CHARLOTTE, MI—Spartan Motors, Inc. has announced operating results for the first quarter of 2011. Highlights for the quarter include increased order intake and progress on key strategic initiatives. Revenues were $95.1 million, down 19.1 percent compared to the same quarter of the prior year, which drove a net loss of $0.9 million, or $0.03 per diluted share, compared to breakeven results for the same period in 2010.
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 percent 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 percent 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.
“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. 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,” says John Sztykiel, president and CEO of Spartan Motors.
“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,” added Sztykiel.
Some highlights of how Spartan’s fire service offerings fit into its four part operational plan include:
· At the March Fire Department Instructors Conference (FDIC) – the largest fire rescue training conference in the world – Spartan Chassis formally introduced its newest cab and chassis, the “Spartan Force”. This recent product addition offers custom features, such as improved performance, spacious cab and lifetime frame warranty, all at an aggressive market-penetrating price.
· The assembly of the N-Series gas cab and chassis, in partnership with Isuzu Commercial Truck of America, illustrates another seized opportunity and demonstrates Spartan’s ability to leverage its chassis expertise. his product will ramp-up during 2011.
· A Secondary Power System (SPS), introduced at FDIC for the emergency response market by Spartan Chassis, delivers significant improvements in fuel consumption, exhaust emissions and noise pollution, while enhancing main engine service life and maintenance needs.
· 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.
· Crimson Fire significantly expanded its product portfolio with the addition of the Classic Series. Consisting of eight new product offerings, this product line complements the Legend and Star Series. The Classic Series offers high performance and is already known for durability and unparalleled quality at affordable prices – a critical market position given current economic realities.
· Proprietary pump modules and tankers, featuring the most durable aluminum extruded body structures in the industry, are examples of new customer-desired products that are now available as a result of the Classic Fire acquisition.
· Crimson Fire was awarded a multi-year international contract with Bomberos de Chile for the production of as many as 30 units, reinforcing the Company’s “global” strategic directive. Five of these vehicles are planned for shipment in the fourth quarter of 2011.
· A robust $11.8 million in cash generation from operations funded the acquisition of Classic Fire without the need for additional borrowing. This is an increase of $2.6 million compared to the $9.2 million of cash generated in the first three months of 2010, driven by aggressive cost and balance sheet management.
· Consolidated backlog expanded 23.5 percent to $166.1 million as of March 31, 2011, up from $134.5 million at year end 2010, driven by new orders for service and delivery vehicles and fire truck chassis. Compared to the same quarter of 2010, the backlog is down as a result of accelerated orders previously received and filled in advance of the EPA’s 2010 engine emission change.
Delays in finalizing the 2011 federal budget resulting in continued stopgap measures created additional headwinds for government funded programs. Accordingly, defense and government markets are expected to remain soft in 2011, negatively impacting Spartan’s emergency response and APA businesses. While there are growth initiatives in these markets, the company does not expect them to fully offset the downward pressure from the overall market conditions.
Sztykiel concludes, “Spartan Motors is better positioned now than at any time during the past three years in light of very challenging times, as we have a more reliable and diversified revenue stream, compelling new products, and a more tightly managed cost structure. This strength, coupled with our talented leadership team, sound strategic plan, invaluable alliances and strong balance sheet, provide a solid foundation for continued strength and the ability to aggressively invest in our future.”
About Spartan Motors
Spartan Motors, Inc. designs, engineers and manufactures specialty chassis, specialty vehicles, truck bodies and aftermarket parts for the recreational vehicle (RV), emergency response, government services, defense, and service and delivery markets. The Company’s brand names – Spartan™, Crimson Fire™, Crimson Fire Aerials™, and Utilimaster® – are known for quality, value, service and first-to-market innovation. The Company employs approximately 1,600 at facilities in Michigan, Pennsylvania, South Dakota, Indiana, Florida and Texas. Spartan reported sales of $481 million in 2010 and is focused on becoming a global leader in the design, engineering and manufacture of specialty vehicles and chassis. Visit Spartan Motors at www.spartanmotors.com.