Spartan Motors Reports Fourth Quarter and Full-Year 2019 Results
NOVI, Mich., March 12, 2020 /PRNewswire/ -- Spartan Motors, Inc. (NASDAQ: SPAR) (the "Company"), the North American leader in specialty vehicle manufacturing and assembly for the commercial and fleet vehicle industries (including last mile delivery, specialty service and vocation-specific upfit markets), as well as for the recreational vehicle markets, today reported operating results for the fourth quarter and full-year periods ending December 31, 2019.
As previously announced, the Company divested its Emergency Response (ER) business effective February 1, 2020. Accordingly, the financial results of ER have been classified as discontinued operations for all periods presented. Unless otherwise noted, financial results presented are based on continuing operations.
Full-Year 2019 Highlights from Continuing Operations
For the full-year 2019 compared to the full-year 2018:
-- Sales increased $186.0 million, or 32.6%, to $756.5 million from $570.5
million. Including the discontinued operations, sales were $1.0 billion
compared to $816.2 million.
-- Income from continuing operations increased $18.7 million, or 103.3%, to
$36.8 million, or $1.03 per share, from $18.1 million, or $0.52 per
share.
-- Adjusted EBITDA increased 80.8% to $64.0 million, or 8.5% of sales, from
$35.4 million, or 6.2% of sales. Including the discontinued operations,
adjusted EBITDA was $57.7 million compared to $34.4 million. Adjusted
EBITDA as a percent of sales would have been approximately 110 basis
points higher, or 9.6%, excluding the pass-through impact on sales from
the one-time multi-year USPS truck body order.
-- Adjusted net income improved 90.9% to $43.9 million, or $1.24 per share,
from $23.0 million, or $0.66 per share. Including the discontinued
operations, adjusted net income per share was $1.03 compared to $0.55.
-- Consolidated backlog at December 31, 2019, totaled $336.6 million, up
$194.0 million, or 136%, compared to $142.6 million at December 31,
2018, excluding the one-time, multi-year USPS truck body order. The
increase was primarily driven by strong demand for vehicles across the
entire product portfolio and the acquisitions made throughout the year.
Fourth Quarter 2019 Highlights from Continuing Operations
For the fourth quarter of 2019 compared to the fourth quarter of 2018:
-- Sales increased $6.1 million, or 3.5%, to $180.0 million from $173.9
million. Including the discontinued operations, sales were $247.6
million compared to $233.0 million.
-- Income from continuing operations increased $9.9 million, or 225.0%, to
$14.3 million, or $0.40 per share, from $4.4 million, or $0.12 per
share.
-- Adjusted EBITDA increased 151.1%, to $23.6 million, or 13.1% of sales,
compared to $9.4 million, or 5.4% of sales. Including the discontinued
operations, adjusted EBITDA was $23.0 million compared to $7.2 million.
"I'm incredibly pleased with our strong finish to the year, and I want to thank the entire team for their contributions. Our results speak to the full organization's focus on long-term profitable growth, by way of geographic expansion, sustainable operational improvements, and customer-centric sales and service, and have well positioned the company for years to come," said Daryl Adams, President and Chief Executive Officer. "Today Spartan is more agile and is better positioned to continue to respond to the macro and micro trends that have accelerated changes in our markets. In addition to improving the Company's liquidity, this transformation will increase profitability, as well as provide us with the speed and flexibility to accelerate growth in our core markets."
Full-Year 2019 Segment Results from Continuing Operations
For the full-year 2019 compared to the full-year 2018:
Fleet Vehicles and Services (FVS)
FVS segment sales increased $188.3 million, or 48.6%, to $575.9 million from $387.5 million. This increase was driven by higher unit volumes and mix. The sales volume increase in 2019 includes $91.4 million of chassis pass-thru revenues compared to $65.4 million in 2018.
Adjusted EBITDA increased $34.0 million to $60.7 million, or 10.5% of sales, from $26.7 million, or 6.9% of sales, a year ago. The improvement was driven by higher volume, mix and productivity improvements. Adjusted EBITDA as a percent of sales would have been approximately 200 basis points higher, or 12.5%, without the pass-through impact on sales from the USPS order.
