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Spartan Motors Reports Operating Income of $1.8 Million in Third Quarter of 2013



 Spartan Motors Reports Operating Income of $1.8 Million in Third Quarter of
                                     2013

All Business Segments Post Operating Income

PR Newswire

CHARLOTTE, Mich., Oct. 29, 2013

CHARLOTTE, Mich., Oct. 29, 2013 /PRNewswire/ --  

(Comparisons below are to Q3 2012)

  o Net sales of $126.1 million, up 11.7% from $112.9 million

       o Delivery & Service revenue increased to $54.9 million from $49.0
         million, up 12.0%
       o Emergency Response revenue rose to $42.9 million from $39.9 million,
         up 7.5%
       o Specialty Vehicles revenue rose to $28.2 million from $23.9 million,
         up 18.0%

  o Gross margin of 12.8% of sales versus 11.5%
  o Operating income of $1.8 million compared to an operating loss of $0.3
    million
  o Income tax expense of $1.3 million to adjust year-to-date provision to an
    expected rate of 20% for 2013
  o Net income of $0.6 million, or $0.02 per diluted share, compared to a net
    loss of $0.3 million, or $0.01 per diluted share
  o Consolidated order backlog at September 30, 2013 was $231.9 million, up
    37.8% from $168.3 million at September 30, 2012

Spartan Motors, Inc. (NASDAQ: SPAR) today announced operating income of $1.8
million for the third quarter of 2013.  After an income tax provision of $1.3
million to adjust income tax expense for 2013 to a projected 20% rate for the
year, Spartan reported net income of $0.6 million, or $0.02 per diluted
share.  In the third quarter of 2012, the Company reported an operating loss
of $0.3 million and a net loss of $0.01 per diluted share.  Spartan reported a
cash balance of $20.0 million as of September 30, 2013, up from $15.6 million
at June 30, 2013. 

Commenting on the quarter, John Sztykiel, Spartan's Chief Executive Officer,
said, "The third quarter was another quarter in which we executed the plan,
the "I" in DRIVE (Integrated Operational Improvement), and delivered improved
operating results.  All three of our segments, Emergency Response (ER),
Delivery and Service (DSV), and Specialty Vehicles (SV), posted operating
income, a reflection that DRIVE is delivering positive results across Spartan
Motors.  Our backlog grew by 37.8% compared to Q3 2012, and we improved our
cash position by $4.4 million from June 30, 2013, both positive indicators as
we close out 2013." 

Sztykiel continued: "DRIVE is working, and we are moving forward.  This
progress is expected to lead to better operating performance in the fourth
quarter of 2013 and into 2014.  With our major operational initiatives showing
positive results and our greatest challenges behind us, we are shifting more
attention to generating diversified growth."

For the first nine months of 2013, Spartan reported revenue of $343.1 million
versus $346.1 million in the same period of 2012.  The decline in revenue from
the prior year was due to the disruption caused by Utilimaster's move of
walk-in van production to Bristol, Ind. in the first quarter of 2013 and the
completion of a large field service solutions program in mid-2012.  Spartan
booked an operating loss of $3.9 million for 2013 year to date, compared to
operating income of $0.2 million for the first three quarters of 2012. 

Third Quarter 2013 Segment Results:

Delivery & Service Vehicles (DSV)

 (In thousands)               Third Quarter
                              2013        2012        % Change
Delivery & Service Vehicles
        Vehicles              $    49,453 $    40,329 22.6%
        Aftermarket & Service 5,476       8,696       -37.0%
        Total revenue         54,929      49,025      12.0%
        Operating income      1,276       600         112.7%

  o DSV sales grew 12.0% to $54.9 million from $49.0 million in the third
    quarter of 2012.  During the third quarter of 2013, DSV ramped up
    production of a 1,900-unit Reach™ order from FedEx® and added a second
    shift in early August to support this order.  During the third quarter of
    2013, DSV produced 402 Reach™ commercial vehicles, compared to 182 units
    in the third quarter of 2012.  Sales of walk-in vans also increased during
    Q3 2013, more than offsetting slower truck body sales and lower
    aftermarket parts revenue.   
  o Third quarter 2013 operating income increased to $1.3 million from $0.6
    million in the third quarter of 2012.  DSV made progress in its Bristol
    launch efforts during the third quarter of 2013, raising daily walk-in van
    production to an average of 21 per day from 14 per day in Q2 2013.  DSV
    also reduced material handling costs during the third quarter with further
    progress expected in the fourth quarter of 2013.
  o Backlog at the end of Q3 2013 totaled $87.5 million, up from $65.0 million
    at the end of Q3 2012.  Backlog declined sequentially from $100.4 million
    at June 30, 2013, which is typical for the DSV segment as vehicle
    deliveries are lower toward the end of the calendar year. 

