Spartan Motors Earnings: Here’s Why Investors Don’t Like These Results

Spartan Motors Inc. (NASDAQ:SPAR) delivered a profit and missed Wall Street’s expectations, BUT beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 1%.

Spartan Motors Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 50% to $0.01 in the quarter versus EPS of $0.02 in the year-earlier quarter.

Revenue: Rose 11.95% to $124.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Spartan Motors Inc. reported adjusted EPS income of $0.01 per share. By that measure, the company missed the mean analyst estimate of $0.03. It beat the average revenue estimate of $112.17 million.

Quoting Management: John Sztykiel, Chief Executive Officer of Spartan Motors, Inc., stated, “The fourth quarter and full year 2012 reflected Spartan’s diversified growth strategy, with fourth-quarter revenues rising 12% over last year and full-year revenues up 10.5% from 2011. We also posted full-year adjusted earnings growth compared to 2011 and a total order backlog that increased 20.0% from year end 2011. Revenue growth was a result of Spartan’s brand strength, new product initiatives and market recovery. In addition to generating revenue growth, we did a very good job of managing operating expenses and the balance sheet. Although we posted sales and adjusted earnings growth in 2012, our results also show that we have more work to do on improving operations, particularly the gross margin. We underestimated the scope and amount of time required to implement our operational/gross margin improvement efforts in 2012 and are dedicating more time and focus to achieve these goals in 2013. Our plan to improve the gross margin includes the following steps: increasing production efficiency, reducing the bill of materials to offset a shift to lower-priced products and further reductions in Reach™ start-up costs. We expect the plan to lead to improved margin performance in 2013 and beyond.”

Key Stats (on next page)…

Revenue increased 10.31% from $112.86 million in the previous quarter. EPS decreased 50% from $0.02 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.02 and has not changed. For the current year, the average estimate is a profit of $0.17, which is the same with that ninety days ago.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)