Spartan Reports Improved Sales, Profits in 2Q
Spartan Motors Inc. today (Aug. 2) announced operating results for the second quarter of 2012. Revenues totaled $114.4 million, up 15% from the second quarter of 2011. Spartan reported net income for the second quarter of $2.4 million, or $0.07 per diluted share, compared to a net loss of $2.2 million, or $0.07 per diluted share, in the second quarter of 2011. Excluding restructuring charges of $0.7 million, Spartan posted adjusted operating earnings of $0.08 per diluted share in the second quarter of 2012, versus an adjusted net loss of $0.01 per diluted share in the second quarter of 2011.
CEO John Sztykiel noted, “Our strategy of blended growth combined with improved operating performance is the right plan for Spartan. Our quarterly results showed the progress we have made on both fronts. We expect to make further progress in operational improvements as we relocate Utilimaster’s operations to Bristol (Ind.) and the Reach to Charlotte (Mich.), among other operational initiatives.”
A breakdown by segment showed:
• The Delivery & Service Vehicles (“DSV”) unit posted second quarter 2012 revenue of $47.8 million, up 23.2% from $38.8 million in the second quarter of 2011. Sales of walk-in vans, truck bodies and aftermarket products including keyless entry, all rose from the prior-year second quarter. Vehicles sales rose to $25.0 million from $22.9 million the previous year while aftermarket parts and field service solutions revenue totaled $22.7 million compared to $15.8 million.
• Spartan’s Emergency Response (“ERC”) and Recreational & Specialty (“RSC”) chassis businesses posted higher sales during the second quarter of 2012 compared to the prior-year period. Sales at the ERC unit totaled $28 million in the most recent quarter, up from $22.2 million in the second quarter of 2011. Revenue for RSC increased to $16.2 million in the second quarter of 2012 versus $15.2 million in the prior-year second quarter.
• Sales at Spartan’s Emergency Response Vehicles (“ERV”) group rose to $15.6 million in the second quarter of 2012, from $13.9 million in the second quarter of 2011. ERV sales grew from the prior year despite a short-term lack of commercial chassis availability during the quarter. One of the two suppliers affected returned to more normal chassis production toward the end of the second quarter of 2012, thereby alleviating most of the chassis shortage. The shortage of commercial chassis negatively impacted second quarter 2012 revenue by approximately $1.2 million.
Spartan’s gross margin excluding restructuring items was 16.9% in the second quarter of 2012 versus 14.5% in the second quarter of 2011. Positively impacting gross profit and gross margin were higher chassis production volumes, favorable mix at Utilimaster due to higher aftermarket parts sales, plus improved operating efficiency throughout the Company. Including restructuring items of $0.6 million in the second quarter of 2012 and $1.7 million in the second quarter of 2011, gross margin was 16.4% and 12.7% for the second quarter of 2012 and 2011, respectively. Restructuring charges in the second quarter of 2012 were mainly related to the relocation of DSV’s Utilimaster operations to Bristol, Ind.
Operating expenses in the second quarter of 2012 totaled $14.8 million, or 12.9% of sales, excluding restructuring charges, compared to $15.3 million, or 15.4% of sales, in the second quarter of 2011. Restructuring charges in the second quarter of 2012 were $0.1 million, or 0.1% of sales, versus $1.1 million, or 1.1% of sales in the second quarter of 2011. Restructuring charges for the most recent quarter were due primarily to the transfer of Reach walk-in van production to Spartan’s Charlotte, Mich. facility. Including restructuring charges, operating expense in the second quarter of 2012 was $14.9 million or 13.0% of sales, compared to $16.3 million or 16.4% of sales in the prior-year second quarter.
Regarding the company’s outlook, CFO Joe Nowicki stated, “Our expectations for the year remain largely unchanged. We expect 2012 revenue to increase from 2011 in the mid- to upper-single digits, a slight increase from our last update. We are adjusting our projected gross margin for the year down slightly, to the 14.5 – 15% range, with operating expenses of 12 – 12.5%. For the year, we expect revenue growth in our Emergency Response businesses as well as at Utilimaster, but remind investors that Utilimaster’s margins will be negatively impacted by the completion of our keyless entry program in July and less efficient vehicle production until the relocation to Bristol is complete. We continue to move forward with our initiatives and expect to generate continued profitability in future quarters.”
To read the entire report click here.