Spartan Motors Reports Second Quarter 2014 EPS of $0.01 - WTVM.com-Columbus, GA News Weather & Sports

Spartan Motors Reports Second Quarter 2014 EPS of $0.01

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SOURCE Spartan Motors, Inc.

CHARLOTTE, Mich., Aug. 5, 2014 /PRNewswire/ -- Spartan Motors, Inc. (NASDAQ: SPAR) ("Spartan" or the "Company") today reported net income of $0.2 million, or $0.01 per share, in the quarter ended June 30, 2014.  In the second quarter of 2013, Spartan reported net income of $0.7 million, or $0.02 per share.   

Second Quarter 2014 Overview

For the second quarter of 2014 compared to the second quarter of 2013, Spartan reported:

  • Net sales of $115.8 million, down 4.2% from $120.9 million
  • Gross margin of 12.7% of sales versus 12.9%
  • Net income of $0.2 million, or $0.01 per share, versus net income of $0.7 million, or $0.02 per share
    • Delivery & Service (DSV) operating profit of $1.7 million versus operating loss of $1.6 million
    • Emergency Response (ER) operating loss of $1.5 million versus operating profit of $0.4 million
    • Specialty Chassis & Vehicles (SCV) operating profit of $1.4 million compared to operating profit of $3.9 million
  • Cash balance of $29.7 million at June 30, 2014, compared to $30.7 million at December 31, 2013
  • Order backlog increased to $246.7 million at June 30, 2014, from $242.7 million at December 31, 2013
  • Repurchased $1 million of Spartan common stock during the second quarter 2014

"Spartan posted net income of $0.01 per share in the second quarter, a substantial improvement from a loss of $0.06 per share in the first quarter of 2014," stated John Sztykiel, Spartan's Chief Executive Officer.  "The DSV and SCV segments again reported operating profits, and the performance of our ER group improved significantly from the first quarter of 2014.  We are seeing the benefits of better operational execution and greater commercial discipline throughout the organization.  We expect this positive trend to continue through the second half of 2014 as we execute our DRIVE strategy."

Second Quarter 2014 Segment Results:
Delivery & Service Vehicles (DSV)

 (In thousands)

 


Second Quarter





2014

2013

% Change

Delivery and Service Vehicles

Revenue





Vehicles


$  44,639

$     38,591

15.7%


Aftermarket & Service

4,894

5,564

-12.0%


Total revenue

$  49,533

$     44,155

12.2%


Operating income (loss)

$    1,683


$    (1,640)

NMF








  • Vehicle sales revenue grew to $44.6 million from $38.6 million, with shipments of truck bodies and walk-in vans increasing year-over-year.  Vehicle shipments totaled 2,336 units in the second quarter of 2014, up from 2,059 units a year ago.  Despite growth in revenue and units produced, ongoing chassis shortages constrained truck body shipments during the second quarter.  DSV shipped 471 Reach units in the second quarter, of which 270 were newly redesigned models.  The remaining 201 Reach vehicles shipped during the quarter were units that were previously delayed due to a component shortage.   
  • Sales of aftermarket parts and field service solutions declined 12.0% to $4.9 million in the second quarter of 2014.  During the quarter, DSV ramped up operations at a Saltillo, Mexico up-fit facility for Chrysler's Ram ProMaster van, which partially offset lower sales of other aftermarket products and services in the quarter. 
  • Operating profit for the second quarter of 2014 was $1.7 million versus an operating loss of $1.6 million in 2013. The improvement in profitability for the quarter was due to growth in vehicle production volume, higher margins on the redesigned Reach that went into production during the second quarter of 2014, and greater operating efficiency at Bristol, which was in an early launch phase during the second quarter of 2013.
  • Backlog at June 30, 2014, stood at $63.0 million, which included 400 Reach units scheduled to be built and shipped during the third quarter of 2014.  Backlog at June 30, 2013 was $100.4 million, which included a 1,900-unit Reach order, while backlog at year-end 2013 was $73.1 million.    

