[GRAPHIC OMITTED][GEHL COMPANY LOGO]
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
USA
Contact:
Kenneth Hahn
Chief Financial Officer
262-334-6632
News Release
GEHL COMPANY REPORTS SECOND QUARTER EARNINGS OF $.42 PER SHARE;
REVISES 2003 FULL YEAR OUTLOOK
WEST BEND, WI, July 24, 2003 - Gehl Company (NASDAQ NM: GEHL), a
manufacturer of compact construction and agricultural equipment, today reported
significantly higher net income for the second quarter ended June 28, 2003, of
$2.2 million, or $.42 per diluted share, compared to net income of $895,000, or
$.16 per diluted share, in the second quarter of 2002. Net income for the second
quarters of 2003 and 2002 includes after-tax charges of $81,000, or $.02 per
diluted share, and $195,000, or $.04 per diluted share, respectively, relating
to previously announced restructuring costs. Net sales were $68.6 million in the
quarter ended June 28, 2003, compared to net sales of $66.7 million for the
second quarter of 2002.
For the first six months of 2003, Gehl reported net income of $2.7 million,
or $.51 per diluted share, compared to net income of $1.1 million, or $.20 per
diluted share, in the first half of 2002. Net income for the first six months of
2003 and 2002 includes after-tax charges of $187,000, or $.04 per diluted share,
and $255,000, or $.05 per diluted share, respectively, relating to previously
announced restructuring costs. Net sales were $127.1 million in the first six
months of 2003, compared to $126.8 million in the first half of 2002.
William D. Gehl, Chairman & CEO, stated "We are pleased with our second
quarter and first half results, especially in light of uneven U.S. economic
performance and the challenging conditions we continue to face in our
agricultural and construction segments." Mr. Gehl said "The agricultural market
has been slow due to depressed milk prices - a situation likely to continue for
the rest of the year. However, sales from
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Gehl Company
Gehl Reports Second Quarter 2003 Results
July 24, 2003
page 2
new product introductions, aggressive cost control throughout all areas of the
Company, benefits resulting from the closure last year of two of our five
manufacturing facilities and lower interest rates all contributed positively to
our second quarter results."
Construction Equipment Sales
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Gehl construction equipment segment sales in the second quarter of 2003
were $44.1 million, a 7% increase from second quarter 2002 net sales of $41.1
million. The increase of construction equipment segment sales in the second
quarter of 2003 was primarily the result of shipments of compact track loaders,
a new product line introduced in the second quarter of 2002. In addition,
increased sales by the Company's attachment business benefited the construction
equipment segment sales.
Agricultural Equipment Sales
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Gehl agricultural equipment segment sales in the second quarter of 2003
were $24.5 million, down from $25.6 million in the year-ago period. Agricultural
equipment net sales continue to be adversely impacted by lower milk prices. Milk
prices in the second quarter of 2003 were approximately 10% lower than in the
comparable period of 2002, and were at a lower average price than in the first
quarter of 2003. Increased sales by the Company's attachment business, as well
as higher shipments of compact track loaders, introduced in the second quarter
of 2002, and windrow mergers, introduced in the first quarter of 2003, partially
offset reduced agricultural implement and skid loader shipments in the quarter.
Gross Margins and Expenses
- --------------------------
For the second quarter of 2003, Gehl's gross margin was 21.1%, versus 21.3%
during the same period in 2002. Gross margin for construction equipment was
23.2% for the second quarter, compared with 20.3% for the second quarter of
2002. The increase in the gross margin for the construction equipment segment
was primarily the result of improved manufacturing efficiencies, the favorable
effects of the two plant closures completed by the Company during the prior year
and the levels of discounts and sales incentives associated with the mix of
products shipped. Gross margin for the
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agricultural equipment segment was 17.4%, compared with the 23.1% realized for
the comparable period in 2002. The decrease in agricultural equipment gross
margin was due to continued significant competitive pressure resulting in higher
sales discounts and sales incentives, reduced production levels, as well as a
less favorable mix of product shipments.
As a result of tight cost controls, selling, general and administrative
expense levels in the second quarter of 2003 were $10.8 million, or 15.8% of net
sales, a 4.6% decrease from $11.3 million, or 17.0% of net sales, in the second
quarter of 2002. Favorable foreign exchange transaction impacts and lower
interest and interest-related costs, such as costs of selling retail finance
contracts receivable, due to the overall lower interest rate environment,
contributed to the improved earnings.
