ASV Issues 2005 Outlook

GRAND RAPIDS, Minn. – ASV issued its initial financial guidance for 2005 last month. ASV anticipates its net sales for the year ending Dec. 31, 2005 will be in the range of $210 million to $230 million, an increase of 38 to 45 percent over its anticipated sales of $153 million to $158 million for 2004. ASV anticipates sales of its R-Series Posi-Track products will account for approximately 45 percent of its projected 2005 net sales, with undercarriage sales to Caterpillar accounting for approximately 33 percent of its projected net sales for 2005, an increase of 27 to 28 percent over 2004. Sales from ASV's recently acquired subsidiary, Loegering Mfg., 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.

"The rubber track loader market has grown from $10 million in 1995 to an expected $500 million for 2004,” said ASV CEO Gary Lemke, commenting on ASV’s outlook for 2005. “As we close out 2004, we continue to see growth for this market in 2005. We plan to capitalize on this growth by introducing another new R-Series Posi-Track model at our dealer meeting in January 2005. This new 86-horsepower model includes many of the features already found on our larger R-Series machines, along with a distinctive new vertical lift loader design. This new loader design allows increased lift heights and greater forward reach than our current R-Series products and is becoming increasingly popular in the construction, site development and rental markets.

“We also intend to formally roll out the Loegering Versatile Track System (VTS) in 2005,” Lemke continued. “We have spent the last few months working with Loegering suppliers to assure adequate quantities of raw materials are available to meet the expected demand for this product in 2005."
 
As mentioned above, ASV anticipates the sales of its undercarriages to Caterpillar for use on their 5-model line of Multi-Terrain Loaders (MTL) will increase in 2005 to $69 million to $76 million, compared with $54 million to $60 million in 2004. Discussing this increase, Lemke stated, "The success Caterpillar has had with their MTL products has led to increased undercarriage orders for 2005. Even with the contractual gross profit revisions for 2005, we anticipate our overall gross profit percentage on the sale of undercarriages will exceed 20 percent for 2005."

During 2004, ASV increased its quarterly gross profit percentage, despite rising steel costs. For 2005, the company anticipates its gross profit percentage will be in the range of 22 to 23 percent for the twelve months ended Dec. 31, 2005. With the acquisition of Loegering, selling, general and administrative expenses are expected to be in the range of 7 to 8 percent of net sales for 2005. Research and development expenses are currently expected to be in the range of 0.5 to 0.75 percent of net sales for 2005.

Finally, ASV currently has approximately 13.3 million shares of common stock outstanding, with Caterpillar owing 24 percent of ASV's shares. Based upon the factors mentioned above, ASV anticipates its diluted earnings per share for 2005 will be in the range of $1.50 to $1.65 per share. This represents an increase of 25 to 31 percent over the estimated range of $1.20 to $1.26 for 2004. This earnings per share guidance does not include an estimated $.05 per share effect of implementing FASB Standard No. 123, Share-Based Payment, requiring the expensing of stock options for the second half of 2005. ASV assumes a total of 14 million shares of common stock outstanding in its diluted earnings per share calculation for 2005.

ASV designs, manufactures and sells rubber-tracked, all-purpose crawlers and related accessories, attachments and traction products. ASV also manufactures rubber-tracked undercarriages, some of which are a primary component on Caterpillar's Multi Terrain Loaders.