CHARLOTTE, Mich.– Spartan Motors reported operating results for the first quarter ending March 31.
First Quarter 2018 Highlights
For the first quarter of 2018 compared to the first quarter of 2017:
- Sales increased $6.0 million, or 3.6%, to $173.0 million from $167.1 million
- Gross profit margin improved 300 basis points to 12.8% of sales from 9.8% of sales
- Net income improved $5.3 million, or 482.0%, to $4.2 million, or $0.12 per share, from a loss of $1.1 million, or $0.03 per share. The previous year included $2.6 million of acquisition and restructuring related expenses.
- Adjusted EBITDA increased 33.8% to $5.6 million, or 3.2% of sales, from $4.2 million, or 2.5% of sales
- Adjusted net income improved $2.0 million, or 158.3% to $3.3 million, or $0.09 per share, from $1.3 million, or $0.04 per share
- Backlog increased $203.3 million to $554.6 million at March 31, 2018 from $351.3 million at March 31, 2017
Notes: As of January 1, the company has adopted the new Revenue Recognition Standard (“ASC 606”) using the modified retrospective transition method. For more details regarding ASC 606 and its impact on the company’s financial results, see the company’s quarterly report on Form 10-Q for the quarter ended March 31.
“We really hit the ground running in 2018, as we experienced another strong, consecutive quarter of profitable growth,” said Daryl Adams, president and chief executive officer. “The robust start to the year was driven by the ongoing efforts of our entire team to generate continued operational improvement as well as strong growth in our core markets.”
- Fleet Vehicles and Services (FVS)
FVS segment sales increased 10.7% to $59.7 million from $53.9 million. The revenue increase was primarily due to sales mix and higher Reach vehicle and up fit center volumes.
Adjusted EBITDA decreased $1.7 million to $4.6 million, or 7.7% of sales, from $6.2 million, or 11.6% of sales, a year ago. The decrease is primarily due to start-up costs associated with the new USPS truck body plant in Ephrata, PA., as well as sales mix.
The segment backlog at March 31, 2018, totaled $335.3 million, up 194.2%, compared to $114.0 million at March 31, 2017 due to the previously announced multi-year contract with the United States Postal Service (USPS).
Emergency Response (ER)
ER segment sales decreased $13.5 million to $66.7 million, or 16.8%, from $80.2 million. Included in the prior year sales is $15.1 million of revenue that resulted from the timing of revenue relating to the Smeal acquisition. Excluding these sales, revenue increased $1.6 million, or 2.5%, over the prior year, reflecting increased production of complete fire apparatus and custom cab and chassis.
Adjusted EBITDA improved $2.6 million to a profit of $1.2 million, or 1.9% of sales, from a loss of $1.3 million a year ago. The improvement was primarily the result of better pricing and operational improvements.
The segment backlog at March 31, 2018 totaled $189.6 million, down 11.6%, compared to $214.5 million at March 31, 2017.
Specialty Chassis & Vehicles (SCV)
SCV segment sales increased 46.4% to $48.2 million from $33.0 million a year ago. Revenues were driven mainly by a $13.5 million increase in luxury motor coach chassis sales, resulting from market share gains and continued strong industry demand.
Adjusted EBITDA increased $1.6 million to $3.1 million, or 6.5% of sales, from $1.5 million, or 4.7% of sales, a year ago, mainly due to strong momentum in motorhome chassis and operational improvements.
The segment backlog at March 31, 2018 totaled $29.7 million, up 29.8%, compared to $22.8 million at March 31, 2017.
Raising 2018 Net Income, EPS and Adjusted EPS Guidance
The Company’s first quarter results reflect strong topline performance on a comparable basis and continued operational improvements from all three business segments. Results for the first quarter include a $1.4 million, or $0.04 per share, tax benefit related to the appreciation in value of equity-based compensation that vested during the quarter. As a result, the effective tax rate for 2018 is expected to be approximately 23%.
Looking ahead to the remainder of the year, the Company reaffirms its previous revenue and adjusted EBITDA guidance, and is increasing its net income, EPS and adjusted EPS guidance for this tax benefit. The 2018 outlook is now expected to be as follows:
- Revenue to be in the range of $790.0 – $815.0 million, unchanged
- Net income of $20.2 – $22.4 million, up from previous guidance of $18.8 – $21.0 million
- Adjusted EBITDA of $39.0 – $42.0 million, unchanged
- Effective tax rate of approximately 23%, down from previous guidance of 28%
- Earnings per share of $0.58 – $0.64, up from previous guidance of $0.54 – $0.60, assuming approximately 35.3 million shares outstanding
- Adjusted earnings per share of $0.60 – $0.66, up from previous guidance of $0.56 – $0.62
“Following our transition year, we remain clearly on the path of profitable growth. Each segment of Spartan’s business posted strong profitability on an adjusted EBITDA basis. These solid results create a positive, winning environment that spreads through our entire team, as we all work together to drive enhanced performance, greater efficiency and ultimately stronger bottom line results for the company and its shareholders,” Adams concluded.
Conference Call, Webcast, Investor Presentation and Investor Information
Spartan Motors will host a conference call for analysts and portfolio managers at 10 a.m. EDT today to discuss these results and current business trends. The conference call and webcast will be available via:
Webcast: www.spartanmotors.com (Click on “Investor Relations” then “Webcasts”)
Conference Call: 1-844-868-8845 (domestic) or 412-317-6591 (international); passcode: 10119535
For more information about Spartan, please visit www.spartanmotors.com.
SOURCE: Spartan Motors press release