Supreme Industries, Inc. (NYSE MKT: STS) reported that consolidated net sales from continuing operations in 2014 were $236.3 million, compared with $246.8 million in 2013.
The revenue decline in 2014 was due to softer retail demand, as well as a chassis shortage and severe weather that hampered first-quarter sales and profitability. As a result, full-year gross margin contracted to 18.6% of net sales, compared with 19.6% of net sales in the prior year.
Operating income in 2014 was $13 million, compared with $17.6 million in 2013, and income from continuing operations was $8.5 million for 2014, down from $11.2 million the year before.
The company's discontinued shuttle bus operations generated a $1.6 million after-tax net loss in 2014 and an after-tax net loss of $4.8 million in 2013. Including the negative impact from discontinued operations on both years' results, reported net income improved to $6.9 million, or $0.41 per diluted share in 2014, up from reported net income of $6.4 million, or $0.39 per diluted share, last year.
"During 2014, we actively addressed underperforming business units, invested capital to enhance growth and efficiency, and elevated customer focus across the organization. These initiatives and our improved financial condition have put us in the position to reinstate a quarterly cash dividend and return capital to shareholders," said Mark Weber, President and Chief Executive Officer. "The growth in our order backlog also provides evidence that our sales initiatives are beginning to gain traction. These internal efforts, combined with positive market momentum, give us optimism as we look ahead to the coming year."
"Order backlog at the end of 2014 was up approximately 13% to $79.9 million, compared with $70.8 million at the end of the prior year and the backlog has continued to grow since the beginning of 2015, due to the receipt of additional fleet orders," he concluded.
Fourth-quarter net income was $1.5 million, down 2% from $1.7 million for the same period a year ago.
The 2013 results included a $0.5 million net loss related to discontinued operations. Net income from continuing operations was $1.5 million or $0.09 per diluted share in the final quarter of 2014, versus $2.1 million, or $0.13 per diluted share, in last year's comparable quarter.
Consolidated net sales from continuing operations in the fourth quarter of 2014 declined to $53.3 million, compared with $64.9 million in the same quarter last year. In the prior year quarter, net sales reflected an incremental fleet order of approximately $8 million that was placed unseasonably late during the 2013 calendar year. That account returned to a more normalized spring delivery pattern in 2014, resulting in the majority of the year-over-year decline of fourth quarter sales.
"The work truck market reported mixed results versus 2013 for the quarter; however, our new orders gained momentum," said Weber. "Our customers are generally optimistic about future market conditions and are anticipating growth in 2015, which is reflected in our improved order backlog."
Due to the lower net sales, gross profit from continuing operations declined to $10.0 million in the quarter, versus $11.2 million last year. However, gross margin improved to 18.8% of sales, compared with 17.2% of sales in the fourth quarter of 2013. The current quarter margin expansion resulted from overhead cost controls and the lower proportion of fleet shipments compared with the prior year.
Operating income from continuing operations decreased to $2.4 million from $3.2 million primarily due to the lower sales level. Interest expense increased $0.2 million during the quarter as a result of more chassis on hand to bridge possible OEM delivery delays.