Spartan Motors, Inc. (Nasdaq: SPAR) announced that net sales were down 31% in the fourth quarter compared to the same quarter in 2008, due mainly to the completion of a large-scale defense vehicle contract in 2008, as well as lower SPA sales in the current quarter. The results included the completion of the company's acquisition of Utilimaster on Nov. 30, 2009.
"We are pleased in some respects with the accomplishments of our team during a very demanding quarter," said John Sztykiel, President and CEO of Spartan Motors. "On the positive side, we completed the purchase of Utilimaster and began our integration efforts, while continuing to align our core business to the current level of demand. On a negative note, we lost money, which is something we do not do often. That said, we are starting to see meaningful improvements in some markets, such as fire trucks and motorhomes, as consolidated backlog, excluding the new Utilimaster acquisition, rose 25.7 percent from the prior year and 35.6 percent from the third quarter of 2009."
Consolidated net sales for the quarter were $100.5 million, up 12% percent sequentially from the third quarter due to the incremental Utilimaster sales, which were partially offset by lower service parts and assemblies (SPA) sales.
Spartan's EVTeam operating segment, which consists of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 13.3 percent year-over-year increase in sales for the 2009 fourth quarter. Sales of fire truck chassis in the quarter also increased 15 percent compared to the same period in 2008.
With the lower sales levels compared to the prior year and a shift in revenue mix toward lower-margin products, gross margin in Q409 fell to 14.9 percent of sales from 21.1 percent in Q408. Spartan attributed the change in margins to a shift in revenue mix from defense and SPA sales to motorhome and fire truck chassis. In addition, margins were adversely impacted in Q409 by approximately $0.5 million related to the inventory valuation associated with the Utilimaster acquisition. On a sequential basis, gross margin declined from 17.6 percent in Q309 due primarily to the shift in mix from SPA to motorhome and fire truck chassis.
Net loss for the quarter was $0.4 million, or $0.01 per diluted share, which included one-time pre-tax charges of $1.2 million related to Spartan's acquisition of Utilimaster. Excluding these items, the adjusted earnings per diluted share would have been $0.01.
Joe Nowicki, Chief Financial Officer, said: "While we made solid progress on our cost structure in the fourth quarter, we still have work to do in 2010. With the shift in revenue mix we experienced last quarter, we must continue to focus on improving efficiencies and reducing costs to align our spending with current demand. In the near term, we will also see the impact of increased investments in R&D on our bottom line, but we believe these investments are essential to our long-term growth and profit expansion. We also continue to place a priority on managing our balance sheet and cash flow, and we see opportunities for continued improvement in these areas in 2010."
For the full year, Spartan reported net sales of $429.9 million, compared with net sales of $844.4 million in 2008. The decline in sales for the year was primarily the result of the completion of a large defense order in 2008 combined with softness in the current motorhome market. Gross profit fell with the lower revenue level, but as a percent of sales, gross margin increased to 19.0 percent in 2009, up from 17.5 percent in 2008, due mainly to a shift in mix toward higher margin products.