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Spartan Motors Reports Third Quarter 2012 Results

              Spartan Motors Reports Third Quarter 2012 Results

PR Newswire

CHARLOTTE, Mich., Oct. 30, 2012

CHARLOTTE, Mich., Oct. 30, 2012 /PRNewswire/ --Spartan Motors, Inc. (NASDAQ:
SPAR) ("Spartan" or the "Company") today announced operating results for the
third quarter of 2012. Revenues totaled $112.9 million compared to $120.3
million in the third quarter of 2011. Spartan reported a net loss of $0.3
million for the third quarter of 2012, or ($0.01) per diluted share compared
to net income of $3.2 million, or $0.10 per diluted share in the third quarter
of 2011. Excluding pre-tax restructuring charges of $1.6 million, Spartan
posted adjusted operating earnings for the quarter of $0.02 per diluted share.

For the quarter ended Sept. 30, 2012, Spartan began reporting its operating
results in three segments: Emergency Response (ER), Delivery & Service
Vehicles (DSV) and Specialty Vehicles (SV). Results for these segments are
included below.

Third Quarter 2012 Summary:

  oNet sales of $112.9 million (down 6% from Q3 2011 sales of $120.3
    million):

       oEmergency Response sales totaled $39.9 million, up 12.9% from $35.3
         million in Q3 2011
       oDelivery & Service Vehicle sales totaled $49.0 million, down 20.0%
         from $61.2 million in Q3 2011
       oSpecialty Vehicles sales totaled $23.9 million, up 0.8% from $23.8
         million in Q3 2011

  oGAAP results (including restructuring charges):

       oGross margin of 11.5% of sales, down from 17.0% in Q3 2011
       oOperating loss of $0.3 million and operating margin of (0.2)%,
         compared to operating income of $5.3 million and operating margin of
         4.4% in Q3 2011

       oNet loss of $0.3 million, or ($0.01) per diluted share

  oAdjusted operating results (non-GAAP, excluding restructuring charges):

       oAdjusted gross margin of 12.9% of sales
       oAdjusted operating income of $1.4 million, or 1.2% of sales
       oAdjusted net income of $0.7 million, or $0.02 per diluted share

  oRestructuring charges totaled $1.6 million, or $0.03 per diluted share in
    Q3 2012, mostly related to the previously disclosed sale of the Wakarusa,
    Ind. campus and move to Bristol, Ind.
  oTax expense for the quarter included $0.2 million related to a prior
    period tax position
  oEarnings before interest, taxes, depreciation and amortization (EBITDA)
    was $3.6 million in Q3 2012 versus $7.6 million in Q3 2011
  oEnding consolidated backlog of $168.3 million at Sept. 30, 2012 versus
    $173.3 million at June 30, 2012 and $142.6 million at Sept. 30, 2011; Q3
    2012 new orders totaled $108.1 million
  oSales to businesses and consumers were 61% of total revenue versus 63% in
    Q2 2011
  oCash balance of $26.7 million at Sept. 30, 2012 compared to $33.3 million
    at June 30, 2012

John Sztykiel, Chief Executive Officer of Spartan Motors, Inc., commented on
the third quarter, "Spartan continued its trend of generating an adjusted
operating profit through the third quarter of 2012 as our Emergency Response
and Specialty Vehicles units posted growth in revenue and order backlog
compared to the third quarter of 2011. The improved performance of these
units underscores the importance of our diversification strategy as the growth
in these segments partially offset a slower quarter in our Delivery & Service
Vehicles unit. We are executing our plan and continuing our momentum in
returning our ER and Specialty Vehicles units to growth and taking action to
improve our operations."

