Spartan Motors Relocating Utilimaster Operations

Spartan Motors Inc. today (Feb. 14) announced that it will relocate Utilimaster Corp.’s manufacturing operations, headquarters and all supporting departments and functions to Bristol, Ind., from the current location in nearby Wakarusa. The move is expected to begin during the second quarter of 2012 and be completed by year end.

According to a press release, the final lease agreements are pending as company officials are working closely with leaders from state, county and local government in Indiana to finalize the negotiation of incentives for the relocation, which will result in continued economic growth and stability for Utilimaster, as well as the Elkhart area.

The move to Bristol, located 20 miles east of Wakarusa, will consolidate Utilimaster’s operations into one facility from its current campus of 16 buildings. Moving into a single plant, combined with lean manufacturing practices, will enable Utilimaster to improve product quality and manufacturing efficiency by reducing operating costs and eliminating non-value added steps. Other highlights include:

• Reducing footprint from 760,000 to 425,000 square feet.

• Campus shrinks from 106 to 26 acres.

• Estimated annual savings of $4 million.

• Improved manufacturing flow, containerization and kitting.

• 80% reduction of material/vehicle movement.

• Production lines will accommodate multiple platforms.

• Increased sub-assembly capacities.

• A new manufacturing showcase for customers.

“The competitive nature of the delivery and service market requires that we continuously assess and improve our operations,” said Tom Gorman, COO of Spartan Motors, parent to industry supplier Spartan Chassis Inc. “The relocation to the Bristol plant will create a safer manufacturing environment for our associates and a platform from which we can accelerate our ongoing quality improvement efforts, in order to grow the Delivery and Service business in the future.

“While Utilimaster continues to perform well, we are taking these steps to ensure the business remains competitive in the long term. The dramatic reduction of non-value added operations represents an opportunity to reduce costs, and we’re focused on ensuring this strategy delivers the right results.”

The Bristol facility features over 425,000 square feet of contiguous manufacturing space that will enable continuous flow and improved work cell layout.

“Utilimaster has experienced significant growth since we acquired the company more than two years ago,” said John Sztykiel, president and CEO of Spartan Motors. “Their successful integration has exceeded our acquisition performance targets and is an important part of Spartan today. Ensuring Utilimaster’s long-term growth and profitability are driving our actions as we consolidate Utilimaster into one modern facility.

“This is the third step of our strategic plan to enhance Utilimaster’s performance. Our first step was to improve operating income in the current facilities; and the second was to bring the Reach to market. Our third step is to consolidate Utilimaster into one modern facility in order to enhance further operational efficiency and income.”

Reflecting the current weakness in the commercial real estate market in Wakarusa, the company will incur an asset impairment charge of $4 million to $6 million in the first quarter of 2012 as a result of closing the facility.

Delivery Vehicles Boost Spartan 3Q Revenues

Charlotte, Mich.-based Spartan Motors Inc. today (Oct. 26) announced improved operating results for the third quarter of 2011 reflecting significant gains in its delivery and service vehicles segment and the ongoing benefits of actions taken earlier in the year to realign operations.

Revenues were $120.3 million, up 21% from the second quarter, driven by increased sales in the delivery and service segment ahead of the peak holiday season, which offset softness in other markets Spartan serves. Also contributing to the improvement in third quarter revenues were sizable orders for aftermarket parts and assemblies. Improved product mix and initial cost savings due to Spartan’s operational realignment in the previous quarter resulted in net income of $3.2 million, or $0.10 per diluted share.

Third quarter 2011 results:

• Net sales of $120.3 million (flat with Q3 2010 sales of $120.6 million).

• Gross margin of 17% of sales (up from 16.4% in Q3 2010)

• Operating expense of $15.2 million (up $0.8 million compared to Q3 2010)

• Net income of $3.2 million 10 cents per diluted share), down from $3.3 million (11 cents per diluted share) a year ago

• Cash from continuing operations of $26.4 million (for the first nine months of 2011)

• Ending consolidated backlog of $142.8 million (down 20.4 percent from Q2 2011)

• Total debt of $5.2 million

• Cash balance of $30.5 million (up $16.0 million from Q4 2010)

“Our top line performance highlighted the strength of our diversified business lines as solid growth in Utilimaster’s business drove outstanding results in our delivery and service vehicles segment,” said John Sztykiel, president and CEO of Spartan Motors. “The performance at Utilimaster helped to offset softness in the recreational vehicle, emergency response and defense markets and helped reduce our exposure to government-dependent revenue streams.

