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Nov 9, 2011 2:08 PM

Supreme Industries reported third-quarter net  income from continuing operations of $1.5 million, or $0.10 per diluted share,  compared with income from continuing operations of $300,000, or $0.02 per  diluted share, in the prior year.

  Including the impact from discontinued  operations, net income improved to $0.10 per diluted share, reversing the  year-ago net loss of $0.01 per share.

  Consolidated net sales increased 19% to $72.8  million in the third quarter, up from $61.5 million in last year's comparable  period.

  "We are pleased to report a positive  quarter for Supreme,” said Supreme President and Chief Executive Officer Kim  Korth. “We have been working aggressively on multiple fronts to improve our  performance, and it is gratifying to see these efforts begin to show up on the  bottom line. The strategy of deploying robust and integrated metrics for  managing all aspects of the business has resulted in much tighter  organizational alignment which, in turn, enables us to further lever Supreme's  national presence and scale. In addition to new practices and procedures, we  are making strategic investments in our facilities designed to yield added  enhancements to future productivity and flexibility."

  Gross profit rose 55% to $9.3 million from  last year's $6 million. Gross margin, as a percentage of sales, expanded 303  basis points to 12.79%, compared with 9.76% in the third quarter of 2010,  primarily due to improved product mix, better management of labor and overhead,  and increased sales. The company said order levels remained strong during the  quarter. The sales order backlog at quarter end was $90 million, compared with  $89 million a year ago.

  Selling, general and administrative expenses  were $6.7 million in the third quarter of 2011, compared with $5.2 million in  2010. The increase was due to higher commissions associated with increased  sales volume and marketing programs, as well as approximately $0.2 million of  non-recurring general and administrative expenses from investments aimed at  improving operations and severance costs.

  Operating income surged to $2.8 million, up  387%, from the $0.6 million reported in last year's third quarter.

  To support future growth, Supreme entered  into a new four-year credit agreement during the quarter with Wells Fargo  Capital Finance, LLC, which includes a revolving line of credit of up to $45  million. Interest expense during the quarter included approximately $0.8  million from accelerated amortization of capitalized bank refinancing fees  related to the company's previous credit agreement. As a result, reported  interest expense was $1.2 million during the third quarter, compared with $0.3  million last year.

  Excluding non-recurring charges and the  above-mentioned bank refinancing fees, the company would have achieved  third-quarter net income from continuing operations of approximately $2.5  million, or $0.17 per diluted share, versus $700,000, or $0.05 per diluted  share, in the third quarter of 2010. Last year's results from continuing  operations were negatively impacted by approximately $400,000 of non-recurring  legal settlement and related costs.

  "Our internal efforts have positioned  Supreme to capitalize on the recovering core truck market and will also support  our growth strategies in the bus and armored divisions," Korth added.  "With the recent closing of our new credit agreement with Wells Fargo, we  now have the foundation in place to make on going improvements in our business  and to continue our efforts to enhance shareholder value."