[GRAPHIC OMITTED]
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 Reports Third Quarter 2003 Results;
Net Sales 11% Higher Than Last Year;
Announces The Pending Sale of Two Previously
Closed Manufacturing Facilities
WEST BEND, WI, October 24, 2003 - Gehl Company (NASDAQ NM: GEHL), a
worldwide distributor and manufacturer of compact construction and agricultural
equipment, today reported a net loss for the quarter ended September 27, 2003,
of ($0.9) million, or ($.17) per diluted share, after giving effect to an
after-tax asset impairment charge of $2.4 million, or $.44 per diluted share,
and an after-tax charge of $0.1 million, or $.02 per diluted share, relating to
the Company's previously announced closure and pending sales of its Lebanon,
Pennsylvania and Owatonna, Minnesota manufacturing facilities. The Company
reported net income of $0.2 million, or $.04 per diluted share, in the third
quarter of 2002, after giving effect to an after-tax charge of $0.2 million, or
$.04 per diluted share, relating to the Company's previously announced plant
closures.
By year-end, the Company expects to complete the sales of the two
manufacturing facilities which were closed pursuant to a previously announced
initiative undertaken to rationalize the Company's excess manufacturing
capacity. The asset impairment charge recorded in the 2003 third quarter adjusts
the book value of these manufacturing facilities, and certain related assets, to
their net realizable value based on the pending sales.
Excluding after-tax charges, net income for the third quarter of 2003
was $1.6 million, or $.29 per diluted share, compared to net income of $0.4
million, or $.08 per share, in the third quarter of 2002.
( M O R E)
Gehl Company
Gehl Reports Third Quarter 2003 Results, Net Sales 11% Higher Than Last Year
October 24, 2003
page 2
Net sales were $60.5 million in the quarter ended September 27, 2003,
compared to net sales of $54.6 million for the third quarter of 2002, an
increase of 11%.
William D. Gehl, Chairman & CEO, stated "Our operational results for
the third quarter met our expectations. We have experienced a gradual
strengthening of demand for our construction equipment, which has been offset,
to a degree, by the slowness in our agricultural equipment segment." With
respect to the pending sales of the manufacturing facilities, Mr. Gehl said "The
impairment charge recognized during the third quarter reflects the state of the
economy, in general, and the current industrial real estate market, in
particular. The disposals of the facilities will conclude our plant
rationalization program, which has resulted in improved overall operating
efficiencies, and will enable us to eliminate the ongoing upkeep and carrying
costs associated with these facilities."
For the first nine months of 2003, Gehl reported net income of $1.8
million, or $.34 per diluted share, after giving effect to an after-tax asset
impairment charge of $2.4 million, or $.44 per diluted share, and an after-tax
charge of $0.3 million, or $.05 per diluted share, relating to the Company's
previously announced closure and pending sales of two of its manufacturing
facilities. The Company reported net income of $1.3 million, or $.25 per diluted
share, in the first nine months of 2002, after giving effect to an after-tax
charge of $0.5 million, or $.08 per diluted share, relating to the Company's
previously announced plant closures.
Excluding after-tax charges, net income for the first nine months of
2003 was $4.5 million, or $.83 per diluted share, compared to net income of $1.8
million, or $.33 per share, in the first nine months of 2002.
Net sales were $187.5 million in the first nine months of 2003,
compared to $181.3 million in the first nine months of 2002.