“Our net income for the third quarter validates the restructuring actions we have taken over the last several months and demonstrates our ability to drive significant leverage to the bottom line. Our relationship with Isuzu grows stronger as we approach full capacity with production of the N-Series Gas cab and chassis. As we begin generating sales of the Reach commercial van that will also help us achieve a more diversified revenue mix.”

To view the full report click here.

 

 

Spartan, Isuzu Launch Reach Delivery Vehicle

Utilimaster Corp., a subsidiary of Charlotte, Mich.-based Spartan Motors Inc. specializing in walk-in vans and commercial truck bodies for the delivery and service market, and Anaheim, Calif.-based Isuzu Commercial Truck of America, Inc., one of the world’s largest manufacturers of medium- and heavy-duty trucks, jointly launched the Reach commercial van today (Oct. 25) at Spartan’s Utilimaster plant in Wakarusa, Ind.

Senior management from Utilimaster, Spartan and Isuzu held a ribbon-cutting ceremony and ceremonial gift exchange before an audience of customers, government officials, regional media and special guests.

“The Reach represents a great opportunity to impact our customers’ businesses, significantly reduce both fuel consumption across their fleets as well as their carbon footprint,” said Utilimaster President John Forbes. “Today is the culmination of a focused program that benefited from the global resources and power train capabilities of Isuzu and the market-specific knowledge and product development capabilities of Utilimaster.”

“We are leading – not following – the changing needs of the marketplace,“ Spartan President & CEO John Sztykiel told the assemblage, adding that the Reach is “the biggest breakthrough in the commercial van marketplace in the last 30 years” because of its styling, fuel-conscious drivetrain and durable chassis.

First introduced in March, the Reach – with a Utilimaster-designed body atop an Isuzu NPR ECO-MAX chassis powered by Isuzu’s 3.0-liter diesel engine – offers the functionality of a custom-built work truck along with the styling and ergonomics of a cargo van, Spartan reports. Fuel economy is a key selling point of the Reach, according to Spartan, which claims that it yields 35% better fuel economy than a traditional commercial van.

Spartan claims the Reach offers “best-in-class mileage” and meets EPA emissions standards, yet still provides true commercial truck capabilities and delivers a dramatically lower cost of ownership than traditional walk-in vans.

“The continued diligent work of everyone involved on this product has positioned us for further growth in the delivery and service market,” Sztykiel commented. “Today we celebrate the success of this team and their ability to produce a sustainable product that meets the duty-cycle demands of our customers, improved safety performance and driver ergonomics, as well as an exceptionally low cost of ownership.”

“Powering the Reach is Isuzu’s state-of-the-art, bio-diesel fuel compatible 4JJ1-TC 3.0-liter turbocharged engine mated to an Aisin medium-duty 6-speed automatic transmission,” Spartan’s release states. “Both the engine and transmission have class-leading B10 durability ratings of 310,000 miles, meaning that 90% of units will reach that mileage before requiring an overhaul.

“Utilimaster guided the development of the Reach’s aerodynamic shape, along with its use of composite materials, which together improve fuel efficiency and reduce interior noise,” the release continues. “The lightweight composite materials provide a 700-pound weight savings compared to traditional aluminum and steel materials. The Reach van also employs impact-resistant composite panels designed to reduce overall maintenance costs.”

Spartan’s new Reach, which some in the industry have speculated could have small motorhome applications, has a 151-inch wheelbase and is available in 12-and-14 foot body lengths. With an interior up to 27 inches higher than a conventional domestic van — and ten inches wider than imported vans — the Reach’s cargo area offers 540 or 630 cubic feet of storage, depending on the body length selected, Spartan reports.

Meanwhile, Hodge Patel, district director for 2^nd District Rep. Joe Donnelly, told the Utilimaster crowd that the Reach launch represented yet another step in the recovery of Elkhart County, where the unemployment rate exceeded a “staggering” 20% in March of 2009 during the pit of the recession. Patel applauded Spartan for taking an inventive approach in new product development that helped bring jobs to the area. “We see it right here behind us – a light weight vehicle, better fuel efficiency and a better design,” said Patel.

Spartan Keeps on Rolling, Even in Tough Times

The following is a column authored by Tom Walsh of the Detroit Free Press offering a look at Spartan Motors Inc.’s ability to roll with the times.

“Adapt. Evolve. Lead.”

John Sztykiel, president and CEO of Spartan Motors, kept repeating that mantra during our breakfast last week.

It may be the only way for him to keep his sanity.

In a topsy-turvy business world typified by last week’s stock market spasms, few companies have endured more extreme ups and downs in the past few years than Spartan Motors.

