GEHL [GRAPHIC OMITTED]
Gehl Company Tel: 262/334-9461
143 Water Street Fax: 262/334-6603
CONTACT: P.O. Box 179 http://www.gehl.com
Kenneth Hahn (investors) West Bend, WI 53095-0179
Vice President, Finance & Treasurer USA
262-334-6632
News Release
Drew Brown/Andrew Cole (media)
Citigate Sard Verbinnen
212-687-8080
GEHL REPORTS SECOND QUARTER 2001 RESULTS OF $.58 PER SHARE
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WEST BEND, WI, July 26, 2001 - Gehl Company (Nasdaq: GEHL), a manufacturer
of compact construction and agricultural equipment, today reported net income
for the second quarter ended June 30, 2001 of $3.2 million, or $0.58 per diluted
share, exceeding the Company's revised guidance of $.52 to $.57 per diluted
share. Net sales were $77.4 million in the quarter, above guidance of $74.5 to
$76.0 million. Second quarter 2001 results compare to net income of $5.1
million, or $0.90 per diluted share, and net sales of $79.1 million for the
second quarter of 2000. For the first six months of 2001, Gehl reported net
income of $4.2 million and net sales of $141.1 million.
"As we indicated in late June, second quarter results were clearly
impacted by soft economic conditions and related weakness in the construction
equipment market, particularly the steep drop in the North American telescopic
handler market which is down 27% industry-wide through June - as well as
currency trends that are dampening export shipments and a dealer community that
continues to manage its inventory levels conservatively," said William D. Gehl,
Chairman, President and CEO. "That said, we are pleased that Company-wide North
American skid loader shipments in the second quarter increased 4% over the
comparable period of 2000, in the face of the overall North American skid loader
retail market being down 5% for the same period. Further, we are making
significant strides in executing the series of strategic initiatives we
identified previously to further enhance shareholder value, including the
introduction of several new products in the first half of 2001."
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Construction Equipment Sales
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Sales of construction equipment in the second quarter of 2001 were $41.3
million, compared with $49.9 million in the second quarter of 2000. Company
sales and industry markets continued to be unfavorably affected by the impacts
of lower rental rates for compact construction equipment, particularly
telescopic handlers - as well as the adverse effects of the weak Euro on export
shipments and rental dealers' caution about adding to or replacing fleet units.
Offsetting these industry-wide difficult conditions are some early successes for
Gehl in selling telescopic handlers through its Mustang distribution channel and
the continued favorable market acceptance of the four new skid loader models
introduced earlier this year for Gehl and Mustang dealers.
Agricultural Equipment Sales
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Gehl reported agricultural equipment sales of $36.1 million in the second
quarter of 2001, compared with $29.2 million during the year-ago period. The
Company experienced continued success in leveraging its agricultural equipment
distribution network for shipments of compact construction equipment, including
telescopic handlers, compact excavators and mini-loaders. The Company is
encouraged by sales of its recently introduced round baler product line and new
Agri-Loader telescopic handler products designed exclusively for the
agricultural market. Improved domestic milk prices also contributed to the
positive performance of the Company's agricultural equipment business.
Gross Margins and Expenses
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For the second quarter of 2001, Gehl's gross margin was 25.4% versus 27.1%
for the same period in 2000. Gross margin for construction equipment was 22.4%
for the second quarter, compared with 25.2% for the second quarter of 2000. The
decrease in construction equipment gross margin during the quarter was the
result of competitive market conditions, lower production volumes and a less
favorable mix of products. Gross margin for agricultural equipment was 28.9%,
compared with 30.2% for the comparable period in 2000.
Operating expense levels in the second quarter of 2001 were $13.4 million,
or 17.4% of net sales, compared with $11.4 million, or 14.4% of net sales, in
the second quarter of 2000. Gehl continues to invest in revenue-enhancing
projects to position the Company for future growth and
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market share expansion, which include its web-enabled attachment business, CE
Attachments, Inc., new product development, implementation of its enterprise
resource planning (ERP) system, and the centralization of service parts
distribution. Such investments, combined with increased selling-related costs
resulting from competitive market conditions, and a lower level of sales,
contributed to the Company's increased operating expenses as a percentage of net
sales. Lower interest and interest-related costs, such as costs of selling
retail finance contracts receivable, due to the overall lower interest rate
environment offset, in part, the operating expense increase.
Full Year Outlook
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Commenting on the full year outlook, William D. Gehl stated, "We believe
that we should be able to meet the lower end of previous guidance for the full
year, notwithstanding the continuing soft economic conditions and related
weakness in the construction market, particularly the steep drop in the
telescopic handler market." The low end of the range for full year 2001
previously provided by the Company in February 2001 was $1.52 per diluted share.
Strategic Initiatives Update
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The Company reported solid progress during the second quarter 2001 on the
strategic initiatives the Board and management have undertaken to enhance
shareholder value, including the expansion and leveraging of the Company's
multiple distribution channels, the introduction of significant new products,
and continuing research and development on products for the compact construction
and agricultural equipment marketplaces.
Gehl reported significant progress in leveraging its existing
distribution channels to sell products across the Company's two business
segments. The Company added 13 new rural equipment dealers to its distribution
network for compact excavators, nearly doubling the number of dealers offering
the product, and introduced its mini-loaders to 7 new rural dealers in the
second quarter. Gehl also introduced the telescopic handler product, previously
only available through Gehl brand construction dealers, to 14 Mustang dealers
during the second quarter.
The Company reported shipments of several new key products in the second
quarter of 2001, including the Agri-Loader, which the Company shipped to several
new rural equipment dealers, bringing the total number of dealers carrying the
product to 34 nationwide. Gehl commenced
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shipments of its new large skid loader to both Gehl and Mustang dealers and
began offering the new Personnel Work Platform System feature on all DL Series
Dynalift telescopic handlers shipped during the second quarter. Looking ahead,
Gehl plans to begin shipments of new forage harvesting equipment for the
agricultural market and will introduce new mid-size models of compact excavators
and a Net Wrap feature for round balers in late 2001.
