EX-99.1 2 spmex991_042408.htm SPARTAN MOTORS EXHIBIT 99.1 TO FORM 8-K Spartan Motors Exhibit 99.1 to Form 8-K - 04/24/08

EXHIBIT 99.1

Spartan Motors, Inc.


 

1000 Reynolds Rd.   Charlotte, MI 48813   USA
Telephone 517.543.6400   Facsimile 517.543.5403
Web Page - www.spartanmotors.com



FOR IMMEDIATE RELEASE

Spartan Motors Highlights Quarterly Results

 

Net sales of $264.1 million; Increased 11.2% compared to fourth quarter 2007

 

Quarterly earnings of $0.45 per diluted share; Increased 80% compared to fourth quarter 2007

 

Consolidated backlog of $237.3 million; Decreased 29.9% compared to fourth quarter 2007

 

Return on invested capital of 42.6%; Increased 55.5% compared to fourth quarter 2007

 

Gross margin of 15.4%; Increased 21.3% compared to fourth quarter 2007

CHARLOTTE, Michigan, April 24, 2008 - Spartan Motors, Inc. (NASDAQ: SPAR) reported its best quarter in company history with a 84.8 percent year-over-year increase in revenues and a 105.1 percent year-over-year increase in net earnings.

First Quarter Results
Spartan reported net earnings of $14.8 million, or $0.45 per diluted share, on net sales of $264.1 million in the first quarter ended March 31, 2008, compared with net earnings of $7.2 million, or $0.22 per diluted share, on net sales of $142.9 million in same quarter of 2007.

"The first quarter was an illustration of our flexible manufacturing model, which enabled us to take advantage of our multiple market strategy," said John Sztykiel, president and CEO of Spartan Motors. "As we experienced lower demand for motorhome chassis, we emphasized our operational focus on products for our military and emergency-rescue customers. We rescaled our motorhome chassis operations to accommodate the expected decrease in industry demand. The result was increased sales and improved efficiencies."

Spartan Motors' consolidated backlog decreased 5.1 percent year-over-year to approximately $237.3 million as of March 31, 2008. Spartan Motors anticipates fulfilling its current backlog orders by January 2009. The current backlog does not include the $45 million order from General Dynamics Land Systems and Force Protection announced in April 2008.

Spartan reported gross margin of 15.4 percent in the first quarter of 2008, a decrease compared with gross margin of 17.3 percent in the same period in 2007, but a 21.3 percent improvement over gross margin of 12.7 percent for the 2007 fourth quarter. Spartan attributed the year-over-year decrease in gross margin to product mix and volume pricing pressures from its military customers. Spartan reported the increase in gross margin compared to the 2007 fourth quarter was due to improved operational efficiencies.

Spartan Chassis
Sales at Spartan Chassis, the company's largest subsidiary and operating unit, increased 91.6 percent year-over year to $245.3 million for the 2008 first quarter. Sales from Spartan Chassis were 92.9 percent of Spartan Motors' total consolidated sales in the 2008 first quarter. First quarter net earnings at Spartan Chassis improved 99.1 percent year-over-year, and the unit's backlog as of March 31, 2008 increased 6.9 percent year-over-year.

Spartan's chassis sales to the Class A diesel motorhome market decreased 32.1 percent year-over-year in the 2008 first quarter, a favorable comparison to the 33.3 percent year-over-year decrease in industry wholesale shipments for the first two months of 2008, the latest data available from the Recreational

-more-




Spartan Motors / Page 2 of 6

Vehicle Industry Association (RVIA). Spartan's backlog for RV chassis decreased 53.6 percent year-over-year to $17.5 million as of March 31, 2008.

Sales of fire truck chassis decreased 2.9 percent in the first quarter of 2008 compared to the same period of last year. Backlog for fire truck chassis at the end of the 2008 first quarter was $70.7 million, a 16.2 percent decrease compared to the 2007 first quarter. Compared to the fourth quarter 2007, backlog for fire truck chassis increased 17.1 percent as Spartan's OEM customers improved production in response to better competitive conditions.

Other product sales, including specialty chassis for MRAP military vehicles, and Spartan Chassis' growing service, parts and accessories (SPA) business, increased 330.2 percent year-over-year in the first quarter of 2007. Backlog for other products increased 86.5 percent year-over-year to $99.2 million as of March 31, 2008.

Emergency Vehicle Team (EVTeam)
Spartan's EVTeam operating unit, consisting of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 13.3 percent year-over-year increase in sales for the 2008 first quarter. Though the unit posted a net loss for the quarter, the EVTeam reported a 39.6 percent improvement in segment bottom-line compared to the first quarter of 2007, and a 75.5 percent improvement compared to the fourth quarter of 2007.