Left defenseless

When I wrote in 2007 about Spartan — a builder of custom chassis and motor vehicles — the company was on a roll.

The Iraq war was in full swing and Spartan had suddenly become a favored supplier of Mine Resistant Ambush Protected (MRAP) armored vehicles to the U.S. military.

For a modest outfit whose previous product mix was mostly fire engines, ambulances and motorhome chassis, “it was like a gold rush,” Sztykiel recalled.

Employment at Spartan, based in Charlotte, about 20 miles southwest of Lansing, doubled to more than 1,000 within 20 months. Sales jumped 89% in two years, but then, as the Iraq war wound down and MRAP orders dried up, plummeted from $844 million in 2008 to $409 million a year later.

Net profit plunged from $42 million in 2008 to $12 million in 2009 and $4 million last year. Spartan started this year with two quarterly losses. Its stock price, near $25 per share in 2007, fell 90% to barely $2 in late 2008 and ’09, and has recently traded near $5, closing Friday at $4.51.

Changing the mix

Sztykiel and his team have had to reinvent Spartan — and they appear to be making progress. Order backlogs have risen 33% so far this year to $179 million.

The big move to shift away from reliance on military orders was the acquisition in late 2009 of Utilimaster, an Indiana-based maker of delivery and service vans.

“Internet shopping and other changes in society are working in their favor,” Sztykiel said of Utilimaster vans used by such companies as UPS and Federal Express.

An alliance with Isuzu followed. Three months ago, Spartan began assembling Isuzu N-series commercial trucks in Charlotte. The N-series had been built at General Motors’ Janesville, Wis., plant until it closed in 2009.

Meanwhile, Isuzu and Utilimaster are partnering on a next-generation commercial van called the Reach, which promises 35% fuel-economy improvement in the segment.

“In 2008,” Sztykiel said, “89% of our business was government-related, including military and emergency-response vehicles. Now it’s only 45% government and 55% private.”

Spartan’s employment in the Charlotte area fell to around to 600 with the decline in MRAP orders, but the ramp-up of Isuzu N-series work has recently added 56 jobs and total Spartan employment is expected to reach 1,750 by year-end, with the biggest clusters in Michigan and Indiana.

Sztykiel expects a return to profitability the second half of this year.

And true to his adapt-evolve-lead mantra, he’s scouting for new revenue streams.

The step-van truck segment where Utilimaster is a market leader “is about 12,000 trucks a year,” he noted. “But the larger market for commercial vehicles, where Ford and Nissan and others play, is about 225,000 units a year.”

“Now if we snag just 2% of that, it would be nearly 5,000 units a year and 400 or 500 more employees …”

 

Spartan CEO Sztykiel Still Upbeat on RV Sector

Editor’s Note: The following is a blog authored by Julian Gothard for Examiner.com.

John Sztykiel, president and CEO of Charlotte, Mich.-based Spartan Motors Inc., said during Tuesday’s (July 26) webcast following the company’s second-quarter earnings report that he remained bullish about Spartan’s future prospects in spite of the company recording a Q2 adjusted net loss of $424,000. The loss came on the back of $2.8 million in restructuring charges and a dramatic 14% drop in sales which cost the company some $16 million in lost revenue.

Sztykiel, who expects growth in both company revenue and earnings in the second half of the year, was upbeat about Spartan’s performance in the recreational vehicle market where, in spite of a slight improvement in the RV market as a whole, Spartan experienced a 26% fall in chassis sales. The Spartan CEO noted that the motorhome sales mix has shifted from high-end diesel to less expensive models in the Class A and Class C markets with some existing customers downsizing and new customers opting for smaller sized motorhomes.

As reported in June, Spartan Motors is relocating in 2012 their motorhome chassis manufacturing operation from Charlotte, to Wakarusa, Ind. Northern Indiana is home to many of Spartan’s chassis customers. Indeed, more than 60% of all RV’s and 58% of all Class A motorhomes are manufactured in the Hoosier State.

Sztykiel reiterated that Spartan’s current focus will remain on motorized RVs principally because of the size of the RV market from a dollar perspective and the RV market’s continued popularity amongst vacationers. An “RV is not only … inexpensive but it gives you the freedom to go wherever you want whenever you want. Thus as we look to the future we’re still very, very excited about it,” he said.

 

Spartan, Utilimaster Granted Tax Abatement

The Wakarusa (Ind.) Town Council passed two resolutions declaring certain Utilimaster Corp. properties as revitalization areas for the purpose of 10-year tax abatements on both real and personal property for Utilimaster and Spartan Motors Inc., which owns Utilimaster.

