CHARLOTTE, Mich., Feb 18, 2010 /PRNewswire via COMTEX/ — Spartan Motors, Inc. (Nasdaq: SPAR) today announced results for its 2009 fourth quarter and full year, which included the completion of the Company’s acquisition of Utilimaster on Nov. 30, 2009.
Fourth-quarter highlights:
- Net sales of $100.5 million
- Gross margin of 14.9 percent of sales
- Operating expenses of $15.0 million (15.0 percent of sales)
- Total one-time acquisition-related charges of $1.2 million
- Net loss of $0.01 per diluted share (adjusted earnings of $0.01 per share, excluding impact of acquisition)
- Ending cash balance of $18.5 million (a 34.5 percent increase over Q408)
- Consolidated backlog of $247.6 million at year end 2009
“We are pleased in some respects with the accomplishments of our team during a very demanding quarter,” said John Sztykiel, President and CEO of Spartan Motors. “On the positive side, we completed the purchase of Utilimaster and began our integration efforts, while continuing to align our core business to the current level of demand. On a negative note, we lost money, which is something we do not do often. That said, we are starting to see meaningful improvements in some markets, such as fire trucks and motorhomes, as consolidated backlog, excluding the new Utilimaster acquisition, rose 25.7 percent from the prior year and 35.6 percent from the third quarter of 2009.”
Consolidated net sales for the quarter were $100.5 million, up 12.0 percent sequentially from Q309 due to the incremental Utilimaster sales, which were partially offset by lower service parts and assemblies (SPA) sales. Compared with the fourth quarter of 2008, net sales fell 31.3 percent due mainly to the completion of a large-scale defense vehicle contract in 2008, as well as lower SPA sales in the current quarter. By contrast, Spartan’s EVTeam operating segment, which consists of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 13.3 percent year-over-year increase in sales for the 2009 fourth quarter. Sales of fire truck chassis in the quarter also increased 15.0 percent compared to the same period in 2008. Likewise, Spartan’s chassis sales to the Class A diesel motorhome market more than doubled in the quarter, driven by new products and recent improvements in the recreational vehicle (RV) market.
With the lower sales levels compared to the prior year and a shift in revenue mix toward lower-margin products, gross margin in Q409 fell to 14.9 percent of sales from 21.1 percent in Q408. Spartan attributed the change in margins to a shift in revenue mix from defense and SPA sales to motorhome and fire truck chassis. In addition, margins were adversely impacted in Q409 by approximately $0.5 million related to the inventory valuation associated with the Utilimaster acquisition. On a sequential basis, gross margin declined from 17.6 percent in Q309 due primarily to the shift in mix from SPA to motorhome and fire truck chassis.
Operating expenses for the 2009 fourth quarter declined by $8.8 million, or 37.0 percent, compared to the same period last year. Spartan attributed the improvement due to the absence of $6.0 million in one-time settlement costs incurred in 2008, as well as the Company’s continued efforts to control operating expenses, which were offset partially by the additional operating expenses from Utilimaster. Total operating expenses in the quarter, inclusive of $0.7 million in acquisition-related costs, were $15.0 million, down from $23.8 million in the same period last year. Operating expenses in the quarter included incremental R&D expenses associated with chassis that are compliant with the new 2010 emission standards, as well as development costs associated with a new product at Utilimaster. On a sequential basis, operating expenses increased from $14.6 million in Q309, primarily due to the additional operating expenses from Utilimaster of approximately $1.4 million, partially offset by a $0.7 million reduction in restructuring charges.
Net loss for the quarter was $0.4 million, or $0.01 per diluted share, which included one-time pre-tax charges of $1.2 million related to Spartan’s acquisition of Utilimaster. Excluding these items, the adjusted earnings per diluted share would have been $0.01.
Joe Nowicki, Chief Financial Officer, said: “While we made solid progress on our cost structure in the fourth quarter, we still have work to do in 2010. With the shift in revenue mix we experienced last quarter, we must continue to focus on improving efficiencies and reducing costs to align our spending with current demand. In the near term, we will also see the impact of increased investments in R&D on our bottom line, but we believe these investments are essential to our long-term growth and profit expansion. We also continue to place a priority on managing our balance sheet and cash flow, and we see opportunities for continued improvement in these areas in 2010.”
For the full year, Spartan reported net sales of $429.9 million, compared with net sales of $844.4 million in 2008. The decline in sales for the year was primarily the result of the completion of a large defense order in 2008 combined with softness in the current motorhome market. Gross profit fell with the lower revenue level, but as a percent of sales, gross margin increased to 19.0 percent in 2009, up from 17.5 percent in 2008, due mainly to a shift in mix toward higher margin products.
