Supreme Industries, Inc. (NYSE Amex: STS), reported a slowing in the rate of decline in sales during the third quarter.
The manufacturer of specialized commercial vehicles, including truck bodies, shuttle buses, armored vehicles and homeland response vehicles, announced that third-quarter 2009 net sales were off 18 percent to $50.1 million from $61.1 million in the same period a year ago. For the first nine months of 2009, net sales declined 30 percent to $149.0 million, versus $212.3 million in 2008's first nine months. Total sales backlog stood at $61.9 million, versus $64.9 million as of September 2008.
The Company's reported a net loss of $1.5 million, or $0.11 per share, versus a net loss of $600,000, or $0.04 per share, in last year's comparable quarter. For the first nine months of 2009, Supreme reported a net loss of $4.0 million, or $0.28 per share, compared with the 2008 net loss of $200,000, or $0.01 per diluted share.
"During 2009, we incurred losses primarily due to the decline in the commercial truck market over the past 12 months, which is down approximately 40 percent according to the latest Polk report,” said Robert Wilson, president and chief operating officer. “With core dry freight trucks and related products having historically represented approximately 65 percent of our revenues on average over prior periods, our revenues have been dramatically affected by these conditions. To date, we have reduced our annualized operating costs in excess of $15 million to help mitigate the effects of the decline in our core truck revenue. We are continually executing a strategy to improve our operational processes, reduce costs and research new materials to increase value to our customers, with an emphasis on 'green' materials and technologies, while also upgrading existing and developing new product offerings."
Gross profit margin as a percentage of net sales was 7.8 percent for the 2009 quarter and 6.9 percent for the nine-months. This compares with 8.9 percent and 9.6 percent, respectively, for the like periods of 2008. The year-over-year contraction for both periods was due primarily to lower sales volume and the effect of fixed manufacturing overhead costs.
Selling, general and administrative expenses decreased $1.5 million, or 22 percent, to $5.3 million for the third quarter, and for the nine months, were 21 percent lower at $16.5 million. This compares with SG&A expenses of $6.8 million and $20.8 million for the respective periods in 2008. The decrease was primarily attributable to employee headcount and related cost reductions, which, the Company indicated, are a large part of the cost-savings initiatives begun in late 2008.
We believe the truck market is building pent-up demand as the average age of vehicles in use is estimated to be more than nine years, compared with the historic average of six years,” Wilson said. “However, when we will benefit from this market condition is unclear. On the other hand, our armored and bus divisions are anticipated to perform favorably for the balance of 2009 and into 2010. Our focus is to lower our cost structure (particularly in the truck division), restore profitability as soon as possible, maximize cash flows and reduce debt."