GEHL
Gehl Company Tel: 262/334-9461
143 Water Street Fax: 262/334-6603
P.O. Box 179 http://www.gehl.com
West Bend, WI 53095-0179
CONTACT: USA
Kenneth Hahn (investors)
Chief Financial Officer
262-334-6632
Drew Brown/Andrew Cole (media)
Citigate Sard Verbinnen
212-687-8080
News Release
GEHL COMPANY REPORTS 2001 NET INCOME, BEFORE NON-RECURRING
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CHARGES, OF $5.4 MILLION, OR $.99 PER DILUTED SHARE
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WEST BEND, WI, February 28, 2002 -- Gehl Company (NASDAQ NM: GEHL), a
manufacturer of compact construction and agricultural equipment, today reported
net sales for the year ended December 31, 2001 of $251.6 million, compared to
$258.1 million recorded for the prior year. Net income for the year ended
December 31, 2001, including non-recurring charges, totaled $2.3 million, or
$.42 per diluted share, compared to $9.7 million, or $1.72 per diluted share, in
2000. Non-recurring after-tax charges in 2001 were $3.1 million, including $2.8
million, or $.51 per diluted share, for plant rationalization initiatives, and
$.3 million, or $.06 per diluted share, for strategic review process expenses,
both of which were recorded in the third quarter of 2001. Excluding these
non-recurring charges, the Company's net income in 2001 was $5.4 million, or
$.99 per diluted share. Net income in 2000 included a gain of $.5 million, or
$.10 per diluted share, on the disposal of a former branch service center.
For the quarter ended December 31, 2001, Gehl reported net sales of $49.6
million, compared to $52.1 million for the fourth quarter of 2000. Sales were
lower due primarily to dealers' cautiousness to commit to adding stock units
into inventory because of continued unfavorable economic conditions. The Company
reported a net
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 2
loss of $430,000, or $.08 per diluted share, for the quarter,
compared to net income of $270,000, or $.05 per diluted share, in the fourth
quarter of 2000. The fourth quarter net income in 2000 included a gain of $.10
per diluted share on the disposal of a former branch service center.
William D. Gehl, Chairman, President and CEO, said "The past year was a
challenging one for Gehl as our markets, particularly for construction
equipment, continued to trend downward as a result of the weakening of the
economy. The reluctance of dealers to add to inventory, as well as lower rental
rates and an excess of used equipment, exacerbated the industry-wide slowdown in
the construction equipment business. The telescopic handler market was down
nearly 27% industry-wide in 2001, following a 25% decline in 2000. In this
difficult construction equipment market, we managed production levels to meet
the generally lower demand. Favorable milk prices helped boost agricultural
equipment sales, which increased 18% year-over-year, and our skid loader market
share improved last year despite an industry-wide decline in retail demand of
10%. However, the overall uncertainty of the markets made forecasting difficult
and performance less predictable throughout the year."
Gehl said "In the fall, the Company committed significant management
resources to undertaking a comprehensive review of strategic options available
to Gehl to increase shareholder value. Upon the conclusion of a complete and
thorough process, the Board affirmed the strategic plan, outlined in February
2001, as the best means of creating shareholder value. Executing on the plan, we
took significant steps to improve the bottom line and better position Gehl for
improved market conditions, including a restructuring that will close one plant
and consolidate our Mustang brand skid loader manufacturing into our Madison,
South Dakota plant -- streamlining operations and further reducing costs."
( M O R E )
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 3
Gehl stated "Further, we are taking the following steps to increase
shareholder value:
o "we intend to continue to exploit fully the extensive cross marketing
opportunities that exist among our multiple distribution channels,
with 450 construction and 380 agricultural equipment dealers
worldwide, to drive sales of our compact construction and agricultural
equipment products - which represent some of the broadest product
lines in these markets.
o "we are continuing to invest in product research and bringing
innovative products to market - such as the new 7000 Series of skid
loaders, introduced last year and currently the world's largest skid
loader;
o "we are continuing to grow the successfully launched CE Attachments,
Inc. as a single-source, web-enabled, supplier of a wide range of
attachments for all brands of compact equipment to all construction
and agricultural equipment dealers;
o "and, we expect to grow our business by seeking to acquire other
manufacturers of compact equipment, both here and abroad."
In conclusion, Gehl said "We're facing tough and uncertain business
conditions and expect to continue to do so at least for the first half of the
year. Within this difficult business environment, our focus is squarely on
executing our strategic plan to build shareholder value. We strongly believe our
strategic initiatives, combined with our additional efforts to streamline the
business, will increase the Company's long-term profitability and enhance value
for all shareholders."