Emergency Response (ER)

 (In thousands)

 


Second Quarter





2014

2013

% Change

Emergency Response

Revenue





Total revenue

$    42,118

$    43,781

-3.8%


Operating income (loss)

$    (1,461)

$   438

NMF







  • ER revenue declined slightly during the second quarter to $42.1 million, from $43.8 million a year ago.  Lower revenue was a result of fewer chassis being shipped to external customers, an increase in chassis held in inventory for a 70-truck order from Peru and production delays due to a computer server malfunction at the Brandon, South Dakota facility.  Prior to the end of the second quarter, Spartan shipped the first group of 10 fire trucks to Peru.  The remainder of the Peru order is expected to be completed during the third quarter of 2014.    
  • The ER segment posted an operating loss of $1.5 million in the second quarter of 2014 compared to operating income of $0.4 million in the second quarter of 2013.  The operating loss was due to lower chassis sales to external customers and higher expenses due in part to the impact of the server malfunction.  On a sequential quarterly basis, the ER segment's operating loss was reduced by 60% from $3.7 million in the first quarter of 2014, as the Company made progress in improving operational performance and realized the positive effects of a more favorable product mix.
  • Backlog at June 30, 2014 was $165.1 million compared to $115.1 million at June 30, 2013.  Backlog at December 31, 2013 was $156.5 million.

Sztykiel commented on the ER segment, "Emergency Response is an important, strategic market for Spartan.  Our backlog has increased 43.4% from the second quarter of 2013, indicating the strength of the Spartan brand, but also resulting in longer wait times for customers.  To help reduce delivery times and leverage our flexible manufacturing base, Spartan intends to continue building certain fire truck models at its Charlotte campus after the completion of the Peru order. 

"In July, we committed additional resources and created a team dedicated specifically to accelerating the rate of change in the ER business.  This group is conducting a comprehensive review of the ER business from the order process through production and delivery to drive continuing improvements in operating performance.  We are confident the team's efforts will result in more efficient operations and ensure the ER segment achieves  sustained profitability." 

Specialty Chassis & Vehicles (SCV)

 (In thousands)

 


Second Quarter





2014

2013

% Change

Specialty Chassis & Vehicles

Revenue





Motorhome & Bus

$   17,799

$     20,378

-12.7%


Parts and Accessories

4,169

7,822

-46.7%


Other Specialty Vehicle

2,176

4,738

-54.1%


Total revenue

$   24,144

$     32,938

-26.7%


Operating income

$    1,426

$      3,900

-63.4%







  • Revenue in the SCV segment declined to $24.1 million from $32.9 million due to lower sales throughout the segment, with the exception of Isuzu contract manufacturing operations.  Motorhome chassis production declined during the second quarter to $17.8 million from $20.4 million, as a major customer reduced orders to work off its RV inventory levels.  Growth in shipments to other customers during the quarter partially offset these reductions.  Aftermarket Parts & Accessories (APA) sales declined in the second quarter of 2014 from the prior year mainly due to lower defense sales, which was expected due to budget cuts.  Other Specialty Vehicle revenues declined to $2.2 million which reflected the lack of Specialty and Defense (SDG) revenue in the second quarter 2014.  In the second quarter of 2013, SDG had revenue of $3.1 million from military vehicle sales.  The absence of SDG revenue in the second quarter of 2014 more than offset higher revenue from the Isuzu contract manufacturing operations when compared to the second quarter of 2013.
  • Operating income declined to $1.4 million from $3.9 million.  Operating expenses included an additional $0.2 million accrual for the previously announced motorhome steering gear recall.  Lower operating income also resulted from lower sales in all SCV business lines, with the exception of the Isuzu manufacturing operations. 
  • Backlog at June 30, 2014 totaled $18.6 million versus $17.6 million at June 30, 2013.  At December 31, 2013, SCV's backlog stood at $13.0 million

Sztykiel commented, "While motorhome chassis sales in 2014 are expected to lag year-ago levels, we expect a return to growth in 2015.  We added a new customer in the second quarter and are expanding our product lineup to fit the needs of more customers.  Next year, we expect to see more RVs riding on a Spartan chassis." 

Financial Summary and Outlook

"Spartan reported net income of $0.01 per share in the second quarter, highlighting our efforts to raise operating performance as we execute DRIVE throughout the organization.  The Company was profitable despite the challenges of lower revenue in the SCV and ER segments," stated Lori Wade, Spartan's Chief Financial Officer.  "Gross margin of 12.7% in the second quarter of 2014 approached the 12.9% reported in the second quarter of 2013 and was a marked improvement over the 10.0% gross margin reported in the first quarter of 2014.  Performance in the DSV segment improved dramatically from last year when the Bristol facility was still in an early launch phase.

"Net income for the second quarter of 2014 was higher than operating income due to an adjustment to our tax provision to record the impact of the change in our full year financial projections.  Our 2014 full year tax rate is negatively impacted by roughly 5 – 6% due to the expiration of the research and development tax credit on December 31, 2013." 