On July 13, 2001, the Company officially launched its online attachment
distribution company, CE Attachments, which operates as an independent
web-enabled wholesale distributor of special purpose attachments used on skid
loaders, compact excavators and other types of compact construction equipment.
As an independent distributor, CE Attachments will market an extensive range of
attachments to fit all major makes and models, including Gehl and Mustang
brands. CE Attachments offers a range of strategic e-commerce capabilities
including on-line product research, financing and technical support through its
website, and will coordinate inventory and shipping from a distribution center
located in Owatonna, MN. Initial market reception to CE Attachments has been
positive.
Strategic Review Process Update
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As announced on May 9, 2001, Gehl is engaged in the process of reviewing
its strategic alternatives, including the possible sale of the Company. Various
U.S. and international entities have expressed interest in pursuing a business
combination transaction or other strategic relationship with the Company. Gehl
is continuing the second stage of the review process.
About Gehl Company
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Gehl Company (Nasdaq: GEHL) is a leading manufacturer of equipment used
worldwide in construction and agricultural markets. Founded in 1859, Gehl is
headquartered in West Bend, WI, with manufacturing facilities in West Bend, WI;
Lebanon, PA; Madison and Yankton, SD; and Owatonna, MN. The Company markets its
products under the Gehl(R) and Mustang(R) brand names. Mustang product
information is available at www.mustangmfg.com. CE Attachments 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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Forward Looking Statements
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Certain matters discussed 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 future market
conditions, the review of the Company's strategic alternatives, and the
Company's future sales and earnings, are forward-looking statements. These
forwarding-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,
unanticipated changes in general economic and capital market conditions, the
Company's ability to implement successfully its strategic initiatives,
unanticipated developments related to the Company's review of its strategic
alternatives, 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, changes in environmental laws, 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 2001 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.
(TABLES TO FOLLOW)
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the Second Quarter Ended For the Six Months Ended
(unaudited) (unaudited)
-------------------------------- ------------------------------------
June 30, 2001 July 1, 2000 June 30, 2001 July 1, 2000
--------------- --------------- --------------- -----------------
NET SALES $ 77,363 $ 79,080 $ 141,079 $ 151,134
Cost of goods sold 57,679 57,684 105,168 110,456
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GROSS PROFIT 19,684 21,396 35,911 40,678
Selling, general
& administrative expenses 13,446 11,421 26,198 23,165
--------------- --------------- --------------- -----------------
INCOME FROM OPERATIONS 6,238 9,975 9,713 17,513
Interest expense (1,146) (1,391) (2,342) (2,264)
Interest income 489 445 1,018 825
Other (expense) income, net (673) (1,138) (1,904) (1,923)
--------------- --------------- --------------- -----------------
INCOME BEFORE INCOME TAXES 4,908 7,891 6,485 14,151
Income tax provision 1,718 2,762 2,270 4,953
--------------- --------------- --------------- -----------------
NET INCOME $ 3,190 $ 5,129 $ 4,215 $ 9,198
=============== =============== =============== =================
EARNINGS PER SHARE
Diluted $ .58 $ .90 $ .77 $ 1.60
=============== =============== =============== =================
Weighted average number of common
shares and common stock equivalents 5,529 5,685 5,508 5,737
Basic $ .60 $ .93 $ .79 $ 1.65
=============== =============== =============== =================
Weighted average number of common
shares 5,341 5,520 5,337 5,560
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2001 December 31, 2000 July 1, 2000
(unaudited) (audited) (unaudited)
------------------- --------------------- -----------------
ASSETS
Cash $ 4,268 $ 2,590 $ 3,885
Accounts receivable - net 99,169 69,546 86,093
Inventories 37,492 45,598 41,109
Deferred tax assets 8,078 8,078 8,431
Other current assets 9,900 17,185 16,496
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Total current assets 158,907 142,997 156,014
Property, plant and equipment - net 44,517 46,172 43,090
Intangible assets 12,759 13,086 15,334
Other assets 16,031 20,463 17,566
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TOTAL ASSETS $ 232,214 $ 222,718 $ 232,004
=================== ===================== =================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Total current liabilities $ 56,227 $ 50,027 $ 56,641
Long-term debt obligations 59,571 60,885 62,233
Deferred income taxes 5,096 5,096 3,949
Other long-term obligations 3,940 3,692 6,017
Total shareholders' equity 107,380 103,018 103,164
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TOTAL LIABILITIES AND $ 232,214 $ 222,718 $ 232,004
SHAREHOLDERS' EQUITY =================== ===================== =================
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Six Months Ended
(unaudited)
-----------------------------------------
June 30, 2001 July 1, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,215 $ 9,198
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation 2,511 2,482
Amortization 369 438
Proceeds from sales of finance contracts 57,874 40,656
Increase in finance contracts receivable (47,980) (49,112)
Cost of sales of finance contracts 2,201 2,117
Net change in remaining working capital items (16,006) (22,755)
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Net cash provided by (used for) operating activities 3,184 (16,976)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (2,100) (8,544)
Other 1,485 284
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Net cash used for investing activities (615) (8,260)
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CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment of) proceeds from line of credit facility (1,150) 31,228
Proceeds from issuance of common stock 147 406
Purchase of treasury stock - (3,864)
Other 112 341
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Net cash (used for) provided by financing activities (891) 28,111
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Net increase in cash 1,678 2,875
Cash, beginning of period 2,590 1,010
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Cash, end of period $ 4,268 $ 3,885
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