Supreme Industries, Inc. (NYSE MKT: STS) reported that first-quarter net income from continuing operations increased to $1.9 million, compared with $200,000 in 2014, driven by strong customer demand for medium-duty work trucks.
Consolidated net sales from continuing operations increased 18.5% in the quarter, reaching $63.3 million, compared with $53.4 million in the first quarter of 2014. Last year's sales were negatively impacted by chassis shortages and severe weather, which did not repeat in the 2015 period.
Gross margin from continuing operations grew to 18.1% of sales in the first quarter of 2015, versus 14.8% of sales in the first three months of 2014. The improvement was mainly due to the increase in truck sales, with a larger contribution from retail shipments and labor utilization improvements associated with the fleet builds.
Selling, general and administrative expenses increased by $0.9 million, or 12.0%, to $8.4 million for the three months ended March 28, 2015, as compared with $7.5 million for the three months ended March 29, 2014. The increase was the result of profit-based incentive compensation plans and higher salary costs resulting from annual merit increases. Additionally, sales wages increased as the company improved its market presence by adding and upgrading sales personnel in key regions.
"Entering 2015, positive momentum continued on several fronts. New sales initiatives implemented last year as part of our profitable growth agenda, combined with strong customer demand for medium-duty work trucks, have been driving top-line growth," commented Mark Weber, President and Chief Executive Officer. "In addition to fleet awards received since the beginning of the year, retail orders also strengthened during the quarter increasing our backlog."
Due to heightened order activity, backlog at March 28, 2015, increased to $94.3 million, up 18% since the end of 2014. This represents a 27% increase from the order backlog of $73.9 million at the end of last year's first quarter.
The company's discontinued shuttle bus business was sold in the first quarter of 2014 and generated a $1.6 million after-tax net loss in that period. Including the impact from discontinued operations, net income improved to $1.9 million, or $0.11 per diluted share, in the first quarter of 2015, reversing the reported net loss of $1.3 million, or $0.08 per diluted share, in last year's first quarter.
Working capital increased to $55.3 million at March 28, 2015, compared with $44.4 million at December 27, 2014, mainly due to large increases in inventory and accounts receivable associated with the large fleet build in process.
Stockholders' equity increased 2.1% to $82.8 million at March 28, 2015, compared with $81.0 million at December 27, 2014. Book value per share grew to $5.02 at the 2015 quarter-end versus $4.94 at the end of 2014.