Spartan Motors Announces Third Quarter Results
28 October 1998
Spartan Motors Announces Third Quarter Results With 82% Increase in Net Sales, 317% Increase in Operating Income
CHARLOTTE, Mich.--(AutomotiveWire)--Oct. 28, 1998--Spartan Motors, Inc. (NASDAQ/NMS:SPAR) today announced an 82 percent increase in net sales for its third quarter ended September 30, 1998.The Charlotte, Mich.-based manufacturer of custom chassis reported record net sales of $69.6 million in the third quarter of 1998, as compared to net sales of $38.3 million in the same period last year. Spartan Motors attributed the 82 percent increase to strong sales in its core chassis business and its Emergency Vehicle Team subsidiaries, which were acquired between August 1997 and February 1998.
Spartan Motors recorded net income of $2.1 million, or $0.16 per share, in the third quarter of 1998, compared with a net loss of $1.5 million, or ($0.12) per share, in the same period last year. The Company's earnings performance reflects its increased net sales and continued cost control efforts. Excluding Carpenter, Spartan Motors would have posted net earnings of $2.4 million, or $0.19 per share, in the 1998 third quarter.
The Company posted operating income of $3.9 million for third quarter 1998, a 317 percent increase over the $926,000 recorded in the same quarter in the prior year. Spartan Motors increased operating income 98 percent to $8.6 million for the first nine months of 1998, versus $4.4 million generated in the same period a year ago.
For the nine-month period ended September 30, 1998, Spartan Motors reported net income of $2.5 million, or $0.20 per share, on net sales of $184.3 million, compared with a net loss of $1.8 million, or ($0.15) per share, on net sales of $123.2 million in the same period in 1997. Spartan's nine-month 1998 results include an equity loss of $3.1 million for its investment in Carpenter Industries, versus an equity loss from Carpenter of $4.8 million in the prior year period.
"Profitability was driven by increased sales along with improved operations, and we are pleased with these results," said Spartan Motors President and Chief Operating Officer John Sztykiel.
In the third quarter ended September 30, 1998, Spartan's gross profit as a percentage of sales improved from 13.6 percent in the second quarter of 1998 to 13.9 percent in the third quarter. In addition, total operating expenses as a percentage of sales declined from 10.6 percent in the second quarter of 1998 to 8.4 percent for this quarter.
Spartan reported its chassis order backlog was more than $75 million at the end of third quarter 1998. The motorhome backlog for custom chassis is approximately 17 percent higher than it was in January of this year. Spartan attributed excellent demand for its motorhome chassis to a strong recreational vehicle market, driven by the baby boomer population reaching early retirement and an increased focus on rear engine diesel motorhomes. Rear engine diesels are expected to go from 20 percent of the class A RV market to more than 25 percent by the end of 1998.
The Company also said it is experiencing growth in its transit and tour bus chassis business, based on recently announced contracts to build and deliver 80 transit bus chassis and 75 tour bus platforms in the first half of 1999. The two contracts represent new orders in excess of $10 million.
"We expect the bus chassis business to grow in 1999 and these two orders are an excellent foundation," said John Sztykiel. "We remain committed to profitable growth in all of our niches as we continue to diversify our business."
According to the Company, Luverne Fire Apparatus, Quality Manufacturing and Road Rescue Ambulance, the three subsidiaries that comprise the Emergency Vehicle Team, generated more than $6 million in new orders for 44 emergency vehicles during its first annual dealer meeting. The new products were well received by the more than 200 dealers, guests and factory representatives in attendance at the conference, which was held September 30 - October 3, 1998 in Orlando, Fla.
Luverne Fire Apparatus introduced LEAR, its new fire apparatus product with an all extruded aluminum body, enabling dealers to compete in a market that represents approximately 40 percent of vehicles sold. Another new Luverne product, the TSS, features a tubular stainless steel fire apparatus body, which provides a durable and affordable product offering. Dekalb County, Ga. recently ordered eight units, all on Spartan chassis.
