Spartan Motors (SPAR) Tops Q1 EPS by 1c, Revenues Beat; Affirms FY19 EPS/Revenue Outlook

Spartan Motors (NASDAQ: SPAR) reported Q1 EPS of $0.04, $0.01 better than the analyst estimate of $0.03. Revenue for the quarter came in at $234 million versus the consensus estimate of $204.94 million.

First Quarter 2019 HighlightsFor the first quarter of 2019 compared to the first quarter of 2018:

• Sales increased $61.0 million, or 35.2%, to $234.0 million from $173.0 million.
• As anticipated, the first quarter 2019 results included incremental tariff-related commodity cost increases and higher component costs totaling $2.3 million, or $0.05 per share, that negatively impacted net income, adjusted net income and adjusted EBITDA.
• Gross profit margin declined 230 basis points to 10.5% of sales from 12.8% of sales. Of the decline, 170 basis points were attributable to $32.5 million of USPS chassis pass-through sales and an additional 100 basis points were due to the tariff-related headwinds, partially offset by pricing and operational improvements.
• Net income decreased to $1.4 million, or $0.04 per share, from $4.2 million, or $0.12 per share. Prior-year net income includes a net working capital adjustment of $1.5 million, or $0.03 per share, relating to the Smeal acquisition and a tax benefit of $1.4 million, or $0.04 per share, related to the appreciation in value of equity-based compensation that vested during the year-ago quarter. Excluding these items, net income was comparable to the prior year.
• Adjusted EBITDA decreased 17.9% to $4.6 million, or 2.0% of sales, from $5.6 million, or 3.2% of sales.
• Adjusted net income decreased $1.8 million, or 54.5%, to $1.5 million, or $0.04 per share, from $3.3 million, or $0.09 per share. Excluding the $1.4 million tax benefit from the first quarter of 2018, adjusted net income decreased $0.4 million, or 21.1%, from the prior year.
• Consolidated backlog, excluding the one-time multi-year USPS truck body order at March 31, 2019, totaled $359.2 million, up $18.6 million, or 5.5%, compared to $340.6 million at March 31, 2018. Including the USPS order, consolidated backlog totaled $432.3 million compared to $554.6 million a year ago.

"We are pleased with the positive start to the year, as many of the initiatives we pursued last year are gaining traction," said Daryl Adams, President and Chief Executive Officer. "With the hard work and concentrated efforts of our entire team, we were able mitigate continued tariff-related commodity headwinds and post solid operating results to start the year. We also achieved new business wins in several key markets in all three of our business units, which we expect will help drive our results for the remainder of the year."

"The hard work, resourcefulness and determination of our teams have set a positive foundation for long-term performance," continued Adams. "Each business unit has made progress on several fronts, and we are confident that this effort has set the stage for sustained revenue growth, improved profitability and broader geographic reach."

GUIDANCE:

Spartan Motors sees FY2019 EPS of $0.57-$0.65, versus the consensus of $0.61. Spartan Motors sees FY2019 revenue of $865-9050 million, versus the consensus of $890.43 million.

For earnings history and earnings-related data on Spartan Motors (SPAR) click here.

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