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CHARLOTTE, Mich. — Spartan Motors reported operating results for the fourth quarter and full year periods ending Dec. 31.
Full Year 2018 Highlights
For the full year 2018 compared to the full year 2017:
- Sales increased $109.1 million, or 15.4%, to $816.2 million from $707.1 million
- Net income declined $0.9 million, or 5.8%, to $15.0 million, or $0.43 per share, from $15.9 million, or $0.46 per share
- Adjusted EBITDA increased 1.4% to $31.8 million, or 3.9% of sales, from $31.3 million, or 4.4% of sales
- Adjusted net income improved 14.2% to $17.0 million, or $0.48 per share, from $14.9 million, or $0.43 per share
- Consolidated backlog, excluding the exclusive multi-year USPS truck body order at Dec. 31, totaled $359.2 million, up 11.9%, compared to $321.1 million at Dec. 31, 2017. Including the USPS order, consolidated backlog totaled $473.0 million compared to $535.1 million a year ago.
Fourth Quarter 2018 Highlights
For the fourth quarter of 2018 compared to the fourth quarter of 2017:
- Sales increased $51.9 million, or 28.7%, to $233.0 million from $181.1 million
- Net income declined $0.6 million, or 24.9%, to $1.8 million, or $0.05 per share, from $2.4 million, or $0.07 per share
- Adjusted EBITDA declined 28.1%, to $6.7 million, or 2.9% of sales, compared to $9.3 million, or 5.1% of sales
- Adjusted net income declined 10.9% to $3.4 million, or $0.10 per share, from $3.9 million, or $0.11 per share
- Acquired Strobes-R-Us, a regional Florida-based vehicle upfitter, expanding the company’s manufacturing footprint and addressable market in the southeastern United States
- To date, repurchased 191,000 shares at an average price of $7.55 per share, or $1.4 million in the aggregate, since adopting a 10b5-1 trading plan on Dec. 17 pursuant to the company’s one million share repurchase authorization
“Spartan generated strong top-line growth in 2018, driven by the performance of our FVS and SCV segments, despite second-half industry-wide headwinds that negatively impacted our profitability,” said Daryl Adams, president and chief executive officer. “I am proud of the solid efforts from our Spartan team as we worked to mitigate the impact of these headwinds, which resulted in a better than expected fourth quarter.”
Full Year 2018 Segment Results
For the full year 2018 compared to the full year 2017:
Fleet Vehicles and Services (FVS)
FVS segment sales increased $136.4 million, or 54.3%, to $387.5 million from $251.1 million. A substantial portion of the revenue increase was due to pass-through sales on the USPS truck body order ($64.8 million) in addition to increased volume relating to Reach vehicle, and upfits. The adoption of ASC 606 increased reported segment sales by $2.1 million.
Adjusted EBITDA decreased $0.3 million to $26.7 million, or 6.9% of sales, from $27.0 million, or 10.7% of sales, a year ago. The adjusted EBITDA and EBITDA as a percent of sales decreased due primarily to unfavorable sales mix, tariff-driven increases in commodity and component costs, chassis shortages, supplier component delays, and increased freight costs and disruptions. Without the pass-through impact on sales from the USPS order, adjusted EBITDA as a percent of sales would have been approximately 140 basis points higher, or 8.3%.
The adoption of ASC 606 had minimal impact on reported segment adjusted EBITDA.
The segment backlog, excluding the exclusive multi-year USPS truck body order at December 31, 2018, totaled $105.0 million, up 95.5%, compared to $53.7 million at Dec. 31, 2017. Including the USPS order, segment backlog totaled $218.8 million compared to $267.7 million a year ago, reflecting the progress made on the USPS contract. The adoption of ASC 606 reduced reported segment backlog by $7.3 million.
The integration of the recent strategic acquisition of regional Florida-based upfitter, Strobes-R-Us, remains on track and is expected to be accretive to 2019 earnings. The acquisition brings enhanced capabilities to both Fleet Vehicle and Services and Emergency Response upfits, and further expands Spartan’s manufacturing footprint into the southeastern United States, which now covers the entire east coast.
Emergency Response (ER)
ER segment sales decreased $57.2 million to $245.6 million, or 18.9%, from $302.9 million. Included in the prior year sales is $23.2 million of revenue that resulted from the timing of revenue related to the Smeal acquisition. Excluding these sales, revenue decreased $34.1 million, or 12.2%, over the prior year, primarily due to lower volume reflecting an industry-wide decline in fire apparatus sales, the acquisition disruption and unfavorable sales mix, partially offset by pricing changes realized in 2018. The adoption of ASC 606 decreased reported segment sales by $14.9 million.
Adjusted EBITDA decreased $2.2 million to $1.0 million, or 0.4% of sales, from $3.2 million, or 1.0% of sales, a year ago, primarily due to reduced volume, tariff-driven increases in commodity and component costs, and supplier component delays resulting in production and labor inefficiencies, partially offset by pricing. The adoption of ASC 606 decreased reported segment adjusted EBITDA by $0.4 million.
Sequentially, segment backlog at December 31, 2018, increased 18.0% to $234.2 million, excluding the impact of ASC 606. Reported segment backlog at Dec. 31, totaled $216.5 million compared to $233.6 million at Dec. 31, 2017. The adoption of ASC 606 reduced reported segment backlog by $17.7 million.
Specialty Chassis & Vehicles (SCV)
SCV segment sales increased $34.4 million to $193.2 million, or 21.7%, from $158.8 million a year ago. Revenues were driven mainly by a $24.9 million increase in luxury motor coach chassis sales, due to increased unit volume driven by market share gains and continued industry demand.
Adjusted EBITDA increased $4.6 million to $18.7 million, or 9.7% of sales, from $14.1 million, or 8.9% of sales, a year ago, mainly due to the strong demand for luxury motor coach chassis, partially offset by tariff-driven increases in commodity and component costs, increased freight costs and disruptions, and chassis component and labor shortages, resulting in production and labor inefficiencies.
The segment backlog at Dec. 31, totaled $37.7 million, up 11.4%, compared to $33.8 million at Dec. 31, 2017.
SOURCE: Spartan Motors press release