Financial Position
Spartan reported an operating cash flow decrease in the 2008 first quarter of $26.6 million compared to a decrease of $6.6 million in the same quarter of 2007, driven largely by increased working capital needs required by the 84.8 percent year-over-year increase in sales in the 2008 first quarter.

On a consolidated basis, Spartan posted a return on invested capital (ROIC) of 42.6 percent in the first quarter of 2008, compared to ROIC of 25.7 percent for the same quarter in 2007. Spartan defines return on invested capital as operating income less taxes, on an annualized basis, divided by total shareholders' equity.

The company ended the quarter with $84.6 million in long-term debt, which includes financing for Spartan Chassis' new facilities, as well as growth in working capital to support the sales increase. Spartan reported $5.3 million in cash and cash equivalents at the end of the 2008 first quarter.

Future Outlook
"We believe our improved production efficiencies, along with our strong consolidated backlog, will help generate significant cash flow in the second half of 2008, which will be utilized to grow the business and reduce debt," said Sztykiel. "Based on key indicators such as increased emergency-rescue orders in the first quarter, a slight improvement in motorhome chassis orders in March, the recent new orders from two of our military customers, we are optimistic about 2008, yet we remain mindful of the difficult economic conditions affecting one of our core markets.

"Looking ahead to the future, we remain a strategic supplier to the hardened vehicle market for the U.S. and allied foreign militaries for MRAP and similar programs. We are promoting six new products in 2008 that will drive sales starting in 2009. At Spartan Chassis, we are entering the commercial part of the fire truck chassis and the First Response All Call (FRAC) market through the Furion chassis. We are also adding more body up-fit work to our motorhome chassis.

"At Crimson Fire, we are promoting the Boomer, entering the Government Services Administration/Wildfire (GSA) market and showing a FRAC product developed jointly with Road Rescue. At Road Rescue, we are adding a new handicap accessible transport ambulance in addition to the joint FRAC product with Crimson Fire. Between these new market opportunities and our growing service, parts and accessories business, we like our prospects for 2009 and beyond."




Spartan Motors / Page 3 of 6

Conference Call & Webcast
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."

About Spartan Motors
Spartan Motors, Inc. (www.spartanmotors.com) designs, engineers and manufactures custom chassis and vehicles for the recreational vehicle, fire truck, ambulance, emergency-rescue and specialty vehicle markets. The Company's brand names - SpartanTM, Crimson FireTM, Crimson Fire AerialsTM, and Road RescueTM - are known for quality, value, service and being the first to market with innovative products. The Company employs approximately 1,300 at facilities in Michigan, Pennsylvania, South Carolina, and South Dakota. Spartan reported sales of $681.9 million in 2007 and is focused on becoming the premier manufacturer of specialty vehicles and chassis in North America.

This release contains forward-looking statements, including, without limitation, statements concerning our business, future plans and objectives and the performance of our products. Forward looking statements are identifiable by words such as "believe," "anticipate," "will," "sustain," and "continue." These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Technical complications may arise that could prevent the prompt implementation of the plans outlined above. The company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the company's Annual Report on Form 10-K filing and other filings with the United States Securities and Exchange Commission (available at http://www.sec.gov). Government contracts and subcontracts typically involve long payment and purchase cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification development and changes, price negotiations and milestone requirements. An announced award of a governmental contract is not equivalent to a finalized executed contract and does not assure that orders will be issued and filled. Government agencies also often retain some portion of fees payable upon completion of a project and collection of contract fees may be delayed for long periods, which can negatively impact both prime contractors and subcontractors. The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise, except as required by law.

###

CONTACT:

 

 

 

John Sztykiel, CEO, or Jim Knapp, CFO
Spartan Motors, Inc.
(517) 543-6400

Jeff Lambert or Ryan McGrath
Lambert, Edwards & Associates, Inc.
(616) 233-0500 / rmcgrath@lambert-edwards.com





Spartan Motors / Page 4 of 6

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended March 31, 2008 and 2007
 
 

 


 

March 31, 2008

 

March 31, 2007

 
 

$-000-


 

%


 

$-000-


 

%


 
                 

Sales

264,095

     

142,882

     

Cost of Products Sold

223,465


 
 
 

118,190


 
 
 

Gross Profit

40,630


 

15.4


 

24,692


 

17.3


 
                 

Operating Expenses:

               

   Research and Development

4,688

 

1.8

 

3,790

 

2.7

 

   Selling, General and Administrative

12,540


 

4.7


 

9,482


 

6.6


 

Total Operating Expenses

17,228

 

6.5

 

13,272

 

9.3

 
   
 
 
 
 
 
 
 

Operating Income

23,402


 

8.9


 

11,420


 

8.0


 
                 

Other Income (Expense):

               

   Interest Expense

(732

)

(0.3

)

(246

)

(0.2

)

   Interest and Other Income

93


 

0.0


 

137


 

0.1


 

