Spartan Motors Announces Strong First Quarter Sales, Earnings Growth
29 April 1999
Spartan Motors Announces Strong First Quarter Sales, Earnings Growth
CHARLOTTE, Mich., April 29 -- Spartan Motors, Inc.
kept pace with the robust national market for RVs and other
specialty vehicles, posting a 28% increase in net sales and a 54% increase in
net earnings for the first quarter ended March 31, 1999.
The Charlotte, Mich.-based manufacturer of custom chassis, emergency
vehicles and buses said net income grew to $1.45 million, or $0.12 per share,
in the 1999 first quarter, compared with net income of $938,237, or $0.07 per
share, in the same period in 1998. The net income growth came despite losses
at the Company's Carpenter Industries affiliate, which builds school buses.
Spartan Motors said Carpenter narrowed its loss to $1.4 million in the most
recent first quarter, compared with an operating loss of $4.6 million in the
same period last year. Spartan Motors said the financial impact from
Carpenter in both periods was comparable, as the bus builder's financial
results were accounted for using the equity method in the 1998 first quarter.
Spartan began consolidating Carpenter's results in October 1998, following the
Company's purchase of a majority stake in the Company.
Consolidated net sales increased to a record $75.6 million in the 1999
first quarter, compared with net sales of $59.2 million in the 1998 quarter.
Strong growth within Spartan Motors' chassis group and improved results at the
Company's Emergency Vehicle Team (EVTeam) subsidiaries -- Luverne Fire
Apparatus, Quality Manufacturing and Road Rescue -- contributed to the
increase.
Spartan said its core chassis business contributed net earnings of
approximately $0.22 per share in the 1999 first quarter, compared with net
earnings of $0.17 per share in the first quarter 1998, bolstered by strong
increases in its RV and fire truck product lines. The EVTeam added
approximately $0.02 per share in the 1999 first quarter, compared with a net
loss in the prior year first quarter. The EVTeam earned a total of $0.01 per
share in all of 1998.
"We are extremely pleased with the results of our core chassis operations,
which were our best in five years," said John Sztykiel, president and chief
operating officer of Spartan Motors. "Each of our RV, fire truck and
specialty chassis segments showed increased sales in the first quarter,
clearly demonstrating that this division has returned to firing on all
cylinders. The EVTeam hit our performance targets and was profitable in the
quarter, as we begin to realize the benefits of consolidated purchasing and
efficiencies across this division. We are pleased with their progress as
well."
Spartan Motors continued to capitalize on strong overall demand in the
Class A RV market, posting double-digit growth in motorhome chassis sales and
gaining three new OEM customers during the 1999 first quarter. Two of the new
OEM orders specify Spartan's recently introduced entry-level Summit RV
chassis, which is slated for production beginning in the third quarter.
"The RV market is building momentum driven by sheer demographics, as well
as a stable economic environment and outlook. We are the critical chassis
supplier to the Class A RV industry, and expect our innovation and product
quality will allow us to further penetrate this market," said Sztykiel. "In
our other chassis markets, our engineering and quality advantages are being
rewarded with new business and record order backlogs."
At March 31, 1999, backlog for all products rose by 53% to more than
$124.2 million, versus $81.1 million in backlog at the end of the first
quarter 1998.
Spartan reported its fire truck chassis growth is being fueled by
increased orders from Spartan's EVTeam companies, as well as other OEMs.
Spartan Motors said that the fire truck industry is recognizing that even
though the Company has relationships with three OEMs, Spartan is committed to
being a major chassis supplier to all OEMs in the fire apparatus marketplace.
Sztykiel said: "We are optimistic about all our operations, including
Carpenter, where we remain steadfast in our commitment to its long-term profit
potential. We are making headway in getting their operation profitable and
expect Carpenter will reach the breakeven point on a month-to-month basis in
the third quarter of this year."
Sztykiel added that Spartan Motors expects 1999 second-quarter results to
be slightly less than the Company's 1999 first quarter sales and earnings
performance, due to lower expected sales of transit bus chassis.
"We are still on track to see breakout performance in the back half of
1999," said Sztykiel. "Significantly reduced losses at Carpenter and
accelerated growth in our core chassis and EVTeam operations will be the
catalysts that ensure we reach our targets relative to full-year sales and
earnings expectations."
Commenting on the financial results, Spartan Motors Chief Financial
Officer Richard J. Schalter said: "Gross margins on a comparative basis,
excluding Carpenter, increased to 15.6% in the current year first quarter, up
from 14.7% in the same period in 1998. Likewise, total operating expenses as
a percentage of sales, excluding Carpenter, declined 40 basis points to 9.0%.
These measurable improvements highlight the initial impact of our consolidated
purchasing and operating systems initiatives, and come at a time when Spartan
Motors is increasing its product development, engineering and marketing
efforts to sustain its top-line growth."
The Company generated positive cash from operations of $2.5 million in the
first quarter 1999, compared with a cash outflow of $5.4 million in the prior
year first quarter. Spartan announced it reduced long-term debt by 7% or
$1.9 million since year-end 1998. At March 31, 1999, long-term debt stood at
$26.7 million.
"We recognize significant opportunities to improve our balance sheet and
income statement through key areas such as inventory turns and accounts
receivable. We are committed to accomplishing this by pushing financial
measurement and accountability throughout the Spartan Motors organization,"
said Schalter. "We made progress in the first quarter 1999, but a great deal
of work remains to ensure we are maximizing our cost structure and achieving a
significant return on capital."
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, 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
Consolidated Income Statements
First Quarters of 1999 and 1998
March 31, 1998 March 31, 1999
$-000 % $-000 %
Sales 59,156 75,626
Cost of Sales 50,470 64,787
Gross Profit 8,686 14.7 10,839 14.3
Operating Expenses:
Research and Development 1,317 2.2 1,743 2.3
Selling 1,881 3.2 2,365 3.1
General and Administration 2,339 4.0 3,096 4.1
Total Operating Expenses 5,537 9.4 7,204 9.5
Operating Income 3,149 5.3 3,635 4.8
Other Income (Expense):
Interest Expense (218) (0.4) (758) (1.0)
Interest and Other Income 294 0.5 116 0.2
Total Other Income (Expense) 76 0.1 (642) (0.8)
Earnings before Equity
Investment and Taxes 3,225 5.4 2,993 4.0
Income (Loss) on Equity
Investment in Affiliate (1,250) (2.1) -- 0.0
Earnings before Taxes 1,975 3.3 2,993 4.0
Taxes 1,037 1.8 1,547 2.0
Net Earnings 938 1.6 1,446 2.0
Net Earnings per Share 0.07 0.12
Weighted Average Shares 12,528 12,536