Operating expenses for the year were reduced by $16.2 million to $63.4 million due to the Company’s continued focus on controlling operating expenses, as well as the absence of $6.0 million in one-time settlement costs incurred in 2008. Operating expenses for 2009 also included $0.7 million in charges relating to Spartan’s restructuring, which took place primarily in the third quarter, as well as $0.7 million in costs related to the acquisition of Utilimaster in the fourth quarter.
Income from operations for the year was $18.6 million, compared with $68.7 million in 2008. On the bottom line, Spartan reported net income of $11.8 million for 2009, or $0.36 per diluted share, versus net income of $42.7 million, or $1.30 per diluted share, in the prior year. Excluding one-time charges related to restructuring and merger activities, the 2009 adjusted earnings would have been $0.40 per diluted share.
Backlog at Dec. 31, 2009 stood at $247.6 million, up 45.7 percent from $169.9 million at Dec. 31, 2008. Excluding the $34.1 million backlog from Utilimaster, Spartan’s total backlog increased by 25.7 percent over the prior year. Also excluding backlogs for SPA, which were not included in consolidated backlog in 2008, total backlogs would have increased 18.9 percent from the prior year. The improvement in backlog was driven by significantly improved order flow in motorhome and fire truck chassis ahead of updated emissions standards scheduled to take effect in 2010.
Spartan reported positive operating cash flow of $38.1 million in the year ended Dec. 31, 2009, due primarily to reduced working capital requirements. The company ended the year with $18.5 million in cash and cash equivalents, and $35.2 million in long-term debt, an increase from $16.6 million at Dec. 31, 2008, which was due mainly to the financing of approximately $43.0 million for the acquisition of Utilimaster in the fourth quarter. In 2009, Spartan reduced accounts receivable by 38.9 percent compared to levels at the end of 2008, which was a result of the Company’s continued efforts to improve collections. Inventory levels increased slightly during the year due to the addition of Utilimaster.
On a consolidated basis, Spartan posted a return on invested capital (ROIC) of 6.8 percent for the year ended 2009. Spartan uses ROIC, defined as operating income less taxes, on an annualized basis, divided by total shareholders’ equity, for internal performance benchmarking.
Sztykiel concluded: “From a full-year perspective, we accomplished a lot in 2009, achieving profitability despite a 49.1 percent drop in sales, significantly diversifying our business through the great synergy opportunities we expect with the Utilimaster acquisition, and realigning our cost and operational structure. Adding Utilimaster to our portfolio of specialty vehicle brands provides us with important inroads into a new market, and we expect our continued investments in new products to help keep Spartan at the forefront of specialty vehicle innovation. While we are seeing some improvement in fire trucks and motorhomes, other areas of our core markets remain difficult. As we work our way towards recovery, we will remain vigilant in controlling our costs and enhancing the efficiency of our operations, which should afford us the flexibility to meet changing market conditions directly and profitably.”
Reconciliation of Non-GAAP Financial Measures
This release contains Adjusted Earnings Per Share, which is a Non-GAAP financial measure. Adjusted Earnings Per Share is calculated by excluding from Earnings Per Share items that we believe to be infrequent or not indicative of our operating performance. For the periods covered by this release, such items consist of the following: expenses associated with restructuring actions taken to adjust our cost structure to the current business climate; closing and start-up costs related to mergers and acquisitions; and one-time settlement costs. We present Adjusted Earnings Per Share because we consider it to be an important supplemental measure of our performance and believe it to be useful in showing ongoing results from operations distinct from items that are infrequent or not indicative of our operating performance.
Adjusted Earnings Per Share is not a measurement of our financial performance under GAAP and should not be considered as an alternative to Earnings Per Share under GAAP. Adjusted Earnings Per Share has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating Adjusted Earnings Per Share, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted Earnings Per Share is not intended to suggest that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results and using Adjusted Earnings Per Share only as a supplement.
The following table reconciles Adjusted Earnings Per Share to Earnings Per Share for the periods indicated.
Financial Summary (Non-GAAP)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
Earnings (Loss) per Share -
Diluted $(0.01) $0.09 $0.36 $1.30
Add Back: Settlement Costs 0.17 0.17
Add Back: Acquisition Related
Expenses 0.02 - 0.02 -
Add Back: Restructuring
Charges - - 0.02 -
--- --- ---- ---
Adjusted Earnings per Share -
Diluted $0.01 $0.26 $0.40 $1.47
===== ===== ===== =====
Conference Call, Webcast and Roadcast(TM)
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 theshyftgroup.com, click on “Shareholders,” and then on “Webcasts.”