Emergency Response Vehicles and Specialty Vehicles Gain in Third Quarter 2012

  oSpartan's Emergency Response Vehicles segment, which includes both the
    Emergency Response Chassis and Emergency Response Bodies operations,
    posted a sales gain of $4.6 million, or 12.9%, in the third quarter of
    2012 compared to the prior year. Sales of Spartan's custom chassis
    accounted for most of the increase, as the market gradually recovered and
    responded favorably to Spartan's new product offerings. During the
    quarter, Spartan shipped the first few ER chassis equipped with the
    Spartan APS advanced airbag restraint system.
  oThe Specialty Vehicles segment generated revenue of $23.9 million in the
    third quarter of 2012, up 0.8% from $23.8 million in the year-ago third
    quarter. Most of the increase came from higher sales of recreational
    vehicle chassis, which totaled $17.1 million for the third quarter of
    2012, an increase of $3.0 million, or 20.9%, over the third quarter of
    2011. RV chassis sales increased as RV manufacturers using Spartan's
    custom chassis increased their sales and market share during the third
    quarter of 2012.
  oThe Delivery & Service Vehicles segment posted third quarter 2012 revenue
    of $49.0 million, down from $61.2 million in the third quarter of 2011.
    The revenue decline was largely due to the decline in aftermarket
    accessory sales during the most recent third quarter. Vehicle sales in Q3
    2012 were adversely affected to a lesser extent by a decline in walk-in
    van sales compared to Q3 2011 when DSV shipped a record number of units to
    a major customer. Shortages of some materials also pushed out production
    of some walk-in van units beyond Q3 2012. Partially offsetting the
    decline in walk-in van sales was an increase in truck body sales in Q3
    2012 compared to Q3 2011. In addition, production of the Reach van in
    Charlotte commenced during the third quarter, with 182 units shipped
    during the period.
  oSpartan's gross margin excluding restructuring items was 12.9% in the
    third quarter of 2012 versus 17.0% in the third quarter of 2011. Compared
    to the third quarter of 2011, the gross margin was negatively impacted by
    lower revenue, including the absence of keyless entry sales at DSV.
    Including restructuring items of $1.5 million in the third quarter of
    2012, gross margin was 11.5% of sales.
  oRestructuring charges were related to the relocation of DSV's Utilimaster
    operations to Bristol, Ind., including $0.9 million in impairment charges
    to the value of the Wakarusa, Ind. campus. The additional impairment was
    taken to reflect the expected realizable value of the buildings as
    discussed in the Company's prior releases.
  oOperating expenses in the third quarter of 2012 declined by $2.1 million
    to $13.1 million, or 11.6% of sales, excluding restructuring charges,
    compared to $15.2 million, or 12.6% of sales, in the third quarter of
    2011. Including restructuring charges of $0.1 million, or 0.1% of sales,
    operating expenses for the third quarter of 2012 amounted to $13.2
    million, or 11.7% of sales. Operating expenses declined year over year due
    to management's ongoing efforts to control expenses.
  oTax expense for the third quarter of 2012 was $0.1 million. The Company's
    effective tax rate was impacted unfavorably due to a state court ruling
    regarding a prior period tax position that occurred in the third quarter.
    This event was a non-recurring, discrete event for tax purposes that
    required recognizing the entire impact of the uncertain tax position in
    the third quarter.

Investment at Bristol Continues, Inventories Rise Due to Product Shipment
Timing

  oAt the end of the third quarter of 2012, the Company's cash balance stood
    at $26.7 million, down from $33.3 million at the end of the second quarter
    of 2012. Cash balances were reduced by $6.6 million due to an increase in
    inventory of $13.3 million, partially offset by an increase in accounts
    payable of $7.6 million. Inventories in the ER segment increased by $6.6
    million, largely due to delays in receiving commercial chassis that pushed
    out production schedules and shipment dates beyond Sept. 30, 2012. During
    the quarter, the Company invested $4.3 million in capital equipment,
    including $3.6 million for the Bristol, Ind. facility.

Gradual Recovery in Markets Continues, Management Cautiously Optimistic

Joe Nowicki, Spartan's Chief Financial Officer, stated regarding the Company's
third quarter performance and outlook, "Our Emergency Response and Specialty
Vehicles units performed well in the third quarter of 2012 and are expected to
maintain that momentum through the end of 2012. The third quarter was also a
period of significant investment in Bristol which, along with higher
inventories in the DSV and ER units, reduced our cash balances. We expect
inventories to be reduced during the fourth quarter of 2012, along with lower
capital spending. With orders booked for the rest of the year, we look for
2012 revenue to increase from 2011 in the mid- to upper-single digits and
expect the adjusted gross margin for the year to be in the 14 – 14.5% range,
with adjusted operating expenses of 12 – 12.5%. Looking ahead to 2013, we
expect revenue to grow in the mid-single digits over 2012. We will continue
to manage our cost structure and expect to make progress toward our goals of
17% gross margins, 11% operating expenses, and 6% operating income."

