Spartan Motors Announces Fourth Quarter and 2003 Year-End Results
CHARLOTTE, Mich., Feb. 19 /PRNewswire-FirstCall/ -- Spartan Motors,
Inc. today announced results for the fourth quarter and 2003 year-
end, highlighted by continued momentum in motorhome and fire truck
chassis sales and the completion of key operating initiatives. The
Charlotte, Mich.-based manufacturer of custom motorhome chassis,
fire truck chassis and emergency-rescue vehicles reported net
earnings of $1.3 million, or $0.10 perdiluted share, on net sales
of $61.1 million for the fourth quarter of 2003, versus net
earnings of $2.2 million, or $0.18 per diluted share, on net sales
of $63.4 million for the same quarter of last year. For the full
year, Spartan reported net earnings of $6.0 million, or $0.49 per
diluted share, on net sales of $237.4 million in 2003, compared
with net earnings of $11.7 million, or $0.97 per diluted share, on
net sales of $259.5 million in 2002. "From a pure financial
perspective, 2003 was not a great year, just a good year. However,
it was critical for us to focus on building the foundation and
improving our operations from a long-term perspective," said John
Sztykiel, chief executive officer of Spartan Motors. "Based on
these priorities, we are pleased to report that 2003 was not only
necessary, but a success." Sztykiel continued: "Last year we merged
our two fire truck businesses into one, forming Crimson Fire(R); we
consolidated our Road Rescue ambulance facilities into one plant;
webegan upgrading and expanding the dealer networks for Crimson
Fire and Road Rescue; and we invested in key leadership and R&D
at Crimson to launch an aerial fire truck product line. "By
accomplishing these initiatives and making the necessary
investments in 2003, we are in a stronger position now than we have
been in the last three years. More importantly, we are well
positioned for future growth, especially in the emergency-rescue
marketplace." Spartan said the merger of its fire truck
operationsunder the Crimson Fire(R) brand and the consolidation of
its ambulance operations resulted in approximately $1.4 million in
non-recurring costs in 2003. Despite these investments and a
significant increase in new product development at both Spartan
Chassis and Crimson Fire, the Company generated $11.9 million in
cash flow from continuing operations in 2003 and ended the year
with no long-term debt. Cash reserves increased to $18.5 million
for the fourth quarter of 2003, compared to $15.4 million inthe
prior quarter. During 2003, Spartan Motors issued its first annual
regular cash dividend of $0.10 per share and increased its special
cash dividend to $0.10 per share. The combined dividends represent
a 25.0 percent increase over the amount paid out in 2002 and a
185.7 percent increase over the $0.07 per share paid out in 2001.
Fourth Quarter Operating Highlights During the fourth quarter,
consolidated sales were essentially flat versus the third quarter
of 2003, and down 3.7 percent compared to the fourth quarter of
2002. Spartan reported net sales of $61.1 million in the fourth
quarter of 2003 versus net sales of $63.4 million in the fourth
quarter of 2002. Spartan said stronger fire truck chassis sales
partially offset declines in motorhome chassis and emergency
vehicle team (EVTeam) sales. Consolidated gross margin decreased to
14.9 percent in the fourth quarter of 2003, compared to 16.9
percent for the same period in 2002. Operating margin declined to
3.0 percent in the fourth quarter from 5.0 percent in the
prior-year period. Margins were impacted by lower overhead
absorption due to the sales decline, as well as start-up costs
related to Crimson Fire's Aerial initiative. Spartan's EVTeam
profitability was also negatively impacted by the continuing
ramp-up of Road Rescue's Marion, S.C. facility. Spartan implemented
