Gehl Reports Record First-Quarter Sales and Income

May 1, 2006 — Gehl Co., West Bend, Wis., reported record first quarter net sales from continuing operations of $122.1 million for the quarter that ended March 31, 2006, which is an increase of 12% from 2005 first quarter net sales from continuing operations of $108.9 million. Record first quarter income from continuing operations was $6.4 million, or $.51 per diluted share, for the first quarter of 2006, compared with income from continuing operations of $4.9 million, or $.47 per diluted share, for the first quarter of 2005.

 

On April 3, Gehl announced the discontinuation of its agricultural product lines. Income from continuing operations does not include an after-tax charge of $8.9 million, or $.72 per share, which the company recorded in the first quarter of 2006 related to the discontinuance of these product lines. Gehl expects to record the balance of its estimated total after-tax charge (an additional $0.5 million, or $.04 per share) related to the discontinuation in the second quarter of 2006. Including the $8.9 million after-tax charge, Gehl recorded a net loss of $2.7 million in the first quarter of 2006 compared to net income of $4.9 million in the first quarter of 2005.

 

Operating profit was $11.3 million, or 9.2% of net sales, in the first quarter of 2006, compared to $8.4 million, or 7.7% of net sales, in the first quarter of 2005. The improvement in operating profit as a percentage of net sales was the result of operating expense leverage and increased gross margin. Operating expenses were 12.3% of net sales in the first quarter of 2006, down from 13.4% in the first quarter of 2005. Gross margin improved to 21.5% in the first quarter of 2006 compared to 21.2% in the first quarter of 2005. The increase in gross margin was primarily due to improved product price realization in the first quarter of 2006.

 

“First quarter results provided an excellent start to the year,” said William D. Gehl, chairman and chief executive officer. “Record first quarter sales and income, as well as improved margins, reflect the successful execution of our compact equipment focused strategy, continued strength in our construction markets and our ongoing efforts to drive cost out of our business.”

 

Along with the first quarter results, Gehl reaffirmed its 2006 full year outlook with net sales from continuing operations in the range of $485 million to $495 million and earnings per diluted share from continuing operations of $2.20 to $2.30. Expected earnings per diluted share include an estimated $0.06 per share of compensation expense related to the Company's adoption of Statement of Financial Accounting Standards No. 123R, which requires companies to recognize compensation expense for all stock-based awards.