Spartan Motors Reports Strong Operational Improvements in
First Quarter
Manufacturer Exceeds Analyst Earnings Estimates for Second Straight Quarter
CHARLOTTE, Mich., April 26 Buoyed by strong operational
improvements in its core chassis business, Spartan Motors, Inc.
today announced results for the first quarter ended March 31, 2001.
Despite softer sales of its custom RV platforms, the Charlotte,
Mich.-based manufacturer reported net earnings of $1.5 million, or $0.14 per
share, for the first quarter of 2001, compared with net earnings of
$2.0 million, or $0.16 per share, for the first quarter of 2000. Spartan
Motors exceeded the earnings estimate of $0.09 per share from Red Chip Review
-- the second consecutive quarter the Company has surpassed the street
estimate.
Spartan reported net sales of $58.7 million for the just-completed
quarter, compared with net sales of $77.4 million for the same period in 2000.
The decline reflects continued softness in the market for recreational vehicle
platforms, offset partially by an 11 percent increase in sales of fire truck
chassis.
"Despite a tough sales environment, we were able to maintain our earnings
momentum and continue our margin improvements," said John Sztykiel, president
and chief operating officer of Spartan Motors. "We attribute this performance
to the operational improvements in all our subsidiary operations.
"We continue to benefit from measures put in place over the past 18 months
that allow us to operate a leaner and more efficient organization, as
evidenced by improved gross margins and lower operating expenses."
During the first quarter, Spartan Motors reported a gross margin of
15.6 percent, up from 14.8 percent during the same period in 2000. The Company
said increased focus on cost management helped it reduce operating expenses
6.3 percent, compared with the prior-year first quarter, despite the sales
softness.
Spartan Motors said its efforts to increase productivity and manage costs
generated strong cash flow from operations. The Company reported $9.6 million
in cash flow from continuing operations for the first quarter of 2001, up from
$7.3 million in 2000. Focused inventory management helped Spartan improve its
cash conversion cycle from 71.8 days in 2000 to 66.4 days in the first quarter
of 2001. The Company said it paid down $8.6 million in long-term debt in the
first quarter of 2001.
"As with others in the RV industry, we expected to be challenged by softer
sales during the first half of 2001," Sztykiel said. "Our focus on operational
improvements, through programs such as Spartan Profit And Return (SPAR), has
helped us weather this environment. We could see sales picking up during the
second half of the year, and we will continue to reduce operating expenses in
order to maintain a solid bottom line."
The first quarter of 2001 marked Spartan Motors Chassis first full quarter
under SPAR, a value-added financial, compensation and operating model. SPAR
requires a return on investment over and above the cost of capital, and serves
as the framework for evaluating all business initiatives.
"These financial improvements demonstrate our commitment to increasing our
bottom line," said Richard Schalter, chief financial officer and executive
vice president. "We are pleased with the progress we have made, and look
forward to making additional improvements in the quarters ahead."
As a result of its stronger operations focus and higher sales of fire
truck chassis, Spartan Motors Chassis reported that its gross margin was
16.1 for the just-completed quarter, compared with 14.8 percent during the
year-ago period.
"We are pleased with the improved sales of our fire truck chassis, and
expect that momentum will continue in the subsequent quarters," Sztykiel said.
"As more apparatus manufacturers and fire departments recognize the benefit of
custom chassis, we continue to take market share away from commercially built
products."
Schalter said, "While sales of our RV platforms have softened, we feel the
Federal Reserve's lowering of interest rates will encourage consumer spending.
The RV lifestyle remains popular, and consumers are continuing to buy new
motorhomes -- they are looking for products that allow them to fully enjoy
their time on the road."
The Emergency Vehicle Team reported a sales increase of 4.3 percent during
the first quarter of 2001, fueled by stronger sales of its custom fire trucks
and ambulances. Luverne showed the strongest growth of the three subsidiaries,
boosted by $7 million in orders for new fire trucks from fire departments in
Chicago, Cleveland, Cincinnati, Ohio, and Tulsa, Okla.
"It is great to see large cities look to Luverne for their premium fire
trucks," said Jeff Lautt, president of Luverne Fire Apparatus.
"We continue to improve the market penetration of our custom emergency
vehicles as municipalities and other purchasing agencies continue to recognize
the benefits of buying made-to-order products," Sztykiel said. "Orders were
higher during the first quarter of 2001, and the EVTeam enjoys a strong
backlog. We are working to translate some of the operational improvements we
have made in our chassis business to our EVTeam subsidiaries, so that their
contributions will make a bigger impact on our bottom line in the second half
of 2001."
"Effective in June, we will begin implementing a coordinated procurement
process between all four business units. Over time, we expect to see
significant reductions in costs, as we average the effective purchasing
strengths of all four companies. While we are focused on growing sales and
market penetration, we are just as focused on improving our corporate
operational effectiveness."
Spartan Motors, Inc. and Subsidiaries
Consolidated Income Statements
Three Months Ended March 31, 2001 and 2000
March 31, March 31,
2000 2001
$-000 $-000
Sales 77,395 58,658
Cost of Sales 65,902 49,529
Gross Profit 11,493 9,129
Operating Expenses:
Research and Development 1,640 1,596
Selling, General and Administrative 4,791 4,429
Total Operating Expenses 6,431 6,025
Operating Income 5,062 3,104
Other Income (Expense):
Interest Expense (344) (527)
Interest and Other Income (159) 105
Total Other Income (Expense) (503) (422)
Earnings before Equity Investment and Taxes 4,559 2,682
Taxes 1,609 1,214
Net Earnings from Continuing Ops. 2,950 1,468
Discontinued Operations:
Loss from Operations-Carpenter 981 --
Loss on Closure-Carpenter -- --
Net Earnings 1,969 1,468
EPS-Continuing Operations 0.24 0.14
EPS-Loss from Operations-Carpenter (0.08) --
EPS-Loss on Closure of Carpenter -- --
Net Earnings per Share 0.16 0.14
Weighted Average Shares 12,157 10,518