CONSTRUCTION EQUIPMENT SALES
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Sales of construction equipment in the fourth quarter of 2001 were $23.4
million versus $27.7 million recorded in the fourth quarter of 2000, a decrease
of 16%. Construction equipment sales for the full year ended December 31, 2001
were $125.2 million, 17% below the $151.1 million for the full year ended
December 31, 2000.
( M O R E )
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 4
Construction equipment sales continued to be lower as dealers did not add
significantly to or replace fleet units or add stock units into inventory
because of unfavorable economic conditions. Lower industry-wide rental rates for
compact construction equipment, particularly telescopic handlers, reduced demand
for the Company's construction equipment products. Industry-wide telescopic
handler retail demand in North America in 2001 was down approximately 27% below
the level in 2000. Partially offsetting these unfavorable industry-wide
conditions were sales of the Company's telescopic handlers through its Mustang
distribution channel and the continued favorable market acceptance of the four
new skid loader models introduced earlier in 2001 for Gehl and Mustang dealers.
The Company introduced new mid-sized models of compact excavators in the second
half of 2001, which it anticipates will be well received in the market place.
AGRICULTURAL EQUIPMENT SALES
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Sales of agricultural equipment in the fourth quarter of 2001 rose 8% to
$26.2 million, compared to $24.4 million recorded in the fourth quarter of 2000.
Agricultural equipment sales for the full year ended December 31, 2001 were
$126.4 million, up 18% from the $107.0 million recorded for the full year ended
December 31, 2000. Agricultural equipment sales increased, in part, due to the
Company's successful strategy to leverage its rural equipment distribution
network by shipping compact construction equipment to select rural dealers in
the agricultural equipment market. Additionally, several new products, including
a line of round balers and new skid loader models, contributed significantly to
the increase in agricultural equipment revenues. Favorable domestic milk prices
also contributed to the positive performance of the Company's agricultural
equipment business.
( M O R E )
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 5
GROSS MARGINS AND OPERATING EXPENSES
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For the fourth quarter of 2001, the Company's total gross margin was 24.4%,
versus 24.5% for the fourth quarter of 2000. For the full year 2001, total gross
margin was 25.7% vs. 26.4% for 2000. Gross margin for construction equipment was
23.1% and 22.4% for the 2001 fourth quarter and full year periods, respectively,
compared to 22.3% and 24.3%, respectively, for the comparable periods of 2000.
The reduction in construction equipment gross margin for the full year 2001 was
generally the result of competitive market conditions that resulted in downward
pressure on pricing, lower production levels, and a less favorable mix of
product shipments. Gross margin for agricultural equipment was 25.5% and 28.9%,
for the 2001 fourth quarter and full year periods, respectively, compared to the
27.0% and 29.2% margins realized for the comparable periods of 2000.
Selling, general and administrative expenses in the fourth quarter of 2001
increased to 24.4% of net sales, from 21.1% in the fourth quarter of 2000, and
for the full year 2001 increased to 20.2% of net sales, from 17.8% for the full
year 2000.
Gehl continues to invest in revenue-enhancing projects to position the
Company for market share expansion and long term future growth. These
investments include its recently launched attachment business, CE Attachments,
Inc., new product research and development, implementation of Gehl's enterprise
resource planning (ERP) system, and the centralization of service parts
distribution. While the Company believes these investments are critical to its
future growth, they do negatively impact selling, general and administrative
expenses as a percentage of net sales.
2002 FINANCIAL GUIDANCE
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Business conditions in the Company's key markets are not projected to
improve materially during the first half of 2002, from year-end 2001 levels. As
a result, the Company expects its financial performance in the first and second
quarters of 2002 to be at lower levels than those experienced during comparable
periods of 2001.
( M O R E )
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 6
Assuming the U.S. economy begins to recover in 2002, sales momentum should build
gradually over the course of the second half.
Total Company sales for 2002 are currently projected to be approximately
flat as compared with 2001. In the 2002 revenue mix, the Company anticipates
construction equipment sales as a percentage of total sales will be higher as
compared to 2001. The new accounting standard providing for the elimination of
goodwill amortization is expected to add approximately $.08 to earnings per
diluted share. Diluted earnings per share for 2002 is expected to be in the
range of $.90 to $1.00, including the new goodwill accounting treatment and
excluding restructuring expenses that will be incurred in 2002.
