Spartan Motors Posts Improved Earnings, Record Sales
27 April 2000
Spartan Motors Posts Improved Earnings, Record Sales
First-Quarter Results Fueled by Emergency Vehicles, SMI Chassis
CHARLOTTE, Mich., April 27 Driven by stronger sales of its
chassis and emergency vehicles, Spartan Motors, Inc. (Nasdaq: SPAR) posted
higher earnings on record sales for the first quarter ended March 31, 2000.
The Charlotte, Mich.-based manufacturer of custom chassis, emergency
vehicles and buses said that net earnings grew 36 percent to $2.0 million, or
$0.16 per diluted share, for the first quarter, compared to net earnings of
$1.4 million, or $0.12 per diluted share, during the same period in 1999.
Spartan reported that sales grew to a record $84.6 million in the first
quarter 2000, compared with net sales of $75.6 million during the same period
in 1999. The growth was led by improved sales of Spartan chassis and
increases at its Emergency Vehicle Team (EVTeam) companies, which make fire
trucks and ambulances.
"Our first-quarter results and the contributions made by two of our
business segments are another step in the right direction," said John
Sztykiel, president and chief operating officer of Spartan Motors. "Sales of
our RV chassis within the chassis segment remained strong during the quarter,
although we are beginning to see some signs of leveling off. Our EVTeam
enjoyed one of its best quarters to date and continues to grow in both sales
and profits."
Spartan Chassis continued to build on the sales momentum of fire trucks
and recreational vehicles during the first quarter. Fire truck chassis posted
a solid quarter, and that product line continues to pick up market share.
While the RV industry continues to enjoy record sales, Sztykiel said that
volatility in the financial markets could translate into lower sales during
the second quarter.
"What compounds this uncertainty is that the second quarter is a time when
RV dealers typically reduce their inventory in anticipation of model
changeover," Sztykiel said. "This year, the tightening may be greater as we
deal with the combined effects of consumer uncertainty and the normal slowdown
before changeover.
"Yet, we do not expect lower RV sales than 1999, just less dramatic
growth, and we anticipate better year-over-year profitability. We have
several new RV products coming online in mid-year, which should positively
impact the third and fourth quarters. On a broader scale, our decision to
pursue the path of diverse but complementary product offerings at Spartan
allows us to spread the opportunity -- and the risk -- to ensure more
predictability in our results."
Spartan's EVTeam posted record sales during the 2000 first quarter.
Emergency vehicle sales at Quality Manufacturing and Road Rescue were
extremely strong, with both posting their best-ever revenues in the month of
March as they continue to grow faster than the market.
Spartan said its EVTeam is experiencing strong order flow, led by
Quality's recent $15 million order from the Atlanta Fire Department, its
largest order to date. The custom fleet will be built on Spartan chassis.
Road Rescue had a solid first quarter and is poised for a strong year in 2000.
Sztykiel said the growth is being driven by new products such as the LE
Series, as well as a market shift toward the high-end ambulance style produced
by Road Rescue.
"The outlook for our EVTeam is good," Sztykiel said. "Operationally, all
three of our companies have continued their improvements. Given the increased
backlog at Quality and Road Rescue, combined with strong bid activity at
Luverne, we expect to see continued growth for our emergency vehicles."
Carpenter Industries also continued to improve its operating performance
during the first quarter. The school bus manufacturer received an order for
100 school buses from the city of Cleveland, with an option to purchase an
additional 100 buses.
Consolidated Operating Results
Spartan Motors reported that operating income improved 50 basis points
over the year-ago period from 4.8 percent to 5.3 percent.
Total operating expenses as a percentage of sales decreased from 9.5
percent to 7.6 percent in the current quarter.
Gross margin declined to 12.9 percent during the first quarter, from 14.3
percent during the same period in 1999.
"We have begun to see a shift in our RV product mix toward the Summit
chassis which, at the entry level, brings lower margins," said Richard
Schalter, chief financial officer of Spartan Motors. "This shift, combined
with the introduction of new products at our EVTeam companies, lowered our
gross margins for the quarter."
Spartan Motors improved its cash flow from operations during the first
quarter, generating $2.7 million compared with $2.2 million during the first
quarter of 1999. The Company also reduced its long-term debt by $2.9 million,
or 10.6 percent from year-end 1999 to stand at $24.6 million at the close of
the first quarter.
"Our improvements in cash flow and our ability to pay down debt reflect
our focus on reducing inventory and narrowing our days in receivables,"
Schalter said. "We continue to push financial measurement and accountability
through all departments and business units at Spartan, and we are beginning to
see some of the fruits of this effort.
"We expect to see further reductions in inventory as we eliminate a large
buffer stock of transmissions, a result of the fact that transmissions are no
longer on allocation from Allison."
Spartan also reported that it has repurchased 749,000 shares of its common
stock as part of a buyback plan approved by the board of directors in November
1999. The board authorized the Company to repurchase up to 2 million shares,
or 16 percent of Spartan's stock, in open market transactions, reflecting its
confidence in the future of Spartan Motors.
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
First Quarters of 2000 and 1999
March 31, 2000 March 31, 1999
$-000 % $-000 %
Sales 84,625 75,626
Cost of Sales 73,695 64,787
Gross Profit 10,930 12.9 10,839 14.3
Operating Expenses:
Research and Development 1,755 2.1 1,743 2.3
Selling 2,323 2.7 2,365 3.1
General and Administration 2,367 2.8 3,096 4.1
Total Operating Expenses 6,445 7.6 7,204 9.5
Operating Income 4,485 5.3 3,635 4.8
Other Income (Expense):
Interest Expense (773) (0.9) (758) (1.0)
Interest and Other Income (134) (0.2) 116 0.2
Total Other Income (Expense) (907) (1.1) (642) (0.8)
Earnings before Equity Investment
and Taxes 3,578 4.2 2,993 4.0
Taxes 1,609 1.9 1,547 2.0
Net Earnings 1,969 2.3 1,446 2.0
Net Earnings per Share 0.16 0.12
Weighted Average Shares 12,157 12,536