Supreme Industries, Inc. reported that gross margin from continuing operations during the first quarter was 14.8%, compared with 19.7% in last year's first quarter.
Supreme Industries, Inc. (NYSE MKT: STS) reported that gross margin from continuing operations during the first quarter was 14.8%, compared with 19.7% in last year's first quarter.
The current-year margin contraction was primarily due to unfavorable product mix compared to 2013, which included a higher proportion of lower-margin fleet business and its associated start up inefficiencies, as well as a lower proportion of higher-margin retail and specialty vehicles. Shortages of light-duty chassis from a major supplier constrained shipping volume during the quarter causing higher labor and overhead cost compared to last year, and production efficiencies were also hampered by the extremely inclement weather.
All earnings per share and share figures were adjusted for the 5% stock dividend distributed in the second quarter of 2013.
During the first quarter of 2014, the previously disclosed divestiture of the company's shuttle bus assets was completed. As a result, the shuttle bus business has been reclassified as a discontinued operation in the company's financial statements.
Consolidated net sales from continuing operations in the quarter were $53.4 million, compared with $56.4 million in the first quarter of 2013. The revenue decrease was primarily due to lower sales of specialty vehicles versus the prior year, as well as chassis constraints impacting first-quarter fleet shipments.
Other income decreased $700,000 primarily due to a realized gain on the sale of real estate during the first quarter of 2013. Interest expense improved 22% from last year on lower debt balances. Income tax expense from continuing operations was $100,000, down from $1.3 million in last year's first quarter. The effective tax rate from continuing operations in the first quarter of 2014 was 32.4%, compared with 33.2% in 2013's first quarter.
Income from continuing operations was $200,000, or $0.01 per diluted share, versus $2.6 million, or $0.16 per diluted share, last year. Including the $1.6 million after-tax operating loss from the discontinued shuttle bus operations, the net loss reported for the first quarter was $1.3 million, or $0.08 per diluted share compared with last year's net income of $2.3 million, or $0.14 per diluted share.
"Our first-quarter product mix and delayed deliveries from major suppliers had a negative impact on margins in the quarter," said President and Chief Executive Officer Mark Weber. "We are taking actions to mitigate our business risk from future chassis supply interruptions by increasing the size of our pools of chassis and broadening the product offering.”
Backlog, excluding shuttle bus, at the end of the quarter stood at $74 million, compared with $72 million at December 28, 2013, and $69 million at the end of 2013's first quarter.