Consolidated Backlog Up 57.3 Percent; Return on Invested Capital
Improves to 16.2 Percent CHARLOTTE, Mich., Oct. 26
/PRNewswire-FirstCall/ -- Spartan Motors, Inc. (NASDAQ:SPAR) today
reported its best-ever third quarter sales and earnings for the
quarter ended Sept. 30, 2006, marked by a 50.7 percent increase in
net earnings and a 21.9 percent increase in net sales. Spartan
Motors, a leading manufacturer of custom motorhome chassis, fire
truck chassis, specialty vehicle chassis and emergency-rescue
vehicles, reported net earnings of $4.1 million, or $0.30 per
diluted share, on net sales of $108.9 million for the third quarter
of 2006, compared with net earnings of $2.7 million, or $0.21 per
diluted share, on net sales of $89.3 million for the third quarter
of 2005. The company attributed its improved quarterly results to
record-level fire truck chassis sales, increased military vehicle
chassis sales and improved performance at Spartan's EVTeam
operating group, consisting of the company's subsidiaries Crimson
Fire, Crimson Fire Aerials and Road Rescue, as compared to last
year's third quarter. Spartan also outperformed the overall
softness in the Class A RV market, posting only a modest sales
decline for motorhome chassis as it continues to gain market share.
"This was another strong quarter, driven by the strength of our
brands, as reflected in our increased sales and backlog and the
consistency of our execution," said John Sztykiel, president and
CEO of Spartan Motors. "Though conditions in the RV market remain
difficult, we continue to gain market share, and I am more
optimistic than I was three months ago. Consumer confidence has
improved two months in a row, fuel costs have dropped and our RV
backlog is moving in the right direction. "For the first time ever,
sales of Class A diesel motorhomes have surpassed sales of Class A
gas units at the retail level, which demonstrates the desire of
customers for diesel. The continued shift in motorhomes from gas to
diesel bodes well for Spartan Chassis. At the same time, increased
sales of fire truck chassis, fire trucks and military vehicle
chassis have also given us a stronger, more diversified foundation
beyond the RV market, which now makes up less than half of our
total sales. This will ultimately reduce cyclicality from an
earnings perspective." Through the first nine months of 2006,
Spartan's sales increased 20.3 percent and earnings increased 85.4
percent compared to the same period last year. Spartan reported net
earnings of $13.5 million, or $1.03 per diluted share, on net sales
of $321.8 million, for the nine months ended Sept. 30, 2006, the
best nine-month period in company history. "Our growth year-to-date
has been driven by our focus on operations and existing products,
without any major product introductions. We are becoming a
disciplined group of people, working as a team and focused on
execution. Looking ahead to 2007, we plan to introduce several new
products, which we anticipate accelerating our growth into 2008."
Spartan reported its gross margin improved to 15.8 percent in the
third quarter of 2006, compared with 15.1 percent for the same
period in 2005, reflecting improved product mix, pricing, overhead
utilization and labor efficiencies. Operating margin also improved
to 5.7 percent in the third quarter of 2006, compared with 4.8
percent in the same quarter of 2005. Spartan's consolidated backlog
as of Sept. 30, 2006 increased 57.3 percent over last year's
quarter to approximately $230.9 million. Spartan Motors anticipates
filling 35 to 40 percent of its current backlog orders by December
31, 2006. On a consolidated basis, Spartan posted a return on
invested capital (ROIC) of 16.2 percent in the third quarter of
2006, a 19.1 percent increase compared to ROIC of 13.6 percent for
the same quarter in 2005. (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 $5.8 million in long-term debt and $5.6 million in
cash and cash equivalents. Spartan Chassis Third quarter earnings
at Spartan Chassis, the company's largest operating subsidiary,
improved 11.7 percent compared to last year's third quarter, while
sales increased 19.6 percent. Difficult conditions in the RV
industry led to a decrease of 5.9 percent in RV chassis sales
compared to the third quarter of 2005. Industry-wide, the Class A
wholesale market declined by an average of 16 percent for July and
August, the latest data available. Conversely, sales of fire truck
chassis increased 27.3 percent year-over-year, setting a new
quarterly record. "Our RV sales were affected by the overall
downturn in the RV market, though we continue to add market share
and have increased our RV backlog compared to a year ago," said
Sztykiel. "We are certainly encouraged by early indicators of an
uptick in the RV market in the fourth quarter due to lower gas
prices and the highest level of consumer confidence in 2006. For
fire truck chassis, we had our best-ever quarter in terms of sales
and our backlog for fire truck chassis has nearly doubled over last
year." Sales of specialty vehicle chassis, which include military
vehicles, increased 259.0 percent compared to last year's quarter.
