Supreme Industries, Inc. (NYSE Amex: STS) today announced that the net loss for the first quarter was $1.4 million, or $0.10 per share, versus net income of $0.2 million, or $0.02 per diluted share, in last year's comparable quarter.
First-quarter 2009 net sales were $49.3 million, compared with $75.9 million in the same period of 2008. Supreme's core dry-freight and bus product sales were off 44 percent and 26 percent year over year, respectively. The company noted that, due to the effect of the recession and restrictive credit markets, there was a severe and pervasive downturn in commercial vehicle sales during the first quarter. Additionally, in management's judgment, a number of StarTrans customers delayed bus product purchases in anticipation of finalized Federal mass-transit stimulus funding.
"In anticipation of the steep decline in business activity, management has been prudently allocating resources to longer-term initiatives while addressing the recessionary market conditions,” Supreme President and Chief Operating Officer Robert W. Wilson said. “To date, management has implemented annualized cost reductions of approximately $12.3 million, with a large component of the savings resulting from our 36 percent headcount reduction.
"With the bus backlog now growing, we recently added production of the StarTrans shuttle bus line to our Woodburn, Ore. plant, where we now manufacture curved-wall fiberglass shuttle buses such as Supreme's Senator and Candidate models. This new bus production capacity enables Supreme to provide enhanced service capabilities west of the Rockies and in western Canada and improves our competitiveness in these markets due to freight-cost savings. With a full line of bus products, our nationwide presence and a strong sales organization, we are strategically well-positioned in this sector.
"Additionally, the Department of State business for armored vehicles has been a bright spot in an otherwise bleak economic environment as net sales for the quarter were $3.3 million."
Gross profit margin as a percentage of net sales was 5.7 percent, versus 10 percent for the same quarter in 2008, primarily as a result of the lower unit volume. Selling, general and administrative expenses were reduced 16.5 percent to $5.8 million, compared with $6.9 million in the prior-year quarter, and interest expense for the respective periods was essentially flat at $0.6 million.
Net cash provided by operating activities was $5.8 million, aided by reductions in inventory levels and accounts receivable during the quarter. At quarter-end, working capital totaled $54.3 million, compared with $60.3 million at year-end 2008, and the working capital ratio was 4.1 to 1 versus 4.2 to 1 for the respective periods. During the first quarter, long-term debt was reduced by $4.9 million and, as a percentage of total assets, stood at 23.7 percent, versus 26.1 percent at Dec. 27, 2008. Stockholders' equity was $69.2 million, or $4.89 per share, at March 28, 2009, compared with $70.4 million, or $4.98 per share, at Dec. 27, 2008. Order backlog stood at $58.6 million, versus $60.0 million at year-end 2008.
Wilson concluded: "Although we have recently seen some signals that indicate easing credit markets and improved economic indicators in some market sectors, we have yet to observe any convincing evidence that a sustained rebound in demand is underway. However, new commercial vehicle registrations in 2008 were at their lowest level since 1994; thus, we believe that there is pent-up demand from an aging fleet of commercial vehicles that will soon need to be replaced. When the replacement cycle begins, our expectation is that Supreme's diversified product line, aggressive cost reductions and solid balance sheet will allow us to benefit from any improvement in demand."
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