Spartan Motors Reports Second Quarter 2015 Net Income of $1.2 Million

Aug 05, 2015, 07:00 ET from Spartan Motors, Inc.

CHARLOTTE, Mich., Aug. 5, 2015 /PRNewswire/ -- Spartan Motors, Inc. (NASDAQ: SPAR) ("Spartan" or the "Company") today reported operating results for the second quarter of 2015.  The Company posted net income of $1.2 million, or $0.03 per share, on revenue of $144.8 million versus net income of $0.2 million, or $0.01 per share, in the second quarter of 2014.  Results for the second quarter of 2015 include pre-tax restructuring expenses of $0.8 million in the Emergency Response (ER) segment and a charge of $1.1 million stemming from an agreement with the National Highway Traffic Safety Administration (NHTSA).

Second Quarter 2015 Overview

For the second quarter of 2015 compared to the second quarter of 2014:

  • Net sales of $144.8 million, up 25.1% from $115.8 million
  • Gross margin of 12.0% of sales versus 10.9%*
  • Operating income of $2.3 million versus operating income of approximately $31,000
  • Net income of $1.2 million, or $0.03 per share, versus net income of $0.2 million, or $0.01 per share
  • Cash balance of $20.6 million at June 30, 2015, up from $12.0 million at March 31, 2015
  • Order backlog increased to $262.7 million at June 30, 2015, from $243.7 million at December 31, 2014 and $246.7 million at June 30, 2014

(*Cost of goods sold for both periods includes certain engineering expenses that were previously classified as operating expenses.  This classification change resulted in an increase in cost of goods sold totaling $2.4 million in the second quarter of 2015 and $2.0 million in the second quarter of 2014.  There was no impact on operating income or net income for either period.)

Daryl Adams, Spartan's Chief Executive Officer, stated, "We are pleased to report growth in revenue and operating profit in the second quarter of 2015.  All three of our segments reported improved operating results compared to last year.  Operating income for the second quarter totaled $2.3 million, including NHTSA settlement costs of $1.1 million and ER restructuring costs of $0.8 million.  Even with these costs included in our results, the Company's performance is moving in the right direction.

"Spartan's top priority continues to be turning around the performance of the Emergency Response (ER) segment, especially ER Body operations, where we worked to eliminate production bottlenecks.  There are more obstacles to be overcome, but we are making progress and starting to see a positive impact on operating results.  The Delivery & Service Vehicles (DSV) and Specialty Chassis & Vehicles (SCV) segments reported higher revenue and operating income resulting from efforts to diversify their customer bases and product offerings.  Moving forward, we will work to gain momentum as we implement operational initiatives throughout the Company, toward our goal of improved operating performance," concluded Adams.

Second Quarter 2015 Segment Results: 

Delivery & Service Vehicles (DSV)

 (In thousands)

Second Quarter

2015

2014

% Change

Delivery and Service Vehicles

Revenue

Vehicles

$  45,038

$     44,639

0.9%

Aftermarket & Service

7,802

4,894

59.4%

Total revenue

$  52,840

$     49,533

6.7%

Operating income (loss)

$    3,293

$       1,683

95.7%

  • Total revenue increased to $52.8 million from $49.5 million in the second quarter of 2014, mainly due to higher aftermarket parts sales, which increased 59.4% to $7.8 million.  Vehicle revenue was up slightly, as a favorable mix more than offset lower unit volume.  DSV shipped 2,049 vehicles in the second quarter of 2015 compared to 2,336 vehicles in the second quarter of 2014.  Truck body production was limited by chassis shortages that have negatively impacted the industry for several quarters.  The timing of certain walk-in van orders also reduced production in the second quarter of 2015 compared to the prior year.         
  • Operating profit was $3.3 million in the second quarter of 2015, up nearly 96% from the prior year.  Higher aftermarket parts sales, a more favorable product mix and operating efficiency gains led to higher operating profit compared to the second quarter of 2014.  
  • The DSV segment's backlog at the end of the second quarter of 2015 stood at $88.5 million, compared to $60.6 million at the end of 2014.     

