Spartan Motors Posts Record Sales in 1999
17 February 2000
Spartan Motors Posts Record Sales in 1999
Profits Affected by Fourth-Quarter Writedown and Losses at Carpenter Unit
CHARLOTTE, Mich., Feb. 17 -- Spartan Motors, Inc.
today announced its results for fiscal 1999, highlighted by
continued breakout performance in its core chassis business. The Company also
reported significant progress on its share repurchase plan, implemented in the
fourth quarter based on the board's belief that Spartan's stock is
undervalued.
The Charlotte, Mich.-based manufacturer of custom chassis, emergency
vehicles and buses reported sales grew 19.9 percent to a record $306.2 million
for the year ended Dec. 31, 1999, compared with $255.3 million in 1998. The
Company attributed the double-digit increase to strong sales of its
recreational vehicle (RV) and fire truck chassis, which finished the year up
29.2 percent.
Despite its strong top-line performance, Spartan Motors posted a net loss
of $1.39 million, or $0.11 per share, in 1999, compared with net income of
$3.49 million, or $0.28 per share, in 1998. The Company said the results
reflect the previously announced fourth quarter writedown of $4.0 million or
$0.32 per share after tax, due to the bankruptcy of one of its customers,
Metrotrans Corp., and losses during 1999 totaling $8.3 million, or $0.66 per
share, at Spartan's Carpenter Industries school bus unit.
"We continue to achieve our top-line goals, but our success was masked in
1999 by Carpenter and the impact of the Metrotrans writedown," said John
Sztykiel, president and chief operating officer of Spartan Motors. "Our
losses at Carpenter, while significant, are expected to narrow in the first
quarter of 2000, and we look for this trend to continue. In addition, our
core chassis business has never been stronger, fueled by increased sales of
our motorhome and emergency vehicle chassis. We look forward to building on
1999's sales momentum in the coming year, and coupling it with a solid return
to profitability."
Spartan also reported that it has repurchased over 400,000 shares of its
stock in open market transaction at an average price of $4.19 through February
14, 2000. The buyback plan, which authorizes the repurchase of up to 2
million shares or 16 percent of Spartan's stock, was initiated by the board of
directors in November 1999 and reflects the board's confidence in the future
of the Company.
Spartan Motors said its chassis business, exclusive of the Metrotrans
writedown, contributed $0.83 per share to earnings in fiscal 1999, a 38
percent increase over its $0.60 per share contribution in 1998. The increase
highlights continued sales and gross margin expansion in Spartan's largest
product line, RV chassis, as well as sustained growth in its fire truck
chassis business. Spartan posted a decrease in its transit bus chassis sales,
due primarily to the bankruptcy of Metrotrans. Metrotrans represented less
than 3 percent of Spartan's total sales over the past three years.
RV chassis sales grew $40.5 million, or 29.7 percent, in 1999 as Spartan
Motors capitalized on increased consumer demand, a booming Class A motorhome
market, and increased market share penetration. Sales of Spartan's Mountain
Master and Summit Series chassis led the growth in this segment in 1999. In
addition, the Company's introduction of new chassis for the entry-level Class
A RV market are taking hold and filling the industry's need for more
performance-oriented products on the entry-level diesel-pusher platform.
"Our Summit entry-level RV chassis had a great debut in 1999 and its
success is continuing through the first quarter of 2000, where it is tracking
more than double our forecast," Sztykiel said. "The Summit Series addresses
an important and expansive niche of the RV market and demonstrates Spartan's
commitment to product development and leading edge innovation -- in the RV
market as well as all the markets we serve."
Spartan Motors reported that its Emergency Vehicle Team (or EVTeam), which
consists of fire truck makers Luverne Fire Apparatus and Quality Manufacturing
and ambulance manufacturer Road Rescue, contributed $0.04 per share to
earnings in 1999, compared with $0.01 per share in 1998. The increase
reflects higher sales at all three of its EVTeam companies.
"We are pleased with the increased profitability in our EVTeam, but
recognize we need to continue to sharpen our focus on these businesses to
ensure their profitability grows," Sztykiel said. "One area where we are
making inroads is in reducing manufacturing costs as we begin to maximize the
benefits of our joint purchasing alliance with Federal Signal and leverage our
product development and engineering costs across the EVTeam companies."
Spartan reported that its Carpenter Industries operation posted a loss in
the fourth quarter 1999 and for the year, as expected. Carpenter's operating
loss of $8.3 million in 1999 was substantially lower than its $20 million
operating loss in 1998.
"We underestimated the timetable needed to regain customer confidence in
Carpenter's products," Sztykiel said. "Since Carpenter's introduction of the
new Chancellor front and rear-engine body, the market's confidence level has
improved dramatically. This is exhibited through the increased backlog at the
end of January 2000, which is more than double that of a year-ago January.
Commenting on Spartan's financial position at year end, Chief Financial
Officer Rich Schalter said: "Increased emphasis on financial controls and
measurement yielded several positive outcomes for Spartan in 1999, including a
40 percent improvement in inventory turns and a 10 percent reduction in
accounts receivables despite a nearly 20 percent increase in sales. Our focus
-- and compensation structure -- have been redirected toward return on
capital, and we expect to continue to reap benefits from this in the quarters
to come."
Schalter added: "Spartan's net sales have increased 75% over the last
three years, but profits have been volatile due to a combination of internal
factors like Carpenter and external issues such as the bankruptcy of customer
Metrotrans. In 2000, we are committed to managing our downside risk to avoid
bumps in the road and ensure our strong sales growth flows to the bottom
line."
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 a majority 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
Year End and Fourth Quarter 1999 and 1998
YEAR ENDED FOURTH QTR ENDED
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
$-000 $-000 $-000 $-000
Sales 306,156 255,338 71,784 71,045
Cost of Sales 267,542 217,978 64,917 59,651
Gross Profit 38,614 37,360 6,867 11,394
Operating Expenses:
Research and Development 7,008 5,517 1,841 1,487
Selling 9,712 8,370 2,503 2,293
General and Administration 17,816 10,778 7,842 3,565
Total Operating Expenses 34,536 24,665 12,186 7,345
Operating Income 4,078 12,695 (5,319) 4,049
Other Income (Expense):
Interest Expense (2,738) (1,215) (685) (445)
Interest and Other Income 344 300 69 (419)
Total Other Income (Expense) (2,394) (915) (616) (864)
Earnings before Equity
Investment and Taxes 1,684 11,780 (5,935) 3,185
Income (Loss) on Equity
Investment in Affiliate - (4,059) - (955)
Earnings before Taxes 1,684 7,721 (5,935) 2,230
Taxes 3,075 4,236 (1,168) 1,287
Net Earnings (1,391) 3,485 (4,767) 943
Net Earnings per Share (0.11) 0.28 (0.38) 0.08
Weighted Average Shares 12,483 12,507 12,404 12,537