The segment backlog at December 31, 2019, totaled $305.9 million, up 191%, compared to $105.0 million at December 31, 2018, which reflects strong demand for vehicles across the Company's entire product portfolio and excludes the one-time multi-year USPS truck body order.
Specialty Chassis and Vehicles (SCV)
SCV segment sales decreased $7.3 million to $185.9 million, or 3.8%, from $193.2 million a year ago. This was primarily due to a decrease in luxury motor coach chassis sales, partially offset by sales from the Royal Truck Body (Royal) acquisition.
Adjusted EBITDA increased $2.1 million to $20.7 million, or 11.1% of sales, from $18.6 million, or 9.6% of sales, a year ago. The improvement was primarily due to luxury motor coach chassis pricing and the Royal acquisition, partially offset by lower luxury motor coach chassis sales and mix.
The segment backlog at December 31, 2019, totaled $30.7 million, a 19% decrease, compared to $37.7 million at December 31, 2018.
Discontinued Operations
On February 1, 2020, the Company completed the sale of the ER business for $55 million in cash, subject to certain post-closing adjustments. The ER assets and liabilities have been reclassified as held-for-sale in the accompanying balance sheet and ER operating results have been reclassified as discontinued operations for all periods presented in the accompanying financial statements.
2020 Outlook
"Our 2019 financial performance reflects the successful integration of several key acquisitions and the continued momentum in our core markets. As we look to 2020, we are confident that the strategic business transformation will bear positive results and position the Company to provide the industry leading innovative solutions our customers demand. With the proceeds from the recent sale of our ER business, we are well positioned to deploy capital at higher returns that will drive our performance," continued Adams.
Company outlook for full-year 2020 from continuing operations is expected to be as follows:
-- Revenue to be in the range of $730.0 to $780.0 million, midpoint $755.0
million
-- Net income of $37.0 to $43.0 million, midpoint $40.0 million
-- Adjusted EBITDA of $66.0 - $74.0 million, midpoint $70.0 million
-- Effective tax rate of approximately 22%
-- Earnings per share of $1.04 - $1.20, midpoint $1.12; assuming 35.4
million shares outstanding
-- Adjusted earnings per share of $1.20 - $1.36, midpoint $1.28
"In 2019, we transformed the company and greatly improved our focus within our core markets. We have expanded our U.S. manufacturing presence and have enhanced our product portfolio across all vehicle classes to meet customer demand. With increased resources available to capitalize on emerging opportunities and a strategic eye toward both organic and acquisitive growth, we are optimistic about this year and the foreseeable future," concluded Adams.
Conference Call, Webcast, Investor Presentation and Investor Information
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. The conference call and webcast will be available via:
Webcast: www.spartanmotors.com/webcasts or click on "Investor Relations" then "Webcasts"
Conference Call: 1-866-652-5200 (domestic) or 412-317-6060 (international); passcode: 10139520
For more information about Spartan, please visit www.spartanmotors.com.
About Spartan Motors
Spartan Motors, Inc. is the North American leader in specialty vehicle manufacturing and assembly for the commercial and retail vehicle industries (including last-mile delivery, specialty service and vocation-specific upfit markets), as well as for recreational vehicle markets. The Company is organized into two core business segments: Spartan Fleet Vehicles and Services and Spartan Specialty Chassis and Vehicles. Today, its family of brands also include Utilimaster, Royal Truck Body, Strobes-R-Us, Spartan Chassis, Spartan Authorized Parts, Spartan Authorized Service Centers, and Spartan Factory Service Centers. Spartan Motors and its go-to-market brands are well known in their respective industries for quality, durability, aftermarket product support and first-to-market innovation. The Company employs approximately 2,900 associates, and operates facilities in Michigan, Indiana, Pennsylvania, South Carolina, Florida, Missouri, California, Arizona, Texas, and Saltillo, Mexico. Spartan reported sales from continuing operations of $757 million in 2019. Learn more about Spartan Motors at www.spartanmotors.com.
