WEST BEND, Wis.–(BUSINESS WIRE)–Feb. 27, 2006–Gehl Company (NASDAQ NM:GEHL – News), today reported net income of $6.2 million or $.50 per share for the fourth quarter of 2005. This compares with net income of $2.9 million or $.29 per share for the final quarter of 2004. The 2005 fourth quarter was positively impacted by $.12 per share as a result of reversing, in full, a $1.5 million after-tax warranty charge the Company had recorded in its second quarter of 2005. Fourth quarter 2005 revenues were a record $108.7 million compared with $93.9 million in the same period a year earlier.
Annual revenues were $478.2 million in 2005, also a record level, compared with $361.6 million in 2004. Construction segment net sales increased 42% to $344.0 million for 2005, reflecting continued strength in the North American construction markets and share gains in European markets. Agricultural segment net sales increased 13% to $134.2 million in 2005. Compact equipment sales within the Agricultural segment increased 28% in 2005, while agricultural implement shipments declined 16% from the prior year. Compact equipment sales within the Agricultural segment grew to 70% of segment sales in 2005 versus 62% in 2004.
For the full year 2005, the Company’s net income totaled a record $21.8 million or $1.97 per share. Comparable results were $13.4 million or $1.47 per share in 2004.
Key factors driving the increase in net income in 2005 included higher shipment volume, cost containment and effective pricing actions. These items were partially offset by higher net interest expense, due to higher average debt balances and higher interest rates in 2005 versus 2004, and higher expenses related to the sale of retail finance contracts.
“Our team performed extremely well in 2005,” said William D. Gehl, Chairman and Chief Executive Officer. “They are successfully executing our compact equipment focused strategy, and it is reflected in our 2005 financial performance. We tightly managed our costs, introduced innovative new products, expanded our telescopic handler manufacturing capacity, invested in state-of-the-art manufacturing technologies and improved our capital structure.”
2006 Full Year Outlook
The Company’s markets for compact equipment continued to show strong demand throughout the fourth quarter of 2005. Orders in the fourth quarter increased over 100% compared to the prior year, driven largely by the Company’s introduction of its new E-Series skid loader line and the continuing strength of rental industry demand for telescopic handlers. Backlog at December 31, 2005, of $186.3 million, increased over 180% from year-end 2004.
Based on 2006 forecasted market growth for compact equipment in North America, as well as the Company’s recent order rate, backlog position and production capacity, the Company expects 2006 net sales to be in the range of $510 million to $520 million, an increase of between 7% and 9% over 2005 levels. Operating margins are expected to continue to improve as the result of initiatives to tightly manage costs and improve efficiencies throughout the organization.
Provided general economic conditions continue to be favorable, input prices remain stable, and the availability of product from the Company’s suppliers is sufficient to meet demand, the Company expects to earn in the range of $2.13 to $2.18 per share in 2006. Expected earnings per share include an estimated $.06 per share of compensation expense related to the Company’s adoption, in the first quarter of 2006, of Statement of Financial Accounting Standards No.123R, which requires companies to recognize compensation expense for all stock-based awards.
All earnings per share information included in this release is on a fully diluted basis.