John Sztykiel concluded, "Despite the challenging year-over-year comparison to
the third quarter of 2011, we kept moving forward toward our goals. Some of
our accomplishments include moving Reach production to Charlotte and shipping
182 units during the quarter, making more progress on relocating Utilimaster
to Bristol, Ind. and receiving additional orders for the Reach from UPS and
FedEx. Operationally, the fourth quarter of 2012 is important as we start the
move of Utilimaster from Wakarusa, Ind. to Bristol, which we expect to yield
annualized savings of $4 million. The investments we made in Emergency
Response are paying off and our business is becoming stronger. In closing, we
have two strong brands, Utilimaster and Spartan, as demonstrated by the 18%
growth in backlog compared to the third quarter of 2011, that are leading us
forward in these challenging times. Recognizing the positives with the
challenges, we will continually refine and execute our plan to ensure that we
move Spartan forward."

Reconciliation of Non-GAAP Financial Measures

This release contains adjusted gross profit, adjusted gross margin, adjusted
operating expenses, adjusted operating income, adjusted net earnings (loss)
and adjusted earnings (loss) per share measures, as well as earnings before
interest, taxes, depreciation and amortization (EBITDA), which are all
Non-GAAP financial measures. These are calculated by excluding items that we
believe to be infrequent or not indicative of our operating performance. For
the periods covered by this release such items consist of expenses associated
with restructuring actions taken to improve the efficiency and profitability
of certain of our manufacturing operations and adjust our cost structure to
the current business climate. We present these adjusted Non-GAAP measures
because we consider them to be important supplemental measures of our
performance and believe them to be useful to show ongoing results from
operations distinct from items that are infrequent or not indicative of our
operating performance. We define EBITDA as operating income (loss) excluding
restructuring charges, less depreciation and amortization. We believe EBITDA
is a useful tool that allows comparison of financial performance by
eliminating the impact of differences in capital structure, restructuring
charges and capital spending, among others, between different time periods or
industries.

The adjusted Non-GAAP measures are not measurements of our financial
performance under GAAP and should not be considered as an alternative to gross
profit, gross margin, operating expense, operating income, net earnings (loss)
or earnings (loss) per share under GAAP. These adjusted Non-GAAP measures have
limitations as analytical tools and should not be considered in isolation or
as a substitute for analysis of our results as reported under GAAP. In
addition, in evaluating the adjusted Non-GAAP measures, you should be aware
that in the future we may incur expenses similar to the adjustments in this
presentation, despite our assessment that such expenses are infrequent or not
indicative of our operating performance. Our presentation of the adjusted
Non-GAAP measures should not be construed as an inference that our future
results will be unaffected by unusual or infrequent items. We compensate for
these limitations by providing equal prominence of our GAAP results and using
adjusted Non-GAAP measures only as a supplement.

The following table reconciles gross profit to adjusted gross profit, gross
margin to adjusted gross margin, operating income to adjusted operating
income, operating expense to adjusted operating expense, net earnings (loss)
to adjusted net earnings (loss), earnings (loss) per share to adjusted
earnings (loss) per share and operating income (loss) to EBITDA for the
periods indicated.



