Supreme Industries, Inc. (NYSE Amex: STS) announced that net sales for the second quarter declined 34 percent to $49.6 million, compared with $75.3 million in the prior-year quarter. For the first half of 2009, net sales declined 35 percent to $98.9 million, versus $151.2 million in 2008’s first half. Sales declines for both periods were attributable primarily to lingering recessionary conditions and restrictive credit markets.
The second-quarter net loss was $1.1 million, or $0.08 per share, versus net income of $0.2 million, or $0.02 per diluted share, in last year’s comparable quarter. For the first half of 2009, the company reported a net loss of $2.5 million, or $0.18 per share, compared with 2008 net income of $0.4 million, or $0.03 per diluted share.
Supreme President and Chief Operating Officer Robert W. Wilson commented: “Management’s aggressive efforts to reduce costs have mitigated the impact of the unprecedented downturn in the commercial vehicle market. On a sequential basis, we generated improvement in gross margin, and narrowed our operating losses by 49%, on relatively flat revenues, versus the first quarter of the year.”
Compared with last year’s second quarter, sales in Supreme’s core dry-freight and bus product lines were off 49 percent and 14 percent, respectively. However, the company’s armored vehicle division posted a 351 percent sales increase versus the prior-year period. Net sales declines for the first half of 2009 were comparable with the quarterly results, with dry-freight and buses decreasing 47 percent and 20 percent, respectively, while armored increased 221 percent versus the first six months of 2008.
“Benefiting from the Department of State business, our armored vehicle segment continues to be a performance standout as revenues for the second quarter and first half grew $3.4 million and $7.2 million, respectively, from 2008,” added Wilson. “Going forward, we expect the armored division production will continue to remain steady for the balance of 2009. Our bus division is also expected to continue to show sequential improvement in the second half of 2009. Both businesses are healthy and backlogs are strong, which will aid in partially offsetting the depressed dry-freight truck body business.”
Gross profit margin as a percentage of net sales was 7.3 percent for the second quarter of 2009 and 6.5 percent for the first half. That compares with 5.7 percent in first-quarter 2009, and 9.8 percent and 9.9 percent, respectively, for the second quarter and first half of 2008. The year-over-year gross margin contraction for both periods was primarily the result of lower unit volume and the fixed nature of certain overhead expenses.
Selling, general and administrative expenses decreased $1.6 million, or 23 percent, to $5.4 million for the second quarter, and for the six months, were down 20 percent to $11.2 million. This compares with SG&A of $7.0 million and $14.0 million for the respective periods in 2008. The decreases were primarily attributable to headcount and wage reductions.
“Stringent working capital management has allowed us to pay down 42 percent of our long-term debt since year-end 2008, and our working capital ratio was a still-healthy 3.2 to 1,” Wilson said. “We are pleased with the debt reduction and with the sequential operating improvements we experienced during the quarter. While encouraged by early indications of easing conditions in the market and industry forecasts for rebounding sales in 2010, until those signals translate into tangible evidence, we will proceed cautiously and continue our aggressive focus on enhancing revenue opportunities and reducing costs.”