Total Other Income (Expense)

(639

)

(0.3

)

(109

)

(0.1

)

   
 
 
 
 
 
 
 

Earnings before Taxes on Income

22,763


 

8.6


 

11,311


 

7.9


 
                 

Taxes on Income

7,982

 

3.0

 

4,104

 

2.9

 
   
 
 
 
 
 
 
 

Net Earnings

14,781


 

5.6


 

7,207


 

5.0


 
                 
   
 
 
 
 
 
 
 

Basic Net Earnings per Share

0.46


 
 
 

0.23


 
 
 
                 
   
 
 
 
 
 
 
 

Diluted Net Earnings per Share

0.45


 
 
 

0.22


 
 
 
                 
                 

Basic Weighted Average Common Shares Outstanding

31,954

     

31,655

     
                 
                 

Diluted Weighted Average Common Shares Outstanding

32,512

     

32,610

     





Spartan Motors / Page 5 of 6

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 
 
 

 


 

March 31, 2008

 

December 31, 2007

 
 

$-000


 

$-000


 
             

ASSETS

         

 

Current assets:

         

 

   Cash and cash equivalents

$

5,298

 

$

13,527

 

   Accounts receivable, net

 

171,708

   

132,907

 

   Inventories

 

95,461

   

103,076

 

   Deferred income tax assets

 

6,925

   

6,925

 

   Other current assets

 

3,461


 
 

1,978


 

      Total current assets

 

282,853

   

258,413

 

           

 

Property, plant and equipment, net

 

59,292

   

56,673

 

Goodwill

 

2,457

   

2,457

 

Deferred income tax assets

 

775

   

775

 

Other assets

 

261


 
 

346


 

Total assets

$


345,638


 

$


318,664


 

           

 

LIABILITIES AND SHAREHOLDERS' EQUITY

         

 

Current liabilities:

         

 

   Accounts payable

$

71,790

 

$

90,769

 

   Accrued warranty

 

11,536

   

10,824

 

   Accrued compensation and related taxes

 

8,748

   

10,431

 

   Accrued vacation

 

1,951

   

1,758

 

   Accrued customer rebates

 

1,994

   

1,963

 

   Deposits from customers

 

6,163

   

5,540

 

   Taxes on income

 

8,361

   

551

 

   Other current liabilities and accrued expenses

 

4,163

   

3,367

 

   Current portion of long-term debt

 

523


 
 

522


 

      Total current liabilities

 

115,229

   

125,725

 

           

 

Other non-current liabilities

 

1,025

   

1,025

 

Long-term debt, less current portion

 

84,564

   

62,695

 

           

 

Shareholders' equity:

         

 

   Common stock

 

324

   

324

 

   Additional paid in capital

 

63,469

   

62,649

 

   Retained earnings

 

81,027


 
 

66,246


 

      Total shareholders' equity

 

144,820

   

129,219

 

   
 
 
 
 

 

Total liabilities and shareholders' equity

$


$345,638


 

$


318,664


 





Spartan Motors / Page 6 of 6

Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Quarter Ended March 31, 2008

 
 

 


Three Months Ended March 31, 2008 (amounts in thousands)


 

 

Business Segments


           

 

Chassis


 
 

EVTeam


 
 

Other


 
 

Consolidated


 

                   

Motorhome Chassis Sales

38,145

               

38,145

Fire Truck Chassis Sales

29,737

         

(5,449

)

 

24,288

EVTeam Product Sales

 

   

24,252

         

24,252

Other Product Sales

177,410


 
 
 
 
 
 
 
 

177,410


 

 

                 

Total Net Sales

245,292


 
 

24,252


 
 

(5,449


)


 

264,095


 

 

                 

Interest Expense (Income)

(51

)

 

398

   

385

   

732

Depreciation Expense

589

   

281

   

457

   

1,327

Segment Net Earnings (Loss)

16,644

   

(436

)

 

(1,427

)

 

14,781



Period End Backlog (amounts in thousands)


 

 

March 31, 2007


 

June 30, 2007


 

September 30, 2007


 

December 31, 2007


 

March 31, 2008


                   

  Motorhome Chassis *

37,679

 

23,768

 

26,097

 

27,312

 

17,465

  Fire Truck Chassis *

84,416

 

72,097

 

67,071

 

60,374

 

70,720

  Other Product *

53,178


 

131,801


 

228,803


 

199,362


 

99,153


    Total Chassis

175,273

 

227,666

 

321,971

 

287,048

 

187,338

  EVTeam Product *

74,843


 

62,691


 

61,178


 

51,316


 

49,975


                   

Total Backlog

250,116


 

290,357


 

383,149


 

338,364


 

237,313



*

Anticipated time to fill backlog orders; 2 months or less for motorhome chassis and 4-10 months for fire truck chassis, other product and EVTeam product