Financial Summary (Non-GAAP)
(In thousands, except per share data)
(Unaudited)
                   Three Months Ended September   Nine Months Ended September
                   30,                            30,
                   2012     % of  2011    % of  2012    % of  2011    % of
                            sales          sales          sales          sales
Gross profit/Gross $12,968  11.5   $20,446 17.0   $45,456 13.1   $46,136 14.7
margin
Add back:
restructuring      1,543    1.4    -       -      5,760   1.7    1,731   0.5
charges
Adjusted gross                                    $
profit/Adjusted    $ 14,511 12.9   $20,446 17.0   51,216  14.8   $47,867 15.2
gross margin
Operating expenses $ 13,243 11.7   $15,170 12.6   $       13.1   $45,831 14.6
                                                  45,266
Less:
restructuring      100      0.1    -       -      1,976   0.6    1,050   0.3
charges
Adjusted operating $ 13,143 11.6   $15,170 12.6   $       12.5   $44,781 14.2
expenses                                          43,290
                   Three Months Ended September   Nine Months Ended September
                   30,                            30,
                   2012     % of  2011    % of  2012    % of  2011    % of
                            sales          sales          sales          sales
Operating income   $                             $            $ 
(loss)/Operating   (275)    (0.2)  $ 5,276 4.4    190    0.1    305    0.1
margin
Add back:
restructuring      1,643    1.5    -       -      7,736   2.2    2,781   0.9
charges
Adjusted operating $                             $ 
income/Adjusted    1,368    1.2    $ 5,276 4.4    7,926   2.3    $ 3,086 1.0
operating margin
Net income (loss)  $       (0.3)  $ 3,198 2.7    $    0.0    $     0.0
                   (327)                           9           80
Add back:
restructuring      1,002    0.9    -       -      4,719   1.4    1,796   0.6
charges, net of
tax
Adjusted net       $      0.6    $ 3,198 2.7    $      1.4    $ 1,876 0.6
income             675                           4,728
Net earnings per   $               $             $           $   
share - basic and  (0.01)         0.10            -           -
diluted
Add back:
restructuring      0.03            -              0.14           0.06
charges, net of
tax
Adjusted net       $             $             $            $ 
earnings per share 0.02            0.10           0.14           0.06
- diluted
Operating income   $              $ 5,276
(loss)             (275)
Add back:
restructuring      1,643           -
charges
Adjusted operating 1,368           5,276
income (loss)
Add back:
depreciation and   2,229           2,291
amortization
Earnings before
interest, taxes,   $              $
depreciation and   3,597           7,567
amortization

Conference Call, Webcast and Roadcast®

Spartan Motors will host a conference call for analysts and portfolio managers
at 10 a.m. ET today to discuss these results and current business trends. To
listen to a live webcast of the call, please visit www.spartanmotors.com,
click on "Shareholders," and then on "Webcasts."

For more information about Spartan, please view the Company's Roadcast
"digital roadshow" designed for investors. To launch the Spartan Motors
Roadcast, please visit www.spartanmotors.com and look for the "Virtual Road
Show" link on the right side of the page.

About Spartan Motors

Spartan Motors, Inc. designs, engineers and manufactures specialty chassis,
specialty vehicles, truck bodies and aftermarket parts for the recreational
vehicle (RV), emergency response, government services, defense, and delivery
and service markets. The Company's brand names – Spartan™, Spartan Chassis™,
Spartan ER™, Spartan ERV™ and Utilimaster® - are known for quality,
performance, service and first-to-market innovation. The Company employs
approximately 1,800 associates at facilities in Michigan, Pennsylvania, South
Dakota, Indiana, Florida and Texas. Spartan reported sales of $426 million in
2011 and is focused on becoming a global leader in the design, engineering and
manufacture of specialty vehicles and chassis. Visit Spartan Motors at
www.spartanmotors.com.

This release contains several forward-looking statements that are not
historical facts, including statements concerning our business, strategic
position, financial strength, future plans, objectives, and the performance of
our products. These statements can be identified by words such as "believe,"
"expect," "intend," "potential," "future," "may," "will," "should," and
similar expressions regarding future expectations. These forward-looking
statements involve various known and unknown risks, uncertainties, and
assumptionsthat are difficult to predict with regard to timing, extent, and
likelihood. Therefore, actual performance and results may materially differ
from what may be expressed or forecasted in such forward-looking statements.
Factors that could contribute to these differences include operational and
other complications that may arise affecting the implementation of our plans
and business objectives; continued pressures caused by economic conditions and
the pace and extent of the economic recovery; challenges that may arise in
connection with the integration of new businesses or assets we acquire or the
disposition of assets; restructuring of our operations, and/or our expansion
into new geographic markets; issues unique to government contracting, such as
competitive bidding processes, qualification requirements, and delays or
changes in funding; disruptions within our dealer network; changes in our
relationships with major customers, suppliers, or other business partners,
including Isuzu; changes in the demand or supply of products within our
markets or raw materials needed to manufacture those products; and changes in
laws and regulations affecting our business. Other factors that could affect
outcomes are set forth in our Annual Report on Form 10-K and other filings we
make with the Securities and Exchange Commission (SEC), which are available at
www.sec.gov or our website. All forward-looking statements in this release
are qualified by this paragraph. Investors should not place undue reliance on
forward-looking statements as a prediction of actual results. We undertake no
obligation to publicly update or revise any forward-looking statements in this
release, whether as a result of new information, future events, or otherwise.

