Gehl Company Reports Record 2005 Fourth Quarter and Annual Sales and Income
WEST BEND, Wis.--Feb. 2, 20067, 2006--Gehl Company , today reported net income of $6.2 million or $.50 per share for the fourth quarter of 2005. This compares with net income of $2.9 million or $.29 per share for the final quarter of 2004. The 2005 fourth quarter was positively impacted by $.12 per share as a result of reversing, in full, a $1.5 million after-tax warranty charge the Company had recorded in its second quarter of 2005. Fourth quarter 2005 revenues were a record $108.7 million compared with $93.9 million in the same period a year earlier.Annual revenues were $478.2 million in 2005, also a record level, compared with $361.6 million in 2004. Construction segment net sales increased 42% to $344.0 million for 2005, reflecting continued strength in the North American construction markets and share gains in European markets. Agricultural segment net sales increased 13% to $134.2 million in 2005. Compact equipment sales within the Agricultural segment increased 28% in 2005, while agricultural implement shipments declined 16% from the prior year. Compact equipment sales within the Agricultural segment grew to 70% of segment sales in 2005 versus 62% in 2004.
For the full year 2005, the Company's net income totaled a record $21.8 million or $1.97 per share. Comparable results were $13.4 million or $1.47 per share in 2004.
Key factors driving the increase in net income in 2005 included higher shipment volume, cost containment and effective pricing actions. These items were partially offset by higher net interest expense, due to higher average debt balances and higher interest rates in 2005 versus 2004, and higher expenses related to the sale of retail finance contracts.
"Our team performed extremely well in 2005," said William D. Gehl, Chairman and Chief Executive Officer. "They are successfully executing our compact equipment focused strategy, and it is reflected in our 2005 financial performance. We tightly managed our costs, introduced innovative new products, expanded our telescopic handler manufacturing capacity, invested in state-of-the-art manufacturing technologies and improved our capital structure."
2006 Full Year Outlook
The Company's markets for compact equipment continued to show strong demand throughout the fourth quarter of 2005. Orders in the fourth quarter increased over 100% compared to the prior year, driven largely by the Company's introduction of its new E-Series skid loader line and the continuing strength of rental industry demand for telescopic handlers. Backlog at December 31, 2005, of $186.3 million, increased over 180% from year-end 2004.
Based on 2006 forecasted market growth for compact equipment in North America, as well as the Company's recent order rate, backlog position and production capacity, the Company expects 2006 net sales to be in the range of $510 million to $520 million, an increase of between 7% and 9% over 2005 levels. Operating margins are expected to continue to improve as the result of initiatives to tightly manage costs and improve efficiencies throughout the organization.
Provided general economic conditions continue to be favorable, input prices remain stable, and the availability of product from the Company's suppliers is sufficient to meet demand, the Company expects to earn in the range of $2.13 to $2.18 per share in 2006. Expected earnings per share include an estimated $.06 per share of compensation expense related to the Company's adoption, in the first quarter of 2006, of Statement of Financial Accounting Standards No.123R, which requires companies to recognize compensation expense for all stock-based awards.
All earnings per share information included in this release is on a fully diluted basis.
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 (http://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
(unaudited and in thousands, except per share data)
For the For the
Fourth Quarter Ended Year Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
NET SALES $ 108,662 $ 93,942 $ 478,214 $ 361,598
Cost of goods
sold 87,150 76,602 384,493 289,910
------------ ------------ ------------ ------------
GROSS PROFIT 21,512 17,340 93,721 71,688
Selling,
general
and
administrative
expenses 11,401 13,256 55,411 50,980
------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS 10,111 4,084 38,310 20,708
Interest
expense (1,029) (962) (5,469) (2,838)
Interest
income 1,091 894 4,314 2,312
Other
(expense)
income, net (983) 353 (4,324) (197)
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES 9,190 4,369 32,831 19,985
Provision for
income taxes 2,994 1,442 11,031 6,598
------------ ------------ ------------ ------------
NET INCOME $ 6,196 $ 2,927 $ 21,800 $ 13,387
============ ============ ============ ============
NET INCOME PER SHARE
Diluted $ 0.50 $ 0.29 $ 1.97 $ 1.47
Weighted
average
number of
common
shares and
common stock
equivalents 12,449 10,209 11,054 9,134
Basic $ 0.52 $ 0.30 $ 2.06 $ 1.51
Weighted
average
number of
common
shares 11,956 9,854 10,583 8,841
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
December 31, 2005 December 31, 2004
----------------- -----------------
ASSETS
Cash $ 4,842 $ 5,262
Accounts receivable - net 175,932 123,514
Finance contracts receivable
- net 34,524 73,343
Inventories 43,580 38,925
Deferred income taxes 7,483 8,104
Prepaid expenses and other
current assets 8,100 2,859
----------------- -----------------
Total current assets 274,461 252,007
Property, plant and equipment
- net 36,272 34,072
Goodwill 11,748 11,748
Other assets 25,691 10,373
----------------- -----------------
Total assets $ 348,172 $ 308,200
================= =================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total current liabilities $ 74,296 $ 89,159
Long-term debt obligations 52,069 69,467
Other long-term liabilities 12,331 11,866
Deferred income taxes 983 1,247
Total shareholders' equity 208,493 136,461
----------------- -----------------
Total liabilities and
shareholders' equity $ 348,172 $ 308,200
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GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
For the Year Ended
-------------------------------------
December 31, 2005 December 31, 2004
----------------- -----------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 21,800 $ 13,387
Adjustments to reconcile
net income to net cash
used for operating
activities:
Depreciation and
amortization 4,945 4,664
Gain on sale of
property, plant and
equipment (162) (119)
Compensation expense
for long-term
incentive stock grants 232 -
Tax benefit related to
exercise of stock
options 1,110 636
Deferred income taxes (206) (1,145)
Cost of sales of
finance contracts 2,732 260
Proceeds from the sales
of finance contracts 190,028 65,464
Increase in finance
contracts receivable (154,902) (138,027)
(Decrease) increase in
cash due to changes
in:
Accounts receivable
- net (54,446) (30,500)
Inventories (6,037) (6,787)
Accounts payable 4,426 9,898
Remaining working
capital items (17,171) (897)
----------------- -----------------
Net cash used
for operating
activities (7,651) (83,166)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Property, plant and equipment
additions (7,575) (3,669)
Proceeds from the sale of
property, plant and
equipment 478 2,330
Other 20 (290)
----------------- -----------------
Net cash used
for investing
activities (7,077) (1,629)
CASH FLOWS FROM FINANCING
ACTIVITIES:
(Repayments of) proceeds from
revolving credit loans (17,595) 42,705
(Repayments of) proceeds from
other borrowings - net (17,298) 20,414
Proceeds from issuance of
common stock 49,201 23,250
----------------- -----------------
Net cash
provided by
financing
activities 14,308 86,369
Net (decrease) increase in
cash (420) 1,574
Cash, beginning of period 5,262 3,688
----------------- -----------------
Cash, end of period $ 4,842 $ 5,262
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