UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

 

Date of Report (Date of Earliest Event Reported):  April 27, 2010

 

 

SPARTAN MOTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

 

 

517-543-6400

(Registrant's Telephone Number, Including Area Code)

 

 

Not Applicable

(Former Name or Former Address, if changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

£    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a‑12)

£    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02        Results of Operations and Financial Condition

 

On April 27, 2010, Spartan Motors, Inc. (the "Corporation") issued a press release announcing its financial results for the quarter ended March 31, 2010.  A copy of the press release is attached to this Current Report as Exhibit 99.1.

 

The information in this Item 2.02 and the attached Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01        Financial Statements and Exhibits

 

(d)       Exhibits

 

99.1     Press release issued April 27, 2010 regarding the financial results for the quarter ended March 31, 2010.

 

 

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SIGNATURES

 

            Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

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FOR IMMEDIATE RELEASE                             

 

Spartan Motors Reports 2010 First Quarter Results

 

CHARLOTTE, Mich., April 27, 2010 – Spartan Motors, Inc. (NASDAQ: SPAR) today announced break-even results for its 2010 first quarter, which were underscored by the Company’s relentless focus to strengthen their balance sheet while continuing to make new product investments that will enhance the long term growth and profitability of the business. 

 

First-quarter highlights:

§  Net sales of $122.5 million (up 6.1% from Q1 2009)

§  Gross margin of 14.0 percent of sales

§  R&D cost of $5.3 million (which includes $1.8 million for two major product introductions)

§  Operating expenses of $16.9 million (13.8 percent of sales)

§  Breakeven results with net income of $3,000, or $0.00 per diluted share

§  Ending cash balance of $4.4 million

§  Ending long term debt balance of $12.2 million (a $23.0 million reduction from year-end)

§  Consolidated backlog of $218.9 million

 

“While demand in the first quarter was challenging in a number of our markets, the current economic climate has not diminished our long-term view of the business,” said John Sztykiel, President and CEO of Spartan Motors.  “During the quarter, we saw continued improvement in Motorhomes and Emergency Response, which was offset by soft sales in Aftermarket Parts and Assemblies (APA) and Defense.  While this shift in revenue mix had a negative impact on our gross margins, we remained steadfast in managing our operating costs, which enabled us to breakeven while improving our balance sheet and our long-term prospects for growth as we expensed $1.8 million for two major R&D projects.  Looking out over the longer term, we are encouraged by the many growth opportunities for Spartan, including our recent agreement with Isuzu to assemble cha ssis and jointly develop our next-generation commercial vehicle, which will provide a platform for future growth in a number of markets.”

 

Consolidated net sales for the quarter were $122.5 million, up 6.1 percent from last year due to incremental Utilimaster sales, higher sales of motorhome chassis and an increase in sales at EVTeam.  On a sequential basis, net sales rose 22.0 percent from the fourth quarter of 2009, due mainly to the strength of motorhome chassis sales, improvement at EVTeam, and the addition of a full quarter of Utilimaster sales.  Spartan’s EVTeam operating segment, which consists of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 22.9 percent year-over-year increase in sales for the 2010 first quarter.  Sales of fire truck chassis in the quarter also increased 13.4 percent compared to the same period in 2009.  Spartan’s chassis sales to the Class A diesel motorhome market increased by $24.3 million, driven by recent im provements in the overall recreational vehicle (RV) market.  These gains in first-quarter sales were offset by a decrease of $48.5 million in other product sales, which consist primarily of APA and defense vehicle sales.

 

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Given the significant shift in revenue mix away from APA and Defense sales toward lower-margin products, gross margin in the first quarter of 2010 fell to 14.0 percent of sales from 22.6 percent in the first quarter of 2009.  On a sequential basis, gross margins declined modestly, from 14.9 percent in the fourth quarter, due primarily to the continued shift in mix from APA and Defense to motorhome and service and delivery vehicles.

 

Operating expenses for the 2010 first quarter increased by $0.1 million, or 0.8 percent, compared to the same period last year.  Spartan attributed the increase to the incremental operating expenses of Utilimaster, offset by the cost reduction efforts put in place in the prior year.  The Company also spent $1.8 million on R&D related costs for two major product introductions – the recently announced next-generation commercial vehicle being developed in conjunction with Isuzu and the development of a new cab and chassis related to the 2010 emissions standards.  Total operating expenses in the quarter were $16.9 million, up from $16.8 million in the same period last year.  On a sequential basis, operating expenses increased from $15.0 million in the fourth quarter, primarily due to the additional incremental operating expenses from a full quarter of Utilimaster results, compared with the one month included in the final quarter of 2009.

 

Net income for the quarter was $3,000, or $0.00 per diluted share, compared with net income of $6.1 million, or $0.19 per diluted share in the prior year’s first quarter. 