This release contains several forward-looking statements that are not historical facts, including statements concerning our business, strategic position, financial projections, financial strength, future plans, objectives, and the performance of our products and operations. These statements can be identified by words such as "believe," "expect," "intend," "potential," "future," "may," "will," "should," and similar expressions regarding future expectations. These forward-looking statements involve various known and unknown risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, and likelihood. Therefore, actual performance and results may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could contribute to these differences include operational and other complications that may arise affecting the implementation of our plans and business objectives; continued pressures caused by economic conditions and the pace and extent of the economic recovery; challenges that may arise in connection with the integration of new businesses or assets we acquire or the disposition of assets; restructuring of our operations, and/or our expansion into new geographic markets; issues unique to government contracting, such as competitive bidding processes, qualification requirements, and delays or changes in funding; disruptions within our dealer network; changes in our relationships with major customers, suppliers, or other business partners, including Isuzu; changes in the demand or supply of products within our markets or raw materials needed to manufacture those products; and changes in laws and regulations affecting our business. Other factors that could affect outcomes are set forth in our Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission (SEC), which are available at www.sec.gov or our website. All forward-looking statements in this release are qualified by this paragraph. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update or revise any forward-looking statements in this release, whether as a result of new information, future events, or otherwise.
Spartan Motors, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
December 31, December 31,
2019 2018
ASSETS
Current assets:
Cash and cash equivalents $19,349 $27,439
Accounts receivable, less allowance of $228 and $99 58,874 68,009
Contract assets 10,898 9,229
Inventories 59,456 39,213
Other receivables - chassis pool agreements 8,162 -
Other current assets 5,344 3,952
Current assets held for sale 90,725 97,487
Total current assets 252,808 245,329
Property, plant and equipment, net 40,074 32,485
Right of use assets - operating leases 32,147 -
Goodwill 43,632 22,367
Intangible assets, net 54,061 5,011
Other assets 2,295 2,261
Net deferred tax asset 25,520 7,141
Noncurrent assets held for sale - 39,190
TOTAL ASSETS $450,537 $353,784
===
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $54,713 $73,384
Accrued warranty 5,694 4,407
Accrued compensation and related taxes 15,841 7,678
Deposits from customers 2,640 871
Operating lease liability 5,162 -
Other current liabilities and accrued expenses 15,967 8,620
Short-term debt - chassis pool agreements 8,162 -
Current portion of long-term debt 177 60
Current liabilities held for sale 49,601 43,077
Total current liabilities 157,957 138,097
Other non-current liabilities 4,922 4,058
Long-term operating lease liability 27,241 -
Long-term debt, less current portion 88,670 25,547
Total liabilities 278,790 167,702
Shareholders' equity:
Preferred stock, no par value: 2,000 shares authorized (none issued) -
Common stock, $0.01 par value; 80,000 shares authorized; 35,343 and 35,321 outstanding 353 353
Additional paid in capital 85,148 82,816
Retained earnings 86,764 103,571
Total Spartan Motors, Inc. shareholders' equity 172,265 186,740
Non-controlling interest (518) (658)
Total shareholders' equity 171,747 186,082
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $450,537 $353,784
===
Spartan Motors, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
2019 2018 2019 2018
Sales $179,960 $173,916 $756,542 $570,527
Cost of products sold 142,541 154,780 639,509 497,370
Restructuring charges 2 6 13
Gross profit 37,419 19,134 117,027 73,144
Operating expenses:
Research and development 1,389 919 4,864 3,771
Selling, general and administrative 17,688 12,333 64,473 46,206
Restructuring charges 46 76 649
Total operating expenses 19,123 13,252 69,413 50,626
Operating income 18,296 5,882 47,614 22,518
Other income (expense):
Interest expense (1,008) (262) (1,839) (1,080)
Interest and other income (expense) 423 (344) 1,370 12
Total other expense (585) (606) (469) (1,068)
Income from continuing
