West Bend, Wis.-based Gehl Company last week reported record annual net sales of $361.6 million for the year ended Dec. 31, 2004, an increase of $117.2 million, or 48 percent, from 2003 net sales of $244.4 million. Net income for the year ended Dec. 31, 2004 was $13.4 million, or $2.20 per share, compared to net income of $2.6 million, or 49 cents per share, in 2003. Included in the company's 2003 earnings was an after-tax charge of $2.7 million, or 50 cents per share, related to the closure of two manufacturing facilities. This charge was offset by a favorable tax adjustment of $400,000, or 7 cents per share, related to the finalization of prior year tax returns.
Higher sales and earnings for the year were the result of the overall economic expansion and generally improving conditions in the construction and agricultural markets, coupled with the successful introduction of several new products, including the new Gehl 40 series skid-steer loaders. Housing starts up nearly 6 percent, interest rates at historically low levels and higher milk prices stimulated demand for the company's compact construction and agricultural equipment. Construction equipment net sales were up 56 percent in 2004.
For the quarter ended Dec. 31, 2004, Gehl reported record fourth-quarter net sales of $93.9 million, compared to $56.9 million in the fourth quarter of 2003, an increase of $37 million, or 65 percent. Net income was $2.9 million, or 43 cents per share, for the quarter ended Dec. 31, 2004 compared to net income of $800,000, or 14 cents per share, in the fourth quarter of 2003.
"I am very pleased with our progress in 2004," said William Gehl, chairman and CEO. "As a result of successfully executing our strategies, our performance has improved throughout every facet of our business. We have tightly managed our cost structure, introduced new products, improved manufacturing production flow and expanded our strategic partnerships."
Demand, in general, for compact construction equipment in the North American market during 2005 is expected to increase 6 percent to 9 percent over 2004 levels, while demand for agricultural implements in the North American market is expected to be flat to up 5 percent compared to 2004.
Based on the current market outlook, the company's 2005 net sales are expected to increase 10 percent to 12 percent over 2004 levels. Operating margins are expected to improve as the result of continued initiatives to manage costs and improve efficiencies throughout the organization, and higher production levels at our manufacturing facilities.
Provided general economic conditions continue to be favorable, steel prices stabilize, and the availability of product from the company's suppliers is sufficient to meet demand, the company expects to earn in the range of $2.45 to $2.55 per share in 2005.
