Spartan Motors Inc. (
Q2 2011 Earnings Call
July 26, 2011 10:00 AM ET
Paula Droste – Director of IR
John Sztykiel – CEO
Joe Nowicki – CFO and Chief Compliance Officer
Rhem Wood – BB&T Capital Markets
David Fondrie – Heartland Funds
Previous Statements by SPAR
» Spartan Motors Inc. CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Spartan Motors CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Spartan Motors CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Spartan Motors, Inc. Q2 2010 Earnings Call Transcript
Good morning, and welcome to Spartan Motors second quarter 2011 conference call. All participants will be in a listen-only mode until the question-and-answer session of the conference call. This call is being recorded at the request of Spartan Motors. If anyone has any objections, you may disconnect at this time.
I would now like to introduce Paula Droste, Director of Investor Relations and Treasury for Spartan Motors. Ms. Droste, you may proceed.
Good morning, everyone, and welcome to Spartan Motors second quarter 2011 earnings call. I’m Paula Droste, Director of Investor Relations and Treasury for Spartan Motors. And I’m joined on the call today by John Sztykiel, President and CEO, and Joe Nowicki, our Chief Financial Officer.
I assume all of you saw the company’s earnings release on the news wire and internet this morning. John and Joe would take a few minutes to discuss the results for the quarter. However, before we do, it is my responsibility to inform you that certain predictions and projections made on today’s conference call regarding Spartan Motors and its operations may be considered forward-looking statements under the Securities Laws.
As a result, I must caution you that as with any prediction or projection, there are a number of factors that could cause Spartan’s results to differ materially. All known risks or management beliefs could materially affect the results identified in our Form 10-K and 10-Q filed with the SEC. However, there may be other risks we face.
With that, I’d like to turn the call over to our CEO, John Sztykiel.
All right. Thank you, Paula. Good morning to those listening on today’s call. First, I’ll briefly cover our Q2 financial highlights followed by the operational plan, growth agenda, the market overview. Joe Nowicki, our CFO, will then provide a detailed review of the quarterly financial results in covering the restructuring charges. We will then conclude by sharing our strategic direction that will pave the way for future profitable growth followed by Q&A.
First, an overview of our second quarter results. On our 2010 year-end call, we indicated the first half of 2011 would be challenging from a demand perspective. We also talked about our optimism for the future based on our intent to develop new products and alliances to drive top line growth while aggressively managing our cost structure. Both of these statements were reinforced this quarter.
Sales in Q2 fell 14% from last year’s level, driven by tightening of state and municipal budgets and reduced revenues and emergency response, in part due to pull ahead orders in 2010 ahead of the emissions change. In addition, the defense and motorhome markets continue to soften. These decreases were partially offset by increased revenues in the delivery and service segment and related field service projects.
Compared to Q1, sales were up 3% as a result of increased sales in the delivery and service segment and also from emergency response bodies, even when excluding Classic Fire sales.
In the second quarter, we swiftly and successfully contracted our cost structure to align with the demand of our markets. During this quarter, we incurred nearly 3 million of restructuring charges before tax as part of our continuing effort to align our cost structure with current levels of revenue. Our new leaner operations will enable us to continue to build our balance sheet and invest the right resources and the most promising growth strategies.
Net result, we experienced an adjusted net loss of $424,000 or $0.01 per diluted share when excluding the one-time restructuring charges. Again, we anticipated a tough half in 2011 being the first half from a financial perspective. Reality, the softening of three of our markets, continued efforts, develop new products and the timing of the investments of these new products all seem to come together in the first half of 2011.
And our lower restructuring efforts were necessary. They are never easy. They are very, very difficult given the impact on some of our associates in the related communities. However, as we move forward these are the right moves to ensure the long-term success of Spartan Motors and to the benefit of all of our stakeholders?
On a positive note, compelling products in strategic efforts drove our backlog up for the second straight quarter to a $179 million. This is an increase of 8% over the first quarter and 33% from Q4 of 2010, driven in part by delivery and service vehicles, emergency response bodies, field service solutions and emergency response chassis.
And you know, just take a moment to reflect on the two quarters in a row of backlog increase, very, very difficult in especially vehicle business something we take great pride in.
We expect growth in both revenue and earnings in the second half of the year, as reflected in our improved backlog. The momentum in our service and delivery market, the higher than expected order intake for emergency response chassis and bodies, the integration of the Classic Fire and the launch of our new revolutionary commercial van product, the Reach, plus the retooling of our operational structure, will drive us in the right direction as we move through 2011.
Joe will review the financials in greater detail shortly. Next I’ll cover the review of our strategic plan.
From an operational perspective, the framework for our actions combined with our ten strategic directives guide us in the right direction. Our four part operational plan is really quite simple. Growth in profitable market share to a disciplined three point approach.