According to the Goshen News, Utilimaster will be making real estate improvements of approximately $1.88 million, including adding about 6,000 square feet to Plant 11. The company committed to adding 60 additional jobs in return for the tax abatements.

Council member Phil Klotz said Spartan Motors will move part of its motorhome chassis department from Charlotte, Mich., to Wakarusa.

The tax abatement amounts to 100% the first year and goes down to 5% in the 10th year. Although the official abatement documents state the company will be adding 60 jobs, a sign by the road outside the plant says the company is hiring 100 people.

In a separate article, the South Bend Tribune reported that the Spartan chassis will be made at a building already on the Utilimaster property, which consists of four manufacturing and 15 additional buildings.

“One of our 10 strategic directives is customer-centric because in any business model, the closer you can get yourself to the customer, typically the easier it is to be more effective and efficient in growing the business relationship,” John Sztykiel, president and CEO of Spartan Motors, said. “Eighty-two percent of all recreational vehicles are manufactured in northern Indiana.

According to the state, Elkhart County will consider additional property tax abatement at the request of the Economic Development Corp. of Elkhart County. But Sztykiel seemed to downplay the role the incentives played in making the move in a phone interview with the Tribune on Wednesday (June 8).

“Indiana’s a great state and they have done a lot of things right from a business perspective,” he said. “But it simply boils down to we are within minutes of where 80% of the industry is, so just pure logic said this is the right thing to do.”

It was the company’s long-range thinking when it purchased Utilimaster in 2009, he said, adding that the company hopes for additional growth in the future.

“Obviously if the business grows, which we expect it to over time, from an RV perspective, our business would grow,” Sztykiel said.

There is not a whole lot of automation in the production of chassis so if sales grow, so will the work force, he said.

Sztykiel also noted that University of Michigan economist Richard Curtin, an RV industry adviser, has been stressing how speed to market will be even more critical as time goes on because people expect to have their product much faster.

The move of the chassis division ties in directly with that thought process, Sztykie said.

Spartan Motors was formed outside of Lansing in 1976 when a small group of automotive engineers, who had lost their jobs when their company went bankrupt, launched their own business. Today, it employs approximately 1,600 in six states and had $481 million in sales in 2010.

Spartan Motors Inc. Execs Discuss Q1 Results

Spartan Motors Inc. executives conducted a conference call on Tuesday (April 26) to discuss details of their first quarter financial results. Click here to read a transcript of that discussion, courtesy of Seeking Alpha.

Spartan Motors Inc. Reports Q1 Sales Fall 19%

Spartan Motors Inc. today (April 26) announced operating results for the first quarter of 2011. Revenues were $95.1 million, down 19.1% compared to the same quarter of the prior year, which drove a net loss of $900,000, or 3 cents per diluted share, compared to breakeven results for the same period in 2010.

Highlights for the quarter include increased order intake and progress on key strategic initiatives, according to a news release.

Compared to the same quarter of 2010, the first quarter’s revenue and gross margin reflect a product mix shift from emergency response products, recreational vehicle chassis and aftermarket parts and assemblies (APA) to service and delivery vehicles. Results also reflect the impact of a softening emergency response market, partially offset by improvements in the service and delivery market.

Order intake climbed with a 42.7% sequential improvement over the fourth quarter of 2010, driven by service and delivery vehicle and emergency response chassis orders. This improvement is reflected in the consolidated backlog of $166.1 million, up 23.5% from year end.

Management remained focused on all four pillars of its operational plan during the quarter. The four-part operational plan comprised of offering compelling products, growing profitable market share, achieving and maintaining a strong balance sheet and effectively managing the company’s cost structure, is intended to ensure long-term profitable growth and alignment with shareholder interests.

Spartan noted what it called “Profitable Growth Opportunities and Compelling Products.” In this section, it cited the “execution of a multi-year supply agreement with Navistar Engine Group expanded the offering of clean diesel engine technology to include an advanced exhaust gas recirculation (EGR) option on a Spartan Chassis’ Gladiator. Spartan Chassis already offers a selective catalyst reduction (SCR) engine technology that meets the EPA’s 2010 engine emission standards.”

First quarter 2011 results:

• Net sales of $95.1 million (down 19.1% from Q1 2010).
• Gross margin of 13.6% of sales (down from 14.3% in Q1 2010).
• Operating expenses of $14.3 million (down $1.9 million from $16.2 million in Q1 2010).
• Net loss of $900,000 or 3 cents per share.
• Cash from continuing operations of $11.8 million (up $2.6 million from Q1 2010).
• Ending consolidated backlog of $166.1 million (up 23.5% from Q4 2010).
• Debt of $5.2 million.
• Cash balance of $25 million.