In July 2006, BAE Systems awarded Spartan a subcontract to assist
with the production of the Iraqi Light Armored Vehicle (ILAV), a
mine-blast protected vehicle. During the quarter, the company also
received several new subcontract orders from Force Protection, Inc.
for Cougar chassis in addition to those previously announced. "The
increase in fire truck chassis orders has created a production
constraint, which we are in the process of solving with a new
102,000-square- foot manufacturing facility, expected to open in
May 2007. This new facility will alleviate the current capacity
issue, create capacity for new products and accelerate production
rates. We are pleased with how well our associates at Spartan
Chassis have ramped up production in support of the Cougar and ILAV
projects. We have room for growth in this market, as we are only
running at 35 percent capacity for specialty and military vehicles
production, and remain excited about our prospects in specialty
vehicles." Emergency Vehicle Team (EVTeam) Spartan's EVTeam
operating group, consisting of its Crimson Fire, Crimson Fire
Aerials and Road Rescue subsidiaries, narrowed its net loss by 47.0
percent compared to the same quarter of last year. Spartan reported
the improvement was due to a 38.4 percent increase in sales for the
group and a net profit at Crimson Fire, the subsidiary's second
consecutive quarter of profitability. "Crimson Fire and Crimson
Fire Aerials continue to move in the right direction," Sztykiel
said. "As sales accelerate at Crimson Fire and Crimson Fire
Aerials, we also see greater pull-through sales from Spartan
Chassis, which increases total profitability. Road Rescue is also
moving in the right direction, as we are making a concentrated
effort to boost production while reducing costs." Conference Call,
Webcast and Presentation 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
http://www.spartanmotors.com/webcasts.asp. About Spartan Motors
Spartan Motors, Inc. (http://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 --
Spartan(TM), Crimson Fire(TM), Crimson Fire Aerials(TM), and Road
Rescue(TM) -- are known for quality, value, service and being the
first to market with innovative products. The Company employs
approximately 900 at facilities in Michigan, Pennsylvania, South
Carolina, and South Dakota. Spartan reported sales of $343.0
million in 2005 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. 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. Spartan Motors, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations Three
Months Ended September 30, 2006 and 2005 September 30, September
30, 2006 2005 $-000- % $-000- % Sales 108,876 89,315 Cost of
Products Sold 91,709 75,795 Gross Profit 17,167 15.8 13,520 15.1
Operating Expenses: Research and Development 3,092 2.9 2,387 2.7
Selling, General and Administrative 7,852 7.2 6,810 7.6 Total
Operating Expenses 10,944 10.1 9,197 10.3 Operating Income 6,223
5.7 4,323 4.8 Other Income (Expense): Interest Expense (65) (0.1)
(30) (0.0) Interest and Other Income 205 0.2 243 0.3 Total Other
Income (Expense) 140 0.1 213 0.3 Earnings before Taxes on Income
6,363 5.8 4,536 5.1 Taxes on Income 2,289 2.1 1,833 2.1 Net
Earnings 4,074 3.7 2,703 3.0 Basic Net Earnings per Share 0.31 0.22
Diluted Net Earnings per Share 0.30 0.21 Basic Weighted Average
Common Shares Outstanding 13,330 12,533 Diluted Weighted Average
Common Shares Outstanding 13,578 12,814 Spartan Motors, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations Nine
Months Ended September 30, 2006 and 2005 September 30, September
30, 2006 2005 $-000- % $-000- % Sales 321,769 267,557 Cost of
Products Sold 269,161 229,931 Gross Profit 52,608 16.3 37,626 14.1
Operating Expenses: Research and Development 8,903 2.8 6,853 2.6
Selling, General and Administrative 22,580 7.0 19,528 7.3 Total
Operating Expenses 31,483 9.8 26,381 9.9 Operating Income 21,125
6.5 11,245 4.2 Other Income (Expense): Interest Expense (151) (0.0)
(107) (0.0) Interest and Other Income 720 0.2 583 0.2 Total Other
Income (Expense) 569 0.2 476 0.2 Earnings before Taxes on Income
21,694 6.7 11,721 4.4 Taxes on Income 8,146 2.5 4,415 1.7 Net
Earnings 13,548 4.2 7,306 2.7 Basic Net Earnings per Share 1.04
0.58 Diluted Net Earnings per Share 1.03 0.57 Basic Weighted
Average Common Shares Outstanding 12,973 12,515 Diluted Weighted
Average Common Shares Outstanding 13,173 12,778 Spartan Motors,
Inc. and Subsidiaries Condensed Consolidated Balance Sheets
September 30, December 31, 2006 2005 $-000 $-000 ASSETS Current
assets: Cash and cash equivalents $5,563 $9,702 Marketable
securities 1,988 Accounts receivable, net 59,677 37,017 Inventories
55,438 44,265 Deferred income tax assets 3,745 3,745 Taxes
receivable 236 990 Other current assets 11,187 1,949 Total current
assets 135,846 99,656 Property, plant and equipment, net 23,963
18,478 Goodwill 4,543 4,543 Other assets 501 531 Total assets
$164,853 $123,208 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $34,335 $20,746 Accrued warranty
5,919 4,503 Accrued compensation and related taxes 5,465 4,241
Accrued vacation 1,353 1,189 Deposits from customers 9,150 13,640
Other current liabilities and accrued expenses 5,346 4,608 Current
portion of long-term debt 54 53 Total current liabilities 61,622
48,980 Long-term debt, less current portion 5,776 1,317 Deferred
income tax liabilities 309 309 Shareholders' equity: Preferred
stock - - Common stock 138 126 Additional paid in capital 49,441
37,040 Retained earnings 47,567 35,448 Accumulated other
comprehensive loss - (12) Total shareholders' equity 97,146 72,602
Total liabilities and shareholders' equity $164,853 $123,208
DATASOURCE: Spartan Motors, Inc. CONTACT: John Sztykiel, CEO, or
Jim Knapp, CFO, of Spartan Motors, Inc., +1-517-543-6400; or Ryan
McGrath or Jeff Lambert of Lambert, Edwards & Associates, Inc.,
+1-616-233-0500, or Web site: http://www.spartanmotors.com/
http://www.spartanmotors.com/webcasts.asp
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