Supreme Industries, Inc. (NYSE MKT: STS) announced that full-year 2016 net income increased 47.9% to a record of $19 million—up from net income of $12.9 million in 2015.
Full-year 2016 net sales grew 7.4%, to $299.0 million, compared with $278.4 million in 2015. The increase reflects higher year-over-year sales volume of retail work trucks destined for commercial end users.
Gross margin, as a percentage of sales, expanded to 22.4% in 2016, up from 19.5% in 2015. The higher year-over-year gross margin was due to a more profitable product and customer mix, as well as volume-related efficiency gains. Operating income grew 49.9% in 2016, reaching $28.9 million, and was up from $19.3 million in 2015.
Net sales in the fourth quarter of 2016 totaled $61.9 million, compared with $67.7 million in the comparable period of 2015. Third-quarter retail orders were down quarter-over-quarter, contributing to the 8.6% fourth quarter sales decline.
The lower sales volume, coupled with a less profitable product mix, resulted in a gross margin, as a percentage of sales, of 19.9% in the fourth quarter. This compared with 21.7% in the same quarter last year. Operating income was $2.7 million in the quarter, down from $5.7 million in the fourth quarter of 2015.
Fourth quarter net income in 2016 totaled $2.0 million, or $0.12 per diluted share, compared with $3.8 million, or $0.22 per diluted share in 2015's fourth quarter.
"We are certainly pleased to report record full-year net income of $19 million, or $1.11 per diluted share, for 2016," said Mark Weber, President and Chief Executive Officer. "We are disappointed in our fourth quarter financial results. However, we had a solid rebound in order activity during the fourth quarter as retail orders increased 11% sequentially from the third quarter and fleet order intake remained strong through January.
"Our order backlog at the end of January 2017 was $115.8 million, up 13.1% or $13.4 million, compared with January of 2016, excluding $1.2 million of Trolley backlog."
Working capital was $58.2 million at the end of 2016, compared with $51.9 million at December 26, 2015. Cash flow from operations improved to $29.3 million for the year ended December 31, 2016 as compared with $9.8 million for the year ended December 26, 2015. The company ended the year with $35.2 million in cash and cash equivalents, and $7.5 million in total debt. Stockholders' equity increased to $101.7 million at December 31, 2016, compared with $88.6 million at December 26, 2015, increasing tangible book value per share to $6.02, compared with $5.32 at the end of 2015.