Emergency Response (ER)

 (In thousands)          Third Quarter
                         2013        2012        % Change
Emergency Response
        ERC              $    18,675 $    19,772 -5.5%
        ERV              24,227      20,118      20.4%
        Total revenue    42,902      39,890      7.6%
        Operating income 726         89          715.7%

  o ER posted revenue of $42.9 million in Q3 2013, up 7.5% from Q3 2012
    revenue of $39.9 million.  Sales of Emergency Response Vehicles (ERV) rose
    20.4% to $24.2 million from $20.1 million in Q3 2012.  Emergency Response
    Chassis (ERC) sales declined slightly to $18.7 million from $19.8 million
    in the third quarter of 2012, largely due to order timing issues that
    resulted in several completed chassis remaining in inventory at September
    30, 2013.
  o Operating performance improved during the third quarter of 2013 with the
    ER segment reporting operating income of $0.7 million, up from $0.1
    million in the third quarter of 2012.  ERV raised its output as
    demonstrated by its 20.4% revenue growth and made progress in improving
    operating efficiency as well.  Further progress is expected throughout the
    fourth quarter of 2013 and into 2014.  
  o Backlog again increased during the quarter ended September 30, 2013 to
    $119.7 million, compared to $85.9 million at September 30, 2012, and
    $115.1 million at June 30, 2013.  Growth in backlog is due to higher fire
    truck demand, combined with production constraints at our Brandon, SD
    facility.  This has resulted in order-to-delivery times of nine months or
    more in certain cases.  Operational improvement initiatives currently
    underway at Brandon are raising production capacity and operating
    efficiency.  Management expects these initiatives to reduce lead times and
    enhance profitability.
  o Spartan ERV was awarded a contract worth approximately $17 million to
    supply 56 custom chassis fire trucks to the Peruvian Volunteer Fire
    Department Headquarters during 2014.  This contract is scheduled to be
    finalized October 31, with an option for the Peruvian authority to
    purchase an additional 14 units.  Spartan ERV plans to build these units
    in its Ocala, Fla. facility.

Specialty Vehicles (SV)

 (In thousands)                 Third Quarter
                                2013        2012        % Change
Specialty Vehicles
        Motorhome & Bus         $    21,126 $    17,129 23.3%
        Parts and Accessories   5,348       5,534       -3.4%
        Other Specialty Vehicle 1,769       1,279       38.3%
        Total revenue           28,243      23,942      18.0%
        Operating income        1,613       504         220.0%

  o Revenue increased 18.0% to $28.2 million in the third quarter of 2013
    compared to $23.9 million in the third quarter of 2012.  Sales of
    motorhome chassis grew to $21.1 million versus $17.1 million a year ago
    due to market share gains made by a major customer.   Production of Isuzu
    N-series trucks also increased during the third quarter of 2013, more than
    offsetting a slight decline in Aftermarket Parts & Accessories sales
    compared to the prior year. 
  o Operating income grew to $1.6 million in Q3 2013 from $0.5 million due to
    revenue growth and the positive impact from turnaround efforts in the
    motorhome chassis business that began in early 2012. 
  o Order backlog at September 30, 2013 rose to $24.7 million from $17.4
    million at September 30, 2012 due to motorhome chassis backlog nearly
    doubling from the prior year.  On a sequential quarter basis, backlog
    increased from $17.6 million at June 30, 2013 on the strength of motorhome
    chassis orders.   
  o During the third quarter of 2013, SV's Aftermarket Parts & Accessories
    (APA) group was notified it had received a Gold DLA Land and Maritime
    Recognition for Excellence Award for 2012 from the Defense Logistics
    Agency.  This was the fourth consecutive year that APA has received the
    Gold award.  APA earned a perfect score of 100 for delivery and quality
    performance with over 1,500 shipments made during the year. 