operations before income
taxes 17,711 5,276 47,145 21,450
Income tax expenses 3,426 860 10,355 3,334
---
Income from continuing
operations 14,285 4,416 36,790 18,116
Loss from discontinued
operations, net of income
taxes (41,952) (2,581) (49,216) (3,104)
---
Net (loss) income (27,667) 1,835 (12,426) 15,012
Less: Net income
attributable to non-
controlling interest 154 140 -
Net (loss) income
attributable to Spartan
Motors, Inc. $(27,821) $1,835 $(12,566) $15,012
Basic earnings (loss) per share
Continuing operations $0.40 $0.12 $1.03 $0.52
Discontinued operations $(1.19) $(0.07) $(1.39) $(0.09)
Basic (loss) earnings per share $(0.79) $0.05 $(0.36) $0.43
Diluted earnings (loss) per share
Continuing operations $0.40 $0.12 $1.03 $0.52
Discontinued operations $(1.18) $(0.07) $(1.39) $(0.09)
Diluted (loss) earnings per share $(0.78) $0.05 $(0.36) $0.43
Basic weighted average
common shares outstanding 35,339 35,210 35,318 35,187
===
Diluted weighted average
common shares outstanding 35,582 35,210 35,416 35,187
===
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Year Ended December 31, 2019 (in thousands of dollars)
---
Business Segments
Fleet Vehicles &
Specialty
Other
Consolidated
Services Chassis &
Vehicles
---
Fleet vehicle sales $504,023 $5,278 $(5,278) $504,023
Motorhome chassis sales - 127,130 127,130
Other specialty chassis and vehicles - 43,067 43,067
Aftermarket parts and assemblies 71,871 10,451 82,322
Total Sales $575,894 $185,926 $(5,278) $756,542
===
Adjusted EBITDA $60,663 $20,716 $(17,334) $64,045
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Year Ended December 31, 2018 (in thousands of dollars)
---
Business Segments
Fleet Vehicles &
Specialty
Other
Consolidated
Services Chassis &
Vehicles
---
Fleet vehicle sales $297,627 $10,221 $(10,221) $297,627
Motorhome chassis sales - 149,533 149,533
Other specialty chassis and vehicles - 22,570 22,570
Aftermarket parts and assemblies 89,922 10,875 100,797
Total Sales $387,549 $193,199 $(10,221) $570,527
===
Adjusted EBITDA $26,680 $18,620 $(9,915) $35,385
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Three Months Ended December 31, 2019 (in thousands of dollars)
---
Business Segments
Fleet Vehicles &
Specialty
Other
Consolidated
Services Chassis &
Vehicles
---
Fleet vehicle sales $122,593
$ -
$ - $122,593
Motorhome chassis sales - 25,306 25,306
Other specialty chassis and vehicles - 19,371 19,371
Aftermarket parts and assemblies 9,955 2,735 12,690
Total Sales $132,548 $47,412
$ - $179,960
===
Adjusted EBITDA $21,076 $6,608 $(4,098) $23,586
Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
(Unaudited)
Three Months Ended December 31, 2018 (in thousands of dollars)
---
Business Segments
Fleet Vehicles &
Specialty
Other
Consolidated
Services Chassis &
Vehicles
---
Fleet vehicle sales $102,710 $2,904 $(2,904) $102,710
Motorhome chassis sales - 33,890 33,890
Other specialty chassis and vehicles - 6,002 6,002
Aftermarket parts and assemblies 28,299 3,015 31,314
Total Sales $131,009 $45,811 $(2,904) $173,916
===
Adjusted EBITDA $6,476 $5,301 $(2,425) $9,352
Sales and Other Financial Information by Business Segment
(Unaudited)
Period End Backlog (amounts in thousands of dollars)
---
Dec. 31, 2019
Sept. 30, 2019
Jun. 30, 2019
Mar. 31, 2019 Dec. 31, 2018
Fleet Vehicles and Services* $305,876 $223,753 $272,399 $188,528 $218,775
Motorhome Chassis * 20,097 26,719 31,852 28,470 36,584
Other Vehicles 10,062 11,769 -
Aftermarket Parts and Accessories 575 1,459 565 667 1,072
Total Specialty Chassis & Vehicles 30,734 39,947 32,417 29,137 37,656
Total Backlog $336,610 $263,700 $304,816 $217,665 $256,431
===
* Anticipated time to fill backlog orders at December 31, 2019; two-12 months for Fleet Vehicles and Services; less than one month to 12 months for Specialty Chassis and Vehicles.
Reconciliation of Non-GAAP Financial Measures
This release contains adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which is a non-GAAP financial measure. This non-GAAP measure is calculated by excluding items that we believe to be infrequent or not indicative of our continuing operating performance. In the fourth quarter of 2019, in connection with the divestiture of our ER business, we refined the definition of adjusted EBITDA as income from continuing operations before interest, income taxes, depreciation and amortization, as adjusted to eliminate the impact of restructuring charges, acquisition related expenses and adjustments, non-cash stock-based compensation expenses, and other gains and losses not reflective of our ongoing operations. Adjusted EBITDA for all prior periods presented have been recast to conform to the current presentation.