Spartan also will update the financial information on its Roadcast “digital roadshow” for investors. To launch the Spartan Motors Roadcast, please visit theshyftgroup.com and look for the “Virtual Road Show” link on the right side of the page.
About Spartan Motors
Spartan Motors, Inc. (theshyftgroup.com) designs, engineers and manufactures specialty chassis, specialty vehicles and truck bodies and aftermarket parts for the outdoor recreation/RV, emergency-response, defense, delivery and service markets. The company’s brand names – Spartan(TM), Crimson Fire(TM), Crimson Fire Aerials(TM), Road Rescue(TM) and Utilimaster(R) – are known for quality, value, service and being the first to market with innovative products. The company employs approximately 1,600 at facilities in Michigan, Pennsylvania, South Carolina, South Dakota, Indiana and Texas. Spartan reported sales of $430 million in 2009 and is focused on becoming a global leader in the manufacture of specialty vehicles and chassis.
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. For example, we may encounter unforeseen difficulties and challenges in entering new markets or in pursuing strategic acquisitions. In addition, technical and other complications may arise that could prevent the timely implementation of our plans or that may impact the expected outcome of those plans. As a result, actual results and future events could differ materially from those anticipated in such statements. 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 Statements of Income
Three Months Ended December 31, 2009 and 2008
December 31, 2009 December 31, 2008
----------------- -----------------
$000 % $000 %
---- --- ---- ---
Sales 100,455 146,314
Cost of Products Sold 85,526 115,387
Restructuring Charges 5
--- --- --- ---
Gross Profit 14,924 14.9 30,927 21.1
------ ---- ------ ----
Operating Expenses:
Research and Development 4,463 4.5 4,814 3.3
Selling, General and Administrative 10,507 10.5 18,971 12.9
Restructuring Charges 21 0.0
--- --- --- ---
Total Operating Expenses 14,991 15.0 23,785 16.2
Operating Income (Loss) (67) (0.1) 7,142 4.9
--- ---- ----- ---
Other Income (Expense):
Interest Expense (355) (0.4) (251) (0.2)
Interest and Other Income 32 0.1 56 0.0
--- --- --- ---
Total Other Income (Expense) (323) (0.3) (195) (0.2)
Earnings (Loss) before Taxes on Income
(Loss) (390) (0.4) 6,947 4.7
---- ---- ----- ---
Taxes on Income (Loss) 23 - 4,085 2.8
Net Earnings (Loss) (413) (0.4) 2,862 1.9
==== ==== ===== ===
Basic Net Earnings (Loss) per Share (0.01) 0.09
===== ====
Diluted Net Earnings (Loss) per Share (0.01) 0.09
===== ====
Basic Weighted Average Common Shares
Outstanding 32,755 32,668
Diluted Weighted Average Common
Shares Outstanding 32,755 32,729
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Twelve Months Ended December 31, 2009 and 2008
December 31, 2009 December 31, 2008
----------------- -----------------
$000 % $000 %
---- --- ---- ---
Sales 429,926 844,390
Cost of Products Sold 347,647 696,120
Restructuring Charges 270
--- --- --- ---
Gross Profit 82,009 19.0 148,270 17.5
------ ---- ------- ----
Operating Expenses:
Research and Development 17,690 4.1 19,461 2.3
Selling, General and Administrative 44,961 10.4 60,097 7.1
Restructuring Charges 713 0.2
--- --- --- ---
Total Operating Expenses 63,364 14.7 79,558 9.4
Operating Income 18,645 4.3 68,712 8.1
------ --- ------ ---
Other Income (Expense):
Interest Expense (1,339) (0.3) (2,062) (0.2)
Interest and Other Income 753 0.2 679 0.1
--- --- --- ---
Total Other Income (Expense) (586) (0.1) (1,383) (0.1)
Earnings before Taxes on Income 18,059 4.2 67,329 8.0
------ --- ------ ---
Taxes on Income 6,287 1.5 24,615 2.9
Net Earnings 11,772 2.7 42,714 5.1
====== === ====== ===
Basic Net Earnings per Share 0.36 1.31
==== ====
Diluted Net Earnings per Share 0.36 1.30
==== ====
Basic Weighted Average Common Shares
Outstanding 32,729 32,582
Diluted Weighted Average Common
Shares Outstanding 32,916 32,817
Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, December 31,
2009 2008
------------- -------------
$000 $000
---- ----
ASSETS
Current assets:
Cash and cash equivalents $18,475 $13,741
Accounts receivable, net 46,377 75,935