Fourth Quarter 2013 Outlook

Lori Wade, Interim Chief Financial Officer, stated, "We expect the fourth
quarter of 2013 to be profitable, with operating results comparable to those
of the third quarter of 2013.  The industry-wide slowdown in commercial truck
orders that began in Q3 2013, along with certain chassis availability issues,
is negatively impacting our fourth quarter sales and operating income
forecast.  As a result, we anticipate a modest loss for the full year due to
Bristol move- and launch-related costs incurred in the first quarter of 2013. 

"We are confident in our outlook for profitable growth as we close out 2013
and prepare for 2014.  Our confidence in the future is demonstrated by
Spartan's Board of Directors' declaration of a semi-annual dividend of $0.05
per share, marking more than 20 consecutive years of paying a regular
dividend."

Business Update

Spartan's CEO John Sztykiel said, "The third quarter was about improved
operating performance in all three of our business segments, plus the strength
of our brands as demonstrated by backlog growth and ERV's selection to produce
56 fire trucks for Peru.  We competed head-on with other major fire truck
manufacturers for this order and emerged on top.  This was a big win and a
positive addition to our 2014 outlook.

"We realize we face challenges that temper our optimism, but we are meeting
those challenges and overcoming them, making incremental gains each quarter. 
The ER and SV segments are moving in the right direction.  Despite some
seasonal softening in the DSV segment, its overall direction is positive.  Two
of our major fleet customers recently indicated their e-commerce ground
deliveries had increased this year, with further growth expected through the
holiday season.  We will continue to execute DRIVE and expect to show improved
performance in the fourth quarter of 2013 and 2014 as well."

D.R.I.V.E. is Spartan's operating strategy based on five tenets:

  o Diversified Growth
  o Redefining New Technologies
  o Integrated Operational Improvement
  o Vibrant Culture
  o Extend Our Core ... Spartan Chassis

Conference Call, Webcast and Investor Information
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 visit www.spartanmotors.com. 

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 1,700 associates at facilities in Michigan, Pennsylvania, South
Dakota, Indiana, Florida and Texas. Spartan reported sales of $471 million in
2012 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 projections, financial strength, future plans, objectives,
and the performance of our products and operations. 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 assumptions that 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    December
                                                                      30,          31,
                                                                      2013
                                                                      (Unaudited)  2012
ASSETS
Current assets:
                                                                      $            $      
Cash and cash equivalents                                              19,964         
                                                                                   21,748
Accounts receivable, less allowance of $964 and $1,021                52,299       47,139
Inventories                                                           82,374       67,591
Deferred income tax assets                                            6,291        6,291
Income taxes receivable                                               2,683        3,011
Assets held for sale                                                  716          716
Other current assets                                                  2,534        6,027
Total current assets                                                  166,861      152,523
Property, plant and equipment, net                                    55,850       59,122
Goodwill                                                              20,815       20,815
Intangible assets, net                                                10,334       11,052
Other assets                                                          2,052        1,639
                                                                      $            $      
TOTAL ASSETS                                                           255,912      
                                                                                   245,151
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
                                                                      $            $      
Accounts payable                                                       32,917         
                                                                                   23,000
Accrued warranty                                                      7,433        6,062
Accrued customer rebates                                              2,144        2,299
Accrued compensation and related taxes                                6,735        7,748
Deposits from customers                                               12,108       6,386
Other current liabilities and accrued expenses                        6,420        8,113
Current portion of long-term debt                                     92           82
Total current liabilities                                             67,849       53,690
Other non-current liabilities                                         2,905        3,071
Long-term debt, less current portion                                  5,275        5,207
Deferred income tax liabilities                                       4,454        4,454
Shareholders' equity:
Preferred stock, no par value: 2,000 shares authorized (none issued)  -            -
Common stock, $0.01 par value; 40,000 shares authorized; 34,116
and                                                                   341          339

