008 June 30, 2007
$-000- % $-000- %
Sales 460,615 295,465
Cost of Products Sold 386,238 246,761
Gross Profit 74,377 16.1 48,704 16.5
Operating Expenses:
Research and Development 9,430 2.0 7,486 2.5
Selling, General
and Administrative 25,426 5.5 19,151 6.5
Total Operating Expenses 34,856 7.5 26,637 9.0
Operating Income 39,521 8.6 22,067 7.5
Other Income (Expense):
Interest Expense (1,169) (0.3) (682) (0.3)
Interest and Other Income 293 0.1 329 0.1
Total Other Income (Expense) (876) (0.2) (353) (0.2)
Earnings before Taxes on Income 38,645 8.4 21,714 7.3
Taxes on Income 13,449 2.9 7,992 2.7
Net Earnings 25,196 5.5 13,722 4.6
Basic Net Earnings per Share 0.79 0.43
Diluted Net Earnings per Share 0.77 0.42
Basic Weighted Average Common
Shares Outstanding 31,957 31,828
Diluted Weighted Average Common
Shares Outstanding 32,554 32,549
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Quarter and Six Months Ended June 30, 2008
Three Months Ended June 30, 2008 (amounts in thousands of dollars)
Business Segments
Chassis EVTeam Other Consolidated
Motorhome Chassis Sales 30,206 30,206
Fire Truck Chassis Sales 25,627 (6,259) 19,368
EVTeam Product Sales 22,007 22,007
Other Product Sales 124,939 124,939
Total Net Sales 180,772 22,007 (6,259) 196,520
Interest Expense 64 372 436
Depreciation Expense 649 297 463 1,409
Segment Net Earnings (Loss) 12,433 (714) (1,304) 10,415
Six Months Ended June 30, 2008 (amounts in thousands of dollars)
Business Segments
Chassis EVTeam Other Consolidated
Motorhome Chassis Sales 68,351 68,351
Fire Truck Chassis Sales 55,364 (11,708) 43,656
EVTeam Product Sales 46,259 46,259
Other Product Sales 302,349 302,349
Total Net Sales 426,064 46,259 (11,708) 460,615
Interest Expense 13 769 387 1,169
Depreciation Expense 1,238 578 920 2,736
Segment Net Earnings (Loss) 29,077 (1,150) (2,731) 25,196
Period End Backlog (amounts in thousands of dollars)
June 30, Sept. 30, Dec.31, March 31, June 30,
2007 2007 2007 2008 2008
Motorhome Chassis * 23,768 26,097 27,312 17,465 12,533
Fire Truck Chassis * 72,097 67,071 60,374 70,720 75,931
Other Product * 131,801 228,803 199,362 166,457 188,665
Total Chassis 227,666 321,971 287,048 254,642 277,129
EVTeam Product * 62,691 61,178 51,316 49,975 43,094
Total Backlog 290,357 383,149 338,364 304,617 320,223
* Anticipated time to fill backlog orders; 2 months or less for motorhome
chassis and 10 months or less for fire truck chassis, other product and
EVTeam product.
SOURCE Spartan Motors, Inc.
07/24/2008
CONTACT: John Sztykiel, CEO, or Jim Knapp, CFOboth of Spartan Motors,
Inc., +1-517-543-6400or Jeff Lambert or Ryan McGrath
[email protected]both of Lambert, Edwards & Associates, Inc. for
Spartan Motors, Inc. +1-616-233-0500
Web site: https://theshyftgroup.com
(SPAR)