Full Year Outlook
- -----------------
In light of the still unsettled outlook for the U.S. economic recovery, the
Company now expects less improvement in the U.S. economy during the second half
of the year. As a result, and combined with the first half actual results, the
Company now expects its net sales to range between being flat to up
approximately 2% in 2003. If the Company's sales levels meet projected
forecasts, the Company expects to earn in the range of $.70 to $.85 per diluted
share in 2003.
Forward Looking Statements
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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, 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
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this press release. Factors that could cause such a variance include, but are
not limited to, a further delay in the expected general economic recovery,
unanticipated changes in capital market conditions, the Company's ability to
implement successfully its strategic initiatives, 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 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 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 2003 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.
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; 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 (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 )
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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 28, June 29, June 28, June 29,
2003 2002 2003 2002
-------- -------- -------- --------
NET SALES $ 68,551 $ 66,689 $127,082 $126,757
Cost of goods sold 54,085 52,462 100,353 99,171
-------- -------- -------- --------
GROSS PROFIT 14,466 14,227 26,729 27,586
======== ======== ======== ========
Selling, general
and administrative expenses 10,818 11,342 21,852 23,263
Restructuring and other charges 121 300 281 392
-------- -------- -------- --------
Total operating expenses 10,939 11,642 22,133 23,655
INCOME FROM OPERATIONS 3,527 2,585 4,596 3,931
Interest expense (984) (1,166) (1,883) (2,129)
Interest income 528 498 1,031 980
Other income (expense), net 275 (540) 384 (1,053)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 3,346 1,377 4,128 1,729
Provision for income taxes 1,105 482 1,379 605
-------- -------- -------- --------
NET INCOME $ 2,241 $ 895 $ 2,749 $ 1,124
======== ======== ======== ========
EARNINGS PER SHARE
Diluted $ 0.42 $ 0.16 $ 0.51 $ 0.20
Weighted average number of common
shares and common stock equivalents 5,351 5,513 5,372 5,516
Basic $ 0.42 $ 0.17 $ 0.51 $ 0.21
Weighted average number of common
shares 5,346 5,399 5,360 5,387
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 28, 2003 December 31, 2002 June 29, 2002
(unaudited) (audited) (unaudited)
------------- ----------------- -------------
ASSETS
Cash $ 4,742 $ 2,243 $ 2,855
Accounts receivable - net 118,098 97,627 110,571
Finance contracts receivable - net 6,426 4,701 1,804
Inventories 36,550 36,771 45,714
Deferred income taxes 8,469 8,469 10,171
Prepaid expenses and other current assets 1,877 3,203 1,900
------------- -------------- ----------
Total current assets 176,162 153,014 173,015
Property, plant and equipment - net 45,056 46,697 47,091
Goodwill 11,748 11,696 12,556
Other assets 15,037 14,662 13,956
------------- -------------- ----------
Total assets $ 248,003 $ 226,069 $ 246,618
============= ============== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 60,716 $ 49,634 $ 56,560
Long-term debt obligations 64,426 56,135 71,530
Other long-term liabilities 22,538 22,518 14,650
Deferred income taxes 1,644 1,644 2,460
Total shareholders' equity 98,679 96,138 101,418
------------- -------------- ----------
Total liabilities and shareholders' equity $ 248,003 $ 226,069 $ 246,618
============= ============== ==========
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Six Months Ended
(unaudited)
--------------------------------------------
June 28, 2003 June 29, 2002
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,749 $ 1,124
Adjustments to reconcile net income to net cash
(used for) provided by operating activities:
Depreciation 2,550 2,129
Amortization 13 118
Cost of sales of finance contracts 10 1,198
Proceeds from the sales of finance contracts 46,979 48,143
Increase in finance contracts receivable (49,312) (41,252)
Net change in remaining working capital items (6,668) (9,813)
------------- -------------
Net cash (used for) provided by operating activities (3,679) 1,647
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions - net (808) (5,073)
Other (112) 1,223
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Net cash used for investing activities (920) (3,850)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loans 8,359 3,590
Repayments of other borrowings - net (635) (1,547)
Proceeds from issuance of common stock 102 532
Treasury stock purchases (728) (190)
Other - 425
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Net cash provided by financing activities 7,098 2,810
Net increase in cash 2,499 607
Cash, beginning of period 2,243 2,248
------------- -------------
Cash, end of period $ 4,742 $ 2,855
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