Spartan Motors Posts Strong Gains in Sales, Profits In Q2 and 6 Month Periods
29 July 1999
Spartan Motors Posts Strong Gains in Sales, Profits In Second-Quarter and Six-Month Periods
CHARLOTTE, Mich., July 29 -- Spartan Motors, Inc.
continues to ride the crest of strong RV sales and improved
operating efficiencies, reporting its fourth consecutive quarter of increased
year-over-year results. The Company's second quarter ended June 30, 1999 was
highlighted by a 36% increase in sales and strong profitability.
The Charlotte, Mich.-based manufacturer of custom chassis, emergency
vehicles and buses said net income grew to $1.0 million, or $0.08 per share,
in the 1999 second quarter, compared with a net loss of $454,000, or $0.04 per
share, in the same period in 1998. Spartan Motors said the profit improvement
principally reflects the strong performance of its core chassis business, led
by a healthy recreational vehicle (RV) market and improved results at its
Carpenter Industries operation. Spartan Motors' net sales increased to $75.3
million in the current quarter, compared with net sales of $55.5 million in
the year-ago second quarter.
For the six months ended June 30, 1999, Spartan reported a five-fold
increase in net income to $2.5 million, or $0.20 per share, compared with
$484,000, or $0.04 per share, in the first six months of 1998. Spartan
recorded net sales of $150.9 million in the 1999 six months, versus $114.7
million in the same period in 1998, a 32% increase.
Improved operating results at Carpenter positively impacted the quarterly
and six-month comparisons. Carpenter posted a net loss of $994,000 in the
1999 second quarter, compared with a net loss of $1.4 million in the first
quarter 1999. Carpenter posted a stand-alone net loss of $9.8 million in the
1998 second quarter.
Spartan's core chassis business contributed net earnings of approximately
$0.17 per share in the 1999 second quarter, compared with $0.10 per share in
the second quarter 1998, showcasing the strength of Spartan's RV chassis.
Spartan's EVTeam added $0.01 per share in the second quarter 1999, in line
with the prior year second quarter.
"Our core chassis business continues on a record-setting pace," said John
Sztykiel, president and chief operating officer of Spartan Motors. "Driving
this growth is our aggressive pursuit of new customers and new-model
penetration in the RV market, our continued ability to gain market share in
the fire truck market, and our unrelenting focus on quality and cost control
to ensure profits grow ahead of sales. That said, we still have work to do in
some areas of our operations and are committed to tightening the reins on
accounts receivable, inventory turns and overall cost of capital."
Spartan Motors said it continues to be on the leading edge of accelerating
demand in the RV market, in particular the larger motorhome or Class A
segment. Spartan posted a 48.2% increase in RV chassis sales versus the year-
ago second quarter and expects to build on this growth rate in the third
quarter as it kicks off production of its new Summit chassis. Introduced at
the end of 1998, the Summit is an entry-level diesel pusher RV chassis that
creates a new product category within the RV marketplace.
"The demographic and economic momentum pushing the RV market show no sign
of slowing down. As a leading supplier in the industry's fastest growing
sector -- rear-engine diesel chassis -- we are poised to benefit with
increased sales," said Sztykiel.
In the fire truck chassis market, Spartan reported continued growth in the
second quarter and a 24% increase through the first half of 1999, reversing
the trend of 1998. Spartan said increased orders from new and existing OEM
customers fueled the gains.
"We see no let-up in chassis sales entering the third quarter and
anticipate stronger growth as new products and customers come on-line. The
second quarter is traditionally our lightest quarter of the year, and we look
forward to strong third and fourth quarters," said Sztykiel.
At June 30, 1999, backlog for all products rose by 40% to more than $112
million, versus $80 million in backlog at the end of the second quarter 1998.
The increase reflects the strength of Spartan's RV chassis sales, as well as
new fire truck orders.
Spartan reported that its EVTeam showed continued profitability in the
second quarter and first six months of 1999. Moving forward, Spartan said the
EVTeam's contribution should continue to grow, buoyed by sales growth, new
dealer relationships and Spartan's recently announced joint purchasing
alliance with Federal Signal Corporation. The alliance, initiated during the
1999 second quarter, will benefit all of Spartan Motors' operations beginning
later this year.
Spartan said results at its Carpenter subsidiary remain on plan, which
includes improved operating results on a quarterly basis.
"We are making the necessary changes and improvements at this operation,"
said Anthony Sommer, Spartan Motors executive vice president and head of the
Carpenter unit for Spartan. "Our next task is the introduction of a larger,
rear-engine transit-style bus, which will take place at the National
Association of Pupil Transportation (NAPT) show in November. This will
represent the first major joint effort between Carpenter and Spartan and will
integrate a new body style with our rear-engine diesel chassis. Importantly,
this initiative allows us to serve a larger part of the school bus market,
while integrating the work flow, efficiency and quality improvements we have
made in other areas of Carpenter and its products."
Commenting on the financial results, Spartan Motors Chief Financial
Officer Richard J. Schalter said: "Gross profit as a percentage of sales
declined for both the second quarter and first half of 1999, principally
reflecting the consolidation of Carpenter's gross margin results in the 1999
periods. In contrast, we reduced our operating expenses as a percentage of
sales year over year as Spartan Motors benefited from cost containment efforts
and the ability to leverage expenses across our four subsidiaries."
For the quarter ended June 30, 1999, Spartan's total operating expenses
fell to 9.5% of sales from 10.7% of sales in the year-ago second quarter.
Spartan reported a gross margin of 13.0% in the 1999 second quarter, down from
13.6% in the same period in 1998.
"Our increased emphasis on financial awareness and accountability is
manifesting itself in certain areas of the organization," said Schalter. "Our
task now is to continue to raise the bar and improve on every aspect of our
financial management objectives."
"Based on our order backlog, new products and customers coming on-stream,
and the operating improvements we are making at Spartan, we remain on pace to
have a strong back-half of 1999 and to meet expectations for the year,"
concluded 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, 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
Three-Months Ended Six-Months Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
$-000 $-000 $-000 $-000
Sales 75,263 55,504 150,889 114,660
Cost of Sales 65,470 47,932 130,257 98,402
Gross Profit 9,793 7,572 20,632 16,258
Operating Expenses:
Research and
Development 1,679 2,235 3,422 3,552
Selling 2,272 1,185 4,637 3,066
General and
Administration 3,232 2,517 6,328 4,856
Total Operating
Expenses 7,183 5,937 14,387 11,474
Operating Income 2,610 1,635 6,245 4,784
Other Income (Expense):
Interest Expense (561) (267) (1,319) (485)
Interest and
Other Income 112 201 228 495
Total Other Income
(Expense) (449) (66) (1,091) 10
Earnings before Equity Investment
and Taxes 2,161 1,569 5,154 4,794
Income (Loss) on Equity Investment
in Affiliate - (1,521) - (2,771)
Earnings before
Taxes 2,161 48 5,154 2,023
Taxes 1,148 502 2,695 1,539
Net Earnings 1,013 (454) 2,459 484
Net Earnings per
Share 0.08 (0.04) 0.20 0.04
Weighted Average
Shares 12,535 12,564 12,535 12,488