Supreme Industries Reports Third-Quarter 2013 Earnings

  Supreme Industries Reports Third-Quarter 2013 Earnings

Business Wire

GOSHEN, Ind. -- October 24, 2013

Supreme Industries, Inc. (NYSE MKT: STS), a leading manufacturer of
specialized commercial vehicles including truck bodies, shuttle buses, and
specialty vehicles, today announced earnings for its third quarter ended Sept.
28, 2013. All earnings per share and share figures have been adjusted for the
5% stock dividend paid in the second quarter of 2013.

2013 Third-Quarter Results

Supreme reported strong order intake in the third quarter led by significant
fleet business and improved retail demand for the Company’s truck bodies.
Backlog at the end of the quarter increased 36% to $85.6 million, compared
with $63.0 million at the end of last year’s third quarter.

Consolidated net sales for the third quarter declined 6.1%, to $67.3 million,
compared with $71.7 million last year. The revenue decrease was attributable
to lower sales volume in the bus and specialty vehicle divisions along with
OEM chassis delays in the truck division.

Gross margin declined to 15.9%, or $10.7 million, compared with 16.1%, or
$11.6 million, in the third quarter of 2012, primarily due to lower sales
during the quarter on fixed overhead expenses. Additionally, the truck
division experienced incremental training costs associated with the startup of
the fleet business.

Income tax expense of $0.6 million was recorded in the quarter due to the
Company’s return to normalized tax rates. In last year’s comparable period,
the Company recorded income tax expense of $0.1 million which included the
reversal of a deferred tax valuation allowance due to improved profitability.

Net income for the third quarter was $1.5 million, or $0.09 per diluted share,
compared with net income of $3.6 million, or $0.22 per diluted share, last
year. On a proforma basis, adjusting for the 2012 legal costs associated with
the King County lawsuit and normalizing the 2012 income tax expense, last
year’s earnings per share would have been $0.17 per diluted share. A
supplemental reconciliation of net income and net income per share is included
with this press release.

“While we are certainly not satisfied with our overall sales decline in the
third quarter, we are very encouraged with strong orders in our truck division
during the period. Based on our backlog, we anticipate the fourth quarter will
reflect substantially improved shipments over the prior year’s comparable
quarter barring any unforeseen supply chain chassis issues.We have made good
progress on improving on-time deliveries and there are additional
opportunities remaining to compress the order-to-cash conversion cycle,”said
President and Chief Executive Officer Mark Weber.

2013 Nine-Month Results

Consolidated net sales for the nine-month period decreased 8.2%, to $209.7
million, from $228.4 million last year, due to lower fleet and bus sales. For
the nine months, gross margin, as a percentage of sales, increased to 17.0%,
compared with 15.7% in 2012. This improvement reflects margin-expansion
initiatives including process improvements, enhanced manufacturing
efficiencies and strategic purchasing that commenced in 2012. Gross profit
declined to $35.7 million, from last year’s $35.9 million.

Income tax expense increased by $2.3 million versus last year resulting from
the normalized tax rates in 2013 and last year’s reversal of the valuation
allowance.

Net income for the first nine months was $4.8 million, or $0.29 per diluted
share, compared with $11.4 million, or $0.71 per diluted share, last year. On
a proforma basis, adjusting for the King County legal settlement and related
costs and normalizing the 2012 income tax expense, the earnings for the first
nine months of this year would have been $0.44 per diluted share compared with
$0.50 per diluted share last year.

Working capital increased to $42.9 million at Sept. 28, 2013, compared with
$38.6 million at Dec. 29, 2012. Working capital requirements to support the
higher backlog, combined with the payment of the legal settlement, resulted in
total debt increasing $1.7 million to $15.8 million at quarter end, versus
$14.1 million at Dec. 29, 2012, and $12.3 million one year ago. Stockholders’
equity increased to $72.3 million at Sept. 28, 2013, compared with $67.2
million at Dec. 29, 2012. Book value, on a per-share basis, was $4.48 at
quarter end versus $4.20 at the end of 2012. Net cash provided by operating
activities during the first nine months of 2013 was $2.3 million compared with
$7.9 million in 2012.

Weber added, “We are very encouraged by our backlog and recent demand trends
in the truck division. We are implementing initiatives targeted to improve the
contributions of those divisions that are performing below expectations, which
we expect will have a positive impact on future consolidated results.”

Conference Call Information

A conference call will be held tomorrow, October 25, 2013, at 9 a.m. ET to
review the third-quarter and nine months results. To participate in the live
call, dial 877-300-8521 (International: 412-317-6026) 10 minutes before the
call begins, or 8:50 a.m. ET. The conference ID is 10035030. The call also
will be streamed live and can be accessed at http://www.SupremeInd.com. Those
unable to participate in the live conference call may access a replay, which
will be available on Supreme’s website for approximately 30 days.

To be added to Supreme Industries’ email distribution list, please click on
the link below:
http://www.clearperspectivegroup.com/clearsite/sts/emailoptin.html.

About Supreme Industries

Supreme Industries, Inc. (NYSE MKT: STS), is a nationwide manufacturer of
specialized truck bodies produced to the specifications of its customers.
Supreme also manufactures special-purpose “shuttle-type” buses and specialty
vehicles. The Company's transportation equipment products are used by a wide
variety of industrial, commercial and law enforcement customers.