   33,862 outstanding
Additional paid in capital                                            74,277       72,873
Retained earnings                                                     100,811      105,517
Total shareholders' equity                                            175,429      178,729
                                                                      $            $      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             255,912      
                                                                                   245,151

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
                            Three Months Ended          Nine Months Ended

                            September 30,               September 30,
                            2013           2012         2013       2012
Sales                       $              $            $          $    
                             126,074       112,857       343,084    346,087
Cost of products sold       109,943        98,346       304,981    294,871
Restructuring charge        -              1,543        -          5,760
Gross profit                16,131         12,968       38,103     45,456
Operating expenses:
Research and development    2,726          2,909        8,424      9,902
Selling, general and        11,593         10,234       33,628     33,388
administrative
Restructuring charge        -              100          -          1,976
Total operating expenses    14,319         13,243       42,052     45,266
Operating income (loss)     1,812          (275)        (3,949)    190
Other income (expense):
Interest expense            (79)           (81)         (235)      (253)
Interest and other income   173            178          433        434
Total other income          94             97           198        181
(expense)
Income (loss) before taxes  1,906          (178)        (3,751)    371
Taxes                       1,343          149          (750)      362
Net earnings (loss)         $              $            $          $          
                            563             (327)        (3,001)        9
Basic net earnings (loss)   $              $            $          $          
per share                    0.02          (0.01)        (0.09)    0.00
Diluted net earnings (loss) $              $            $          $          
per share                    0.02          (0.01)        (0.09)    0.00
Basic weighted average      34,133         33,374       33,502     33,795
common shares outstanding
Diluted weighted average    34,182         33,374       33,502     33,824
common shares outstanding

Three Months Ended September 30,  2013 (amounts in thousands of dollars)
                 Business Segments
                 Emergency    Delivery &   Specialty
                 Response     Service      Vehicles   Other      Consolidated
                              Vehicles
Emergency        $            $            $          $          $        
Response Chassis  18,675             -          -            -   18,675
Sales
Emergency
Response Vehicle 24,227       -            -          -          24,227
Sales
Utilimaster      -            49,453       -          -          49,453
Vehicle Sales
Motorhome        -            -            21,126     -          21,126
Chassis Sales
Other Specialty  -            -            1,769      -          1,769
Vehicles
Aftermarket
Parts and        -            5,476        5,348      -          10,824
Assemblies
Total Sales      $            $            $          $          $      
                  42,902      54,929        28,243           -   126,074
Depreciation and $            $            $          $          $          
Amortization         347      1,062        361          621      2,391
Expense
Operating Income $            $            $          $          $          
(Loss)               726      1,276         1,613     (1,803)    1,812
Segment Assets   $            $            $          $          $      
                  79,840      81,728        29,750    64,584     255,912

Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Unaudited
Period End Backlog (amounts in thousands of dollars)
                   Sept. 30,    June 30,     March 31,   Dec. 31,   Sept. 30,
                   2013         2013         2013        2012       2012
Emergency Response $ 27,137     $ 28,388     $ 34,053    $  37,005  $   32,454
Chassis*
Emergency Response 92,556       86,760       70,023      58,764     53,458
Vehicles*
Total Emergency    119,693      115,148      104,076     95,769     85,912
Response Backlog
Motorhome Chassis  22,104       14,166       13,736      13,453     12,863
*
Other Vehicles*    -            -            3,056       3,968      -
Aftermarket Parts  2,635        3,437        7,319       9,179      4,536
and Assemblies
Total Specialty    24,739       17,603       24,111      26,600     17,399
Vehicles Backlog
     Delivery &    87,492       100,399      100,394     39,656     65,026
Service Vehicles *
Total Backlog      $231,924     $233,150     $228,581    $162,025   $  168,337
* Anticipated time to fill backlog orders at September 30, 2013; 4 months or
less for emergency
response chassis; 10 months or less for emergency response vehicles; 3 months
or less for motorhome
chassis; 6 months or less for delivery and service vehicles.

 

SOURCE Spartan Motors, Inc.

Website: http://www.spartanmotors.com
Contact: Lori Wade, Interim CFO, Spartan Motors, Inc., (517) 543-6400; Greg
Salchow, Director IR & Treasury, Spartan Motors, Inc., (517) 543-6400
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