Supreme Industries Reports Revenues and Earnings For 2004 Fourth Quarter and Full Year
GOSHEN, Ind.--Feb. 3, 2005--Supreme Industries, Inc. -- (AMEX:STS), a leading manufacturer of specialized vehicles, including truck bodies and shuttle buses, today announced financial results for the 2004 fourth quarter and year ended December 25, 2004.Substantially improved demand in all of the Company's major product lines produced record revenues in both the fourth quarter and full year of 2004. The Company had revenues of $72.8 million for the quarter ended December 25, 2004, compared to $58.2 million for the same period last year. Full-year revenues were $308.0 million in 2004, compared to $226.9 million for the same period in 2003.
Net income for the fourth quarter of 2004 was $978,061, or $0.08 per diluted share, compared to $1.2 million, or $0.10 per diluted share, in the fourth quarter of 2003. Supreme's 2004 full-year net income was $4.7 million, or $0.38 per diluted share, compared to $4.6 million, or $0.38 per diluted share, for the same period in 2003.
Net income in the fourth quarter and full year was negatively impacted principally by escalating raw material costs. Raw material costs as a percentage of net sales increased 3.7 percent in the twelve months of 2004 over the same period of 2003. It is estimated that these raw material price increases cost the Company $11.4 million of pre-tax income in 2004. Start-up and training expenses at the Company's new Oregon manufacturing facility cost the Company approximately $1.5 million of pre-tax income in 2004. The Company also incurred costs in readying its facility expansions in Texas, Pennsylvania and Georgia.
Net income for the fourth quarter and the year was positively impacted by a significantly lower effective tax rate compared to the 2003 periods. Research and development tax credits claimed for amended tax filings were recorded in the fourth quarter of 2004 and credited to income.
Robert Wilson, executive vice president and chief financial officer, stated, "Improving market conditions produced an increase in new orders of 52 percent and a record backlog of $89.1 million up from $66.1 million at the prior year end. The largest revenue increase was in the Company's dry freight product line, which grew 57 percent over 2003. However, gross margins for the fourth quarter and full year were negatively affected by competitive market conditions and the continuance of unprecedented cost increases in virtually every raw material used by the Company, including steel, aluminum, resin, fiberglass, and wood. Steel costs increased an average of 71 percent in 2004 over 2003, resin costs an average of 58 percent, and wood, aluminum and gelcoat costs experienced increases in the mid- to high-teen percents. Due to our sizable backlog and industry policy of honoring prices for 30 days, it usually takes up to four months for a price increase to take its full effect. This lag in the effectiveness of our price increases announced in March, April and July partially led to a gross profit margin of 8.8 percent for the fourth quarter of 2004 versus 11.8 percent last year, and 10.0 percent for the twelve-month period in 2004 from 12.7 percent in the prior period.
"The management team continues to monitor and aggressively respond to the increases in raw material costs and has recently announced an additional average price increase of 7 percent effective January 1. Since raw material prices have yet to stabilize, 2005 could be a challenging year for Supreme. However, we remain committed to achieving higher profitability. Our primary financial objective for 2005 is to improve our gross margin by 2 percentage points over the level achieved in 2004. While we consider this to be achievable based on current business conditions, we cannot provide assurance that this improvement will be achieved due to the potential consequences of competitive circumstances, material costs, economic uncertainty, and adverse geopolitical events."
Selling, general and administrative expenses as a percentage of revenues declined in both the fourth-quarter and twelve-month periods of 2004 compared to the same periods of 2003 due to increased revenues and the fixed nature of these expenses.
Interest expense increased from $176,000 in the fourth quarter of 2003 to $349,000 in the same period of 2004. For the twelve-month period, interest expense increased from $783,000 in 2003 to $1,017,000 in 2004. Increased interest expense in the periods related to slightly higher interest rates during the last half of 2004 and higher interest bearing bank borrowings used to finance working capital attributable to higher revenues and to fund various plant purchases.
