Spartan Motors Profits Up 54 percent
CHARLOTTE — Spartan Motors Inc. announced net earnings increased 54.3 percent and net sales increased 43.1 percent for the first quarter ending March 31, compared to the year-ago quarter.
The Charlotte-based manufacturer of custom motor home chassis, fire truck chassis and emergency-rescue vehicles reported net earnings of $2 million on record net sales of $88.9 million. Spartan earned only $1.3 million in profit on sales of $62.1 million in 2004.
Spartan said the increased earnings for the quarter were driven by improved operating performance by all four of its subsidiary companies — Spartan Chassis, Crimson Fire, Crimson Fire Aerials and Road Rescue.
Top line growth was driven by sales gains at Spartan Chassis and Road Rescue.
“Spartan Chassis continues to grow market share in both the RV and emergency rescue markets, which translated to higher sales and earnings for the company,” said John Sztykiel, president and CEO of Spartan Motors.
The EVTeam segment continued to move forward, he said. That segment’s focus on lean manufacturing is starting to take effect; it cut its loss by 50 percent from the preceding quarter and increased sales by 13.7 percent over the year-ago quarter.
“We remain on pace to return the EVTeam back to profitability in the second half of the year,” Sztykiel said. “In each of our subsidiaries we are focused on a strategy of product and technology innovation, aimed at introducing new vehicles and products several times per year. All of these technological and product innovations are designed to meet the most important expectations of the customer. Seven new products and innovations were introduced by the four subsidiary companies at the most recent Fire Department Instructors Conference (FDIC) trade show.
“On the whole, we are pleased, but not satisfied, with improved sales and earnings. However, we are very encouraged about our record $134.5 million backlog, a more than 14 percent increase over the fourth quarter of 2004, and what this represents for the remainder of 2005.”
Spartan reported the continued higher cost of steel, competitive pricing and production constraints at Crimson Fire and Road Rescue led to a decline in consolidated gross margin, down from 14.9 percent in 2004 to 13.2 percent. But that does mark an improvement from the preceding quarter’s 11.9 percent.
“Due to the timing of our order cycle and price increases, we are just now beginning to recapture through pricing the majority of higher steel costs,” said Chief Financial Officer Jim Knapp. “Thanks to our efforts to pass on material cost increases to the marketplace and the abatement in the rise in steel costs, the price of steel was less a factor this quarter than in prior quarters. We expect to recapture more of these costs during the next two quarters as the higher-priced units move through the backlog.”
Sales at Spartan Chassis grew by 43.4 percent in the first quarter, driven by a 65.7 percent increase in RV chassis sales.
Fire truck chassis sales were slightly less than the same period last year, though Spartan anticipates 2005 to be this segment’s strongest year based on order activity. It had a record 217 orders for custom fire truck chassis in the quarter.