 

Joe Nowicki, Chief Financial Officer, said: “Some of our major accomplishments for the quarter lie within our balance sheet.  We continued to work down receivables and were able to generate sufficient cash to repay all the incremental borrowings from our acquisition of Utilimaster.  Despite this great progress in our working capital, we still have room for further improvement on our inventory levels.  We also have additional potential to enhance efficiency and lower our operating costs.  Over the next several months, we will continue to execute on the cost reduction initiatives we put in place last year, and seek out opportunities for additional improvement.  We will look to implement processes that will enhance our manufacturing efficiencies and better flex our costs and operations with our current level and mix of revenue.”

 

Consolidated backlog at March 31, 2010 increased to $218.9 million from $217.5 million at March 31, 2009.  Compared with the same period last year, backlogs of Fire Truck and Motorhome chassis increased by a combined $16.1 million and Specialty Vehicle backlog increased by $7.3 million.  In addition, the ending backlog includes $35.1 million from the acquisition of Utilimaster in December of 2009.  These improvements were more than offset by a $39.9 million decrease in APA backlog and a $16.8 million decrease in EVTeam backlog.

 

Spartan reported operating cash flow of $10.2 million in the first three months of the year, due primarily to reduced working capital requirements.  The Company ended the first quarter with $4.4 million in cash and cash equivalents, and $12.2 million in long-term debt, an improvement from long-term debt of $35.2 million at Dec. 31, 2009, as Spartan utilized operating cash flow and existing cash balances to eliminate the incremental borrowings following the acquisition of Utilimaster in the fourth quarter of 2009.  During the first quarter, Spartan maintained its reduced receivable levels from the end of 2009, while inventory levels improved by approximately $2.2 million from year-end.

 

Sztykiel concluded:  “The first quarter marked a number of key accomplishments for Spartan, both strategically and operationally.  As we complete the integration of Utilimaster, we continue to identify and exploit new opportunities to drive our growth.  The ability of our flexible operations to adjust to changing market conditions, reduce costs and preserve cash flow, combined with our strong balance sheet, provide Spartan the ability to take advantage of new opportunities as they arise.  These strengths strategically position Spartan for many future opportunities, as experienced with the recent agreement with Isuzu, whereby the N-Series gasoline chassis and the new commercial walk-in van are key market products with significant future opportunity.  We view this new relationship as a starting point in our long-term vision to strategica lly enter new market niches that fit well with Spartan’s core strengths. In addition, ACT research is forecasting medium-duty vehicle (classes 5-7) production, which is largely tied to health of the housing and construction industries, is expected to see a more steady and gradual increase in production, growing 19 percent in 2010 and 32 percent in 2011.  This is considered a leading economic indicator that positions Spartan well in the next two years in light of these product launches.  2009 was a year of Transformation. 2010 will be a year of Implementation.”

 

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Spartan Motors / Page 3 of 6

 

Conference Call, Webcast and Roadcast™

Spartan Motors will host a conference call for analysts and portfolio managers at 10 a.m. ET today to discuss these results and current business trends.  To listen to a live webcast of the call, please visit www.spartanmotors.com, click on “Shareholders,” and then on “Webcasts.”

 

Spartan also will update the financial information on its Roadcast “digital roadshow” for investors.  To launch the Spartan Motors Roadcast, please visit www.spartanmotors.com and look for the “Virtual Road Show” link on the right side of the page. 

About Spartan Motors

Spartan Motors, Inc. (www.spartanmotors.com) designs, engineers and manufactures specialty chassis, specialty vehicles and truck bodies and aftermarket parts for the Outdoor Recreation/RV, emergency-response, defense, government services, delivery and service markets.  The Company’s brand names – Spartan™, Crimson Fire™, Crimson Fire Aerials™, Road Rescue™ and Utilimaster® – are known for quality, value, service and being the first to market with innovative products.  The Company employs approximately 1,600 at facilities in Michigan, Pennsylvania, South Carolina, South Dakota, Indiana and Texas.  Spartan reported sales of $430 million in 2009 and is focused on becoming a global leader in the manufacture of specialty vehicles and chassis.

 

 

This release contains forward-looking statements, including, without limitation, statements concerning our business, future plans and objectives and the performance of our products.  Forward looking statements are identifiable by words such as “believe,” “anticipate,” “will,” “sustain,” and “continue.”  These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate.  For example, we may encounter unforeseen difficulties and challenges in entering new markets or in pursuing strategic acquisitions.  In addition, technical and other complications may arise that could prevent the timely implementation of our plans or that may impact the expected outcome of those plans.  As a result, actual results and future events could differ materially from those anticipated in such statements.  The Company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the Company's Annual Report on Form 10-K filing and other filings with the United States Securities and Exchange Commission (available at http://www.sec.gov).  Government contracts and subcontracts typically involve long payment and purchase cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification development and changes, price negotiations and milestone requirements.  An announced award of a governmental contract is not equivalent to a finalized executed contract and does not assure that orders will be issued and filled.  Government agencies also often retain some portion of fees payable upon completion of a project and collection of contract fees may be delayed for long periods, which can negatively impact both pr ime contractors and subcontractors.  The Company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise, except as required by law.

