Gehl Company Reports Improved First Quarter Earnings
WEST BEND, Wis.--April 24, 2003--Gehl Company , a manufacturer of light construction and agricultural equipment, today reported higher net income for the first quarter ended March 29, 2003, of $508,000, or $.09 per diluted share, compared to net income of $229,000, or $.04 per diluted share, in the first quarter of 2002. The net income amounts for the first quarters of 2003 and 2002 include after-tax charges of $104,000, or $.02 per diluted share, and $60,000, or $.01 per diluted share, respectively, relating to previously announced restructuring and plant rationalization projects. Net sales were $58.5 million in the quarter ended March 29, 2003, compared to net sales of $60.1 million for the first quarter of 2002.William D. Gehl, Chairman, President & CEO, stated "Despite markets which have not improved since the beginning of the year, we were able to improve our results for the first quarter of 2003 and to continue the improvement realized in the last quarter of 2002. Aggressive cost control throughout all areas of the Company, the closure last year of two of our five manufacturing facilities, reduced costs associated with selling retail finance contracts and an 18% increase in construction equipment sales due in part to the success of new product introductions all contributed to our improved results."
"We continue," Mr. Gehl said, "to innovate our product lines, improve our manufacturing and distribution processes and to seek every opportunity to reduce our costs - all to better position the Company to benefit from the long awaited economic upturn."
Construction Equipment Sales
Gehl construction equipment segment sales in the first quarter of 2003 were $35.8 million, an 18% increase from first quarter 2002 net sales of $30.4 million. Demand for compact track loaders and all-wheel-steer loaders, new products which were introduced in the second and third quarters of 2002, respectively, was strong during the first quarter of 2003 and accounted for the majority of the construction equipment segment sales increase.
Agricultural Equipment Sales
Gehl agricultural equipment segment sales in the first quarter of 2003 were $22.7 million, down from $29.7 million in the year-ago period. Agricultural equipment net sales were adversely impacted by significantly lower milk prices as well as drought conditions in certain regions of the United States. Shipments of compact track loaders, introduced in the second quarter of 2002, partially offset reduced agricultural implement and skid loader shipments in the quarter.
Gross Margins and Expenses
For the first quarter of 2003, Gehl's gross margin was 21.0%, versus 22.2% during the same period in 2002. Gross margin for construction equipment was 22.8% for the first quarter, compared with 22.3% for the first quarter of 2002. The increase in the gross margin for the construction equipment segment was primarily the result of improved manufacturing efficiencies and the favorable effects of the Company's recently completed plant rationalization project. Gross margin for the agricultural equipment segment was 18.0%, compared with the 22.1% realized for the comparable period in 2002. The decrease in agricultural equipment gross margin was due to significant competitive pressure resulting in higher sales discounts and sales incentives, reduced production levels, as well as a less favorable mix of product shipments.
Selling, general and administrative expense levels in the first quarter of 2003 were $11.0 million, or 18.9% of net sales, a 7.4% decrease from $11.9 million, or 19.8% of net sales, in the first quarter of 2002. The decrease is primarily due to the aggressive steps taken to control costs. Favorable foreign exchange transaction impacts and lower interest and interest related costs, such as costs of selling retail finance contracts receivable, due to the overall lower interest rate environment, compared to the first quarter of 2002, contributed to the improved earnings.
Full Year Outlook
Based on the current market outlook, the Company's net sales are expected to range between being flat to up approximately 4% in 2003. Any growth in net sales is expected to result primarily from the sales of recently introduced products and new products to be introduced in 2003. Growth in net sales is more likely to occur in the construction equipment segment as compared with the agricultural equipment segment. Overall, any anticipated sales growth would likely occur in the latter portion of 2003 based on the Company's expectation of a gradually improving economy. Though it remains difficult to predict results in these unsettled economic times, if the economy experiences some gradual improvement and the Company's sales levels meet projected forecasts, the Company continues to expect to earn in the range of $.60 to $.75 per diluted share in 2003.
Forward Looking Statements
Certain statements included in this press release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding the Company's future financial position, business strategy, targets and projected sales and earnings, and the plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as the Company "believes," "anticipates," "expects", "estimates" or "projects" or words of similar meaning are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those anticipated as of the date of this press release. Factors that could cause such a variance include, but are not limited to, a delay in the expected general economic recovery, unanticipated changes in capital market conditions, the Company's ability to implement successfully its strategic initiatives, market acceptance of newly introduced products, the cyclical nature of the Company's business, the Company's and its customers' access to credit, competitive pricing, product initiatives and other actions taken by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), technological difficulties, changes in currency exchange rates, the Company's ability to secure sources of liquidity necessary to fund its operations, changes in environmental laws, the impact of any acquisition effected by the Company, and employee and labor relations. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, the Company's expectations for fiscal year 2003 are based in part on certain assumptions made by the Company, including those relating to commodities prices, which are strongly affected by weather and other factors and can fluctuate significantly, housing starts and other construction activities, which are sensitive to, among other things, interest rates and government spending, and the performance of the U.S. economy generally. The accuracy of these or other assumptions could have a material effect on the Company's ability to achieve its expectations.