Emergency Response (ER)

 (In thousands)

Second Quarter

2015

2014

% Change

Emergency Response

Revenue

$    61,249

$    42,118

45.4%

Operating income (loss)

$    (1,221)

$    (1,461)

16.4%

  • ER segment revenue increased 45.4% to $61.2 million due to higher volume more than offsetting a less favorable product mix.  Second quarter 2015 revenue included 21 pumper units shipped to Sao Paulo, Brazil, near the end of the quarter, compared to 10 pumpers exported to Peru in the second quarter of 2014.         
  • The operating loss in the ER segment narrowed to $1.2 million from a loss of $1.5 million in the second quarter of 2014.  Improved operating performance for the segment resulted primarily from higher volume driving revenue growth, despite incurring $0.8 million in restructuring expenses and approximately $0.5 million in NHTSA settlement-related costs.  
  • Backlog decreased to $148.8 million at June 30, 2015, compared to $160.7 million at December 31, 2014. 

Specialty Chassis & Vehicles (SCV)

 (In thousands)

Second Quarter

2015

2014

% Change

Specialty Chassis & Vehicles

Revenue

Motorhome & Bus

$   19,714

$   17,799

10.8%

Parts and Accessories

5,117

4,169

22.7%

Other Specialty Vehicle

5,904

2,176

171.3%

Total revenue

$   30,735

$   24,144

27.3%

Operating income

$     1,991

$     1,426

39.6%

  • The SCV segment reported higher revenue as all business units posted higher sales compared to the second quarter of 2014.  Total segment revenue increased 27.3%, to $30.7 million from $24.1 million.   Motorhome and bus chassis sales increased to $19.7 million from $17.8 million, as higher volume outweighed a less favorable product mix shift.  Aftermarket Parts & Assemblies (APA) sales rose to $5.1 million from $4.2 million, while Other Specialty Vehicle revenue included the sale of 18 International Light Armored Vehicles (ILAVs) during the second quarter of 2015. 
  • Operating income increased to $2.0 million in the second quarter of 2015 from $1.4 million.  Contributing to operating income growth were higher APA sales, contract manufacturing and ILAV shipments, which more than offset approximately $0.5 million in NHTSA settlement-related costs and the negative impact of an adverse mix shift in motorhome chassis.  
  • Backlog at June 30, 2015 totaled $25.4 million versus $22.4 million at December 31, 2014.   

Financial Summary and Outlook

Lori Wade, Spartan's Chief Financial Officer, commented, "Operating results for the second quarter of 2015 reflected revenue growth and greater operating efficiency in all three of our segments.  Revenue growth was highest in the ER and SCV segments, while ongoing issues with chassis availability constrained DSV's vehicle production.  Higher revenue and efficiency gains more than offset the unfavorable impact of $1.9 million in non-recurring expenses. 

"Our balance sheet at June 30 reflected progress in our efforts to reduce inventory and receivables.  Reflecting these efforts, cash increased to $20.6 million, up from $12.0 million at March 31, 2015.  We expect quarter-end cash balances of approximately $20 million for the rest of 2015, based on our current business outlook.  Gross margin increased to 12.0% from 10.9% in the second quarter of 2014, due to the positive impact of revenue growth and gains in operating efficiency," stated Wade.

Wade concluded, "Our outlook for 2015 is for further revenue growth in the third quarter, with mid- to upper-single-digit growth for the entire year.  Financial performance in the third quarter of 2015 is expected to be similar to that of the second quarter of this year.  We project a modest operating profit for 2015, including ER segment-related restructuring expenses, consistent with prior guidance."

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 1,600 associates at facilities in Michigan, Pennsylvania, South Dakota and Indiana. Spartan reported sales of $507 million in 2014 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,

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$         20,597

$         28,570

Accounts receivable, less allowance of $149 and $144

63,563

48,362

Inventories

69,943

71,163

Deferred income tax assets

7,799

7,799

Income taxes receivable

1,729

1,696

Other current assets

2,827

3,661

Total current assets

166,458

161,251

Property, plant and equipment, net

49,547

50,417

Goodwill

15,961

15,961

Intangible assets, net

8,545

8,958

Other assets

2,380

2,226

TOTAL ASSETS

$       242,891

$       238,813

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$         30,517

$         22,762

Accrued warranty

9,751

9,237

Accrued customer rebates

2,832

2,166

Accrued compensation and related taxes

9,067

8,226

Deposits from customers

10,005

11,524

Other current liabilities and accrued expenses

5,399

6,646

Current portion of long-term debt

61

59

Total current liabilities

67,632

60,620

Other non-current liabilities

2,454

2,365

Long-term debt, less current portion

5,171

5,202

Deferred income tax liabilities

2,008

2,008

Shareholders' equity:

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

-

-

Common stock, $0.01 par value; 40,000 shares authorized; 34,276 and 34,094 outstanding

343

341

Additional paid in capital

76,135

75,695

Retained earnings

89,306

92,724

Total Spartan Motors, Inc. shareholders' equity

165,784

168,760

Non-controlling interest

(158)

(142)

Total shareholders' equity

165,626

168,618

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$       242,891

$       238,813

 

 

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,

2015

2014

2015

2014

Sales

$ 144,824

$    115,795

$   273,196

$   243,754

Cost of products sold

127,263

103,152

243,765

220,082

Restructuring charge

119

-

455

-

Gross profit

17,442

12,643

28,976

23,672

Operating expenses:

Research and development

1,164

721

2,633

1,864

Selling, general and administrative

13,241

11,891

26,843

25,319

Restructuring charge

692

-

1,512

-

Total operating expenses

15,097

12,612

30,988

27,183

Operating income (loss)

2,345

31

(2,012)

(3,511)

Other income (expense):

Interest expense

(112)

(91)

(202)

(185)

Interest and other income

31

111

157

239

Total other income (expense)

(81)

20

(45)

54

Income (loss) before taxes

2,264

51

(2,057)

(3,457)

Taxes

1,088

(179)

(338)

(1,546)

Net Income (loss)

1,176

230

(1,719)

(1,911)

Less: net loss attributable to non-controlling interest

(1)

(17)

(16)

(18)

Net income (loss) attributable to Spartan Motors Inc.

$         1,177

$           247

$    (1,703)

$    (1,893)

Basic net earnings (loss) per share

$           0.03

$          0.01

$      (0.05)

$      (0.06)

Diluted net earnings (loss) per share

$           0.03

$          0.01

$      (0.05)

$      (0.06)

Basic weighted average common shares outstanding

34,280

34,446

33,767

33,842

Diluted weighted average common shares outstanding

34,281

34,450

33,767

33,842

 

 

Spartan Motors, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

Unaudited

Three Months Ended June 30,  2015 (in thousands of dollars)

Business Segments

Emergency Response

Delivery & Service Vehicles

Specialty Chassis & Vehicles

Other

Consolidated

Emergency Response Vehicle Sales

$     61,249

$               -

$             -

$          -

$        61,249

Utilimaster Vehicle Sales

-

45,038

-

-

45,038

Motorhome Chassis Sales

-

-

19,714

-

19,714

Other Specialty Vehicles

-

-

5,904

-

5,904

Aftermarket Parts and Assemblies

-

7,802

5,117

-

12,919

       Total Sales

$     61,249

$   52,840

$ 30,735

$         -

$      144,824

Depreciation and Amortization Expense

$          249

$        894

$        96

$     567

$          1,806

Operating Income (Loss)

(1,221)

3,293

1,991

(1,718)

2,345

Segment Assets

78,845

72,148

15,838

76,060

242,891

 

 

Spartan Motors, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

Unaudited

Period End Backlog (amounts in thousands of dollars) 

June 30, 2015

March 31, 2015

Dec. 31, 2014

Sept. 30, 2014

June 30, 2014

Emergency Response Vehicles*

$148,762

$157,486

$160,743

$155,968

$165,144

Delivery & Service Vehicles Backlog *

88,526

87,485

60,630

54,789

62,994

Motorhome Chassis *

23,196

13,980

16,436

20,972

15,761

Other Vehicles*

-

3,268

3,994

-

-

Aftermarket Parts and Assemblies

2,194

1,830

1,932

1,676

2,803

Total Specialty Chassis & Vehicles Backlog

25,390

19,078

22,362

22,648

18,564

Total Backlog

$262,678

$264,049

$243,735

$233,405

$246,702

* Anticipated time to fill backlog orders at June 30, 2015; 13 months or less for emergency response vehicles; 3 months or less for motorhome chassis; 7 months or less for delivery and service vehicles; and 1 month or less for other products.

SOURCE Spartan Motors, Inc.



RELATED LINKS

http://www.spartanmotors.com