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. 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. 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.
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 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.”
Spartan Motors Inc. today (Oct. 28) reported improved sales and solid profitability for its 2010 third quarter.
The results also included the sale of the assets of its Road Rescue ambulance business for approximately $8 million. Spartan’s third quarter performance was highlighted by increased sales of specialty vehicles and motorhome products, and substantially reduced operating expense as a percentage of sales compared to the same quarter of 2009.
Third quarter highlights:
- Net sales of $120.6 million (up 39.7% from Q3 2009, which did not include Utilimaster).
- Gross margin of 16.4% of sales (down from 18.8% in Q3 2009).
- Operating expenses of 11.9% of sales (down from 15.8% in Q3 2009).
- Net earnings from continuing operations of $3.5 million (up 112.1% from Q3 2009).
- Cash balance of $16.7 million (up $6.5 million from Q2 2010).
- Debt of $15.3 million (down $5 million from Q2 2010).
- Consolidated backlog of $172.6 million (down from $205.7 million in Q2 2010).
- Motorhome sales show continued stability with sales in the quarter up 94% from the same quarter of 2009, and sequentially up 3% from the second quarter of 2010.
“We are pleased with our accomplishments in the quarter. Our focus on creating compelling products and driving growth in profitable markets continues to serve us well. Our profitable results were complemented by the sale of Road Rescue, which was completed well ahead of expectations. The improvements made to our cost structure earlier in the year – while very difficult – contributed greatly to our performance in the quarter,” said John Sztykiel, president and CEO of Spartan Motors.
“Innovation is a core element of our culture, which continues to prove vital to our success at creating products for transforming markets and driving profitable market share. Our progress is evident as we recently showcased our 2010 emergency-response cab and chassis at the Fire-Rescue International Conference (FRI) with a 2010 EPA-certified Cummins diesel engine. In addition, the next-generation commercial vehicle and the N-Series gasoline chassis, generated through our new partnership with Isuzu, strategically position Spartan for significant long-term growth as we look to the delivery and service market.”
Allied Specialty Vehicles Inc. (ASV), a portfolio company of American Industrial Partners (AIP), today (Sept. 21) announced that it has purchased ambulance manufacturer Road Rescue from Spartan Motors Inc. in an asset transaction for $8 million. Road Rescue is a manufacturer of premium Type I and Type III ambulances.
AIP is parent company of Fleetwood RV Inc.
“We’re excited to add the Road Rescue brand to our portfolio of ambulance companies. For many years, Road Rescue has been regarded as one of the leading high-end builders of modular ambulances, and under ASV, we anticipate further enhancing that reputation,” Randall Swift, president and CEO of Winter Park, Fla.-based ASV, stated in a news release.
ASV, with revenue of approximately $1 billion, is a market leader in three industry segments: Fire & Emergency, Recreational Vehicles, and Bus & Industrial. The company was formed on August 25, 2010, through the combination of four existing portfolio companies of AIP: E-ONE Inc., Collins Industries Inc., and Halcore Group Inc.; with Fleetwood RV Inc. to be combined in the fourth quarter of this year.
American Industrial Partners is an operationally focused middle market private equity firm comprised primarily of multidisciplined engineers and experienced operators which makes control investments in North-American based industrial businesses and implements strategies to grow the earnings of those businesses. AIP has managed three prior funds which totaled over $1 billion and is currently investing its fourth fund, $405.5 million American Industrial Partners Capital Fund IV LP.
Spartan Motors Inc. today (July 23) reported results for its 2010 second quarter, which included the impact of the previously announced business realignment plan.
Spartan posted a net loss for the quarter of $2.6 million, which included the unfavorable impact of these actions. Before one-time restructuring charges, adjusted net earnings from continuing operations was a positive $900,000, or $0.03 per diluted share.
Second-quarter highlights (which reflect Road Rescue as a discontinued operation):
- Net sales of $115.7 million.
- Gross margin of 14.3% of sales (15.1 percent before restructuring charges).
- Operating expenses of 14.2% of sales (13.4% before restructuring charges).
- Restructuring charges of $1.8 million, or $0.03 per diluted share, net of tax.
- Cash balance of $10.1 million (up $5.7 million from Q1 2010).
- Debt of $20.3 million (down $3.1 million from Q1 2010).
- Consolidated backlog of $205.7 million.
John Sztykiel, president and CEO of Spartan Motors, said:, “In the second quarter, we focused our efforts on three key areas: exiting the Road Rescue business to focus on our more profitable markets, aligning our cost structure with our current and near term sales volumes and investing in promising and profitable growth opportunities. While we have a lot of complexity in our financial reports this quarter, when you peel back the results you will see that we made solid progress in our key financial metrics and also continued to invest in our strategic growth initiatives.”
Exit from Road Rescue Business
Spartan is fielding many inquiries from both strategic and financial buyers interested in acquiring Road Rescue, its ambulance manufacturing business.
