Supreme Industries Reports Third-Quarter 2005
GOSHEN, Ind.--Nov. 3, 2005--Supreme Industries, Inc. (AMEX:STS):-- Quarterly revenues increased 9.2% to $77.3 million
-- EPS in the quarter increased 42.9%
-- Order backlog remains strong at $69.1 million
Supreme Industries, Inc. (AMEX:STS), a leading manufacturer of specialized vehicles including truck bodies and shuttle buses, today announced improved financial results for the 2005 third-quarter and nine-month periods ended September 24, 2005, over the same periods of last year.
Continued demand for the Company's truck body and bus product lines produced higher revenues and earnings in the third quarter and first nine months of 2005. The Company recorded revenues of $77.3 million for the third quarter of 2005, compared to $70.8 million for the same period last year, an increase of $6.5 million or 9.2 percent. Revenues in the first nine months improved $27.9 million, or 11.9 percent, to $263.1 million in the 2005 period from $235.2 million in the 2004 period.
Net income for the third quarter was $1.3 million, or $0.10 per diluted share, in 2005 compared to $0.9 million, or $0.07 per diluted share, in 2004, and for the first nine months was $7.3 million, or $0.57 per diluted share, for the 2005 period and $3.8 million, or $0.30 per diluted share, in the 2004 period.
Gross profit as a percentage of net sales decreased slightly in the current quarter versus the same period last year. Improvements in direct labor, overhead and delivery expenses as a percentage of net revenues were offset by an increase in material cost as a result of the Company's annual physical inventories. Management believes this increase in material cost is a result of multiple factors, including among others, changes in demand that influence product mix, highly customized products and the associated manufacturing processes, updates to core products and development of new products. Additionally, rapidly escalating raw material costs during 2004 coupled with a significant increase in revenue further contributed to the adjustments. Gross profit improved for the nine months ended September 24, 2005 primarily as a result of the price increases the Company implemented throughout 2004 and the beginning of 2005.
Additionally, gross profit in the 2005 third-quarter and nine-month periods was negatively impacted by an escalation in group health insurance costs, particularly in the second quarter. These costs increased by $343,000 and $1,081,000 for the third-quarter and nine-month periods ended September 24, 2005 respectively, compared to the corresponding periods in 2004.
Selling, general and administrative expenses decreased as a percent of net sales from 8.7 percent in the 2004 third quarter to 7.8 percent in the 2005 third quarter, and from 7.7 percent in the first nine months of 2004 to 7.5 percent in the same period of 2005. Selling, general and administrative expenses as a percentage of net sales decreased due to increased sales.
Interest expense increased from $259,000 in the third quarter of 2004 to $511,000 in the same period of 2005. For the first nine months, interest expense increased from $667,000 in 2004 to $1.6 million in 2005. The increase in interest expense for both periods is a result of increased debt incurred principally for increased working capital and higher short-term interest rates in 2005 versus 2004.
Stockholders' equity improved to $74.8 million, and working capital increased to $56.5 million; the Company continues to aggressively manage its working capital assets. Backlog was $69.1 million as of September 24, 2005.
Robert W. Wilson, executive vice president, stated, "The Company experienced increased revenues in the first nine months of 2005 primarily as a result of the price increases the Company implemented throughout 2004 and to a lesser extent in 2005 as well as an increase in fleet business. Despite the reduced gross margin in the third quarter, Supreme achieved a 90 percent increase in diluted EPS in the first nine months of 2005 versus 2004. The Company remains on track to achieve its 2005 gross margin goal of no less than 12 percent.
Wilson concluded, "While the competitive landscape remains challenging, Supreme's backlog, especially in the bus division, along with its strong positioning within the truck and bus markets, creates optimism for the future."
As announced on October 28, 2005, Supreme's board of directors approved a $0.095 per share cash dividend on its outstanding Class A and Class B Common Stock to be paid on November 21, 2005, to shareholders of record on November 14, 2005. This cash dividend is the ninth consecutive quarterly cash dividend in what the Company intends to be a continuing series of quarterly cash dividends, business conditions permitting.
A
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.
The Company's significant accounting policies are discussed in Note 1 of the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 25, 2004. In Management's opinion, the Company's critical accounting policies include allowance for doubtful accounts, excess and obsolete inventories, inventory relief, accrued insurance and accrued warranty.
Financial tables follow........
Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
September 24, September 25, September 24, September 25,
2005 2004 2005 2004
------------- ------------- -------------- -------------
Revenue:
Net sales $77,055,374 $70,583,750 $262,594,085 $234,805,503
Other income 231,583 194,721 531,801 383,380
------------- ------------- -------------- -------------
77,286,957 70,778,471 263,125,886 235,188,883
------------- ------------- -------------- -------------
Costs and
expenses:
Cost of
sales 68,797,402 62,926,848 230,464,233 210,382,935
Selling,
general and
admini-
strative 5,984,152 6,152,810 19,736,568 18,053,433
Interest 510,595 259,273 1,567,628 667,459
------------- ------------- -------------- -------------
75,292,149 69,338,931 251,768,429 229,103,827
------------- ------------- -------------- -------------
Income
before
income
taxes 1,994,808 1,439,540 11,357,457 6,085,056
Income taxes 709,000 547,000 4,077,000 2,315,000
------------- ------------- -------------- -------------
Net income $1,285,808 $892,540 $7,280,457 $3,770,056
============= ============= ============== =============
Earnings per
share:
Basic $.10 $.07 $.59 $.31
Diluted .10 .07 .57 .30
Shares used in
the computation
of earnings
per share:
Basic 12,561,453 12,099,083 12,379,668 12,071,986
Diluted 12,948,791 12,446,990 12,792,411 12,484,342
Cash dividend
per share $.095 $.035 $.165 $.10
Supreme Industries, Inc. and Subsidiaries Consolidated Balance Sheets
September 24, December 25,
2005 2004
(Unaudited) (Audited)
-------------- --------------
Assets
Current assets $85,929,195 $80,680,035
Property, plant and equipment, net 48,079,556 47,190,964
Intangible assets, net 735,014 765,080
Other assets 526,203 560,540
-------------- --------------
Total assets $135,269,968 $129,196,619
============== ==============
Liabilities
Current liabilities $29,402,595 $29,781,764
Long-term debt 27,900,000 28,766,667
Deferred income taxes 3,043,979 3,085,179
Other long-term debt 114,870 ---
-------------- --------------
Total liabilities 60,461,444 61,633,610
Total stockholders' equity 74,808,524 67,563,009
-------------- --------------
Total liabilities and stockholders'
equity $135,269,968 $129,196,619
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