Supreme Industries, Inc. (NYSE MKT: STS), benefiting from strong demand for medium-duty trucks, reported that consolidated net sales from continuing operations increased 15.4% to $82.6 million in the second quarter, compared with $71.6 million during same quarter last year.
Net income of $4.3 million was unchanged from last year.
As a result of the higher sales volume, second quarter gross profit in 2015 increased to $15.5 million, up from $14.6 million in 2014. As a percentage of sales, second quarter gross margin was 18.7%, compared with 20.5% in last year's second quarter. The margin contraction was due to product mix and a higher proportion of fleet sales in the current year which yield a lower gross margin percentage. Second quarter operating income was $6.4 million for both 2015 and 2014.
"As expected, sales of medium-duty work trucks accelerated in the second quarter," said Mark Weber, President and Chief Executive Officer. "As our restructured sales organization gains momentum, Supreme has begun to increase market share with targeted national accounts. This positive customer reaction reinforces our strategy of implementing a more customer-centric value proposition."
In the first half of 2015, consolidated net sales from continuing operations increased 16.8% to $145.9 million, compared with $124.9 million in the prior year. Higher net sales in 2015 were the result of increased truck sales, which more than offset a sales decline of trolleys and specialty vehicles.
Gross margin, as a percentage of sales, expanded to 18.4% in the six month period, compared with 18.0% in 2014's first half. This, combined with the higher sales volume, resulted in first half gross profit increasing more than 19.5% to $26.9 million, compared with $22.5 million in last year's comparable period. Severe weather and a shortage of available chassis negatively impacted last year's results and these factors did not repeat in 2015. First half operating income increased 39.7% to $9.5 million in 2015, compared with $6.8 million in 2014.
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 on last year's results, net income improved to $6.3 million, or $0.37 per diluted share, in the first half of 2015, compared with net income of $2.9 million, or $0.17 per diluted share last year. Excluding the impact from discontinued operations, net income improved to $6.3 million, or $0.37 per diluted share, up from $4.5 million, or $0.26 per diluted share in 2014's first half.
"Compared with last year, new order intake was stronger in the second quarter of 2015 across both retail and fleet work truck segments. We are optimistic as we enter the second half of the year with an improved backlog and positive order intake trends," Weber said.
Sales order backlog at the end of the second quarter stood at $74 million, up more than 30% compared with $56.8 million, at the end of last year's second quarter.