The following tables provide a reconciliation of net income (loss) and
earnings (loss) per diluted share reported in accordance with accounting
principles generally
(M O R E)
Gehl Company
Gehl Reports Third Quarter 2003 Results, Net Sales 11% Higher Than Last Year
October 24, 2003
page 3
accepted in the United States of America (GAAP) to net income and earnings per
diluted share excluding the asset impairment charge and other restructuring
costs for the third quarter and first nine months of 2003 and 2002 (dollars in
thousands, except per share amounts):
Third Quarter 2003 Third Quarter 2002
--------------------------------------- -----------------------------------
Net (Loss) (Loss) Earnings Net (Loss) Earnings Per
Income Per Share Income Share
--------------------------------------- -----------------------------------
GAAP - as reported ($903) ($.17) $223 $.04
Adjustments:
Asset impairment 2,375 .44 - -
Other restructuring costs 78 .02 216 .04
--------------------------------------- -----------------------------------
Excluding Adjustments $1,550 $.29 $439 $.08
======================================= ===================================
Nine Months 2003 Nine Months 2002
--------------------------------------- -----------------------------------
Earnings Per Earnings Per
Net Income Share Net Income Share
------------------- ------------------- ------------------ ----------------
GAAP - as reported $1,846 $.34 $1,347 $.25
Adjustments:
Asset impairment 2,375 .44 - -
Other restructuring costs 264 .05 471 .08
------------------- ------------------- ------------------ ----------------
Excluding Adjustments $4,485 $.83 $1,818 $.33
=================== =================== ================== ================
Construction Equipment Net Sales
- --------------------------------
Gehl construction equipment segment net sales in the third quarter of
2003 were $38.8 million, a 23% increase from third quarter 2002 net sales of
$31.5 million. Demand for telescopic handlers, compact excavators and compact
track loaders, a product line introduced in the second quarter of 2002, was
strong in the third quarter of 2003. In addition, the Company's attachment
business and European subsidiary, Gehl Europe, had increased shipments that
benefited the overall construction equipment segment net sales.
Agricultural Equipment Net Sales
- --------------------------------
Gehl agricultural equipment segment net sales in the third quarter of
2003 were $21.7 million, down from $23.1 million in the year-ago period. The
decrease in
(M O R E)
Gehl Company
Gehl Reports Third Quarter 2003 Results, Net Sales 11% Higher Than Last Year
October 24, 2003
page 4
agricultural equipment segment net sales was primarily due to higher levels of
sales discounts and incentives resulting from continued competitive pricing
pressure. Increased net sales by the Company's attachment business, as well as
higher shipments of hay tools, were offset by reduced shipments of other
agricultural implements and skid loaders in the quarter. While milk prices
increased during the third quarter to levels in excess of the year-ago period,
the price increase was likely not a factor in the 2003 third quarter as it is
just beginning to have a favorable impact on dairy farm income.
Gross Margins and Expenses
- --------------------------
For the third quarter of 2003, Gehl's gross margin was 21.7%, versus
21.5% during the same period in 2002. Gross margin for construction equipment
was 24.8% for the third quarter, compared with 22.6% for the third 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 2002 Owatonna, Minnesota plant closure and the levels of
discounts and sales incentives associated with the mix of products shipped.
Gross margin for the agricultural equipment segment was 16.1%, compared with the
19.9% 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 of agricultural implements, as well as a less favorable mix of product
shipments.
Selling, general and administrative expense levels in the third quarter
of 2003 were $10.3 million, or 17.1% of net sales, compared to $10.1 million, or
18.6% of net sales, in the third quarter of 2002. Favorable foreign exchange
transaction impacts and lower interest-related costs, such as costs of selling
retail finance contracts receivable, due to the overall lower interest rate
environment, benefited earnings in the third quarter of 2003.
(M O R E)
Gehl Company
Gehl Reports Third Quarter 2003 Results, Net Sales 11% Higher Than Last Year
October 24, 2003
page 5
Full Year Outlook
- -----------------
The Company expects a modest improvement in the U.S. economy during the
last quarter of the year. As a result, and combined with the actual results for
the year to date, the Company expects to earn, excluding the asset impairment
charge, in the range of $.78 to $.83 per diluted share in 2003. Including the
asset impairment charge, the Company expects 2003 earnings to be in the range of
$.34 to $.39 per diluted share.
