Supreme Industries, Inc. reported that consolidated net sales from continuing operations in the first half of 2014 and for the second quarter were basically flat.
Supreme Industries, Inc. (NYSE MKT: STS) reported that consolidated net sales from continuing operations in the first half of 2014 and for the second quarter were basically flat.
For the first two quarters, consolidated net sales were $125.3 million, just over last year’s $124.9 million.
Consolidated net sales from continuing operations grew to $71.6 million in the second quarter, reflecting a 3.8% increase compared with $68.9 million during the second quarter of last year.
Supreme divested its unprofitable shuttle bus operations in March 2014, which have been reclassified as discontinued operations in its financial statements.
Net income per diluted share was $0.25 versus $0.06 during the second quarter of 2013; on a continuing operations basis, net income per diluted share was $0.25 and $0.24 for the respective periods.
Gross profit from continuing operations was $14.6 million, or 20.5% of sales, compared with $14.5 million, or 21.1% of sales, in the second quarter of 2013. The current quarter margin percentage contraction was primarily due to customer and product mix. Additionally, prior year margins benefited from a greater proportion of higher-margin retail truck sales with fleet orders being placed later than normal in 2013. This year, fleet ordering patterns have returned to normal and as a result, the second quarter of 2014 included a higher percentage of fleet business versus the prior year.
Supreme settled a lawsuit in the second quarter of 2013 that contributed to a $3 million after-tax net loss being recorded in its discontinued shuttle bus operations for that quarter. Including the negative impact from discontinued operations on 2013's results, reported net income improved to $4.3 million in the quarter, or $0.25 per diluted share, up from reported net income of $0.9 million, or $0.06 per diluted share, in last year's comparable quarter.
"Business conditions remained solid during the spring and the OEM chassis shortage that hampered financial performance in the first quarter has been mitigated. This allowed us to generate improvements in both sales and earnings in the second quarter," said Mark Weber, President and Chief Executive Officer.
"During the first half of the year we made notable talent and training investments in our marketing and sales organizations. We also rolled out our proprietary, lightweight body wall, FiberPanel HC, that allows customers to reduce operating costs by increasing payload. Our investments in both product and customer facing talent are in support of our profitable growth agenda for Supreme.”
Gross margin, as a percentage of sales, contracted to 18%, compared with 20.5% in 2013's first half. This resulted in first half gross profit declining to $22.5 million, compared with $25.6 million in last year's comparable period primarily due to unfavorable product mix, shortages of light duty chassis and severe weather conditions in the first quarter of 2014. Income from continuing operations in the first half of 2014 was $4.5 million, compared with $6.6 million a year ago.
Additional financial highlights:
- Cash and equivalents increased to $12.5 million, up from $3.9 million at December 28, 2013.
- Net cash provided by operating activities during the first half of 2014 was $6.2 million, compared with $4.5 million of net cash generated by operations in 2013.
- Stockholders' equity increased to $77.6 million at June 28, 2014, compared with $74.1 million at December 28, 2013.