Spartan Motors, Inc (SPAR) Q1 2010 Earnings Call April 27, 2010 10:00 a.m. ET Executives Jeff Lambert - IR, Lambert, Edwards & Associates, Inc. John Sztykiel - President & CEO Joe Nowicki - CFO Analysts [Mike Rigonella] - Barrington Research Ned Borland - Hudson Securities Jamie Wilen - Wilen Management Joe Maxa - Dougherty & Company Presentation Operator
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A quick word about the format of today's call, John Sztykiel will begin the call with a brief overview of the quarter and then go over the operational results for each business segment and conclude with a bit of an outlook followed by Joe Nowicki who will discuss the financial results for the quarter and will conclude with a Q&A session at which time the operator will instruct you on how to enter the queue.I'd like to turn it over to John Sztykiel. John? John Sztykiel All right, Jeff. Good morning and thank you for all of you being here. The basis of our strategic and operational plans is really quite simple; number one, compelling products and services; number two, growth and profitable market share; three, cost structure management; and number four, balance sheet management. While we've made some significant progress, we continue to face some challenges relative to the current economic client in our related markets. Grant it our profit line looks small for the quarter but it was a return to profitable results, especially in light of the investments we made in our future growth. That we feel great about. On the balance sheet management side of life we also made some great strides in improving our operating cash flow, paying down all the incremental debt we incurred with the Utilimaster acquisition in the fourth quarter of last year. Joe will get into that in detail. Cost structure management; we reduced our operating expenses to 13.8% of sales for the quarter from 14.5% in the prior year same quarter and from 15% in the fourth quarter of last year. We're not where we want to be yet but we're on the right track and the plans are in place to continue to work our cost structure down and that will happen.
Compelling products and services; the investment in our new 2010 emission compliance chassis is very, very complex, very, very large and over time will drive business, the new next generation commercial that we are developing with Isuzu, an exciting product.Combined we invested $1.8 million in R&D in those two projects alone in the first quarter of this year. Although the elevated R&D had a short-term negative impact on our reported results the investment yielded some exciting new opportunities for our future growth. If one does not develop compelling products and services, the future growth in profitable market share will just not happen. The next generation commercial vehicle that Utilimaster developed with Isuzu is the latest example of harnessing our R&D efforts to meet the demands of the marketplace, not just today but tomorrow as well. The new vehicle offers the quality, durability and optimization of space that Utilimaster is known for in a package the offers consumers a compelling total cost of ownership from both an acquisition and operating cost perspective. It is also a vehicle that offers weight rating and cargo capacity right in the sweet spot of currently unmet consumer demand as well as lower floors to allow for drivers to get in and out of, a taller interior height for increased cargo area and easier work maneuverability in the back of the vehicle and best-in-class view economy, all ideal features for the delivery and service marketplace. While the primary focus of this next generation product will be the delivery and service market, over time this vehicle platform can and will probably be utilized in numerous other markets powering this next generation commercial vehicle will be Isuzu's 4J engine, a turbocharged intercooler three liter duel overhead [inaudible] injection four cylinder diesel engine that will generate approximately 150 horsepower, 280, two foot pounds of torque.
I know this is a lot of data but this engine is a commercial truck engine that has a V10 life rating and approximately 310,000 miles of useful life before a major overhaul. This is a big [ITCR] item important to the consumer as other competitive products utilize a passenger car type engine, which typically do not have that high of a durability cycle.Read the rest of this transcript for free on seekingalpha.com