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| Gehl Company | Tel: 262/334-9461 |
| 143 Water Street | Fax: 262/334-7517 |
| P.O. Box 179 | http://www.gehl.com |
| West Bend, WI 53095-0179 | |
| USA | |
Contact:
Thomas M. Rettler
Chief Financial Officer
262-334-6632
News Release
GEHL COMPANY REPORTS STRONG SECOND QUARTER RESULTS;
ADJUSTS FULL YEAR OUTLOOK
WEST BEND, WISCONSIN, July 30, 2007 – Gehl Company (NASDAQ GSM: GEHL) today reported second quarter income from continuing operations of $8.8 million, or $.71 per diluted share, for the quarter ended June 30, 2007 compared with income from continuing operations of $9.4 million, or $.75 per diluted share, for the second quarter of 2006.
Net sales for the second quarter of 2007 were $135.3 million compared to net sales of $139.5 million in the second quarter of 2006. The strength of the Company’s international markets, along with market share gains in the second quarter, partially offset the impact of the continued softness in the North American housing market. Total sales outside of North America increased 23% in the second quarter of 2007 versus the same period in 2006. While the North American telehandler market was down 26% in the second quarter of 2007 versus the same period in 2006, the Company’s telehandler volume increased over 9%.
Gross margin improved to 21.8% in the second quarter of 2007 compared to 21.6% in the second quarter of 2006. The increase was primarily driven by the favorable results the Company continued to achieve from its added supply chain resources and investments in state-of-the-art manufacturing equipment. Selling, general and administrative expenses of $15.7 million during the 2007 second quarter compared to $15.3 million in the second quarter of 2006. As a percent of net sales, selling, general and administrative expenses increased to 11.6% compared to 10.9% in the prior year quarter, which partially reflected planned increases in research and development and information technology projects.
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Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 2
For the first six months of 2007, Gehl reported net sales from continuing operations of $250.6 million compared to $261.6 million in the first six months of 2006. Income from continuing operations was $15.3 million, or $1.23 per diluted share, for the first six months of 2007 compared to $15.8 million, or $1.27 per diluted share, for the first six months of 2006.
“Despite weak U.S. residential construction markets, our second quarter revenues and earnings per share were solid. Strong international markets, a successful launch of our new RS5-19 telehandler and gross margin improvement resulting from our added supply chain resources all contributed to our sound second quarter results,” said William D. Gehl, Chairman and Chief Executive Officer.
2007 Full Year Outlook
Based on the Company’s first half results, current backlog position and management’s expectation that the North American housing market will continue to experience weakness for the balance of 2007, the Company adjusted its 2007 full year outlook. The Company expects net sales from continuing operations in the range of $465 million to $485 million and earnings per diluted share from continuing operations of $2.05 to $2.25.
Conference Call
A conference call is scheduled for 1:00 p.m. CDT Monday, July 30, 2007. The call will review 2007 second quarter and first half earnings and discuss the Company’s 2007 full year outlook.
All interested parties are invited to listen to the presentation. The conference call may be accessed by dialing (800) 299-9630 or (617) 786-2904 up to 15 minutes before the call begins. The passcode is 65679970. Access may also be gained through the Company’s web site (www.gehl.com) by first clicking on the Investor Relations tab, then clicking on Webcasts, and then selecting the 2nd Quarter 2007 Financial Earnings Conference Call Webcast. An archive of the presentation will be available for one year after the call on the Company’s web site. A telephonic replay of the conference call will be available beginning at 3:00 p.m. CDT on July 30th and will be available for one week after the call by dialing (888) 286-8010 or (617) 801-6888. The replay passcode is 19534796.
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Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 3
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 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, those risk factors cited in the Company’s filings with the Securities and Exchange Commission, any adverse change in general economic conditions, unanticipated changes in capital market conditions, the Company’s ability to implement successfully its strategic initiatives (including cost reduction initiatives), unanticipated expenses associated with the discontinuance of the Company’s agricultural implement lines, market acceptance of newly introduced products, unexpected issues related to the pricing and availability of raw materials (including steel) and component parts, unanticipated difficulties in securing product from third party manufacturing sources, the ability of the Company to increase its prices to reflect higher prices for raw materials and component parts, 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 or interest rates, the Company’s ability to secure sources of liquidity necessary to fund its operations, changes in environmental laws, the impact of any strategic transactions 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 2007 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.
Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 4
About Gehl Company
Gehl Company (NASDAQ GSM: GEHL) is a manufacturer of compact equipment used worldwide in construction and agricultural markets. Founded in 1859, the Company is headquartered in West Bend, Wisconsin. The Company markets its products under the Gehl ® and Mustang ® 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).
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Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 5
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
| For the Second Quarter Ended
(unaudited)
| For the Six Months Ended
(unaudited)
|
|---|
| June 30,
2007
| June 30,
2006
| June 30,
2007
| June 30,
2006
|
|---|
| Net sales | | | $ | 135,347 | | $ | 139,455 | | $ | 250,561 | | $ | 261,578 | |
| Cost of goods sold | | | | 105,807 | | | 109,332 | | | 195,257 | | | 205,203 | |
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Gross profit | | | | 29,540 | | | 30,123 | | | 55,304 | | | 56,375 | |
Selling, general and administrative expenses | | | | 15,703 | | | 15,263 | | | 30,655 | | | 30,242 | |
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| |
| |
| |
| |
Income from operations | | | | 13,837 | | | 14,860 | | | 24,649 | | | 26,133 | |
Interest expense | | | | (1,168 | ) | | (793 | ) | | (2,077 | ) | | (1,943 | ) |
| Interest income | | | | 1,098 | | | 793 | | | 2,106 | | | 2,044 | |
| Other expense, net | | | | (302 | ) | | (667 | ) | | (1,346 | ) | | (2,154 | ) |
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Income from continuing operations before income taxes | | | | 13,465 | | | 14,193 | | | 23,332 | | | 24,080 | |
Provision for income taxes | | | | 4,646 | | | 4,808 | | | 8,050 | | | 8,309 | |
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Income from continuing operations | | | | 8,819 | | | 9,385 | | | 15,282 | | | 15,771 | |
(Loss) income from discontinued operations, net of tax | | | | (108 | ) | | 37 | | | (268 | ) | | (79 | ) |
Loss on disposal of discontinued operations, net of tax | | | | -- | | | (112 | ) | | -- | | | (9,039 | ) |
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Net income | | | $ | 8,711 | | $ | 9,310 | | $ | 15,014 | | $ | 6,653 | |
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Diluted net income (loss) per share: | | |
| from continuing operations | | | $ | 0.71 | | $ | 0.75 | | $ | 1.23 | | $ | 1.27 | |
| from discontinued operations | | | | (0.01 | ) | | (0.01 | ) | | (0.02 | ) | | (0.73 | ) |
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| Total diluted net income per share | | | $ | 0.70 | | $ | 0.75 | | $ | 1.20 | | $ | 0.53 | |
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Weighted average number of common | | |
| shares and common stock equivalents | | | | 12,477 | | | 12,490 | | | 12,464 | | | 12,456 | |
Basic net income (loss) per share: | | |
| from continuing operations | | | $ | 0.73 | | $ | 0.78 | | $ | 1.26 | | $ | 1.31 | |
| from discontinued operations | | | | (0.01 | ) | | (0.01 | ) | | (0.02 | ) | | (0.76 | ) |
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| Total basic net income per share | | | $ | 0.72 | | $ | 0.77 | | $ | 1.24 | | $ | 0.55 | |
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Weighted average number of common shares | | | | 12,132 | | | 12,043 | | | 12,121 | | | 11,994 | |
Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 6
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
| June 30, 2007
| December 31, 2006
| June 30, 2006
|
|---|
ASSETS | | | | | | | | | | | |
| Cash | | | $ | 5,039 | | $ | 6,892 | | $ | 6,117 | |
| Accounts receivable - net | | | | 233,498 | | | 187,582 | | | 202,768 | |
| Finance contracts receivable - net | | | | 10,034 | | | 8,371 | | | 16,649 | |
| Inventories | | | | 42,346 | | | 48,649 | | | 41,305 | |