Road Rescue has maintained the quality and reliability of shipments due to the dedication and commitment of the Marion, S.C., workforce
All Road Rescue results are now classified as discontinued operations and presented below income from continuing operations, net of tax
Spartan redefined reportable segments into Delivery and Service Vehicles, consisting of Utilimaster, and Specialty Vehicles, which consists of the company’s fire truck chassis, motorhome chassis, other vehicles, fire truck bodies and aftermarket parts and assemblies
Net loss from Road Rescue for the second quarter was $2.4 million, which includes $1.8 million of impairment and restructuring charges, net of tax
Realigning Cost Structure
Second quarter results from continuing operations included $1.8 million in restructuring charges related to realigning the business to current level and mix of revenues
Adjusted gross profit reached $17.5 million, while adjusted gross margin increased to , 15.1%, an improvement from first-quarter adjusted gross profit of $16.9 million, or 14.3 percent
Excluding restructuring charges, operating expenses in the quarter were reduced by $0.7 million compared to the same period in 2009. In addition, the second quarter of 2010 included $3.5 million of operating expenses related to Utilimaster that were not present in 2009 results
Operating cash flow was $22.1 million in the first six months of the year, driven by reduced working capital requirements that primarily consisted of a $16.0 million reduction in inventory levels
Investment in Profitable Growth Opportunities
R&D investment of $1.2 million in the current quarter related to costs for two major product introductions – the recently announced Next Generation Commercial Van (NGCV) being developed in conjunction with Isuzu and the development of new cab and chassis products related to the 2010 emissions standards
A prototype of the NGCV, a product of Spartan’s alliance with Isuzu, rolled off the line at Utilimaster this past week; production still on track to begin in mid-2011
Assembly relationship with Isuzu on the N-series chassis is proceeding according to plan, with production expected to begin in mid-2011
Crimson Fire’s new product, the “Transformer,” is complete and is being well received in the marketplace having achieved its first sale in Texas
Joe Nowicki, CFO, said, “Despite the loss for the quarter, we are very pleased with the pace of progress in implementing cost management and balance sheet initiatives across the organization. We began last fall realigning our cost structure to current and near-term demand and focusing on areas of our business that generate profitable market share. The actions we are taking are difficult, but improvements in our operating results, excluding the one-time charges, demonstrate that we are gaining ground toward achieving our interim financial goal of mid single-digit operating income. In addition, we are making substantial progress on continuing to strengthen our balance sheet – improvements in receivables and inventories, both dollars and turns, enabled us to further pay down debt and grow our cash balances, providing enhanced financial stability and future opportunity.”
Spartan Motors Inc. today (June 22) announced its intent to exit its Road Rescue ambulance operation as part of the company’s continuing review of all aspects of its business.
The exit will allow Charlotte, Mich.-based Spartan, which also manufactures Class A motorhome chassis, to focus its resources on the highest growth and profit opportunities. The exit from the underperforming Road Rescue operation is expected to be completed by the end of 2010. In addition, Spartan announced in a news release a number of actions designed to reduce expenses and better align its cost structure with current levels and mix of demand.
The exit from Spartan’s Road Rescue ambulance operation in Marion, S.C., is part of a long-term strategic review initiated at the beginning of the year of all parts of the company’s business. These actions are designed to focus Spartan’s resources on those operations with the greatest potential for sustainable growth and profitability. Spartan expects to complete the exit by the end of the year following the fulfillment of existing customer orders. The company is in discussions with potential purchasers to facilitate a sale of the operations or facilities as part of the exit plan. Road Rescue generated approximately $20 million in revenues in 2009 and it employs 132 full-time associates.
“We are strategically focused on providing compelling products that generate sustainable growth and profitable market share, highlighted by good momentum at Spartan Chassis and Crimson Fire, as well as our recently announced new commercial van product at Utilimaster and our collaborative efforts with Isuzu,” said John Sztykiel, president and CEO of Spartan Motors. “Over the last 12 months, Spartan has evolved, as has the emergency response market, and the Road Rescue operation is not large enough to justify the resource commitment when we have greater potential elsewhere. Road Rescue partnered with another ambulance company, where there is additional scale and product breadth, would be a real asset.”
Spartan also announced a number of actions to realign its cost structure. These included a temporary reduction in board of directors’ retainer fees, salary reductions for members of the executive leadership team and other senior leaders, some select work force reductions, and other actions as part of its continuing efforts to reduce fixed costs to better match its current level of business.
“Although these decisions are never easy, as they impact the lives of our associates and the communities we serve, we believe these actions will result in improved effectiveness in our operations. It also allows us to better focus our efforts in Spartan’s five core markets – emergency response, outdoor recreation/RV, defense, delivery and service, and specialty – while maximizing demand for Spartan chassis, aftermarket parts and assemblies and the Isuzu strategic alliance. We have tremendous strategic opportunity, and it is imperative we reduce our operational cost base to improve our position going forward.”
With the realignment actions and exit from Road Rescue, Spartan expects to incur pre-tax one-time charges of approximately $6 million to $7 million, the majority of which will be recognized in the company’s second and third quarter results. Management expects these actions to reduce the company’s permanent cost structure by $5 million to $6 million on an annualized pre-tax basis.
Joe Nowicki, CFO, added: “The actions we announced today represent our continuing efforts to right-size our operations based on the current business environment. Our exit from Road Rescue is a result of our ongoing evaluation of all areas of Spartan’s business and is an important next step in executing on our previously announced strategic financial plan. It will allow us to concentrate our resources and product development in our highest growth, most profitable opportunities, and we believe it was necessary to ensure our long-term success.”
Several RV-related firms are scheduled to make presentations at the prestigious 4th Annual Barrington Research Conference May 25-26 at the Four Seasons Hotel in Chbicago.
Among the nearly 50 presenters are management leaders representing Drew Industries Inc., TriMas Corp., Spartan Motors Inc. and Navistar International Corp.
Barrington’s Industrial Conference provides institutional investors with access to management through a series of one-on-one and small group meetings.
More information on the conference, including registration for institutional investors, is located at http://www.brai.com.