changes in the fourth quarter which will allow targeted production
rates to be achieved early in the second quarter of 2004. "The core
demographics for both RV and emergency rescue vehicles are very
strong as we move into 2004," said Sztykiel. "From 1990 to 2000,
the RV industry grew at an annual rate of 6.2 percent. More
importantly, the prime buying audience for RVs, the 50 to 70 age
bracket, is expected to expand by 35 percent from 2000 to 2010
versus the previous decade. Elevated consumer confidence, which
stands at its highest point in 18 months, is also a positive
indicator for the market. "In emergency vehicles, Crimson Fire's
order intake grew consistently throughout 2003, culminating in near
record orders for the fourth quarter, and orders for Road Rescue
products were up 27.3 percent in 2003 compared with 2002." Spartan
Chassis Sales of Spartan's motorhome chassis increased for the
third consecutive quarter, growing 4.0 percent from the third
quarter of 2003, but declining from last year's near-record
fourth-quarter levels. The Class A RV market was up slightly in the
fourth quarter, and projections are for continued growth in 2004
spurred by improving consumer confidence and economic conditions,
coupled with favorable demographics. Spartan said it expects to
keep pace with or exceed industry growth in 2004 based on its
strong showing at the Recreational Vehicle Industry Association
(RVIA) show in December 2003. "With the addition of our new
entry-level RV chassis, the Competitor, Spartan now has the
broadest line of diesel chassis and a formidable challenger to the
gas chassis market. We also launched our premium-level RV chassis,
providing the ultimate performance chassis to meet the growing
super- premium segment of the Class A market," Sztykiel said. "We
are already seeing these products open new doors for us and
extending our penetration with existing OEMs. We expect thatour
motorhome chassis sales will benefit from these add-on products in
the second half of 2004." Spartan fire truck chassis sales grew
12.6 percent in the quarter compared with the fourth quarter of
2002 and grew 6.0 percent over the third quarter of 2003. During
2003, Spartan sold more than 500 fire truck chassis, the most ever
in a single year. "We continue to see strong momentum in our fire
truck chassis sales, as well as in the overall Emergency Rescue
market," Sztykiel said. "Increased federal funding, coupled with
increasing safety standards and a general awareness of the
importance of equipping first responders with the right tools to do
their job, has created favorable market conditions. In fact, the
Homeland Security Department's Assistance to Firefighters Grant
Program (AFGP) paid for 1,294 new fire apparatus vehicles in 2003
and the AFGP is expected to fund even more units in 2004."
Emergency Vehicle Team (EVTeam) For the fourth quarter, Spartan
Motors said sales in its EVTeam segment, comprised of Crimson Fire
and Road Rescue, decreased 9.1 percent versus the same quarter of
last year. Increased sales at Crimson Fire were offset by lower
production rates and the resulting lower sales at Road Rescue due
to the ramp-up of the Marion, S.C. facility. "In 2003, 33 percent
of Crimson Fire's orders came from past Quality/Luverne customers,
meaning two-thirds of its sales were from new fire districts, a
testament to their product momentum and to their proprietary
tubular stainless steel body design, which is proving to be a
strong market advantage," said Sztykiel. "At Road Rescue, we did
not achieve full production rates in the fourth quarter as planned,
which impacted revenues. We made staffing and process changes in
the fourth quarter, and we are already seeing improvements. We have
a strong order book at both Crimson Fire and Road Rescue, and
anticipate the EVTeam will perform at a much higher level in 2004.