 

 

CONTACT:
John Sztykiel, CEO, or Joseph Nowicki, CFO	Jeff Lambert or Jeff Tryka, CFA
Spartan Motors, Inc.	Lambert, Edwards & Associates
(517) 543-6400	(616) 233-0500 / jtryka@lambert-edwards.com

 

 

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Spartan Motors / Page 4 of 6

 

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended March 31, 2010 and 2009

 

 

							March 31, 2010				March 31, 2009
							(Unaudited)				(Unaudited)
							$-000-		%		$-000-		%
Sales							122,517				115,498
Cost of Products Sold							105,397				89,376
Gross Profit							17,120		14.0		26,122		22.6
Operating Expenses:
	Research and Development						5,279		4.3		4,760		4.1
	Selling, General and Administrative						11,629		9.5		12,008		10.4
Total Operating Expenses							16,908		13.8		16,768		14.5
Operating Income							212		0.2		9,354		8.1
Other Income (Expense):
	Interest Expense						(317	)	(0.3	)	(325	)	(0.3	)
	Interest and Other Income						109		0.1		216		0.2
Total Other Income (Expense)							(208	)	(0.2	)	(109	)	(0.1	)
Earnings before Taxes on Income							4		0.0		9,245		8.0
Taxes on Income							1		0.0		3,186		2.8
Net Earnings							3		0.0		6,059		5.2
Basic Net Earnings per Share							0.00				0.19
Diluted Net Earnings per Share							0.00				0.19
Basic Weighted Average Common Shares Outstanding							32,905				32,441
Diluted Weighted Average Common Shares Outstanding							33,069				32,508

 

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Spartan Motors / Page 5 of 6

Spartan Motors, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

						March 31, 2010		December 31, 2009
						(Unaudited)		(Unaudited)
						$-000-		$-000-
ASSETS
Current assets:
	Cash and cash equivalents				$	4,379	$	18,475
	Accounts receivable, net					45,786		46,377
	Inventories					100,153		102,401
	Deferred income tax assets					6,984		6,984
	Income taxes receivable					4,176		4,212
	Other current assets					3,619		3,664
		Total current assets				165,097		182,113
Property, plant and equipment, net						78,823		80,228
Goodwill and other intangible assets, net						29,712		29,895
Other assets						974		1,041
Total assets					$	274,606	$	293,277
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable				$	28,870	$	20,137
	Accrued warranty					6,956		6,692
	Accrued compensation and related taxes					4,179		5,520
	Accrued vacation					2,126		1,912
	Accrued customer rebates					1,402		1,324
	Deposits from customers					8,339		11,992
	Other current liabilities and accrued expenses					7,504		6,300
	Current portion of long-term debt					11,132		11,146
		Total current liabilities				70,508		65,023
Other non-current liabilities						4,179		4,189
Long-term debt, less current portion						12,199		35,204
Deferred income tax liabilities						8,341		8,341
Shareholders' equity:
	Common stock					329		329
	Additional paid in capital					67,596		67,099
	Retained earnings					111,454		113,092
		Total shareholders' equity				179,379		180,520
Total liabilities and shareholders' equity					$	274,606	$	293,277

 

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Spartan Motors / Page 6 of 6

Spartan Motors, Inc. and Subsidiaries

Sales and Other Financial Information by Business Segment

Three Months Ended March 31, 2010

Unaudited

 

 

Three Months Ended March 31, 2010 (amounts in thousands of dollars)
		Business Segments
		Spartan Chassis		EVTeam		Utilimaster			Other			Consolidated
Fire Truck Chassis Sales		37,692							(6,134	)		31,558
Motorhome Chassis Sales		27,512										27,512
EVTeam Product Sales				26,455								26,455
Utilimaster Product Sales						23,745						23,745
Other Product Sales
Specialty Vehicles		1,326										1,326
Aftermarket Parts and    Assemblies		11,921										11,921
Total Net Sales		78,451		26,455		23,745			(6,134	)		122,517
Interest Expense (Income)		1		470		47			(199	)		317
Depreciation and Amortization Expense		1,082		209		757			594			2,642
Segment Net Earnings (Loss)		1,292		190		(929	)		(550	)		3

 

Period End Backlog (amounts in thousands of dollars)
		March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010
Fire Truck Chassis *		98,025			84,840			82,386			123,791			101,730
Motorhome Chassis *		4,365			6,743			9,589			20,022			16,731
Other Product *
Specialty Vehicles		8,064			2,781			4,214			16,970			15,396
Aftermarket Parts and         Assemblies		47,763			20,249			8,725			11,467			7,864
Total Chassis		158,217			114,613			104,914			172,250			141,721
EVTeam Product *		83,344			72,352			72,615			72,402			66,516
Utilimaster Product *											34,059			35,146
Intercompany Eliminations		(24,050	)		(26,232	)		(20,056	)		(31,113	)		(24,520	)
Total Backlog		217,511			160,733			157,473			247,598			218,863

 

 

* Anticipated time to fill backlog orders; 2 months or less for motorhome chassis, 6 months or less for Utilimaster and 10 months or less for fire truck chassis, other product and EVTeam product. Utilimaster was included in the backlog beginning December 31, 2009.

 

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