News releases and other information on the Company are available on the
Internet at: http://www.supremeind.com or
http://www.b2i.us/irpass.asp?BzID=1482&to=ea&s=0

Other than historical facts contained herein, the matters set forth in this
news release are “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act, as amended, and reflect the view of management with
respect to future events. When used in this report, words such as “believe,”
“expect,” “anticipate,” “estimate,” “intend,” “plan” and similar expressions,
as they relate to Supreme or its plans or operations, identify forward-looking
statements. Such forward-looking statements are based on assumptions made by,
and information currently available to, management. Although management
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that the expectations reflected in
such forward-looking statements are reasonable, and it can give no assurance
that such expectations will prove to be correct. Important factors that could
cause actual results to differ materially from such expectations include,
without limitation, an economic slowdown in the specialized vehicle industry,
limitations on the availability of chassis on which Supreme’s product is
dependent, availability of raw materials, raw material cost increases and
severe interest rate increases. Furthermore, Supreme can provide no assurance
that any raw material cost increases can be passed on to its customers through
implementation of price increases for Supreme’s products. The forward-looking
statements contained herein reflect the current view of management with
respect to future events and are subject to those factors and other risks,
uncertainties and assumptions relating to the operations, results of
operations, cash flows and financial position of Supreme. Supreme assumes no
obligation to update the forward-looking statements or to update the reasons
actual results could differ from those contemplated by such forward-looking
statements.

                          —FINANCIAL RESULTS FOLLOW—

Supreme Industries, Inc. and Subsidiaries
Consolidated Statements of Income
                                                 
                 Three Months Ended                Nine Months Ended
                 September 28,   September 29,    September 28,    September 29,
                 2013             2012             2013             2012
Net Sales        $ 67,310,853     $ 71,671,126     $ 209,738,971    $ 228,411,988
Cost of sales     56,629,738     60,097,281     174,045,648    192,508,241 
Gross profit       10,681,115       11,573,845       35,693,323       35,903,747
                                                                    
Selling,
general and        8,354,912        7,570,491        25,507,577       24,231,123
administrative
expenses
Legal
settlement and     -                328,415          3,600,161        455,415
related costs
Other income      (94,227    )    (174,445   )    (827,008    )   (766,585    )
Operating          2,420,430        3,849,384        7,412,593        11,983,794
income
                                                                    
Interest          315,963        149,710        537,354        729,520     
expense
Income before      2,104,467        3,699,674        6,875,239        11,254,274
income taxes
                                                                    
Income tax
expense           573,030        129,183        2,114,865      (195,134    )
(benefit)*
Net income       $ 1,531,437     $ 3,570,491     $ 4,760,374     $ 11,449,408  
                                                                    
Income per
share:
Basic            $ 0.09           $ 0.22           $ 0.30           $ 0.72
Diluted            0.09             0.22             0.29             0.71
Shares used in
the
computation of
income per
share:
(Adjusted for
5% stock
dividend paid
on June 3,
2013)
Basic              16,160,518       15,966,506       16,087,864       15,945,830
Diluted            16,546,113       16,243,852       16,425,542       16,209,108
                                                                                  

* The Company reported a tax benefit for the first nine months of 2012,
resulting from the utilization of previously unrecognized net operating loss
carryforwards.

Supreme Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
                                                          
                                             September 28,   December 29,
                                             2013            2012
                                                             
Assets
Current assets                               $ 69,613,773    $ 61,007,286
Property, plant and equipment, net             44,733,676      42,937,988
Other assets                                  1,295,885      1,142,809
Total assets                                 $ 115,643,334   $ 105,088,083
                                                             
Liabilities
Current liabilities                          $ 26,762,954    $ 22,363,408
Long-term liabilities                         16,569,948     15,561,793
Total liabilities                              43,332,902      37,925,201
Total stockholders' equity                    72,310,432     67,162,882
Total liabilities and stockholders' equity   $ 115,643,334   $ 105,088,083
                                                               

Supreme Industries, Inc. and Subsidiaries
Reconciliation of Net Income and Net Income Per Share
                                                           
               Three Months Ended               Nine Months Ended
               September 28,   September 29,    September 28,   September 29,
               2013            2012             2013            2012
                                                                
Net income     $  1,531,437    $ 3,570,491      $  4,760,374    $ 11,449,408
Legal
settlement
and related       -            227,392*            2,492,730    315,327*
costs, net
of tax
Adjusted
income tax       -             (1,008,858 )     -             (3,657,018 )
expense**
Adjusted net   $  1,531,437    $ 2,789,025      $  7,253,104    $ 8,107,717
income
                                                                
                                                                
Per-share
Data
                                                                
Net Income:
Basic          $  0.09         $ 0.22           $  0.30         $ 0.72
Diluted           0.09           0.22              0.29           0.71
Legal
settlement
and related
costs, net
of tax:
Basic             -              0.01              0.15           0.02
Diluted           -              0.01              0.15           0.02
Adjusted
income tax
expense:**
Basic             -              (0.06      )      -              (0.23      )
Diluted          -             (0.06      )     -             (0.23      )
Adjusted net
income:
Basic          $  0.09         $ 0.17           $  0.45         $ 0.51
Diluted           0.09           0.17              0.44           0.50
                                                                
* Represents proforma tax effected legal costs.
** 2012 proforma income tax expense adjusted to 2013’s normalized statutory
rates.
                                                                
Shares used
in the
computation
of income
per share:
(Adjusted
for 5% stock
dividend
paid on June
3, 2013)
Basic             16,160,518     15,966,506        16,087,864     15,945,830
Diluted           16,546,113     16,243,852        16,425,542     16,209,108

Contact:

Investor and Media Contact:
Supreme Investor Relations
Matthew J. Dennis, CFA, 574-228-4130
 
Press spacebar to pause and continue. Press esc to stop.