Spartan Motor's CEO Discusses Q2 Results - Earnings Transcript

Start Time: 10:00

End Time: 11:05

Spartan Motors, Inc. (SPAR)

Q2 2012 Earnings Call

August 2, 2012 10:00 A.M. ET

Executives

Greg Salchow - Director of Investor Relations and Treasury

John Sztykiel - President and Chief Executive Officer

Joe Nowicki – Chief Financial Officer

Analysts

Walt Liptak – Barrington Research

Joe Maxa – Dougherty & Company LLC

Robert Kosowsky – Sidoti & Company

Rhem Wood – BB&T Capital Markets

Presentation

Operator

Good morning and welcome to Spartan Motor’s Second Quarter 2012 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 Greg Salchow, Director of Investor Relations and Treasury for Spartan Motors. Mr. Salchow, you may now proceed.

Greg Salchow

Thank you, Andrew. Good morning, everyone, and welcome to Spartan Motors second quarter 2012 conference call. I’m joined today by John Sztykiel, President and CEO of Spartan Motors and Joe Nowicki, the Chief Financial Officer.

I assume all of you has seen today’s earnings release on the newswire and Internet. In addition to our earnings release, we also have a press release concerning an order for 150 new Reach vans from UPS. This order was mentioned in our June 25, 2012 update on the Reach.

Before we start the call, I need to inform you that certain statements made today during our conference call which may include management’s current outlook, viewpoint, predictions and projections regarding Spartan Motors and its operations may be considered forward-looking statements under the securities laws. I must caution you that, as with any prediction or projection, there are a number of factors that could cost Spartan’s result to differ materially.

All known risks our management believes could materially affect the results are identified in our Forms 10-K and 10-Q filed with the SEC. However, there may be other risks we face.

Also please note that during the question-and-answer period, we will take one question and one follow-up per analyst that will allow everyone the opportunity to ask a question. After asking your question, you’re welcome to rejoin the queue for additional questions as time permits.

Finally, John Sztykiel is joining us on the call from Denver where he is representing the company at the International Fire Apparatus Show.

Now I’m pleased to turn the call over to John for his opening remarks.

John Sztykiel

All right. Thank you, Greg. Good morning everyone and thank you for joining us on today’s Spartan Motors second quarter 2012 conference call. As you know, from reading our press release, our latest quarterly result showed a great feel of improvement from the second quarter 2011.

Results also demonstrate that Spartan continued its momentum from the first quarter of 2012 through the second quarter with Spartan reporting greater profitability of $0.08 per diluted share excluding restructuring items, growth in orders and growth in backlog to $173.3 million.

We ended the second quarter of 2012 on a positive note and entered the second half of the year in a stronger competitive position than at the beginning of the year. At the same time, all of us are aware that the global economy and financial markets can change very, very quickly today leaving me to be cautiously optimistic about the environments in which we operate.

For the first time in over a year, all of our business units showed improvement in their operating results. Revenues were up across the board during the second quarter of 2012 and our businesses converted that revenue growth in the earnings growth as well, simply results.

Simply put, our blended growth strategy of acquisitions, alliances and organic innovations is delivering the revenue growth and the focus on operations is improving profitability. The main points, I and we hope you take away from this morning’s call, are Spartan’s growth in revenues, in earnings, plus higher orders and order backlog throughout the company.

The major factors behind Spartan’s growth are product and industry leadership and delivering positive results by executing our strategic and operational plans. Joe Nowicki will talk about the quarterly results in greater detail, but I want to mention a few of the highlights especially in our Delivery & Service and Emergency Response businesses.

You’ll remember that in the second quarter, we combined Crimson and Classic Fire into Spartan ERV, which stands for Spartan Emergency Response Vehicles. We also named Dennis Schneider to lead Spartan ERV and Spartan ERC, our Emergency Response Charity business, so we have now one combined entity, Spartan ER. These moves along with our new products grabbed a lot of attention for Spartan’s Emergency Response businesses and generating growth and revenue and the order backlog, simply results.

Spartan’s ER Chassis business grew by $5.8 million from the second quarter of 2011 to 2012 while ERV sales were up $1.7 million for the same period. Combined ERV order backlog of the vehicles group at June 30 of 2012 was up by $3 million to $83.3 million.

While ERC, the Chassis Group, the order intake in June was the highest we’ve seen in the last four years. Higher orders in ERC is especially encouraging since it indicates that despite budgetary pressures, municipality still recognize the advantages and total value of a custom fire-truck chassis. We’re going a lot of things right in our Emergency Response businesses and our customers are noticing. The market is noticing.

We will continue to execute the plan, which is to develop and bring market innovative new products that we brought the competition and leave them behind. That’s what we did with our Spartan Advantage Protection System or APS as we call it.

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