Wade continued her remarks, stating, "Spartan's balance sheet and liquidity position remained solid.  Cash at June 30, 2014 was $29.7 million despite the addition of $8 million of inventory for the 70 fire trucks being built for Peru.  A strong cash position and positive outlook for the second half of the year allowed us to repurchase $1 million of Spartan common stock and pay a dividend of $1.7 million, or $0.05 per share, during the second quarter. 

"We are revising our 2014 revenue projection to a range of $500$520 million, a reduction of $5 million from the upper end of the range.  Lower projected motorhome chassis revenue and production delays in the ER segment cause us to be more conservative at the top end of our estimated revenue range.  Lower revenue is also expected to have an adverse impact on operating margins, so we are revising our expected operating margin for 2014 to a range of 0.5% to 1.0% of sales.  We expect Spartan to report an operating profit for the third and fourth quarters of 2014, as well as for the year as a whole."

Business Summary

Sztykiel commented, "We are pleased with our second quarter performance, reporting a profit of $0.01 per share and the strength of our balance sheet, despite the challenges.  Due to the strength of our brands, we are gaining traction in our marketplace as we execute DRIVE in a disciplined manner.  Challenges remain, but we have a positive outlook for operating performance in the second half of 2014."

D.R.I.V.E. is Spartan's operating strategy based on five tenets:

  • Diversified Growth
  • Redefining Technology and Innovation
  • Integrated Operational Excellence
  • Vibrant Culture
  • Excited Consumers/Brand Loyalists

Conference Call, Webcast and Investor Information

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 www.spartanmotors.com, click on "Shareholders," and then on "Webcasts."  For more information about Spartan, please visit www.spartanmotors.com

About Spartan Motors

Spartan Motors, Inc. designs, engineers and manufactures specialty chassis, specialty vehicles, truck bodies and aftermarket parts for the recreational vehicle (RV), emergency response, government services, defense, and delivery and service markets. The Company's brand names – Spartan™, Spartan Chassis™, Spartan ER™, Spartan ERV™ and Utilimaster® - are known for quality, performance, service and first-to-market innovation. The Company employs approximately 1,700 associates at facilities in Michigan, Pennsylvania, South Dakota, Indiana and Florida. Spartan reported sales of $470 million in 2013 and is focused on becoming a global leader in the design, engineering and manufacture of specialty vehicles and chassis. Visit Spartan Motors at www.spartanmotors.com.

This release contains several forward-looking statements that are not historical facts, including statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations. These statements can be identified by words such as "believe," "expect," "intend," "potential," "future," "may," "will," "should," and similar expressions regarding future expectations.  These forward-looking statements involve various known and unknown risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, and likelihood.  Therefore, actual performance and results may materially differ from what may be expressed or forecasted in such forward-looking statements.  Factors that could contribute to these differences include operational and other complications that may arise affecting the implementation of our plans and business objectives; continued pressures caused by economic conditions and the pace and extent of the economic recovery; challenges that may arise in connection with the integration of new businesses or assets we acquire or the disposition of assets; restructuring of our operations, and/or our expansion into new geographic markets; issues unique to government contracting, such as competitive bidding processes, qualification requirements, and delays or changes in funding; disruptions within our dealer network; changes in our relationships with major customers, suppliers, or other business partners, including Isuzu; changes in the demand or supply of products within our markets or raw materials needed to manufacture those products; and changes in laws and regulations affecting our business.   Other factors that could affect outcomes are set forth in our Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website.  All forward-looking statements in this release are qualified by this paragraph.  Investors should not place undue reliance on forward-looking statements as a prediction of actual results.  We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.

 

 

Spartan Motors, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except par value)



(Unaudited)




June 30,


December 31,


2014


2013

ASSETS




Current assets:




Cash and cash equivalents

$         29,677


$         30,707

Accounts receivable, less allowance of $194 and $769

49,186


47,560

Inventories

84,432


81,419

Deferred income tax assets

6,736


6,736

Income taxes receivable

3,704


1,641

Assets held for sale

329


373

Other current assets

2,410


2,291

Total current assets

176,474


170,727





Property, plant and equipment, net

52,190


54,278

Goodwill

15,961


15,961

Intangible assets, net

9,526


10,094

Other assets

2,157


2,222

TOTAL ASSETS

$       256,308


$       253,282





LIABILITIES AND SHAREHOLDERS' EQUITY








Current liabilities:




Accounts payable

$         35,246


$         30,525

Accrued warranty

8,564


7,579

Accrued customer rebates

2,282


2,190

Accrued compensation and related taxes

7,350


6,440

Deposits from customers

17,983


18,006

Other current liabilities and accrued expenses

6,269


5,333

Current portion of long-term debt

58


79

Total current liabilities

77,752


70,152





Other non-current liabilities

2,362


3,109

Long-term debt, less current portion

5,232


5,261

Deferred income tax liabilities

3,209


3,209





Shareholders' equity:




Preferred stock, no par value: 2,000 shares authorized (none issued)

-


-

Common stock, $0.01 par value; 40,000 shares authorized; 34,273 and 34,210
outstanding

343


342

Additional paid in capital

75,474


75,075

Retained earnings

91,952


96,132

Total Spartan Motors, Inc. shareholders' equity

167,769


171,549

Non-controlling interest

(16)


2

Total shareholders' equity

167,753


171,551

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$       256,308


$       253,282





 

 

Spartan Motors, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2014


2013


2014


2013









Sales

$ 115,795


$    120,874


$   243,754


$   217,010

Cost of products sold

101,133


105,248


216,347


195,038

Gross profit

14,662


15,626


27,407


21,972









Operating expenses:








Research and development

2,740


2,897


5,599


5,698

Selling, general and administrative

11,891


11,661


25,319


22,035

Total operating expenses

14,631


14,558


30,918


27,733









Operating income (loss)

31


1,068


(3,511)


(5,761)









Other income (expense):








Interest expense

(91)


(87)


(185)


(156)

Interest and other income

111


115


239


261

Total other income (expense)

20


28


54


105









Income (loss) before taxes

51


1,096


(3,457)


(5,656)









Taxes

(179)


405


(1,546)


(2,093)









Net Income (loss)

230


691


(1,911)


(3,563)









Less: net loss attributable to non-controlling interest

(17)


-


(18)


-









Net income (loss) attributable to Spartan Motors Inc.

$            247


$           691


$    (1,893)


$    (3,563)









Basic net earnings (loss) per share

$           0.01


$          0.02


$      (0.06)


$      (0.11)









Diluted net earnings (loss) per share

$           0.01


$          0.02


$      (0.06)


$      (0.11)









Basic weighted average common shares outstanding

34,446


34,105


33,842


33,447









Diluted weighted average common shares outstanding

34,450


34,139


33,842


33,447









 

 

Spartan Motors, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

Unaudited











Three Months Ended June 30,  2014 (amounts in thousands of dollars) 












Business Segments






Emergency
Response


Delivery &
Service
Vehicles


Specialty
Vehicles


Other


Consolidated











Emergency Response Vehicles Sales

$       42,118


$                -


$                -


$                 -


$       42,118

Delivery & Service Vehicles Sales

-


44,639


-


-


44,639

Motorhome Chassis Sales

-


-


17,799


-


17,799

Other Specialty Vehicles

-


-


2,176


-


2,176

Aftermarket Parts and Assemblies

-


4,894


4,169


-


9,063











Total Sales

$       42,118


$      49,533


$      24,144


$                 -


$     115,795











Depreciation and Amortization Expense

$            249


$        1,122


$           188


$            601


$         2,160

Operating Income (Loss)

$       (1,461)


$        1,683


$        1,426


$      (1,617)


$              31

Segment Assets

$       87,811


$      74,655


$      21,843


$       71,999


$     256,308

 

 

Spartan Motors, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

Unaudited


Period End Backlog (amounts in thousands of dollars) 












June 30,
2014


March 31,
2014


Dec. 31,
2013


Sept. 30,
2013


June 30,
2013











Emergency Response Vehicles

165,144


176,350


156,489


119,693


115,148











Delivery & Service Vehicles *

62,994


83,356


73,148


87,492


100,399











      Motorhome Chassis *

15,761


12,866


11,370


22,104


14,166

      Other Vehicles*

-


-


-


-


-

      Aftermarket Parts and Assemblies

2,803


1,438


1,654


2,635


3,437

Total Specialty Vehicles Backlog

18,564


14,304


13,024


24,739


17,603











Total Backlog

$  246,702


$    274,010


$    242,661


$    231,924


$    233,150


* Anticipated time to fill backlog orders at June 30, 2014; 9 months or less for emergency response chassis;
12 months or less for emergency response vehicles; 2 months or less for motorhome chassis; 4 months or
less for delivery and service vehicles.


 

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