Stockholders' equity totaled $67.6 million, or $5.57 per share, at December 25, 2004. To support a substantially higher backlog at year end, working capital totaled $50.7 million compared with $42.9 million at year-end 2003. The Company continues to aggressively manage its working capital assets.
"We are very disappointed that we were unable to more effectively counteract the extreme raw material cost increases we experienced in 2004," Wilson concluded. "However, many of our raw materials cannot be hedged, and our product sales contracts typically have not contained automatic price escalation provisions. The Company's major suppliers have indicated that raw material cost increases for most of the commodities should be at rates considerably less than the rates of increase experienced in 2004. Supreme continues to experience strong order intake, a healthy backlog and low inventory levels in our distribution channels. All of these factors bode well for a healthy level of revenues in 2005, and we believe, based on our current assessment of business conditions, that demand will remain strong despite our price increases over the last 10 months. Lastly, we look forward to improved profitability as the net benefit of our price increases is realized."
As announced on January 28, 2005, Supreme's board of directors approved a $0.035 per share cash dividend on its outstanding Class A and Class B Common Stock to be paid on February 14, 2005. This cash dividend is the sixth consecutive quarterly cash dividend in what the Company intends to be a continuing series of quarterly cash dividends, business conditions permitting.
A live webcast of Supreme Industries' earnings conference call can be heard today at 4:30 p.m. Eastern Time at www.supremeind.com.
Supreme Industries, Inc. is a nationwide manufacturer of specialized truck bodies that are produced to the specifications of its customers. Supreme also manufactures the StarTrans(R) line of special-purpose "shuttle-type" buses. The Company's transportation equipment products are used by a wide variety of industrial and commercial customers.
Financial Tables Follow...
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three-Months Ended Twelve-Months Ended
--------------------------- ---------------------------
December 25, December 27, December 25, December 27,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenue:
Net sales $72,520,807 $56,997,918 $307,326,310 $224,853,226
Other income 252,765 1,242,955 636,145 2,022,954
------------- ------------- ------------- -------------
72,773,572 58,240,873 307,962,455 226,876,180
------------- ------------- ------------- -------------
Costs and expenses:
Cost of sales 66,173,141 50,295,956 276,556,076 196,290,476
Selling,
general and
administrative 6,234,097 5,834,350 24,287,530 22,247,343
Interest 349,273 176,127 1,016,732 782,662
------------- ------------- ------------- -------------
72,756,511 56,306,433 301,860,338 219,320,481
------------- ------------- ------------- -------------
Income before
income taxes 17,061 1,934,440 6,102,117 7,555,699
Income taxes (961,000) 757,000 1,354,000 2,914,000
------------- ------------- ------------- -------------
Net income $978,061 $1,177,440 $4,748,117 $4,641,699
============= ============= ============= =============
Earnings per share (a) :
Basic $.08 $.10 $.39 $.39
Diluted .08 .10 .38 .38
Shares used in the computation of earnings per share (a) :
Basic 12,118,448 11,948,959 12,083,601 11,921,777
Diluted 12,445,153 12,303,156 12,477,333 12,139,590
(a) 2003 share and per share data have been adjusted for a ten percent
stock dividend paid in October 2003.
Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
December 25, December 27,
2004 2003
-------------- --------------
Assets
Current assets $80,474,950 $65,583,737
Property, plant and equipment, net 47,190,964 37,444,901
Intangible assets, net. 765,081 816,622
Other assets 560,540 2,459,841
-------------- --------------
Total assets $128,991,535 $106,305,101
============== ==============
Liabilities
Current liabilities $29,781,764 $22,725,059
Long-term debt 28,561,583 17,366,609
Deferred income taxes 3,085,179 2,541,274
Other long-term liabilities 0 29,190
-------------- --------------
Total liabilities 61,428,526 42,662,132
Total stockholders' equity 67,563,009 63,642,969
-------------- --------------
Total liabilities and stockholders'
equity $128,991,535 $106,305,101
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