Spartan Motors (SPAR) Tops Q1 EPS by 7c, Revenues Miss; Withdraws FY20 Guidance

Spartan Motors (NASDAQ: SPAR) reported Q1 EPS of $0.32, $0.07 better than the analyst estimate of $0.25. Revenue for the quarter came in at $176.9 million versus the consensus estimate of $180.22 million.

First Quarter 2020 Highlights from Continuing Operations

For the first quarter of 2020 compared to the first quarter of 2019:

• Sales increased $4.7 million, or 2.8%, to $176.9 million from $172.2 million. Sales increased $37.4 million, or 26.8%, excluding $32.7 million of pass-through revenues from the one-time USPS truck body order in the prior year.
• Gross profit margin improved 850 basis points to 20.5% of sales from 12.0% of sales.
• Income from continuing operations increased $6.9 million, or 142.9%, to $11.7 million, or $0.33 per share, from $4.8 million, or $0.13 per share. Income from continuing operations includes a $2.6 million, or $0.08 per share, income tax gain resulting from the recognition of a loss carryback relating to the divestiture of ER and available under the newly enacted CARES Act.
• Adjusted EBITDA increased $10.0 million, or 119.4%, to $18.4 million, or 10.4% of sales, from $8.4 million, or 4.9% of sales. The prior year adjusted EBITDA as a percentage of sales was negatively impacted by approximately 110 basis points due to pass-through sales from the one-time USPS truck body order.
• Adjusted net income increased $6.1 million, or 115.1%, to $11.4 million, or $0.32 per share, from $5.3 million, or $0.15 per share.
• Consolidated backlog at March 31, 2020, totaled $344.7 million, up $200.1 million, or 138.4%, compared to $144.6 million at March 31, 2019, excluding the one-time, multi-year USPS truck body order of $73.1 million.

"Despite the severity of the market conditions we are currently experiencing, we are pleased with the strong start to the year, as many of the transformative initiatives we pursued last year are gaining traction," said Daryl Adams, President and Chief Executive Officer. "With the divestiture of ER, we benefited from operating in a more focused core market within an expanded geographic footprint, as a result of our recent acquisitions in the delivery and specialty vehicle markets. Though we continued to manufacture in this challenging environment, our operations were impacted by the pandemic. Near the end of the first quarter, we took a series of aggressive actions to mitigate the Covid impact, including actions to safeguard our employees and adjust production on a plant-by-plant basis to keep up with customer demand."

Withdrawing Full Year 2020 Guidance

Despite the strong start to the year and the ongoing market demand for our products, the magnitude and duration of the COVID impact remain uncertain. The Company currently anticipates returning to normal production levels by the end of May and has the backlog position to deliver solid growth for the balance of the year, excluding USPS chassis pass-through sales. However, production at any of our facilities may be further impacted by chassis and component availability, as well as possible future government, market or Company response related to the pandemic. For these reasons, Spartan is withdrawing full year 2020 financial guidance and plans to provide an updated outlook once we have greater clarity regarding the implications of COVID-19 on our business.

"Our strong first quarter results are a major indicator that our business transformation efforts and strategy are working. As we weather this storm, we are being deliberate about making the production adjustments needed to operate the business safely and efficiently in the short-term, and I'd like to thank the team for their continued flexibility and cooperation in our joint response. We believe the disruption to our business is only temporary. Despite the current headwinds, our strong backlog position and increasing demand provide us with an added measure of confidence over the long-term," concluded Adams.

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

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