Spartan Motors, Inc. ( SPAR) Q4 2010 Earnings Conference Call February 15, 2011, 10:00 am ET Executives Paula Droste – Director, IR and Treasury John Sztykiel – CEO Joe Nowicki – CFO and Chief Compliance Officer Analysts Joe Maxa – Dougherty & Company Ned Borland – Hudson Securities Mike Ruggirello – Barrington Research Presentation Operator
Previous Statements by SPAR
» Spartan Motors CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Spartan Motors, Inc. Q2 2010 Earnings Call Transcript
» Spartan Motors, Inc Q1 2010 Earnings Call Transcript
With that, I’d like to turn the call over to our CEO, John Sztykiel.John Sztykiel Thank you, Paula. And good morning to those listening in on today's call and those on the Internet. Today we will share an overview of our operational and strategic achievements and highlights of our Q4 results. We will also give you an update on current market conditions, their impact on 2011 and beyond. We will conclude by sharing our strategic direction that will pave the way for future Spartan opportunities followed by Q&A. And again, as usual, Joe will get into a deep dive on the financials and some of the impacts going on from an operational perspective within each one of our business segments. A year ago we shared our top two priorities; reducing our cost structure, an operational focus; and investing in profitable growth, a strategic focus. While our work is not done, we are proud of our progress on both of these fronts. During 2010, we rounded out our initiatives to include balance sheet management and developing compelling products and services. And again we’ve made large strides in both of these initiatives that will position us for future growth, but also help to deliver results as 2011 moves on. Moving on to key milestones. And again, there are a lot of accomplishments in Q4, some of which have been noted in the release, some of which will cover as well on the call, including continued growth in our top line, reduction in our operating expense as a percent of our sales, a strengthened balance sheet with significantly lower debt and working capital. Our biggest challenge is the backlog, and we will discuss that in more detail later in the call. Utilimaster was acquired just over a year ago, and the work to integrate the business into the Spartan system was completed during 2010. As a result, service and delivery sales are now the largest portion of our sales mix at about 31% for the last quarter. This market also contributed to our operating income in the second half of the year, fulfilling our goal of investing in profitable growth. We must still make improvements in gross margins and ensure that strategic initiatives are implemented, and the good news is we are making progress on both fronts.
During the fourth quarter, we also completed the sale of Road Rescue and finished all related transitional services. This sale hit three or four areas of focus as resources supporting that effort are redirected towards other activities aligned with our operational and strategic plan. In reality, the pure ambulance market was not the right strategic fit for us, plus we struggled operationally. Although difficult, it was the right decision. Simply, if we cannot be a market leader within a reasonable timeframe at an acceptable investment, we will not be in that particular market.The significant Spartan transformation that’s important to mention is the added depth of talent and wisdom to our Board and leadership team. This talent top grading continues today and includes personnel from other industries and specific functions. We also have a lot of very, very good people within SMI as we work to both rotate and move them up from a leadership responsibility perspective, but those added talents broadened to include expertise in global commerce, lean manufacturing, innovative processes, acquisition and alliance formation. We are fortunate to have their leadership caliber from a Board or operational perspective, and all stakeholders will continue to benefit from them. When I look at the SMI brands of Spartan Chassis, Crimson Fire and Utilimaster, all have delivered a number of innovations over the years that compel the marketplace to buy our products and services. Today we have 13 active or pending patents. As time goes on, I have no doubt we will have more and we will continue to develop new products that will ensure competitive advantage, i.e., compel the marketplace to buy from us that are difficult to replicate. A significant achievement supporting our pursuit of profitable growth opportunities was our alliance with Isuzu announced early last year in the April timeframe. Read the rest of this transcript for free on seekingalpha.com