"Our Emergency Vehicle Team subsidiaries continue to perform and that is what we expect," said John Sztykiel.
During the 1998 fourth quarter, Spartan Motors increased its equity investment in Carpenter Industries and also announced that Anthony Sommer, Spartan Motors Executive Vice President, will oversee the turnaround efforts of Carpenter Industries.
"We have taken control of the day-to-day operations and have finalized its financial restructuring," said John Sztykiel. "The creditors, the dealers, and others have all come forward and contributed to put Carpenter back on its feet. Now our challenge is to produce the results and we look forward to accomplishing that."
"To give you a perspective of the opportunity with Carpenter, the total size of the fire truck, motorhome, tour and transit bus markets are approximately 50,000 chassis," said George Sztykiel, Chairman and Chief Executive Officer of Spartan Motors. "The addition of school bus chassis at 35,000 units is a significant increase in opportunity. In addition to chassis, there is also a profitable growth opportunity in school bus bodies and, over the next 12 months, we expect Carpenter to improve as they work toward profitability. Sommer has the experience, the focus and now the control to make this happen."
"We feel our efforts over the last 18 months have put us in a very good position for future growth, even if the economy slows," said John Sztykiel. "We see many similarities between now and 1991 to 1994, a period of dramatic growth for Spartan Motors despite the uncertainty in the U.S. economy and financial markets. Our products are well positioned to capitalize on the trends in our society. The demand for high-end, leisure-related products bodes well for custom chassis in the RV market. In addition, demographic changes also represent growth opportunities in chassis for school, transit and tour buses, as well as emergency vehicles. These markets tend to be more recession-resistant. Our challenge is to produce operating results and we look forward to that challenge," said John Sztykiel.
Spartan Motors, Inc. (http://www.spartanmotors.com) is a leading developer and manufacturer of custom chassis for fire trucks, recreational vehicles, transit buses, school buses, step vans and other specialty vehicles. The Company also owns fire and rescue vehicle manufacturers Luverne Fire Apparatus, Quality Manufacturing and Road Rescue, Inc. and an equity interest in school bus body manufacturer Carpenter Industries, Inc.
The statements contained in this news release include certain predictions and projections that may be considered forward-looking statements by the securities laws. These statements involve a number of risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and actual results may differ materially.
Spartan Motors, Inc. and Subsidiaries
Condensed Income Statements
($ in thousands)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1998 1997 1998
________ ________ ________ ________
Sales $ 38,327 $ 69,633 $123,241 $184,294
Cost of Sales 32,891 59,924 104,868 158,327
________ ________ ________ ________
Gross Profit 5,436 9,709 18,373 25,967
Operating Expenses:
Research and Development 1,072 1,412 3,324 4,031
Selling 1,654 2,078 5,327 6,077
General and Administrative 1,784 2,357 5,355 7,213
________ ________ ________ ________
Total Operating Expenses 4,510 5,847 14,006 17,321
________ ________ ________ ________
Operating Income 926 3,862 4,367 8,646
________ ________ ________ ________
Other Income (Expense):
Interest Expense (176) (285) (623) (770)
Interest and Other Income 152 224 867 719
________ ________ ________ ________
Total Other Income (Expense) (24) (61) 244 (51)
Earnings Before Equity Investment
and Taxes 902 3,801 4,611 8,595
Income (Loss) on Equity
Investment in Affiliate (2,134) (333) (4,765) (3,103)
Earnings (Loss) Before Taxes (1,232) 3,468 (154) 5,492
Taxes 226 1,410 1,675 2,949
________ ________ ________ ________
Net Earnings (Loss) $ (1,458) $ 2,058 $ (1,829) $ 2,543
________ ________ ________ ________
________ ________ ________ ________
Net Earnings (Loss) Per Share $ (0.12) $ 0.16 $ (0.15) $ 0.20
________ ________ ________ ________
________ ________ ________ ________
Weighted Average Common
Shares Outstanding 12,393 12,552 12,472 12,500