We have the toughest part of our transition behind us, we have
favorable industry conditions, and we look forward to reaping the
rewards of our investments in new plants, new products and vehicle
innovations." In June 2003, Crimson Fire also announced the opening
of a new facility in Lancaster, Penn. to build its new aerial
ladder product line. Crimson Fire is investing $1.7 million in the
new Crimson aerial business, including $1.0 million in capital
investments and $700,000 in start-up expenses spanning 2003 and
2004. Crimson Fire Aerials is expected to employ more than 30
people in Lancaster by the end of 2004. Crimson said it received
financial incentives from the state of Pennsylvania including
$170,000 in job creation tax credits and customized job training,
as well as a $500,000 low-interest equipment loan. Crimson Fire
Aerials has already received orders in advance of introducing its
new aerial product at the Fire Department Instructors' Conference
(FDIC) in late April 2004. Spartan Profit and Return (SPAR)/Backlog
On a consolidated basis, Spartan posted a return on invested
capital(1) of 8.0 percent in the 2003 year. The decline from its
target of 15-20 percent ROIC reflects the impact of the operational
investments made in 2003. Spartan reported its consolidated backlog
was $95.4 million as of December 31, 2003, an increase of 26.8
percent over the backlog level at December 31, 2002. The Company
said the backlog increase was driven by orders for Road Rescue
ambulances and motorhome chassis. Spartan Motors reported that
Crimson Fire saw its orders grow throughout 2003 and both Crimson
and Road Rescue have strong backlogs. "Spartan Motors is stronger
now than at any time during the last three years. We are filling
out our product line for RV and fire truck chassis, adding an
aerial offering and increasing dealer distribution for Crimson
Fire. Road Rescue continues to show operational improvement to go
along with its strong order backlog. And we look forward to growth
in all our divisions in 2004, as our focus shifts towards driving
top-line growth," Sztykiel said. "As evidenced by our backlog,
which grew 26.0 percent during 2003, our product portfolio gives us
the opportunity for sales growth in the coming year." Fourth
Quarter Earnings Web Cast Spartan Motors will host a conference
call at 10 a.m. Eastern Time today to discuss these results and
current business trends. To listen to the call, please click on the
following link or go to http://www.spartanmotors.com/webcasts.asp .
A replay of the call will be available through 5 p.m. Eastern Time,
Thursday, February 26, 2004. 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 and emergency-rescue markets. The
company's brand names -- Spartan(R), Crimson Fire(R) and Road
Rescue(R) -- are known in their market niches for quality, value,
service and being the first to market with innovative products.
Spartan Motors employs approximately 700 at facilities in Michigan,
Alabama, Pennsylvania, South Carolina, and South Dakota is publicly
traded on The NASDAQ Stock Market under the ticker symbol SPAR. The
statements contained in this news release include certain
predictions and projections that may be considered "forward-looking
statements" under the securities laws. These forward-looking
statements are identifiable by words or phrases indicating that the
Company or management "expects," "believes" or is "confident" that
a particular result "may" or "should" occur, that a particular item
"bodes well," that the Company "looks forward" to a particular
result, or similar statements. These statements involve many risks
and uncertainties that could cause actual results to differ
materially, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's
operations, markets, products, services and prices. Accounting
estimates are inherently forward-looking. Additional information
about these and other factors that may adversely affect these
forward-looking statements are contained in the Company's reports
and filings with the Securities and Exchange Commission. The
Company undertakes no obligation to update or revise any
forward-looking statements to reflect developments or information
obtained after the date of this news release. (1) The Company
defines return on invested capital by calculating operating income,
less taxes, on an annualized basis, divided by total shareholders'
equity. Spartan Motors, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets December 31, December 31, 2003 2002
$-000- $-000- ASSETS Current assets: Cash and cash equivalents
$18,481 $8,082 Accounts receivable, net 19,604 28,823 Inventories
26,588 25,205 Taxes receivable 958 - Other current assets 4,767
4,751 Current assets of discontinued operations - 307 Total current
assets 70,398 67,168 Property, plant and equipment, net 14,784
15,155 Goodwill, net 4,543 4,543 Other assets 1,657 1,446 Total
assets $91,382 $88,312 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable $15,066 $15,940 Other current
liabilities and accrued expenses 2,094 2,202 Accrued warranty 2,538
2,768 Taxes on income - 1,412 Accrued vacation, compensation and
related taxes 3,767 5,449 Deposits from customers 6,797 4,098
Current liabilities of discontinued operations - 9 Total current
liabilities 30,262 31,878 Long-term debt, less current portion - -
Shareholders' equity: Preferred stock - - Common stock 122 120
Additional paid in capital 32,229 30,776 Retained earnings 28,769
25,538 Total shareholders' equity 61,120 56,434 Total liabilities
and shareholders' equity $91,382 $88,312 Spartan Motors, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations Three
Months Ended December 31, 2003 and 2002 December 31, 2003 December
31, 2002 $-000- % $-000- % Sales 61,057 63,428 Cost of Sales 51,973
52,701 Gross Profit 9,084 14.9 10,727 16.9 Operating Expenses:
Research and Development 1,667 2.7 1,747 2.8 Selling, General and
Administrative 5,568 9.2 5,799 9.1 Total Operating Expenses 7,235
11.9 7,546 11.9 Operating Income 1,849 3.0 3,181 5.0 Other Income
(Expense): Interest Expense (99) (0.2) (47) (0.1) Interest and
Other Income (436) (0.6) 99 0.2 Total Other Income (Expense) (535)
(0.8) 52 0.1 Earnings before Equity Investment and Taxes 1,314 2.2
3,233 5.1 Taxes 205 0.4 1,012 1.6 Net Earnings from Continuing Ops.
