ASV Has Record First Quarter

GRAND RAPIDS, Minn. – ASV, manufacturer of rubber-tracked, all-purpose crawlers and related accessories, attachments and traction products, today reported record results for its first quarter of 2005, its fourth consecutive quarter of record sales and earnings. Net sales for the three months ended March 31 increased 61 percent to $53.2 million, compared with $33.1 million for the same period in 2004. Assisted by a 110-basis-point improvement in its gross profit percentage, ASV reported net earnings of $5.5 million for the first quarter of 2005, compared with net earnings of $3.6 million for the first quarter of 2004. Diluted earnings per share increased 54 percent to $0.40 for the first quarter of 2005 compared with $0.26 for the first quarter of 2004.
 
“Our first quarter saw continued sales increases of ASV's R-Series Posi-Track products as well as undercarriages sold to Caterpillar for use on their Multi-Terrain Loaders (MTL),” said ASV chairman and CEO Gary Lemke, commenting on the results. “Sales of our R-Series Posi-Track products increased 23 percent in the first quarter of 2005 compared with the first quarter of 2004 and accounted for 41 percent of our first quarter 2005 sales. With our planned production increases of R-Series products throughout the balance of the year, we expect our R-Series growth to be in excess of 35 percent for all of 2005.

“Sales of MTL undercarriages increased 55 percent in the first quarter of 2005 compared with the first quarter of 2004, and accounted for 33 percent of our first quarter 2005 sales,” Lemke continued. “Sales from Loegering Mfg., acquired by ASV in October of 2004, accounted for 12 percent, or $6.4 million, of our sales for the first quarter of 2005. Sales of the Versatile Track System (VTS) accounted for 40 percent of Loegering's first quarter 2005 sales. Finally, as the field population of machines and undercarriages continues to grow, sales of service parts increased 77 percent in the first quarter of 2005.”

Discussing ASV's results further, Lemke said, "I'm very pleased to see how ASV has handled its supply chain, which resulted in our increased gross profit percentage in the first quarter of 2005, even in the face of increased raw material costs. During the first quarter of 2005, our gross profit percentage increased to 24 percent compared with 22.9 percent  for the first quarter of 2004 and 22.4 percent for the fourth quarter of 2004 due to savings realized from cost reduction projects, lower unit costs from increased volume and price increases on R-Series Posi-Track products. Our operating expenses came in at the low end of our anticipated range, with selling, general and administrative expenses totaling 7.1 percent of net sales for the first quarter of 2005, compared with 5.7 percent of net sales for the first quarter of 2004. This increase was due primarily to the inclusion of Loegering, which does not yet enjoy the same degree of leverage that ASV does.

“We continued to invest in research and development to expand our product line,” Lemke added. “During the first quarter of 2005, ASV completed its newest product, the RCV vertical lift loader, which went into production in April of 2005. In addition, Loegering will be expanding its product line with a smaller version of its VTS product expected to be available in the third quarter of 2005."
2005 GUIDANCE INCREASE. ASV previously issued sales guidance for 2005 in the range of $210 million to $230 million and diluted earnings per share guidance in the range of $1.50 to $1.65 per share. Given the results for the first quarter of 2005, ASV is increasing its guidance, with sales now expected to be in the range of $220 million to $230 million for 2005, an increase of 37 to 43 percent over 2004. Diluted earnings per share are now expected to be in the range of $1.60 to $1.73 per share, an increase of 25-35% compared with 2004.

ASV anticipates its sales breakdown for 2005 will remain as previously guided, with R-Series Posi-Track products expected to account for approximately 45 percent of its projected 2005 net sales and MTL undercarriages accounting for approximately 33 percent. Sales of Loegering products are expected to account for approximately 12 percent of ASV's projected net sales for 2005, with parts and used equipment accounting for approximately 10 percent.
 
Commenting on the guidance increase, Lemke stated, "We believe the market is starting to fully realize the benefits of ASV's rubber track technology. We intend to capitalize on this by continuing to grow our distribution network, expand our product offerings and develop new markets and applications for our industry leading rubber track technology."