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Spartan Motors Inc. Reports Operating Results (10-Q)

May 07, 2010 | About:
10qk

10qk

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Spartan Motors Inc. (SPAR) filed Quarterly Report for the period ended 2010-03-31.

Spartan Motors Inc. has a market cap of $179.3 million; its shares were traded at around $5.45 with a P/E ratio of 26 and P/S ratio of 0.5. The dividend yield of Spartan Motors Inc. stocks is 1.8%. Spartan Motors Inc. had an annual average earning growth of 15.5% over the past 10 years.SPAR is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the three months ended March 31, 2010, consolidated sales increased $7.0 million (6.1%) compared to sales for the same period in 2009 of $115.5 million. The increase was primarily due to the addition of Utilimaster, acquired on November 30, 2009, which added $23.7 million in sales for the three months ending March 31, 2010. Without the inclusion of Utilimaster, there would have been a decrease in sales of $16.7 million (14.5%) period-over-period. This decrease was primarily attributable to the Spartan Chassis segment. Driving this decrease was the reduction of specialty vehicle and APA sales to the defense industry. There were smaller positive offsets in the motorhome and fire truck markets. The EVTeam also showed an increase in sales of $4.9 million for the quarter ended March 31, 2010 over March 31, 2009. Changes to the 2010 engine emission standards resulted in higher fire truck sales for the first quarter of 2010 compared to the same period of 2009.

Operating expenses as a percent of sales decreased to 13.8% from 14.5% for the three month period ended March 31, 2010 compared to that of 2009. Operating expense dollars showed an increase of $0.1 million (0.8%) over the same three month period. This was the result of the addition of Utilimaster, which added $3.5 million in expenses, offset by expense reductions primarily at Spartan Chassis which had savings of $2.9 million (23.6%) from $12.7 million in the prior year.

At March 31, 2010, the Company had $218.9 million in backlog, which includes Utilimasters backlog of $35.1 million, compared to $217.5 million at March 31, 2009, which excluded Utilimaster. Excluding Utilimaster, the decrease in backlog period-over-period of $33.7 million is attributable to both the EVTeam of $16.8 million and Spartan Chassis of $16.5 million. Backlog balances are negatively impacted by product mix shift toward motorhomes, aftermarket part and assemblies and service and delivery vehicles which carry shorter lead times than fire truck, ambulance and specialty vehicles. Intercompany eliminations in the backlog make up the remaining difference between periods. The Company anticipates filling its current backlog orders by October 2010.

Sales decreased by $19.7 million (20.1%) in the first quarter of 2010 from $98.2 million in the same quarter of 2009. Other product sales drove the majority of the sales decrease, with a $48.5 million (78.5%) decrease from $61.7 million to $13.2 million, quarter over quarter. The decrease in other product sales at Spartan Chassis was primarily due to a decrease in volume of APA sales of $40.3 million (78.5%), along with a decrease in volume of specialty vehicle sales of $8.2 million (86.1%). The decrease in specialty vehicle and APA sales was due to the decrease of defense related orders in 2010 and in the fourth quarter of the prior year, in comparison to 2009 for the same periods. There were no changes in pricing of products sold by Spartan Chassis that had a significant impact on its financial statements when comparing year-over-year.

Offsetting the decrease in other product sales was an increase in sales volume for the motorhome product line with sales increasing $24.3 million (767.3%), from $3.2 million to $27.5 million, quarter over quarter. The increase in motorhome chassis sales was driven by stronger industry demand, specifically orders placed by dealers replenishing depleted inventories. The year-over-year backlog of motorhome orders increased nearly fourfold period-over-period, but remains well below levels attained in 2007 and prior. Accordingly, 2010 production levels have been higher than they were in 2009. We expect 2010 to remain at the current sales volume levels, not returning in the short term to the record level sales we once had. Fire truck chassis sales also increased by $4.4 million (13.4%) from $33.2 million in the first quarter of 2009. The increase in fire truck sales volume has been driven by the 2010 engine emission regulatory change.

The first quarter of 2010 marked a sales increase of $4.9 million (22.9%), from $21.5 million in the first quarter of 2009. The 2010 emission standards that went into effect drove up sale order volume, directly affecting production and sales levels. The backlog for the EVTeam at March 31, 2010 was $66.5 million, down 20.2% from $83.3 million at March 31, 2009 as the orders are being filled.

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