“We anticipated a tough environment in the first half of 2011, and while unhappy with the loss, we are moving forward and expect to be in a better position for the second half of 2011,” said said John Sztykiel, president and CEO of Spartan Motors.  ”We made progress in each area of our four-part operational plan during the quarter. Two parts were addressed with the recent acquisition of Classic Fire as it exemplifies our commitment to delivering compelling new products and growing profitable market share. This acquisition also demonstrates our commitment to the emergency response market as we expanded our emergency response line and added leadership talent to our bench.

“The growth of orders and the increase in backlog were driven by new orders for both service and delivery vehicles and fire truck chassis. These improvements are a result of Spartan’s revenue diversification and growth strategy, which includes growth through acquisitions, alliances and organic new product development,” he added.

Fleetwood Deemed ‘Major’ Spartan Customer

Spartan Motors Inc., parent company of Spartan Chassis Inc., has filed its 10-K document with the Securities and Exchange Commission (SEC).

Highlight of business operations, as reported by GuruFocus.com, include the following:

The company’s success depends on its ability to respond quickly to changing market demands and new regulatory requirements. Thus, it emphasizes research and development and commits significant resources to develop and adapt new products and production techniques. The company dedicates a portion of its facilities to research and development projects and focuses on implementing the latest technology from component manufacturers into existing products and manufacturing prototypes of new product lines. The company spent $16.9 million, $17 million and $18.8 million on research and development in 2010, 2009, and 2008, respectively.

In 2010, the company s customer base included two major customers, as defined by sales of more than 10% of total net sales. Sales to BAE Systems  and to Fleetwood RV Inc., which are both customers of Spartan Chassis, were $65.2 million and $48.7 million respectively for 2010.

Sales to customers outside the United States were $14.2 million, $11.1 million and $11.2 million for the years ended Dec. 31, 2010, 2009 and 2008, respectively, or 2.9%, 2.6% and 1.3%, respectively, of sales for those years. All of the company s long-lived assets are located in the United States.

Visit www.spartanmotors.com for a full version of the Spartan 10-K filing.

Spartan Motorhome Chassis Sales Rose 150%

Spartan Motors Inc. today (Feb. 15) announced improved net sales and profitability for its 2010 fourth quarter.

Increased sales volumes, from service and delivery vehicles, aftermarket parts and assemblies (APA) and specialty vehicles, were driven by management’s focus on top-line growth and market diversification, according to a news release from the Charlotte, Mich.-based chassis builder.

In addition, aggressive management of costs and working capital allowed operating income from continuing operations to exceed $4 million, and generate cash from continuing operations of $9.6 million. Backlog declined to $134.5 million reflecting the challenging market conditions the Company will face in the first half of 2011.

In the RV sector, annual motorhome chassis sales were $89 million in 2010, an improvement of 150% year-over-year from 2009. Although still below historical levels, motorhome chassis sales volume improvement reflects the gradual industry recovery.

Fourth quarter 2010 highlights, compared to the same quarter of 2009:

• Net sales of $126.9 million (up 31.4%).
• Gross margin of 15.3% (down from 15.5%).
• Operating expenses of 11.7% of sales (down from 14.7%).
• Net earnings from continuing operations of $3.7 million (up from $100,000).
• Consolidated backlog of $134.5 million (down from $234 million).
• Cash from continuing operations of $9.6 million (up from $5 million).

Full year highlights:

• Net sales of $480.7 million (up 17.4%).
• Gross margin of 15.1% (down from 19.8%).
• Operating expenses of 12.9% of sales (down from 14.7%).
• Net earnings from continuing operations of $7.2 million (down from $13.2 million).
• Cash from continuing operations of $38.4 million (up from $34.3 million).
• Debt of $5.2 million (down $41.1 million or 89% since year-end 2009).
• Cash balance of $14.5 million (down $4.0 million since year-end 2009).

“In 2010 we continued to implement the strategic initiatives that we started in the second half of 2009,” said John Sztykiel, president and CEO of Spartan Motors. “Although we have already begun to see positive financial and operating results from those actions, we are even more optimistic about the opportunities and longer-term growth potential that we have. We did expect some margin compression in this year’s results because of the addition of the service and delivery vehicle business. However, this addition effectively diversified our revenue stream by 23%, further reducing Spartan’s industry-specific market exposure. Our 2010 four-part plan was simple, focused and successful: driving growth in profitable markets, creating compelling products, effectively managing costs and strengthening our balance sheet. We remain committed to this strategy as we move forward in 2011.”

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