We present the non-GAAP measure adjusted EBITDA because we consider it to be an important supplemental measure of our performance. The presentation of adjusted EBITDA enables investors to better understand our operations by removing items that we believe are not representative of our continuing operations and may distort our longer-term operating trends. We believe this measure to be useful to improve the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not indicative of our continuing operating performance. We believe that presenting this non-GAAP measure is useful to investors because it permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our historical performance. We believe that the presentation of this non-GAAP measure, when considered together with the corresponding GAAP financial measures and the reconciliations to that measure, provides investors with additional understanding of the factors and trends affecting our business than could be obtained in the absence of this disclosure.
Our management uses adjusted EBITDA to evaluate the performance of and allocate resources to our segments. Adjusted EBITDA is also used, along with other financial and non-financial measures, for purposes of determining annual and long-term incentive compensation for our management team.
Financial Summary (Non-GAAP)
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
---
Spartan Motors, Inc. 2019
% of 2018 % of 2019
% of 2018
% of
sales sales sales sales
---
Income from
continuing
operations $14,285 7.9% $4,416 2.5% $36,790 4.9% $18,116 3.2%
Net (income) loss
attributable to
non-controlling
interest (154) (140)
Add (subtract):
Restructuring and
other related
charges 46 152 316 662
Acquisition related
expenses and
adjustments 1,544 1,150 3,531 1,952
Non-cash stock-
based compensation
expense 1,403 949 5,281 4,027
Deferred tax asset
adjustment (14) 135 (313)
Tax effect of
adjustments (619) (440) (2,056) (1,433)
Adjusted net income $16,505 9.2% $6,213 3.6% $43,857 5.8% $23,011 4.0%
Income from
continuing
operations $14,285 7.9% $4,416 2.5% $36,790 4.9% $18,116 3.2%
Net (income) loss
attributable to
non-controlling
interest (154) (140)
Add (subtract):
Depreciation and
amortization 2,028 1,562 6,073 6,214
Taxes on income 3,426 860 10,355 3,334
Interest expense 1,008 263 1,839 1,080
EBITDA $20,593 11.4% $7,101 4.1% $54,917 7.3% $28,744 5.0%
Add (subtract):
Restructuring and
other related
charges 46 152 316 $662
Acquisition related
expenses and
adjustments 1,544 1,150 3,531 1,952
Non-cash stock-
based compensation
expense 1,403 949 5,281 4,027
Adjusted EBITDA $23,586 13.1% $9,352 5.4% $64,045 8.5% $35,385 6.2%
Diluted net earnings
per share $0.40 $0.12 $1.03 $0.52
Add (subtract):
Restructuring and
other related
charges 0.02
Acquisition related
expenses and
adjustments 0.04 0.03 0.11 0.06
Non-cash stock-
based compensation
expense 0.05 0.03 0.15 0.11
Deferred tax asset
adjustment (0.01)
Tax effect of
adjustments (0.02) (0.01) (0.05) (0.04)
Adjusted diluted net
earnings per share $0.47 $0.17 $1.24 $0.66
Financial Summary (Non-GAAP)
Consolidated
(In thousands, except per share data)
(Unaudited)
Forecast
Year Ending December 31, 2020
Low
Mid
High
---
Income from
continuing
operations $36,978 $39,786 $42,594
Add:
Depreciation and
amortization 11,098 11,098 11,098
Interest expense 1,048 1,048 1,048
Taxes 10,428 11,220 12,012
Add (subtract):
Non-cash stock-
based compensation
and other charges 6,800 6,800 6,800
Adjusted EBITDA $66,352 $69,952 $73,552
===
Earnings per share $1.04 $1.12 $1.20
Add:
Non-cash stock-
based compensation
and other charges 0.19 0.19 0.19
Less tax effect of
adjustments (0.03) (0.03) (0.03)
Adjusted earnings
per share $1.20 $1.28 $1.36
===
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SOURCE Spartan Motors, Inc.
