Spartan Motors, Inc. announced operating income of $1.1 million, or diluted EPS of $0.02, for the second quarter of 2013. All of the company's business segments posted improved operating results compared to the first quarter of 2013, with Specialty Vehicles and Emergency Response reporting higher operating income compared to the year-ago second quarter. In the second quarter of 2012, Spartan posted operating income of $3.9 million, or diluted EPS of $0.07, in large part due to the positive contribution of Utilimaster's parts and field service solutions.
Second quarter 2013 revenues grew to $120.9 million versus $114.4 million, up 5.7 percent from Q2 2012 due to growth in the Specialty Vehicles segment. Revenue in the Specialty Vehicles segment increased $9.9 million from the second quarter of 2012 to $32.9 million. Growth in Specialty Vehicles revenue was attributable to an increase in RV sales of $4.2 million compared to the prior year, and the completion of a limited-run ILAV (Iraqi Light Armored Vehicle) order in the Defense unit. Emergency Response revenues increased slightly to $43.8 million in Q2 2013 from $43.6 million in Q2 2012. Growth in these two segments more than offset a year-over-year revenue decline of $3.6 million in the Delivery & Service segment to $44.2 million in Q2 2013, according to the company.
John Sztykiel, President and CEO of Spartan Motors, Inc., stated, "For Spartan, the second quarter of 2013 was about demonstrating operational improvement in every market segment from the first quarter of 2013 and backlog growth, both sequentially and year-over-year. The Company generated improved results by implementing the D (Diversified Growth) and I (Integrated Operational Improvement) in DRIVE. We expect improved results in the third and fourth quarters of 2013 as we execute our DRIVE strategy and deliver on our shareholder commitments."
According to the company, D.R.I.V.E. is Spartan's operating strategy based on the five following tenets:
• Diversified Growth
• Redefining New Technologies
• Integrated Operational Improvement
• Vibrant Culture
• Extend Our Core
Spartan's Interim Chief Financial Officer Lori Wade provided an outlook for the remainder of 2013, "Spartan met our expectations, posting a modest profit for the second quarter of 2013. We expect revenue and operating income in the third and fourth quarters of 2013 to increase from Q2 2013 and the respective comparable quarters of 2012. The challenges we face in the DSV segment will impact our Q3 2013 performance but should be resolved prior to the end of 2013. Despite these challenges, we expect DSV to be profitable in the third and fourth quarters of this year, with performance continuing to improve in 2014 as anticipated cost savings are realized. For the year, we expect to realize mid-single-digit revenue growth. Lower margins in the first quarter of 2013 are expected to reduce full-year operating margins, but margins are expected to improve throughout the remainder of the year. For 2013 as a whole, we expect average operating expenses to increase to support growth initiatives, but to remain within a range of 11.5 percent - 12.0 percent of sales for the year. Operating margins are projected to be approximately 0.5 percent - 1.5 percent for the year, with the second half of 2013 expected to exceed the full-year average."
John Sztykiel concluded his remarks, stating, "Spartan met its target of reporting a profit for the second quarter of 2013. We also generated outstanding growth in order backlog – up 34.5 percent from Q2 2012 – due to the growing demand for our innovative products. Growth in backlog is critical to our future since a strong future revenue stream is needed for operational improvement to have an impact on profitability.
"It is important to note that all three of our operating segments showed improvement in Q2 from Q1 2013, with two of the three reporting operating income in Q2. We project further improvements in operating performance in the third and fourth quarters of 2013 compared to the second quarter of 2013, and expect Spartan to be profitable for the year. We are committed to increasing shareholder value and are moving forward every day."
