Spartan Motors, Inc. (NASDAQ: SPAR) announced revenues of $120.3 million in the third quarter, up 21% over the second quarter—reflecting significant gains in its Delivery and Service Vehicles segment and the ongoing benefits of actions taken earlier in the year to realign operations.
Also contributing to the improvement in third-quarter revenues were sizable orders for Aftermarket Parts and Assemblies (APA). 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 3Q 2010 sales of $120.6 million)
- Gross margin of 17.0 percent of sales (up from 16.4 percent in 3Q 2010)
- Operating expense of $15.2 million (up $0.8 million compared to 3Q 2010)
- Net income of $3.2 million ($0.10 per diluted share)
- 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 2Q 2011)
- Total debt of $5.2 million
- Cash balance of $30.5 million (up $16.0 million from 4Q 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 (RV), emergency response and defense markets and helped reduce our exposure to government-dependent revenue streams. Utilimaster's performance helped drive our business-to-business (B2B) and business-to-consumer (B2C) revenues to 63 percent of the total – leaving our business-to-government (B2G) revenues at just 37 percent. This is a dramatic improvement over the 2008 timeframe when 88 percent of our revenue was B2G derived and just 12% was B2B/B2C. This further demonstrates the insight of the diversified growth strategy we implemented in 2009.
"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."
- The Reach, a commercial van offering up to 35 percent better fuel economy with improved safety and operational performance, was launched into market during the third quarter. The Reach is being offered by a nationwide network of Isuzu dealers. The first orders were received near the end of the third quarter, with initial shipments expected in the fourth quarter.
- Classic Fire has been fully integrated into Spartan's emergency response vehicle lineup, creating a more diversified product line to meet the needs of the budget-sensitive market. The Classic Series of emergency response vehicles has been added to the Legend and Star Series, and will be focused on the lower-priced niche of the fire truck market.
- Spartan Chassis has been developing an ADA-compliant "low floor" chassis for use in the shuttle bus market. Expansion into this market illustrates Spartan's efforts to penetrate adjacent chassis markets that have countercyclical growth cycles to current markets served.
- Spartan Chassis was awarded orders for 23 Metro Star® emergency response cab and chassis for multiple fire departments in China. The latest orders represent another step forward in Spartan's efforts to expand sales globally and bring the total number of units sold to China to 94. These orders are expected to be delivered in the fourth quarter of 2011 and the first quarter of 2012.
- Production of the Isuzu N-Series Gas cab and chassis increased to 21 units per day, or 5,000 per year, during the quarter. The N-Series contributes significantly to Isuzu's position as America's top selling low cab forward truck, a position Isuzu has enjoyed since 1986.
- Utilimaster fulfilled significant orders of Aftermarket Parts and Assemblies for a large fleet customer in the third quarter. This helped to boost revenues and gross margins in the segment, and Utilimaster is pursuing additional profitable field service growth opportunities. These solutions enable existing customer fleets to achieve performance improvement, increased safety and the ability to retrofit new vocational packages. These achievements highlight Spartan's success in APA by capturing improved revenue opportunities and contribution margin.