Gehl Co. last week reported record fourth quarter 2006 sales to complete a record year. Full-year 2006 net sales were $486.2 million, an increase of 9 percent from 2005 net sales of $447.0 million. Global market share gains in the company’s skid-steer loader product line, along with strong demand throughout most of the year for its telehandler product line and improved product price realization, all contributed to the company’s revenue growth.
Income from operations was $46.1 million, or 9.5 percent of net sales, in 2006 compared to $38.8 million, or 8.7 percent of net sales, in 2005. Operating expenses as a percent of sales remained flat at 12 percent in 2006 compared to 2005. This result was achieved despite a pre-tax compensation expense of $1.1 million, or 0.2 percent of net sales, related to the expensing in 2006 of stock-based awards pursuant to FASB Statement No. 123R and a fourth-quarter pre-tax charge of $1.1 million for an accounts receivable reserve related to a customer account currently in collection.
Net income from continuing operations was $28.1 million, or $2.26 per share, for 2006 compared with net income from continuing operations of $22.1 million, or $2.00 per share, for 2005. The 2006 net income from continuing operations includes the previously discussed accounts receivable after-tax charge of $0.7 million, or 6 cents per share, and the after-tax impact of the FASB Statement No. 123R expense of $0.7 million, or 6 cents per share.
Net sales for the fourth quarter ended Dec. 31, were a record $103.6 million, an increase of 1 percent from the 2005 fourth quarter net sales of $102.4 million. Net sales remained solid in the quarter despite softening conditions in certain markets and product categories.
The North American skid-steer loader and telehandler markets decreased 22.9 percent and 11.6 percent, respectively, during the fourth quarter of 2006 versus the fourth quarter of 2005. During the comparable period, the company experienced only a 17.6-percent decline in skid-steer loader demand and an increase in telehandler demand of 7.4 percent, demonstrating the continuation of its market share gains.
Income from operations was $7.9 million, or 7.7 percent of net sales, in the fourth quarter of 2006 compared to $9.5 million, or 9.2 percent of net sales, in the fourth quarter of 2005. Operating expenses were 13.3 percent of net sales in the fourth quarter of 2006, up from 10.7 percent in the fourth quarter of 2005.
Net income from continuing operations was $4.9 million, or 40 cents per share, for the fourth quarter of 2006 compared with net income from continuing operations of $5.8 million, or 46 cents per share, for the fourth quarter of 2005.
“The employees of Gehl Company pulled together to produce another year of excellent financial results as we recorded record sales, income and earnings per share from continuing operations,” said William Gehl, chairman and CEO. “We gained market share in our two largest product categories, skid loaders and telehandlers, despite the market for North American skid loaders being down from 2005. We believe our focus on compact equipment, recent investments in the business, and continued focus on cost savings are the right strategies to position the company for the future.”
North American markets are currently forecasted to be down through the first half of 2007 with some recovery anticipated over the second half of the year. Industry forecasts for the first quarter alone project a reduction in demand of anywhere from 5 to 30 percent, depending on the product category, Gehl officials said.
Based on current 2007 market forecasts, current company backlog position, new product acceptance rate and targeted market share gains, the company expects 2007 net sales to be in the range of $465 million to $495 million. Despite improving gross margin, full year operating margin is expected to decline slightly because of incremental operating expense investments in product research and development and information technology projects totaling approximately $4.3 million. The company expects net income per share from continuing operations of $2.00 to $2.30 in 2007.
All income per share information is on a diluted basis.
Headquartered in West Bend, Wis., Gehl Co. is a global manufacturer of compact equipment used in construction and agricultural markets. The company markets its products under the Gehl and Mustang brand names.
