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Supreme Industries Increases Fourth-Quarter Sales

February 14, 2014

Supreme Industries, Inc., a manufacturer of specialized commercial vehicles including truck bodies and specialty vehicles, announced financial results for its fourth quarter ended December 28, 2013. All earnings per share and share figures have been adjusted for the 5-percent stock dividend distributed in the second quarter of 2013.

2013 Fourth-Quarter Results

Consolidated net sales for the fourth quarter increased 25.6 percent, to $72.5 million, compared with $57.7 million last year. The revenue increase was attributable to a fall fleet build and improved retail demand for truck bodies, partially offset by lower sales volume in the specialty vehicle and bus divisions.

Gross margin expanded to 15.2 percent of quarterly sales, compared with 13.2 percent in last year's fourth quarter, despite margin pressure in the bus product line. The margin improvement, combined with higher net sales, drove gross profit up to $11.1 million, or a 45.7 percent increase from the $7.6 million reported in the fourth quarter of 2012. The margin expansion is primarily due to product mix, continued manufacturing efficiency improvements and higher capacity utilization.

An income tax expense of $0.7 million was recorded in the quarter due to the Company's return to normalized tax rates. In last year's comparable period, the Company recorded an income tax benefit of $0.1 million that included the reversal of a deferred tax valuation allowance due to improved profitability.

Net income for the fourth quarter was $1.7 million, or $0.10 per diluted share, up from net income of $0.4 million, or $0.02 per diluted share, last year.

During the quarter, the Company announced its intention to divest the highly competitive shuttle bus business. The increasingly competitive environment in the bus industry has led to higher discounting making it more difficult to meet Supreme's profitability objectives. While shuttle bus products represented less than 13% of the Company's consolidated 2013 sales, the business generated unacceptable margins in 2013.

On a proforma basis, adjusting and eliminating the net losses of the shuttle bus business (including costs associated with the King County lawsuit) and normalizing the 2012 income tax expense, diluted earnings per share more than doubled to $0.13, compared with $0.05 a year ago. A reconciliation of net income and net income per share is included with this press release.

"The decision to divest the shuttle bus business is expected to help us maximize shareholder value by optimally allocating resources where they will earn the highest return. Supreme's core business of manufacturing and selling customized truck bodies has recently undergone successful facilities and manufacturing process upgrades, resulting in better operating efficiencies and expanding margins for these products," said President and Chief Executive Officer Mark Weber.

2013 Full-Year Results

Consolidated net sales for the twelve-month period decreased 1.4%, to $282.3 million, from $286.1 million last year, due to lower bus and specialty vehicle sales offset by increased truck body volume. For the twelve months, gross profit increased to $46.8 million, from last year's $43.5 million. Gross margin, as a percentage of sales, increased to 16.6%, compared with 15.2% in 2012. The margin growth reflects improved product mix and margin-expansion initiatives including process improvements, manufacturing efficiencies and competitive sourcing.

Income tax expense increased by $3.2 million versus last year resulting from the normalized tax rates in 2013, and last year's reversal of the valuation allowance.

Reported net income for the twelve months was $6.4 million, or $0.39 per diluted share, compared with $11.8 million, or $0.73 per diluted share last year. On a proforma basis, adjusting and eliminating for the impact of the shuttle bus business (including costs associated with the King County lawsuit) and normalizing the 2012 income tax expense, diluted earnings per share for the full year improved to $0.68 compared to $0.53 for 2012.

Backlog at the end of the year increased 28.4% to $71.5 million, compared with $55.7 million at the end of 2012, excluding shuttle bus business.

Additional year-over-year key performance indicators include:

  • Working capital was $37.6 million at December 28, 2013, compared to $38.6 million for the fourth quarter 2012.
  • Net cash provided by operating activities in 2013 was $13.5 million, compared with $12.4 million in 2012.
  • Total debt declined more than 30% to $9.7 million at year end, compared with $14.1 last year.
  • Stockholders' equity increased 10.3% to $74.1 million at December 28, 2013, compared with $67.2 million at December 29, 2012.
  • Book value, on a per-share basis, grew to $4.59 at year-end versus $4.20 at the end of last year.

