Gehl Company Reports Record First Quarter 2006 Sales and Income
WEST BEND, Wis.--April 28, 2006--Gehl Company , today reported record first quarter net sales from continuing operations of $122.1 million for the quarter ended March 31, 2006, an increase of 12% from 2005 first quarter net sales from continuing operations of $108.9 million. Record first quarter income from continuing operations was $6.4 million, or $.51 per diluted share, for the first quarter of 2006, compared with income from continuing operations of $4.9 million, or $.47 per diluted share, for the first quarter of 2005.On April 3, 2006, the Company announced the discontinuation of its agricultural implement product lines. Income from continuing operations does not include an after-tax charge of $8.9 million, or $.72 per share, which the Company recorded in the first quarter of 2006 related to the discontinuance of these product lines. The Company expects to record the balance of its estimated total after-tax charge related to the discontinuation (an additional $0.5 million, or $.04 per share) in the second quarter of 2006. Including the $8.9 million after-tax charge, the Company recorded a net loss of $2.7 million in the first quarter of 2006 compared to net income of $4.9 million in the first quarter of 2005.
Operating profit was $11.3 million, or 9.2% of net sales, in the first quarter of 2006, compared to $8.4 million, or 7.7% of net sales, in the first quarter of 2005. The improvement in operating profit as a percentage of net sales was the result of operating expense leverage and increased gross margin. Operating expenses were 12.3% of net sales in the first quarter of 2006, down from 13.4% in the first quarter of 2005. Gross margin improved to 21.5% in the first quarter of 2006 compared to 21.2% in the first quarter of 2005. The increase in gross margin was primarily due to improved product price realization in the first quarter of 2006.
"First quarter results provided an excellent start to the year," said William D. Gehl, Chairman and Chief Executive Officer. "Record first quarter sales and income, as well as improved margins, reflect the successful execution of our compact equipment focused strategy, continued strength in our construction markets and our ongoing efforts to drive cost out of our business."
2006 Full Year Outlook
The Company reaffirmed its 2006 full year outlook with net sales from continuing operations in the range of $485 million to $495 million and earnings per diluted share from continuing operations of $2.20 to $2.30. Expected earnings per diluted share include an estimated $0.06 per share of compensation expense related to the Company's adoption of Statement of Financial Accounting Standards No. 123R, which requires companies to recognize compensation expense for all stock-based awards.
Conference Call
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. 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 OPERATIONS
(unaudited and in thousands, except per share data)
For the First Quarter Ended
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March 31, April 2,
2006 2005
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Net sales $ 122,123 $ 108,881
Cost of goods sold 95,871 85,838
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Gross profit 26,252 23,043
Selling, general and administrative
expenses 14,979 14,635
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Income from operations 11,273 8,408
Interest expense (1,150) (1,440)
Interest income 1,251 1,133
Other expense, net (1,487) (658)
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Income from continuing operations before
income taxes 9,887 7,443
Provision for income taxes 3,501 2,530
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Income from continuing operations 6,386 4,913
(Loss) income from discontinued
operations, net of tax (116) 11
Loss on disposal of discontinued
operations, net of tax (8,927) -
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Net (loss) income $ (2,657) $ 4,924
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Diluted earnings per share:
from continuing operations $ 0.51 $ 0.47
from discontinued operations (0.73) 0.00
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Total diluted earnings per share $ (0.21) $ 0.47
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Weighted average number of common
shares and common stock equivalents 12,423 10,401
Basic earnings per share:
from continuing operations $ 0.53 $ 0.49
from discontinued operations (0.76) 0.00
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Total basic earnings per share $ (0.22) $ 0.49
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Weighted average number of common
shares 11,946 10,010
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
March 31, December 31, April 2,
2006 2005 2005
----------- ------------ -----------
ASSETS
Cash $ 3,062 $ 4,842 $ 26,142
Accounts receivable - net 183,309 158,695 133,115
Finance contracts receivable
- net 14,681 34,524 40,667
Inventories 44,225 39,121 34,566
Assets of discontinued
operations - net 12,436 24,607 37,097
Deferred income taxes 11,974 7,483 8,104
Prepaid expenses and other
current assets 9,216 8,100 3,030
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Total current assets 278,903 277,372 282,721
Property, plant and
equipment - net 29,778 29,923 28,117
Goodwill 11,748 11,748 11,748
Other assets 32,078 25,691 24,294
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Total assets $ 352,507 $ 344,734 $ 346,880
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Total current liabilities $ 82,177 $ 70,858 $ 102,119
Long-term debt obligations 48,883 52,069 87,851
Other long-term liabilities 13,813 12,331 12,588
Deferred income taxes 983 983 1,247
Total shareholders' equity 206,651 208,493 143,075
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Total liabilities and
shareholders' equity $ 352,507 $ 344,734 $ 346,880
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GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
For the Three Months Ended
--------------------------
March 31, April 2,
2006 2005
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (2,657) $ 4,924
Adjustments to reconcile net (loss)
income to net cash provided by
(used for) operating activities:
Loss on discontinued operations
(non-cash) 11,682 -
Depreciation and amortization 1,393 1,415
Loss on sale of property, plant and
equipment 2 -
Compensation expense for share based
payments 319 53
Deferred income taxes (4,491) -
Cost of sales of finance contracts 877 (717)
Proceeds from the sales of finance
contracts 49,031 46,643
Increase in finance contracts
receivable (28,696) (12,473)
Increase in retained interest in
sold finance contracts (8,881) (14,821)
(Decrease) increase in cash due to
changes in:
Accounts receivable - net (25,570) (35,546)
Inventories (2,775) (4,103)
Accounts payable 9,372 8,181
Remaining working capital items 3,661 77
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Net cash provided by (used for)
operating activities 3,267 (6,367)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (1,061) (2,053)
Proceeds from the sale of property, plant
and equipment 10 -
Other (8) (2)
------------ ------------
Net cash used for investing
activities (1,059) (2,055)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments on) proceeds from revolving
credit loans (3,129) 18,411
Repayments of other borrowings - net (927) 8,722
Proceeds from issuance of common stock 68 2,169
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Net cash (used for) provided by
financing activities (3,988) 29,302
Net (decrease) increase in cash (1,780) 20,880
Cash, beginning of period 4,842 5,262
------------ ------------
Cash, end of period $ 3,062 $ 26,142
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