In 2002, the Company will substantially complete the restructuring program
which was announced in September 2001, to reduce costs through several major
plant rationalization initiatives. Restructuring expenses for full-year 2002 are
projected to impact diluted earnings per share by $.15 to $.20 for period costs
which are recorded as incurred.
Despite the difficult operating environment currently experienced by all
compact equipment companies, Gehl is a strong and well-positioned competitor in
the industry. As its markets improve and the Company continues to execute its
strategic plan, management is confident that the result will be increased value
for all shareholders.
About Gehl Company
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Gehl Company (Nasdaq NM: GEHL) 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; 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 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
( M O R E )
Gehl Company
Gehl Company Reports 4th Quarter and Full Year 2001 Results
February 28, 2002
page 7
contact: Gehl Company, 143 Water Street, West Bend, WI 53095 (telephone:
262-334-9461).
Forward Looking Statements
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The Company intends that 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 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, unanticipated changes in
general economic and capital market conditions, the Company's ability to
implement successfully its strategic initiatives and plant rationalization
actions, 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 2002 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 )
( M O R E )
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Fourth Quarter Ended For the Year Ended
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Dec 31, Dec 31, Dec 31, Dec 31,
2001 2000 2001 2000
(unaudited) (unaudited) (audited) (audited)
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NET SALES $ 49,626 $ 52,147 $ 251,636 $ 258,118
Cost of goods sold 37,520 39,369 187,069 190,093
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GROSS PROFIT 12,106 12,778 64,567 68,025
Selling, general
and administrative expenses 12,092 11,011 50,811 46,040
Strategic review process costs - - 513 -
Restructuring charge - - 4,300 -
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Total operating expenses 12,092 11,011 55,624 46,040
INCOME FROM OPERATIONS 14 1,767 8,943 21,985
Interest expense (886) (1,272) (4,299) (4,741)
Interest income 575 483 2,024 1,760
Other expense, net (364) (562) (3,122) (4,148)
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(LOSS) INCOME BEFORE INCOME TAXES (661) 416 3,546 14,856
Income tax (benefit) provision (231) 146 1,241 5,200
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NET (LOSS) INCOME $ (430) $ 270 $ 2,305 $ 9,656
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(LOSS) EARNINGS PER SHARE
Diluted $ (0.08) $ 0.05 $ 0.42 $ 1.72
Weighted average number of common
shares and common stock equivalents 5,357 5,412 5,507 5,607
Basic $ (0.08) $ 0.05 $ 0.43 $ 1.76
Weighted average number of common
shares 5,357 5,343 5,345 5,475
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
December 31, 2001 December 31, 2000
(audited) (audited)
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ASSETS
Cash $ 2,248 $ 2,590
Accounts receivable - net 90,714 69,546
Finance contracts receivable - net 7,511 16,549
Inventories 52,161 45,598
Prepaid income taxes 10,171 8,078
Prepaid expenses and other current assets 1,119 636
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Total current assets 163,924 142,997
Property, plant and equipment - net 43,431 46,172
Intangible assets 12,417 13,086
Other assets 17,637 20,463
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Total assets $ 237,409 $ 222,718
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LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 56,466 $ 50,027
Long-term debt obligations 64,237 60,885
Deferred income taxes 2,460 5,096
Other long-term obligations 14,225 3,692
Total shareholders's equity 100,021 103,018
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Total liabilities and shareholders' equity $ 237,409 $ 222,718
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GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year Ended
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December 31, 2001 December 31, 2000
(audited) (audited)
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CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 2,305 $ 9,656
Adjustments to reconcile net income to net cash
used for operating activities:
Depreciation 4,687 4,885
Amortization 729 849
Gain on sale of property, plant and equipment - (863)
Restructuring costs 1,754 -
Cost of sales of finance contracts 3,222 4,990
Deferred income taxes (1,611) 121
Increase in finance contracts receivable (99,104) (105,606)
Proceeds from the sales of finance contracts 109,740 93,485
Net change in remaining working capital items (21,828) (14,649)
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Net cash used for operating activities (106) (7,132)
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (4,135) (12,577)
Other 553 (3,247)
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Net cash used for investing activities (3,582) (15,824)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loans 3,580 29,570
Proceeds from issuance of common stock 357 526
Treasury stock purchases (245) (5,924)
Other (346) 364
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Net cash provided by financing activities 3,346 24,536
Net (decrease) increase in cash (342) 1,580
Cash, beginning of year 2,590 1,010
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Cash, end of year $ 2,248 $ 2,590
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