Inventories 102,401 86,648
Deferred income tax assets 6,984 7,076
Taxes receivable 4,212 -
Deposits on engines - 5,457
Other current assets 3,664 2,606
----- -----
Total current assets 182,113 191,463
Property, plant and equipment, net 80,228 66,786
Goodwill and other intangible assets, net 29,895 2,457
Deferred income tax assets - 241
Other assets 1,041 193
----- ---
Total assets $293,277 $261,140
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $20,131 $21,776
Accrued warranty 6,692 8,352
Accrued compensation and related taxes 5,520 12,136
Accrued vacation 1,912 1,904
Accrued customer rebates 1,324 1,498
Deposits from customers 11,992 9,922
Taxes on income - 1,972
Other current liabilities and accrued expenses 6,300 4,584
Current portion of long-term debt 11,146 10,640
------ ------
Total current liabilities 65,017 72,784
Other non-current liabilities 4,195 1,157
Long-term debt, less current portion 35,204 16,556
Deferred income tax liabilities 8,341 -
Shareholders' equity:
Common stock 329 326
Additional paid in capital 67,099 64,606
Retained earnings 113,092 105,711
------- -------
Total shareholders' equity 180,520 170,643
Total liabilities and shareholders' equity $293,277 $261,140
======== ========
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Three and Twelve Months Ended December 31, 2009
Unaudited
Three Months Ended December 31, 2009 (amounts in thousands of dollars)
Business Segments
------------------------------
Chassis EVTeam Utilimaster* Other Consolidated
------- ------ ------------ ----- ------------
Fire Truck
Chassis Sales 37,500 (7,745) 29,755
Motorhome
Chassis Sales 19,039 19,039
EVTeam Product
Sales 25,309 25,309
Utilimaster
Product Sales 13,248 13,248
Other Product
Sales
Specialty Vehicles 2,710 2,710
Service Parts
and Accessories 10,394 10,394
------ ------
Total Net Sales 69,643 25,309 13,248 (7,745) 100,455
====== ====== ====== ====== =======
Interest Expense
(Income) - 516 17 (178) 355
Depreciation and
Amortization
Expense 1,086 235 357 594 2,272
Segment Net
Earnings (Loss) 2,030 (106) (663) (1,674) (413)
Twelve Months Ended December 31, 2009 (amounts in thousands of dollars)
Business Segments
-----------------------------
Chassis EVTeam Utilimaster* Other Consolidated
------- ------ ------------ ----- ------------
Fire Truck
Chassis Sales 149,719 (29,070) 120,649
Motorhome
Chassis Sales 35,613 35,613
EVTeam Product
Sales 95,692 95,692
Utilimaster
Product Sales 13,248 13,248
Other Product Sales
Specialty Vehicles 24,402 24,402
Service Parts
and Accessories 140,322 140,322
------- -------
Total Net Sales 350,056 95,692 13,248 (29,070) 429,926
======= ====== ====== ======= =======
Interest Expense
(Income) - 1,836 17 (514) 1,339
Depreciation and
Amortization
Expense 4,150 928 357 2,330 7,765
Segment Net
Earnings (Loss) 18,666 (1,160) (663) (5,071) 11,772
Period End Backlog (amounts in thousands of dollars)
Dec. 31, March 31, June 30, Sept. 30, Dec. 31,
2008 2009 2009 2009 2009
-------- --------- -------- --------- --------
Fire Truck Chassis** 73,473 98,025 84,840 82,386 123,791
Motorhome Chassis** 5,552 4,365 6,743 9,589 20,022
Other Product**
Specialty Vehicles 8,500 8,064 2,781 4,214 16,970
Service Parts and
Accessories 47,763 20,249 8,725 11,467
----- ------ ------ ----- ------
Total Chassis 87,525 158,217 114,613 104,914 172,250
EVTeam Product** 96,383 83,344 72,352 72,615 72,402
Utilimaster Product** 34,059
Intercompany
Eliminations (14,009) (24,050) (26,232) (20,056) (31,113)
------- ------- ------- ------- -------
Total Backlog 169,899 217,511 160,733 157,473 247,598
* Results for Utilimaster represent one month of activity and related
segment net loss includes approximately $500 thousand of non-recurring
charges related to the inventory valuation associated with the
acquisition.
** Anticipated time to fill backlog orders; 2 months or less for motorhome
chassis, 6 months or less for Utilimaster and 10 months or less for fire
truck chassis, other product and EVTeam product. Service parts and
accessories were included in the backlog beginning in March 31, 2009 and
Utilimaster was included in the backlog beginning December 31, 2009.
SOURCE Spartan Motors, Inc.