"The pending divestiture of the shuttle bus business represents a continued transition towards an organizational focus on profitable growth. As we enter 2014, we are encouraged by the opportunities we see in the work truck and specialty vehicle product lines, where customers value high-quality products and dependable delivery performance. Supreme will celebrate its 40th Anniversary during 2014, which is a direct result of our dedicated employees and loyal customers," Weber concluded.

Conference Call Information

A conference call will take place tomorrow, February 14, 2014, at 9:00 a.m. EST to review the 2013 fourth-quarter and full-year results. To participate in the live call, dial 877-300-8521 (International: 412-317-6026) 10 minutes before the call begins, or at 8:50 a.m. EST. The conference ID is 10040843. The call also will be streamed live and can be accessed at http://www.SupremeInd.com. Those unable to participate in the live conference call may access a replay, which will be available on Supreme's website for approximately 30 days.

About Supreme Industries

Supreme Industries, Inc. (NYSE MKT: STS), is a nationwide manufacturer of truck bodies and specialty vehicles produced to the specifications of its customers. The Company's transportation equipment products are used by a wide variety of industrial, commercial and law enforcement customers.

News releases and other information on the Company are available on the Internet at: http://www.supremeind.com or http://www.b2i.us/irpass.asp?BzID=1482&to=ea&s=0

Other than historical facts contained herein, the matters set forth in this news release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, and reflect the view of management with respect to future events. When used in this report, words such as "believe," "expect," "anticipate," "estimate," "intend," "plan" and similar expressions, as they relate to Supreme or its plans or operations, identify forward-looking statements. Such forward-looking statements are based on assumptions made by, and information currently available to, management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that the expectations reflected in such forward-looking statements are reasonable, and it can give no assurance that such expectations will prove to be correct.Important factors that could cause actual results to differ materially from such expectations include, without limitation, an economic slowdown in the specialized vehicle industry, limitations on the availability of chassis on which Supreme's product is dependent, availability of raw materials, raw material cost increases and severe interest rate increases. Furthermore, Supreme can provide no assurance that any raw material cost increases can be passed on to its customers through implementation of price increases for Supreme's products. The forward-looking statements contained herein reflect the current view of management with respect to future events and are subject to those factors and other risks, uncertainties and assumptions relating to the operations, results of operations, cash flows and financial position of Supreme. Supreme assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those contemplated by such forward-looking statements.

-FINANCIAL RESULTS FOLLOW-

 

Supreme Industries, Inc. and Subsidiaries

Consolidated Statements of Income

 

 

 

Three Months Ended

 

Twelve Months Ended

   

December 28,

 

December 29,

 

December 28,

 

December 29,

   

2013

 

2012

 

2013

 

2012

Net Sales

 

$

72,534,328

   

$

57,728,124

   

$

282,273,299

   

$

286,140,112

 

Cost of sales

 

 

61,475,298

 

 

 

50,135,847

 

 

 

235,520,946

 

 

 

242,644,088

 

Gross profit

   

11,059,030

     

7,592,277

     

46,752,353

     

43,496,024

 
               

 

Selling, general and administrative expenses

   

8,659,771

     

7,371,194

     

34,167,348

     

31,602,317

 

Legal settlement and related costs

   

-

     

161,329

     

3,600,161

     

616,744

 

Other income

 

 

(98,529

)

 

 

(450,472

)

 

 

(925,537

)

 

 

(1,217,057

)

Operating income

   

2,497,788

     

510,226

     

9,910,381

     

12,494,020

 
               

 

Interest expense

 

 

87,836

 

 

 

241,705

 

 

 

625,190

 

 

 

971,225

 

Income before income taxes

   

2,409,952

     

268,521

     

9,285,191

     

11,522,795

 
               

 

Income tax expense (benefit)*

 

 

744,450

 

 

 

(115,056

)

 

 

2,859,315

 

 

 

(310,190

)

Net income

 

$

1,665,502

 

 

$

383,577

 

 

$

6,425,876

 

 

$

11,832,985

 

               

 

Income per share:

               

Basic

 

$

0.10

   

$

0.02

   

$

0.40

   

$

0.74

 

Diluted

   

0.10

     

0.02

     

0.39

     

0.73

 
               

 

Shares used in the computation of income per share:

               

(Adjusted for 5% stock dividend paid on June 3, 2013)

               

Basic

   

16,180,874

     

15,980,849

     

16,113,136

     

15,954,564

 

Diluted

   

16,581,208

     

16,219,930

     

16,487,804

     

16,212,508

 

* The Company reported a tax benefit for both periods of 2012, resulting from the utilization of previously unrecognized net operating loss carryforwards.

