Supreme Industries Inc. (STS:BUY) Robust demand for trucks coupled with superior execution capabilities is driving strong growth in revenues

12-AUG-16 – Supreme Industries Inc. (STS:BUY) Robust demand for trucks coupled with superior execution capabilities is driving strong growth in revenues, which in turn is aiding Supreme to enhance gross margins through improved plant utilization. Going forward, we believe Supreme is well positioned to capture growth opportunities through its various strategic initiatives including sales team expansion, focus on leasing, lean manufacturing, and new product innovations. We initiate coverage with a BUY rating and a $20.00 price target.

Investment Thesis

Supreme Industries is one of the largest truck body manufacturers in the U.S., producing 20,000 units annually from eight manufacturing and component facilities strategically located to serve major geographic
markets.
Completion of a restructuring exercise over 2011-13 that included lean manufacturing practices, refinancing debt and divesting non-core business, coupled with robust truck demand has helped Supreme to
report a strong financial turnaround both in terms of revenue growth and margin improvement over the past couple of years.
We believe Supreme is well positioned to capture growth opportunities in 2016 and beyond, and outpace overall industry growth through various strategic initiatives including sales team expansion, focus on
leasing, continued deployment of lean manufacturing techniques, and development of new products.
We initiate coverage with a BUY rating and $20.00 price target.

RISKS

A number of smaller, regional players could create significant product pricing pressures and adversely impact the company’s financial performance.