Spartan Motors Reports Fourth Quarter and Full-Year 2019 Results
As previously announced, the Company divested its Emergency Response (ER) business effective
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-yearUSPS 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 atDecember 31, 2018 , excluding the one-time, multi-yearUSPS 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
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
Adjusted EBITDA increased
The segment backlog at
Specialty Chassis and Vehicles (SCV)
SCV segment sales decreased
Adjusted EBITDA increased
The segment backlog at
Discontinued Operations
On
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
Conference Call, Webcast, Investor Presentation and Investor Information
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
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
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Consolidated Balance Sheets |
||||||
(In thousands, except par value) |
||||||
(Unaudited) |
||||||
|
|
|||||
2019 |
2018 |
|||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ 19,349 |
$ 27,439 |
||||
Accounts receivable, less allowance of |
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 |
- |
||||
|
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, |
353 |
353 |
||||
Additional paid in capital |
85,148 |
82,816 |
||||
Retained earnings |
86,764 |
103,571 |
||||
|
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 |
||||
|
||||||||
Consolidated Statements of Operations |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
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 |
$ (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 |
|
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Sales and Other Financial Information by Business Segment |
|||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||
Year Ended |
|||||||||||||||||||||||||||||||||||||||
Business Segments |
|||||||||||||||||||||||||||||||||||||||
Fleet Vehicles & |
Specialty |
Other |
Consolidated |
||||||||||||||||||||||||||||||||||||
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 |
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|
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Sales and Other Financial Information by Business Segment |
|||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||
Year Ended |
|||||||||||||||||||||||||||||||||||||||
Business Segments |
|||||||||||||||||||||||||||||||||||||||
Fleet Vehicles & |
Specialty |
Other |
Consolidated |
||||||||||||||||||||||||||||||||||||
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 |
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|
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Sales and Other Financial Information by Business Segment |
|||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
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Business Segments |
|||||||||||||||||||||||||||||||||||||||
Fleet Vehicles & |
Specialty |
Other |
Consolidated |
||||||||||||||||||||||||||||||||||||
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 |
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|
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Sales and Other Financial Information by Business Segment |
|||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
Business Segments |
|||||||||||||||||||||||||||||||||||||||
Fleet Vehicles & |
Specialty |
Other |
Consolidated |
||||||||||||||||||||||||||||||||||||
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) |
||||||||||
|
|
|
|
|
||||||
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 |
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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 |
Twelve Months Ended |
||||||||||||||
|
2019 |
% of |
2018 |
% of |
2019 |
% of |
2018 |
% of |
|||||||
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 |
|||||||
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
Juris Pagrabs, Group Treasurer & Director of Investor Relations, Spartan Motors, Inc, 517-997-3862