Spartan Motors, Inc. (NASDAQ: SPAR) announced third-quarter operating income of $1.8 million. After an income tax provision of $1.3 million to adjust income tax expense for 2013 to a projected 20% rate for the year, Spartan reported net income of $600,000—compared to an operating loss of $300,000 in the same period last year.

"The third quarter was another quarter in which we executed the plan, the "I" in DRIVE (Integrated Operational Improvement), and delivered improved operating results,” said John Sztykiel, Spartan's Chief Executive Officer. “All three of our segments, Emergency Response (ER), Delivery and Service (DSV), and Specialty Vehicles (SV), posted operating income, a reflection that DRIVE is delivering positive results across Spartan Motors.  Our backlog grew by 37.8% compared to Q3 2012, and we improved our cash position by $4.4 million from June 30, 2013, both positive indicators as we close out 2013. 

"DRIVE is working, and we are moving forward.  This progress is expected to lead to better operating performance in the fourth quarter of 2013 and into 2014.  With our major operational initiatives showing positive results and our greatest challenges behind us, we are shifting more attention to generating diversified growth."

For the first nine months of 2013, Spartan reported revenue of $343.1 million versus $346.1 million in the same period of 2012.  The decline in revenue from the prior year was due to the disruption caused by Utilimaster's move of walk-in van production to Bristol, Ind. in the first quarter of 2013 and the completion of a large field service solutions program in mid-2012.  Spartan booked an operating loss of $3.9 million for 2013 year to date, compared to operating income of $200,000 for the first three quarters of 2012. 

Delivery & Service Vehicles (DSV)

  • DSV sales grew 12.0% to $54.9 million from $49.0 million in the third quarter of 2012.  During the third quarter of 2013, DSV ramped up production of a 1,900-unit Reach order from FedEx and added a second shift in early August to support this order.  During the third quarter of 2013, DSV produced 402 Reach commercial vehicles, compared to 182 units in the third quarter of 2012.  Sales of walk-in vans also increased during Q3 2013, more than offsetting slower truck body sales and lower aftermarket parts revenue.   
  • Third quarter 2013 operating income increased to $1.3 million from $0.6 million in the third quarter of 2012.  DSV made progress in its Bristol launch efforts during the third quarter of 2013, raising daily walk-in van production to an average of 21 per day from 14 per day in Q2 2013.  DSV also reduced material handling costs during the third quarter with further progress expected in the fourth quarter of 2013.
  • Backlog at the end of Q3 2013 totaled $87.5 million, up from $65.0 million at the end of Q3 2012.  Backlog declined sequentially from $100.4 million at June 30, 2013, which is typical for the DSV segment as vehicle deliveries are lower toward the end of the calendar year. 

Emergency Response (ER)

  • ER posted revenue of $42.9 million in Q3 2013, up 7.5% from Q3 2012 revenue of $39.9 million.  Sales of Emergency Response Vehicles (ERV) rose 20.4% to $24.2 million from $20.1 million in Q3 2012.  Emergency Response Chassis (ERC) sales declined slightly to $18.7 million from $19.8 million in the third quarter of 2012, largely due to order timing issues that resulted in several completed chassis remaining in inventory at September 30, 2013.
  • Operating performance improved during the third quarter of 2013 with the ER segment reporting operating income of $0.7 million, up from $0.1 million in the third quarter of 2012.  ERV raised its output as demonstrated by its 20.4% revenue growth and made progress in improving operating efficiency as well.  Further progress is expected throughout the fourth quarter of 2013 and into 2014.  
  • Backlog again increased during the quarter ended September 30, 2013 to $119.7 million, compared to $85.9 million at September 30, 2012, and $115.1 million at June 30, 2013.  Growth in backlog is due to higher fire truck demand, combined with production constraints at our Brandon, SD facility.  This has resulted in order-to-delivery times of nine months or more in certain cases.  Operational improvement initiatives currently underway at Brandon are raising production capacity and operating efficiency.  Management expects these initiatives to reduce lead times and enhance profitability.
  • Spartan ERV was awarded a contract worth approximately $17 million to supply 56 custom chassis fire trucks to the Peruvian Volunteer Fire Department Headquarters during 2014.  This contract is scheduled to be finalized October 31, with an option for the Peruvian authority to purchase an additional 14 units.  Spartan ERV plans to build these units in its Ocala, Fla. facility.

Specialty Vehicles (SV)

  • Revenue increased 18.0% to $28.2 million in the third quarter of 2013 compared to $23.9 million in the third quarter of 2012.  Sales of motorhome chassis grew to $21.1 million versus $17.1 million a year ago due to market share gains made by a major customer.   Production of Isuzu N-series trucks also increased during the third quarter of 2013, more than offsetting a slight decline in Aftermarket Parts & Accessories sales compared to the prior year. 
  • Operating income grew to $1.6 million in Q3 2013 from $0.5 million due to revenue growth and the positive impact from turnaround efforts in the motorhome chassis business that began in early 2012. 
  • Order backlog at September 30, 2013 rose to $24.7 million from $17.4 million at September 30, 2012 due to motorhome chassis backlog nearly doubling from the prior year.  On a sequential quarter basis, backlog increased from $17.6 million at June 30, 2013 on the strength of motorhome chassis orders.   
  • During the third quarter of 2013, SV's Aftermarket Parts & Accessories (APA) group was notified it had received a Gold DLA Land and Maritime Recognition for Excellence Award for 2012 from the Defense Logistics Agency.  This was the fourth consecutive year that APA has received the Gold award.  APA earned a perfect score of 100 for delivery and quality performance with over 1,500 shipments made during the year.