Supreme Full-Year Profit SlipsPosted: Updated:
Goshen-based Supreme Industries Inc. (NYSE: STS) is reporting 2013 net income of $6.4 million, down from $11.8 million in 2012. Chief Executive Officer Mark Weber believes last year's decision to divest its shuttle bus business will result in better operating efficiencies.
February 14, 2014
Goshen, Ind. -- Supreme Industries, Inc. (NYSE MKT: STS), a leading manufacturer of specialized commercial vehicles including truck bodies and specialty vehicles, today announced financial results for its fourth quarter ended December 28, 2013. All earnings per share and share figures have been adjusted for the 5% stock dividend distributed in the second quarter of 2013.
2013 Fourth-Quarter Results
Consolidated net sales for the fourth quarter increased 25.6%, 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% of quarterly sales, compared with 13.2% 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% 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.
Source: Supreme Industries Inc.