| Assets of discontinued operations - net | | | | 2,132 | | | 3,783 | | | 10,222 | |
| Retained interest in sold finance contracts | | | | 37,673 | | | 20,318 | | | 17,722 | |
| Deferred income taxes | | | | 9,688 | | | 9,128 | | | 12,074 | |
| Prepaid expenses and other current assets | | | | 5,132 | | | 6,310 | | | 3,385 | |
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| |
| Total current assets | | | | 345,542 | | | 291,033 | | | 310,242 | |
Property, plant and equipment - net | | | | 33,421 | | | 32,415 | | | 29,577 | |
| Goodwill | | | | 11,748 | | | 11,748 | | | 11,748 | |
| Other assets | | | | 32,786 | | | 29,914 | | | 21,805 | |
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| |
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Total assets | | | $ | 423,497 | | $ | 365,110 | | $ | 373,372 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | |
| Total current liabilities | | | $ | 131,530 | | $ | 89,504 | | $ | 92,561 | |
| Long-term debt obligations | | | | 23,863 | | | 25,183 | | | 46,805 | |
| Other long-term liabilities | | | | 20,398 | | | 19,642 | | | 15,366 | |
| Total shareholders’ equity | | | | 247,706 | | | 230,781 | | | 218,640 | |
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Total liabilities and shareholders’ equity | | | $ | 423,497 | | $ | 365,110 | | $ | 373,372 | |
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Gehl Company
Gehl Company Reports Strong Second Quarter Results;
Adjusts Full Year Outlook
July 30, 2007
page 7
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
| For the Six Months Ended
|
|---|
| June 30, 2007
| June 30, 2006
|
|---|
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net income | | | $ | 15,014 | | $ | 6,653 | |
| Adjustments to reconcile net income to net cash (used for) | | |
| provided by operating activities: | | |
| Loss on discontinued operations (non-cash) | | | | -- | | | 7,593 | |
| Depreciation and amortization | | | | 2,577 | | | 2,581 | |
| Compensation expense for share based payments | | | | 948 | | | 753 | |
| Cost of sales of finance contracts | | | | 823 | | | 1,894 | |
| Proceeds from the sales of finance contracts | | | | 69,818 | | | 102,944 | |
| Increase in finance contracts receivable | | | | (72,304 | ) | | (85,594 | ) |
| Increase in retained interest in sold finance contracts | | | | (18,413 | ) | | (10,747 | ) |
| (Decrease) increase in cash due to changes in: | | |
| Accounts receivable - net | | | | (43,975 | ) | | (40,238 | ) |
| Inventories | | | | 6,790 | | | 2,180 | |
| Accounts payable | | | | 12,764 | | | 12,922 | |
| Remaining working capital items | | | | 3,746 | | | 7,214 | |
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| Net cash (used for) provided by operating activities | | | | (22,212 | ) | | 8,155 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | |
| Property, plant and equipment additions | | | | (3,576 | ) | | (1,964 | ) |
| Proceeds from the sale of property, plant and equipment | | | | 50 | | | 10 | |
| Other | | | | (4 | ) | | 39 | |
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| |
| Net cash used for investing activities | | | | (3,530 | ) | | (1,915 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | |
| Repayments on revolving credit loans | | | | (1,272 | ) | | (5,180 | ) |
| Proceeds from (repayments on) other borrowings - net | | | | 24,890 | | | (1,041 | ) |
| Proceeds from exercise of stock options | | | | 271 | | | 1,256 | |
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| Net cash provided by (used for) financing activities | | | | 23,889 | | | (4,965 | ) |
Net (decrease) increase in cash | | | | (1,853 | ) | | 1,275 | |
| Cash, beginning of period | | | | 6,892 | | | 4,842 | |
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| Cash, end of period | | | $ | 5,039 | | $ | 6,117 | |
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