About Gehl Company
Gehl Company is a manufacturer of compact equipment used worldwide in construction and agricultural markets. Founded in 1859, the Company is headquartered in West Bend, WI, with manufacturing facilities in West Bend, WI; and Madison and Yankton, SD. The Company markets its products under the Gehl (R) and Mustang (R) brand names. Mustang product information is available on the Mustang Manufacturing website (www.mustangmfg.com). CE Attachments, Inc. information is available at (www.ceattach.com). Gehl Company information is available at (www.gehl.com) or contact: Gehl Company, 143 Water Street, West Bend, WI 53095 (telephone: 262-334-9461).
(TABLES TO FOLLOW)
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the First Quarter Ended
(unaudited)
---------------------------------
March 29, 2003 March 30, 2002
--------------- ----------------
NET SALES $ 58,531 $ 60,068
Cost of goods sold 46,268 46,709
--------------- ----------------
GROSS PROFIT 12,263 13,359
Selling, general
and administrative expenses 11,034 11,921
Restructuring and other charges 160 92
--------------- ----------------
Total operating expenses 11,194 12,013
INCOME FROM OPERATIONS 1,069 1,346
Interest expense (899) (963)
Interest income 503 482
Other income (expense), net 109 (513)
--------------- ----------------
INCOME BEFORE INCOME TAXES 782 352
Income tax provision 274 123
--------------- ----------------
NET INCOME $ 508 $ 229
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EARNINGS PER SHARE
Diluted $ 0.09 $ 0.04
Weighted average number of
common shares and common stock
equivalents 5,393 5,519
Basic $ 0.09 $ 0.04
Weighted average number of
common shares 5,374 5,374
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 29, 2003 December 31, 2002 March 30, 2002
(unaudited) (audited) (unaudited)
-------------- ----------------- --------------
ASSETS
Cash $ 2,642 $ 2,243 $ 1,200
Accounts receivable
- net 113,730 97,627 106,515
Finance contracts
receivable - net 5,164 4,701 5,820
Inventories 35,731 36,771 54,088
Deferred income taxes 8,469 8,469 10,171
Prepaid expenses and
other current assets 2,182 3,203 1,646
-------------- ----------------- --------------
Total current
assets 167,918 153,014 179,440
Property, plant and
equipment - net 45,761 46,697 44,686
Goodwill 11,696 11,696 12,556
Other assets 14,398 14,662 17,824
-------------- ----------------- --------------
Total assets $ 239,773 $ 226,069 $ 254,506
============== ================= ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total current
liabilities $ 56,290 $ 49,634 $ 59,801
Long-term debt
obligations 62,698 56,135 77,422
Other long-term
obligations 22,533 22,518 14,478
Deferred income
taxes 1,644 1,644 2,460
Total
shareholders'
equity 96,608 96,138 100,345
-------------- ----------------- --------------
Total liabilities
and shareholders'
equity $ 239,773 $ 226,069 $ 254,506
============== ================= ==============
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the First Quarter Ended
(unaudited)
----------------------------------
March 29, 2003 March 30, 2002
---------------- ----------------
CASH FLOW FROM OPERATING
ACTIVITIES:
Net income $ 508 $ 229
Adjustments to reconcile net
income to net cash
used for operating activities:
Depreciation 1,287 1,063
Amortization 6 61
Cost of sales of finance
contracts 43 523
Proceeds from the sales of
finance contracts 18,121 18,357
Increase in finance
contracts receivable (18,800) (17,570)
Net change in remaining
working capital items (6,401) (10,599)
---------------- ----------------
Net cash used for
operating activities (5,236) (7,936)
CASH FLOW FROM INVESTING
ACTIVITIES:
Property, plant and equipment
additions - net (319) (2,259)
Other (108) 69
---------------- ----------------
Net cash used for
investing activities (427) (2,190)
CASH FLOW FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit
loans 6,597 8,864
Repayments of other borrowings
- net (390) (203)
Proceeds from issuance of
common stock 31 164
Treasury stock purchases (176) -
Other - 253
---------------- ----------------
Net cash provided by
financing activities 6,062 9,078
Net increase (decrease) in cash 399 (1,048)
Cash, beginning of period 2,243 2,248
---------------- ----------------
Cash, end of period $ 2,642 $ 1,200
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