Supreme Industries, Inc. today announced that net sales were down 9.5% for its first quarter ending March 29.
Net sales were $75.9 million, compared with $83.9 million, in the same year-ago period. The 9.5 percent decline was attributed primarily to the slowing economy, fleet order scheduling being later than the prior year and a pronounced downturn in the truck manufacturing industry.
Sales of Supreme's core dry-freight products were off 24 percent year-over-year, while increased sales of buses and other specialty vehicles offset a considerable portion of this decline. Net income was $0.2 million, or $0.02 per diluted share, compared with $1 million, or $0.08 per diluted share, in last year's first quarter.
"Our StarTrans bus division turned in a very solid quarter, with sales up 13 percent versus a year ago," commented Supreme President and Chief Operating Officer Robert W. Wilson. "In particular, our new premium products are being well received in the market. Additionally, our SilverCrown luxury motorcoaches realized a substantial sales increase during the period. We are also experiencing improving order intake for hybrid vehicles and anticipate that this trend will continue. It appears that our strategy of broadening our market opportunities through expanded specialty product offerings is being validated."
Gross profit margin as a percentage of net sales was 10.0 percent, versus 10.7 percent in 2007. To mitigate rising commodity and fuel costs, the company implemented a 3 percent price increase on core truck products effective mid-March. Selling, general and administrative expenses of $6.9 million were unchanged from the prior-year quarter.
Interest expense declined to $0.6 million from $0.7 million in 2007. Stockholders' equity at quarter-end was $74.3 million, or $5.75 per share, versus $75.5 million, or $5.84 per share, at Dec. 29, 2007. Working capital totaled $64.4 million, compared with $58.5 million at year-end 2007. The working capital ratio at March 29 was 3.5 to 1, compared with 3.3 to 1 at the end of last year; and long-term debt as a percentage of total assets stood at 25.6 percent, versus 21.7 percent at Dec. 31, 2007. The increase in debt was principally attributable to increased working capital associated with seasonal fleet orders.
The backlog at March 29 reflected the change in mix of business. Supreme experienced a 7 percent decrease in core truck products backlog while bus and luxury motorcoach backlogs increased by 34 percent and 115 percent, respectively. As a result, the backlog at quarter-end increased to $85.8 million from $81.3 million at March 31, 2007.
The company noted that, subsequent to quarter-end, it received two important orders not included in the above backlog. The Department of State has affirmed the quality of Supreme's prototype armored vehicles by placing an initial order for 25 units valued at $2.1 million. These orders relate to a master contract agreement signed in 2007 for up to $100 million over five years. The contract calls for periodic orders by the DOS and is subject to termination at any time. Additionally, the company received an order from a cable company in the Northeast for 162 Astro Bodies with a total value of approximately $1.0 million. These units will be produced in partnership with General Motors and will be delivered beginning in the third quarter.
"Looking ahead, truck industry participants are anticipating a continuation of the downturn for the balance of the year," Wilson commented. "Additionally, the strike at auto parts maker American Axle is a concern as it has the potential to significantly affect chassis availability from General Motors. The strike had minimal impact on our production in the first quarter; however, we have begun to experience production disruptions in the current quarter, and are hopeful for a speedy resolution.
"The launch of our newly designed van body remains on schedule with production targeted to commence during the fourth quarter of this year. The redesigned product will increase the standardization of components across all of our production facilities, and reduce the time and costs associated with customizing and producing these vehicles. Finally, with our strong balance sheet, diversified products and excellent management team, we intend to capitalize on pent-up demand in the industry when the economy rebounds," Wilson concluded.
The Supreme Industries Board of Directors recently announced a cash dividend on its outstanding Class A and Class B Common Stock, based upon the company's financial condition and business prospects. Stockholders of record as of May 20, 2008, will receive $0.095 for each share owned on that date, payable on May 27, 2008. This cash dividend is the nineteenth consecutive quarterly cash dividend since the Company commenced payment of cash dividends in 2003. Future cash dividend payments are necessarily subject to then current business conditions and outlook.