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, including the statements in the section
entitled "Full Year Outlook," 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, 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, unanticipated issues or costs
associated with the sales of the Lebanon, Pennsylvania and Owatonna, Minnesota
manufacturing facilities, 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
(M O R E)
Gehl Company
Gehl Reports Third Quarter 2003 Results, Net Sales 11% Higher Than Last Year
October 24, 2003
page 6
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
- ------------------
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 )
(M O R E)
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Third Quarter Ended For the Nine Months Ended
(unaudited) (unaudited)
-------------------------------- ------------------------------
September 27, September 28, September 27, September 28,
2003 2002 2003 2002
------------- ------------ ----------- -----------
NET SALES $ 60,465 $ 54,575 $ 187,547 $ 181,332
Cost of goods sold 47,346 42,867 147,699 142,038
---------- ----------- ----------- -----------
GROSS PROFIT 13,119 11,708 39,848 39,294
Selling, general
and administrative expenses 10,339 10,130 32,191 33,393
Asset impairment and other restructuring costs 3,716 333 3,997 725
---------- ----------- ----------- -----------
Total operating expenses 14,055 10,463 36,188 34,118
(LOSS) INCOME FROM OPERATIONS (936) 1,245 3,660 5,176
Interest expense (908) (1,055) (2,791) (3,184)
Interest income 418 527 1,449 1,507
Other income (expense), net 78 (373) 462 (1,426)
---------- ----------- ----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (1,348) 344 2,780 2,073
Income tax (benefit) provision (445) 121 934 726
---------- ----------- ----------- -----------
NET (LOSS) INCOME $ (903) $ 223 $ 1,846 $ 1,347
========== =========== =========== ===========
(LOSS) EARNINGS PER SHARE
Diluted $ (0.17) $ 0.04 $ 0.34 $ 0.25
Weighted average number of common
shares and common stock equivalents 5,310 5,451 5,365 5,494
Basic $ (0.17) $ 0.04 $ 0.35 $ 0.25
Weighted average number of common
shares 5,310 5,414 5,343 5,396
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 27, 2003 December 31, 2002 September 28, 2002
(unaudited) (audited) (unaudited)
------------------ ----------------- -------------------
ASSETS
Cash $ 2,212 $ 2,243 $ 2,339
Accounts receivable - net 112,843 97,627 106,133
Finance contracts receivable - net 5,973 4,701 2,897
Inventories 31,810 36,771 44,173
Deferred income taxes 8,469 8,469 10,171
Prepaid expenses and other current assets 8,905 3,203 1,981
---------------- ----------------- ---------------
Total current assets 170,212 153,014 167,694
Property, plant and equipment - net 34,866 46,697 47,088
Goodwill 11,748 11,696 12,556
Other assets 15,023 14,662 16,821
---------------- ----------------- ---------------
Total assets $ 231,849 $ 226,069 $ 244,159
================ ================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 59,653 $ 49,634 $ 53,386
Long-term debt obligations 50,631 56,135 72,360
Other long-term obligations 22,611 22,518 14,672
Deferred income taxes 1,190 1,644 2,460
Total shareholders' equity 97,764 96,138 101,281
---------------- ----------------- ---------------
Total liabilities and shareholders' equity $ 231,849 $ 226,069 $ 244,159
================ ================= ===============
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Nine Months Ended
(unaudited)
----------------------------------------------------
September 27, 2003 September 28, 2002
------------------ ------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,846 $ 1,347
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,699 3,214
Amortization 40 173
Deferred income taxes (454) -
Asset impairment (non-cash) 3,599 -
Cost of sales of finance contracts (175) 1,608
Proceeds from the sales of finance contracts 82,455 73,816
Increase in finance contracts receivable (84,022) (69,178)
Net change in remaining working capital items (6,963) (8,887)
---------------- -------------
Net cash provided by operating activities 25 2,093
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment additions - net (1,226) (6,165)
Other (113) 1,231
---------------- -------------
Net cash used for investing activities (1,339) (4,934)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loans 2,999 5,068
Repayments of other borrowings - net (1,090) (2,167)
Proceeds from issuance of common stock 102 544
Treasury stock purchases (728) (556)
Other - 43
---------------- -------------
Net cash provided by financing activities 1,283 2,932
Net (decrease) increase in cash (31) 91
Cash, beginning of period 2,243 2,248
---------------- -------------
Cash, end of period $ 2,212 $ 2,339
================ =============