 

Supreme Industries, Inc. and Subsidiaries

Consolidated Balance Sheets

 

 

 

 

 

 
   

December 28,

   

December 29,

   

2013

   

2012

         

 

Assets

         

Current assets

 

$

65,923,357

   

$

61,007,286

Property, plant and equipment, net

   

46,387,839

     

42,937,988

Other assets

 

 

1,219,655

   

 

1,142,809

Total assets

 

$

113,530,851

   

$

105,088,083

         

 

Liabilities

         

Current liabilities

 

$

28,343,456

   

$

22,363,408

Long-term liabilities

 

 

11,107,228

   

 

15,561,793

Total liabilities

   

39,450,684

     

37,925,201

Total stockholders' equity

 

 

74,080,167

   

 

67,162,882

Total liabilities and stockholders' equity

 

$

113,530,851

   

$

105,088,083

         

 

 

 

Supreme Industries, Inc. and Subsidiaries

Reconciliation of Net Income and Net Income Per Share

 

 

 

 

 

 

 

 

 
   

Three Months Ended

 

Twelve Months Ended

   

December 28,

 

December 29,

 

December 28,

 

December 29,

   

2013

 

2012

 

2013

 

2012

               

 

Net income, as reported

 

$

1,665,502

 

$

383,577

   

$

6,425,876

 

$

11,832,985

 
               

 

Normalized taxes (2012 periods adjusted to 2013 effective tax rate, net of tax benefit reported in 2012)

 

 

-

 

 

197,760

 

 

 

-

 

 

3,859,211

 

               

 

Tax adjusted net income before shuttle bus operations

   

1,665,502

   

185,817

     

6,425,876

   

7,973,774

 
               

 

Shuttle bus operations (including legal costs):

               

Reported legal settlement and related costs

   

-

   

161,329

     

3,600,161

   

616,744

 

Shuttle bus loss from operations, net of legal above

 

 

750,459

 

 

883,427

 

 

 

4,236,270

 

 

334,587

 

Total shuttle bus operations

   

750,459

   

1,044,756

     

7,836,431

   

951,331

 

Tax effect (shuttle bus rates–39.1% for 2013, 39.4% for 2012 periods)

 

 

293,429

 

 

411,634

 

 

 

3,064,045

 

 

374,824

 

Total adjustment, net of tax

 

 

457,030

 

 

633,122

 

 

 

4,772,386

 

 

576,507

 

Adjusted net income

 

$

2,122,532

 

$

818,939

 

 

$

11,198,262

 

$

8,550,281

 

               

 

Per Share Data:

               
               

 

Net Income (as reported, not calculated on this schedule)

               

Basic

 

$

0.10

 

$

0.02

   

$

0.40

 

$

0.74

 

Diluted

   

0.10

   

0.02

     

0.39

   

0.73

 

Adjusted income tax expense

               

Basic

   

-

   

(0.01

)

   

-

   

(0.24

)

Diluted

   

-

   

(0.01

)

   

-

   

(0.24

)

Shuttle bus operations

               

Basic

   

0.03

   

0.04

     

0.30

   

0.04

 

Diluted

 

 

0.03

 

 

0.04

 

 

 

0.29

 

 

0.04

 

Adjusted net income

               

Basic

 

$

0.13

 

$

0.05

   

$

0.70

 

$

0.54

 

Diluted

   

0.13

   

0.05

     

0.68

   

0.53

 
               

 

Shares used for per-share calculations:

               

(Adjusted for 5% stock dividend paid on June 3, 2013)

               

Basic

   

16,180,874

   

15,980,849

     

16,113,136

   

15,954,564

 

Diluted

   

16,581,208

   

16,219,930

     

16,487,804

   

16,212,508

 

Supreme Industries, Inc.
Investor and Media Contact:
Matthew J. Dennis, CFA, Supreme Investor Relations, 574-228-4130 

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