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
                                       September 30,
                                       2012                 December 31,
                                       (Unaudited)          2011
ASSETS
Current assets:
Cash and cash equivalents              $      26,690  $     
                                                            31,677
Accounts receivable, less allowance of 50,043               40,042
$1,010 and $749
Inventories                            70,796               66,991
Deferred income tax assets             6,425                6,425
Income taxes receivable                5,368                1,479
Assets held for sale                   4,973                -
Other current assets                   2,247                2,455
Total current assets                   166,542              149,069
Property, plant and equipment, net     58,273               65,399
Goodwill                               20,815               20,815
Intangible assets, net                 11,275               11,943
Other assets                           1,601                1,383
TOTAL ASSETS                           $     258,506   $     248,609
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                       $      30,092  $     
                                                            21,649
Accrued warranty                       6,262                5,802
Accrued customer rebates               2,115                1,546
Accrued compensation and related taxes 6,295                5,670
Deposits from customers                6,550                7,902
Other current liabilities and accrued  8,738                7,772
expenses
Current portion of long-term debt      55                   55
Total current liabilities              60,107               50,396
Other non-current liabilities          3,742                2,932
Long-term debt, less current portion   5,046                5,084
Deferred income tax liabilities        7,359                7,359
Shareholders' equity:
Preferred stock, no par value: 2.0
shares authorized (none issued)        -                    -
Common stock, $0.01 par value; 40,000
shares
authorized; 33,821 and 33,596          338                  336
outstanding
Additional paid in capital             72,240               71,145
Retained earnings                      109,674              111,357
Total shareholders' equity             182,252              182,838
TOTAL LIABILITIES AND SHAREHOLDERS'    $     258,506   $     248,609
EQUITY



Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                    Three Months Ended September 30,  Nine Months Ended September 30,
                    2012      % of  2011      % of  2012     % of  2011      % of
                              sales            sales           sales            sales
Sales               $112,857         $                $               $
                                     120,303         346,087         314,800
Cost of products    98,346    87.1   99,857    83.0   294,871  85.2   266,933   84.8
sold
Restructuring       1,543     1.4    -         -      5,760    1.7    1,731     0.5
charges
Gross profit        12,968    11.5   20,446    17.0   45,456   13.1   46,136    14.7
Operating
expenses:
   Research and     2,909     2.6    3,274     2.7    9,902    2.9    10,472    3.3
   development
   Selling,
   general and      10,234    9.1    11,896    9.9    33,388   9.6    34,309    10.9
   administrative
   Restructuring    100       0.1    -         -      1,976    0.6    1,050     0.3
   charges
Total operating     13,243    11.7   15,170    12.6   45,266   13.1   45,831    14.6
expenses
Operating income    (275)     (0.2)  5,276     4.4    190      0.1    305       0.1
(loss)
Other income
(expense):
   Interest         (81)      (0.1)  (88)      (0.1)  (253)    (0.1)  (260)     (0.1)
   expense
   Interest and
   other income     178       0.2    (72)      (0.1)  434      0.1    83        0.0
   (expense)
Total other         97        0.1    (160)     (0.1)  181      0.1    (177)     (0.1)
income (expense)
Income (loss)       (178)     (0.2)  5,116     4.3    371      0.1    128       0.0
before taxes
Taxes               149       0.1    1,918     1.6    362      0.1    48        0.0
Net earnings        $      (0.3)  $ 3,198  2.7    $     0.0    $       0.0
(loss)               (327)                              9         80
Basic net           $             $             $            $   
earnings (loss)     (0.01)           0.10            0.00            0.00
per share
Diluted net         $             $             $            $   
earnings (loss)     (0.01)           0.10            0.00            0.00
per share
Basic weighted
average common      33,374           33,506           33,795          33,391
shares
outstanding
Diluted weighted
average common      33,374           33,525           33,824          33,459
shares
outstanding



Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(amounts in thousands of dollars)
                              (Unaudited)
Three Months Ended September 30, 2012 (amounts in
thousands of dollars)
                  Business Segments
                  Emergency   Delivery &
                  Response    Service       Specialty   Other    Consolidated
                                            Vehicles
                  Vehicles    Vehicles
Emergency         $ 
Response Chassis  29,109                                        $   29,109
Sales
Emergency
Response Body     10,781                                         10,781
Sales
Utilimaster                   40,329                             40,329
Vehicle Sales
Motorhome Chassis                           17,129               17,129
Sales
Other Specialty                             1,279                1,279
Vehicles
Aftermarket Parts             8,696         5,534                14,230
and Assemblies
Total Sales       $          $  49,025   $  23,942  $     $112,857
                  39,890                                 -
Depreciation and  $       $         $       $      $   
Amortization      207         689           162         1,171   2,229
Expense
Operating Income  89          600           504         (1,468)  (275)
(Loss)
Segment Assets    71,798      85,118        24,483      77,107   258,506
Nine Months Ended September 30, 2012 (amounts in
thousands of dollars)
                  Business Segments
                  Emergency   Delivery &
                  Response    Service       Specialty   Other    Consolidated
                                            Vehicles
                  Vehicles    Vehicles
Emergency         $ 
Response Chassis  81,702                                        $   81,702
Sales
Emergency
Response Body     35,687                                         35,687
Sales
Utilimaster                   103,757                            103,757
Vehicle Sales
Motorhome Chassis                           51,715               51,715
Sales
Other Specialty                             6,410                6,410
Vehicles
Aftermarket Parts             51,867        14,949               66,816
and Assemblies
Total Sales       $ 117,389  $ 155,624    $  73,074  $     $ 346,087
                                                          -
Depreciation and  $                     $        $ 
Amortization      670         $   2,025  510        3,665    $   6,870
Expense
Operating Income  (3,256)     8,157         994         (5,705)  190
(Loss)
Segment Assets    71,798      85,118        24,483      77,107   258,506



Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Unaudited
Period End Backlog (amounts in thousands of dollars)
                     Sept. 30,     Dec. 31,      March 31,  June 30,  Sept.
                     2011          2011          2012       2012      30, 2012
 Emergency
Response             $  48,151   $  45,567   $         $        $  
                                                 47,926    48,698   46,633
 Chassis*
 Emergency
Response             26,007        28,432        34,235     34,604    39,279

 Bodies*
Total Emergency      74,158        73,999        82,161     83,302    85,912
Response Backlog
 Motorhome       11,640        10,018        10,712     10,885    12,863
Chassis *
 Other Vehicles* 1,668         2,287         150        -         -
 Aftermarket
Parts and 1,203         2,955         2,610      3,989     4,536

 Assemblies
Total Specialty      14,511        15,260        13,472     14,874    17,399
Vehicles Backlog
 Delivery &      53,888        47,694        40,032     75,116    65,026
Service Vehicles *
Total Backlog        $ 142,557    $ 136,953    $          $        $ 
                                                 135,665   173,292   168,337
* Anticipated time to fill backlog orders at September 30, 2012; 5
months or less for emergency response chassis; 7 months or less for
emergency response bodies; 3 months or less for motorhome chassis; 6
months or less for delivery and service vehicles; and 1 month or
less for other products.



SOURCE Spartan Motors, Inc.

Website: http://www.spartanmotors.com
Contact: Joseph Nowicki, CFO, Spartan Motors, Inc., +1-517-543-6400, or Greg
Salchow, Director IR & Treasury, Spartan Motors, Inc., +1-517-543-6400
 
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