Supreme Industries, Inc. (NYSE MKT: STS) said sales and earnings in the first quarter were “negatively impacted during the quarter by temporary delays in receiving customer-supplied chassis to commence rental fleet production.”
"While no orders were lost, the delays due to third-party transportation capacity constraints required the orders to be rescheduled across all plants into subsequent quarters,” said Mark Weber, President and Chief Executive Officer. “Operations were impacted as a result of dedicated personnel being onboarded, trained and awaiting chassis arrival. Fortunately, the chassis transportation issues were resolved by late March, and our shipments have ramped up accordingly."
Net sales in the first quarter declined 1% to $68.7 million, compared with net sales of $69.4 million in the comparable quarter of 2016. First-quarter net income in 2017 was $1.9 million, or $0.11 per diluted share, compared with $3.8 million, or $0.22 per diluted share, in the same quarter of the prior year.
In the first quarter of 2017, gross margin declined to 18.9% of sales, down from 21.8% of sales in 2016's comparable quarter. This was primarily the result of labor inefficiencies associated with the chassis delays. Additionally, the quarter was impacted by costs associated with plant optimization lean initiatives, higher health insurance claims, as well as a higher mix of lower-margin rental fleet shipments. Quarterly operating income was $3 million in the first quarter of 2017, compared with $5.8 million in the first quarter of 2016.
"We are encouraged to report that order intake exceeded $100 million in the opening quarter of 2017 and set a new first-quarter record for Supreme," Weber continued. "Both rental fleet and retail orders delivered solid year-over-year growth as we continued to gain momentum with strategic accounts."
Order backlog at the end of the first quarter was $115 million, up 16% from $99 million at the same time last year, excluding the trolley backlog of $2.5 million (the trolley product line was divested in 2016).
Working capital was $59.6 million at the end of 2017's first quarter, compared with $58.2 million at December 31, 2016. On April 1, 2017, the Company had $5.4 million of cash and cash equivalents on hand and total debt was $7.3 million. Stockholders' equity increased to $102.8 million, compared with $101.7 million at December 31, 2016. Tangible book value per share was $6.06 at April 1, 2017, compared with $6.02 per share at the end of last year. Supreme's debt to equity ratio at the end of the first quarter of 2017 was 7.1%.