1,109 1.8 2,221 3.5 Discontinued Operations: Gain on Disposal of
Carpenter 144 0.3 - 0.0 Net Earnings 1,253 2.1 2,221 3.5 Basic Net
Earnings per Share: Net Earnings from Continuing Operations 0.09
0.18 Discontinued Operations: Gain on Disposal of Carpenter 0.01 -
Basic Net Earnings per Share 0.10 0.18 Diluted Net Earnings per
Share: Net Earnings from Continuing Operations 0.09 0.18 Gain from
Discontinued Operations: Gain on Disposal of Carpenter 0.01 -
Diluted Net Earnings per Share 0.10 0.18 Basic Weighted Average
Common Shares Outstanding 12,171 12,013 Diluted Weighted Average
Common Shares Outstanding 12,461 12,505 Spartan Motors, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations Year
Ended December 31, 2003 and 2002 December 31, 2003 December 31,
2002 $-000- % $-000- % Sales 237,372 259,527 Cost of Sales 202,524
213,530 Gross Profit 34,848 14.7 45,997 17.7 Operating Expenses:
Research and Development 7,070 3.0 7,152 2.8 Selling, General and
Administrative 21,604 9.1 21,531 8.2 Total Operating Expenses
28,674 12.1 28,683 11.0 Operating Income 6,174 2.6 17,314 6.7 Other
Income (Expense): Interest Expense (330) (0.1) (348) (0.1) Interest
and Other Income (99) (0.1) 438 0.1 Total Other Income (Expense)
(429) (0.2) 90 0.0 Earnings before Equity Investment and Taxes
5,745 2.4 17,404 6.7 Taxes 1,305 0.5 5,969 2.3 Net Earnings from
Continuing Ops. 4,440 1.9 11,435 4.4 Discontinued Operations: Gain
on Disposal of Carpenter 1,609 0.6 270 0.1 Net Earnings 6,049 2.5
11,705 4.5 Basic Net Earnings per Share: Net Earnings from
Continuing Operations 0.37 1.00 Discontinued Operations: Gain on
Disposal of Carpenter 0.13 0.02 Basic Net Earnings per Share 0.50
1.02 Diluted Net Earnings per Share: Net Earnings from Continuing
Operations 0.36 0.95 Gain from Discontinued Operations: Gain on
Disposal of Carpenter 0.13 0.02 Diluted Net Earnings per Share 0.49
0.97 Basic Weighted Average Common Shares Outstanding 12,123 11,525
Diluted Weighted Average Common Shares Outstanding 12,434 12,013
DATASOURCE: Spartan Motors, Inc. CONTACT: John Sztykiel, CEO, or
Jim Knapp, CFO of Spartan Motors, Inc., +1-517-543-6400; or Jeff
Lambert or Tim Hanson of Lambert, Edwards & Associates, Inc.,
+1-616-233-0500, , for Spartan Motors, Inc. Web site:
http://www.spartanmotors.com/
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