Spartan Motors, Inc. Q3 2009 Earnings Call Transcript

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2009-10-22 11:18:08.0

Tags: Call Transcript, Afghanistan, Earnings, Spartan Motors Inc., MRAP, Strategy, Management, Seeking Alpha

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from Walt Liptak at Barrington Research.

Walt Liptak – Barrington Research

Hey, good morning, guys. Walt Liptak with Barrington.

John Sztykiel

Good morning, Walt.

Walt Liptak – Barrington Research

Congratulations on a great quarter.

Joe Nowicki

Thank you.

Walt Liptak – Barrington Research

I’ve got a -- my first question is on your comments about MRAPs in Afghanistan. Do you know the number of MRAPs that are operating in that country?

John Sztykiel

Walt, this is John Sztykiel. We don’t know the number. We do know the number continues to grow. I think the last note we had seen published in the press that the IED rates were now at a rate of 800 per month and the trend was up. Obviously, that number will decrease as the snow continues to fall and winter starts to set in. But at least from an operational perspective, the number of MRAPs is up versus what they forecasted 18 months ago. So we see this as a positive trend.

Walt Liptak – Barrington Research

Okay. I’m sorry, the number you’re quoting is there is 800 IEDs exploding per month?

John Sztykiel

Yes. I think that was the last quote. No, I’m not sure if that was July or August. But that was the last stated quote from an IED perspective.

Walt Liptak – Barrington Research

Okay. But let me ask you this. What do you expect the run rate for MRAP parts might be over the next couple of quarters?

John Sztykiel

You know, honestly, that is hard for us to make an estimate. I mean, those discussions are going on right now. We’ve had people overseas to try to understand that exactly, because when you have a product that has a tremendous success rate from a survivability perspective, it is imperative that you have the right part at the right place at the right time. I will say this. I think one of the things, which is important to note in getting into the detail, that MRAP-related products where Spartan has participated in have a high level of operational performance and readiness in theater in Iraq and we are focused on the same business model in Afghanistan.

There also is the opportunity to upgrade the suspension systems into a bigger engine, et cetera. I mean, one of the things from just a pure geographic perspective in Afghanistan, and it relates to MRAPs, is Iraq was mostly flat. Only to the north that you only [ph] start to get into some mountainous areas where for the most part, Afghanistan is very, very mountainous all over. And it’s no different than the fire truck or the RV business. When you have mountains, you need more horsepower to get a heavy object up the hill.

 

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